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WASHINGTON — Members of Congress threatened to intervene in a dispute between the U.S. Department of Housing and Urban Development and a Montana Indian tribe Wednesday, saying the department needs to release millions of dollars in Indian housing grants.

Sen. John McCain, the Arizona Republican who is chairman of the Senate Indian Affairs Committee, said at a hearing Wednesday that the committee may consider legislation to urge HUD to release about $300 million in nationwide housing grants that the department has frozen due to the Fort Peck Housing Authority's lawsuit.

At issue is the formula used for distributing HUD's housing block grants for Indian tribes. A federal judge ruled last month that certain units should be included in the tribe's calculated inventory, calling into question the department's current formula for calculating the grants. The department has requested a stay in the case, freezing millions of dollars in housing grants across the country in the meantime.

Orlando Cabrera, HUD's assistant secretary for the Office of Public and Indian Housing, said the department's lawyers had advised them to hold off on distributing the funds in case the formula has to be recalculated for all the grants. The case will probably be resolved before Congress could act, Cabrera said.

"Probably's not good enough," McCain said.

The committee's ranking Democrat, Sen. Byron Dorgan of North Dakota, said the lawyers were not giving good advice.

"It's almost unforgivable," Dorgan said after the hearing, noting the housing crisis on many reservations. "It just smacks of bureaucratic incompetence."

Cabrera and John Fredericks, a lawyer for Fort Peck, said the two parties are in negotiations on the issue. If they come to agreement, Cabrera said, it could release the money for other tribes. Fredericks said if they don't come to agreement, they will ask the federal court to clarify how the grant formulas should be handled.

In a letter written to the department Wednesday, the executive director of the National American Indian Housing Council said the funding shortfalls could affect tribes' credit and possibly even shut down some housing authorities.

"Many if not most … recipients are absolutely dependent on such funding to continue operating and providing service to their low-income Indian clientele," wrote Gary Gordon.

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