Kickapoo Tribe of Oklahoma, CR No. 170 (1991) Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division _________________________ In the Case of: ) ) Kickapoo Tribe of ) DATE: December 26, 1991 Oklahoma, ) ) Appellant, ) ) Docket No. C-389- v. - ) Decision No. 170 ) Indian Health Service, ) ) Appellee. ) _________________________) DECISION This case is before me on a request for hearing filed by Appellant, Kickapoo Tribe of Oklahoma (KTO), challenging a decision by Appellee, Indian Health Service (IHS), to decline to enter into a contract with KTO under the Indian Self-Determination Act, 25 U.S.C. 450 et seq. (Act). IHS moved for summary disposition, asserting that there were no disputed issues of material fact and that the case could be decided based on undisputed facts and the law. KTO did not dispute the facts asserted by IHS. It opposed IHS' motion on legal grounds and cross-moved for summary disposition. I held an oral argument on the parties' respective motions on October 30, 1991, in Washington, D.C. I have considered the undisputed material facts, the parties' arguments, and applicable law. I conclude that IHS timely declined to enter into a contract with KTO. Therefore, KTO is not entitled to a contract with IHS based on an untimely denial of its proposal. I conclude further that IHS did not contravene its duty to provide KTO with technical assistance to overcome IHS' stated objections to KTO's contract proposal. Finally, I conclude that IHS' decision to decline to enter into a contract with KTO was not in compliance with applicable statutory or regulatory criteria for contract denials. Therefore, I direct IHS to reconsider KTO's contract proposal in accordance with applicable statutory and regulatory criteria. ISSUES The issues in this case are whether IHS: 1. Untimely declined KTO's contract proposal; 2. Contravened its duty to provide KTO withtechnical assistance to overcome IHS' stated objections to KTO's contract proposal; and 3. Declined to enter into a contract with KTO in compliance with applicable statutory and regulatory criteria for contract denials. FINDINGS OF FACT AND CONCLUSIONS OF LAW 1. IHS is an agency within the Public Health Service of the United States Department of Health and Human Services. Declaration of Robert H. Harry, Jr., D.D.S. (Harry Declaration) Par. 1. 1/ 2. IHS provides comprehensive health services for approximately 1,011,000 American Indian and Alaska Native people living on or near Federal Indian reservations throughout the United States and in traditional Indian country in Oklahoma and Alaska. Harry Declaration Par. 2. 3. The IHS health delivery system includes hospitals, health centers and smaller health stations and treatment locations. Harry Declaration Par. 2. 4. IHS also purchases health services from non-IHS providers under its contract health care program. IHS administers its programs directly, through contracts with Indian tribal organizations under the Act, or with other Indian contractors under the Buy Indian Act, 25 U.S.C. 47. Harry Declaration Par. 2. 5. The IHS Oklahoma City Area Office (OCAO) is one of 12 IHS Area Offices. OCAO is responsible for comprehensive health services provided through various IHS programs to IHS beneficiaries living in Oklahoma, Texas and Kansas. Harry Declaration Par. 3. 6. KTO and the Kickapoo Traditional Tribe of Texas (KTTT) are among the Indian tribes served by OCAO. Harry Declaration Par. 4. 7. The tribal government offices of KTO are located in McLoud, Oklahoma. Harry Declaration Par. 5. 8. The tribal government offices of KTTT are located on the KTTT reservation, south of Eagle Pass, in Maverick County, Texas. Harry Declaration Par. 6; See IHS Ex. D. 9. KTTT is an Indian tribe organized under federal law and is independent of KTO. Harry Declaration Par. 11; IHS Ex. C; Indian Reorganization Act, 25 U.S.C. 476. 10. On July 11, 1989, KTTT was recognized by the Secretary of the United States Department of the Interior as an independent Indian tribe. Harry Declaration Par. 11; IHS Ex. C. 11. By letter dated June 12, 1990, KTTT requested to assume the IHS Contract Health Services (CHS) program in Maverick County, Texas, under an Indian Self-Determination Act contract. Harry Declaration Par. 12; IHS Ex. D. 12. At the time KTTT requested to assume the Maverick County CHS program, KTO was administering that program under an Indian Self-Determination Act contract with IHS. Harry Declaration Par. 14; IHS Ex. E. 13. The contract between KTO and IHS provided health services to Indians residing in Eagle Pass and Maverick County, Texas. Harry Declaration Par. 14; IHS Ex. E; See IHS Ex. D. 14. On September 15, 1990, IHS awarded KTTT an Indian Self-Determination Act contract to provide contract health services in Maverick County. Harry Declaration Par. 16; IHS Ex. G. 15. One effect of the contract between IHS and KTTT was to replace KTO with KTTT as the contractor to provide health services to Indians in Maverick County, Texas. Findings 12-14; See IHS Ex. F. 16. The contract between IHS and KTO to provide health services to Indians in Maverick County, Texas expired on January 31, 1991. Harry Declaration Par. 15; IHS Ex. F. 17. KTO submitted to IHS a proposal, dated October 11, 1990, for an Indian Self-Determination Act contract to provide health care services. IHS Ex. H. 18. The October 11, 1990 proposal recited that the geographic area to be served by the proposed contract consisted of three counties in the South Central part of Oklahoma. IHS Ex. H. 19. The October 11, 1990 proposal also recited that the population to be served by the proposed contract consisted of "Texas Band Kickapoo Tribe who have changed there (sic) enrollment to Oklahoma Kickapoo from May 1989 thru December 1989." IHS Ex. H. 20. The intent of the October 11, 1990 proposal was to provide contract health services to 382 Indians residing in Maverick County, Texas, whom KTO considers to be members of its tribe. Findings 17-19; IHS Ex. H. 21. The October 11, 1990 proposal was received by IHS on October 23, 1990. Harry Declaration Par. 17; IHS Ex. I. 22. On October 26, 1990, IHS, acting in good faith, returned the October 11, 1990 proposal to KTO. Harry Declaration Par. 18; IHS Ex. I; Tr. at 60. 