[Federal Register Volume 67, Number 31 (Thursday, February 14, 2002)]
[Proposed Rules]
[Pages 6998-7035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3248]



[[Page 6997]]

-----------------------------------------------------------------------

Part III





Department of Health and Human Services





-----------------------------------------------------------------------



42 CFR Part 36, et al.



Tribal Self-Governance Amendments of 2000; Proposed Rule

  Federal Register / Vol. 67, No. 31 / Thursday, February 14, 2002 / 
Proposed Rules  

[[Page 6998]]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 36, et al.

RIN 0917-AA05


Tribal Self-Governance Amendments of 2000

AGENCY: Indian Health Service, DHHS.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Secretary of the Department of Health and Human Services 
(DHHS) proposes this rule to implement Title V of the Tribal Self-
Governance Amendments of 2000 (the Act). The proposed rule has been 
negotiated among representatives of Self-Governance and non-Self-
Governance Tribes and the DHHS. The proposed rule includes provisions 
governing how DHHS/Indian Health Service (IHS) carries out its 
responsibility to Indian Tribes under the Act and how Indian Tribes 
carry out their responsibilities under the Act. Any interested party is 
invited to comment on the proposed rule. As required by section 517 (b) 
of the Act, the Department has developed this proposed rule with active 
Tribal participation of Indian Tribes, inter-Tribal consortia, Tribal 
organizations and individual Tribal members, using the guidance of the 
Negotiated Rulemaking Act, 5 U.S.C. 561 et seq.

DATES: Comments must be received on or before April 15, 2002. We will 
send copies of this notice of proposed rulemaking (NPRM) to each Indian 
Tribe. We especially invite comments from individual Indian Tribes, 
Tribal members, and Tribal organizations.

ADDRESSES: Send your written comments to: Betty Gould, Regulations 
Officer, Division of Regulatory and Legal Affairs, IHS, 12300 Twinbrook 
Parkway, Suite 450, Rockville, MD 20857, Telephone 301-443-1116. (This 
is not a toll-free number.) Comments received will be available for 
inspection at the address above from 9 a.m. to 3 p.m., Monday through 
Friday, beginning approximately two weeks after publication.

FOR FURTHER INFORMATION CONTACT: For questions about this proposed rule 
contact: Paula Williams, Director, Office of Tribal Self-Governance, 
IHS, 5600 Fishers Lane, Room 5A-55, Rockville, MD 20857, Telephone 301-
443-7821. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: ``The Tribal Self-Governance Amendments of 
2000'', Pub. L. 106-260, repeals Title III of the Indian Self-
Determination Act, Pub. L. 93-638, as amended, (ISDA) and enacts a new 
Title V that establishes a permanent Self-Governance program within 
DHHS. Thus, Indian and Alaska Native Tribes are now able to compact for 
the operation, control, and redesign of various IHS activities on a 
permanent basis. Section 517 of Title V requires the Secretary, not 
later than 90 days after the date of the enactment of the Act, to 
initiate procedures under the Negotiated Rulemaking Act, 5 U.S.C. 561 
et seq, to negotiate and promulgate the regulations necessary to carry 
out Title V. The Act calls for the establishment of a negotiated 
rulemaking committee pursuant to 5 U.S.C. 565, comprised only of 
Federal and Tribal representatives, with a majority of the Tribal 
government representatives representing Self-Governance Tribes. The 
Negotiated Rulemaking Committee on Joint Tribal and Federal Self-
Governance (the Committee) conferred with and allowed representatives 
of Indian Tribes, inter-Tribal consortia, Tribal organizations, and 
individual Tribal members to actively participate in the rulemaking 
process.
    Copies of the Committee's charter are on file with the appropriate 
committees of Congress and with the Library of Congress in accordance 
with section 9(c) of the Federal Advisory Committee Act, 5 U.S.C. 
Appendix.

Public Participation in Pre-Rulemaking Activity

    A Notice of Intent to establish the Committee was published in the 
Federal Register at 65 FR 75906 on December 5, 2000. In the Notice of 
Intent, we proposed a rulemaking committee of representatives from 12 
Self-Governance Tribes, 11 non-Self-Governance Tribes, and 7 Federal 
officials totaling 30 members. The Notice of Intent established a 
deadline of January 4, 2001, for submission of written comments. Twenty 
comments were received. The comments provided valuable input from 
Indian Tribes, organizations, and individuals. In order to change the 
composition of the Committee, as suggested by some comments, the 
Committee would have needed to be increased to more than 30 members. 
Carrying out the negotiated rulemaking process through a committee with 
more than 30 members would be cumbersome and challenging in reaching 
consensus under the time period required by section 517. Therefore, the 
size of the Committee was not changed. The members, representing 12 
Self-Governance Tribes, 11 non-Self-Governance Tribes, and 7 Federal 
officials, meet the requirements of the Act. The Committee is co-
chaired by one Tribal representative and one Federal representative.
    The negotiated rulemaking meetings were open to the public. 
Individuals that were not voting members of the Committee had an 
opportunity to attend meetings and to give input to the 30 members of 
the Committee. The public was informed about the establishment of the 
Committee through a notice in the Federal Register at 66 FR 15063 on 
March 15, 2001.
    The first meeting of the Negotiated Rulemaking Committee on Joint 
Tribal and Federal Self-Governance was held in San Diego, California on 
March 15-16, 2001. At that meeting, the Committee established three 
sub-committees, a meeting schedule, and a protocol for deliberations. 
The Committee agreed to operate based on consensus decision-making. The 
DHHS committed to publish all consensus decisions as the proposed rule. 
The Committee further agreed that any committee member and his/her 
constituents could comment on this proposed rule.
    To complete the regulations within the statutory timeframe, the 
Committee divided the areas subject to regulation among three 
subcommittees, each co-chaired by one Federal and one Tribal 
representative. The sub-committees made recommendations to the 
Committee on whether regulations in a particular area were desirable. 
If the Committee agreed that regulations were desirable, the sub-
committees developed options for draft regulations. The sub-committees 
presented their options to the full Committee, which discussed them and 
eventually approved the proposed regulations.
    Between April 2001 and August 2001, the Committee met five times in 
different locations throughout the country. All meetings were announced 
in the Federal Register at 66 FR 10182, 66 FR 17657, and 66 FR 27620. 
Generally, the meetings lasted three days. Sub-committees also met and 
held teleconferences to develop draft material in support of the full 
Committee meetings.
    In developing regulatory language, full Committee consensus was 
reached on the regulations that follow under subparts ``A'' through 
``P.'' Where the full Committee could not reach consensus as defined in 
its protocol, this preamble includes a brief description of the issue, 
along with the Federal and Tribal positions when available. The public 
is invited to comment on these issues as well as on the proposed 
regulations.
    Where the Tribal position is stated, it reflects dissatisfaction 
with proposed

[[Page 6999]]

resolution of the issues by the Federal representatives and preference 
for alternative language as put forth by the Indian Tribes. Where the 
Federal position is stated, it represents the official views of the 
DHHS, as expressed by the designated Federal officials.
    There are only three issues where consensus was not reached. The 
three issues are: whether the provisions of Title V apply to 
statutorily mandated grants added to a funding agreement after award; 
application of Davis-Bacon prevailing wage rates to construction 
projects funded with both Federal and non-Federal funds; and Department 
of Justice representation under section 314 of Public Law 101-512, as 
amended, of Indian Tribes and Tribal certifying officers for 
environmental claims.

Key Areas of Disagreement

Whether Provisions of Title V Apply to Statutorily Mandated Grants 
Added to a Funding Agreement After Award

    Tribal Position: The Tribal position is that section 505(b)(2) 
provides that Self-Governance Tribes have the alternative of including 
in funding agreements ``such programs, services, functions, or 
activities (or portions thereof) include all programs, services, 
functions, or activities (or portions thereof) including grants (which 
may be added to a Funding Agreement after an award of such grant), with 
respect to which Indian Tribes or Indians are primary or significant 
beneficiaries, administered by the DHHS through the IHS and all local, 
field, service unit, area, regional, and central headquarters and 
National Office functions so administered under the authority of * * * 
*'' (emphasis added).
    The Tribal position is that the language in section 505(b)(2) makes 
clear Congress' intent that Self-Governance Tribes have the option of 
including grants that have been awarded in their funding agreement. 
Once these grants are incorporated in a funding agreement, they are 
subject to all of the terms and conditions set forth in the funding 
agreement as well as all of the provisions of Title V and applicable 
regulations. In contrast, the Federal position is that while grants may 
be included in a funding agreement at Tribal option, none of the 
provisions of Title V or regulations promulgated under section 517 
apply. On the other hand, the Federal position is that the regulations, 
policies, and guidance generally applicable to grants apply to these 
grants included in funding agreements.
    From the Tribal perspective, the thrust of self-governance is to 
remove excessive Federal control and return funding and decisions to 
local Tribal control. Whatever flexibility may exist within the grant 
system, placing grants in a funding agreement without providing the 
flexibility and benefits of Title V defeats the goal of this inclusion. 
Statutes are to be construed so as to produce a harmonious whole and so 
as to further the legislative scheme. In this instance, concluding that 
none of Title V's provisions or regulations promulgated under section 
517 apply to these grants after they are included in a funding 
agreement is illogical and impedes Congress' intent when Title V was 
enacted. To the extent the language in section 505(b)(2) is ambiguous, 
Title V makes clear that any ambiguities are to be resolved in favor of 
the interpretation that facilitates the inclusion of programs, 
services, functions and activities (PSFAs) and related funds in a 
funding agreement. See section 512(a). In this instance IHS should 
interpret section 505(b)(2) making all provisions in Title V and 
regulations promulgated under section 517 applicable to statutorily 
mandated grants after they have been incorporated. Accordingly, the 
Tribal representatives propose that the following provision be included 
in the final Title V regulation and invite comments on the language set 
forth below:
    Q: What provisions of Title V apply to statutorily mandated grants 
added to the funding agreement?
    A: Once the grant is awarded and added to the funding agreement, 
unless provided otherwise in these regulations, all provisions of Title 
V and these regulations shall apply.
    Federal Position: The Department firmly believes that statutorily 
mandated grants are, and must remain, subject to the terms and 
conditions of the statute mandating the grant, the grant award, and the 
Department's grant regulations.
    The Federal position is that section 505(b)(1) distinguishes 
between two types of grants: ``discretionary IHS competitive grants'' 
and ``Congressionally earmarked competitive grants.'' Discretionary IHS 
competitive grants are defined in the proposed regulations as ``grants 
established by IHS pursuant to IHS' discretionary authority without any 
statutory directive.'' See Sec. 137.10) Section 505(b)(1) specifically 
authorizes Self-Governance Tribes to negotiate their full Tribal share 
funding for such grants and receive that funding along with funding for 
other PSFAs as part of the negotiation and award of these funding 
agreements, rather than to compete for a grant award.
    Section 505(b)(1) distinguishes the above discretionary grants from 
``Congressionally earmarked competitive grants'' which are defined in 
the proposed regulations as ``statutorily mandated grants'' meaning ``a 
grant specifically designated in a statute for a defined purpose.'' See 
Sec. 137.10 Statutorily mandated grants are specifically excluded from 
the provisions in section 505(b)(1). Rather, section 505(b)(2) 
authorizes statutorily mandated grants to be ``added to a funding 
agreement after an award of such grants.''
    This distinction recognizes that statutorily mandated grants are 
not considered part of the PSFAs negotiated and awarded in the funding 
agreement. To the contrary, statutorily mandated grants have their own 
statutorily designated requirements for award. Statutorily mandated 
grants, pursuant to their authorizing statutes, are awarded through the 
Department's grants process which is governed by the Department's grant 
regulations and policies. These establish the terms and conditions of 
the grant.
    While statutorily mandated grants may be added to funding 
agreements after award of the grant, such grants retain their separate 
character as grants and continue to be governed by the terms and 
conditions of the statute mandating the grant and the grant award--not 
the terms of the funding agreement or compact or the statutory 
provisions of Title V. Thus, as agreed to in these proposed 
regulations, statutorily mandated grant programs may not be redesigned, 
and the grant awards may not be reallocated for other purposes.
    The Department, within the governing grants process, has agreed to 
lump sum funding for statutorily mandated grants and to the use of 
interest earned on such funding to enhance the grant program in order 
to accommodate Tribal programmatic concerns. However, the Department 
firmly believes that statutorily mandated grants are and must remain 
subject to the terms and conditions of the statute mandating the grant, 
the grant award, and the Department's grant regulations. Accordingly, 
the Federal representatives propose that the following provision be 
included in the final Title V regulation and invite comments on the 
language set forth below:
    Q: What provisions of Title V apply to statutorily mandated grants 
added to the funding agreement?
    A: None of the provisions of Title V apply.

[[Page 7000]]

Application of Davis-Bacon Prevailing Wage Rates to Construction 
Projects Funded With Both Federal and Non-Federal Funds

    Tribal Position: The Committee reached consensus on two proposed 
regulations, which provide that Davis-Bacon wage rates do not apply to 
construction projects funded solely with non-Federal funds but do apply 
to covered employees working on construction projects funded solely by 
the Federal Government. A third funding possibility also occurs with 
frequency in the construction of IHS health facilities--a mixture of 
funds from both Federal and non-Federal sources. The Tribal position is 
that Davis-Bacon wage rates do not apply to those portions of a 
construction project funded from non-Federal sources. Accordingly, the 
Tribal representatives propose that the following provision be included 
in the final Title V regulation and invite comments on the language set 
forth below:
    Q: Do Davis-Bacon wage rates apply to construction projects 
performed by Tribes using both Federal funds and non-Federal funds?
    A: The Davis-Bacon wage rates only apply to the portion of the 
project that is funded with Federal funds. The Davis-Bacon Act and wage 
rates do not apply to portions of the project funded with non-Federal 
funds or when Tribes perform work with their own employees.
    The Tribal representatives believe that this simple clarification 
gives Self-Governance Tribes performing Title V construction projects 
greater autonomy and thus advances Title V's goal of effectively 
``implementing the Federal policy of government-to-government relations 
with Indian Tribes'' and of further ``strengthen[ing] the Federal 
policy of Indian self-determination.'' See 25 U.S.C.A. Sec. 458aaa 
(Pub. L. 106-260, Sec. 2(6), Title V Congressional findings reproduced 
as note following section 458aaa).
    In support of its position, the Tribal representatives note that by 
its own terms, the Davis-Bacon Act of March 3, 1931, ch. 411, Secs. 1, 
46 Stat. 1494, as amended, 40 U.S.C. Secs. 276a(a), confers no rights 
directly on construction workers paid either with Federal or non-
Federal funds. Rather, it imposes certain restrictions on the Federal 
Government when Federal funds are used to perform construction 
activities. See generally Universities Research Ass'n, Inc. v. Coutu, 
450 U.S. 754, 772 (1981) (``The Davis-Bacon Act requires that certain 
stipulations be placed in Federal construction contracts for the 
benefit of mechanics and laborers, but it does not confer rights 
directly on those individuals.''). Section 509(g) of the Act merely 
extends Davis-Bacon prevailing wage requirements to ``laborers and 
mechanics employed by contractors and subcontractors (excluding Tribes 
and Tribal organizations) in the construction, alteration, or repair * 
* * of a building or other facilities in connection with the 
construction projects funded by the United States under [the Indian 
Self-Determination and Education Assistance] Act.'' 25 U.S.C. 458aaa-
8(g) (emphasis added).
    The Tribal representatives disagree with the Federal position that 
section 509(g) ``unambiguously states'' that Davis-Bacon wage rates 
``do apply'' to portions of a Title V construction project that are not 
``funded by the United States under [the Indian Self-Determination and 
Education Assistance] Act.'' 25 U.S.C. 458aaa-8(g). The Tribal position 
is that the Title V language clearly provides for just the opposite 
result: that Davis-Bacon wage rates only apply to those portions of the 
project that are actually funded by the United States, precisely as 
stated in the Tribal proposed regulation.
    The Tribal representatives further point out that even if the 
language of section 509(g) is subject to the broader reading advanced 
by the Federal representatives, that fact simply makes this provision 
ambiguous. Section 509(g) certainly does not provide that Davis-Bacon 
wage rates apply to construction projects ``funded in whole or in 
part'' by the United States. If it did, the Federal position would have 
greater merit. However, given its actual language, section 509(g) is at 
best unclear. And if the language of Title V is unclear or is open to 
more than one reasonable interpretation, rules of statutory 
construction for Indian legislation require that the Title V Negotiated 
Rulemaking Committee reject interpretations which work against the 
interests of Self-Governance Tribes. South Dakota v. Bourland, 508 U.S. 
679, 687 (1993); Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 
766 (1985) (``Statutes are to be construed liberally in favor of the 
Indians; ambiguous provisions are to be interpreted to the Indians' 
benefit.''). Federal courts have relied on this rule to interpret 
ambiguous provisions of the ISDA to the benefit of Indian Tribes. See 
Ramah Navajo Chapter v. Lujan, 112 F.3d 1455, 1462-63 (10th Cir. 1997); 
Shoshone-Bannock Tribes of the Fort Hall Reservation v. Shalala 
(Shoshone-Bannock I ), 988 F. Supp. 1306, 1317 (D. Ore. 1997). In 
Ramah, the Tenth Circuit held that ``the canon of construction favoring 
Native Americans controls over the more general rule of deference to 
agency interpretations of ambiguous statutes.'' Ramah, 112 F.3d at 
1462. Thus, `` `if the [ISDA] can reasonably be construed as the Tribe 
would have it construed, it must be construed that way.' '' Id. at 1462 
(quoting Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439, 1445 (D.C. 
Cir. 1988)). See also section 512(a) of the Act.
    Federal position: The Federal position is that no regulation is 
necessary for projects funded with a mixture of Federal and non-Federal 
funds because the language of section 509(g) unambiguously states that 
the Davis-Bacon wage rates do apply. Section 509(g) defines the 
employees that are covered, namely ``[a]ll laborers and mechanics 
employed by contractors or subcontractors (excluding Indian Tribes and 
Tribal organizations).'' Section 509(g) also sets forth the activities 
it covers: ``construction, alteration, or repair, including painting or 
decorating of a building or other facilities.'' Finally, section 509(g) 
provides that all covered employees who perform covered activities 
shall receive Davis-Bacon wages if they perform those activities ``in 
connection with construction projects funded by the United States under 
this Act.'' The Federal representatives believe the terms of the 
statute are clear: if a project receives Federal funding, then any 
covered employees carrying out covered activities ``in connection 
with'' the project must be paid Davis-Bacon wages.

Department of Justice Representation of Tribes and Tribal Certifying 
Officers for Environmental Claims.

    Tribal position: The Committee reached consensus on all but one of 
the proposed regulations related to enforcement of the National 
Environmental Policy Act (NEPA) and the National Historic Preservation 
Act (NHPA). The Tribal representatives and Federal representatives 
disagree on whether the Federal Government, specifically the Department 
of Justice, must defend Indian Tribes and Tribal certifying officers if 
they are sued as a result of carrying out these Federal environmental 
responsibilities. For the reasons provided below, the Tribal 
representatives propose that the following regulation be included in 
the final Title V regulations and invites comments on the language set 
forth below:
    Q: Are Indian Tribes and Tribal certifying officers entitled to the 
benefit of a Federal defense if they are sued as

[[Page 7001]]

a result of carrying out their Federal environmental responsibilities?
    A: Yes. Indian Tribes and Tribal Certifying Officers are performing 
Federal functions when carrying out these Federal environmental 
responsibilities, and they are deemed to be Federal agencies and 
Federal officials for this limited purpose. Under section 314 of Public 
Law 101-512, as amended, the Department of Justice is authorized and 
directed to defend Indian Tribes and Tribal employees who are sued with 
respect to claims resulting from the performance of these Federal 
functions.
    The Tribal representatives believe that the potential for Self-
Governance Tribes to assume Federal responsibilities for NEPA and NHPA 
compliance under Title V removes a substantial burden from IHS 
construction program managers and places that burden on Tribal 
officials. In transferring this burden, it is important to treat Tribal 
and Federal certifying officials equally. The Tribal representatives 
believe this can best be achieved by assuring Tribal certifying 
officials the benefit of a Federal defense under section 314 of Pub. L. 
101-512 for NEPA enforcement actions brought against them. This 
protection is essential, and fundamentally fair, given that little or 
no Federal funding is likely to be available to Self-Governance Tribes 
to cover the expense of such litigation, and that private insurance is 
almost certainly unavailable for such claims.
    The Tribal representatives believe their position is fully 
consistent with the language of the statute and greatly furthers the 
Title V Congressional policy of providing Self-Governance Tribes with 
all the resources, benefits and protections that IHS officials would 
have in carrying out this core governmental function.
    Specifically, section 314 of Pub. L. 101-512 requires the United 
States to defend ``any civil action or proceeding'' involving 
``claims'' resulting from the performance of a self-governance compact. 
It provides as follows:

    With respect to claims resulting from the performance of 
functions * * * under a contract, grant agreement, or any other 
agreement or compact authorized by the Indian Self-Determination and 
Education Assistance Act * * *, an Indian Tribe, Tribal organization 
or Indian contractor is deemed hereafter to be part of the Bureau of 
Indian Affairs in the Department of the Interior or the IHS in the 
DHHS while carrying out any such contract or agreement and its 
employees are deemed to be employees of the Bureau or Service while 
acting within the scope of their employment in carrying out the 
contract or agreement: Provided, That after September 30, 1990, any 
civil action or proceeding involving such claims brought hereafter 
against any Indian Tribe, Tribal organization, or Indian contractor 
or Tribal employee covered by this provision shall be deemed to be 
an action against the United States and will be defended by the 
Attorney General and be afforded the full protection and coverage of 
the Federal Tort Claims Act * * * Provided further, That beginning 
with the fiscal year ending September 30, 1991, and thereafter, the 
appropriate Secretary shall request through annual appropriations 
funds sufficient to reimburse the Treasury for any claims paid in 
the prior fiscal year pursuant to the foregoing provisions. * * * 
(emphasis added.)

Pub. L. 101-512, Title III, Sec. 314, Pub. L. 103-138, Title III, 
Sec. 308 (reprinted in 25 U.S.C.A. Sec. 450f, Historical and Statutory 
Notes.
    Under ordinary rules of English grammar, the phrase ``such claims'' 
includes all claims resulting from the performance of a compact because 
``such claims'' refers back to ``claims resulting from the performance 
of functions under a * * * compact,'' the antecedent immediately 
preceding the reference. Nothing in the provision suggests that ``such 
claims'' are limited to tort claims. In interpreting this statutory 
requirement, the Title V Negotiated Rulemaking Committee should first 
look to the plain language of the Act. Good Samaritan Hospital v. 
Shalala, 508 U.S. 402, 409 (1993) (``The starting point in interpreting 
a statute is its language for, if the intent of Congress is clear, that 
is the end of the matter''). Indeed, some courts have interpreted 
section 314 to cover ``statutory claims'' and have assumed that it 
covers contract claims resulting from the performance of a compact or 
self-determination contract. See Waters v. United States, 812 F.Supp. 
166 (N.D. Cal. 1993) (intentional torts and statutory claims within 
Sec. 314's reach); Carlow v. United States, 40 Fed. Cl. 773 (1998) 
(Sec. 314 demonstrates that upon retrocession, the United States is 
liable for legitimate contract claims incurred by Tribal contractors 
administering ISDA programs). See also Brown v. United States, 43 Fed. 
Cl. 538 (1998) (Tribal compactor not indispensable party to action for 
mismanagement of lease because action against Indian Tribe is deemed to 
be an action against the United States).
    Section 314's legislative history also supports this plain language 
interpretation. Earlier laws extending the so-called tort claims 
coverage to Tribal organizations explicitly limited the coverage to 
specific types of torts by including the language ``claims * * * for 
personal injury, including death.'' An early draft of Pub. L. 101-512 
contained identical limiting language. The absence of that language in 
the final draft indicates that Congress intended there to be no 
limitation; all claims are included. The presence of new language, 
extending the coverage to ``any civil action or proceeding'' indicates 
that Congress intended the coverage to include, at a minimum, some 
class of actions broader than torts and, presumably, all civil actions 
and proceedings that result from the performance of compacts. Congress 
knew how to limit this coverage to tort claims, indeed to only certain 
specified tort claims, in 1988 and 1989, but declined to do so in 1990 
and thereafter.
    This plain language interpretation does not create any unforeseen 
burdens for the United States. Congress initially extended the so-
called tort claim coverage to ISDA contractors and compactors on a 
limited basis, following the failure of the Federal Government to 
procure liability insurance on behalf of Indian Tribes, and pending the 
Secretary's investigation of the feasibility of procuring such 
insurance or providing alternative protection. When the Secretary 
failed to investigate the cost and availability of liability insurance, 
Congress made the coverage permanent in the course of extending and 
refining the scope of that coverage in a variety of settings. The 
legislative history indicates that Congress understood that Pub. L. 
101-512 and its predecessors simply restored the status quo by making 
the Federal Government responsible for any legal liability associated 
with the performance of Federal functions. It does not expand the 
United States' liability. It simply precludes the United States from 
reducing its own liability and shifting that liability to Self-
Governance Tribes via the ISDA without providing an equal level of 
protection.
    A plain language interpretation also does not render the ``full 
protection and coverage'' clause null or void. Moreover, reading the 
provision as a whole, it is clear that section 314 provides several 
benefits to Self-Governance Tribes and that those benefits are 
cumulative. Self-Governance Tribes performing Federal functions are 
entitled to assert Federal defenses under the FTCA and to have the 
United States assume its position as a defendant and to be represented 
by the Attorney General and to have any resulting liability covered by 
the Treasury and to have the IHS request appropriations to reimburse 
the Treasury. While the FTCA protection does not have any application 
in the context of a NEPA enforcement lawsuit, that does not relieve the 
Federal Government of its obligation to provide Tribes with the other 
benefits conferred

[[Page 7002]]

by section 314, namely the benefit of a Federal defense. This also 
responds to the Federal representatives' argument that the application 
of section 314 to NEPA enforcement actions ``would result in a mismatch 
of processes, remedies, and defenses.'' As set forth in the proposed 
regulations, a NEPA enforcement action under Section 509(a)(2) of the 
Act will presumably be handled under the same Administrative Procedures 
Act (APA) process as currently occurs when the Secretary performs these 
Federal environmental responsibilities. No confusion or complication 
need result simply because Justice Department attorneys are handling 
the defense, instead of members of the private bar.
    A narrow interpretation of the coverage of section 314 would shift 
the burden from the Department of Justice to the IHS or worse still to 
American Indian and Alaskan Native beneficiaries of IHS health 
programs. A narrow interpretation would require Self-Governance Tribes 
to incur substantial expense for liability insurance and/or legal 
representation. The IHS would then, in the Tribal representatives' 
view, be legally obliged to provide adequate contract support funds to 
cover these expenses. If it failed to do so, as a result of shortfalls 
or for some other reason, funds that should be used to provide direct 
services would be diverted and the beneficiaries would suffer from 
diminished health care services, again contrary to Congress' intent. An 
unduly narrow interpretation would thus conflict with Congressional 
intent in Title V and impair the Federal trust responsibility to 
deliver health care to Indian people. See S. Rep. 100-274, Dec. 21, 
1987 at 2646 (``The United States has assumed a trust responsibility to 
provide health care to Native Americans. The intent of the Committee is 
to prevent the Federal Government from divesting itself, through the 
self-determination process, of the obligation it has to properly carry 
out that responsibility.'').
    Congress clearly intended to confer on Self-Governance Tribes the 
same benefits that Federal officials enjoy when performing these 
Federal functions. It is clear that Self-Governance Tribes are carrying 
out Federal responsibilities. The nature of the legal liability 
associated with such responsibilities does not change because a Tribal 
government is performing a Federal function. The unique nature of the 
legal trust relationship between the Federal Government and Tribal 
governments requires that the Federal Government provide liability 
insurance coverage in the same manner as such coverage is provided when 
the Federal Government performs the function.
    S. Rep. 100-274, Dec. 21, 1987 at 2645. Similarly, transferring the 
obligation to perform NEPA compliance determinations from Federal to 
Tribal officials, with virtually no additional funding and without 
providing these officials with a Federal defense, would create a 
windfall for the Federal Government, at the expense of Indian health 
care, contrary to Congressional intent. Department of Justice attorneys 
are well-experienced in APA litigation and would be in a better 
position to defend Tribal government officials in NEPA enforcement 
actions than would members of the private bar. The rare cases likely to 
be brought under this law will create no undue hardship or expense for 
the Department of Justice.
    Federal position: The Federal position is that section 314 of Pub. 
L. 101-512 read as whole applies solely to claims within the ambit of 
the FTCA. There is no indication in the legislative history of section 
314 that it was intended to do anything other than extend FTCA coverage 
for tort claims. See, e.g., H.R. Rep. No. 101-789, 101st Cong., 2d 
Sess. 72 (1990). The Tribal position would draw support from a 
Congressional rejection of an earlier version of this provision that 
would cover only claims for personal injury and death. However, this 
legislative history reflects Congressional concern that property damage 
claims would be excluded under the earlier version, see 135 Cong. Rec. 
S8767, S8834 (July 26, 1989) (remarks of Senator Inouye), and not an 
intent to broaden this provision beyond tort claims. Furthermore, 
section 314 only extends the ``protection and coverage of the [FTCA].'' 
Waivers of the sovereign immunity of the United States are construed 
narrowly, and in favor of the sovereign. Reading section 314 to imply 
that any other statutory waiver of Federal sovereign immunity extends 
to Indian Tribes would violate this principle and invade the province 
of the legislative branch.
    If FTCA coverage did apply to private suits brought to enforce 
Tribal implementation of Federal environmental responsibilities, it 
would result in a mismatch of processes, remedies, and defenses. 
Private suits to enforce the NEPA generally involve court review of an 
administrative record under the APA for injunctive or declaratory 
relief. The APA does not authorize the award of damages. 5 U.S.C. 
Sec. 702. The FTCA, by contrast, allows for trial de novo in the 
district courts, and waives the sovereign immunity of the United States 
for damages. 28 U.S.C. Sec. 1346(b)(1). Moreover, the FTCA imposes 
liability only for negligent acts in the same manner and to the same 
extent that a private person would be liable, 28 U.S.C. Sec. 2674, and 
provides a defense for the discretionary activities of Federal 
officials. 28 U.S.C. Sec. 2680(a). Private suits to enforce Federal 
environmental responsibilities seek to enforce laws applicable to 
Federal agencies, not private persons, and squarely challenge the 
exercise of agency discretion under Federal law.
    Finally, even if section 314 did apply to actions other than torts, 
section 509(a)(2) itself makes clear that the Tribal certifying officer 
is the proper defendant for claims arising from the performance of 
Federal environmental responsibilities, not the United States. For this 
reason, the Federal position is that no regulation is required.
    During final Departmental review of the NPRM, Sec. 137.401 was 
deleted because it would have provided Self-Governance Tribes with the 
opportunity to participate in the final stages of the budget request 
process. Tribal participation in the initial stages of the request 
process is already provided by the Department Policy on Indian/Alaska 
Native Tribes and Indian Organizations dated August 7, 1997. In June of 
2001, the Department held its third annual tribal budget consultation 
meeting as part of the development of the FY 2003 budget. Participation 
in the final stages of the budget request process cannot be provided 
without violating the Executive Branch's longstanding policy on the 
need to preserve the confidentiality of pre-decisional budget 
information as outlined in Section 36 of OMB Circular A-11, 
``COMMUNICATIONS WITH CONGRESS AND THE PUBLIC AND CLEARANCE 
REQUIREMENTS.''
    Section 513 of Title V addressed the President's responsibilities 
regarding the budget, which are outside the scope of this rulemaking. 
Regulatory provisions have not been included to implement this section.

