# 62 FR 35718: Implementation of the Native American Housing Assistance and Self-Determination Act of 1996; Proposed Rule

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## Section

- **Citation:** 62 FR 35718
- **Heading:** Implementation of the Native American Housing Assistance and Self-Determination Act of 1996; Proposed Rule
- **Jurisdiction:** Federal
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Federal Register / Vol. 62 / 62 FR 35718

## Text

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 950, 953, 955, 1000, 1003 and 1005

[Docket No. FR-4170-P-10]
RIN 2577-AB74

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

AGENCY: Office of the Assistant Secretary for Public and Indian
Housing; HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would 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. As required by section 106(b)(2) of NAHASDA, HUD has
developed this proposed rule with active tribal participation and using
the procedures of the Negotiated Rulemaking Act.

DATES: Comments on the proposed rule are due on or before August 18,
1997. Comments on the proposed information collection requirements are
due on or before September 2, 1997.

ADDRESSES: Interested persons are invited to submit written comments
regarding this proposed rule to the Rules Docket Clerk, Office of
General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC 20410. Comments
should refer to the above docket number and title. A copy of each
comment submitted will be available for public inspection and copying
between 7:30 a.m. and 5:30 p.m. weekdays at the above address.
Facsimile (FAX) comments will not be accepted.
et Clerk, Office of
General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC 20410. Comments
should refer to the above docket number and title. A copy of each
comment submitted will be available for public inspection and copying
between 7:30 a.m. and 5:30 p.m. weekdays at the above address.
Facsimile (FAX) comments will not be accepted.

For additional information concerning the information collection
requirements contained in this rule, please see the ``Findings and
Certifications'' section of this preamble. A copy of any comment
regarding the information collection requirements must be sent to:
Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and
Budget, New Executive Office Building, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Dominic Nessi, Deputy Assistant
Secretary for Native American Programs, 1999 Broadway, Suite 3390,
Denver, CO 80202; telephone (303) 675-1600. Speech or hearing-impaired
individuals may access this number via TTY by calling the Federal
Information Relay Service at 1-800-877-8339. (With the exception of the
``800'' number, these telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Statutory Background

On October 26, 1996, President Clinton signed into law the Native
American Housing Assistance and Self-Determination Act of 1996 (Pub. L.
104-330) (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. Beginning on October 1, 1997, the first day of
Fiscal Year (FY) 1998, a single block grant program will replace
assistance previously authorized under:
1. The United States Housing Act of 1937 (42 U.S.C. 1437 et seq.)
(1937 Act);
2. The Indian Housing Child Development Program under Section 519
of the Cranston-Gonzalez National Affordable Housing Act (12 U.S.C.
1701z-6 note);
3
nt program. Beginning on October 1, 1997, the first day of
Fiscal Year (FY) 1998, a single block grant program will replace
assistance previously authorized under:
1. The United States Housing Act of 1937 (42 U.S.C. 1437 et seq.)
(1937 Act);
2. The Indian Housing Child Development Program under Section 519
of the Cranston-Gonzalez National Affordable Housing Act (12 U.S.C.
1701z-6 note);
3. The Youthbuild Program under subtitle D of title IV of the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12899 et
seq.);
4. The Public Housing Youth Sports Program under section 520 of the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 11903a);
5. The HOME Investment Partnerships Program under title II of the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12721 et
seq.); and
6. Housing assistance for the homeless under title IV of the
Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11361 et seq.)
and the Innovative Homeless Demonstration Program under section 2(b) of
the HUD Demonstration Act of 1993 (42 U.S.C. 11301 note).
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.
Section 106 of NAHASDA sets out the general procedure for the
implementation of the new Indian housing block grant (IHBG) program.
The procedure described is a two-step process. First, section 106(a)
requires the publication of a notice in the Federal Register not later
than 90 days after enactment of NAHASDA. The purpose of the notice is
to establish any requirements necessary for the transition from the
provision of assistance for Indian tribes and Indian housing
authorities under the 1937 Act and other related provisions of law to
the provision of assistance in accordance with NAHASDA
requires the publication of a notice in the Federal Register not later
than 90 days after enactment of NAHASDA. The purpose of the notice is
to establish any requirements necessary for the transition from the
provision of assistance for Indian tribes and Indian housing
authorities under the 1937 Act and other related provisions of law to
the provision of assistance in accordance with NAHASDA. Secondly,
section 106(b) requires that HUD issue final regulations implementing
NAHASDA no later than September 1, 1997. Section II of this preamble
discusses the transition requirements established by HUD. The remainder
of the preamble presents an overview of the development and contents of
the proposed regulations.

II. Transition Requirements

On January 27, 1997 (62 FR 3972), HUD published the transition
notice required by section 106(a) of NAHASDA. HUD subsequently amended
the January 27, 1997 notice to extend the Indian Housing Plan (IHP)
submission deadline to November 3, 1997 (62 FR 8258, February 24,
1997).
The January 27, 1997 notice focused on the information which must
be included in an Indian tribe's IHP and the treatment of activities
and funding under programs repealed by NAHASDA. Although section 106(b)
of NAHASDA requires that HUD issue final regulations by September 1,
1997, the ``old'' system of funding expires on the first day of FY 1998
(October 1, 1997). The submission of an IHP and a determination by HUD
that the IHP complies with NAHASDA is a prerequisite for funding under
NAHASDA. Accordingly, the January 27, 1997 notice established IHP
submission requirements in order to ensure that there is sufficient
time for Indian tribes to prepare their IHPs, and for HUD to review
them
f funding expires on the first day of FY 1998
(October 1, 1997). The submission of an IHP and a determination by HUD
that the IHP complies with NAHASDA is a prerequisite for funding under
NAHASDA. Accordingly, the January 27, 1997 notice established IHP
submission requirements in order to ensure that there is sufficient
time for Indian tribes to prepare their IHPs, and for HUD to review
them. Similarly, the January 27, 1997 notice provided guidance for the
treatment of activities and funding under programs repealed by NAHASDA
in order to permit Indian tribes to have the greatest time available
under the new law to consider and prepare for the transition from the
``old'' programs to the new IHBG program.
The deadline for submission of an IHP is November 3, 1997. Indian
tribes wishing to participate in the new IHBG program in FY 1998 should
familiarize themselves with the transition requirements established in
the Federal Register notices described above.

III. Negotiated Rulemaking

As described above, section 106(b) of NAHASDA requires that HUD
issue final implementing regulations no later than September 1, 1997.
Further, section 106(b)(2)(A) of NAHASDA provides that all regulations
required under NAHASDA be issued according to the negotiated rulemaking
procedure under subchapter III of chapter 5 of title 5, United States
Code. The rulemaking procedure referenced is the Negotiated Rulemaking
Act of 1990 (5 U.S.C. 561-570). Accordingly, the Secretary of HUD
established the Native American Housing Assistance & Self-Determination
Negotiated Rulemaking Committee (Committee) to negotiate and develop a
proposed rule implementing NAHASDA.
Prior to the establishment of the Committee, HUD held a series of
meetings with tribal representatives to discuss the regulatory
implementation of NAHASDA. These meetings were preliminary to the
formal negotiated rulemaking process required by NAHASDA
ing Assistance & Self-Determination
Negotiated Rulemaking Committee (Committee) to negotiate and develop a
proposed rule implementing NAHASDA.
Prior to the establishment of the Committee, HUD held a series of
meetings with tribal representatives to discuss the regulatory
implementation of NAHASDA. These meetings were preliminary to the
formal negotiated rulemaking process required by NAHASDA. The
preliminary meetings provided a valuable exchange of ideas that
assisted in focusing the efforts of the Committee.
The Committee consists of 58 members. Forty-eight of these members
represent geographically diverse small, medium, and large Indian
tribes. There are ten HUD representatives on the Committee.
Additionally, three individuals from the Federal Mediation and
Conciliation Service served as facilitators. While the Committee is
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 and its approved charter. 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. Procedures recommended by
tribal leaders on the negotiated rulemaking process were also adopted
by the Committee. HUD committed to using, to the maximum extent
feasible consistent with its legal obligations, all consensus decisions
as
mmittee define ``consensus'' as general agreement
demonstrated by the absence of expressed disagreement by a Committee
member in regards to a particular issue. Procedures recommended by
tribal leaders on the negotiated rulemaking process were also adopted
by the Committee. 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 further agreed that any
Committee member or his/her constituents could comment on this proposed
rule. The Committee will consider all comments in drafting the final
rule.
In order to complete the proposed regulations by the statutory
deadline, 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. The seven workgroups were: (1) Preamble, Policy and
Definitions; (2) IHP Preparation and Submission, Monitoring, Review and
Compliance; (3) Allocation Formula; (4) Affordable Housing Activities;
(5) Transition Requirements; (6) Alternative Financing; and (7)
Drafting Coordination.
The first meeting of the Committee was in February of 1997. At that
meeting the Committee established workgroups, a protocol for
deliberations and a meeting schedule. 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 the draft regulations produced by the
workgroups. Each of these meetings lasted between four and eight days
mmittee established workgroups, a protocol for
deliberations and a meeting schedule. 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 the draft regulations produced by the
workgroups. Each of these meetings lasted between four and eight days.
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. All of the Committee sessions were announced in the
Federal Register and were open to the public.

IV. Summary of New 24 CFR Part 1000

The rule proposes to implement NAHASDA in a new 24 CFR part 1000.
Part 1000 would be divided into six subparts (A through F), each
describing the regulatory requirements for a different aspect of
NAHASDA. For the convenience of readers, part 1000 is in Question and
Answer format. Additionally, the rule will as much as practicable not
repeat statutory language but rather make reference to specific
provisions. A reader of the rule must therefore have the statute
available while reading the rule.
The full Committee reached consensus on the individual subparts of
this proposed rule. However, the Committee has yet to endorse an
integrated proposed rule. The full Committee asks for public comment on
the workgroup products, and suggestions regarding any modifications
necessary to produce an integrated rule. The full Committee will meet
to consider the public comments and to produce an integrated final
rule.
The following is a brief description of the contents of each
subpart:

Subpart A--General
as yet to endorse an
integrated proposed rule. The full Committee asks for public comment on
the workgroup products, and suggestions regarding any modifications
necessary to produce an integrated rule. The full Committee will meet
to consider the public comments and to produce an integrated final
rule.
The following is a brief description of the contents of each
subpart:

Subpart A--General

Subpart A would contain the legal authority and scope of the
regulations. It would also set forth definitions for key terms used in
the balance of the regulations. Additionally, subpart A would cross-
reference to other applicable Federal laws and regulations. Although
HUD encourages readers to familiarize themselves with all of the
provisions of subpart A, it wishes to highlight the following sections
contained in this subpart:
Section 1000.8. Section 1000.8 provides that HUD may waive any non-
statutory provision of this rule in accordance with 24 CFR 5.110. This
section requires that any waivers be based upon a determination of good
cause. In making this determination, HUD may consider such factors as
undue hardship. Under section 106 of the Department of Housing and
Urban Development Reform Act of 1989 (42 U.S.C. 3545) waivers will be
in writing and published in the Federal Register.
Section 1000.10. Section 1000.10 sets forth the generally
applicable definitions used throughout 24 CFR part 1000. The Committee
has adopted without change many of the definitions set forth in section
4 of NAHASDA. Section 1000.10 proposes to define 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,'' ``Median income,'' ``Near-
elderly persons,'' ``Nonprofit,'' ``Recipient,'' Secretary,''
``State,'' and ``Tribally designated housing entity (TDHE)'' by cross-
referencing to section 4
``Drug-related criminal activity,''
``Elderly families and near-elderly families,'' ``Elderly person,''
``Grant beneficiary,'' ``Indian,'' ``Indian housing plan (IHP),''
``Indian tribe,'' ``Low-income family,'' ``Median income,'' ``Near-
elderly persons,'' ``Nonprofit,'' ``Recipient,'' Secretary,''
``State,'' and ``Tribally designated housing entity (TDHE)'' by cross-
referencing to section 4. Further, the term ``Affordable housing
activities'' is defined by cross-referencing to the list of eligible
activities set forth in section 202 of NAHASDA.
In the case of the definitions of ``Family'' and ``Indian area,''
the Committee determined that it was necessary to make minor clarifying
changes to the statutory definitions in section 4 of NAHASDA.
Specifically, the definition of ``Family'' has been revised to clarify
that the term includes, but is not limited to, the types of families
identified in the statutory definition. Similarly, the Committee has
added a sentence to the statutory definition of ``Indian area'' to
specify that ``[w]henever the term `jurisdiction' is used in NAHASDA it
shall mean `Indian area,' except where specific reference is made to
the jurisdiction of a court.''
Section 4 of NAHASDA required that the Committee develop additional
language expanding upon the statutory definitions of ``Income'' and
``Person with disabilities.'' In both cases, the Committee elected to
use the language of existing HUD definitions codified in title 24 of
the CFR.
Section 4 of NAHASDA defines ``Income'' to mean income from all
sources of each member of the household ``as determined in accordance
with criteria prescribed by'' HUD. The Committee chose to use the term
``annual income,'' rather than the term ``income.'' Further, the
Committee elected to adopt the income criteria set forth in HUD's
current Indian housing program regulations at 24 CFR part 950
ction 4 of NAHASDA defines ``Income'' to mean income from all
sources of each member of the household ``as determined in accordance
with criteria prescribed by'' HUD. The Committee chose to use the term
``annual income,'' rather than the term ``income.'' Further, the
Committee elected to adopt the income criteria set forth in HUD's
current Indian housing program regulations at 24 CFR part 950.
Accordingly, the definition of ``Annual income'' set forth in this
proposed rule is nearly identical to the existing definition of the
term at 24 CFR 950.102.
The statutory definition of ``Person with disabilities'' requires a
regulatory definition of the term ``physical, mental, or emotional
impairment.'' The Committee elected to model this definition on the
definition of ``physical or mental impairment'' set forth in HUD's
regulations implementing section 504 of the Rehabilitation Act of 1973,
as amended (29 U.S.C. 794) (24 CFR part 8). Although the definition of
``physical, mental, or emotional impairment'' contained in this
proposed rule makes several minor editorial changes to the definition
of ``physical or mental impairment'' at 24 CFR 8.3, these changes do
not alter the intent or meaning of the definition in part 8.
The definitions of ``Annual contributions contract (ACC)'' and
``Indian housing authority (IHA)'' set forth in this proposed rule are
also modelled on the existing definitions of these terms in 24 CFR part
950.
Section 1000.12. This section sets forth the nondiscrimination
requirements which are applicable to NAHASDA. Specifically,
Sec. 1000.12 provides that the following civil right authorities are
applicable to NAHASDA: (1) The requirements of the Age Discrimination
Act of 1975 (42 U.S.C.
forth in this proposed rule are
also modelled on the existing definitions of these terms in 24 CFR part
950.
Section 1000.12. This section sets forth the nondiscrimination
requirements which are applicable to NAHASDA. Specifically,
Sec. 1000.12 provides that the following civil right authorities are
applicable to NAHASDA: (1) 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; (2)
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and HUD's
regulations at 24 CFR part 8; and (3) title II of the Civil Rights Act
of 1968 (25 U.S.C. 1301-1303), to the extent such title is applicable,
and other applicable Federal civil rights statutes. Additionally, this
section 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.) do not apply to actions by Indian tribes under section
201(b) of NAHASDA.
HUD has revised the regulatory language developed by the Committee
by adding the reference to title II of the Civil Rights Act of 1968.
This addition reflects the statutory language of section 102(c)(5)(A)
of NAHASDA, which requires that recipients include a certification of
compliance with title II in their IHP.
Section 1000.14. This section sets forth the relocation and real
property acquisition policies which are applicable to NAHASDA. Except
for minor editorial and formatting changes, Sec. 1000.14 is identical
to the corresponding provision in HUD's regulations for the Indian
Community Development Block Grant program (See 24 CFR 953.602).
Section 1000.16. This section describes the labor standards
applicable to NAHASDA. Section 1000.16 provides, in accordance with
section 104(b) of NAHASDA, that contracts and agreements for
assistance, sale or lease under NAHASDA must require prevailing wage
rates determined under the Davis-Bacon Act (40 U.S.C
ions for the Indian
Community Development Block Grant program (See 24 CFR 953.602).
Section 1000.16. This section describes the labor standards
applicable to NAHASDA. Section 1000.16 provides, in accordance with
section 104(b) of NAHASDA, that contracts and agreements for
assistance, sale or lease under NAHASDA must require prevailing wage
rates determined under the Davis-Bacon Act (40 U.S.C. 276a-276a-5) to
be paid to laborers and mechanics employed in the development of
affordable housing projects. HUD has added a sentence to the regulatory
language developed by the Committee to reflect an additional statutory
requirement. Specifically, Sec. 1000.16 now provides that section
104(b) also mandates that these contracts and agreements require that
prevailing wages determined 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 such projects.
Section 1000.20. Section 1000.20 provides that an Indian tribe is
not required to assume environmental review responsibilities. Rather,
this proposed rule states 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. HUD has added a sentence to the
regulatory language adopted by the Committee to clarify that a HUD
environmental review must be completed for any 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 to such activities with respect to the property.
HUD's resources may be such that it may be unable to undertake
environmental reviews if the Indian tribe chooses not to assume
environmental review responsibilities. HUD needs to examine its
resources and further consider this issue
recipient may acquire,
rehabilitate, convert, lease, repair or construct property, or commit
HUD or local funds to such activities with respect to the property.
HUD's resources may be such that it may be unable to undertake
environmental reviews if the Indian tribe chooses not to assume
environmental review responsibilities. HUD needs to examine its
resources and further consider this issue. In addition, HUD is
reviewing whether a conflict exists between the 60 day maximum period
permitted in section 103(a)(2) of NAHASDA for HUD to review the IHP
and, in cases where an Indian tribe declines to assume environmental
review responsibilities and an activity requires an Environmental
Impact Statement (EIS), the greater time required for finalizing EISs
prepared and circulated for review and comment in accordance with the
National Environmental Policy Act of 1969 prior to a Federal decision
being made (including a general minimum of 90 days between publication
of a notice of draft EIS and the agency decision). HUD is also
reviewing possible options for reconciling the conflict, if any.
Accordingly, HUD wishes to alert the public that it may not be legally
permissible both to provide for a choice and to give full effect to the
requirements of the National Environmental Policy Act of 1969 and
related statutes. In particular, if HUD determines that a statutory
conflict exists, one of the options for reconciling the conflicts may
result in HUD not being able to implement the policy of allowing an
Indian tribe the option of not assuming environmental review for
actions that are subject to the statutory 60 day approval period.
Further, conforming changes will need to be made at the final rule
stage to HUD's regulations at 24 CFR part 58 (Environmental Review
Procedures for Entities Assuming HUD Environmental Responsibilities) to
reflect the environmental review procedures established in new part
1000.
Section 1000.30
suming environmental review for
actions that are subject to the statutory 60 day approval period.
Further, conforming changes will need to be made at the final rule
stage to HUD's regulations at 24 CFR part 58 (Environmental Review
Procedures for Entities Assuming HUD Environmental Responsibilities) to
reflect the environmental review procedures established in new part
1000.
Section 1000.30. This section describes the conflict of interest
provisions applicable to 24 CFR part 1000. Paragraph (a) of
Sec. 1000.30 cross-references to certain requirements of 24 CFR part 85
(Administrative Requirements for Grants and Cooperative Agreements to
State, Local and Federally Recognized Indian Tribal Governments).
Specifically, Sec. 1000.30(a) as adopted by the Committee provided that
``[i]n the procurement of supplies, equipment, construction and
services by recipients and subrecipients, the conflict of interest
provisions of 24 CFR 85.36 or 24 CFR 85.42 (as applicable) shall
apply.'' HUD has added the phrase ``other property'' after the word
``equipment'' in Sec. 1000.30 to clarify that the conflict of interest
provisions in 24 CFR 85.36 and 24 CFR 85.42 apply to property as well
as services.
HUD welcomes public comment on additional ways it may strengthen
the conflict of interest provisions to ensure that affordable housing
activities are conducted effectively without fraud, waste, or
mismanagement. In particular, HUD invites comment on whether the
regulation should require persons who participate in the decision-
making process to recuse themselves from decisions that directly affect
the provision of assistance to themselves or their relatives. During
the public comment period, HUD also will be considering additional ways
to strengthen the conflict of interest provisions to ensure that
affordable housing activities are conducted effectively without fraud,
waste, or mismanagement
ipate in the decision-
making process to recuse themselves from decisions that directly affect
the provision of assistance to themselves or their relatives. During
the public comment period, HUD also will be considering additional ways
to strengthen the conflict of interest provisions to ensure that
affordable housing activities are conducted effectively without fraud,
waste, or mismanagement. Additionally, HUD will be considering whether
the final rule should require persons who participate in the decision-
making process to recuse themselves from decisions that directly affect
the provision of assistance to themselves or their relatives.
Accordingly, the final rule may reflect stronger conflict of interest
provisions than are set forth in this proposed rule based on any public
comments received and HUD's further consideration of the subject
matter.
Section 1000.32. This section provides that HUD may make case-by-
case exceptions to the conflict of interest provisions set forth in
Sec. 1000.30(b). As originally adopted by the Committee, this section
would have permitted an Indian tribe or TDHE to grant exceptions. HUD
has revised the language adopted by the Committee to specify that only
HUD may allow an exception to the conflict of interest provisions. HUD
has determined that this change is necessary to ensure that exceptions
are granted fairly and without abuse. Further, the change conforms
Sec. 1000.32 to its counterpart provision in HUD's regulations
governing the Community Development Block Grant (CDBG) program (see 24
CFR 570.611(d)).
Section 1000.38. This section describes the flood insurance
n to the conflict of interest provisions. HUD
has determined that this change is necessary to ensure that exceptions
are granted fairly and without abuse. Further, the change conforms
Sec. 1000.32 to its counterpart provision in HUD's regulations
governing the Community Development Block Grant (CDBG) program (see 24
CFR 570.611(d)).
Section 1000.38. This section describes the flood insurance

requirements applicable to NAHASDA. Specifically, Sec. 1000.38 provides
that under the Flood Disaster Protection Act of 1973, as amended (42
U.S.C. 4001-4128), a recipient may not permit the use of Federal
financial assistance for acquisition and construction purposes
(including rehabilitation) in an area identified by the Federal
Emergency Management Agency (FEMA) as having special flood hazards
unless certain specified conditions are met.