23. IHS advised KTO that it had determined from KTO's proposal that KTO was requesting a portion of the Contract Health Services funds allocated to KTTT to administer its contract in Maverick County, Texas. IHS Ex. I. 24. IHS advised KTO that KTO was not authorized to request a portion of the funds allocated to KTTT because a tribal resolution from KTTT was required to serve members of that tribe with those funds. IHS Ex. I. 25. KTO resubmitted its proposal to IHS. The resubmitted proposal was dated October 30, 1990. IHS Ex. J. 26. IHS received KTO's resubmitted proposal on November 5, 1990. Harry Declaration Par. 20. 27. In its resubmitted proposal, KTO asserted that it was not requesting a portion of the funds which had been allocated to KTTT. IHS Ex. J. 28. KTO additionally asserted that it did not intend to contract with IHS to provide health services to members of KTTT. IHS Ex. J. 29. KTO stated that it intended to contract to provide health services to 382 "former Texas Band Kickapoo" who enrolled in KTO after May 1990. IHS Ex. J. 30. In its October 11, 1990 proposal as clarified by its October 30, 1990 resubmitted proposal, KTO told IHS that it intended to contract to provide health services to 382 Indians in Maverick County, Texas who had been covered by the contract between IHS and KTTT before they enrolled in KTO. See Findings 17-28. 31. On January 4, 1991, IHS declined KTO's proposal. IHS Ex. M. 32. IHS is required by law to approve or disapprove a contract request made under the Act within 60 days of the date it receives the request. 25 U.S.C. 450f(a)(2); 42 C.F.R. 36.213. 33. The date IHS received KTO's proposal within the meaning of the law was November 5, 1990, the date IHS received KTO's resubmitted proposal. Findings 21-26. 34. IHS declined KTO's proposal within 60 days of the date it received it. Findings 31, 33. 35. IHS timely declined KTO's proposal. Findings 32, 34. 36. Under the Act, there are three grounds on which IHS may decline a proposal to contract. These are that: (1) the service to be rendered to the Indian beneficiaries of the particular program or function to be contracted will not be satisfactory; (2) adequate protection of trust resources is not assured; or (3) the proposed project or function to be contracted for cannot be properly completed or maintained by the proposed contract. 25 U.S.C. 450f(a)(2)(A-C). 37. In declining KTO's proposal, IHS asserted that the proposed project or function to be contracted for could not be properly completed or maintained by the proposed contract. Harry Declaration Par. 22; IHS Ex. M; See 25 U.S.C. 450f(a)(2)(C). 38. IHS did not assert any other statutory basis for declining KTO's contract proposal. IHS Ex. M. 39. In declining KTO's contract proposal, IHS advised KTO that the IHS contract health services program is governed by regulations which establish Contract Health Service Delivery Areas (CHSDAs) for purposes of program administration. IHS Ex. M; 42 C.F.R. 36.22. 40. IHS told KTO that the regulations at 42 C.F.R. 36.22(a)(6) establish Maverick County, Texas, as the CHSDA for KTTT. IHS Ex. M. 41. IHS told KTO that, under 42 C.F.R. 36.22(a)(3), the State of Oklahoma is a CHSDA that is separate from the Maverick County, Texas, CHSDA. IHS Ex. M. 42. IHS advised KTO that, under IHS' application of 42 C.F.R. 36.22, KTO may not contract for a portion of the contract health service program which is administered by KTTT for its CHSDA in Maverick County, Texas. IHS Ex. M. 43. In effect, IHS told KTO that IHS interpreted 42 C.F.R. 36.22 to give KTTT an exclusive right to contract for health services for all Indians residing within Maverick County, Texas, even if they were not members of KTTT. Findings 39-42; See IHS Ex. M. 44. IHS declined KTO's contract proposal because it concluded that, as a matter of law, KTO could not contract for a portion of the contract health service program which is administered by KTTT for Indians residing in Maverick County, Texas. Findings 39-43; See IHS Ex. M; 42 C.F.R. 36.22. 45. IHS did not evaluate KTO's proposal to determine whether, but for IHS' conclusion that KTO could not contract for health services as a matter of law, the proposal complied with applicable contract criteria and standards. IHS Ex. M. 46. The Act and regulations require that, where IHS declines a contract proposal, it shall, if requested, provide the proposing tribal organization with technical assistance, to the extent practicable, to overcome deficiencies in the proposal. 25 U.S.C. 450f(b)(2); 42 C.F.R. 36.212(f). 