Shingle Springs Rancheria, CR No. 318 (1994)

$05:Civil Money Penalty

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: Shingle Springs Rancheria, Appellant,
- v.-
Indian Health Service, Appellee and
Chapa-De Indian Health Program, Inc., and
Rumsey Rancheria, Intervenors

DATE: May 26, 1994

Docket No. C-93-020
Decision No. CR318

RECOMMENDED DECISION

This case is before me on a request for hearing filed by Appellant,
Shingle Springs Rancheria (Shingle Springs). Shingle Springs
challenges an October 9, 1992 determination by the Appellee, Indian
Health Service (IHS), to award Shingle Springs a contract to
provide health care services for its members and the unaffiliated
Indian population in El Dorado County, California, and to award
Intervenor, Chapa-De Indian Health Program, Inc., (Chapa-De) a
contract to provide health care services to members of the
Intervenor, Rumsey Rancheria (Rumsey) and to the unaffiliated
Indian population in Nevada, Sierra and Placer counties in
California.

I conducted a hearing in Sacramento, California, on July 13 - 16,
1993. The parties submitted post-hearing briefs.

I have carefully considered the evidence of record, the parties'
arguments, and the applicable law. I conclude that the October 9,
1992 determination of the IHS was lawful. Therefore, I recommend
that the determination be sustained.

BACKGROUND

On October 1, 1991, the California Area Office (CAO) of the IHS
received a proposal from Shingle Springs to contract, pursuant to
the Indian Self-Determination Act (ISDA or Act), Pub. L. 93-638, as
amended, 25 U.S.C. 450, et seq., directly with the IHS to
provide services to eligible Indians in the Chapa-De Service Area.
This Service Area consisted of the California counties of El
Dorado, Nevada, Sierra, and Placer. The proposal stated that
Shingle Springs would provide health care services to the Chapa-De
Service Area effective April 1, 1992 using leased facilities in
Auburn and Placerville. IHS Ex. 1; Tr. at 346, 740, 746 - 47. 1/

On November 12, 1991, the CAO received a contract proposal
submitted under the provisions of ISDA from Chapa-De to provide
health services to Rumsey members and all eligible Indians in
Placer, Nevada, Sierra, and El Dorado counties. IHS Ex. 2 at 1;
Tr. at 159-60. Additionally, Chapa-De proposed to serve eligible
members in Yolo county, including members of Rumsey. Chapa-De did
not propose to serve Shingle Springs' tribal members. IHS Ex. 2;
Tr. at 169, 173, 182, 185, 315, 322, 330, 580, 592, 625, 630 - 31.
Chapa-De proposed to continue operating its existing facilities in
Auburn and Placerville. Chapa-De was sanctioned to operate as a
tribal organization under ISDA based on a resolution from Rumsey
which is a federally recognized tribe. IHS Ex. 2, 4.

After the submission of Chapa-De's contract proposal, the CAO had
before it two ISDA proposals for essentially the same service
population. By regulation, IHS must approve an ISDA contract
proposal within 90 days of receipt unless, within 60 days, IHS
makes specific findings that either the services provided will be
unsatisfactory, adequate protection of trust resources is not
assured, or the proposed project of function to be contracted for
or cannot be properly completed or maintained by the contract. 25
U.S.C. 450f(a)(2). IHS requested Shingle Springs' permission to
extend the 60 day regulatory deadline, but Shingle Springs refused.
CD Ex. 9.

On December 2, 1991, the CAO accepted Shingle Springs proposal.
In the letter accepting the proposal, IHS stated that it would be
necessary for Shingle Springs to designate an individual other than
the current tribal chairperson to act as the principal agent for
Shingle Spring's contract. IHS Ex. 10. IHS' desire for another
person to act as principal agent was based on the fact that the
current tribal chairperson was, at the time, under investigation by
the Inspector General for the Department of Health and Human
Services (I.G.). Tr. at 332 - 33.

On December 17, 1991, the CAO declined Chapa-De's proposal. IHS
Ex. 11. On December 23, 1991, Chapa-De appealed the declination of
its proposal to the IHS Contract Proposal Declination Appeals Board
under 42 C.F.R. 214. The appeal was then referred to the
Departmental Appeals Board of the Department of Health and Human
Services (DAB). On December 7, 1991, Chapa-De filed a motion to
stay the award of the IHS contract to Shingle Springs pending
Chapa-De's administrative appeal. Chapa-De also filed an action in
the District Court (Chapa-De v. Sullivan, E.D. Cal. Civ. No.
S-91-1754) challenging the approval of the contract proposal of
Shingle Springs and seeking a stay of the award of such contract.
This court action was subsequently voluntarily dismissed by
Chapa-De. IHS Ex. 20.

On January 15, 1992, IHS moved for summary dismissal of Chapa-De's
appeal based on the ground that Chapa-De was not a qualified tribal
organization. IHS contended that Rumsey had not properly
retroceded from the Northern Valley Indian Health Program, the
tribal organization that previously was providing its members with
health care. 2/ Tr. at 349.

On February 28, 1992, I heard oral argument on IHS's motion via
telephone conference. IHS Ex. 21. During the conference, I made
a preliminary ruling that Chapa-De was properly qualified as a
tribal organization within the meaning of the ISDA, based on the
sanctioning resolution from Rumsey. Id.

Subsequent to my oral ruling, IHS apparently concluded it needed to
reexamine its earlier positions regarding the contract proposals of
Chapa-De and Shingle Springs. Based on my preliminary ruling, IHS
now viewed the contract proposals of Shingle Springs and Chapa-De
as competing proposals to provide services for essentially the same
area. IHS Ex. 9; Tr. at 350. IHS met with both Chapa-De and
Shingle Springs over the next several months to attempt to settle
the matter. IHS Ex. 9. On August 7, 1992, IHS proposed a
settlement. IHS Ex. 13. On September 21, 1992, the settlement was
rejected by Shingle Springs.

On October 9, 1992, the CAO issued a final revised determination
which had the effect of rejecting the parties' prior contract
proposals. IHS approved a revised contract for Chapa-De to provide
services for Rumsey members and eligible unaffiliated Indians in
the counties of Sierra, Nevada, and Placer. With regard to
eligible unaffiliated Indians in Yolo County, the CAO agreed to
redraw service area boundaries after consultation with all
interested contractors. Shingle Springs was granted a revised
contract approval to provide services for its members and
unaffiliated Indians in the county of El Dorado. IHS' October 9
determination revised the former Chapa-De service area into two
distinct areas, thus enabling Rumsey and Shingle Springs to
exercise their respective rights to contract under ISDA. As this
decision in effect declined the parties' original proposals, the
CAO offered each party the right to appeal the determination
according to 42 C.F.R. 214. On November 9, 1992, Shingle
Springs appealed the final revised determination and requested a
formal hearing in accordance with 42 C.F.R. 36.214(a). Chapa-De
did not appeal the final revised determination and withdrew its
pending request for hearing based on IHS's declination of its
November 12, 1991 contract proposal. Accordingly, on November 27,
1992, I dismissed Chapa-De's request for hearing.

On November 25, 1992, I conducted a conference call between
representatives from Shingle Springs, Chapa-De and IHS relating to
the appeal filed by Shingle Springs. During the conference, I
granted Rumsey and Chapa-De's uncontested motion to intervene in
these proceedings and established a briefing schedule. Upon review
of the parties' briefs, I conducted another telephone conference on
April 13, 1992. I informed the parties that the briefs
demonstrated that there remained material issues in dispute where
credibility needed to be assessed. Accordingly, I scheduled an
evidentiary hearing in Sacramento, California for July 13 - 16,
1993. I directed the parties to file proposed statements of the
issues. On May 28, 1993, I issued an Order which set out eight
issues that would be considered at the evidentiary hearing. I
conducted a hearing in this case in Sacramento, California on July
13 - 16, 1993.

At the hearing, I admitted into evidence the following exhibits:
IHS Ex. 1 through 25, inclusive; CD Ex. 1 through 16, inclusive; SS
Ex. 4 - 12, 15 - 18, 20 - 24, 27, 28, 30 - 33, 35, 36, 38 - 40, 42
- 52, 55 - 61, 63, 64, 66, 68, 75 - 84, 88, 89, and 91, inclusive.
SS Ex. 91 was admitted for the limited purpose of showing the
target population of Chapa-De's contract proposal. I also admitted
three Administrative Law Judge (ALJ) Exhibits into evidence as ALJ
Ex. 1, ALJ Ex. 2 and ALJ Ex. 3.

Shingle Springs withdrew SS Ex. 13, 14, 34, 37, 65, 70, 72, 73 and
74. I rejected SS Ex. 1 - 3, 19, 25, 26, 29, 41, 53, 54, 62, 67,
69, 71, 85, 86, 87, 90, 92 and 93.

In conjunction with its posthearing response brief, Shingle Springs
offered four attachments as proposed exhibits. I mark these for
identification as SS Ex. 94, 95, 96 and 97. I reject all of them
as being untimely submitted. Moreover, these proposed exhibits
were not submitted in accordance with the schedule or procedures
outlined in my April 16, 1993 Order and Notice of Hearing.
Additionally, Chapa De and IHS were unfairly prejudiced by Shingle
Springs' submission of these proposed exhibits because, with the
exception of SS Ex. 96 and 97, which are resubmissions of rejected
exhibits, they were provided no notice to examine or contest the
submission prior to Shingle Springs filing the attachments. The
following are additional reasons why I reject each of them.

SS Ex. 94 is a decision of the Comptroller General of the United
States dated February 18, 1976. Shingle Springs apparently
submitted this document for the purpose of showing that once a
contract proposal is approved under the ISDA, the award of a
contract is mandatory. SS Ex. 94 is irrelevant because it is a
decision that predates the 1988 Amendments to the ISDA and because
it does not deal with ISDA contracting for health care. Nor does
SS Ex. 94 address any of the issues as stated in my May 28, 1993
Statement of Issues to be Considered at Hearing. Even assuming
arguendo that SS Ex. 94 could be construed as a statement of
statutory intent, the fact remains that Shingle Springs could have
submitted this in accordance with either the exhaustive prehearing
or posthearing briefing processes. The issue of whether IHS is
legally bound to award a contract once they approve an ISDA
proposal has been an undercurrent throughout these entire
proceedings, and it strains credulity for me to accept Shingle
Springs' contention that SS Ex. 94 is a response to newly raised
information or argument by Chapa De and IHS. Accordingly, I reject
SS Ex. 94.

SS Ex. 95 is a Notice revising and updating the list of entities
recognized and eligible for funding and services from the Bureau of
Indian Affairs. 58 Fed. Reg. 54364 (October 21, 1993). The Notice
was apparently submitted for the purpose of showing that there are
many Alaska Indian Tribes with no defined geographic territory
which have no authority to contract under ISDA. Why Shingle
Springs believes this information to be relevant is unclear, except
as background to SS Ex. 96 and perhaps to refute IHS assertions of
the uniqueness of the presence of unaffiliated Indians in
California. SS Ex. 95, however, is not probative of the issues
before me and is rejected.

SS Ex. 96 is another Federal Register Notice entitled "Alaska Area
Guidelines for Tribal Clearances for Indian Self-Determination
Contracts." 95 Fed. Reg. 27178 (May 18, 1991). This is the same
document that had been offered at the hearing as SS Ex. 90. I
rejected this exhibit at the hearing and I reject it now for the
reasons I stated at the hearing. Tr. at 126 - 27, 520 - 27, 566 -
67. Nothing in the parties' briefs has made this document any more
relevant or probative of the issues before me than it was at the
time of the hearing, and my initial ruling on this matter stands.

SS Ex. 97 is an excerpt from the document that was previously
offered as SS Ex. 93. I rejected this exhibit at the hearing and
I reject it now for the reasons I stated at the hearing. Tr. at
142, 515 - 522, 527, 556 - 567. At the hearing, I initially
deferred ruling of SS Ex. 93 pending testimony from Shingle
Springs' witness designed to lay a foundation to support the
admission of this document into evidence. However, Shingle Springs
failed to lay a sufficient or appropriate foundation. Moreover, as
I noted at the hearing, Shingle Springs failed to overcome the
prejudice and untimeliness of their submission of this exhibit by
failing to make any showing that the document was relevant or
probative of any of the issues before me. Id.

ISSUES

1. Whether IHS' redetermination letter of October 9, 1992 to
Shingle Springs and Chapa-De constitutes a statutory declination,
pursuant to 25 U.S.C. 450f(a)(2), of Shingle Springs' October
1991 contract proposal, 3/ under the ISDA, to provide medical
services to all IHS beneficiaries in the four county area [the
former Chapa-De Service Area]. 4/

2. Whether the acceptance by IHS of Shingle Springs' contract
proposal under the ISDA in December 1991 was conditional and
whether Shingle Springs met such conditions and was in a position
to enter into such contract on January 29, 1992 to provide medical
services to all IHS beneficiaries in the four-county area by April
1, 1992. 5/3. Whether Chapa-De is a qualified "tribal
organization" for the purpose of submitting a contract proposal
under the ISDA.

4. Whether the statutory time frame for approving or
declining self determination contract proposals as set forth at 25
U.S.C. 450(f)(2) is applicable to Shingle Springs' contract
proposal of October 1991 if such contract was conditional or
overlapped with a competing proposal from Chapa-De.

5. Whether IHS has implemented IHS Policy Letter 89-4,
relating to the awarding of contracts 120 days from the date the
contract proposal was originally submitted, in such a manner that
it would bind IHS if Shingle Springs' proposal was conditional
and/or there was a competing proposal from Chapa-De which was on
appeal.

6. Whether IHS has implemented IHS Circular 88-2, relating to
"service units," in such a manner that "service areas" in the State
of California must be established or modified in accordance with
the procedures set forth in such Circular.

7. Whether IHS has adhered to designated "service areas" in
accepting self determination contract proposals in the State of
California, and in what circumstances, if any, has IHS modified or
established, on a case-by-case basis, new "service areas" in
connection with such contracts.

8. Whether IHS' letter of October 9, 1992, which modified a
prior designated service area for the provision of medical services
to IHS' beneficiaries, was in accord with IHS Circular 88-2 or
whether it was in accord with past procedures followed by IHS in
awarding contracts for self- determination in the State of
California.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The following findings contain general background information. 6/

1. IHS provides comprehensive health care for approximately
1,011,000 American Indians and Alaska Natives throughout the United
States. IHS Ex. 3.

2. IHS is responsible for administering Indian health programs
pursuant to the ISDA. 25 U.S.C. 450 et seq; IHS Ex. 3.

3. The CAO is one of 12 IHS area offices across the country and
is responsible for the comprehensive health care services provided
to IHS health care beneficiaries (beneficiaries) living in the
State of California. IHS Ex. 3.

4. CAO utilizes a Leadership Team to review all ISDA contract
proposals and for recommending to the Area Office Director whether
to approve or decline the proposal. The final decision is made by
the Area Director. Tr. at 354, 400, 402.

5. The Leadership Team is composed of the five CAO Associate
Directors, the CAO Deputy Director and the Contract Proposal
Liaison Office (CPLO). Tr. at 343.

6. Rumsey is a federally recognized Indian tribe with a land base
in Yolo County which has 31 resident members and 20 members living
in nearby areas. IHS Ex. 2 at 7.; SS Ex. 38.; CD Ex. 5, 7.

7. Chapa-De is a non-profit California corporation that has
provided health care services since 1974 to approximately 4,700 IHS
beneficiaries in the four county area currently known as the
Chapa-De Service Area. IHS Ex. 2 at 8, 3; SS Ex. 38.

8. Shingle Springs is a federally recognized Indian tribe with a
land base in western El Dorado county and has approximately 18
members residing on the rancheria. IHS Ex. 14 at 2; SS Ex. 24.
9. Shingle Springs is located immediately west-southwest of
Placerville, in El Dorado county. IHS Ex. 22 at 39.

10. The Chapa-De Service Area consists of El Dorado, Nevada,
Placer and Sierra counties in Northern California. The counties
are adjacent to each other with Sierra County being the
northernmost, and in sequence to the south are the counties of
Nevada, Placer, and El Dorado. Ex. 3, 22 at 39.

11. Approximately 25 percent of the eligible beneficiaries in the
Chapa-De Service Area live in El-Dorado County. IHS Ex. 3.

12. Approximately 75 percent of the eligible beneficiaries in the
Chapa-De Service Area live in Sierra, Nevada, and Placer counties.
IHS Ex. 3.

13. The largest concentration of eligible beneficiaries in the
Chapa-De Service Area is in Placer County, near Auburn, California.
IHS Ex. 3.

14. The Chapa-De Service Area contains two health care facilities
currently operated by Chapa-De: a comprehensive facility in Auburn
located in western Placer County and a smaller satellite clinic in
Placerville located in western El Dorado County near the Shingle
Springs Rancheria. IHS Ex. 3.

15. In 1974, Chapa-De began providing services to Indians in the
Chapa-De Service Area after receiving IHS funding pursuant to a
subcontract with the California Rural Indian Health Board (CRIHB).
IHS Ex. 2.

16. In 1989, after being sanctioned as a tribal organization by
Shingle Springs Rancheria, Chapa-De began contracting directly with
IHS pursuant to a contract under the ISDA. IHS Ex. 2 at 8.
17. Since 1989, Rumsey has been a member of an eight tribe
consortium that sanctions the Northern Valley Indian Health
Program, Inc. SS Ex. 38.

18. NVIH provides comprehensive health care services to
approximately 8,000 eligible Indians in an eight county area
including Yolo county. IHS Ex. 4, 5; CD Ex. 7.

19. Members of Rumsey receive health care services in NVIH's
Oroville clinic, located approximately 90 minutes from the
rancheria. IHS Ex. 3.

20. At times, members of Rumsey also would receive health care
services from Chapa-De's Auburn clinic, which is located 30 - 45
minutes from the rancheria. IHS Ex. 2 at 8.

21. In November 1991, Rumsey decided to withdraw from NVIH and
sanction Chapa-De to provide health care services for its members.
IHS Ex. 6.

22. Unaffiliated Indians are Indians who are not members of a
federally recognized tribe. Tr. at 317, 809.

23. Eligible unaffiliated Indians in California are entitled to
IHS services but have no right to contract to provide their own
health care services under the ISDA. See, 25 U.S.C. 1679(b)(2)
and (3).

24. No federally recognized tribe has an absolute right to be
awarded an ISDA contract to provide health care services to
unaffiliated Indians to the exclusion of any other Indian tribe who
may propose to contract for them. Tr. at 149 - 50; See, 25 U.S.C.
1679(b)(2) and (3).

25. The current Chapa-De Service Area contains approximately 4700
eligible beneficiaries for medical services of which almost all are
unaffiliated with any federally recognized tribe. IHS Ex. 2 at 8,
3.

The following findings set forth the procedural history.

26. On June 27, 1991, Shingle Springs notified Chapa-De that it
wished to contract directly with IHS to provide health care
services to Shingle Springs' members and to all other eligible IHS
beneficiaries in the Chapa-De Service Area. IHS Ex. 7.

27. Chapa-De's contract to provide health care services in the
Chapa-De Service Area was due to expire on March 31, 1992. SS Ex.
17.

28. On June 28, 1991, Shingle Springs notified IHS that, as of
March 31, 1992, it no longer would authorize Chapa-De to contract
with IHS on its behalf and wished to contract with IHS directly
under the ISDA to provide health services in the Chapa-De service
area. SS Ex. 17.

29. On July 19, 1991, Chapa-De responded to Shingle Springs
correspondence by acknowledging Shingle Springs' right to contract
with IHS to provide health care services to its own tribal members,
but rejected Shingle Springs' assertion that Shingle Springs had a
superior right to provide services to the unaffiliated Indians in
the Chapa-De service area and further stated that Chapa-De intended
to submit a proposal to the CAO for renewal of its contract. IHS
Ex. 7, 8.

30. On October 1, 1991, the CAO received an ISDA contract proposal
from Shingle Springs in which Shingle Springs proposed to contract
directly with IHS to provide services to its members and "eligible
Indians" in the four county Chapa-De area beginning April 1, 1992.
IHS Ex. 1; SS Ex. 24 at 142; Tr. at 346.

31. In its October 1, 1991 proposal, Shingle Springs indicated
that it would continue to provide the same comprehensive health
care program as is being provided by Chapa-De, but would lease
facilities in Auburn and Placerville. IHS Ex. 1 at 3; Tr. at 740,
746 - 47.

32. Shingle Springs proposed to lease facilities in Auburn and
Placerville because Chapa-De would not allow Shingle Springs to use
Chapa-De's health clinics. Tr. at 740, 746 - 47.

33. In its October 1, 1991 proposal, Shingle Springs did not
propose to contract to provide medical services for members of any
other federally recognized tribe. IHS Ex. 1.

34. On November 6, 1991, Chapa-De obtained a sanctioning
resolution from the federally recognized tribe of Rumsey Rancheria.
IHS Ex. 2, 6; Tr. at 159 - 60.

35. Any organization proposing to contract to provide health care
services to Indians under the ISDA must have a sanctioning
resolution from a federally recognized tribe. ISDA, 25 U.S.C.
450(b)(l), 450(f)(a).

36. On November 12, 1991, the CAO received an ISDA contract
proposal from Chapa-De to provide health care services to Rumsey
tribal members "and other eligible Indians residing in Yolo,
Placer, Nevada, Sierra, and El Dorado counties". IHS Ex. 2 at 6;
Tr. at 159 - 60.

37. The term "eligible Indians" is customarily used by federally
recognized tribes in the State of California to refer to Indians
who are eligible to receive IHS services but are not members of any
federally recognized tribe located in the geographical area which
is the subject of the contract proposal. Tr. at 317.

38. In its November 12, 1991 proposal, Chapa-De did not propose to
provide services for members of Shingle Springs. IHS Ex. 2, 3; Tr.
at 137, 147 - 49, 162, 169, 173, 182, 185, 315, 322, 330, 580, 592,
594, 618 - 621, 625, 630 - 632, 808 - 809.

39. The contract proposals of Shingle Springs and Chapa-De
contained competing provisions to include "eligible Indians"
located in the same four county geographical area. Findings 30,
31, 33, 36; IHS Ex. 1, 2.

40. Since neither Shingle Springs nor Rumsey proposed to contract
for members of any federally recognized tribe other than their own,
each tribe was the sole beneficiary of its contract proposal and
neither needed an authorizing resolution from the other pursuant to
25 U.S.C. 450(b)(l), 450f(a).

41. IHS is required to approve a contract proposal submitted under
the Act within 90 days of the date it receives the proposal, unless
it rejects a proposal within 60 days in accordance with the
declination criteria. 25 U.S.C. 450f(a)(2).

42. The CAO was reviewing Shingle Springs' proposal when it
received Chapa-De's proposal. The CAO had never before received,
within 60 days of receipt of a proposal, an overlapping proposal
that proposed to serve much of the same area and the same
unaffiliated Indians. Findings 31, 36; Tr. at 153 - 162, 347, 640.

43. IHS requested Shingle Springs' permission to extend the 60-day
deadline. CD Ex. 8.

44. Shingle Springs refused to grant IHS an extension of its
60-day deadline. CD Ex. 9.

45. Upon review of Shingle Springs' proposal, the CAO Leadership
Team recommended that the Area Director accept the proposal. Tr.
at 348.

46. The CAO Leadership Team raised a number of concerns relating
to Shingle Springs' resolution, management system, accounting
system, financial system and lack of a facility but determined that
none of these concerns warranted declination of the contract
proposal. Tr. at 372 - 75, 586 - 87.

47. Although aware of the investigation of Ms. Elsie Shilin, the
Tribal Chairperson of Shingle Springs, by the I.G., the CAO did not
make any recommendation to the Area Director concerning this
matter. Tr. at 584 - 85, 653.

48. The principal agent is the person who negotiates, executes and
administers the contract on behalf of the Tribe. Tr. at 332 - 33.

49. The investigation involving Ms. Shilin concerned the misuse of
federal funds from Indian tribal organizations and falsification of
travel vouchers of such magnitude that the I.G. referred the
information it had obtained regarding Ms. Shilin's misuse of funds
to the United States Attorney for prosecution. Tr. at 288, 290,
325 - 26, 402. CD Ex. 16 at 1 - 4.

50. Ms. Shilin was charged with four counts of violating 18 U.S.C.
1163 (embezzlement and theft from an Indian Tribal Organization in
an amount less than $100) and two counts of violating 18 U.S.C.
1003 (knowingly and fraudulently demanding a sum not exceeding $100
in the public stocks of the United States by virtue of a false
instrument). CD Ex. 16.

51. Five of the six counts against Ms. Shilin were dismissed. CD
Ex. 16.

52. Ms. Shilin pled guilty to one of the six counts, specifically
a violation of 18 U.S.C. 1163 (embezzlement and theft from an
Indian Tribal Organization in an amount less than $100). CD Ex.
16.

53. The CAO was concerned that the pending investigation of
Shingle Springs' Tribal Chairperson put into question whether the
interests of IHS and the intended beneficiaries of the proposed
ISDA contract would be adequately protected. Tr. at 408, 440.

54. The CAO was faced with an impending regulatory deadline to
accept or decline Shingle Springs' ISDA contract proposal, Shingle
Springs' refusal to grant an extension of the deadline, an (at that
time unresolved) investigation of the principal agent for Shingle
Springs, and an otherwise valid contract proposal by Shingle
Springs. SS Ex. 49; Findings 39 - 52.

55. IHS, through the CAO, is responsible for assuring that Shingle
Springs' ISDA contract proposal is satisfactory and that the funds
allocated would be used for the purpose intended. 42 C.F.R.
36.208, See 25 U.S.C. 450a, 450c, 450f.

56. IHS, through the CAO, has the responsibility under the ISDA to
accord all federally recognized Indian tribes the right to
self-determination. 25 U.S.C. 450f(a)(1).

57. IHS, through the CAO, has the obligation to maintain the
federal government's unique and continuing responsibility to the
Indian people as a whole. 25 U.S.C. 450a(b).

58. Ensuring that ISDA contract monies are used for the purpose
for which they were intended is a component of IHS maintaining the
federal government's unique and continuing responsibility to the
Indian people. Finding 57; 25 U.S.C. 450a, 450c.

59. The CAO's December 2, 1991 letter stated that the next step in
the process is to "prepare for contract negotiations and contract
award." IHS Ex. 10.

60. The CAO's December 2, 1991 letter was not an award of the
contract to Shingle Springs. IHS Ex. 10; Finding 59.

61. Shingle Springs' contract proposal indicated that it would
begin to provide health care services as of April 1, 1992. IHS Ex.
1.

62. On January 30, 1992, Shingle Springs lacked the facilities
necessary to provide health care services in accordance with its
contract proposal. IHS Ex. 1; Tr. at 259 - 60, 373, 386 and 401.

63. Shingle Springs could not have begun to provide health care
services as of April 1, 1992, as it proposed to do in its contract
proposal. Findings 61, 62; SS Ex. 35, 40, 55, 57 - 58; IHS Ex. 19.

64. Shingle Springs could not have complied with the terms of its
contract proposal even if IHS had awarded the contract as
originally configured to Shingle Springs. Finding 63.

