Implementation of the Native American Housing Assistance and Self-Determination Act of 1996; Final Rule

SUMMARY: On July 2, 1997, HUD published a rule proposing to implement

the Native American Housing Assistance and Self-Determination Act of

1996 (NAHASDA). NAHASDA reorganizes the system of Federal housing

assistance to Native Americans by eliminating several separate programs

of assistance and replacing them with a single block grant program. In

addition to simplifying the process of providing housing assistance,

the purpose of NAHASDA is to provide Federal assistance for Indian

tribes in a manner that recognizes the right of Indian self-

determination and tribal self-governance. This rule makes final the

policies and procedures set forth in the July 2, 1997 proposed rule,

and takes into consideration the public comments received on the

proposed rule. As required by section 106(b)(2) of NAHASDA, HUD

developed the proposed and final rules with active tribal participation

and using the procedures of the Negotiated Rulemaking Act.

EFFECTIVE DATE: April 13, 1998.

FOR FURTHER INFORMATION CONTACT: Jacqueline Johnson, Deputy Assistant

Secretary for Native American Programs, Department of Housing and Urban

Development, 451 Seventh Street, SW, Room 4100, Washington, DC 20410;

telephone (202) 708-0950 (this is not a toll-free number). Speech or

hearing-impaired individuals may access this number via TTY by calling

the toll-free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. The July 2, 1997 Proposed Rule

On July 2, 1997 (62 FR 35718), HUD published for public comment a

rule proposing to implement the Native American Housing Assistance and

Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA).

NAHASDA streamlines the process of providing housing assistance to

Native Americans. Specifically, it eliminates several separate programs

of assistance and replaces them with a single block grant program. In

addition to simplifying the process of providing housing assistance,

the purpose of NAHASDA is to provide Federal assistance for Indian

tribes in a manner that recognizes the right of Indian self-

determination and tribal self-governance.

The July 2, 1997 rule proposed to implement NAHASDA in a new 24 CFR

part 1000. Part 1000 is divided into six subparts (A through F), each

describing the regulatory requirements for a different aspect of

NAHASDA. The Committee elected to present new part 1000 in a ``Question

and Answer'' format. Additionally, the rule as much as practicable did

not repeat statutory language. A reader was therefore required to have

the statute available while reading the rule.

The July 2, 1997 rule also proposed to make several conforming

amendments to HUD's existing Indian housing regulations. For example,

the rule proposed to remove 24 CFR part 950 from the Code of Federal

Regulations. Part 950, which sets forth the regulatory requirements for

the ``old'' system of funding, was made obsolete by NAHASDA.

The rule also proposed to redesignate 24 CFR part 953 (Community

Development Block Grants for Indian tribes and Alaskan Native Villages)

and 24 CFR part 955 (Loan Guarantees for Indian Housing) as 24 CFR

parts 1003 and 1005, respectively. These redesignations were designed

to consolidate HUD's Indian housing regulations in the ``1000 series''

of title 24, and assist program participants by presenting uniformity.

Finally, the July 2, 1997 rule proposed amendments to the

regulations currently set forth in part 955. These revisions were

designed to reflect the amendments made by NAHASDA to section 184 of

the Housing and Community Development Act of 1992 (12 U.S.C. 1715z-

13a).

The July 2, 1997 proposed rule provided a detailed description of

the amendments to title 24 of the CFR.

II. Negotiated Rulemaking.

Section 106(b)(2)(A) of NAHASDA provides that all regulations

required under NAHASDA be issued according to the negotiated rulemaking

procedure under subchapter II of chapter 5 of title 5, United States

Code. The rulemaking procedure referenced is the Negotiated Rulemaking

Act of 1990. Accordingly, the Secretary of HUD established the Native

American Housing Assistance and Self-Determination Negotiated

Rulemaking Committee (Committee) to negotiate and develop a proposed

rule implementing NAHASDA.

The Committee consisted of 58 members. Forty-eight of these members

represented geographically diverse small, medium, and large Indian

tribes. There were ten HUD representatives on the Committee.

Additionally, three individuals from the Federal Mediation and

Conciliation Service served as facilitators. While the Committee was

much larger than usually chartered under the Negotiated Rulemaking Act,

its larger size was justified due to the diversity of tribal interests,

as well as the number and complexity of the issues involved.

Tribal leaders recommended and the Committee agreed to operate

based on consensus rulemaking. The protocols adopted by the Committee

define ``consensus'' as general agreement demonstrated by the absence

of expressed disagreement by a Committee member in regards to a

particular issue. HUD committed to using, to the maximum extent

feasible consistent with its legal obligations, all consensus decisions

as the basis for the proposed rule.

The Committee divided itself into six workgroups. Each workgroup

was charged with analyzing specified provisions of the statute and

drafting any regulations it believed were necessary for implementing

those provisions. The draft regulations developed by the workgroups

were then brought before the full Committee for review, amendment, and

approval. A seventh workgroup was assigned the task of reviewing the

approved regulations for format, style, and consistent use of

terminology.

During February, March, and April 1997 the Committee met four

times. The meetings were divided between workgroup sessions at which

regulatory language was developed and full Committee sessions to

discuss draft regulations produced by the workgroups. Tribal leaders

were encouraged to attend the meetings and participate in the

rulemaking process.

It was the Committee's policy to provide for public participation

in the rulemaking process. All of the Committee sessions were announced

in the Federal Register and were open to the public.

After the Negotiated Rulemaking Committee delivered a proposed

rule, the Department placed the rule in clearance in accordance with

its customary procedures for the finalization of proposed rules. As a

result, numerous changes were suggested by offices within HUD which

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had not been part of the negotiated rulemaking process. The Department

did not send up a ``red flag'' or adjust its customary process,

notwithstanding the fact that the proposed rule was the product of a

negotiated rulemaking process. As a result, changes were made to the

negotiated rule and were not communicated to the Negotiated Rulemaking

Committee for comment prior to publication.

After discussing conflicting views of the propriety of the

Department's actions, the Committee determined (with HUD agreement)

that the Department's changes would be given consideration in a manner

similar to public comments. As with public comments, the Department's

changes were accepted by the Committee where they contributed to the

clarity or legal accuracy of the rule, or where they more effectively

implemented NAHASDA.

The Department regrets any misunderstanding its actions may have

caused.

III. Discussion of Public Comments on the July 2, 1997 Proposed

Rule

The public comment period on the July 2, 1997 proposed rule expired

on August 18, 1997. The rule was of significant interest to Indian

country, as demonstrated by the 134 public comments submitted on the

regulations. These comments offered detailed and helpful suggestions on

the implementation of NAHASDA. The Committee met during August,

September, and October 1997 to consider the public comments and develop

this final rule. This section of the preamble presents a summary of the

significant issues raised by the public commenters on the July 2, 1997

proposed rule, and the Committee's responses to these comments. For the

convenience of readers, the discussion of the public comments is

organized by subpart and regulatory section.

Subpart A--General

Subpart A contains the legal authority and scope of the

regulations. It also sets forth definitions for key terms used in the

balance of the regulations. Subpart A also cross-references to other

applicable Federal laws and regulations. Additionally, subpart A

describes the conflict of interest provisions which are applicable

under the new Indian housing block grant program.

Section 1000.1. Section 1000.1 describes the applicability and

scope of 24 CFR part 1000. The Committee has made a clarifying

amendment to this provision. Specifically, a sentence has been added to

explain that to the extent practicable the regulations do not repeat

statutory language.

Section 1000.2. Several commenters believe that the final rule

should restate the trust responsibility of the United States to Indian

tribes. One of the commenters recommended language regarding trust

responsibility for inclusion in the final rule. The Committee has

adopted the language suggested by this commenter and added a new

undesignated paragraph at the end of Sec. 1000.2.

Section 1000.4. Several commenters believe that this section did

not accurately reflect the objectives of NAHASDA. The Committee has

addressed this concern by specifically reiterating the language of

NAHASDA section 201(a) which sets forth the primary objective of

NAHASDA.

Section 1000.6. Several commenters objected to the unilateral

change made by HUD to this section. Specifically, the language

originally adopted by the Committee provided that the new Indian

Housing Block Grant (IHBG) program is a ``formula driven'' program. HUD

revised this to read ``formula grant program.'' The Committee has

adopted the suggestion made by these commenters to use the original

regulatory language. The Committee believes this language more

accurately reflects the nature of the IHBG program.

Section 1000.8. Several commenters believe that this section, which

merely cross-referenced to HUD's general regulatory waiver provision at

24 CFR 5.110, was unclear. The Committee has corrected this by revising

the section to reiterate the language of Sec. 5.110.

Another commenter recommended that HUD should be required to

respond to waiver requests within 30 days of receipt or the waiver

should be automatically approved. The authority to grant regulatory

waivers rests solely with the Secretary. The default approval procedure

suggested by the commenter would contradict this principle.

Accordingly, the comment has not been adopted.

Section 1000.10. A number of comments were received which suggested

changes to definitions contained in the proposed rule. The Committee

reviewed each of the comments and determined as follows:

1. Adjusted income. Several comments suggested excluding child

support from annual income. The definition of adjusted income is

specified in the statute. The statutory definition allows the Indian

tribe to include in its Indian Housing Plan (IHP) other amounts they

decide to exclude from annual income. Accordingly, no revision was made

to the proposed rule.

2. Annual income. A number of suggestions were received to remove

from the definition of annual income specific items such as per capita

payments, lease payments, education stipends, etc. The definition in

the proposed rule is modeled on the obsolete 1937 Act definition which

was repealed by NAHASDA. In response to these comments, the Committee

has revised the definition of ``annual income'' to provide Indian

tribes with greater flexibility in determining what is annual income.

The revised definition is modeled on the definition of annual income in

the HOME program (24 CFR part 92) and provides three distinct

definitions of annual income from which a recipient may choose.

3. Homebuyer payment. The Committee has added a new definition of

``homebuyer payment.'' As explained in the preamble to the proposed

rule (62 FR 35722), the term ``homebuyer payment'' is limited to lease-

purchase payments, such as those in the Mutual Help Homeownership

Opportunity Program. The addition of this new definition will clarify

the meaning of the phrase for readers of the regulations.

4. Indian area. The proposed rule provided the broadest possible

definition of ``Indian area'' to allow Indian tribes or Tribally

Designated Housing Entities (TDHEs) to operate. The Committee has

chosen not to make substantive revisions to this definition. However,

in response to several comments, it has clarified the definition.

5. Indian tribe. One commenter suggested that only Federally

recognized Indian tribes be recognized in Alaska. The definition of

eligible recipients is statutory; therefore, no change was made to the

definition.

6. Median Income. The Committee has amended the definition of

median income. The proposed rule merely cross-referenced to the

statutory definition. The amendment clarifies the definition for

purposes of eligibility under a recipient's program.

7. Person with disabilities. HUD made several changes to language

adopted by the Committee at the proposed rule stage designed to clarify

that this definition was based on HUD's definition of ``physical, or

mental impairment'' at 24 CFR 8.3. The regulations at 24 CFR part 8

implement section 504 of the Rehabilitation Act of 1973 (29 U.S.C.

794). The Committee reviewed the HUD changes and determined they were

unnecessary. Accordingly, this final rule reflects the original

Committee language.

8. Total development cost. Several comments suggested

clarifications and

[[Page 12336]]

modifications to this definition. Total development cost is a term used

only for purposes of the formula. Therefore, the term is being defined

under subpart D and is being removed from this section.

Section 1000.12. This section describes the nondiscrimination

requirements that are applicable to the Indian Housing Block Grant

(IHBG) program. In response to several public comments, the Committee

has made several clarifying revisions to Sec. 1000.12. The section now

clarifies that the Indian Civil Rights Act applies to Federally

recognized Indian tribes exercising powers of self-government. Further,

Sec. 1000.12(b) now clearly provides that title VI of the Civil Rights

Act of 1964 (42 U.S.C. 2000d) and title VIII of the Civil Rights Act of

1968 (42 U.S.C. 3601 et seq.) apply to Indian tribes that are not

covered by the ICRA. However, the title VI and title VIII requirements

do not apply to actions by Indian tribes under section 201(b) of

NAHASDA.

Section 1000.14. Several commenters objected to the relocation and

property disposition requirements set forth in this section. The

commenters wrote that these requirements were burdensome and redundant.

Several commenters suggested that Sec. 1000.14 simply cross-reference

to the Department of Transportation regulations at 49 CFR part 24. The

Department of Transportation is the lead agency in the implementation

of the Uniform Relocation Act. The Committee has reviewed Sec. 1000.14

and determined that it provides clear and concise guidance to

recipients. Accordingly, no changes have been made.

Section 1000.16. A number of comments were received which expressed

concern with the application of Davis-Bacon Act requirements to

NAHASDA. The payment of Davis-Bacon wage rates to laborers and

mechanics in the development of affordable housing under NAHASDA is a

statutory requirement under section 104(b) of NAHASDA and cannot be

removed by regulation.

Other commenters suggested that the regulations limit the

applicability of Davis-Bacon to projects larger than 12 units. This

suggestion was not adopted by the Committee for lack of statutory

authority.

A number of commenters suggested that the labor standards section

was not sufficiently clear. The Committee has replaced the language in

the proposed rule, including those provisions modified by HUD without

the consent of the Committee, with a more explicit discussion of labor

standards including the applicability of Davis-Bacon wage rates, HUD

determined wage rates, the Contract Work Hours and Safety Standards

Act, and miscellaneous related laws and issuances.

Section 1000.18. One commenter questioned whether HUD or the

recipient will have to conduct an Environmental Assessment (EA) before

HUD's compliance determination for an IHP. The commenter recommended

that the final rule clarify this issue. Section 1000.18 has been

revised to provide that an environmental review does not have to be

completed prior to HUD's compliance determination for an IHP.

One commenter noted that 24 CFR parts 50 and 58 do not refer to the

Archaeological Resources Protection Act and Native American Graves

Protection and Repatriation Act. The commenter believed these statutes

should be addressed in the final rule. The Committee has not adopted

this suggestion. Parts 50 and 58 list only statutes that apply to

Federal projects specifically. The statutes referenced by the commenter

have a broader scope.

Section 1000.20. Forty-seven comments were received on this

section. These comments deal with HUD's environmental review

responsibilities addressing the payment of review costs; the timely

completion of reviews; and the eligibility, under NAHASDA, for NEPA

training.

This section has been modified by the Committee to provide greater

flexibility in addressing environmental review requirements. In

addition to requesting HUD to complete reviews or the Indian tribe

completing reviews, the Indian tribe can now choose to provide HUD with

necessary information for HUD to complete the environmental reviews.

Also, a sentence has been added which clearly notifies recipients that

environmental reviews must be completed before affordable housing

activities affecting the environment can begin.

Additionally, HUD raised an issue in the preamble of the proposed

rule concerning the timing of environmental reviews as it relates to

approval of the IHP. HUD has reviewed the IHP approval process and has

determined that the approval of the IHP does not have an impact on the

completion of the environmental reviews.

Section 1000.22. One commenter suggested that the final rule state

whether additional funds will be available to the Indian tribes to meet

the environmental review requirements. The rule states in Sec. 1000.22

that environmental review costs are eligible costs. Another commenter

wrote that Indian tribes should be reimbursed for all related expenses

to the extent they assume environmental review responsibilities. The

Committee has not revised Sec. 1000.22 in response to these comments.

There will be no additional funds available to Indian tribes for the

review.

Section 1000.26. Several commenters objected to the applicability

of 24 CFR part 85 to recipients under NAHASDA. These commenters

believed that making part 85 applicable violated the self-governance

principles of NAHASDA. Part 85 establishes uniform administrative

requirements for grants and cooperative agreements to State, local, and

Federally recognized tribal governments. The Committee determined that

the consensus language of Sec. 1000.26 should not be changed.

Several commenters recommended that the final rule specify which

administrative provisions are applicable to NAHASDA. The Committee has

adopted this comment. Accordingly, Sec. 1000.26 has been revised to

list the administrative requirements which apply to NAHASDA.