Subpart B--Affordable Housing Activities

Subpart B would contain the regulations necessary for the
implementation of title II of NAHASDA. Among the topics addressed by
subpart B would be eligible affordable housing activities, low-income
requirements, lease requirements and tenant selection. Although HUD
encourages readers to familiarize themselves with all of the provisions
of subpart B, it wishes to highlight the following sections contained
in this subpart:
Section 1000.104. This section lists the types of families which
are eligible for affordable housing activities under NAHASDA.
Paragraphs (b) and (c) of Sec. 1000.104 set forth the conditions under
which a non low-income Indian family or a non-Indian family may receive
housing assistance under NAHASDA. Such families are presumed to meet
the requirements of Sec. 1000.104 if they are currently residing in
housing assisted under the 1937 Act. HUD has added language to the
regulatory text adopted by the Committee which clarifies that the
presumption applies only if there is no evidence to the contrary.
Sections 1000.106 to 1000.116
on-Indian family may receive
housing assistance under NAHASDA. Such families are presumed to meet
the requirements of Sec. 1000.104 if they are currently residing in
housing assisted under the 1937 Act. HUD has added language to the
regulatory text adopted by the Committee which clarifies that the
presumption applies only if there is no evidence to the contrary.
Sections 1000.106 to 1000.116. Title II of NAHASDA requires HUD
approval of certain eligible affordable housing activities under
NAHASDA. Specifically, section 202(6) of NAHASDA permits recipients to
conduct housing activities under model programs that are designed to
carry out the purposes of NAHASDA and that are specifically approved by
HUD for such purposes. Further, section 201(b)(2) of NAHASDA permits a
recipient to provide certain assistance to non low-income Indian
families with HUD approval.
Sections 1000.106 to 1000.116 of this proposed rule concern HUD
approval of eligible affordable housing activities. These sections
refer to HUD approval of model activities and ``other housing
programs.'' This phrase does not appear in the statutory language of
NAHASDA. HUD interprets the phrase ``other housing programs'' to apply
solely to the provision of assistance to non low-income Indian families
under section 201(b)(2) of NAHASDA.
Section 1000.124. Section 1000.124 provides that a recipient may
charge a low-income rental tenant or homebuyer payments not to exceed
thirty percent of the adjusted income of the family. HUD interprets the
phrase ``homebuyer payments'' to be limited to lease-purchase payments,
such as those in the existing Mutual Help Homeownership Opportunity
Program (See 24 CFR part 950, subpart E).
HUD has made one modification to the regulatory language adopted by
the Committee. That regulation provided that the thirty-percent (30%)
requirement ``applies only to NAHASDA grant amounts.'' HUD has removed
this phrase from Sec
r payments'' to be limited to lease-purchase payments,
such as those in the existing Mutual Help Homeownership Opportunity
Program (See 24 CFR part 950, subpart E).
HUD has made one modification to the regulatory language adopted by
the Committee. That regulation provided that the thirty-percent (30%)
requirement ``applies only to NAHASDA grant amounts.'' HUD has removed
this phrase from Sec. 1000.124 since the statutory limitation on the
amount of the rent and homebuyer payment is not limited to the grant
amounts.
Section 1000.134. Section 1000.134 establishes the conditions under
which a recipient (or an entity funded by the recipient) may demolish
or dispose of Indian housing units owned or operated pursuant to an
Annual Contribution Contract. Paragraph (c) of Sec. 1000.134 provides
that in any disposition sale of a housing unit, the recipient will use
a sale process designed to maximize the sale price. Further,
Sec. 1000.134(c) provides that ``[t]he sale proceeds from the
disposition of any housing unit are program income under NAHASDA and
must be used in accordance with the requirements of NAHASDA and this
part.'' HUD revised this sentence to more closely track the statutory
language of section 104(a)(1)(B) of NAHASDA. As originally adopted by
the Committee, the sentence read: ``The sale proceeds from the
disposition of any housing unit are program income under NAHASDA and
must be used for appropriate purposes under NAHASDA.'' Section
104(a)(1)(B) requires that the recipient use any ``program income for
affordable housing activities in accordance with the provisions of this
Act.''
Section 1000.136. Section 1000.136 describes the insurance
requirements which apply to housing units assisted with NAHASDA grants
ny housing unit are program income under NAHASDA and
must be used for appropriate purposes under NAHASDA.'' Section
104(a)(1)(B) requires that the recipient use any ``program income for
affordable housing activities in accordance with the provisions of this
Act.''
Section 1000.136. Section 1000.136 describes the insurance
requirements which apply to housing units assisted with NAHASDA grants.
Specifically, this section requires that a recipient provide adequate
insurance either by purchasing insurance or by indemnification against
casualty loss by providing insurance in adequate amounts to indemnify
the recipient against loss from fire, weather, and liability claims for
all housing units owned or operated by the recipient. HUD has added a
sentence to the regulatory language adopted by the Committee which
clarifies that these requirements are in addition to the applicable
flood insurance requirements set forth in Sec. 1000.38.
Section 1000.142. Section 205 of NAHASDA sets forth the criteria
for affordable housing under NAHASDA. Among other criteria, section
205(a)(2) requires that affordable housing remain affordable ``for the
remaining useful life of the property (as determined by the
Secretary).'' Section 1000.142 of this proposed rule reflects the
statutory useful life requirement. The Committee developed the
following regulatory language for Sec. 1000.142: ``Each recipient shall
describe in its IHP the useful life of each assisted housing unit in
each of its developments.'' HUD has modified this language by inserting
the phrase ``for Secretarial determination'' after the word ``IHP.''
The addition of this phrase clarifies that through approval of the IHP,
the Secretary will determine the useful life of the affordable housing
as required by section 205.
Section 1000.148. Section 1000.148 describes the information which
must be contained in a notice of eviction or termination
ied this language by inserting
the phrase ``for Secretarial determination'' after the word ``IHP.''
The addition of this phrase clarifies that through approval of the IHP,
the Secretary will determine the useful life of the affordable housing
as required by section 205.
Section 1000.148. Section 1000.148 describes the information which
must be contained in a notice of eviction or termination. The
regulatory language adopted by the Committee provided that ``[t]he
owner or manager will apply the law applicable to the jurisdiction.''
For purposes of clarity, HUD has revised Sec. 1000.148 to more closely
track the statutory requirements set forth in section 207(a)(5) of
NAHASDA. Section 1000.148 now requires that the owner or manager must
give adequate written notice of termination of the lease, in accordance
with the period of time required under State, tribal, or local law.
Further, Sec. 1000.148 provides that, notwithstanding any State,
tribal, or local law, the notice must inform the resident of the
opportunity, prior to any hearing or trial, to examine any relevant
documents, records, or regulations directly related to the eviction or
termination.
Section 1000.152. Section 1000.152 tracks the statutory language of
section 208(c) of NAHASDA. Section 208(c) concerns the recipient's use
of criminal conviction information on adult applicants and tenants.
Section 1000.152 provides that recipients shall use this information
solely for purposes of applicant screening, lease enforcement and
eviction actions. Further, Sec. 1000.152 provides that ``[t]he
information may be disclosed only to a person who has a job related
need for the information and who is an officer, employee, or authorized
representative of the recipient or the owner of housing assisted under
NAHASDA.'' HUD revised the regulatory language developed by the
Committee by
applicant screening, lease enforcement and
eviction actions. Further, Sec. 1000.152 provides that ``[t]he
information may be disclosed only to a person who has a job related
need for the information and who is an officer, employee, or authorized
representative of the recipient or the owner of housing assisted under
NAHASDA.'' HUD revised the regulatory language developed by the
Committee by

inserting the phrase ``or the owner'' after the word ``recipient.'' The
addition of this phrase conforms Sec. 1000.152 to section 208(c) of
NAHASDA, which authorizes the release of criminal conviction
information to an officer, employee, or authorized representative of an
owner.
Section 1000.156. This section sets forth the housing development
cost limits applicable to ensure modest housing construction under
NAHASDA. Section 1000.156 provides that, unless approved by HUD, the
total development cost (TDC) per unit will be no more than 100% of the
TDC. HUD has added a sentence to the regulatory language adopted by the
Committee to clarify that TDC shall include the costs of making a
project meet the accessibility requirements of 24 CFR part 8
(Nondiscrimination Based on Handicap in Federally Assisted Programs and
Activities of the Department of Housing and Urban Development) for new
construction and alterations of existing housing facilities.

Subpart C--Indian Housing Plan (IHP)