Miscellaneous Issue: Labor

    The Committee considered but decided not to address the effect of 
the ISDA, and particularly Title V, on the application of other Federal 
private sector labor laws. Although this matter is not addressed in the 
proposed regulation, the IHS recognizes that the United States and 
Self-Governance Tribes have a unique government-to-government 
relationship, and that activities in furtherance of that relationship 
that are authorized by Title V are not ordinary government procurement 
activities. The IHS also

[[Page 7003]]

recognizes that when Indian Tribes undertake self-governance 
activities, they step into the shoes of the IHS in carrying out the 
Federal Government's unique responsibility to provide health care for 
Native Americans. This is a trust responsibility that Congress carries 
out under the Indian Commerce Clause. The provision of health care to 
Native Americans is a unique Federal responsibility that Congress has 
delegated to the IHS, and which in turn has been delegated to Indian 
Tribes as specified in their self-governance compacts and funding 
agreements. Under these unique circumstances, and given that Tribes, 
Tribal organizations and Indian patients are not to be penalized by the 
transfer of Federal health programs to Tribal operation under Title V, 
the IHS believes that it is contrary to the intent of the ISDA to apply 
to Self-Governance Tribes carrying out Title V compacts and funding 
agreements general Federal laws such as the National Labor Relations 
Act that would not apply to the IHS if the IHS were carrying out the 
compacted PSFA.

Summary of Regulations

    The narrative below is keyed to specific subparts of the proposed 
rule.

Subpart A--General Provisions

    This subpart contains provisions describing the authority, purpose 
and scope of these regulations. This subpart contains Congressional 
policies set forth in Title V. This subpart also contains provisions 
regarding the effect of these regulations on existing Tribal rights, 
whether Title V may be construed to reduce funding for programs serving 
a Indian Tribe under this Title or other laws, and the effect of these 
regulations on Federal policy directives.

Subpart B--Definitions

    This subpart sets forth definitions for key terms used in the 
balance of the regulations. Most of the definitions come from 
definitions set forth in Title I or Title V. Throughout this proposed 
rule, the terms ``Indian Tribe'' and ``Self-Governance Tribe'' are 
used. These terms are included in the definition section. When a 
provision applies to all Federally-recognized Tribes (including Self-
Governance Tribes), the term ``Indian Tribe'' is used; the term ``Self-
Governance Tribe'' is used when referring to an Indian Tribe 
participating in self-governance under Title V. Each term includes 
inter-Tribal consortia and Tribal organizations under conditions set 
forth in the definition of ``Indian Tribe.'' Terms unique to Subpart 
N--Construction are defined in that subpart and not in subpart B.

Subpart C--Selection of Indian Tribes for Participation in Self-
Governance

    This subpart describes the eligibility criteria an Indian Tribe 
must satisfy to participate in self-governance. This subpart explains 
that Self-Governance Tribes currently participating under Title III of 
the ISDA and up to 50 additional Indian Tribes per year are eligible to 
participate in self-governance. This subpart also provides that more 
than one Indian Tribe can participate in the same compact and/or 
funding agreement under conditions set forth in this subpart. This 
subpart explains that in order to be eligible to participate in self-
governance an Indian Tribe must successfully complete a planning phase, 
must request participation in the program through a resolution or 
official action of the governing body of each Indian Tribe to be 
served, and must demonstrate financial stability and financial 
management capability. This subpart describes how an Indian Tribe 
demonstrates financial stability and financial management capacity and 
what information is considered in making this determination. Finally, 
this subpart describes that planning and negotiation grants may be 
available, but not required, for participation.

Subpart D--Self-Governance Compact

    This subpart describes the authority for Self-Governance Tribes to 
negotiate compacts and identifies what is included in a compact. This 
subpart explains that a compact is a separate document from a funding 
agreement and that the compact must be executed before or at the same 
time as A funding agreement.

Subpart E--Funding Agreement

    This subpart describes the authority for Self-Governance Tribes to 
negotiate funding agreements and identifies what is included in a 
funding agreement. This subpart describes what terms are required to be 
included in a funding agreement and what terms are included at the 
Self-Governance Tribe's option.

Subpart F--Statutorily Mandated Grants

    This subpart describes to what extent statutorily mandated grants 
may be added to a funding agreement after award. Although there were 
extensive discussions between the Tribal and Federal representatives as 
to whether the provisions of Title V applied to statutorily mandated 
grants once added to the funding agreement, consensus was not reached. 
The Tribal position is that once the grant is awarded and added to the 
funding agreement, all of the provisions of Title V apply. The Federal 
position is that none of the provisions of Title V apply to statutorily 
mandated grants. A more detailed explanation of the basis for this 
disagreement is contained in the Key Areas of Disagreement section of 
these proposed rules.
    Notwithstanding this disagreement, Tribal and Federal 
representatives reached consensus on several important issues 
concerning statutorily mandated grant funds. Tribal and Federal 
representatives agreed that a statutorily mandated grant may be added 
to a funding agreement as an annual lump sum advance payment after the 
grant is awarded. They also agreed that a Self-Governance Tribe may 
keep the interest earned on these grant funds and may use such interest 
earned to enhance the grant program, including allowable administrative 
costs. In addition, consensus was reached as to the extent such grant 
funds may be reallocated or redesigned and that FTCA coverage applies. 
Finally, the Tribal and Federal representatives reached agreement on 
reporting requirements that apply to statutorily mandated grants.

Subpart G--Funding

    This subpart describes what funds must be transferred to a Self-
Governance Tribe in a funding agreement and when those funds must be 
transferred. This subpart describes those circumstances where the 
Secretary is prohibited from reducing or failing to transfer funds and 
where the Secretary is permitted to increase funds. This subpart 
describes miscellaneous provisions pertaining to funding provided under 
a funding agreement. This subpart describes that a funding agreement 
may provide for a stable base budget and describes what funds are 
included in the stable base budget.

Subpart H--Final Offer

    This subpart describes the final offer and rejection process. The 
final offer begins the process for resolving, within a specific time 
frame, disputes that may develop in negotiations of compacts or funding 
agreements. This subpart describes the process for an Indian Tribe to 
present a final offer and the procedures the Secretary must follow to 
reject a final offer.

Subpart I--Operational Provisions

    This subpart contains provisions that address most of the 
operational aspects of self-governance. This subpart explains that 
Self-Governance Tribes must ensure that internal measures are

[[Page 7004]]

in place to address conflicts of interest and also addresses the audit 
requirements that Self-Governance Tribes must comply with, together 
with the accounting standards that govern the expenditure of self-
governance funds. It also includes provisions regarding records and 
record-keeping requirements.
    This subpart explains that Self-Governance Tribes may redesign or 
consolidate PSFAs and may reallocate or redirect funds paid under a 
funding agreement. It includes a provision barring a Self-Governance 
Tribe from simultaneously compacting a program under Title V and 
contracting the same program under Title I. It also includes provisions 
regarding health status reporting requirements. This subpart addresses 
the disposition of savings generated by self-governance activities and 
explains that such savings will be identified in the annual report 
required under the Act. It explains the process by which Tribes may 
access both government-furnished real property and government-furnished 
personal property for use in the performance of a self-governance 
compact or funding agreement. It includes a provision authorizing funds 
paid under Title V compacts and grants to be treated as non-Federal 
funds for matching or cost participation requirements.
    This subpart also includes a provision explaining that section 
102(d) of the Act, 25 U.S.C. 450f(d) and section 314 of Public Law 101-
512, which in part relates to the FTCA, apply to self-governance 
compacts and funding agreements. It also incorporates by reference the 
FTCA procedures set forth in the Title I regulations at 25 CFR Part 
900, subpart M.
    During the negotiations, Tribal representatives raised several 
issues concerning the relationship between coverage under the FTCA and 
supplemental liability insurance coverage, and they proposed specific 
regulations to address these concerns. The Committee ultimately decided 
that additional regulations were unnecessary because these concerns may 
be addressed under the existing statutes and regulations, as discussed 
below.
    The first issue Tribal representatives raised was whether 
supplemental liability insurance purchased by Indian Tribes may be 
viewed as protecting the Federal Government. Since 1988, there has been 
no provision in the ISDA or other law that requires Indian Tribes to 
purchase liability insurance to protect or indemnify the Federal 
Government. At that time, Congress in 1988 amended the ISDA to: (1) 
delete a requirement that the Indian Tribes purchase liability 
insurance to protect the government, and (2) include FTCA coverage for 
Indian Tribes carrying out self-determination contracts. The Indian 
Self-Determination and Education Assistance Act Amendments of 1988, 
Pub. L. 100-472, repealed the first sentence of then section 103(c) of 
the Act requiring Indian Tribes to purchase liability insurance and 
substituted a provision extending FTCA coverage to medical malpractice 
now at section 102(d) of the Act. Instead of Indian Tribes insuring the 
United States, the United States extended its self-insurance to the 
Tribes. See S. Rep. No. 100-274 at 26-27, reprinted in 1988 
U.S.C.C.A.N. 2620, 2645-46. FTCA coverage was extended to general tort 
liability claims by section 314 of Public Law 101-512.
    Tribal representatives have requested clarification as to FTCA 
coverage of Tribal council members and Tribal organization's governing 
boards. The FTCA generally covers any activities of the Indian Tribe 
and its Tribal council members and Tribal organizations and their 
governing boards in carrying out a compact or funding agreement 
including activities necessary for assumption of IHS programs 
(including, but not limited to, adoption of financial management and 
personnel systems) and oversight and other activities by such councils 
and boards to assure effective implementation in carrying out such 
agreements.
    Whether the FTCA applies in any particular case is decided on an 
individual case-by-case basis, first by the Department of Justice and 
subsequently by the Federal courts. Thus, Indian Tribes may wish to 
purchase liability insurance supplemental to FTCA coverage, and this is 
an allowable cost under the compact and funding agreement.

Subpart J--Waivers

    This subpart contains procedures authorizing the Secretary to waive 
regulations promulgated to implement Title V or regulations promulgated 
under the authority specified in section 505(b) of the Act. This 
subpart explains how an Indian Tribe applies for a waiver, how the 
waiver request is processed, the applicable time frames for approval of 
waiver requests and that a denial of a waiver request is appealable in 
Federal court.

Subpart K--Withdrawal

    This subpart addresses the procedures that apply when a Self-
Governance Tribe withdraws from a Tribal organization or inter-Tribal 
consortium. Matters addressed include the effective date of the 
withdrawal, disposition of funds upon a withdrawal, and the future 
administration of the withdrawn programs.

Subpart L--Retrocession

    This subpart addresses the procedures that apply when a Self-
Governance Tribe retrocedes a program to the Secretary, and includes 
provisions pertaining to the contents of the retrocession notice, the 
effective date of the retrocession, the effect of retrocession on other 
or future contracts or compacts, and the disposition of government 
furnished property associated with the retroceded program.

Subpart M--Reassumption

    This subpart addresses procedures by which the Secretary, without 
the consent of the Self-Governance Tribe, may reassume the operation of 
a program and associated funding in a compact or funding agreement, 
including the circumstances under which reassumption may occur, the 
steps which must be followed in any reassumption, the procedural and 
appeal rights, the effective date of any reassumption, and the return 
of government-furnished property. This subpart also addresses the 
additional processes that must be followed in the event of an immediate 
reassumption.

Subpart N--Construction.

    This subpart addresses the process by which participating Self-
Governance Tribes may agree to undertake construction projects and 
programs under section 509 of the Act. In its scope, this subpart 
distinguishes between construction projects, and ongoing programs that 
support construction projects. This subpart sets forth the process for 
Self-Governance Tribes to enter into and administer self-governance 
construction project agreements for construction projects, which may 
include Tribal shares of related construction programs. Alternatively, 
Self-Governance Tribes may assume construction programs (but not 
projects) using the compact and funding agreement process set forth in 
Subparts D and E.
    Definitions are provided that are unique to this subpart. The 
definitions of construction project and construction project agreement 
are found in section 501 of the Act. For other terms which are common 
to this subpart and the Title I construction regulations set forth at 
25 C.F.R. 900, subpart J, the Title I definitions have been adapted 
with minor changes. See 25 CFR 900.113.

[[Page 7005]]

NEPA Process
    Self-Governance Tribes performing construction under section 509 
are required to assume the Secretary's responsibilities for the 
completion of the construction project under the NEPA, the NHPA, and 
related Federal environmental laws. Sections 137.285 through 137.306 
describes these Federal environmental responsibilities and provides 
Tribal options to carry out these responsibilities by adopting Federal 
agency environmental review policies and procedures or by developing 
their own. Sections 137.292, 137.293 and 137.310 through 137.312 
describes how Self-Governance Tribes assume Federal environmental 
responsibilities by resolution, as well as the minimum criteria for the 
limited waiver of Tribal sovereign immunity required by section 
509(a)(2) to allow judicial review of a Tribal certifying officer's 
actions under this subpart.
Notification and Project Assumption
    Sections 137.320 through 137.344 describe the Secretary's 
responsibility to notify and consult with Indian Tribes concerning the 
development of construction budgets and new funding allocation 
methodologies, as well as when funds are available for the planning, 
design and construction of IHS construction projects. This subpart 
further describes the process that Self-Governance Tribes and the 
Secretary use to develop, negotiate and approve (or reject) 
construction project agreements under Title V. These sections explain 
the content and budget requirements for construction project 
agreements, the Secretary's funding and payment obligations to Self-
Governance Tribes, the different types of construction project 
agreements and the process for resolving disputes when Self-Governance 
Tribes and the Secretary cannot agree on the content of a construction 
project agreement. These sections also describe the Self-Governance 
Tribes' authority to reallocate project funds and to use excess funds 
remaining at the completion of a construction project agreement.
Role of the Self-Governance Tribe in Carrying Out Construction Project 
Agreements
    Sections 137.350 through 137.353 describe the Self-Governance 
Tribes' responsibility to complete construction project agreements and 
provide day-to-day management and administration for construction 
projects, within available funding. These sections also describe the 
Self-Governance Tribes' options if unforeseen circumstances increase 
project costs. These sections also describe the Self-Governance Tribes' 
responsibility to submit semiannual construction progress and financial 
reports to the Secretary.
Role of the Secretary in Carrying Out Construction Project Agreements
    Section 137.341 sets forth how Self-Governance Tribes will receive 
payments for construction project agreements under section 509(e). 
Section 137.341 clarifies that when Self-Governance Tribes enter lump 
sum fixed price contracts, Self-Governance Tribes may opt to receive 
payment for a performance period measured either as one year, or as one 
project phase. Sections 137.360 through 137.365 sets forth the process 
for Secretarial review and approval of project planning and design 
documents, as well as Secretarial review and approval of any proposed 
amendments to the construction project agreement under section 509(f). 
Section 137.362 clarifies when Secretarial approval of proposed 
amendments is required, and when Self-Governance Tribes may make 
unilateral changes. Section 137.366 discusses the timing and purpose of 
site visits by the Secretary. Section 137.367 provides that the 
Secretary does not have the authority to issue stop orders, nor any 
other role in the day-to-day management of the construction project. 
Section 137.368 clarifies that the Secretary has no responsibility for 
overseeing health and safety code compliance during a Self-Governance 
Tribe's administration of a construction project agreement.
Other Provisions
    Sections 137.370 describe the relationship between the construction 
subpart and other Title V subparts. Sections 137.371 through 137.374 
describe the Self-Governance Tribes' authority and options for 
acquiring real property with funds provided under a construction 
project agreement, as well as the eligibility of Tribally-owned 
facilities for replacement, maintenance and improvement on the same 
basis as Federally-owned facilities. Sections 137.376 through 137.377 
explain the application of metric standards, Federal procurement laws, 
and regulations to construction project agreements. Finally, Sections 
137.378 through 137.379 explain when and how Davis-Bacon wage rates 
apply to construction project agreements. The issue of whether Davis-
Bacon wage rates apply to construction projects funded from both 
Federal and non-Federal sources is discussed in the Key Areas of 
Disagreement section of the proposed regulation.

Subpart O--Secretarial Responsibilities

    This subpart addresses (1) consultation with Self-Governance Tribes 
in the budget formulation process, and (2) the Secretary's annual 
report to Congress on the administration of Title V and on Tribal 
funding requirements (including guidelines to be used in the 
formulation of the report).

Subpart P--Appeals

    This subpart addresses post-award appeals, pre-award appeals 
(including informal conferences), appeals of immediate reassumptions, 
and attorneys fees and costs under the Equal Access to Justice Act. As 
a general matter, this subpart states that all of the remedial 
provisions available to Tribes under section 110 of the Act are 
available to Self-Governance Tribes under Title V. For post-award 
disputes, the proposed regulation incorporates the regulations 
applicable to Title I contracts.
    For pre-award appeals, the proposed regulation builds upon the 
procedures employed under Title I. Of special note are: (1) The 
provision authorizing the Interior Board of Indian Appeals to employ 
its existing procedures as a guide when considering appeals under this 
subpart; (2) the authority of the Interior Board of Indian Appeals 
(IBIA) in handling appeals; (3) the duty of the Administrative Law 
Judge (ALJ) to hold a hearing within 90 days of the date of the order 
referring the appeal to the ALJ; and (4) the duty of the Secretary to 
modify, adopt or reverse a recommended decision within 45 days.
    Immediate reassumption appeals closely follow the similar appeal 
process available under the Title I regulations for emergency 
reassumptions.
    The proposed regulation on claims for attorneys' fees and costs 
under the Equal Access to Justice Act employs the same procedures 
available to Indian Tribes under the Title I regulations.

Regulatory Impact Statement

    We have examined the impacts of this rule as required by Executive 
Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612) as 
amended by subtitle D of the Small Business Regulatory Fairness Act of 
1996 (Public Law 104-121) and the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4). Executive Order 12866 directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits

[[Page 7006]]

(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Unless it is certified that 
the proposed rule is not expected to have a significant economic impact 
on a substantial number of small entities, the Regulatory Flexibility 
Act requires analysis of regulatory options that minimize any 
significant economic impact of a rule on small entities. Section 202 of 
the Unfunded Mandates Reform Act (Public Law 104-4) requires an 
assessment of anticipated costs and benefits before proposing any rule 
that may result in expenditure by State, local, and tribal governments, 
in aggregate, or by the private sector, of $100 million in any one year 
(adjusted annually for inflation). We have determined that this rule is 
consistent with the principles set forth in the Executive Order and in 
these statutes and find that this rule will not have an effect on the 
economy that exceeds $100 million in any one year (adjusted for 
inflation). Therefore, no further analysis is required under the 
Unfunded Mandates Reform Act. Because this rule does not impose any new 
costs on small entities, it will not result in a significant economic 
impact on a substantial number of small entities. Thus, a Regulatory 
Flexibility Analysis is not required. In accordance with the provisions 
of Executive Order 12866, this regulation was reviewed by the Office of 
Management and Budget.

Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this proposed rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
this proposed rule would not have substantial direct effect on the 
States, on the relationship between the National Government and States, 
or on the distribution of power and responsibilities among the various 
levels of government. As this rule has no Federalism implications, a 
Federalism summary impact statement is not required.

Executive Order 13175--Consultation and Coordination With Indian 
Tribal Governments

    In accordance with the Act, this proposed rule was developed by a 
negotiated rulemaking committee comprised only of Federal and Tribal 
representatives, with a majority of the Tribal government 
representatives representing Self-Governance Tribes. The committee 
agreed to operate based on consensus decisionmaking. The proposed 
regulations have been agreed on by consensus. Where consensus was not 
reached, both the Tribal and Federal positions are discussed in the 
preamble.

National Environmental Policy Act (NEPA) Statement

    The DHHS has determined that this proposed rule does not constitute 
a major Federal action significantly affecting the quality of the human 
environment and that no detailed statement is required pursuant to 
NEPA.

Paperwork Reduction Act (PRA) of 1995

    This proposed regulation contains information collection provisions 
that are subject to review by the Office of Management and Budget (OMB) 
under the Paperwork Management Reduction Act of 1995 (44 U.S.C. 3501-
3520). The information collection requirements in this proposed 
regulation have been negotiated between the Department and Tribal 
representatives through the negotiated rulemaking process and have been 
agreed to by the parties in the negotiation. Health status reporting 
requirements will be negotiated on an individual Tribal basis and 
included in individual compacts or funding agreements. Self-governance 
Tribes will also have the option of participating in a voluntary 
national uniform data collection effort with the IHS. The subparts 
summarized below more specifically describe the information collection 
requirements. As required by the PRA of 1995 (44 U.S.C. 3507(d)), the 
Department has submitted a copy of these sections to the OMB for its 
review:

Subpart C--Selection of Tribes for Participation in Self-Governance

    The provisions in this subpart require collection of information 
that indicates successful completion of the planning phase, a Tribal 
resolution requesting participation in self-governance, and information 
that demonstrates financial stability and financial capacity for 
participation in self-governance. The Department needs and uses this 
information to determine the qualified applicant pool for the self-
governance project. The information is collected at the time the Indian 
Tribe requests participation in self-governance. The annual reporting 
and record keeping burden for this collection of information is 
estimated to average 10 hours for each new request for 50 respondents. 
The total annual reporting and record keeping burden for this 
collection is estimated to be 500 hours.

Subparts D and E--Compact and Funding Agreement

    The compact sets forth the general terms of the government-to-
government relationship between the Self-Governance Tribe and the 
Secretary and any terms the parties intend to control year after year. 
A funding agreement is required for each Self-Governance Tribe 
participating in self-governance and it provides the information that 
authorizes the Self-Governance Tribe to plan, conduct, consolidate, 
administer, and receive funding. The funding agreement identifies the 
PSFAs to be performed or administered; the budget category; the funds 
to be provided; the time and method of transfer of the funds; and, 
information regarding any other negotiated provisions or Tribal 
requests for stable base funding.
    The provisions in this subpart require collection of information or 
record-keeping requirements that may be contained in either the compact 
or the funding agreement, such as the information provided in health 
status reports or the information needed when requesting multi-year 
funding. The Department needs and uses this information to determine 
eligibility of the applicant; to evaluate applicant capabilities; and 
to protect the service population and safeguard Federal funds and other 
resources. The information serves as the official record of the compact 
or funding agreement terms agreed to by the negotiating parties. The 
information is collected at the time the Self-Governance Tribe makes an 
initial request to compact or when the Self-Governance Tribe decides to 
take specific action to retrocede. The annual reporting and record 
keeping burden for this collection of information is estimated to 
average 34 hours for each response for 50 respondents. The total annual 
reporting and record keeping burden for this collection is estimated to 
be 1700 hours.

Subpart N--Construction Projects

    The provisions in this subpart require collection of information 
regarding the Self-Governance Tribes' assumption of Federal 
responsibilities with respect to construction, including building codes 
and architectural and engineering standards (including health and 
safety), the successful completion of the construction project, and 
carrying out the negotiated construction project agreement. The 
information needed includes the semi-annual construction project 
progress and financial reports.

[[Page 7007]]

    The Department needs and uses this information to determine 
eligibility of the applicant and to protect the service population and 
safeguard Federal funds and other resources. The information serves as 
the official record of the compact or funding agreement terms agreed to 
by the negotiating parties.
    The information is collected at the time the Self-Governance Tribe 
negotiates the construction project agreement and through semi-annual 
reports. The annual reporting and record keeping burden for this 
collection of information is estimated to average 40 hours for each 
response for 30 respondents. The total annual burden for the collection 
is estimated to be 1200 hours.

Subpart P--Appeals

    This subpart provides the appeals procedures available to Indian 
Tribes. It explains how to file a notice of appeal and what the notice 
should contain as well as instructions for submitting a written 
statement of objections. The Department uses this information to 
evaluate and grant or deny an appeal. The information is collected and 
reported once an Indian Tribe files an appeal. The annual reporting and 
record keeping burden for this collection of information is estimated 
to average 40 hours for each response for 8 respondents. The total 
annual reporting and record keeping burden for this collection is 
estimated to be 320 hours.
    In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires 
that we solicit comments by the effected public on the following 
issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of the IHS;
     The accuracy of our estimate of the information collection 
burden (the time it takes respondents to read complete and submit the 
requested information);
     The quality, utility, and clarity of the information we 
are collecting; and
     Recommendations to minimize the information collection 
burden on the affected public, including use of automated collection 
techniques.
    Under the PRA, DHHS must obtain OMB approval of all information and 
record keeping requirements. No person is required to respond to an 
information collection request unless the form or regulation requesting 
the information has a currently valid OMB control number. This number 
will appear in 42 CFR part 137 upon approval. To obtain a copy of the 
information collection clearance requests, explanatory information, and 
related form, contact Lance Hodahkwen, Reports Clearance Officer, 12300 
Twinbrook Parkway, Suite 450, Rockville, MD 20852 at (301) 443-5938.
    By law, the OMB must submit comments to the DHHS within 60 days of 
publication of this proposed rule, but may respond as soon as 30 days 
after publication. Therefore, to ensure consideration by the OMB, 
please send comments regarding these reporting burden estimates or any 
other aspect of these information collection requirements to the Office 
of Information and Regulatory Affairs, OMB, Room 10235, New Executive 
Office Building, Washington, DC 20503; Attention: IHS Desk Officer, 
Allison Eydt.
    This rule imposes no unfunded mandates on any governmental or 
private entity and is in compliance with the provisions of the Unfunded 
Mandates Act of 1995.

List of Subjects

42 CFR Parts 36 and 136

    Employment, Government procurement, Health care, Health facilities, 
Indians, Penalties, Reporting and recordkeeping requirements.