Section 1000.28. Several commenters believed the Committee should

provide a definition of ``self governance tribe.'' The Committee has

added a sentence to this section which provides that for purposes of

Sec. 1000.28, a self-governance Indian tribe is an Indian tribe that

participates in self governance activities as authorized under Public

Law 93-638 (25 U.S.C. 450 et seq.).

Other commenters wrote that making the part 85 requirements

applicable to self-governance Indian tribes violated the principles of

tribal self-determination. The Committee agrees with these comments.

Accordingly, the provision has been revised to provide that a self-

governance Indian tribe may certify that its administrative

requirements and standards meet or exceed the comparable requirements

set forth in Sec. 1000.26.

Section 1000.30 through 34. Several commenters objected to the

inclusion of specific conflict of interest provisions in the proposed

rule. The commenters believe that recipients should make their own

determination regarding conflict of interest based on local conditions

or the fact that other programs administered by the recipient may have

conflict of interest requirements that are not entirely consistent with

the proposed requirements. The Committee has not revised Sec. 1000.30

based on these comments. The Committee determined that the final rule

should set forth specific conflict of interest provisions to guide

recipients.

Other commenters objected to the unilateral changes made by HUD

subsequent to Committee approval. The

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Committee reviewed the language modifications made by HUD and

determined the language is clearer than the original language.

Accordingly, the change has been incorporated.

In response to a number of public comments, the Committee has

clarified the meaning of the term ``family ties'' used in this section.

Section 1000.30 has been revised to make clear that this term applies

to immediate family ties, which are determined by the Indian tribe or

TDHE in its operating policies.

The Committee has also removed the reference to 24 CFR part 84,

Grants and Agreements with Institutions of Higher Education, Hospitals,

and Other Non-Profit Organizations, from this section based upon its

determination that the common rule requirements of part 85,

Administrative Requirements for Grants and Cooperative Agreements to

State, Local and Federally Recognized Indian Tribal Governments, apply

to recipients. The part 85 requirements apply to governmental entities

and therefore are more appropriate for recipients of NAHASDA

assistance.

Additionally, the Committee has added a new Sec. 1000.30(c) which

excludes from the conflict of interest provisions those individuals who

would otherwise be eligible for program benefits. Additional language

clarifications were also made to sections 1000.32 and 1000.34.

Section 1000.36. Proposed Sec. 1000.36 would have required a

recipient to retain records regarding exceptions made to the conflict

of interest provisions for a period of at least 5 years. Section

1000.548 of the proposed rule, renumbered as Sec. 1000.552 in the final

rule, requires that recipients maintain all other IHBG program records

for a period of three years. One commenter suggested that the final

rule establish a uniform time period for the retention of program

records. The commenter further suggested that the three-year time

period set forth in Sec. 1000.548 of the proposed rule, now

Sec. 1000.552, be adopted. The Committee agrees and has revised

Sec. 1000.36 accordingly.

Section 1000.38. Several commenters objected to HUD's changes to

the original Committee language. These commenters believe that the

revisions made by HUD establish onerous flood insurance requirements.

Other comments expressed concern with the workability of flood

insurance requirements and suggested adding exclusions such as for

inability to obtain coverage or for costs below $5000, or exemptions

from the requirements due to lack of available land outside marginal

floodplain areas. Another commenter stated that flood insurance

requirements should be limited to acquisition and construction

projects.

The Committee has decided to retain the revisions made by HUD to

Sec. 1000.38. HUD's changes added a citation to the Flood Disaster

Protection Act of 1973 (42 U.S.C. 4001-4128) (FDPA). In addition, the

changes clarified that flood insurance requirements apply under the

FDPA to financial assistance for ``acquisition and construction

purposes'', rather than to all affordable housing activities under

NAHASDA. There is no authority to administratively adopt the exemptions

suggested. Section 102(c)(2) of the FDPA contains an exclusion from the

flood insurance purchase requirement for loans that have an original

outstanding balance of $5000 or less and a repayment term of one year

or less.

One commenter suggested that the following language from the FDPA

should be added to the end of paragraph 1000.38(b): ``Provided, that if

the financial assistance provided is in the form of a loan or an

insurance or guaranty of a loan, the amount of flood insurance required

need not exceed the outstanding principal balance of the loan and need

not be required beyond the term of the loan.'' The Committee has made

the recommended change with minor revisions.

Section 1000.40. A number of comments were received questioning the

applicability of lead-based paint poisoning prevention requirements to

NAHASDA, the complexity and cost of complying with program regulations

which applied to housing developed under the 1937 Act, and the limited

information provided under the proposed rule as to the lead-based paint

poison prevention requirements. In order to streamline the lead-based

paint poisoning requirements applicable to NAHASDA and to provide

guidance to recipients on protection against lead poisoning from

applied paint, the Committee has replaced the limited language in the

proposed rule with more extensive, grant activity based language

utilizing HUD's experience in the HOME program.

Section 1000.42. Several commenters objected to the applicability

of HUD's regulations at 24 CFR part 135, Economic Opportunities for

Low-and Very Low-Income Persons, which implement section 3 of the

Housing and Urban Development Act of 1968. The commenters believe that

independent Section 3 regulations should be developed for the IHBG

program. The Committee has determined that the development of

independent Section 3 regulations would be extremely time-consuming.

Further, the part 135 regulations provide an existing set of useful and

comprehensive requirements for implementing the Section 3 requirements.

Accordingly, the Committee has decided to retain the reference to 24

CFR part 135.

The Committee has made two changes to Sec. 1000.42. First, the

lengthy sentence explaining the purpose of section 3 has been removed

and has been replaced with a more concise statement of purpose. This

sentence merely repeated the language already found in 24 CFR 135.1.

Second, a new Sec. 1000.42(b) has been added which clarifies that the

section 3 requirements apply only to those Section 3 covered projects

or activities for which the amount of assistance exceeds $200,000.

Sections 1000.44 and 1000.46. Similar public comments were received

on these two sections. Section 1000.44 provides that the prohibitions

in 24 CFR part 24 on the use of debarred, suspended, or ineligible

contractors apply to the IHBG program. Section 1000.46 provides that

requirements of the Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et

seq.) and HUD's implementing regulations in 24 CFR part 24 apply to the

IHBG program.

Several commenters recommended that Indian tribes be allowed to

develop their own debarment and drug-free workplace procedures. The

Committee reviewed the requirements set forth in 24 CFR part 24, and

determined that they should continue to be referenced in the

regulations. The Committee did make one clarifying change to

Secs. 1000.44 and 1000.46. Specifically, the sections have been revised

to clarify that the part 24 requirements apply, in addition to any

tribal debarment and drug-free workplace requirements.

Sections 1000.48 through 1000.54. One commenter recommended that

the rule be amended to state that an Indian tribe or TDHE may provide

preferences in the employment, training, procurement and services to

members of the Federally recognized Indian tribes. The reason Indian

preference was not addressed in the proposed rule is because it was a

non-consensus item as indicated in the preamble to the proposed rule.

The Committee has added four sections which address the applicability

of Indian preference, requirements for the provision of Indian

preference in program administration and procurement, and methods for

addressing complaints.

Sections 1000.56, 1000.58, and 1000.60. Numerous comments were

received on the issue of the method of NAHASDA payments, identified as

a nonconsensus issue in the proposed

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rule. After full consideration, HUD and the tribal members of the

Committee have agreed to add new Secs. 1000.56, 1000.58, and 1000.60,

which track the statutory language of section 204(b) of NAHASDA.

Section 204(b) authorizes a recipient to invest grant amounts for the

purposes of carrying out affordable housing activities in investment

securities and other obligations as approved by the Secretary.

The new regulatory provisions provide for a ``phase-in'' of the

recipient's ability to drawdown NAHASDA funds for investment purposes.

Specifically, new Sec. 1000.58(f) provides that a recipient may invest

its IHBG annual grant in an amount equal to the annual formula grant

less any formula grant amounts allocated for the operating subsidy

element of the Formula Current Assisted Housing Stock (FCAS) component

of the formula multiplied by the following percentages, as appropriate:

50% in Fiscal Years 1998 and 1999; 75% in Fiscal Year 2000; and 100% in

Fiscal Year 2001 and thereafter. Investments under these provisions may

be for a period no longer than two years.

Section 1000.62. NAHASDA grant amounts will often generate interest

funds from investment and program funds from tribal housing activities.

The question of whether recipients could keep interest funds was a

nonconsensus issue in the proposed rule. Many commenters and tribal

committee members strongly supported the right of the recipients to

keep all interest income earned on grant amounts. The Committee agrees

and has drafted a new Sec. 1000.62 to the final rule.

Tribal representatives and HUD agree that Sec. 1000.62 provides

that all program income must be used for affordable housing activities,

but Indian tribes argue that program income is not subject to the

requirements applicable to NAHASDA grant amounts. HUD disagrees, and

interprets Sec. 1000.62 to mean that the use of program income is

subject to the same requirements as grant amounts and intends to

implement Sec. 1000.62 accordingly. This would have the effect of

requiring program income to be subject to other statutory requirements

such as environmental review requirements and maximum rent requirements

applicable to grant amounts.

The Committee recognizes the importance of the need for developing

guidance for accounting for program income grant amounts generated by

the combined use of NAHASDA grant amounts and other funds. This

guidance will be jointly developed by HUD and tribal representatives

appointed by the Committee co-chairs. Every attempt will be made to

develop and issue this guidance as expeditiously as possible.

Subpart B--Affordable Housing Activities

Subpart B contains the regulations necessary for the implementation

of title II of NAHASDA. Among the topics addressed by subpart B are

eligible affordable housing activities, low-income requirements, lease

requirements and tenant selection.

Section 1000.104. Several commenters objected to the language,

``absent evidence to the contrary'', added at the end of each sentence.

This language was stricken. This section was intended to clarify that

NAHASDA and these regulations do not affect the eligibility of

homebuyers and tenants assisted under the 1937 Act. The regulations

were revised to reflect this intent. The original language was unclear

regarding whether current families residing in housing units were

automatically eligible for all NAHASDA activities or only for continued

occupancy. One commenter commented that all Indians residing in Indian

Country should be eligible for housing assistance. All Indians are

eligible for assistance under specified activities under NAHASDA.

However, the regulations are written to reflect the intent of Congress

to provide assistance primarily for low income Indian families and to

establish eligibility requirements for non low-income Indian families.

NAHASDA does not impose requirements on continuing income eligibility

after a participant enters a housing program.

Section 1000.106. One comment was received on the different

standards applied to non low-income Indian families and non-Indian

families. The regulations reflect the statutory requirements in NAHASDA

and the Congressional intent to provide housing primarily for low

income Indian families, while recognizing an Indian tribe's need to

house other persons who are essential to the well-being of Indian

families.

Section 1000.108. The Committee agreed with comments to remove the

phrase ``other housing activities'' from this section and Sec. 1000.112

to clarify that these regulations are addressing the assistance to non

low-income Indian families and model housing activities.

Section 1000.110. For purposes of clarity, Sec. 1000.118 has been

redesignated as Sec. 1000.110 and moved to immediately follow

Sec. 1000.108. Former Secs. 1000.108 through 116 were renumbered to

conform to this change.

NAHASDA requires a family to be low income at the time of purchase

of a home. This caused problems for families buying homes pursuant to a

lease purchase agreement. To solve the problem, the section was revised

by adding a new paragraph (a) to make families who are not low income

at the time of purchase of a home, eligible under the non low-income

requirements. In addition, this section was revised to allow recipients

to provide housing to non low-income Indian families who have been

determined by the recipient to be essential to the well-being of the

Indian families in the area, without requiring a higher repayment than

low income Indian families.

Numerous comments were received that the formula for providing

assistance to non low-income Indian families was difficult to

understand. The formula was simplified. Comments were received that the

amount a non low-income family must pay for the assistance should not

be more than the fair market value of the assistance. Comments were

received that the regulations gave HUD too much discretion. The

regulations were revised to give more discretion to recipients,

including the authority to limit payments to Fair Market Value.

Section 1000.112. One commenter believed that these regulations

give too much discretion to HUD in evaluating model housing activities.

The Committee disagreed with the comment because the regulations

provide that HUD will review the proposals with the goal of approving

the activities.

Section 1000.114. One commenter asked that the regulations state

how notice is to be given. The regulations were changed to clarify that

notice by HUD will be given in writing. One commenter commented that

HUD should be given 90 days rather than 60 to approve or disapprove a

proposal. The Committee believes that sixty days is sufficient time for

HUD to approve or disapprove a proposal. This time period is consistent

with the time period for approving an IHP.

Section 1000.116. A commenter requested that this section establish

a time frame. The time frame is specified in Sec. 1000.114. Other

commenters asked whether the time period is affected by the

consultation requirement. The time period within which HUD must respond

is not affected by the requirement to consult with a recipient

regarding its proposal.

Section 1000.118. Commenters asked whether the days specified in

this section were calendar or business days and suggested that the

number of days be consistent in each step of the appeal

[[Page 12339]]

process. The number of days specified in paragraphs (b), (c) and (d) of

this section were changed to 20 calendar days. Paragraph (a) of this

section was clarified to read ``30 calendar days.'' The appeal process

is consistent with other administrative appeal processes.

Section 1000.122. Several commenters stated the answer to the

question should be ``yes.'' The final rule clarifies that while NAHASDA

does not prohibit the use of grant funds as matching funds, other

programs may or may not have restrictions on what may be used as

matching funds.

Section 1000.124. Many comments were received that the 30 percent

maximum rent or homebuyer payment would impose a hardship in areas

where the administrative fee alone exceeds 30 percent of a family's

income. The 30 percent requirement is statutory and cannot be changed

by the regulations. Many comments were also received on the impact of

these regulations on current Mutual Help participants and Section 8

participants. These regulations do not apply to current participants of

a lease purchase agreement, including Mutual Help or Homeownership

participants under the 1937 Act or Section 8 participants. Their

contracts are not affected by NAHASDA. A definition of ``homebuyer

payment'' has been added to the list of defined terms in subpart A,

which only refers to payments made under a lease purchase agreement for

the purchase of a home. This clarifies that Sec. 1000.124 applies only

to rental payments and homebuyer payments made under a lease purchase

agreement.

A commenter requested clarification on how adjusted income is

determined. Guidance on adjusted income is provided in the definitions

section. The section was revised to clarify that these regulations

apply only to units assisted with NAHASDA grant amounts. A sentence was

also added to address minimum rents.

Section 1000.126. Several commenters objected to the 30 percent

limitation on rent or homebuyer payments. The 30 percent requirement is

statutory.

Section 1000.132. Many commenters supported this section.

Section 1000.134. One commenter suggested that all HUD requirements

for demolition or disposition be provided under this part. This section

sets forth all requirements for demolition or disposition. Comments

were received asking for more flexibility in disposing of units

especially where units were sold to low-income Indian families. This

section was revised to reflect this concern. The change allows a

recipient to dispose of a home to a low-income Indian family without

maximizing the sale price, so long as the disposition is consistent

with a recipient's IHP.

Section 1000.138. Several commenters asked that the regulations

exempt from the procurement requirements insurance purchased from

Amerind. Language was added to the regulations to provide an exemption

for nonprofit insurance entities which are owned and controlled by

recipients and which have been approved by HUD.

Section 1000.142. Many comments were received regarding the

necessity of HUD determining ``useful life'' and the criteria used to

make such determination. The statute requires HUD to make

determinations of what is ``useful life.'' The regulations clarify this

while ensuring that the determination will be made in accordance with

the local conditions of the Indian area.

Section 1000.146. Many commenters expressed concern about the

requirement that homebuyers be income eligible at the time of purchase.

This is a statutory requirement. However, Sec. 1000.110 was revised to

allow families buying a home under a lease purchase agreement and who

are no longer low-income at the time of purchase to be eligible as a

non low-income family. This section has been revised to cross reference

to Sec. 1000.110.

Section 1000.148. This section of the proposed rule was removed

because it was attempting to clarify the statutory language in section

207(a)(3) of NAHASDA concerning what law is applicable regarding the

period of time required in giving notice. The answer confused rather

than clarified that the law applicable to notice timing requirements is

the applicable State, tribal or local law. The issue of applicable law

can best be resolved in the recipient's lease.