Subpart C would set forth the regulatory requirements concerning
the preparation, submission, and review of an Indian tribe's IHP.
Although HUD encourages readers to familiarize themselves with all of
the provisions of subpart C, it wishes to highlight the following
sections contained in this subpart:
Section 1000.214. This section provides that there are no separate
IHP requirements for small Indian tribes. The IHP requirements set
forth in subpart C are minimal
aration, submission, and review of an Indian tribe's IHP.
Although HUD encourages readers to familiarize themselves with all of
the provisions of subpart C, it wishes to highlight the following
sections contained in this subpart:
Section 1000.214. This section provides that there are no separate
IHP requirements for small Indian tribes. The IHP requirements set
forth in subpart C are minimal. Further, HUD has general authority
under section 101 of NAHASDA to waive IHP requirements when an Indian
tribe cannot comply with IHP requirements due to circumstances beyond
its control. The waiver authority under section 101 provides
flexibility to address the needs of every Indian tribe, including small
Indian tribes. The original regulatory language for Sec. 1000.214
developed by the Committee referred to the Secretary's authority under
section 101 to waive IHP requirements for an ``Indian tribe or TDHE.''
HUD has revised Sec. 1000.214 to clarify that the section 101 waiver
provision applies only to Indian tribes.
Section 1000.216. Section 102(c)(5) of NAHASDA requires that a
recipient include certain certifications of compliance in its IHP.
Among other certifications, the recipient must certify that it will
comply with title II of the Civil Rights Act of 1968 in carrying out
NAHASDA, to the extent that title II is applicable, and other
applicable Federal statutes. Section 101(b)(2) of NAHASDA permits HUD
to waive these certification requirements if HUD determines that an
Indian tribe has not complied or cannot comply with the certification
requirements due to circumstances beyond the control of the Indian
tribe. Section 1000.216 cross-references to this statutory provision.
HUD has added a sentence to the regulatory text adopted by the
Committee which clarifies that although HUD may waive the certification
requirement, the recipient must still comply with the nondiscrimination
requirements listed in Sec. 1000.12.
Section 1000.226
uirements due to circumstances beyond the control of the Indian
tribe. Section 1000.216 cross-references to this statutory provision.
HUD has added a sentence to the regulatory text adopted by the
Committee which clarifies that although HUD may waive the certification
requirement, the recipient must still comply with the nondiscrimination
requirements listed in Sec. 1000.12.
Section 1000.226. Section 1000.226 of this proposed rule sets forth
a non-exclusive list of eligible administrative and planning expenses
under the IHBG program. HUD has made two revisions to the list
developed by the Committee. First, HUD has removed staff and overhead
costs directly related to carrying out affordable housing activities
from the list of eligible expenses. These costs do not constitute
administrative and planning expenses. Additionally, HUD has amended the
list by adding the expenses related to the collection of data necessary
to challenge the data used in the IHBG formula. This addition reflects
the language of Sec. 1000.320(a), which provides that the collection of
data for this purpose is an allowable cost for IHBG funds.
Section 101(h) of NAHASDA requires that HUD authorize, by
regulation, each recipient to use a percentage of its NAHASDA grant
amounts for administrative and planning expenses relating to carrying
out NAHASDA and activities assisted with such amounts. This proposed
rule, however, does not set forth such a percentage. HUD is considering
the appropriate percentage which it is statutorily required to
establish at the final rule stage.
Section 1000.228. Section 101(c) of NAHASDA prohibits HUD from
awarding NAHASDA grant funds to a recipient unless the governing body
of the locality within which any affordable housing to be assisted with
grant amounts will be situated has entered into a local cooperation
agreement with the recipient
ppropriate percentage which it is statutorily required to
establish at the final rule stage.
Section 1000.228. Section 101(c) of NAHASDA prohibits HUD from
awarding NAHASDA grant funds to a recipient unless the governing body
of the locality within which any affordable housing to be assisted with
grant amounts will be situated has entered into a local cooperation
agreement with the recipient. Section 1000.228 of this proposed rule
provides that the requirement for a local cooperation agreement
``applies to assistance of rental and lease-purchase homeownership
units under the 1937 Act or NAHASDA which are owned by the Indian tribe
or TDHE.'' HUD has revised the regulatory language developed by the
Committee by using the word ``assistance'' rather than ``development.''
This change clarifies that section 101(c) covers all assistance, and
not just development.
HUD also notes that a cooperation agreement is not required in
those cases where the affordable housing will be located on an Indian
reservation and the Indian tribe is the recipient, since a tribal
government could not enter into an agreement with itself.
Section 1000.230. Section 101(d)(1) of NAHASDA requires that
affordable housing assisted with NAHASDA grant amounts be exempt from
all real or personal property taxes levied or imposed by any State,
tribe, city, county, or other political subdivision. Section 1000.230
of this proposed rule provides that the tax-exemption requirement
``applies only to assistance of rental and lease-purchase homeownership
units under the 1937 Act or NAHASDA which are owned by an Indian tribe
or TDHE.'' As is the case with Sec. 1000.228, HUD has revised
Sec. 1000.230 by substituting the word ``development'' with the word
``assistance.'' This revision clarifies that section 101(d)(1) applies
to all assistance of rental and lease-purchase homeownership units.

Subpart D--Allocation Formula
-purchase homeownership
units under the 1937 Act or NAHASDA which are owned by an Indian tribe
or TDHE.'' As is the case with Sec. 1000.228, HUD has revised
Sec. 1000.230 by substituting the word ``development'' with the word
``assistance.'' This revision clarifies that section 101(d)(1) applies
to all assistance of rental and lease-purchase homeownership units.

Subpart D--Allocation Formula

Subpart D would implement title III of NAHASDA. Specifically, it
would establish the components, definitions, and data sources used in
the NAHASDA block grant formula. The allocation formula is set forth in
an appendix to this proposed rule. Although the formula is currently
set forth in an appendix, it may be incorporated in the regulatory text
at the final rule stage.

Subpart E--Federal Guarantees for Financing of Tribal Housing
Activities

Subpart E would describe the regulatory requirements necessary for
the implementation of title VI of NAHASDA. This subpart would establish
the terms and conditions by which HUD will guarantee the obligations
issued by an Indian tribe or TDHE for the purposes of financing
affordable housing activities.
Subpart E does not contain a provision setting forth the
requirements for eligible lenders. HUD believes that the establishment
of lender eligibility requirements will help to ensure the stability
and integrity of the title VI loan guarantee program. HUD proposes the
use of the lender eligibility criteria used in the Indian loan
guarantee program authorized by section 184 of the Housing and
Community Development Act of 1992 (Pub. L. 102-550, approved October
28, 1992) (currently codified at 24 CFR part 955). The section 184
program has been highly successful in
to ensure the stability
and integrity of the title VI loan guarantee program. HUD proposes the
use of the lender eligibility criteria used in the Indian loan
guarantee program authorized by section 184 of the Housing and
Community Development Act of 1992 (Pub. L. 102-550, approved October
28, 1992) (currently codified at 24 CFR part 955). The section 184
program has been highly successful in

providing access to sources of private financing to Indian families and
Indian housing authorities who otherwise could not acquire housing
financing because of the unique legal status of Indian trust land.
Accordingly, HUD believes the section 184 lender eligibility
requirements provide a good model for loan guarantees under title VI of
NAHASDA. HUD invites public comment on the proposed lender eligibility
criteria. The regulatory provision proposed by HUD would read as
follows:

Who Are Eligible Lenders Under This Subpart?

The loan shall be made only by a lender approved by and meeting
qualifications established in this subpart, except that loans
otherwise insured or guaranteed by any agency of the Federal
Government, or made by an organization of Indians from amounts
borrowed from the United States shall not be eligible for guarantee
under this part. The following lenders are deemed to be approved
under this part:
(a) Any mortgagee approved by HUD for participation in the
single family mortgage insurance program under title II of the
National Housing Act.
(b) Any lender whose housing loans under chapter 37 of title 38,
United States Code are automatically guaranteed pursuant to section
1802(d) of such title.
(c) Any lender approved by the Department of Agriculture to make
guaranteed loans for single family housing under the Housing Act of
1949.
ation in the
single family mortgage insurance program under title II of the
National Housing Act.
(b) Any lender whose housing loans under chapter 37 of title 38,
United States Code are automatically guaranteed pursuant to section
1802(d) of such title.
(c) Any lender approved by the Department of Agriculture to make
guaranteed loans for single family housing under the Housing Act of
1949.
(d) Any other lender that is supervised, approved, regulated, or
insured by any agency of the Federal Government.

HUD encourages readers to familiarize themselves with all of the
provisions of subpart E; however, it wishes to highlight the following
section contained in this subpart:
Section 1000.408. This section sets forth the conditions which HUD
will prescribe when providing a guarantee for notes or other
obligations issued by an Indian tribe. The regulatory language
developed by the Committee would have authorized a repayment period in
excess of twenty years if the period was commercially reasonable or was
an industry standard. HUD has revised Sec. 1000.408 to provide that the
repayment period may not exceed twenty years. This change is based on
HUD's legal interpretation of section 601(c) of NAHASDA which provides
that HUD ``may not deny a guarantee under [title VI of NAHASDA] on the
basis of the proposed repayment period for the note or other obligation
unless the period is more than 20 years or the Secretary determines
that the period causes the guarantee to constitute an unacceptable
financial risk.'' HUD has determined that the statutory language of
section 601(c) prohibits a repayment period of greater than 20 years.

Subpart F--Recipient Monitoring, Oversight and Accountability
e proposed repayment period for the note or other obligation
unless the period is more than 20 years or the Secretary determines
that the period causes the guarantee to constitute an unacceptable
financial risk.'' HUD has determined that the statutory language of
section 601(c) prohibits a repayment period of greater than 20 years.

Subpart F--Recipient Monitoring, Oversight and Accountability

Subpart F would implement title IV of NAHASDA. Among other topics,
this subpart would address monitoring of compliance, performance
reports, HUD and tribal review, audits, and remedies for noncompliance.
Sections 1000.504 and 1000.524 of this subpart discuss performance
measures. The newness of the IHBG program makes it difficult to
establish detailed performance objectives. As the IHBG program evolves,
and greater programmatic experience is developed, it will be possible
to set forth the necessary performance measurements with greater
clarity and detail.
Although HUD encourages readers to familiarize themselves with all
of the provisions of subpart F, it wishes to highlight the following
sections contained in this subpart:
Section 1000.502. This section describes the monitoring
responsibilities of the recipient, the grant beneficiary and HUD under
NAHASDA. HUD has revised the language adopted by the Committee to
reference the periodic reviews required under the applicable
nondiscrimination requirements set forth in Sec. 1000.12 (See
Sec. 1000.502(c)).
Section 1000.508. This section provides that if the recipient's
monitoring activities identify programmatic concerns, it must take one
of several specified corrective actions. As originally adopted by the
Committee, this section listed the actions the recipient ``may'' take
to remedy identified concerns. HUD has strengthened this language to
specify that a recipient is required to take one of the listed remedial
actions.
Section 1000.510
the recipient's
monitoring activities identify programmatic concerns, it must take one
of several specified corrective actions. As originally adopted by the
Committee, this section listed the actions the recipient ``may'' take
to remedy identified concerns. HUD has strengthened this language to
specify that a recipient is required to take one of the listed remedial
actions.
Section 1000.510. This section sets forth the Indian tribe's
responsibility if the tribal monitoring identifies compliance concerns.
The language adopted by the Committee provided that ``[t]he Indian
tribe should ensure that appropriate corrective action is taken.'' HUD
has strengthened and clarified this provision by revising it to read:
``The Indian tribe's responsibility is to ensure that appropriate
corrective action is taken.''
Section 1000.526. This section lists the types of information HUD
may use in conducting a performance review of the recipient. HUD has
expanded the list adopted by the Committee to provide that HUD may also
consider ``any other relevant information'' (see Sec. 1000.526(i)).
Section 1000.528. This language in this section is closely modelled
on section 405(c) of NAHASDA. Specifically, Sec. 1000.528 provides that
HUD may make appropriate adjustments in the amount of the annual grants
under NAHASDA in accordance with the finding of HUD pursuant to reviews
and audits under section 405 of NAHASDA. HUD may adjust, reduce, or
withdraw grant amounts, or take other action as appropriate in
accordance with the reviews and audits, except that grant amounts
already expended on affordable housing activities may not be recaptured
or deducted from future assistance provided on behalf of an Indian
tribe.
HUD added Sec. 1000.528 subsequent to the completion of the
negotiated rulemaking meetings. Accordingly, the Committee did not have
the opportunity to approve the language of Sec. 1000.528
ance with the reviews and audits, except that grant amounts
already expended on affordable housing activities may not be recaptured
or deducted from future assistance provided on behalf of an Indian
tribe.
HUD added Sec. 1000.528 subsequent to the completion of the
negotiated rulemaking meetings. Accordingly, the Committee did not have
the opportunity to approve the language of Sec. 1000.528. HUD believes
the addition of this provision is necessary to provide Indian tribes
with a fuller picture of the review and audit authority provided to HUD
by NAHASDA. HUD emphasizes that the language of Sec. 1000.528 is nearly
identical to the language of section 405(c). Section 1000.528 does not
establish any requirements or procedures in addition to those
authorized under NAHASDA.
Section 1000.532. This section sets forth the hearing requirements
that will be used under NAHASDA. HUD has revised the language adopted
by the Committee to clarify that for hearings under section 504 of the
Rehabilitation Act of 1973 or the Age Discrimination Act of 1975, the
procedures in 24 CFR part 180 must be used.
Section 1000.538. This section describes the recipient audits
required under NAHASDA. Specifically, Sec. 1000.538 provides that a
recipient must comply with the requirements of the Single Audit Act
which requires annual audits of recipients that expend Federal funds
equal to or in excess of $300,000. The audit shall be made by an
independent auditor in accordance with generally accepted government
auditing standards covering financial and compliance audits.

