[Federal Register Volume 81, Number 104 (Tuesday, May 31, 2016)]
[Proposed Rules]
[Pages 34290-34301]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12596]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 1000

[Docket No. FR-5650-P-12]
RIN 2577-AC90


Native American Housing Assistance and Self-Determination Act; 
Revisions to the Indian Housing Block Grant Program Formula

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Indian Housing Block Grant 
(IHBG) Program allocation formula authorized by section 302 of the 
Native American Housing Assistance and Self-Determination Act of 1996, 
as amended (NAHASDA). Through the IHBG Program, HUD provides federal 
housing assistance for Indian tribes in a manner that recognizes the 
right of Indian self-determination and tribal self-government. HUD 
negotiated the proposed rule with active tribal participation and using 
the procedures of the Negotiated Rulemaking Act of 1990. The proposed 
regulatory changes reflect the consensus decisions reached by HUD and 
the tribal representatives on ways to improve and clarify the current 
regulations governing the IHBG Program formula.

DATES: Comment Due Date: August 1, 2016.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 7th Street 
SW., Room 10276, Washington, DC 20410-0500. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.

[[Page 34291]]

    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule.

    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. HUD will make all properly 
submitted comments and communications available for public inspection 
and copying between 8 a.m. and 5 p.m. weekdays at the above address. 
Due to security measures at the HUD Headquarters building, you must 
schedule an appointment in advance to review the public comments by 
calling the Regulations Division at 202-708-3055 (this is not a toll-
free number). Individuals with speech or hearing impairments may access 
this number via TTY by calling the toll-free Federal Relay Service at 
800-877-8339. Copies of all comments submitted are available for 
inspection and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Randall R. Akers, Acting Deputy 
Assistant Secretary for Native American Programs, Office of Public and 
Indian Housing, Department of Housing and Urban Development, 451 
Seventh Street, SW., Room 4126, Washington, DC 20410-5000, telephone, 
(202) 402-7598 (this is not a toll-free number). Hearing or speech-
impaired individuals may access this number via TTY by calling the 
toll-free Federal Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    The Native American Housing Assistance and Self-Determination Act 
of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA) changed the way that housing 
assistance is provided to Native Americans. NAHASDA eliminated several 
separate assistance programs and replaced them with a single block 
grant program, known as the Indian Housing Block Grant (IHBG) Program. 
NAHASDA and its implementing regulations, codified at 24 CFR part 1000, 
recognize tribal self-determination and self-governance while 
establishing reasonable standards of accountability. Reflective of 
this, section 106 of NAHASDA provides that HUD shall develop 
implementing regulations with active tribal participation and using the 
procedures of the Negotiated Rulemaking Act of 1990 (5 U.S.C. 561-570).
    NAHASDA has been amended and reauthorized several times since being 
signed into law in 1996. Following the enactment of the Native American 
Housing Assistance and Self-Determination Reauthorization Act of 2008 
(Pub. L. 110-411, approved October 14, 2008) (NAHASDA Reauthorization 
Act) HUD established a negotiated rulemaking committee on January 5, 
2010 (75 FR 423), that focused on implementing the NAHASDA 
Reauthorization Act and prior amendments to NAHASDA. The negotiated 
rulemaking committee addressed all IHBG program regulations, except 
those provisions which govern the NAHASDA allocation formula codified 
in subpart D of 24 CFR part 1000. As a result of that negotiated 
rulemaking, HUD published a final rule on December 3, 2012 (77 FR 
71513), that revised HUD regulations governing the IHBG Program and the 
Title VI Loan Guarantee program (under Title VI of NAHASDA, 25 U.S.C. 
4191, et seq.) A separate negotiated rulemaking was subsequently begun 
to review the allocation formula regulations.

II. The IHBG Formula Negotiated Rulemaking Committee

    On July 3, 2012 (77 FR 39452) and September 18, 2012 (77 FR 57544), 
HUD published notices in the Federal Register announcing HUD's intent 
to establish a negotiated rulemaking committee for the purposes of 
reviewing the regulations at 24 CFR part 1000, subpart D, and 
negotiating recommendations for a possible proposed rule modifying the 
IHBG formula. On June 12, 2013 (78 FR 35178), HUD published for public 
comment the names and affiliations of the committee's proposed members. 
On July 30, 2013 (78 FR 45903), after considering public comment on the 
proposed membership, HUD published a Federal Register notice announcing 
the final list of members of the IHBG Formula Negotiated Rulemaking 
Committee (Committee) and announcing the date of the first meeting of 
the Committee. The Committee membership consists of 24 designated 
representatives of tribal governments (or authorized designees of those 
tribal governments). The Committee membership reflected a balanced 
representation of Indian tribes, both geographically and based on size. 
In addition to the tribal members, there were two HUD representatives 
on the Committee. Committee meetings took place on August 27-28, 2013, 
September 17-19, 2013, April 23-24, 2014, June 11-13, 2014, July 29-31, 
2014, August, 26-28, 2014, August 11-13, 2015, and January 26-27, 2016. 
The Committee agreed to operate based on consensus rulemaking and its 
approved charter and protocols. All of the Committee meetings were 
announced in the Federal Register and were open to the public.\1\
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    \1\ See, 78 FR 45903 (July 30, 2013); 78 FR 54416 (September 4, 
2013); 79 FR 14204 (March 13, 2014); 79 FR 28700 (May 23, 2014); 80 
FR 30004 (May 26, 2015); 80 FR 33157 (June 11, 2015); 81 FR 881 
(January 8, 2016).
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    The Committee divided itself into multiple workgroups to analyze 
specified provisions of the IHBG formula and to draft any new or 
revised regulatory language it believed was necessary. A workgroup was 
responsible for analyzing the regulations for the Need component. 
Another workgroup reviewed the provisions governing the Formula Current 
Assisted Stock (FCAS) component. The workgroups were not authorized to 
reach any final or binding decisions but rather, reported to the full 
Committee. The draft regulatory language developed by the workgroups 
was then brought before the full Committee for review, amendment, and 
approval.
    At the August 2014 meeting, an additional study group, the Data 
Study Group, was established to assess alternative data sources to the 
2000 United States Decennial Census, which currently serves as the data 
source for the factors that are used to calculate the Need component of 
the allocation formula, including American Indian and Alaskan Native 
(AIAN) households with housing cost burdens, inadequate housing, low- 
and moderate-income AIAN households, and AIAN population. The Data 
Study Group was comprised of one Committee member from each of the six 
HUD-designated ONAP regions, plus one HUD representative. The Data 
Study Group members identified three technical experts and HUD provided 
a technical expert to assist with the work. Meetings of the Data Study 
Group were open to all Committee members and to the public. The Data 
Study Group met both

[[Page 34292]]

telephonically and in-person and operated on a consensus basis.
    In a Federal Register notice published on September 25, 2014 at 79 
FR 57489, the Committee solicited suggestions from the public for 
potential data sources that would achieve an optimal balance of the 
following factors: recognition of tribal sovereignty; data relevant to 
eligible AIAN housing needs; and collected using a methodology that is 
objective, equitable, transparent, consistent, capable of being applied 
to all existing formula areas, statistically reliable, and replicable 
both over time and diverse geographies. The data would need to be 
collected and submitted by proficient persons or organizations with 
appropriate capacity and training and to be collected on a recurring 
basis at reasonable intervals or be capable of reliable statistical 
aging. Finally, the data source could not impose an undue 
administrative or financial burden upon tribes, needed to be cost-
effective, and be capable of being fully evaluated by the Data Study 
Group within a one-year timeframe.
    After receiving responses to the September 25, 2014 Federal 
Register notice, the Data Study Group identified 49 different data 
sources that were reviewed by the technical experts against a pre-
determined set of screening criteria. Of the 49 nominated data sources, 
the Data Study Group agreed unanimously that 30 did not meet these 
criteria. The technical experts then prepared detailed 
characterizations of the remaining 19 data sources. Based on the 
characterization process and the discussion that followed, the Data 
Study Group rejected 10 more data sources that did not meet the pre-
determined criteria. The Data Study Group moved nine remaining data 
sources forward for comprehensive evaluation. These included the 
following four sets of core data and five sets of support data:

Core Data

 Most Recent Decennial Census data collected by the U.S. Census 
Bureau
 American Community Survey collected by the U.S. Census Bureau
 National Tribal Survey to be Administered by a Federal Agency
 National Tribal Survey to be Administered by tribes

Support Data

 Tribal Enrollment Data
 Indian Health Service Population Projections
 U.S. Census Bureau Population Estimates
 Data Reported by IHBG Grant Recipients on Formula Response 
Form
 Total Development Costs (TDC)

    The Data Study Group carefully considered the evaluation results of 
technical experts, had multiple discussions among its membership, 
including requests for clarification from the technical experts, and on 
July 31, 2015, issued its final report containing a recommendation for 
a data source or sources to be used in calculating the AIAN persons 
variable of the Need component of the IHBG funding formula, which it 
presented to the full Committee. Specifically, the Data Study Group 
recommended that the AIAN population be the greater of the most 
recently available American Community Survey (ACS), Decennial Census, 
or Challenge data, and that data no longer be aged. This proposal did 
not reach consensus at the full Committee level. The Data Study Group's 
full report can be found as a supporting document to this proposed rule 
at www.Regulations.gov.

III. This Proposed Rule

    The Committee undertook a comprehensive review of the IHBG Formula. 
The Committee also reviewed any statutory changes that still needed to 
be addressed in the regulations. The Committee identified certain areas 
of the IHBG formula that required clarification, were outdated, or 
could be improved. With the exception of changes to Sec.  
1000.330(b)(ii), this proposed rule reflects the consensus decisions 
reached by the Committee during the negotiated rulemaking process on 
the best way to address these issues. The following section of this 
preamble provides a summary of the consensus recommended changes to the 
IHBG formula by this proposed rule.

A. Revision of Definition of Formula Area (Sec.  1000.302)

    To conform Sec.  1000.302 to the decision of the United States 
Court of Appeals for the Tenth Circuit in United Keetoowah Band of 
Cherokee Indians of Oklahoma v. United States Department of Housing and 
Urban Development,\2\ HUD is revising the definition of formula area at 
24 CFR 1000.302 by striking the reference to ``court jurisdiction'' in 
paragraph (2)(i) of the definition.
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    \2\ 567 F.3d 1235 (10th Cir. 2009).
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B. Continued Funding of Section 8 Units (Sec.  1000.306)

    The proposed rule would make a technical amendment to Sec.  
1000.306 to eliminate paragraph (c), an outdated section that addressed 
how Section 8 units would be treated under the formula. Currently, 
Sec.  1000.306(c) provides that, during the five-year review of the 
FCAS component of the formula, the count of units associated with 
expired contracts for tenant-based Section 8 rental assistance would be 
reduced by the same percentage as the current assisted rental stock has 
diminished since September 30, 1999. After HUD issued this regulation, 
section 502(a) of NAHASDA was amended by the Omnibus Indian Advancement 
Act (Pub. L. 106-568, approved December 27, 2000) (25 U.S.C. 4181(a)) 
to provide that housing subject to a contract for tenant-based Section 
8 rental assistance prior to September 30, 1997, under the authority of 
the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is to be 
considered a dwelling unit for purposes of section 302(b)(1) of 
NAHASDA. As a result, the proposed rule removes paragraph (c) from 
Sec.  1000.306.

C. Components of IHBG Formula (Sec.  1000.310)

    The proposed rule would revise Sec.  1000.310 to reflect that the 
IHBG formula would consist of four components: FCAS (Sec.  1000.316), 
Need (Sec.  1000.324), 1996 Minimum (Sec.  1000.340), and Undisbursed 
IHBG funds factor (Sec.  1000.342). FCAS, Need, and 1996 Minimum are 
existing components of the formula. The proposed addition of the 
Undisbursed IHBG funds factor is discussed below.

D. Conversions of Units From Low-Rent FCAS to Mutual Help or From 
Mutual Help to Low-Rent FCAS (Sec.  1000.316)

    This proposed rule would clarify the type and eligibility of low-
income dwelling units developed under the United States Housing Act of 
1937 that are converted from Low-Rent to Mutual Help or, from Mutual 
Help to Low-Rent. The Committee proposed a new paragraph (c) to codify 
HUD's existing practice and establish the following. Units that were 
converted before NAHASDA's effective date of October 1, 1997, would 
count in the formula as the type of unit to which they were converted, 
and their FCAS eligibility would be evaluated on the basis of the type 
of unit to which they were converted. The amount of per unit FCAS 
funding for units that were converted after October 1, 1997, would be 
determined according to the unit's type specified in the original 
Annual Contributions Contract (ACC), i.e. the ACC in effect on 
September 30, 1997, while their FCAS eligibility would be evaluated on 
the basis of the type to

[[Page 34293]]

which they were converted. Furthermore, the rule would require 
recipients to report conversions on their Formula Response Form. The 
Committee emphasized that the decision to convert a unit was a local 
decision for the tribe or TDHE (tribally designated housing entity) to 
make at its discretion.

E. Mutual Help Unit Conveyance (Sec.  1000.318(a))

    This proposed rule would clarify in Sec.  1000.318 the FCAS 
eligibility of Mutual Help and Turnkey III units developed under the 
United States Housing Act of 1937 that are not conveyed within 25 years 
from the Date of Full Availability (DOFA plus 25 years). The proposed 
rule would provide specific milestones for demonstrating FCAS 
eligibility. Specifically, the proposed rule would provide that a unit 
may continue to be considered FCAS when conveyance of the unit is 
prevented by a legal impediment, if the tribe, TDHE, or Indian Housing 
Authority (IHA) has taken all other steps necessary to effectuate the 
conveyance and has made and documented reasonable efforts to remove the 
impediment. Mutual Help and Turnkey III units that are eligible for 
conveyance under the terms of their Mutual Help and Occupancy Agreement 
(MHOA) but not conveyed would continue to be considered FCAS if the 
delay in conveyance is caused by reasons beyond the control of the 
tribe, TDHE, or IHA. Section 302(b)(1)(D) of NAHASDA (25 U.S.C. 
4152(b)(1)(D)) provides that the term ``reasons beyond the control of a 
recipient'' means, after the recipient makes ``reasonable efforts'' to 
resolve all issues necessary for conveyance, the conveyance is still 
delayed because there remain delays in obtaining or, the absence of 
title status reports, incorrect or inadequate legal descriptions or 
other legal documentation necessary for conveyance, clouds on title due 
to probate or intestacy or other court proceedings, or any other legal 
impediment. Thus, under this proposed rule, to demonstrate reasonable 
efforts, the tribe, TDHE or IHA would be required, no later than four 
months after the unit becomes eligible for conveyance, to create a 
written plan of action that describes the impediment and the actions it 
will take to resolve the impediment within 24 months after the date the 
unit became eligible for conveyance. If the legal impediment remains 
after that 24-month period, the unit would no longer be considered FCAS 
unless the tribe, TDHE, or IHA provides evidence from a third party, 
such as a Federal, State, or tribal court, or State or Federal agency, 
documenting that the impediment continues to prevent conveyance. 
Proposed Sec.  1000.318(a)(3) would address Mutual Help and Turnkey III 
units that, as of the effective date of this regulation, have not been 
conveyed because timely conveyance was demonstrably beyond the tribe's 
control. These units would be considered to have become eligible to 
convey on the effective date of this regulation, triggering the time 
periods for creating a written plan of action to resolve the impediment 
and conveying the units or providing the third party evidence of 
continued impediment within the 24-month period. Section 
1000.318(a)(3)(iv) would apply to units that have not been conveyed due 
to legal impediments, and would not apply to units that are eligible 
for conveyance before the effective date of this regulation but have 
not been conveyed for other reasons.