Section 1000.150. One commenter asked whether HUD would pay the

costs of obtaining the criminal conviction information. Another asked

if it was a requirement to obtain the criminal conviction information.

The costs of obtaining criminal conviction information is an eligible

cost of NAHASDA. A recipient is not required to obtain such

information. One commenter asked what could be done if such agencies

refuse to comply with the request. HUD cannot force other agencies to

comply, but the Indian tribe may seek a legal recourse.

Section 1000.154. One commenter suggested that persons other than

those specified in NAHASDA section 208(c) be authorized to receive

criminal conviction information. The Committee believes this is

inconsistent with NAHASDA.

Section 1000.156. Many comments were received on this section. Many

commented on the various elements included in the total development

cost. One commenter asked whether donations counted towards total

development cost. One commenter objected to any limits. The section was

revised to clearly establish a limit on the amount of IHBG funds that

can be used on the dwelling construction and equipment of a unit, and

to clarify that other costs of development were eligible NAHASDA costs

but not subject to the limit.

The costs of making a unit handicapped accessible is a part of the

dwelling construction cost. The limit was placed in these regulations

in recognition of the few cases of abuse in past Indian housing

programs and was developed to prevent abuses in the new IHBG program.

Subpart C--Indian Housing Plan (IHP)

Subpart C sets forth the regulatory requirements concerning the

preparation, submission, and review of an Indian tribe's IHP. (Note:

The numbers of several sections in this subpart have been amended due

to the addition of new sections. For example, Sec. 1000.210 of the

proposed rule is numbered as Sec. 1000.218 of this final rule.)

Section 1000.201. One commenter requested that language be added to

the beginning of the sentence to indicate ``At the beginning of every

fiscal year HUD will distribute funds .'' The language ``At the

beginning'' was not incorporated because the allocation of the formula

is subject to appropriations and allocation at the beginning of the

Fiscal Year cannot be guaranteed . Also, distribution of the grant is

based on submission and approval of an IHP which may not take place at

the beginning of the FY.

Another commenter suggested that funds should be allowed to be

carried forward from one fiscal year to another. Based on NAHASDA, a

recipient has more than one year to expend each annual grant based on

goals and objectives in the IHP. As a performance measure,

Sec. 1000.524 provides that within 2 years of grant award, 90 percent

of the funds must be obligated by the recipient. Another commenter

asked what would happen to an Indian tribe's or TDHE's allocation under

NAHASDA if an IHP was not submitted by November 3, 1997 deadline. A new

provision has been added to address this question.

[[Page 12340]]

Section 1000.202. One commenter requested that eligible recipients

should include TDHEs which existed and received funding as a Public

Housing Agency (PHA) or Indian Housing Authority (IHA) under the 1937

Act. The Committee believes the language in Sec. 1000.202 is clear as

to who is an eligible recipient and the specific recipients are more

fully defined in Sec. 1000.206. Also, a new section (Sec. 1000.208) has

been added which addresses the commenter's concern regarding an Indian

tribe which had two IHAs established prior to September 30, 1996.

However, under NAHASDA, PHAs are not default TDHEs unless otherwise

recognized as IHAs under these regulations.

Section 1000.204. One commenter asked if the Indian tribe is

obligated to notify an existing TDHE for its jurisdiction within a

certain time period, if the Indian tribe designates itself as the grant

recipient. First, if the Indian tribe designates itself as the

recipient, there is no TDHE. Also, there is no requirement in NAHASDA

which requires any notification to an existing entity which may own or

manage units developed under the 1937 Act. The same commenter asked

whether the TDHE is required to submit an IHP for its existing housing

stock if the Indian tribe is also submitting an IHP within the same

jurisdiction. If an Indian tribe designates itself as a recipient,

there is no TDHE and the Indian tribe must provide for existing housing

stock in its IHP. One commenter raised several concerns regarding the

administration of NAHASDA regarding conflicts of interest,

mismanagement, fraud, and abuse. The regulations as a whole were

written to address these concerns.

Section 1000.206. Several commenters requested clarification on how

TDHEs in Alaska are designated. TDHEs in Alaska are designated in the

same manner as any other TDHE. Several commenters also stated that a

default TDHE should be able to submit an IHP and obtain funding without

obtaining Tribal certification. Section 102(d) of NAHASDA requires

Tribal certification for each IHP including a default TDHE. However,

the Committee has added Sec. 1000.210 to address the commenters'

concern regarding what would happen to 1937 Act units if an Indian

tribe did not submit an IHP or if a default TDHE could not obtain

tribal certification.

Section 1000.208 of the proposed rule. This section was formerly

designated as Sec. 1000.208, but has been redesignated as Sec. 1000.212

due to the addition/redesignation of other regulatory text. One

commenter questioned the need for a detailed five-year plan; another

requested that the five-year plan be submitted at the end of the first

year of funding; and another requested deleting the requirement for the

one-year plan. These requirements are statutory; however, the Committee

believes the submission requirements are reasonable. Several commenters

have requested an extension of the IHP submission deadline and

clarification on what happens if the deadline date is not met. Section

100.214 (formerly designated as Sec. 1000.209) has been amended to

address the commenters concerns regarding the IHP submission deadline

date. Also, Sec. 1000.216 has been added to clarify what happens if the

deadline date is not met.

Section 1000.211 of the proposed rule. This section was formerly

designated as Sec. 1000.210, but has been redesignated as Sec. 1000.218

due to the addition/redesignation of other regulatory text. One

commenter asked what plan requirements were necessary for a consortium

of Indian tribes. The Committee agrees that this comment needs to be

addressed and language has been added to Sec. 1000.212 to address this

concern. Two commenters stated that the reference in the proposed rule

was incorrect. The rule has not been revised, because it reflects the

proper statutory reference.

Section 1000.212 of the proposed rule. This section was formerly

designated as Sec. 1000.212, but has been redesignated as Sec. 1000.220

due to the addition/redesignation of other regulatory text. A commenter

requested that additional language be added to this section to

encourage Indian tribes to assess the ability of the existing

infrastructure to support additional housing. In response, the

Committee believes that the current language that Indian tribes are

encouraged to perform comprehensive housing needs assessments is

adequate.

Section 1000.214 of the proposed rule. This section was formerly

designated as Sec. 1000.214, but has been redesignated as Sec. 1000.222

due to the addition/redesignation of other regulatory text. Two

commenters requested that waiver authority be given to a TDHE. The

Committee agrees and adopted the comment by adding a new Sec. 1000.224.

Comments were received in support of the definition of ``small Indian

tribe'' and also agreeing that ``small Indian tribe'' should not be

defined. No changes have been made to the regulations because the

Committee believes that the IHP requirements are reasonable and the

deadline date has been extended to allow small Indian tribes additional

time to complete the plan.

Section 1000.216 of the proposed rule. This section was formerly

designated as Sec. 1000.216, but has been redesignated as Sec. 1000.226

due to the addition/redesignation of other regulatory text. Two

commenters requested that the HUD changes made to this section be

deleted. One stated that Title II of the Civil Rights Act would create

problems for Indian tribes. The Title II referred to in Sec. 1000.12 is

the Indian Civil Rights Act. However, because the nondiscrimination

requirements, as well as other Federal requirements outlined in these

regulations apply whether or not the recipient certifies that it will

comply, the language inserted in Sec. 1000.226 is not needed and has

been removed.

Section 1000.218 of the proposed rule. This section was formerly

designated as Sec. 1000.218, but has been redesignated as Sec. 1000.228

due to the addition/redesignation of other regulatory text. One

commenter stated that the word ``will'' should be changed to ``shall''

and the word ``substantial'' should be removed. The word ``will'' and

``shall'' have the same meaning in these regulations. Also, the

Committee has agreed that NAHASDA gives HUD the authority to develop

the IHP format and minor changes may be needed to address comments.

Accordingly, no changes have been made to this section.

Section 1000.220 of the proposed rule. This section was formerly

designated as Sec. 1000.220, but has been redesignated as Sec. 1000.230

due to the addition/redesignation of other regulatory text. One

commenter stated that HUD should be given a limit of 60 days to

respond. This requirement is statutory and is outlined in

Sec. 1000.230(b). Another commenter stated that a recipient should be

required to agree to reasonable time frames for which to provide

required certifications. The certifications are a requirement of the

IHP submission and are statutory. An IHP cannot be determined to be in

compliance without the certifications based on section 102(c)(5) of

NAHASDA unless waived under Sec. 1000.226.

A commenter stated that HUD approval should be required only for

substantial modifications to the IHP. The Committee agrees with this

comment and has added appropriate language to Sec. 1000.232. A

commenter stated that the limited HUD review of the IHP should be

clearly defined. This limited review is outlined in section 103(c) of

NAHASDA and the Committee determined that it was not necessary to

repeat these statutory requirements. Another commenter asked when a HUD

review would not be

[[Page 12341]]

necessary.NAHASDA mandates an IHP review by HUD.

Two commenters addressed the waiver provision in Sec. 1000.230. One

requested that the words ``requested and approved'' be added in

paragraph (d). The Committee agrees and has added the language. The

second stated that the waiver could not impose conditions which the

recipient could not comply with due to conditions beyond the

recipient's control. The Committee does not believe this language is

necessary since the waiver indicates that HUD has determined the

recipient cannot meet certain plan requirements.

Another commenter requested a new section to address partial

approval of an IHP. HUD can only make a grant if it is determined that

the plan meets the requirements of section 102 of NAHASDA. Therefore,

this additional language has not been included in the regulations.

However, HUD may approve an IHP pending approval of a model activity or

assistance to non low-income Indian families.

Section 1000.222 of the proposed rule. This section was formerly

designated as Sec. 1000.222, but has been redesignated as Sec. 1000.232

due to the addition/redesignation of other regulatory text. Several

commenters addressed the requirement for modifications of the IHP

including the 60-day timeframe for review. The Committee has addressed

these comments by providing language in the regulations which limits

when HUD's review and determination of compliance is necessary and

provides the flexibility requested.

Section 1000.224 of the proposed rule. This section was formerly

designated as Sec. 1000.224, but has been redesignated as Sec. 1000.234

due to the addition/redesignation of other regulatory text. One

commenter recommended defining applicable judicial review available

following final agency action. No change to the regulations is required

because an agency's action may be challenged under the Administrative

Procedure Act. Another commenter requested that a question be added on

the requirements of the form HUD 50058. It is not necessary to address

this in final regulations, however, the requirements as of October 1,

1997 will be covered in the transition notice published in the Federal

Register.

Section 1000.226 of the proposed rule. This section was formerly

designated as Sec. 1000.226, but has been redesignated as Sec. 1000.236

due to the addition/redesignation of other regulatory text. Several

comments were received on this section. Some commenters requested a

percentage should be set for administration and planning; others felt

that the recipient should set the percentage. Several commenters asked

that indirect costs be included as an eligible expense. There were also

several questions related to reimbursement for reasonable planning

costs associated with developing the IHP. NAHASDA states that the

Secretary shall, by regulation, authorize each recipient to use a

percentage of any grant amounts for administrative and planning

expense. Section 1000.238 has been added which establishes a percentage

which can be used for these costs and clarifies the eligibility of

indirect costs. This percentage can be exceeded with HUD review and

approval. The Committee has also made changes to Sec. 1000.236 which

are intended to further clarify what are considered administrative and

planning costs.

Section 1000.228 of the proposed rule. This section was formerly

designated as Sec. 1000.228, but has been redesignated as Sec. 1000.240

due to the addition/redesignation of other regulatory text. There were

many comments received on this section. The Committee has clarified

when a local cooperation agreement is needed. A statutory amendment

would be required to address any of the other comments.

Section 1000.230 of the proposed rule. This section was formerly

designated as Sec. 1000.230, but has been redesignated as Sec. 1000.242

due to the addition/redesignation of other regulatory text. There were

many comments received on this section. The Committee has clarified

when the tax exemption requirement applies. A statutory amendment would

be required to address any of the other comments.

Subpart D--Allocation Formula

Subpart D implements title II of NAHASDA. Specifically, it

establishes the formula for allocating amounts available for a fiscal

year for block grants under NAHASDA.

Section 1000.301. One commenter felt that the following sentence

should be added to Sec. 1000.301: ``Native Regional Housing Authorities

in Alaska shall be the recipients of grants awarded under section

202(1) of NAHASDA for the maintenance and operation of current assisted

stock.'' This cannot be done by regulation; it is a statutory

requirement that Indian tribes be funded directly. The Committee agreed

to adopt the clarifying changes made by HUD to this section at the

proposed rule stage.

Section 1000.302. Several commenters wrote that the references to

24 CFR part 950 should be removed from the definition of ``Allowable

Expense Level (AEL) factor.'' As the commenters noted, the part 950

regulations are made obsolete by this final rule. The Committee agreed

and revised the definition to reflect the removal of 24 CFR part 950.

Four commenters felt there was no reference provided for how

AELFMR, AEL, FMR factor, local area cost adjustment factor for

construction, and TDC are computed or what office is responsible for

determining these rates or how they can be challenged. Except for AEL

and TDC, the Committee felt the definitions are complete as written in

the rule. The definition for AEL has been changed in the rule to

improve its clarity. AEL was calculated by ONAP and will not be

calculated again, there is a method to challenge FMR and the

requirements are available from HUD. The definition of TDC has been

added to the rule.

Six commenters were concerned with separate definitions of annual

income for formula purposes than in the rest of the rule. The

definition of annual income is different for purposes of the formula

because the formula uses data collected by Census while the annual

income for the remainder of the rule relates to income data collected

from families by the Indian tribe or TDHE (and is statutory). For

clarity, the definition has been changed to ``Formula Annual Income''

and the census definition is included.

Numerous comments were received on the definition for formula area.

Several commenters proposed alternative definitions. Some commenters

felt the rule should clearly state that a local cooperation agreement

is not required where an Indian tribe or TDHE is providing housing

services. Several commenters believed that other service areas

designated by an Indian tribe as historical areas of operation or areas

of service described in the Indian tribe's ordinance should be included

in the definition of formula area. Three commenters felt that Tribal

Jurisdictional Statistical Area and Tribal Designated Statistical Area

should be defined or removed from the definition.

In response to comments, new language was added which maintains the

integrity of the formula by both allowing Indian tribes that provide

housing assistance off tribal lands to include a larger geographic

area. The regulations still constrain the area and the population

counted for an Indian tribe so that it would be fair and equitable for

all Indian tribes.

The Committee added a definition of ``Formula Response Form'' to

reflect the changes made elsewhere in the rule. The proposed rule would

have required data for the formula to be included in

[[Page 12342]]

the IHP. However, because the data is needed before the IHP submission

date, the Committee decided to require formula data to be submitted on

a separate form.

One commenter felt the definition of ``Section 8 unit'' should be

clarified. Some Section 8 assistance is not tied to a unit; rather, it

is tenant-based assistance. The commenter believed this definition

lumps all Section 8 under the definition and is confusing. The

Committee considered the comment, and believes the definition is clear.

Sections 1000.304 and 1000.306. Several commenters believed that

proposed Sec. 1000.304(a) puts the burden on Indian tribes to develop

measurable and verifiable data. The commenters felt this should be

HUD's responsibility. The Committee believes that proposed

Sec. 1000.304 adequately meets the concerns of the commenters. However,

the section may have been unclear to commenters so it has been split

into two sections (Secs. 1000.304 and 1000.306). An additional

reference to reviewing the factors in Formula Current Assisted stock is

added in reference to comments received on funding for Section 8 noted

later.

One commenter recommended that the final rule require the use of

more reliable data as soon as possible, and not establish a five year

waiting period. The Committee believes the method currently proposed

satisfies this concern as efforts to improve data must be begun

immediately in order to complete the effort within five years.

Section 1000.308. A commenter believed the formula should be

modified by a committee in the same fashion as the formula was

developed. Section 1000.306 allows public participation in revision of

the formula. While the tribal Committee members encourage HUD to

convene a tribal group to negotiate modifications, the rule was not

changed to require this.

