[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
INDIAN TRUST FUND ACCOUNTS
=======================================================================
OVERSIGHT HEARING
before the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
February 6, 2002
__________
Serial No. 107-81
__________
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/
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COMMITTEE ON RESOURCES
JAMES V. HANSEN, Utah, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska, George Miller, California
Vice Chairman Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana Dale E. Kildee, Michigan
Jim Saxton, New Jersey Peter A. DeFazio, Oregon
Elton Gallegly, California Eni F.H. Faleomavaega, American
John J. Duncan, Jr., Tennessee Samoa
Joel Hefley, Colorado Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland Solomon P. Ortiz, Texas
Ken Calvert, California Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado Calvin M. Dooley, California
Richard W. Pombo, California Robert A. Underwood, Guam
Barbara Cubin, Wyoming Adam Smith, Washington
George Radanovich, California Donna M. Christensen, Virgin
Walter B. Jones, Jr., North Islands
Carolina Ron Kind, Wisconsin
Mac Thornberry, Texas Jay Inslee, Washington
Chris Cannon, Utah Grace F. Napolitano, California
John E. Peterson, Pennsylvania Tom Udall, New Mexico
Bob Schaffer, Colorado Mark Udall, Colorado
Jim Gibbons, Nevada Rush D. Holt, New Jersey
Mark E. Souder, Indiana James P. McGovern, Massachusetts
Greg Walden, Oregon Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho Hilda L. Solis, California
Thomas G. Tancredo, Colorado Brad Carson, Oklahoma
J.D. Hayworth, Arizona Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
Tim Stewart, Chief of Staff
Lisa Pittman, Chief Counsel/Deputy Chief of Staff
Steven T. Petersen, Deputy Chief Counsel
Michael S. Twinchek, Chief Clerk
James H. Zoia, Democrat Staff Director
Jeffrey P. Petrich, Democrat Chief Counsel
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C O N T E N T S
----------
Page
Hearing held on February 6, 2002................................. 1
Statement of Members:
Christensen, Hon. Donna M., a Delegate in Congress from the
Virgin Islands, Prepared statement of...................... 179
Cubin, Hon. Barbara, a Representative in Congress from the
State of Wyoming, Prepared statement of.................... 179
Faleomavaega, Hon. Eni F.H., a Delegate in Congress from
American Samoa, Prepared statement of...................... 107
Hansen, Hon. James V., a Representative in Congress from the
State of Utah.............................................. 1
Prepared statement of.................................... 2
Kildee, Hon. Dale E., a Representative in Congress from the
State of Michigan, Prepared statement of................... 179
Pallone, Hon. Frank, Jr., a Representative in Congress from
the State of New Jersey, Prepared statement of............. 181
Rahall, Hon. Nick J. II, a Representative in Congress from
the State of West Virginia................................. 3
Prepared statement of.................................... 4
Rehberg, Hon. Dennis R., a Representative in Congress from
the State of Montana, Prepared statement of................ 182
Udall, Hon. Tom, a Representative in Congress from the State
of New Mexico, Prepared statement of....................... 45
Young, Hon. Don, a Representative in Congress from the State
of Alaska, Prepared statement of........................... 182
Statement of Witnesses:
Cobell, Elouise, IIM Trust Beneficiary....................... 70
Prepared statement of.................................... 73
Response to questions submitted for the record........... 78
Gray, Donald T., Esq., Nixon Peabody LLP..................... 150
Prepared statement of.................................... 151
Hall, Tex G., President, National Congress of American
Indians.................................................... 124
Prepared statement of.................................... 126
Jandreau, Michael, Chairman, Lower Brule Sioux Tribe......... 68
Prepared statement of.................................... 69
Makil, Ivan, President, Salt River Pima-Maricopa Indian
Community.................................................. 57
Prepared statement of.................................... 59
Matt, D. Fred, Chairman, The Confederated Salish and Kootenai
Tribes of the Flathead Nation.............................. 62
Prepared statement of.................................... 64
Norton, Hon. Gale, Secretary, U.S. Department of the Interior 5
Prepared statement of.................................... 11
Response to questions submitted for the record........... 22
Tillman, Charles O., Jr., Chairman, InterTribal Monitoring
Association................................................ 110
Prepared statement of.................................... 111
ITMA Position Statement submitted for the record......... 120
Windy Boy, Jonathan, President, Council of Large Land Base
Tribes..................................................... 137
Prepared statement of.................................... 138
Additional materials supplied:
Addison, Anthony A., Chairman, Northern Arapaho Business
Council, Statement submitted for the record................ 183
Addison, Anthony A., Chairman, Northern Arapaho Business
Council, Letter to the Department of the Interior submitted
for the record............................................. 185
Anoatubby, The Honorable Bill, Governor, The Chickasaw
Nation, Statement submitted for the record................. 186
Assiniboine & Sioux Tribes, Counterproposal to Bureau of
Indian Trust Assets Management submitted for the record.... 187
Berrey, John Lane, Osage Nation/Quapaw Tribe of Oklahoma,
Statement and memorandum submitted for the record.......... 101
Blackfeet Tribal Business Council, Letters submitted for the
record..................................................... 82
Bradley, Carman, Chairman, Council of Energy Resource Tribes,
Statement submitted for the record......................... 199
Bourland, Gregg J., Tribal Chairman, Cheyenne River Sioux
Tribe, Statement of the Great Plains Tribal Chairmen's
Association submitted for the record....................... 203
Hoopa Valley Tribe, Tribal Self-Governance Trust Reform
Proposal submitted for the record.......................... 208
Mille Lacs Band of Ojibwe, Letter submitted for the record... 218
Montana Wyoming Tribal Leaders Council, Resolution submitted
for the record............................................. 220
Nez Perce Tribe, Statement submitted for the record.......... 222
Slonaker, Thomas N., The Special Trustee for American
Indians, Statement submitted for the record................ 20
Tribal Chairmen's Position Statement submitted for the record 224
Tribal Council of the Northern Cheyenne Tribe, Resolution
submitted for the record................................... 177
Windy Boy, Alvin, Sr., Chairman, The Chippewa Cree Tribe of
the Rocky Boy's Reservation, Statement submitted for the
record..................................................... 228
INDIAN TRUST FUND ACCOUNTS: THE DEPARTMENT OF THE INTERIOR'S
RESTRUCTURING PROPOSAL AND THE IMPACTS OF THE COURT ORDER CLOSING
ACCESS TO THE DEPARTMENT'S COMPUTER SYSTEM
----------
Wednesday, February 6, 2002
U.S. House of Representatives
Committee on Resources
Washington, DC
----------
The Committee met, pursuant to notice, at 10 a.m., in room
1334, Longworth House Office Building, Hon. James V. Hansen
(Chairman of the Committee) presiding.
STATEMENT OF THE HON. JAMES V. HANSEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF UTAH
The Chairman. We appreciate you all being here today, and
we know there is great interest in what we are doing here. A
lot of folks are in the overflow room, and we apologize that we
do not have adequate room for everybody, but we just do not. We
would appreciate it if those in the hall would stand against
the sides so they do not clog the passageway. We are a little
concerned about fire problems. We thank everyone for being
here.
We are going to limit the opening statements to myself and
the ranking member, and then we will go directly to the
witnesses.
I would like to begin by welcoming our distinguished
witnesses and thank you all for coming. The Federal
Government's trust obligation to Native Americans and the
Department of the Interior's management of tribal and
individual Indian trust funds and assets are both complex and
important issues. I look forward to an informative and frank
discussion with all of our witnesses.
The scope of this hearing is broad and is intended to
provide an overview of current developments in trust reform and
challenges facing the Federal Government and Native Americans
in our trust relationship. I expect our witnesses to discuss
several issues, including the Department's proposal to
restructure the Bureau of Indian Affairs, ideas to improve
trust asset management, and the impacts of the recent shut-down
of the Department's computer system and restriction to Internet
access.
The Chairman. The Committee views the Government's trust
relationship with Native Americans to be a nonpartisan issue
that demands our sincere attention. There is no room for
political posturing. I expect our witnesses to respond honestly
to pointed and direct questions, and I expect members to
respect the good intentions and good faith of all of our
witnesses.
We appreciate having Secretary Norton with us today. You
have inherited a complex and emotional situation. Although the
current administration is on the receiving end of the brunt of
the blame for inadequate trust management, previous
administrations, dating back decades, have largely ignored this
problem.
I appreciate Secretary Norton's direct involvement in
efforts to find a solution. The Committee recognizes, however,
that all three branches of the Federal Government are equally
responsible for ensuring the integrity of the trust
relationship. Congress has a critical role in providing funding
and a meaningful direction. We look to the Department and its
Secretary to carry out and manage the trust.
As recently noted by the court monitor in the Cobell v.
Norton litigation, the three branches of the Government are now
united to consider the creation of a long overdue trust
organization to remedy past trust management, and the statement
from the Court goes accordingly:
``One of the three branches of the Federal Government must
manage the creation of a new fiduciary trust organization whose
experienced trust officials must select, organize and train a
nationwide trust staff and move forward as rapidly as possible
at building a new trust management system--not tinkering with a
resurrected crew and vessel--to properly house, maintain, and
protect the Indian Trust beneficiaries' land, resources, and
assets.''
The Committee understands, however, that a resolution to
the trust management problem will not come exclusively from
within the government. We respect the need for tribal
consultation and input from other outside experts. We are here
today to explore ideas and possible solutions that will once
and for all establish the necessary business practices,
procedures, policies, and resources necessary for meaningful
trust reform.
A notable American philosopher once said, ``Those who do
not remember the past are bound to repeat it.'' I recognize
there are no easy answers to trust reform, but the Government
must do everything possible to break the cycle of mismanagement
that has existed for many years. Unless we identify a system to
properly execute the Government's trust responsibility to
Native Americans, the Department will remain at risk of
investing in projects that do not satisfy basic trust
management requirements.
I appreciate you all being here, and I will now turn the
time over to the ranking member from West Virginia, the
Honorable Nick Rahall.
[The prepared statement of Chairman Hansen follows:]
Statement of The Honorable James V. Hansen, Chairman, Committee on
Resources
Good morning. I'd like to begin by welcoming our distinguished
witnesses and thank you all for coming. The federal government's trust
obligation to Native Americans and the Department of the Interior's
management of tribal and individual Indian trust funds and assets are
both complex and important issues. I look forward to an informative and
frank discussion with all of our witnesses.
The scope of this hearing is broad and is intended to provide an
overview of current developments in trust reform and challenges facing
the federal government and Native Americans in our trust relationship.
I expect our witnesses to discuss several issues, including the
Department's proposal to restructure the Bureau of Indian Affairs,
ideas to improve trust asset management, and the impacts of the recent
shut-down of the Department's computer system and restriction to
internet access.
This Committee views the government's trust relationship with
Native Americans to be a nonpartisan issue that demands our sincere
attention. There is no room for political posturing. I expect our
witnesses to respond honestly to pointed and direct questions and I
expect Members to respect the good intentions and good faith of all our
witnesses.
We appreciate having Secretary Norton with us today. You have
inherited a complex and emotional situation. Although the current
Administration is on the receiving end of the brunt of the blame for
inadequate trust management, previous Administrations dating back
decades have largely ignored the problem.
I appreciate Secretary Norton's direct involvement in efforts to
find a solution. The Committee recognizes, however, that all three
branches of the federal government are equally responsible for ensuring
the integrity of the trust relationship. Congress has a critical role
in providing funding and meaningful direction. We look to the
Department and its Secretary to carry out and manage the trust. As
recently noted by the Court Monitor in the Cobell v. Norton litigation,
the three branches of the government are now united to consider the
creation of a long overdue trust organization to remedy past trust
mismanagement.
``One of the three branches of the federal government must
manage the creation of a new fiduciary trust organization whose
experienced trust officials must select, organize and train a
nationwide trust staff and move forward as rapidly as possible
at building a new trust management system--not tinkering with a
resurrected crew and vessel--to properly house, maintain, and
protect the Indian Trust beneficiaries' land, resources, and
assets.''
The Committee understands, however, that a resolution to the trust
management problem will not come exclusively from within the
government. We respect the need for tribal consultation and input from
other outside experts. We are here today to explore ideas and possible
solutions that will once and for all establish the necessary business
practices, procedures, policies, and resources necessary for meaningful
trust reform.
A notable American philosopher once said, ``Those who do not
remember the past are bound to repeat it.'' I recognize that there are
no easy answers to trust reform, but the government must do everything
possible to break the cycle of mismanagement that has existed for
years. Unless we identify a system to properly execute the government's
trust responsibility to Native Americans, the Department will remain at
risk of investing in projects that do not satisfy basic trust
management requirements.
We will now hear from our first panel. Secretary Norton, please
proceed.
______
STATEMENT OF THE HON. NICK RAHALL, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WEST VIRGINIA
Mr. Rahall. Thank you, Mr. Chairman.
I want to, first, thank you, Chairman Hansen, for honoring
my request to have today's hearing. It is unfortunate, but
true, that through both Democratic and Republican
administrations, as you have said, Mr. Chairman, for decades,
the Interior Department has acted like the Enron of Federal
agencies when it comes to managing Indian trust funds and
Indian trust assets.
Over the years, countless investigative reports by the
Congress, the GAO, the Inspector General, and others have been
issued on the failure of the BIA to properly account for and
manage Indian trust funds. Congressional hearings have been
held and millions of dollars have been spent in ill-fated
attempts to fix the system. However, each administration has
fumbled, with the succeeding administration recovering the
ball, only to hand it off to the next with that seemingly
elusive goal of restoring faith and integrity into a system yet
to be achieved.
It is true that Secretary Norton is in contempt
proceedings, but I would observe that every Interior Secretary
in modern times is culpable to one extent or another to this
situation. One of the reasons that I requested this hearing was
to examine the Secretary's rather sudden and unexpected
proposal at the time to form a new agency within the Interior
Department that would be vested with all of the Indian trust
fund responsibilities that are currently managed by the BIA and
the Office of Special Trustee.
This plan was developed with no input from Indian tribes or
account holders. It was a huge mistake, causing process to
become the issue instead of what really is the matter at hand,
which is whether each individual Indian and tribal account
accurately reflects the amount of money that it should contain.
But make no mistake about it, there is pain and misery in
Indian Country because of the failure in Federal trust
responsibility.
Today's hearing, hopefully, will shed additional light on
how all of the stakeholders, members of this Committee
included, can reach for a fair resolution of this matter in the
near future.
As I told Deputy Secretary Steven Griles in my office last
week, we want to be a part of the solution, not the problem. At
the same time, in speaking for members on this side of the
aisle, at least, we will not stand idle if we see the rights
and privileges of those we are charged with a trust
responsibility for are being trammeled.
I look forward to hearing the testimony today and, again, I
thank you, Chairman Hansen, for honoring my request for this
hearing.
[The prepared statement of Mr. Rahall follows:]
Statement of The Honorable Nick J. Rahall II, a Representative in
Congress from the State of West Virginia
I would like to first thank Chairman Hansen for honoring my request
for this hearing.
It is unfortunate, but true, that through both Democrat and
Republican Administrations the Interior Department has acted like the
Enron of federal agencies when it comes to managing Indian trust
assets.
Over the years, countless investigative reports by the Congress,
GAO, the Inspector General and others have been issued on the failure
of the BIA to properly account for and manage the Indian trust funds.
Congressional hearings have been held. And millions of dollars have
been spent in ill-fated attempts to fix the system.
However, each Administration has fumbled, with the succeeding
Administration recovering the ball only to hand it off to the next with
that seemingly elusive goal of restoring faith and integrity into the
system yet to be achieved.
It is true that Secretary Norton is in contempt proceedings. But I
would observe that every Interior Secretary in modern times is culpable
to one extent or another for this situation.
One of the reasons I requested this hearing was to examine the
Secretary's rather sudden and unexpected proposal at the time to form a
new agency within the Interior Department that would be vested with all
of the Indian trust fund responsibilities currently managed by the BIA
and Office of Special Trustee.
This plan was developed with no input from Indian tribes or account
holders. It was a huge mistake, causing process to become the issue
instead of what really is the matter at hand, which is, whether each
individual Indian and tribal account accurately reflects the amount of
money it should contain.
For make no mistake about it, there is pain and misery in Indian
Country because of the failure in federal trust responsibility.
Today's hearing hopefully will shed additional light on how all of
the stakeholders, the Members of this Committee included, can reach a
fair resolution of this matter in the near future.
As I told Deputy Secretary Steve Griles in my office last week, we
want to be part of the solution, not the problem. At the same time, and
speaking for Members on this side of the aisle at least, we will not
stand idle if we see the rights and privileges, of those we are charged
with a trust responsibility, for being trammeled.
I look forward to hearing the testimony of the witnesses.
______
The Chairman. Thank you, Mr. Rahall. Let met thank the
Secretary for being with us, and, again, let me apologize. This
isn't the room we normally use for a hearing of this size, but
the other one is going through a little restructuring right
now, so we are just going to have to get along.
Madam Secretary, we would appreciate it if you would come
up and take your place. And, Nancy, don't run the clock on the
Secretary, OK?
Maybe you would like to introduce who is accompanying you,
and we turn the time to you.
STATEMENT OF THE HONORABLE GALE A. NORTON, SECRETARY OF THE
INTERIOR, ACCOMPANIED BY NEAL McCALEB, ASSISTANT SECRETARY OF
INDIAN AFFAIRS AND TOM SLONAKER, SPECIAL TRUSTEE, WASHINGTON,
D.C.
Secretary Norton. Thank you very much, Mr. Chairman and
members of the Committee. I am very pleased to join you today
to testify about our Indian trust programs.
I have submitted a written statement that I ask be
incorporated into the record.
The Chairman. Without objection.
Secretary Norton. Thank you.
Before I begin my statement, I would like to introduce
other officials of the Department of Interior who are here
today. With me is Neal McCaleb, who is the Assistant Secretary
for Indian Affairs, and Tom Slonaker, who is the Special
Trustee for Native American Trust.
Also, here in the room today, and I would also like to
identify them, is Jim Cason, who is the Associate Deputy
Secretary, and he is the one who has been working night and day
to address our Internet shutdown issues.
Ross Swimmer is here. He is the Director of the Office of
Indian Trust Transition.
Deputy Secretary Griles was planning to be here today, but
he is testifying in the Cobell litigation this morning.
I have asked Mr. McCaleb, Mr. Slonaker, Mr. Swimmer, and
Mr. Cason to remain for the balance of the testimony today
because I think it is important for us to hear the perspectives
that are being offered to the Committee and to continue our
listening and understanding of this issue.
Last year, in my first hearing in front of Congress, I
spoke briefly about the matter of Indian trust reform. At that
time, I said, ``As the Trustee, I clearly recognize the
important obligations of the Department to put in place those
systems, procedures, and people to fulfill our obligation to
the trust beneficiaries, both individual Indians and tribes.''
However, I also emphasized that I have grave concerns about
our existing management systems. My experience of the past year
has certainly reinforced my feelings from last February.
The problems that we are trying to solve have been over 100
years in the making, and I would like to share something with
you today that well illustrates that. This is a newspaper front
page from the Philadelphia newspaper called The Press. One of
the articles is headlined, ``Indian Trust Fund Losses: Funds
Alleged to have been Abstracted from the Department of the
Interior.''
The other headline on this page says, ``General Custer
Killed.'' This is from July 6th, 1876. Obviously, the issues
have gone on for a long time.
Congress has reviewed the issues of Indian trust asset
management many times. As Representative Rahall pointed out,
true reform has never been achieved. Many, many times we have
come to the point where Congress has examined the issues, where
the Department of Interior has proposed reforms, where the
tribes have discussed the need for reform, and yet time after
time after time, decade after decade, we have failed to
actually achieve reform.
I am perhaps unrealistically optimistic, but still somewhat
optimistic that the time has arrived, that we have a strong
interest, from many different quarters, in seeing reform
actually take place, and that is what we are working to
achieve.
Let me describe for you some of the issues that we face and
why this is such a complex issue. Trust asset management
involves approximately 11 million acres held in trust or
restricted status for individual Native Americans. Forty-five
million acres are held in trust for the tribes. This is a total
of 56 million acres managed by the Department of Interior, and
that amounts to the combined size of the States of Maine,
Massachusetts, Vermont, New Hampshire, Connecticut, Rhode
Island, Delaware, Maryland and the District of Columbia.
This land produces income for about 350,000 individual
Indian owners and 315 tribal owners. Leasing and sales revenues
of approximately $300 million per year are distributed to more
than 225,000 open individual Indian money accounts and revenue
of approximately $800 million per year is distributed to the
1,400 tribal accounts.
Our management of lands for individual Indians dates back
to 1887. At that time, Congress passed the General Allotment
Act, which allocated tribal lands to individual members of
tribes in parcels of 80 or 160 acres. The expectation of
Congress was that this would continue for no more than 25
years, with that land being held in trust for the individual
Indians. However, Congress kept extending that time period and
ultimately made that into a permanent status.
By the 1930's, it was widely accepted that the General
Allotment Act had failed. Congress stopped the further
allotment of lands, but the interest in the allotted lands
began to fractionate, as lands were passed from generation to
generation. There are now an estimated 1.4 million fractional
interests of 2 percent or less involving 58,000 tracts of
individually allotted lands.
The challenges related to fractional interest in allotted
lands continue. These interests expand exponentially with each
new generation to the point where we now have incredibly tiny
ownership interests. There is a chart that is attached to your
testimony, and that chart reflects the tiny ownership amounts
that we have.
Here is the one I can actually read. As you will see, for
example, in the first column beyond the blackened area, this is
the fraction of lands that people hold. This is just in one
little parcel of land. We have someone who owns 1/592nd-
interest in that. Some other people own 29/77,750ths interest.
These interests, obviously, are not the entire interest in the
land. This is just one page reciting a few people's interests
in this land.
When you get over to the last column, you see the decimal
places carrying out the description of how much interest these
individuals own in this tract of land, and you get into .0003
as an interest in this piece of land. In order to actually
convert all of this to a fraction where we had a common
denominator, we had to get into 228,614,400 as the least-common
denominator for this.
As you can imagine, this is a complete bookkeeping
nightmare, and it is very difficult when you are talking about
a tract of land that might, perhaps, have had a $250-a-year
annual income for a grazing lease. Once this is divided down to
the individuals receiving their tiny share, we have many
interests where the annual income is less than a penny. These
are representative of the kinds of interests we manage, and
these are not even reflective of the smallest interests that we
see.
The Department is bound by its trust obligations to account
for each owner's interest regardless of size, even though these
accounts might generate such small revenues. Each is managed
without the assessment of any management fees and with the same
diligence that applies to all accounts. In contrast, in a
commercial setting, these accounts would be eliminated because
of the assessment of routine management fees.
The income that comes in from these tiny interests in land
is what flows into our individual Indian money accounts, and so
small interests in land lead to small accounts with small
balances.
I recognize that in the last Congress you passed the Indian
Land Consolidation Act Amendments of 2000, and we appreciate
you grappling with the issue in that way. We are examining that
now as we are implementing it, and we may find that additional
incentives are needed to expedite the consolidation of these
interests.
I would like to now lay out some of the other pressing
interests that we see in addition to fractionation.
First, the Department is not well structured to focus on
its trust duties. Trust responsibilities are spread throughout
the Department. Thus, trust leadership is diffuse. The Bureau
of Indian Affairs itself has a long history of decentralized
management and, as a result, it does not have clear and unified
policies and procedures relating to trust management. Each of
the 12 BIA regional offices and 85 BIA agency offices has
developed policies and procedures that are unique to that
region and to each of the tribes that are within that region.
A second issue that we face is that planning systems
relating to trust have been inadequate. A new strategic plan
needs to be developed.
Third, the Department's approach to trust management has
been to manage the program as a Government trustee, not a
private trustee. The Department agrees that our trust duty
requires a better way of managing than we have had in the past.
However, the current structure of the Department is not
suitable for carrying out the expectations of the tribes, the
Congress or the courts. To meet this level of expectation will
require more funding and resources than have historically been
provided to the Department, and this has led to the President's
fiscal year 2003 budget request of an additional $84 million in
trust asset management funding.