65. When IHS declines a contract proposal and the tribe requests
technical assistance, IHS is obligated to provide it to the tribal
organization to overcome deficiencies in a tribe's contract
proposal. 25 U.S.C. 450f(b)(2).

66. IHS informed Shingle Springs that their ISDA proposal did not
adequately address the requirements of the leasing priority system
(lps) and provided instruction to Shingle Springs as to how to
revise their proposal. SS Ex. 20.

67. The CAO Leadership Team reviewed the Chapa-De proposal and
recommended to the CAO Director that the proposal be declined
because of Rumsey's failure to properly withdraw its previous
resolution supporting receipt of medical service from Northern
Valley before sanctioning Chapa-De to provide such services. Tr.
at 348 - 49, IHS Ex. 9.

68. On December 17, 1991, CAO declined Chapa-De's contract
proposal. IHS Ex. 11.

69. The CAO declined Chapa-De's proposal on the bases that: 1)
Shingle Springs' proposal was more satisfactory in meeting the
self-determination and health care goals under the ISDA; and 2)
since CAO had already accepted Shingle Springs' proposal, the
proposed project or function could not be properly completed or
maintained by Chapa-De. IHS Ex. 11.

70. IHS' declination of Chapa-De's proposal was based primarily on
IHS' incorrect determination at that time that Chapa-De was not a
qualified tribal organization within the meaning of the ISDA. Tr.
at 349; IHS Ex. 9.

71. IHS initially believed that Rumsey could not sanction Chapa-De
to submit an ISDA proposal and continue its support for the
Northern Valley program. Tr. at 348 - 49.

72. On December 23, 1991, Chapa-De appealed its contract
declination to the Departmental Appeals Board.

73. On December 27, 1991, Chapa-De filed a motion to stay the
award of the ISDA contract to Shingle Springs pending
administrative appeal.

74. On January 15, 1992, IHS moved for dismissal of Chapa-De's
administrative appeal, primarily on the ground that Chapa-De was
not a qualified tribal organization and therefore was not entitled
to be awarded a contract under the ISDA. Tr. 349; IHS Ex. 9.

75. I heard oral arguments in this case on February 28, 1992, at
which time I made a preliminary oral ruling that Chapa-De was a
qualified tribal organization within the meaning of ISDA. Tr. at
349; IHS Ex. 21.

76. Subsequent to my preliminary ruling, IHS changed its position
and determined that Chapa-De was a qualified tribal organization
within the meaning of ISDA and therefore had rights to contract
under the Act to provide health care services to Indians. IHS Ex.
9; Tr. at 350; Findings 74, 75.

77. Subsequent to my preliminary ruling, IHS viewed Shingle
Springs' October 1, 1991 and Chapa-De's November 12, 1991 contract
proposals as valid competing proposals. IHS Ex. 9, 14; Tr. at 350.

78. IHS conducted negotiations with Chapa-De and Shingle Springs
over the next several months. IHS Ex. 9; Tr. at 350.

79. Chapa-De offered to allow Shingle Springs to take over
Chapa-De's clinic in El Dorado County. IHS Ex. 9 at 5.

80. IHS proposed a settlement agreement on August 7, 1992. IHS Ex.
13.

81. Shingle Springs rejected the settlement agreement on September
21, 1992. IHS Ex. 9.

82. On October 9, 1992, CAO made a final revised determination as
to Shingle Springs' and Chapa-De's contract proposals. IHS Ex. 14.

83. In its October 9, 1992 revised determination, CAO concluded
that both Shingle Springs and Chapa-De had submitted acceptable
proposals for the same program or service area and divided the
program to best approximate the expected service population for the
respective facilities while assuring that both programs would
operate satisfactorily. IHS Ex. 14.

84. Under IHS' October 9, 1992 revised determination, Chapa-De
would be awarded a contract to provide health care services to
Rumsey members and the eligible unaffiliated Indians in Placer,
Nevada and Sierra counties. IHS Ex. 14.

85. Under IHS' October 9, 1992 revised determination, Shingle
Springs would be awarded a contract to provide health care services
to its members and the eligible unaffiliated Indians in El Dorado
County. IHS Ex. 14.

86. In its revised determination, IHS noted that Shingle Springs
would have to address the availability of an acceptable facility
before it could be awarded a contract. IHS Ex. 14.

87. In its revised determination, IHS indicated that, at some
unspecified point in the future, it would redraw the service area
boundaries to include Yolo County. IHS Ex. 14.

88. Shingle Springs appealed IHS' final revised determination and
requested a formal hearing pursuant to 42 C.F.R. 36.214(a). IHS
Ex. 14.

89. At no stage in these proceedings has Shingle Springs contested
the apportionment or allocation of the program or service area
between itself and Chapa-De as set forth in IHS's revised
determination. Statement of Issues; Tr. at 11 - 12.

90. Shingle Springs contends that it should be awarded the contract
it originally proposed on October 1, 1991 and that Chapa-De is not
a qualified tribal organization for purposes of submitting a
contract proposal under the ISDA to serve any part of the Chapa-De
Service Area. Tr. at 8 - 11.

Chapa-De is a qualified "tribal organization" for purposes of
submitting a contract proposal under the ISDA.

91. For purposes of this Decision, a self-determination contract is
a contract involving a tribal organization and the Secretary of
Health and Human Services for the planning, conduct and
administration of programs or services which are otherwise provided
to Indian tribes and their members pursuant to federal law. 25
U.S.C. 450b(j).

92. IHS is required, 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, including construction
programs. 25 U.S.C. 450f(a)(1) (emphasis added).

93. For purposes of ISDA contracting, an Indian tribe is any Indian
tribe, band, nation, or other organized group or community, which
is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians. 25 U.S.C. 450b(e).

94. For purposes of ISDA contracting, an Indian is a person who is
a member of an Indian tribe. 25 U.S.C. 450b(d).

95. For purposes of ISDA contracting, a tribal organization is a
recognized governing body of any Indian tribe; any legally
established organization of Indians which is controlled,
sanctioned, or chartered by such governing body or which is
democratically elected by the adult members of the Indian community
to be served by such organization and which includes the maximum
participation of Indians in all phases of its activities, provided,
that in any case where a contract is let or grant is made to an
organization to perform services benefiting more than one Indian
tribe, the approval of each such Indian tribe shall be a
prerequisite to the letting or making of such contract or grant.
25 U.S.C. 450b(l) (paraphrase) (emphasis added).

96. Rumsey is a federally recognized Indian tribe within the
meaning of the ISDA. Finding 93; CD Ex. 7; 25 U.S.C. 450f; Tr.
at 579 - 81.

97. In Chapa-De's November 12, 1991 ISDA contract proposal, Rumsey
stated that it would be withdrawing its sanctioning resolution from
Northern Valley Indian Health, Inc., and giving an authorizing
resolution to Chapa-De. IHS Ex. 2 at 7 - 8.

98. On November 6, 1991, Rumsey adopted Resolution No. 11-06-91-1,
in which, effective March 31, 1992, Rumsey withdrew its resolution
sanctioning Northern Valley Indian Health, Inc., as a tribal
organization to provide services to Rumsey members and other
eligible Indians. CD Ex. 7; IHS Ex. 6, 9.

99. Effective March 31, 1992, Rumsey designated Chapa-De as a
tribal organization for purposes of providing comprehensive health
care to Rumsey members and other eligible Indians in Yolo, Sierra,
Nevada, El Dorado, and Placer Counties, and authorized Chapa-De to
apply for, negotiate, and enter into an ISDA contract for that
purpose. CD Ex. 7 at 2; IHS Ex. 6, 9.

100. As of March 31, 1992, Chapa-De is a qualified tribal
organization for purposes of contracting for the purposes of
providing comprehensive health care to Rumsey members and other
eligible Indians in Yolo, Sierra, Nevada, El Dorado and Placer
Counties. Findings 95 - 99.

101. Chapa-De did not propose to provide comprehensive health care
services to the members of any of the tribes in those counties
which have designated another provider for such services. CD Ex.
7; IHS Ex. 2.

102. Chapa-De's ISDA contract proposal did not propose to provide
services to Shingle Springs' tribal members. IHS Ex. 2.

103. Chapa-De's ISDA contract proposal proposed to serve much of
the same area as Shingle Springs' ISDA proposal. IHS Ex. 2.

104. Chapa-De's proposal did not contravene the proviso in 25
U.S.C. 450(b)(l), since the contract proposal did not propose to
benefit more than one Indian tribe. See, Kickapoo Tribe of
Oklahoma v. IHS, Decision of the Director of IHS (May 22, 1992).

105. Chapa-De's ISDA contract proposal competed with Shingle
Springs' ISDA proposal for the right to provide services to a large
number of eligible Indians who were unaffiliated with any federally
recognized tribe. Findings 99, 102, 103; IHS Ex. 9.

106. Shingle Springs does not "benefit," within the meaning of 25
U.S.C. 450(b)(l), from Chapa-De's proposal to provide health
services merely because Shingle Springs' tribal members would be
eligible to obtain health care services pursuant to Chapa-De's ISDA
contract proposal. Kickapoo at 8 - 9.

107. There is no requirement imposed by ISDA, its regulations, or
the Director's decision in Kickapoo which prohibits Rumsey, through
Chapa-De, from submitting a ISDA contract proposal to provide
medical services for its members and other eligible Indians in the
four county area where Shingle Springs Rancheria is located.
Findings 91 - 106.

The statutory time frame for approving or declining
self-determination proposals as set forth in 25 U.S.C. 450f(2) is
applicable to Shingle Springs' contract proposal of October 1991,
but IHS was not required to award a contract based on acceptance of
Shingle Springs' proposal because it overlapped with a competing
proposal from Chapa-De.

108. The ISDA mandates that IHS recognize the right of each
federally-recognized Indian tribe to contract for the delivery of
health services. 25 U.S.C. 450a.

109. IHS was faced with competing contract proposals from Shingle
Springs and Chapa-De. Findings 39, 77, 101, 102, 105 - 07.

110. IHS had until December 2, 1991 to decline Shingle Springs'
proposal based on one of the enumerated statutory criteria. IHS
Ex. 1, 3; 25 U.S.C. 450f(2).

111. IHS had until January 11, 1992 to decline Chapa-De's contract
proposal based on one of the enumerated statutory criteria. IHS
Ex. 2, 3; 25 U.S.C. 450f(2); Finding 41.

112. Shingle Springs contract proposal was submitted on October 1,
1991, prior to the submission of Chapa-De's contract proposal on
November 12, 1991. Findings 36, 38, 42.

113. The 60-day deadline was December 2, 1991 for Shingle Springs'
proposal and January 11, 1992 for Chapa-De's proposal. Findings
30, 36, 41.

114. Shingle Springs refused to give IHS permission to extend the
60 day deadline. CD Ex 9.

TL.R IHS accepted Shingle Springs' proposal within the 60 day
deadline. IHS Ex. 10; Finding 113.

116. As a general principle of federal contract law, a bid protest
must be resolved before a contract can be executed. Ameron v.
United States Army Corps of Engineers, 809 F.2d 979 (1986).

117. As a general principle of federal contract law, an agency is
authorized to suspend the procurement process pending its
resolution of a bid protest. Honeywell, Inc. v. U.S., 870 F.2d 644
(Fed. Cir. 1989); Dairy Maid Dairy, Inc., v. U.S., 837 F. Supp.
1370 (E.D. Va. 1993).

118. An agency's power to administer a congressionally created
program necessarily requires the formulation of policy and the
making of rules to fill any gap left, implicitly or explicitly, by
Congress. Morton v. Ruiz, 415 U.S. 199, 231 (1973) (Morton).

119. The Court's holding in Morton does not stand for the
proposition that an agency must, in all instances, follow its own
internal procedures. Morton.

120. The Court's holding in Morton is limited to the specific facts
of Morton. Lincoln v. Vigil, 113 S. Ct. 2024 (1993), at 2035.

121. The Court's holding in Morton does not support Shingle
Springs' position that IHS was compelled in this case to award
Shingle Springs' ISDA proposal within 60 days of receipt of the
proposal. Morton; Finding 120.

122. An agency's attempt to harmonize inconsistent statutory
provisions is sustainable if the agency acts in a reasonable and
responsible manner. Citizens to Save Spencer County v. EPA, 600
F.2d 844, 872, 890 (D.C. Cir. 1979).

123. Rules of agency organization and general statements of an
agency's policy are exempt from the APA requirement of notice and
comment rulemaking and are unreviewable by the courts. Lincoln v.
Vigil, 113 S.Ct. 2024, 2031 - 2034 (1993); 553(b)(A) of the APA.

124. An agency's allocation of lump sum appropriations is
unreviewable. Lincoln at 2031 - 2034.

125. The special trust relationship between IHS and the Indian
people does not limit IHS' discretion to reorder its priorities
from serving a subgroup of beneficiaries to serving the broader
subgroup of Indians nationwide. Lincoln at 2031 - 2034.

126. Shingle Springs and Chapa-De's competing proposals could not
both be properly maintained within the meaning of 42 U.S.C.
450f(2)(c), because they proposed to serve almost identical
geographic areas containing essentially the same eligible Indians
and IHS could not award two ISDA contracts to serve the same areas
and service populations. Findings 30, 33, 36, 39, 40, 77, 103 -
07.

127. IHS had to choose between Chapa-De's and Shingle Springs'
competing proposals. Finding 126.

128. A prospective ISDA contractor is not automatically entitled
to an award of the contract merely because its proposal is
approved. 25 U.S.C. 450f(2); Findings 108 - 127.

129. IHS complied with the regulatory deadline in the face of
competing proposals from Shingle Springs and Chapa-De. Findings
109, 115.

130. Chapa-De is entitled, pursuant to 42 C.F. R. 36.214, to
appeal the IHS declination of its November 12, 1991 contract
proposal to IHS' Contract Proposal Declination Appeals Board and
ultimately, if necessary, to the Director of IHS to ensure that the
declination was proper and in accordance with applicable statutory
and regulatory guidelines. 25 U.S.C. 450f(b)(3).

131. Chapa-De promptly appealed IHS' declination of its ISDA
contract proposal. IHS Ex. 11; Tr. at 351.

132. IHS could not award Shingle Springs an ISDA contract nor
implement Shingle Springs' proposal without adversely affecting
Chapa-De's right to contest IHS' declination of Chapa-De's ISDA
proposal. Findings 108 - 115, 126 - 131.

133. The Secretary of HHS, through the Director of IHS, is directed
by statute to enter into self-determination contracts with all
tribes and tribal organizations who have a valid tribal resolution.
25 U.S.C. 450f(a)(1).

134. Both Chapa-De and Shingle Springs had valid tribal
resolutions. Findings 8, 34, 96, 97, 100.

135. IHS could not fulfill its statutory mandate by awarding all of
the Chapa-De Service area to Shingle Springs and denying Chapa-De
its right to contract under ISDA. 25 U.S.C. 450f(a)(1).

136. IHS could not fulfill its statutory mandate by awarding all of
the Chapa-De Service Area to Chapa-De and denying Shingle Springs
its right to contract under the ISDA. 25 U.S.C. 450f(a)(1).

137. IHS was faced with a novel and unique situation, not addressed
by the ISDA or the regulations, of two tribes proposing to contract
for almost the exact same areas and provide services to roughly the
same service population of unaffiliated Indians. Tr. at 153, 162;
Findings 103, 105.

138. Shingle Springs is entitled to contract under the ISDA to
provide services for its own tribal members. Finding 92; 25 U.S.C.
450f(a)(1).

139. Chapa-De is entitled to contract under the ISDA to provide
services for its Rumsey tribal members. Finding 92; 25 U.S.C.
450f(a)(1).

140. The ISDA does not contemplate nor does it account for the
presence of eligible unaffiliated Indians. Rationale. 7/

141. Unaffiliated Indians cannot provide a sanctioning resolution
to a health care provider that would enable that provider to
contract to provide services to them under the ISDA. 25 U.S.C.
450, 450f.

142. Neither Chapa-De nor Shingle Springs can be endorsed by tribal
resolution of the eligible unaffiliated Indians. Findings 23, 141.

143. Neither Chapa-De nor Shingle Springs has a superior right to
obtain an ISDA contract to provide services to the eligible
unaffiliated Indians. Findings 91 - 107, 126 - 42.

144. IHS has discretionary authority to take appropriate actions to
carry out the principles of self-determination, as set forth in the
ISDA, in making its determination as to how to allocate resources
with regard to the competing proposals submitted by Shingle Springs
and Chapa-De. Findings 91 - 143.

145. Dividing the eligible unaffiliated Indians between Chapa-De
and Shingle Springs contract proposals is left to the discretion of
IHS. Findings 91 - 144.

IHS has not implemented IHS Policy Letter 89-4, relating to
awarding contracts 120 days from the date the contract proposal was
originally submitted, in such a manner that it would bind IHS given
the presence of a competing proposal and a pending appeal from
Chapa-De.

146. IHS Policy Letter 89-4 provides guidance to IHS contract
officers on implementing "contracts, other than construction
contracts," under ISDA. SS Ex. 10.

147. IHS Policy Letter 89-4 provides for the adoption of a 120-day
goal for IHS to issue a contract award, and further provides that
although IHS intends to observe the time frames, the time frames
may be extended at the request of an Indian tribe or tribal
organization, or by IHS with the consent of the Indian tribe or
tribal organization. SS Ex. 10 at 2.

148. Administrative instructions issued periodically by IHS to its
officers and employees are found primarily in the Indian Health
Service Manual and the Area Office and Program Office supplements.
These instructions are operating procedures to assist officers and
employees in carrying out responsibilities, and are not regulations
establishing program requirements which are binding upon members of
the general public. 42 C.F.R. 36.2.

149. IHS Policy Letter 89-4 is a letter from the Acting Director of
IHS to IHS contracting officers. SS Ex. 10.

150. The purpose of IHS Policy Letter 89-4 is to provide guidance
on implementation of the 1988 amendments to the ISDA. SS Ex. 10.

151. IHS Policy Letter 89-4 is an administrative instruction as
defined by the regulations. Findings 146 - 50; 42 C.F.R. 36.2.

152. IHS Policy Letter 89-4 does not establish requirements which
are binding upon members of the general public. IHS Ex. 10; 42
C.F.R. 36.2; Findings 146 - 51 .

153. IHS Policy Letter 89-4 provides that an ISDA contract shall be
awarded within 120 days from the date the proposal is submitted.
SS Ex. 10; Tr. at 259.

154. It is routine for ISDA contract proposals to be modified
during the period after the proposal has been approved but before
the contract is awarded. Tr. at 258.

155. It is routine for ISDA contract proposals to not be awarded
within 120 days in cases where the proposal is modified. Tr. at
258.

156. IHS Policy Letter 89-4 is an internal policy guideline to be
followed by IHS contracting officers to ensure that ISDA contract
proposals do not languish in the system. Tr. at 258.

157. There is no language contained in IHS Policy Letter 89-4 that
would indicate that it was intended to limit IHS discretion in
awarding ISDA contracts. SS Ex. 10.

158. IHS' policy has been to attempt to comply with its internal
120-day guideline contained in Policy Letter 89-4. Tr. at 260 -65,
413; Finding 156.

159. There is no language contained in IHS Policy Letter 89-4
that would indicate that it was meant to overrule IHS discretion in
dealing with the unique and novel situations such as that presented
by the overlapping contract proposals from Shingle Springs and
Chapa-De in awarding ISDA contracts. SS Ex. 10.

160. IHS Policy Letter 89-4 does not mandate that an ISDA contract
should be awarded within 120 days. SS Ex. 10; Findings 146 - 59.

161. IHS Policy Letter 89-4 does not mandate that an ISDA contract
should be awarded in the face of competing proposals sanctioned by
two federally recognized tribes. Findings 146 - 60.

162. There is no language contained in IHS Policy Letter 89-4 that
would indicate that it was meant to be controlling where IHS had
approved a contract to a federally recognized tribe and declined an
overlapping proposal from a competing tribe which had appealed the
declination. SS Ex. 10.

163. There is no language contained in IHS Policy Letter 89-4 that
would indicate that it was meant to mandate that IHS award a
contract where such award would serve to moot the rights of a
federally recognized tribe to appeal an ISDA contract declination.
SS Ex. 10.

164. IHS Policy Letter 89-4 has not been implemented by IHS in such
a way as to moot the rights of a federally recognized tribe to
appeal an ISDA contract declination. SS Ex. 10; Tr. at 153;
259-60; 319.

165. IHS Policy Letter 89-4 should be read in accordance with the
ISDA, and, to the extent that it is contrary to the ISDA, the ISDA
is controlling.

166. IHS Policy Letter 89-4 does not and cannot be read to overrule
each federally recognized tribe's right to self-determination under
the ISDA.

167. IHS Policy Letter 89-4 has not been implemented by IHS in such
a way as to overrule any tribe's right to self-determination under
the ISDA. Findings 146 - 66.

168. Neither ISDA nor the implementing regulations require IHS to
award an ISDA contract within 120 days from the date the contract
proposal is submitted. 25 U.S.C. 450 et. seq.; 42 C.F.R.
36.201 et. seq.

169. On January 30, 1992, the Director of the CAO informed Shingle
Springs that he would not apply the 120 day timetable set out in
Policy Letter 89-4 because of the "special situation" created by
the competing proposals from two qualified contractors and the
pending appeal by Chapa-De. CD Ex. 56; Tr. at 153.

170. IHS Policy Letter 89-4 is a general statement of IHS's goal of
processing contracts from submission to award within 120 days. SS
Ex. 10; Tr. at 153; Findings 146 - 69.

171. IHS has not implemented Policy Letter 89-4 in such a manner to
bind IHS in all situations to award a contract within 120 days. SS
Ex. 10; Tr. at 153 - 62, 259 - 60, 319; 42 C.F.R. 36; Findings
146 - 70.

172. IHS had never before encountered competing ISDA proposals
where two federally recognized tribes proposed to provide services
for the same geographic area. Tr. at 153 - 62.

173. IHS had never before encountered competing ISDA proposals
where a federally recognized tribe had appealed IHS' declination of
their proposal and where IHS had already approved the contract
proposal of another tribe. Tr. at 153 - 62.

174. IHS believed that it was protecting the rights of both Shingle
Springs and Rumsey by not awarding the contract within the 120 day
period. Tr. at 153, 262, 644 - 45, 689; IHS Ex. 24.
175. IHS has not implemented Policy Letter 89-4 in such a manner to
bind IHS to award a contract in a situation IHS had never before
encountered. Tr. at 153 - 62; Findings 146 - 74.

176. IHS Policy Letter 89-4 has not been implemented by IHS in such
a manner so that IHS abdicates its responsibility to properly
administer and award ISDA contracts. Findings 146 - 75.
177. IHS has not implemented Policy Letter 89-4 in such a manner
that it served to bind IHS in all situations. Findings 146 - 76.
178. IHS has not implemented Policy Letter 89-4 in such a manner
that it served to bind IHS in this case to award Shingle Springs a
contract within 120 days of the time Shingle Springs submitted its
proposal. Findings 146 - 77.

179. IHS' actions in this case in not following the 120-day
guideline contained in Policy Letter 89-4 were a legitimate
exercise of IHS' discretionary authority. Findings 116 - 78.

IHS has not implemented IHS Circular 88-2, relating to "service
units", in such a manner that "service areas" in the State of
California must be established or modified in accordance with the
procedures set forth in such Circular.

180. IHS Circular 88-2 sets forth IHS policy and procedures with
respect to the establishment of and changes in the boundaries of
IHS-operated and tribally-operated service units. IHS Ex. 16 at 1.

181. It has been the practice of the CAO to allow tribes to
contract for part of a service area. Tr. at 216 - 233.

182. It has been the practice of the CAO to allow a tribe from one
service area to become part of another service area. Tr. at 228 -
230.

183. It is the practice of the CAO not to use service areas as a
bar to ISDA contracting, but rather to substantively review each
ISDA proposal pursuant to the declination criteria. Tr. at 353
-54, 382.

184. Anthony D'Angelo (AD) is the Director of IHS' Division of
Program Statistics. Tr. at 192.

185. AD's office manages the statistical data bases that are used
by IHS to produce reports on the health status of American Indians.
Tr. at 193.

186. AD gave clear, concise and comprehensive testimony. Tr. at
192 - 216.

187. AD demonstrated a detailed knowledge of IHS policies and
practices through his testimony. Tr. at 192 - 216; Findings 184 -
86.

188. AD demonstrated a detailed knowledge of IHS Circular 88-2, its
background and implementation. Tr. at 192 - 216. Findings 184 -
87.

189. AD is a credible witness. Tr. at 192 - 216; Findings 184 -
88.

190. AD is responsible for making a recommendation to the Director
of IHS whenever an IHS Area Office requests a change of a service
unit pursuant to Circular 88-2. Tr. at 195.

191. Examples of circumstances that would require IHS to change
service unit boundaries include: establishment of a new tribe; a
change in the utilization pattern of the service unit; a new
contractual relationship pursuant to an ISDA contract. Tr. at 195.

192. Circular 88-2 becomes relevant only after the IHS Area Office
establishes an ISDA contracting relationship with the tribe. Tr. at
197, 207.

193. Circular 88-2 was created to coordinate the process for
assigning administrative codes for statistical purposes for both
IHS and tribally operated service units. Tr. at 193.

194. Circular 88-2 is intended to assist IHS in designating service
units for statistical reporting and is independent of ISDA
contracting. Tr. at 202.

195. Prior to 1988, tribally operated service units, which are not
entities of the federal government, could not be assigned
administrative codes for statistical purposes. Tr. at 193 - 94.

196. Prior to 1988, IHS operated service units, which are entities
of the federal government, could be assigned administrative codes
for statistical purposes. Tr. at 193.

197. IHS needed to collect statistical data from both the IHS
operated and tribally operated service units. Tr. at 210 - 11.

198. Prior to 1988, tribally operated service units were called
statistical service units and did not have an administrative code.
Tr. at 210 - 11.

199. Prior to 1988, official IHS service units were assigned an
administrative code. Tr. at 210 - 11.

200. IHS created Circular 88-2 to eliminate the distinction between
"statistical service units" and IHS operated service units. Tr. at
210.

201. IHS Circular 88-2 was intended to help IHS designate service
units for statistical purposes. Tr. at 202.

202. IHS Circular 88-2 is independent of ISDA contracting
procedures. Tr. at 202.

203. IHS Circular 88-2 was designed to assign administrative codes
to both IHS operated and tribally operated service units. Tr. at
193 - 95.

204. It is the current IHS national policy for IHS to approve a
tribe's request for its service area to be established as a service
unit. Tr. at 197.

205. It is the current IHS practice in California that when the CAO
receives an ISDA proposal that has the effect of changing service
unit boundaries, the CAO first approves the contract proposal and
then at a later date requests a change in the service unit
boundaries pursuant to Circular 88-2. Tr. at 198 -200, 202 - 03
and 215.

206. Circular 88-2 was originally part of IHS' response to
congressional direction to improve its methodology for allocating
health care resources to Indian tribes. See, S. Rep. No. 165,
100th Cong., 1st Sess. (1987) at 111 - 12.