Section 1000.310. Two commenters stated that the word ``formula''

added by HUD makes no sense. One commenter felt the proposed

Secs. 1000.308 and 1000.310 didn't seem to work together. The commenter

also believed there is inconsistency among the proposed Secs. 1000.308,

1000.324, 1000.326, and 1000.328 which need clarification. The word

``formula'' is included to maintain consistency in the rule. In

response to the confusion over the relationship of Formula Current

Assisted Stock to Section 8, they were combined under the single

heading of Formula Current Assisted Stock. Furthermore, to provide

greater clarity, the order of presentation was changed so that Formula

Current Assisted Stock is listed before Need because this is the manner

in which the formula is actually calculated. As a result of this change

the sections on FCAS are moved ahead of the sections on Need and are

renumbered accordingly.

Section 1000.312. Four comments were received relating to who

should receive funding under Current Assisted Stock in cases where the

ownership of the Current Assisted Stock remains separate from the

Indian tribe. One commenter suggested that a new Sec. 1000.346 be

added, responding to the issue of whether IHAs or TDHEs are entitled to

continued financial assistance for rental public housing projects.

NAHASDA requires that the funding for Current Assisted Stock be

provided to the Indian tribe where the Current Assisted Stock is

located. Because of this statutory requirement, the Committee could not

make the changes requested by the commenters, however language in

Sec. 1000.327 does address this concern as it relates to the

overlapping areas unique to Alaska due to the Alaska Native Settlement

Claims Act (ANSCA).

Section 1000.314. Two commenters felt the explanation on how the

formula addresses units developed under the 1937 Act and in the

development pipeline on October 1, 1997 was unclear. The Committee

agreed and has reworded Secs. 1000.314 through 1000.320 to improve

clarity. The major change was to combine Section 8 into the ``formula

current assisted stock'' component of the formula. As noted earlier

under definitions, changes to IHP submission dates required the

creation of a Formula Response Form.

Two commenters felt that units developed under NAHASDA should be

included in the funding formula. One of the commenters felt that by not

providing such a subsidy creates an incentive not to add either rental

or homeownership units because the formula will not take into account

the maintenance costs of these units. NAHASDA allows for great

flexibility in developing housing stock. At this time the Committee is

not able to determine the level of need for NAHASDA stock subsidy. This

will be re-evaluated within the required 5-year time frame as noted in

Sec. 1000.306.

Two commenters stated that the development of housing units for

homeownership under a model distinct from the existing Mutual Help

program requires a larger initial subsidy investment to reduce the

mortgage burden for the homeowner. However, the formula, because it

fails to account for this greater expense, fails to count non-mutual

help homeownership units, or include sufficient development funds. This

encourages the use of the mutual help model instead of the mortgage

model, which discourages the leveraging of private funds for mortgages

and goes against NAHASDA. The Committee felt no changes were necessary.

Under self-determination Indian tribes have responsibility to develop

affordable housing activities within their available resources.

Section 1000.316. One commenter wrote that proposed Sec. 1000.330

is confusing. The commenter questioned how Section 8 contracts that

have expired or are due to expire in any subsequent year can be

meaningful to a number derived as of September 30, 1997. The Committee

agrees that the section is confusing and has incorporated it into

Sec. 1000.316 and reworded it for clarity.

One commenter wrote that Section 8 units should be multiplied by

the national per unit average for low-rent units and not the Section 8

unit average since they are administered as low income rental units.

The Committee disagrees. In developing the base funding for

homeownership, Low-Rent, and Section 8 of the Formula Current Assisted

Stock, the Committee sought to develop the base funding for each which

reflects the actual operating cost of each.

One commenter wrote that Section 8 participants should continue to

have flexibility to pay more than 30 percent of income in order to

compete for units on the private rental market. Statutorily, recipients

are not allowed to charge low-income families receiving subsidy under

NAHASDA more than 30 percent of the family's adjusted income for

affordable housing.

Four comments received were opposed to funding expired Section 8

contracts under NAHASDA. Opinions were expressed that NAHASDA does not

have enough appropriation to fund the Section 8 and that the Section 8

administered by IHAs has a large number of non-Indians. Two commenters

specified support for funding Section 8 under the formula.

Once a Section 8 contract administered by an IHA expires it cannot

be renewed under the 1937 Act. To maintain this assistance for the

households currently served by the Indian tribes, the Committee felt it

was important to provide assistance under NAHASDA. Nonetheless, the

Committee understands the concerns about the limited assistance

available for Indian housing and has made note in this section and

Sec. 1000.306 that in five years subsidy for Section 8 should be

reconsidered as a component of the formula.

[[Page 12343]]

Section 1000.317. Many comments were received from IHAs in Alaska

concerning funds to maintain and operate 1937 Act units owned by the

IHAs. In response to these comments, a new section has been added which

states that formula funds for 1937 Act units owned by Regional Native

Housing Authorities in Alaska will be allocated to the regional tribe.

Section 1000.318. One commenter wrote that even if units are

conveyed over to a homeowner, the units should still count as Current

Assisted Stock if the units are part of the five-year Comp Grant plan

because there is a continuing obligation on the part of the Indian

tribe's housing program to provide the assistance which has been

promised. However, a conveyed unit, because it has become a private

home, does not qualify as Current Assisted Stock. However, conveyed

units for which Comprehensive Grant funding has been obligated in prior

years may be modernized as scheduled.

One commenter stated that block grant amounts should be fixed based

on units in management and should only be reduced as units leave

management. The grant will not be increased when units are added to

management after October 1, 1997. This gives the IHA no incentive to

convey units out of management nor does it provide for costs of

management of rental units added by the grant. The Committee considered

this concern and has added language that requires conveyance of the

units as soon as practicable as they are paid off under existing

homeownership contracts.

One commenter noted that TDHEs should not be required to repay

grant amounts for housing inventories reduced within the FY. The next

grant year should be based on inventory at that date. The Committee

agrees and has clarified this provision.

Two commenters suggested that the last sentence in the proposed

Sec. 1000.336 have the following added: ``...by the Tribe or TDHE.''

The Committee has incorporated this change and also added ``or IHA'' to

take into account situations where the IHA, not designated as the TDHE,

continues to own the units.

Section 1000.324. The Committee agreed to adopt the clarifying

change made by HUD to this section. One commenter noted that the

``without kitchen or plumbing'' variable is not an accurate measure of

substandard housing because some Indian tribes building housing in

remote location or extreme environmental conditions build new homes

without kitchen or plumbing. After careful consideration of many

issues, including the concern of the commenter, the Committee felt that

it was important to include some indicator of substandard housing.

Currently, the only indicator of substandard housing collected in a

uniform manner for all Indian tribes related to substandard housing is

``without kitchen or plumbing.'' Accordingly, no change has been made

to the rule.

One commenter expressed that ``Without kitchen or plumbing'' should

include heating. While the Committee considered this issue, it was not

felt that the available data would adequately address the concern and

thus the change to the variable could not be accommodated.

Two commenters noted that because most reservations are poverty

areas and the majority of housing consists of HUD built homes and 30

percent is the maximum amount charged, the housing cost burden

component appears to mainly reflect urban need. The commenter felt the

need components should measure criteria which are proportionally

consistent across the country and not include regional or special group

needs. Because housing need is different throughout the country, each

of the variables in the formula has some regional bias, including the

housing cost burden variable referenced in the comment. However, it is

the Committee's position that the combination of all of the variables

in the formula most fairly allocates funds toward housing need in all

regions of the country.

Two commenters felt there should be two need components. One as

AIAN households which are overcrowded and the second as AIAN Households

without kitchen or plumbing. Separating the two variables was

considered. However, they were combined because they are highly

correlated; places with overcrowding tend to also have households

without complete kitchen or plumbing. The Committee combined the two

variables in order to reflect both overcrowding and some components of

substandard housing.

One commenter felt the need component should include non-Indians

presently living in current assisted stock. IHAs provide housing for

both Indians and non-Indians alike. The Committee recognizes that

households with a divorced non-Indian with Indian children are not

counted by the household variables, nor are other non-Indians that an

Indian tribe may choose to serve. However, the needs side of the

formula is intended to target toward Native American housing need.

After receiving the funds based on Native American housing need, the

Indian tribe may choose who they wish to serve. The current assisted

stock component of the formula funds per unit regardless of the race of

the resident.

One commenter noted that the formula does not adequately take into

consideration the disparity between communities that currently have

adequate infrastructure and those that do not. Among tribal communities

in the same geographic region, the per-unit cost of infrastructure

development typically varies much more than the per-unit cost for the

houses alone. Tribal communities located in places that require capital

investment infrastructure, such as very deep wells or long pipelines,

will be severely disadvantaged under the current formula. The Committee

sought out infrastructure data to be used in the formula. However,

after discussions with Indian Health Service staff, it was determined

that at this time the data were not appropriate for this formula.

However, this will be one factor to be considered during the review of

the formula over the next five years.

Several commenters recommended that the formula points and methods

to weight these components agreed to by the Committee should be added

to the regulations. The Committee agreed and has included the weights

in the proposed rule.

Section 1000.326. Several comments submitted regarding

``overlapping service areas'', when more than one Indian tribe defines

the same formula area. One commenter indicated that in Alaska there are

tribal boundaries and a number of projects that border two or more

Indian tribes. Furthermore, Alaska Native Land Claims Corporations

overlap many Indian tribes. One commenter feared that without a quick

HUD determination regarding overlapping formula area, Indian tribes

might be placed in the situation of having to do political ``battle''

with one another to determine their fair share. The Committee agrees

with the comments and have revised Sec. 1000.326 to address overlap

disputes between state and Federal Indian tribes as well as

Sec. 1000.327 to address the allocation of data for the unique

overlapping areas in Alaska.

In addition, one comment was received relating to dual tribal

membership and a change was made in the rule to reflect that concern.

The other concern related to HUD's timing for dealing with issues

related to overlapping areas and a change was made to put in a date

specific when overlapping issues will be addressed.

[[Page 12344]]

One commenter indicated that the IHS is interested in working with

HUD and other agencies on developing better data sources regarding the

number and conditions of AIAN homes. Over the next 5 years HUD and the

Indian tribes intend to improve the data available on Native American

Housing need. IHS participation in this process is greatly appreciated.

Furthermore, IHS assistance with current data that might be used for

addressing problems related to overlapping service areas will be

extremely helpful.

Section 1000.328. Twenty-four of the comments suggested that the

needs component of the formula should provide a minimum level of

funding, thirteen of the commenters suggesting a base allocation of

$150,000.

After giving this issue serious consideration, the Committee agreed

that if an Indian tribe receives less than $50,000 under the needs side

of the formula in the first year it applies for funding, its need

component is set to $50,000 with a downward adjustment for all other

Indian tribes to cover this cost. In subsequent years up to the year

2002, an Indian tribe receiving less than $25,000 under need has their

grant adjusted up to $25,000.

The Committee determined this minimum grant amount was allowable

under NAHASDA under ``other objectively measurable conditions as the

Secretary and Indian tribes may specify.''

Section 1000.330. One commenter felt it would be more equitable to

allocate a standard across-the board housing allowance for every

registered Native American who is a member of a recognized Indian

tribe. A housing allowance for every registered Native American is

contrary to the intent of the Act. NAHASDA requires that the block

grants be targeted to the need of the Indian tribes and the Indian

areas of the Indian tribes for assistance for affordable housing

activities (Sec. 302(b)).

Two commenters felt that U.S. Census data do not reflect the

housing need in Indian country. One commenter recommended the use of

tribal waiting lists for housing and that those waiting lists be

audited to ensure accuracy. In developing the proposed rule, issues of

Census data quality and potential use of waiting list were discussed

and carefully considered. Although recognizing the limitations of

Census data, it is currently the only data available that is collected

in a uniform manner that can be confirmed and verified for all Indian

tribes on income and housing need. Section 1000.306 notes that a new

set of measurable and verifiable data on Native American housing need

will be developed not later than 5 years from the date of issuance of

these regulations. Waiting lists tend to reflect local need rather than

national need that is comparative across Indian tribes.

Section 1000.332. Three commenters felt this section (designated in

the proposed rule as Sec. 1000.318) should provide the procedural

requirements for securing HUD approval, including automatic approval if

HUD fails to act within a specified time. The Committee believes the

details provided in Sec. 1000.336 are adequate. However, the Committee

felt commenters were confused by the order of the questions and answers

presented in proposed Secs. 1000.316 and 1000.318. Accordingly, the

final rule reverses the order of these two sections.

Fourteen comments were received discussing HUD's provision of

notice regarding formula data. Several commenters recommended that the

data should be provided to Indian tribes/TDHEs immediately for review.

Commenters also suggested that HUD be required to provide notice of

data and projected allocation not less than 120 days before the end of

HUD's fiscal year. Other commenters recommended that HUD should be

required to provide notice of data and projected allocation not less

than 120 days before the date IHPs are required to be submitted.

The section was changed by adding a specific date (August 1 of each

year) by which HUD will provide each Indian tribe with the data and a

preliminary allocation based on an estimated appropriation for the next

fiscal year. For consistency, all other deadlines in the formula

component of the rule were made date specific.

Section 1000.334. Several related comments were made reflecting

what information could be used for challenge. One commenter stated that

many States, counties, cities, universities and other educational

institutions have better data than the U.S. Census. The commenters

asked why more systems need to be created if they are in place at the

regional or local level. One commenter wrote that if the TDHE is

providing accurate, verifiable information to be used in the formula,

HUD should not be able to disallow that information. Two commenters

wrote that challenge data could be certified by the Indian tribe and

the BIA, as the BIA already uses tribal enrollment numbers for some

contract funding.

The data used for the formula must be uniformly and consistently

collected for all Indian tribes. Local data sources do not necessarily

provide this. However, the Committee revised the rule to allow HUD

greater discretion to accept data.

Section 1000.336. Five commenters requested more detail on ``a

method acceptable to HUD'' for challenge. A more detailed explanation

of ``a method acceptable to HUD'' for challenge will be included in the

information packet sent out with the data to be used in the formula.

Nonetheless, the Committee agreed that the section needed to be

clarified in respect to submission of challenge material and the rule

was changed accordingly.

Section 1000.338 of the proposed rule. This section was formerly

designated as Sec. 1000.338 but has been redesignated as Sec. 1000.325

for purposes of clarity and better organization of the regulatory text.

One commenter wrote that this section on adjusting for local area costs

is unclear to someone unfamiliar with the existing program. An

explanation of this section is included in the appendix which explains

how the formula works. In addition, TDC is defined in Sec. 1000.302.

Section 1000.340. Because many small IHAs did not receive

modernization funding in FY 1996, two commenters felt the formula

should be based on a three to five year average of operating subsidy

and modernization received by the IHA. However, the current use of FY

1996 modernization is a statutory requirement that cannot be changed by

regulation. Nonetheless, the comments reminded the Committee that an

explanation of how this statutory requirement is incorporated into the

formula was mistakenly not included in the proposed rule. Accordingly,

new Sec. 1000.342 has been added.

Section 1000.342. The proposed rule specifically requested comment

on the issue of whether or not there should be an emergency and

disaster relief set-aside as part of the block grant allocation.

Seventeen commenters opposed a set-aside. Several commenters wrote

that funds should not be taken off the top of the block grant. These

commenters believed this would serve to punish everyone for the

disasters impacting the few. Other commenters suggested that an Indian

tribe should address disaster relief by setting aside its own reserves

for such circumstances. One commenter noted that a fund should not be

established because insurance requirements protect TDHE property and

FEMA is available for natural disasters. Another commenter opposed a

set aside due to the lack of accepted definitions for ``emergency'' and

``disaster.'' One of the comments suggested individual insurance

coverage

[[Page 12345]]

should be required to be sufficient to cover disaster situations at 100

percent.