42 CFR Parts 36a and 136a

    Grant programs-education, Grant programs-health, Grant programs-
Indians, Health care, Health professions, Indians, Penalties, Reporting 
and recordkeeping requirements, Scholarships and fellowships, Student 
aid.

42 CFR Part 137

    Grant programs-Indians, Health care.

    Dated: August 13, 2001.
Michael H. Trujillo,
Assistant Surgeon General, Director.
    Dated: January 25, 2002.
Tommy G. Thompson,
Secretary.

    For the reasons set out in the preamble, we are amending chapter I 
of title 42 of the Code of Federal Regulations as follows:

PART 36--[REDESIGNATED AS PART 136]

    1. The authority for part 36 continues to read as follows:

    Authority: 25 U.S.C. 13; sec. 3, 68 Stat. 674 (42 U.S.C. 2001, 
2003); Sec. 1, 42 Stat. 208 (25 U.S.C. 13); 42 U.S.C. 2001, unless 
otherwise noted.

    2. Part 36--Indian Health is redesignated as part 136 and 
transferred to a new Subchapter M--Indian Health Service, Department of 
Health and Human Services.
    3. In redesignated part 136, in the section listed in the first 
column, the references listed in the second column are revised to read 
as shown in the third column:

----------------------------------------------------------------------------------------------------------------
  In redesignated part 136               References to Sec.                     Are revised to read Sec.
----------------------------------------------------------------------------------------------------------------
136.14......................  36.12                                     136.12
136.21......................  36.61(c)                                  136.61
136.23......................  36.12                                     136.12
136.23......................  36.61                                     136.61
136.42......................  36.41                                     136.41
136.43......................  36.41                                     136.41
136.53......................  36.51                                     136.51
136.53......................  36.54                                     136.54
136.56......................  36.54                                     136.54
136.106.....................  36.105                                    136.105
136.116.....................  36.114                                    136.114
136.303.....................  36.302                                    136.302
136.321.....................  36.320                                    136.320
136.322.....................  36.332                                    136.332
136.351(b)(4)...............  36.350(a)                                 136.350(a)
136.351(b)(5)...............  36.350(a)                                 136.350(a)
136.351(b)(7)...............  36.350(a)                                 136.350(a)
136.351(b)(10)..............  36.350(a)                                 136.350(a)
136.353.....................  36.350(a)(7) and (8)                      136.350(a)(7) and (8)

[[Page 7008]]

 
136.371.....................  36.370                                    136.370
136.372.....................  36.332                                    136.332
----------------------------------------------------------------------------------------------------------------

PART 36a--[REDESIGNATED AS PART 136a]

    4. The authority for part 36a continues to read as follows:

    Authority: Sec. 3, 68 Stat. 674; 42 U.S.C 2003; 42 Stat. 208, 
sec. 1, 68 Stat. 674; 25 U.S.C. 13, 42 U.S.C. 2001, unless otherwise 
noted.

    5. Part 36a--Indian Health is redesignated as Part 136a and 
transferred to new Subchapter--Indian Health Service, Department of 
Health and Human Services.
    6. Add a new part 137 to new subchapter M to read as follows:

SUBCHAPTER M--INDIAN HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN 
SERVICES

PART 137--TRIBAL SELF-GOVERNANCE

Subpart A--General Provisions
Sec.
137.1   Authority, purpose and scope.
137.2   Congressional policy.
137.3   Effect on existing Tribal rights.
137.4   May Title V be construed to limit or reduce in any way the 
funding for any program, project, or activity serving an Indian 
Tribe under this or other applicable Federal Law?
137.5   Effect of these regulations on Federal program guidelines, 
manual, or policy directives.
Subpart B--Definitions
137.10   Definitions.
Subpart C--Selection of Indian Tribes for Participation in Self-
Governance
137.15   Who may participate in Tribal Self-Governance?
137.16   What if more than 50 Indian Tribes apply to participate in 
self-governance?
137.17   May more than one Indian Tribe participate in the same 
compact and/or funding agreement?
137.18   What criteria must an Indian Tribe satisfy to be eligible 
to participate in self-governance?

Planning Phase

137.20   What is required during the planning phase?
137.21   How does an Indian Tribe demonstrate financial stability 
and financial management capacity?
137.22   May the Secretary consider uncorrected significant and 
material audit exceptions identified regarding centralized financial 
and administrative functions?
137.23   For purposes of determining eligibility for participation 
in self-governance, may the Secretary consider any other information 
regarding the Indian Tribe's financial stability and financial 
management capacity?
137.24   Are there grants available to assist the Indian Tribe to 
meet the requirements to participate in self-governance?
137.25   Are planning and negotiation grants available?
137.26   Must an Indian tribe receive a planning or negotiation 
grant to be eligible to participate in self-governance?
Subpart D--Self-Governance Compact
137.30   What is a self-governance compact?
137.31   What is included in a compact?
137.32   Is a compact required to participate in self-governance?
137.33   May an Indian Tribe negotiate a funding agreement at the 
same time it is negotiating a compact?
137.34   May a funding agreement be executed without negotiating a 
compact?
137.35   What is the term of a self-governance compact?
Subpart E--Funding Agreements
137.40   What is a funding agreement?
137.41   What PSFAs must be included in a funding agreement?
137.42   What Tribal shares may be included in a funding agreement?
137.43   Are all funds identified as Tribal shares always paid to 
the Self-Governance Tribe under a funding agreement?

Terms in a Funding Agreement

137.45   What terms must be included in a funding agreement?
137.46   May additional terms be included in a funding agreement?
137.47   Do any provisions of Title I apply to compacts, funding 
agreements, and construction project agreements negotiated under 
Title V of the Act?
137.48   What is the effect of incorporating a Title I provision 
into a compact or funding agreement?
137.49   What if a Self-Governance Tribe requests such incorporation 
at the negotiation stage of a compact or funding agreement?

Term of a Funding Agreement

137.55   What is the term of a funding agreement?
137.56   Does a funding agreement remain in effect after the end of 
its term?
137.57   How is a funding agreement amended during the effective 
period of the funding agreement?
Subpart F--Statutorily Mandated Grants
137.60   May a statutorily mandated grant be added to a funding 
agreement?
137.65   May a Self-Governance Tribe receive statutorily mandated 
grant funding in an annual lump sum advance payment?
137.66   May a Self-Governance Tribe keep interest earned on 
statutorily mandated grant funds?
137.67   How may a Self-Governance Tribe use interest earned on 
statutorily mandated grant funds?
137.68   May funds from a statutorily mandated grant be added to a 
funding agreement be reallocated?
137.69   May a statutorily mandated grant program added to a funding 
agreement be redesigned?
137.70   Are the reporting requirements different for a statutorily 
mandated grant program added to a funding agreement?
137.71   May the Secretary and the Self-Governance Tribe develop 
separate programmatic reporting requirements for statutorily 
mandated grants?
137.72   Are Self-Governance Tribes and their employees carrying out 
statutorily mandated grant programs added to a funding agreement 
covered by the Federal Tort Claims Act (FTCA)?
Subpart G--Funding

General

137.75   What funds must the Secretary transfer to a Self-Governance 
Tribe in a funding agreement?
137.76   When must the Secretary transfer to a Self-Governance Tribe 
funds identified in a funding agreement?
137.77   When must the Secretary transfer funds identified in a 
funding agreement which does not correspond to the Federal fiscal 
year, e.g., calendar year?
137.78   When must the Secretary transfer funds that were not paid 
as part of the initial lump sum payment?
137.79   May a Self-Governance Tribe negotiate a funding agreement 
for a term longer or shorter than one year?
137.80   What funds must the Secretary include in a funding 
agreement?

Prohibitions

137.85   Is the Secretary prohibited from failing or refusing to 
transfer funds that are due to a Self-Governance Tribe under Title 
V?
137.86   Is the Secretary prohibited from reducing the amount of 
funds required under Title V to make funding available for self-
governance monitoring or administration by the Secretary?
137.87   May the Secretary reduce the amount of funds due under 
Title V in subsequent years?
137.88   May the Secretary reduce the amount of funds required under 
Title V to pay for Federal functions, including Federal pay costs, 
Federal employee retirement benefits, automated data processing, 
technical assistance, and monitoring of activities under the Act?
137.89   May the Secretary reduce the amount of funds required under 
Title V to pay for costs of Federal personnel

[[Page 7009]]

displaced by contracts under Title I or self-governance under Title 
V?
137.90   May the Secretary increase the funds required under the 
funding agreement?

Acquisition of Goods and Services from the IHS

137.95   May a Self-Governance Tribe purchase goods and services 
from the IHS on a reimbursable basis?

Prompt Payment Act

137.98   Does the Prompt Payment Act apply to funds transferred to a 
Self-Governance Tribe in a compact or funding agreement?

Interest or Other Income on Transfers

137.100   May a Self-Governance Tribe retain and spend interest 
earned on any funds paid under a compact or funding agreement?
137.101   What standard applies to a Self-Governance Tribe's 
management of funds paid under a compact or funding agreement?

Carryover of Funds

137.105   May a Self-Governance Tribe carryover from one year to the 
next any funds that remain at the end of the funding agreement?

Program Income

137.110   May a Self-Governance Tribe retain and expend any program 
income earned pursuant to a compact and funding agreement?

Limitation of Costs

137.115   Is a Self-Governance Tribe obligated to continue 
performance under a compact or funding agreement if the Secretary 
does not transfer sufficient funds?

Stable Base Budget

137.120   May a Self-Governance Tribe's funding agreement provide 
for a stable base budget?
137.121   What funds may be included in a stable base budget amount?
137.122   May a Self-Governance Tribe with a stable base budget 
receive other funding under its funding agreement?
137.123   Once stable base funding is negotiated, do funding amounts 
change from year to year?
137.124   Does the effective period of a stable base budget have to 
be the same as the term of the funding agreement?
Subpart H--Final Offer
137.130   What is covered by this subpart?
137.131   When should a final offer be submitted?
137.132   How does the Indian Tribe submit a final offer?
137.133   What does a final offer contain?
137.134   When does the 45 day review period begin?
137.135   May the Secretary request and obtain an extension of time 
of the 45 day review period?
137.136   What happens if the agency takes no action within the 45 
day review period (or any extensions thereof)?
137.137   If the 45 day review period or extension thereto, has 
expired, and the Tribe's offer is deemed accepted by operation of 
law, are there any exceptions to this rule?
137.138   Once the Indian Tribe's final offer has been accepted or 
deemed accepted by operation of law, what is the next step?

Rejection of Final Offers

137.140   On what basis may the Secretary reject an Indian Tribe's 
final offer?
137.141   How does the Secretary reject a final offer?
137.142   What is a ``significant danger'' or ``risk'' to the public 
health?
137.143   How is the funding level to which the Indian Tribe is 
entitled determined?
137.144   Is technical assistance available to an Indian Tribe to 
avoid rejection of a final offer?
137.145   If the Secretary rejects a final offer, is the Secretary 
required to provide the Indian Tribe with technical assistance?
137.146   If the Secretary rejects all or part of a final offer, is 
the Indian Tribe entitled to an appeal?
137.147   Do those portions of the compact, funding agreement, or 
amendment not in dispute go into effect?
137.148   Does appealing the decision of the Secretary prevent 
entering into the compact, funding agreement or amendment?

Burden of Proof

137.150   What is the burden of proof in an appeal from rejection of 
a final offer?

Decision Maker

137.155   What constitutes a final agency action?
Subpart I--Operational Provisions

Conflicts of Interest

137.160   Are Self-Governance Tribes required to address potential 
conflicts of interest?

Audits and Cost Principles

137.165   Are Self-Governance Tribes required to undertake annual 
audits?
137.166   Are there exceptions to the annual audit requirements?
137.167   What cost principles must a Self-Governance Tribe follow 
when participating in self-governance under Title V?
137.168   May the Secretary require audit or accounting standards 
other than those specified in Sec. 137.167?
137.169   How much time does the Federal Government have to make a 
claim against a Self-Governance Tribe relating to any disallowance 
of costs, based on an audit conducted under Sec. 137.165?
137.170   When does the 365 day period commence?
137.171   Where do Self-Governance Tribes send their audit reports?
137.172   Should the audit report be sent anywhere else to ensure 
receipt by the Secretary?
137.173   Does a Self-Governance Tribe have a right of appeal from a 
disallowance?

Records

137.175   Is a Self-Governance Tribe required to maintain a 
recordkeeping system?
137.176   Are Tribal records subject to the Freedom of Information 
Act and Federal Privacy Act?
137.177   Is the Self-Governance Tribe required to make its records 
available to the Secretary?
137.178   May Self-Governance Tribes store patient records at the 
Federal Records Centers?
137.179   May a Self-Governance Tribe make agreements with the 
Federal Records Centers regarding disclosure and release of the 
patient records stored pursuant to Sec. 137.178?
137.180   Are there other laws that govern access to patient 
records?

Redesign

137.185   May a Self-Governance Tribe redesign or consolidate the 
PSFAs that are included in a funding agreement and reallocate or 
redirect funds for such PSFAs?

Non-Duplication

137.190   Is a Self-Governance Tribe that receives funds under Title 
V also entitled to contract under section 102 of the Act [25 U.S.C. 
450(f)] for such funds?

Health Status Reports

137.200   Are there reporting requirements for Self-Governance 
Tribes under Title V?
137.201   What are the purposes of the Tribal reporting 
requirements?
137.202   What types of information will Self-Governance Tribes be 
expected to include in the reports?
137.203   May a Self-Governance Tribe participate in a voluntary 
national uniform data collection effort with the IHS?
137.204   How will this voluntary national uniform data set be 
developed?
137.205   Will this voluntary uniform data set reporting activity be 
required of all Self-Governance Tribes entering into a compact with 
the IHS under Title V?
137.206   Why does the IHS need this information?
137.207   Will funding be provided to the Self-Governance Tribe to 
compensate for the costs of reporting?

Savings

137.210   What happens if self-governance activities under Title V 
reduce the administrative or other responsibilities of the Secretary 
with respect to the operation of Indian programs and result in 
savings?
137.211   How does a Self-Governance Tribe learn whether self-
governance activities have resulted in savings as described in 
Sec. 137.210.

Access to Government Furnished Property

137.215   How does a Self-Governance Tribe obtain title to real and 
personal property furnished by the Federal Government for use in the 
performance of a compact, funding agreement, construction project

[[Page 7010]]

agreement, or grant agreement pursuant to section 512(c) of the Act 
[25 U.S.C. 458aaa-11(c)]?

Matching and Cost Participation Requirements

137.217   May funds provided under compacts, funding agreements, or 
grants made pursuant to Title V be treated as non-Federal funds for 
purposes of meeting matching or cost participation requirements 
under any other Federal or non-Federal program?

FTCA

137.220   Do section 314 of Public Law 101-512 [25 U.S.C. 450f note] 
and section 102(d) of the Act [25 U.S.C. 450f(d)] (regarding, in 
part, FTCA coverage) apply to compacts, funding agreements and 
construction project agreements?
Subpart J--Regulation Waiver
137.225   What regulations may be waived under Title V?
137.226   How does a Self-Governance Tribe request a waiver?
137.227   How much time does the Secretary have to act on a waiver 
request?
137.228   Upon what basis may the waiver request be denied?
137.229   What happens if the Secretary neither approves or denies a 
waiver request within the time specified in Sec. 137.227.
137.230   Is the Secretary's decision on a waiver request final for 
the Department?
137.231   May a Self-Governance Tribe appeal the Secretary's 
decision to deny its request for a waiver of a regulation 
promulgated under section 517 of the Act [25 U.S.C. 458aaa-16]?
Subpart K--Withdrawal
137.235   May an Indian Tribe withdraw from a participating inter-
Tribal consortium or Tribal organization?
137.236   When does a withdrawal become effective?
137.237   How are funds redistributed when an Indian Tribe fully or 
partially withdraws from a compact or funding agreement and elects 
to enter a contract or compact?
137.238   How are funds distributed when an Indian Tribe fully or 
partially withdraws from a compact or funding agreement administered 
by an inter-Tribal consortium or Tribal organization serving more 
than one Indian Tribe and the withdrawing Indian Tribe elects not to 
enter a contract or compact?
137.239   If the withdrawing Indian Tribe elects to operate PSFAs 
carried out under a compact or funding agreement under Title V 
through a contract under Title I, is the resulting contract 
considered a mature contract under section 4(h) of the Act [25 
U.S.C. 450b(h)]?
Subpart L--Retrocession
137.245   What is retrocession ?
137.246   How does a Self-Governance Tribe retrocede a PSFA?
137.247   What is the effective date of a retrocession?
137.248   What effect will a retrocession have on a retroceding 
Self-Governance Tribe's rights to contract or compact under the Act?
137.249   Will retrocession adversely affect funding available for 
the retroceded program?
137.250   How are funds distributed when a Self-Governance Tribe 
fully or partially retrocedes from its compact or funding agreement?
137.251   What obligation does the retroceding Self-Governance Tribe 
have with respect to returning property that was provided by the 
Secretary under the compact or funding agreement and that was used 
in the operation of the retroceded program?
Subpart M--Reassumption
137.255   What does reassumption mean?
137.256   Under what circumstances may the Secretary reassume a 
program, service, function, or activity(or portion thereof)?
137.257   What steps must the Secretary take prior to reassumption 
becoming effective?
137.258   Does the Self-Governance Tribe have a right to a hearing 
prior to a non-immediate reassumption becoming effective?
137.259   What happens if the Secretary determines that the Self-
Governance Tribe has not corrected the conditions that the Secretary 
identified in the notice?
137.260   What is the earliest date on which a reassumption can be 
effective?
137.261   Does the Secretary have the authority to immediately 
reassume a PSFA?
137.262   If the Secretary reassumes a PSFA immediately, when must 
the Secretary provide the Self-Governance Tribe with a hearing?
137.263   May the Secretary provide a grant to a Self-Governance 
Tribe for technical assistance to overcome conditions identified 
under Sec. 137.257.
137.264   To what extent may the Secretary require the Self-
Governance Tribe to return property that was provided by the 
Secretary under the compact or funding agreement and used in the 
operation of the reassume program?
137.265   May a Tribe be reimbursed for actual and reasonable close 
out costs incurred after the effective date of reassumption?
Subpart N--Construction

Purpose and Scope

137.270   What is covered by this subpart?
137.271   Why is there a separate subpart in these regulations for 
construction project agreements?
137.272   What other alternatives are available for Self-Governance 
Tribes to perform construction projects?
137.273   What are IHS construction PSFAs?
137.274   Does this subpart cover construction programs?
137.275   May Self-Governance Tribes include IHS construction 
programs in a construction project agreement or in a funding 
agreement?

Construction Definitions

137.280   Construction definitions.

NEPA Process

137.285   Are Self-Governance Tribes required to accept Federal 
environmental responsibilities to enter into a construction project 
agreement?
137.286   Do Self-Governance Tribes become Federal agencies when 
they assume these Federal environmental responsibilities?
137.287   What is the National Environmental Policy Act (NEPA)?
137.288   What is the National Historic Preservation Act (NHPA)?
137.289   What is a Federal undertaking under NHPA?
137.290   What additional provisions of law are related to NEPA and 
NHPA?
137.291   May Self-Governance Tribes carry out construction projects 
without assuming these Federal environmental responsibilities?
137.292   How do Self-Governance Tribes assume environmental 
responsibilities for construction projects under section 509 of the 
Act [25 U.S.C. 458aaa-8]?
137.293   Are Self-Governance Tribes required to adopt a separate 
resolution or take equivalent Tribal action to assume environmental 
responsibilities for each construction project agreement?
137.294   What is the typical IHS environmental review process for 
construction projects?
137.295   May Self-Governance Tribes elect to develop their own 
environmental review process?
137.296   How does a Self-Governance Tribe comply with NEPA and 
NHPA?
137.297   If the environmental review procedures of a Federal agency 
are adopted by a Self-Governance Tribe, is the Self-Governance Tribe 
responsible for ensuring the agency's policies and procedures meet 
the requirements of NEPA, NHPA, and related environmental laws?
137.298   Are Self-Governance Tribes required to comply with 
Executive Orders to fulfill their environmental responsibilities 
under section 509 of the Act [25 U.S.C. 458aaa-8]?
137.299   Are Federal funds available to cover the cost of Self-
Governance Tribes carrying out environmental responsibilities?
137.300   Since Federal environmental responsibilities are new 
responsibilities which may be assumed by Tribes under section 509 of 
the Act [25 U.S.C. 458aaa-8], are there additional funds available 
to Self-Governance Tribes to carry out these formerly inherently 
Federal responsibilities?
137.301   How are project and program environmental review costs 
identified?
137.302   Are Federal funds available to cover start-up costs 
associated with initial Tribal assumption of environmental 
responsibilities?
137.303   Are Federal or other funds available for training 
associated with Tribal assumption of environmental responsibilities?

[[Page 7011]]

137.304   May Self-Governance Tribes buy back environmental services 
from the IHS?
137.305   May Self-Governance Tribes act as lead, cooperating, or 
joint lead agencies for environmental review purposes?
137.306   How are Self-Governance Tribes recognized as having lead, 
cooperating, or joint lead agency status?
137.307   What Federal environmental responsibilities remain with 
the Secretary when a Self-Governance Tribe assumes Federal 
environmental responsibilities for construction projects under 
section 509 of the Act [25 U.S.C. 458aaa-8]?
137.308   Does the Secretary have any enforcement authority for 
Federal environmental responsibilities assumed by Tribes under 
Section 509 of the Act?
137.309   How are NEPA and NHPA obligations typically enforced?
137.310   Are Self-Governance Tribes required to grant a limited 
waiver of their sovereign immunity to assume Federal environmental 
responsibilities under Section 509 of the Act [25 U.S.C. 458aaa-8]?
137.311   Are Self-Governance Tribes entitled to determine the 
nature and scope of the limited immunity waiver required under 
section 509(a)(2) of the Act?
137.312   Who is the proper defendant in a civil enforcement action 
under section 509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2)]?

Notification (Prioritization Process, Planning, Development and 
Construction)

137.320   Is the Secretary required to consult with affected Indian 
Tribes concerning construction projects and programs?
137.321   How do Indian Tribes and the Secretary identify and 
request funds for needed construction projects?
137.322   Is the Secretary required to notify an Indian Tribe that 
funds are available for a construction project or a phase of a 
project?

Project Assumption Process

137.325   What does a Self-Governance Tribe do if it wants to 
perform a construction project under section 509 of the Act [25 
U.S.C. 458aaa-8]?
137.326   What must a Tribal proposal for a construction project 
agreement contain?
137.327   May multiple projects be included in a single construction 
project agreement?
137.328   Must a construction project proposal incorporate 
provisions of Federal construction guidelines and manuals?
137.329   What environmental considerations must be included in the 
construction project agreement?
137.330   What happens if the Self-Governance Tribe and the 
Secretary cannot develop a mutually agreeable construction project 
agreement?
137.331   May the Secretary reject a final construction project 
proposal based on a determination of Tribal capacity or capability?
137.332   On what bases may the Secretary reject a final 
construction project proposal?
137.333   What procedures must the Secretary follow if the Secretary 
rejects a final construction project proposal, in whole or in part?
137.334   What happens if the Secretary fails to notify the Self-
Governance Tribe of a decision to approve or reject a final 
construction project proposal within the time period allowed?
137.335   What costs may be included in the budget for a 
construction agreement?
137.336   What is the difference between fixed-price and cost-
reimbursement agreements?
137.337   What funding must the Secretary provide in a construction 
project agreement?
137.338   May funds from other sources be incorporated into a 
construction project agreement?
137.339   May the Self-Governance Tribe use project funds for 
matching or cost participation requirements under other Federal and 
non-Federal programs?
137.340   May a Self-Governance Tribe contribute funding to a 
project?
137.341   How will a Self-Governance Tribe receive payment under a 
construction project agreement?
137.342   What happens to funds remaining at the conclusion of a 
cost reimbursement construction project?
137.343   What happens to funds remaining at the conclusion of a 
fixed price construction project?
137.344   May a Self-Governance Tribe reallocate funds among 
construction project agreements?

Roles of Self-Governance Tribe in Establishing and Implementing 
Construction Project Agreements

137.350   Is a Self-Governance Tribe responsible for completing a 
construction project in accordance with the negotiated construction 
project agreement?
137.351   Is a Self-Governance Tribe required to submit construction 
project progress and financial reports for construction project 
agreements?
137.352   What is contained in a construction project progress 
report?
137.353   What is contained in a construction project financial 
report?

Roles of the Secretary in Establishing and Implementing Construction 
Project Agreements

137.360   Does the Secretary approve project planning and design 
documents prepared by the Self-Governance Tribe?
137.361   Does the Secretary have any other opportunities to approve 
planning or design documents prepared by the Self-Governance Tribe?
137.362   May construction project agreements be amended?
137.363   What is the procedure for the Secretary's review and 
approval of amendments?
137.364   What constitutes a significant change in the original 
scope of work?
137.365   What is the procedure for the Secretary's review and 
approval of project planning and design documents submitted by the 
Self-Governance Tribe?
137.366   May the Secretary conduct onsite project oversight visits?
137.367   May the Secretary issue a stop work order under a 
construction project agreement?
137.368   Is the Secretary responsible for oversight and compliance 
of health and safety codes during construction projects being 
performed by a Self-Governance Tribe under section 509 of the Act 
[25 U.S.C. 488aaa-8]?

Other

137.370   Do all provisions of this part apply to construction 
project agreements under this subpart?
137.371   Who takes title to real property purchased with funds 
provided under a construction project agreement?
137.372   What should the Self-Governance Tribe do if it wants real 
property purchased with construction project agreement funds to be 
taken into trust?
137.373   Do Federal real property laws, regulations and procedures 
that apply to the Secretary also apply to Self-Governance Tribes 
that purchase real property with funds provided under a construction 
project agreement?
137.374   Does the Secretary have a role in reviewing or monitoring 
a Self-Governance Tribe's actions in acquiring real property with 
funds provided under a construction project agreement?
137.375   Are Tribally-owned facilities constructed under section 
509 of the Act [25 U.S.C. 458aaa-8] eligible for replacement, 
maintenance, and improvement funds on the same basis as if title to 
such property were vested in the United States?
137.376   Are design and construction projects performed by Self-
Governance Tribes under section 509 of the Act [25 U.S.C. 458aaa-8] 
subject to Federal metric requirements?
137.377   Do Federal procurement law and regulations apply to 
construction project agreements performed under section 509 of the 
Act [25 U.S.C. 458aaa-8]?
137.378   Does the Federal Davis-Bacon Act and wage rates apply to 
construction projects performed by Self-Governance Tribes using 
their own funds or other non-Federal funds?
137.379   Do Davis-Bacon wage rates apply to construction projects 
performed by Self-Governance Tribes using Federal funds?
Subpart O--Secretarial Responsibilities Budget Request
137.400--137.404  [Reserved].

Reports

137.405   Is the Secretary required to report to Congress on 
administration of Title V and the funding requirements presently 
funded or unfunded?
137.406   In compiling reports pursuant to this section, may the 
Secretary impose any reporting requirements on Self-Governance 
Tribes, not otherwise provided in Title V?

[[Page 7012]]

137.407   What guidelines will be used by the Secretary to compile 
information required for the report?
Subpart P--Appeals
137.410   For the purposes of section 110 of the Act [25 U.S.C. 
450m-1] does the term Acontract include compacts, funding 
agreements, and construction project agreements entered into under 
Title V?

Post-Award Disputes

137.412   Do the regulations at 25 CFR Part 900, Subpart N apply to 
compacts, funding agreements, and construction project agreements 
entered into under Title V?

Pre-Award Disputes

137.415   What decisions may an Indian Tribe appeal under 
Secs. 137.415 through 137.436?
137.416   Do Secs. 137.415 through 137.436 apply to any other 
disputes?
137.417   What procedures apply to Interior Board of Indian Appeals 
(IBIA) proceedings?
137.418   How does an Indian Tribe know where and when to file its 
appeal from decisions made by IHS?
137.419   What authority does the IBIA have under Secs. 137.415 
through 137.436?
137.420   Does an Indian Tribe have any options besides an appeal?
137.421   How does an Indian Tribe request an informal conference?
137.422   How is an informal conference held?
137.423   What happens after the informal conference?
137.424   Is the recommended decision from the informal conference 
final for the Secretary?
137.425   How does an Indian Tribe appeal the initial decision if it 
does not request an informal conference or if it does not agree with 
the recommended decision resulting from the informal conference?
137.426   May an Indian Tribe get an extension of time to file a 
notice of appeal?
137.427   What happens after an Indian Tribe files an appeal?
137.428   How is a hearing arranged?
137.429   What happens when a hearing is necessary?
137.430   What is the Secretary's burden of proof for appeals 
covered by Sec. 137.145?
137.431   What rights do Indian Tribes and the Secretary have during 
the appeal process?
137.432   What happens after the hearing?
137.433   Is the recommended decision always final?
137.434   If an Indian Tribe objects to the recommended decision, 
what will the Secretary do?
137.435   Will an appeal adversely affect the Indian Tribe's rights 
in other compact, funding negotiations, or construction project 
agreements?
137.436   Will the decisions on appeal be available for the public 
to review?