207. IHS Circular 88-2 was part of a package of legislation that
was never given formal or final effect due to a congressional
moratorium that has been renewed annually. 52 Fed. Reg. 35044
(September 16, 1987) (final rule); Continuing Appropriations,
Fiscal Year 1988, Pub. L. 100-202, 100th Cong., 1st Sess. 315,
100 Stat. 1329 - 254, 315 (1987) (moratorium on implementation);
see also Department of the Interior and Related Agencies
Appropriations Act, 1989, Pub. L. 100-446, 102 Stat 1774, 1817
(1988); Department of the Interior and Related Agencies
Appropriations Act, 1990, Pub. L. 101-121, 103 Stat. 701, 734
(1989); Department of the Interior and Related Agencies
Appropriations Act, 1991, Pub. L. 101-512, 104 Stat. 1915, 1952
(1990); Department of the Interior and Related Agencies
Appropriations Act, 1993, Pub. L. 102-381, 106 Stat. 1374, 1409
(1992).

208. Circular 88-2 has no bearing on whether IHS accepts or
declines ISDA contract proposals. Tr. at 154, 155, 161, 215,
401 and 649; Findings 180 - 207.

209. Circular 88-2 is not a substantive rule which binds IHS agency
discretion and private party conduct in ISDA contracting.
Findings 180 - 208.

210. It has been the practice of the CAO that, when it receives an
ISDA contract proposal that proposes to alter the existing service
area boundaries, it reviews the proposal on a case-by-case basis
without regard to the existing boundaries. Tr. at 216 - 245, 793.

211. There have been three recent approvals of requests for changes
in the service unit boundaries in California. Tr. at 198.

212. The three changes in service unit boundaries were as follows:
1) the Sycuan -- CAO awarded the contract in 1989 and requested
change in the service unit boundary in June 1993; 2) the Warner
Mountain -- CAO awarded the contract in 1992 and requested the
change in the service unit boundary in July 1993; and 3) the
Manchester/Point Arena --CAO awarded the contract in 1990 and
requested the change in the service unit boundary in July 1993.
Tr. at 198 - 201.

213. In each of these three instances, the CAO first awarded the
ISDA contract that changed the service unit boundaries and then the
CAO requested the change in service unit designation pursuant to
Circular 88-2. Tr. at 198 - 201.

214. Circular 88-2 does not restrict the contracting rights of
tribes who want to change the boundaries of their service area.
Findings 180 - 213.

215. Approval of an ISDA contract proposal that changes the
service area boundaries is not contingent on the contracting
tribe's compliance with all of the requirements of Circular 88-2.
Tr. at 215; Findings 180 - 214.

216. Thomas Harwood (TH) is the Area Director for IHS in
California. Tr. at 398 - 99.

217. TH is a credible witness. Tr. at 398 - 442.

218. A 1988 proposal by the CAO to establish rigid service areas in
California was never adopted because of a lack of consensus among
the tribes. IHS Ex. 17; Tr. at 403 - 05.

219. Circular 88-2 does not restrict the contracting rights of a
tribe who submits an ISDA proposal which proposes to change the
service area boundaries. Findings 180 - 218.

220. Circular 88-2 has no bearing on ISDA contracting decisions.
Tr. at 154, 403 - 05; Findings 180 - 219.

221. Circular 88-2 does not limit IHS' discretion to award ISDA
contracts. Findings 180 - 220.

222. Circular 88-2 does not limit a tribe's right to submit ISDA
contract proposals. Findings 180 - 221.

IHS has not adhered to designated "service areas" in accepting self
determination contract proposals in the State of California and has
modified or established new "service areas" in connection with such
contracts on a case by case basis.

223. Athena Schoening (AS) is the Deputy Associate Director for the
Office of Tribal Activities for IHS. Tr. at 145.

224. AS is responsible for the day to day management of three
divisions including the Division of Self-Determination Services.
Tr. at 145.

225. Immediately prior to being Deputy Associate Director for the
Office of Tribal Activities for IHS, AS was the Director of the
Division of Self-Determination Services from 1989 to October 1992.
Tr. at 145.

226. The Division of Self-Determination Services formulates IHS
policy regarding ISDA and oversees the implementation of this
policy through the IHS Area Offices. Tr. at 146.

227. AS demonstrated an extensive knowledge of IHS policy as it
pertains to ISDA. Tr. at 145 - 61.

228. AS demonstrated an extensive and detailed knowledge of IHS
modification and establishment of service areas in California. Tr.
at 145 - 61.

229. AS is a credible witness. Tr. at 145 - 61; Findings 223 -
228.

230. IHS does not restrict tribes from redesigning service areas
when tribes submit contract proposals under ISDA. Tr. at 155, 161.

231. Harry Weiss (HW) is currently an IHS contracting specialist in
the CAO. Tr. at 217.

232. HW has been an IHS contracting specialist in the CAO for the
past 12 years. Tr. at 217.

233. Based on his professional experience, HW gave extensive and
detailed testimony as to ISDA contracting practices in California.
Tr. at 217.

234. HW is a credible witness. Tr. at 216 - 46; Findings 231 - 33.

235. There have been numerous changes in service areas in
California. Tr. at 216 - 46.

236. These changes include three geographical areas in California
-- the counties of Lassen, Shasta, Trinity, Siskiyou, and Modoc in
Northern California; the counties of Sonoma and Mendocino in West
Central California; and in San Diego County in Southern California.
Tr. at 216 - 46.

237. IHS beneficiaries in Lassen, Shasta, Trinity, Siskiyou, and
Modoc counties in Northern California originally received their
services from the California Rural Indian Health Board (CRIHB).
Tr. at 219.

238. From 1978 to the present, there have been numerous changes in
Northern California service areas that were made by IHS pursuant to
ISDA contract proposals. Tr. at 218 - 28.

239. Currently, there are six tribal contractors operating programs
in the Northern California counties of Lassen, Shasta, Trinity,
Siskiyou, and Modoc. Tr. at 218 - 46; IHS Ex. 22 at 8.
240. All of the changes in the service areas in the Northern
California counties of Lassen, Shasta, Trinity, Siskiyou, and Modoc
over the last 15 years have been at the request of a tribe pursuant
to ISDA contracting. IHS Ex. 22 at 8; Tr. at 218 - 46.
241. Originally, in the West Central California counties of Sonoma
and Mendocino, the Manchester/Point Arena Rancheria was part of the
Consolidated Tribal Health Plan Service Area. Tr. at 229.

242. The Manchester/Point Arena Rancheria made an ISDA contract
proposal in 1990 that its health care services be provided by the
Sonoma County Indian Health Program. Tr. at 231.

243. The CAO altered the boundaries of both the Consolidated Tribal
Health Plan Service Area and Sonoma County Service Area pursuant to
ISDA contract proposals. Tr. at 228 - 31; Findings 238 - 42.

244. Originally, ISDA health services were provided in San Diego
County by the Indian Health Council. Tr. at 231.

245. Currently, only the northern part of San Diego County is
served by the Indian Health Council. Tr. at 231 - 32.

246. The southern half of San Diego County, excluding the Sycuan
Band of Mission Indians, is currently served by the Southern Indian
Health Council. Tr. at 231 - 32.

247. The Sycuan Indians currently provide their own health
services. Tr. at 231 - 32.

248. The service area boundaries in San Diego County have been
changed from one tribal organization providing
health services for the entire area to three tribal organizations
providing services to that same area. Findings 244 - 47.

249. The service area boundaries in San Diego County have been
changed pursuant to ISDA contract proposals. Finding 248.

250. Molin Molicay (MM) reviewed ISDA contract proposals for the
CAO from 1977 through 1980. Tr. at 793.

251. MM testified that, during the time he worked for the CAO, he
reviewed ISDA contract proposals that had the effect of changing
service area boundaries. Tr. at 759 - 793.

252. IHS and the CAO have changed service area boundaries pursuant
to ISDA contract proposals. Tr. at 759 - 793; Findings 223 - 251.

253. CAO received an ISDA proposal from the California Rural Indian
Health Board sanctioned by Blue Lake Rancheria. Tr. at 354 - 55;
California Rural Indian Health Board, Inc., and Blue Lake Rancheria
v. IHS, DAB CR273, at 3 (1993) (Blue Lake).

254. Blue Lake Rancheria proposed to contract under ISDA to provide
health care services to its own tribal members as well as the
unaffiliated Indians in another service area. Tr. at 353 - 54;
Blue Lake at 2 - 3.

255. The CAO declined the proposal on the basis that the distance
the Blue Lake tribal members would have to travel to receive health
services would not be satisfactory. Tr. at 353 - 55; Blue Lake at
5.

256. The CAO did not use the fact that Blue Lake's proposal redrew
service area boundaries as a basis for denying the contract
proposal. Tr. at 164 - 65; Blue Lake at 5 - 7; Blue Lake, Decision
of the Director of IHS.

257. IHS has modified service areas on a case by case basis when
accepting ISDA contract proposals. Findings 223 - 256; Blue Lake,
Decision of the Director of IHS.

IHS' letter of October 9, 1992, which modified a prior designated
service area for the provision of medical services to IHS'
beneficiaries was in accord with IHS Circular 88-2 and past
procedures followed by IHS in awarding contracts for self
determination in the State of California.

258. The term "service unit" is synonymous with the term "service
area". SS Ex. 7; IHS Ex. 17; Tr. at 207.

259. In 1988, the CAO proposed to form rigid service areas in
California. IHS Ex. 15, 17; CD Ex. 4.

260. The proposed service units were never adopted because of
state-wide disagreement among Indian tribes as to the appropriate
boundaries. IHS Ex. 15; CD Ex. 4.

261. The proposed service units were never adopted because of
cultural, geographic, political and historical differences between
California tribes. SS Ex. 5.

262. A service unit is an administrative entity with the
responsibilities for planning, managing, and evaluating the IHS
programs serving a defined geographic area less than that for which
an Area Office is responsible. SS Ex. 11, 16.

263. California has never had "service units" in the formal sense,
but rather has had service areas which have evolved over time to
reflect demographic concentrations and political negotiations by
the Indian and tribal organizations. CD Ex. 3.

264. A tribe's ability to contract to provide services under the
ISDA is not conditioned upon the tribe's obtaining a resolution of
support from all Indian tribes in a given service area. IHS Ex.
18; Southern Indian Health Council, Inc., v. Sullivan,
CIVS-88-0240-EJG-JFM (E.D. Ca. January 8, 1990) (Southern Indian
Health Council.

265. A tribe proposing to contract to provide services under the
ISDA need only obtain a resolution of support from those tribes
within the service area it proposes to provide services to within
the service area. IHS Ex. 18; Southern Indian Health Council.

266. A tribe proposing to contract to provide services under the
ISDA may divide or otherwise reconfigure the existing service area
to exercise its self-determination rights. IHS Ex. 18; Southern
Indian Health Council.

267. IHS may maintain rigid service areas for the purpose of
planning or allocating funds for the provision of health care to
California Indians. IHS Ex. 18; Southern Indian Health Council.
268. IHS may not maintain rigid service areas that, as a condition
of an Indian tribe contracting under the ISDA, mandate that the
tribe obtain a sanctioning resolution from all tribes in the
service area, even ones to which the tribe does not propose to
provide services. IHS Ex. 18; Southern Indian Health Council.
269. In 1989, Manchester Point Arena designated Sonoma County
Indian Health Project, Inc., as its tribal organization. CD Ex. 6.

270. Manchester Point Arena designated Sonoma County Indian Health
Project, Inc. in order to obtain what it thought would be better
services for its tribal members. CD Ex. 6.

271. The California Rural Indian Health Board, Inc. (CRIHB)
requested modification of its service area to include Manchester
Point Arena. CD Ex. 6.

272. The CAO modified CRIHB's ISDA contract to include the
Manchester Point Arena. CD Ex. 6.

273. Since 1983, Southern Indian Health Council, Inc., (SIHC) has
provided comprehensive health care, pursuant to ISDA, to Indians
and other eligible persons in San Diego County. IHS Ex. 18.

274. SIHC's membership originally consisted of the Barona, Campo,
Cuyapaipe, Jamul, La Posta, Manzanita, Sycuan and Viejas Bands of
Mission Indians. IHS Ex. 18.

275. Due to a dispute which arose in 1985, in 1986 SIHC moved its
health care facilities from the Sycuan reservation to the Barona
reservation. IHS Ex. 18.

276. Sycuan withdrew from the SIHC when the health care facilities
were moved to the Barona reservation. IHS Ex. 18.

277. In October 1986, SIHC submitted an ISDA proposal to serve the
Barona, Campo, Cuyapaipe, Jamul, La Posta, Manzanita and Viejas
Bands of Mission Indians. IHS Ex. 18.

278. The CAO denied SIHC's proposal because SIHC did not have a
resolution from all tribes in the service area, and because IHS
took the position that to divide SIHC's health care program would
be contrary to 25 U.S.C. 450b(c). IHS Ex. 18; 25 U.S.C.
450b(c).

279. The CAO also took the position that SIHC was not a valid
tribal organization without a resolution of support from all tribes
within the service area, including Sycuan. IHS Ex. 18 at 6.

280. In 1990, the U.S. District Court found that IHS's requirement
that SIHC obtain a sanctioning resolution from all Indian tribes in
the SIHC, even ones which SIHC does not propose to serve, was
contrary to the plain meaning of 25 U.S.C. 450b(c). IHS Ex. 18.

281. In 1988, the ISDA was amended and 25 U.S.C. 450b(c) (1983)
was recodified as 25 U.S.C. 450b(l). 25 U.S.C. 450Ab(l); IHS
Ex. 18 at 2.

.RPT A tribe that proposes to serve its own members need not obtain
a sanctioning resolution from another tribe in the same service
area, unless the tribe proposes to provide services to the members
of the other tribe. Findings 258 - 81.

283. Chapa-De's ISDA proposal did not propose to serve members of
the Shingle Springs Rancheria. Findings 36, 40; IHS Ex. 2.

284. Chapa-De's ISDA proposal did propose to serve members of the
Rumsey Rancheria and the unaffiliated Indian population. IHS Ex.
2.

285. Shingle Springs has shown that, in States other than
California, formal service units have been implemented. SS Ex. 9,
11, 12, 16, 64, 66, 75, 89.

286. Since the 1988 amendments to the ISDA, IHS has taken a more
expansive view of service units than that espoused by Circular
88-2. SS Ex. 11, 12, 16, 64 - 66, 80 - 83.

287. In some instances in California, the CAO has implemented ISDA
contracts by reconfiguring service area boundaries. IHS Ex. 22;
Tr. at 759 - 773, 793; Findings 258 - 86.

288. The CAO has implemented ISDA contracts in California with
flexibility with regard to service unit boundaries. Findings 258
- 87.

289. The CAO does not reject an ISDA contract proposal merely
because the proposing tribe is located outside the service area
they are proposing to serve. See, California Rural Indian Health
Board, Inc., et al., v. IHS, September 7, 1993 Decision of the IHS
Director adopting the June 23, 1993 recommended decision in Blue
Lake, DAB CR273 (1993).

290. IHS' revised contract determination of October 9, 1992, was in
accord with IHS Circular 88-2. Findings 258 - 89; IHS Ex. 14.

291. IHS' revised contract determination of October 9, 1992 was in
accord with the past procedures followed by IHS in awarding
contracts for self-determination in the State of California.
Findings 258 - 90.

IHS' redetermination letter of October 9, 1992 to Shingle Springs
and Chapa-De constitutes in effect a statutory declination pursuant
to 25 U.S.C. 450f(a)(2), of their respective ISDA proposals to
provide medical services to essentially the same eligible
beneficiaries in the four county area.

292. The Secretary is directed to approve an ISDA contract proposal
within 90 days from the receipt of the proposal unless, within 60
days from the receipt of the proposal, specific findings are made
that (A) the service to be rendered to the Indian beneficiaries of
the particular program or function to be contracted will not be
satisfactory; (B) adequate protection of trust resources is not
assured; or (C) 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).

293. Shingle Springs' October 1, 1991 ISDA contract proposal
proposed to operate a comprehensive health program for eligible
Indians in El Dorado, Placer, Sierra, and Nevada Counties. IHS Ex.
1.

294. Chapa-De's November 12, 1991 ISDA contract proposal proposed
to serve Rumsey Rancheria tribal members and the eligible Indian
population residing in Yolo, Placer, Sierra, Nevada and El Dorado
Counties. IHS Ex. 2 at 10.

295. IHS' October 9, 1992 redetermination revised its initial
decision and divided the program to best serve the expected service
population for the respective facilities while assuring that both
programs would operate satisfactorily. IHS Ex. 14.

296. IHS' October 9, 1992 redetermination awarded Shingle Springs
an ISDA contract to serve its members and the eligible unaffiliated
Indians in El Dorado County. IHS Ex. 14.

297. IHS' October 9, 1992 redetermination awarded Rumsey via
Chapa-De, a contract for Rumsey members and the eligible
unaffiliated Indians in Placer, Nevada, and Sierra Counties. IHS
Ex. 14.

298. The October 9, 1992 redetermination modified the contract
proposals of Shingle Springs and Chapa-De, which proposed to serve
the same Indian population, and was a declination pursuant to the
third declination criteria -- that neither tribe's proposed project
nor the function being contracted for could be properly completed
or maintained by the proposed contract. 25 U.S.C.
450f(a)(2)(c).

299. The October 9, 1992 redetermination was a constructive
declination that comported with the intent and purpose of the ISDA
and the regulations. 25 U.S.C. 450f(a)(2)(c); 42 C.F.R.
36.212.

300. The overarching goal of the ISDA is to enable IHS to
facilitate the contracting process so that each Indian tribe which
desires can obtain self-determination through contracting to
provide health care to that tribe's own members. 25 U.S.C.
450(a), 450a(a) - (c), 450f(a) - (d), 450h.

301. Throughout this process, IHS has acted in good faith to
facilitate both Shingle Springs and Chapa-De receiving an ISDA
contract consistent with each tribe's self-determination rights.
IHS Ex. 9, 10, 11, 13.

302. IHS has attempted to settle this case to accord both Shingle
Springs and Chapa-De their rights to self-determination. IHS Ex.
9, 13, 14.

303. IHS, as the agency administering Indian health care contracts
under the ISDA, has the discretion to address novel situations in
a manner consistent with the goals of the ISDA. Vietnam Veterans
of America v. Secretary of the Navy, 843 F.2d 528 (D.C. Cir. 1988)
(Vietnam Veterans); Morton v. Ruiz.

304. The situation in this case, with Shingle Springs and Chapa-De
submitting proposals which competed for largely the same service
population, was a situation that had never before been faced by
IHS. Tr. at 150, 178 - 79, 261, 643 - 45, 700; Findings 42, 137.

305. IHS is required to decline an ISDA contract proposal within 60
days of receipt if it makes specific findings, otherwise IHS must
approve the ISDA contract proposal within 90 days of receipt. 25
U.S.C. 450f(a)(2).

306. There is no time limit from the date of receipt of a proposal
for IHS to enter into an ISDA contract with a tribe submitting a
proposal. 25 U.S.C. 450f(a)(2).

307. The statutory 60-day time frame was established to provide
tribal organizations with the right to appeal contract declinations
and to receive a hearing on the record. 25 U.S.C. 450f(a)(2),
(b)(3).

308. The 60-day time frame contained in 25 U.S.C. 450f(a)(2) is
designed to ensure that if IHS declines to enter into a contract
with a tribal organization, it must provide both a formal notice of
declination and an opportunity and procedures for hearing to the
tribal organization. S. Rep. No. 274, 100th Cong., 2d Sess. 24
(1988), reprinted in 1988 U.S.C.C.A.N. 2620, 2643.

309. The 60-day time frame contained in 25 U.S.C. 450f(a)(2) is
designed to ensure that denials of requests for self-determination
contracts are handled only through the declination process and not
through agency-imposed threshold criteria. S. Rep. No. 274, 100th
Cong., 2d Sess. 24 (1988), reprinted in 1988 U.S.C.C.A.N. 2620,
2643.

310. The 60-day time frame contained in 25 U.S.C. 450f(a)(2) is
designed to assure that a tribal organization receives a hearing in
accordance with the requirements of the Administrative Procedure
Act. S. Rep. No. 274, 100th Cong., 2d Sess. 24 (1988), reprinted
in 1988 U.S.C.C.A.N. 2620, 2643.

311. The 1988 amendments to the ISDA were designed to eliminate
practices of federal agencies which blocked tribal organizations
from obtaining ISDA contracts, and which blocked tribal
organizations from exercising their appeal rights. S. Rep. No.
274, 100th Cong., 2d Sess. 24 (1988), reprinted in 1988
U.S.C.C.A.N. 2620, 2643.

312. The ISDA does not acknowledge nor does it contemplate the
presence of unaffiliated Indians.

313. The ISDA does not contemplate nor does it address the issue of
self-determination for unaffiliated Indians.

314. The ISDA does not contemplate nor does it address whether one
tribal organization should be given preference over another with
regard to providing health services to unaffiliated Indians.
315. The 1988 Amendments do not contemplate nor address the
situation of two tribes submitting ISDA proposals competing to
provide health care services to the same geographic area.

316. The ISDA does not contemplate nor address the situation of two
tribes submitting ISDA proposals competing to provide health care
services to the same geographic area.

317. The 1988 Amendments do not contemplate nor address the
situation of two tribes submitting ISDA proposals within the 60-
day statutory timeframe for declination of an ISDA proposal, where
both proposals are competing to provide health care services to the
same geographic area.

318. The ISDA does not contemplate nor address the situation of two
tribes submitting ISDA proposals within the 60 day statutory time
frame for declination of an ISDA proposal, where both proposals are
competing to provide health care services to the same geographic
area.

319. An agency has discretion to address situations that are not
contemplated nor addressed by the applicable statute. Vietnam
Veterans; Morton; Findings 144 - 45, 303.

ECNT It is left to the discretion of IHS to determine which of two
qualified tribal organization will provide health care services to
unaffiliated Indians. Findings 144 - 45, 303, 319.

321. IHS' October 9, 1992 determination did not take the form that
the CAO customarily uses in ISDA contract declination letters. Tr.
at 366.

322. IHS' October 9, 1992 determination informed both Shingle
Springs and Chapa-De that each was entitled to appeal the
determination pursuant to 42 C.F.R. 36.214. Tr. at 396; IHS Ex.
14.

323. The regulations provide that a tribal organization, upon
receiving a notice advising them that their ISDA contract proposal
has been declined and further advising them of the basis for IHS'
decision to decline, may file a written appeal within 30 days after
receipt of the declination and may request a hearing. 42 C.F.R.
36.214(a).

324. IHS' October 9, 1992 determination was not a declination in
accordance with every aspect of 25 U.S.C. 450f(a)(2). IHS Ex.
14; 25 U.S.C. 450f(a)(2); Finding 321.

325. IHS' October 9, 1992 determination informed Shingle Springs
and Chapa-De of their appeal rights. IHS Ex. 14; Finding 322.

326. IHS' October 9, 1992 determination modified Shingle Springs'
October 1, 1991 ISDA contract proposal. IHS Ex. 1, 14; Findings 30
- 31.

327. IHS' October 9, 1992 determination modified Chapa-De's
December 2, 1991 ISDA contract proposal. IHS Ex. 2, 14; Finding
36.

328. IHS' October 9, 1992 determination was in accordance with the
statutory purpose of the ISDA to accord both Shingle Springs and
Chapa-De their rights to self-determination. IHS Ex. 14; Findings
292 - 327.

329. IHS' October 9, 1992 determination was in accordance with the
statutory purpose of providing the opportunity for a full hearing
to a tribal organization whose ISDA contract proposal has been
denied. 25 U.S.C. 450f(a)(2), (b)(3); Findings 292 - 328.

330. Shingle Springs viewed IHS' October 9, 1992 determination as
a declination of its ISDA proposal and appealed to contest the
declination. Tr. at 715 - 16.

331. The regulations should be construed to be flexible in the face
of unique or novel situations. Findings 292 - 330.

332. The regulations should be construed to comport with the goals
of the ISDA, including the 1988 amendments. Findings 292 - 331.

333. IHS' October 9, 1992 determination was a valid declination in
accordance with the intent of the ISDA. Findings 1 - 332.

334. IHS' October 9, 1922 determination was a valid declination in
accordance with IHS' discretionary authority. Findings 1 - 333.

On January 29, 1992, Shingle Springs was not in a position to
fulfill the terms of its ISDA contract to provide medical services
to all IHS beneficiaries in the four-county area by April 1, 1992.
8/

335. IHS could not award an ISDA contract to Shingle Springs in
accordance with the terms of Shingle Springs' proposal because the
proposal overlapped with and competed with Chapa-De's proposal.
IHS Ex. 1, 2, 14; Findings 30 - 31, 33, 36, 38 - 39, 77.

336. In the absence of statutory and regulatory authority
permitting the conditional acceptance of contract proposals under
the ISDA, IHS lacked authority to conditionally approve Shingle
Springs' October 1, 1991 ISDA contract proposal. Findings 1 - 335.

337. The statutory declination criteria contain sufficient
authority for IHS to have declined both of the proposals at issue
in this case. 25 U.S.C. 450f(a)(2)(A) - (C); Findings 1 - 336.

338. In view of the sufficiency of the statutory declination
mechanism to allow IHS to decline the proposals, IHS did not have
the discretion to go outside the statute to impose a condition upon
the acceptance of Shingle Springs' October 1, 1991 ISDA contract
proposal. Findings 1 - 337.

339. As of November 1, 1991, Shingle Springs did not believe that
it had to obtain space for its proposed health clinics through the
Leasing Priority System (LPS). SS Ex. 35.

340. The LPS is a lengthy process whereby a tribe that is
contracting to provide services under the ISDA must obtain
congressional approval of the tribe's proposed lease site. SS Ex.
35, 55.

341. On November 21, 1991, CAO informed Shingle Springs that
Shingle Springs' proposal had not adequately addressed LPS
requirements. SS Ex. 40.

342. As of November 22, 1991, Shingle Springs realized that it had
to obtain leased space via the LPS and that the earliest this could
occur was May 31, 1992. SS Ex. 42. 9/

343. Shingle Springs' attempts to obtain leased space on its own,
outside the LPS, were not successful. SS Ex. 57, 58.

344. As of January 30, 1992, Shingle Springs was still not in a
position to provide services pursuant to its ISDA contract proposal
to provide medical services to IHS beneficiaries in the former
four-county area by April 1, 1992, because it had not leased a
facility in which to provide the services. Tr. at 259-60, 373, 386
and 701.

345. On January 29, 1992, Shingle Springs was not in a position to
enter into an ISDA contract to provide medical services to all IHS
beneficiaries in the four-county area by April 1, 1992. Findings
339 - 44.

CONCLUSION

346. IHS' October 9, 1992 determination accords Shingle Springs and
Chapa-De their full rights to self-determination, including their
right to appeal the declination of their ISDA proposals. Findings
1 - 345.