Thirty-three commenters were in favor of a disaster and/or

emergency set aside. Many of these commenters recommended that the fund

not exceed $10 million. Several commenters suggested that Indian tribes

applying for this funding should be required to show that no other

relief is available from other sources. One commenter supported the

emergency fund, but recommended that Indian tribes should also have the

option of establishing an emergency fund with a portion of their grant

funds. After considering all of the comments, the Committee determined

that a set aside would be difficult to implement and inadvisable. The

Committee recommends that recipients consider the establishment of an

insurance pool.

Performance Variable. The July 2, 1997 proposed rule solicited

comments on the use of a performance variable in the formula

allocation. Numerous comments were received.

Many commenters supported the inclusion of a performance variable

in the allocation formula. These commenters believed a performance

variable was necessary to establish a connection between performance

and the amount of funding an Indian tribe receives. Further, the

commenters believed that the inclusion of a performance variable would

encourage proper fiscal management by Indian tribes. One commenter

recommended that the performance objectives be established by the

Indian tribes and be tribally driven.

Many commenters were opposed to the performance variable. These

commenters believe that a performance variable is unnecessary and would

only serve to divide Indian tribes. These commenters believed that the

inclusion of a performance variable would lead to the high-performing

recipients getting rewarded at the expense of low-performing

recipients, which are in most need of assistance. One commenter writing

against the proposal believes the inclusion of a performance variable

would allow HUD subjectivity in funding decisions.

The Committee believes that performance is an important issue.

However, the Committee determined that the inclusion of a performance

variable in the formula would be inappropriate. Rather, the Committee

has addressed performance measures in subpart F of these regulations,

which deals with compliance issues and adjustments to funding.

General comments on the allocation formula. Several commenters

submitted comments that did not refer to a specific section of subpart

D, but rather concerned the allocation formula generally.

One commenter suggested the allocation formula be published as part

of the final rule. The Committee agrees and the formula is published as

part of the appendix to this final rule.

Another commenter suggested splitting allocations by region or size

of Indian tribe on a bi-annual or tri-annual basis. This suggestion was

considered and not adopted by the Committee for reasons of fairness and

equity.

One commenter questioned whether special consideration would be

given to the high costs of construction and maintenance in Alaska. The

Committee provided for different regional costs to be accounted for in

the formula.

Another commenter recommended that $15 million of the total amount

of funds under the Need component be reserved annually for development

of off-site sanitation facilities (water, sewer, and solid waste

facilities) and allocated to Indian tribes based on a separate

methodology. The Committee considered but did not adopt this proposal

due to the impracticality of administering such a fund.

Subpart E--Federal Guarantees for Financing of Tribal Housing

Activities

Subpart E describes the regulatory requirements necessary for the

implementation of title VI of NAHASDA. This subpart establishes the

terms and conditions by which HUD will guarantee the obligations issued

by an Indian tribe or Tribally Designated Housing Entity for the

purposes of financing eligible affordable housing activities. (Note:

The numbers of several sections in this subpart have been amended due

to the addition of new sections. For example, Sec. 1000.406 of the

proposed rule is numbered as Sec. 1000.408 of this final rule.)

Section 1000.402. Several commenters suggested that State

recognized Indian tribes should not be eligible for participation in

Title VI. Two of these commenters added that if any State recognized

Indian tribes were permitted to participate that their funding should

come from a separate appropriation. The regulations were not changed

because the statute allows for participation by State Indian tribes

that meet the definition in section 4(12)(c) of NAHASDA.

Section 1000.404. This section of the final rule contains new

language. Section 1000.404 of the proposed rule has been redesignated

as Sec. 1000.406 in the final rule. The preamble to the proposed rule

sought input on whether a definition of lender should be added in the

final rule. Some commenters agreed that the language should be added

while others stated that no regulatory language should be added. It was

the decision of the Committee that a lender definition was advisable.

It was further agreed to utilize the language found in HUD's

regulations for the Section 184 Loan Guarantee Program (currently

located in 24 CFR part 955, but redesignated by this final rule as 24

CFR part 1005) to provide consistency in the two loan guarantee

programs. Further, it was agreed that the additional language added to

the definition of lender in part 1005 was appropriate for Title VI as

well (see discussion of changes to part 1005 below). These agreements

are implemented in the revised Sec. 1000.404 of the final rule.

Section 1000.406 of the proposed rule. Section 1000.406 of the

proposed rule has been redesignated as Sec. 1000.408 in the final rule.

One commenter suggested that HUD require only a certification and not

volumes of paperwork. The Committee agreed with the comment but made no

change to the proposed rule as the language as published was

sufficiently broad and did not require excessive paperwork. An

additional commenter stated that the financing terms of a non-

guaranteed loan should not exceed the financing terms of a guaranteed

loan to avoid penalizing financially responsible Indian tribes. The

Committee concurred and reworded the rule to conform with statutory

language regarding the timely execution of program plans.

Section 1000.408 of the proposed rule. Section 1000.408 of the

proposed rule has been redesignated as Sec. 1000.410 in the final rule.

Numerous comments were received stating that the term of the Title VI

loan should be longer than 20 years. The commenters noted that the

proposed rule language provided no flexibility and was

counterproductive to establishing creative financing mechanisms. One

commenter requesting the longer loan term suggested that each

application stand on its own merits. The Committee agreed with this

suggestion and amended the language in the final rule. Additionally,

the language in paragraph (a) was amended to correct wording which

erroneously provided that security pledged with the note or other

obligation could have been sold if the note was sold.

Section 1000.412 of the proposed rule. Section 1000.412 of the

proposed rule has been redesignated as Sec. 1000.414 in the final rule.

While no comments were received, this section was divided into separate

paragraphs to clearly show the

[[Page 12346]]

reader that NAHASDA contains two, distinctive requirements.

Section 1000.414 of the proposed rule. Section 1000.414 of the

proposed rule has been redesignated as Sec. 1000.416 in the final rule.

Several commenters requested a change in wording from ``may'' to

``will'' which they believed responded to concerns from Indian tribes

and was more grammatically correct. The Committee concurred and amended

the language as noted.

Section 1000.418 of the proposed rule. Section 1000.418 of the

proposed rule has been redesignated as Sec. 1000.420 in the final rule.

Two comments requested a change in the proposed rule by adding ``should

not'' instead of the proposed wording of simply ``not.'' The Committee

did not concur with this change as the statute limits the net interest

costs to 30 percent and does not provide for the flexibility the

commenter is seeking.

Section 1000.422 of the proposed rule. Section 1000.422 of the

proposed rule has been redesignated as Sec. 1000.424 in the final rule.

Several comments were received requesting the removal of the

certification on the drug-free workplace and relocation requirements

and the rewording of the certifications in general to be clearer to the

reader. The Committee concurred with these recommendations and further

streamlined the listing of required certifications. Several commenters

requested that ``regulation'' be changed to ``requirements'' since the

reference is to a statutory requirement, as opposed to a regulatory

requirement. The Committee accepted this change.

Section 1000.428 of the proposed rule. Section 1000.428 of the

proposed rule has been redesignated as Sec. 1000.430 in the final rule.

Several commenters suggested that the word ``reasonable'' be added to

the conditions under which HUD may list conditions in the issuance of a

guarantee certificate. The Committee concurred and made this change in

paragraph (c) of this section. A comment was received requesting that a

45 day limit be placed on HUD to provide its request for information.

The Committee agreed that a review period should be established and

retained the 30 day review period.

Section 1000.432 of the proposed rule. Section 1000.432 of the

proposed rule has been redesignated as Sec. 1000.434 in the final rule.

Two comments requested that the allocation process for title VI

applicants be based only on seeking loan guarantee assistance. The

Committee did not recommend any changes based on this comment as the

Title VI applications will be received by the Department throughout the

year and not at one time. Therefore, it is impossible for the

Department to accurately predict the number of loans and the amount of

those loans when applying the formula.

Two comments requested that the date when applications could be

submitted for the unused funds be changed from the fourth quarter to

the third quarter. The Committee agreed with these comments and the

language was amended. Additionally, language was added to make clear to

the reader that an application previously denied under the regional

allocation method would need to be resubmitted at the beginning of the

third quarter to be made eligible for unused funds.

Two comments stated that the allocation method should be based on

need. The Committee did not adopt this recommendation as there is no

statutory basis for such a requirement. The Committee believes that the

language in the proposed rule provided a fair distribution of available

funds. During the third quarter, an adjustment will be made for regions

with higher participation or lower participation in Title VI.

Section 1000.434 of the proposed rule. Section 1000.434 of the

proposed rule has been redesignated as Sec. 1000.436 in the final rule.

A comment was received which supported the monitoring of Title VI funds

by HUD. The Committee agreed with this comment but determined that such

monitoring was fully provided for in the proposed rule language.

Therefore, no change was necessary. A comment was also received which

recommended that this provision be deleted from the rule. The Committee

did not concur on this provision as it would contradict the statute.

Subpart F--Recipient Monitoring, Oversight and Accountability

Subpart F implements title IV of NAHASDA. Among other topics, this

subpart addresses monitoring of compliance, performance reports, HUD

and tribal review, audits, and remedies for noncompliance. (Note: The

numbers of several sections in this subpart have been amended due to

the addition of new sections. For example, Sec. 1000.528 of the

proposed rule is numbered as Sec. 1000.532 of this final rule.)

General comment. One commenter suggested that HUD elevate its

capabilities to insure that it can effectively monitor NAHASDA

activities. No regulatory changes were proposed.

Section 1000.501. One commenter was in favor of this provision.

Section 1000.502. HUD had added the word ``periodically'' in

describing the HUD review process which otherwise was cross-referenced

to section Sec. 100.520. This prompted several negative comments.

Section 1000.520 states that HUD will ``at least annually'' review each

recipient's performance. Therefore, the word ``periodically'' has been

removed.

HUD also added citations to 24 CFR 8.56 and 24 CFR 146.31. Several

commenters objected to this addition. These referenced regulations are

not applicable to these reviews and NAHASDA regulations, so they have

been deleted.

In paragraph (c) one commenter expressed concern about adding the

word ``auditing'' to HUD's review practices since HUD is unlikely to

conduct financial audits of recipients. Therefore, the word

``auditing'' has been deleted.

One commenter challenged HUD's monitoring and suggested further

regulating how Indian tribes and HUD should carry out their monitoring

responsibilities. NAHASDA mandates that HUD monitor activities and the

Committee believes that it is prudent for both HUD and Indian tribes to

monitor recipients. The Committee additionally believes that Indian

tribes and HUD should generally not be further restricted in their

monitoring activities.

Several commenters wanted further detail on monitoring activities.

However, the Committee believes the regulations as currently stated are

adequate and appropriate.

Section 1000.508. A number of commenters objected to the

regulations mandating that recipients take certain specified actions if

they identified programmatic concerns. The regulations have been

changed to state that some corrective action must be taken, but is not

limited to the remedies outlined.

A comment argued that HUD has an obligation to provide technical

assistance. This comment was considered but no language was adopted.

Section 1000.510. Similar to some comments regarding Sec. 1000.508,

commenters were concerned about the language added by HUD concerning

``responsibility'' and how this might be interpreted or what

consequences it might have. However, the Committee agreed to retain the

language.

Section 1000.512. At the suggestion of several commenters,

paragraph (c) has been changed to cross-reference to Sec. 1000.524.

Section 1000.514. Contrary to the suggestions of several

commenters, the Committee does not believe that it is necessary to

address the particulars of audit submissions in this section. Many

[[Page 12347]]

comments were received suggesting that Indian tribes need more time to

submit performance reports. Therefore, the proposed period of 45 days

has been changed to 60 days. Also, based on one comment, ``program

year'' has now been changed to ``recipient's program year.''

Section 1000.516. As with the change made to Sec. 1000.514, the

term ``program year'' has been changed to read ``recipient's program

year.''

One commenter inquired about staggering IHP deadlines to allow them

to fit different fiscal years. The submission period for IHPs has been

changed to permit IHP submission anytime prior to July 1 of the Federal

Fiscal Year for which funds are appropriated (See Sec. 1000.214).

Coordination of plan submission with individual fiscal years has been

left to the discretion of the individual recipients.

Section 1000.521. At the suggestion of several commenters, this new

question and answer has been added giving HUD 60 days to issue a report

on a recipient's performance.

Section 1000.522. Many comments were received regarding the notice

for on-site reviews. In response, the regulations have been changed to

require a 30-day written notice in most cases. One commenter suggested

that in emergency situations where a notice is not required, that the

term ``emergency'' be defined. However, the Committee believes that

such a definition would be too cumbersome. One commenter proposed that

the recipient and HUD be required to mutually agree on whether an on-

site review should be done. The Committee does not agree with this

proposal because it might conflict with the rights and duties that HUD

has under NAHASDA.

The Committee encourages HUD to be sensitive to the right of Indian

tribes to participate in exit reviews. Though no specific action is

promulgated, HUD should incorporate such rights in its review

procedures.

Section 1000.524. As addressed in the discussion of previous

sections, paragraph (d) is changed to read ``recipient's program

year.''

At the suggestion of several commenters, the amount of time that a

recipient has to submit an annual performance report has been changed

from 45 days to 60 days.

One commenter wanted to expressly address treatment of obligated

funds and to define them as expended funds. However, the Committee

feels this is not an appropriate definition and that explanatory

language is not necessary.

One commenter felt that ``substantial'' compliance with regulations

and statutes should be required in paragraph (f). The Committee agrees

with this commenter and has changed the regulations accordingly.

One commenter suggested that HUD review be done biannually.

However, this conflicts with the statutory requirement that HUD review

recipients annually.

Section 1000.526. Many commenters objected to HUD adding paragraph

(i) to the list of information which it may consider in reviewing a

recipient's performance. It was agreed that this section be revised to

apply only to ``reliable'' information relating to performance

measurements.

One commenter asked whether paragraph (h) is an inappropriate

waiver of attorney-client privilege. The Committee does not interpret

this as a waiver because the section merely allows HUD to take into

account matters that may be in litigation.

Section 1000.530. This section of the final rule contains new

language. Section 1000.530 of the proposed rule has been redesignated

as Sec. 1000.538 in the final rule. A number of comments were received

which stated that the proposed regulations did not provide a recipient

a period of time to cure a performance problem before the Department

initiates remedies available to it under either Sec. 1000.528 of the

proposed rule, redesignated as Sec. 1000.532 in the final rule,

(adjustments to future grants) or Sec. 1000.530 of the proposed rule,

redesignated as Sec. 1000.538 in the final rule, (adjustments to

current grant based on substantial noncompliance). The final rule adds

new language at Sec. 1000.530 which, depending upon the severity of the

performance problem, provides a number of corrective and remedial

measures which the recipient may take to cure the performance problem.

At least one or more of the corrective and remedial actions must be

taken by the Department before the Department pursues the remedies

available to it under Secs. 1000.532 or 1000.538 of the final rule.

Such corrective or remedial measures are designed to (1) prevent

continuance of the problem, (2) mitigate any adverse effects, and (3)

prevent recurrence of the problem. The corrective and remedial actions

are phrased as requests and recommendations to recipients.

Section 1000.528 of the proposed rule. Section 1000.528 of the

proposed rule has been redesignated as Sec. 1000.532 in the final rule.

The July 2, 1997 proposed rule identified the reduction of grant

amounts under section 405(c) of NAHASDA without affording notice and an

opportunity for a hearing to be a nonconsensus issue. The tribal

position in the proposed rule was that prior to the Department taking

action under section 405(c) to adjust, reduce or withdraw future grant

awards, the Department must provide notice and an opportunity for a

hearing which would be available to the recipient under section 401(a)

of NAHASDA (relating to substantial noncompliance issues involving the

current year grant). The Department took the position in the proposed

rule that section 405(c) permits the Department to adjust, reduce,

withdraw, or take other appropriate actions based on the Department's

review and audit of the recipient without providing prior notice and an

opportunity for hearing.

Section 1000.528 of the proposed rule was drafted by the Department

to implement section 405(c). The section, as drafted, did not provide

notice and an opportunity for hearing.