47. By letters dated January 11 and February 8, 1991, KTO requested technical assistance from IHS to overcome IHS' basis for declining KTO's contract proposal. Harry Declaration Par. 23; IHS Ex. N. 48. On January 18 and February 28, 1991, IHS advised KTO that IHS staff would be available to provide KTO with technical assistance consistent with federal guidelines and the intent of the Act. IHS Ex. O. 49. IHS told KTO that technical assistance is ordinarily provided to overcome operational and programmatic barriers to contracting, such as deficient management systems. IHS Ex. O. 50. IHS advised KTO that it would be unable to provide KTO with technical assistance intended to overcome applicable regulations. IHS Ex. O. 51. In effect, IHS told KTO that IHS could not provide technical assistance to overcome a deficiency in a contract proposal, where IHS was precluded by regulation from entering into a contract. Findings 48-50; See IHS Ex. O. 52. IHS offered to provide technical assistance to KTO to the extent required by the Act and regulations. Findings 46, 48-51; 25 U.S.C. 450f(b)(2); 42 C.F.R. 36.212(f). 53. IHS did not contravene its duty to provide KTO with technical assistance to overcome deficiencies in KTO's contract proposal. Findings 46-52. 54. Regulations establishing CHSDAs establish geographic areas within which contract health services may be provided to resident Indians. 42 C.F.R. 36.22. 55. The purpose of regulations establishing CHSDAs is to comply with the congressional intention that funds appropriated for the general support of the IHS health program be used to provide health services for Indians who live on or near reservations. 42 C.F.R. 36.22(a). 56. Regulations establishing CHSDAs do not require IHS to contract exclusively for health services within any CHSDA with a tribe whose reservation is entirely or in part located within that CHSDA. See 42 C.F.R. 36.22. 57. Regulations establishing CHSDAs do not preclude IHS from entering into a contract with a tribe whose reservation is not located within a designated CHSDA for health services for tribal members within that CHSDA. See 42 C.F.R. 36.22. 58. Regulations establishing CHSDAs do not preclude IHS from entering into separate contracts with more than one tribal organization to provide health services to Indians of different tribes who reside within a designated CHSDA. See 42 C.F.R. 36.22. 59. IHS could not lawfully decline KTO's proposal on the ground that KTO may not contract for a portion of the contract health service program which is administered by KTTT for its CHSDA in Maverick County, Texas. Findings 42-44, 54-56; See 42 C.F.R. 36.22. 60. IHS has a duty to consider KTO's contract proposal in accord with applicable laws and regulations. ANALYSIS 1. IHS timely declined KTO's contract proposal. As a threshold issue, KTO asserts that IHS declined KTO's contract proposal more than 60 days from the date that IHS received it from KTO. KTO contends that, under both the statute and regulations, IHS is required to enter a contract with KTO by virtue of its untimely declination of the proposal. I conclude that the declination was timely. Therefore, no right to a contract inured to KTO as a consequence of the timing of the declination by IHS. 2/ The undisputed facts relevant to this issue are that, on October 11, 1990, KTO first submitted its proposal to contract with IHS to provide health care to Indians in Maverick County, Texas. Findings 17-20. IHS received this proposal on October 23, 1990. Finding 21. On October 26, 1990, IHS returned the proposal to KTO. Finding 22. IHS explained to KTO that it interpreted KTO's proposal as a request to be allocated a portion of IHS funds that had been previously allocated to KTTT for administration of the KTTT health care contract in Maverick County. Finding 23. IHS asserted that it would need a tribal resolution from KTTT authorizing the reallocation of funds before IHS could process the request. Finding 24. On October 30, 1990, KTO resubmitted its proposal to IHS, and on November 5, 1990, IHS received KTO's resubmitted proposal. Findings 25-26. In its resubmitted proposal, KTO advised IHS that it was not requesting a portion of the IHS contract funds which were allocated to KTTT, and that it did not intend to contract with IHS to provide health services to members of KTTT. Finding 27-28. IHS declined KTO's resubmitted contract proposal on January 4, 1991. Finding 31. There is nothing in these facts to suggest that IHS acted in other than good faith when it returned KTO's proposal on October 26, 1990. Finding 22. The IHS employee or employees who were charged with reviewing the proposal concluded that it consisted of a request for a portion of the funds previously allocated by IHS to KTTT. Finding 23. For that reason, IHS told KTO that it could not act on KTO's proposal absent an authorizing resolution from KTTT. Finding 24; IHS Ex. I. KTO opted to resubmit its proposal to IHS, asserting that IHS had misunderstood the nature of KTO's proposal. Findings 25, 27-30; IHS Ex. J. The Act requires that where IHS declines to enter into a contract with a tribe, it shall state its objections to the tribe within 60 days. 25 U.S.C. 450f(a)(2) and 450f(b)(1). Regulations provide that IHS will approve or decline a contract proposal within 60 calendar days after receipt. 