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General Memorandum 11-119

General Memorandum 11-119
FY 2012 Interior Appropriations Update

With the release on October 14, 2011, by the Senate Appropriations Subcommittee on Interior, Environment and Related Agencies (Subcommittee) of its draft FY 2012 appropriations bill, we are now able to see the differences between the House and Senate budget recommendations for the Indian Health Service (IHS) and Indian Affairs (Bureau of Indian Affairs/Bureau of Indian Education). The Senate draft bill was not formally marked up by the Senate Interior Appropriations Subcommittee and was released without an accompanying draft Committee report. Subcommittee Chair Reed (D-RI) and Ranking Member Murkowski (R-AK) noted in a press statement that the draft bill was to serve as the Chairman's mark for the Subcommittee and "a starting point for further discussions with our Senate colleagues and serves as a solid foundation for future negotiations with the House." We do not expect there will be a formal Senate Appropriations Committee markup of the bill. The House began debating its version of the FY 2012 Interior appropriations bill (HR 2584, H.Rpt. 112-151) but it was pulled from the House floor in late July due to disagreements on policy riders, primarily those dealing with the Environmental Protection Agency.

In this Memorandum we highlight the significant differences between the House and Senate Indian Health Service/Indian Affairs proposals and legislative language or provisions of particular interest.

We attach the Indian Affairs (IA) and IHS budget charts for the Senate draft bill which includes comparisons with amounts enacted in FY 2011 and proposed by the Administration for FY 2012, along with the budget charts from the House Committee Report. Detailed information on the distribution of increases or decreases by account level will not be available until the IHS and IA release their detailed budget charts.

Federal agencies are currently being funded under a Continuing Resolution that extends through November 18, 2011. It is uncertain whether Congress will be able to enact FY 2012 appropriations bills prior to November 18, although that is its goal. If that not does happen, another Continuing Resolution will be necessary.

INDIAN HEALTH SERVICE

The House bill includes more funding for every IHS account than the Senate bill with the exception of construction of sanitation facilities. Most of the difference between the two bills appears to be how much built-in costs (pay raises, inflation) funding would be available. Given that there is no Senate report accompanying its proposed bill, we are unable to be as specific as we would like.

The House bill recommends $392 million over FY 2011 enacted for IHS, while the Senate bill recommends $213 million over FY 2011 enacted for IHS. The Administration had requested a $554 million increase.

The only real IHS program increase in the House and Senate bills is for Contract Support Costs. Other apparent increases are related to funds for inflation, Commissioned Officers pay, and/or staffing and operations of new facilities. Of particular note are the following differences between the House and Senate bills:

Program FY11 Enacted FY12 House bill FY12 Senate draft bill
Hospitals & Clinics 1,762,865,000 1,858,433,000 1,821,880,000
Contract Health Services 779,927,000 836,685,000 829,927,000
Contract Support Costs 397,693,000 573,761,000 442,693,000

The House bill includes funding requested by the Administration for pay raises for Commissioned Officers (1.4 percent pay raise which costs $4.1 million), inflation ($155.3 million for a 1.5 percent non-medical inflation rate and a 3.6 percent medical inflation rate) and for staffing and operating costs for new facilities ($71.5 million). The House and Senate bills do not include the Administration's request of $96.6 million for population growth.

The House bill would provide $16.4 million for a methamphetamine and suicide prevention initiative and $10 million for a domestic violence initiative. The Senate bill specifies that any funding provided for these programs is to be distributed at the discretion of the Director but does not provide specific funding for them.

Both bills contain requested funds for construction of health care facilities (Barrow Hospital, Kayenta Health Center, San Carlos Health Center, and a Youth Residential Treatment Center in California), with the House providing $540,000 more than requested by the Administration for this account. The House bill would reduce construction of sanitation facilities by nearly $20 million, but also provides that $20 million in unobligated prior year funds may be used for the Facilities account.

Bill Language.