Extensive comments were received which unanimously supported the

tribal position that the Department afford notice and an opportunity

for hearing prior to the Department taking the section 405(c) remedies

against the future year grant. The final rule states HUD will (1)

provide notice and an informal meeting to resolve program deficiencies

prior to taking the section 405(c) remedies and following the future

grant adjustment, reduction, withdrawal, or other action, and (2)

provide the recipient with a hearing identical to that afforded

recipients under section 401(a) of NAHASDA. The funds adjusted,

reduced, or withdrawn shall not be reallocated until 15 days after this

hearing has been held and a final decision rendered.

Several comments stated that the statutory language in section

405(c) regarding ``appropriate adjustments'' to future grants is vague

and provides little or no guidance to either the Department or

recipients. They recommended that some explanation be provided as to

the standard that applies when HUD makes a determination to adjust a

future grant. Paragraph (c) provides such a standard and mandates that

the Department make adjustments in the recipient's future grant

appropriate to the deficiency when the recipient has not complied

significantly with a major activity of its IHP. If a reduction is made,

a recipient may request a hearing identical to that provided for

reductions under section 401(a) of NAHASDA.

Other comments were received that were directed at reducing the

share of grant funds to recipients who failed to meet their own IHP

goals and objectives. The solution to this situation recommended by

these commenters was

[[Page 12348]]

to provide a performance variable in the funding allocation formula.

Also received were comments specific to the issue of whether annual

funding would continue for programs with identified management and

performance shortfalls and whether, as proposed, the regulations would

implement a system that could increase the existing project development

pipeline. However, many comments were received that opposed adding

performance variables to the formula to reduce funding to non-

performing programs.

The response to these varied comments is the insertion of paragraph

(c)--a mandatory program sanction which HUD must take. The sanctions

only occur if a recipient fails to comply significantly with a major

activity of its IHP and the deficiencies that caused the failure were

not beyond the control of the recipient.

Since each participant prepares its own IHP and conducts monitoring

and oversight activities to assure the IHP will be accomplished, the

Committee believes that the actions taken by HUD in the new paragraph

(c) are necessary to provide a ``means of last resort'' when the

recipient fails in a way that wastes or mismanages NAHASDA funding.

Further, the Committee intends that inclusion of paragraph (c)

underscores HUD's responsibility to assure that funds are allocated to

programs that address the goals and objectives set forth in their

housing plans, thereby playing an active role in assuring the program's

success.

Section 1000.530 of the proposed rule. Section 1000.530 of the

proposed rule has been redesignated as Sec. 1000.538 in the final rule.

A number of commenters submitted questions regarding the definition of

``substantial noncompliance.'' Several comments were received

concerning providing a review and allowing an opportunity to cure a

case of substantial noncompliance. In whole or in part, these concerns

have been addressed in changes and additions made under Secs. 1000.530,

1000.532, 1000.534, and 1000.536 of the final rule. One commenter

endorsed the language as published.

Section 1000.532 of the proposed rule. Section 1000.532 of the

proposed rule has been redesignated as Sec. 1000.540 in the final rule.

Numerous comments were received regarding hearing procedures to be

followed. The reference to 24 CFR part 26 has been left intact.

However, the references to the Rehabilitation Act and the Age

Discrimination Act (which were added by HUD) have been removed since

these laws are not applicable in the context of this section.

Section 1000.534 of the proposed rule. Section 1000.534 of the

proposed rule has been redesignated as Sec. 1000.542 in the final rule.

Commenters in Alaska were concerned about how this section might apply

to them and the unique circumstances when an Indian tribe might refuse

to both certify a TDHE and submit an IHP covering certain existing

units. This issue has been addressed in Sec. 1000.210.

Several commenters were concerned with the structure and language

of paragraph (b). The Committee has not revised the language, because

the current language reflects the statute.

One commenter expressed concern that this section is inconsistent

with the principles of self-determination, although the commenter

acknowledges that the section is required by the statute. Because it is

mandated by NAHASDA, no change was made to the regulations.

Section 1000.534 of the final rule. This section of the final rule

contains new language. Section 1000.534 of the proposed rule has been

redesignated as Sec. 1000.542 in the final rule. The proposed rule

identified as a nonconsensus issue the question of a definition of the

term ``substantial noncompliance'' contained in section 401 of NAHASDA.

The Indian tribes proposed a definition for this term which is the

basis for terminating, reducing, or limiting payments under NAHASDA.

HUD disagreed with inclusion of the definition, but welcomed public

comment on whether the term should be defined and how. There were many

public comments on this matter and all urged inclusion of a definition.

The final rule adds a definition at Sec. 1000.534 that indicates both

the substantiality and noncompliance aspects of the definition.

Section 1000.536 of the proposed rule. This question was added to

the proposed rule by HUD and the proposed rule language has been

completely removed. One commenter's challenge to this question made the

Committee realize that this provision is not needed. Tribal conditions

and performance are evaluated each year by HUD upon the submission of

an IHP. At that time, HUD shall make a new determination as to whether

the recipient is in substantial compliance. Therefore, HUD is required

to follow this process instead of determining that a particular

instance of substantial noncompliance has ceased.

Section 1000.536 of the final rule. This section of the final rule

contains new language. The language of Sec. 1000.536 of the proposed

rule has been removed from the final rule. This new question and answer

provides that NAHASDA grant funds withheld from a recipient and not

returned as a result of the hearing will be distributed by HUD in

accordance with the next NAHASDA formula allocation.

Section 1000.538 of the proposed rule. Section 1000.538 of the

proposed rule has been redesignated as Sec. 1000.544 in the final rule.

Several comments were received on this section. The regulations have

been changed to better explain this requirement. (Also, see changes to

Secs. 1000.546 and 1000.548 of the final rule, which were

Secs. 1000.542 and 1000.544 of the proposed rule.)

Section 1000.540. The proposed rule language for this entire

section has been removed because OMB Circular A-133 establishes new

procedures for cognizant agencies and auditing oversight. Section

1000.532 of the proposed rule has been redesignated as Sec. 1000.540 in

the final rule.

Section 1000.552 of the proposed rule. Section 1000.552 of the

proposed rule has been redesignated as Sec. 1000.556 in the final rule.

Several comments were received asking for clarification on this

section. Language has been added to explain that there may be other

laws or policies which are applicable.

Section 1000.554 of the proposed rule. Section 1000.554 of the

proposed rule has been redesignated as Sec. 1000.558 in the final rule.

Several comments were received asking for clarification on this

section. Language has been added to explain that there may be other

laws or policies which are applicable.

Amendments to 24 CFR Part 1005--Section 184 Loan Guarantee Program

Regulations

Section 1005.103. A comment was received which recommended a

clarifying rewording of the definition for ``Holder.'' The Committee

agreed and revised the wording of the section accordingly.

Section 1005.104. One commenter provided several comments on the

eligibility of lenders for the 184 program. While these comments were

directed to the requirements of other Federal agencies, the rule was

amended to expand the eligibility of lenders.

Section 1005.105. The Committee agreed to reword the provisions of

paragraph (b) for further clarity and compliance with NAHASDA.

Many comments were received regarding paragraph (f) of this

section. One commenter noted the adverse affect on HMDA data if loan

applicants must go through a denial process. A comment discussed the

shortage of housing in

[[Page 12349]]

rural Alaska and noted that a requirement for a written documentation

would present a disadvantage to buyers under this program. Questions

were also raised about the type and amount of documentation required.

Several commenters requested removal of the ``lack of access to private

financial markets'' language. Several commenters noted that the

proposed language would discourage access to private markets which was

inconsistent with the objective of NAHASDA. One commenter proposed that

this provision be delayed until a later time so that market comparables

could be established.

The Committee considered all comments and determined that the

language regarding ``lack of access'' could not be removed as it is

contained in NAHASDA. The Committee agrees with the comments that the

provision, as drafted, could be detrimental to the program and Indian

country and therefore the rule was revised. The new requirement

provides for a certification from the borrower that they lack access to

private financial markets. Written documentation is no longer required

to support this certification.

Section 1005.107. Several commenters believed that NAHASDA intended

that the TDHE servicing the Indian tribe be eligible under the

liquidation provision. The Committee agreed with this comment and added

the language.

III. Findings and Certifications

Paperwork Reduction Act

The information collection requirements contained in this rule have

been approved by the Office of Management and Budget (OMB) in

accordance with the Paperwork Reduction Act of 1995 (42 U.S.C. 3501-

3530), and assigned OMB control number 2577-0218. An agency may not

conduct or sponsor, and a person is not required to respond to, a

collection of information unless the collection displays a valid

control number.

Environmental Impact

A Finding of No Significant Impact with respect to the environment

was made at the proposed rule stage in accordance with HUD regulations

at 24 CFR part 50, implementing section 102(2)(C) of the National

Environmental Policy Act of 1969 (42 U.S.C. 4332). That Finding of No

Significant Impact remains applicable to this final rule and is

available for public inspection during business hours in the Office of

the Rules Docket Clerk, Room 10276, Department of Housing and Urban

Development, 451 Seventh Street, SW, Washington, DC 20410-0500.

Executive Order 12612, Federalism

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this rule have no federalism implications, and that the

policies are not subject to review under the Order.

Executive Order 13045, Protection of Children From Environmental Health

Risks and Safety Risks

This rule will not pose an environmental health risk or safety risk

on children.

Unfunded Mandates Reform Act

The Secretary has reviewed this rule before publication and by

approving it certifies, in accordance with the Unfunded Mandates Reform

Act of 1995 (2 U.S.C. 1532), that this rule does not impose a Federal

mandate that will result in the expenditure by state, local, and tribal

governments, in the aggregate, or by the private sector, of $100

million or more in any one year.

Executive Order 12866, Regulatory Planning and Review.

The Office of Management and Budget (OMB) reviewed this rule under

Executive Order 12866, Regulatory Planning and Review. OMB determined

that this rule is a ``significant regulatory action,'' as defined in

section 3(f) of the Order (although not economically significant, as

provided in section 3(f)(1) of the Order). Any changes made to the

final rule subsequent to its submission to OMB are identified in the

docket file, which is available for public inspection in the office of

the Department's Rules Docket Clerk, Room 10276, 451 Seventh Street,

SW, Washington, DC 20410-0500.

Regulatory Flexibility Act

The Secretary, in accordance with the Regulatory Flexibility Act (5

U.S.C. 605(b)) has reviewed and approved this rule, and in so doing

certifies that this rule would not have a significant economic impact

on a substantial number of small entities.

List of Subjects

24 CFR Part 950

Aged, Grant programs--housing and community development, Grant

programs--Indians, Indians, Individuals with disabilities, Low and

moderate income housing, Public housing, Reporting and recordkeeping

requirements.

24 CFR Part 953

Alaska, Community development block grants, Grant programs--housing

and community development, Indians, Reporting and recordkeeping

requirements.

24 CFR Part 955

Indians, Loan programs--Indians, Reporting and recordkeeping

requirements.

24 CFR Part 1000

Aged, Community development block grants, Grant programs--housing

and community development, Grant programs--Indians, Indians,

Individuals with disabilities, Low and moderate income housing, Public

housing, Reporting and recordkeeping requirements.

24 CFR Part 1003

Alaska, Community development block grants, Grant programs--housing

and community development, Indians, Reporting and recordkeeping

requirements.

24 CFR Part 1005

Indians, Loan programs--Indians, Reporting and recordkeeping

requirements.

Accordingly, for the reasons described above, in title 24 of the

Code of Federal Regulations, Chapter IX is amended as follows:

PART 950--[REMOVED]

1. Part 950 is removed.

PART 953--[REDESIGNATED]

2. Part 953 is redesignated as part 1003.

2a. Part 955 is redesignated as part 1005.

3. Part 1000 is added to read as follows:

PART 1000--NATIVE AMERICAN HOUSING ACTIVITIES

Subpart A--General

Sec.

1000.1 What is the applicability and scope of these regulations?

1000.2 What are the guiding principles in the implementation of

NAHASDA?

1000.4 What are the objectives of NAHASDA?

1000.6 What is the nature of the IHBG program?

1000.8 May provisions of these regulations be waived?

1000.10 What definitions apply in these regulations?

1000.12 What nondiscrimination requirements are applicable?

1000.14 What relocation and real property acquisition policies are

applicable?

[[Page 12350]]

1000.16 What labor standards are applicable?

1000.18 What environmental review requirements apply?

1000.20 Is an Indian tribe required to assume environmental review

responsibilities?

1000.22 Are the costs of the environmental review an eligible cost?

1000.24 If an Indian tribe assumes environmental review

responsibility, how will HUD assist the Indian tribe in performing

the environmental review?

1000.26 What are the administrative requirements under NAHASDA?

1000.28 May a self-governance Indian tribe be exempted from the

applicability of Sec. 1000.26?

1000.30 What prohibitions regarding conflict of interest are

applicable?

1000.32 May exceptions be made to the conflict of interest

provisions?

1000.34 What factors must be considered in making an exception to

the conflict of interest provisions?

1000.36 How long must a recipient retain records regarding

exceptions made to the conflict of interest provisions?

1000.38 What flood insurance requirements are applicable?

1000.40 Do lead-based paint poisoning prevention requirements apply

to affordable housing activities under NAHASDA?

1000.42 Are the requirements of section 3 of the Housing and Urban

Development Act of 1968 applicable?

1000.44 What prohibitions on the use of debarred, suspended or

ineligible contractors apply?

1000.46 Do drug-free workplace requirements apply?

1000.48 Are Indian preference requirements applicable to IHBG

activities?

1000.50 What Indian preference requirements apply to IHBG

administration activities?

1000.52 What Indian preference requirements apply to IHBG

procurement?

1000.54 What procedures apply to complaints arising out of any of

the methods of providing for Indian preference?

1000.56 How are NAHASDA funds paid by HUD to recipients?

1000.58 Are there limitations on the investment of IHBG funds?

1000.60 Can HUD prevent improper expenditure of funds already

disbursed to a recipient?

1000.62 What is considered program income and what restrictions are

there on its use?

Subpart B--Affordable Housing Activities

1000.101 What is affordable housing?

1000.102 What are eligible affordable housing activities?

1000.104 What families are eligible for affordable housing

activities?

1000.106 What families receiving assistance under title II of

NAHASDA require HUD approval?

1000.108 How is HUD approval obtained by a recipient for housing

for non low-income Indian families and model activities?

1000.110 Under what conditions may non low-income Indian families

participate in the program?

1000.112 How will HUD determine whether to approve model housing

activities?

1000.114 How long does HUD have to review and act on a proposal to

provide assistance to non low-income Indian families or a model

housing activity?

1000.116 What should HUD do before declining a proposal to provide

assistance to non low-income Indian families or a model housing

activity?

1000.118 What recourse does a recipient have if HUD disapproves a

proposal to provide assistance to non low-income Indian families or

a model housing activity?

1000.120 May a recipient use Indian preference or tribal preference

in selecting families for housing assistance?

1000.122 May NAHASDA grant funds be used as matching funds to

obtain and leverage funding, including any Federal or state program

and still be considered an affordable housing activity?

1000.124 What maximum and minimum rent or homebuyer payment can a

recipient charge a low-income rental tenant or homebuyer residing in

housing units assisted with NAHASDA grant amounts?

1000.126 May a recipient charge flat or income-adjusted rents?

1000.128 Is income verification required for assistance under

NAHASDA?

1000.130 May a recipient charge a non low-income family rents or

homebuyer payments which are more than 30 percent of the family's

adjusted income?

1000.132 Are utilities considered a part of rent or homebuyer

payments?

1000.134 When may a recipient (or entity funded by a recipient)

demolish or dispose of current assisted stock?

1000.136 What insurance requirements apply to housing units

assisted with NAHASDA grants?

1000.138 What constitutes adequate insurance?

1000.140 May a recipient use grant funds to purchase insurance for

privately owned housing to protect NAHASDA grant amounts spent on

that housing?

1000.142 What is the ``useful life'' during which low-income rental

housing and low-income homebuyer housing must remain affordable as

required in sections 205(a)(2) and 209 of NAHASDA?

1000.144 Are Mutual Help homes developed under the 1937 Act subject

to the useful life provisions of section 205(a)(2)?

1000.146 Are homebuyers required to remain low-income throughout

the term of their participation in a housing program funded under

NAHASDA?