Fourth, the computer software system known as the Trust
Asset and Accounting Management System, which we refer to as
TAAMS, has been inadequate. The Department had hoped to go a
long way to solving its problems, and yet this system has
failed to achieve many of its objectives. Also, our information
technology security measures associated with Indian trust data
lack integrity and have not been adequate to protect trust data
or to comply with Office of Management and Budget standards.
A current challenge that has been in the headlines is the
Cobell litigation. In 1996, five plaintiffs filed suit against
the Departments of Treasury and Interior, alleging breach of
trust with respect to the United States' handling of individual
Indian money accounts.
In the first trial, in December 1999, the Court ruled that
the Department was in breach of four trust duties. The Court
declared, among other things, that the 1994 Trust Reform Act
requires Interior and Treasury to provide plaintiffs an
accurate accounting of all money in their accounts without
regard to when the funds were deposited and requires retrieval
and retention of all information concerning the trust necessary
to render an accurate accounting. This decision was affirmed by
the D.C. Court of Appeals in February of last year.
The second trial dealing with historical accounting has not
yet been scheduled. The trial about whether Neal McCaleb and
myself should be held in contempt in our official capacities is
ongoing as we speak.
To address the problems I have mentioned, a number of
actions have been initiated in my first year as Secretary. We
are developing a new strategic plan that will reflect a
beneficiary approach to trust management and service delivery.
Objectives will include maintaining comprehensive, up-to-date,
and accurate land and actual resource ownership records,
developing a robust accounting system to manage financial acts
and developing a plan to attract and maintain a qualified,
effective workforce.
Last July, I created the Office of Historical Trust
Accounting. Its mission is to develop a detailed plan for a
comprehensive historical accounting of trust accounts. We
expect this plan will provide a foundation for Congress to
evaluate our future funding requests.
The budget unveiled this week asked for a $9-million
increase for this historical accounting. A full reconciliation
of all accounts will ultimately require considerably more
money. Conducting a full audit transaction-by-transaction will
be difficult and very expensive, probably hundreds of millions
of dollars. Without such an accounting, however, the plaintiffs
in the ongoing litigation may continue to assert, as they have
in the press, that they are owed tens of billions of dollars.
Turning to the reorganization of the Department. We heard
from many sources, including the Special Trustee, our
management consultant, EDS, the court monitor in the Cobell
litigation and through various budget reviews that one of the
fundamental barriers to trust reform was the disorganized
scattering of trust functions throughout the Department.
Our management consultant's review, for example, called for
a single accountable trust reform executive sponsor. Last
November, we proposed the formation of a Bureau of Indian Trust
Asset Management or BITAM. This option envisions consolidating
most of the trust reform and trust asset management functions
throughout the Department into a new bureau that would report
to a new Assistant Secretary. Essentially, we would separate
out the service functions of BIA, like education, law
enforcement and so forth. Those would remain within the Bureau
of Indian Affairs.
The trust asset management functions, the financial
accounting functions, would go into the new organization. It
was hoped that that would consolidate things in a way that we
could have consistent and coherent planning and the ability to
have an organization dedicated to the high standards of
accounting.
On November 20th, 2001, I issued an order to establish the
Office of Indian Trust Transition within the Office of the
Secretary,a need shortly thereafter I appointed Ross Swimmer to
be its Director. It is currently charged with developing the
new strategic plan and organizing the Department's efforts to
implement that plan.
We are currently in the process of consulting with tribes
to involve them in reorganizing the Department's trust asset
management responsibilities. We have held a series of
consultation meetings. To date, the tribes have expressed their
dissatisfaction with both our consultation process and with our
reorganization proposal.
A task force of tribal leaders has been formed as a way of
facilitating the consultation process. I have committed
financial resources to support the task force and other
consultation efforts. Working with these tribal leaders, we are
earnestly endeavoring to achieve progress on trust reform.
This past weekend, we held our first meeting in
Shepherdstown, West Virginia. The tribal leaders who were
present listened to us and also presented various alternatives
to our BITAM proposal. We listened to their proposals, as well.
We are currently working through our management consultant
and the task force to evaluate all of the various proposals.
Overall, I was very encouraged by the meeting. I felt that we
had begun developing a good working relationship and the
interpersonal trust necessary to tackle a tough problem
together.
Now, on Sunday, as the meeting was drawing to a close, I
asked the task force members what I should say as I talked with
you all about their perspectives and about our meeting
together. Well, it was an hour-long discussion, so I can't
begin to capture everything that was said, but I wanted to
share with you some of the perspectives.
They wanted me to convey that while the tribes had rejected
the BITAM proposal, they understood that I had inherited a
disturbing problem for which no past administration had come up
with a solution. They wanted you to know that there is more to
understanding this problem than ordinary trust law. There is
Indian trust law. Due to the willingness of the tribes to work
together, we can address many of the longstanding problems in
Indian Country. We all agreed that we were excited about
working together and that this was true because of some of the
breakthroughs at least in understanding that came from that
meeting.
Congress must understand that the trust responsibility
comes from treaties under which tribes gave up massive amounts
of their resources. I have also learned, through the
consultation process and the task force, that, frankly, to my
great surprise, the tribes are very strong attached to the
Bureau of Indian Affairs. They may view it as dysfunctional and
as a mismanaged organization, but it is the entity to which
they have invested considerable time and attention, and it is
their consistent point of contact with the Federal bureaucracy.
Because a number of the tribal leaders who participated in
the task force meeting this last weekend are actually
testifying here today, I am sure that they will also share
their views of the meeting.
Let me quickly turn to our computer system, and the
shutdown of our access to the Internet. Many of you have
inquired about that and received inquiries from your
constituents about that.
On December 5th, 2001, as part of the Cobell proceedings,
the Court ordered the Department to disconnect from the
Internet all of the computer systems that house or provide
access to Indian trust data. The temporary restraining order
came at the request of plaintiffs and was based on a report by
the special master for the Court prepared on the security
weaknesses of information technology security.
On December 17th, the Court ordered a consent order
proposed by the Department over the objection of the
plaintiffs. It establishes a process that allows the Department
to resume operations of some computer systems after providing
the special master assurances that the problems he identified
have been resolved and the security meets a certain standard.
The December 17th consent order is the only mechanism under
which the Department may use some systems or reconnect them to
the Internet. Under that order, we first sought to operate the
IT systems required to make payments to individual Indians. Our
initial request was to operate a key Indian system, and it was
made on December 17th, 2001. The special master concurred with
our intent to operate this system recently.
On December 21st, we requested to operate another key
system that would govern mineral receipts, and that application
is still pending. It is our intent to make lease payments to
individual Indians as rapidly as we are permitted to do so.
As a rough estimate, about 90 percent of the Department of
Interior is currently off-line. Several other requests have
been forwarded to the special master recently. We will continue
to work with the Court to expedite the resumption of the many
public service programs that depend on reconnecting to the
Internet.
We have taken initial steps to prepare a long-term
strategic plan that would deal with the security of this data.
We expect that the core of this dedicated network can be
installed during fiscal year 2002. There would be a phase-in of
additional hardware and a shift of data from other systems
expected to take approximately 3 years. The overall cost of the
estimate for that is $65- to $70 million.
The actions that I have taken are only the beginning of a
long, intensive effort that will be required. We will turn to
Congress for help in our endeavors.
In conclusion, let me underscore a few points. Indian trust
asset management is a very high priority for the Department. We
need to establish an organizational structure that facilitates
trust reform and trust asset management. We need to establish
an ongoing effective consultation mechanism with the tribes.
The Department must improve computer support and security to
ensure the integrity of Indian trust data.
We are being challenged by litigation which might require
significant changes in how the trust is managed. It appears
that substantial resources will be required to meet the growing
expectations of tribes, the courts, and Congress. The tribes,
Interior, and Congress have to reconcile the competing
principles associated with trust responsibility and self-
determination. It is important that at the end of this process,
the tribes have greater ability to govern themselves and
determine their own future.
Thank you for inviting me to testify here today, and I look
forward to answering your questions.
[The prepared statements of Secretary Norton and Mr.
Slonaker follow:]
Statement of The Honorable Gale A. Norton, Secretary of the Interior,
U.S. Department of the Interior
Introduction
Thank you, Mr. Chairman and Members of the Committee, for inviting
me to testify at this hearing on the Native American Trust program
being administered by the Department of the Interior, including the key
elements of trust reform and trust asset management.
Comments on the trust program were included in my first
Congressional testimony as Secretary of the Interior. On February 28,
2001, I told Congress the following:
``I would like to comment on a matter of very high priority for
myself and for the Department, and that is the matter of Indian
trust reform. As the Trustee, I clearly recognize the important
obligations of the Department to put in place those systems,
procedures, and people to fulfill our obligation to the trust
beneficiaries, both individual Indians and tribes. This is an
enormous undertaking in correcting the errors and omissions of
many decades. Coming into this position, and so early in my
tenure seeing a decision from the Court of Appeals in the
Cobell litigation, I have to say that I have grave concerns
about our existing management systems. It is a very high
priority for me that the person who comes in as Assistant
Secretary of Indian Affairs and the other people who fulfill
leadership positions as to our Indian responsibilities are
people with strong management backgrounds and abilities.''
(Emphasis added)
My experience of the past year has reinforced the concerns I
expressed last February. The problems we are working to solve have been
over a century in the making. Allow me to explain the Department's role
in managing Indian trust assets, the amount of land and accounts we
hold in trust, the work entailed in managing these accounts, the
challenges we face in trust management, the work underway to address
these challenges, and areas where legislative and executive action is
needed.
Background
Current Holdings--An understanding of the work that lies ahead
requires a recognition of the complex issues we have inherited. Trust
asset management involves approximately 11 million acres held in trust
or in restricted status for individual Indians and nearly 45 million
acres held in trust for the Tribes, a combined area the size of Maine,
Massachusetts, Vermont, New Hampshire, Connecticut, Rhode Island,
Delaware, Maryland, and the District of Columbia. This land produces
income from more than 100,000 active leases for 350,000 individual
Indian owners and 315 Tribal owners. Leasing and sales revenues of
approximately $300 million per year are distributed to more than
225,000 open Individual Indian Money (IIM) accounts and revenue of
approximately $800 million per year is distributed to the 1,400 Tribal
accounts.
Trust Functions in Interior--Indian trust asset management involves
many agencies and offices within the Department, including the Bureau
of Indian Affairs, the Office of the Special Trustee for American
Indians, the Minerals Management Service, the Bureau of Land
Management, the Bureau of Reclamation, the U.S. Fish and Wildlife
Service, the National Park Service, and the Office of Surface Mining.
For example, the Bureau of Indian Affairs is responsible for the
leasing of trust lands, keeping tract of land ownership, lease
obligations, and appeals. The Office of the Special Trustee focuses on
the management of the actual trust accounts. The Minerals Management
Service handles royalty collection and the verification of those
payments. The Bureau of Land Management does the official surveys of
Indian trust land and tracks the status of actual lease operations on
the land.
In short, these agencies must hire, train and retain personnel
that:
1. LLease trust lands;
2. LConduct surveys across millions of acres to ensure leases are
properly administered;
3. LKeep records of leases held by hundreds of thousands of owners;
4. LRecord differing types of income from differing leases;
5. LReview transactions within individual accounts;
6. LIdentify Indian heirs through complex probate proceedings;
7. LPreserve trust records dating back a hundred years; and
8. LEnsure the security of complex computer software housing much
of this information.
This is not a simple responsibility, and there have been years of
debate and litigation over how it should be carried out.
History of the General Allotment Act--One of the most difficult
aspects of trust management is the management of the individual Indian
money accounts. In 1887, Congress passed the General Allotment Act,
which basically allocated tribal lands to individual members of tribes
in 80 and 160-acre parcels. The expectation was that these allotments
would be held in trust for their Indian owners for no more than 25
years. The intention was to turn Native Americans into private
landowners and accelerate their assimilation into an agricultural
society. Most Indians, however, retained their traditional ways and
chose not to become assimilated into the non-Indian society. Congress
extended the 25-year trust period, but finally, by the 1930s, it was
widely accepted that the General Allotment Act had failed. In 1934,
Congress, through the first Indian Reorganization Act, stopped the
further allotment of tribal lands.
Interests in these allotted lands started to ``fractionate'' as
interests divided among the heirs of the original allottees, expanding
exponentially with each new generation. There are now an estimated 1.4
million fractional interests of 2% or less involving 58,000 tracts of
individually owned trust and restricted lands. The Department is bound
by its trust obligations to account for each owner's interest,
regardless of size. Even though these accounts today might generate
less than one cent in revenue each year, each must be managed, without
the assessment of any management fees, with the same diligence that
applies to all accounts. In contrast, in a commercial setting, these
small accounts would be eliminated because of the assessment of routine
management fees.
Prior Review By Congress--Over the past 100 years, Congress has
reviewed the issue of Indian trust asset management many times. In
1934, the Commissioner of Indian Affairs warned Congress that
fractionated interests in individual Indian trust lands cost large sums
of money to administer, and left Indian heirs unable to control their
own land. ``Such has been the record, and such it will be unless the
government, in impatience or despair, shall summarily retreat from a
hopeless situation, abandoning the victims of its allotment system. The
alternative will be to apply a constructive remedy as proposed by the
present Bill.'' The bill ultimately led to the Act of June 18, 1934
which attempted to resolve the problems related to fractionation, but
as we now know did not.
In 1992, the House Committee on Government Operations filed a
report entitled ``Misplaced Trust: the Bureau of Indian Affairs'
Management of the Indian Trust Fund.'' That report listed the many
failures of the Bureau of Indian Affairs to manage properly Indian
trust funds. It pointed out that GAO audits of 1928, 1952, and 1955, as
well as 30 Inspector General reports since 1982 had found fault with
management of the system. The report notes that Arthur Andersen & Co.
1988 and 1989 financial audits stated that ``some of these weaknesses
are so pervasive and fundamental as to render the accounting systems
unreliable.''
The House Report cites an exchange between Chairman Mike Synar and
then Interior Inspector General James Richards in which Mr. Richards
states:
``I think the Bureau of Indian Affairs will not change until
there is some political consensus in that it must change. It is
the favorite * * * target of everyone who is shocked by
ineptitude and its insensitivity. Yet when we try to
restructure it either from a Congressional sense or from an
Executive sense, there are always naysayers and there never
develops a political sense for positive change.''
In 1984, a Price Waterhouse report laid out a list of procedures
needed to make management of these funds consistent with commercial
trust practices. One of these recommendations was considering a shift
of BIA disbursement activities to a commercial bank. This set in motion
a political debate on whether to take such an action. Congress stepped
in and required that BIA reconcile and audit all Indian trust accounts
prior to any transfer to a third party. BIA contracted with Arthur
Andersen to prepare a report on what would be entailed in an audit of
all trust funds managed by BIA in 1988. Arthur Andersen prepared a
report stating it could audit the trust funds in general, but it could
not provide verification of each individual transaction.
Arthur Andersen stated that it might cost as much as $281 million
to $390 million in 1992 dollars to audit the IIM accounts at the then
93 BIA agency offices. The Committee report states in reaction to that:
``Obviously, it makes little sense to spend so much when there
was only $440 million deposited in the IIM trust fund for
account holders as of September 30, 1991. Given that cost and
time have become formidable obstacles to completing a full and
accurate accounting of the Indian trust fund, it may be
necessary to review a range of sampling techniques and other
alternatives before proceeding with a full accounting of all
300,000 accounts in the Indian trust fund. However, it remains
imperative that as complete an audit and reconciliation as
practicable must be undertaken.''
The Committee report then moves on to the issue of fractionated
heirships which I know Congress has made several attempts to correct.
The report notes that in 1955 a GAO audit recommended a number of
solutions including eliminating BIA involvement in income distribution
by requiring lessees to make payments directly to Indian lessors,
allowing BIA to transfer maintenance of IIM accounts to commercial
banks, or imposing a fee for BIA services to IIM accountholders. The
report then states the Committee's concern that BIA is spending a great
deal of taxpayers' money administering and maintaining tens of
thousands of minuscule ownership interests and maintaining thousands of
IIM trust fund accounts with little or no activity, and with balances
of less than $50.
In many ways, the problems and potential solutions remain the same
as they did when this report was published.
Current Challenges in Trust Management
As you can see, the problems we are currently facing are not new
ones. I would like to lay out some of the most pressing issues that are
now before us.
Lack of Integration and Centralization of Trust Management--First,
the Department is not well structured to focus on its trust duties.
Trust responsibilities are spread throughout the Department. Thus,
trust leadership is diffuse. The Bureau of Indian Affairs (BIA) itself
has a long history of decentralized management and as a result, does
not have clear and unified policies and procedures relating to trust
management. Each of the 12 BIA Regional offices and 85 BIA agency
offices has developed policies and procedures that are unique to its
region and to the Tribes and individuals it serves. While BIA has
developed some national policies over the past few years, its overall
approach to trust management is still decentralized. The need for such
clear and unified policies remains large, but very little has been
done.
Lack of a Good Strategic Plan--Second, the planning systems related
to trust are inadequate. The American Indian Trust Fund Management
Reform Act of 1994 (the 1994 Trust Reform Act) required the development
of a comprehensive strategic plan for all phases of the trust
management business cycle that would ensure proper and efficient
discharge of the Secretary's trust responsibilities to Indian tribes
and individual Indians in compliance with that Act. The court in Eloise
Pepion Cobell, et al. v. Gale A. Norton, et al. (the Cobell
litigation), which I will discuss later in my testimony, also requested
information on the Department's plan for remedying problems identified
by the court. These two responsibilities evolved into the development
of the original High-Level Implementation Plan (HLIP) dated July 1,
1998. The HLIP was revised and updated on February 29, 2000. The Eighth
Quarterly Report that the Department submitted to the Court on January
16, 2002 states:
``As described in prior submissions to the Court, the
Department now views the High Level Implementation Plan (HLIP),
by which trust management reform progress was measured and
reported to the Court, to be obsolete. As reflected in the
introduction, HLIP milestones have become increasingly
disconnected from the overall objectives of trust reform. The
HLIP is now outdated. Many of its identified activities have
been designated as being completed; however, little material
progress is evident. More fundamentally, the HLIP does not
reflect an adequately coordinated and comprehensive view of the
trust reform process. A continuing re-examination of ongoing
trust reform is needed along with clarification of trust asset
management objectives.''
Changing Standard of Trust Management--Third, the Department's
longstanding approach to trust management has been to manage the
program as a government trustee, not a private trustee. Today, judicial
interpretation of our trust responsibilities is moving us toward a
private trust model. The Department agrees that our trust duty requires
a better way of managing than has been done in the past. The current
structure of the Department is not suitable for carrying out the
expectations of the tribes, the Congress, or the courts. To meet this
level of expectation will require more funding and resources than have
been historically provided to the Department.
Computer Problems--Fourth, the Trust Asset and Accounting
Management System software known as TAAMS, which the Department had
hoped would go a long way to solving trust problems, has yet to achieve
many of its objectives. Interior began developing TAAMS in 1998 from an
off-the-shelf program, intending for it to be a comprehensive,
integrated, automated national system for title and trust resource
activities. Using this software, Interior employees would record key
information about land ownership, leases, accounts receivable income,
and so forth. In November 2001, the Department's contractor, Electronic
Data Systems (EDS), found that the current land title portion of TAAMS
provides useful capabilities, but recommended deferring any further
effort on the realty and accounting portions.
In addition, Departmental information technology security measures
associated with Indian trust data lack integrity and are not adequate
to protect trust data or to comply with Office of Management and Budget
requirements. In fact, on December 5, the court ordered the Department
to disconnect all computers from the Internet that housed or provided
access to Indian trust data. The Department then disconnected nearly
all of its computer systems from the Internet because they are
interconnected.
Fractionated Heirships--Fifth, the challenges related to
fractionated interests in allotted land continue. These interests
expand exponentially with each new generation to the point where now we
have single pieces of property with ownership interests that are less
than .000002 of the whole interest. A stark example of the size of some
of these interests is attached to my testimony. It is a page from a
redacted 1983 Title Status Report for an allotment on the Sisseton
Reservation in South Dakota. Please note the ownership percentages for
each individual listed on the far right side of the sheet. The numbers
speak for themselves. (See Appendix A)
Litigation
Court Decisions Related to Trust--The Supreme Court has defined the
government's trust obligations towards Indian tribes in two seminal
cases--United States v. Mitchell, 445 U.S. 535 (1980)(Mitchell I) and
United States v. Mitchell, 463 U.S. 206 (1983)(Mitchell II). A guiding
principle of the Mitchell decisions is that a fiduciary obligation of
the kind that would support a cause of action for money damages against
the United States must be clearly established in the governing statutes
and regulations. In some recent lower court decisions, however, courts
have upheld money damage claims against the United States even where
federal officials had not violated any statutory or regulatory
requirements. The Department has been working with the Department of
Justice to determine how to respond to these decisions.
The Cobell Litigation--On June 10, 1996, five plaintiffs filed suit
against the Departments of Treasury and Interior, alleging breach of
trust with respect to the United States' handling of individual Indian
money (IIM) accounts. The Court in this action bifurcated the issues
for trial. In the first trial, in December 1999, the Court ruled that
the Department was in breach of four trust duties. The Court declared,
among other things, that the 1994 Trust Reform Act requires: (1)
Interior and Treasury to provide plaintiffs an accurate accounting of
all money in their individual Indian money trust without regard to when
the funds were deposited; and (2) retrieval and retention of all
information concerning the trust necessary to render an accurate
accounting. The Court also ordered Interior to file a revised High-
Level Implementation Plan (HLIP) to remedy these breaches. This
decision was affirmed by the D.C. Circuit Court of Appeals on February
23, 2001. The second trial, dealing with historical accounting has not
yet been scheduled.
Most recently, on November 28, 2001, the Court issued an order to
show cause why civil contempt should not lie against Assistant
Secretary McCaleb and me, in our official capacity, on four counts:
Failure to comply with the Court's Order of December 21,
1999, to initiate a Historical Accounting Project.
Committing a fraud on the Court by concealing the
Department's true actions regarding the Historical Accounting Project
during the period from March 2000 until January 2001.
Committing a fraud on the Court by failing to disclose
the true status of the TAAMS project between September 1999 and
December 21, 1999.
Committing a fraud on the Court by filing false and
misleading quarterly status reports starting in March 2000, regarding
TAAMS and BIA Data Cleanup.
On December 5, 2001, the Court ordered the Department to disconnect
from the Internet all of the Department's computer systems that house
or provide access to Indian trust data. This was followed on December
6, 2001, by a supplemental order to show cause why Assistant Secretary
McCaleb and I should not be held in civil contempt, in our official
capacity, for issues related to computer security of IIM trust data.
The contempt trial has been underway since December 10, 2001.
Tackling the Problems
To address the difficult challenges of trust reform, a number of
actions have been initiated in my first year. These include formulating
a proposal to reorganize trust management; creating a new office of
Historical Trust Accounting (OHTA); and initiating development of a new
strategic plan for improved trust management.
Strengthening Departmental Management--A high priority for me has
been to identify and recruit seasoned managers who can objectively
assess the facts and problems and propose practical solutions so that
we fulfill our fiduciary duties to account for the trust assets of
Native Americans. The first member of my Indian trust management team
was sworn in on July 4, 2001, and the most recent member came on board
November 26, 2001. The team is engaged in a day-to-day decision process
related to trust reform and trust asset management. Those who have
worked with my new team can attest to their extraordinary work ethic,
management experience, seasoned leadership and creativity in
undertaking complicated tasks. (See Appendix A)
Developing a New Trust Management Strategic Plan--As I discussed
above, the ``High-Level Implementation Plan'' (HLIP), developed by the
Department in 1998, has received considerable criticism. It is a non-
integrated, task-oriented set of activities related to trust reform
that has failed to accomplish significant progress in improving
delivery of trust management to the tribes and to individual Indian
money (IIM) account holders. We are now working to create a plan to
guide future Departmental activities that will provide an integrated,
goal-focused approach to managing trust assets.