F. Demolition and Rebuilding of FCAS Units

    At the August 2014 meeting, the Committee approved revising Sec.  
1000.318 to add a new paragraph (d) to establish the eligibility 
criteria for FCAS units that are demolished and rebuilt. Under section 
302(b)(1)(C) of NAHASDA, if a unit is demolished and the recipient 
rebuilds the unit within 1-year of demolition of the unit, the unit may 
continue to be considered an FCAS unit under the formula. To implement 
this requirement, the Committee approved a regulatory provision that 
would permit the unit to continue to be considered FCAS if the 
recipient certifies in writing, within one-year from the date that the 
unit becomes damaged or deteriorated, that it has taken tangible action 
to demolish and rebuild the unit. In addition, the provision would 
require that reconstruction of the unit be completed within four years 
of the point at which demolition or replacement became necessary. At 
the end of the four year period, the unit would no longer be considered 
FCAS unless the recipient notified HUD that the reconstruction of the 
unit has been completed. If a recipient fails to rebuild a unit within 
the four-year time frame, the unit would nonetheless have been 
considered eligible as FCAS during those four years. This provision was 
intended to incentivize the reconstruction of properties in a condition 
of such significant disrepair that they must be demolished and rebuilt 
in order to preserve critical housing stock and ensure that housing 
remains available to assist low-income Indian families in the future.
    Upon further review, HUD has determined that this provision may 
exceed the scope of section 302(b)(1)(C) of NAHASDA. The provision 
would have potentially allowed FCAS units that are rebuilt in a time 
period that exceeds 1-year from the time of demolition to remain FCAS 
units under the formula. While this proposed rule does not propose 
specific regulatory language addressing demolished FCAS units, HUD is 
seeking public comment on how to address this issue by regulation, 
while also remaining within the scope of section 302(b)(1)(C) of 
NAHASDA.
    In this regard, HUD notes that during this negotiated rulemaking, 
the FCAS workgroup considered defining the term ``demolition'' in order 
to help clarify the point in time in which the 1-year period begins to 
run. For instance, the workgroup discussed whether to define demolition 
in cases involving natural disasters or fires as occurring at the time 
of the event. The workgroup also considered whether demolition should 
be defined as occurring only when a recipient voluntarily demolishes 
units in order to clear a site for a new replacement unit. HUD is 
specifically soliciting public comment, therefore, on these and 
alternative proposals that address section 302(b)(1)(C). Once HUD 
receives all public comments on this proposed rule, it is HUD's intent 
to afford the Committee, based on the public comment received, another 
opportunity at the final negotiated rulemaking session to consider 
specific regulatory language addressing this issue to be included in a 
final rule.

G. Overlapping Formula Areas (Sec.  1000.326)

    This proposed rule would revise Sec.  1000.326(a) to provide in 
cases where a State recognized tribe's formula area overlaps with the 
formula area of a Federally recognized Indian tribe, that the Federally 
recognized Indian tribe would receive the allocation for the formula 
area up to its population cap. The revision also provides that the 
State recognized tribe would receive the balance of the allocation, if 
any exists, up to its own population cap.
    Section 1000.326 would also be revised to require that HUD follow 
the notice and comment procedures in the definition of ``Formula Area'' 
(Sec.  1000.302 (2)(ii)) upon receiving a request for expansion or 
redefinition of a tribe's formula area, if approving the request would 
create an overlap of formula areas with one or more other tribes. This 
proposed change is intended

[[Page 34294]]

to ensure that tribes potentially affected by the request be notified 
and have the opportunity to comment on the request.

H. Minimum Total Grant Allocation of Carryover Funds (Sec.  1000.329)

    Section 1000.329 is proposed as a new provision of the Need 
component of the IHBG formula. Section 1000.329 would provide for a 
minimum block grant allocation in the event that amounts available for 
allocation include carryover funds. This section would provide that 
allocations be adjusted to ensure all tribes a minimum block grant 
allocation of 0.011547 percent of that year's IHBG appropriation. HUD 
and the Committee estimated, based on current year appropriations, that 
approximately $3 million would be required to ensure that tribes 
receive a minimum allocation of approximately 0.011547 percent of the 
annual IHBG appropriation (close to $75,000, given historical 
appropriated amounts). Therefore, HUD would set aside an amount equal 
to the lesser of $3 million of available carryover funds or the entire 
amount of available carryover funds to increase allocations pursuant to 
this section. If set-aside carryover funds are insufficient to fund all 
eligible tribes at 0.011547 percent of that year's appropriations, the 
minimum total grant would be reduced to an amount which can be fully 
funded with the available set-aside carryover funds. Set-aside 
carryover funds that are not required to fund this additional 
allocation would be carried over to the subsequent year's formula. A 
tribe would be eligible for a minimum allocation under Sec.  1000.329 
if there are eligible households at or below 80 percent of median 
income in the tribe's formula area. For purposes of this proposed rule, 
``carryover funds'' are defined as any grant funds voluntarily returned 
to the formula or not accepted by tribes in a fiscal year. The 
definition of carryover funds would not include any amounts that are 
returned to the IHBG formula voluntarily or involuntarily pursuant to 
Sec.  1000.536, as a result of a HUD action under Sec.  1000.532. The 
Committee considered and rejected including such amounts in the 
definition of carryover funds under this section.

I. Volatility Control of Changes in Need Component of Formula Caused by 
Introduction of New Data Source (Sec.  1000.331)

    Section 1000.331 would be added to minimize and phase-in funding 
changes to allocations under the Need component of the formula 
resulting from the introduction of a new data source under Sec.  
1000.330, beginning in fiscal year 2018 (the first year that a new data 
source could be introduced). Under Sec.  1000.331, if as a direct 
result of the introduction of a new data source, an Indian tribe's 
allocation under the Need component of the formula results in an 
allocation that is less than 90 percent of the amount it received under 
the Need component in the immediate previous fiscal year, the Indian 
tribe's Need allocation would be adjusted upward to an amount equal to 
90 percent of the previous year's Need allocation. As proposed, this 
volatility control provision would not impact other adjustments under 
24 CFR part 1000, including minimum funding, census challenges, formula 
area changes, or an increase in the total amount of funds available 
under the Need component. Section 1000.331 also proposes that in the 
event that HUD's IHBG appropriation is reduced and results in a 
decrease in the total amount of funds available under the Need 
component, an Indian tribe's adjusted allocation under Sec.  
1000.331(a) would be reduced by an amount proportionate to the reduced 
amount available for distribution under the Need component of the 
formula. Adjustments to the tribe's Need allocation under Sec. Sec.  
1000.331(b) or (c) would be made after adjustment of the tribe's 
allocation under Sec.  1000.331(a).

J. Data Challenges and Appeals of HUD Formula Determinations (Sec.  
1000.336)

    This rule proposes to revise Sec.  1000.336 to provide that an 
Indian tribe, TDHE, and HUD may challenge data used to determine the 
proposed undisbursed funds factor, Sec.  1000.342. Specifically, this 
section would add the undisbursed funds factor to the list of IHBG 
formula data and HUD formula determinations that Indian tribes and 
TDHEs may appeal under the formula appeal procedures in Sec.  1000.336. 
As the undisbursed funds factor is part of the formula for determining 
allocations, its application is not an enforcement action (under 24 CFR 
part 1000, subpart F).
    In addition, Sec.  1000.336(d) would be revised to clarify the 
format and provide the timeframes by which the tribe or TDHE must 
submit its appeal of the undisbursed funds factor. As proposed, this 
section would provide that the appeal must be in writing and submitted 
to HUD no later than 30 days after the tribe's or TDHE's receipt of 
HUD's application of the undisbursed funds factor.
    This proposed rule also revises Sec. Sec.  1000.336(e) and (f) for 
clarity. These revisions do not substantively amend these provisions.

