Jun 222012

By Tammy Gray —

The federal government could owe Native American tribes, including the Navajo Nation, up to $1 billion under a ruling by the U.S. Supreme Court that the government must pay the full amount of contracts with the tribes.

The Navajo Ramah Chapter of New Mexico became a plaintiff in the suit after the federal government decided in 1994 to cap payments to tribes, regardless of amounts specified in the contracts.

Payments in question were related to services such as law enforcement, health care, education and fire safety. The federal government contracted with tribes to provide their own services, rather than providing them directly. For nearly 20 years, the federal government paid the full amount of the contracts, but then limited the payments starting in 1994.

In a 5-4 split decision, the U.S. Supreme Court found that the government could not choose to limit payment of contracts, regardless of whether Congress set aside funding for the payments.

SCOTUSblog, sponsored by Bloomberg law, noted in its “plain English summary” of the case, “The Court ruled that a promise is a promise, even if the government doesn’t have immediately available enough money to pay all of the contractors it had promised to pay for their services.”

The ruling did not specify the amounts due to each tribe, but the combined total could reach $1 billion. The decision is hailed as a victory not only for tribes, but as an assurance that the federal government will have to pay contracts made with any entity in full.