V. Nonconsensus Provisions and Rationale

The Committee was unable to reach consensus on five issues. On four
of the issues, HUD and tribal representatives disagreed on proposed
regulatory language. These issues involve legal determinations which
must be made by HUD. In the case of the allocation formula, tribal
representatives could not reach consensus on the use of a performance
variable. The following
us Provisions and Rationale

The Committee was unable to reach consensus on five issues. On four
of the issues, HUD and tribal representatives disagreed on proposed
regulatory language. These issues involve legal determinations which
must be made by HUD. In the case of the allocation formula, tribal
representatives could not reach consensus on the use of a performance
variable. The following

section of the preamble summarizes these issues and presents the
different positions. The summaries were drafted by proponents of the
position on the Drafting Coordination Workgroup.

1. Issue: Indian Preference for Procurement

Is one time HUD approval necessary for alternative Indian
Preference methods for procurement? The Committee drafted a proposed
regulatory provision on this issue which was not approved by the
Committee. The proposed provision is reproduced below.
Tribal Position: The tribes believe that a certification of
compliance with the requirements of section 7(b) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b) is
sufficient to satisfy the requirements for alternative Indian
Preference methods.
HUD's Position: HUD approval for alternative Indian Preference
methods is intended to ensure that the minimum procurement requirements
of 24 CFR 85.36 are met in the implementation of alternative methods of
providing Indian Preference.
The proposed regulatory provision which was not approved reads:

What Indian Preference Requirements Are Applicable?
or alternative Indian
Preference methods.
HUD's Position: HUD approval for alternative Indian Preference
methods is intended to ensure that the minimum procurement requirements
of 24 CFR 85.36 are met in the implementation of alternative methods of
providing Indian Preference.
The proposed regulatory provision which was not approved reads:

What Indian Preference Requirements Are Applicable?

(a) Applicability. HUD has determined that grants under this
part are subject to Section 7(b) of the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450b). Section 7(b) provides
that any contract, subcontract, grant or subgrant pursuant to an act
authorizing grants to Indian organizations or for the benefit of
Indians shall require that, to the greatest extent feasible:
(1) Preference and opportunities for training and employment
shall be given to Indians, and
(2) Preference in the award of contracts and subcontracts shall
be given to Indian organizations and Indian-owned economic
enterprises as defined in section 3 of the Indian Financing Act of
1974 (25 U.S.C. 1452).
(b) Definitions.
(1) The Indian Self-Determination and Education Assistance Act
defines ``Indian'' to mean a person who is a member of an Indian
tribe and defines ``Indian tribe'' to mean any Indian tribe, band,
nation, or other organized group or community including any Alaska
Native village or regional or village urban corporation as defined
or established pursuant to the Alaska Native Claims Settlement Act,
which is recognized as eligible for the special programs and
services provided by the United States to Indians because of their
status as Indians.
ndian tribe'' to mean any Indian tribe, band,
nation, or other organized group or community including any Alaska
Native village or regional or village urban corporation as defined
or established pursuant to the Alaska Native Claims Settlement Act,
which is recognized as eligible for the special programs and
services provided by the United States to Indians because of their
status as Indians.
(2) In section 3 of the Indian Financing Act of 1974 ``economic
enterprise'' is defined as any Indian--owned commercial, industrial,
or business activity established or organized for the purpose of
profit, except that Indian ownership must constitute not less than
51 percent of the enterprise. This act defines ``Indian
organization'' to mean the governing body of any Indian tribe or
entity established or recognized by such governing body.
(c) Preference in administration of grant. To the greatest
extent feasible, preference and opportunities for training and
employment in connection with the administration of grants awarded
under this part shall be given to Indians.
(d) Preference in contracting. To the greatest extent feasible,
recipients shall give preference in the award of contracts for
projects funded under this part to Indian organizations and Indian-
owned economic enterprises.
(1) Each recipient shall:
(i) Advertise for bids or proposals limited to qualified Indian
organizations and Indian-owned enterprises; or
(ii) Use a two-stage preference procedure, as follows:
(A) Stage 1. Invite or otherwise solicit Indian-owned economic
enterprises to submit a statement of intent to respond to a bid
announcement or request for proposals limited to Indian-owned firms.
(B) Stage 2. If responses are received from more than one Indian
enterprise found to be qualified, advertise for bids or proposals
limited to Indian organizations and Indian-owned economic
enterprises; or
age 1. Invite or otherwise solicit Indian-owned economic
enterprises to submit a statement of intent to respond to a bid
announcement or request for proposals limited to Indian-owned firms.
(B) Stage 2. If responses are received from more than one Indian
enterprise found to be qualified, advertise for bids or proposals
limited to Indian organizations and Indian-owned economic
enterprises; or
(iii) Develop, subject to HUD one-time approval, the recipient's
own method of providing preference. An Indian preference policy
which was previously approved by HUD for a recipient under the
provisions of 24 CFR part 1003 will meet the requirements of this
section.
(2) If the recipient selects a method of providing preference
that results in fewer than two responsible qualified organizations
or enterprises submitting a statement of intent, a bid or a proposal
to perform the contract at a reasonable cost, then the recipient
shall:
(i) Re-advertise the contract, using any of the methods
described in paragraph (d)(1) of this section; or
(ii) Re-advertise the contract without limiting the
advertisement for bids or proposals to Indian organizations and
Indian-owned economic enterprises; or
(iii) If one approvable bid or proposal is received, request
Area ONAP review and approval of the proposed contract and related
procurement documents, in accordance with 24 CFR 85.36, in order to
award the contract to the single bidder or offeror.
(3) Procurements that are within the dollar limitations
established for small purchases under 24 CFR 85.36 need not follow
the formal bid or proposal procedures of paragraph (d) of this
section, since these procurements are governed by the small purchase
procedures of 24 CFR 85.36. However, a recipient's small purchase
procurement shall, to the greatest extent feasible, provide Indian
preference in the award of contracts.
n the dollar limitations
established for small purchases under 24 CFR 85.36 need not follow
the formal bid or proposal procedures of paragraph (d) of this
section, since these procurements are governed by the small purchase
procedures of 24 CFR 85.36. However, a recipient's small purchase
procurement shall, to the greatest extent feasible, provide Indian
preference in the award of contracts.
(4) All preferences shall be publicly announced in the
advertisement and bidding or proposal solicitation documents and the
bidding and proposal documents.
(5) A recipient, at its discretion, may require information of
prospective contractors seeking to qualify as Indian organizations
or Indian-owned economic enterprises. Recipients may require
prospective contractors to include the following information before
submitting a bid or proposal, or at the time of submission:
(i) Evidence showing fully the extent of Indian ownership and
interest;
(ii) Evidence of structure, management and financing affecting
the Indian character of the enterprise, including major subcontracts
and purchase agreements; materials or equipment supply arrangements;
and management salary or profit-sharing arrangements; and evidence
showing the effect of these on the extent of Indian ownership and
interest; and
(iii) Evidence sufficient to demonstrate to the satisfaction of
the recipient that the prospective contractor has the technical,
administrative, and financial capability to perform contract work of
the size and type involved.
(6) The recipient shall incorporate the following clause
(referred to as the Section 7(b) clause) in each contract awarded in
connection with a project funded under this part:
vidence sufficient to demonstrate to the satisfaction of
the recipient that the prospective contractor has the technical,
administrative, and financial capability to perform contract work of
the size and type involved.
(6) The recipient shall incorporate the following clause
(referred to as the Section 7(b) clause) in each contract awarded in
connection with a project funded under this part:
(i) The work to be performed under this contract is on a project
subject to Section 7(b) of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b) (Indian Act). Section 7(b)
requires that to the greatest extent feasible (A) preferences and
opportunities for training and employment shall be given to Indians
and (B) preferences in the award of contracts and subcontracts shall
be given to Indian organizations and Indian-owned economic
enterprises.
(ii) The parties to this contract shall comply with the
provisions of Section 7(b) of the Indian Act.
(iii) In connection with this contract, the contractor shall, to
the greatest extent feasible, give preference in the award of any
subcontracts to Indian organizations and Indian-owned economic
enterprises, and preferences and opportunities for training and
employment to Indians.
(iv) The contractor shall include this Section 7(b) clause in
every subcontract in connection with the project, and shall, at the
direction of the recipient, take appropriate action pursuant to the
subcontract upon a finding by the recipient or HUD that the
subcontractor has violated the Section 7(b) clause of the Indian
Act.
erences and opportunities for training and
employment to Indians.
(iv) The contractor shall include this Section 7(b) clause in
every subcontract in connection with the project, and shall, at the
direction of the recipient, take appropriate action pursuant to the
subcontract upon a finding by the recipient or HUD that the
subcontractor has violated the Section 7(b) clause of the Indian
Act.
(e) Complaint procedures. The following complaint procedures are
applicable to complaints arising out of any of the methods of
providing for Indian preference contained in this part, including
alternate methods enacted and approved in a manner described in this
section.
(1) Each complaint shall be in writing, signed, and filed with
the recipient.
(2) A complaint must be filed with the recipient no later than
20 calendar days from the date of the action (or omission) upon
which the complaint is based.
(3) Upon receipt of a complaint, the recipient shall promptly
stamp the date and time of receipt upon the complaint, and
immediately acknowledge its receipt.
(4) Within 20 calendar days of receipt of a complaint, the
recipient shall either meet, or communicate by mail or telephone,
with

the complainant in an effort to resolve the matter. The recipient
shall make a determination on a complaint and notify the
complainant, in writing, within 30 calendar days of the submittal of
the complaint to the recipient. The decision of the recipient shall
constitute final administrative action on the complaint.

