Opinion ID: 173267
Heading Depth: 3
Heading Rank: 1

Heading: Relevant Statutory and Regulatory History

Text: Prior to 1997,2 financial assistance for low-income housing programs arose through a number of separate programs under the Housing Act of 1937. See Implementation of the Native American Housing Assistance and Self-Determination Act of 1996, Proposed Rule, 62 Fed. Reg. 35,718, 35,719 (July 2, 1997). Some programs helped Indian families afford low-income rental options and others allowed families to purchase housing through lease-to-own or lease-purchase agreements. This financial assistance was awarded according to the terms of individual Annual Contribution Contracts (ACCs) between the government and individual Indian tribes or Tribal Housing Entities. See 24 C.F.R. § 1000.10(b) (defining “Annual Contributions Contract”). Each ACC was awarded a certain amount of funding for the Tribal Housing Entity to cover the costs of specific public-housing projects. 42 U.S.C. § 1437c(a)(2) (1996) (explaining the operation of ACCs). That changed. Congress enacted NAHASDA in an attempt to consolidate low-income housing assistance for Indian tribes and simplify the distribution of funds. NAHASDA terminated the housing assistance programs established under the Housing Act of 1937 and created a new system.3 This new method of distributing funds sought to “[recognize] 2 NAHASDA’s effective date was October 1, 1997. P.L. 104-330, Tit. I, § 107, 110 Stat. 4030 (1996). 3 HUD identified programs terminated by NAHASDA in the “Statutory Background” section of its proposed rule. See Implementation of the Native American Housing Assistance and Self-Determination Act of 1996, Proposed Rule, 62 Fed. Reg. 35,718, 35,719 (July 2, 1997). -3- the right of Indian self-determination and tribal self-governance by making such assistance available directly to the Indian tribes or tribally designated entities . . .” 25 U.S.C. § 4101(7). This new system required the distribution of appropriated funds through annual block grants to individual housing entities for the purpose of carrying out affordable housing activities. 25 U.S.C. § 4111. Congress directed HUD to establish an allocation formula for this new system to reflect the need of the Indian tribes in the distribution of appropriated funds through block grants. 25 U.S.C. § 4152(a).4 It specifically described the intended structure of the formula: The formula shall be based on factors that reflect the need of the Indian tribes and the Indian areas of the tribes for assistance for affordable housing activities, including the following factors: (1) The number of low-income housing dwelling units owned or operated at the time pursuant to a contract between an Indian housing authority for the tribe and the Secretary. (2) The extent of poverty and economic distress and the number of Indian families within Indian areas of the tribe. (3) Other objectively measurable conditions as the Secretary and the Indian tribes may specify. 25 U.S.C. § 4152(b).5 4 The full text of the statute is reproduced as Appendix A to this Order and Judgment. 5 In addition to the factors specified in § 4152(b)(1)-(3), Congress required consideration of two other factors: In establishing the formula, the Secretary shall consider -- (1) the relative administrative capacities and other challenges faced by the recipient, including, but not limited to geographic distribution within the Indian area and technical capacity; and -4- Congress also required the regulations be crafted through a negotiated rulemaking process that involved interested Indian tribes. 25 U.S.C. § 4116. The negotiated rulemaking committee included fifty-eight members. Forty-eight of these members represented “geographically diverse small, medium and large Indian tribes.” 62 Fed. Reg. 35,719. This committee was larger “than usually chartered under the Negotiated Rulemaking Act” because of “the diversity of tribal interests, as well as the number and complexity of the issues involved.” Id. It operated solely by consensus and HUD agreed to use all of the committee consensus decisions, to the extent allowable under the law, as the basis for the proposed rulemaking. Id. at 35,719-20. The committee crafted a number of factors for the block grant formula, including the factor at issue in this appeal, which HUD considered when it adopted the final regulations. The block-grant formula was included in the final regulations and codified at 24 C.F.R. §§ 1000.304–1000.340. It included two separately calculated components: 1) “Formula Current Assisted Housing Stock” units (current units);6 and 2) “Need.”7 24 (2) the extent to which terminations of assistance under subchapter V of this chapter will affect funding available to State recognized tribes. 25 U.S.C. § 4152(c). Subsection (c)(1) is addressed in the regulations at 24 C.F.R. § 1000.538 which allows HUD to provide technical assistance if the Housing Entity’s inability to comply with NAHASDA provisions is not due to willful noncompliance. Subsection (c)(2) references the termination of the housing assistance provided under the Housing Act of 1937 and is addressed at 24 C.F.R. § 1000.312 where HUD includes the 1937 programs in the definition of current units. HUD addressed these factors within its regulations. Neither party raised the section in their briefs, so we do not consider them further. 6 Formula Current Assisted Stock is defined by regulation to include all dwelling units owned or operated by an entity as of September 30, 1997, and limited other units. 24 C.F.R. § 1000.314. This definition was the starting point in determining current units. Subsequent regulations, including § 1000.318, identified when Formula Current Assisted -5- C.F.R. § 1000.310. In accordance with the formula, to determine the amount of funding a Tribal Housing Entity would receive in a particular fiscal year, HUD first calculated the number of current units owned or operated by each Tribal Housing Entity and earmarked funds from the total appropriation to fund them.8 The current need portion for each Tribal Housing Entity was then established by applying preset weighted criteria to the remaining amount of appropriated funds. Because the funds earmarked for the current unit portion of the formula directly reduced the amount of funding available for current need disbursement, the current units component was of primary importance to Tribal Housing Entities. A larger number of current units funded in a particular fiscal year decreased the funds available for the current needs of all Tribal Housing Entities. The current units calculation for an individual Tribal Housing Entity began with the number of dwelling units owned or operated by that entity at the time of NAHASDA’s enactment. Id. Over the years, some rent-to-own units became eligible to be transferred from a Tribal Housing Entity’s inventory or be otherwise disposed of due to the terms of a contract between the Tribal Housing Entity and the unit’s occupant. For Stock became ineligible for purposes of the block grant formula. 7 The criteria for determining need, each weighted differently, include: (1) American Indian and Alaskan Native (AIAN) households with housing cost burden greater than 50% of “formula area income;” (2) AIAN households that are overcrowded or without kitchen or plumbing; (3) AIAN housing shortage; (4) AIAN households with income less than or equal to 30% of “formula median income;” (5) AIAN households with income between 30% and 50% of “formula median income;” (6) AIAN households with income between 50% and 80% of “formula median income;” and (7) AIAN persons. 24 C.F.R. § 1000.324. 8 See Appendix A to Part 1000 – Indian Housing block grant Formula Mechanics HUD, Nos. 5-6; see also 25 U.S.C. § 1000.324. -6- instance, a lease-to-own agreement between a Tribal Housing Entity and a low-income family may terminate in a given year and title to the residence would be transferred accordingly. Reflecting this reduction, HUD included a downward adjustment in the current units calculation. This adjustment was equal to the number of dwelling units a tribe “no longer has the legal right to own, operate, or maintain . . . whether such right is lost by conveyance, demolition, or otherwise.” 24 C.F.R. § 1000.318(a). Units are to be removed from a Tribal Housing Entity’s inventory “as soon as practicable after the unit becomes eligible for conveyance.” 24 C.F.R. § 1000.318(a)(1). In determining the number of these disqualified units, HUD relied on information provided by the individual Tribal Housing Entities on annual “Formula Response Forms.” 24 C.F.R. § 1000.312.