Appeals of an Immediate Reassumption of a Self-Governance Program

137.440   What happens in the case of an immediate reassumption 
under section 507(a)(2)(C) of the Act [25 U.S.C. 458aaa-6(a)(2)(C)]?
137.441   Will there be a hearing?
137.442   What happens after the hearing?
137.443   Is the recommended decision always final?
137.444   If a Self-Governance Tribe objects to the recommended 
decision, what action will the Secretary take?
137.445   Will an immediate reassumption appeal adversely affect the 
Self-Governance Tribe's rights in other self-governance 
negotiations?

Equal Access to Justice Act Fees

137.450   Does the Equal Access to Justice Act (EAJA) apply to 
appeals under this subpart?

    Authority: 25 U.S.C. 458 et seq.

Subpart A B General Provisions


Sec. 137.1  Authority, purpose and scope.

    (a) Authority. These regulations are prepared, issued and 
maintained with the active participation and representation of Indian 
Tribes, Tribal organizations and inter-Tribal consortia pursuant to the 
guidance of the negotiated rulemaking procedures required by section 
517 of the Act [25 U.S.C. 458aaa-16].
    (b) Purpose. These regulations codify rules for self-governance 
compacts, funding agreements, and construction project agreements 
between the Department of Health and Human Services (DHHS) and Self-
Governance Tribes to implement sections 2, 3, and 4 of Pub. L. 106-260.
    (c) Scope. These regulations are binding on the Secretary and on 
Indian Tribes carrying out programs, services, functions, and 
activities (or portions thereof) (PSFAs) under Title V except as 
otherwise specifically authorized by a waiver under section 512(b) of 
the Act [25 U.S.C. 458aaa-11(b)].
    (d) Information Collection. The information collection requirements 
contained in these rules have been approved by the Office of Management 
and Budget (OMB) and assigned the following approval numbers: [Approval 
numbers will appear in this location in the final rule.]


Sec. 137.2  Congressional policy.

    (a) According to section 2 of Public Law 106-260, Congress has 
declared that:
    (1) The Tribal right of self-government flows from the inherent 
sovereignty of Indian Tribes and nations;
    (2) The United States recognizes a special government-to-government 
relationship with Indian Tribes, including the right of the Indian 
Tribes to self-governance, as reflected in the Constitution, treaties, 
Federal statutes, and the course of dealings of the United States with 
Indian Tribes;
    (3) Although progress has been made, the Federal bureaucracy, with 
its centralized rules and regulations, has eroded Tribal Self-
Governance and dominates Tribal affairs.
    (4) The Tribal Self-Governance Demonstration Project, established 
under title III of the Indian Self-Determination Act (ISDA) [25 U.S.C. 
450f note] was designed to improve and perpetuate the government-to-
government relationship between Indian Tribes and the United States and 
to strengthen Tribal control over Federal funding and program 
management;
    (5) Although the Federal Government has made considerable strides 
in improving Indian health care, it has failed to fully meet its trust 
responsibilities and to satisfy its obligations to the Indian Tribes 
under treaties and other laws; and
    (6) Congress has reviewed the results of the Tribal Self-Governance 
Demonstration Project and finds that transferring full control and 
funding to Tribal governments, upon Tribal request, over decision 
making for Federal PSFAs
    (i) Is an appropriate and effective means of implementing the 
Federal policy of government-to-government relations with Indian 
Tribes; and
    (ii) Strengthens the Federal policy of Indian self-determination.
    (b) According to section 3 of Pub. L. 106-260, Congress has 
declared its policy to:
    (1) Permanently establish and implement Tribal Self-Governance 
within the DHHS;
    (2) Call for full cooperation from the DHHS and its constituent 
agencies in the implementation of Tribal Self-Governance--
    (i) Enable the United States to maintain and improve its unique and 
continuing relationship with, and responsibility to, Indian Tribes;
    (ii) Permit each Indian Tribe to choose the extent of its 
participation in self-governance in accordance with the provisions of 
the ISDA relating to the provision of Federal services to Indian 
Tribes;
    (iii) Ensure the continuation of the trust responsibility of the 
United States to Indian Tribes and Indians;
    (iv) Affirm and enable the United States to fulfill its obligations 
to the Indian Tribes under treaties and other laws;

[[Page 7013]]

    (v) Strengthen the government-to-government relationship between 
the United States and Indian Tribes through direct and meaningful 
consultation with all Tribes;
    (vi) Permit an orderly transition from Federal domination of 
programs and services to provide Indian Tribes with meaningful 
authority, control, funding, and discretion to plan, conduct, redesign, 
and administer PSFAs that meet the needs of the individual Tribal 
communities;
    (vii) Provide for a measurable parallel reduction in the Federal 
bureaucracy as programs, services, functions, and activities (or 
portion thereof) are assumed by Indian Tribes; (viii) Encourage the 
Secretary to identify all PSFAs of the DHHS that may be managed by an 
Indian Tribe under this Act and to assist Indian Tribes in assuming 
responsibility for such PSFAs; and
    (ix) Provide Indian Tribes with the earliest opportunity to 
administer PSFAs from throughout the Department.
    (c) According to section 512(a) of the Act [25 U.S.C. 458aaa-
11(a)], Congress has declared, except as otherwise provided by law, the 
Secretary shall interpret all Federal laws, Executive Orders, and 
regulations in a manner that will facilitate:
    (1) The inclusion of PSFAs and funds associated therewith, in the 
agreements entered into under this section;
    (2) The implementation of compacts and funding agreements entered 
into under this title; and
    (3) The achievement of Tribal health goals and objectives.
    (d) According to section 512(f) of the Act [25 U.S.C. 458aaa-
11(f)], Congress has declared that each provision of Title V and each 
provision of a compact or funding agreement shall be liberally 
construed for the benefit of the Indian Tribe participating in and any 
ambiguity shall be resolved in favor of the Indian Tribe.
    (e) According to section 515(b) of the Act [25 U.S.C. 458aaa-
14(b)], Congress has declared that nothing in the Act shall be 
construed to diminish in any way the trust responsibility of the United 
States to Indian Tribes and individual Indians that exists under 
treaties, Executive orders, or other laws and court decisions.
    (f) According to section 507(g) of the Act [25 U.S.C. 458aaa-6(g)], 
Congress has declared that the Secretary is prohibited from waiving, 
modifying, or diminishing in any way the trust responsibility of the 
United States with respect to Indian Tribes and individual Indians that 
exists under treaties, Executive orders, other laws, or court 
decisions.
    (g) According to section 515(c) of the Act [25 U.S.C. 458aaa-
14(c)], Congress has declared that the Indian Health Service (IHS) 
under this Act shall neither bill nor charge those Indians who may have 
the economic means to pay for services, nor require any Tribe to do so. 
Nothing in this section shall impair the right of the IHS or an Indian 
Tribe to seek recovery from third parties section 206 of the Indian 
Health Care Improvement Act [25 U.S.C. 1621e], under section 1 of the 
Federal Medical Care Recovery Act [42 U.S.C. 2651], and any other 
applicable Federal, State or Tribal law.
    (h) According to section 507(e) of the Act [25 U.S.C. 458aaa-6(e)], 
Congress has declared that in the negotiation of compacts and funding 
agreements the Secretary shall at all times negotiate in good faith to 
maximize implementation of the self-governance policy. The Secretary 
shall carry out Title V in a manner that maximizes the policy of Tribal 
Self-Governance, and in a manner consistent with the purposes specified 
in section 3 of the Act.


Sec. 137.3  Effect on existing Tribal rights.

    Nothing in this part shall be construed as:
    (a) Affecting, modifying, diminishing, or otherwise impairing the 
sovereign immunity from suit enjoyed by Indian Tribes;
    (b) Terminating, waiving, modifying, or reducing the trust 
responsibility of the United States to the Indian Tribe(s) or 
individual Indians. The Secretary must act in good faith in upholding 
this trust responsibility;
    (c) Mandating an Indian Tribe to apply for a compact(s) or grant(s) 
as described in the Act; or
    (d) Impeding awards by other Departments and agencies of the United 
States to Indian Tribes to administer Indian programs under any other 
applicable law.


Sec. 137.4  May Title V be construed to limit or reduce in any way the 
funding for any program, project, or activity serving an Indian Tribe 
under this or other applicable Federal Law?

    No, if an Indian Tribe alleges that a compact or funding agreement 
violates section 515(a) of the Act [25 U.S.C. 458aaa-14(a)], the Indian 
Tribe may apply the provisions of section 110 of the Act [25 U.S.C. 
450m-1].


Sec. 137.5  Effect of these regulations on Federal program guidelines, 
manual, or policy directives.

    Unless expressly agreed to by the Self-Governance Tribe in the 
compact or funding agreement, the Self-Governance Tribe shall not be 
subject to any agency circular, policy, manual, guidance, or rule 
adopted by the IHS, except for the eligibility provisions of section 
105(g) of the Act [25 U.S.C. 450j(g)] and regulations promulgated under 
section 517 of the Act [25 U.S.C. 458aaa-16(e)].

Subpart B--Definitions.


Sec. 137.10  Definitions.

    Unless otherwise provided in this part:
    Act means sections 1 through 9 and Titles I and V of the Indian 
Self-Determination and Education Assistance Act of 1975, Public Law 93-
638, as amended.
    Appeal means a request by an Indian Tribe for an administrative 
review of an adverse decision by the Secretary.
    Compact means a legally binding and mutually enforceable written 
agreement that affirms the government-to-government relationship 
between a Self-Governance Tribe and the United States.
    Congressionally earmarked competitive grants as used in section 
505(b)(1) of the Act [25 U.S.C. 458aaa-4(b)(1)] means statutorily 
mandated grants as defined in this section and used in subpart H of 
this part.
    Contract means a self-determination contract as defined in section 
4(j) of the Act [25 U.S.C. 450b].
    Days means calendar days; except where the last day of any time 
period specified in these regulations falls on a Saturday, Sunday, or a 
Federal holiday, the period shall carry over to the next business day 
unless otherwise prohibited by law.
    Department means the Department of Health and Human Services.
    Director means the Director of the Indian Health Service.
    Funding agreement means a legally binding and mutually enforceable 
written agreement that identifies the PSFAs that the Self-Governance 
Tribe will carry out, the funds being transferred from the Service 
Unit, Area, and Headquarter's levels in support of those PSFAs and such 
other terms as are required, or may be agreed upon, pursuant to Title 
V.
    Gross mismanagement means a significant, clear, and convincing 
violation of a compact, funding agreement, or regulatory, or statutory 
requirements applicable to Federal funds transferred to an Indian Tribe 
by a compact or funding agreement that results in a significant 
reduction of funds available for the PSFAs assumed by a Self-Governance 
Tribe.
    IHS means Indian Health Service.
    IHS discretionary grant means a grant established by IHS pursuant 
to the IHS'

[[Page 7014]]

discretionary authority without any specific statutory directive.
    Indian means a person who is a member of an Indian Tribe.
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group, or community, including pueblos, rancherias, colonies, 
and any Alaska Native Village, or regional or village corporation as 
defined in 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; provided that in any case in which an 
Indian Tribe has authorized another Indian Tribe, an inter-Tribal 
consortium, or a Tribal organization to plan for or carry out programs, 
services, functions, or activities (or portions thereof) on its behalf 
under Title V, the authorized Indian Tribe, inter-Tribal consortium or 
Tribal organization shall have the rights and responsibilities of the 
authorizing Indian Tribe (except as otherwise provided in the 
authorizing resolution or in this part). In such event, the term 
`Indian Tribe' as used in this part includes such other authorized 
Indian Tribe, inter-Tribal consortium, or Tribal organization.
    Indirect costs shall have the same meaning as it has in 25 CFR 
900.6 as applied to compacts, funding agreements and construction 
project agreements entered into under this part.
    Inherent Federal functions means those Federal functions which 
cannot legally be delegated to Indian Tribes.
    Inter-Tribal consortium means a coalition of two or more separate 
Indian Tribes that join together for the purpose of participating in 
self-governance, including Tribal organizations.
    OMB means the Office of Management and Budget.
    PSFA means programs, services, functions, and activities (or 
portions thereof).
    Real property means any interest in land together with the 
improvements, structures, and fixtures and appurtenances thereto.
    Reassumption means rescission, in whole or part, of a funding 
agreement and assuming or resuming control or operation of the PSFAs by 
the Secretary without consent of the Self-Governance Tribe.
    Retained Tribal share means those funds that are available as a 
Tribal share but which the Self-Governance Tribe elects to leave with 
the IHS to administer.
    Retrocession means the voluntary return to the Secretary of a self-
governance program, service, function or activity (or portion thereof) 
for any reason, before or on the expiration of the term of the funding 
agreement.
    Secretary means the Secretary of Health and Human Services (and his 
or her respective delegates.)
    Self-Governance means the program of self-governance established 
under section 502 of the Act [25 U.S.C. 458aaa-1].
    Self-Governance Tribe means an Indian Tribe participating in the 
program of self-governance pursuant to section 503(a) of the Act [25 
U.S.C. 458aaa-2(a)] or selected and participating in self-governance 
pursuant to section 503(b) of the Act [25 U.S.C. 458aaa-2(b)].
    Statutorily mandated grant as used in this section and subpart F of 
this part means a grant specifically designated in a statute for a 
defined purpose.
    Title I means sections 1 through 9 and Title I of the Indian Self-
Determination and Education Assistance Act of 1975, Pub. L. 93-638, as 
amended.
    Title V means Title V of the Indian Self-Determination and 
Education Assistance Act of 1975, Pub. L. 93-638, as amended.
    Tribal organization means the recognized governing body of any 
Indian Tribe; any legally established organization of Indians which is 
controlled, sanctioned, or chartered by such governing body or which is 
democratically elected by the adult members of the Indian community to 
be served by such organization and which includes the maximum 
participation of Indians in all phases of its activities; provided, 
that in any case where a contract or compact is entered into, or a 
grant is made, to an organization to perform services benefitting more 
than one Indian Tribe, the approval of each such Indian Tribe shall be 
a prerequisite to the entering into or making of such contract, 
compact, or grant.
    Tribal share means an Indian Tribe's portion of all funds and 
resources that support secretarial PSFAs that are not required by the 
Secretary for the performance of inherent Federal functions.

Subpart C--Selection of Indian Tribes for Participation in Self-
Governance


Sec. 137.15  Who may participate in Tribal Self-Governance?

    Those Self-Governance Tribes described in 503(a) of the Act [25 
U.S.C. 458aaa-2(a)] participating in the Title III Tribal Self-
Governance Demonstration Project and up to 50 additional Indian Tribes 
per year that meet the criteria in Sec. 137.18 may participate in self-
governance.


Sec. 137.16  What if more than 50 Indian Tribes apply to participate in 
self-governance?

    The first 50 Indian Tribes who apply and are determined to be 
eligible shall have the option to participate in self-governance. Any 
Indian Tribe denied participation due to the limitation in number of 
Indian Tribes that may take part is entitled to participate in the next 
fiscal year, provided the Indian Tribe continues to meet the financial 
stability and financial management capacity requirements.


Sec. 137.17  May more than one Indian Tribe participate in the same 
compact and/or funding agreement?

    Yes, Indian Tribes may either:
    (a) Each sign the same compact and/or funding agreement, provided 
that each one meets the criteria to participate in self-governance and 
accepts legal responsibility for all financial and administrative 
decisions made under the compact or funding agreement, or
    (b) Authorize another Indian Tribe to participate in self-
governance on their behalf.


Sec. 137.18  What criteria must an Indian Tribe satisfy to be eligible 
to participate in self-governance?

    To be eligible to participate in self-governance, an Indian Tribe 
must have:
    (a) Successfully completed the planning phase described in 
Sec. 137.20;
    (b) Requested participation in self-governance by resolution or 
other official action by the governing body of each Indian Tribe to be 
served; and
    (c) Demonstrated, for three fiscal years, financial stability and 
financial management capability.

Planning Phase


Sec. 137.20  What is required during the planning phase?

    The planning phase must be conducted to the satisfaction of the 
Indian Tribe and must include:
    (a) Legal and budgetary research; and
    (b) Internal Tribal government planning and organizational 
preparation relating to the administration of health programs.


Sec. 137.21  How does an Indian Tribe demonstrate financial stability 
and financial management capacity?

    The Indian Tribe provides evidence that, for the three years prior 
to participation in self-governance, the Indian Tribe has had no 
uncorrected significant and material audit exceptions in the required 
annual audit of the Indian Tribe's self-determination contracts or 
self-governance funding agreements with any Federal agency.

[[Page 7015]]

Sec. 137.22  May the Secretary consider uncorrected significant and 
material audit exceptions identified regarding centralized financial 
and administrative functions?

    Yes, if the Indian Tribe chooses to centralize its self-
determination or self-governance financial and administrative functions 
with non-self-determination or non-self-governance financial and 
administrative functions, such as personnel, payroll, property 
management, etc., the Secretary may consider uncorrected significant 
and material audit exceptions related to the integrity of a cross-
cutting centralized function in determining the Indian Tribe's 
eligibility for participation in the self-governance program.


Sec. 137.23  For purposes of determining eligibility for participation 
in self-governance, may the Secretary consider any other information 
regarding the Indian Tribe's financial stability and financial 
management capacity?

    No, meeting the criteria set forth in Secs. 137.21 and 137.22, 
shall be conclusive evidence of the required stability and capability 
to participate in self-governance.


Sec. 137.24  Are there grants available to assist the Indian Tribe to 
meet the requirements to participate in self-governance?

    Yes, any Indian Tribe may apply, as provided in Sec. 137.25, for a 
grant to assist it to:
    (a) Plan to participate in self-governance; and
    (b) Negotiate the terms of the compact and funding agreement 
between the Indian Tribe and Secretary.


Sec. 137.25  Are planning and negotiation grants available?

    Subject to the availability of funds, IHS will annually publish a 
notice of the number of planning and negotiation grants available, an 
explanation of the application process for such grants, and the 
criteria for award. Questions may be directed to the Office of Tribal 
Self-Governance.


Sec. 137.26  Must an Indian tribe receive a planning or negotiation 
grant to be eligible to participate in self-governance?

    No, an Indian Tribe may use other resources to meet the planning 
requirement.

Subpart D--Self-Governance Compact


Sec. 137.30  What is a self-governance compact?

    A self-governance compact is a legally binding and mutually 
enforceable written agreement that affirms the government-to-government 
relationship between a Self-Governance Tribe and the United States.


Sec. 137.31  What is included in a compact?

    A compact shall include general terms setting forth the government-
to-government relationship consistent with the Federal Government's 
trust responsibility and statutory and treaty obligations to Indian 
Tribes and such other terms as the parties intend to control from year 
to year.


Sec. 137.32  Is a compact required to participate in self-governance?

    Yes, Tribes must have a compact in order to participate in self-
governance.


Sec. 137.33  May an Indian Tribe negotiate a funding agreement at the 
same time it is negotiating a compact?

    Yes, at an Indian Tribe's option, a funding agreement may be 
negotiated prior to or at the same time as the negotiation of a 
compact.


Sec. 137.34  May a funding agreement be executed without negotiating a 
compact?

    No, a compact is a separate document from a funding agreement, and 
the compact must be executed before or at the same time as a funding 
agreement.


Sec. 137.35  What is the term of a self-governance compact?

    Upon approval and execution of a self-governance compact, the 
compact remains in effect for so long as permitted by Federal law or 
until terminated by mutual written agreement or retrocession or 
reassumption of all PSFAs.

Subpart E--Funding Agreements


Sec. 137.40  What is a funding agreement?

    A funding agreement is a legally binding and mutually enforceable 
written agreement that identifies the PSFAs that the Self-Governance 
Tribe will carry out, the funds being transferred from service unit, 
area and headquarters levels in support of those PSFAs and such other 
terms as are required or may be agreed upon pursuant to Title V.


Sec. 137.41  What PSFAs must be included in a funding agreement?

    At the Self-Governance Tribe's option, all PSFAs identified in and 
in accordance with section 505(b) of the Act must be included in a 
funding agreement, subject to section 507(c) of the Act [25 U.S.C. 
458aaa-6(c)].


Sec. 137.42  What Tribal shares may be included in a funding agreement?

    All Tribal shares identified in sections 505(b)(1) [25 U.S.C. 
458aaa-4(b)(1)] and 508(c) of the Act [25 U.S.C. 458aaa-7(c)] may be 
included in a funding agreement, including Tribal shares of IHS 
discretionary grants.


Sec. 137.43  Are all funds identified as Tribal shares always paid to 
the Self-Governance Tribe under a funding agreement?

    No, at the discretion of the Self-Governance Tribe, Tribal shares 
may be left, in whole or in part, with IHS for certain PSFAs. These 
shares are referred to as a ``retained Tribal shares.''

Terms in a Funding Agreement


Sec. 137.45  What terms must be included in a funding agreement?

    A funding agreement must include terms required under section 
505(d) of the Act [25 U.S.C. 458aaa-4(d)] and provisions regarding 
mandatory reporting and reassumption pursuant to section 507(a) of the 
Act [25 U.S.C. 458aaa-6(a)], unless those provisions have been included 
in a compact.


Sec. 137.46  May additional terms be included in a funding agreement?

    Yes, at the Self-Governance Tribe's option, additional terms may be 
included as set forth in sections 506 [25 U.S.C. 458aaa-5] and 516(b) 
of the Act [25 U.S.C. 458aaa-15(b)]. In addition, any other terms to 
which the Self-Governance Tribe and the Secretary agree may be 
included.


Sec. 137.47  Do any provisions of Title I apply to compacts, funding 
agreements, and construction project agreements negotiated under Title 
V of the Act?

    (a) Yes, the provisions of Title I listed in section 516(a) of the 
Act [25 U.S.C. 458aaa-15(a)] and section 314 of Pub. L. 101-512, as 
amended, [25 U.S.C. 450f note] mandatorily apply to a compact, funding 
agreement and construction project agreement to the extent they are not 
in conflict with Title V. In addition, at the option of a Self-
Governance Tribe, under section 516(b) of the Act [25 U.S.C. 458aaa-
15(b)] any provisions of Title I may be included in the compact or 
funding agreement.
    (b) The provisions of Title I referenced in section 516(a) of the 
Act [25 U.S.C. 458aaa-15(a)] are sections 5 [25 U.S.C. 450c], 6 [25 
U.S.C. 450d], 7 [25 U.S.C. 450e], 102(c) and (d) [25 U.S.C. 450f(c) and 
(d)], 104 [25 U.S.C. 450i], 105(k) and (l) [25 U.S.C. 450j(k) and (l)], 
106(a) through (k) [25 U.S.C. 450j-1(a) through (k)], and 111 [25 
U.S.C. 450n] of the Act.


Sec. 137.48  What is the effect of incorporating a Title I provision 
into a compact or funding agreement?

    The incorporated Title I provision shall have the same force and 
effect as if it were set out in full in Title V.

[[Page 7016]]

Sec. 137.49  What if a Self-Governance Tribe requests such 
incorporation at the negotiation stage of a compact or funding 
agreement?

    In that event, such incorporation shall be deemed effective 
immediately and shall control the negotiation and resulting compact and 
funding agreement.

Term of a Funding Agreement


Sec. 137.55  What is the term of a funding agreement?

    A funding agreement shall have the term mutually agreed to by the 
parties. Absent notification from an Indian Tribe that it is 
withdrawing or retroceding the operation of one or more PSFAs 
identified in the funding agreement, the funding agreement shall remain 
in full force and effect until a subsequent funding agreement is 
executed.


Sec. 137.56  Does a funding agreement remain in effect after the end of 
its term?

    Yes, the provisions of a funding agreement remain in full force and 
effect until a subsequent funding agreement is executed. Upon execution 
of a subsequent funding agreement, the provisions of such a funding 
agreement are retroactive to the end of the term of the preceding 
funding agreement.


Sec. 137.57  How is a funding agreement amended during the effective 
period of the funding agreement?

    A funding agreement may be amended by the parties as provided for 
in the funding agreement, Title V, or this part.

Subpart F--Statutorily Mandated Grants


Sec. 137.60  May a statutorily mandated grant be added to a funding 
agreement?

    Yes, in accordance with section 505(b)(2) of the Act [25 U.S.C. 
458aaa-4(b)(2)], a statutorily mandated grant may be added to the 
funding agreement after award.


Sec. 137.65  May a Self-Governance Tribe receive statutorily mandated 
grant funding in an annual lump sum advance payment?

    Yes, grant funds shall be added to the funding agreement as an 
annual lump sum advance payment after the grant is awarded.


Sec. 137.66  May a Self-Governance Tribe keep interest earned on 
statutorily mandated grant funds?

    Yes, a Self-Governance Tribe may keep interest earned on 
statutorily mandated grant funds.


Sec. 137.67  How may a Self-Governance Tribe use interest earned on 
statutorily mandated grant funds?

    Interest earned on such funds must be used to enhance the grant 
program including allowable administrative costs.


Sec. 137.68  May funds from a statutorily mandated grant added to a 
funding agreement be reallocated?

    No, unless it is permitted under the statute authorizing the grant 
or under the terms and conditions of the grant award, funds from a 
statutorily mandated grant may not be reallocated.


Sec. 137.69  May a statutorily mandated grant program added to a 
funding agreement be redesigned?

    No, unless it is permitted under the statute authorizing the grant 
or under the terms and conditions of the grant award, a program added 
to a funding agreement under a statutorily mandated grant may not be 
redesigned.


Sec. 137.70  Are the reporting requirements different for a statutorily 
mandated grant program added to a funding agreement?

    Yes, the reporting requirements for a statutorily mandated grant 
program added to a funding agreement are subject to the terms and 
conditions of the grant award.


Sec. 137.71  May the Secretary and the Self-Governance Tribe develop 
separate programmatic reporting requirements for statutorily mandated 
grants?

    Yes, the Secretary and the Self-Governance Tribe may develop 
separate programmatic reporting requirements for statutorily mandated 
grants.


Sec. 137.72  Are Self-Governance Tribes and their employees carrying 
out statutorily mandated grant programs added to a funding agreement 
covered by the Federal Tort Claims Act (FTCA)?

    Yes, Self-Governance Tribes and their employees carrying out 
statutorily mandated grant programs added to a funding agreement are 
covered by the FTCA. Regulations governing coverage under the FTCA are 
published at 25 CFR Part 900, Subpart M.

Subpart G--Funding

General


Sec. 137.75  What funds must the Secretary transfer to a Self-
Governance Tribe in a funding agreement?

    Subject to the terms of any compact or funding agreement, the 
Secretary must transfer to a Tribe all funds provided for in the 
funding agreement, pursuant to section 508(c) of the Act [25 U.S.C. 
458aaa-7(c)] and '137.80. The Secretary shall provide funding for 
periods covered by joint resolution adopted by Congress making 
continuing appropriations, to the extent permitted by such resolutions.


Sec. 137.76  When must the Secretary transfer to a Self-Governance 
Tribe funds identified in a funding agreement?

    When a funding agreement requires an annual transfer of funding to 
be made at the beginning of a fiscal year, or requires semiannual or 
other periodic transfers of funding to be made commencing at the 
beginning of a fiscal year, the first such transfer shall be made not 
later than 10 days after the apportionment of such funds by the OMB to 
the Department, unless the funding agreement provides otherwise.


Sec. 137.77  When must the Secretary transfer funds identified in a 
funding agreement which does not correspond to the Federal fiscal year, 
e.g., calendar year?

    When the period covered by a funding agreement crosses Federal 
fiscal years and unless 100 percent of the funding is available and 
agreed to in the funding agreement, funding for the funding agreement 
will be apportioned between the two fiscal years and payments due under 
the funding agreement associated with each respective fiscal year will 
be made on the later of:
    (a) The effective date of the funding agreement, or
    (b) Ten days after apportionment from OMB.


Sec. 137.78  When must the Secretary transfer funds that were not paid 
as part of the initial lump sum payment?

    The Secretary must transfer any funds that were not paid in the 
initial lump sum payment within 10 days after distribution 
methodologies and other decisions regarding payment of those funds have 
been made by the IHS.