42 C.F.R. 36.213. They provide further that the deadline for approval or declination may be extended only with the written consent of the tribe which submitted the proposal. Id. KTO argues that the operative receipt date for purposes of the statute and regulations was October 23, 1990, the date IHS received KTO's first proposal to contract. KTO asserts that the declination date of January 4, 1991 is more than 60 days from the date of IHS' receipt of the original KTO proposal and is thus untimely. IHS contends that the operative receipt date was November 5, 1991, the date IHS received KTO's resubmitted proposal. IHS argues that, as it declined to enter into a contract within 60 days from the date it received the resubmitted proposal, it complied with the 60 day period for contract proposal review established by statute and regulations. I conclude that KTO's act of resubmission of its contract proposal entitled IHS to treat the resubmitted proposal as a new submission of a proposal. Therefore, IHS' time limits for processing the resubmitted proposal began to run as of the date it received it. It processed the resubmitted proposal within 60 days of receipt, which is timely under the Act and regulations. Findings 33-35. The congressional intent implicit in the Act, and implemented by the regulations, is that IHS not be dilatory in evaluating tribal contract proposals. However, neither the Act nor the regulations bar IHS from returning proposals to tribes which it in good faith determines to be incomplete, nor do they preclude tribes from opting to resubmit proposals, in lieu of appealing returned proposals, in order to address concerns raised by IHS. KTO asserts that legislative history to the Act supports its position that IHS was obligated to act within 60 days of its receipt of KTO's initial contract proposal. See S. Rep. No. 274, 100th Cong., 2d Sess. 24 (1988), reprinted in 1988 U.S. Code Cong. & Admin. News 2620, 2643. I disagree with this argument. As I note above, Congress was concerned that IHS not be dilatory in reviewing and acting on contract proposals. However, the legislative history does not suggest that the Act precludes either IHS or KTO from the procedural steps which they opted for with respect to KTO's proposal and its resubmitted proposal. IHS returned KTO's original contract proposal because it concluded that the proposal was incomplete. KTO might have opted to treat the return as a declination. Had it done so, it arguably could have exercised appeal rights as provided by the Act and regulations. Instead, it resubmitted the proposal to IHS. KTO effectively reinitiated the proposal process by resubmitting its proposal to IHS. By telling IHS that it was resubmitting its proposal, IHS was in effect telling IHS that it was making a new submission of its proposal rather than demanding that IHS continue to process its original proposal. IHS Ex. J. In its resubmission, KTO did not assert that it expected IHS to award a contract or issue a declination within 60 days of the date that it had received KTO's first proposal. Id. There is no language contained in the document by which KTO resubmitted its proposal which could be interpreted to suggest that KTO expected that IHS would review the resubmitted proposal within 60 days of the date IHS received KTO's original proposal. Id. KTO argues that any decision by me finding the January 4, 1991 declination date to be timely would "eviscerate" the contract evaluation time limit established by the Act. Appellant's Response Brief at 6. KTO contends that IHS would be able to avoid any requirement of timely denial by simply returning tribal contract proposals on the ground that they were incomplete. I disagree with this assertion. As I find above, the record establishes IHS to have acted in good faith. There is no suggestion here that IHS was attempting to avoid the statutory time requirements for processing KTO's proposal by returning the proposal to KTO. Had KTO believed that IHS was not acting properly, KTO arguably could have opted to treat the return of its contract proposal as a declination and could have exercised its hearing and appeal rights. 3/ 2. IHS did not contravene its duty to provide KTO with technical assistance to overcome objections to KTO's contract proposal. Both the Act and regulations provide that, where practicable and when requested to do so by a tribe, IHS must provide technical assistance to overcome its objections to a contract proposal. 25 U.S.C. 450f(b)(2); 42 C.F.R. 36.212(f). KTO contends that IHS contravened this duty by failing to provide it with technical assistance. IHS argues that it could not have provided the assistance demanded by KTO and that it did not contravene its lawful duty. I conclude that, given the circumstances under which IHS declined KTO's proposal, IHS could not have provided practicably the technical assistance demanded by KTO. Therefore, IHS did not violate its duty to provide technical assistance to KTO. IHS declined KTO's contract proposal because it concluded that, as a matter of law, it could not enter into a contract with KTO. IHS determined that it was absolutely barred from contracting with KTO because, under the regulations, the territory for which KTO proposed to contract, Maverick County, Texas, was exclusively subject to a contract between IHS and KTTT. Findings 42-44; see Part 3 of this Analysis, infra. IHS could not have offered KTO any meaningful technical assistance to overcome IHS' objection to the proposal, because IHS had effectively decided that KTO was precluded from contracting for health services in Maverick County regardless of how KTO phrased its contract proposal. Nothing IHS might have advised KTO about its proposal, and nothing KTO might have done in response to IHS' advice, would have affected that conclusion. 