2. Issue: Interest Income

Can interest income earned on advances of grant funds be retained
by a recipient?
Tribal Position: For the following reasons, the tribal position is
that recipients can retain interest income earned on advances of
NAHASDA grant funds to be used for affordable housing activities:
cision of the recipient shall
constitute final administrative action on the complaint.

2. Issue: Interest Income

Can interest income earned on advances of grant funds be retained
by a recipient?
Tribal Position: For the following reasons, the tribal position is
that recipients can retain interest income earned on advances of
NAHASDA grant funds to be used for affordable housing activities:
(a) Under Public Law 93-638 self-determination contracts and self-
governance compacts, federal policy allows tribes to receive lump-sum
distributions for their programs and to keep any interest they earn on
such funds before expending the funds on their programs. The Congress
directed through NAHASDA that ``Federal assistance to meet these
responsibilities [federal housing responsibilities to Indians] 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 TDHEs under authorities
similar to those accorded Indian tribes in Public Law 93-638 (25 U.S.C.
450 et seq.)'' (NAHASDA section 2(7)--Congressional Findings). The
tribal representatives believe that this language authorizes HUD to
make NAHASDA grant amounts available to recipients in lump-sum
distributions and that recipients can then keep any interest earned on
this money before the recipient expends the money on eligible
affordable housing activities.
in Public Law 93-638 (25 U.S.C.
450 et seq.)'' (NAHASDA section 2(7)--Congressional Findings). The
tribal representatives believe that this language authorizes HUD to
make NAHASDA grant amounts available to recipients in lump-sum
distributions and that recipients can then keep any interest earned on
this money before the recipient expends the money on eligible
affordable housing activities.
(b) The tribal representatives also believe that NAHASDA expressly
authorizes recipients to invest grant amounts and retain any interest.
NAHASDA states: ``A recipient may invest grant amounts for the purposes
of carrying out affordable housing activities in investment securities
and other obligations as approved by the Secretary'' (NAHASDA section
204(b)).
HUD's Position: HUD believes that the Congressional findings in
NAHASDA do not overcome the longstanding opinions of the Comptroller
General that recipients may not augment appropriation amounts by
earning interest on grant funds pending disbursement for a program
purpose and that interest earned on grant advances belongs to the
Federal Government. A more explicit statutory provision is needed which
authorizes the recipient to draw down grant funds in a lump sum and to
retain any interest earned.
HUD construes section 204(b) of NAHASDA consistent with the above
stated opinions of the Comptroller General. Accordingly, the statute
permits recipients to invest grant amounts for the purposes of carrying
out affordable housing activities, but this does not permit recipients
to invest grant funds solely for the purpose of earning interest to
augment the grant amount.
A workgroup of the Committee developed the following definition of
``Program Income'' but HUD could not agree on the underlined language:
dingly, the statute
permits recipients to invest grant amounts for the purposes of carrying
out affordable housing activities, but this does not permit recipients
to invest grant funds solely for the purpose of earning interest to
augment the grant amount.
A workgroup of the Committee developed the following definition of
``Program Income'' but HUD could not agree on the underlined language:

(1) Program income is defined as any income that is realized
from the disbursements of grant amounts. Program income includes
income from fees for services performed from the use of real or
rental of real or personal property acquired with grant funds, from
the sale of commodities or items developed, acquired, etc. with
grant funds, and from payments of principal and interest on loans
made with grant funds. Program income includes interest income
earned on grant funds prior to disbursement.
(2) Any program income over the amount of $250 per annum can be
retained by a recipient provided it is used for affordable housing
activities in accordance with section 202 of NAHASDA. Any program
income realized that is less than $250 per annum shall be excluded
from consideration as program income. Such funds may be retained but
are not classified and treated as program income.
(3) If program income is realized from an eligible activity
funded with both grant funds as well as other funds, i.e., funds
that are not grant funds, then the amount of program income realized
will be based on a percentage calculation that represents the
proportional share of funds provided for the activity generating the
program income that are grant funds.
d and treated as program income.
(3) If program income is realized from an eligible activity
funded with both grant funds as well as other funds, i.e., funds
that are not grant funds, then the amount of program income realized
will be based on a percentage calculation that represents the
proportional share of funds provided for the activity generating the
program income that are grant funds.
(4) Costs incident to the generation of program income shall be
deducted from gross income to determine program income.

3. Issue: Reducing Grant Amounts

Should HUD be allowed to reduce, adjust, or withdraw NAHASDA grant
funds without giving notice and a hearing to a recipient?
Tribal Position: Tribal representatives felt that before the
Secretary takes any actions to adjust, reduce, or withdraw grant
amounts the Secretary must comply with the due process requirements set
forth in section 401 of NAHASDA to give a recipient reasonable notice
and an opportunity for a hearing.
HUD's Position: Section 405(c) of NAHASDA expressly permits HUD to
adjust, reduce, or withdraw grant amounts in accordance with HUD's
review and audits of recipients. This authority is in addition to the
authority in section 401 to take actions based on the recipient's
substantial noncompliance with the requirements of NAHASDA.

4. Issue: Substantial Noncompliance

How is substantial noncompliance defined under NAHASDA section
401(a) before the Secretary may terminate, reduce, or limit the
availability of payments under NAHASDA or replace the TDHE?
Tribal Position: The tribal representatives proposed a definition
for substantial noncompliance, as follows:
For HUD to conclude that a recipient has failed to comply
substantially with any provision of NAHASDA, HUD must find:
(a) An act or omission or series of acts or omissions; or
(b) A pattern or practice or activities constituting willful
noncompliance with the requirements under NAHASDA; or
(c) Criminal activity; or
esentatives proposed a definition
for substantial noncompliance, as follows:
For HUD to conclude that a recipient has failed to comply
substantially with any provision of NAHASDA, HUD must find:
(a) An act or omission or series of acts or omissions; or
(b) A pattern or practice or activities constituting willful
noncompliance with the requirements under NAHASDA; or
(c) Criminal activity; or
(d) Such other activity or activities--
by the recipient which place the housing program at sufficient risk
with the primary objectives of NAHASDA to warrant HUD taking the
remedial actions set forth under sections 401 and 402 of NAHASDA.
HUD's Position: HUD disagrees with the tribal representatives'
proposed definition for four reasons. First, the ``sufficient risk''
standard may prove to be essentially rudderless, leaving to HUD the
question of whether actions pose such a sufficient risk, without any
clear standard. Second, the standard is limited to such risk to the
primary objectives of the law, which term will not necessarily cover
``any provision'' of NAHASDA, as section 401 compels. Third, subjecting
any act or omission to the ``sufficient risk'' standard could have the
unintended effect of converting minor actions to ``substantial'' ones.
Fourth, the test ignores the statute's emphasis on past noncompliance.
This statutory provision, like many others in NAHASDA, is patterned
after the community development block grant (CDBG) legislation at title
I of the Housing and Community Development Act of 1974, as amended (42
U.S.C. 5301 et seq.). While little case law exists in this area, it is
apparent that the CDBG provision in question is one which has been
viewed with as much emphasis on its past nature as on substantiality
(See Kansas City v. HUD, 861 F.2d 739 (D.C.Cir. 1988)). The proposed
definition fails to take this aspect of the standard into account. HUD
welcomes public comment on what would be an appropriate standard for
this term or, for
law exists in this area, it is
apparent that the CDBG provision in question is one which has been
viewed with as much emphasis on its past nature as on substantiality
(See Kansas City v. HUD, 861 F.2d 739 (D.C.Cir. 1988)). The proposed
definition fails to take this aspect of the standard into account. HUD
welcomes public comment on what would be an appropriate standard for
this term or, for

that matter, whether the term should be defined in the regulation.