This new plan will reflect a beneficiary approach to trust
management and service delivery. Objectives will include maintaining
comprehensive, up-to-date and accurate land and natural resource
ownership records, and developing a robust accounting system to manage
financial accounts and transactions. An integral aspect of the plan
will be the development of a workforce plan, and associated activities,
to attract and maintain a qualified, effective workforce.
Creating a New Office of Historical Accounting--To better
coordinate all activities relating to historical accounting--an
obligation imposed by the 1994 Trust Reform Act and confirmed by the
court opinions in Cobell--on July 10, 2001, I created the Office of
Historical Trust Accounting (OHTA) within the Bureau of Indian Affairs.
OHTA's assignment was further guided by Congressional instructions
given in the Conference Report on the Department's fiscal year 2001
appropriations bill which stated the following:
''...the managers direct the Department to develop a detailed
plan for the sampling methodology it adopts, its costs and
benefits, and the degree of confidence that can be placed on
the likely results. This plan must be provided to the House and
Senate Committees on Appropriations prior to commencing a full
sampling project. Finally, the determination of the use of
funds for sampling or any other approach for reconciling a
historical IIM accounting must be done within the limits of
funds made available by the Congress for such purposes.''
The Department will deliver a Comprehensive Plan to Congress to
outline the full range of historical accounting activities and to
provide a foundation for Congress to evaluate the Department's funding
requests. OHTA has already released its ``Blueprint for Developing the
Comprehensive Historical Accounting Plan for Individual Indian Money
Accounts'' and ``Report Identifying Preliminary Work for the Historical
Accounting.''
We have requested a $9 million increase in our fiscal year 2003
Budget for this historical accounting, but as I discussed earlier, when
a full reconciliation of all accounts is undertaken considerably more
money would be required. In responding to the court's requirement that
we do a complete historical accounting of each account by conducting a
full audit, transaction by transaction, we will face challenges that
will pose great difficulty and will be very expensive. Without such an
accounting, the plaintiffs in the ongoing litigation will continue to
assert, as they have in the press, that they are owed $60 billion to
$100 billion. A comprehensive historical accounting is likely to cost
hundreds of millions of dollars, and still may not be viewed as
entirely satisfactory because of gaps in existing records.
Proposing a Departmental Reorganization of Trust Management--
Reformation of the Department's trust responsibilities was, of course,
mandated by Congress in the 1994 Trust Reform Act. In its 1999 opinion,
the District Court in Cobell declared that the Department had breached
certain duties found in the Act. I have heard from many sources--e.g.,
the Special Trustee, EDS, the Court Monitor, and through budget
reviews--that one of the fundamental barriers to trust reform is the
disorganized scattering of trust functions throughout the Department.
In August 2001, during our formulation of the fiscal year 2003 budget,
various proposals and issues were identified concerning the trust asset
management roles of the BIA, the Office of Special Trustee for American
Indians (OST), and other Departmental entities carrying out trust
functions. During the month of September, an additional issue was
identified by the Special Trustee regarding OST simultaneously
performing both operational responsibilities and providing oversight.
The Special Trustee indicated that such dual responsibilities
represented an inherent conflict. Based on these and other areas of
concern, an internal working group was created.
The internal working group developed a number of organizational
options ranging from maintaining the status quo to privatizing
functions to realigning all trust and associated personnel into a
separate organization under a new Assistant Secretary within the
Department. These options were evaluated based on the best method for
delivering trust services and other functions to American Indians and
Tribal governments.
While this internal review was underway, Electronic Data Systems
(EDS) was undertaking an independent, expert evaluation. On November
12, 2001, EDS presented its report ``DOI Trust Reform Interim Report
and Roadmap for TAAMS and BIA Data Cleanup: Highlights and Concerns''
in which it called for a ``single, accountable, trust reform executive
sponsor.''
I decided to propose the formation of an organizational unit called
the Bureau of Indian Trust Asset Management (BITAM). This option
envisioned the consolidation of most trust reform and trust asset
management functions located throughout the Department into a new
bureau that would report to a new Assistant Secretary. The new
Assistant Secretary would have authority and responsibility for trust
reform efforts and for continuing Indian trust asset management. The
proposal was reviewed by EDS and received a supportive endorsement. I
chose this option because it consolidates trust asset management,
establishes a clearly focused organization, provides additional senior
management attention to this high priority program and retains the
program within the Department to facilitate coordination with the
Native American community. Under this proposal, BIA would focus on its
other core functions and programs such as providing tribal services,
helping tribes with economic development, and education.
On November 20, 2001, I issued an order to establish the Office of
Indian Trust Transition (OITT) within the Office of the Secretary and
shortly thereafter I appointed Ross Swimmer to be the Director of the
OITT. The OITT is currently charged with developing the strategic plan
to replace the HLIP, and organizing the Department's efforts to
implement that strategic plan.
Mr. Swimmer will be working with all entities within the Department
involved in trust asset management to develop the strategic plan. The
immediate objective has been for the Department to identify its
resources currently being applied to trust management and to try and
focus those more carefully on the tasks with the highest priority, as
will be set out in the strategic plan.
Fulfilling our Obligations to Consult with Tribes--We are currently
consulting with Tribes to involve them in the process of attempting to
reorganize the Department's trust asset management responsibilities. To
date, Tribes have expressed their dissatisfaction with the consultation
process and with Interior's reorganization proposal.
The Department has held a series of consultation meetings. The
first was in Albuquerque, New Mexico on December 13, 2001. Six
additional consultation meetings in different locations have been held
and a seventh is scheduled. The meetings have been very well attended.
A task force of tribal leaders has been formed as a way of
facilitating the consultation process. The task force consists of two
elected tribal leaders from each region, with a third tribal leader
acting as an alternate. I have committed financial resources to support
the task force and other consultation efforts. Working with these
tribal leaders, we are earnestly endeavoring to achieve progress on
trust reform.
This past weekend I held my first meeting with the tribal task
force in Shepherdstown, West Virginia. The tribal leaders present
listened to us, and also presented various alternative proposals to
BITAM. During the course of consultation sessions and the task force
meeting, various tribal organizations presented alternatives to
Interior's BITAM proposal. We are currently working through EDS and the
task force to evaluate these proposals. My initial reaction is that:
(1) the various proposals all recognize a need for significant
improvement in trust management, and (2) the proposals contain many
insightful suggestions that can potentially be merged with portions of
Interior's reorganization proposal to achieve broader consensus.
A number of the tribal leaders who participated in the task force
meeting this past weekend are actually testifying here today. I am sure
they will share their views of the meeting with you. On Sunday, while I
was meeting with the task force, I asked them what they would like me
to convey to you about the weekend's task force meeting. They wanted me
to convey to you several items, including:
we are confident that together we can solve problems,
while tribes have rejected the BITAM proposal, I have
inherited a problem that is very disturbing, and for which no past
administration has come up with a solution,
there is more to understanding this problem than trust
law; there is Indian trust law,
due to the willingness of tribes to work together, we can
address many of the long-standing problems in Indian country,
we are optimistic that reorganization will set the
direction to address many of the issues facing us all,
Congress must understand that the trust responsibility we
all bear comes from treaties under which tribes gave up massive amounts
of their resources.
Reconnecting Departmental Computers to the Internet--As I
mentioned, on December 5, 2001, as part of the ongoing Cobell v. Norton
proceedings, the Court ordered the Department to disconnect from the
Internet all of the computer systems that house or provide access to
Indian trust data. The interruption in service occurred when the Court
issued a temporary restraining order directing the Department to
disconnect computers from the Internet. The temporary restraining order
came at the request of plaintiffs and was based on a report the Special
Master for the Court had prepared on the security weaknesses of
information technology security involving individual Indian trust data.
The Department is committed to complying strictly with the orders of
the Court. Computer systems have been completely shut down where the
Department has not yet been able to verify complete, immediate
termination of access to individual Indian trust data.
On December 17, 2001, the Court entered a consent order proposed by
the Department, over the objections of the plaintiffs. It establishes a
process that allows the Department to resume operations of some
computer systems after providing the Special Master assurances that
problems he identified have been addressed and that security meets a
certain standard. The December 17 consent order is the only mechanism
under which the Department may utilize some systems or reconnect them
to the Internet.
The Department prioritized its requests under the Consent Order to
seek first the Special Master's concurrence to operate the information
technology systems required to make payments to individual Indians. For
example, our initial request to operate a key Indian system was made on
December 17, 2001. The Special Master concurred with our intent to
operate this system recently. Our December 21, 2001 request to operate
another key system (governing mineral receipts) is still pending. It is
our intent to make lease payments to individual Indians as rapidly as
we are permitted to do so.
To date, we have received concurrence to permit Internet service to
the United States Geological Survey and the Office of Surface Mining,
Reclamation and Enforcement, along with a few isolated computers
located at the National Interagency Fire Center and the Department of
the Interior Law Enforcement Watch Office. As a rough estimate,
approximately 90% of the Department is still prohibited to use the
Internet. Several other requests have been forwarded to the Special
Master recently. We will continue to work with the Special Master to
expedite the resumption of the many public service programs which
depend upon reconnection to the Internet.
The Department has taken initial steps to prepare a long-term
strategic plan to improve the security of individual Indian trust data.
The Department intends to bring relevant individual Indian trust
information technology systems into compliance with the applicable
standards outlined in OMB Circular A-130.
We expect that the core of the dedicated network can be installed
during fiscal year 2002, with the anticipated phase-in and shift of
data from other systems expected to take approximately three years. The
overall cost estimate could be $65-70 million. The final estimate will
be determined as we develop a capital asset plan.
Areas Where Interior Needs Help From Congress
These actions are only the beginning of a long, intensive effort
that will be required of the Administration, Congress, and the Courts.
Significant work needs to be done.
FY 2003 Budget--The President released his fiscal year 2003 budget
this week and it includes my recommendations for $83.6 million in
spending increases for trust management and accounting. Increased
spending for improved trust management is one of the major initiatives
of the Department's proposed fiscal year 2003 budget.
Trust Management Expectations--As I mentioned above, the courts
expect the Department to deliver trust services based on a very high
standard. Congress must recognize that meeting these expectations will
require significantly more funding and resources. The courts first look
to Congress for its expression of intent as to how the trust program
should be managed. Congress must make clear what it envisions the
responsibility of the Secretary to be, and provide the resources
necessary to carry out those responsibilities, while recognizing the
other financial responsibilities and mandates of the Bureau of Indian
Affairs and the Department as a whole.
Land Fractionation--The last Congress enacted the Indian Land
Consolidation Act Amendments of 2000 in order to prevent further
fractionation of trust allotments made to Indians and to consolidate
fractional interests and ownership of those interests into usable
parcels. As we begin to implement ILCA, we may find that additional
incentives are needed to expedite the consolidation of these interests.
Conclusion
I began this testimony by quoting from last year's testimony. As I
stated earlier, my concerns are reinforced now that I have completed
one year in office.
In conclusion:
Indian trust asset management responsibility is a very
high priority for the Department.
The Department needs to establish an organizational
structure that facilitates trust reform and trust asset management.
The Department needs to establish an ongoing effective
consultation mechanism with tribes.
The Department must improve the computer support and
security to ensure the integrity of Indian trust data.
The Department is being challenged by litigation which
requires significant changes in how the trust is managed.
It appears that substantial resources will be required to
meet the growing expectations of the tribes, the courts, and Congress.
The tribes, Interior, and the Congress have to reconcile
the competing principles associated with trust responsibility and self-
determination.
This concludes my testimony, Mr. Chairman. Thank you again for
inviting me to testify today.
[GRAPHIC] [TIFF OMITTED] T7526.001
Appendix B
the senior management team
J. Steven Griles, Deputy Secretary and Chief Operating Officer of
the Department of Interior, who was confirmed on July 17, 2001. Prior
to his appointment as Deputy Secretary, Mr. Griles had eighteen years
of senior management experience at the Department of Interior and with
the Commonwealth of Virginia. This service included directing national
programs for the management of public lands, mineral resources and
collection of royalties from federal mineral leases.
Neal McCaleb took office as the Assistant Secretary for Indian
Affairs on July 4, 2001. Mr. McCaleb is a member of the Chickasaw tribe
of Oklahoma and the former chairman of the Chickasaw National Bank. He
is also a civil engineer by profession who served as the Secretary of
Transportation for the State of Oklahoma. Mr. McCaleb was also a member
of the President's Commission on Indian Reservation Economies and has
served eight years in the Oklahoma State Legislature.
William Myers, the Solicitor of the Department of the Interior,
took office on July 23, 2001. Mr. Myers is a former Assistant to the
United States Attorney General, Deputy General Counsel at the
Department of Energy, and has been in private practice with the law
firm of Holland & Hart.
James Cason, Associate Deputy Secretary, began his service with the
Department on August 13, 2001 and serves as the principal manager of
the Office of the Deputy Secretary. Mr. Cason has 11 years of federal
experience managing complex public lands, agriculture, and mineral
programs, including service as the Acting Assistant Secretary for Lands
and Minerals Management. He also has seven years experience as the Vice
President for Risk Management of an international technology company.
He is currently overseeing a range of trust management projects,
including analysis and development of the Department's security systems
for our computer and data networks.
Ross Swimmer, appointed as Director of the Office of Indian Trust
Transition on November 26, 2001, is a former Assistant Secretary for
Indian Affairs. Mr. Swimmer is also the former General Counsel and
Principal Chief of the Cherokee Nation of Oklahoma. In addition, he has
served as president of the First National Bank of Tahlequah, Oklahoma
and Chairman of the First State Bank in Hulbert, Oklahoma. He was most
recently the President and CEO of Cherokee Nation Industries, and of
counsel to the law firm of Hall, Estill, Hartwick, Gable, Golden and
Nelson, PC.
Wayne Smith, appointed Deputy Assistant Secretary for Indian
Affairs on October 23, 2001. Mr. Smith is the former Chief Counsel to
the California Assembly Republican Caucus and served as Chief of Staff
for the California Attorney General.
Phil Hogen, the new Associate Solicitor for the Division of Indian
Affairs at the Department, took office on October 25, 2001. Mr. Hogen
is an enrolled member of the Oglala Sioux tribe of South Dakota and
served as the former United States Attorney for South Dakota. He has
also been the Director of the Office of American Indian Trust, and Vice
Chairman of the National Indian Gaming Commission.
Bert Edwards, the director of the Office of Historical Trust
Accounting (OHTA), took office on July 10, 2001, when OHTA was created
by Secretarial order. The OHTA is charged with planning, organizing and
executing the historical accounting of Individual Indian Money (IIM)
accounts. Mr. Edwards served three years as the Chief Financial Officer
for the Department of State, where he oversaw financial, accounting and
budgeting operations for a $4 billion budget, 25,000 worldwide
employees and 260 embassies and consulates in 130 countries. Prior to
that, Mr. Edwards had 24 years experience as an audit partner for
Arthur Andersen LLP.
Bill Roselius, who became IT Systems Consultant for Indian Affairs
on September 11, 2001. Mr. Roselius has a 42-year career in information
technology, working for the Oklahoma Department of Transportation, a
number of hardware and software computer firms and major corporations
including IBM and Chromalloy.
______
[The prepared statement of Mr. Slonaker follows:]
Statement of Thomas N. Slonaker, The Special Trustee for American
Indians
Mr. Chairman, as the Special Trustee for American Indians, I am
pleased to have this opportunity to discuss with the Committee issues
pertaining to the reform of the trust responsibility within the
Department of the Interior. It has now been 20 months since I was
confirmed by the Senate as the Special Trustee. During that time I have
reached several conclusions that I would like to share with you
regarding the capability of the Government to manage appropriately the
Indian trust assets it holds as trustee for specific Indian
beneficiaries, comprised of some 300 tribes and nearly 300,000
individuals.
Trust reform, as well as the ongoing delivery of trust services to
these individual and tribal beneficiaries, has reached a point where
radical measures need to be undertaken now.
Specifically, the Department's discharge of its trust
responsibilities, as it is now organized, is inadequate to the demands
placed upon it.
The primary problems are as follows. First, there is the need for a
clear understanding of the Government's trust obligation to the
beneficiaries. Second, there is a great need for experienced trust
management. Finally, there is the need to ensure accountability by
those responsible for delivering trust services.
It is self evident that the nature and scope of the Federal
Government's trust obligations in the area of Indian affairs is complex
and reflects a history dating to the establishment of the Federal
Government. The American Indian Trust Fund Management Reform Act of
1994 addresses itself to a discreet part of those Federal obligations:
the physical assets the Government holds or controls as trustee for
some 300 tribes and approximately 300,000 individual Native Americans.
Like a private trustee or commercial bank's trust department, the
Department is responsible for identifiable assets, in this instance
primarily land and investable cash, and is required to manage those
assets, make fiducially responsible investment decisions, account for
the income produced and report fully to the beneficiaries about its
stewardship of these Indian trust assets. Like every other trustee, the
Government trustee is required to know at every moment what assets are
held in trust, how those assets are invested and managed and to whom
the proceeds of that management belong and are to be paid. The Reform
Act has erased any doubt that those traditional trust duties are
Federal trust duties.
The problems that trouble the Department are management problems.
The lack of management capability is signaled by the evident need for
senior managers with experience in delivering trust services and
operating trust systems. Additionally, there is a critical need for
senior level, project management skills applicable to large trust
reform projects.
The lack of accountability refers to the need to have all staff
that are charged with trust responsibilities perform as directed by
informed and responsible senior managers.
Until a better understanding of the trust obligation, better
management, and more accountability are in place, regardless of what
the trust organization looks like--it will be difficult for the
Government to come into compliance with the 1994 Reform Act.
I concur with the Secretary's concept of a single organizational
unit responsible for the management of the Indian trust assets. That
organization has the potential of addressing the accountability
concerns by placing one executive, responsible to the Secretary, in
charge of the delivery of the appropriate, required trust services to
tribes and individual Indians. I believe a single organization with its
own chain of command, that is, not diluted by intersecting other
Departmental chains of command, can work better than the present
arrangement. The devil, however, is in the details, and the new
organization must have the right executive direction and actually hold
people accountable.
I also believe that the trust organization needs to be detached
from the Bureau of Indian Affairs and placed on its own footing.
It has been proposed by the Special Trustee's Advisory Board on
December 7, 2001, a group created by the 1994 Reform Act, that the
entire Indian trust function be removed from Interior and lodged in a
self contained organization to be created by Congress. This thought was
an initiative of that Board. It is based in large part on the
Department's inability over the many years to identify and cure its
management problems, and is a suggestion that has merit.
On the other hand, I disagree with those who suggest that once the
trust organization is ``fixed'' that it be returned to the Bureau of
Indian Affairs. I believe that organizations are not well motivated to
make necessary changes if they know that one day they will return to
their previous owner.
I also want to comment on the role of the Special Trustee. I
believe that the Special Trustee is required to provide candid and
informed guidance to the Secretary as she seeks the more effective
management of the trust responsibilities under her control. The Office
of the Special Trustee (OST) will continue to focus on its oversight
responsibilities. Therefore, OST must be provided appropriate resources
and pursue every opportunity to ensure that trust reform is carried out
effectively and efficiently.
For instance, the Office of the Special Trustee receives
appropriations for trust reform activities, no matter where in Interior
the reform project is managed. OST then initiates the funding of
projects when and if adequate plans and management appear to be
satisfactory. In some instances, we have found it necessary to
interrupt funding when expected project success is not being achieved.
This process has proven helpful to the reform process and has given the
Special Trustee a useful and independent voice in that effort. I
believe this budget control over the reform of the trust function
should continue to be a part of OST's responsibility. The independence
and informed objectivity of the OST, I believe, is essential to
achieving lasting trust reform.
Reform can be done with the right leadership, the necessary
accountability, and consequences for non-performance.
Thank you.
______
[The Department of the Interior's response to questions
submitted for the record follow:]
responses to supplemental questions from democratic members of the
house resources committee
Question (1): Are you committed to full disclosure of all the
problems with Bureau of Indian Affairs management of the trust assets
regardless of any settlement that may or may not be negotiated? Please
explain.
Answer: Interior is committed to the full disclosure of all
problems related to the management of Indian trust assets. The
Department is equally committed to seeking out, addressing, and
resolving trust asset management problems in all our relevant bureaus
and organizations.
Question (2): Without a full disclosure and acknowledgement of the
scope of the problem, do you expect any proposed solution to work?
Without a full disclosure, how can you expect Indian tribes to trust
the federal government?
Answer: Interior is committed to full disclosure. We will continue
to search for and disclose problems. Our disclosure and acknowledgment
of the scope of the problem to date explains why we are pursuing a
reorganization of trust functions within the Department.
Question (3): Are you committed to cleaning up the backlog of
incorrect and missing data about trust assets, and doing so in
cooperation with tribes? Please explain?
Answer: Yes we are committed to the cleanup of the backlog and a
major effort is already underway. Government subject matter experts are
working with Electronic Data Systems (EDS) on determining the data
validation universe and priorities for corrective action. The Tribal
Task Force work group will be incorporated into this effort. It is
important to recognize however, that no one expects that all data since
1887 can be found and validated by records. Interior realizes it will
need to address how to manage the problem of missing information.
Question (4): As a possible solution to conducting a historical
accounting of trust accounts, would you be willing to grant money to
tribes, rather than the BIA, so tribes can go through the backlog?
Answer: Considerations regarding the Privacy Act and fiduciary
requirements may limit the role tribes can play in accounting or with
the data validation effort, but all options will certainly be
considered in determining how to effectively and efficiently fulfill
the requirements of the accounting. If tribes have access to individual
account information or have proposals for supporting such an
accounting, they are encouraged to contact the Office of Historical
Trust Accounting.
Question (5): What immediate improvements do you think are needed
in the Department to properly manage tribal trust assets?
Answer: A single responsible and accountable agency or division
within the Department of the Interior with a high level manager
dedicated to the task of managing Indian assets is needed. This
conclusion is supported by an EDS recommendation that the Secretary
have a single, executive sponsor in charge of trust reform and
management. If this work continues to be one of many responsibilities
within the Bureau of Indian Affairs, we believe it will be difficult to
get the attention needed for trust asset management and accountability.
We are also working with IT experts and the Court to improve security
of trust data. Other necessary improvements are explicated in the
Status Report to the Court number Eight dated January 16, 2002.
Question (6): As you may know, the Navajo Nation Council voted on
January 26 to disburse $537,000 to hundreds of financially distressed
Navajo families who have not been paid their gas and oil royalty checks
by the Department of the Interior since November. Do you believe that
the Navajo Nation as well as other tribes are entitled to be reimbursed
for the grants they have distributed and will you work to see that
these tribes are properly reimbursed?
Answer: Our responsibility is to make payments to the individual
Indian beneficiaries. We assume that the Navajo Nation has an agreement
with its members with regard to reimbursement once the Department is
able to make payments to individuals.
Question (7): Did the Department of Interior approach Judge
Lamberth and indicate that a shut down of the computer system would
create an economic hardship on those who are dependent on their royalty
checks to survive? A simple yes or no answer will suffice.
Answer: A simple yes or no answer, in this case, does not suffice.
The plaintiffs filed a motion requesting that Interior disconnect
systems from the Internet on the night of December 4, 2001. At the
December 5, 2001 hearing before the Court, Interior, through the
Department of Justice, advised that it had not had adequate time to
assess fully the impact of disconnection. Counsel requested two days in
which to complete the assessment and report to the Court.
Notwithstanding the Department's request for additional time, the Court
ordered that all computers housing Indian data or having access to
Indian data be disconnected from the Internet. Because of the
interconnectedness of Interior's systems, this resulted in an immediate
shutdown.
Under the Indian Self-Determination and Education Assistance Act
tribes have assumed responsibilities for trust management through
agreements with the BIA and are managing those assets and accounts
effectively.
Question (8a): How does your proposal preserve the viability and
validity of contracts and compacts negotiated to date?
Answer (a): Many Indian tribes are doing an effective job of
managing trust assets and administering federal program money. The goal
of the Department is to continue extending self-determination and self-
governance contracts to tribes with the expectation that some tribes
become their own resource managers to the greatest extent possible.
The proposal for a trust asset management bureau is not intended to
interfere with any tribal contracts or compacts. Oversight and
monitoring of tribal contractors will continue through any new agency.