Sec. 137.79  May a Self-Governance Tribe negotiate a funding agreement 
for a term longer or shorter than one year?

    Yes, upon Tribal request, the Secretary must negotiate a funding 
agreement for a term longer or shorter than a year. All references in 
these regulations to funding agreements shall also include funding 
agreements for a term longer or shorter than one year.


Sec. 137.80  What funds must the Secretary include in a funding 
agreement?

    The Secretary must include funds in a funding agreement in an 
amount equal to the amount that the Self-Governance Tribe would have 
been entitled to receive in a contract under Title I, including amounts 
for direct program costs specified under section 106(a)(1) of the Act 
and amounts for contract support costs specified under section

[[Page 7017]]

106(a) (2), (3), (5), and (6) of the Act [25 U.S.C. 450j-1(a)(2), (3), 
(5) and (6)]. In addition, the Secretary shall include any funds that 
are specifically or functionally related to the provision by the 
Secretary of services and benefits to the Self-Governance Tribe or its 
members, all without regard to the organizational level within the 
Department where such functions are carried out.

Prohibitions


Sec. 137.85  Is the Secretary prohibited from failing or refusing to 
transfer funds that are due to a Self-Governance Tribe under Title V?

    Yes, sections 508(d)(1)(A) and (B) of the Act [25 U.S.C. 458aaa-
7(d)(1)(A) and (B)] expressly prohibit the Secretary from:
    (a) Failing or refusing to transfer to a Self-Governance Tribe its 
full share of any central, headquarters, regional, area, or service 
unit office or other funds due under Title V, except as required by 
Federal law, and
    (b) From withholding portions of such funds for transfer over a 
period of years.


Sec. 137.86  Is the Secretary prohibited from reducing the amount of 
funds required under Title V to make funding available for self-
governance monitoring or administration by the Secretary?

    Yes, the Secretary is prohibited from reducing the amount of funds 
required under Title V to make funding available for self-governance 
monitoring or administration.


Sec. 137.87  May the Secretary reduce the amount of funds due under 
Title V in subsequent years?

    No, in accordance with section 508(d)(1)(C)(ii) of the Act [[25 
U.S.C. 458aaa-7(d)(1)(C)(ii)], the Secretary is prohibited from 
reducing the amount of funds required under Title V in subsequent 
years, except pursuant to:
    (a) A reduction in appropriations from the previous fiscal year for 
the program or function to be included in a compact or funding 
agreement;
    (b) A Congressional directive in legislation or accompanying 
report;
    (c) A Tribal authorization;
    (d) A change in the amount of pass-through funds subject to the 
terms of the funding agreement; or
    (e) Completion of a project, activity, or program for which such 
funds were provided.


Sec. 137.88  May the Secretary reduce the amount of funds required 
under Title V to pay for Federal functions, including Federal pay 
costs, Federal employee retirement benefits, automated data processing, 
technical assistance, and monitoring of activities under the Act?

    No, the Secretary may not reduce the amount of funds required under 
Title V to pay for Federal functions, including Federal pay costs, 
Federal employee retirement benefits, automated data processing, 
technical assistance, and monitoring of activities under the Act.


Sec. 137.89  May the Secretary reduce the amount of funds required 
under Title V to pay for costs of Federal personnel displaced by 
contracts under Title I or Self-Governance under Title V?

    No, the Secretary may not reduce the amount of funds required under 
Title V to pay for costs of Federal personnel displaced by contracts 
under Title I or Self-Governance under Title V.


Sec. 137.90  May the Secretary increase the funds required under the 
funding agreement?

    Yes, the Secretary may increase the funds required under the 
funding agreement. However, the Self-Governance Tribe and the Secretary 
must agree to any transfer of funds to the Self-Governance Tribe unless 
otherwise provided for in the funding agreement.

Acquisition of Goods and Services from the IHS


Sec. 137.95  May a Self-Governance Tribe purchase goods and services 
from the IHS on a reimbursable basis?

    Yes, a Self-Governance Tribe may choose to purchase from the IHS 
any goods and services transferred by the IHS to a Self-Governance 
Tribe in a compact or funding agreement. The IHS shall provide any such 
goods and services to the Self-Governance Tribe, on a reimbursable 
basis, including payment in advance with subsequent adjustment.

Prompt Payment Act


Sec. 137.96  Does the Prompt Payment Act apply to funds transferred to 
a Self-Governance Tribe in a compact or funding agreement?

    Yes, the Prompt Payment Act, 39 U.S.C. section 3901 et seq., 
applies to the transfer of all funds due under a compact or funding 
agreement authorized pursuant to Title V. See also ''137.76 through 
137.78 and 137.341(f).

Interest or Other Income on Transfers


Sec. 137.100  May a Self-Governance Tribe retain and spend interest 
earned on any funds paid under a compact or funding agreement?

    Yes, pursuant to section 508(h) of the Act [25 U.S.C. 458aaa-7(h)], 
a Self-Governance Tribe may retain and spend interest earned on any 
funds paid under a compact or funding agreement.


Sec. 137.101  What standard applies to a Self-Governance Tribe's 
management of funds paid under a compact or funding agreement?

    A Self-Governance Tribe is under a duty to invest and manage the 
funds as a prudent investor would, in light of the purpose, terms, 
distribution requirements, and provisions in the compact or funding 
agreement and Title V. This duty requires the exercise of reasonable 
care, skill, and caution, and is to be applied to investments not in 
isolation but in the context of the investment portfolio and as a part 
of an overall investment strategy, which should incorporate risk and 
return objectives reasonably suitable to the Self-Governance Tribe. In 
making and implementing investment decisions, the Self-Governance Tribe 
has a duty to diversify the investments unless, under the 
circumstances, it is prudent not to do so. In addition, the Self-
Governance Tribe must:
    (a) Conform to fundamental fiduciary duties of loyalty and 
impartiality;
    (b) Act with prudence in deciding whether and how to delegate 
authority and in the selection and supervision of agents; and
    (c) Incur only costs that are reasonable in amount and appropriate 
to the investment responsibilities of the Self-Governance Tribe.

Carryover of Funds


Sec. 137.105  May a Self-Governance Tribe carryover from one year to 
the next any funds that remain at the end of the funding agreement?

    Yes, pursuant to section 508(i) of the Act, a Self-Governance Tribe 
may carryover from one year to the next any funds that remain at the 
end of the funding agreement.

Program Income


Sec. 137.110  May a Self-Governance Tribe retain and expend any program 
income earned pursuant to a compact and funding agreement?

    All Medicare, Medicaid, or other program income earned by a Self-
Governance Tribe shall be treated as supplemental funding to that 
negotiated in the funding agreement. The Self-Governance Tribe may 
retain all such

[[Page 7018]]

income and expend such funds in the current year or in future years 
except to the extent that the Indian Health Care Improvement Act (25 
U.S.C. 1601 et seq.) provides otherwise for Medicare and Medicaid 
receipts. Such funds shall not result in any offset or reduction in the 
amount of funds the Self-Governance Tribe is authorized to receive 
under its funding agreement in the year the program income is received 
or for any subsequent fiscal year.

Limitation of Costs


Sec. 137.115  Is a Self-Governance Tribe obligated to continue 
performance under a compact or funding agreement if the Secretary does 
not transfer sufficient funds?

    No, if a Self-Governance Tribe believes that the total amount of 
funds provided for a specific PSFA in a compact or funding agreement is 
insufficient, the Self-Governance Tribe must provide reasonable written 
notice of such insufficiency to the Secretary. If the Secretary does 
not increase the amount of funds transferred under the funding 
agreement in a quantity sufficient for the Self-Governance Tribe to 
complete the PSFA, as jointly determined by the Self-Governance Tribe 
and the Secretary, the Self-Governance Tribe may suspend performance of 
the PSFA until such time as additional funds are transferred.

Stable Base Budget


Sec. 137.120  May a Self-Governance Tribe's funding agreement provide 
for a stable base budget?

    Yes, at the option of a Self-Governance Tribe, a funding agreement 
may provide for a stable base budget, specifying the recurring funds to 
be transferred to a Self-Governance Tribe for a period specified in the 
funding agreement.


Sec. 137.121  What funds may be included in a stable base budget 
amount?

    The stable base budget amount may include, at the option of the 
Self-Governance Tribe,
    (a) Recurring funds available under section 106(a) of the Act [25 
U.S.C. 450j-1];
    (b) Recurring Tribal shares; and
    (c) Any recurring funds for new or expanded PSFAs not previously 
assumed by the Self-Governance Tribe.


Sec. 137.122  May a Self-Governance Tribe with a stable base budget 
receive other funding under its funding agreement?

    Yes, the funding agreement may include non-recurring funds, other 
recurring funds, and other funds the Self-Governance Tribe is entitled 
to include in a funding agreement that are not included in the stable 
base budget amount.


Sec. 137.123  Once stable base funding is negotiated, do funding 
amounts change from year to year?

    Stable base funding amounts are subject to adjustment:
    (a) Annually only to reflect changes in Congressional 
appropriations by sub-sub activity excluding earmarks;
    (b) By mutual agreement of the Self-Governance Tribe and the 
Secretary; or
    (c) As a result of full or partial retrocession or reassumption.


Sec. 137.124  Does the effective period of a stable base budget have to 
be the same as the term of the funding agreement?

    No, the Self-Governance Tribe may provide in its funding agreement 
that the effective period of the stable base budget will be either 
longer or shorter than the term of the funding agreement.

Subpart H--Final Offer


Sec. 137.130  What is covered by this subpart?

    This subpart explains the final offer process provided by the 
statute for resolving, within a specific timeframe, disputes that may 
develop in negotiation of compacts, funding agreements, or amendments 
thereof.


Sec. 137.131  When should a final offer be submitted?

    A final offer should be submitted when the Secretary and an Indian 
Tribe are unable to agree, in whole or in part, on the terms of a 
compact or funding agreement (including funding levels).


Sec. 137.132  How does the Indian Tribe submit a final offer?

    (a) A written final offer should be submitted:
    (1) During negotiations to the agency lead negotiator;
    (2) Thereafter to the Director.
    (b) The document should be separate from the compact, funding 
agreement, or amendment and clearly identified as a ``Final Offer.''


Sec. 137.133  What does a final offer contain?

    A final offer contains a description of the disagreement between 
the Secretary and the Indian Tribe and the Indian Tribe's final 
proposal to resolve the disagreement.


Sec. 137.134  When does the 45 day review period begin?

    The 45 day review period begins from the date the IHS receives the 
final offer. Proof of receipt may include a date stamp, or postal 
return receipt, or hand delivery.


Sec. 137.135  May the Secretary request and obtain an extension of time 
of the 45 day review period?

    Yes, the Secretary may request an extension of time before the 
expiration of the 45 day review period. The Indian Tribe may either 
grant or deny the Secretary's request for an extension. To be 
effective, any grant of extension of time must be in writing and be 
signed by the person authorized by the Indian Tribe to grant the 
extension before the expiration of the 45 day review period.


Sec. 137.136  What happens if the agency takes no action within the 45 
day review period (or any extensions thereof)?

    The final offer is accepted automatically by operation of law.


Sec. 137.137  If the 45 day review period or extension thereto, has 
expired, and the Tribe's offer is deemed accepted by operation of law, 
are there any exceptions to this rule?

    No, there are no exceptions to this rule if the 45 day review 
period or extension thereto, has expired, and the Tribe's offer is 
deemed accepted by operation of law.


Sec. 137.138  Once the Indian Tribe's final offer has been accepted or 
deemed accepted by operation of law, what is the next step?

    After the Indian Tribe's final offer is accepted or deemed 
accepted, the terms of the Indian Tribe's final offer and any funds 
included therein, shall be added to the funding agreement or compact 
within 10 days of the acceptance or the deemed acceptance.

Rejection of Final Offers


Sec. 137.140  On what basis may the Secretary reject an Indian Tribe's 
final offer?

    The Secretary may reject an Indian Tribe's final offer for one of 
the following reasons:
    (a) The amount of funds proposed in the final offer exceeds the 
applicable funding level to which the Indian Tribe is entitled under 
the Act;
    (b) The PSFA that is the subject of the final offer is an inherent 
Federal function that cannot legally be delegated to an Indian Tribe;
    (c) The Indian Tribe cannot carry out the PSFA in a manner that 
would not result in significant danger or risk to the public health; or
    (d) The Indian Tribe is not eligible to participate in self-
governance under section 503 of the Act [25 U.S.C. 458aaa-2].


Sec. 137.141  How does the Secretary reject a final offer?

    The Secretary must reject a final offer by providing written notice 
to the

[[Page 7019]]

Indian Tribe based on the criteria in Sec. 137.140 not more than 45 
days after receipt of a final offer, or within a longer time period as 
agreed by the Self-Governance Tribe consistent with this subpart.


Sec. 137.142  What is a ``significant danger'' or ``risk'' to the 
public health?

    A significant danger or risk is determined on a case-by-case basis 
in accordance with section 507(c) of the Act [25 U.S.C. 458aaa-6(c)].


Sec. 137.143  How is the funding level to which the Indian Tribe is 
entitled determined?

    The Secretary must provide funds under a funding agreement in an 
amount equal to the amount that the Indian Tribe would have been 
entitled to receive under self-determination contracts under this Act, 
including amounts for direct program costs specified under section 
106(a)(1) of the Act [25 U.S.C. 450j-1(a)(1)] and amounts for contract 
support costs specified under section 106(a)(2), (3), (5), and (6) of 
the Act [25 U.S.C. 450j-1(a)(2), (3), (5) and (6)], including any 
tribal shares.


Sec. 137.144  Is technical assistance available to an Indian Tribe to 
avoid rejection of a final offer?

    Yes, upon receiving a final offer, the Secretary must offer any 
necessary technical assistance, and must share all relevant information 
with the Indian Tribe in order to avoid rejection of a final offer.


Sec. 137.145  If the Secretary rejects a final offer, is the Secretary 
required to provide the Indian Tribe with technical assistance?

    Yes, the Secretary must offer and, if requested by the Indian 
Tribe, provide additional technical assistance to overcome the stated 
grounds for rejection.


Sec. 137.146  If the Secretary rejects all or part of a final offer, is 
the Indian Tribe entitled to an appeal?

    Yes, the Indian Tribe is entitled to appeal the decision of the 
Secretary, with an agency hearing on the record, and the right to 
engage in full discovery relevant to any issue raised in the matter. 
The procedures for appeals are found in subpart P of this part. 
Alternatively, at its option, the Indian Tribe has the right to sue 
pursuant to section 110 of the Act [25 U.S.C. 450m-1] in Federal 
district court to challenge the Secretary's decision.


Sec. 137.147  Do those portions of the compact, funding agreement, or 
amendment not in dispute go into effect?

    Yes, subject to section 507(c)(1)(D) of the Act [25 U.S.C. 458aaa-
6(c)(1)(D)].


Sec. 137.148  Does appealing the decision of the Secretary prevent 
entering into the compact, funding agreement, or amendment?

    No, appealing the decision of the Secretary does not prevent 
entering into the compact, funding agreement, or amendment.

Burden of Proof


Sec. 137.150  What is the burden of proof in an appeal from rejection 
of a final offer?

    With respect to any appeal, hearing or civil action, the Secretary 
shall have the burden of demonstrating by clear and convincing evidence 
the validity of the grounds for rejecting the final offer.

Decision Maker


Sec. 137.155  What constitutes a final agency action?

    A final agency action shall consist of a written decision from the 
Department to the Indian Tribe either:
    (a) By an official of the Department who holds a position at a 
higher organizational level within the Department than the level of the 
departmental agency in which the decision that is the subject of the 
appeal was made; or
    (b) By an administrative judge.

Subpart I--Operational Provisions

Conflicts of Interest


Sec. 137.160  Are Self-Governance Tribes required to address potential 
conflicts of interest?

    Yes, self-Governance Tribes participating in self-governance under 
Title V must ensure that internal measures are in place to address 
conflicts of interest in the administration of self-governance PSFAs.

Audits and Cost Principles


Sec. 137.165  Are Self-Governance Tribes required to undertake annual 
audits?

    Yes, under the provisions of section 506(c) of the Act [25 U.S.C. 
458aaa-5(c)], Self-Governance Tribes must undertake annual audits 
pursuant to the Single Audit Act, 31 U.S.C. 7501 et seq.


Sec. 137.166  Are there exceptions to the annual audit requirements?

    Yes, the exceptions are described in 31 U.S.C. 7502 of the Single 
Audit Act.


Sec. 137.167  What cost principles must a Self-Governance Tribe follow 
when participating in self-governance under Title V?

    A Self-Governance Tribe must apply the cost principles of the 
applicable OMB circular, except as modified by:
    (a) Section 106 (k) of the Act [25 U.S.C. 450j-1],
    (b) Other provisions of law, or
    (c) Any exemptions to applicable OMB circulars subsequently granted 
by the OMB.


Sec. 137.168  May the Secretary require audit or accounting standards 
other than those specified in Sec. 137.167?

    No, no other audit or accounting standards shall be required by the 
Secretary.


Sec. 137.169  How much time does the Federal Government have to make a 
claim against a Self-Governance Tribe relating to any disallowance of 
costs, based on an audit conducted under Sec. 137.165?

    Any right of action or other remedy (other than those relating to a 
criminal offence) relating to any disallowance of costs is barred 
unless the Secretary provides notice of such a disallowance within 365 
days from receiving any required annual agency single audit report or, 
for any period covered by law or regulation in force prior to enactment 
of the Single Agency Audit Act of 1984, any other required final audit 
report.


Sec. 137.170  When does the 365 day period commence?

    For the purpose of determining the 365 day period, an audit report 
is deemed received on the date of actual receipt by the Secretary, at 
the address specified in Sec. 137.172, if, within 60 days after 
receiving the audit report, the Secretary does not give notice of a 
determination by the Secretary to reject the single-agency audit report 
as insufficient due to non-compliance with chapter 75 of title 31, 
United States Code or noncompliance with any other applicable law.


Sec. 137.171  Where do Self-Governance Tribes send their audit reports?

    (a) For fiscal years ending on or before June 30, 1996, the audit 
report must be sent to: National External Audit Review Center, Lucas 
Place Room 514, 323 W. 8th St., Kansas City, MO 64105.
    (b) For fiscal years, beginning after June 30, 1996, the audit 
report must be sent to: Single Audit Clearinghouse, 1201 E. 10th St., 
Jeffersonville, IN 47132.

[[Page 7020]]

Sec. 137.172  Should the audit report be sent anywhere else to ensure 
receipt by the Secretary?

    Yes, the Self-Governance Tribe should also send the audit report 
to: National External Audit Review Center, Lucas Place Room 514, 323 W. 
8th St., Kansas City, MO 64105.


Sec. 137.173  Does a Self-Governance Tribe have a right of appeal from 
a disallowance?

    Yes, the notice must set forth the right of appeal and hearing to 
the Interior Board of Contract Appeals, pursuant to section 110 of the 
Act [25 U.S.C. 450m-1].

Records


Sec. 137.175  Is a Self-Governance Tribe required to maintain a 
recordkeeping system?

    Yes. Tribes are required to maintain records and provide Federal 
agency access to those records as provided in Sec. 137.177.


Sec. 137.176  Are Tribal records subject to the Freedom of Information 
Act and Federal Privacy Act?

    No, except to the extent that a Self-Governance Tribe specifies 
otherwise in its compact or funding agreement, the records of the Self-
Governance Tribe shall not be considered Federal records for purposes 
of chapter 5 of title 5, United States Code.


Sec. 137.177  Is the Self-Governance Tribe required to make its records 
available to the Secretary?

    Yes, after 30 days advance written notice from the Secretary, the 
Self-Governance Tribe must provide the Secretary with reasonable access 
to such records to enable the Department to meet its minimum legal 
recordkeeping system requirements under sections 3101 through 3106 of 
title 44 United States Code.


Sec. 137.178  May Self-Governance Tribes store patient records at the 
Federal Records Centers?

    Yes, at the option of a Self-Governance Tribe, patient records may 
be stored at Federal Records Centers to the same extent and in the same 
manner as other Department patient records in accordance with section 
105(o) of the Act [25 U.S.C. 450j(o)].


Sec. 137.179  May a Self-Governance Tribe make agreements with the 
Federal Records Centers regarding disclosure and release of the patient 
records stored pursuant to Sec. 137.178?

    Yes, a Self-Governance Tribe may make agreements with the Federal 
Records Centers regarding disclosure and release of the patient records 
stored pursuant to Sec. 137.178.


Sec. 137.180  Are there other laws that govern access to patient 
records?

    Yes, a Tribe must consider the potential application of Tribal, 
Federal and state law and regulations that may apply to requests for 
access to Tribal patient records, such as the provisions 42 CFR 2.1-
2.67 pertaining to records regarding drug and/or alcohol treatment.

Redesign


Sec. 137.185  May a Self-Governance Tribe redesign or consolidate the 
PSFAs that are included in a funding agreement and reallocate or 
redirect funds for such PSFAs?

    Yes, a Self-Governance Tribe may redesign or consolidate PSFAs 
included in a funding agreement and reallocate or redirect funds for 
such PSFAs in any manner which the Self-Governance Tribe deems to be in 
the best interest of the health and welfare of the Indian community 
being served, only if the redesign or consolidation does not have the 
effect of denying eligibility for services to population groups 
otherwise eligible to be served under applicable Federal law.

Non-Duplication


Sec. 137.190  Is a Self-Governance Tribe that receives funds under 
Title V also entitled to contract under section 102 of the Act [25 
U.S.C. 450(f)] for such funds?

    For the period for which, and to the extent to which, funding is 
provided under the compact or funding agreement, the Self-Governance 
Tribe is not entitled to contract with the Secretary for such funds 
under section 102 of the Act [25 U.S.C. 450f], except that such Self-
Governance Tribe is eligible for new programs on the same basis as 
other Indian Tribes.

Health Status Reports


Sec. 137.200  Are there reporting requirements for Self-Governance 
Tribes under Title V?

    Yes, compacts or funding agreements negotiated between the 
Secretary and a Self-Governance Tribe must include a provision that 
requires the Self-Governance Tribe to report on health status and 
services delivery. These reports may only impose minimal burdens on the 
Self-Governance Tribes.


Sec. 137.201  What are the purposes of the Tribal reporting 
requirements?

    Tribal reports enable the Secretary to prepare reports required 
under Title V and to develop the budget request. The reporting 
requirements are not intended as a quality assessment or monitoring 
tool, although such provision may be included at the option of the 
Self-Governance Tribe. Under no circumstances will the reporting 
requirement include any confidential, proprietary or commercial 
information. For example, while staffing levels may be a part of a 
report, pay levels for the staff are considered confidential between 
the Self-Governance Tribe and the employee.


Sec. 137.202  What types of information will Self-Governance Tribes be 
expected to include in the reports?

    Reports will be derived from existing minimal data elements 
currently collected by Self-Governance Tribes, and may include patient 
demographic and workload data. Not less than 60 days prior to the start 
of negotiations or a mutually agreed upon timeframe, the IHS will 
propose a list of recommended minimal data elements, along with 
justification for their inclusion, to be used as a basis for 
negotiating these requirements into the Self-Governance Tribe's compact 
or funding agreement.


Sec. 137.203  May a Self-Governance Tribe participate in a voluntary 
national uniform data collection effort with the IHS?

    Yes, in order to advance Indian health advocacy efforts, each Self-
Governance Tribe will be encouraged to participate, at its option, in 
national IHS data reporting activities such as Government Performance 
Results Act, epidemiologic and surveillance reporting.


Sec. 137.204  How will this voluntary national uniform data set be 
developed?

    IHS will work with representatives of Self-Governance Tribes, in 
coordination with the Tribal Self Governance Advisory Committee 
(TSGAC), to develop a mutually-defined annual voluntary uniform subset 
of data that is consistent with Congressional intent, minimizes 
reporting burdens, and responds to the needs of the Self-Governance 
Tribe.


Sec. 137.205  Will this voluntary uniform data set reporting activity 
be required of all Self-Governance Tribes entering into a compact with 
the IHS under Title V?

    No, to the extent that specific resources are available or have not 
otherwise been provided to the Self-Governance Tribe for this purpose, 
and if the Self-Governance Tribes choose to participate, the IHS will 
provide resources, hardware, software, and technical assistance to the 
Self-Governance Tribes to facilitate data gathering to ensure data 
consistency and integrity under this voluntary effort.


Sec. 137.206  Why does the IHS need this information?

    This information will be used to comply with sections 513 [25 
U.S.C. 458aaa-12] and 514 [25 U.S.C. 458aaa-13] of the Act as well as 
to assist IHS

[[Page 7021]]

in advocating for the Indian health system, budget formulation, and 
other reporting required by statute, development of partnerships with 
other organizations that benefit the health status of Indian Tribes, 
and sharing of best practices.


Sec. 137.207  Will funding be provided to the Self-Governance Tribe to 
compensate for the costs of reporting?

    Yes, reporting requirements are subject to the Secretary providing 
specific funds for this purpose in the funding agreement.

Savings


Sec. 137.210  What happens if self-governance activities under Title V 
reduce the administrative or other responsibilities of the Secretary 
with respect to the operation of Indian programs and result in savings?

    To the extent that PSFAs carried out by Self-Governance Tribes 
under Title V reduce the administrative or other responsibilities of 
the Secretary with respect to the operation of Indian programs and 
result in savings that have not otherwise been included in the amount 
of Tribal shares and other funds determined under section 508(c) of the 
Act [25 U.S.C. 458aaa-7(c)], the Secretary must make such savings 
available to the Self-Governance Tribes, for the provision of 
additional services to program beneficiaries in a manner equitable to 
directly served, contracted, and compacted programs.


Sec. 137.211  How does a Self-Governance Tribe learn whether self-
governance activities have resulted in savings as described in 
Sec. 137.210.

    The annual report prepared pursuant to section 514(b)(2) [25 U.S.C. 
458aaa-13(b)(2)] of the Act must specifically identify any such 
savings.

Access to Government Furnished Property


Sec. 137.215  How does a Self-Governance Tribe obtain title to real and 
personal property furnished by the Federal Government for use in the 
performance of a compact, funding agreement, construction project 
agreement, or grant agreement pursuant to section 512(c) of the Act [25 
U.S.C. 458aaa-11(c)]?

    (a) For government-furnished real and personal property made 
available to a Self-Governance Tribe, the Self-Governance Tribe must 
take title to all real or personal property unless the Self-Governance 
Tribe requests that the United States retain the title.
    (b) For government-furnished personal property made available to a 
Self-Governance Tribe:
    (1) The Secretary, in consultation with each Self-Governance Tribe, 
must develop a list of the property used in a compact, funding 
agreement, or construction project agreement.
    (2) The Self-Governance Tribe must indicate any items on the list 
to which the Self-Governance Tribe wants the Secretary to retain title.
    (3) The Secretary must provide the Self-Governance Tribe with any 
documentation needed to transfer title to the remaining listed property 
to the Self-Governance Tribe.
    (c) For government-furnished real property made available to a 
Self-Governance Tribe:
    (1) The Secretary, in consultation with the Self-Governance Tribe, 
must develop a list of the property furnished for use in a compact, 
funding agreement, or construction project agreement.
    (2) The Secretary must inspect any real property on the list to 
determine the presence of any hazardous substance activity, as defined 
in 41 CFR 101-47.202.2(b)(10).
    (3) The Self-Governance Tribe must indicate on the list to the 
Secretary any items of real property to which the Self-Governance Tribe 
wants the Secretary to retain title and those items of property to 
which the Self-Governance Tribe wishes to obtain title. The Secretary 
must take such steps as necessary to transfer title to the Self-
Governance Tribe those items of real property which the Self-Governance 
Tribe wishes to acquire.

Matching and Cost Participation Requirements


Sec. 137.217  May funds provided under compacts, funding agreements, or 
grants made pursuant to Title V be treated as non-Federal funds for 
purposes of meeting matching or cost participation requirements under 
any other Federal or non-Federal program?

    Yes, funds provided under compacts, funding agreements, or grants 
made pursuant to Title V may be treated as non-Federal funds for 
purposes of meeting matching or cost participation requirements under 
any other Federal or non-Federal program.

FTCA


Sec. 137.220  Do section 314 of Public Law 101-512 [25 U.S.C. 450f 
note] and section 102(d) of the Act [25 U.S.C. 450f(d)] (regarding, in 
part, FTCA coverage) apply to compacts, funding agreements and 
construction project agreements?

    Yes, regulations governing FTCA coverage are set out at 25 CFR Part 
900, Subpart M.

