The freeze could bring small housing authorities to close or default on loans, Marty Shuravloff, chairman of the National American Indian Housing Council, told the U.S. Senate Indian Affairs Committee on Wednesday. Shuravloff, who was elected the council's national chairman in May, is the executive director of the Kodiak Island Housing Authority.

The Kodiak authority is not in imminent danger because it operates on federal money received the previous year as a hedge against this type of disruption, Shuravloff said. The U.S. Department of Housing and Urban Development has halted the Kodiak authority's $4 million grant for fiscal year 2006, he said.

Steve Ginnis, who runs the Fairbanks-based Interior Regional Housing Authority, said the HUD action should have no immediate effect on his organization, which submitted its annual plan earlier.

The authority, which acts as an umbrella for 28 tribal groups in the Interior, receives about $11 million from the federal agency, according to Ginnis. It has enough reserves to operate for a while without interruption, he said.

But that may not be the case for some smaller, village-based authorities, he said. Several Interior villages operate their own housing programs, with yearly federal Indian housing block grants around $100,000 in some cases.

Indian housing authorities, using mostly federal money, operate programs to cut housing costs and encourage homeownership for tribal members. Federal funding has been flat in recent years.

Tribal officials were notified of the freeze in a June 9 letter from HUD assistant secretary Orlando Cabrera.

The action follows a May 25 decision in Colorado by U.S. District Judge Richard Matsch, who ruled against HUD in favor of the Fort Peck Housing Authority, the tribal housing organization for Montana's Fort Peck Indian Reservation.

Agency officials, following up on an inspector general's report, concluded HUD had overpaid the Fort Peck authority for several years and they asked for repayment.

Fort Peck sued, contending that the agency misinterpreted the law and had no authority to ask for repayment. Matsch ruled that HUD had not followed the 1996 Native American Housing Assistance and Self-Determination Act.

Under the law, payments to Indian housing authorities are partly based on need but also on an authority's housing stock, defined as "the number of low-income housing dwelling units owned or operated at the time pursuant to a contract between an Indian housing authority for the tribe and the secretary (of HUD)."

Matsch said the phrase "at the time" meant Sept. 30, 1997, the day before the law became effective. Thus "the number" of housing units used in calculating payments cannot fall below the number that existed at that time, the judge said.

"The implications of this," Cabrera said, "are potentially far-reaching, and this ongoing litigation may result in a significant recalculation of all (Indian Housing Block Grants), both for fiscal year 2006 and past (fiscal years)."

Cabrera said HUD wants the judge's ordered stayed or modified. Until then, he said, "the department is unable to process any further fiscal year 2006 Indian housing block grant awards."

Nationwide, the decision froze about $300 million of a $620 million pool.