This level of oversight is necessary because the Secretary remains
ultimately responsible under the law for trust management and can not
contract that responsibility away.
Question (8b): Given the success of tribal management of trust
functions, why does your proposal not specifically call for further
technical support and funding in order to expand tribal management of
trust functions? Isn't this one clear example where trust management is
already working effectively?
Answer: The BIA currently provides technical support and funding to
tribes for tribal management of trust functions. The Department
oversees tribal management of trust assets and functions under self-
determination and self-governance agreements. Our proposal continues
that support and oversight. We will consider the need for additional
technical support as tribes expand their management of trust assets and
functions.
Question (8c): What will the role of the tribes be in managing
trust assets in the future?
Answer: Management of trust assets by tribes should continue in the
same manner as is currently done. Before contracting with the tribe,
the Department reviews and determines that the tribe has the ability to
account for funds and assets and has expertise in the management of
trust assets. Tribal management of individual Indian trust assets needs
different consideration. Trust services for individual Indians may be
provided by a tribe, when appropriate, as long as the contracting tribe
is able to exercise the same level of fiduciary duty and maintain the
same level of service that the Secretary provides. These issues will
continue to be addressed regardless of the reorganization initiatives.
The BITAM proposal suggests that ``trust'' and ``non-trust''
functions be separated.
Question (9a): Can such functions really be separated as a matter
of law or policy?
Answer: ``Trust'' functions refer generally to assets of land,
natural resources and money. ``Non-trust'' functions refer generally to
service areas such as law enforcement, health, housing, education,
economic development and general welfare. Separating the two functions
is not intended to diminish the importance of either. However,
separation does recognize that certain assets are held by the United
States for the benefit of individuals or tribes while other items are
more in the nature of services or federally funded programs. While the
Federal government has a trust obligation for both functions, we
believe these ``trust'' and ``non-trust'' functions can be separated
for management purposes.
Question (9b): Do not all Indian programs within the BIA reflect
the government's approach to fulfilling its responsibilities under its
trust relationship to the Indian tribes?
Answer: Yes
Question (9c): As a practical matter, is it not true that BIA
personnel at the local level perform a range of duties, which cut
across your BITAM proposal's dividing line between ``trust'' and ``non-
trust'' functions?
Answer: In many instances, employees at all levels of the BIA and
in particular at the local levels do perform duties that cross over
many functions. This can create problems of accountability,
confidentiality and conflict of interest. For the same reasons that a
commercial bank and its trust department must be independent from one
another, there is value to having trust officers at the agency level
who are separate from other staff.
Question (9d): By creating a new bureau, are you not duplicating
the federal bureaucracy assigned to these intertwined matters?
Answer: It is believed that there will be little duplication of
effort. In fact, many of the trust employees can be co-located at BIA
Agency offices as well as some of the Regional offices. The work
performed by trust employees should complement other activities of the
BIA. Administrative overhead (such as personnel, procurement, etc.)
could be shared.
The Department recently began a consultation process with tribes
regarding the restructuring of the Department's trust account and trust
asset management. Despite unanimous, unequivocal, nationwide
condemnation by tribal leaders of the BITAM proposal to restructure the
Department by creating a new agency within the Department, that
proposal is still on the table.
Question (10a): Why has it not been withdrawn?
Answer: The concept of an independent bureau within the Department
was developed for discussion with tribes after considerable thought and
analysis. The Secretary, the Special Trustee for American Indians and
the Assistant Secretary for Indian Affairs support the concept. The
concept was further endorsed by the consulting firm of EDS, which was
hired to perform an analysis of the progress of trust reform.
The Department's proposal has not been withdrawn because it
addresses the problems identified with the way the trust functions are
currently managed in the Department. In addition, most of the criticism
we have received to date has been directed at the process of
consultation rather than the proposal itself.
The Secretary appreciates tribal input and alternatives and is open
to the different plans currently being submitted. At the same time, the
BITAM proposal will remain on the table as what we expect will be one
of many options for the Secretary to consider. The Department is
committed to trust reform and looks forward to working with the tribes
and in particular the joint task force on BIA Trust Management Reform,
on developing a reorganization that will accomplish the goal of better
trust asset management and accountability.
Question (10b): What role will the new tribal task force have in
developing a plan?
Answer: The tribal task force will review all proposals and will
help develop the criteria against which all proposals will be
evaluated. We have asked EDS to perform the actual evaluation according
to those criteria and those results will be presented to the task
force.
Question (10c): To what extent have you and your staff considered
alternatives prepared by the tribes and what process will be used by
the Department to consider the alternatives?
Answer: A two-day review of tribal concerns and proposals was held
at the Department's training center in Shepherdstown, West Virginia,
with the tribal leaders task force. The Secretary was in attendance
during a review of tribal proposals. The Department continues to
receive input from tribes and from the tribal leaders task force. As
stated above, criteria for evaluating the various proposals will be
developed with the tribal task force, and EDS will present an
evaluation of all proposals using those criteria.
Question (10d): Will you accept an alternative to your proposal
developed by tribes if it addresses all of the underlying concerns that
BITAM seeks to address?
Answer: The Secretary has told the tribes that she would accept an
alternative proposal if it accomplishes the objective of improving
accountability of trust management and satisfies the concerns that led
to the development of the BITAM proposal.
Your consultant, Electronic Data Service (EDS), determined that no
matter what structure is implemented to handle trust management,
significant resources are needed to hire additional staff and to train
existing and new staff.
Question 11: How do you propose to fund such needs?
Answer: Trust asset management is a unique function within the
federal government. The Secretary has requested additional funding for
the trust reform and management functions and will continue to be
supportive of efforts to obtain funding from Congress as appropriate.
Judge Lamberth in the Cobell case will be deciding sometime over
the upcoming weeks whether to appoint a receiver as the plaintiffs in
that case have requested.
Question 12: How will the Department's BITAM proposal be affected
by the appointment of a receiver?
Answer: A receivership of this kind is unprecedented. We would need
to review the type and duration of any receivership that may be created
by before we can answer this question.
The President's fiscal year 2003 budget proposal contains language
that states ``the statute of limitations shall not commence to run on
any claim, including any claim in litigation pending on the date of
enactment of this Act, concerning losses to or mismanagement of trust
funds, until the affected tribe or individual Indian has been furnished
with an accounting of such funds which the beneficiary can determine
whether there has been a loss.''
Question (13a): Do you believe this language is adequate enough to
revive claims of tribes that might otherwise be time-barred from filing
claims against the United States for mismanagement of tribal trust
funds?
Answer: No, it is the Department's position that the language in
the President's fiscal year 2003 budget proposal does not revive claims
of tribes that were or are time-barred. The appropriations language has
been read very broadly by at least one court, which interpreted the
appropriations language to revive claims that had already become time-
barred before the appropriations language was adopted, and to apply to
claims beyond trust fund claims. In other words, the appropriations
language has been misconstrued to make the United States liable for
claims far beyond the claims at which it was directed.
Now that Congress has passed S. 1857, a pending enrolled bill
encouraging the negotiated settlement of tribal claims by establishing
December 31, 1999, as the date on which tribes are deemed to have
received the Andersen reconciliation reports, and assuming the bill is
signed into law, the appropriations language quoted above no longer
appears to be necessary. The Department believes that S. 1857 fully
addresses the tribes' legitimate statute of limitations concerns and
therefore obviates the need for the 2003 budget language. S. 1857 would
allow tribes to postpone filing claims and facilitate voluntary
dismissal of those already filed, enabling the United States to engage
in negotiations concerning tribal trust accounts with interested tribes
to resolve their claims.
Question (13b): Do the ``Reconciliation Reports'' conducted by
Arthur Andersen and provided to tribes in 1996 constitute a full
accounting of tribal trust funds?
Answer: The reconciliation was undertaken in response to
Congressional directives in 1988, 1989 and 1990, that BIA take steps to
reconcile Indian trust fund accounts as accurately as possible back to
the earliest practicable date. Pursuant to these directives, BIA
commenced planning and preparation for the reconciliation project in
1990. As part of the planning process, reconciliation procedures were
agreed upon by the Department, OMB, and tribal representatives as the
best approach, and incorporated into the contract with Arthur Andersen.
The Department spent over $20 million on the Andersen reconciliation of
tribal accounts; however, the Department was not able to obtain an
independent certification of the work as directed by Congress. Further
accounting for the tribal accounts will be very costly and will require
that Congress provide supplemental appropriations for that purpose.
Your testimony highlights the problem of fractionation of trust
allotments and suggests the need for incentives to expedite the
consolidation of these interests. The President's budget states that
consolidation is ``expected to reduce the Government's costs of
managing Indian lands.'' The President's plan, however, proposes a
decrease of $3 million for the Indian land consolidation account.
Question 14: Can you identify for the Committee the increases and
decreases in the President's budget proposal for trust management
programs throughout the Department of Interior and include a
description of those programs?
Answer: The 2003 OST budget includes program increases of $50.3
million for trust reform initiative projects, including $30.3 million
for special work projects, $2.0 million for breaches projects, and $9.0
million for historical accounting activities, and a one-time decrease
of $3.0 million for Indian Land Consolidation activities.
Program increases for special work projects include $2.5 million
for OST Data cleanup, $5.0 million for BIA Data Cleanup, $6.0 million
for TAAMS, $4.0 million for Records Management, $4.0 million for
Policies and Procedures, $6.0 million for Risk Management, $5.1 million
for Trust Improvement Coordination. Increases for breaches projects
include $300,000 for Workforce Planning and $1.7 million for Systems
Architecture. The increase for historical accounting includes $9.0
million for records collection and reconciliation of IIM accounts. A
$2.2 million budget reduction is requested for training due to
completion of some phases of training. The Indian Land Consolidation
program is funded at $8.0 million, a one-time reduction of $3.0
million. In addition to appropriated funds, it is expected that
carryover funds will be available in 2003 to maintain on-going program
activities.
To ensure that trust management improvements are sustained, the BIA
budget for 2003 includes a program increase of $34.8 million. Trust
activities within BIA focus on sound management of natural resources,
accurate and timely real estate transactions, and sound leasing
decisions to preserve and enhance the value of trust lands. Program
increases include $15.8 million for trust services to provide real
estate appraisals, surveys, and other services, probates, and land
titles and records processing; $4.5 million for natural resources
programs to manage lands that generate revenues; $6.0 million for
tribal courts and social workers; and $8.5 million for trust reform
oversight ($3.0 million) and information technology improvements ($5.5
million).
These activities are discussed in greater detail in the OST and BIA
Budget Justifications that are provided to the Committee under separate
cover.
Question 15: why characterize BITAM proposal as a consolidation of
trust functions when the plan really only consolidate trust function of
the BIA?
Answer: All trust functions within the Department are being
considered for consolidation in the new organization. This would
include trust services from other bureaus such as the Bureau of Land
Management, Bureau of Reclamation, Fish and Wildlife Service, Office of
the Special Trustee for American Indians, Minerals Management Services
as well as BIA. The Department is seeking advice from tribal leaders
regarding the best organizational approach on how to do this. Until
advice and recommendations are received, the Department is remaining
open to alternative organizational approaches that will accomplish the
goal of satisfactory trust management and accountability.
Question 16: With respect to the Department's reprogramming request
to tap into fiscal year 1902 funds, will the Department notify the
House and Senate Appropriations committees of its ongoing dialogue with
the tribal task force?
Answer: Yes. We will make every effort to keep the Committees
informed of the status of the reorganization effort.
Question 17: Will the Department refrain from submitting future
reprogramming requests regarding trust management reform until an
agreement is reached with the tribal task force?
Answer: It is not known whether an agreement/consensus will be
arrived at with the task force. We are hopeful that can occur. If we
cannot arrive at an agreement the differences will be well documented.
However, trust reform is also under the jurisdiction of the District
Court and Court orders must be complied with as well as acts of
Congress and regulations. Reprogramming requests will be made only when
necessary to carry out the responsibilities of the Department and the
tribes will be made aware if any reprogramming requests are made.
Question 18: Can you explain how the management of an Indian trust
differs from a trust in the private sector, particularly with regard to
the rights of a beneficiary?
Answer: Trusts in the private sector are managed according to the
instrument establishing the trust and by state law. However, Indian
trusts do not have a single instrument that establishes the trust and
provides guidance for managing it. Instead, the trust is governed by
statues, treaties, and executive orders that have been enacted over a
period of time. The rights of the beneficiaries are similar in some
respects but vary in others. The rights are the same in that the
trustee should manage the trust corpus with a high degree of care,
skill, and loyalty. However, the rights of the beneficiary are
different when it comes to integrating the other roles of the
Secretary. For example, courts have recognized that the Department, as
trustee, can represent conflicting tribes on the same issue because of
her overall duties as Secretary. Whereas, the private trustee does not
have these other duties and would not be called upon to represent two
conflicting beneficiaries. Also, Congress has enacted statues, such as
the Indian Self-Determination and Education Assistance Act which
provide specific instructions to the Secretary to allow tribes to
manage the trust corpus while retaining the Secretary as the trustee to
approve of commercial uses such as leasing. Finally, in determining
whether the beneficiary is entitled to damages for breach of trust,
courts must look to statutes to determine whether Congress intended to
subject the United States to money damages for breach of trust. Some
actions which may be breach of trust in a commercial setting may not
entitle the beneficiaries to money damages against the United States.
Question 19: It is true that the Interior Department will be
requesting that a new trust asset management business model be
conducted of the Department's trust reform efforts?
Answer: Yes, EDS has been engaged to examine and document the
current, or ``AS-IS'' business practices. The Department will then
examine the documented AS-IS processes and determine what future
changes need to be made, or the reengineered TO-BE processes. The
Department will incorporate applicable laws, regulations, and policies
into the analysis. An independent validation of these reengineered
processes will take place.
Question 20: Currently, how many outstanding prime contracts does
the Department have on trust reform efforts? Of these, how many are
with businesses that are Native American Indian owned Small
Disadvantaged Business Owned, 8(a), or women and Service Disabled
Veteran Owned?
The Office of the Special Trustee and the Office of Historical
Trust Accounting have contracts with:
Arthur Andersen, LLP
Bankers Trust
Bloomberg, Inc.
Booz Allen Hamilton
Chavarria, Dunne & Lamey, LLC
DataCom Sciences, Inc.- Native American owned, 8(a)
Deloitte & Touch LLP
Electronic Data Systems, Inc.
Ernst & Young LLP
Grant Thornton, LLP
Gustavson Associates
Hughes and Bentzen PLLC
Iron Mountain
KPMG
L R Compton--Native American owned, 8(a)
Los Alamos Technical Associates
Millican & Associates
NAID, Inc.--Native American owned, 8(a), Disabled Veteran
National Opinion Research Center at the University of
Chicago
Science Application International Corporation
SEI Investments. Inc.
Upper Mohawk Inc.
The Bureau of Indian Affairs currently has six trust reform
contracts:
ATS--small business.
NATEC--Native American, woman owned
Data Com--3 contracts which consist of data cleanup,
probate file processing, and posting and recording. These contracts are
with Native American and small business owned companies.
NAID--Native American, Disabled Veteran, 8(a) owned.
The Minerals Management Service currently has 11 Prime Contracts:
Accenture--One currently active contract for development,
operations and maintenance of automated systems that manage and store
trust asset data.
Peregrine Systems, Inc,--One currently active contract
for the management of minerals revenue and production data submitted by
revenue and production reporters. The data is associated with mineral
leases on Indian Tribal and Allotted lands and Federal land.
Cooperative Agreements with Indian Tribes--Eight
currently active contracts with Indian Tribes to conduct audit and
compliance work related to mineral revenues associated with leases
located on Tribal lands. These agreements are authorized under Section
202 of the Federal Oil and Gas Royalty Management Act.
Navajo Tribe Southern Ute Tribe
Shoshone/Arapaho Tribes Ute Mountain Tribe
Jicarilla Tribe Blackfeet Tribe
Ute Tribe Crow Tribe
Wyandotte Net Tel----One currently active contract was
awarded under the Franchise Authority of MMS to Wyandotte Net Tel on
August 18, 2001. Wyandotte Net Tel is tribally owned by the Wyandotte
Indian Tribe. The five year Indefinite Delivery, Indefinite Quantity
type contract has a not to exceed ceiling of $100,000,000 and was
awarded under the Small Business Administrations 8a program. The
contract is for telecommunications and information technology supplies
and services for various government agencies. White Sands Missile Range
and the Army at Ft. Monmouth New Jersey are the major users of the
contract.
Other Agreements--One currently active Intergovernmental
Personnel Act Agreement with the Shoshone/Arapaho Tribes for a tribal
auditor to work in the Farmington Indian Mineral Office.
*LMemoranda of agreement with the National Archives and Records
Administration regarding the storage and inventory of records.
*LMemorandum agreement between MMS and the Office of the
Special Trustee (OST) under which the MMS Minerals Revenue Management
provides cost-reimbursable services to the OST.
Question 21: For the future, how does the Department plan to ensure
that it remains in compliance with the ``Buy Indian Act'', Small and
Disadvantaged Business Owned Act, 8(a), and the Women and Service
Disabled Veteran Owned Act?
Answer: All contracting officers within the Department are
knowledgeable of the procurement laws including those listed in the
question. Every effort is made to ensure that laws and regulations are
followed and this will continue to be the practice of the Department in
the future.
Question 22: Pursuant to a question from Mrs. Christensen, you
agreed to provide the Committee with information regarding the amount
of money being spent this fiscal year on the Office of Trust
Transition.
Answer: The Office of Indian Trust Transition anticipates
expenditures for its planned activities will approach $200,000 by the
end of the current fiscal year.
______
The Chairman. Thank you, Madam Secretary. We appreciate you
being here and appreciate your testimony.
This is the first time we have ever had a full hearing in
this room, so we are just asking people, as they come in, to
sit down. We are going to take the rules of the Committee, and
we will recognize people as they came in, except for Mr.
Rahall.
Let me caution the members to stay within your 5 minutes.
This is going to be a long hearing. I am not going to call on
everyone, but what I will do, if you want to speak, will you
just raise your hand, and then we will give you that
opportunity.
Mr. Rahall, we will turn to you.
Mr. Rahall. Thank you, Mr. Chairman. I will be very quick.
I want to thank Secretary Norton for taking the time to be here
today, along with the gentlemen on either side of her.
You mentioned that you will be leaving after your
testimony, so you will not be hearing the tribal leaders'
testimony or panels that are coming next; is that correct?
Secretary Norton. That is correct. Unfortunately, I need to
leave today.
Mr. Rahall. I understand. But you will have somebody here
during the whole rest of the panel?
Secretary Norton. My top people who are involved in this
will be here to listen to the remainder of the panels.
Mr. Rahall. Thank you. I must say it was very good
testimony, a good presentation of the problem here, and a good
history of the problem, and there is not much of your testimony
with which I could disagree, of course.
But the central issue, I think, is rather each individual
Indian and tribal account accurately reflects, of course, the
amount of money that it should contain. As you have said, and
as we all know, you are under a court order to conduct an
historical accounting of the individual Indian money accounts.
So my question is can the Department accomplish that task? And,
if not, what is the alternative to conducting such an
historical accounting?
Secretary Norton. Our Office of Historical Trust Accounting
is currently formulating a complete plan for how that might be
accomplished, and it is a fairly complex task. There are some
aspects of accounting that can be done fairly quickly and in a
fairly straightforward way.
For example, some of the tribes received large payments as
a result of lawsuits, and that money came in in a large amount.
It has gone out to people in specific amounts. We can trace
those and verify those in a fairly straightforward way.
There are other records that have been lost through time,
that have been destroyed, fires or other decay of records is
unavoidable when you look back over many years. Unfortunately,
there are some things we may never be able to piece together,
and so we are laying out exactly how the task would look to go
back and try to identify as much as we can. We think it's going
to be important to present that to Congress and to seek the
funding that will be necessary to do an accounting. We are
moving forward with undertaking a complete accounting.
Mr. Rahall. So you cannot categorically state here today
that you are capable of doing the historical accounting that is
necessary.
Secretary Norton. I am not sure what I have not answered
here.
Mr. Rahall. You cannot do a full historical accounting. You
have mentioned the documents that may have been burned or
destroyed for one reason or another. So the answer would be,
no, you cannot do a full historical accounting.
Secretary Norton. We have the initial--we have,
essentially, our bank records. The Historical Accounting is
essentially trying to find external sources to verify what is
in our records. So we have essentially the bank's records. Now
we are trying to find canceled checks or invoices that would be
the second check on what is in our records, and it is the
canceled checks or the external invoices, those are the things
that are the challenge in trying to piece together.
And so we have a great deal, well, we can certainly say
with assurance that not every piece of paper is out there--
Mr. Rahall. And a lot is not--
Secretary Norton. So it would be possible to find every
piece of paper because there are pieces of paper that just
simply do not exist today.
Mr. Rahall. Some of that could be rather substantial and of
major consequence.
Secretary Norton. At this point, I don't know what the
universe of that is. Part of what our office is doing is just
checking to see how much of that information still exists.
There are fairly extensive records, for example, that cover a
number of time periods. There have been audits done in the past
that are fairly complete. There are other time periods where it
is not as complete.
One of the things that we need to assess is just how much
information is out there and available.
Mr. Rahall. Thank you, Mr. Chairman.
The Chairman. Madam Secretary, Mr. Rahall talked about this
accounting thing. What period of time, to the best guess you
can give us, will this cover?
Secretary Norton. That, Mr. Chairman, is still an
unresolved question. The Court has asked for an accounting that
would cover the funds regardless of when they were put into the
system. There is still a question as to whether there is a
statute of limitations and how that might affect the
accounting, but we are proceeding to gather documents at this
point that would cover the entire range.
The Chairman. The Committee has been under the impression
that we can go back all of the way to 1887.
Secretary Norton. That is certainly, you know, we are
trying to acquire all of the historical documentation.
The Chairman. What kind of money are you looking at to do
an accounting reconciliation all of the way back to 1887? Have
you projected the cost of this?
Secretary Norton. We, as part of our planning process, are
trying to do some cost estimates. It is certainly in the
hundreds of millions of dollars range.
The Chairman. The tribes feel that consultation was an
afterthought, that you conducted it subsequent to a decision
rather than concurrent with it. Why did you send up a
reprogramming request before you even started consultation?
Secretary Norton. Under the consultation requirements, we
are essentially to begin consultation once we have a plan that
is capable of having an intelligent discussion, and we felt
that we began consultation at that point. We also sent a
reprogramming request that was fairly open-ended, that was
something that would give us the opportunity to begin the
reorganization and the transition process and would allow those
things to be fleshed out as time went on.
It has been a process of learning about the consultation
approach. We wanted to move forward on our proposal. We felt
that we had received fairly consistent feedback on the
weaknesses within our organization. It is very important that
we move forward quickly with fairly dramatic change in order to
have significant reform. We want to work with the tribes to be
sure that what we are doing is appropriate.
Although we have asked for the reprogramming, although I
continue to push forward with our proposal, that is because I
want to see something actually materially achieved from this.
We believe that there is a lot we can learn. There are ways of
improving our proposal, and we are open to doing that. What we
don't want to do is miss the opportunity to move forward
quickly.
The Chairman. How will you ensure that trust management is
undertaken constructively with tribes and IIM accountholders in
a manner that is directed toward developing a true relationship
based on transparency and honesty?
Secretary Norton. I think our task force has provided a
good building block for that, and it gives us the opportunity
to reach out further to tribes because of the leaders that are
involved in that. We are building our relationship with the
tribes and want to obtain input from them.
The Chairman. Thank you very much.
As this Committee knows, I normally hold my questions to
the last, but I am going to be turning this over to J.D.
Hayworth in a short time, so I wanted to ask my questions.
Now, on the minority side, those who want to speak, would
you raise your hands.
All right, we are going by who came first then. Why did I
even ask?
[Laughter.]
The Chairman. Mrs. Christensen, you were the first one
here, and then Mr. Kildee.
Mrs. Christensen, you are recognized for 5 minutes.
Mrs. Christensen. Thank you, and I will try to be brief.