Extension of the Restriction of IHS Funds in Alaska to Regional Native Organizations. While the Administration proposed to discontinue the provision, enacted as part of the FY 2010 Interior Appropriations (PL 111-88), that provided (through September 30, 2011) that IHS funds for Alaska be made available only to regional Alaska Native health organizations (with some exceptions), Representative Cole (R-OK) offered an amendment during Committee consideration of the bill which was approved and which would extend this provision through September 30, 2013. The Senate bill (Sec. 421) has an identical provision. The language is:

Sec. 457. (a) Notwithstanding any other provision of law and until October 1, 2013, the Indian Health Service may not disburse funds for the provision of health care services pursuant to Public Law 93-638 (25 U.S.C. 450 et seq.) to any Alaska Native village or Alaska Native village corporation that is located within the area served by an Alaska Native regional health entity.
(b) Nothing in this section shall be construed to prohibit the disbursal of funds to any Alaska Native village or Alaska Native village corporation under any contract or compact entered into prior to May 1, 2006, or to prohibit the renewal of any such agreement.
(c) For the purpose of this section, Eastern Aleutian Tribes, Inc., the Council of Athabascan Tribal Governments, and the Native Village of Eyak shall be treated as Alaska Native regional health entities to which funds may be disbursed under this section.

Indian Employment, Training, and Related Services. A provision added by Representative Cole (R-OK) during House Committee markup would make some important clarifications to the consolidated program that tribes administer under the authority of the Indian Employment Training and Related Services Demonstration Act, Public Law 102-477 (477). It addresses the 477 tribes' two primary concerns with the current administration of PL 102-477 by the federal agencies: 1) the threat to end the practice of transferring 477 program funds to participating tribes through agreements under the Indian Self-Determination Education and Assistance Act; and 2) the 2009 Office of Management and Budget Circular A-133 which requires 477 tribes and tribal organizations to report their 477 expenditures separately by funding source for audit purposes. The House bill language follows. The Senate bill has no comparable language.
Sec. 430. Notwithstanding any other provision of law, and notwithstanding any auditing or reporting circular of the Office of Management and Budget or related compliance memoranda, hereinbefore and hereinafter (1) any funds supplied by any Federal department or agency to carry out a plan under Public Law 102-477 (the Indian Employment, Training and Related Services Demonstration Act), as amended, shall be consolidated and made available to the applicable Indian tribe or tribal organization pursuant to an existing contract, compact, or funding agreement under title I or title IV of Public Law 93-638 (the Indian Self-Determination and Education Assistance Act), as amended; and (2) no Indian tribe or tribal organization carrying out such a plan shall be required to separately account for the expenditure of the funds of each Federal department or agency after the date on which the funds are consolidated and paid to the Indian tribe or tribal organization.

Other. The House and Senate bills would continue language from previous appropriations acts including: a statutory cap on IHS contract support costs; language attempting to limit the ability of IHS and BIA to fund past-year shortfalls in contract support funding from remaining unobligated balances for those fiscal years; prohibition on implementing the IHS 1987 eligibility regulations; allowing IHS and tribal facilities to extend health care to non-Indians subject to charges; prohibition on IHS funds being used for Department of Health and Human Services assessments unless it has been approved by Congress; and an exemption for ISDEAA agreements from the no-bid contract provision. (See our General Memorandum 11-027 of February 23, 2011, for additional information on these provisions.)

DEPARTMENT OF THE INTERIOR
INDIAN AFFAIRS

The Senate Subcommittee bill would provide nearly $2.48 billion for Indian Affairs, which is $46.3 million less than the House bill, $17.3 million below the budget request and $110.6 million below the FY 2011 level. Within the recommended total are $2.34 billion for the Operation of Indian Programs (OIP; $6.79 million above the House bill) and $104.9 million for Construction ($50 million below the House bill).