Subpart J--Regulation Waiver


Sec. 137.225  What regulations may be waived under Title V?

    A Self-Governance Tribe may request a waiver of regulation(s) 
promulgated under section 517 of the Act [25 U.S.C. 458aaa-16] or under 
the authorities specified in section 505(b) of the Act [25 U.S.C. 
458aaa-4(b)] for a compact or funding agreement entered into with the 
IHS under Title V.


Sec. 137.226  How does a Self-Governance Tribe request a waiver?

    A Self-Governance Tribe may request a waiver by submitting a 
written request to the Secretary identifying the applicable Federal 
regulation(s) sought to be waived and the basis for the request.


Sec. 137.227  How much time does the Secretary have to act on a waiver 
request?

    The Secretary must either approve or deny the requested waiver in 
writing within 90 days after receipt by the Secretary.


Sec. 137.228  Upon what basis may the waiver request be denied?

    A denial may be made only upon a specific finding by the Secretary 
that identified language in the regulation may not be waived because 
such waiver is prohibited by Federal law.


Sec. 137.229  What happens if the Secretary neither approves or denies 
a waiver request within the time specified in Sec. 137.227?

    The waiver request is deemed approved.


Sec. 137.230  Is the Secretary's decision on a waiver request final for 
the Department?

    Yes, the Secretary's decision on a waiver request is final for the 
Department.


Sec. 137.231  May a Self-Governance Tribe appeal the Secretary's 
decision to deny its request for a waiver of a regulation promulgated 
under section 517 of the Act [25 U.S.C. 458aaa-16]?

    The decision may not be appealed under these regulations but may be 
appealed by the Self-Governance Tribe in Federal Court under applicable 
law.

Subpart K--Withdrawal


Sec. 137.235  May an Indian Tribe withdraw from a participating inter-
Tribal consortium or Tribal organization?

    Yes, an Indian Tribe may fully or partially withdraw from a 
participating inter-Tribal consortium or Tribal organization its share 
of any PSFAs included in a compact or funding agreement.

[[Page 7022]]

Sec. 137.236  When does a withdrawal become effective?

    A withdrawal becomes effective within the time frame specified in 
the resolution that authorizes withdrawal from the participating Tribal 
organization or inter-Tribal consortium. In the absence of a specific 
time frame set forth in the resolution, such withdrawal becomes 
effective on
    (a) The earlier of 1 year after the date of submission of such 
request, or the date on which the funding agreement expires; or
    (b) Such date as may be mutually agreed upon by the Secretary, the 
withdrawing Indian Tribe, and the participating Tribal organization or 
inter-Tribal consortium that has signed the compact or funding 
agreement on behalf of the withdrawing Indian Tribe, inter-Tribal 
consortium, or Tribal organization.


Sec. 137.237  How are funds redistributed when a Indian Tribe fully or 
partially withdraws from a compact or funding agreement and elects to 
enter a contract or compact?

    When an Indian Tribe eligible to enter into a contract under Title 
I or a compact or funding agreement under Title V fully or partially 
withdraws from a participating inter-Tribal consortium or Tribal 
organization, and has proposed to enter into a contract or compact and 
funding agreement covering the withdrawn funds:
    (a) the withdrawing Indian Tribe is entitled to its Tribal share of 
funds supporting those PSFAs that the Indian Tribe will be carrying out 
under its own contract or compact and funding agreement (calculated on 
the same basis as the funds were initially allocated in the funding 
agreement of the inter-Tribal consortium or Tribal organization); and
    (b) the funds referred to in paragraph (a) of this section must be 
transferred from the funding agreement of the inter-Tribal consortium 
or Tribal organization, on the condition that the provisions of 
sections 102 [25 U.S.C. 450f] and 105(i) of the Act [25 U.S.C. 450j], 
as appropriate, apply to the withdrawing Indian Tribe.


Sec. 137.238  How are funds distributed when an Indian Tribe fully or 
partially withdraws from a compact or funding agreement administered by 
an inter-Tribal consortium or Tribal organization serving more than one 
Indian Tribe and the withdrawing Indian Tribe elects not to enter a 
contract or compact?

    All funds not obligated by the inter-Tribal consortium or Tribal 
organization associated with the withdrawing Indian Tribe's returned 
PSFAs, less close out costs, shall be returned by the inter-Tribal 
consortium or Tribal organization to the IHS for operation of the PSFAs 
included in the withdrawal.


Sec. 137.239  If the withdrawing Indian Tribe elects to operate PSFAs 
carried out under a compact or funding agreement under Title V through 
a contract under Title I, is the resulting contract considered a mature 
contract under section 4(h) of the Act [25 U.S.C. 450b(h)]?

    Yes, if the withdrawing Indian Tribe elects to operate PSFAs 
carried out under a compact or funding agreement under Title V through 
a contract under Title I, the resulting contract is considered a mature 
contract under section 4(h) of the Act [25 U.S.C. 450b(h)] at the 
option of the Indian Tribe.

Subpart L--Retrocession


Sec. 137.245  What is retrocession?

    Retrocession means the return by a Self-Governance Tribe to the 
Secretary of PSFAs, that are included in a compact or funding 
agreement, for any reason, before the expiration of the term of the 
compact or funding agreement.


Sec. 137.246  How does a Self-Governance Tribe retrocede a PSFA?

    The Self-Governance Tribe submits a written notice to the Director 
of its intent to retrocede. The notice must specifically identify those 
PSFAs being retroceded. The notice may also include a proposed 
effective date of the retrocession.


Sec. 137.247  What is the effective date of a retrocession?

    Unless the request for retrocession is rescinded, the retrocession 
becomes effective within the timeframe specified by the parties in the 
compact or funding agreement. In the absence of a specification, the 
retrocession becomes effective on:
    (a) The earlier of 1 year after:
    (1) The date of submission of the request, or
    (2) The date on which the funding agreement expires; or
    (b) Whatever date is mutually agreed upon by the Secretary and the 
retroceding Self-Governance Tribe.


Sec. 137.248  What effect will a retrocession have on a retroceding 
Self-Governance Tribe's rights to contract or compact under the Act?

    A retrocession request shall not negatively affect:
    (a) Any other contract or compact to which the retroceding Self-
Governance Tribe is a party;
    (b) Any other contracts or compacts the retroceding Self-Governance 
Tribe may request; and
    (c) Any future request by such Self-Governance Tribe or an Indian 
Tribe to compact or contract for the same program.


Sec. 137.249  Will retrocession adversely affect funding available for 
the retroceded program?

    No, the Secretary shall provide no less than the same level of 
funding that would have been available if there had been no 
retrocession.


Sec. 137.250  How are funds distributed when a Self-Governance Tribe 
fully or partially retrocedes from its compact or funding agreement?

    Any funds not obligated by the Self-Governance Tribe and associated 
with the Self-Governance Tribe's returned PSFAs, less close out costs, 
must be returned by the Self-Governance Tribe to IHS for operation of 
the PSFA's associated with the compact or funding agreement from which 
the Self-Governance Tribe retroceded in whole or in part.


Sec. 137.251  What obligation does the retroceding Self-Governance 
Tribe have with respect to returning property that was provided by the 
Secretary under the compact or funding agreement and that was used in 
the operation of the retroceded program?

    On the effective date of any retrocession, the retroceding Self-
Governance Tribe, shall, at the option of the Secretary, deliver to the 
Secretary all requested property and equipment provided by the 
Secretary under the compact or funding agreement, to the extent used to 
carry out the retroceded PSFAs, which at the time of retrocession has a 
per item current fair market value, less the cost of improvements borne 
by the Self-Governance Tribe in excess of $5,000 at the time of the 
retrocession.

Subpart M--Reassumption


Sec. 137.255  What does reassumption mean?

    Reassumption means rescission by the Secretary without consent of 
the Self-Governance Tribe of PSFAs and associated funding in a compact 
or funding agreement and resuming responsibility to provide such PSFAs.


Sec. 137.256  Under what circumstances may the Secretary reassume a 
program, service, function, or activity (or portion thereof)?

    (a) Subject to the steps in Sec. 137.257, the Secretary may 
reassume a program, service, function, or activity (or portion thereof) 
and associated funding if the Secretary makes a specific finding 
relative to that PSFA of :

[[Page 7023]]

    (1) Imminent endangerment of the public health caused by an act or 
omission of the Self-Governance Tribe, and the imminent endangerment 
arises out of a failure to carry out the compact or funding agreement; 
or
    (2) Gross mismanagement with respect to funds transferred to the 
Self-Governance Tribe by a compact or funding agreement, as determined 
by the Secretary, in consultation with the Inspector General, as 
appropriate.
    (b) Immediate reassumption may occur under additional requirements 
set forth in Sec. 137.261.


Sec. 137.257  What steps must the Secretary take prior to reassumption 
becoming effective?

    Except as provided in Secs. 137.261 for immediate reassumption, 
prior to a reassumption becoming effective, the Secretary must:
    (a) Notify the Self-Governance Tribe in writing by certified mail 
of the details of findings required under Secs. 137.256(a)(1) and (2);
    (b) Request specified corrective action within a reasonable period 
of time, which in no case may be less than 45 days;
    (c) Offer and provide, if requested, the necessary technical 
assistance and advice to assist the Self-Governance Tribe to overcome 
the conditions that led to the findings described under (a); and
    (d) Provide the Self-Governance Tribe with a hearing on the record 
as provided under Subpart of this part.


Sec. 137.258  Does the Self-Governance Tribe have a right to a hearing 
prior to a non-immediate reassumption becoming effective?

    Yes, at the Self-Governance Tribe's request, the Secretary must 
provide a hearing on the record prior to or in lieu of the corrective 
action period identified in Sec. 137.257(b).


Sec. 137.259  What happens if the Secretary determines that the Self-
Governance Tribe has not corrected the conditions that the Secretary 
identified in the notice?

    (a) The Secretary shall provide a second written notice by 
certified mail to the Self-Governance Tribe served by the compact or 
funding agreement that the compact or funding agreement will be 
rescinded, in whole or in part.
    (b) The second notice shall include:
    (1) The intended effective date of the reassumption;
    (2) The details and facts supporting the intended reassumption; and
    (3) Instructions that explain the Indian Tribe's right to a formal 
hearing within 30 days of receipt of the notice.


Sec. 137.260  What is the earliest date on which a reassumption can be 
effective?

    Except as provided in Sec. 137.261, no PSFA may be reassumed by the 
Secretary until 30 days after the final resolution of the hearing and 
any subsequent appeals to provide the Self-Governance Tribe with an 
opportunity to take corrective action in response to any adverse final 
ruling.


Sec. 137.261  Does the Secretary have the authority to immediately 
reassume a PSFA?

    Yes, the Secretary may immediately reassume operation of a program, 
service, function, or activity (or portion thereof) and associated 
funding upon providing to the Self-Governance Tribe written notice in 
which the Secretary makes a finding:
    (a) Of imminent substantial and irreparable endangerment of the 
public health caused by an act or omission of the Indian Tribe; and
    (b) The endangerment arises out of a failure to carry out the 
compact or funding agreement.


Sec. 137.262  If the Secretary reassumes a PSFA immediately, when must 
the Secretary provide the Self-Governance Tribe with a hearing?

    If the Secretary immediately reassumes a PSFA, the Secretary must 
provide the Self-Governance Tribe with a hearing under Subpart P of 
this part not later than 10 days after such reassumption, unless the 
Self-Governance Tribe and the Secretary agree to an extension.


Sec. 137.263  May the Secretary provide a grant to a Self-Governance 
Tribe for technical assistance to overcome conditions identified under 
Sec. 137.257?

    Yes, the Secretary may make a grant for the purpose of obtaining 
technical assistance as provided in section 103 of the Act [25 U.S.C. 
458aaa-h].


Sec. 137.264  To what extent may the Secretary require the Self-
Governance Tribe to return property that was provided by the Secretary 
under the compact or funding agreement and used in the operation of the 
reassume program?

    On the effective date of any reassumption, the Self-Governance 
Tribe, shall, at the option of the Secretary and only to the extent 
requested by the Secretary, deliver to the Secretary property and 
equipment provided by the Secretary under the compact or funding 
agreement, to the extent the property was used to directly carry out 
the reassume program, service, function, or activity (or portion 
thereof), provided that at the time of reassumption the property has a 
per item current fair market value, less the cost of improvements borne 
by the Self-Governance Tribe, in excess of $5,000 at the time of the 
reassumption.


Sec. 137.265  May a Tribe be reimbursed for actual and reasonable close 
out costs incurred after the effective date of reassumption?

    Yes, a Tribe may be reimbursed for actual and reasonable close out 
costs incurred after the effective date of reassumption.

Subpart N--Construction

Purpose and Scope


Sec. 137.270  What is covered by this subpart?

    This subpart covers IHS construction projects carried out under 
section 509 of the Act [25 U.S.C. 458aaa-8].


Sec. 137.271  Why is there a separate subpart in these regulations for 
construction project agreements?

    Construction projects are separately defined in Title V and are 
subject to a separate proposal and review process. Provisions of a 
construction project agreement and this subpart shall be liberally 
construed in favor of the Self-Governance Tribe.


Sec. 137.272  What other alternatives are available for Self-Governance 
Tribes to perform construction projects?

    Self-Governance Tribes also have the option of performing IHS 
construction projects under a variety of other legal authorities, 
including but not limited to Title I of the Act, the Indian Health Care 
Improvement Act, Public Law 94-437, and Public Law 86-121. This subpart 
does not cover projects constructed pursuant to agreements entered into 
under these authorities.


Sec. 137.273  What are IHS construction PSFAs?

    IHS construction PSFAs are a combination of construction projects 
as defined in Sec. 137.280 and construction programs.


Sec. 137.274  Does this subpart cover construction programs?

    No, except as provided in Sec. 137.275, this subpart does not cover 
construction programs such as the:
    (a) Maintenance and Improvement Program;
    (b) Construction program functions; and,
    (c) Planning services and construction management services.


Sec. 137.275  May Self-Governance Tribes include IHS construction 
programs in a construction project agreement or in a funding agreement?

    Yes, Self-Governance Tribes may choose to assume construction 
programs

[[Page 7024]]

in a construction project agreement, in a funding agreement, or in a 
combination of the two. These programs may include the following:
    (a) Maintenance and improvement program;
    (b) Construction program functions, and
    (c) Planning services and construction management services.

Construction Definitions


Sec. 137.280  Construction definitions.

    ALJ means administrative law judge.
    APA means Administrative Procedures Act, 5 U.S.C. 701-706.
    Budget means a statement of the funds required to complete the 
scope of work in a construction project agreement. For cost 
reimbursement agreements, budgets may be stated using broad categories 
such as planning, design, construction, project administration, and 
contingency. For fixed price agreements, budgets may be stated as lump 
sums, unit cost pricing, or a combination thereof.
    Categorical exclusion means a category of actions that do not 
individually or cumulatively have a significant effect on the human 
environment and that have been found to have no such effect in 
procedures adopted by a Federal agency in implementation of these 
regulations and for which, therefore, neither an environmental 
assessment nor an environmental impact statement is required. Any 
procedures under this section shall provide for extraordinary 
circumstances in which a normally excluded action may have a 
significant environmental effect.
    CEQ means Council on Environmental Quality in the Office of the 
President.
    Construction management services (CMS) means activities limited to 
administrative support services; coordination; and monitoring oversight 
of the planning, design, and construction process. CMS activities 
typically include:
    (1) Coordination and information exchange between the Self-
Governance Tribe and the Federal Government;
    (2) Preparation of a Self-Governance Tribe's project agreement; and
    (3) A Self-Governance Tribe's subcontract scope of work 
identification and subcontract preparation, and competitive selection 
of construction contract subcontractors.
    Construction phase is the phase of a construction project agreement 
during which the project is constructed, and includes labor, materials, 
equipment and services necessary to complete the work, in accordance 
with the construction project agreement.
    Construction project means:
    (1) An organized noncontinuous undertaking to complete a specific 
set of predetermined objectives for the planning, environmental 
determination, design, construction, repair, improvement, or expansion 
of buildings or facilities described in a project agreement, and
    (2) Does not include construction program administration and 
activities described in sections 4(m)(1) through (3) of the Act [25 
U.S.C. 4b(m)(1) through (3)], that may otherwise be included in a 
funding agreement under section 505 of the Act [25 U.S.C. 458aaa-4].
    Construction project agreement means a negotiated agreement between 
the Secretary and a Self-Governance Tribe, that at a minimum:
    (1) Establishes project phase start and completion dates;
    (2) Defines a specific scope of work and standards by which it will 
be accomplished;
    (3) Identifies the responsibilities of the Self-Governance Tribe 
and the Secretary;
    (4) Addresses environmental considerations;
    (5) Identifies the owner and operations and maintenance entity of 
the proposed work;
    (6) Provides a budget;
    (7) Provides a payment process; and
    (8) Establishes the duration of the agreement based on the time 
necessary to complete the specified scope of work, which may be 1 or 
more years.
    Design phase is the phase of a construction project agreement 
during which project plans, specifications, and other documents are 
prepared that are used to build the project. Site investigation, final 
site selection activities and environmental review and determination 
activities are completed in this phase if not conducted as a part of 
the planning phase.
    Maintenance and improvement program:
    (1) As used in this subpart means the program that provides funds 
for eligible facilities for the purpose of:
    (i) Performing routine maintenance;
    (ii) Achieving compliance with accreditation standards;
    (iii) Improving and renovating facilities;
    (iv) Ensuring that Indian health care facilities meet existing 
building codes and standards; and
    (v) Ensuring compliance with public law building requirements.
    (2) The maintenance and improvement program is comprised of routine 
maintenance and repair funding and project funding. Typical maintenance 
and improvement projects have historically been funded out of regional 
or national project pools and may include, but are not limited to, 
total replacement of a heating or cooling system, remodel of a medical 
laboratory, removal of lead based paint, abatement of asbestos and 
abatement of underground fuel storage tanks. Maintenance and repair 
program funding provided under a funding agreement is not covered under 
this subpart.
    NEPA means the National Environmental Policy Act of 1969 [42 U.S.C. 
4321 et seq.].
    NHPA means the National Historic Preservation Act [16 U.S.C. 470 et 
seq.].
    Planning phase is the phase of a construction project agreement 
during which planning services are provided.
    Planning services may include performing a needs assessment, 
completing and/or verifying master plans, developing justification 
documents, conducting pre-design site investigations, developing budget 
cost estimates, conducting feasibility studies as needed, conducting 
environmental review activities and justifying the need for the 
project.
    SHPO means State Historic Preservation Officer.
    Scope of work means a brief description of the work to be 
accomplished under the construction project agreement, sufficient to 
confirm that the project is consistent with the purpose for which the 
Secretary has allocated funds.
    THPO means Tribal Historic Preservation Officer.

NEPA Process


Sec. 137.285  Are Self-Governance Tribes required to accept Federal 
environmental responsibilities to enter into a construction project 
agreement?

    Yes, under section 509 of the Act [25 U.S.C. 458aaa-8], Self-
Governance Tribes must assume all Federal responsibilities under the 
NEPA of 1969 [42 U.S.C. 4321 et seq.] and the National Historic 
Preservation Act [16 U.S.C. 470 et seq.] and related provisions of law 
that would apply if the Secretary were to undertake a construction 
project, but only those responsibilities directly related to the 
completion of the construction project being assumed.


Sec. 137.286  Do Self-Governance Tribes become Federal agencies when 
they assume these Federal environmental responsibilities?

    No, while Self-Governance Tribes are required to assume Federal 
environmental responsibilities for projects in place of the Secretary, 
Self-Governance Tribes do not thereby

[[Page 7025]]

become Federal agencies. However, because Self-Governance Tribes are 
assuming the responsibilities of the Secretary for the purposes of 
performing these Federal environmental responsibilities, Self-
Governance Tribes will be considered the equivalent of Federal agencies 
for certain purposes as set forth in this subpart.


Sec. 137.287  What is the National Environmental Policy Act (NEPA)?

    The NEPA is a procedural law that requires Federal agencies to 
follow established environmental review procedures, which include 
reviewing and documenting the environmental impact of their actions. 
NEPA establishes a comprehensive policy for protection and enhancement 
of the environment by the Federal Government; creates the Council on 
Environmental Quality in the Office of the President; and directs 
Federal agencies to carry out the policies and procedures of the Act. 
CEQ regulations (40 CFR 1500-1508) establish three levels of 
environmental review: categorical exclusions, environmental 
assessments, and environmental impact statements.


Sec. 137.288  What is the National Historic Preservation Act (NHPA)?

    The National Historic Preservation Act requires Federal agencies to 
take into account the effects of their undertakings, such as 
construction projects, on properties covered by the NHPA, such as 
historic properties, properties eligible for listing on the National 
Register of Historic Places, or properties that an Indian Tribe regards 
as having religious and/or cultural importance. Section 106 of the NHPA 
[16 U.S.C. 70f] requires Federal agencies to afford the Advisory 
Council on Historic Preservation, acting through the State Historic 
Preservation Officer or the Tribal Historic Preservation Officer, a 
reasonable opportunity to comment on such undertakings.


Sec. 137.289  What is a Federal undertaking under NHPA?

    The Advisory Council on Historic Preservation has defined a Federal 
undertaking in 36 CFR 800.16(y) as a project, activity, or program 
funded in whole or in part under the direct or indirect jurisdiction of 
a Federal agency, including those carried out by or on behalf of a 
Federal agency; those carried out with Federal financial assistance; 
those requiring a Federal permit, license or approval; and those 
subject to State or local regulation administered pursuant to a 
delegation or approval by a Federal agency.


Sec. 137.290  What additional provisions of law are related to NEPA and 
NHPA?

    (a) Depending upon the nature and the location of the construction 
project, environmental laws related to NEPA and NHPA may include:
    (1) Archaeological and Historical Preservation Act [16 U.S.C. 461];
    (2) Archeological Resources Protection Act [16 U.S.C. 470];
    (3) Clean Air Act [42 U.S.C. 7401];
    (4) Clean Water Act [32 U.S.C. 1251];
    (5) Coastal Barrier Improvement Act [42 U.S.C. 4028];
    (6) Coastal Barrier Resources Act [16 U.S.C. 3501];
    (7) Coastal Zone Management Act [16 U.S.C. 1451];
    (8) Comprehensive Environmental Response, Compensation, and 
Liability Act [42 U.S.C. 9601];
    (9) Endangered Species Act [16 U.S.C. 1531 et seq.];
    (10) Farmland Protection Policy Act [7 U.S.C. 4201 et seq.];
    (11) Marine Protection, Research, and Sanctuaries Act [33 U.S.C. 
1401];
    (12) National Historic Preservation Act [16 U.S.C. 470 et seq.];
    (13) National Trails System Act [16 U.S.C. 1241];
    (14) Native American Graves Protection and Repatriation Act [25 
U.S.C. 3001];
    (15) Noise Control Act [42 U.S.C. 7901];
    (16) Resource Conservation and Recovery Act [42 U.S.C. 3251];
    (17) Safe Drinking Water Act [42 U.S.C. 300];
    (18) Toxic Substance Control Act [15 U.S.C. 2601];
    (19) Wild and Scenic Rivers Act [16 U.S.C. 1271]; and
    (20) Wilderness Act [16 U.S.C. 1131].
    (b) This section provides a list of environmental laws for 
informational purposes only and does not create any legal rights or 
remedies, or imply private rights of action.


Sec. 137.291  May Self-Governance Tribes carry out construction 
projects without assuming these Federal environmental responsibilities?

    Yes, but not under section 509 of the Act [25 U.S.C. 458aaa-8]. 
Self-Governance Tribes may otherwise elect to perform construction 
projects, or phases of construction projects, under other legal 
authorities (see Sec. 137.272).


Sec. 137.292  How do Self-Governance Tribes assume environmental 
responsibilities for construction projects under section 509 of the Act 
[25 U.S.C. 458aaa-8]?

    Self-Governance Tribes assume environmental responsibilities by:
    (a) Adopting a resolution or taking an equivalent Tribal action 
which:
    (1) Designates a certifying officer to represent the Self-
Governance Tribe and to assume the status of a responsible Federal 
official under NEPA, NHPA, and related provisions of law; and
    (2) Accepts the jurisdiction of the Federal court, as provided in 
Sec. 137.310 and Sec. 137.311 for purposes of enforcement of the 
Federal environmental responsibilities assumed by the Self-Governance 
Tribe; and
    (b) Entering into a construction project agreement under section 
509 of the Act [25 U.S.C. 458aaa-8].


Sec. 137.293  Are Self-Governance Tribes required to adopt a separate 
resolution or take equivalent Tribal action to assume environmental 
responsibilities for each construction project agreement?

    No, the Self-Governance Tribe may adopt a single resolution or take 
equivalent Tribal action to assume environmental responsibilities for a 
single project, multiple projects, a class of projects, or all projects 
performed under section 509 of the Act [25 U.S.C. 458aaa-8].


Sec. 137.294  What is the typical IHS environmental review process for 
construction projects?

    (a) Most IHS construction projects normally do not have a 
significant impact on the environment, and therefore do not require 
environmental impact statements (EIS). Under current IHS procedures, an 
environmental review is performed on all construction projects. During 
the IHS environmental review process, the following activities may 
occur:
    (1) Consult with Tribal, Federal, state, and local officials and 
interested parties on potential environmental effects;
    (2) Document assessment of potential environmental effects; (IHS 
has developed a form to facilitate this process.)
    (3) Perform necessary environmental surveys and inventories;
    (4) Consult with the Advisory Council on Historic Preservation, 
acting through the SHPO or THPO, to ensure compliance with the NHPA;
    (5) Determine if extraordinary or exceptional circumstances exist 
that would prevent the project from meeting the criteria for 
categorical exclusion from further environmental review under NEPA, or 
if an environmental assessment is required;
    (6) Obtain environmental permits and approvals; and
    (7) Identify methods to avoid or mitigate potential adverse 
effects;
    (b) This section is for informational purposes only and does not 
create any legal rights or remedies, or imply private rights of action.

[[Page 7026]]

Sec. 137.295  May Self-Governance Tribes elect to develop their own 
environmental review process?

    Yes, Self-Governance Tribes may develop their own environmental 
review process or adopt the procedures of the IHS or the procedures of 
another Federal agency.


Sec. 137.296  How does a Self-Governance Tribe comply with NEPA and 
NHPA?

    Self-Governance Tribes comply with NEPA and the NHPA by adopting 
and following:
    (a) Their own environmental review procedures;
    (b) The procedures of the IHS; and/or
    (c) The procedures of another Federal agency.


Sec. 137.297  If the environmental review procedures of a Federal 
agency are adopted by a Self-Governance Tribe, is the Self-Governance 
Tribe responsible for ensuring the agency's policies and procedures 
meet the requirements of NEPA, NHPA, and related environmental laws?

    No, the Federal agency is responsible for ensuring its own policies 
and procedures meet the requirements of NEPA, NHPA, and related 
environmental laws, not the Self-Governance Tribe.


Sec. 137.298  Are Self-Governance Tribes required to comply with 
Executive Orders to fulfill their environmental responsibilities under 
section 509 of the Act [25 U.S.C. 458aaa-8]?

    No, but Self-Governance Tribes may at their option, choose to 
voluntarily comply with Executive Orders. For facilities where 
ownership will vest with the Federal Government upon completion of the 
construction, Tribes and the Secretary may agree to include the goals 
and objectives of Executive Orders in the codes and standards of the 
construction project agreement.


Sec. 137.299  Are Federal funds available to cover the cost of Self-
Governance Tribes carrying out environmental responsibilities?

    Yes, funds are available:
    (a) For project-specific environmental costs through the 
construction project agreement; and
    (b) For environmental review program costs through a funding 
agreement and/or a construction project agreement.


Sec. 137.300  Since Federal environmental responsibilities are new 
responsibilities, which may be assumed by Tribes under section 509 of 
the Act [25 U.S.C. 458aaa-8], are there additional funds available to 
Self-Governance Tribes to carry out these formerly inherently Federal 
responsibilities?

    Yes, the Secretary must transfer not less than the amount of funds 
that the Secretary would have otherwise used to carry out the Federal 
environmental responsibilities assumed by the Self-Governance Tribe.


Sec. 137.301  How are project and program environmental review costs 
identified?

    (a) The Self-Governance Tribe and the Secretary should work 
together during the initial stages of project development to identify 
program and project related costs associated with carrying out 
environmental responsibilities for proposed projects. The goal in this 
process is to identify the costs associated with all foreseeable 
environmental review activities.
    (b) If unforeseen environmental review and compliance costs are 
identified during the course of design and construction, the Self-
Governance Tribe or the Self-Governance Tribe and the Secretary (with 
or without amendment as required by Sec. 137.363) may do one or more of 
the following:
    (1) Mitigate adverse environmental effects;
    (2) Alter the project scope of work; and/or
    (3) Add additional program and/or project funding, including 
seeking supplemental appropriations.