Thank you, Mr. Chairman, for this hearing. It is not the
first hearing on this issue that I have been to, and I hope
that as we leave here we are going to see more of the change
that the Secretary talked about.
I want to welcome the Secretary to the hearing. We
appreciated your testimony. Like our Ranking Member Rahall, it
is very complete. I have really no quarrel with it and will
begin by taking you at your word.
I have a question because there is an issue that whenever
we have hearings that involve the Native American tribes, one
of the issues that is always in question, that always seems to
be at the crux of the problem is the respect for the
sovereignty of the tribes.
So I wanted to ask you, as the current Secretary, can we
proceed on the principle that your office fully respects the
sovereignty of the tribes as a principle that will guide the
future deliberations on this subject? Especially in light of
the fact that consultation did not take place as the plan was
being developed?
Secretary Norton. We certainly do respect that sovereignty,
and one of the things that led to concern on the side of the
tribes was a misperception that we wanted to take back the
management of assets that many of the tribes had already
assumed. Quite the contrary. I think that it is best for the
tribes to be actively involved in managing their own assets,
and I want to encourage that and see that whatever we do is not
an obstacle to the tribes' ability and initiative to do that.
Mrs. Christensen. Thanks. Just two more, I think, brief
questions.
How much is being spent in this fiscal year on BITAM. And
related to that, there as a question that your proposal
weakened the BIA. If you would comment on that or there was
some concern about that.
Secretary Norton. At this point, BITAM itself does not
exist. We have an Office of Trust Transition that is focusing
on our strategic planning and figuring out how we move to the
future, whatever that future is, and there is a lot of common
work that needs to be done, whichever course of action we take.
So there is nothing specifically on BITAM in the President's
fiscal year 2003 budget request. We continue the budgeting
under the Office of Special Trustee and the BIA, so we do not
assume the existence of BITAM in the President's budget
request.
Nevertheless, we are moving forward on the trust reform
issues, and I can provide you with the dollar figures.
Mrs. Christensen. But how much is being spent in this
fiscal year?
Secretary Norton. Let me get that information--on BITAM
itself?
Mrs. Christensen. Yes.
Secretary Norton. Technically, zero.
Mrs. Christensen. On the Office of Transition? If you don't
have those figures, if you could--
Secretary Norton. I would be happy to provide that for you.
Mrs. Christensen. It is my understanding that some tribes
receive services directly from BIA, and others manage some of
the programs through 638 contracts, and others manage them
through self-governance compacts. How does the plan for the new
trust agency affect the different styles or deliberately reduce
services to the tribes or does it not?
Secretary Norton. One of the difficult issues we need to
grapple with, whatever the organizational structure looks like,
is the sometimes conflicting issue of the standard to which the
Department is held in its trust responsibilities and our
ability to have the tribes do their own contracting through
638.
If we are held to a financial accounting standard that is
the same type of accounting standard that applies for any major
financial institution, then we may perhaps also have to hold
the tribes to that standard in their own administration of
their contracts. Now I don't know that that is what the tribes
want to see, I don't know that that is what Congress wants to
see, but that is one of the issues that I think we need to
grapple with is how we allow the tribes to go forward with
their own handling of their own affairs, have a high standard
for that, without making it so high that nobody but a huge
financial institution could meet it.
The Chairman. The time of the gentlelady has expired.
Mrs. Christensen. Yes, my time is up. Thank you.
Thank you, Mr. Chairman.
The Chairman. The gentleman from Arizona, Mr. Hayworth?
Mr. Hayworth. Thank you, Mr. Chairman.
Madam Secretary, welcome. Thank you for complete testimony
in a problem, if we call it vexing, that is probably the
understatement of two centuries. I recall a task force that the
gentleman from Michigan and I co-chaired back in the 104th
Congress dealing with this particular challenge. As has been
pointed out by both the Chairman and ranking member, this is
something that has involved so many prior administrations. We
appreciate the efforts being made to deal with it.
I think it is important to amplify portions of your
testimony. So, for the record, let me ask you, Madam Secretary,
what is the current standard of accountability for dealing with
Indian trusts?
Secretary Norton. It is a much more complex issue than one
might think. We have a fiduciary responsibility. The courts
have expressed it in that way. At some point, we have been held
to something that is like a profit-maximizing-type of standard.
In other ways, I think we have a standard that is too--it
allows the tribes, for example, to have self-governance to take
over contracting, where it appears that what Congress wants is
something a little less than the rigorous financial management
structure. It is an evolving standard, and we have the
statutory standards that are set out. The courts have, at
times, looked to common law to amplify those statutory
standards. It is also dependent upon the treaties that we may
have with particular tribes, so it is not an easy, clear
answer.
Mr. Hayworth. Well, following up on that, I am interested
in your perception and opinion. As we have noted, this has
carried into the third branch of Government, with the judiciary
being involved, court cases continuing, you under a court
order, testimony going on today. Based on that, your training
in the law and upon your assumption of this role, as Secretary
of the Interior, in your opinion, what standard does the court
believe should be applied to managing Indian trusts?
Secretary Norton. Well, I don't want to reflect on the
particular litigation in which we are involved, but in general
I think the courts are moving closer to a financial accounting
standard, something that would be similar to the standard for a
major bank or trust company, and that is what has come out as
particular types of issues have been litigated. That, again,
depends on the individual statutes, and treaties and so forth.
Mr. Hayworth. Thank you, Madam Secretary.
If I could, I realize I have about a minute and a half
left, just to address a couple of questions to our special
trustee, Mr. Slonaker. I thank you for being here today with
the Secretary.
Just to make it part of the record, in your role as Special
Trustee, do you report directly to the Secretary?
Mr. Slonaker. I do.
Mr. Hayworth. And what are your performance criteria for
progress for trust management?
Mr. Slonaker. Basically, the 1994 Reform Act, and the
accounting, and the accountabilities that are embodied within
that plan.
Mr. Hayworth. Have you submitted a plan in this regard?
Mr. Slonaker. Well, the first Special Trustee submitted a
strategic plan, which was partially rejected by the then-
current Secretary. That evolved into what I recall more of a
tactical plan known as the High-Level Implementation Plan. That
evolved into an HLIP-2, if you will. At this point, in my
personal view, we see ourselves as a Department evolving yet
another plan which will be what I recall more strategic. It
will be based, in large part, not only on the analysis of the
Department itself, but also on the assistance we have gotten
from some outside consultants who have looked at this
independently.
Mr. Hayworth. With this evolution in plans, do you feel
safe in saying you are making progress? Are you able to gauge
any type of progress in this regard?
Mr. Slonaker. I think there is progress around the edges.
My concern is that the progress that has not been made by the
Department, in terms of the major systems and the major
projects which are the heart of trust reform, if you will, and
the heart of our obligation as a Government to the
beneficiaries, and that would encompass such things as the
accounting system which the Secretary referred to earlier, it
would also include the probate process, and it would include,
very importantly, what is commonly known as the data clean-up
aspects of this reform.
I don't believe that there has been sufficient progress on
those areas which, as I say, are really the heart of trust
reform.
Mr. Hayworth. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. The gentleman from Michigan, Mr. Kildee? Mr.
Kildee has been a champion on Native American issues for many,
many years. We appreciate it.
Mr. Kildee. Thank you, Mr. Chairman. Thank you, Mr. Hansen.
I look out, I have been here in Congress now this is my
26th year, and I recognize the majority out there. I have
worked with some of you. Some of you have worked for me, and
hopefully I am working for all of you. But it is good to see
all of you. We have known each other for many, many years.
I cannot say, you know, who is on which side of this issue
because I think we are all on the side of justice, and I think
that was we work closely together to achieve the maximum, the
optimum justice, the better we will serve the Indians who
deserve this justice so much.
I read the Constitution regularly, and it says the Congress
shall have the power to regulate commerce among foreign
nations, several States and with the Indian tribes. So,
ultimately, Congress has to be involved in this, and we want to
be deeply involved.
You have received an order to come up with a plan, and in
that order, you were told to consult with the affected Indian
Nations and individuals. To what degree was that consultation
concurrent, as you developed the plan, and to what degree was
that consultation subsequent to your development of the plan,
Secretary Norton?
Secretary Norton. In terms of our reorganization proposal,
there was nothing that specifically required us to do a
reorganization. It was in response to the need for unified
management and to answer a persistent question of who is in
charge of trust reform.
We anticipated proposing an idea that was a general idea
and a general reorganization proposal, and then moving forward
to flesh out the details of that through a consultation
process.
Mr. Kildee. It seems to me, from my own unscientific
methods, that the majority of the Indian Nations and the
individual Indians do not agree with separating those fiscal
trust responsibilities out into a separate agency from BIA.
That would seem to indicate that the consultation with the
Indian tribes and individuals was only subsequent to your work,
rather than concurrent with your work.
Could you comment on that?
Secretary Norton. Our work is still in progress, and we are
learning things all the time about how we can improve our
proposal. We have, essentially, two conflicting major pieces of
information. One of those says that the BIA system is broken,
that BIA has not successfully managed these assets, and after
years and years of trying to improve the BIA management, we
still haven't seen results.
The other aspect of it is largely coming before the tribes
saying continue to have BIA do the same thing. And so we get
some very strong indication that BIA ought to be out of the
picture of doing the management, other very strong feedback
that BIA needs to continue to be at the center of this process.
And, frankly, we are still trying to figure out how we get the
best of both worlds.
Mr. Kildee. Since it is a work still in progress, how wed
are you then to the idea that you must separate out these
fiscal trust responsibilities into a separate agency from BIA?
Secretary Norton. I think that at some level we need to
have leadership separate from BIA. We need to have a system
that is going to be able to look at this in a fresh way and
really move forward with reform. It needs to be outside of the
old structure. Now, whether that is a different part of BIA or
whether that is a parallel agency with BIA, there are other
proposals to have it entirely outside of the Department of
Interior, and those are things that you all should consider.
But, at some point, we need to have enough departure from the
current organization to have real reform.
Mr. Kildee. But it could be, as you indicated, maybe still
within the BIA as a separate entity within BIA?
Secretary Norton. That is what a number of the tribes have
proposed. I still believe that our separate organization is
superior and is more likely to bring needed change, but I have
not entirely closed my mind to the opinions I am hearing from
other people. Perhaps they can offer some way that we can get
that reform. At this point, I do still remain convinced that a
separate organization would be stronger in bringing the kind of
reform that we would like to see.
The Chairman. The time of the gentleman has expired.
Mr. Kildee. Just one final. There is a very obscure agency
in this city, which is very important. It is called FASB, the
Federal Accounting Standards Board, which has come into
prominence now because of Enron. When you went through all of
your work on these accounts, did you follow all of the
standards of the FASB, the Federal Accounting Standards Board?
Secretary Norton. Let me defer to Mr. Slonaker on that.
Mr. Slonaker. I was tangentially involved with some of the
thinking on what the organization should be. I don't believe
that FASB's standards would apply to the creation of an
organization, unless I misunderstood your question, sir.
Mr. Kildee. No, that was my question. So you did not
necessarily apply FASB to this accounting system.
Mr. Slonaker. Well, let us be clear on what we are talking
about here. We are really talking about two things. You are
talking about, I believe, sir, FASB accounting standards, on
the one hand. I think the Secretary and I are addressing issues
having to do with the accounting system per se. Obviously,
there are certain accounting standards that will apply to
accounting that is done for the beneficiaries, but I think the
thrust of the Secretary's comment here has to do with the
organization to create and run that system, if I am making
myself clear.
Mr. Kildee. Not entirely, but I will pursue that later.
Thank you.
The Chairman. Thank you.
The gentleman from Montana, Mr. Rehberg?
Mr. Rehberg. Thank you, Mr. Chairman.
I am struck by the opportunity to follow Mr. Kildee.
Between us, your 26-year tenure and my 1-year, we have 27 years
between us to solve this problem.
[Laughter.]
Mr. Rehberg. And what I have come to the conclusion, Mr.
Kildee, in serving here for a year, that a lot of people
support reform as long as it doesn't change anything, and I
find that unique and ironic that we would be talking about a
problem that has existed for so long and perhaps been on the
back burner. And I thank some of my constituents for bringing
the case forward. Perhaps it takes the Court to--
Mr. Kildee. I might say to the gentleman that, in fairness
to you, there is 26 years' experience and that is 1 year
repeated 26 times. I am not sure what I have.
[Laughter.]
Mr. Rehberg. Let me begin by asking the question of you,
Madam Secretary, you made the point that a lot of these trust
responsibilities were created by treaty. Were those done by
tribe, by reservation or as a whole? And where I am leading
with this is, trying to think outside the box, is there any
reason why all tribes, it is all or nothing? Is there an
opportunity within the Congress to make a determination that if
there are tribes that don't like the way the BIA has handled
it, that they would have the opportunity to separate themselves
and go out to the private sector and have a private sector
trustee responsibility?
Secretary Norton. I would certainly like to see the
opportunity for tribes to be able to do that. I think that that
might be very beneficial for tribes, and I certainly personally
would like to preserve that option.
Our problem is essentially our needs to have a unified
computer system, for example; to have one data base where we
can look to find the information on who owns which pieces of
property, what the leases are on those property, what the
accounts receivable are, and so on and so forth, to have a
basic financial accounting system that meets 21st century
accounting standards. It is almost impossible to do that,
unless you have some standardization.
And so our needs, from a management standpoint, to have
standardization complicate the policy goal of letting the
tribes to have their independence to chart their own way. So
that is just one of the tough issues that we have to grapple
with.
Mr. Rehberg. Mr. Slonaker, you have been there for how
long?
Mr. Slonaker. I was confirmed about 20 months ago.
Mr. Rehberg. And you took Mr. Holman's place?
Mr. Slonaker. Yes, sir.
Mr. Rehberg. It seemed, in his prior statements, that he
was willing to consider and, in fact, recommended to the
Secretary that it be taken as one of the alternatives taken
outside of the Department of Interior. Is that a position that
you have tried to promote within your responsibility as the
trustee?
Mr. Slonaker. The idea of taking it outside of the
Department is very appealing. I, clearly, concur with the
Secretary that this ought to be this trust function, which I
would refer to as a fiduciary function, as opposed to what I
also would call the large trust obligation of the Government.
In other words, I am distinguishing between the financial
management of the land, on the one hand, for income for
beneficiaries, on the one hand, and the larger trust
obligation, which has to do with social services, and highways,
and so on and so forth.
So I, clearly, believe and concur with the Secretary that
the financial trust or the fiduciary trust, if you will, should
be put on its own footing in a separate organization. I also
think the idea of moving it entirely out of the Interior
Department is a very appealing one. As you know, under the 1994
act, the act created an advisory board to the Special Trustee,
and that advisory board, as a matter of fact, has recommended
just that.
But there are many alternative plans on the table here, to
which the Secretary has alluded. The central premise, I
believe, is that there has to be a single organization in
Interior or outside Interior that is responsible for the
fiduciary trust obligations of the Government.
Mr. Rehberg. Let me ask you, then, between the two of you,
do you have any indication from any tribe that they would be
willing to try and be a pilot project for moving--I know you
have a big bite to chew here, but it would seem like if we took
smaller bites and maybe separated some and showed, perhaps,
that there was an alternative or an opportunity for some of
these tribes to move out on their own, giving you the time to
go ahead and create your own system, but not having the
responsibility for that individual entity, that that might be a
way of solving some of the problems. Again, it is all for one
or one for all. It seems a little burdensome to you because it
is so big.
Secretary Norton. There are some tribes that are already
doing their own management, and some tribes are doing a very
sophisticated job of managing their assets. Perhaps Mr.
Slonaker would like to provide some details on that.
Mr. Slonaker. Under the 1994 act, tribes do have that
option. Very little that has happened so far, and I can't tell
you for sure why, more hasn't happened, but most tribes have
opted to stay within the Government's obligation.
The Chairman. The time of the gentleman has expired.
Does the gentleman from New Jersey have questions? The
gentleman is recognized for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
I have to start, Madam Secretary, by being very blunt. I
really don't believe that creating a new agency for these trust
accounts is the answer, and I think it is pretty clear that
most, if not all, of Indian Country has pretty much said the
same thing.
I listened to what you said today, and I know this is, as
you say, just the beginning, but I don't really see that you
have made the case that we need a new agency. You talked about
how we need more funds, we maybe need a change in the
workforce, we need new computers, new accounting methods, but I
don't see how that problem is solved or necessitates creating a
new agency. It seems to me that you need to reform the existing
agency and making those changes within the existing agency, not
just transfer everything from Hall A to Hall B.
The other problem I have is that you talked about how the,
when you had the meetings this weekend, that the tribes felt,
not that they agree with everything at the BIA, but they felt
some sort of affinity to the BIA, and I think that kind of goes
to the heart of the matter.
I think that your approach, and as Mr. Kildee said, of
basically coming up with the separate agency idea and then
going later for consultation, is a kind of a patronistic
approach. That is the basic problem here. In other words, this
is money that belongs to the Indians. This is their trust. This
is their accounts.
I think that essentially what they are saying is that it
should have been left to them, at least initially, to come up
with the idea about how to go about handling this, rather than
coming up with your own idea and saying we need a new agency
and then saying, OK, we will consult with you and see if you
can somehow merge your ideas into what we are already doing.
My questions really go to the consultation process. If this
task force that has been set up now that you mentioned is
really going to be effective, it seems to me that you should
just start from scratch. You should not assume that your
proposal is the way to go and that you are just taking some
ideas from them. You should just say, look, we are starting
from scratch, you know. I have this proposal out there, but you
come up with the idea, and you tell me what you think, and then
we will give our input.
I would ask you to comment on that, but two or three other
things to comment.
Second, I would say give them enough time. I mean, it is
not clear at all to me that this isn't something you are trying
to wrap up in a few weeks or a few months. I think that this is
something that needs some time for this task force to be
successful and to be able to come up with a recommendation that
is, essentially, a consensus approach.
And then the third thing I would ask you to comment on, a
larger issue, is what is consultation all about? In other
words, I know there were executive orders in place under the
Clinton administration that said that you had to consult. Is
this administration taking the position that those executive
orders are still in effect and that there is a requirement of
consultation from the beginning on this or even other issues?
First, why not just start from scratch, scrap everything;
second, what kind of time period are you going to give them;
and, third, comment to me about the consultation process and
how this administration sees the existing executive orders or
whether they need to be repromulgated or they are still in
effect on the consultation issue.
Secretary Norton. Those are some very good questions.
First of all, as to the idea of just sort of taking
everything off the table, and just starting from scratch and
just, you know, letting this all bubble up slowly through the
process as we get consensus, the problem is that my trust
responsibility doesn't get put on hold for several years until
we reach an end result. I have a trust responsibility that
exists right now, and I need to do what I think is best to
improve our provision of services.
And the proposal we put on the table was done from my
perspective as a manager. As a manager, I am convinced that the
best way and the most straightforward way of achieving an
improvement in our management would be the create a new
organization, to give clear direction, to start moving things
into a process that is organized, makes sense, very directed
and really oriented toward financial management.
I, also, recognize that that has been a fairly consistent
theme over decades of looking at reform proposals. Every time
something that has been put on the table that would really be a
dramatic reform proposal has been offered, it has always failed
to materialize because it is not often what the tribes want to
see. It is a change that has been difficult to get.
I want to push forward to make some changes and to make
changes in a short timeframe. For those changes to be
successful, though, it is going to have to reflect the needs of
the beneficiaries, and to best get that reflection of those
needs incorporated into the process, we need to be doing very
intense discussions with the tribes. That is what we have begun
to do through this task force.
Neal McCaleb has been in days and days of consultation
meetings with the tribes. I have attended consultation, a
couple of the consultation sessions and spent some hours with
tribal leaders discussing these issues. Clearly, we have a lot
more to do, but I would rather do that in a concentrated
timeframe, to get that input, to get those decisions made, than
let this just go on, and on, and on and not reach closure.
Mr. Pallone. About the executive orders, do you consider
those in effect--
Secretary Norton. Oh, I am sorry. We are abiding by those
executive orders. We have been working to get our process to
meet those executive orders and to work with the tribes on
that.
Mr. Hayworth. [Presiding] The gentleman's time has expired.
Mr. Pallone. Thank you.
Mr. Hayworth. I thank the gentleman from New Jersey.
My friend from Utah, 5 minutes.
Mr. Cannon. Thank you, Mr. Chairman.
Madam Secretary, I couldn't help but think, as you spoke,
of the first time you appeared here before us, where I think I
expressed my approval at your appointment, and perhaps even
gushing approval. I was hopeful, at that time, that you would
have the ability to come into the Department and solve some of
the problems, a culture which resulted in lying to the
representatives, the elected representatives of my State,
before the announcement of a huge monument, the kind of culture
that resulted in the planting of lynx hair and hundreds of
other problems that you have seen in that Department, but you
have had some difficulties in doing that.
Our good friend, your Under Secretary, Steve Griles, was
not appointed for some time. When was he actually confirmed by
the Senate?
Secretary Norton. He took office in late July, and so his
appointment or his confirmation was about that time.
Mr. Cannon. And Cathleen Clark, who is your Director for
the BLM, finally got her confirmation when?
Secretary Norton. Oh, just right as the Senate was leaving
town in December.
Mr. Cannon. We really do appreciate the other bodies acting
on that expeditiously before leaving town, I might point out.
These are great people, and I appreciate the quality of people
that you have chosen to surround yourself.
May I ask how much of your time are you spending on this
issue now?
Secretary Norton. I am spending, well, certainly, more on
this issue than any other single issue. For the last few
months, perhaps more than all other issues put together.
Mr. Cannon. Like, say, 60 percent of your time; is that
where you are going?
Secretary Norton. That would be a rough estimate, yes. I
haven't obviously kept track of the hours, but--
Mr. Cannon. This is just ballpark.
Secretary Norton. It is a predominant issue for us.
Mr. Cannon. It is a lot. And how much of the time of Under
Secretary Griles is he spending on this issue, do you think?
Secretary Norton. He is probably spending about 12 hours a
day on this issue, and then the rest of the Department is in
addition to that.
Mr. Cannon. So we have a something that advertises 110-
percent effort, he is doing something more than 110 percent.
Secretary Norton. About 150 percent, I think.
Mr. Cannon. And you have an Assistant Under Secretary, Jim
Cason, who is, essentially, spending full time on this issue,
as I understand it.
Secretary Norton. Full time for Jim Cason is 18-hour days.
He has been putting those in consistently. It is amazing, you
know, no matter how early you come in, no matter how late you
are there, whether it is a Saturday or a Sunday, we have those
people and some others working on our trust reform issues.
Mr. Cannon. And if I seem approving, Mr. Chairman, of the
team at Interior, it is because I worked with them when I was
at Interior, and I can attest that what the Secretary is saying
probably understates the magnificence of what they are capable
of doing.
On the other hand, if I can get back to one of the issues
at hand here, a number of checks have not been mailed out to
people who depend on those checks. Do you have a sense of the
number of those checks that haven't been mailed out or the
amount of money?
Secretary Norton. Let me see if I can get that information.
We do have some information on what has been mailed out. Neal,
let me defer to you on that.
Mr. Cannon. What I am really shooting at here, and Mr.
McCaleb, if you could help us, it seems to me that a whole lot
of people are suffering a huge amount of pain because checks
are not going out from the Department, which they have depended
upon to make their house payments, and their car payments, and
to buy groceries; is that the case or not?
Mr. McCaleb. Indeed, that is true. And in response to your
specific question, it is hard for me to quantify how many
checks have not been mailed out because they are not uniform
each month. I can't tell you how many checks have been mailed
out since early January, when we began to bring some of the
systems up.
Mr. Cannon. But it is fair to say that we have got a lot of
people who are suffering because they don't have a check they
depend on.
Mr. McCaleb. Absolutely. We are not sending out any oil and
gas mineral lease checks that are the preponderance of the--
Mr. Cannon. Madam Secretary, I want to just touch on
another issue before my time runs out.
You are a lawyer, and I suspect you talked with the
solicitor after you received the order that affected what
information you could have on the Internet, did you consider
that and did you consider alternatives to shutting down your
Internet systems?