347. IHS' October 9, 1992 determination is a valid and reasonable
distribution of the unaffiliated eligible Indian population between
Shingle Springs and Chapa-De in order to provide sufficient
resources to enable them to have viable programs and ensure that
all IHS beneficiaries have satisfactory services. Findings 1 -
346.

348. IHS' October 9, 1992 determination is a valid exercise of
agency discretion by IHS. Findings 1 - 347.

349. IHS' October 9, 1992 determination is consistent with the
language and intent of the ISDA and the relevant regulations.
Findings 1 - 348.

350. I recommend to the Director of IHS that IHS' October 9, 1992
determination be upheld. Findings 1 - 349.

RATIONALE

At the heart of this case is IHS' October 9, 1992 determination to
award Shingle Springs an ISDA contract to provide health care
services to its tribal members and the eligible unaffiliated
Indians in El Dorado County, California and to award Chapa-De an
ISDA contract to provide health care services to members of Rumsey
(but not unaffiliated Indians) in Yolo County, California, and the
unaffiliated Indians in Nevada, Sierra, and Placer Counties in
California.

Shingle Springs' position is that it is entitled to an ISDA
contract to serve the entire four-county Chapa-De Service Area
(consisting of El Dorado, Nevada, Sierra, and Placer Counties).
Shingle Spring contends that IHS was legally obligated to award it
an ISDA contract to provide health care services to the entire
Chapa-De Service Area once it accepted Shingle Springs ISDA
contract proposal on December 2, 1991. Shingle Springs supports
this contention based on their interpretation of the content and
purpose of IHS Policy Letter 89-4. 10/

Moreover, Shingle Springs contends that IHS had no legal authority
to award any part of the Chapa-De Service Area to Chapa-De because
Chapa-De was endorsed by a tribal resolution from Rumsey, a tribe
located outside of the existing Chapa-De Service Area. Shingle
Springs' position is that, as a prerequisite to obtaining an ISDA
contract, an organization must be sanctioned by a valid resolution
from a federally recognized tribe within the existing service area
where the services will be provided. Shingle Springs supports this
view by relying on IHS Circular 88-2 and the alleged past practice
in the State of California of not altering service areas without
following certain specified procedures which were not followed in
this case. Additionally, Shingle Springs argues that IHS' October
9, 1992 determination was contrary to the ISDA, the applicable
regulations, IHS policies and procedures, and the Director's
Decision in Kickapoo. Shingle Springs, however, does not contest
IHS' apportionment of the Service Area between itself and Chapa-De.

IHS contends that its December 2, 1991 acceptance of Shingle
Springs ISDA contract proposal does not mandate that IHS award the
contract to Shingle Springs. IHS argues that neither IHS Circular
88-2 nor IHS Policy Letter 89-4 is a substantive requirement
binding IHS in its contracting with Indian tribes under ISDA. IHS
contends that it was faced with the unique situation of two
competing proposals for an overlapping geographic area. IHS
further contends that Shingle Springs' right to self-determination
encompasses only the right to provide health services to its own
tribal members, and does not give Shingle Springs a right superior
to Chapa-De's to provide health care services to the eligible
unaffiliated Indians in the area.

According to IHS, the purpose of the ISDA is to provide
self-determination rights to all federally recognized tribes. To
that end, IHS contends that its October 9, 1992 determination is in
accord with the intent of the ISDA because it grants both Shingle
Springs and Rumsey the right to provide health care services to
their own tribal members. Moreover, IHS contends that its October
9, 1992 determination was in effect a declination of Shingle
Springs' proposal and that neither the ISDA, the regulations, IHS
policies and procedures, nor the Director's Decision in Kickapoo
bind IHS to award the ISDA contract to Shingle Springs.

IHS does not point to any provision of ISDA that directly pertains
to the circumstances of this case. The ISDA does not account for
unaffiliated Indians, who make up the majority of the population to
be served by the contracts at issue here; and ISDA did not
anticipate that tribes or tribal organizations would compete to
serve the same areas, because the individuals were expected to be
members of one and only one tribe, and the goal of
self-determination would define which persons a given tribe or
tribal organization would serve.

The ISDA did expect small tribes, or tribes sharing a federally
designated reservation area, to be served in some instances by
common organizations (depending on resources and efficiency of
delivery), and therefore provides for multiple approvals: "[I]n any
case where a contract is let. . .to an organization to perform
services benefiting more than one Indian tribe, the approval of
each such Indian tribe shall be a prerequisite to the letting . .
.of such contract[.]" ISDA, Section 450b(l) (1988). However, the
idea of self-determination, carried to its logical end, would work
without direct competition, in that each tribe would eventually
perform contracts for services benefiting its own membership
without conflicting with the self-determination interests of any
other sovereign entity.

For example, if a tribal organization had a self-determination
contract to serve three small tribes (pursuant to proper sanction
by each), and one tribe later wanted its own contract, that tribe
would withdraw its sanction from the larger organization and make
a proposal to the IHS. The principle of self-determination would
require IHS to contract with that tribe, and the tribal
organization's contract would be limited to the two remaining
tribes which continued to sanction it. This simple one-for-one
correspondence made it unnecessary for the statute, or the
administrative agencies, to develop procedures for selecting from
among competitive proposals between tribes or tribal organizations:
either an organization had no right to serve a particular tribe, or
it had an exclusive right to self-determination and IHS was
directed to contract with it.

California and Alaska are the only states where the assumption that
all Indian people are represented by a federally recognized tribe
or the equivalent does not hold true, because treaties with
particular tribes were not executed there as in other states, and
consequently a significant population of Indian people belong to no
federally recognized tribal entity. In Alaska, the situation was
addressed by the Alaskan Native Claims Settlement Act (ANCSA),
which provided a mechanism for establishing or recognizing
quasi-tribal entities (tribes, ANCSA corporations and Native
Villages). 43 U.S.C. 1601 et seq. The ISDA definition of
"Indian tribe" incorporates the organizational entities defined in
the ANCSA. However, even in Alaska, where ISDA and ANCSA intersect
and both supply parameters as to what constitutes the eligible
contracting tribal entity, conflict is still possible between
organizations claiming the same constituency. In such cases, IHS
has established priorities for determining which competing entity
is the appropriate representative. Cooks Inlet Native Association
v. Bowen, 819 F.2d 1471, 1477 (9th Cir. 1987) ("The agencies have
established priorities for determining the governing body of a
tribe from the eligible, competing entities. These priorities have
been followed since 1977, and are consistent with the
administrative interpretation of the Self-Determination Act's
definition of `tribe.' [cites omitted])." However, the situation
in Alaska is not comparable to that in California. Alaska has a
formal regulatory mechanism to select among competing entities.
None exists in California.

Unlike ANCSA corporations, unaffiliated Indians do not appear in
the ISDA at all. Unaffiliated Indians nonetheless receive services
under ISDA contracts, because the ISDA creates a self-determination
contract preference for all services provided to Indians by IHS,
and the statute defining IHS responsibilities requires IHS to
provide health services for unaffiliated Indians. 25 U.S.C.
1679(b)(2), (3) (eligibility of Indians in California who are not
members of federally recognized tribes).

No statute parallel to the ANCSA operates in California, and so a
large number of individuals who are recognized as Indians there do
not have a corresponding tribal entity through which to deal with
federal agencies. The question for IHS then is not "which
organization represents the tribe," but which tribe or tribal
organization is entitled to, or best situated to, provide service
to a particular geographic population of unaffiliated Indians.
Thus, there is potential in California for competition for ISDA
health services contracts, and there are not sovereign political
entities to represent all individuals in the population to be
served. This potential gave rise to the issues presented by this
case.

I. Chapa-De is a qualified "tribal organization" for the purpose
of submitting a contract proposal under the ISDA.

A self-determination contract is a contract involving a tribal
organization and the Secretary for the planning, conduct and
administration of programs or services which are otherwise provided
to Indian tribes and their members pursuant to federal law.
Finding 91; 25 U.S.C. 450b(j). Under the ISDA, federally
recognized Indian tribes and their members are awarded contracts to
plan, conduct and administer programs or services that are
otherwise provided by the federal government. In this case, both
Shingle Springs and Chapa-De have submitted proposals to plan,
conduct, and administer Indian health services in a four-county
area. Findings 30, 36. IHS is required upon the request of any
Indian tribe by tribal resolution to enter into a
self-determination contract with such tribe, or its tribal
organization, to plan, conduct and administer programs or parts
thereof, including construction programs. Finding 92; 25 U.S.C.
450f(a)(1).

It is uncontested that Rumsey is a federally recognized tribe
within the meaning of the ISDA. The ISDA defines a tribal
organization as follows:

A tribal organization is a recognized governing body of any
Indian tribe; any legally established organization of Indians which
is controlled, sanctioned, or chartered by such governing body or
which is democratically elected by the adult members of the Indian
community to be served by such organization and which includes the
maximum participation of Indians in all phases of its activities:
Provided, That in any case where a contract is let or grant is made
to an organization to perform services benefiting more than one
Indian tribe, the approval of each such Indian tribe shall be a
prerequisite to the letting or making of such contract or grant.

25 U.S.C. 450b(l); Finding 95. Prior to November 6, 1991,
Rumsey had sanctioned Northern Valley Indian Health, Inc. as a
tribal organization to provide comprehensive health care services
under the ISDA to Rumsey members and other eligible Indians. On
November 6, 1991, Rumsey adopted a tribal resolution in which,
effective March 31, 1992, it withdrew its resolution sanctioning
NVIH and sanctioned Chapa-De to provide health care services to
Rumsey members and other eligible Indians.

Accordingly, as of March 31, 1992, Chapa-De was a tribal
organization for purposes of contracting to provide health care
services under the ISDA to Rumsey members and other eligible
Indians in Yolo, Sierra, Nevada, El Dorado and Placer Counties.
Finding 100. Since the ISDA contract at issue in this case had a
startup date of April 1, 1992, Chapa-De was a tribal organization
for purposes of the ISDA contract proposal at issue here.

In its December 17, 1991 declination of Chapa-De's contract
proposal, IHS based its declination on its contention that Chapa-De
was not a qualified tribal organization under ISDA. Subsequent to
Chapa-De's appeal of IHS' determination, on February 28, 1992, in
the context of IHS' motion to dismiss Chapa-De's appeal, I heard
oral argument and made a preliminary ruling that Chapa-De was a
tribal organization within the meaning of the ISDA. Finding 75.
After my preliminary ruling, IHS conceded that Chapa-De was a
qualified tribal organization within the meaning of the ISDA.
Finding 76.

A valid sanctioning resolution from Rumsey renders Chapa-De a valid
tribal organization under the ISDA. Shingle Springs has not been
able to point to any evidence to the contrary, nor have they
disputed this point in any meaningful way. Shingle Springs argues
that if IHS determines that a tribal organization which is
geographically located outside the service area is a valid tribal
organization for purposes of ISDA contracting, this could lead to
large, distant, tribal organizations submitting ISDA contract
proposals which would reconfigure service areas and absorb small
local tribal organizations. However, this fear is without merit
for several reasons. First, as a practical matter, Shingle Springs
has offered no evidence that the scenario they propound has or ever
will occur. Second, IHS has the authority to decline an ISDA
contract proposal on the basis of impracticality or, alternatively,
on the fact that the tribe proposing to provide services is too far
away to properly monitor and administer the contract. (See 25
U.S.C. 450f(2)(C) which permits declination of an ISDA proposal
because the "proposed [contract] project or function cannot be
properly completed or maintained".) Third, even if the "outside"
tribe were awarded an ISDA contract to provide services to the
service area, IHS would still have to honor the right of
self-determination of any tribe within the service area.

It should be pointed out that the likely underlying basis for the
rigid interpretation offered by Shingle Springs is its desire to
provide health care services to as many of the unaffiliated Indians
as possible, for the simple reason that including these Indians
will result in the award of the largest possible contract. In
short, the unaffiliated Indians provide the recognized Indian
tribes with a means to enlarge their contract awards. This
situation is unique to California because the service areas in
California contain such large numbers of unaffiliated Indians, and
these Indians have no mechanism for self-determination under the
ISDA. Therefore, to the extent that a tribal organization in
California proposes to provide ISDA contract services in a given
area, that area frequently will consist largely of unaffiliated
Indians.

In this case, Rumsey, a recognized Indian tribe with a land base
outside the Chapa-De Service Area, proposes to provide contractual
services to its members and eligible unaffiliated Indians within
the Chapa-De Service Area. Included as part of Rumsey's proposal
is a request that the four-county Chapa-De Service Area be enlarged
to include Yolo County, where Rumsey is located. Rumsey has not
sought to provide services to tribal members of Shingle Springs.
Like Shingle Springs, Rumsey seeks to include within its contract
award all the eligible unaffiliated Indians located within the
Chapa-De Service Area. In essence, two recognized Indian tribes
have submitted competing proposals under ISDA for the same eligible
unaffiliated Indians in order to justify the largest possible
health services contract.

Shingle Springs argues that, under the Director's decision in
Kickapoo, Chapa-De is not eligible to submit an ISDA contact
proposal because its sanctioning tribe does not benefit under
section 4(l) of the Act, 25 U.S.C. 450b(1). 11/ Since Rumsey's
tribal land is located outside of the Chapa-De Service Area,
Shingle Springs reasons that Rumsey does not benefit from services
provided in that area and so is ineligible to submit or sanction a
proposal. SS P.H. Br. at 34. 12/ Shingle Springs argues furhter
that it is the only tribe benefiting from the performance of health
services in the Chapa-De Service Area and is the only tribe that
IHS has ever required to provide a resolution authorizing a tribal
organization to enter into a contract with IHS in the Service Area.
Therefore, Shingle Springs contends that it is the only possible
tribe which can properly undertake an ISDA contract for the
Chapa-De Service Area or sanction a tribal organization to do so.

IHS and Chapa-De contend that Shingle Springs' reliance on the
Director's decision in Kickapoo is misplaced. They point out that,
under the proposals submitted by Shingle Springs and Chapa-De, only
Shingle Springs benefits from its proposal and only Rumsey benefits
from the Chapa-De proposal. Neither proposal provides for the
provision of medical services to the members of any recognized
tribe other than its own members or those of its sanctioning tribe.
IHS P.H. Br. at 28 - 30; Findings 30 - 36, 38, 101 - 105.

A close reading of Shingle Springs' argument reveals that it is
premised on the assumption that, to "benefit" from a proposal, the
tribe must be in a service area subject to an existing contract,
and receiving benefits under that contract, prior to submitting its
proposal. 13/ It is evident from the Director's decision in
Kickapoo that a tribe (or tribal organization) benefits from an
ISDA contract proposal if its proposal will serve its own members
within its own land base. The "benefits" analysis in Kickapoo thus
means that a tribe must benefit from the program which is the
subject of the contract proposal. 14/ As pointed out by IHS and
Chapa-De, under the revised determination of IHS in October, 1992,
both Shingle Springs and Rumsey "benefit" from the revised division
of the program. IHS proposes to provide separate programs for
Shingle Springs and Rumsey, with neither tribe benefitting from the
program being administered and run by the other. Moreover, under
the October 9, 1992 redetermination, the former Chapa-De Service
Area will be modified into two new areas, one area incorporating
the land base of Rumsey and the other incorporating the land base
of Shingle Springs.

If Shingle Springs' analysis of the Director's decision in Kickapoo
is accepted, then there could never be a change in a service area
to include a tribe not already in that area, unless that tribe
received a resolution accepting such modification from each tribe
already located in the existing service area and receiving benefits
from the program provided in that service area. There is no such
requirement under the ISDA. Moreover, a federal court in
California specifically held that the ISDA does not require a tribe
to obtain consent from all tribes within that tribe's service area
in order to be able to provide services for its own tribal members.
Southern Indian Health Council v. Sullivan, CIVS-88-0240-EJG-JFM
(E.D. CA. January 8, 1990). 15/ Imposition of such a requirement
would significantly hamper the self-determination rights granted to
federally recognized tribes under ISDA, and would be particularly
inappropriate in California where service areas are modified
according to the needs of individual tribes.

Section 4(l) of the Act requires that a tribe must "benefit" from
the program that it proposes in its contract proposal submitted
under ISDA. If more than one tribe "benefits" from a proposal,
then the tribe submitting the proposal must obtain a resolution
authorizing such contract from the other tribe. Such a requirement
is logical, since a tribe that submits a proposal to provide
services both to itself and another tribe would, by the nature of
the proposal, restrict the right of the other tribe to provide
services to its own members. Since only one contractor may provide
health services to a tribe at any given time, the tribe that
consents to having its services provided by another tribal
organization gives up the right to provide those same services to
its tribal members, at least for the duration of the contract.
Simply, two tribal organizations cannot be awarded contracts to
provide identical health care services to the same tribe. 16/

In Kickapoo, the boundaries of the contract health services (CHS)
were set by regulation in contract health service delivery areas
(CHSDAs). 17/ In contrast, both Chapa-De and Shingle Springs
proposed to provide direct services. No regulatory framework
exists in California regarding direct service delivery areas.
Hence, here the former Chapa-De Service Area boundaries do not bar
Rumsey from authorizing Chapa-De's proposal nor does the fact that
Rumsey resides outside of such former boundaries preclude such
proposal from being considered under ISDA.

II. The statutory time frame for approving or declining
self-determination proposals as set forth in 25 U.S.C. 450f(2) is
applicable to Shingle Springs' contract proposal of October 1991,
but IHS was not required to award a ISDA contract to Shingle
Springs based on Shingle Springs' proposal because it overlapped
with a competing proposal from Chapa-De and was the object of an
appeal filed by Chapa-De. 18/

A. IHS has discretionary legal authority under ISDA toalter
the time frame for approving or declining self-determination
proposals in the context of this case.

25 U.S.C. 450f(2) provides that:

. . . a tribal organization may submit a proposal for a
self-determination contract to the Secretary for review. The
Secretary shall, within 90 days after receipt of the proposal,
approve the proposal unless, within sixty days of receipt of the
proposal, a specific finding is made that --

(A) the service to be rendered to the Indian
beneficiaries of the particular program or function to be
contracted will not be satisfactory;
(B) adequate protection of the trust resources is not
assured; or
(C) the proposed project or function to be contracted for
cannot be properly completed or maintained under the proposed
contract.

There is no dispute that 25 U.S.C. 450f(2) establishes a
timetable by which IHS must decide whether to accept or reject an
ISDA contract proposal. Indeed, IHS made every effort to comply
with this timetable, even requesting an extension from Shingle
Springs when it sought more time to properly consider the issues.
Findings 43 - 44.

As a preliminary issue, a question arises as to whether the
existence of the competing contract proposals submitted by Shingle
Springs and Chapa-De and the pending appeal by Chapa-De of the
declination of its contract proposal by IHS provides a legal basis
for IHS to suspend the award process under ISDA in order to protect
the appeal rights of Chapa-De. Shingle Springs argues that IHS has
no such discretionary authority.

An examination of the law set forth in analogous procurement
contract cases provides a starting point in considering this issue.
In the law of federal procurement, where competition is not only
contemplated but forms the basis for contract award, there are
procedures for protest and appeal at various points during the
process of soliciting proposals and selecting a contractor, and
when a party invokes these procedures the contract process is
suspended. ISDA contracts are specifically exempted from treatment
as federal procurements. 19/ ISDA, section 450b(j). However, even
though federal procurement law does not apply to ISDA contracts,
the statute setting forth rules for resolution of disputes about a
federal agency's treatment of competitors for government contracts
offer persuasive authority for suspending contract award or
execution pending protests in order to protect the integrity of the
contracting process. See, Competition in Contracting Act, 31
U.S.C. 3551 et seq.

In Ameron Inc. v. United States Army Corps of Engineers, 809 F.2d
979 (3d Cir. 1986), the court explained that the bid protest
resolution procedures under the Competition in Contracting Acts
(CICA) are designed to enforce federal agencies' compliance with
required bid procedures and allow disappointed bidders to compel
the executive branch to explain procedural decisions to the
Comptroller General. Ameron at 983-84. Ameron, Inc., a
disappointed bidder, had protested a contract award. Before the
protest was resolved, the Army Corps of Engineers went forward with
execution of the contract by the winning bidder. Ameron sought
injunctive relief in federal court, while the Army Corps of
Engineers argued that, to the extent CICA imposed a stay on
contract execution by the executive branch, it represented an
unconstitutional legislative veto. The court interpreted the stay
provisions of the CICA as follows: "CICA contains a variety of
provisions regarding the timing of procurements challenged by
protests. The net effect of these provisions is to suspend the
procurement process until the Comptroller General has issued his
recommendation." Id. at 984. "[B]arring exigent circumstances,
once a bid protest has been filed, a contract cannot be executed
until the protest has been resolved." Id. at 985. The Third
Circuit characterized the CICA as providing an "automatic stay
provision," and "stay-extending power," reasoning that a stay of
contract award pending resolution of a protest was necessary to
give effect to the Controller General's recommendations. Id. at
986 - 87.

Honeywell, Inc. v. U.S., 870 F.2d 644 (Fed. Cir. 1989), a case
factually similar to this case, is illustrative of the fact that an
agency is empowered to suspend the procurement process pending
resolution of the protest, and further supports the notion that an
agency is empowered to interrupt the procurement process to correct
its own procedural errors. In Honeywell, the two lowest bidders
for an Army contract engaged in protests. The second-lowest
bidder, Honeywell, protested to the contracting agency, the Army,
that the lowest bidder, Haz-Tad, was not the type of business
entity qualified to participate in the procurement. Id. at 646.
The Army agreed with this characterization and rejected Haz-Tad's
bid as unresponsive to the Army's solicitation for proposals. Id.
Haz-Tad protested the rejection of its bid to the General
Accounting Office (GAO) and prevailed. Id. When the Army reversed
its initial position in accordance with the Comptroller General's
recommendation and awarded the contract to Haz-Tad, Honeywell filed
suit, claiming that the Army's action in following the GAO
recommendation was arbitrary and capricious. Id. at 647. The
Court of Claims reviewed the GAO recommendation on which the Army
had acted, set it aside as lacking a rational basis, and enjoined
the Army from awarding the contract to Haz-Tad. The Federal
Circuit reversed, upholding the Army's reliance on the Comptroller
General's recommendation. While the matter proceeded through the
Court of Claims and the Court of Appeals, the Army suspended the
award and execution of the planned procurement.

Another recent procurement case illustrative of the importance of
mandatory stay provisions in resolving disputes between competitors
for government contracts under CICA is Dairy Maid Dairy, Inc. v.
U.S., 837 F.Supp. 1370 (E.D. Va. 1993). In this case, Dairy Maid
objected to the Army overriding the CICA automatic stay provisions
to award a contract to Contact International, Inc., ("CIC") while
Dairy Maid's pre-award protest was pending. In an earlier,
"virtually identical contract" involving the same two contractors,
pending a protest by CIC, the Army had stayed execution of the
contract it had awarded to Dairy Maid and instead extended a
previous contract with CIC. Dairy Maid argued that the Army's
disparate treatment of the two situations was arbitrary and
capricious. Unlike the case before me, where the statute is silent
on competition altogether, CICA provides that if an agency makes
specific findings it can override a pre-award protest and go
forward with contract award before the GAO has issued its
recommendation. Id. at 1377 - 78. The District Court held that
the agency had failed to make the statutory showings necessary to
permit override of the pre-award stay, and further that the agency
had improperly failed to stop performance of the contract in
response to Dairy Maid's post-award protest, as required by CICA.

There is general legal precedent, outside the context of
procurement contract law, applicable to the circumstances of this
case. Where there is no statutory language to apply to unforeseen
circumstances, courts have declined to review an agency's
development of policy or modification of its own procedures.
Morton v. Ruiz, 415 U.S. 199 (1973), contains the most cited
formulation of this principle: "The power of an administrative
agency to administer a congressionally created and funded program
necessarily requires the formulation of policy and the making of
rules to fill any gap left, implicitly or explicitly, by Congress."
Id. at 231. For example, review of an agency action is not
available under the APA where such action is committed to agency
discretion by law, including "where `statutes are drawn in such
broad terms that in a given case there is no law to apply[.]'"
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410
(1971) (applying 5 U.S.C. 701(a)(2).

Also, an agency's rule which attempted to harmonize two
inconsistent statutory provisions has been sustained because "the
agency in a reasonable and responsible manner exercise[d] the
discretion that by inadvertence or legislative impasse it has been
afforded[,]" even though "[o]ther, equally reasonable
accommodations of the above competing interests can be imagined,
and we do not suggest that [the federal agency]'s procedures or
final solutions in any sense approach the ideal." Citizens to Save
Spencer County v. EPA, 600 F.2d 844, 872, 890 (D.C. Cir. 1979).

Here, although the statutory requirements may not have been clearly
inconsistent at the time they were enacted, the unexpected
competition between two valid contractors for overlapping areas
created a conflict between the ISDA requirement to accept proposals
timely and the requirement to contract with "any" tribe or tribal
organization. The ISDA does not provide for the circumstances
presented by this case. Therefore, IHS must fill in the gap left
by the Act through the exercise of its discretionary authority to
ensure that the Act's Indian self-determination contract rights are
available to both Shingle Springs and Rumsey.

When an agency exercises such discretionary authority, some cases
have held that an agency may depart from a prior norm, but the
agency has a judicially enforceable obligation to explain its
departure, even if the practice or policy has not been formally
promulgated or published. Atchison, Topeka and S.F. R. Co. v.
Wichita Board of Trade, 412 U.S. 800, 807-808 (1973); Greyhound
Corp. v. I.C.C., 551 F.2d 414 (D.C. Cir. 1977). IHS included such
justification in its redetermination letter of October 9, 1992.
IHS explained that, following its initial determination, it had two
acceptable competing proposals for the same service area, and that,
therefore, it was necessary to divide the area for contract
purposes. The purpose of enforcing informal norms against agencies
is to prevent them from frustrating the expectations fostered in
private individuals by agency practice or by an agency's
publication of guides and manuals. As I will discuss, acceptance
of IHS self-determination contracts proposals or awarding contracts
based on an accepted proposal can be delayed under the statute,
either to allow time for technical assistance to bring a proposal
to a point where it can be approved, or to allow time for a tribe
to acquire facilities and personnel required to perform a contract.
Rationale, IIA - C.

While Shingle Springs argues to the contrary, the record
demonstrates that past IHS practice reflects such flexibility in
contracting. Rationale, V - VI. Shingle Springs cites the
following language for the proposition that an agency's internal
procedural rules are enforceable against it if those rules affect
the substantive rights of private individuals: "Where the rights
of individuals are affected, it is incumbent upon agencies to
follow their own procedures." Morton v. Ruiz, 415 U.S. 199, 235
(1973). However, a close reading of Morton demonstrates that this
generic statement is not applicable to the facts of this case.
There is nothing in Morton that suggests that IHS policy letters
and circulars must be followed in all cases, irrespective of any
extenuating circumstances, or when they were never applied as
substantive rules. In Morton, the court was addressing a situation
where the Bureau of Indian Affairs (BIA) had denied general
assistance benefits to an Indian (Ruiz) because of a provision in
the BIA manual that limited eligibility for benefits to Indians who
were living on reservations. Since Ruiz had moved off of the
reservation, BIA denied him general assistance benefits based on
the provision contained in the manual. Morton, at 199.