Sec. 137.302  Are Federal funds available to cover start-up costs 
associated with initial Tribal assumption of environmental 
responsibilities?

    (a) Yes, start-up costs are available as provided in section 508(c) 
of the Act [25 U.S.C. 458aaa-7(c)]. During the initial year that these 
responsibilities are assumed, the amount required to be paid under 
section 106(a)(2) of the Act [25 U.S.C. 450j-1(a)(2)] must include 
startup costs consisting of the reasonable costs that have been 
incurred or will be incurred on a one-time basis pursuant to the 
agreement necessary:
    (1) To plan, prepare for, and assume operation of the environmental 
responsibilities; and
    (2) To ensure compliance with the terms of the agreement and 
prudent management.
    (b) Costs incurred before the initial year that the agreement is in 
effect may not be included in the amount required to be paid under 
section 106(a)(2) of the Act [25 U.S.C. 450j-1(a)(2)] if the Secretary 
does not receive a written notification of the nature and extent of the 
costs prior to the date on which such costs are incurred.


Sec. 137.303  Are Federal or other funds available for training 
associated with Tribal assumption of environmental responsibilities?

    Yes, Self-Governance Tribes may use construction program and 
project funds for training and program development. Training and 
program development funds may also be available from other Federal 
agencies, such as the Environmental Protection Agency and the National 
Park Service, state and local governments, and private organizations.


Sec. 137.304  May Self-Governance Tribes buy back environmental 
services from the IHS?

    Yes, Self-Governance Tribes may ``buy back'' project related 
services in their construction project agreement, including design and 
construction engineering, and environmental compliance services from 
the IHS in accordance with Section 508(f) of the Act [25 U.S.C. 458aaa-
7(f)] and Sec. 137.95, subject to the availability of the IHS's 
capacity to conduct the work.


Sec. 137.305  May Self-Governance Tribes act as lead, cooperating, or 
joint lead agencies for environmental review purposes?

    Yes, Self-Governance Tribes assuming Federal environmental 
responsibilities for construction projects under section 509 of the Act 
[25 U.S.C. 458aaa-8] are entitled to receive equal consideration, on 
the same basis as any Federal agency, for lead, cooperating, and joint 
lead agency status. For informational purposes, the terms ``lead,'' 
``cooperating,'' and ``joint lead agency'' are defined in the CEQ 
regulations at 40 CFR 1508.16, 1508.5 and 1506.2 respectively.


Sec. 137.306  How are Self-Governance Tribes recognized as having lead, 
cooperating, or joint lead agency status?

    Self-Governance Tribes may be recognized as having lead, 
cooperating, or joint lead agency status through funding or other 
agreements with other agencies. To the extent that resources are 
available, the Secretary will encourage and facilitate Federal, state, 
and local agencies to enter into agreements designating Tribes as lead, 
cooperating, or joint lead agencies for environmental review purposes.


Sec. 137.307  What Federal environmental responsibilities remain with 
the Secretary when a Self-Governance Tribe assumes Federal 
environmental responsibilities for construction projects under section 
509 of the Act [25 U.S.C. 458aaa-8]?

    (a) All environmental responsibilities for Federal actions not 
directly related to construction projects assumed by Tribes under 
section 509 of the Act [25 U.S.C. 458aaa-8] remain with the Secretary. 
Federal agencies, including the IHS, retain responsibility for ensuring 
their environmental review procedures meet the requirements of

[[Page 7027]]

NEPA, NHPA and related provisions of law, as called for in 
Sec. 137.297.
    (b) The Secretary will provide information updating and changing 
IHS agency environmental review policy and procedures to all Self-
Governance Tribes implementing a construction project agreement, and to 
other Indian Tribes upon request. If a Self-Governance Tribe 
participating under section 509 of the Act [25 U.S.C. 458aaa-8] does 
not wish to receive this information, it must notify the Secretary in 
writing. As resources permit, at the request of the Self-Governance 
Tribe, the Secretary will provide technical assistance with carrying 
out Federal environmental responsibilities.


Sec. 137.308  Does the Secretary have any enforcement authority for 
Federal environmental responsibilities assumed by Tribes under section 
509 of the Act [25 U.S.C. 458aaa-8]?

    No, the Secretary does not have any enforcement authority for 
Federal environmental responsibilities assumed by Tribes under section 
509 of the Act [25 U.S.C. 458aaa-8].


Sec. 137.309  How are NEPA and NHPA obligations typically enforced?

    NEPA and NHPA obligations are typically enforced by interested 
parties who may file lawsuits against Federal agencies alleging that 
the agencies have not complied with their legal obligations under NEPA 
and NHPA. These lawsuits may only be filed in Federal court under the 
provisions of the APA, 5 U.S.C. 701-706. Under the APA, a Federal judge 
reviews the Federal agency's actions based upon an administrative 
record prepared by the Federal agency. The judge gives appropriate 
deference to the agency's decisions and does not substitute the court's 
views for those of the agency. Jury trials and civil discovery are not 
permitted in APA proceedings. If a Federal agency has failed to comply 
with NEPA or NHPA, the judge may grant declaratory or injunctive relief 
to the interested party. No money damages or fines are permitted in APA 
proceedings.


Sec. 137.310  Are Self-Governance Tribes required to grant a limited 
waiver of their sovereign immunity to assume Federal environmental 
responsibilities under section 509 of the Act [25 U.S.C. 458aaa-8]?

    Yes, but only as provided in this section. Unless Self-Governance 
Tribes consent to the jurisdiction of a court, Self-Governance Tribes 
are immune from civil lawsuits. Self-Governance Tribes electing to 
assume Federal environmental responsibilities under section 509 of the 
Act [25 U.S.C. 458aaa-8] must provide a limited waiver of sovereign 
immunity solely for the purpose of enforcing a Tribal certifying 
officer's environmental responsibilities, as set forth in this subpart. 
Self-Governance Tribes are not required to waive any other immunity.


Sec. 137.311  Are Self-Governance Tribes entitled to determine the 
nature and scope of the limited immunity waiver required under section 
509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2)]?

    (a) Yes, Section 509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2)] 
only requires that the waiver permit a civil enforcement action to be 
brought against the Tribal certifying officer in his or her official 
capacity in Federal district court for declaratory and injunctive 
relief in a procedure that is substantially equivalent to an APA 
enforcement action against a Federal agency. Self-Governance Tribes are 
not required to subject themselves to suit in their own name, to submit 
to trial by jury or civil discovery, or to waive immunity for money 
damages, attorneys fees, or fines.
    (b) Self-Governance Tribes may base the grant of a limited waiver 
under this subpart on the understanding that:
    (1) Judicial review of the Tribal certifying official's actions are 
based upon the administrative record prepared by the Tribal official in 
the course of performing the Federal environmental responsibilities; 
and
    (2) Actions and decisions of the Tribal certifying officer will be 
granted deference on a similar basis as Federal officials performing 
similar functions.


Sec. 137.312  Who is the proper defendant in a civil enforcement action 
under section 509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2)]?

    Only the designated Tribal certifying officer acting in his or her 
official capacity may be sued. Self-Governance Tribes and other Tribal 
officials are not proper defendants in lawsuits brought under section 
509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2)].

Notification (Prioritization Process, Planning, Development and 
Construction)


Sec. 137.320  Is the Secretary required to consult with affected Indian 
Tribes concerning construction projects and programs?

    Yes, before developing a new project resource allocation 
methodology and application process the Secretary must consult with all 
Indian Tribes. In addition, before spending any funds for planning, 
design, construction, or renovation project, whether subject to a 
competitive application and ranking process or not, the Secretary must 
consult with any Indian Tribe that would be significantly affected by 
the expenditure to determine Tribal preferences concerning the size, 
location, type, and other characteristics of the project.


Sec. 137.321  How do Indian Tribes and the Secretary identify and 
request funds for needed construction projects?

    In addition to the requirements contained in section 513 of the Act 
[25 U.S.C. 458aaa-12], Indian Tribes and the Secretary are encouraged 
to jointly identify health facility and sanitation needs at the 
earliest possible date for IHS budget formulation. In developing budget 
justifications for specific projects to be proposed to Congress, the 
Secretary shall follow the preferences of the affected Indian Tribe(s) 
to the greatest extent feasible concerning the size, location, type, 
and other characteristics of the project.


Sec. 137.322  Is the Secretary required to notify an Indian Tribe that 
funds are available for a construction project or a phase of a project?

    (a) Yes, within 30 days after the Secretary's allocation of funds 
for planning phase, design phase, or construction phase activities for 
a specific project, the Secretary shall notify, by registered mail with 
return receipt in order to document mailing, the Indian Tribe(s) to be 
benefitted by the availability of the funds for each phase of a 
project. The Secretarial notice of fund allocation shall offer 
technical assistance in the preparation of a construction project 
proposal.
    (b) The Secretary shall, within 30 days after receiving a request 
from an Indian Tribe, furnish the Indian Tribe with all information 
available to the Secretary about the project including, but not limited 
to: construction drawings, maps, engineering reports, design reports, 
plans of requirements, cost estimates, environmental assessments, or 
environmental impact reports and archeological reports.
    (c) An Indian Tribe is not required to request this information 
prior to either submitting a notification of intent or a construction 
project proposal.
    (d) The Secretary shall have a continuing responsibility to furnish 
information to the Indian Tribes.

Project Assumption Process


Sec. 137.325  What does a Self-Governance Tribe do if it wants to 
perform a construction project under section 509 of the Act [25 U.S.C. 
458aaa-8]?

    (a) A Self-Governance Tribe may start the process of developing a 
construction project agreement by:

[[Page 7028]]

    (1) Notifying the Secretary in writing that the Self-Governance 
Tribe wishes to enter into a pre-agreement negotiation phase as set 
forth in section 105(m)(3) of the Act [25 U.S.C. 450j(m)(3)]; or
    (2) Submitting a proposed construction project agreement. This 
proposed agreement may be the final proposal, or it may be a draft for 
consideration and negotiation, or
    (3) A combination of the actions described in paragraphs (a)(1) and 
(2) of this section.
    (b) Upon receiving a Self-Governance Tribe's request to enter into 
a pre-negotiation phase the Secretary shall take the steps outlined in 
section 105(m)(3) of the Act [25 U.S.C. 450j(m)(3)].


Sec. 137.326  What must a Tribal proposal for a construction project 
agreement contain?

    A construction project proposal must contain all of the required 
elements of a construction project agreement as defined in 
Sec. 137.280. In addition to these minimum requirements, Self-
Governance Tribes may propose additional items.


Sec. 137.327  May multiple projects be included in a single 
construction project agreement?

    Yes, a Self-Governance Tribe may include multiple projects in a 
single construction project agreement proposal or may add additional 
approved projects by amendment(s) to an existing construction project 
agreement.


Sec. 137.328  Must a construction project proposal incorporate 
provisions of Federal construction guidelines and manuals?

    (a) No, the Self-Governance Tribe and the Secretary must agree upon 
and specify appropriate building codes and architectural and 
engineering standards (including health and safety) which must be in 
conformity with nationally recognized standards for comparable 
projects.
    (b) The Secretary may provide, or the Self-Governance Tribe may 
request, Federal construction guidelines and manuals for consideration 
by the Self-Governance Tribe in the preparation of its construction 
project proposal. If Tribal construction codes and standards (including 
national, regional, State, or Tribal building codes or construction 
industry standards) are consistent with or exceed otherwise applicable 
nationally recognized standards, the Secretary must accept the Tribally 
proposed standards.


Sec. 137.329  What environmental considerations must be included in the 
construction project agreement?

    The construction project agreement must include:
    (a) Identification of the Tribal certifying officer for 
environmental review purposes,
    (b) Reference to the Tribal resolution or equivalent Tribal action 
appointing the Tribal certifying officer and accepting the jurisdiction 
of the Federal court for enforcement purposes as provided in 
Sec. 137.310 and 137.311.
    (c) Identification of the environmental review procedures adopted 
by the Self-Governance Tribe, and
    (d) An assurance that no action will be taken on the construction 
phase of the project that would have an adverse environmental impact or 
limit the choice of reasonable alternatives prior to making an 
environmental determination in accordance with the Self-Governance 
Tribe's adopted procedures.


Sec. 137.330  What happens if the Self-Governance Tribe and the 
Secretary cannot develop a mutually agreeable construction project 
agreement?

    The Self-Governance Tribe may submit a final construction project 
proposal to the Secretary. No later than 30 days after the Secretary 
receives the final construction project proposal, or within a longer 
time agreed to by the Self-Governance Tribe in writing, the Secretary 
shall review and make a determination to approve or reject the 
construction project proposal in whole or in part.


Sec. 137.331  May the Secretary reject a final construction project 
proposal based on a determination of Tribal capacity or capability?

    No, the Secretary may not reject a final construction project 
proposal based on a determination of Tribal capacity or capability.


Sec. 137.332  On what basis may the Secretary reject a final 
construction project proposal?

    (a) The only basis for rejection of project activities in a final 
construction project proposal are:
    (1) The amount of funds proposed in the final construction project 
proposal exceeds the applicable funding level for the construction 
project as determined under sections 508(c) [25 U.S.C. 458aaa-7(c)] and 
106 of the Act [25 U.S.C. 450j-1].
    (2) The final construction project proposal does not meet the 
minimum content requirements for construction project agreements set 
forth in section 501(a)(2) of the Act [25 U.S.C. 458aaa(a)(2)]; and
    (3) The final construction project proposal on its face clearly 
demonstrates that the construction project cannot be completed as 
proposed.
    (b) For construction programs proposed to be included in a 
construction project agreement, the Secretary may also reject that 
portion of the proposal that proposes to assume an inherently Federal 
function that cannot legally be delegated to the Self-Governance Tribe.


Sec. 137.333  What procedures must the Secretary follow if the 
Secretary rejects a final construction project proposal, in whole or in 
part?

    Whenever the Secretary rejects a final construction project 
proposal in whole or in part, the Secretary must:
    (a) Send the Self-Governance Tribe a timely written notice of 
rejection that shall set forth specific finding(s) that clearly 
demonstrates, or that is supported by controlling legal authority 
supporting the rejection;
    (b) Within 20 days, provide all documents relied on in making the 
rejection decision to the Self-Governance Tribe;
    (c) Provide assistance to the Self-Governance Tribe to overcome any 
objections stated in the written notice of rejection;
    (d) Provide the Self-Governance Tribe with a hearing on the record 
with the right to engage in full discovery relevant to any issue raised 
in the matter and the opportunity for appeal of the decision to reject 
the final construction contract proposal, under the regulations set 
forth in subpart P of this part, except that the Self-Governance Tribe 
may, in lieu of filing an appeal, initiate an action in Federal 
district court and proceed directly under sections 511 [25 U.S.C. 
458aaa-10] and 110(a) of the Act [25 U.S.C. 450m-1(a)]. With respect to 
any hearing or appeal or civil action conducted pursuant to this 
section, the Secretary shall have the burden of demonstrating by clear 
and convincing evidence the validity of the grounds for rejecting the 
final construction project proposal (or portion thereof); and
    (e) Provide the Self-Governance Tribe with the option of entering 
into the severable portions of a final proposed construction project 
agreement (including a lesser funding amount) that the Secretary did 
not reject, subject to any additional alterations necessary to conform 
the construction project agreement to the severed provisions. 
Exercising this option does not affect the Self-Governance Tribe's 
right to appeal the portion of the final construction project proposal 
that was rejected by the Secretary.

[[Page 7029]]

Sec. 137.334  What happens if the Secretary fails to notify the Self-
Governance Tribe of a decision to approve or reject a final 
construction project proposal within the time period allowed?

    If the Secretary fails to notify the Self-Governance Tribe of the 
decision to approve or reject within 30 days (or a longer period if 
agreed to by the Self-Governance Tribe in writing), then the proposal 
will be deemed approved by the Secretary.


Sec. 137.335  What costs may be included in the budget for a 
construction agreement?

    (a) A Self-Governance Tribe may include costs allowed by applicable 
OMB Circulars, and costs allowed under sections 508(c) [25 U.S.C. 
458aaa-7(c)], 106 [25 U.S.C. 450j-1] and 105 (m) of the Act [25 U.S.C. 
450j(m)]. The costs incurred will vary depending on which phase of the 
construction process the Self-Governance Tribe is conducting and type 
of construction project agreement that will be used.
    (b) Regardless of whether a construction project agreement is fixed 
price or cost-reimbursement, budgets may include costs or fees 
associated with the following:
    (1) Construction project proposal preparation;
    (2) Conducting community meetings to develop project documents;
    (3) Architects, engineers, and other consultants to prepare project 
planning documents, to develop project plans and specifications, and to 
assist in oversight of the design during construction;
    (4) Real property lease or acquisition;
    (5) Development of project surveys including topographical surveys, 
site boundary descriptions, geotechnical surveys, archeological 
surveys, and NEPA compliance;
    (6) Project management, superintendence, safety and inspection;
    (7) Travel, including local travel incurred as a direct result of 
conducting the construction project agreement and remote travel in 
conjunction with the project;
    (8) Consultants, such as demographic consultants, planning 
consultants, attorneys, accountants, and personnel who provide 
services, to include construction management services;
    (9) Project site development;
    (10) Project construction cost;
    (11) General, administrative overhead, and indirect costs;
    (12) Securing and installing moveable equipment, telecommunications 
and data processing equipment, furnishings, including works of art, and 
special purpose equipment when part of a construction contract;
    (13) Other costs directly related to performing the construction 
project agreement;
    (14) Project contingency:
    (i) A cost-reimbursement project agreement budgets contingency as a 
broad category. Project contingency remaining at the end of the project 
is considered savings.
    (ii) Fixed-price agreements budget project contingency in the lump 
sum price or unit price.
    (c) In the case of a fixed-price project agreement, a reasonable 
profit determined by taking into consideration the relevant risks and 
local market conditions.


Sec. 137.336  What is the difference between fixed-price and cost-
reimbursement agreements?

    (a) Cost-reimbursement agreements generally have one or more of the 
following characteristics:
    (1) Risk is shared between IHS and the Self-Governance Tribe;
    (2) Self-Governance Tribes are not required to perform beyond the 
amount of funds provided under the agreement;
    (3) Self-Governance Tribes establish budgets based upon the actual 
costs of the project and are not allowed to include profit;
    (4) Budgets are stated using broad categories, such as planning, 
design, construction project administration, and contingency;
    (5) The agreement funding amount is stated as a ``not to exceed'' 
amount;
    (6) Self-Governance Tribes provide notice to the IHS if they expect 
to exceed the amount of the agreement and require more funds;
    (7) Excess funds remaining at the end of the project are considered 
savings; and,
    (8) Actual costs are subject to applicable OMB circulars and cost 
principles.
    (b) Fixed Price agreements generally have one or more of the 
following characteristics:
    (1) Self-Governance Tribes assume the risk for performance;
    (2) Self-Governance Tribes are entitled to make a reasonable 
profit;
    (3) Budgets may be stated as lump sums, unit cost pricing, or a 
combination thereof;
    (4) For unit cost pricing, savings may occur if actual quantity is 
less than estimated; and, (5) Excess funds remaining at the end of a 
lump sum fixed price project are considered profit.


Sec. 137.337  What funding must the Secretary provide in a construction 
project agreement?

    The Secretary must provide funding for a construction project 
agreement in accordance with sections 106 [25 U.S.C. 450j-1] and 508(c) 
of the Act [25 U.S.C. 458aaa-7(c)].


Sec. 137.338  May funds from other sources be incorporated into a 
construction project agreement?

    Yes, at the request of the Self-Governance Tribe, the Secretary may 
include funds from other agencies as permitted by law, whether on an 
ongoing or a one-time basis.


Sec. 137.339  May a Self-Governance Tribe use project funds for 
matching or cost participation requirements under other Federal and 
non-Federal programs?

    Yes, notwithstanding any other provision of law, all funds provided 
under a construction project agreement may be treated as non-Federal 
funds for purposes of meeting matching or cost participation 
requirements under any other Federal or non-Federal program.


Sec. 137.340  May a Self-Governance Tribe contribute funding to a 
project?

    Yes, the Self-Governance Tribe and the Secretary may jointly fund 
projects. The construction project agreement should identify the 
Secretarial amount and any Tribal contribution amount that is being 
incorporated into the construction project agreement. The Self-
Governance Tribe does not have to deposit its contribution with the 
Secretary.


Sec. 137.341  How will a Self-Governance Tribe receive payment under a 
construction project agreement?

    (a) For all construction project agreements, advance payments shall 
be made annually or semiannually, at the Self-Governance Tribe's 
option. The initial payment shall include all contingency funding for 
the project or phase of the project to the extent that there are funds 
appropriated for that purpose.
    (b) The amount of subsequent payments is based on the mutually 
agreeable project schedule reflecting:
    (1) Work to be accomplished within the advance payment period,
    (2) Work already accomplished, and
    (3) Total prior payments for each annual or semiannual advance 
payment period.
    (c) For lump sum, fixed price agreements, at the request of the 
Self-Governance Tribe, payments shall be based on an advance payment 
period measured as follows:
    (1) One year; or
    (2) Project Phase (e.g., planning, design, construction). If 
project phase is chosen as the payment period, the full amount of funds 
necessary to perform the work for that phase of the

[[Page 7030]]

construction project agreement is payable in the initial advance 
payment. For multi-phase projects, the planning and design phases must 
be completed prior to the transfer of funds for the associated 
construction phase. The completion of the planning and design phases 
will include at least one opportunity for Secretarial approval in 
accordance with Sec. 137.360.
    (d) For the purposes of payment, Sanitation Facilities Construction 
Projects authorized pursuant to Pub. L. 86-121, are considered to be a 
single construction phase and are payable in a single lump sum advance 
payment in accordance with paragraph (c)(2) of this section.
    (e) For all other construction project agreements, the amount of 
advance payments shall include the funds necessary to perform the work 
identified in the advance payment period of one year.
    (f) Any agreement to advance funds under paragraphs (b), (c) or (d) 
of this section is subject to the availability of appropriations.
    (g) (1) Initial advance payments are due within 10 days of the 
effective date of the construction project agreement; and
    (2) Subsequent payments are due:
    (i) Within 10 days of apportionment for annual payments or
    (ii) Within 10 days of the start date of the project phase for 
phase payments.


Sec. 137.342  What happens to funds remaining at the conclusion of a 
cost reimbursement construction project?

    All funds, including contingency funds, remaining at the conclusion 
of the project are considered savings and may be used by the Self-
Governance Tribe to provide additional services for the purpose for 
which the funds were originally appropriated. No further approval or 
justifying documentation is required before the expenditure of the 
remaining funds.


Sec. 137.343  What happens to funds remaining at the conclusion of a 
fixed price construction project?

    (a) For lump sum fixed price construction project agreements, all 
funds remaining at the conclusion of the project are considered profits 
and belong to the Self-Governance Tribe.
    (b) For fixed price construction project agreements with unit price 
components, all funds remaining that are associated with overestimated 
unit price quantities are savings and may be used by the Self-
Governance Tribe in accordance with Sec. 137.342. All other funds 
remaining at the conclusion of the project are considered profit and 
belong to the Self-Governance Tribe.


Sec. 137.344  May a Self-Governance Tribe reallocate funds among 
construction project agreements?

    Yes, a Self-Governance Tribe may reallocate funds among 
construction project agreements to the extent not prohibited by 
applicable appropriation law(s).

Roles of Self-Governance Tribe in Establishing and Implementing 
Construction Project Agreements


Sec. 137.350  Is a Self-Governance Tribe responsible for completing a 
construction project in accordance with the negotiated construction 
project agreement?

    Yes, a Self-Governance Tribe assumes responsibility for completing 
a construction project, including day-to-day on-site management and 
administration of the project, in accordance with the negotiated 
construction project agreement. However, Self-Governance Tribes are not 
required to perform beyond the amount of funds provided. For example, a 
Self-Governance Tribe may encounter unforeseen circumstances during the 
term of a construction project agreement. If this occurs, options 
available to the Self-Governance Tribe include, but are not limited to:
    (a) Reallocating existing funding;
    (b) Reducing/revising the scope of work that does not require an 
amendment because it does not result in a significant change;
    (c) Utilizing savings from other projects;
    (d) Requesting additional funds or appropriations;
    (e) Utilizing interest earnings;
    (f) Seeking funds from other sources; and/or
    (g) Redesigning or re-scoping that does result in a significant 
change by amendment as provided in Secs. 137.363 and 137.364.


Sec. 137.351  Is a Self-Governance Tribe required to submit 
construction project progress and financial reports for construction 
project agreements?

    Yes, a Self-Governance Tribe must provide the Secretary with 
construction project progress and financial reports semiannually or, at 
the option of the Self-Governance Tribe, on a more frequent basis. 
Self-Governance Tribes are only required to submit the reports, as 
negotiated in the Construction Project Agreement, after funds have been 
transferred to the Self-Governance Tribe for a construction project. 
Construction project progress reports and financial reports are only 
required for active construction projects.


Sec. 137.352  What is contained in a construction project progress 
report?

    Construction project progress reports contain information about 
accomplishments during the reporting period and issues and concerns of 
the Self-Governance Tribe, if any.


Sec. 137.353  What is contained in a construction project financial 
report?

    Construction project financial reports contain information 
regarding the amount of funds expended during the reporting period, and 
financial concerns of the Self-Governance Tribe, if any.

Roles of the Secretary in Establishing and Implementing 
Construction Project Agreements


Sec. 137.360  Does the Secretary approve project planning and design 
documents prepared by the Self-Governance Tribe?

    The Secretary shall have at least one opportunity to approve 
project planning and design documents prepared by the Self-Governance 
Tribe in advance of construction if the Self-Governance Tribe is 
required to submit planning or design documents as a part of the scope 
of work under a construction project agreement.


Sec. 137.361  Does the Secretary have any other opportunities to 
approve planning or design documents prepared by the Self-Governance 
Tribe?

    Yes, but only if there is an amendment to the construction project 
agreement that results in a significant change in the original scope of 
work.


Sec. 137.362  May construction project agreements be amended?

    Yes, the Self-Governance Tribe, at its discretion, may request the 
Secretary to amend a construction project agreement to include 
additional projects. In addition, amendments are required if there is a 
significant change from the original scope of work or if funds are 
added by the Secretary. The Self-Governance Tribe may make immaterial 
changes to the performance period and make budget adjustments within 
available funding without an amendment to the construction project 
agreement.


Sec. 137.363  What is the procedure for the Secretary's review and 
approval of amendments?

    (a) The Secretary shall promptly notify the Self-Governance Tribe 
in writing of any concerns or issues that may lead to disapproval. The 
Secretary shall share relevant information and documents, and make a 
good faith effort to resolve all issues and concerns of the Self-
Governance Tribe. If, after consultation with the Self-Governance

[[Page 7031]]

Tribe, the Secretary intends to disapprove the proposed amendment, then 
the Secretary shall follow the procedures set forth in Secs. 137.330 
through 137.334.
    (b) The time allowed for Secretarial review, comment, and approval 
of amendments is 30 days, or within a longer time if agreed to by the 
Self-Governance Tribe in writing. Absence of a written response by the 
Secretary within 30 days shall be deemed approved.
    (c) The timeframe set forth in paragraph (b) of this section is 
intended to be the maximum time and may be reduced based on urgency and 
need, by agreement of the parties. If the Self-Governance Tribe 
requests reduced timeframes for action due to unusual or special 
conditions (such as limited construction periods), the Secretary shall 
make a good faith effort to accommodate the requested timeframes.


Sec. 137.364  What constitutes a significant change in the original 
scope of work?

    A significant change in the original scope of work is:
    (a) A change that would result in a cost that exceeds the total of 
the project funds available and the Self-Governance Tribe's contingency 
funds; or
    (b) A material departure from the original scope of work, including 
substantial departure from timelines negotiated in the construction 
project agreement.


Sec. 137.365  What is the procedure for the Secretary's review and 
approval of project planning and design documents submitted by the 
Self-Governance Tribe?