3. IHS' declination did not comply with the requirements of the Act and regulations. The central issue in this case is whether IHS properly denied KTO's proposal for a contract. I conclude that IHS abused its discretion by not considering the merits of KTO's proposal. Therefore, I direct IHS to reconsider KTO's proposal based on the criteria contained in the Act and applicable regulations. I make no conclusion as to whether, based on the merits, IHS is under an obligation to award a contract to KTO. KTO, a tribe whose administrative offices are in Oklahoma, proposed to contract with IHS to provide health services to 382 Indians residing in Maverick County, Texas. Findings 7, 17-20, 29-30. Maverick County is the location of the reservation and tribal government of another federally-recognized Indian tribe, KTTT. Findings 8-9. KTO did not propose to contract to provide health services to KTTT members, but to Indians in Maverick County who considered themselves to be members of KTO. Finding 29. As of the dates IHS received both KTO's original and resubmitted proposal, IHS had already contracted with KTTT to provide health services to Indians in Maverick County, Texas. Findings 14-15. IHS asserted that the Indians covered by this contract included the 382 Indians in Maverick County who considered themselves to be members of KTO, and not KTTT. Findings 14-15, 30. IHS declined KTO's resubmitted proposal on the ground that, under applicable regulations, Maverick County was a CHSDA that had been allocated to KTTT. Findings 40-42. IHS concluded that KTTT had an exclusive right to contract with IHS for Indian health services in Maverick County and KTO was barred from any consideration as a contractor for a portion of the Maverick County CHSDA. Findings 43-44. Regulations establishing CHSDAs assure that Indians who live near but not on reservations and who maintain close economic and cultural ties with the reservation Indians are eligible to receive Indian health services to the same extent as are the reservation Indians. 42 C.F.R. 36.21 - 36.23. These regulations do not, contrary to IHS' contention, establish exclusive contract rights for an entire CHSDA for a tribe whose reservation is partly or entirely within that CHSDA. The regulations do not preclude a tribe and IHS from contracting to provide services for Indians within a CHSDA, even if that tribe's reservation is not all or in part located within the CHSDA. Thus, the regulations are designed to include certain non-reservation Indians residing within a CHSDA as being eligible for health services to the same extent as are reservation Indians residing within that CHSDA. They are not intended to exclude tribes from eligibility to contract to provide such services. There is a strong congressional mandate in the Act that the Secretary of the Department of Health and Human Services (the Secretary), and his delegate, IHS, will not erect arbitrary barriers to consideration of contract proposals by Indian tribes. The Act states that the Secretary is: directed, upon the request of any Indian tribe by tribal resolution, to enter into a self-determination contract or contracts with a tribal organization to plan, conduct, and administer programs or portions thereof . . . 25 U.S.C. 450f(a)(1) (emphasis added). The Act thus directs the Secretary to consider contract proposals by "any" Indian tribe and to enter into contracts with "any" tribal organization of a tribe, unless certain specific statutory grounds exist to justify declination as set forth in 25 U.S.C. 450f(a)(2)(A-C). See Finding 36. The plain language of the Act does not suggest a congressional intent that the Secretary create exclusive territories to allocate to individual tribes for contracts with IHS. The Act authorizes the Secretary to enact regulations applying its provisions. 25 U.S.C. 450k(a). As the Secretary's delegate, I do not have authority in hearing this case to question the Secretary's judgment or to decide that any regulation is ultra vires the Act. To the extent that regulations explicitly authorize IHS to act in a particular manner concerning contract proposals, I am obligated to apply that authority without questioning its lawfulness. I must apply the plain meaning of the regulations to this case, even though I might conclude that such application could be ultra vires the Act. Therefore, I make no analysis here as to whether regulations establishing CHSDAs are ultra vires. However, I am obligated also to apply the regulations in a manner which is consistent with congressional intent, to the extent that I do not contravene the regulations' plain meaning. Therefore, in interpreting the regula-tions which establish CHSDAs, I must read them consistent with the broad congressional mandate that the Secretary contract with tribes without erecting arbitrary barriers, unless I find a specific limitation on contracts in the regulations. Furthermore, to the extent that the regulations are unclear or ambiguous, I must look to the language of the Act as a controlling statement of intent. In applying the CHSDA regulations for the purpose of deciding this case, the question is whether these regulations explicitly preclude a tribe from contracting for health services for Indians in a CHSDA in which that tribe has no reservation and in which another tribe does have a reservation. I conclude that no such preclusion exists in the regulations. The regulations provide that: In accord with the congressional intention that funds appropriated for the general support of the health program of the Indian Health Service be used to provide health services for Indians who live on or near Indian reservations, contract health service delivery areas are established . . . . 