K. Undisbursed IHBG Funds Factor (Sec.  1000.342)

    The Committee proposed adding Sec.  1000.342 to encourage tribes to 
timely expend their annual grants. Section 1000.342 would add an 
undisbursed funds factor to the IHBG formula. As proposed, the 
undisbursed funds factor would apply to Indian tribes whose initial 
allocation calculation is $5 million or more. A tribe's initial 
allocation calculation would include its FCAS, Need, the 1996 Minimum, 
and repayments or additions for past over- or under-funding for each 
Indian tribe (under 24 CFR part 1000, subpart D). Repayments or 
additions would not include repayments resulting from enforcement 
actions (24 CFR part 1000, subpart F).
    Section Sec.  1000.342(a) proposes that an Indian tribe would be 
subject to the undisbursed funds factor if it has undisbursed IHBG 
funds in an amount that is greater than the sum of its prior 3 years 
initial allocation calculations. Under proposed Sec.  1000.342(c), for 
purposes of this section, ``undisbursed IHBG funds'' means the amount 
of IHBG funds allocated to an Indian tribe in HUD's line of credit 
control system (or successor system) on October 1 of the fiscal year 
for which the allocation is made. To determine the amount of 
undisbursed IHBG funds of a tribe under an umbrella TDHE (a recipient 
that has been designated to receive grant amounts by more than one 
Indian tribe), Sec.  1000.342(c) proposes that the TDHE's total balance 
in HUD's line of credit control system on October 1 of the fiscal year 
for which the allocation is made would be multiplied by a percentage 
based on the tribe's proportional share of the initial allocation 
calculation of all tribes under the umbrella. Under proposed Sec.  
1000.342(b), if subject to the undisbursed funds factor in a given 
fiscal year, the Indian tribe's grant allocation would be the greater 
of the initial allocation calculation minus the amount of undisbursed 
IHBG funds that exceed the sum of the prior 3 years' initial allocation 
calculations, or its 1996 Minimum. Section 1000.342(d) also proposes 
that amounts subtracted from an initial allocation calculation under 
this section would be redistributed under the Need component of the 
formula to Indian tribes not subject to this section.

IV. Eighth Meeting of Negotiated Rulemaking Committee--Data Sources for 
the Need Variables (Sec.  1000.330)

    The eighth meeting of the Committee, which took place on January 
26-27, 2016, was convened at the request of the

[[Page 34295]]

Committee following HUD's issuance of a proposal on November 19, 2015, 
to resolve the data source issue. Specifically, HUD proposed the use of 
the ACS 5-year Estimates as the source of the data for the variables in 
paragraphs (a) through (f) of Sec.  1000.324 and the most recent 
Decennial Census as the source for the total AIAN persons variable in 
Sec.  1000.324(g). In each case, HUD proposed adjusting the data 
sources in order to address undercounts reported by the U.S. Census 
Bureau and the unique concerns resulting from conducting the ACS sample 
in Indian Country.
    In an effort to address the concerns of the Committee regarding 
this proposal, HUD scheduled the eighth meeting to discuss the use of 
these data sources, vote on adjustments to data sources and approve the 
final preamble language. HUD's proposal is discussed in more detail 
later in this preamble.
    Section 1000.330 describes the data source used for the Need 
variables in Sec.  1000.324. Currently, Sec.  1000.330 provides that 
the data sources for the Need variables ``shall be data available that 
is collected in a uniform manner that can be confirmed and verified for 
all AIAN households and persons living in an identified area.'' Current 
Sec.  1000.330 also states that ``[i]nitially, the data used are the 
U.S. Decennial Census data.'' HUD originally codified Sec.  1000.330 in 
1998 \3\ and revised the section in 2007.\4\ Currently, HUD uses the 
2000 Decennial Census as the data source for the Needs variables.
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    \3\ 63 FR 12334, March 12, 1998.
    \4\ 72 FR 20018, April 20, 2007.
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    Beginning in 2010, the U.S. Census Bureau discontinued use of the 
``long form'' that, along with the short-form census questionnaire, 
went to a sample of households. The ``long form'' contained additional 
questions and provided more detailed socioeconomic information about 
the population. As part of this change, the more detailed socioeconomic 
information once collected by the long-form questionnaire is now 
collected by the ACS. The ACS potentially provides more current data 
regarding communities and is sent to a sample of the population on a 
rotating basis throughout the decade.
    One impact of the discontinuation of the use of the ``long form'' 
is that data for six of the seven variables in Sec.  1000.324 are no 
longer collected by the Decennial Census. During the course of this 
negotiated rulemaking the Committee extensively discussed revising 
Sec.  1000.330 to use more current data sources, including the ACS, 
that might be used to determine Need under the formula. Because of the 
complexity of the issue, the Committee agreed by consensus to a 
procedure to identify and evaluate alternate data sources. 
Specifically, at the sixth negotiated rulemaking meeting in August 
2014, the Committee agreed to provide itself with an additional year to 
study the issue by delaying implementation of any new data source until 
fiscal year 2018. At the same time, the Committee agreed to form the 
Data Study Group that would seek to identify and evaluate potential 
data sources that could replace the 2000 Decennial Census. The 
Committee provided that the Data Study Group would report its findings 
and recommendations by the seventh negotiated rulemaking scheduled for 
August 2015. The Committee also agreed that absent a consensus decision 
by the Committee regarding a new data source, HUD would make a final 
decision on a new data source that would be introduced starting in 
fiscal year 2018. The data source would be data collected in a uniform 
manner that can be confirmed and verified for all AIAN household and 
persons living in an identified area. Initially, the data used would be 
the most recent data available from the U.S. Census Bureau.
    As discussed in this preamble, the Data Study Group conducted an 
extensive review of several potential data sources and reported the 
results of its work and its recommendations at the seventh negotiated 
rulemaking session. The Committee did not accept the recommendations of 
the Data Study Group and did not come to a consensus on a new data 
source. This inability to reach consensus was based in part on a 
concern expressed by several Committee members that the 2010 Decennial 
Census undercounted AIAN persons in some tribal areas and that the ACS 
suffered from similar inaccuracies.
    Throughout the negotiated rulemaking process, HUD's Committee 
representatives made it known that while HUD was open to the results of 
the Data Study Group and worked toward reaching consensus on the data 
source, HUD considered the ACS as providing an up-to-date, reliable, 
comprehensive and accurate data source available for the variables in 
Sec.  1000.324. In this regard, HUD made clear that the ACS were data 
``collected in a uniform manner that can be confirmed and verified for 
all AIAN households and persons living in an identified area.'' HUD 
also made it known that the 2010 Decennial Census also met these 
standards for the count of AIAN persons variable in Sec.  1000.324(g). 
Accordingly, and consistent with the Committee's consensus decision to 
establish the Need study group, this rule proposes to use the ACS 5-
Year Estimates as the source of the data for the variables in 
paragraphs (a) through (f) of Sec.  1000.324, and the most recent 
Decennial Census as the source for the total AIAN person variable in 
Sec.  1000.324(g). HUD believes that the use of these sources more 
accurately reflect Indian Country given the substantial changes that 
have taken place since 2000.
    Notwithstanding, HUD recognized that the Data Study Group found 
evidence to support the concerns of a number of tribes that the 2010 
Decennial Census has a significant undercount in some tribal areas and 
that the ACS suffers from a similar inaccuracy. HUD has further 
researched these concerns and identified three adjustments that 
mitigate these problems. These adjustments were the focus of eighth 
meeting of the Committee, which took place on January 26-27, 2016.
    Undercount on reservations. After each Decennial Census, the U.S. 
Census Bureau conducts a follow-up survey to determine the extent that 
the Decennial Census under- or over-counted particular subgroups within 
the U.S. population. To address any undercount in the formula, HUD 
proposed in Sec.  1000.330(b)(i) to increase the count of AIAN persons 
(single race; and single and multi-race) for all geographies identified 
in the most recent Decennial Census as having a statistically 
significant undercount confirmed by the U.S. Census Bureau. The U.S. 
Census Bureau determined in its post-Census 2010 enumeration that there 
was a statistically significant 4.88 percent undercount of AIAN persons 
living in Reservations and Trust Lands, including restricted fee land 
acquired under the Treaty of Guadalupe Hidalgo, but not in other tribal 
areas.\5\ As proposed, this adjusted total would serve as the basis to 
determine the total AIAN person factor at Sec.  1000.324(g) until the 
next Decennial Census is released. If a statistically significant 
undercount occurs in the next Decennial Census, the AIAN person count 
for Sec.  1000.324(g) would be adjusted based on the amount of that 
undercount.
---------------------------------------------------------------------------