5. Issue: Performance Variable

Should a measure of performance be used as a variable within the
allocation formula for NAHASDA Block Grant funds? This issue was not
agreed to among tribal representatives.
Position Opposing the Use of a Performance Variable: Taking a stand
against the use of a performance variable in the allocation formula
does not mean taking a stand against quality performance; rather, it
means taking a stand against the use of an unnecessary and penal method
of evaluating how tribes serve their own people.
It is unnecessary because both the statute and the proposed
compliance regulations already address how to deal with poor
performance.
It is penal in that it disciplines a failing tribe, instead of
focusing on assisting that tribe.
NAHASDA requires the development of a formula for the allocation of
block grant funds based on need and maintenance of current housing
stock. It does not mandate or even suggest that such a formula address
an individual tribe's performance, presumably because NAHASDA itself
deals adequately with the issue by requiring annual performance
reports, providing for audits and monitoring, and specifying remedies
for non-compliance with NAHASDA (including failure to expend monies on
low-income activities).
The relief available to the Secretary allows him to make
adjustments in future grant amounts, to require the repayment of
misspent amounts, to seek civil remedies, and to appoint a replacement
TDHE, among other things
erformance
reports, providing for audits and monitoring, and specifying remedies
for non-compliance with NAHASDA (including failure to expend monies on
low-income activities).
The relief available to the Secretary allows him to make
adjustments in future grant amounts, to require the repayment of
misspent amounts, to seek civil remedies, and to appoint a replacement
TDHE, among other things. If these remedies are not the same as the
penalty imposed by the performance factor, then those who favor the
performance factor essentially are opting for an additional penalty. If
the remedies are the same, then by definition they are duplicative.
Those who favor a performance factor in the allocation formula
skirt the fact that failure to perform to standard would absolutely
result in the lowering of one tribe's subsequent allocations, thereby
resulting in the raising of the allocation of other tribes whose
performance was excellent. Such a position has merit at first blush,
but fails in the final analysis, for Indian tribes do not need to raise
themselves on the backs of their fallen brothers and sisters.
Technical assistance will be available to a tribe that performs
poorly, but that is the case with or without the use of a performance
variable, and the real trigger should come before failure, not in its
wake. Supporters of the performance factor argue that the penalty comes
only after the first full year of performance; they neglect to mention
that it can continue to come each year, year after year, with each new
application for a block grant. None of us has any experience with
NAHASDA or how it will affect the ability to provide quality housing
assistance in the first few years, especially for the smaller tribes
and newer TDHEs. To include a performance variable at this stage is
premature.
A performance variable in the allocation formula is neither
required nor contemplated by NAHASDA
with each new
application for a block grant. None of us has any experience with
NAHASDA or how it will affect the ability to provide quality housing
assistance in the first few years, especially for the smaller tribes
and newer TDHEs. To include a performance variable at this stage is
premature.
A performance variable in the allocation formula is neither
required nor contemplated by NAHASDA. Even without a performance
variable, all tribes will be required to develop performance objectives
and to describe how they intend to use their block grant funds. Even
without a performance factor, HUD will not continually provide funds to
a poorly performing tribe. With a performance factor many tribes will
unnecessarily perform their work under greater pressure and with less
of the support from their fellow tribes who will benefit from their
failure. The performance variable is unnecessary and insidious and
serves as just another way in which to divide tribes, just as it has
divided the rulemaking committee and resulted in nonconsensus.
Position in favor of the Performance Variable: Some Committee
members feel that in order for a tribe or TDHE to efficiently and
effectively meet the housing needs of its constituents its performance
should be quantified through tribally initiated performance objectives.
Towards this end, a system that will measure the performance of a tribe
or TDHE against objectives determined by each individual tribe was
developed by these members and presented to the Committee for
consideration. These members feel development of such objectives,
provided they respect and accommodate the diversity of tribal needs,
will not impose an undue burden on tribes or their TDHEs, but instead
will allow them to more effectively meet the needs of their
constituents
nst objectives determined by each individual tribe was
developed by these members and presented to the Committee for
consideration. These members feel development of such objectives,
provided they respect and accommodate the diversity of tribal needs,
will not impose an undue burden on tribes or their TDHEs, but instead
will allow them to more effectively meet the needs of their
constituents. Development of such performance objectives will encourage
all recipients of NAHASDA funds to clearly describe objectives and
describe how they will use the limited resources made available by the
Congress in a timely and businesslike manner.
Crucial to the implementation of any performance objectives and
their codification in the formula allocation is a commitment to promote
and develop the technical and administrative capacity among all tribes
that administer affordable housing activities. The variable must
trigger the provision of technical assistance to those tribes or their
TDHEs that encounter difficulty meeting the objectives they set for
themselves. Towards this end, the variable is a proactive means for
tribes and their TDHEs that obligates the Secretary to promote and
develop greater technical and administrative capacity so that both
tribes and the Department are assured NAHASDA funds will be used to
provide affordable housing to deserving Native Americans.
The performance variable proposed for Committee consideration will
not measure performance against tribally set objectives until the end
of the year--as such it does not take effect until the second year of
NAHASDA. Throughout the year, tribes would have an opportunity to
update or change their objectives should events occur that are beyond
their control. The performance variable only reduces funding in the
following year to those tribes or TDHEs that fail to accomplish what
they said they would accomplish and then only if they fail to meet
several of their objectives set for the year
d year of
NAHASDA. Throughout the year, tribes would have an opportunity to
update or change their objectives should events occur that are beyond
their control. The performance variable only reduces funding in the
following year to those tribes or TDHEs that fail to accomplish what
they said they would accomplish and then only if they fail to meet
several of their objectives set for the year.
While the temporary reduction in funds was construed by many
Committee members as a punitive measure, the proponents of the
performance variable feel it addresses a broader reality facing Indian
housing--continued provision of funds to a poorly performing entity is
not an efficient use of limited appropriations, poorly performing
recipients do not put as many people in housing as could otherwise be
done, and the current political climate will not continue to subsidize
poorly run programs that will not or do not use appropriated funds in a
timely manner for the purposes for which they were allocated.
Accordingly, members supporting the incorporation of the performance
variable in the allocation of NAHASDA funds feel it is imperative that
tribes be the driving force that initiate measures that assure the
maximum number of deserving Native Americans are provided a house to
call home and the technical and administrative capacities of all tribes
are increased to accomplish this objective. Rather than rely on the
Department or others to establish the criteria by which tribes will
perform, it is time for tribes to take the initiative and set their own
high standards--the performance variable and tribally determined
objectives as proposed take this important step.

VI. Items Highlighted for Comment

Public comment is invited on this proposed rule in its entirety,
including those issues highlighted in this preamble. The Committee
especially seeks comments on the following issues.

1. Local Cooperation Agreements and Tax Exemption Issues
own
high standards--the performance variable and tribally determined
objectives as proposed take this important step.

VI. Items Highlighted for Comment

Public comment is invited on this proposed rule in its entirety,
including those issues highlighted in this preamble. The Committee
especially seeks comments on the following issues.

1. Local Cooperation Agreements and Tax Exemption Issues

Sections 101(c), (d), and (e) of NAHASDA, governing local co-
operation agreements, tax exemption, and user fees proved to be
problematic, and the statutory requirements were generally agreed to be
inappropriate and unreasonable in the context of a formula block grant
program. The Committee's tribal caucus approved and forwarded to the
Congress a technical amendment intended to deal with the problems.
However, in the event that the Congress does not act on this amendment,
potential recipients should be aware of the following issues:
(a) How to handle situations in which local governing bodies refuse
to enter into local cooperation agreements with recipients;
(b) How to handle payments where more than one local governing body
provides services;
(c) Should there be a limit on assistance to a unit or individual
below which the requirements of this section should not apply; and
(d) How to deal with local governing bodies that fail to comply
with their cooperation agreements. Should there be a certification by
the recipient each year that the local governing body has complied with
the certification agreement?
HUD is interpreting the statutory provisions for local cooperation
agreements, tax exemption, and user fees in the context of the long-
standing history of the requirements in the 1937 Act. Accordingly, the
applicability of these provisions is limited in the regulations to
rental housing (including homebuyer programs for lease-purchase of
homes) owned by the Indian tribe or TDHE.

2. Labor Standards of NAHASDA
ng the statutory provisions for local cooperation
agreements, tax exemption, and user fees in the context of the long-
standing history of the requirements in the 1937 Act. Accordingly, the
applicability of these provisions is limited in the regulations to
rental housing (including homebuyer programs for lease-purchase of
homes) owned by the Indian tribe or TDHE.

2. Labor Standards of NAHASDA

NAHASDA requires prevailing wage rates determined under the Davis-
Bacon Act (40 U.S.C. 276a-276a-5) to be paid to laborers and mechanics
employed in the development of affordable housing projects. NAHASDA
also requires prevailing wages determined by HUD to be paid to
maintenance laborers and mechanics employed in the operation, and to
architects, technical engineers, draftsmen and technicians employed in
the development of such projects. Some Committee members felt that
applying prevailing wage standards to all development and maintenance
assisted in any way by NAHASDA is not practical or reasonable and that
some minimum exemption is needed. Placing these requirements on small
development and maintenance activities and certain types of projects
leveraged with other funds and with other owners would make many such
activities infeasible. Many committee members also felt that in
accordance with the Congressional findings of NAHASDA, Indian tribes
should have the right to apply their own wage standards or Tribal
Employment Rights Office (TERO) standards in an effort to encourage
tribal employment and that those should supersede Davis-Bacon and HUD
wage rates. Since Davis-Bacon and HUD rates are a statutory
requirement, the Congress must act to address or remove this provision.

3. Formula Used to Allocate NAHASDA Block Grant Funds
ibes
should have the right to apply their own wage standards or Tribal
Employment Rights Office (TERO) standards in an effort to encourage
tribal employment and that those should supersede Davis-Bacon and HUD
wage rates. Since Davis-Bacon and HUD rates are a statutory
requirement, the Congress must act to address or remove this provision.

3. Formula Used to Allocate NAHASDA Block Grant Funds

The Committee encourages comment on the following two issues--(a)
whether or not the definition of ``formula area'' accurately reflects
the geography that most tribes serve; and (b) how to develop a better
data source than the U.S. Census that is uniformly and consistently
collected throughout Indian areas for purposes of future formula
allocations.
Although not to be commented on in respect to the proposed rule,
tribes should be aware that their individual allocations under the
Needs component of the formula are based on two primary pieces of
information: (a) Geography--HUD will inform each tribe of the geography
being used for its ``formula area'' so that tribes may correct or
challenge the geographic definition for their area; and (b) data for
Native Americans living in the ``formula area''--the U.S. Census is
known to have made an undercount, each tribe should review the data for
its area (provided by HUD) to determine if it wishes to challenge the
Census data as allowed under the proposed rule.

4. Formula Set-Aside for Emergency and Disaster Relief
y correct or
challenge the geographic definition for their area; and (b) data for
Native Americans living in the ``formula area''--the U.S. Census is
known to have made an undercount, each tribe should review the data for
its area (provided by HUD) to determine if it wishes to challenge the
Census data as allowed under the proposed rule.

4. Formula Set-Aside for Emergency and Disaster Relief

Some Committee members felt it was important that an emergency and
disaster relief fund be established with a portion of the Indian
Housing Block Grant funds. The initial proposal was that the fund be
capitalized at $10 million in its first year and that it be replenished
in future years such that it begins each year with a balance of $10
million. Other Committee members suggested that the fund should address
only disaster relief and that each Tribe or TDHE develop its own
reserves for emergency circumstances. The Committee is requesting
comments on (a) whether or not an emergency and/or disaster relief fund
should be developed and (b) if so, how it should be administered.

5. When May NAHASDA Block Grant Funds be Drawn-Down?

The Committee held informal discussions about whether NAHASDA grant
amounts will be drawn-down in lump-sum payments or whether they will be
drawn-down as the funds are due to be spent by a recipient. Tribal
leaders expressed the view that grant amounts should be distributed in
lump-sum up-front distributions so that recipients can invest the grant
amounts and earn and retain interest on the funds as tribes do in
Public Law 93-638 self-determination contracts and self-governance
compacts. Lump-sum distributions are also consistent with the
Congressional findings in NAHASDA. As set forth in section V.2. of this
preamble (nonconsensus issue regarding interest income), HUD has
determined that NAHASDA does not authorize the recipient to drawdown
grant funds in a lump sum.
est on the funds as tribes do in
Public Law 93-638 self-determination contracts and self-governance
compacts. Lump-sum distributions are also consistent with the
Congressional findings in NAHASDA. As set forth in section V.2. of this
preamble (nonconsensus issue regarding interest income), HUD has
determined that NAHASDA does not authorize the recipient to drawdown
grant funds in a lump sum.

6. Applicability of Section 3 of the Housing and Urban Development Act
of 1968 and the Lead Based Paint Requirements of 24 CFR Part 35

Tribal members expressed strong disagreement of the applicability
of these laws on the basis of their burdensome reporting requirements
or high compliance costs. Tribal members believed that compliance with
Indian preference requirements under NAHASDA and its regulations should
also be deemed as meeting the requirements of section 3 requiring a
preference for low and very low-income persons. HUD does not agree with
this tribal position. The Committee requested that HUD look at how the
section 3 and lead based paint requirements would be applied to the
IHBG program and whether NAHASDA's lead based paint requirements would
be the same as they are for the HOME program.
HUD's current regulations setting forth its section 3 requirements
(24 CFR part 135) and lead-based paint hazard requirements (24 CFR part
35) were published prior to the enactment of NAHASDA. HUD is currently
developing final rules revising 24 CFR parts 35 and 135. HUD will
address the impact of its section 3 and lead-based paint regulatory
requirements on Native American housing assistance, especially in light
of the changes made by

NAHASDA, in the development of the final rules.

7. The Applicability of 24 CFR Part 85--Uniform Administrative
Requirements for Grants
of NAHASDA. HUD is currently
developing final rules revising 24 CFR parts 35 and 135. HUD will
address the impact of its section 3 and lead-based paint regulatory
requirements on Native American housing assistance, especially in light
of the changes made by

NAHASDA, in the development of the final rules.