The court's holding in Morton was therefore targeted to the
situation where an internal policy memo, not promulgated in
accordance with the APA, was used by the BIA to extinguish the
entitlement of Indians residing outside of reservations to general
assistance benefits. The court noted that the manual provision
cited by BIA to support its denial of benefits to Indians not
residing on reservations was solely an internal agency brochure
that was intended to control policies that do not relate to the
public. Morton at 235. The court held that while the underlying
statute arguably gave the BIA the authority to deny benefits to
Indians residing outside of reservations, the BIA could not use the
provision contained in its manual to extinguish the rights of those
Indians and could do so only via the notice and comment rulemaking
via the APA. Morton at 235 - 36.

In reaching its conclusion, the court in Morton noted that the use
of the provision in the BIA manual to deny general assistance
benefits to Indians living off of reservations was contrary to the
requirements contained in the BIA's own manual that required
publication of all directives that "inform the public of privileges
and benefits available" and of "eligibility requirements". Morton
at 235. Therefore, Morton does not support Shingle Springs'
position, because it holds that an internal agency policy that
affects the rights of individuals and that is not promulgated in
accordance with agency standards is ineffective. Morton at 236.

Admittedly, there is language in Morton stating that an agency is
bound to follow its own policies and procedures. Morton at 235.
However, this language does not stand for the proposition that an
agency is bound by the letter of all of its publications. Rather,
the language points to an inconsistency in BIA's own manual.
Specifically, it alludes to the fact that BIA was using its manual
to deny benefits to Indians living off the reservation, while the
same manual mandated that the public be informed, via formal
rulemaking, of eligibility requirements and of privileges and
benefits available. Morton, at 235. 20/

Additionally, while some courts have used the language in Morton
that is cited by Shingle Springs as supporting a requirement that
an agency is bound to follow strictly its own internal policies and
procedures, the rule has only been applied in circumstances
distinguishable from the instant matter. Some have arisen in the
context of adverse personnel actions by federal agencies against
their own employees, and courts have required those agencies to
comply with procedures for appealing such actions even where the
procedures were not formally promulgated. Paige v. Harris, 584
F.2d 178, 184-85 (7th Cir. 1978) (an agency must abide by its own
personnel regulations, even when it is not clear whether their
language was precatory or mandatory); Doe v. Hampton, 566 F.2d 265,
(1977) (provisions of the Federal Personnel Manual may be binding
on an executive agency, although "not `every piece of paper
emanating from a Department or Independent Agency is a
regulation.'" [cites omitted]); Service v. Dulles, 354 U.S. 363
(1957) (an agency must comply with informal procedural guarantees
such as those mentioned in the Federal Personnel Manual). These
cases of employee removals have a constitutional flavor, in that
the manual provisions invoked due process rights of the employees
facing removal.

Similarly, an internal procedural rule which required the agency to
inform individuals facing deportation proceedings of their right to
counsel was held to bind the Immigration and Naturalization
Service, at least to the extent that the INS's failure to apply the
rule was deemed reversible error, causing the deportation to be
reversed and remanded to the INS. Montilla v. INS, 926 F.2d 162,
166-67 (2d Cir. 1991). Formerly, an alien would have had to show
that the agency's procedural error was prejudicial, but Montilla
held that failure to follow a procedural rule designed to benefit
aliens was sufficient to require reversal. Notably, the rules in
Montilla were published in the Code of Federal Regulations, not
informal manual provisions. A later district court case within the
same circuit criticized Montilla for its failure to limit its
applicability explicitly to the quasi-constitutional right at issue
there. Ali v. Reno, 829 F.Supp. 1415, 1427 (S.D. N.Y. 1993).

Another case cited by Shingle Springs to the same effect involved
a formal (adjudicatory) rulemaking process which was tainted by ex
parte contacts with one of the competitors affected by the rule.
Sangamon Valley TV Corp. v. U.S., 269 F.2d 221 (D.C. Cir. 1959).
The informal agency procedure upheld in this case was one which
forbade such ex parte contacts. As in the cases involving
personnel removals and the deportation hearing, the reviewing court
here appeared to uphold an agency's internal procedural rules for
the purpose of preserving the integrity of an adjudicatory process.
It is not clear that the Morton holding that an agency must follow
its own informal procedural rules would ever be applied outside
this context.

A line of cases opposing the Morton rule, also in an adjudicatory
context, holds that "It is always within the discretion of a court
or an administrative agency to relax or modify its procedural rules
adopted for the orderly transaction of business before it when in
a given case the ends of justice require it." NLRB v. Monsanto
Chemical Co., 205 F.2d 763, 764 (8th Cir. 1953); see also Modern
Plastics Corp. v. McCulloch, 400 F.2d 14, 19 (6th Cir. 1968)
(informal procedures, even though published in the Code of Federal
Regulations, are "mere guidelines"). IHS cites a similar
"guideline" case in a prosecutorial context. U.S. v. Craveiro, 907
F.2d 260, 263-64 (1st Cir. 1990) (no rights are created by
procedural rules calling for pre-trial notice to defendants of the
possibility of enhanced sentencing). A Supreme Court case held
that the Department of Justice was not bound by a Circular Letter
which purported to limit grand jury discretion, because "It was
never promulgated as a regulation of the Department and published
in the Federal Register. It was simply a housekeeping provision of
the Department and was not intended to curtail or limit the
well-recognized powers of the grand jury[.]" Sullivan v. U.S., 348
U.S. 170, 173 (1954).

The holdings of these cases permitting agencies to depart from
their procedural rules may be restricted to their adjudicatory and
prosecutorial settings. However, Lincoln v. Vigil, 113 S.Ct. 2024
(1993), suggests that rules of agency organization and general
statements of policy, which are exempt from the APA requirement of
notice and comment rulemaking, are likewise unreviewable by courts.
21/

In Lincoln, southwestern Indians who had benefitted from an IHS
pilot program serving disabled children protested IHS' termination
of that program. The Supreme Court refused to accept uncritically
the APA presumption-of-review analysis suggested by parties and
federal courts below, but instead examined the statutory authority
upon which the program was based. Finding that there was no
explicit statutory reference to the project, the Court concluded
that it was developed as a discretionary use of unrestricted
appropriations that Congress had supplied to IHS, and, therefore,
there was no law against which to review IHS's acts in developing
or terminating the program:

We hold that the Service's decision to discontinue the Program
was `committed to agency discretion by law' and therefore not
subject to judicial review under the Administrative Procedure Act,
5 U.S.C. 701(a)(2), and that the Service's exercise of that
discretion was not subject to the notice-and-comment rulemaking
requirements imposed by 553.

Vigil at 2027.

Although arguably Morton would support treating the decision by IHS
to terminate the program as a "rule" requiring notice and comment
(and indeed some courts have followed Morton in finding that
similar agency actions require rulemaking) 22/, the Supreme Court
barely considered this argument. The Court in Lincoln stated that:
(1) agency allocation of lump-sum appropriations is unreviewable;
(2) to the extent Morton appears to require special procedural
protections for Indian programs based on the special trust
relationship between Indian people and the federal government,
there are no such protections because "that relationship. . .could
not limit the Service's discretion to reorder its priorities from
serving a subgroup of beneficiaries to serving the broader class of
all Indians nationwide;" and (3) the administrative framework of
the discontinued program, as well as its termination, were "rules
of agency organization," or possibly "general statements of
policy," specifically exempt from notice and comment rulemaking by
section 553(b)(A) of the APA. Lincoln at 2031 - 34. 23/

The case before me is analogous to Lincoln because here, as in
Lincoln, IHS is operating within a statutory framework that does
not provide for the consideration of competing contract proposals
and there is no specific statutory constraint barring IHS' proposed
action. Therefore, even assuming in this case that there are
agency policies or guidelines that directed the outcome sought by
Shingle Springs, a conclusion vigorously opposed by IHS and
Intervenors, the holding in Lincoln supports the finding that IHS
has the discretionary authority to decline to follow such policy or
guidelines unless there exists a direct congressional mandate to
the contrary. Shingle Springs can point to no such mandate in this
case.

Based on the above legal analysis, I find that the IHS has
discretionary authority to take appropriate actions to carry out
the principals of self-determination set out in ISDA in considering
the competing proposals where there is no Congressional mandate
prohibiting such exercise of discretion. I further find that IHS
had the authority and discretion to suspend the award of the ISDA
contract at issue here, pending resolution of the competing
proposals from Chapa-De and Shingle Springs.

B. The statutory framework under ISDA for accepting or
rejecting contract proposals does not impose a requirement on IHS
that, irrespective of the cicumstances, all such accepted proposals
be awarded.

The CAO received Shingle Springs' ISDA contract proposal on October
1, 1991. Finding 30. Therefore, under the statute, IHS had to
approve Shingle Springs' proposal by no later than December 30,
1991, unless IHS determined that one of the three specific
declination criteria applied. In the event one of the declination
criteria applied, IHS was required to decline Shingle Springs' ISDA
contract proposal by no later than December 2, 1991. Finding 110;
25 U.S.C. 450f(a)(2). On November 12, 1991, while Shingle
Springs' ISDA contract proposal was pending, IHS received
Chapa-De's ISDA contract proposal. Chapa De's proposal proposed to
serve much of the same geographic area as Shingle Springs'
proposal. The ISDA mandated that IHS had to approve Chapa-De's
proposal by February 10, 1992, unless IHS determined that one of
the three specific declination criteria were met. If IHS
determined that one of the declination criteria was applicable to
Chapa-De's proposal, IHS was obligated to decline the proposal by
January 11, 1992. Finding 111.

IHS officials testified that having two tribal organizations submit
ISDA proposals for practically identical overlapping geographic
areas was a situation they had never before encountered. Finding
137. IHS, upon receipt of the two competing proposals, recognized
the novelty and potential difficulties of the situation and was
unsure of how to proceed. Findings 105, 137. Accordingly, IHS
requested an extension of the 60-day declination deadline, but
Shingle Springs refused to grant IHS an extension. Finding 114.

Because Shingle Springs refused to extend the deadline, IHS was
compelled to approve Shingle Springs' proposal by December 30,
1991. IHS did have the option of declining Shingle Springs'
proposal by November 30, 1991, pursuant to the statutory
declination criteria. However, IHS chose to accept the proposal.
IHS did little, if any, analysis of the merits of Shingle Springs'
proposal, but chose to accept it based on IHS' assumption that
Chapa-De's proposal was deficient because it lacked a valid
sanctioning resolution. Finding 70. Specifically, IHS found that
Shingle Springs' proposal better served the self-determination
goals of the ISDA, because Shingle Springs' proposal had a valid
sanctioning resolution and IHS believed at that time that
Chapa-De's did not. Finding 69. I have already concluded that
Rumsey's sanctioning resolution supporting Chapa-De's November 12,
1992 ISDA contract proposal was valid. Rationale, I; Findings 91
- 107.

IHS contends that its December 2, 1991 letter was a conditional
acceptance of Shingle Springs' ISDA contract proposal.
Specifically, IHS conditioned its approval on Shingle Springs'
designating an individual other than Elsie Shilin, Shingle Springs'
tribal chairperson, to serve as principal agent for its ISDA
contract. IHS' concerns were based on the I.G's investigation of
Ms. Shilin, pending at the time of the contract proposal, for
misuse of federal funds from Indian tribal organizations and
falsification of travel vouchers. CD Ex. 16; Tr. at 288, 290, 325
- 26, 402, 408, 440; Finding 53.

Shingle Springs argues that under 25 U.S.C. 450f(a)(2), IHS was
obligated to accept its ISDA contract proposal within 90 days
unless it declined the proposal within 60 days. Shingle Springs
contends that because IHS did not decline its proposal using the
statutory declination criteria within the 60-day statutory time
frame, IHS was required to unconditionally award the ISDA contract
to Shingle Springs. SS R. Br. at 3.

Additionally, Shingle Springs contends that, where two ISDA
proposals for the same area are received at different
times, IHS is required to act on the proposal it receives first.
According to Shingle Springs, only if IHS declines the first ISDA
proposal using the criteria at 25 U.S.C. 450f(2) can IHS then
consider the ISDA proposal that is received subsequently. In this
case, Shingle Springs argues that since it submitted its ISDA
proposal first, and because IHS did not decline it using the
declination criteria, IHS could not even delve into the merits of
Chapa-De's ISDA proposal. Moreover, Shingle Springs argues that
IHS was compelled to decline Chapa-De's proposal because, in IHS'
December 2, 1991 letter, it had awarded the contract to Shingle
Springs and could not award an ISDA contract to Chapa-De for that
same area. SS R. Br. at 6 - 7.

IHS and Intervenors argue that the ISDA does not address the
problem of competing proposals to provide services in the same
service area. They contend that 25 U.S.C. 450f(2) only requires
IHS to decide whether to accept a proposal within 90 days or reject
a proposal within 60 days, and does not establish a time frame for
awarding a contract once the proposal has been approved. IHS R.
Br. at 1.

Upon review of the Act, I find that 25 U.S.C. 450f(a)(2) confers
no right to an automatic award of an ISDA contract merely because
a proposal is accepted. In most cases award of the contract will
follow from acceptance of the contract proposal. Here, however,
IHS has contended all along that because the situation of competing
proposals has never before arisen, the facts do not come under the
rubric of the normal contract declination process. I find that, as
IHS and Intervenors assert, the Act does not address the
possibility that two validly sanctioned proposals for overlapping
areas could be submitted.

Moreover, I find that the ISDA makes no distinction between ISDA
contract proposals based on the timing of their receipt by IHS. 24/
Under Shingle Springs' analysis, the time a proposal is received by
IHS determines whether IHS can accept the proposal. However, no
such distinction exists in the ISDA, which obliges IHS to ensure
the self-determination rights of each tribe and each tribe's right
to appeal the declination of its proposal. 25 U.S.C. 450f(a),
450f(b)(3); S. Rep. No. 274, 100th Cong., 2d Sess. 24 (1988)
reprinted in 1988 U.S.C.C.A.N., 2620, 2643. Additionally, the
analytical framework proposed by Shingle Springs would provide an
incentive for a tribe to submit an incomplete or vague ISDA
proposal to IHS simply to get priority over another tribe. This
would penalize the tribal entity whose ISDA proposal may have taken
longer to submit because it was thoughtful and well-conceived.
Thus, the Act neither establishes a preference for contracts
submitted earlier, nor ensures automatic contract award once a
proposal has been approved.

Further, IHS' December 2, 1991 acceptance of Shingle Springs'
proposal clearly does not constitute a contract award, contrary to
Shingle Springs' assertion, as it states "The next step of the
contracting process is to prepare for contract negotiations and
contract award." IHS Ex. 10. Therefore, Shingle Springs was
informed from the outset that it had not yet been awarded the ISDA
contract by virtue of IHS December 2, 1991 approval of its ISDA
contract proposal.

Furthermore, IHS and Intervenors contend that the specific
statutory deadlines must be construed in conjunction with the ISDA
as a whole, to assure each tribe's right to appeal the declination
of its proposal. IHS and Intervenors argue that Shingle Springs'
interpretation of the statute would defeat Intervenors' rights to
appeal the declination of their ISDA contract proposal because IHS
would be obligated to award the ISDA contract to Shingle Springs
once 60 days had passed from Shingle Springs' submission and IHS
could no longer decline it. Such a result would moot the appeal
process for Intervenors, because a contract including services
their tribal organization proposed to deliver would have already
been awarded before Intervenors' appeal resulted in a decision.

The statute states that the Secretary shall approve the proposal
within 90 days of receipt, unless she makes one of several specific
findings and declines the proposal within 60 days of receipt. 25
U.S.C. 450f(a)(2). Nowhere in this provision is it stated that
IHS must award a contract within either 60 or 90 days. The
provision merely specifies deadlines for the approval or
declination of an ISDA contract proposal.

Accordingly, Shingle Springs' contention that the IHS becomes
obligated to award an ISDA contract if it has not declined the
contract proposal within 60 days of receipt is without merit.
Shingle Springs' contention that the earliest of two or more
validly sanctioned ISDA proposals that IHS receives has priority
over a proposal received subsequently is also without merit. 25/
Finally, Shingle Springs' argument that the IHS letter approving
its proposal in effect awarded the contract is without merit.

C. While IHS erred by failing to decline Shingle Springs'
proposal under the third declination criterion at 25 U.S.C.
450f(a)(2)(C) and by conditionally accepting Shingle Springs'
contract proposal, IHS' error was mooted by the following: 1)
Shingle Springs' and Chapa-De's proposals overlapped and were in
competition; 2) Shingle Springs' failed to be in a position to
begin operations pursuant to the terms of the contract; and 3) IHS'
obligation to accord Chapa-De the right to appeal the declination
of its ISDA proposal.

IHS could have avoided much of the controversy arising under the
approval and declination deadlines if it had declined both contract
proposals pursuant to 450f(a)(2)(C) of the Act, i.e., that the
proposed project or function to be contracted for cannot be
properly completed or maintained by the proposed contract, based on
the fact that the two proposals overlapped with regard to provision
of services to eligible unaffiliated Indians residing in the same
geographical area. Under 450f(b) of the Act, once the contract
proposals were declined, IHS could have provided technical
assistance to both Shingle Springs and Chapa-De in an effort to
reconcile their overlapping contract proposals. If this had been
done, there would be no issue of whether acceptance of a contract
proposal absolutely commits IHS to award a contract based on such
proposal.

Even if IHS was not obliged to decline both proposals on the basis
of the overlapping service populations, it should have declined
Shingle Springs' proposal because of the ongoing fraud
investigation of the tribal chairperson designated to administer
the proposed contract. [See n. 28 of this Decision]. Instead, IHS
accepted Shingle Springs' proposal, but attempted to address the
risk posed by the fraud investigation by inserting a condition to
its acceptance, requiring Shingle Springs to designate as principal
agent someone other than the individual that was under
investigation. 26/

IHS was without authority to impose a condition on approval of an
ISDA contract proposal. In view of the existing statutory
mechanism, which permits IHS to decline a proposal based on the
specific declination criteria and offer technical assistance to the
tribe or tribal organization to address the objections and promote
development of an acceptable ISDA proposal, 27/ the same
declination criterion cited supra as applicable to the problem of
overlapping proposals applies here to the objection based on the
fraud investigation of the proposed principal agent. 28/ This
circumstance rendered the proposed contract defective, in that "the
proposed project or function. . .cannot be properly completed or
maintained" where the proposed agent is under suspicion of misuse
of program funds with respect to prior federal grants or contracts.
ISDA, section 450f(a)(2)(C).

Shingle Springs also argues that IHS, by conditionally accepting
Shingle Springs' contract proposal, has improperly imposed
threshold criteria upon its right to self-determination, thereby
failing to apply the declination criteria and afford Shingle
Springs its appeal rights under ISDA. Shingle Springs asserts that
such threshold criteria were explicitly rejected by Congress when
it amended the Act in 1988. SS R.P.H. Br. at 13 - 16. Since I
have agreed with Shingle Springs' conclusion by finding that IHS
did act improperly in imposing a condition on its approval, rather
than declining Shingle Springs' proposal, it is not necessary to
address this contention at length. The essence of the argument is
that Congress intended the declination criteria to restrain IHS
from refusing to award contracts based on objections other than
those Congress considered substantial enough to specify as
justifying declination. 29/ Congress, in enacting the amendments
to the ISDA, wanted to insure that IHS had no mechanism for
declining an ISDA proposal without appeal rights inuring to the
disappointed contractor. As discussed below, the fact that Shingle
Springs has been accorded and indeed is currently exercising its
appeal rights defeats the argument that IHS intended by its
conditional approval to impose illegal "threshold criteria" against
Shingle Springs which would deprive them of any appeal rights.

Shingle Springs is correct in its assertions that IHS: 1) should
have relied on section 450f(a)(2)(C) of the Act to decline Shingle
Springs' contract proposal and 2) acted improperly by approving the
proposal with a condition. SS R. Br. at 15 - 16. Absent the other
circumstances in this case, Shingle Springs would be correct in its
contention that IHS' action in offering a conditional approval was
improper and denied Shingle Springs the appeal rights that would
otherwise have vested at the time its proposal was declined.
However, the question of conditional approval, as well as the issue
of whether or when Shingle Springs met or failed to meet the
condition, were rendered moot by other factors.

1. That the ISDA does not address nor contemplate competing
proposals compelled IHS to deviate from the statutory deadlines.

First, the Act contains no provision that addresses the existence
of two valid, overlapping, and therefore competing, proposals. IHS
was therefore compelled to deviate from the statutory deadlines
because it was required to address a situation that was not
contemplated by the statute. Until IHS found a way ultimately to
meet its statutory obligations to both Rumsey and Shingle Springs
by reconfiguring the preexisting service area and awarding
non-competing contracts to both tribes, award of a contract to
either party was impossible. IHS' letter of June 19, 1992 notified
Shingle Springs and Intervenors that their proposals were
competing. IHS Ex. 9. 30/ This letter shows that, once IHS
correctly realized it had two competing proposals, IHS also
realized that it could not award an ISDA contract in accordance
with either of the proposals.

Faced with an obligation to approve an ISDA proposal unless it
could be declined within 60 days of receipt, and confronted with
competing proposals and no statutory basis for choosing between
them, IHS chose to extend the statutory deadlines while attempting
to design contracts fulfilling the self-determination rights of
both Shingle Springs and Rumsey. Initially, whether or not an
improper condition had been imposed, and regardless of Shingle
Springs' response to it, IHS would have required more time to
resolve the situation than the statutory deadlines provide. Based
on the parties' positions prior to the hearing, it is evident that
IHS would have had to engage in the same lengthy process of
attempted negotiation to arrive at the solution that IHS proposed
in its October 9, 1992 letter. This is especially true because IHS
was, for the first time, confronted with a situation where both
parties were entitled to an ISDA contract to provide health care
services to a part, but not all, of the territory contained in
their overlapping proposals.

2. Shingle Springs' failure to be in a position to carry out
the terms of its ISDA proposal renders IHS' error moot.

Secondly, the contract could not have been awarded within the
120-day suggested deadline in any case, because as a practical
matter Shingle Springs had not yet acquired the facilities
necessary to perform the contract as proposed and was therefore not
in a position to enter into its ISDA contract on January 29, 1992
to provide medical services to all IHS beneficiaries in the four
county area by April 1, 1992.

As I stated previously, even assuming IHS' December 2, 1991
acceptance of Shingle Springs' contract proposal was conditional,
IHS lacked the authority to impose a condition upon the acceptance
of Shingle Springs' ISDA proposal and IHS erred in failing to
decline the proposal. However, I find that even absent IHS' error,
Shingle Springs was not in a position to satisfy the terms of its
proposed ISDA contract.

I now focus on whether, by January 29, 1992, Shingle Springs was in
a position to enter into a contract to begin providing services to
the IHS beneficiaries in the four-county area as of April 1, 1992,
the date that Shingle Springs proposed to begin to provide services
under its contract. The date of January 29, 1992 is relevant also
because, as I noted earlier, Policy Letter 89-4 provides that an
ISDA contract proposal shall be awarded within 120 days from the
date a proposal is submitted. Rationale, IIB; Findings 146 - 79.
Shingle Springs has contended throughout these proceedings that,
since Policy Letter 89-4 mandates an award within 120 days of the
submission of an ISDA proposal, 31/ IHS was obligated to award
Shingle Springs the ISDA contract by no later than January 29,
1992. 32/

Therefore, I now examine the contracting situation as it existed on
these two dates to determine whether Shingle Springs was able to
fulfill the terms of the contract as of either of those dates.
While Shingle Springs has contended throughout these proceedings
that it should have been awarded an ISDA contract for the entire
Chapa-De Service area, Shingle Springs was not in a position to
provide services pursuant to that contract as of January 29, 1992
or as of the April 1, 1992 startup date of the contract.

The primary reason for this is that Shingle Springs did not timely
take the steps to obtain leased facilities through the LPS. As of
November 1, 1991, Shingle Springs believed erroneously that it did
not have to use the LPS to obtain leased space for its proposed
health clinics. SS Ex. 35; Finding 339. Shingle Springs believed
erroneously that it could obtain leased space independent of the
leasing priority system, through the Indian Health Care Improvement
Act. SS Ex. 35. Shingle Springs also believed erroneously that
the LPS did not apply to facilities under 11,000 square feet. SS
Ex. 35.

In a letter dated November 21, 1991 the CAO advised Shingle Springs
that its proposal did not adequately address the requirements of
the leasing priority system and suggested it revise its proposal to
do so. SS Ex. 40. In a November 22, 1991 letter to the CAO,
Shingle Springs conceded that its previous position regarding the
LPS was in error, and admitted that, due to the complexities and
delays associated with the leasing priority system, the earliest
Shingle Springs could obtain leased space through the leasing
priority system was May 31, 1992. Finding 342. Therefore, Shingle
Springs knew as of November 22, 1991 that it could not fulfill the
terms of the contract because it lacked the office space in which
to provide the services.

In a letter dated January 25, 1992, the CAO requested that Shingle
Springs consent to an extension of the current Chapa-De contract
through May 31, 1992 to allow time for congressional approval of
Shingle Springs' proposed lease site. IHS Ex. 19; SS Ex. 55. In
a letter dated February 28, 1992, Ms. Shilin and Shingle Springs
demonstrated an intention to lease facilities to enable it to carry
out services in accordance with its ISDA proposal. SS Ex. 57.
However, Shingle Springs was thwarted in this attempt because it
had not obtained the requisite Congressional approval. SS Ex. 58.
Thus, according to this correspondence, Shingle Springs could not
have executed the contract even had IHS awarded the contract in
accordance with Shingle Springs' proposal. SS Ex. 55, 57, 58.
Even if I were to find that IHS was mandated to award the ISDA
contract to Shingle Springs by January 29, 1992, the fact remains
that Shingle Springs could not have carried out the terms of its
contract. Likewise, even as of April 1, 1992, Shingle Springs was
not in a position to fulfill the terms of their ISDA contract
proposal.

Additionally, the implementation of an ISDA contract to serve the
eligible Indians in the area was put on hold because of the unique
circumstances of competing proposals which compelled IHS to extend
the statutory deadline while attempting to design contracts that
would fulfill the self-determination rights of both Shingle Springs
and Rumsey. The result of this was that the parties entered into
settlement negotiations that lasted most of 1992. IHS Ex. 9.
Shingle Springs, which initially balked at IHS extending Chapa-De's
contract, subsequently realized that it was not in a position to
carry out the terms of the contract and consented to several
extensions of Chapa-De's contract to ensure uninterrupted service
to its tribal members.