Secretary Norton. Our systems are interconnected. The court
order says that anything that is connected to the trust data,
where someone, an outside hacker, could gain access to trust
data, has to be shut down. As a consequence, we saw no
alternative but to shut down every aspect of our system. We are
now working to bring those things back up.
Mr. Cannon. It is hard for me to imagine how a Federal
judge could have a greater effect on slowing down the processes
which the American people elected a President, who nominated
you and who confirmed you and your fellows at the Interior
Department more than has happened here and caused such a
retardation of what I think are important issues for Americans
and which are painfully important to those individuals who
haven't gotten their check. I hope we can get this problem
resolved in a way that the Department, and the American people
and the recipients of those checks can move forward, and we can
get back--my office has a problem and I know the Committee has
a problem getting information from your Department because of
your being off-line. I hope we can get that resolved soon.
Thank you.
Mr. Hayworth. The gentleman's time has expired. We thank
the gentleman from Utah.
Our friend from American Samoa, Mr. Faleomavaega.
Mr. Faleomavaega. Thank you, Mr. Chairman.
I do, also, want to welcome Madam Secretary for appearing
at our Committee this morning.
Madam Secretary, I know this position may not be considered
very important probably among your peers. It doesn't even
require Senate confirmation or not even a top security or
crypto clearance, but, Madam Secretary, when are we going to
get a Director for Territorial Affairs? It is almost one-third
of this administration's term, and for half a million people's
needs and welfare, and we don't even have a point person for
this within the Department.
Can you take this to President Bush? What can we do to
assist in this effort? I really think it is very disappointing
that we still do not have a Director that should oversee the
needs of the territories.
Secretary Norton. We are frustrated by that as well. We
have been in the process of trying to identify the right
individual for that position, and even just within the past
week I have heard some additional efforts in that regard, but
we do not yet have that final decision made.
Mr. Faleomavaega. I was told 3 months ago that the
appointment was going to be made in 2 weeks. Now it is the year
2002, and we are about ready to go to the month of March. Maybe
we might as well not even have a Director for Territorial
Affairs.
I do want to second the concerns that have been expressed
by the previous members of the Committee, especially of our
Chairman and also our ranking Democrat, Mr. Rahall. This issue
is not a new issue, as you well are aware of. I believe the
late Congressman Mike Synar, from Oklahoma, for 5 years he
conducted extensive hearings, and research and study of this
issue of trust funds. And now, at this point, perhaps the only
reason why we are moving on this is because the Federal courts
are on our backs now in trying to find a solution to this.
In the 1990's, we enacted or authorized some $20 million
even to conduct an auditing, and I guess we were not even
successful in doing that, expended $20 million just to audit
the accounts. In 1994, we passed the American Indian Trust Fund
Management Reform Act, hopefully, to resolve the issue. I would
like to ask you, Madam Secretary, is this law that was passed
in 1994, there is no teeth whatsoever in helping reconcile the
records or whatever the responsibilities that Mr. Slonaker is
to take up?
Are we short of any enactment on the part of the Congress
to give you more authority to address the issue so we don't
have to go to the Federal court?
Secretary Norton. The 1994 act sets out some specific
standards that we are to meet in our trust responsibilities,
and that is what we are implementing as we go through this
process, and that is what has formed a large part of the
court's decisionmaking process as well.
The issues have largely been ones of implementation, and
clearing out the--
Mr. Faleomavaega. I would like to ask Mr. Slonaker, since
he is the Special Trustee, are there any deficiencies in the
law that we passed in 1994, Mr. Slonaker, so that we can give
you the necessary authority to do what you need to do to
reconcile the accounts. It seems to me that is the most
fundamental problem that we have here. I hate to make it sound
simple, but if we have got problems since we passed this last 6
years or 7 years ago, tell us how to improve the law so we can
give you more teeth in the process.
Mr. Slonaker. Very interesting question. I don't think the
1994 act, the way it was set up, has been terribly successful,
and I guess the problem that I perceive is that as I have
looked at the whole process of trust reform, what is really
needed--which the Secretary has alluded to--is stronger
organization, and I would add one very important thing to that,
and that is stronger management.
Mr. Faleomavaega. Even from the previous administration,
they kept telling us, We are going to reorganized the BIA, we
are going to reorganize the BIA, and we never got any
reorganization plans for the BIA. So my question is: Rather
than going through this executive procedure and reorganizing
the BIA, perhaps we need to make improvements in the law that
we passed in 1994.
What do you think of that, Madam Secretary?
Secretary Norton. The court found that the Department was
in breach of the responsibilities created under that act, and
so our efforts have been to cure those breaches and to move
forward with complying fully with our responsibilities.
Mr. Faleomavaega. I have several other questions, Mr.
Chairman. I know my time is up. I will wait for the second
round.
Mr. Hayworth. I thank the gentleman from Samoa.
The gentleman from California, Mr. Gallegly.
Mr. Gallegly. Thank you, Mr. Chairman. And I want to thank
the Chairman for calling these hearings today, and I welcome
you, Secretary Norton. I know you have some very great
challenges ahead, as has every Secretary of the Interior in my
15-plus years here.
The mismanagement of the Indian trust funds I believe has
got to stop, and if the executive branch can't stop it, I
really believe it is incumbent on this body to enact
legislation which will do the job once and for all.
During the 104th Congress, I had the distinct honor of
chairing a Subcommittee of this Committee which had
jurisdiction over Native American legislation. At that time it
came to my attention that hundreds of thousands of individual
Indian money accounts had been mismanaged by the Interior
Department.
The Resources Committee created a Task Force of Indian
Trust Fund Management. That task force held hearings in
Washington, D.C., Anchorage, Alaska, and in Phoenix. The task
force heard from all sorts of Native Americans, Government, and
private witnesses.
The General Accounting Office informed us that 32,901 trust
account transactions involving over $2.4 billion could not be
traced in an audit, which couldn't even be called an audit
because there weren't enough documents to audit. Things were so
bad that the auditors dropped the word ``audit'' and adopted
the word ``reconciliation.''
The GAO has also informed us that only 10 percent of the
Indian mineral leases selected to be reconciled could even be
verified as having been acted upon. We were told of discoveries
that trust management systems did not exist, that an accounts
receivable system did not exist, and that an adequate records
retention or archive systems didn't even exist.
Of course, the Bureau of Indian Affairs assured us that
these problems were being solved and that a new fancy
accounting system was being put into operation and more funding
was needed, and that mismanagement of Indian trust funds would
end. In May 1996, the Cobell suit was filed in the Federal
district court. Next we heard that Secretary Babbitt and his
colleague at the Treasury Department were being held in
contempt of court and fined $600,000.
Meanwhile, Congress continued to appropriate millions and
millions and millions of dollars in what appears to have been a
futile effort to straighten out this mess. And now President
Bush has sent us a proposed budget for fiscal year 2003se 004,
which includes continued funding of these activities.
I applaud the Chairman for holding the hearings. I applaud
you for being here, Madam Secretary. It is very, very hard for
me to be optimistic, even with all the words we have heard this
morning.
I look forward to us moving ahead. I believe that the
Native Americans have put up with this charade long enough, and
I hope that we can do something once and for all, and I hope
that if the administration can't do it, that the Congress will
act on it.
On your plan, Madam Secretary, before implementation, is it
your intent to look for a comment from the Native American
community before any form of implementation takes place?
Secretary Norton. Yes, Congressman, we are very actively
involved in getting comments and consultation and input from
the Native American community, both formally and informally. So
we are very actively engaged now in that dialogue.
Mr. Gallegly. How optimistic are you, Madam Secretary?
Secretary Norton. I am fairly optimistic that we have good
discussions taking place and we are getting a lot more
understanding in the last few weeks than we began with. So we
have made tremendous progress, I think, in a couple of months
in getting better understanding from both sides.
On the other hand, there is a tremendous resistance to
change. As we have become more and more familiar with the
management challenges, every time we unpeel a new layer of the
onion we find more challenges. We just put out an eighth report
to the court that is a very detailed analysis of where we are,
to the best of our understanding, on each of the various
management issues in front of us. And we would be happy to
provide you with a copy of that. It is a very pervasive
management problem, and almost everything that we are doing can
be improved. We are just, you know, in the process of learning
how to do those improvements.
Mr. Gallegly. I thank you, Madam Chairman. I thank you, Mr.
Chairman. When I was first named to chair the Subcommittee on
Native American issues, I had someone come to me and say, Mr.
Chairman, a few years ago when General Custer left for Little
Big Horn, he gave the order: Don't do anything--gave the order
to BIA: Do not do anything until I return.
There are a lot of folks that believe that that order was
complied with.
[Laughter.]
Mr. Hayworth. I thank the gentleman from California.
We have heard the bells ring, and we have a vote, 15
minutes for the first vote, followed by a 5-minute vote. But I
believe we do have time to turn to my friend from New Mexico
for his 5 minutes of questions before we adjourn to walk over
for the vote.
Mr. Udall?
Mr. Udall of New Mexico. Thank you, Mr. Chairman. And
welcome, Madam Secretary. Good to have you here today.
Mr. Chairman, I would ask that my statement be put in the
record.
Mr. Hayworth. Without objection.
[The prepared statement of Mr. Udall of New Mexico
follows:]
Statement of The Honorable Tom Udall, a Representative in Congress from
the State of New Mexico
Mr. Chairman and Ranking Member Rahall:
In the 1800s the United States Government entered into a trustee
relationship with the Indian Nations. Over the last century, the trust
relationship has developed and has been defined, by our Constitution,
statutes, federal agency rules and practices, executive orders, and
through numerous court rulings. In addition, this unique trust
relationship and responsibility has helped to preserve the cultures,
traditions, values, and inherent sovereign rights which has led to
support Indian tribal self-determination and self-governance and paved
the road for the federal government to work with Indian tribes on a
government-to-government basis.
So why are we here today? We are here because for more than a
century-----as the federal government has been the trustee of funds for
Indian tribes and individual Indians---Congress, as well as previous
Administrations, continue to work on addressing the issues of the
mismanagement of Indian trust fund accounts. However, the last several
Administrations have put proposals on the table for discussion, but
little success has come from those discussions and the efforts to
address the problems.
Today's oversight hearing, which I am glad to see Secretary Norton
attending, will focus on the status of individual and tribal trust fund
accounts and how the Department of Interior is responding to issues
raised in the class action lawsuit Corbell v. Norton. These responses
range from the Department's restructuring proposal and the Tribal
opposition it faces to the lack of effort, on the part of the Secretary
of Interior, to work with the court and special master to stress the
potential ``economic'' hardships the Internet shutdown, which holds the
Indian trust data, could create for the more than 40,000 Native
Americans who receive royalty fund checks. These funds are generated
from rights and leases, including grazing, quarrying, timber,
agriculture, oil, natural gas, and minerals, on lands held in trust for
tribes and individual Indians.
At issue for me and the members of the Navajo Nation, Jicarilla
Apache, and Pueblos---from the congressional district I represent---is
that over 40,000 Native Americans have not received any royalty checks
from the federal government since December 6, 2002, when U.S. District
Judge Royce Lamberth ordered the Department of Interior to shut down
its Internet links. Judge Lamberth issued the order after he concluded
that inadequate computer security left the trust accounts vulnerable to
outside hackers.
Mr. Chairman, as a result of this order Native Americans from
throughout our country, who depend on and have regularly received check
payments prior to December 6th, have been left out in the cold. Many
Native Americans depend on these checks to pay their rent, purchase
food and clothing, as well as purchase other basic necessities.
Everyone seems to be doing something to assist Native Indians and
tribes who are waiting for their checks from the federal government. In
the Navajo Nation for example, the Navajo Nation Council voted on
January 26th to disperse over $500,000 in grants to hundreds of
financially strapped Navajo families on the east side of the
reservation who have not been paid their gas and oil royalty checks by
the Department. I'd like to remind Secretary Norton that the issuance
of royalty payments to Tribes and individual Indians are done monthly,
some quarterly, and some annually. With that said, I believe that the
federal government should pay back the Navajo Nation for their efforts
to help their constituents and the federal government should also pay
those who are awaiting their checks with interest.
What is an insult to the tribes across the country is the
``rhetorical spin'' that the Department of Interior is putting out, and
I quote, ``Royalty payments will be made eventually as soon as we can
work out with the [court's] special master to bring some of our systems
back up that relate to this lease information.'' This quote appeared in
a January 8th article in the Washington Post and almost a month later
we are still waiting. I believe neither the Department nor you, Madam
Secretary, realize the gravity of the situation which weighs heavily
upon our tribes and individual Indians day-by-day as the Department
continues to work at a snail's pace to get these checks out.
Mr. Chairman, I find it hard to believe that the Department did
not---nor currently has---safe guards in place to administer the
distribution of checks should the Department's computer system crash or
go off line in the future. What I find particularly disturbing is that
the Department---realizing that without their computer system they
could not issue checks---didn't make a strong or convincing argument to
Judge Lamberth or the Special Master that a shutdown would create
economic hardships on those who are dependent on the checks to survive.
I believe that the Department needs to reassess the steps they are
taking to respond to the issues raised in Corbell v. Norton. When the
193 tribes of the National Congress of American Indians unanimously
adopted a resolution opposing the Secretary's Plan, similar to actions
taken by other tribes and pueblos throughout the country, they sent a
clear message that they oppose the Department's restructuring plan.
I don't think coming up with a plan, taking that plan across the
country to so- called consultation meetings, asking the Congress to
allow for the reprogramming of funds to create a new Agency to handle
trust assets management, and doing all of this in haste is the right
path to take. The path that the Department has taken and which we
continue to travel I have not doubt will result in a future Congress
and Administration having to address this very same issue with little
to no success.
Thank you Mr. Chairman. I look forward to hearing today's testimony
from Secretary Norton and our two other panels.
______
Mr. Udall of New Mexico. Madam Secretary, I think you have
done a very good job at telling us that this is a very
difficult problem, but I would like to emphasize what my
colleague Chris Cannon from Utah said and put a human face on
this issue.
Many of my constituents are impacted enormously by these
IIM accounts. I mean, we have had chapter meetings wherein, as
you know, the Navajo reservation is very rural, and so if
somebody has to leave their piece of grazing plot and coming
into a chapter meeting, it is a big deal. And when you have 400
people show up to a chapter meeting and all of them very upset
that they are not getting royalty payments, it is a huge deal.
And when you look at the human consequences, which what we are
talking about is many of these elderly people that have
survived on these checks for many, many years, and now the
checks aren't going out, as you and Mr. McCaleb have just
acknowledged.
And so I can't quite understand how this all happened if
somebody knew that this was going to be the impact, and I guess
my first question to you is--I know you are a former State
Attorney General. I know you know about representing big
agencies in front of the courts. I can't believe that a Federal
judge would enter an order like this if he was told of the
impact that this was going to have. And what I want to know is:
Did your attorneys tell the judge in a very concrete way that
constituents of mine, constituents, I think, of other members
here on the panel--Mr. Cannon obviously has people in that
situation--that these people weren't going to get check, that
they were going to have some of their homes foreclosed, that
they were going to probably have cars repossessed?
This is something that is having a devastating impact on
the reservation, and I don't understand how a judge would do
this. So can you tell me that your lawyers laid this all out
for him?
Secretary Norton. The plaintiffs moved for the restraining
order and the injunction to protect the Indian trust data from
hackers who might come in and harm that data. The primary focus
has been in trying to protect that information. Obviously, the
impact is one that we are realizing more and more as time goes
on.
It was my hope that we would be able to get those systems
back up online more quickly than we have been able to do so.
And we put our initial emphasis on getting exactly those
systems up and running. The first requests that we put forward
were for those systems that would provide payments to Indians
before any of the other aspects of the Department's Internet
system, except for a few that were critically important for
public health and safety.
Other than those very small parts of our Department's
network, the first ones we have dealt with have been the most
difficult ones, and those are the Indian financial processing
aspects of the system. So we are put that as our highest
priority, and we are moving forward.
We have been compiling the impacts and presenting--you
know, putting all of that information into a report. We have
been submitting that information to the special master and
working with the special master to keep him apprised of the
impacts of each of those systems.
Mr. Udall of New Mexico. Madam Secretary, with all due
respect, I don't think you--either you didn't understand my
question or you didn't focus on it, and my question was not
what you have done subsequently. I know that a court order has
been entered, and I know that you and your people are very
upset about it, and you know the consequences and you have
tried to take actions to remediate it.
But did your lawyers tell the judge at the time there was
discussion of the plaintiffs' order, did they say this is going
to be the result and argue that vociferously? Your counsel's
job is to represent the trust responsibility, to represent the
Department, to do everything that they can to let the court
know the consequences of entering an order like this. And I am
mystified as to how this happened.
Mr. Hayworth. The gentleman's time has expired.
Mr. Udall of New Mexico. No, I understand, and we have a
vote on.
Mr. Hayworth. And I thank you. I am trying to be indulgent
with the time. If the Secretary wants to respond briefly?
Mr. Udall of New Mexico. And I will stick around, like my
colleague here, for a second round, also.
Mr. Hayworth. Great. If you want to respond, we can. I am
trying to be accommodating to members. The gentleman from Idaho
has to be three places at once, too, and he asked to go ahead
with his questions. So I recognize him for 5 minutes.
Mr. Simpson. Thank you, Mr. Chairman. Thank you, Secretary.
I appreciate you being here today to testify on this, and I
appreciate the fact that during your confirmation hearing in
the Senate, this is one of the issues that you brought up at
that time that needed your attention. It is a difficult issue.
I have before me a press release, I guess, that is found on
the Cobell website on ``Judge suggests game playing by Interior
may hurt''--``may be behind Internet shutdown.'' And as Mr.
Udall mentioned, did the plaintiffs' attorney object to--I
mean, as I understand it, you have tried to put back online
those things necessary to get the payments out to the Native
Americans as quickly as possible. Has the plaintiff's attorney
objected to that?
Secretary Norton. Yes.
Mr. Simpson. OK.
Secretary Norton. It's my--let me verify.
Yes.
Mr. Simpson. Thank you. On another issue, underlying your
reorganizational proposal, is it driven more by the Cobell
litigation or is it driven by the trust fund responsibility
that is entrusted to you?
Secretary Norton. It is twofold. The court has in many
respects provided the impetus for moving quickly. The
responsibility is one that is--as everyone has said, almost
every Secretary of the Interior coming in has recognized the
need for reform and has tried to move forward with some sort of
reform. But at this point, I think having the three branches of
government all focused on reform may be a unique time period.
Mr. Simpson. I appreciate that. On the board that you had
up here, we were looking at the administrative costs, $800,000
for those accounts that had 20 transactions or more, $9.76
million for those that had 20 transactions or less. Does that
money come out of the trust fund, the Native Americans trust
fund?
Secretary Norton. No. The administrative costs are entirely
appropriated money.
Mr. Simpson. Should they come out of the trust funds?
Secretary Norton. That is a question that Congress can look
at.
Mr. Simpson. In the historical account proceedings, trying
to re-create that, you have mentioned that it is going to cost
in the hundreds of millions of dollars to do that and do it as
accurately as possible. And we all know it probably won't be
totally accurate because of the loss of records as they get
older and older.
The plaintiffs have indicated $60 to $100 billion in
settlement costs. Is that reasonable, or are they out of left
field?
Secretary Norton. I at this point don't want to speculate
on that number for obvious reasons. It, I think, is worthwhile
for us to move forward on trying to more accurately look at the
information that is available to us, to look at data to assess
what the real discrepancies might be.
Mr. Simpson. One final question. Under this, for lack of a
better term, mess that is created there, that is there in these
trust fund accounts, they are going to get worse over time,
aren't they, with fractionalization?
Secretary Norton. Absolutely.
Mr. Simpson. So, I mean, it is not only something that
needs to be dealt with from the historical perspective of
making sure that we have it right, but dealt with so that it
doesn't get worse into the future in one way or another. And
somehow we have to deal--
Secretary Norton. That is correct.
Mr. Simpson. --with this fractionalization and other
things.
Secretary Norton. Yes, that is correct.
Mr. Simpson. I thank you for your work on behalf of the
Department of Interior, the people of the country, and the
Native Americans. I know you are trying to do a good job, and
it is a difficult task you have got there. We look forward to
working with you on it.
Secretary Norton. Thank you.
Mr. Hayworth. I thank the gentleman for is questions.
The Committee will stand in recess until the votes are
completed. Then we will return.
[Recess.]
Mr. Hayworth. The Committee will come to order, now that
the power switch has been turned on for amplification.
Madam Secretary, and those who join you, we thank you for
your indulgence and spending time on this. It lends credence to
your point that you have been concentrating on this, and we
thank you very much for your patience as we continue.
A couple of notes. Some people have expressed an indication
they would like to do some follow-up questions, and we will try
to get there. But what I would stress to the Committee members,
if we can get to some new and substantive information rather
than covering old ground--we understand the challenges of time
and being in so many different places because we have any
number of folks who have a variety of perspectives. But the
Secretary and the Assistant Secretary and the Special Trustee
have graciously said they would remain for part of the day, and
we are very appreciative of that.
That is right. I would also point out that we can submit
questions in writing as well.
With that in mind, we resume the questioning, and we turn
first to the gentleman from Oklahoma, Mr. Carson.
Mr. Carson. Thank you so much, Mr. Hayworth. Thank you for
staying around for the continuation of this hearing, Madam
Secretary. Thank you for bringing along Neal McCaleb, a great
Oklahoman as well. I know we have Chief Swimmer in the back who
has a vested interest in the hearings process today as well.
Let me ask you a couple of questions. We have talked a lot
about the asset side of Indian lands and what amounts to more
or less an unalloyed fiasco over the last 100 years and
accounting and for them.
There is also in many places across the country significant
liabilities associated with the exploitation of the natural
resources on Indian land. In my district alone, we have the
former center of lead and zinc mining in Ottawa County, now a
massive Superfund site.
Under your proposal, with BITAM taking over responsibility
for some of the trust assets, what would happen to the BIA, for
example, in that Superfund site as a PRP, a potentially
responsible party, what would happen to environmental
liabilities associated with some of the Indian land?
Secretary Norton. Congressman, that is a level of detail
that we have not contemplated in our proposal yet.
Mr. Carson. OK. Very good. Do you have a sense of at what
point in time whether discussion will be had on establishing
those kind of details and what kind of timeframe we can expect
kind of those details to be unveiled?
Secretary Norton. That is an ongoing process, and we will
be working with the tribes and consulting as we go along on
those things. That is something that is obviously not at the
forefront of our financial management concerns, and so I would
anticipate that that would be something that would remain in
its current posture for quite a while. And I just am not sure
that we would ever contemplate a change for that.
Mr. Carson. One of the concerns of people who will testify
subsequent to you is that asset management is an
extraordinarily complicated matter, something outside the
expertise of any one of those people who are spending their
lives devoted to the subject, and that the Department of
Interior and the BIA do not have adequate personnel to deal
with this issue, with all the latest developments with this,
that we have some very fine managers and extremely dedicated
public servants, but not the level of specialized expertise it
takes to follow the funds and get to the bottom of all of this.
Can you tell us if you would agree with that statement?
And, second, is the BIA, is the Department of Interior under
your proposals, you know, planning on hiring folks, you know,
perhaps from the private sector with the kind of expertise in
these complicated transactions that are routinely being done in
the commercial world but don't yet seem to have infiltrated the
Government?
Secretary Norton. Having a workforce plan is part of our
strategic plan to make sure that we do have the kinds of
expertise that are necessary. That is something that is still
to go into our strategic plans. We don't have the specific
answers.
I have seen some of the tribes handle very sophisticated
oil and gas operations, for example, and they have done that
either through the tribes themselves or through outside
contracting beyond the BIA responsibilities. And I think that
has functioned very well, and we certainly would not want to
interfere with the tribe's ability to draw on that kind of
expertise.
Mr. Carson. Let me ask--because my time is limited, as is
yours, I know. There are two other areas I would like to
inquire about rather quickly.