    (a) The Secretary shall review and approve planning documents to 
ensure compliance with planning standards identified in the 
construction project agreement. The Secretary shall review and approve 
design documents for general compliance with requirements of the 
construction project agreement.
    (b) The Secretary shall promptly notify the Self-Governance Tribe 
in writing of any concerns or issues that may lead to disapproval. The 
Secretary shall share relevant information and documents, and make a 
good faith effort to resolve all issues and concerns of the Self-
Governance Tribe. If, after consultation with the Self-Governance 
Tribe, the Secretary intends to disapprove the documents, then the 
Secretary shall follow the procedures set forth in Sec. 137.333.
    (c) The time allowed for Secretarial review, comment, and approval 
of planning and design documents is 21 days, unless otherwise agreed to 
by the Self-Governance Tribe in writing. Absence of a written response 
by the Secretary within 21 days shall be deemed approved.


Sec. 137.366  May the Secretary conduct onsite project oversight 
visits?

    Yes, the Secretary may conduct onsite project oversight visits 
semiannually or on an alternate schedule negotiated in the construction 
project agreement. The Secretary must provide the Self-Governance Tribe 
with reasonable advance written notice to assist the Self-Governance 
Tribe in coordinating the visit. The purpose of the visit is review the 
progress under the construction project agreement. At the request of 
the Self-Governance Tribe, the Secretary must provide the Self-
Governance Tribe a written site visit report.


Sec. 137.367  May the Secretary issue a stop work order under a 
construction project agreement?

    No, the Secretary has no role in the day-to-day management of a 
construction project.


Sec. 137.368  Is the Secretary responsible for oversight and compliance 
of health and safety codes during construction projects being performed 
by a Self-Governance Tribe under section 509 of the Act [25 U.S.C. 
488aaa-8]?

    No, the Secretary is not responsible for oversight and compliance 
of health and safety codes during construction projects being performed 
by a Self-Governance Tribe under section 509 of the Act [25 U.S.C. 
488aaa-8].

Other


Sec. 137.370  Do all provisions of this part apply to construction 
project agreements under this subpart?

    Yes, to the extent the provisions are not inconsistent with the 
provisions in this subpart. Provisions that do not apply include: 
programmatic reports and data requirements; reassumption; compact and 
funding agreement review, approval, and final offer process; and 
compact and funding agreement contents.


Sec. 137.371  Who takes title to real property purchased with funds 
provided under a construction project agreement?

    The Self-Governance Tribe takes title to the real property unless 
the Self-Governance Tribe requests that the Secretary take title to the 
property.


Sec. 137.372  What should the Self-Governance Tribe do if it wants real 
property purchased with construction project agreement funds to be 
taken into trust?

    The Self-Governance Tribe must submit a resolution of support from 
the governing body of Self-Governance Tribes in which the beneficial 
ownership is to be registered. Upon receipt of the Self-Governance 
Tribes' resolution, the Secretary shall transfer the request to the 
Secretary of the Interior so that it may be expeditiously processed in 
accordance with applicable Federal laws and regulations. The Secretary 
may not require the Self-Governance Tribe to furnish any information in 
support of such a request other than that expressly required by 
applicable law or regulation.


Sec. 137.373  Do Federal real property laws, regulations and procedures 
that apply to the Secretary also apply to Self-Governance Tribes that 
purchase real property with funds provided under a construction project 
agreement?

    No, unless the Self-Governance Tribe has requested the Secretary 
take title to the property.


Sec. 137.374  Does the Secretary have a role in reviewing or monitoring 
a Self-Governance Tribe's actions in acquiring real property with funds 
provided under a construction project agreement?

    No, unless the Self-Governance Tribe has requested the Secretary 
take title to the property. The Self-Governance Tribe is responsible 
for acquiring all real property needed to perform a construction 
project under a construction project agreement, not the Secretary. The 
Secretary shall not withhold funds or refuse to enter into a 
construction project agreement because of a disagreement between the 
Self-Governance Tribe and the Secretary over the Self-Governance 
Tribe's decisions to purchase or lease real property.


Sec. 137.375  Are Tribally-owned facilities constructed under section 
509 of the Act [25 U.S.C. 458aaa-8] eligible for replacement, 
maintenance, and improvement funds on the same basis as if title to 
such property were vested in the United States?

    Yes, Tribally-owned facilities constructed under section 509 of the 
Act [25 U.S.C. 458aaa-8] are eligible for replacement, maintenance, and 
improvement funds on the same basis as if title to such property were 
vested in the United States.


Sec. 137.376  Are design and construction projects performed by Self-
Governance Tribes under section 509 of the Act [25 U.S.C. 458aaa-8] 
subject to Federal metric requirements?

    No, however, the Self-Governance Tribe and the Secretary may 
negotiate the use of Federal metric requirements in the construction 
project agreement when the Self-Governance Tribe will

[[Page 7032]]

design and/or construct an IHS facility that the Secretary will own and 
operate.


Sec. 137.377  Do Federal procurement laws and regulations apply to 
construction project agreements performed under section 509 of the Act 
[25 U.S.C. 458aaa-8]?

    No, unless otherwise agreed to by the Tribe, no provision of the 
Office of Federal Procurement Policy Act, the Federal Acquisition 
Regulations issued pursuant thereto, or any other law or regulation 
pertaining to Federal procurement (including Executive Orders) shall 
apply to any construction project conducted under section 509 of the 
Act [25 U.S.C. 458aaa-8]. The Secretary and the Self-Governance Tribe 
may negotiate to apply specific provisions of the Office of Federal 
Procurement and Policy Act and Federal Acquisition Regulations to a 
construction project agreement or funding agreement. Absent a 
negotiated agreement, such provisions and regulatory requirements do 
not apply.


Sec. 137.378  Does the Federal Davis-Bacon Act and wage rates apply to 
construction projects performed by Self-Governance Tribes using their 
own funds or other non-Federal funds?

    No, the Federal Davis-Bacon Act and wage rates do not apply to 
construction projects performed by Self-Governance Tribes using their 
own funds or other non-Federal funds.


Sec. 137.379  Do Davis-Bacon wage rates apply to construction projects 
performed by Self-Governance Tribes using Federal funds?

    Davis-Bacon Act wage rates only apply to laborers and mechanics 
employed by the contractors and subcontractors (excluding Indian 
Tribes, inter-Tribal consortia, and Tribal organizations) retained by 
Self-Governance Tribes to perform construction. The Davis-Bacon Act and 
wage rates do not apply when Self-Governance Tribes perform work with 
their own employees.

Subpart O--Secretarial Responsibilities

Budget Request


Secs. 137.400-137.404  [Reserved]

Reports


Sec. 137.405  Is the Secretary required to report to Congress on 
administration of Title V and the funding requirements presently funded 
or unfunded?

    Yes, no later than January 1 of each year after the date of 
enactment of the Tribal Self-Governance Amendments of 2000, the 
Secretary shall submit to the Committee on Indian Affairs of the Senate 
and the Committee on Resources of the House of Representatives a 
written report regarding the administration of Title V. The report 
shall include a detailed analysis of the funding requirements presently 
funded or unfunded for each Indian Tribe or Tribal organization, either 
directly by the Secretary, under self-determination contracts under 
title I, or under compacts and funding agreements authorized under 
Title V.


Sec. 137.406  In compiling reports pursuant to this section, may the 
Secretary impose any reporting requirements on Self-Governance Tribes, 
not otherwise provided in Title V?

    No, in compiling reports pursuant to this section, the Secretary 
may not impose any reporting requirements on Self-Governance Tribes, 
not otherwise provided in Title V.


Sec. 137.407  What guidelines will be used by the Secretary to compile 
information required for the report?

    The report shall be compiled from information contained in funding 
agreements, annual audit reports, and data of the Secretary regarding 
the disposition of Federal funds. The report must identify:
    (a) The relative costs and benefits of self-governance, including 
savings;
    (b) With particularity, all funds that are specifically or 
functionally related to the provision by the Secretary of services and 
benefits to Self-Governance Tribes and their members;
    (c) The funds transferred to each Self-Governance Tribe and the 
corresponding reduction in the Federal bureaucracy;
    (d) The funding formula for individual Tribal shares of all 
headquarter's funds, together with the comments of affected Self-
Governance Tribes, developed under Secs. 137.405 of this subpart; and
    (e) Amounts expended in the preceding fiscal year to carry out 
inherent Federal functions, including an identification of those 
functions by type and location.

Subpart P--Appeals


Sec. 137.410  For the purposes of section 110 of the Act [25 U.S.C. 
450m-1] does the term ``contract'' include compacts, funding 
agreements, and construction project agreements entered into under 
Title V?

    Yes, for the purposes of section 110 of the Act [25 U.S.C. 450m-1] 
the term ``contract'' includes compacts, funding agreements, and 
construction project agreements entered into under Title V.

Post-Award Disputes


Sec. 137.412  Do the regulations at 25 CFR Part 900, Subpart N apply to 
compacts, funding agreements, and construction project agreements 
entered into under Title V?

    Yes, the regulations at 25 CFR Part 900, Subpart N apply to 
compacts, funding agreements, and construction project agreements 
entered into under Title V.

Pre-Award Disputes


Sec. 137.415  What decisions may an Indian Tribe appeal under 
Secs. ;137.415 through 137.436?

    An Indian Tribe may appeal:
    (a) A decision to reject a final offer, or a portion thereof, under 
section 507(b) of the Act [25 U.S.C. 458aaa-6(b)];
    (b) A decision to reject a proposed amendment to a compact or 
funding agreement, or a portion thereof, under section 507(b) of the 
Act [25 U.S.C. 458aaa-6(b)];
    (c) A decision to rescind and reassume a compact or funding 
agreement, in whole or in part, under section 507(a)(2) of the Act [25 
U.S.C. 458aaa-6(a)(2)], except for immediate reassumptions under 
section 507(a)(2)(C) of the Act [25 U.S.C. 458aaa-6(a)(2)(C)];
    (d) A decision to reject a final construction project proposal, or 
a portion thereof, under section 509(b) of the Act [25 U.S.C. 458aaa-
8(b)] and subpart N of this part; and
    (e) For construction project agreements carried out under section 
509 of the Act [25 U.S.C. 458aaa-8], a decision to reject project 
planning documents, design documents, or proposed amendments submitted 
by a Self-Governance Tribe under section 509(f) of the Act [25 U.S.C. 
458aaa-8(f)] and subpart N of this part.


Sec. 137.416  Do Secs. 137.415 through 137.436 apply to any other 
disputes?

    No, Secs. 137.415 through 137.436 only apply to decisions listed in 
Sec. 137.415. Specifically, Secs. 137.415 through 137.436 do not apply 
to any other dispute, including, but not limited to:
    (a) Disputes arising under the terms of a compact, funding 
agreement, or construction project agreement that has been awarded;
    (b) Disputes arising from immediate reassumptions under section 
507(a)(2)(C) of the Act [25 U.S.C. 458aaa-6(a)(2)(C)] and Secs. 137.261 
and 137.262, which are covered under Secs. 137.440 through 137.445.

[[Page 7033]]

    (c) Other post-award contract disputes, which are covered under 
Secs. 137.412.
    (d) Denials under the Freedom of Information Act, 5 U.S.C. 552, 
which may be appealed under 45 CFR 5.
    (e) Decisions relating to the award of grants under section 503(e) 
of the Act [25 U.S.C. 458aaa-2(e)], which may be appealed under 45 CFR 
5.


Sec. 137.417  What procedures apply to Interior Board of Indian Appeals 
(IBIA) proceedings?

    The IBIA may use the procedures set forth in 43 CFR 4.22-4.27 as a 
guide.


Sec. 137.418  How does an Indian Tribe know where and when to file its 
appeal from decisions made by IHS?

    Every decision in any of the areas listed in Sec. 137.415 must 
contain information which shall tell the Indian Tribe where and when to 
file the Indian Tribe's appeal. Each decision shall include the 
following statement:

    Within 30 days of the receipt of this decision, you may request 
an informal conference under 42 CFR 137.421, or appeal this decision 
under 42 CFR 137.425 to the Interior Board of Indian Appeals (IBIA). 
Should you decide to appeal this decision, you may request a hearing 
on the record. An appeal to the IBIA under 42 CFR 137.425 shall be 
filed with the IBIA by certified mail or by hand delivery at the 
following address: Board of Indian Appeals, U.S. Department of the 
Interior, 4015 Wilson Boulevard, Arlington, VA 22203. You shall 
serve copies of your Notice of Appeal on the Secretary and on the 
official whose decision is being appealed. You shall certify to the 
IBIA that you have served these copies.

Sec. 137.419  What authority does the IBIA have under Secs. 137.415 
through 137.436?

    The IBIA has the authority:
    (a) To conduct a hearing on the record;
    (b) To permit the parties to engage in full discovery relevant to 
any issue raised in the matter; and
    (c) To issue a recommended decision;
    (d) To take such action as necessary to insure rights specified in 
Sec. 137.430.


Sec. 137.420  Does an Indian Tribe have any options besides an appeal?

    Yes, the Indian Tribe may request an informal conference. An 
informal conference is a way to resolve issues as quickly as possible, 
without the need for a formal hearing. Or, the Indian Tribe may, in 
lieu of filing an administrative appeal under this subpart or upon 
completion of an informal conference, file an action in Federal court 
pursuant to section 110 of the Act [25 U.S.C. 450m-1].


Sec. 137.421  How does an Indian Tribe request an informal conference?

    The Indian Tribe must file its request for an informal conference 
with the office of the person whose decision it is appealing, within 30 
days of the day it receives the decision. The Indian Tribe may either 
hand-deliver the request for an informal conference to that person's 
office, or mail it by certified mail, return receipt requested. If the 
Indian Tribe mails the request, it will be considered filed on the date 
the Indian Tribe mailed it by certified mail.


Sec. 137.422  How is an informal conference held?

    (a) The informal conference must be held within 30 days of the date 
the request was received, unless the Indian Tribe and the authorized 
representative of the Secretary agree on another date.
    (b) If possible, the informal conference will be held at the Indian 
Tribe's office. If the meeting cannot be held at the Indian Tribe's 
office and is held more than fifty miles from its office, the Secretary 
must arrange to pay transportation costs and per diem for incidental 
expenses to allow for adequate representation of the Indian Tribe.
    (c) The informal conference must be conducted by a designated 
representative of the Secretary.
    (d) Only people who are the designated representatives of the 
Indian Tribe, or authorized by the Secretary are allowed to make 
presentations at the informal conference.


Sec. 137.423  What happens after the informal conference?

    (a) Within 10 days of the informal conference, the person who 
conducted the informal conference must prepare and mail to the Indian 
Tribe a written report which summarizes what happened at the informal 
conference and a recommended decision.
    (b) Every report of an informal conference must contain the 
following language:

    Within 30 days of the receipt of the recommended decision from 
the informal conference, you may file an appeal of the initial 
decision of the DHHS agency with the Interior Board of Indian 
Appeals (IBIA) under 42 CFR 137.425. You may request a hearing on 
the record. An appeal to the IBIA under 42 CFR 137.425 shall be 
filed with the IBIA by certified mail or hand delivery at the 
following address: Board of Indian Appeals, U.S. Department of the 
Interior, 4015 Wilson Boulevard, Arlington, VA 22203. You shall 
serve copies of your Notice of Appeal on the Secretary and on the 
official whose decision is being appealed. You shall certify to the 
IBIA that you have served these copies. Alternatively you may file 
an action in Federal court pursuant to section 110 of the Act. [25 
U.S.C. 450m-1].

Sec. 137.424  Is the recommended decision from the informal conference 
final for the Secretary?

    No, if the Indian Tribe is dissatisfied with the recommended 
decision from the informal conference, it may still appeal the initial 
decision within 30 days of receiving the recommended decision and the 
report of the informal conference. If the Indian Tribe does not file a 
notice of appeal within 30 days, or before the expiration of the 
extension it has received under Sec. 137.426 , the recommended decision 
of the informal conference becomes final for the Secretary and may be 
appealed to Federal court pursuant to section 110 of the Act [25 U.S.C. 
450m-1].


Sec. 137.425  How does an Indian Tribe appeal the initial decision if 
it does not request an informal conference or if it does not agree with 
the recommended decision resulting from the informal conference?

    (a) If the Indian Tribe decides to appeal, it must file a notice of 
appeal with the IBIA within 30 days of receiving either the initial 
decision or the recommended decision from the informal conference.
    (b) The Indian Tribe may either hand-deliver the notice of appeal 
to the IBIA, or mail it by certified mail, return receipt requested. If 
the Indian Tribe mails the Notice of Appeal, it will be considered 
filed on the date the Indian Tribe mailed it by certified mail. The 
Indian Tribe should mail the notice of appeal to: Board of Indian 
Appeals, U.S. Department of the Interior, 4015 Wilson Boulevard, 
Arlington, VA 22203.
    (c) The Notice of Appeal must:
    (1) Briefly state why the Indian Tribe thinks the initial decision 
is wrong;
    (2) Briefly identify the issues involved in the appeal; and
    (3) State whether the Indian Tribe wants a hearing on the record, 
or whether the Indian Tribe wants to waive its right to a hearing.
    (d) The Indian Tribe must serve a copy of the notice of appeal upon 
the official whose decision it is appealing. The Indian Tribe must 
certify to the IBIA that it has done so.
    (e) The authorized representative of the Secretary will be 
considered a party to all appeals filed with the IBIA under the Act.
    (f) In lieu of filing an administrative appeal an Indian Tribe may 
proceed directly to Federal court pursuant to section 110 of the Act 
[25 U.S.C. 450m-1].

[[Page 7034]]

Sec. 137.426  May an Indian Tribe get an extension of time to file a 
notice of appeal?

    Yes, if the Indian Tribe needs additional time, the Indian Tribe 
may request an extension of time to file its Notice of Appeal with the 
IBIA within 60 days of receiving either the initial decision or the 
recommended decision resulting from the informal conference. The 
request of the Indian Tribe must be in writing, and must give a reason 
for not filing its notice of appeal within the 30-day time period. If 
the Indian Tribe has a valid reason for not filing its notice of appeal 
on time, it may receive an extension.


Sec. 137.427  What happens after an Indian Tribe files an appeal?

    (a) Within 5 days of receiving the Indian Tribe's notice of appeal, 
the IBIA will decide whether the appeal falls under Sec. 137.415. If 
so, the Indian Tribe is entitled to a hearing.
    (b) If the IBIA cannot make that decision based on the information 
included in the notice of appeal, the IBIA may ask for additional 
statements from the Indian Tribe, or from the appropriate Federal 
agency. If the IBIA asks for more statements, it will make its decision 
within 5 days of receiving those statements.
    (c) If the IBIA decides that the Indian Tribe is not entitled to a 
hearing or if the Indian Tribe has waived its right to a hearing on the 
record, the IBIA will dismiss the appeal and inform the Indian Tribe 
that it is not entitled to a hearing or has waived its right to a 
hearing.


Sec. 137.428  How is a hearing arranged?

    (a) If a hearing is to be held, the IBIA will refer the Indian 
Tribe's case to the Hearings Division of the Office of Hearings and 
Appeals of the U.S. Department of the Interior. The case will then be 
assigned to an Administrative Law Judge (ALJ), appointed under 5 U.S.C. 
3105.
    (b) Within 15 days of the date of the referral, the ALJ will hold a 
pre-hearing conference, by telephone or in person, to decide whether an 
evidentiary hearing is necessary, or whether it is possible to decide 
the appeal based on the written record. At the pre-hearing conference 
the ALJ will provide for:
    (1) A briefing and discovery schedule;
    (2) A schedule for the exchange of information, including, but not 
limited to witness and exhibit lists, if an evidentiary hearing is to 
be held;
    (3) The simplification or clarification of issues;
    (4) The limitation of the number of expert witnesses, or avoidance 
of similar cumulative evidence, if an evidentiary hearing is to be 
held;
    (5) The possibility of agreement disposing of all or any of the 
issues in dispute; and
    (6) Such other matters as may aid in the disposition of the appeal.
    (c) The ALJ shall order a written record to be made of any 
conference results that are not reflected in a transcript.


Sec. 137.429  What happens when a hearing is necessary?

    (a) The ALJ must hold a hearing within 90 days of the date of the 
order referring the appeal to the ALJ, unless the parties agree to have 
the hearing on a later date.
    (b) At least 30 days before the hearing, the Secretary must file 
and serve the Indian Tribe with a response to the notice of appeal.
    (c) If the hearing is held more than 50 miles from the Indian 
Tribe's office, the Secretary must arrange to pay transportation costs 
and per diem for incidental expenses to allow for adequate 
representation of the Indian Tribe.
    (d) The hearing shall be conducted in accordance with the 
Administrative Procedure Act, 5 U.S.C. 556.


Sec. 137.430  What is the Secretary's burden of proof for appeals 
covered by Sec. 137.415?

    As required by section 518 of the Act [25 U.S.C. 458aaa-17], the 
Secretary must demonstrate by clear and convincing evidence the 
validity of the grounds for the decision made and that the decision is 
fully consistent with provisions and policies of the Act.


Sec. 137.431  What rights do Indian Tribes and the Secretary have 
during the appeal process?

    Both the Indian Tribe and the Secretary have the same rights during 
the appeal process. These rights include the right to:
    (a) Be represented by legal counsel;
    (b) Have the parties provide witnesses who have knowledge of the 
relevant issues, including specific witnesses with that knowledge, who 
are requested by either party;
    (c) Cross-examine witnesses;
    (d) Introduce oral or documentary evidence, or both;
    (e) Require that oral testimony be under oath;
    (f) Receive a copy of the transcript of the hearing, and copies of 
all documentary evidence which is introduced at the hearing;
    (g) Compel the presence of witnesses, or the production of 
documents, or both, by subpoena at hearings or at depositions;
    (h) Take depositions, to request the production of documents, to 
serve interrogatories on other parties, and to request admissions; and
    (i) Any other procedural rights under the Administrative Procedure 
Act, 5 U.S.C. 556.


Sec. 137.432  What happens after the hearing?

    (a) Within 30 days of the end of the formal hearing or any post-
hearing briefing schedule established by the ALJ, the ALJ shall send 
all the parties a recommended decision, by certified mail, return 
receipt requested. The recommended decision must contain the ALJ's 
findings of fact and conclusions of law on all the issues. The 
recommended decision shall also state that the Indian Tribe has the 
right to object to the recommended decision.

    (b) The recommended decision shall contain the following statement: 
Within 30 days of the receipt of this recommended decision, you may 
file an objection to the recommended decision with the Secretary under 
42 CFR 137.43. An appeal to the Secretary under 42 CFR 137.43 shall be 
filed at the following address: Department of Health and Human 
Services, 200 Independence Ave. SW., Washington, DC 20201. You shall 
serve copies of your notice of appeal on the official whose decision is 
being appealed. You shall certify to the Secretary that you have served 
this copy. If neither party files an objection to the recommended 
decision within 30 days, the recommended decision will become final.

Sec. 137.433  Is the recommended decision always final?

    No, any party to the appeal may file precise and specific written 
objections to the recommended decision, or any other comments, within 
30 days of receiving the recommended decision. Objections must be 
served on all other parties. The recommended decision shall become 
final for the Secretary 30 days after the Indian Tribe receives the 
ALJ's recommended decision, unless a written statement of objections is 
filed with the Secretary during the 30-day period. If no party files a 
written statement of objections within 30 days, the recommended 
decision shall become final for the Secretary.


Sec. 137.434  If an Indian Tribe objects to the recommended decision, 
what will the Secretary do?

    (a) The Secretary has 45 days from the date it receives the final 
authorized submission in the appeal to modify, adopt, or reverse the 
recommended decision. The Secretary also may remand the case to the 
IBIA for further proceedings. If the Secretary does not modify or 
reverse the recommended decision or remand the case to the IBIA during 
that time, the recommended decision automatically becomes final.

[[Page 7035]]

    (b) When reviewing the recommended decision, the Secretary may 
consider and decide all issues properly raised by any party to the 
appeal, based on the record.
    (c) The decision of the Secretary must:
    (1) Be in writing;
    (2) Specify the findings of fact or conclusions of law that are 
modified or reversed;
    (3) Give reasons for the decision, based on the record; and
    (4) State that the decision is final for the Department.


Sec. 137.435  Will an appeal adversely affect the Indian Tribe's rights 
in other compact, funding negotiations, or construction project 
agreement?

    No, a pending appeal will not adversely affect or prevent the 
negotiation or award of another compact, funding agreement, or 
construction project agreement.


Sec. 137.436  Will the decisions on appeal be available for the public 
to review?

    Yes, all final decisions must be published for the Department under 
this subpart. Decisions can be found on the Department's website.

Appeals of an Immediate Reassumption of a Self-Governance Program


Sec. 137.440  What happens in the case of an immediate reassumption 
under section 507(a)(2)(C) of the Act [25 U.S.C. 458aaa-6(a)(2)(C)]?

    (a) The Secretary may, upon written notification to the Self-
Governance Tribe, immediately reassume operation of a program, service, 
function, or activity (or portion thereof) if:
    (1) The Secretary makes a finding of imminent substantial and 
irreparable endangerment of the public health caused by an act or 
omission of the Self-Governance Tribe; and
    (2) The endangerment arises out of a failure to carry out the 
compact or funding agreement.
    (b) When the Secretary advises a Self-Governance Tribe that the 
Secretary intends to take an action referred to in paragraph (a) of 
this section, the Secretary must also notify the Deputy Director of the 
Office of Hearings and Appeals, Department of the Interior, 4015 Wilson 
Boulevard, Arlington, VA 22203.


Sec. 137.441  Will there be a hearing?

    Yes, unless the Self-Governance Tribe waives its right to a hearing 
in writing. The Deputy Director of the Office of Hearings and Appeals 
must appoint an Administrative Law Judge to hold a hearing,
    (a) The hearing must be held within 10 days of the date of the 
notice referred to in Sec. 137.440 unless the Self-Governance Tribe 
agrees to a later date.
    (b) If possible, the hearing will be held at the office of the 
Self-Governance Tribe. If the hearing is held more than 50 miles from 
the office of the Self-Governance Tribe, the Secretary must arrange to 
pay transportation costs and per diem for incidental expenses. This 
will allow for adequate representation of the Self-Governance Tribe.


Sec. 137.442  What happens after the hearing?

    (a) Within 30 days after the end of the hearing or any post-hearing 
briefing schedule established by the ALJ, the ALJ must send all parties 
a recommended decision by certified mail, return receipt requested. The 
recommended decision shall contain the ALJ's findings of fact and 
conclusions of law on all the issues. The recommended decision must 
also state that the Self-Governance Tribe has the right to object to 
the recommended decision.

    (b) The recommended decision must contain the following statement: 
Within 15 days of the receipt of this recommended decision, you may 
file an objection to the recommended decision with the Secretary under 
Sec. 137.443. An appeal to the Secretary under 25 CFR 900.165(b) shall 
be filed at the following address: Department of Health and Human 
Services, 200 Independence Ave. SW., Washington, DC 20201. You shall 
serve copies of your notice of appeal on the official whose decision is 
being appealed. You shall certify to the Secretary that you have served 
this copy. If neither party files an objection to the recommended 
decision within 15 days, the recommended decision will become final.

Sec. 137.443  Is the recommended decision always final?

    No, any party to the appeal may file precise and specific written 
objections to the recommended decision, or any other comments, within 
15 days of receiving the recommended decision. The objecting party must 
serve a copy of its objections on the other party. The recommended 
decision will become final 15 days after the Self-Governance Tribe 
receives the ALJ's recommended decision, unless a written statement of 
objections is filed with the Secretary during the 15-day period. If no 
party files a written statement of objections within 15 days, the 
recommended decision will become final.


Sec. 137.444  If a Self-Governance Tribe objects to the recommended 
decision, what action will the Secretary take?

    (a) The Secretary has 15 days from the date the Secretary receives 
timely written objections to modify, adopt, or reverse the recommended 
decision. If the Secretary does not modify or reverse the recommended 
decision during that time, the recommended decision automatically 
becomes final.
    (b) When reviewing the recommended decision, the Secretary may 
consider and decide all issues properly raised by any party to the 
appeal, based on the record.
    (c) The decision of the Secretary must:
    (1) Be in writing;
    (2) Specify the findings of fact or conclusions of law that are 
modified or reversed;
    (3) Give reasons for the decision, based on the record; and
    (4) State that the decision is final for the Secretary.


Sec. 137.445  Will an immediate reassumption appeal adversely affect 
the Self-Governance Tribe's rights in other self-governance 
negotiations?

    No, a pending appeal will not adversely affect or prevent the 
negotiation or award of another compact, funding agreement, or 
construction project agreement.

Equal Access to Justice Act Fees


Sec. 137.450  Does the Equal Access to Justice Act (EAJA) apply to 
appeals under this subpart?

    Yes, EAJA claims against the Department will be heard pursuant to 
25 CFR 900.177.

[FR Doc. 02-3248 Filed 2-11-02; 1:29 pm]
BILLING CODE 4160-16-P