Shingle Springs vehemently objects to IHS' failure to meet
deadlines it argues are imposed under ISDA. However, ironically,
through its own missteps and omissions, Shingle Springs could not
have implemented the contract timely even if IHS had awarded it
within the 120-day time frame suggested by Policy Letter 89-4. The
record shows that the delay that Shingle Springs claims occurred in
IHS awarding it a contract was due to a combination of Shingle
Springs' failure to obtain leased space and the parties' voluntary
good faith attempts to settle the case. IHS Ex. 9; Findings 26 -
90, 301, 302, 342 - 46. Therefore, even assuming that IHS should
have awarded the contract to Shingle Springs as of January 29, 1992
or as of April 1, 1992, Shingle Springs could not have carried out
the contract as of either of those dates. Moreover, once Shingle
Springs chose to reject the modification of its October 1, 1991
contract proposal as set forth in IHS' October 9, 1992
redetermination, all efforts to implement its initial proposal were
put on hold pending the outcome of its appeal under ISDA. 33/

3. IHS' obligation to accord Chapa-De a right to appeal its
ISDA declination permits IHS to extend the deadlines for contract
approval and contract award.

Thirdly, on January 30, 1992, IHS stayed the award of Shingle
Springs' October 1, 1991 contract proposal pending the appeal filed
by Chapa-De of the decline of its November 12, 1991 contract
proposal which involved essentially the same geographical area and
service population as that proposed by Shingle Springs. SS Ex. 56.
This action was consistent with IHS' obligation under ISDA to
provide declined proposed contractors full appeal rights. Act,
section 450f(b)(3).

Any of the intervening circumstances mentioned above would have
prevented IHS from meeting the statutory deadline for contract
approval and the internal agency deadline for contract award
following approval. Therefore, the conditional approval had no
effect on the treatment of Shingle Springs' proposal. Moreover,
because IHS' October 9, 1992 redetermination letter was treated as
a constructive declination, it accorded the statutory appeal right
to both Shingle Springs and Intervenors. The parties' appeal
rights have therefore been preserved.

IHS' refusal to award the contract as originally proposed by
Shingle Springs was due to circumstances that arose after the
contract proposal was accepted, was not in contravention of the
self-determination rights afforded Indian tribes under ISDA, and
was consistent with its discretionary authority to take necessary
actions to carry out its responsibilities under the Act. The fact
that Shingle Springs in this case exercised its appeal rights
proves that, although the conditional approval was not proper, the
concern Congress addressed in amending the Act to eliminate
"threshold criteria," and thereby guarantee appeal rights for
tribes whose proposals are declined, is not present in this case.

III. IHS has not implemented IHS Policy Letter 89-4, relating to
awarding contracts 120 days from the date the contract proposal was
originally submitted, in such a manner that it would bind IHS if
IHS gave conditional approval to Shingle Springs' proposal and/or
there was a competing proposal from Chapa-De.

On August 14, 1989, the Acting Director of IHS' Division of Grants
and Grants Policy issued IHS Contract Policy Letter 89-4 to IHS
Contracting Officers. SS Ex. 10. Policy Letter 89-4 was issued in
response to the 1988 amendments to the ISDA and provides in
relevant part:

. . . While the time frames contained in the Amendments are
self-implementing and IHS will adhere to them, a process must be
followed to make this provision meaningful. The process detailed
below is based on existing regulatory language under 42 C.F.R. 36
as well as language from the regulations drafting process for the
Amendments, i.e., the adoption of a 120-day standard for the
issuance of an award.
. . . If the proposal is not declined or otherwise denied, by
the 90th calendar day (or such date representing an authorized
extension) from receipt of the complete proposal, the Area Director
shall advise the Indian tribe or tribal organization that its
proposal has been approved and that an award will be issued
following negotiations but no later than 120 calendar days
following receipt of the proposal (or such date representing an
authorized extension), unless both parties agree to a later date.

SS Ex. 10 at 2 and 3.

Shingle Springs contends that Policy Letter 89-4 is binding upon
IHS as a matter of law because of the "plain language of the Policy
Letter and . . . [the] federal law on the binding effect of
internal agency guidelines." Also, it argues that an agency is
bound by its own rules when the interests of private parties are
affected and "ad hoc departures from those rules, even to achieve
laudable aims, cannot be sanctioned." Reuters, Ltd. v. F.C.C., 781
F.2d 946, 950 (D.C. Cir. 1986).

Shingle Springs states that Policy Letter 89-4 is a substantive
rule which directly affects and impacts the rights and interests of
ISDA contractors. Relying on Morton v. Ruiz, Shingle Springs
further argues that such policy has the force and effect of law and
must be followed. SS P.H. Br. at 25 - 26. Shingle Springs' view
is that Policy Letter 89-4 is binding upon IHS in all situations
and mandates that IHS award the ISDA contract no later than 120
days following the receipt of the contract proposal. Moreover,
according to Shingle Springs, Policy Letter 89-4 mandates that the
120-day deadline must always be followed by IHS unless it is waived
with approval of the contractor. Under Shingle Springs' analysis,
IHS' failure to decline Shingle Springs' ISDA proposal under the
statutory declination criteria compels IHS to enter into an ISDA
contract with Shingle Springs. Shingle Springs also points to the
fact that IHS, prior to this case, has always awarded ISDA
contracts within the 120-day time frame. Lastly, Shingle Springs
emphasizes that IHS did not request, nor did Shingle Springs ever
agree to, an extension of this deadline. SS P.H. Br. at 27.

IHS contends that Policy Letter 89-4 is an unpublished and internal
agency timetable for reviewing contract proposals within 120 days,
the purpose of which is to prevent ISDA proposals from languishing
in the system. 34/ IHS contends that, accordingly, Policy Letter
89-4 is not intended to limit IHS agency discretion and is a policy
statement rather than a substantive rule. Vietnam Veterans of
America, et al. v. Secretary of the Navy, 843 F.2d 528 (D.C. Cir.
1988). According to IHS, under Vietnam Veterans, unless an agency
intends to establish a substantive rule which creates or modifies
rights that can be enforced against the agency, the issuance of a
policy statement by an agency cannot bind the agency's discretion.
As such, IHS argues that it is free to relax or modify Policy
Letter 89-4. Additionally, IHS contends that the situation of
competing proposals, as is the case here, is a unique situation,
and therefore does not fall within the framework of the routine
situations that Policy Letter 89-4 was designed to encompass. IHS
Br. at 22. However, as Shingle Springs correctly indicates in its
reply brief, the D.C. Circuit in Vietnam Veterans distinguished the
non-binding policy statement at issue from informal procedural
rules affecting substantive rights of private parties, which the
court said would be binding on the agency despite their
informality. Id. at 537, 538; SS Reply Br. at 11.

My prior discussion of the cases involving agency discretion,
Rationale, IIA, is applicable here. As discussed, in Morton the
Court refused to give effect to a "legislative-type rule," which
determined eligibility for welfare services and which had not been
promulgated through notice and comment rulemaking but merely
published in an internal Bureau of Indian Affairs (BIA) manual.

This conscious choice of the Secretary not to treat this
extremely significant eligibility requirement affecting the rights
of needy Indians, as a legislative-type rule, renders it
ineffective so far as extinguishing rights of those otherwise
within the class of beneficiaries contemplated by the Congress is
concerned.

Id. at 236. However, the Court in Morton held that the BIA was
bound by the policy stated in its internal operations manual to the
effect that eligibility criteria for agency benefits would be
published in the Federal Register. Id. at 233 - 35. "Where the
rights of individuals are affected, it is incumbent upon agencies
to follow their own procedures." Id. at 235. Thus, the Court held
that the BIA was bound by an informal procedure that prohibited the
agency from enforcing an informal substantive rule. Where the
statement that agencies must follow their own procedures has been
followed as a general rule, the cases have involved adjudicatory
settings (adverse personnel actions, deportation hearings,
on-the-record rulemaking -- Doe V. Hampton, Montilla, Sangamon
Valley which have quasi-Constitutional implications, or in contexts
such as licensing processes where competition is a given.)

Shingle Springs cites Reuters, Ltd. v. F.C.C., 781 F. 2d 946, 950
(D.C. Cir. 1986) for the proposition that agencies may not depart
from procedural rules that confer substantive rights on private
parties, even to achieve laudable aims. However, Reuters is easily
distinguished from the case before me because in Reuters, the court
was dealing with the F.C.C.'s ad hoc departure from a published
rule. Reuters at 947 - 950. Moreover, the court in Reuters, in
stating that an agency must adhere to its own rules and
regulations, made clear that it was explicitly addressing the
situation of an agency's fidelity to rules that have been properly
promulgated, consistent with statutory requirements. Reuters at
951.

Similarly, Shingle Springs relies on Massachusetts Fair Share v.
Law Enforcement Assistance Administration, 758 F.2d 708 (D.C. Cir.
1985) for the proposition that an agency cannot alter procedures
that affect substantive rights of private parties. However, in
Massachusetts Fair Share, the court was addressing the joint
administration of a grant program where one of the agencies had
unilaterally denied a grant application, in direct contradiction to
the agencies' jointly established application process.
Massachusetts Fair Share at 712. Holding that the procedures
established for the administration of the grant program precluded
unilateral action by one of the administering agencies, the court
specifically noted that the Federal Register notice announcing the
grant program had characterized it as jointly developed and
administered. Id. at 712.

Shingle Springs' reliance on Massachusetts Fair Share is therefore
misplaced, because, in that case, the court's objections to the
agency's action were based on the fact that the agency acted
outside the clear mandates contained in the federal register and in
the program documents. In the case before me, unlike Massachusetts
Fair Share, there is no federal register publication nor is there
a wealth of underlying documents that mandates the manner in which
the CAO or IHS is to administer competing ISDA proposals. To the
contrary, this is a case of first impression. Unlike the agency in
Massachusetts Fair Share, IHS here did not have unambiguous
instructions, nor did IHS have a clear policy mandate. As I stated
earlier, the record reflects that IHS was torn between following
89-4 and according Shingle Springs and Intervenors their respective
rights to self-determination. Further, Massachusetts Fair Share
does not squarely address the situation of agencies' discretion to
vary their procedures (as Shingle Springs asserts), because
Massachusetts Fair Share does not indicate whether both of the
empowered agencies could validly have changed their application
process by informal means had they acted jointly.

Policy Letter 89-4 does not resemble a legislative-type rule so
much as it does a rule of agency organization, or a general
statement of policy (statement issued by an agency to "advise the
public prospectively of the manner in which the agency proposes to
exercise a discretionary power"). Chrysler Corp. v. Brown, 441
U.S. 281, 301 n.3 (1979), citing Attorney General's Manual on the
APA (1947). Indeed, pursuant to section 450k(a) of the ISDA, such
rules cannot be imposed on private parties without notice and
comment rulemaking. Further, section 450k(a) stipulates that
regulations which impose "requirements" on tribes or tribal
organizations must be promulgated by APA section 553 notice and
comment rulemaking, implying that other "necessary and proper"
rules, such as agency organizational rules for carrying out the
mandatory provisions, need not be so promulgated.

Although Policy Letter 89-4 contains a self-imposed agency deadline
for contract award and thus affects substantive rights of private
parties proposing contracts, that deadline is not one of those
required by the otherwise highly specific ISDA. Rather, the
purpose of Policy Letter 89-4 is to advise the public prospectively
of the manner in which the IHS proposes to exercises its
discretionary power. As such, it is an internal organizational
rule, within the meaning of Chrysler Corp., which enables IHS to
carry out its statutory mandate. A rule of agency organization or
general statement of policy is not subject to notice and comment
procedures under section 553 of the APA, and under Lincoln v.
Vigil, an agency's departure from such rules would be an
unreviewable exercise of statutory discretion. Lincoln v. Vigil at
2034. Thus, Shingle Springs cannot invoke Policy Letter 89-4 as an
authority to bind IHS, especially in this case, where the departure
from the internal deadline was necessary to permit IHS to comply
with its statutory mandate to accord all tribes the right to
self-determination via the ISDA contracting process.

The ISDA directs IHS to enter into a self-determination contract
with "any tribe or tribal organization," and gives a right of
appeal to tribes and tribal organizations whose proposals are
declined. Thus, had IHS adhered to the deadline, it would have
effectively precluded Chapa-De from exercising its appeal rights.
For IHS to apply a deadline that would prevent Chapa-De from going
forward with its ISDA proposal, and therefore prejudice Chapa-De's
right to contract, the deadline would have to be promulgated by APA
notice and comment rulemaking. See, Chrysler Corp. v. Brown. No
such notice was promulgated in this case.

IHS disputes Shingle Springs' contention that Policy Letter 89-4 is
binding because it affects the interests of private parties.
According to IHS, Shingle Springs has confused the situation in
this case with situations where an agency has created an
adjudicative process for determining the rights of a private party.
IHS believes that Policy Letter 89-4, as an internal agency
guideline for entering into an ISDA contract once IHS has approved
a proposal, conveys no such rights.

Moreover, IHS contends that it needs flexibility in administering
ISDA contracts. According to IHS, it is routine for proposals to
be modified after they have been approved but before the contract
is awarded. Finding 154. IHS points out that it has no means of
ensuring that all difficulties can be ironed out in the 120-day
period mentioned in Policy Letter 89-4. IHS avers that under
Shingle Springs' scenario of a mandatory award of an ISDA contract
within 120 days, a tribe whose ISDA proposal has been accepted
could simply refuse to compromise in implementing the details of
its proposal. The tribal entity could do this knowing that IHS is
bound to award them the contract within 120 days even if the tribe
is not in a position to begin providing services as of that date.
IHS points out that Policy Letter 89-4 was not implemented so as to
limit IHS' discretion to withhold award of an ISDA contract pending
a necessary modification of that contract. n. and Finding 155.

Lastly, IHS contends that Policy Letter 89-4 cannot be used to
defeat Rumsey's and Chapa-De's rights to appeal an ISDA contract
declination. IHS and Intervenors state that ISDA gives a tribal
entity whose proposal has been declined the right to appeal the
declination. IHS and Intervenors contend that to interpret Policy
Letter 89-4 as mandating award of a contract within 120 days would
serve in this instance to moot the appeal rights of the tribal
entity whose proposal was declined. IHS contends that it could not
act to deprive a tribe or tribal organization of its right to
appeal absent a mechanism promulgated in accordance with the notice
and comment procedures of section 553 of the APA.

I find that the purpose of Policy Letter 89-4 is, as is stated in
the document itself, for the Director of IHS to provide guidance to
IHS contract officers on implementing non-construction contracts
under ISDA. SS Ex. 10; Findings 146 - 79. The plain language of
Policy Letter 89-4 indicates that IHS intends to follow the 120
days as a guideline and that IHS is free to remain flexible and
institute changes in this "deadline" as the situation warrants. SS
Ex. 10; Findings 146 - 79.

Contained in the implementing instruction of Policy Letter 89-4 is
a specific reference to the implementing regulations at 42 C.F.R.
36. The implementing regulations state as follows:

Administrative Instructions. The Service periodically issues
administrative instructions to its officers and employees which are
primarily found in the Indian Health Service Manual and the Area
Office and Program Office supplements. These instructions are
operating procedures to assist officers and employees in carrying
out their responsibilities and are not regulations establishing
program requirements which are binding upon members of the general
public.

42 C.F.R. 36.2. Although the regulation is silent as to the
extent to which informal administrative instructions bind IHS, it
clearly shows that IHS viewed them as providing guidance and
assistance to its staff rather than mandating strict limits to
their methods of carrying out their duties under the program.
Thus, the implementing regulations provide further support that the
120-day guideline is a date that is not binding upon IHS.

The statement in IHS' regulation is supported by the Supreme Court
in Lincoln v. Vigil, which found an IHS program decision
unreviewable because it was either a "rule of agency organization"
or a "general statement of policy" under the APA. Id. at 2034.
The Court did not find it necessary to determine which of these two
categories described IHS' action (discontinuing a particular
regional program funded by lump-sum appropriation), but held that
just as both are exempt from APA rulemaking requirements, both
represent exercises of agency discretion which are not reviewable
by courts. Id.

I find that Policy Letter 89-4 is an administrative instruction as
defined by the regulations at 42 C.F.R. 36.2. Finding 151; 42
C.F.R. 36.2; SS Ex. 10. As such, it is not binding upon members
of the general public, but is instead a procedure to assist IHS
employees in carrying out their responsibilities. Findings 146 -
79. Additionally, I find that the intent of IHS in implementing
Policy Letter 89-4 was, as IHS claims, to speed processing of ISDA
contract proposals and to assure that they do not languish in the
system. Findings 170 - 78; Tr. at 258. While this is an admirable
goal, it is not a standard that IHS is required to meet in all
cases. In short, Policy Letter 89-4 is, by its express terms, a
policy and is not a procedural rule that establishes enforceable
rights for tribal contractors. Moreover, there is no language in
Policy Letter 89-4 that suggests that the 120-day time frame was
intended to apply to situations involving IHS' consideration of two
valid competing contract proposals submitted within 45 days of each
other.

I am, however, troubled by the factual circumstance that, in all
cases prior to Shingle Springs' proposal, IHS has strictly adhered
to the 120-day time frame. Thus, despite the express language of
Policy Letter 89-4, it can be argued that, by its past conduct, IHS
has created an expectation in the minds of tribal contractors that
once their ISDA contract proposals are accepted by IHS, they will
be awarded within 120 days, unless they agree to an extension.
Such factual circumstances might suggest the presence of a
procedural rule providing substantive rights to private parties in
routine situations involving ISDA self-determination contracts.

However, the clear goal of the ISDA is to provide equal
self-determination contract rights to all recognized tribes. No
priority is established for a tribe that was previously receiving
services within an established service area that would enable that
tribe to block all other recognized tribes from proposing to serve
its members in that area or a portion of that area. Such an
interpretation was expressly rejected by the court in Southern
Indian Health Council. Rationale, I.

As indicated previously, the ISDA is silent on the issue of
competing tribes. Rationale. Accordingly, absent a congressional
mandate requiring IHS to uniformly apply the 120-day time frame set
forth in Policy Letter 89-4 in all situations irrespective of
whether rights of tribes may be adversely affected, I find that it
is still a rule of agency organization or policy which does not
require notice and comment rulemaking nor provide enforceable
rights to third parties. See Vigil, Findings 108 - 79.

An additional distinction is that, even though IHS created this
expectation generally, in this case it advised Shingle Springs
prior to the end of the 120-day time period that IHS could not
adhere to that time frame due to the pending appeal of the
declination of a competing proposal from Chapa-De. An agency's
decision may depart from the norm, providing that the agency
provides an opinion or analysis indicating that the norm is being
changed and not ignored, and assuring that it the decision is
faithful to and not indifferent to the rule of law. Greyhound
Corp. v. I.C.C., 551 F.2d 414 (D.C. Cir. 1977) at 416.

In this case, IHS did provide Shingle Springs with an opinion or
analysis within the meaning of Greyhound when it informed Shingle
Springs that, because IHS now had two acceptable proposals for the
same program, it was necessary to divide the program to best
approximate the expected service population while assuring that
both programs would operate satisfactorily. IHS Ex. 14. On that
basis, IHS revised its initial determination and divided the
Chapa-De program for purposes of contracting. IHS Ex. 14.
Therefore, to the extent that IHS' October 9, 1992 was a departure
from the past practice of awarding an ISDA contract within 120
days, it falls within the rubric of agency discretion as
articulated in Greyhound, because IHS did not simply disregard its
past practices, but indicated the reasons for the departure from
those practices and gave a basis for its final decision.

An analysis of IHS' actions under the standards articulated in
Atchison, Topeka and Santa Fe R.R. Co. v. Wichita Board of Trade,
412 U.S. 800 (1972) (Santa Fe. R.R.) gives the same result as that
mandated by Greyhound. In Santa Fe R.R., the Court noted an agency
may flatly repudiate a norm by which it operates, provided the
agency provides a clear explanation for its doing so. Santa Fe
R.R., at 808. In this case, as noted above, IHS departed from its
norm of awarding ISDA contracts within 120 days. However, in
accordance with Santa Fe R.R., IHS provided the parties with an
explanation as to why it was departing from this past practice.
IHS Ex. 14. Indeed, throughout settlement negotiations that
occurred for the better part of 1992, IHS made the parties aware of
why it had not awarded the ISDA contract within 120 days. IHS Ex.
12, 13.

That IHS' alleged failure to comply with the 120-day guideline of
Policy Letter 89-4 confers no right upon Shingle Springs is further
supported by the analysis contained in U.S. v. Craveiro, 907 F.2d
260 (1st Cir. 1990). In Craveiro, a defendant in a criminal
proceeding argued for a remand of his sentence. The defendant's
contentions were grounded on three separate arguments, one of which
was the prosecutor's failure to provide pre-trial notice of an
enhanced penalty for a repeat offender in accordance with the
Department of Justice's published guidelines. Craveiro, at 263 -
64. In rejecting the defendant's arguments, the court stated that
internal guidelines of a federal agency, that are not mandated by
statute or the Constitution, do not confer substantive rights on
any party. Craveiro at 264.

Even if I had found persuasive the cases cited by Shingle Springs
supporting the conclusion that Policy Letter 89-4, as applied by
IHS, creates an enforceable private right, the circumstances in
this case would create an exception to such an application to
Shingle Springs. The awarding of the contract within the 120-day
time frame is a bilateral act between IHS and the tribal
contractor. At the time of such award, each party to the contract
must be in position to carry out the terms of the contract. Here,
as previously found, Shingle Springs, by January 29, 1992, was not
in position to carry out the terms of its ISDA contract proposal.
It did not acquire the necessary lease facilities to operate the
medical clinics until the middle of April 1992 -- substantially
after the expiration of the 120-day time period. Rationale, IIC2.

To the extent that a substantive right arose by virtue of IHS' past
practices regarding Policy Letter 89-4, Shingle Springs' actions
could be construed as a waiver to have its proposal awarded in
accordance with Policy Letter 89-4. 35/ Additionally, arguably,
Shingle Springs' failure to be in a position to be able to carry
out the terms of the contract, and its consent to allow Chapa-De to
continue to provide health care services after April 1, 1992 could
rise to the level of an estoppel of Shingle Springs right to assert
that it was harmed by IHS' failure to follow the 120 day guideline,
or that IHS was bound by Shingle Springs' interpretation of Policy
Letter 89-4. 36/

Lastly, for IHS to award Shingle Springs' contract within the
120-day time frame would essentially moot Chapa-De's appeal of IHS'
declination of its contract proposal. The ISDA does not give
priority to Shingle Springs over Intervenors merely because IHS
incorrectly accepted Shingle Springs' proposal before recognizing
that two legitimate and competing proposals had been submitted.
Such circumstance provides an exception to application of a private
right to Shingle Springs, since it would deprive Chapa-De of its
contract rights under ISDA.

Based on the foregoing, I find Shingle Springs' arguments regarding
the enforceability of Policy Letter 89-4 to be without merit. IHS
Policy Letter 89-4 contains no language that would indicate that it
was intended to limit IHS' discretion in awarding ISDA contracts.
SS Ex. 10. The implementing regulations make clear that this is
not the intent of the document. 42 C.F.R. 36.2. Although IHS'
goal is to comply with the 120-day guideline, and it has met that
goal in all prior instances, except when a tribe has agreed to an
extension of time, the record reflects that the situation here was
a unique one not contemplated by the ISDA. Never before had the
CAO encountered a case of two federally recognized tribes
submitting competing proposals for an ISDA contract for essentially
the same geographical area that primarily would serve unaffiliated
Indians. Finding 137. Given the unique situation of competing
proposals for an overlapping service population, it is reasonable
that IHS would need more than 120 days to award the contract for
the Chapa-De Service Area. This is particularly true here, since
IHS needed to undertake the necessary evaluation to properly
allocate the unaffiliated Indians in a manner that would allow each
tribe to have a viable program and exercise their individual
self-determination rights under ISDA.

This is precisely what happened. On January 30, 1992, the Director
of the CAO informed Shingle Springs that he would not apply the
120-day timetable set out in Policy Letter 89-4 because of the
"special situation" created by the competing proposals from two
qualified contractors and the pending appeal by Chapa-De. CD Ex.
56; Tr. at 153. Shingle Springs was nonetheless engaged in
negotiations with Intervenors and IHS that lasted the better part
of 1992, and which culminated in IHS' redetermination of October 9,
1992. IHS Ex. 9, 10, 13, 14. Therefore, Shingle Springs'
objection to IHS' failure to follow the 120 day guideline seems
more a protest of IHS' October 9, 1992 redetermination than it is
a legitimate argument against IHS violating a binding rule. In
essence, Shingle Springs raised this argument once it became aware
that IHS was not going to award it a contract for the entire
Chapa-De Service Area.

Lastly, I find that Policy Letter 89-4 should not be construed in
such a way that is contrary to the intent of the ISDA, nor should
it be construed in such a way that it would compel IHS to award a
contract where it had legitimate reasons for not doing so. The
ISDA contemplates that all tribes have a right to
self-determination and that IHS must assist them in achieving this
goal. 25 U.S.C. 450f(a)(1). ISDA regulations provide specific
procedures to ensure each tribal organization's right to appeal the
declination of its proposal. 25 U.S.C. 450b(f)(3); S. Rep. No.
274, 100th Cong., 2d Sess. 24 (1988), reprinted in U.S.C.C.A.N.
2620, 2643 (1989). In this case, were I to find that IHS had to
award Shingle Springs an ISDA contract within 120 days,
Intervenors' right to appeal would have been rendered meaningless,
because the contract would have been awarded before the appeal was
decided. 37/ Shingle Springs' interpretation of Policy Letter 89-4
is unreasonable because it would force IHS to award the contract
despite their legitimate reservations and their responsibility to
the Indian people as a whole to ensure that IHS funds are used for
the purpose for which they are intended.

IV. IHS has not implemented IHS Circular 88-2, relating to
"service units," in such a manner that "service areas" in the State
of California must be established or modified in accordance with
the procedures set forth in such Circular.

IHS Circular 88-2, issued by IHS on March 25, 1988, provides as
follows:

Purpose: To set forth Indian Health Service (IHS) policy and
procedures with respect to the establishment of and changes in the
boundaries of IHS-operated and tribally-operated service units. .
.

Shingle Springs argues that Circular 88-2 sets forth specific
procedures applicable for establishing and changing service unit
boundaries and that IHS did not follow these procedures with regard
to their contract determination in this case. Shingle Springs
contends that IHS' redetermination of October 9, 1992 reconfigured
the Chapa-De Service Area in violation of the procedures contained
in Circular 88-2. Shingle Springs contends that IHS' October 9,
1992 redetermination redrew the boundaries of the Chapa-De Service
Area and that this action was impermissible absent the formal
procedures contained in Circular 88-2.

With two exceptions, Shingle Springs contends that the CAO has
never permitted a tribe located in one service unit to take over an
adjoining service unit when that tribe has no land base in the
adjoining service unit and when the tribes in the adjoining units
do not consent to changing the unit's boundaries. According to
Shingle Springs, neither exception involved a situation where a
tribe objected to the change and redrawing of the service area
boundaries. Shingle Springs argues further that the IHS policy on
competing proposals qualifies as a substantive rule requiring
notice and comment rulemaking under section 551(4) of APA, a formal
procedure that was not followed by IHS in this case.