    \5\ See, https://www.census.gov/coverage_measurement/pdfs/g04.pdf. The U.S. Census Bureau also found a not statistically 
significant overcount of 3.86 percent for tribal areas off 
reservation (this including Oklahoma Tribal Statistical Area, Tribal 
Designated Statistical Area and the Alaska Native Village 
Statistical Area). HUD is not proposing that these tribal areas be 
adjusted down for the overcount because the overcount was not 
statistically significant.
---------------------------------------------------------------------------

    The eighth meeting of the Committee, considered this adjustment, 
and after consideration, voted on the adjustment.

[[Page 34296]]

The Committee proposed to modify the language to clarify that the count 
would be adjusted for a statistically significant undercount 
specifically for the AIAN population count. After this language was 
changed, the Committee reached consensus on this adjustment. In 
addition, the Committee considered a proposal to consider Indian Lands 
in Remote Alaska the same as Reservation and Trust Lands when it is 
determined that there has been a statistically significant undercount 
in Reservation and Trust Lands, unless the U.S. Census has included 
Remote Alaska in its coverage. This provision was proposed in order to 
address the fact that the U.S. Census Bureau's Census Coverage 
Measurement (CCM) Study did not include Indian Lands in Remote Alaska. 
The term ``Remote Alaska'' means Type of Enumeration Area as delineated 
by the U.S. Census Bureau for the 2010 Decennial Census. With the 
addition of this provision to Sec.  1000.330(b)(i), the Committee 
reached consensus on this item.
    Control total weights within the ACS. A critical component of any 
sample survey is to accurately weight completed surveys to reflect the 
full population the sample is drawn from. HUD recognizes that the 
weighting methodology used by the U.S. Census Bureau for ACS differs 
from what it used for the long-form data from the 2000 Census. For the 
2000 Census long-form, the U.S. Census set the control totals at small 
geographies--places, tribal areas, Census Tracts, etc. As a result, a 
sample set of data for subgroup populations--such as a count of Native 
Americans in a tribal area--were generally very close to the count of 
those same variables from the short-form of the Decennial Census.
    The U.S. Census Bureau adopted a different approach for the ACS, 
setting population control total weights at the county and place levels 
that have population estimates. That is, they are set at a higher level 
geography, mostly county and incorporated places, and not tribal areas. 
The ACS has adopted this approach because it establishes weights for 
all variables according to annual population estimates that are only 
available at these higher level geographies.
    This change in methodology for setting control total weights can 
create a problem for the IHBG formula data for tribes. Without a small 
geography control total for the weights, the ACS can produce a 
population count for a subgroup in a small geography that is much 
different than the Decennial Census count for the same population.
    To address this issue, HUD proposed in Sec.  1000.330(b)(ii) to 
adjust the ACS data for the variables described in paragraphs (a) 
through (f) of Sec.  1000.324 by the ratio of the adjusted total of 
AIAN persons based on the aged 2010 Decennial Census to the most 
recently available ACS count of AIAN persons as adjusted by Sec.  
1000.330(b)(i). HUD believes that this adjustment would make the ACS 
data methodology for small area geographic areas better align with the 
methodology used in the 2000 Decennial Census and provide a more 
accurate count of AIAN persons for smaller tribes. Some tribal members 
of the Committee did not agree.
    During the eighth meeting of the Committee, the Committee 
considered this adjustment, and after consideration, voted on the 
adjustment. The Committee did not reach consensus on the vote for this 
adjustment. The majority of tribal Committee members did not support 
this adjustment. While some members supported this adjustment, the 
majority of tribal Committee members expressed concern with this 
proposal. Some members opposed the use of ACS as the data source for 
the formula and therefore voted against the adjustment. Other members 
supported the use of ACS data but believed that reweighting the data as 
proposed by HUD was not appropriate for other reasons. Specifically, 
some tribal Committee members believed that the undercount of one 
variable, AIAN persons, could not be properly assumed to translate to 
other variables. Notwithstanding, this rule proposes to adjust the ACS 
data for the variables described in paragraph (a) through (f) of Sec.  
1000.324 by the ratio of the adjusted total of AIAN persons based on 
the aged 2010 Decennial Census to the most recently available ACS count 
of AIAN persons as adjusted by Sec.  1000.330(b)(i).
    Aging of the Data. In addition to the adjustments to the 2010 
Decennial Census and ACS data described in this preamble, HUD proposed 
revising the method of aging the data. Specifically, based on the work 
of the Data Study Group, HUD in Sec.  1000.330(b)(i) proposed, 
beginning in fiscal year 2018, to age the data using the U.S. Census 
Bureau county level Population Estimates for Native Americans. In 
proposing this change, HUD notes that the Data Study Group determined 
that the Indian Health Service (IHS) projections based on birth and 
death rate, which is currently used to age the data, do not take into 
account migration and may result in both under and over estimates of 
population growth over time. While not perfect, the U.S. Census Bureau 
county level Population Estimates take into account migration and 
provide a more accurate count of AIAN persons. These Population 
Estimates do not come from the ACS. As a result, Sec.  1000.330(b)(i) 
would state that the data source used to determine the AIAN person 
variable in Sec.  1000.324(g) would be updated annually using the U.S. 
Census Bureau county level Population Estimates for Native Americans.
    During the eighth meeting of the Committee, the Committee 
considered this adjustment, and after consideration, voted on the 
adjustment. The Committee reached consensus on this adjustment.
    Transition Period in Fiscal Years 2016 and 2017. As agreed by the 
Committee by consensus, this proposed rule would delay implementation 
of these changes until fiscal year 2018. In this regard, Sec.  
1000.330(a) of this rule proposes to maintain the status quo during 
this period by providing that the data used to determine the Need 
variables would be the 2000 U.S. Decennial Census and any HUD-accepted 
Census challenges until fiscal year 2018. This section would also 
provide that this data would continue to be aged using IHS birth and 
death records. HUD believes that delaying the use of new data sources 
will help ensure that tribes do not encounter instability or lack of 
predictability for their grants when the rule takes effect. For this 
reason, HUD agreed to this delay.
    Challenge Data. This proposed rule continues to maintain the right 
of Indian tribes to challenge the data described in this section 
pursuant to Sec.  1000.336. Specifically, this proposed rule would 
redesignate currently codified Sec.  1000.330(d) as Sec.  1000.330(c) 
making minor, technical edits to ensure accuracy of the cross-
reference.