42 C.F.R. 36.22(a). They provide further that the Secretary may: from time to time, redesignate areas or communities within the United States as appropriate for inclusion or exclusion from a contract health service delivery area after consultation with the tribal governing body or bodies of those reservations included within the contract health service delivery area. The Secretary will take the following criteria into consideration: (1) The number of Indians residing in the area proposed to be so included or excluded; (2) Whether the tribal governing body has determined that Indians residing in the area near the reservation are socially and economically affiliated with the tribe; (3) the geographic proximity to the reservation of the area whose inclusion or exclusion is being considered; . . . 42 C.F.R. 36.22(b). Finally, the regulations provide that contract health services will be made available, under appropriate conditions, to Indians who: Do not reside on a reservation but reside within a contract health service delivery area, and: (i) Are members of the tribe or tribes located on that reservation or of the tribe or tribes for which the reservation was established, or (ii) maintain close economic and social ties with that tribe or tribes. 42 C.F.R. 36.23(a)(2). 4/ The plain meaning of these regulations is to assure that Indians who do not reside on reservations, but who reside near reservations, and who maintain close economic and social ties with the tribes whose reservations they live near, be entitled to contract health services to the same extent as are reservation Indians. The regulations permit the Secretary to establish CHSDAs as a way of designating en masse those Indians who qualify for such health services by virtue of their proximity to and identification with reservations. They permit the Secretary to make such generalized eligibility determi-nations so as to avoid the undoubtedly costly and difficult case-by-case eligibility assessments that would otherwise be required to accomplish the same end. As the regulations themselves recite, their objective is to extend the benefits of contract health services to non-reservation Indians consistent with congressional intent. 42 C.F.R. 36.22(a). The regulations also are in accord with the United States Supreme Court's decision in Morton v. Ruiz, 415 U.S. 199 (1974), that Congress did not intend to exclude from federal general assistance Indians living in Indian communities near their native reservations. The regulations do not specify who may contract for health services to be provided to non-reservation Indians residing within a CHSDA. They are silent on this issue. While it is envisioned by the regulations that, in most circumstances, the logical contracting party for eligible non-reservation Indians in a CHSDA would be the tribe whose reservation lies within that CHSDA, the regulations do not explicitly exclude other tribes from contracting for such services even if their reservations are outside the CHSDA. Therefore, I do not read the letter of these regulations as expressly conferring exclusive rights to contract for residents of a CHSDA on a tribe whose reservation lies entirely or partially within that CHSDA. Also, I do not find that the regulations impliedly confer exclusive rights to contract for non-reservation Indians in a CHSDA to the tribe whose reservation is within that CHSDA. As I find above, the regulations are silent on the issue of who may contract for non-reservation Indians' health services. Given that silence, I read these regulations consistent with the broad mandate in the Act that the Secretary will not erect arbitrary barriers to consideration of contract proposals by Indian tribes. The Act neither expressly nor impliedly states that the Secretary shall have authority to designate geographic areas within which a tribe will have exclusive contract rights for non-reservation Indians, and I read the regulations to be consistent with this. IHS cites the Ruiz decision as support for its contention that the CHSDA regulations are legitimate and reasonable classifications for the allocation of limited funds by the Secretary in order to administer contract health services. The Court held in Ruiz that the Secretary has authority to create reasonable classification and eligibility requirements in order to allocate limited funds. 415 U.S. at 230. Depending on the funds available to administer the program, such standards could apply legitimately to extend benefits only to a limited portion of a class made eligible by Congress. 415 U.S. at 231. However, the present case does not call into question the legitimacy of the Secretary's eligibility classifications in the CHSDA regulations. What is at issue here is who is eligible to contract to provide benefits to eligible Indians who reside within a CHSDA. The regulations are silent on this issue. Therefore, this case does not test the legitimacy of the classifications of eligibles made by the Secretary in the CHSDA regulations. 5/ IHS argues that the fact that individual KTO members reside in the Maverick County CHSDA does not give KTO a right to contract to serve those members, who reside approximately 600 miles from KTO's CHSDA. While this argument is persuasive, it also begs the question of what is at issue here. The question is not whether KTO has a right to a contract to provide services to its Maverick County members, but whether applicable regulations absolutely bar IHS from considering the merits of KTO's proposal. Under the regulations, KTO members in Maverick County are eligible for contract health services to the extent that they maintain close economic and social ties with KTTT. 42 C.F.R. 36.23(a)(2). The regulations do not preclude KTO from entering into a contract with IHS to supply such services for eligible KTO members in the Maverick County CHSDA. IHS also argues that, under