IHS contends that Circular 88-2 governs internal administrative
procedures when adjusting IHS service unit boundaries and it does
not establish any procedural rights for contractors or IHS
beneficiaries. IHS argues that Circular 88-2 was created to assign
administrative codes to tribally operated service units so that IHS
could collect statistical data on these units. IHS refers to the
testimony of Anthony D'Angelo as proof of this point. Tr. at 193
- 216. Therefore, IHS' position is that Circular 88-2 is intended
to assist IHS in designating service units for statistical
reporting and is independent of ISDA contracting. IHS avers that,
since Circular 88-2 was not intended to limit IHS' discretion to
resolve the unique situation that exists in this case, under
Lincoln v. Vigil it cannot be relied upon by Shingle Springs to do
so.

IHS states that it has been its practice to allow changes in
service unit boundaries based on a variety of reasons including new
tribes, a change in utilization rates within the service unit, or
a new relationship established with a tribe pursuant to ISDA
contracting. IHS' position is that approval of an ISDA contract
proposal can change service area boundaries and that this has
occurred on several occasions. IHS states that it modifies service
areas on a case-by-case basis, and that it does not require that
modifications to service areas be created in accordance with
Circular 88-2. Moreover, IHS states that it does not view Circular
88-2 as a restriction on a tribe's reconfiguring its service area.
IHS states that it does not impose geographic barriers on the
submission of ISDA contracts.
Shingle Springs counters that the testimony of Mr. D'Angelo is
contradicted by the plain language of Circular 88-2. Moreover,
Shingle Springs cites testimony that it contends shows that
Circular 88-2 was binding upon IHS when it reviewed Shingle
Springs' and Chapa-De's proposals. Tr. at 202, 426. However,
contrary to Shingle Springs' contentions, a complete review of the
testimony and of the language of Circular 88-2 itself reveals that
it imposes no restrictions upon reconfigurations of service area
boundaries. IHS Ex. 15; Tr. at 193, 202.

At the hearing, IHS presented credible testimony that the purpose
of the procedures outlined in Circular 88-2 is to coordinate the
process for assigning administrative codes for statistical purposes
for both IHS and tribally operated service units. Finding 193; Tr.
at 193 - 216, 398 - 442. IHS demonstrated that Circular 88-2 is
intended to assist IHS in designating service units for statistical
reporting and is independent of ISDA contracting. Findings 194,
202; Tr. at 193 - 205. Accordingly, the purpose of Circular 88-2
was not to bind IHS' discretion in reconfiguring service areas, but
to enable IHS to gather information about service units.

Moreover, a 1988 proposal to establish formal and inflexible
service areas in California was never approved, due to a lack of
consensus among California tribes. IHS Ex. 15; Finding 218. Since
the tribes themselves could not agree on formal service areas, it
is not plausible that IHS would resurrect this failed attempt in
the form of Circular 88-2. Against this background, IHS'
explanation of the purpose of Circular 88-2 being for statistical
reporting purposes seems even more plausible.
The evidence shows that IHS has, on at least three other occasions
in California, reconfigured established service areas pursuant to
a tribal request to accommodate the tribe's right to
self-determination. Findings 180 - 257. In 1989, the CAO awarded
an ISDA contract to the Sycuan Indians. The service area was
reconfigured in June of 1993 pursuant to tribal request. In 1992,
the CAO awarded an ISDA contract whose service area boundary was
subsequently reconfigured in July 1993 at the request of the Warner
Mountain tribe. In 1990, again the CAO awarded an ISDA contract
which boundaries were changed in July 1993 pursuant to the request
of the Manchester/Point Arena tribe. IHS's policy and practice has
been to approve a tribe's request to alter service area boundaries
in California in accord with the principles of self-determination
for Indian tribes within the State. Findings 223 - 257.
Accordingly, I find that IHS practice in California has been to
implement service areas on a case-by-case basis and that Circular
88-2 does not limit IHS' discretion in this area.

Therefore, under Lincoln v. Vigil and Morton, Circular 88-2 is not
a substantive rule because there was no intent on IHS' part that
Circular 88-2 would mandate a limit on IHS reconfiguring service
areas. Nor has IHS been limited in its ability to alter service
areas as necessary to meet the legitimate self-determination rights
of tribes under ISDA. For these reasons, I find that Circular 88-2
is not a substantive rule which binds IHS agency discretion in this
case.

Circular 88-2 created uniform procedures for designating and
modifying IHS service units, which had formerly been treated
differently, based on whether they were originally established as
federally-run units or as tribally-run units. IHS Ex. 16 at 1; SS
Ex. 6 at 1. Circular 88-2 defined how service units should be
configured, based on a number of management factors, so that they
would be relatively uniform nationally, and described them as
elements of larger areas, called Health Service Delivery Areas
(HSDAs), which were defined in a regulation which was never given
effect, due to a congressional moratorium. 52 Fed. Reg. 35044
(1987) (final rule); Continuing Appropriations, Fiscal Year 1988,
Pub. L. 100-202, 101 Stat. 1329-254, 315 (1987).

Congress had voiced concern to IHS about variation in funding
levels of service units within areas, as well as between areas, and
had directed IHS to improve its resource allocation methodology "to
actually calculate the needs of multiservice unit medical centers
and small service units." S.Rep. No. 165, 100th Cong., 1st Sess.
(1987) at 111-12 (accompanying 1988 appropriation bill, enacted as
Pub.L. 100-202). IHS responded to the request for better
measurement and more equitable allocation by developing standards
for defining the building blocks being measured and compared, i.e.,
the HSDAs and service units. Accordingly, IHS published a final
rule governing designation and modification of HSDA boundaries in
1987, and prepared Circular 88-2 which provided factors for
establishing and updating formalized service units. The
geographical designations, along with tribal affiliations,
functioned to identify individuals eligible for IHS services. 42
C.F.R. 36.12(a)(2). Because Congress was concerned about the
unknown costs of redefining eligibility for IHS services, the
regulation was subjected to a congressional moratorium in September
1987 and renewed annually, and has never been implemented. Pub. L.
100-202, 100th Cong., 1st Sess. 315, 100 Stat. 1329-54 (1987).
As a result, IHS was prohibited by Congress from adopting the
Circular to the extent it implemented those regulations, and the
status of any part of the Circular as agency law is at best
questionable in the face of this Congressional prohibition.

Even assuming, arguendo, that Circular 88-2 could be said to bind
IHS, Shingle Springs could not compel IHS to enforce its
provisions, because ISDA imposes a statutory obligation on IHS with
respect to all Indians, not just Shingle Springs. A particular
group of Indians that has benefited from IHS services may not
assert a right to continued services where the agency has decided
to change from a local service program to a national study
benefitting all Indian people. Lincoln v. Vigil, 113 S.Ct. 2024,
2033 (1993); Hoopa Valley Tribe v. Christie, 812 F.2d 1097, 1102
(9th Cir. 1986) (fiduciary duty of federal government is owed to
all Indians). Thus, Shingle Springs' claim of entitlement to its
proposed self-determination contract cannot succeed, because
applying Circular 88-2 solely to benefit Shingle Springs would
cause detriment to Intervenors.

Lastly, even if Circular 88-2 had survived Congressional action and
applied to service areas in California, by its own terms the
Circular appears to permit the redefinition of an area for contract
purposes which IHS made in its October 9, 1992 redetermination
letter. The Circular explicitly provides that "IHS may contract
below the service unit level for the delivery of a specific health
service (where effectiveness, efficiency and quality considerations
are satisfied), [but] such contracts do not constitute new service
units." IHS Ex. 16 at 2; SS Ex. 6 at 2. The Circular
distinguishes between the purpose of the proposed service units
(planning, gathering of statistics, and resource allocation) and
the concerns driving health service contracts (efficient delivery
under particular local circumstances, including availability of
resources and population distribution). IHS Ex. 16 at 2-3 (secs.
4A, B, C, and E), SS Ex. 6 at 2 - 3 (sections 4A, B, C, and E).
Therefore, the distribution of the original Chapa-De service area
between the two validly sponsored organizations for contract
purposes might fall under IHS' discretion to contract for services
below the service unit level and therefore might not even be
considered a modification to a service unit.

V. IHS has not adhered to designated "service areas" in accepting
self-determination contract proposals in the State of California
and has modified or established new "service areas" in connection
with such contracts on a case by case basis.

Shingle Springs contends that IHS adheres to designated service
areas in California in awarding ISDA contracts. While Shingle
Springs concedes there have been two exceptions to this rule, it
asserts that both occurred with the consent of the tribes involved.
According to Shingle Springs, there exists an historical rule that
tribal resolutions sanctioning tribal organizations to contract
under ISDA must be obtained only from tribes within the service
unit.

Shingle Springs states that a service unit has never been altered
without the consent of all of the affected tribes. Shingle Springs
also contends that Circular 88-2 does not address the issue of a
proposal from a tribe outside the service area. 38/ Lastly,
Shingle Springs argues once more that the "benefits" analysis in
the Director's decision in Kickapoo would bar Chapa-De from
providing program services in the former Chapa-De Service Area. I
have already discussed the Director's decision in Kickapoo in
dealing with Shingle Springs' argument that Rumsey's resolution
sanctioning Chapa-De is invalid to permit Chapa-De to provide
program services in the former Chapa-De Service Area. Rationale,
I; Findings 91 - 107. There is nothing in the Director's decision
in Kickapoo which supports Shingle Springs' tortuous interpretation
of the "benefits" analysis set forth in that decision.

The record also does not support Shingle Springs' contention that
the practice in California regarding service areas would act as a
bar to modification of the Chapa-De Service Area as proposed by
IHS. IHS presented testimony from Athena Schoening. Ms. Schoening
is currently IHS' Deputy Associate Director for the Office of
Tribal Activities and formerly was the individual in charge of the
IHS component that, at the time this case arose, formulated IHS
policy regarding the ISDA and supervised its implementation at the
area offices. At the hearing, Ms. Schoening testified that IHS
does not restrict tribes from redesigning service areas when they
submit ISDA contract proposals.

Additionally, IHS presented the testimony of Harry Weiss, who is
currently and has been a contracting specialist for the CAO for the
past 12 years. Mr. Weiss testified that there have been numerous
changes in service areas in California. Mr. Weiss stated that,
pursuant to the request of tribal organizations, there have been
changes in three service areas in California. Specifically, he
detailed changes in service areas in the counties of Lassen,
Shasta, Trinity, Siskiyou, and Modoc in northern California;
Mendocino and Sonoma Counties in west central California; and in
San Diego County. Tr. at 216 - 46, Findings 223 - 256.

IHS beneficiaries in Lassen, Shasta, Trinity, Siskiyou, and Modoc
Counties originally received their health services from the CRIHB.
Mr. Weiss testified that, over the last 15 years, tribes within
these counties have requested changes in the service areas and that
IHS has accommodated these requests by reconfiguring the service
areas in this region. Finding 235. He further testified that
Manchester Point Arena Rancheria requested to leave the
Consolidated Service Area and to have its ISDA health care services
provided by Sonoma. Pursuant to this request, the CAO altered the
boundaries of both the Consolidated Tribal Health Plan Service Area
and Sonoma County Service Area. Tr. at 228 - 231; Finding 243. In
doing so, the CAO permitted a tribe from one service area to
sanction a tribal organization in an adjoining service area. That
is precisely the same situation that is at issue here.

Lastly, Mr. Weiss testified that ISDA health services in San Diego
County were provided by an organization called the Indian Health
Council. However, pursuant to request from a tribal organization,
the majority of the southern part of San Diego County is now served
by an organization called the Southern Indian Health Council.
Finding 248. A tribe called the Sycuan Band of Mission Indians,
also located in the southern part of San Diego County, provides its
own ISDA health care services. Therefore, in San Diego County
alone, there have been two reconfigurations of the service area
pursuant to tribal request.
Other witnesses confirmed the testimony of Mr. Weiss that, pursuant
to ISDA contract proposals, the geographic area in which services
are provided has often changed. Tr. at 353 - 54; 759 - 77.
Shingle Springs' witness, Errin George Forrest, testified that the
right of self-determination encompasses the ability to alter or
maintain existing services areas, as the tribe sees fit. Tr. at
469 - 71. Accordingly, IHS policy and practice in California has
been to reconfigure service area boundaries pursuant to ISDA
contract proposals. Tr. at 353 - 54, 469 - 71, 759 - 77; Findings
223 - 257.

Additionally, reconfiguring the Chapa-De Service area in accordance
with Chapa-De's ISDA contract request does not violate Shingle
Springs' right to self-determination, or, for that matter, the
rights of any other tribe seeking self-determination. Although
Shingle Springs has argued that its right to self-determination
mandates that it be awarded the Chapa-De Service area, the fact is
that the vast majority of the Indians in the counties at issue here
are unaffiliated and are not associated with Shingle Springs in any
formal way. Findings 8, 25. The only connection the unaffiliated
Indians have to Shingle Springs is that they have been receiving
services from the same ISDA contractor for a number of years.

Shingle Springs would have me believe that this tenuous connection
gives them an undisputed and exclusive right to provide ISDA
services to these people. However, the ISDA does not give either
Shingle Springs, or for that matter Chapa-De, such a right. Under
the ISDA, no tribal organization has a superior claim to contract
to provide services to the unaffiliated Indians merely because they
happen, through historical coincidence, to be located in a service
area that receives services in conjunction with the unaffiliated
Indians.

What Shingle Springs is really asking for is the undisputed right
to provide health care services to 4300 unaffiliated Indians
residing in four counties. However, three of the counties are not
even located on Shingle Springs' tribal land. Findings 7, 9, 10 -
14. Under the ISDA, Shingle Springs' right to self-determination
entitles it only to control its own destiny and provide services to
its own members. Shingle Springs has no undisputed or superior
claim to providing ISDA services to the unaffiliated Indians. It
is within IHS' discretion to decide whether a tribe is awarded an
ISDA contract for the unaffiliated Indians in conjunction with its
award of an ISDA contract to serve its own members, just as it is
within IHS' discretion to reconfigure the service areas in
California pursuant to the request of a tribal organization.
Findings 223 - 291.

In closing on this issue, Shingle Springs' argues that wealthy
tribal organizations from distant locations outside the service
area would act like monopolistic conglomerates and absorb local
Indian-run health programs. I do not believe that this is a likely
scenario, because in order to be permitted to contract to provide
services in the service area, such a tribal organization must show
"benefit" in accordance with the Director's decision in Kickapoo.
IHS would be compelled, under the Director's decision in Kickapoo,
to reject as a matter of law any contract where a tribal
organization could not establish that it benefited from the program
contained in the contract proposal. Assuming that it could meet
the "benefit" requirement, the tribal organization could obtain an
ISDA contract to provide services to another tribe only to the
extent that the other tribe did not exercise its right to
self-determination and contract to provide services for its own
members. 39/

VI. IHS' letter of October 9, 1992, which modified a prior
designated service area for the provision of medical services to
IHS' beneficiaries was in accord with IHS Circular 88-2 and the
past procedures followed by IHS in awarding contracts for
self-determination in the State of California.

Shingle Springs argues that IHS' October 9, 1992 redetermination
violates IHS practices and policies and was not in accordance with
the past procedures for awarding ISDA contracts because IHS has
never altered a service area without the consent of all of the
affected tribes. Shingle Springs contends that IHS was required to
obtain its consent before it awarded any part of the Chapa-De
Service area to Chapa-De.

IHS states that the CAO proposed to establish formal service areas
in California in 1988 and that the proposal was rejected out of
hand. Therefore, IHS and Intervenors argue that absent a system of
formal service areas, IHS is entitled to reconfigure service areas
pursuant to the request of a tribe. IHS contends that this is
mandated in light of the district court's decision in Southern
Indian Health Council v. Sullivan, No. CIVS-88-0240-EJG-JFM (E.D.
Ca. January 8, 1990).

In Southern Indian Health Council, the court was confronted with
the CAO's decision to decline Southern Indian Health Council's
(SIHC) ISDA contract proposal due to the failure of SIHC to obtain
consent from all tribes within its geographic service area. The
difficulty arose because the Sycuan Band of Mission Indians'
(Sycuan) had opted out of the SIHC service area so that it could
provide services to its own members.

SIHC's membership originally consisted of the Barona, Campo,
Cuyapaipe, Jamul, La Posta, Manzanita, Sycuan, and Viejas Bands of
Mission Indians. Due to a dispute between the Sycuan and the SIHC,
Sycuan withdrew from the SIHC and SIHC moved its health care
facilities from the Sycuan Reservation to the Barona Reservation.
After the expiration of their ISDA contract, SIHC submitted another
proposal in which it proposed to provide health care services to
all of the eligible Indians in SIHC's territory, except the Sycuan.
The CAO denied SIHC's proposal, stating that SIHC needed to obtain
a sanctioning resolution from all of the tribes in SIHC's service
area and that SIHC's service area could not be divided.

The court refused to interpret section 450b(c) of the Act, a
provision concerning the need for sanctioning resolutions as a
basis for IHS to maintain rigid, inflexible, service areas that, as
a condition of an Indian tribe contracting under the ISDA, mandate
that the tribe obtain a sanctioning resolution from all tribes in
the service area, even ones to which the tribe does not propose to
provide services. The court accordingly rejected the requirement
imposed at that time by IHS that a tribe needed to obtain a
sanctioning resolution from all other tribes within the service
area as a precondition to providing services solely to that tribe's
own members. Southern Indian Health Council at 5 - 6; IHS Ex. 18
at 5 - 6. Since this decision, the CAO has used Southern Indian
Health Council as a guideline and implemented ISDA contracts in
California with flexibility with regard to service unit boundaries.
40/

Accordingly, under Southern Indian Health Council, the CAO may not
reject an ISDA contract proposal because the proposing tribe is
outside the service area it proposes to serve. Accord Kickapoo.
Therefore, Shingle Springs' argument that the CAO must reject out
of hand Chapa-De's proposal because Rumsey's land base is outside
the Chapa-De service area is without merit. Also, under Southern
Indian Health Council, Chapa-De is not required to have a
sanctioning resolution from Shingle Springs as long as it does not
propose to provide services to Shingle Springs' tribal members.
Chapa-De, having a valid sanctioning resolution from Rumsey, is
entitled to contract to provide services to its own members and IHS
is obligated to reconfigure the service area boundaries to allow
them to do so.

Additionally, IHS has shown that, on at least three other
occasions, in the counties of Lassen, Shasta, Trinity, Siskiyou,
and Modoc in northern California; in Mendocino and Sonoma Counties
in west central California; and in San Diego County (the Mission
Indians' situation dealt with by the court in Southern Indian
Health Council), service areas have been redefined pursuant to
tribal request.

Shingle Springs argues that those three instances are
distinguishable from this case because, in this case, Shingle
Springs has not requested nor has it authorized a reconfiguration
of the Chapa-De service area. This characterization misses the
point. The fact remains that, under Southern Indian Health
Council, Shingle Springs' lack of consent (in the form of an
authorizing resolution) only serves as an obstacle to Chapa-De's
(and Rumsey's) ISDA proposal to the extent that Chapa-De (and
Rumsey) are proposing to contract to provide ISDA services to
Shingle Springs' tribal members. It would not prevent Chapa-De
from contracting to provide services to unaffiliated Indians who
happen to reside in an area containing Shingle Springs tribal
members. The fact that Shingle Springs does not sanction Chapa-De
does not block Chapa-De from providing services to eligible
unaffiliated Indians throughout the entire Chapa-De service area.

Shingle Springs is not entitled to an ISDA contract to provide
services to the Chapa-De Service Area based on historical
precedent. The ISDA gives Shingle Springs only the right to
contract to provide services to its own members. Therefore, as I
stated earlier, Rumsey may contract, via the ISDA, to provide
health care services to the Chapa-De Service Area, with the proviso
that they may not contract to provide services to Shingle Springs'
members without Shingle Springs' consent.

As I stated previously, Circular 88-2 is not a barrier to IHS
reconfiguring service areas in California pursuant to a tribal
request. The Director's Kickapoo decision is only a barrier to the
extent that Rumsey, the sanctioning tribe, cannot show it benefits
in the service area as it is reconfigured. Since Rumsey can show
it benefits from its ISDA proposal, Kickapoo provides no barrier to
Rumsey sanctioning Chapa-De to provide ISDA health services in the
Chapa-De Service area as reconfigured. Moreover, IHS has
demonstrated that on three other occasions, it has modified service
areas in California. Therefore, IHS has demonstrated that its
October 9, 1992 redetermination was in accordance with its previous
practices in awarding ISDA contracts in California and in
accordance with Circular 88-2. Accordingly, IHS' October 9, 1992
determination was in accordance with Circular 88-2 and IHS' past
procedures for awarding ISDA contracts within California.

VII. IHS' redetermination letter of October 9, 1992 to
ShingleSprings and Chapa-De constitutes in effect a statutory
declination, pursuant to 25 U.S.C. 450f(a)(2), of their
respective October 1, 1991 and November 12, 1991 contract proposals
under the ISDA to provide medical services to essentially the same
eligible beneficiaries in the four county area.

The Act states as follows:

The Secretary is directed to approve an ISDA contract proposal
within 90 days from the receipt of the proposal unless, within 60
days from the receipt of the proposal, a specific finding is made
that

(A) the service to be rendered to the Indian
beneficiaries of the particular program or function to be
contracted will not be satisfactory;
(B) adequate protection of trust resources is not
assured; or
(C) the proposed project or function cannot be properly
completed or maintained by the proposed contract.

25 U.S.C. 450f(a)(2).

The Act further provides that:

Whenever the Secretary declines to enter into a
self-determination contract or contracts pursuant to subsection (a)
of this section, the Secretary shall --

(1) state any objections in writing to the tribal
organization,
(2) provide assistance to the tribal organization to
overcome the stated objections, and
(3) provide the tribal organization with a hearing on the
record and the opportunity for appeal on the objections raised,
under such rules and regulations as the Secretary may promulgate.

25 U.S.C. 450f(b).

The regulations provide that:

Upon being advised that an Indian Self-Determination Contract
Proposal has been disapproved by the approving official, and having
been informed of the basis of such decision, the tribal
organization may file a written appeal to the Contract Proposal
Declination Appeals Board within thirty (30) days . . .

42 C.F.R. 36.214.

The regulations also provide that IHS must promptly notify the
tribal organization in writing of the decision to approve or
disapprove its ISDA proposal. If the proposal is disapproved, the
notice shall contain but need not be limited to the following:

1. Specific objections, which are based on failures to meet
applicable program or administrative standards or fund
restrictions, which preclude acceptance of the proposal;

2. Guidance to the tribe regarding the steps which need to be
taken to overcome stated objections;

3. Identification of assistance which can practicably be made
available to the tribe upon request to overcome the stated
objections;

4. Notification to the tribal organization of its right to
appeal and to request an informal or formal hearing.

42 C.F.R. 36.212.

Shingle Springs argues that the ISDA and the regulations set forth
specific procedures which should have been followed by IHS when it
made its October 9, 1992 redetermination. Shingle Springs contends
IHS' redetermination is invalid because it is a declination that
was not in accordance with the declination criteria contained at 42
C.F.R. 36.212. According to Shingle Springs, the ISDA
procedures detailed above must be followed to the letter in every
instance where IHS declines to enter into an ISDA contract.

Specifically, Shingle Springs' position is that IHS' October 9,
1992 redetermination is invalid because it does not: 1)
specifically identify IHS' objections to Shingle Springs proposal
which warrant declination; 2) indicate which applicable program or
administrative standards or fund restrictions would not be met such
that acceptance of the proposal should be precluded; or 3) give
Shingle Springs any advice or provide any assistance on how to
overcome the objections which served as a basis to decline the
proposal. SS P.H. Br. at 19 - 23.

Shingle Springs contends further that award of an ISDA contract
must occur within 120 days unless the tribe consents to extension
and that it had a substantive right to the award of the contract
which vested the moment that IHS approved Shingle Springs' proposal
on December 2, 1991. Shingle Springs contends generally that IHS'
actions in this case constitute a violation of the statutory and
regulatory formalities and that these irregularities make the
declination invalid or ineffective. According to Shingle Springs,
IHS has, after the fact, characterized its determination as in
effect a declination because it knows the determination is not in
accordance with the declination criteria. Moreover, Shingle
Springs argues that IHS has no discretion to create a new
declination mechanism that would undermine the entire declination
process and criteria contained in the ISDA and that IHS' actions in
awarding the contract in this case frustrate congressional policy
as expressed in the legislative history.

IHS admits that its October 9, 1992 determination was not an
appropriate declination in accordance with all of the declination
criteria. In fact, the Deputy Director of the CAO specifically
stated: "I'm not aware a declination letter was ever sent to
Shingle Springs." Tr at 366 - 67.

However, while IHS concedes that its October 9, 1992
redetermination may not have been impeccable, it did alter both
Shingle Springs and Chapa-De's initial proposals and informed each
of them of their right to appeal. IHS points out that the
redetermination states "it is therefore necessary to revise our
initial determination and divide the program for the purposes of
contracting." IHS Ex. 14. Moreover, three of the four counties
Shingle Springs wanted to serve in its initial proposal were
deleted in the redetermination.

IHS emphasizes that the redetermination noted that the CAO had two
acceptable proposals for the same program, and, therefore, it was
a partial declination pursuant to 25 U.S.C. 450f(a)(2)(C). IHS
contends that Shingle Springs was, at a minimum, informed that its
initial proposal was being substantially modified. Therefore, IHS
argues that its October 9, 1992 redetermination, if not a valid
declination in accordance with the declination criteria, was in
effect a declination because it modified Shingle Springs' initial
proposal and put Shingle Springs on notice of its appeal rights.
42 C.F.R. 36.212; 42 C.F.R. 36.214. IHS states that Shingle
Springs' rights were protected by the redetermination, because it
promptly appealed from the redetermination, proving that it
received sufficient notice.

IHS contends that the situation of two tribes submitting competing
proposals is unique and is not contemplated by the ISDA. IHS
further contends that it is entitled to use its discretion in
situations that are not specifically addressed by the statute. IHS
states that it has acted in good faith, as evidenced by the fact
that it negotiated with the parties for almost one year to attempt
to resolve this situation through negotiations and that, after the
parties could not reach an agreement, IHS was compelled to issue
its redetermination. Lastly, IHS contends that Shingle Springs's
claim that it is entitled to contract to provide health care
services to the entire Chapa-De Service Area is flawed, because it
is based on the assumption that all of the unaffiliated Indians
throughout the Chapa-De service area are Shingle Springs tribal
members.

I find that IHS' redetermination was a valid declination in
accordance with 25 U.S.C. 450f(a)(2)(C). The redetermination
does state that IHS has two proposals for the same program. IHS
Ex. 14 at 1. The letter continues "it is necessary to divide the
program to best approximate the expected service population for the
respective facilities while assuring that both programs will
operate satisfactorily. It is therefore necessary to revise our
initial decision and divide the program for purposes of
contracting." IHS Ex. 14 at 1.

While the redetermination letter does not make an explicit
reference to the statutory declination criterion (25 U.S.C.
450f(a)(2)(C), stating the proposed project or function cannot be
properly completed or maintained), it does articulate IHS' position
that neither Shingle Springs' nor Chapa-De's original proposals
could be properly completed or maintained because each tribal
organization was proposing to serve the same geographic area and
IHS could not award the same contract twice. IHS Ex. 14.