V. Tribal Comments

    After HUD's issuance of a proposal on November 19, 2015, and prior 
to the eighth meeting of Committee, HUD invited the tribal members of 
the Committee to submit comments on its proposal and on the preamble 
section describing its proposal. The comment period lasted from 
November 23, 2015, to December 23, 2015. HUD received comments from six 
Committee members during this time frame.
    Several Committee members expressed support for the use of aged 
2010 Decennial Census data for the AIAN population count. Those same 
commenters supported the use of ACS data for the remaining six Need 
variables.
    Other commenters expressed dissatisfaction with the compensation of

[[Page 34297]]

any undercounts and the use of a weighting adjustment for any 
undercounts. All of these tribal Committee members opined that HUD 
improperly made these unanticipated adjustments without consulting the 
Committee or allowing the Committee sufficient time to review. Some 
commenters noted that such adjustments are unnecessary since the Study 
Group found that improvements to the ACS data will be fully implemented 
upon the release of the 2012-2016 ACS data set. One commenter stated 
that if the Decennial Census and ACS were used as data sources, a 
generalized adjustment based on a 4.88 percent undercount would be 
insufficient in some areas and disproportionately beneficial in others. 
Another commenter pointed out that the use of the ACS as proposed in 
the rule will unfairly and significantly harm villages in rural Alaska. 
According to the commenter, these populations are substantially 
undercounted, but HUD is not applying a weighting adjustment to rural 
Alaska because the exact amount of the undercount is unknown.
    One commenter expressed support for developing and using a 
federally- or tribally-administered national tribal survey to collect 
information concerning enrollment in a recognized tribe, in lieu of the 
Decennial Census or the ACS.

VI. Other Nonconsensus Items and Issues for Consideration

A. Current Assisted Stock Cost Adjustment Factor

    In response to a discussion of the Allowable Expense Level 
adjustment factor in Sec.  1000.320 during the 2005 IHBG Negotiated 
Rulemaking Session, HUD commissioned a study to assess the cost of 
operating 1937 Act housing programs across Indian Country and Alaska. 
The Indian Housing Operating Cost Study \6\ examined the potential for 
using, among other sources, data from the U.S. Department of 
Agriculture's 515 program to determine how to weight the operating 
costs for different tribes. The USDA 515 data is derived from Section 
515 units, which are affordable rental housing units in rural areas for 
very low-, low-, and moderate-income families; the elderly; and persons 
with disabilities. Because the data set includes operating expense data 
for projects in some rural counties that serve low- and very low-income 
households, it could be used to estimate costs in some tribes' formula 
area counties.
---------------------------------------------------------------------------

    \6\ This study investigated the costs of operating 1937 Act 
housing programs in Indian Country and Alaska and determined the 
efficacy of the Allowable Expense Level factor in ascertaining these 
costs. For more information, the study can be found at: http://ihbgrulemaking.firstpic.org/images/Library/ihoc_report_final%20423.pdf.
---------------------------------------------------------------------------

    During the seventh Negotiated Rulemaking Session, the FCAS Working 
Group considered whether USDA 515 data could be used as an additional 
cost adjustment factor under Sec.  1000.320. The Committee requested 
the USDA 515 data and requested that HUD calculate block grant 
allocations to all tribes under two scenarios: (1) Using a local area 
cost adjustment factor that is the greater of Fair Market Rents (FMR), 
Allowable Expense Level (AEL), and USDA 515 factors for each tribe, and 
(2) using a factor that is the greater of the FMR and USDA 515 factors. 
Ultimately, the Committee considered a proposal to revise Sec.  
1000.320 to use a local area cost adjustment factor that is the greater 
of FMR, AEL, and USDA 515 factors for each tribe. After discussion of 
the proposal, the Committee was unable to reach consensus on how to 
modify the Current Assisted Stock local cost adjustment in Sec.  
1000.320. Several Committee members raised concerns that the USDA 515 
rural housing rental program did not provide cost data for some 
locations and others felt that insufficient data was available to 
determine how the addition of this factor would affect tribes 
nationwide.

B. Revise the Definition of AIAN

    Although the Data Study Group did not reach consensus on the issue, 
it recommended that the Committee discuss whether or not to exclude 
South, Central, and Canadian AIAN persons from the data provided by the 
Decennial Census and the ACS for purposes of the IHBG formula. The 
study group made this recommendation after some study group members 
expressed concern that the IHBG is intended to serve only AIAN persons 
with a tribal affiliation in the United States. Because individuals 
having their origins in the indigenous peoples of Central America, 
South America, and Canada may or may not fall within the category of 
persons eligible to be served through the IHBG program, the study group 
referred the matter to the full Committee for consideration. The 
Committee discussed this issue as recommended, considered language 
drafted by the Drafting Committee, however the full Committee did not 
take the language up for a formal vote due to the withdrawal of the 
language.

VII. Question for Commenters

    HUD understands that other organizations, including State and local 
governments or nonprofits, may use certain factors or data from the 
IHBG formula to inform their own work with Indian tribes. HUD requests 
public comment on what factors or data are used by these organizations 
and how the changes proposed to the IHBG formula would impact the work 
done by such organizations.

VIII. Tribal Recommendation

    Non-HUD members of the Committee recommend HUD establish a joint 
task force that includes tribal and HUD representatives to develop a 
methodology to collect operating cost data from IHBG recipients in a 
consistent and accurate manner that could be used to adjust for local 
operating costs in the adjustment to the operating subsidy under the 
current assisted stock portion of the formula (i.e. replace the current 
factors under section 1000.320(a)). Non-HUD members recommend that 
resources other than IHBG funds be made available to fund technical 
experts and task force members and other costs that may be identified.
    The Committee notes that for a variety of reasons, the Committee 
did not accommodate the examination of the Needs variables.

IX. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and, therefore, subject to review by the Office of Management and 
Budget (OMB) in accordance with the requirements of the order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. This proposed rule was determined to be a 
``significant regulatory action'' as defined in section 3(f) of 
Executive Order 12866. The docket file is available for public 
inspection in the Regulations Division, Office of General Counsel, 451 
7th Street, SW., Room 10276, Washington, DC 20410-0500. Due to security 
measures at the HUD Headquarters building, an advance appointment to

[[Page 34298]]

review the public comments must be scheduled by calling the Regulations 
Division at 202 402-3055 (this is not a toll-free number). Individuals 
with speech or hearing impairments may access this number via TTY by 
calling the Federal Relay Service, toll free, at 1-800-877-8339.

Paperwork Reduction Act

    The information collection requirements contained in this rule have 
been submitted to the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In accordance 
with the Paperwork Reduction Act, an agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless the collection displays a currently valid OMB control number.
    The burden of the information collections in this proposed rule is 
estimated as follows:

                                      Reporting and Recordkeeping Burden: I
----------------------------------------------------------------------------------------------------------------
                                                                                   Estimated
                                                   Number of       Number of      average time      Estimated
               Section reference                  respondents    responses per  for requirement   annual burden
                                                                  respondent       (in hours)       (in hours)
----------------------------------------------------------------------------------------------------------------
Sec.   1000.316...............................             226               1              0.2             45.2
Sec.   1000.318...............................             212               1              0.5            106
Sec.   1000.336...............................              10               1              4               40
                                               -----------------------------------------------------------------
    Total Burden..............................  ..............  ..............  ...............            191.2
----------------------------------------------------------------------------------------------------------------

In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments from 
members of the public and affected agencies concerning this collection 
of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this rule. Comments must refer 
to the proposal by name and docket number (FR-5650) and must be sent 
to:

HUD Desk Officer, Office of Management and Budget, New Executive Office 
Building, Washington, DC 20503, Fax: (202) 395-6947, and

Reports Liaison Officer, Office of Public and Indian Housing, 
Department of Housing and Urban Development, Room 451, 7th Street SW., 
Washington, DC 20410

Interested persons may submit comments regarding the information 
collection requirements electronically through the Federal eRulemaking 
Portal at http://www.regulations.gov. HUD strongly encourages 
commenters to submit comments electronically. Electronic submission of 
comments allows the commenter maximum time to prepare and submit a 
comment, ensures timely receipt by HUD, and enables HUD to make them 
immediately available to the public. Comments submitted electronically 
through the http://www.regulations.gov Web site can be viewed by other 
commenters and interested members of the public. Commenters should 
follow the instructions provided on that site to submit comments 
electronically.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis for any rule that is subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
The requirements of this rule apply to Indian tribal governments and 
their tribal housing authorities. Tribal governments and their tribal 
housing authorities are not covered by the definition of ``small 
entities'' under the RFA. Accordingly, the undersigned certifies that 
this rule will not have a significant impact on a substantial number of 
small entities.
    Notwithstanding HUD's view that this rule will not have a 
significant effect on a substantial number of small entities, HUD 
specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of section 6 of the Executive Order are met. This rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on state and local governments or preempt state 
law within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments, and on the private sector. This rule will not 
impose any federal mandate on any state, local, or tribal government, 
or on the private sector, within the meaning of UMRA.