the terms of the Act, no authorizing resolution is required from KTO to legitimize a contract between IHS and KTTT which would provide health services to KTO members in Maverick County. I do not disagree with this contention. However, IHS then reasons that since KTTT does not need a resolution to serve members of KTO, the regulations can be read to mean that KTTT has an exclusive right to contract for all eligible Indians in Maverick County. I do not agree with this leap in logic. As I have stated above, the regulations are silent on the issue of who can submit contract proposals to IHS for consideration. The mere fact that KTTT can serve KTO without obtaining a resolution from KTO does not mean that KTO is absolutely barred from ever submitting a contract proposal to IHS for consideration. IHS also asserts that the fact that KTTT does not need a resolution to serve KTO members in Maverick County means that KTO cannot contract for services covered by the existing contract or control the terms of the existing contract between KTTT and IHS. Again, I do not necessarily disagree with this assertion. However, in this case, IHS has declined the contract on the grounds that the regulations absolutely bar it from even considering KTO's contract by virtue of the fact that KTTT is the only tribe that has a reservation located in the Maverick County CHSDA. Since IHS has declined KTO's contract proposal on these grounds, the issue before me is not whether a contract between KTO and IHS would in some way unlawfully impair or breach an existing contract between KTTT and IHS. The issue in this case is narrower. I must decide the threshold issue of whether IHS has a duty to consider KTO's contract proposal at all. Since IHS has taken the position that the regulations absolutely bar consideration of a proposal submitted by a tribe who does not have a reservation in a CHSDA, I do not reach the question of whether under the circumstances of this case, KTO's contract proposal would in fact breach or impair KTTT's existing contract. I conclude that the regulations do not confer an exclusive right on KTTT to contract in Maverick County, and, therefore, IHS has a duty to evaluate KTO's proposal on its merits. 6/ Finally, IHS asserts that to allow KTO to contract to provide contract health services to its members in Maverick County would result in a breakdown of CHSDA designations, which are uniformly established based on reservation boundaries. 7/ This in turn would, according to IHS, lead to an administratively unworkable situation in which IHS would be required to contract with a host of tribes for small groups of members who reside remote from the tribes' reservations, but within other tribes' CHSDAs. I disagree with both of these contentions. As I have held above, the CHSDA regulations establish criteria for determining the eligibility for contract health services of Indians who reside off reservations, but near reservations with which they maintain economic and social ties. My decision that IHS must evaluate the merits of a proposal by a tribe located outside of a CHSDA to provide services for its members who are located within that CHSDA does no violence to the regulatory scheme for determining Indians' eligibility for contract health services. The regulatory test for eligibility for services is simply not at issue in this case. Nor does my decision establish a requirement that IHS approve contract proposals by tribes located outside of CHSDAs to provide health services for members who reside within those CHSDAs. The Act provides criteria for the Secretary to decline proposals to contract. 25 U.S.C. 450f(a)(2). IHS is not required to award a contract based on a proposal which is deficient under the Act, or which fails to comply with standards adopted by the Secretary pursuant to the Act. All that I have held in this decision is that applicable regulations do not provide exclusive contract rights for residents of a CHSDA to a tribe whose reservation lies entirely or in part within that CHSDA. I do not conclude that my interpretation of the regulations would inevitably lead to inefficient overlapping contracts or multiple contracts to provide services to members of different tribes who reside within a CHSDA. 8/ IHS may continue to decline contract proposals which fail to meet statutory standards. The bases for declination specified in 25 U.S.C. 450f(a)(2) include: (1) the service to be rendered or the function to be contracted for will not be satisfactory; (2) adequate protection of trust fund resources is not assured; and (3) the proposed project or function cannot be properly completed or maintained by the proposed contract. On their face, these declination criteria would seem to be sufficiently broad to subsume declinations based on the inefficiencies inherent in a proposal or the superior efficiencies inherent in existing contracts to service a population which is the subject of a proposal. I do not make any findings in this decision as to whether KTO's proposal should be granted or declined by IHS, nor am I suggesting grounds under which IHS might decline KTO's proposal. However, a right to have one's proposal considered on the merits under the Act is not synonymous with a right to enter into a contract. My holding in this decision is narrow. I hold that IHS cannot decline KTO's contract proposal on the grounds that applicable regulations bar a tribe whose reservation does not lie entirely within or in part of a CHSDA from contracting for health services for Indians in that CHSDA. IHS might ultimately decline KTO's proposal