Department of Health and Human Services Proposed Grant Rules Violate ISDEAA

Financial Management

The Department of Health and Human Services (HHS) recently proposed regulations (RIN 0991-AC06) published at 81 Federal Register 45270. This proposed rulemaking would add new regulatory requirements to the Indian Self-Determination and Education Assistance Act (ISDEAA) self-determination contracts and self-governance compacts entered into by tribes and tribal organizations by extending audit requirements and cost principles currently applicable to all HHS federal funds. NAFOA sent a comment letter to HHS strongly recommending that the HHS exempt tribal health programs from the proposed general grant management rules. The general proposed regulations for HHS federal funding remedies for non-compliance in the proposed grant rules include harsh penalties that violate the ISDEAA.

During the development of the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), language was included in 2 CFR § 200.101(b)(3) to make clear that, except for the Single Audit Act, when a provision in the Uniform Guidance conflicts with the ISDEAA the ISDEAA provision shall prevail and govern. Instead of applying this clear, overarching principle to the proposed rule, HHS does the opposite and creates a new regulatory framework that, in part, conflicts with the ISDEAA.

The proposed rule violates ISDEAA by allowing the secretary to apply the remedies for non-compliance in 45 CFR § 75.371 to ISDEAA contracts, compacts, and funding agreements, including:

  • Temporarily withhold cash payments pending correction of the deficiency by the non-federal entity or more severe enforcement action by the HHS awarding agency or pass-through entity.
  • Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action of compliance.
  • Wholly or partly suspend (suspension of award activities) or terminate the federal award.
  • Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and HHS awarding agency regulations at 2 CFR Part 376.
  • Withhold further federal awards for the project or program.
  • Take other remedies that may be legally available.

The sanctions in § 75.371 clearly contradict the ISDEAA. For instance, 25 U.S.C. § 450j-l(f) bars any action related to disallowance of costs made over one year after the secretary receives the tribal government's audit. Additionally, § 450j-l precludes these types of remedies and provides that the secretary may only suspend, withhold, or delay payment of funds for a period of 30 days beginning on the date the secretary makes a determination that a tribe or tribal organization failed to substantially carry out a self-determination contract without cause.

Current Status and Action:

NAFOA has sent comments to HHS to urge the agency to reconsider the proposed rules. The decision to apply general grant rules to self-determination contracts and self-governance compacts was made without the benefit of tribal input through consultation. Additionally, the rule violates ISDEAA and is widely viewed as unreasonable. NAFOA participated on a consultation call on December 9, 2016 and expressed our member tribe beliefs that the rule clearly violates ISDEAA.