First of all is the entire scandal involved in taking down
the Internet and the failures and no checks as a result of
that. There has been--it is my understanding the Department of
Interior was informed about potential security problems with
the accounts years ago and that this is something that has been
long in brewing, but is only recently coming to public
attention. Could you tell us when you were personally informed
of any potential security problems there? And also with this,
there seemed to be basic problems that do not require computer
expertise to appreciate for all of us, and that is, you had
multiple vendors, there are no performance reviews being done,
no routine security checks, I understand, to make sure--see how
difficult it would be to hack into the site, things that are
just standard fare for people who are operating secure systems.
Can you tell us when you were informed about this and, you
know, kind of what is being done to address--you know, what
seem to be some obvious management failures in the
administration of these accounts?
Secretary Norton. Government computers nationwide across
all departments have received poor marks for IT security, and
that is something that has been reported on by many different
audits that have been done for many different systems.
I don't recall when I first heard about these issues. It is
something that has really been brought to a focused attention
for us much more recently. We have now recognized that we need
to make changes and need to make improvements, that our systems
were not adequate, and we are now working hard to get those up
to being adequate.
Mr. Hayworth. The gentleman's time has expired. I thank the
gentleman from Oklahoma.
The gentleman from Montana has indicated that he had a
couple of other questions. The Chair would ask for a show of
hands of those who have additional questions. Fine. We will
take that into account.
We will turn first to the gentleman from Montana.
Mr. Rehberg. Thank you, Mr. Chairman. In preparing for the
hearing today, I was reading over the briefing material and
looked with some anticipation at the report by Ernst & Young. I
don't see it anywhere in here. Is there a problem with
presenting that to Congress? It seems like we paid for it and
it has some information that may be conducive to solving this
problem. And I was hoping that it would be made available. Can
you explain where it is, how we get it, and why it is not here
today?
Secretary Norton. The Department received requests for the
Ernst & Young report informally, and a formal request from
Chairman Skeen and Ranking Minority Member Dicks of the
appropriations side on November 20th.
We submitted a request through the Justice Department to
have the court release that report from a protective order. The
courts yesterday denied our request. We felt it was
appropriate, given that, to read from the letter from the
Appropriations Committee: ``Access to the Ernst & Young study
of the five named plaintiffs is critical to allow the Committee
to evaluate how a transaction-by-transaction review was
accomplished and whether it produced the information needed to
reconcile plaintiffs' accounts and was it a cost-effective
method.''
Skipping a few things, ``It is imperative that the
Committee be provided with the Ernst & Young report in order to
prepare for a hearing in consideration of the fiscal year 2003
budget request.''
We need to work with appropriators to obtain the hundreds
of millions of dollars necessary for a financial accounting,
for a historical accounting, and our request to have the Ernst
& Young report made public was submitted to the court in that
spirit.
At this point we are prevented by the court from providing
that information tot he Committee.
Mr. Rehberg. One of the best decisions I made as a youth
was not to become an attorney, so forgive me if I ask you some
basic questions. I thought I had a future, so I stayed out of
the law.
Is there an appeals process? Can we get that report? You
know, as Chairman of appropriations of the Montana Legislature,
the Supreme Court one time didn't agree with something we did,
and we just cut their funding for two of their justices. We did
catch their attention. How are we going to catch the attention
of this judge? He seems to be doing everything in his power to
make life miserable, as Congressman Cannon said, for people
within the tribes. He seems to make life miserable for Congress
in our sincere attempt to try and solve a problem that has been
sitting around for a long time. How do we send the message that
we want this information? We paid for it. With all due respect
to his legal expertise, he is flat out wrong.
Secretary Norton. Let me respond to that by quoting from
the court's order. ``Either Committee of Congress is free to
seek to have this court modify its protective order to allow
disclosure of this report. Should such a motion be filed, the
court will be obliged to consider the relevant legal questions
surrounding possible release of the report, including whether
release is in the public interest.''
So the court has invited Congress to contact it directly to
seek release of the report.
Mr. Rehberg. Mr. Chairman, through the Committee authority,
I hope we do everything we can to get the information that is
relevant to solving this problem.
Mr. Rahall. Would the gentleman yield?
Mr. Hayworth. The gentleman controls the time, if he will
yield.
Mr. Rehberg. Certainly.
Mr. Rahall. I appreciate it, and just to put on the record,
I did write a letter to Secretary Norton disagreeing with the
request that was made by Chairman Hansen. To me, to have this
information released to the public is like asking one to reveal
their entire checking account. And I don't think many Americans
would sit still for a request by any bank to have their full
checking account details made public. So for that reason, I
view the attempt to release this Ernst & Young report in that
same vein, and I have opposed its release, as did the court
yesterday, I see.
Mr. Rehberg. Mr. Chairman, reclaiming my time, I look at
prior testimony from Madam Secretary that has quite a bit
blacked out. I would assume that same opportunity exists--is
that not correct?--for receiving information that would block
out the appropriate personal areas but still give us the
opportunity to make a logical decision on how to solve the
problem.
Secretary Norton. That is a possibility that might be
pursued.
Mr. Rahall. Would the gentleman yield?
Mr. Hayworth. The gentleman's time has expired. If the
ranking member seeks time--
Mr. Rahall. Just real quick to say it is my understanding
that the information blocked out to which you referred was not
a part of the request that was made by Chairman Hansen.
Mr. Rehberg. If I may take part of your time, I am just
suggesting that perhaps it could be done similar to the
information that we received so we could still use that
information to make decisions.
Mr. Hayworth. The Chair would point out there is always
time to modify and amend. That seems to be a part of the
process we have here.
The gentleman from Michigan?
Mr. Kildee. Just briefly, Mr. Chairman.
Madam Secretary, I commend you for recommending an increase
of $84 million to remedy deficiencies in the trust management.
But I notice that the President proposes a decrease of $3
million for the Indian land consolidation account. Can you tell
us why? And can you identify, perhaps not now but send to the
Committee, identify for the Committee the increases and
decreases in the President's budget proposal for trust
management programs throughout the Department, and include a
description of those programs? Could you specifically tell why
he has a $3 million decrease and then if you could supply for
us other increases or decreases within that?
Secretary Norton. Yes, we would be happy to provide you
with the additional detail on that in written form.
The decrease in the amount of land consolidation money is
because there is a carryover amount from the previous fiscal
year, and so it is anticipated that we will be carrying some
money for this year into that future year.
Frankly, however, we are looking at our approach to that
land consolidation to see if there are some things we can do to
move that along. I just had a meeting earlier this week to
discuss with my staff whether there are some things that we can
do to make that process operate more efficiently and make sure
that we are acquiring as much land as possible with the funds
that are available to us.
Mr. Kildee. Do you feel that the carryover will be
sufficient to allow you to do your job properly in that land
consolidation? The carryover amount of money from previous
years will be enough, despite the $3 million decrease?
Secretary Norton. Frankly, we are still looking at that.
The initial analysis is yes, that should be sufficient. I am
looking at whether there is more that needs to be done over the
longer term to really get ahead of the curve on that problem.
And so I want to continue working with you all to see whether
what we need are some statutory changes or just more funds
going into that process.
Mr. Kildee. If you could do that, I hope that you would ask
for a supplemental, if need be, because that is very important,
that consolidation. And if you could give us a breakdown as I
asked of the various parts of the President's budget in this
area.
Thank you.
Secretary Norton. I would be happy to do that.
Mr. Kildee. Thank you very much.
Thank you, Mr. Chairman.
Mr. Hayworth. Thank you, Mr. Kildee.
From the Chair's purview of round two, I believe the
gentleman from New Jersey had some questions.
Mr. Pallone. Thank you, Mr. Chairman.
Madam Secretary, you mentioned that in your executive
order, I think, on November 21st with reference to this new
agency, you also mentioned that Mr. Swimmer would be the head
of it. Now, I listened before when you talked about how you
needed all these reforms and changes and you needed a separate
agency. But my understanding is that he was the BIA Director
under President Reagan for, I guess, 8 years and I guess--you
know, I have two questions. Why would you take somebody or
suggest somebody who, you know, was there before and the
Director of the agency if you are actually trying to do
something very different? And, second, to what extent--going
back to the consultation issue again, to what extent were the
tribes consulted with regard to his appointment?
Secretary Norton. Ross Swimmer proposed some changes when
he was Assistant Secretary that, had they been adopted, we
would not be in the mess we are today.
There is some disagreement with that.
Mr. Hayworth. The Chair would ask for the gallery and those
guests who join us to please contain themselves. We are not
here at a television show. Thank you.
Mr. Pallone. What about the second part, though? Again, you
know, the concern was that they weren't consulted when the idea
came out in the executive order on the 21st. Were they
consulted at all about him?
Secretary Norton. No one has been consulted about the
appointments process. That is just not ordinarily something
that we do--the consultation process is not well suited to
having public meetings to discuss the merits of individual
people who are job applicants.
Mr. Pallone. Well, again, you know, I am not suggesting
that, you know, you would nominate him and he would be
confirmed in some way by tribal leaders. But I just think in
the same way that there wasn't any consultation, or at least it
hasn't been mentioned, when the proposal was made on November
21st, there should have been some consultation as well about
who would be the head of it, or even now at this stage. I don't
understand--you know, I mean, there is not an official agency
yet, so I guess there probably hasn't been an official
appointment yet. And that could still--you know, I would ask
that you take some input from some of the tribal members at the
time when he is--you know, if at some point there is some
action here.
Secretary Norton. Ross Swimmer is tremendously well
qualified. He is a lawyer. He is a banker. He is a former
tribal leader. He is a former Assistant Secretary. He brings to
this an incredible understanding of these issues and a
background that is uniquely well suited to solving these
problems. And I have been very impressed with the work that I
have seen him do on these issues. He has been part of our
consultation process to listen to the tribes and to understand
their concerns.
Mr. Pallone. Well, thank you. I don't want to continue, Mr.
Chairman. Thank you.
Mr. Hayworth. Thank you, Mr. Pallone.
The gentleman from New Mexico?
Mr. Udall of New Mexico. Thank you, Mr. Chairman. And thank
you, Madam Secretary, for staying around for an additional
round here.
Before you became Secretary, the Navajo Nation filed two
lawsuits against--one against the United States and one against
Peabody Coal, Salt River Project, and Southern California
Edison. And the basis of those lawsuits was that the Department
breached its trust to the Navajo Nation, and the operative set
of facts involved in those cases revolves around former
employees, Ross Swimmer, Mr. Griles. They were involved in this
set of facts.
My understanding, at least I am informed that one of these
cases is already in the Court of Claims and a breach of trust
has been found. So I am asking you, have you looked into these
conflict of interest issues, the fact of having employees that
are in--or future employees that are in a lawsuit situation,
have you looked into that? Or do you intend to look into that?
Secretary Norton. Without going into the specifics of this
particular case, what you are saying is that someone who has
been a Government official in the past and has been sued should
not be a Government official in the future. And I don't think
that is really the position that you want to be advocating.
Mr. Udall of New Mexico. I don't think that is what I am
saying. I am saying that there are facts here that give rise to
conflict of interest questions, and I am asking, have you
looked into them?
Secretary Norton. I am not aware of anything that raises a
conflict of interest, and so I would be--
Mr. Udall of New Mexico. Well, I think--
Secretary Norton. --happy to hear some further detail from
you and to discuss a potential conflict of interest. But I am
not aware of anything other than their previous actions as
Government officials having been the subject of litigation.
Mr. Udall of New Mexico. Subject of litigation, and one of
those suits has, in fact, found a breach of trust, hasn't it?
And they were both a part of the facts and employees at the
time.
Secretary Norton. I would like to defer to the Solicitor's
office to provide you with the information about that.
Mr. Udall of New Mexico. That would be great.
As you know, for 2 months now, checks have gone out to
trust beneficiaries, individual--they have not gone out to
individuals or tribal. But we are informed that as of 12/17 the
court entered an order that allowed you to temporarily turn on
computers to get these checks out. In fact, the language of the
order says on page 6, ``Interior may reconnect to the Internet
for specified periods any information technology system that
houses or provides access to individual Indian trust data for
the limited purpose of performing those functions necessary to
receive, account for, and distribute trust funds or
appropriated funds or to provide other necessary services.''
Can you tell me when was the first time the Department
attempted to use that temporary protocol to get checks out?
Secretary Norton. If I can just go back through some of the
issues--
Mr. Udall of New Mexico. It entered on the 17th. When was
the first time that you attempted to utilize the power under
that order to get checks out?
Secretary Norton. We have felt it necessary in the context
of the special master's interpretation of that consent order to
obtain the permission of the special master before going
forward.
Mr. Udall of New Mexico. And my understanding is it was
mid-January. So you waited an entire a month before you
utilized the procedure. Is that--
Secretary Norton. That was--the action we took in mid-
January was that we obtained the special master's permission,
and so we have not proceeded to open up any part of the
Department's computer system without the permission of the
special master.
Mr. Udall of New Mexico. What part of that order was
ambiguous that I just read? I mean, it seems to me that is for
a broad, sweeping authority to the Department to hook back up
and get checks out. What was ambiguous about that order?
Secretary Norton. It is my understanding that the special
master and the plaintiffs would likely object were we to reopen
parts of our computer system without getting advance
affirmative permission.
Mr. Udall of New Mexico. But the--you know, you have heard
today from a number of members the urgency of getting checks
out. It would seem to me the prudent thing to do would be to
move forward as quickly as possible to try to get the checks
out and let the court tell you otherwise rather than go off and
negotiate with the other side.
Mr. Hayworth. The gentleman's time has expired.
Mr. Udall of New Mexico. Could she follow up on--
Mr. Hayworth. If she wishes to respond, she certainly can
do so.
Secretary Norton. I was going to suggest perhaps having Jim
Cason, who has been the point person on this, to respond to
your questions. I can provide his opportunity to work with you
and answer your questions either privately or in front of the
Committee, whatever is your pleasure.
Mr. Hayworth. Well, Madam Secretary, you have been
indulgent with your time. We do have other panels here, and we
need to get to those questions. I would ask my friend from New
Mexico, as is the right of all members, to put the questions in
writing to the Secretary, and those who join her, and anyone
whom she might identify and have them respond. We will hold
open the hearing record for 2 weeks to have this information
included, and it will be available in the public domain.
Mr. Udall of New Mexico. Thank you, Mr. Chairman. Thank
you, Madam Secretary, for your appearance here today.
Mr. Hayworth. Once again, I thank you, Madam Secretary,
Assistant Secretary McCaleb, and the Special Trustee, for
coming in and serving on this first panel. We appreciate you
being very generous with your time today. We understand there
are many other things, but, again, as I said earlier, I think
it provides evidence as to your intent to try and work through
the challenges we face. And though we may not have unanimity on
every jot and tiddle of public policy, I think all of us
concerned appreciate your time and attention.
Thank you.
Secretary Norton. Thank you.
Mr. Hayworth. The first panel is excused--or P's and Q's or
commas and question marks.
Mr. Hayworth. As we say good-bye to the first panel and
invite up the second panel, a bit of housekeeping from the
Chair. In the past, our former Chairman, Don Young, has worked
with the Inter-Tribal Monitoring Association and has made a
verbal commitment to continue a dialogue to develop, if
necessary, further reform legislation to finalize the
accounting problems with the IIM and tribal accounts. It is my
privilege in the chair to take the opportunity to welcome Don
Young's Alaskan on the Board of ITMA, Bill Martin, and to offer
Mr. Young's continued commitment to work to resolving the trust
fund issue.
I turn now to my friend, the ranking member.
Mr. Rahall. Mr. Chairman, just a housekeeping request, that
all members--a unanimous consent request--that all members be
allowed to insert their opening statements, whether they were
given here today or not.
Mr. Hayworth. Oh, indeed. Without objection, we will
continue in that regard. As we welcome up panel No. 2, the
Chair would first turn to my friend from Montana, who has the
distinction of welcoming a couple of his constituents from Big
Sky Country.
Mr. Rehberg. Thank you, Mr. Chairman. At this time I would
like to introduce two distinguished guests from the State of
Montana. The second person, I believe, testifying today is Fred
Matt, a friend of mine, a tribal Chairman from the Confederated
Salish and Kootenai Tribe, which is in the beautiful Mission
Valley of western Montana. It is a 1.3 million acre
reservation, and Fred has got quite a reputation of being a
tremendous leader, especially in the area of forestry, and
something that I want to try and present to this Committee of
having him help us perhaps in a pilot project with timber
salvage issues. If you look at what they have been able to
accomplish on their own reservation, I think you will be duly
impressed. And thank you, Mr. Matt, for being here today.
The other is another friend of mine, Elouise Cobell.
Elouise is a banker, a rancher, and a member of the Blackfeet
Tribe. She is also the lead plaintiff in Cobell v. Norton. Her
activity in the trust reform issue is not her first foray into
activism. She served as the treasurer of the Blackfeet Nation
and is involved in agricultural and environmental issues in her
home town of Browning, Montana, up on the eastern border of
wonderful Glacier National Park. And thank you for being here
today, Elouise, as well.
Thank you, Mr. Chairman.
Mr. Hayworth. I thank the gentleman from Montana. I thank
the illustrious Montanans who join us. The Chair would also
welcome as part of the panel Michael Jandreau, the Chairman of
the Lower Brule Sioux Tribe. We thank you for coming, Mr.
Chairman. And last in terms of introductions, but not least
because the Chair is constrained to lavish special attention on
our first witness, since he has the great and good sense to
reside in the 6th Congressional District of Arizona, that is my
long-time friend Ivan Makil, who is the President of the Salt
River Pima-Maricopa Indian Community and tireless advocate on
behalf of Native Americans and Indian Country. Mr. President,
we will let you begin with your testimony.
STATEMENT OF IVAN MAKIL, PRESIDENT, SALT RIVER PIMA-MARICOPA
INDIAN COMMUNITY
Mr. Makil. Thank you, Mr. Hayworth. I really appreciate the
opportunity to be here today, and also Ranking Member Rahall
and other members of the Committee, distinguished guests.
I am Ivan Makil, the President of Salt River Pima-Maricopa
Indian Community. We are located right in the Phoenix
metropolitan area, approximately 7,000 members, traditionally a
farming and resource-based community.
I am particularly pleased that Congressman Hayworth, whose
district, as he mentioned, does include our community, is
tasked with the responsibility of chairing this Committee,
particularly because I know that he is very familiar, and I am
impressed with the fact that many of the Committee members are
well versed with this issue. So I won't take a lot of time to
go back and discuss some of the history that I think we all are
familiar with. But certainly the complexity of managing Indian
trusts is extremely complex and certainly is something that you
can't just turn over to anybody, not anybody, at least, like
Arthur Andersen.
Before I propose my recommendation about this issue, I
really would like to re-emphasize the complexity of this topic,
because managing of these trust issues is an issue that, as has
been discussed already, is not just as simple as managing a
portfolio of stocks and bonds. It is necessary to understand
the importance of managing trust lands and that the land itself
must be managed as an asset.
It is also important to understand that this requires
recordkeeping of land ownership as well as managing all the
uses that generate revenue. Activities that take place on these
lands can rum the gamut from resource management, agriculture,
to real estate. From the tribal perspective, there is another
equally important consideration. Tribes are tied to the land
spiritually and culturally. We are inextricably connected to
it.
There is a long history to consider and fiduciary disputes
that must be resolved. Trusts to be managed not only include
tribal lands that are under the authority of the Tribal
Government but also in terms of allotted lands, which has been
discussed as well. And I could give you a lot of examples of
that, but I think there has been plenty already given.
As President for the past 12 years of my tribe, I have
dealt intimately with these issues, and as to my experience not
only as Chairman but on the advisory board, I am here to
recommend a proposed solution based on that experience. I also
have to say to you that I cannot recommend the bank trust model
that has been proposed by Secretary Norton.
I think in addition it is important to say that I have yet
to hear anything substantive as to the benefits of the proposed
model. In fact, if asked, I think tribes would tell you that
there is more that potentially could be lost with that type of
model.
You all know the issues and the relationships with the
Federal Government that we have, whether it is through
treaties, executive orders, or Federal statutes or other
regulations. The recommendation that I am proposing maintains
the role of the Bureau of Indian Affairs and improves its
effectiveness by focusing on the core issues of trust reform.
My proposal is an independent Indian trust commission. This
independent Indian trust commission follows the lines of
actually what I believe the intent of the 1994 legislation was,
in which the commission, although it was set up under the
Office of Special Trustee and an advisory board was set up, the
advisory board was set up without any authority, only in an
advisory capacity.
But this commission would develop a plan for trust reform
and could recommend legislation to Congress. This commission
would also include on the make-up of the commission tribal
leaders with experience in these areas as well as non-members
with banking, finance, and other relative experience that would
be necessary.
This would have to be established by legislation, and
members could be appointed in several different ways. I think
the most familiar way is by the President and with the approval
of Congress. It has got to be independent or at least quasi-
independent of the Department of Interior, and it has to be
able to provide transparent regulatory oversight.
This commission would also maintain control over the budget
that would be earmarked for trust reform and would include, if
necessary, an exit strategy for the commission.
I realize that my time has run out, and I will just make
those comments briefly, and just say that there are examples of
this type of commission. The FCC is one model, and also the
RTC, or Resolution Trust Commission, offered a second model.
I thank you for the time. I realize, again, that my time is
over, and I would be happy to answer any questions.
[The prepared statement of Mr. Makil follows:]
Statement of Ivan Makil, President, Salt River Pima-Maricopa Indian
Community
INTRODUCTION
Chairman Hansen, Ranking Member Rahall, members of the committee,
Secretary Norton and members of the Interior department, and
distinguished guests, I am Ivan Makil, President of the Salt River
Pima-Maricopa Indian Community. Salt River has over 7,000 members in
what has traditionally been a farming and resource-based community.
While I commend the Department for undertaking this monumental task and
putting its proposal forward, I believe I have some concrete proposals
that may better serve Indian country and the federal government.
We applaud the Committee for holding this important hearing and are
particularly gratified that Congressman Hayworth--whose district
includes our community--has been tasked with chairing part of this
hearing because of his intimate knowledge about the Indian trust reform
issue. My testimony today will focus on five main areas: (1) the
proposed restructuring plan; (2) the consultation process; (3) the
impact of the current state of affairs; (4) previous failed efforts to
reform trust; and most importantly, (5) alternative proposals.
As President of the SRPMIC for twelve consecutive years, I possess
extensive personal history, knowledge, and involvement with the lost
and mismanaged Indian trust funds. At the end of my testimony, I
respectfully offer my own recommendations to a solution that should,
once and for all, help to facilitate a successful completion of Indian
trust reform that is consistent with the federal government's trust
duties and maintains the dignity and respect that America's first
people so richly deserve.
PROPOSED RESTRUCTURING PLAN
As you know, Mr. Chairman, the proposed restructuring of the BIA is
one of the biggest issues facing Indian country, and it has sparked a
wide range of emotion throughout Indian country. Many tribal leaders
have argued vehemently against the newly proposed Bureau of Indian
Trust Assets Management (BITAM). As a positive and productive response,
many tribes have drafted a wide variety of options that would
successfully address trust reform without creating a larger federal
bureaucracy. The number of alternative options offered by tribes
demonstrates their own ability and depth in recognizing the core
problems associated with Indian trust management.
For many years, tribal leaders have specifically requested that the
Department focus on the core problems of trust asset management and to
stop making politically motivated cosmetics changes that only
exacerbate the issue. Moving organizational boxes around will not solve
the problem. Unfortunately, many lives in our tribal communities hang
in the balance. We all know that solving the fundamental problems in
the BIA trust management system is what must happen programmatically
regardless of changes in organizational structure.
Nevertheless, continuing the consultation process and congressional
hearings are an important step toward solving this terrible dilemma
that affects the very core of Indian country. I want to make it clear
that the problem of Indian trust reform has lingered on for too many
years and for too many years the sound recommendations of Tribal
leaders have fell on deaf ears. I come here today to lend a helping
hand to the members of the Committee and to the Department in solving
this growing problem.
THE CONSULTATION PROCESS
As far as the consultation process is concerned, I commend the
Department for extending the original deadline for the consultation
period. Only with continued consultation with the tribes will a
workable solution be proposed that will truly reform the trust fund
process. It is my desire to see it extended yet again to ensure that
all of Indian country has the opportunity to participate in this
important process and propose solutions. By continuing consultation,
the Department will be working in good faith and demonstrate its desire
to truly work together with Indian country.