to provide contract health services for its Maverick County members on other grounds. Grounds for declination could include any of the grounds under applicable statutory or regulatory criteria. CONCLUSION Based on the undisputed facts and the law, I conclude that IHS improperly concluded that existing regulations gave KTTT an exclusive right to contract to provide health services for Indians residing in the Maverick County, Texas, CHSDA and improperly declined to review the merits of KTO's proposal to provide contract health services to its members in Maverick County. I direct IHS to review KTO's proposal consistent with applicable statutory and regulatory criteria. _________________________ Steven T. Kessel Administrative Law Judge 1. IHS submitted the Harry Declaration and exhibits which are tabbed "A" through "S" as part of its motion for summary disposition. The undisputed material facts of this case are contained in these attachments. I cite the Harry Declaration and relevant paragraphs therein as "Harry Declaration Par. (paragraph number)." I cite to IHS exhibits as "IHS Ex. (letter designation)." Although IHS did not formally tender its exhibits or the Harry declaration as evidence, I am admitting them into the record of this proceeding, inasmuch as neither the authenticity nor the contents of these documents are disputed by KTO. In addition, I will cite to the transcript of the oral argument as "Tr. at (page)". 2. Since I conclude that IHS' declination was timely, it is unnecessary for me to find whether KTO would have been entitled to a contract had IHS untimely declined the proposal. 3. IHS contends that its return of KTO's initial proposal was not a declination and that KTO would not have been able to assert appeal rights based on IHS' return of the proposal. According to IHS, its return was merely a threshold determination as to whether a prerequisite condition for contracting had been satisfied by KTO. See Southern Indian Health Council, Inc. v. Otis R. Bowen, et al., No. CIVS 88-0240 EJG-JFM (E.D. Cal. Jan. 8, 1990). It is unnecessary for me to decide whether IHS' return of the proposal amounted to a "declination" within the meaning of the Act, because KTO voluntarily resubmitted its proposal and did not attempt to exercise its appeal rights with respect to the return. However, a bad-faith return of a proposal by IHS (which is not the case here) could arguably trigger appeal rights, which would not be triggered by a good-faith threshold determination. 4. The regulations are codified in 42 C.F.R. Part 36, Subpart C (1986). Beginning in 1988, Congress annually has imposed a moratorium on implementation by the Secretary of new regulations governing eligibility for contract health services and this moratorium presently is in effect. See Pub. L. No. 101-512, 104 Stat. 1915, 1952 (1990). However, Congress also has provided that regulations that were in effect on September 15, 1987, including regulations establishing CHSDAs effective in 1986, remain in effect during the period of the moratorium. See section 719(a) of the Indian Health Care Amendments of 1988, Pub. L. No. 100-713, 102 Stat. 4784, 4838 (1988). The CHSDA regulations in effect in 1986 were inexplicably not codified in the 1990 C.F.R. IHS has not provided an explanation for this lapse, and KTO argues that, inasmuch as the regulations were not codified, they were effectively repealed. I conclude that the failure to codify these regulations in 1990 is of no legal significance inasmuch as Congress directed the regulations which were in effect in 1987 remain in effect for the duration of its moratorium on the issuance of new regulations. 5. As I hold above, I do not have the authority to decide whether regulations adopted by the Secretary are ultra vires. Thus, while the lawfulness of the classifi-cations made by the CHSDA regulations are not at issue in this case, I would not in any event have authority to rule on them were they at issue. 6. IHS has not declined KTO's contract on the grounds that it would unlawfully breach its contract with KTTT by withdrawing a portion of the services during the life of that contract and entering into a contract with KTO to provide those services. I therefore make no finding here as to whether an asserted breach of an existing contract would fit within one of the statutory bases for declination of a proposal set forth in 25 U.S.C. 450f(a)(2). 7. Prior to KTTT being recognized by Congress as an Indian tribe, IHS contracted with KTO to supply contract health services for KTO members and KTTT members in Maverick County. At that time, there was no KTTT reservation, and Maverick County had not been designated as a CHSDA by IHS. Neither IHS nor KTO explain why IHS agreed to contract for this large group of (then) non-reservation Indians who, at the time, were not residents of a CHSDA and, therefore, not automatically entitled to contract health services under 42 C.F.R. 36.23(a)(2). In any event, the CHSDA regulations certainly have not been applied by IHS to bar tribes from contracting for non-reservation Indians situated in locales remote from reservations. KTO's former contract to provide health services to Maverick County KTO members is proof of this. 8. However, there appear presently to exist circumstances where multiple contracts have been let to service a given CHSDA. Under the regulations, the States of Alaska, Nevada, and Oklahoma are CHSDAs. 42 C.F.R. 36.22(a)(1) - (3). IHS conceded at oral argument of this case that it does not follow a "one CHSDA -- one contract" rule with respect to these CHSDAs. Tr. at 27.