Environmental Review

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding of 
No Significant Impact is available for public inspection between the 
hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office 
of General Counsel,

[[Page 34299]]

Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410. Due to security measures at the HUD 
Headquarters building, please schedule an appointment to review the 
FONSI by calling the Regulations Division at 202-708-3055 (this is not 
a toll-free number). Individuals with speech or hearing impairments may 
access this number via TTY by calling the Federal Relay Service, toll 
free, at 1-800-877-8339.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance Number (CFDA) for Indian 
Housing Block Grants is 14.867, and the CFDA for Title VI Federal 
Guarantees for Financing Tribal Housing Activities is 14.869.

List of Subjects in 24 CFR Part 1000

    Aged, Community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, 
Individuals with disabilities, Public housing, Reporting and 
recordkeeping requirements.

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR part 1000 as follows:

PART 1000--NATIVE AMERICAN HOUSING ACTIVITIES


0
1. The authority citation for 24 CFR part 1000 continues to read as 
follows:

    Authority: 25 U.S.C. 4101 et seq.; 42 U.S.C. 3535(d).

0
2. In Sec.  1000.302, revise paragraph (2)(i) of the definition of 
``Formula area'' to read as follows:


Sec.  1000.302  What are the definitions applicable for the IHBG 
formula?

* * * * *
    Formula area. * * *
    (2) * * *
    (i) For a geographic area not identified in paragraph (1) of this 
definition, and for expansion or re-definition of a geographic area 
from the prior year, including those identified in paragraph (1) of 
this definition, the Indian tribe must submit, on a form agreed to by 
HUD, information about the geographic area it wishes to include in its 
Formula Area, including proof that the Indian tribe, where applicable, 
has agreed to provide housing services pursuant to a Memorandum of 
Agreement (MOA) with the tribal and public governing entity or entities 
of the area, or has attempted to establish such an MOA, and is 
providing substantial housing services and will continue to expend or 
obligate funds for substantial housing services, as reflected in its 
Indian Housing Plan and Annual Performance Report for this purpose.
* * * * *
0
3. Revise Sec.  1000.306 to read as follows:


Sec.  1000.306  How can the IHBG formula be modified?

    (a) The IHBG formula can be modified upon development of a set of 
measurable and verifiable data directly related to Indian and Alaska 
Native housing need. Any data set developed shall be compiled with the 
consultation and involvement of Indian tribes and examined and/or 
implemented not later than 5 years from the date of issuance of these 
regulations and periodically thereafter.
    (b) The IHBG formula shall be reviewed not later than May 21, 2012, 
to determine if a subsidy is needed to operate and maintain NAHASDA 
units or if any other changes are needed in respect to funding under 
the Formula Current Assisted Stock component of the formula.
0
4. Revise Sec.  1000.310 to read as follows:


Sec.  1000.310  What are the components of the IHBG formula?

    The IHBG formula consists of four components:
    (a) Formula Current Assisted Stock (FCAS) (Sec.  1000.316);
    (b) Need (Sec.  1000.324);
    (c) 1996 Minimum (Sec.  1000.340); and
    (d) Undisbursed IHBG funds factor (Sec.  1000.342).
0
5. In Sec.  1000.316 add paragraph (c) to read as follows:


Sec.  1000.316  How is the Formula Current Assisted Stock (FCAS) 
Component developed?

* * * * *
    (c) Conversion. Conversion of FCAS units from homeownership (Mutual 
Help or Turnkey III) to low-rent or from low-rent to a home ownership 
program.
    (1) If units were converted before October 1, 1997, as evidenced by 
an amended ACC, then those units will be counted for formula funding 
and eligibility purposes as the type of unit to which they were 
converted.
    (2) If units were converted on or after October 1, 1997, the 
following applies:
    (i) Funding type. Units that converted after October 1, 1997 will 
be funded as the type of unit specified on the original ACC in effect 
on September 30, 1997.
    (ii) Continued FCAS eligibility. Whether or not it is the first 
conversion, a unit converted after October 1, 1997, will be considered 
as the type converted to when determining continuing FCAS eligibility. 
A unit that is converted to low-rent will be treated as a low-rent unit 
for purposes of determining continuing FCAS eligibility. A unit that is 
converted to homeownership will be treated as a homeownership unit for 
purposes of determining continuing FCAS eligibility.
    (3) The Indian tribe, TDHE, or IHA shall report conversions on the 
Formula Response Form.
0
6. Revise Sec.  1000.318 by adding paragraph (a)(3) to read as follows:


Sec.  1000.318  When do units under Formula Current Assisted Stock 
cease to be counted or expire from the inventory use for the formula?

    (a) * * *
    (3) A Mutual Help or Turnkey III unit not conveyed after the unit 
becomes eligible for conveyance by the terms of the MHOA may continue 
to be considered Formula Current Assisted Stock only if a legal 
impediment prevented conveyance; the legal impediment continues to 
exist; the tribe, TDHE, or IHA has taken all other steps necessary for 
conveyance and all that remains for conveyance is a resolution of the 
legal impediment; and the tribe, TDHE, or IHA made the following 
reasonable efforts to overcome the impediments:
    (i) No later than four months after the unit becomes eligible for 
conveyance, the tribe, TDHE, or IHA creates a written plan of action, 
which includes a description of specific legal impediments as well as 
specific, ongoing, and appropriate actions for each applicable unit 
that have been taken and will be taken to resolve the legal impediments 
within a 24-month period; and
    (ii) The tribe, TDHE, or IHA has carried out or is carrying out the 
written plan of action; and
    (iii) The tribe, TDHE, or IHA has documented undertaking the plan 
of action.
    (iv) No Mutual Help or Turnkey III unit will be considered FCAS 24 
months after the date the unit became eligible for conveyance, unless 
the tribe, TDHE, or IHA provides evidence from a third party, such as a 
court or state or federal government agency, documenting that a legal 
impediment continues to prevent conveyance. FCAS units that have not 
been conveyed due to legal impediments on [effective date of this 
regulation] shall be treated as having become eligible for conveyance 
on [effective date of this regulation].
* * * * *
0
7. In Sec.  1000.326 revise paragraph (a)(3), redesignate paragraph (c) 
as

[[Page 34300]]

paragraph (d) and add a new paragraph (c), to read as follows:


Sec.  1000.326  What if a formula area is served by more than one 
Indian tribe?

    (a) * * *
    (3) In cases where a State recognized tribe's formula area overlaps 
with the formula area of a Federally recognized Indian tribe, the 
Federally recognized Indian tribe receives the allocation for the 
formula area up to its population cap, and the State recognized tribe 
receives the balance of the overlapping area (if any) up to its 
population cap.
* * * * *
    (c) Upon receiving a request for expansion or redefinition of a 
tribe's formula area, if approving the request would create an overlap, 
HUD shall follow the notice and comment procedures set forth in 
paragraph (2)(ii) of the definition of ``Formula area'' in Sec.  
1000.302.
* * * * *
0
8. Add Sec.  1000.329 to read as follows:


Sec.  1000.329  What is the minimum total grant allocated to a tribe if 
there is carryover funds available?