7. The Applicability of 24 CFR Part 85--Uniform Administrative
Requirements for Grants

The Committee decided that some portions of 24 CFR part 85 may not
be applicable to the IHBG program. At the conclusion of the comment
period, the Committee will review the sections of part 85 and make a
determination as to which of the sections will apply. The public is
encouraged to submit comments on this issue to assist the Committee in
their determination.

8. Rents and Utilities

The Committee decided to give flexibility to recipients to
determine whether or not rent includes utilities. HUD believes this
implementation of NAHASDA is legally permissible, but notes that this
position is a departure from the long-standing HUD policy of including
utilities in rents.

VII. Reorganization of Existing Indian Housing Regulations

In addition to establishing a new 24 CFR part 1000, this rule
proposes to make several conforming amendments to HUD's existing Indian
housing regulations. For example, this proposed rule would remove 24
CFR part 950 from the Code of Federal Regulations. Part 950 sets forth
the regulatory requirements for the ``old'' system of funding which
expires on September 30, 1997. Accordingly, the removal of part 950 is
necessary to ensure that title 24 does not contain outdated
regulations.
This proposed rule would also 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
g which
expires on September 30, 1997. Accordingly, the removal of part 950 is
necessary to ensure that title 24 does not contain outdated
regulations.
This proposed rule would also 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 would consolidate HUD's Indian housing regulations in
the ``1000 series'' of title 24, and assist program participants by
presenting uniformity. In addition to the changes in designation, this
proposes to make amendments to the regulations currently set forth in
part 955. These revisions will reflect the amendments made by NAHASDA
to section 184 of the Housing and Community Development Act of 1992 (12
U.S.C. 1515z-13a).
As a result of these redesignations, several conforming amendments
must be made at the final rule stage to other HUD regulations that
cross-reference to 24 CFR parts 950, 953, and 955.

VIII. Justification for Reduced Comment Period

It is HUD's policy generally to afford the public not less than
sixty days for submission of comments on its notices of proposed
rulemaking (24 CFR 10.1). It was determined that it would not be
practicable to provide a public comment period greater than 45 calendar
days. As noted above, section 106(b)(1) of NAHASDA requires that HUD
issue final regulations implementing NAHASDA by September 1, 1997. In
developing a schedule for completing its work, the Committee has
attempted to strike a balance between the need for public input in the
regulatory implementation of NAHASDA, and the necessity of meeting the
statutory publication deadline. Given the number and complexity of
negotiated rulemaking issues, it was determined that it would not be
possible to issue proposed regulations before today
developing a schedule for completing its work, the Committee has
attempted to strike a balance between the need for public input in the
regulatory implementation of NAHASDA, and the necessity of meeting the
statutory publication deadline. Given the number and complexity of
negotiated rulemaking issues, it was determined that it would not be
possible to issue proposed regulations before today. In order to permit
the publication of a final rule by September 1, 1997, and provide the
Committee with sufficient time to review and address public comments on
this proposed rule, HUD requests that comments be submitted by August
18, 1997. The Committee believes that this 45-day comment period will
provide interested persons with sufficient time to develop and submit
their comments.
The Committee recognizes the value and necessity of public comment
in the development of final regulations implementing NAHASDA and
welcomes comments on this proposed rule. All comments will be addressed
in the final rule. Further, the Committee has sought public input
throughout the negotiated rulemaking process. All Committee meetings
were announced in the Federal Register and were open to the public
without advance registration. Members of the public were also invited
to make statements during the negotiated rulemaking meetings and to
submit written statements for the Committee's consideration.
The Committee also notes that the negotiated rulemaking process
provided for the development of proposed regulations with the active
participation of Indian tribes. Forty-eight of the fifty-eight
Committee members were representatives of geographically diverse small,
medium, and large Indian tribes. These Committee members represented
tribal concerns and interests in the development of regulations
implementing NAHASDA and the proposals contained in this rule reflect
the consensus decisions of the Committee.

IX. Findings and Certifications

Paperwork Reduction Act of 1995
fifty-eight
Committee members were representatives of geographically diverse small,
medium, and large Indian tribes. These Committee members represented
tribal concerns and interests in the development of regulations
implementing NAHASDA and the proposals contained in this rule reflect
the consensus decisions of the Committee.

IX. Findings and Certifications

Paperwork Reduction Act of 1995

(a) The information collection requirements contained in this
proposed rule have been submitted to the Office of Management and
Budget (OMB) for review under the Paperwork Reduction Act of 1995 (44
U.S.C. 3501-3520). 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.
(b) Estimate of the total reporting and recordkeeping burden that
will result from the collection of information:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Est. avg.
Type of collection Proposed section of 24 CFR affected Number of Frequency of response time Annual burden
respondents response (hrs.) hrs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Real property acquisition requirements; 1000.14 (a)(1) and (a)(2).............. 400 1 24 9,600
information a recipient must provide an owner.
Advance written notice to residential tenants 1000.14(c)(2).......................... 400 1 .30 9,000
and homebuyers.
Maintenance of Uniform Relocation Act records.. 1000.14(f)(3).......................... 400 1 .15 60
Maintenance of conflict of interest records.... 1000.36................................ 400 1 .15 60
HUD approval for model activities and non- 1000.108 and 1000.118(b)............... 400 1 16 6,400
Indian families.
Income verification and document maintenance... 1000.128..............................
enance of Uniform Relocation Act records.. 1000.14(f)(3).......................... 400 1 .15 60
Maintenance of conflict of interest records.... 1000.36................................ 400 1 .15 60
HUD approval for model activities and non- 1000.108 and 1000.118(b)............... 400 1 16 6,400
Indian families.
Income verification and document maintenance... 1000.128............................... 400 1 40 16,000
Notification to HUD of demolition/disposition.. 1000.134(b)............................ 400 1 6 2,400
Obtaining and maintenance of criminal 1000.154............................... 400 1 24 9,600
conviction information.
IHP submission requirements.................... 1000.212, 1000.142, 1000.222........... 400 1 120 42,000

Appeal of HUD determination regarding non- 1000.224............................... 400 1 16 6,400
compliance or IHP modification.
Certification and document maintenance for 1000.406............................... 400 1 1 400
title VI of NAHASDA.
Demonstration requirement for multiple 1000.410............................... 400 1 3 1,200
guarantees.
Demonstration requirement for financial 1000.412............................... 400 1 3 1,200
capacity.
Procedures and requirements for title VI loan 1000.420, 1000.422..................... 400 1 20 8,000
guarantee applications.
Amendment procedure for approved guarantees.... 1000.430............................... 400 1 1 400
Monitoring responsibility under NAHASDA........ 1000.502(a), 1000.512, 1000.538........ 400 1 30 12,000
Public comment on performance reports.......... 1000.518............................... 400 1 3 1,200
Program records maintenance.................... 1000.548............................... 400 1 1 400
Certification and document maintenance for lack 1005.105(f)............................ 400 1 1 400
of financial market access requirement in
section 184 loan guarantees.
Section 184 certification of compliance with 1005.112............................... 400 1 .15 42
tribal laws
400 1 3 1,200
Program records maintenance.................... 1000.548............................... 400 1 1 400
Certification and document maintenance for lack 1005.105(f)............................ 400 1 1 400
of financial market access requirement in
section 184 loan guarantees.
Section 184 certification of compliance with 1005.112............................... 400 1 .15 42
tribal laws.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Total Burden, 126,762.
(c) In accordance with 5 CFR 1320.8(d)(1), the Department is
soliciting comments from members of the public and affected agencies
concerning the proposed collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond; including through the use of appropriate automated
collection techniques or other forms of information technology, e.g.,
permitting electronic submission of responses.
(d) OMB is required to make a decision concerning the collection of
information contained in this proposed rule between 30 and 60 days
after publication of this document in the Federal Register. Therefore,
a comment to OMB is best assured of having its full effect if OMB
receives it within 30 days of publication. This does not effect the
deadline for the public to comment on the proposed rule. Comments on
the paperwork collection requirements contained in this rule must be
submitted to those persons indicated in the ADDRESSES section of this
preamble.

Environmental Impact
Register. Therefore,
a comment to OMB is best assured of having its full effect if OMB
receives it within 30 days of publication. This does not effect the
deadline for the public to comment on the proposed rule. Comments on
the paperwork collection requirements contained in this rule must be
submitted to those persons indicated in the ADDRESSES section of this
preamble.

Environmental Impact

A Finding of No Significant Impact with respect to the environment
has been made 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). The Finding of No Significant Impact 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
le 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
ing
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 proposed to be amended as
follows:

PART 950--[REMOVED]

1. Part 950 is removed.

PART 953 [REDESIGNATED]

2. Part 953 is redesignated as part 1003.
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 is the objective of the IHBG program?
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?
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 an environmental review an eligible cost?
1000.24 If an Indian tribe assumes environmental review
responsibility, how will HUD assist the Indian tribe in per
ition policies are
applicable?
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 an 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 24 CFR part 85?
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?

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 activities 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 How will HUD determine whether to approve model housing
activities or other housing programs?
1000.112 How long does HUD have to review and act on a model
housing activity or other housing program proposal?
1000.114 What should HUD do before d
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 How will HUD determine whether to approve model housing
activities or other housing programs?
1000.112 How long does HUD have to review and act on a model
housing activity or other housing program proposal?
1000.114 What should HUD do before declining a model housing
activity or other housing program?
1000.116 What recourse does a recipient have if HUD disapproves a
model housing activity or other program?
1000.118 Under what conditions may non low-income Indian families
participate in the program?
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 any leverage funding, including any federal or state program
and still be considered an affordable housing activity?
1000.124 What is the maximum and minimum rent or homebuyer payment
a recipient can charge a low-income rental tenant or homebuyer?
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% 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 Indian housing units owned or operated
pursuant to an ACC?
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)
ing 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 before NAHASDA subject to
the useful life provisions of section 205(a)(2)?
1000.146 Is a homebuyer required to remain low-income throughout
the term of their participation in a housing program funded under
NAHASDA?
1000.148 What law will an owner or manager follow in providing
adequate written notice of eviction or termination of a lease?
1000.150 How many 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 What housing development cost limits are applicable to
ensure modest housing construction under NAHASDA?

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 a recipient
of the grant?
1000.206 How is a TDHE designated?
1000.208 Is submission of an IHP required?
1000.210 Who prepares and submits an IHP?
1000.212 What are the minimum requirements for the IHP?
1000.214 Are there separate IHP requirements for small Indian
tribes?
1000.216 Can the certification requirements of section 102(c)(5) of
NAHASDA be waived by HUD?
1000.218 If HUD changes its IHP format will Indian tribes be
involved?
1000.220 What is the

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FR_PRORULE_97-17011. Check the current official text before relying on it. Not legal advice.