This interpretation is supported by the CAO's December 17, 1991
letter declining Chapa-De's ISDA proposal. IHS Ex. 11. IHS
declined Chapa-De's ISDA proposal on the grounds that the proposed
contract or function could not be properly completed or maintained.
IHS Ex. 11; 25 U.S.C. 450f(a)(2)(C). While part of this
rationale was based on IHS' erroneous belief that Rumsey had not
properly retroceded from its previous ISDA contract, IHS believed
also that the contract could not be properly completed or
maintained because it was faced with two proposals for the same
area and could not award the same contract twice. IHS Ex. 11.

Once I made my preliminary ruling that Chapa-De was a valid tribal
organization for purposes of ISDA contracting, IHS realized that it
had to look to the declination criteria for a basis for declining
Chapa-De's ISDA proposal. IHS Ex. 9, 10, 11. This can be seen by
comparing IHS' initial position, as articulated in IHS Ex. 9, with
IHS' position after my preliminary ruling, as articulated in IHS
Ex. 10 and 11. Once IHS came to view Chapa-De's and Shingle
Springs' proposals as competing, it realized also that the only
declination criterion that could be used to decline competing
proposals was that the competing proposals could not be properly
completed or maintained, since IHS could not award the same
contract twice. IHS Ex. 10, 11; 25 U.S.C. 450f(a)(2)(C).
Therefore, while IHS' October 9, 1992 redetermination was not as
artfully crafted as it could have been, it nonetheless sufficiently
articulated a declination of both Chapa-De's and Shingle Springs
original proposals pursuant to 25 U.S.C. 450f(a)(2)(C).

Moreover, Shingle Springs' position that the declination was not in
accordance with 42 C.F.R. 36.212 is without merit. In
accordance with 42 C.F.R. 36.212, IHS' October 9, 1992
redetermination does identify which objections warrant declination
and does indicate the applicable program or administrative
standards or fund restrictions which preclude acceptance of the
prior proposal. It does this by stating that IHS had to divide the
program in the face of competing proposals for the same service
area. IHS Ex. 14.

I find no merit also in Shingle Springs contention that IHS'
redetermination gave them no advice or assistance on how to
overcome the objections which served as a basis for IHS to decline
the proposal. Shingle Springs' October 1, 1991 ISDA contract
proposal was rejected because it proposed to serve the same
eligible unaffiliated Indians as Chapa-De proposed to serve. The
purpose of the October 9, 1992 redetermination was to divide the
prior Chapa-De Service Area program which encompassed these
eligible unaffiliated Indians between Rumsey and Shingle Springs in
such a manner that each tribe would have sufficient resources to
operate successful and legitimate programs for its members. In
short, the redetermination letter provided Shingle Springs with the
guidance it required to submit an acceptable proposal under ISDA.
Shingle Springs disagreed with the allocation of resources provided
by the eligible unaffiliated Indians, rejected it as a compromise
and settlement of its dispute with IHS, and filed an appeal under
ISDA.

As stated previously, Shingle Springs does not challenge the
propriety of IHS' allocation of the ISDA contract to the eligible
unaffiliated Indians. Rather, Shingle Springs challenges IHS'
authority to reconfigure the service area and modify Shingle
Springs' October 1, 1991 ISDA contract proposal.

The regulatory criteria are designed to insure that tribal
organizations are provided with notice informing them of the
reasons that IHS has declined their ISDA proposals. The regulatory
criteria are designed also to insure that a tribal organization can
appeal an adverse determination. IHS' redetermination here
permitted them to do that. The fact that Shingle Springs has shown
that IHS may not have worded the declination as artfully as
possible does not change the fact that it was in accordance with
the purpose of the regulations.

Additionally, I find that IHS' redetermination was in effect a
declination in accordance with the intent of the ISDA. Shingle
Springs' October 1, 1991 ISDA proposal proposed to provide services
to its tribal members and eligible Indians in El Dorado, Placer,
Sierra, and Nevada counties. Findings 30 - 31. Chapa-De's
November 12, 1991 ISDA contract proposal proposed to serve Rumsey
tribal members (residing in Yolo County) and eligible unaffiliated
Indians residing in Placer, Sierra, and Nevada Counties. Findings
36, 38. IHS' redetermination of October 9, 1992 awarded Shingle
Springs an ISDA contract to provide health services to its members
and the eligible unaffiliated Indians in El Dorado County and
awarded Chapa-De an ISDA contract to provide health care services
for Rumsey members and the eligible unaffiliated Indians in Placer,
Sierra, and Nevada Counties. IHS Ex. 14.

While a more detailed and specific declination of both Shingle
Springs' and Chapa-De's proposals perhaps would have been
preferable, IHS' redetermination letter fulfilled the purpose of
the statute by reconfiguring the proposals of each tribe and
placing each tribe on notice of its appeal rights. Findings 325 -
334. The record reflects that, in its redetermination, IHS
reconfigured the initial proposals of both Shingle Springs and
Chapa-De. IHS Ex. 1, 2, 10. Moreover, it is apparent that Shingle
Springs viewed IHS' redetermination as a declination of its ISDA
proposal, because they determined it was an adverse result and
appealed it.

Even assuming that IHS' redetermination was not in accordance with
the declination criteria, it is difficult to see how Shingle
Springs was harmed in this case by any of the procedural
irregularities that they allege. IHS worked with Shingle Springs,
Rumsey and Chapa-De for almost one year in an attempt to negotiate
a settlement to this matter. IHS Ex. 13. The record reveals that,
in attempting to resolve the dispute, IHS tried to accord each
tribe its right to self-determination under the ISDA. While it is
true that the scope of Shingle Springs' proposal was narrowed by
IHS' redetermination, Shingle Springs cannot contest that they were
accorded their right to self-determination because they were given
the opportunity to provide health care services to their own tribal
members and to provide services to the unaffiliated Indian
population in El Dorado county. IHS Ex. 14.
Shingle Springs would have me believe that they were harmed because
they did not receive an ISDA contract to serve the entire
unaffiliated population in the four-county area. There can be no
doubt that the size of the area in which they proposed to provide
health care services has been reduced by IHS' October 9, 1992
redetermination. However, ISDA does not provide Shingle Springs
with the exclusive right to provide services to unaffiliated
Indians. This is especially true where, as here, Shingle Springs'
concern appears directed toward maximizing the size of ISDA
contract monies allocated to its health care program by proposing
to provide services to all unaffiliated Indians who happen to
reside in adjoining areas. Moreover, Shingle Springs has no
inherent right to maximize the size of the services provided under
its ISDA proposal to the detriment of other eligible tribal
organizations which could benefit from those same resources. The
Act gives neither Shingle Springs nor Intervenors an inherent right
to provide services to the unaffiliated Indians. Findings 24, 143.
Nor does ISDA contemplate or even address the issue of unaffiliated
Indians. Finding 140. As I have stated, it is left to the
discretion of IHS to allocate health care services to unaffiliated
Indians. Findings 108 - 45; Rationale, I.

Accordingly, I find that IHS properly wielded its discretion in the
presence of the novel situation of competing proposals in deciding,
absent statutory guidance, who would provide ISDA health care
services to the unaffiliated Indians in the area. Therefore, even
assuming that its October 9, 1992 redetermination was not a letter
perfect declination, the record shows that it was a constructive
declination, because it reconfigured both Chapa-De's and Shingle
Springs' original proposals. Furthermore, it was a logical
solution to a case of first impression that preserved the rights of
both Shingle Springs and Chapa-De by placing them on notice and
preserving their right to appeal.

CONCLUSION

Based on the foregoing, I conclude that IHS' October 9, 1992
redetermination is a valid and appropriate exercise of IHS
discretion that accommodated both Rumsey's and Shingle Springs'
rights to self-determination, in accordance with the statutory
intent and purpose of the ISDA. The contentions raised by Shingle
Springs to challenge IHS' determination and to support its position
that it is entitled to serve all the eligible unaffiliated Indians
in the Chapa-De Service Area have no merit in fact or law.

Many of the issues addressed in this case are matters of first
impression under ISDA. The Act does not envision competing tribes,
with each attempting to incorporate within its program the
resources provided by the unaffiliated Indians. IHS' determination
in this matter has modified both Shingle Springs' and Chapa-De's
initial ISDA contract proposals, thus ensuring that the resources
provided by and for the unaffiliated Indians are allocated fairly
to permit each tribe to operate a satisfactory program for its
members. While not contesting this distribution, Shingle Springs
is adamant that, under the ISDA it is entitled to serve all the
unaffiliated Indians in the Chapa-De Service Area. This case holds
that ISDA does not confer upon Shingle Springs an exclusive right
to serve the unaffiliated Indians. Both Shingle Springs and Rumsey
have equally lawful contracting rights under ISDA to provide
services to their own tribal members. However, neither can
exercise those rights to the detriment of the rights of the other.

__________________
Edward D. Steinman
Administrative Law Judge

1. I cite to the exhibits of Shingle Springs as "SS Ex. (number)
at (page)". I cite to the exhibits of IHS as "IHS Ex. (number) at
(page)". I cite to the exhibits of intervenors as CD Ex. (number)
at (page)". I cite to the transcript of the hearing as "Tr. at
(page)". I cite to my Findings of Fact and Conclusions of Law as
"Findings (number)". I cite to Shingle Springs' post-hearing,
response and reply briefs as "SS Br. at (page)" and "SS R. Br. at
(page)" and "SS Reply Br. at (page)" respectively. I cite to IHS'
post-hearing, response and reply briefs as "IHS Br. at (page)" and
"IHS R. Br. at (page)", and "IHS Reply Br. at (page)" respectively.
I cite to Intervenors' post-hearing and response briefs as "CD Br.
at (page)" and "CD R. Br. at (page)", respectively.

2. The statute provides that a tribe may request retrocession
from an ISDA contract. 25 U.S.C. 450j(e). Retrocession is a
process whereby a tribe withdraws from participation in an ISDA
contract, usually for purposes of sanctioning another tribal
organization or itself to obtain an ISDA contract to provide health
care services to its own members. IHS withdrew from its initial
position, that Rumsey had not properly retroceded from Northern
Valley Indian Health Program because one year had not elapsed
between Rumsey's withdrawal from Northern Valley Indian Health
Program and Rumsey's endorsement of Chapa-De, when it was pointed
out that IHS had the authority to waive the one year requirement
pursuant to 25 U.S.C. 450j(e).

3. In my May 28, 1993 Statement of Issues, at issue one,
footnote two to issue two, and issue four, the date of Shingle
Springs' ISDA contract proposal, is incorrectly stated as December
1991. In fact, Shingle Springs ISDA contract proposal was dated
October 1, 1991, and IHS was required to accept or decline the
proposal by December 1, 1991.

4. Shingle Springs has maintained throughout this proceeding
that it does not dispute the proportional allocation of medical
services between itself and Chapa-De as set forth in IHS' October
9, 1992 redetermination.

5. Another factor to be considered in determining whether IHS
conditionally accepted Shingle Springs' October 1, 1991 contract
proposal was the overlapping contract proposal from Chapa-De and
Chapa-De's subsequent appeal of IHS's contract proposal
declination.

6. I have included several headings in my Findings of Fact and
Conclusions of Law. These headings are intended for the
convenience of the reader and are not Findings of Fact and
Conclusions of Law, nor do they alter their meaning.

7. Citations to this Decision are made using the name of the
section of the Decision and the corresponding number or letter in
which the information appears. Since most citations will be to the
Section entitled "Rationale", most citations will appear as
Rationale, (Roman numeral, letter and number). Since the citation
here is contained in an introductory part of the Rationale, it is
simply cited as "Rationale."

8. The phrasing of this heading is a modification of an issue
contained in my Statement of Issues. The modification is due to my
determination that IHS could not have accepted both Chapa-De's and
Shingle Springs' proposals because they overlapped. Rationale,
IIA, B and C. Additionally, IHS does not have the authority to
impose a condition upon Shingle Springs' proposal and, therefore,
whether or not Shingle Springs met the condition is irrelevant.
Rationale, IIC. However, for illustrative purposes only, I will
address whether, even if IHS was obligated to award an ISDA
contract to Shingle Springs, Shingle Springs was not in a position
to fulfill the contract.

9. SS Ex. 42 gives the date May 1991. However, since at the
time the letter was written, May 1991 had already elapsed, I find
that May 1991 is a typographical error and that May 1992 was the
date that was intended.

10. Shingle Springs contends that IHS had no legal authority to
impose a condition on the acceptance of their contract proposal and
that, even if IHS did have the authority to impose a condition,
Shingle Springs met the terms of that condition. However, I have
determined that the issue of whether IHS imposed a condition on
Shingle Springs' ISDA proposal is irrelevant. Rationale, II.

11. Shingle Springs relies on the following "benefits" analysis
from the Director's decision in Kickapoo:

The IHS interprets the proviso to section 4(l) as a statutory
restriction on contracting where the geographic service area and
the program was established for the benefit of that tribe. If a
tribe would have to get an approving resolution from another tribe
because the other tribe benefits from the program proposed to be
contracted then the other tribe can also propose to contract for a
portion of that program. If a tribe does not have to have the
approving resolution of another tribe to contract for a program,
then the other tribe is not eligible to propose to contract for
that program or portion of that program (without the authorizing
resolution of the first tribe).

Id. at 7; SS P.H. Br. at 34.

12. For reasons explained at Rationale, I, Shingle Springs
considers Intervenors' proposal invalid because it would
reconfigure the pre-existing Chapa-De Service Area, the area that
Shingle Springs contends is the only area that can be subject to an
ISDA proposal here.

13. Shingle Springs' position is demonstrated by the following
excerpt from its post-hearing brief:

Rumsey Rancheria, on the other hand, is located outside the
Chapa De Service Area; it is not an Indian tribe that has ever
benefitted under Section 4(l) of the Act from the services provided
by the Chapa De Service Area; and it has never been required by IHS
to provide a resolution to sanction a contract for the functions of
that Service Unit.

SS P.H. Br. at 35.

14. Such a conclusion is evident from the following language of
the Director's decision in Kickapoo: "The IHS interprets the
proviso to section 4(l) as a statutory restriction on contracting
where the program to be contracted is outside a tribe's defined
geographic service area and the program was not established for the
benefit of that tribe. Kickapoo at 7 (emphasis added).

15. Further discussion of this case can be found at Rationale,
VI.

16. The ISDA contemplates that IHS does have the discretion to
divide services within the service area. This means, for example,
that IHS could award one tribe or tribal organization an ISDA
contract to provide clinical laboratory services and award another
tribe or tribal organization an ISDA contract to provide ambulatory
care within the same service area. IHS Circular 88-2.

17. CHS are health services which are provided by third parties
who are reimbursed by IHS (or the tribal contractor) with contract
health funds supplied by IHS. See, 42 C.F.R. 36.22(e).
Services provided by IHS or at a tribal operated facility are
considered "direct services." The boundaries of areas covered by
CHS are defined by regulation, 42 C.F.R. 36.22, and, in
California, by statute, 25 U.S.C. 1680.

18. In my May 28, 1993 Statement of Issues, I stated the issue
as follows: "Whether the acceptance by IHS of Shingle Springs'
contract proposal under the ISDA was conditional and whether
Shingle Springs met such conditions and was in a position to enter
into such contract on January 29, 1992 to provide medical services
to all IHS beneficiaries in the four county area by April 1, 1992."
However, since I have determined that the issue of conditional
approval is not relevant to this Decision, I treat the facts
related to IHS' conditional approval of Shingle Springs' proposal
in summary fashion.

19. There is an exception for construction contracts, which are
covered by the Office of Federal Procurement Policy Act (88 Stat.
796; 41 U.S.C. 401 et seq.) and federal acquisition regulations
promulgated thereunder. Section 450j(a) of the Act.

20. Contrary to the facts in Morton, here there are no
regulations, policies, circulars, or any previously stated IHS'
formal comment on the regulatory impact under ISDA of two valid
competing contract proposals from recognized tribal entities. This
case is a matter of first impression. Shingle Springs does not
point to any IHS document that provides specific guidance regarding
the circumstances presented by this case.

21. This case, like the case at bar, involves IHS actions in
dealing with competing interests among beneficiaries of its
programs. From 1975 to 1985, IHS had been providing diagnostic and
treatment services to handicapped Indian children in the Southwest
pursuant to a specific local program. IHS was exercising its
discretionary authority to allocate resources among eligible
Indians having equal rights to health services. I suspect that
recipients of services from the local program felt that they would
not do as well under the national program and, therefore, brought
legal action to maintain their program. Similarly, Shingle
Springs' appeal is to maintain the sole use of the resources from
the population of unaffiliated Indians in the Chapa-De Service
Area. It too must believe there will be a diminution of its
services if a significant portion of its former resources are used
to fund a program for Rumsey. I presume this to be the case even
though Shingle Springs has not challenged the allocation of
resources in the October 9, 1992 redetermination between itself and
Rumsey.

22. See, Ford Motor Co. v. FTC, 673 F.2d 1008 (9th Cir. 1981),
cert. denied, 459 U.S. 999 (1982); Curry v. Block, 738 F.2d 1556
(11th Cir. 1984); Matzke v. Block, 738 F.2d 799 (10th Cir. 1984);
First Bancorporation v. Board of Governors, 728 F.2d 434 (10th Cir.
1984).

23. Justice Souter, in delivering the Court's opinion, wrote
the following instructive language on the APA: "Determining
whether an agency's statement is what the APA calls a `rule' can be
a difficult exercise. We need not conduct that exercise in this
case, however. For even assuming that a statement terminating the
Program would qualify as a `rule' within the meaning of the APA, it
would be exempt. . ." and it goes on to enumerate the two
exemptions of 553(b)(A) referenced above. Lincoln at 2034.

24. This is true a fortiori, since timing of proposals can only
come into play where proposals are in competition, and I have found
that the Act does not contemplate such competition.

25. The timing of IHS' receipt of the proposals could
conceivably be determinative if a tribe submitted an ISDA proposal
after IHS had awarded the contract to the first tribe submitting a
proposal (assuming that the proposals overlapped with respect to
unaffiliated Indians which either tribe could properly include in
its service population). However, such is not the case here.

26. I recognize that Shingle Springs argues at some length that
no such condition was imposed. My review of the record
demonstrates otherwise. However, I do not need to make findings on
this issue since, even assuming the condition was imposed, I find
that IHS has no authority under ISDA to conditionally accept
contract proposals. Rationale, II.

27. This does not imply, and I do not hold in this Decision,
that IHS is completely without authority to delay or deny a
contract award after the deadline for declination has passed. If
IHS approves a contract proposal and, after the 60-day deadline has
passed, the contracting tribe or tribal organization modifies the
proposal, for example by substituting as administrator an
individual who had been convicted of criminal fraud, the ISDA does
not oblige IHS to award the contract as modified. In fact, in
those circumstances, IHS would be obligated to void the award of
the contract and protect program funds, for instance by deeming the
modification a new proposal (with a new 60 day declination period)
and proceeding to decline it, thus initiating the proposer's right
to appeal. The declination provision of the Act cannot be read to
give ISDA contractors power to unilaterally modify their proposals
after 60 days. Similarly, when the proposed contractor is not in
position to carry out its obligations under the contract proposal
by the effective date, and the contractor is unwilling to extend
the date of the contract award, IHS would not be required to award
the contract in such circumstances. See, Rationale, IIC2.

28. At the time of the investigation, IHS did not know the
extent or nature of the fraud committed by Ms. Shilin. The record
before me shows that, on January 21, 1993, Ms. Shilin was formally
charged with six counts of criminal offenses relating to
allegations that she had misappropriated money from a tribal
organization. The record further reflects that, on April 23, 1993,
Ms. Shilin pled guilty to count 3 (violation of 18 U.S.C. 1163,
embezzlement and theft from Indian Tribal Organizations in an
amount not in excess of $100) and that the remaining five counts
were dismissed. CD Ex. 16. Therefore, at the time IHS was
considering Shingle Springs' ISDA contract proposal (October 1,
1991 through December 30, 1991), IHS did not have a complete set of
facts before it regarding the allegations against Ms. Shilin. At
the time it was considering Shingle Springs' proposal, IHS had
sufficient information to decline the proposal based on the
potential threat to ISDA funds that would be awarded to Shingle
Springs by Ms. Shilin acting as principal agent.

IHS would have been entitled to decline Shingle Springs' proposal
pursuant to 25 U.S.C. 450f(a)(2)(C) on the basis that the
proposed contract cannot be properly completed or maintained, until
it fully explored the facts surrounding the charges against Ms.
Shilin. Indeed, the record reflects that the CAO's contracting
officer stated that he could not sign the contract as long as Ms.
Shilin remained as Shingle Springs' principal agent. Tr. at 283 -
85.

Now, in accordance with this Decision, Shingle Springs will have to
submit to IHS a new, more limited, ISDA contract proposal. If
Shingle Springs chooses again to make Ms. Shilin the principal
agent in its revised ISDA proposal, IHS will have to weigh all of
the facts surrounding Ms. Shilin's conviction and past conduct and
determine whether she still poses a sufficient threat to contract
funds to warrant IHS' declination of Shingle Springs' proposal,
pursuant to 25 U.S.C. 450f(a)(2)(C).

29. The legislative history relied on by Shingle Springs
indicates that the practice Congress intended to abolish through
the amendment was IHS' categorizing certain elements of ISDA
contract proposals as "threshold criteria." By applying these
threshold criteria to determine that some proposals submitted by
tribes did not supply enough information to qualify as proposals,
IHS could avoid the deadlines for approval or declination, and more
importantly could effectively decline proposals without specifying
one of the statutory criteria and without triggering the statutory
appeal rights afforded tribal contractors under section 450f of the
Act.

30. After my preliminary ruling February 28, 1992, IHS altered
its position on the validity of Chapa-De's proposal. However, IHS
notified Shingle Springs on January 30, 1992 that award of its
contract proposal would be stayed pending the appeal by Chapa-De of
the declination of its contract proposal. At least temporarily,
this decision mooted the issue of the propriety of the conditional
acceptance of Shingle Springs' contract proposal.

31. This assumes, of course, that the proposal has not been
declined in accordance with the declination criteria. Rationale,
II. Shingle Springs has contended all along that IHS did not
decline its proposal in accordance with the declination criteria.
Therefore, in this section, I assume, for the sake of argument,
that Shingle Springs should have been awarded an ISDA contract
within 120 days, as they contend. This assumption allows me to
better approach the real issue in this section, which is whether
Shingle Springs was in a position to carry out that contract as of
January 29, 1992, (120 days from the date Shingle Springs submitted
its proposal), or as of April 1, 1992 (the date the Shingle Springs
was supposed to begin to provide services to the Chapa-De Service
area under the new contract). Please note, however, that I make
this assumption only for illustrative purposes only and that in
this Decision, I conclude as a matter of law that IHS is not bound
by the 120 day requirement contained in Policy Letter 89-4.
Rationale, IIB.

32. January 29, 1992 is 120 days after Shingle Springs
submitted its proposal on October 1, 1991.

33. As indicated previously, Shingle Springs' arguments about
IHS' failure to meet certain deadlines are made for the purpose of
challenging IHS' determination not to award it a contract for the
entire Chapa-De Service Area. I have no doubt that, assuming
Shingle Springs and IHS could have worked out a mutually
satisfactory program, the issues of Ms. Shilin's participation in
the contract execution and administration and the timing of
obtaining leased space would have been resolved easily. IHS has an
obligation to ensure that Shingle Springs is given the opportunity
to exercise its self-determination rights under ISDA. The record
demonstrates that IHS has made every reasonable effort to allow
Shingle Springs to exercise such rights. However, it will not and
cannot allow Shingle Springs to exercise contract rights under ISDA
which unlawfully restrict the contract rights of another recognized
Indian tribe under ISDA. To do otherwise would have violated the
mandates of ISDA.

34. IHS concedes that Policy Letter 89-4 has achieved its
intended goal at the CAO, which, with the exception of the Shingle
Springs and Chapa-De proposals, had always awarded ISDA contracts
within the 120-day time period. IHS P.H. Br. at 21, n. 5.

35. Contracts, 3d Ed, Calamari and Perillo, West Publishing Co.
(1987) defines a waiver as "a voluntary and intentional
relinquishment of a known right." Id. at 491. Restatement of the
Law, Contracts, Second Ed. 84 interprets the term waiver as
follows:
Waiver is often inexactly defined as `the voluntary
relinquishment of a known right.' . . . The common definition of
waiver may lead to the incorrect inference that a promisor must
know his legal rights and must intend the legal effect of the
promise. Under 93, it is sufficient if he has reason to know
the essential facts.

Under either definition, an argument could be made that Shingle
Springs' actions amounted to a waiver of any rights it had under
Policy Letter 89-4 (if, indeed it accrued any rights at all), due
to 1) Shingle Springs' consent to allow Chapa-De to be awarded an
interim contract after April 1, 1992; and 2) Shingle Springs'
failure to be in a position to carry out the terms of the proposal
because it had failed to obtain the necessary leased office space.

36. The doctrine of equitable estoppel is a means of precluding
a litigant from asserting an otherwise available claim or defense
against a party who has detrimentally relied on that litigant's
conduct. ATC Petroleum, Inc., v. Sanders, 860 F.2d 1104, 1111
(D.C. Cir. 1988), See generally 3 J. Pomeroy, Equity Jurispendence
804, at 189 (5th ed. 1941). In Heckler v. Community Health
Services of Crawford County, Inc., 467 U.S. 51, 51 (1984) the Court
noted: ". . . the party claiming estoppel must have relied on its
adversary's conduct `in such a manner as to change his position for
the worse' and that reliance must have been reasonable in that the
estoppel did not know nor should it have known that its adversary's
conduct was misleading."

In this case, arguably, IHS could assert the following factors as
precluding Shingle Springs from asserting that it was harmed by
IHS' violation of the 120-day guideline contained in Policy Letter
89-4: 1) Shingle Springs' failure to be in a position to begin
providing services as of April 1, 1992, in accordance with the
terms of the proposed contract; 2) Shingle Springs' consent to
Chapa-De continuing to provide services after the April 1, 1992
startup date; and 3) the parties' good faith participation in the
lengthy settlement process.

37. This might have been the case if Shingle Springs had agreed
to designate another principal agent in accordance with IHS'
instructions and had obtained leased facilities prior to April 1,
1992, the starting date of the ISDA contract at issue here.

38. This is somewhat in conflict with Shingle Springs' position
regarding the applicability of Circular 88-2. Shingle Springs
argued that Circular 88-2 should be construed as formally and
rigidly outlining procedures which must be followed in all cases to
reconfigure service areas. With regard to this issue, Shingle
Springs contends that Circular 88-2 does not address the case of a
tribe from outside the service area submitting an ISDA contract
proposal.

39. Moreover, it is within IHS' discretion to decline an ISDA
proposal in which the proposed project or function cannot be
properly completed or maintained. 25 U.S.C. 450f(a)(2)(C). To
the extent that a distant tribe would be unable to overcome the
likely administrative, efficiency and effectiveness considerations
to managing health care services associated over long distances,
IHS would be entitled to decline its proposal.

40. In California, there is no distinction between service
units and service areas for purposes of contracting under ISDA.
Finding 258.