    (a) If in any given year there are carryover funds, then HUD will 
hold the lesser amount of $3 million or available carryover funds for 
additional allocations to tribes with grant allocations of less than 
0.011547 percent of that year's appropriations. All tribes eligible 
under this section shall receive a grant allocation equal to 0.011547 
percent of that year's appropriations.
    (b)(1) If the set-aside carryover funds are insufficient to fund 
all eligible tribes at 0.011547 percent of that year's appropriations, 
the minimum total grant shall be reduced to an amount which can be 
fully funded with the available set-aside carryover funds.
    (2) If less than $3 million is necessary to fully fund tribes under 
paragraph (a) of this section, any remaining carryover amounts of the 
set aside shall be carried forward to the next year's formula.
    (c) Certify in its Indian Housing Plan the presence of any eligible 
households at or below 80 percent of median income;
    (d) For purposes of this section, carryover funds means grant funds 
voluntarily returned to the formula or not accepted by tribes in a 
fiscal year.
0
9. Revise Sec.  1000.330 to read as follows:


Sec.  1000.330  What are the data sources for the need variables?

    (a) The sources of data for the Need variables shall be data that 
are available and collected in a uniform manner that can be confirmed 
and verified for all AIAN households and persons living in an 
identified area. Until fiscal year 2018, the data used are 2000 U.S. 
Decennial Census data and any HUD-accepted Census challenges. The 2000 
U.S. Decennial Census data shall be adjusted annually using IHS 
projections based upon birth and death rate data provided by the 
National Center for Health Statistics.
    (b)(i) Beginning fiscal year 2018, the data source used to 
determine the AIAN persons variable described in Sec.  1000.324(g) 
shall be the most recent U.S. Decennial Census data adjusted for any 
statistically significant undercount for AIAN population confirmed by 
the U.S. Census Bureau and updated annually using the U.S. Census 
Bureau county level Population Estimates for Native Americans. For 
purposes of this paragraph, Indian Lands in Remote Alaska shall be 
treated as Reservation and Trust Lands, unless the U.S. Census Bureau 
includes Remote Alaska in their Census Coverage Measurement or 
comparable study. The data under this paragraph shall be updated 
annually using the U.S. Census Bureau county level Population Estimates 
for Native Americans.
    (ii) Beginning fiscal year 2018, the data source used to determine 
the variables described in paragraphs (a) through (f) of Sec.  1000.324 
shall initially be the American Community Survey (ACS) 5-year Estimates 
adjusted by the ratio of the count of AIAN persons as provided by 
paragraph (b)(i) of this section to the ACS count of AIAN persons.
    (c) Indian tribes may challenge the data described in this section 
pursuant to Sec.  1000.336.
0
10. Add Sec.  1000.331 to read as follows:


Sec.  1000.331  How will the impacts from adoption of a new data source 
be minimized as the new data source is implemented?

    (a) To minimize the impact of funding changes based on the 
introduction of a new data source under Sec.  1000.330, in fiscal year 
2018 and each year thereafter, if, solely as a direct result of the 
introduction of a new data source, an Indian tribe's allocation under 
the Need component of the formula is less than 90 percent of the amount 
it received under the Need component in the immediate previous fiscal 
year, the Indian tribe's Need allocation shall be adjusted up to an 
amount equal to 90 percent of the previous year's Need allocation.
    (b) Nothing in this section shall impact other adjustments under 
this part, including minimum funding, census challenges, formula area 
changes, or an increase in the total amount of funds available under 
the Need component.
    (c) In the event of a decrease in the total amount of funds 
available under the Need component, an Indian tribe's adjusted 
allocation under paragraph (a) of this section shall be reduced by an 
amount proportionate to the reduced amount available for distribution 
under the Need component of the formula.
    (d) Adjustments under paragraph (b) or (c) of this section shall be 
made to a tribe's Need allocation after adjusting that allocation under 
paragraph (a) of this section.
0
11. Revise Sec.  1000.336 as follows:
0
a. In paragraph (a)(6) remove ``and'';
0
b. In paragraph (a)(7) remove the period and add in its place ``and;''
0
c. Add paragraph (a)(8);
0
d. Revise paragraphs (d), (e), and (f).


Sec.  1000.336  How may an Indian tribe, TDHE, or HUD challenge data or 
appeal HUD formula determinations?

    (a) * * *
    (8) The undisbursed funds factor.
* * * * *
    (d) An Indian tribe or TDHE that seeks to appeal data or a HUD 
formula determination, and has data in its possession that are 
acceptable to HUD, shall submit the challenge or appeal in writing with 
data and proper documentation to HUD. An Indian tribe or TDHE may 
appeal the undisbursed funds factor no later than 30 days after the 
receipt of the formula determination. Data used to challenge data 
contained in the U.S. Census must meet the requirements described in 
Sec.  1000.330(a). Further, in order for a census challenge to be 
considered for the upcoming fiscal year allocation, documentation must 
be submitted by March 30th.
    (e) HUD shall respond to all challenges or appeals no later than 45 
days after receipt and either approve or deny the appeal in writing, 
setting forth the reasons for its decision.
    (1) If HUD challenges the validity of the submitted data HUD and 
the Indian tribe or TDHE shall attempt in good faith to resolve any 
discrepancies so that such data may be included in the formula 
allocation.
    (2) If HUD denies a challenge or appeal, the Indian tribe or TDHE 
may request reconsideration of HUD's denial within 30 calendar days of 
receipt of HUD's denial. The request shall be in writing and set forth 
justification for reconsideration.
    (3) HUD shall in writing affirm or deny the Indian tribe's or 
TDHE's request for reconsideration, setting forth HUD's reasons for the 
decision, within 20 calendar days of receiving the

[[Page 34301]]

request. HUD's denial of a request for reconsideration shall constitute 
final agency action.
    (4) If HUD approves the Indian tribe or TDHE's appeal, HUD will 
adjust to the Indian tribe's or TDHE's subsequent fiscal year 
allocation to include only the disputed fiscal year(s).
    (f) In the event HUD questions whether the data contained in the 
formula accurately represents the Indian tribe's need, HUD shall 
request the Indian tribe to submit supporting documentation to justify 
the data and, if applicable, to provide a commitment to serve the 
population indicated in the geographic area.
0
12. Add Sec.  1000.342 to subpart D to read as follows:


Sec.  1000.342  Are undisbursed IHBG funds a factor in the grant 
formula?

    Yes, beginning fiscal year 2018. After calculating the initial 
allocation calculation for the current fiscal year by calculating FCAS, 
Need, the 1996 Minimum, and repayments or additions for past over- or 
under-funding for each Indian tribe, the undisbursed funds factor shall 
be applied as follows:
    (a) The undisbursed funds factor applies if an Indian tribe's 
initial allocation calculation is $5 million or more and the Indian 
tribe has undisbursed IHBG funds in an amount that is greater than the 
sum of the prior 3 years' initial allocation calculations.
    (b) If subject to paragraph (a) of this section, the Indian tribe's 
grant allocation shall be the greater of the initial allocation 
calculation minus the amount of undisbursed IHBG funds that exceed the 
sum of the prior 3 years' initial allocation calculations, or its 1996 
Minimum.
    (c) For purposes of this section, ``undisbursed IHBG funds'' means 
the amount of IHBG funds allocated to an Indian tribe in HUD's line of 
credit control system (or successor system) on October 1 of the fiscal 
year for which the allocation is made. For Indian tribes under an 
umbrella TDHE (a recipient that has been designated to receive grant 
amounts by more than one Indian tribe), if the Indian tribe's initial 
allocation calculation is $5 million or more, its undisbursed IHBG 
funds is the amount calculated by multiplying the umbrella TDHE's total 
balance in HUD's line of credit control system (or successor system) on 
October 1 of the fiscal year for which the allocation is made by a 
percentage based on the Indian tribe's proportional share of the 
initial allocation calculation of all tribes under the umbrella.
    (d) Amounts subtracted from an initial allocation calculation under 
this section shall be redistributed under the Need component among all 
Indian tribes not subject to paragraph (a) of this section (while also 
retaining the 1996 Minimum).

    Dated: May 4, 2016.
Lourdes Castro Ramirez,
Principal Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 2016-12596 Filed 5-27-16; 8:45 am]
 BILLING CODE 4210-67-P