Operation of Indian Programs. Among the significant differences between the Senate Subcommittee draft and House Committee bills are:

Program FY11 Enacted FY12 House bill FY12 Senate draft bill
Contract Support 219,560,000 228,000,000 205,490,000
Trust-Natural Resources Management 156,082,000 157,361,000 155,983,000
Education
Elem./Sec.-forward funded
Elem./Sec. Programs 752,698,000
(520,048,000)

(76,939,000) 769,485,000
(520,048,000)

(102,730,000) 795,554,000
(526,117,000)

(122,730,000)

Regarding the Contract Support funding, the House Committee Report states:
Contract support costs are fully funded at $228,000,000. Two recent court cases found that the Bureau was legally obligated to pay the full amount of all contract support costs that it had contractually agreed with Indian Tribes to pay, and limitations on the overall contract support cost appropriation does not overcome the Bureau's obligation to pay said costs. The Committee believes that the Bureau should pay all contract support costs for which it has contractually agreed and directs the Bureau to include the full cost of the contract support obligations in its fiscal year 2013 budget submission. (H.Rpt. 112-151, p. 42)

It appears that, as requested, both bills concurred in moving Roads Maintenance funds from Community/Economic Development to the Tribal Government category; and move Minerals and Mining from Trust-Natural Resources Management to the Community/Economic Development category.

Construction. The Senate Subcommittee draft bill would fund the overall Construction account at the budget request level of $104.9 million. The major difference between the House bill and the Senate Subcommittee draft version is in Education Construction funding.

The Administration had proposed to freeze "new construction" and defer replacement facilities construction, resulting in a budget request of $52.1 million for Education Construction (or $88.4 million below the FY 2011 level). The Senate draft bill would provide that amount but the House bill would partially restore Education Construction funds by providing an additional $50 million, for total funding of $102.1 million. The House Committee Report states the increase should be sufficient to complete the remaining projects from the 2004 Replacement School priority list. The House Committee also urged the Bureau to act "with all deliberate speed" to publish a new replacement school construction priority list, and to include funding to implement projects on such list in its FY 2013 budget request.

Bill Language.

Self-Determination Demonstration Project. The House bill, but not the Senate Subcommittee bill, includes a provision that would reinstate a demonstration program to allow certain tribes to manage their trust funds and finances. The language states:
Sec. 123. The Director of the Bureau of Indian Affairs shall reinstate the Demonstration Project that was in place from 2004 until 2008 for the Indian tribes within the California Tribal Trust Reform Consortium, the Salt River Pima-Maricopa Indian Community, the Confederated Salish and Kootenai Tribes of the Flathead Reservation, and the Chippewa Cree Tribe of the Rocky Boys Reservation; shall thereby ensure that the participating tribes shall be able to continue operations independent of the Department of the Interior's trust reform and reorganization; and shall not impose its trust management infrastructure upon or alter the existing trust resource management systems of the above referenced tribes having a self-governance compact and operating in accordance with the Tribal Self-Governance Program set forth in title IV of Public Law 93–638 (25 U.S.C. 458aa–458hh): Provided, That the California Trust Reform Consortium and any other participating Indian tribe agree to carry out their responsibilities under the same written and implemented fiduciary standards as those being carried by the Secretary of the Interior, including complying with section 102 of Public Law 103–412 (25 U.S.C. 4011): Provided further, That participating Indian tribes shall timely transfer funds and supply sufficient data to enable the Secretary of the Interior to comply with section 102 of Public Law 103–412 (25 U.S.C. 4011) for accounts that are maintained by the Department of the Interior when funds are being collected by the Indian tribes: Provided further, That such Indian tribes demonstrate to the satisfaction of the Secretary of the Interior that they have the capability to do so: Provided further, That the Secretary of the Interior shall provide funds to the Indian tribes in an amount equal to that required by section 403(g) of Public Law 93–638 (25 U.S.C. 458cc(g)(3)), including funds specifically or functionally related to the provision of trust services to the Indian tribes or their members.
Carcieri Fix. Neither the Senate nor House version of the Interior Appropriations bill includes the Administration-proposed language that would provide a "clean" Carcieri fix that would have reversed the U.S. Supreme Court's 2009 decision that the Interior Secretary did not have authority to take land into trust for tribes recognized after 1934.

We will report in more detail on FY 2012 Interior, Environment and Related Agencies appropriations as information becomes available. In the meantime please let us know if we may provide additional information or assistance regarding the FY 2012 Interior appropriations.

# # #

Inquiries may be directed to:
Karen Funk (kfunk@hobbsstraus.com)
Marie Osceola-Branch (mosceola-branch@hobbsstraus.com

Available Documents for Download ( any referenced attachments are included in download )


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