1000.150 How may Indian tribes and TDHEs receive criminal

conviction information on adult applicants or tenants?

1000.152 How is the recipient to use criminal conviction

information?

1000.154 How is the recipient to keep criminal conviction

information confidential?

1000.156 Is there a per unit limit on the amount of IHBG funds that

may be used for dwelling construction and dwelling equipment?

Subpart C--Indian Housing Plan (IHP)

1000.201 How are funds made available under NAHASDA?

1000.202 Who are eligible recipients?

1000.204 How does an Indian tribe designate itself as recipient of

the grant?

1000.206 How is a TDHE designated?

1000.208 What happens if an Indian tribe had two IHAs as of

September 30, 1996?

1000.210 What happens to existing 1937 Act units in those

jurisdictions for which Indian tribes do not or cannot submit an

IHP?

1000.212 Is submission of an IHP required?

1000.214 What is the deadline for submission of an IHP?

1000.216 What happens if the recipient does not submit the IHP to

the Area ONAP by July 1?

1000.218 Who prepares an submits an IHP?

1000.220 What are the minimum requirements for the IHP?

1000.222 Are there separate IHP requirements for small Indian

tribes and small TDHEs?

1000.224 Can any part of the IHP be waived?

1000.226 Can the certification requirements of section 102(c)(5) of

NAHASDA be waived by HUD?

1000.228 If HUD changes its IHP format will Indian tribes be

involved?

1000.230 What is the process for HUD review of IHPs and IHP

amendments?

1000.232 Can an Indian tribe or TDHE amend its IHP?

1000.234 Can HUD's determination regarding the non-compliance of an

IHP or a modification to an IHP be appealed?

1000.236 What are eligible administrative and planning expenses?

1000.238 What percentage of the IHBG funds can be used for

administrative and planning expenses?

1000.240 When is a local cooperation agreement required for

affordable housing activities?

1000.242 When does the requirement for exemption from taxation

apply to affordable housing activities?

Subpart D--Allocation Formula

1000.301 What is the purpose of the IHBG formula?

1000.302 What are the definitions applicable for the IHBG formula?

1000.304 May the IHBG formula be modified?

1000.306 How can the IHBG formula be modified?

1000.308 Who can make modifications to the IHBG formula?

1000.310 What are the components of the IHBG formula?

1000.312 What is current assisted stock?

[[Page 12351]]

1000.314 What is formula current assisted stock?

1000.316 How is the Formula Current Assisted Stock (FCAS) Component

developed?

1000.317 Who is the recipient for funds for current assisted stock

which is owned by state-created Regional Native Housing Authorities

in Alaska?

1000.318 When do units under Formula Current Assisted Stock cease

to be counted or expire from the inventory used for the formula?

1000.320 How is Formula Current Assisted Stock adjusted for local

area costs?

1000.322 Are IHA financed units included in the determination of

Formula Current Assisted Stock?

1000.324 How is the need component developed?

1000.325 How is the need component adjusted for local area costs?

1000.326 What if a formula area is served by more than one Indian

tribe?

1000.327 What is the order of preference for allocating the IHBG

formula needs data for Indian tribes in Alaska not located on

reservations due to the unique circumstances in Alaska?

1000.328 What is the minimum amount an Indian tribe can receive

under the need component of the formula?

1000.330 What are data sources for the need variables?

1000.332 Will data used by HUD to determine an Indian tribe's or

TDHE's formula allocation be provided to the Indian tribe or TDHE

before the allocation?

1000.334 May Indian tribes, TDHEs, or HUD challenge the data from

the U.S. Decennial Census or provide an alternative source of data?

1000.336 How may an Indian tribe, TDHE, or HUD challenge data?

1000.340 What if an Indian tribe is allocated less funding under

the block grant formula than it received in Fiscal Year 1996 for

operating subsidy and modernization?

Subpart E--Federal Guarantees for Financing of Tribal Housing

Activities

1000.401 What terms are used throughout this subpart?

1000.402 Are State recognized Indian tribes eligible for guarantees

under title VI of NAHASDA?

1000.404 What lenders are eligible for participation?

1000.406 What constitutes tribal approval to issue notes or other

obligations under title VI of NAHASDA?

1000.408 How does an Indian tribe or TDHE show that it has made

efforts to obtain financing without a guarantee and cannot complete

such financing in a timely manner?

1000.410 What conditions shall HUD prescribe when providing a

guarantee for notes or other obligations issued by an Indian tribe?

1000.412 Can an issuer obtain a guarantee for more than one note or

other obligation at a time?

1000.414 How is an issuer's financial capacity demonstrated?

1000.416 What is a repayment contract in a form acceptable to HUD?

1000.418 Can grant funds be used to pay costs incurred when issuing

notes or other obligations?

1000.420 May grants made by HUD under section 603 of NAHASDA be

used to pay net interest costs incurred when issuing notes or other

obligations?

1000.422 What are the procedures for applying for loan guarantees

under title VI of NAHASDA?

1000.424 What are the application requirements for guarantee

assistance under title VI of NAHASDA?

1000.426 How does HUD review a guarantee application?

1000.428 For what reasons may HUD disapprove an application or

approve an application for an amount less than that requested?

1000.430 When will HUD issue notice to the applicant if the

application is approved at the requested or reduced amount?

1000.432 Can an amendment to an approved guarantee be made?

1000.434 How will HUD allocate the availability of loan guarantee

assistance?

1000.436 How will HUD monitor the use of funds guaranteed under

this subpart?

Subpart F--Recipient Monitoring, Oversight and Accountability

1000.501 Who is involved in monitoring activities under NAHASDA?

1000.502 What are the monitoring responsibilities of the recipient,

the grant beneficiary and HUD under NAHASDA?

1000.504 What are the recipient performance objectives?

1000.506 If the TDHE is the recipient, must it submit its

monitoring evaluation/results to the Indian tribe?

1000.508 If the recipient monitoring identifies programmatic

concerns, what happens?

1000.510 What happens if tribal monitoring identifies compliance

concerns?

1000.512 Are performance reports required?

1000.514 When must the annual performance report be submitted?

1000.516 What reporting period is covered by the annual performance

report?

1000.518 When must a recipient obtain public comment on its annual

performance report?

1000.520 What are the purposes of HUD review?

1000.521 After the receipt of the recipient's performance report,

how long does HUD have to make recommendations under section 404(c)

of NAHASDA?

1000.522 How will HUD give notice of on-site reviews?

1000.524 What are HUD's performance measures for the review?

1000.526 What information will HUD use for its review?

1000.528 What are the procedures for the recipient to comment on

the result of HUD's review when HUD issues a report under section

405(b) of NAHASDA?

1000.530 What corrective and remedial actions will HUD request or

recommend to address performance problems prior to taking action

under Secs. 1000.532 or 1000.538?

1000.532 What are the adjustments HUD makes to a recipient's future

year's grant amount under section 405 of NAHASDA?

1000.534 What constitutes substantial noncompliance?

1000.536 What happens to NAHASDA grant funds adjusted, reduced,

withdrawn, or terminated under Sec. 1000.532 or Sec. 1000.538?

1000.538 What remedies are available for substantial noncompliance?

1000.540 What hearing procedures will be used under NAHASDA?

1000.542 When may HUD require replacement of a recipient?

1000.544 What audits are required?

1000.546 Are audit costs eligible program or administrative

expenses?

1000.548 Must a copy of the recipient's audit pursuant to the

Single Audit Act relating to NAHASDA activities be submitted to HUD?

1000.550 If the TDHE is the recipient, does it have to submit a

copy of its audit to the Indian tribe?

1000.552 How long must the recipient maintain program records?

1000.554 Which agencies have right of access to the recipient's

records relating to activities carried out under NAHASDA?

1000.556 Does the Freedom of Information Act (FOIA) apply to

recipient records?

1000.558 Does the Federal Privacy Act apply to recipient records?

Appendix A to Part 1000--Indian Housing Block Grant Formula

Mechanics

Appendix B to Part 1000--IHBG Block Grant Formula Mechanisms

Authority: 25 U.S.C. 4101 et seq.; 42 U.S.C. 3535(d).

Subpart A--General

Sec. 1000.1 What is the applicability and scope of these regulations?

Under the Native American Housing Assistance and Self-Determination

Act of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA) the Department of

Housing and Urban Development (HUD) provides grants, loan guarantees,

and technical assistance to Indian tribes and Alaska Native villages

for the development and operation of low-income housing in Indian

areas. The policies and procedures described in this part apply to

grants to eligible recipients under the Indian Housing Block Grant

(IHBG) program for Indian tribes and Alaska Native villages. This part

also applies to loan guarantee assistance under title VI of NAHASDA.

The regulations in this part supplement the statutory requirements set

forth in NAHASDA. This part, as much as

[[Page 12352]]

practicable, does not repeat statutory language.

Sec. 1000.2 What are the guiding principles in the implementation of

NAHASDA?

(a) The Secretary shall use the following Congressional findings

set forth in section 2 of NAHASDA as the guiding principles in the

implementation of NAHASDA:

(1) The Federal government has a responsibility to promote the

general welfare of the Nation:

(i) By using Federal resources to aid families and individuals

seeking affordable homes in safe and healthy environments and, in

particular, assisting responsible, deserving citizens who cannot

provide fully for themselves because of temporary circumstances or

factors beyond their control;

(ii) By working to ensure a thriving national economy and a strong

private housing market; and

(iii) By developing effective partnerships among the Federal

government, state, tribal, and local governments, and private entities

that allow government to accept responsibility for fostering the

development of a healthy marketplace and allow families to prosper

without government involvement in their day-to-day activities.

(2) There exists a unique relationship between the Government of

the United States and the governments of Indian tribes and a unique

Federal responsibility to Indian people.

(3) The Constitution of the United States invests the Congress with

plenary power over the field of Indian affairs, and through treaties,

statutes, and historical relations with Indian tribes, the United

States has undertaken a unique trust responsibility to protect and

support Indian tribes and Indian people.

(4) The Congress, through treaties, statutes, and the general

course of dealing with Indian tribes, has assumed a trust

responsibility for the protection and preservation of Indian tribes and

for working with Indian tribes and their members to improve their

housing conditions and socioeconomic status so that they are able to

take greater responsibility for their own economic condition.

(5) Providing affordable homes in safe and healthy environments is

an essential element in the special role of the United States in

helping Indian tribes and their members to improve their housing

conditions and socioeconomic status.

(6) The need for affordable homes in safe and healthy environments

on Indian reservations, in Indian communities, and in Native Alaskan

villages is acute and the Federal government should work not only to

provide housing assistance, but also, to the extent practicable, to

assist in the development of private housing finance mechanisms on

Indian lands to achieve the goals of economic self-sufficiency and

self-determination for Indian tribes and their members.

(7) Federal assistance to meet these responsibilities should be

provided in a manner that recognizes the right of Indian self-

determination and tribal self-governance by making such assistance

available directly to the Indian tribes or tribally designated entities

under authorities similar to those accorded Indian tribes in Public Law

93-638 (25 U.S.C. 450 et seq.).

(b) Nothing in this section shall be construed as releasing the

United States government from any responsibility arising under its

trust responsibilities towards Indians or any treaty or treaties with

an Indian tribe or nation.

Sec. 1000.4 What are the objectives of NAHASDA?

The primary objectives of NAHASDA are:

(a) To assist and promote affordable housing activities to develop,

maintain and operate affordable housing in safe and healthy

environments on Indian reservations and in other Indian areas for

occupancy by low-income Indian families;

(b) To ensure better access to private mortgage markets for Indian

tribes and their members and to promote self-sufficiency of Indian

tribes and their members;

(c) To coordinate activities to provide housing for Indian tribes

and their members and to promote self-sufficiency of Indian tribes and

their members;

(d) To plan for and integrate infrastructure resources for Indian

tribes with housing development for Indian tribes; and

(e) To promote the development of private capital markets in Indian

country and to allow such markets to operate and grow, thereby

benefiting Indian communities.

Sec. 1000.6 What is the nature of the IHBG program?

The IHBG program is formula driven whereby eligible recipients of

funding receive an equitable share of appropriations made by the

Congress, based upon formula components specified under subpart D of

this part. IHBG recipients must have the administrative capacity to

undertake the affordable housing activities proposed, including the

systems of internal control necessary to administer these activities

effectively without fraud, waste, or mismanagement.

Sec. 1000.8 May provisions of these regulations be waived?

Yes. Upon determination of good cause, the Secretary may, subject

to statutory limitations, waive any provision of this part and delegate

this authority in accordance with section 106 of the Department of

Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)).

Sec. 1000.10 What definitions apply in these regulations?

Except as noted in a particular subpart, the following definitions

apply in this part:

(a) The terms ``Adjusted income,'' ``Affordable housing,'' ``Drug-

related criminal activity,'' ``Elderly families and near-elderly

families,'' ``Elderly person,'' ``Grant beneficiary,'' ``Indian,''

``Indian housing plan (IHP),'' ``Indian tribe,'' ``Low-income family,''

``Near-elderly persons,'' ``Nonprofit,'' ``Recipient,'' Secretary,''

``State,'' and ``Tribally designated housing entity (TDHE)'' are

defined in section 4 of NAHASDA.

(b) In addition to the definitions set forth in paragraph (a) of

this section, the following definitions apply to this part:

Affordable housing activities are those activities identified in

section 202 of NAHASDA.

Annual Contributions Contract (ACC) means a contract under the 1937

Act between HUD and an IHA containing the terms and conditions under

which HUD assists the IHA in providing decent, safe, and sanitary

housing for low-income families.

Annual income has one of the following meanings, as determined by

the Indian tribe:

(1) ``Annual income'' as defined for HUD's Section 8 programs in 24

CFR part 5, subpart F (except when determining the income of a

homebuyer for an owner-occupied rehabilitation project, the value of

the homeowner's principal residence may be excluded from the

calculation of Net Family assets); or

(2) Annual income as reported under the Census long-form for the

most recent available decennial Census. This definition includes:

(i) Wages, salaries, tips, commissions, etc.;

(ii) Self-employment income;

(iii) Farm self-employment income;

(iv) Interest, dividends, net rental income, or income from estates

or trusts;

(v) Social security or railroad retirement;

[[Page 12353]]

(vi) Supplemental Security Income, Aid to Families with Dependent

Children, or other public assistance or public welfare programs;

(vii) Retirement, survivor, or disability pensions; and

(viii) Any other sources of income received regularly, including

Veterans' (VA) payments, unemployment compensation, and alimony; or

(3) Adjusted gross income as defined for purposes of reporting

under Internal Revenue Service (IRS) Form 1040 series for individual

Federal annual income tax purposes.

Assistant Secretary means the Assistant Secretary for Public and

Indian Housing.

Department or HUD means the Department of Housing and Urban

Development.

Family includes, but is not limited to, a family with or without

children, an elderly family, a near-elderly family, a disabled family,

a single person, as determined by the Indian tribe.

Homebuyer payment means the payment of a family purchasing a home

pursuant to a lease purchase agreement.

Homeless family means a family who is without safe, sanitary and

affordable housing even though it may have temporary shelter provided

by the community, or a family who is homeless as determined by the

Indian tribe.

IHBG means Indian Housing Block Grant.

Income means annual income as defined in this subpart.

Indian Area means the area within which an Indian tribe operates

affordable housing programs or the area in which a TDHE is authorized

by one or more Indian tribes to operate affordable housing programs.

Whenever the term ``jurisdiction'' is used in NAHASDA it shall mean

``Indian Area'' except where specific reference is made to the

jurisdiction of a court.

Indian Housing Authority (IHA) means an entity that:

(1) Is authorized to engage or assist in the development or

operation of low-income housing for Indians under the 1937 Act; and

(2) Is established:

(i) By exercise of the power of self government of an Indian tribe

independent of state law; or

(ii) By operation of state law providing specifically for housing

authorities for Indians, including regional housing authorities in the

State of Alaska.

Median income for an Indian area is the greater of:

(1) The median income for the counties, previous counties, or their

equivalent in which the Indian area is located; or

(2) The median income for the United States.

NAHASDA means the Native American Housing Assistance and Self-

Determination Act of 1996 (25 U.S.C. 4101 et seq.).

1937 Act means the United States Housing Act of 1937 (42 U.S.C.

1437 et seq.).

Office of Native American Programs (ONAP) means the office of HUD

which has been delegated authority to administer programs under this

part. An ``Area ONAP'' is an ONAP field office.

Person with Disabilities means a person who --

(1) Has a disability as defined in section 223 of the Social

Security Act;

(2) Has a developmental disability as defined in section 102 of the

Developmental Disabilities Assistance and Bill of Rights Act;

(3) Has a physical, mental, or emotional impairment which-

(i) Is expected to be of long-continued and indefinite duration;

(ii) Substantially impedes his or her ability to live

independently; and

(iii) Is of such a nature that such ability could be improved by

more suitable housing conditions.

(4) The term ``person with disabilities'' includes persons who have

the disease of acquired immunodeficiency syndrome or any condition

arising from the etiologic agent for acquired immunodeficiency

syndrome.

(5) Notwithstanding any other provision of law, no individual shall

be considered a person with disabilities, for purposes of eligibility

for housing assisted under this part, solely on the basis of any drug

or alcohol dependence. The Secretary shall consult with Indian tribes

and appropriate Federal agencies to implement this paragraph.

(6) For purposes of this definition, the term ``physical, mental or

emotional impairment'' includes, but is not limited to:

(i) Any physiological disorder or condition, cosmetic

disfigurement, or anatomical loss affecting one or more of the

following body systems: Neurological, musculoskeletal, special sense

organs, respiratory, including speech organs; cardiovascular;

reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and

endocrine; or

(ii) Any mental or psychological condition, such as mental

retardation, organic brain syndrome, emotional or mental illness, and

specific learning disabilities.

(iii) The term ``physical, mental, or emotional impairment''

includes, but is not limited to, such diseases and conditions as

orthopedic, visual, speech, and hearing impairments, cerebral palsy,

autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart

disease, diabetes, Human Immunodeficiency Virus infection, mental

retardation, and emotional illness.

Sec. 1000.12 What nondiscrimination requirements are applicable?

(a) The requirements of the Age Discrimination Act of 1975 (42

U.S.C. 6101-6107) and HUD's implementing regulations in 24 CFR part

146.

(b) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794)

and HUD's regulations at 24 CFR part 8 apply.

(c) The Indian Civil Rights Act (Title II of the Civil Rights Act

of 1968; 25 U.S.C. 1301-1303), applies to Federally recognized Indian

tribes that exercise powers of self-government.

(d) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) and

title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3601 et seq.)

apply to Indian tribes that are not covered by the Indian Civil Rights

Act. However, the Title VI and Title VIII requirements do not apply to

actions by Indian tribes under section 201(b) of NAHASDA.

Sec. 1000.14 What relocation and real property acquisition policies

are applicable?

The following relocation and real property acquisition policies are

applicable to programs developed or operated under NAHASDA:

(a) Real Property acquisition requirements. The acquisition of real

property for an assisted activity is subject to 49 CFR part 24, subpart

B. Whenever the recipient does not have the authority to acquire the

real property through condemnation, it shall:

(1) Before discussing the purchase price, inform the owner:

(i) Of the amount it believes to be the fair market value of the

property. Such amount shall be based upon one or more appraisals

prepared by a qualified appraiser. However, this provision does not

prevent the recipient from accepting a donation or purchasing the real

property at less than its fair market value.

(ii) That it will be unable to acquire the property if negotiations

fail to result in an amicable agreement.

(2) Request HUD approval of the proposed acquisition price before

executing a firm commitment to purchase the property if the proposed

acquisition payment exceeds the fair market value. The recipient shall

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include with its request a copy of the appraisal(s) and a justification

for the proposed acquisition payment. HUD will promptly review the

proposal and inform the recipient of its approval or disapproval.

(b) Minimize displacement. Consistent with the other goals and

objectives of this part, recipients shall assure that they have taken

all reasonable steps to minimize the displacement of persons

(households, businesses, nonprofit organizations, and farms) as a

result of a project assisted under this part.

(c) Temporary relocation. The following policies cover residential

tenants and homebuyers who will not be required to move permanently but

who must relocate temporarily for the project. Such residential tenants

and homebuyers shall be provided:

(1) Reimbursement for all reasonable out-of-pocket expenses

incurred in connection with the temporary relocation, including the

cost of moving to and from the temporarily occupied housing and any

increase in monthly housing costs (e.g., rent/utility costs).

(2) Appropriate advisory services, including reasonable advance

written notice of:

(i) The date and approximate duration of the temporary relocation;

(ii) The location of the suitable, decent, safe and sanitary

dwelling to be made available for the temporary period;

(iii) The terms and conditions under which the tenant may occupy a

suitable, decent, safe, and sanitary dwelling in the building/complex

following completion of the repairs; and

(iv) The provisions of paragraph (c)(1) of this section.

(d) Relocation assistance for displaced persons. A displaced person

(defined in paragraph (g) of this section) must be provided relocation

assistance at the levels described in, and in accordance with the

requirements of, the Uniform Relocation Assistance and Real Property

Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C. 4601-

4655) and implementing regulations at 49 CFR part 24.

(e) Appeals to the recipient. A person who disagrees with the

recipient's determination concerning whether the person qualifies as a

``displaced person,'' or the amount of relocation assistance for which

the person is eligible, may file a written appeal of that determination

with the recipient.

(f) Responsibility of recipient. (1) The recipient shall certify

that it will comply with the URA, the regulations at 49 CFR part 24,

and the requirements of this section. The recipient shall ensure such

compliance notwithstanding any third party's contractual obligation to

the recipient to comply with the provisions in this section.

(2) The cost of required relocation assistance is an eligible

project cost in the same manner and to the same extent as other project

costs. However, such assistance may also be paid for with funds

available to the recipient from any other source.

(3) The recipient shall maintain records in sufficient detail to

demonstrate compliance with this section.

(g) Definition of displaced person. (1) For purposes of this

section, the term ``displaced person'' means any person (household,

business, nonprofit organization, or farm) that moves from real

property, or moves his or her personal property from real property,

permanently, as a direct result of rehabilitation, demolition, or

acquisition for a project assisted under this part. The term

``displaced person'' includes, but is not limited to:

(i) A tenant-occupant of a dwelling unit who moves from the

building/complex permanently after the submission to HUD of an IHP that

is later approved.

(ii) Any person, including a person who moves before the date

described in paragraph (g)(1)(i) of this section, that the recipient

determines was displaced as a direct result of acquisition,

rehabilitation, or demolition for the assisted project.

(iii) A tenant-occupant of a dwelling unit who moves from the

building/complex permanently after the execution of the agreement

between the recipient and HUD, if the move occurs before the tenant is

provided written notice offering him or her the opportunity to lease

and occupy a suitable, decent, safe and sanitary dwelling in the same

building/complex, under reasonable terms and conditions, upon

completion of the project. Such reasonable terms and conditions include

a monthly rent and estimated average monthly utility costs that do not

exceed the greater of:

(A) The tenant-occupant's monthly rent and estimated average

monthly utility costs before the agreement; or

(B) 30 percent of gross household income.

(iv) A tenant-occupant of a dwelling who is required to relocate

temporarily, but does not return to the building/complex, if either:

(A) The tenant-occupant is not offered payment for all reasonable

out-of-pocket expenses incurred in connection with the temporary

relocation, including the cost of moving to and from the temporarily

occupied unit, any increased housing costs and incidental expenses; or

(B) Other conditions of the temporary relocation are not

reasonable.

(v) A tenant-occupant of a dwelling who moves from the building/

complex after he or she has been required to move to another dwelling

unit in the same building/complex in order to carry out the project, if

either:

(A) The tenant-occupant is not offered reimbursement for all

reasonable out-of-pocket expenses incurred in connection with the move;

or

(B) Other conditions of the move are not reasonable.

(2) Notwithstanding the provisions of paragraph (g)(1) of this

section, a person does not qualify as a ``displaced person'' (and is

not eligible for relocation assistance under the URA or this section),

if:

(i) The person moved into the property after the submission of the

IHP to HUD, but, before signing a lease or commencing occupancy, was

provided written notice of the project, its possible impact on the

person (e.g., the person may be displaced, temporarily relocated or

suffer a rent increase) and the fact that the person would not qualify

as a ``displaced person'' or for any assistance provided under this

section as a result of the project.

(ii) The person is ineligible under 49 CFR 24.2(g)(2).

(iii) The recipient determines the person is not displaced as a

direct result of acquisition, rehabilitation, or demolition for an

assisted project. To exclude a person on this basis, HUD must concur in

that determination.

(3) A recipient may at any time ask HUD to determine whether a

specific displacement is or would be covered under this section.

(h) Definition of initiation of negotiations. For purposes of

determining the formula for computing the replacement housing

assistance to be provided to a person displaced as a direct result of

rehabilitation or demolition of the real property, the term

``initiation of negotiations'' means the execution of the agreement

covering the rehabilitation or demolition (See 49 CFR part 24).

Sec. 1000.16 What labor standards are applicable?

(a) Davis-Bacon wage rates. (1) As described in section 104(b) of

NAHASDA, contracts and agreements for assistance, sale or lease under

NAHASDA must require prevailing wage rates determined by the Secretary

of Labor under the Davis-Bacon Act (40 U.S.C. 276a-276a-5) to be paid

to

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laborers and mechanics employed in the development of affordable

housing.

(2) When NAHASDA assistance is only used to assist homebuyers to

acquire single family housing, the Davis-Bacon wage rates apply to the

construction of the housing if there is a written agreement with the

owner or developer of the housing that NAHASDA assistance will be used

to assist homebuyers to buy the housing.

(3) Prime contracts not in excess of $2000 are exempt from Davis-

Bacon wage rates.

(b) HUD-determined wage rates. Section 104(b) also mandates that

contracts and agreements for assistance, sale or lease under NAHASDA

require that prevailing wages determined or adopted (subsequent to a

determination under applicable state, tribal or local law) by HUD shall

be paid to maintenance laborers and mechanics employed in the

operation, and to architects, technical engineers, draftsmen and

technicians employed in the development, of affordable housing.

(c) Contract Work Hours and Safety Standards Act. Contracts in

excess of $100,000 to which Davis-Bacon or HUD-determined wage rates

apply are subject by law to the overtime provisions of the Contract

Work Hours and Safety Standards Act (40 U.S.C. 327).

(d) Volunteers. The requirements in 24 CFR part 70 concerning

exemptions for the use of volunteers on projects subject to Davis-Bacon

and HUD-determined wage rates are applicable.

(e) Other laws and issuances. Recipients, contractors,

subcontractors, and other participants must comply with regulations

issued under the labor standards provisions cited in this section,

other applicable Federal laws and regulations pertaining to labor

standards, and HUD Handbook 1344.1 (Federal Labor Standards Compliance

in Housing and Community Development Programs).

Sec. 1000.18 What environmental review requirements apply?

The environmental effects of each activity carried out with

assistance under this part must be evaluated in accordance with the

provisions of the National Environmental Policy Act of 1969 (NEPA) (42

U.S.C. 4321) and the related authorities listed in HUD's implementing

regulations at 24 CFR parts 50 and 58. An environmental review does not

have to be completed prior to HUD approval of an IHP.

Sec. 1000.20 Is an Indian tribe required to assume environmental

review responsibilities?

(a) No. It is an option an Indian tribe may choose. If an Indian

tribe declines to assume the environmental review responsibilities, HUD

will perform the environmental review in accordance with 24 CFR part

50. The timing of HUD undertaking the environmental review will be

subject to the availability of resources. A HUD environmental review

must be completed for any NAHASDA assisted activities not excluded from

review under 24 CFR 50.19(b) before a recipient may acquire,

rehabilitate, convert, lease, repair or construct property, or commit

HUD or local funds used in conjunction with such NAHASDA assisted

activities with respect to the property.

(b) If an Indian tribe assumes environmental review

responsibilities:

(1) Its certifying officer must certify that he/she is authorized

and consents on behalf of the Indian tribe and such officer to accept

the jurisdiction of the Federal courts for the purpose of enforcement

of the responsibilities of the certifying officer as set forth in

section 105(c) of NAHASDA; and

(2) The Indian tribe must follow the requirements of 24 CFR part

58.

(3) No funds may be committed to a grant activity or project before

the completion of the environmental review and approval of the request

for release of funds and related certification required by sections

105(b) and 105(c) of NAHASDA, except as authorized by 24 CFR part 58

such as for the costs of environmental reviews and other planning and

administrative expenses.

(c) Where an environmental assessment (EA) is appropriate under 24

CFR part 50, instead of an Indian tribe assuming environmental review

responsibilities under paragraph (b) of this section or HUD preparing

the EA itself under paragraph (a) of this section, an Indian tribe or

TDHE may prepare an EA for HUD review. In addition to complying with

the requirements of 40 CFR 1506.5(a), HUD shall make its own evaluation

of the environmental issues and take responsibility for the scope and

content of the EA in accordance with 40 CFR 1506.5(b).

Sec. 1000.22 Are the costs of the environmental review an eligible

cost?

Yes, costs of completing the environmental review are eligible.

Sec. 1000.24 If an Indian tribe assumes environmental review

responsibility, how will HUD assist the Indian tribe in performing the

environmental review?

As set forth in section 105(a)(2)(B) of NAHASDA and 24 CFR 58.77,

HUD will provide for monitoring of environmental reviews and will also

facilitate training for the performance for such reviews by Indian

tribes.

Sec. 1000.26 What are the administrative requirements under NAHASDA?

(a) Except as addressed in Sec. 1000.28, recipients shall comply

with the requirements and standards of OMB Circular No. A-87,

``Principles for Determining Costs Applicable to Grants and Contracts

with State, Local and Federally recognized Indian Tribal Governments,''

and with the following sections of 24 CFR part 85 ``Uniform

Administrative Requirements for Grants and Cooperative Agreements to

State and Local Governments.'' For purposes of this part, ``grantee''

as defined in 24 CFR part 85 has the same meaning as ``recipient.''

(1) Section 85.3, ``Definitions.''

(2) Section 85.6, ``Exceptions.''

(3) Section 85.12, ``Special grant or subgrant conditions for `high

risk' grantees.''

(4) Section 85.20, ``Standards for financial management systems,''

except paragraph (a).

(5) Section 85.21, ``Payment.''

(6) Section 85.22, ``Allowable costs.''

(7) Section 85.26, ``Non-federal audits.''

(8) Section 85.32, ``Equipment,'' except in all cases in which the

equipment is sold, the proceeds shall be program income.

(9) Section 85.33, ``Supplies.''

(10) Section 85.35, ``Subawards to debarred and suspended

parties.''

(11) Section 85.36, ``Procurement,'' except paragraph (a). There

may be circumstances under which the bonding requirements of

Sec. 85.36(h) are inconsistent with other responsibilities and

obligations of the recipient. In such circumstances, acceptable methods

to provide performance and payment assurance may include:

(i) Deposit with the recipient of a cash escrow of not less than 20

percent of the total contract price, subject to reduction during the

warranty period, commensurate with potential risk;

(ii) Letter of credit for 25 percent of the total contract price,

unconditionally payable upon demand of the recipient, subject to

reduction during any warranty period commensurate with potential risk;

or

(iii) Letter of credit for 10 percent of the total contract price

unconditionally payable upon demand of the recipient subject to

reduction during any warranty period commensurate with potential risk,

and compliance with the procedures for monitoring of disbursements by

the contractor.

(12) Section 85.37, ``Subgrants.''

(13) Section 85.40, ``Monitoring and reporting program

performance,'' except paragraphs (b) through (d) and paragraph (f).

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(14) Section 85.41, ``Financial reporting,'' except paragraphs (a),

(b), and (e).

(15) Section 85.44, ``Termination for convenience.''

(16) Section 85.51 ``Later disallowances and adjustments.''

(17) Section 85.52, ``Collection of amounts due.''

(b)(1) With respect

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