Given the fact that Indian trust reform directly impacts almost
every Indian tribe in the country, it would make sense that any
proposal would include the input of the actual benefactors of the trust
relationship. In this regard, it is my desire to see the department
provide some much-needed guidance regarding BITAM's affect on the local
level before finalizing its proposal. I am also concerned that the
BITAM proposal doesn't address the four breaches identified in the
Cobell Court Orders. 1
---------------------------------------------------------------------------
\1\ The Secretary has no written plans for either the gather of
missing data; no written plan for the retention of IIM trust documents;
no written architectural plan; no written plan for addressing the
staffing of trust functions.
---------------------------------------------------------------------------
IMPACT OF THE CURRENT STATE OF AFFAIRS
Fortunately, as a self-governance tribe 2, we were not
adversely affected by the recent shutdown of the Department's computer
system. Through this status, we have taken over many of the services
from the federal government including our own trust accounting system.
While our system isn't perfect, we can account for trust assets and we
continue to issue landowner lease payments in an efficient and
effective manner.
---------------------------------------------------------------------------
\2\ The Tribal Self-Governance Act, P.L. 103-413
---------------------------------------------------------------------------
Our self-governance status also presents an interesting dilemma in
terms of the proposed creation of the BITAM office. With the BITAM, we
are concerned about what the impact will be on ``638 contract'' and
``self-governance'' tribes. I am concerned that the current BITAM
proposal violates both the spirit and the letter of numerous treaties,
executive orders, secretarial orders, and federal statutes and
regulations that promulgate the long standing federal policy of tribal
self-governance and self-determination. 3 I urge Congress to
impress upon the Secretary the importance of protecting our treaty and
trust obligations in developing any proposal regarding trust assets.
---------------------------------------------------------------------------
\3\ The Indian Self-determination and Education Assistance Act
(P.L. 93-638), The Indian Trust Fund Management Improvement Act of
1994, the Federal Oil and Gas Royalty Management Act of 1982, National
Indian Forest Resources Management Act of 1995, the American Indian
Agricultural Resource Management Act of 1995
---------------------------------------------------------------------------
PREVIOUS EFFORTS
As you know, Mr. Chairman, there have been many failed previous
trust reform efforts. Congress most recently enacted the Trust Reform
Act of 1994 to address the many trust management shortcomings and to
provide for effective administration going forward. The ``94 Act
created the Special Trustee for American Indians, operating within the
Department, to oversee reform efforts. It also created the Office of
Special Trustee Advisory Board. As a member of the Advisory Board to
the Special Trustee, I have a unique perspective on Indian trust fund
management because I have been working on this issue for many years.
Over the last five years, we have advised the Special Trustee and
monitored the Department's trust reform efforts. Although the advisory
committee has made some pro-active recommendations, the Special Trustee
hasn't followed through on our proposals. The creation of a new
approach may be the impetus for real reform and solutions to the lost
Indian trust funds debacle once and for all.
AN ALTERNATIVE TO TRUST REFORM
There are many sound options to the proposed BITAM office that may
be incorporated into the Department's proposal. In conjunction with the
Department, the National Congress of American Indians (NCAI), has
convened a tribal leaders task force on trust fund reform. They have
been meeting for several months now and have put together various
proposals to solve the trust reform issue. I would encourage Congress
and the Department to carefully review and debate these and other
proposals to craft the best possible solution.
I am particularly interested in a proposal that would establish an
Independent American Indian Trust Oversight Commission. In reviewing
the various proposals circulating, it has become evident that this
proposal, combined with two proposals, could create a viable regulatory
commission that would avoid the creation of additional bureaucracy.
Recommendations brought forth by the Advisory Board to the Special
Trustee, the Van Ness Feldman proposal, and the Inter Tribal Timber
proposal each have compatible components that are based on sound trust
fund reform principles.
The Independent American Indian Trust Oversight Commission would
have the following structure and purpose:
It would be established by Congressional legislation
The Commission members would be appointed by the
President and approved by Congress
It would be Independent or Quasi-Independent of the
Department of Interior
The Commission would develop a comprehensive plan for
trust reform
The Commission would recommend to Congress legislation to
place responsibility for the reformed trust system and for implementing
a reinvention of the current archaic process
The Commission would provide transparent regulatory
oversight
It would provide annual progress reports to the President
approved by the House Committee on Resources and the Senate Committee
on Indian Affairs
The Commission would have control over the $67 million
proposed by the 2003 President's budget request earmarked specifically
for Indian Trust Reform
The legislation would have a built-in sunset clause that
will dismantle the Commission once it achieves it intended purpose
The Independent American Indian Trust Oversight Commission would
act in a similar manner to the Federal Communication Commission or the
Resolution Trust Corporation and would have the authority to effectuate
real change. The Van Ness Feldman proposal provides an interesting
comparison between the success of the District of Columbia Financial
Responsibility and Management Assistance Authority and the Indian Trust
Fund Management Reform Act. Both were enacted between 1994 and 1995.
Seven years later, one was a spectacular success and the other a
miserable failure. The Van Ness Feldman proposal states that,
``...Congress and the President acted on the well established
management principle that a system that is in bad-a-shape as the D.C.
Government or the Indian trust system cannot reform itself from within.
Reform must be directed from outside and that outside entity must have
plenary authority to impose the reform.'' With input and critical
participation from tribes--the benefactors of Indian trust--such a
proposal could meet with similar success. Many of the other proposals
have merit. All of them should be examined to help craft the proposal
that will work and resolve this lingering headache for the federal
government and Indian country.
SUMMARY
Mr. Chairman, the solution of the mismanaged Indian trust funds
problem should be seen as a unique opportunity to right the wrongs of
the past and not as an attempt to dismantle the BIA. As you know, a
1998 Department of Interior report showed that there were more than
340,000 individual Indian trust fund accounts and that more than $300
million passes through the accounts each year. Tribal leaders and
members alike have lost faith in a government that was entrusted to
protect their assets. To restore this trust, we must find a solution to
this escalating and disturbing problem. The time is now, and I stand
committed to working with the Committee, the Department, and all of
Indian country to find a sound and just solution.
I believe the Department and Indian country are united in the
effort to reform the trust fund system, but we must act together to
achieve our goals. Only with a united front between Indian country and
the federal government will we be able to bring meaningful, achievable,
and necessary reform to the system. Indian country can and will work
with Congress and the Department to find the solution, but the
Department must work with us too.
In conclusion, Mr. Chairman, I commend you for holding this
important hearing on one of the most pressing issues facing Indian
country. I also thank Secretary Norton and Assistant Secretary McCaleb
for putting tribal consultation on the forefront of their agenda. For
too long, Congress and the Administration have let this issue drag on.
With this bold initiative, Indian country is committed now, more than
ever, to finding a solution to this pressing problem. Again, I
encourage the Department to extend the consultation period to ensure
that all tribes are able to participate in this important process and
propose viable solutions in conjunction with the Department's efforts.
I also hope that the Department will carefully review and scrutinize
some of the alternative proposals to BITAM in the hopes of crafting the
best possible solution for Indian country. I remain committed to
helping Congress and the Department in this regard.
Thank you again, Mr. Chairman for allowing me to testify before the
committee today. I would be happy to remain here to answer any
questions you or the other committee members may have.
______
Mr. Hayworth. Thank you very much, President Makil. And the
Chair would remind the witnesses, we do appreciate the effort
to include these remarks within the 5-minute window, and even
taking into account that sometimes we go a little bit over, the
Chair will not try to cut things off too promptly.
Just one another note. Of course, your full testimony has
been submitted and will be made part of the record, so it gives
us a chance to have the synopsis of the bulk of your testimony.
And we are very appreciate for that.
And, with that, we turn now to Chairman Matt. Welcome.
STATEMENT OF D. FRED MATT, CHAIRMAN, THE CONFEDERATED SALISH
AND KOOTENAI TRIBES OF THE FLATHEAD NATION
Mr. Matt. Thank you, and I also will try to be brief,
because, as you pointed out, we have a more detailed copy of
our testimony for you to read at your leisure.
First of all, I would like to recognize the Committee for
taking the time to have us here, and you as Chairman, Mr.
Hayworth, and Congressman Rahall and the other members, we
really appreciate the time, as well as our Congressman from
Montana, Denny. We really appreciate the honor and the
opportunity to provide such important information for you to
help you decipher what is going on in Indian Country. And I
will try to be brief.
Congressman Rehberg described our reservation a little bit.
We have 1.3 million acres. We are in the northwestern part of
the State, and it is literally God's country. When you pray at
night, it is a local call. And we have 7,000 members, and I
really don't even know where to start. Like I said, I am glad
that we have a written statement, and I am glad most of us do,
because it is such an important issue to Indian Country that I
don't even know where to start.
But I do feel this: You know, I have spent a week here, and
I have spent some time running the Mall. I try to do exercise
because that extra 20 pounds is still hanging on. And I pray
during the time that I do my exercise, and I am thinking, What
can I say that will help all of Indian Country, because we are
so different. We are so different in the ways we do business.
What we want to do at Flathead is try to convey just a
little part of what we do there, and we are very proud of it
because we have taken upon ourselves some of those
responsibilities and some of those things that the BIA has
traditionally done, and I think we will point out through my
presentation that it is working. The accounting and all those
other things is working.
But I also feel like that the train has left the station
and we are trying to get on it somewhere. I feel that from the
rest of our tribal leaders. You know, we rally--there are
probably more tribal leaders in town than there was at the
Battle of Little Big Horn. And also, you know, I just can't--I
feel like that I am looking at you there, you as who is going
to bail us out of this, who is going to save us. And I feel
like it is the fourth quarter, and I feel like that we are
sitting back here--you might even call us the Washington
Redskins. And we are going to throw this Hail Mary pass to you,
and I hope you catch that ball, and I hope you do something for
us as Indian Country.
I am really impressed with what knowledge is up there. You
go from folks who have got 27 years of experience that has
represented this Nation. I really appreciate that experience
because, believe me, if I spend 1 week in Washington, D.C.,
that is 6 days too long.
But, with that, now I want to acknowledge one person that
is in the room that means a lot to us in Montana, and he is
here for a very specific reason. I would like to acknowledge
Earl Old Chief. He is the chief of the Blackfeet Nation, and he
is--Earl, would you please stand?
Didn't I say Earl Old Person? OK.
Earl has been around for 30 years, and he has represented
his people for 30 years, and he has been here many times. And
not only is Earl a respected leader, but he is also named as a
plaintiff in the class action lawsuit by the Department of
Interior.
It is important that all parties involved realize why Earl
is here today. He is very concerned, as I am, that the
litigation that he is a part of may well undermine the very
principles of tribal sovereignty, and that he has fought so
hard for to protect for so many years.
I appreciate again the Committee holding this hearing and
asking the views of Indian people on the proposed
reorganization of BIA. For many years, Salish and Kootenai
Tribe knew that the BIA management of trust resources and other
trust programs were broken. And we ourselves stated the process
and made some decisions to do it ourselves. My feeling is we
can do it and we can do a good job of it. And I think we have
proven that.
We have compacted or contracted virtually every function of
the BIA. We have a superintendent that we keep at the agency as
a signature authority. We call him the Maytag man. But it is
just to make a point, that we have--we have repaired dams on--
we have one of the largest irrigation projects in the State of
Montana--is my time already up? And we have a court system, we
have law enforcement. And we manage our IIM accounts. We have a
utility there that services 2,200 Indian and non-Indian
recipients. And we want a health care system.
It goes on and on, and we are very proud of that, but
knowing very well that each tribe that sits behind me and that
is out there has their own way of doing business. I am not up
here to say that that is the only way. But I just think bigger
is not better. I think we, if you ask, if you give us the
opportunity to offer suggestions, offer comments, offer our
solutions that we have on the ground dealt with day in and day
out, we have answers for you. We have professional staff.
There have been reports that have been referred to, and it
is made available to all of you to go through. They have spent
20-some-odd meetings, and there is some good stuff here. Why
reinvent the wheel? Why don't you just borrow some of the good
suggestions that are in these reports and go forward? Why
create a whole new agency that might know something about
balancing a checkbook, but doesn't necessarily know anything
about trust responsibility when it comes to timber, as you
mentioned, and other natural resources.
So, with that, again, I apologize. My staff that comes with
me, Anna Sorel and Randall McDonald, they are probably thinking
that I once again have gone long-winded. But I think the real
fruit of what I have to say today is in our prepared statement
for the record.
[The prepared statement of Mr. Matt follows:]
Statement of D. Fred Matt, Chairman, Confederated Salish and Kootenai
Tribes (CSKT) of the Flathead Nation
Chairman Hanson, Ranking Member Rahall and honored Members of the
House Resources Committee, my name is Fred Matt, and I am Chairman of
the Confederated Salish and Kootenai Tribes (CSKT) of the Flathead
Nation. On behalf of my Tribal Council, I am pleased to provide these
comments regarding the Department of the Interior's proposed
reorganization of the Bureau of Indian Affairs for the purposes of
Trust Reform. My comments will focus on the potential impact the
proposed reorganization may have on tribes like CSKT that have
exercised the opportunities afforded them by P.L. 93-638 the Indian
Self-Determination and Education Assistance Act. I will conclude my
testimony with an alternate proposal for reorganization, which
addresses the concerns I have identified.
CSKT joins with other Tribes in recognizing that Individual Indian
Money (IIM) trust fund accounts have been historically mismanaged. For
many years, we have called for a complete reconciliation of trust fund
accounts and continue to make that request so that there may finally be
justice for the over 300,000 IIM accountholders. We look to the Cobell
v. Norton court case to ensure that accountholders' rights are
protected, to the fullest extent of the law. However, the future
management of Indian (including tribal and individual Indian) financial
trust accounts and trust asset management must be determined through
the thoughtful development of applicable business standards and
consultation with Tribes, not as a response to an on-going court case.
Many tribes, mine included, have for many years operated BIA programs
and through this experience can provide meaningful input toward
effective and long-standing trust management reform. The Department of
the Interior's proposal to create the Bureau of Indian Trust Asset
Management (BITAM) does not achieve this result. It is reform for the
sake of reform and will create far more problems than it will solve.
Over a decade ago, my Tribal Council recognized that one of the
primary responsibilities of tribal government was to ensure tribal
self-sufficiency. Our Tribal Council has held a steadfast commitment
that it is the responsibility of our government to understand the needs
of our people, and further, to ensure the needs of our Tribes and
people are met. This approach is the realization of the principles of
self-determination and self-governance, and results in programs that
match my people's needs in a way that programs designed in Washington
D.C. could never do. The CSKT commitment to Tribal self-sufficiency is
also fulfilled through our efforts in self-governance. We have
fulfilled this responsibility by exercising the opportunities provided
in Public Law 93-638, the Indian Self-Determination and Education
Assistance Act of 1975, as amended. CSKT is one of the original ten
tribes selected to participate in the Self-Governance Demonstration
Project of the DOI. Since that time, we assumed the management and
operation of all of the services, programs and functions previously
provided by the Bureau of Indian Affairs at the Flathead Agency except
for the irrigation division of the Flathead Indian Irrigation Project
(FIIP). We are extremely proud of our P.L. 93-638 contract for
operation of Mission Valley Power, the power division of FIIP that
provides electricity to over 22,000 Indian and non-Indian consumers
throughout the reservation area. Under our administration, MVP has kept
power rates low and has won numerous management awards.
CSKT has also assumed the management of the BIA Real Estate
Services including appraisals. Although this is clearly a trust
function, we have developed a streamlined approach for the Tribes to
provide this function. Our Tribal appraiser produces appraisals for
review and approval by the federal official for the Region. The
Regional official reviews the appraisal to ensure that all federal
standards and requirements are met. Once the official is confident the
appraisal is correct, he then signs off on it.
There are many other examples of our quality management of federal
programs. We operate the Land Titles and Records Office (and are one of
the few tribes in the country to do so), the entire Indian Health
Service health delivery system for nearly 10,000 beneficiaries and
provide law enforcement within the exterior boundaries of our 1.3
million acre reservation that includes portions of four Montana
counties.
Unlike DOI accounts managed by the Federal Government, each year
our Tribes' accounting management undergoes an intensive external
financial audit according to standards developed by the Federal
government. I am proud to report our Tribes' audits over the past years
are clean with no material weaknesses identified. Furthermore, each
year the Department of the Interior's Office of American Indian Trust
conducts a trust evaluation on all BIA programs our Tribes have
assumed. Again, I am proud to report our Tribes' operation meets or
exceeds the standards set forth in their evaluation.
The proposed DOI BITAM reorganization of the trust functions,
including the transfer of all trust programs such as natural resource
and realty programs, is alarming because it poses a threat to our
Tribes' ability to manage and operate programs. Our experience is that
it is extremely difficult, if not impossible to access programs not
located in the BIA (which will include programs in BITAM if
transferred). It is critical to recognize that P.L. 93-638 applies to
BIA programs differently than it applies to DOI programs located
outside the BIA, which are referred to as ``non-BIA programs.'' We have
experienced that non-BIA programs are zealously guarded by the agencies
operating them. The effect is that Tribes have been stymied in their
endeavors to manage federal functions not located in the BIA. This is
demonstrated by the few number of non-BIA Self-Governance agreements
successfully negotiated by Tribes and DOI.
For example, CSKT has attempted to manage two programs located
outside the BIA. The first is the National Bison Range. It is a refuge
managed by DOI U.S. Fish and Wildlife Service. Under federal
regulation, for a Tribe to assume operation of a non-BIA program, the
tribe must demonstrate a geographic, historic and cultural connection.
In our case, CSKT clearly exceeds the burden required by the federal
regulation. First, the refuge is completely located in the heart of the
Reservation, on land taken from the Tribes after the reservation was
established. Second, history credits our late Chairman Michael T.
Pablo's family with saving the buffalo from extinction as they raised
the herd of buffalo eventually bought by the United States government
as the foundation stock on the National Bison Range. And finally, there
is clear cultural connection between bison and tribes. Yet our effort
to manage the National Bison Range under a Self-Governance agreement,
which began immediately after the Tribal Self-Governance Act of 1994
(Title IV of 93-638) was enacted, has been continually thwarted by DOI.
Another CSKT experience in assuming operation of a non-BIA program
was the Financial Trust Services (FTS) including the Individual Indian
Monies Program (IIM) from the Office of Trust Fund Management (OTFM).
Although the FTS program is clearly for the benefit of Indian people
and formerly administered in the BIA, it is now considered a non-BIA
program and guided by the federal regulations for non-BIA programs.
Unlike Title IV regulations for the BIA, the Title IV non-BIA
regulations allow the bureaucracy to determine if and how a program
will transfer to a Tribe. Unfortunately when the decision arises to
transfer a federal program to the Tribes, it is the federal government
that retains final authority, not the Tribes. Faced with the non-BIA
regulations in negotiating, CSKT decided to set aside important
principles of Self-Governance in order to reach an agreement to operate
the FTS program locally when it became clear that OTFM would not
otherwise agree.
Since the first agreement was signed between CSKT and OTFM to
operate the IIM program, there has been a continual erosion of tribal
opportunity to manage the program. During the first years of operation,
our IIM program was able to make changes, such as address changes to
the accounts. Now, all changes, including simple address changes, must
be forwarded to Albuquerque, NM for processing at a central location.
Changes to accounts that require the signature of a federal official
that formerly were signed off by the Agency superintendent must now be
sent to Portland, OR and then to Albuquerque, NM. CSKT has become a
paper-processing program and any meaningful work has been transferred
to the OTFM Central Office. CSKT has every reason to believe the same
thing or worse will occur should BITAM be implemented. In the name of
trust reform, programs will be centralized instead of being delegated
to the local level where we have expertise in implementation. This
would be devastating to our Tribes and the effective tribal operation
we have put in place.
Nowhere in Secretary Norton's proposal to create BITAM are these
concerns addressed. Representatives from my Tribal Council have
attended four of the consultation meetings the DOI has conducted on
this proposal. Each time the tribes in attendance have asked DOI to
explain the impact this proposal will have on tribal contracting or
compacting of BIA programs, but to no avail. There is no answer because
when the proposal was made this critically important question, among so
many important issues, was not considered. This is not acceptable.
Assurance must be made that federal regulations governing BIA programs
for contracting and compacting purposes will remain the same. Tribes
have not created this problem and should not be punished for DOI's
mismanagement. The Cobell case should not be used by either the
plaintiffs or the Department to gut the great legacy left by President
Richard Nixon to the Indian people: the Indian Self-Determination Act.
There are going to be major problems between the BITAM and the BIA
and Indian tribes if this reorganization is allowed to proceed. There
will be finger pointing between the BITAM and the BIA unless the BITAM
is given almost all jurisdiction now retained by the BIA. If that is
the plan, why not simply clean up the BIA? Merely transferring programs
from one box to another will not lead to substantive change.
I have explained our Tribes' self-governance experience to
demonstrate the capability of tribes to manage trust programs to a high
standard and this must be allowed to continue.
As the Committee has requested, the Tribes have developed an
alternate proposal to BITAM even if it might be somewhat premature
since BITAM has generated more questions than answers. CSKT submits the
following as one option available to meet the objectives set forth in
the EDS Report commissioned by the DOI including the primary objective
to consolidate trust functions under a single individual for
accountability purposes. Our proposal uses the final Report of the
Joint Tribal / DOI / BIA Advisory Task Force on Bureau of Indian
Affairs (BIA) Reorganization, which was chartered by Mr. Manual Lujan,
Jr., Secretary of the Interior on December 20, 1990. The final Report
of the Advisory Council was submitted in August 1994. The Task Force
included three tribal representatives from the 12 BIA areas, two
representatives from the Department of the Interior and five BIA
employees. The Task Force met 22 times over a four-year period and
throughout the United States. At each meeting, they made an effort to
incorporate the views of the tribes of the local area into their final
recommendations. All meetings were open to any tribal representative,
regardless of whether they were officially on the Task Force.
We propose, as the Task Force's final Report recommended, the
creation of three separate tiers in the BIA. The first tier is the
Office of the Assistant Secretary including a number of administrative
support offices. It is in this tier that uniform standards would be
developed for all trust functions. The second tier would combine the
current Central Office functions and the regional offices that would be
restructured to provide integrated operational and technical services.
To meet the objectives of trust reform, CSKT recommends this tier have
three Branches, each headed by a Commissioner who would be nominated by
the President and approved by the United States Senate to ensure
continued Congressional involvement in this issue. The Branches would
have the following responsibilities: The first Branch would be
responsible for the Financial Trust Accounting. The second Branch would
be responsible for the management of tangible trust assets that
generate revenue for the Tribes and individual allottees, such as
natural resources. The third Branch would manage all remaining programs
within the BIA. Most importantly, this approach consolidates the
financial accountability under a single high-level individual, the
Assistant Secretary of Indian Affairs. It is in this tier that the
monitoring and evaluation of implementation of uniform standards would
occur. The third tier would be the agency / field office level where
the operations according to the uniform standards would be delivered,
with proper delegations of authority to fulfill the trust
responsibilities of United States government.
The foundation of our proposed organization is the development of
uniform standards for the delivery of trust standards. The tribes and
DOI would mutually develop these standards but in accordance with trust
law principles while taking into account the uniqueness of tribal trust
law and cultural concerns. All BIA services would be provided according
to these standards regardless of whether they were provided by the BIA
or contracted or compacted by tribes. Monitoring and financial auditing
will be essential components of the new delivery system. I have
attached an organizational proposal for your consideration.
Thank you for allowing me to testify and for understanding the
perspective of the Confederated Salish and Kootenai Tribes of the
Flathead Nation.
______
[GRAPHIC] [TIFF OMITTED] T7526.002
Mr. Hayworth. Thank you, Mr. Chairman. I wouldn't worry too
much about that. That seems to be kind of a common affliction
in Washington, D.C., to have a bit of verbosity. I know whereof
you speak, so I appreciate the spirit in which you offer those
remarks.
Chairman Jandreau, welcome. We look forward to hearing your
thoughts.
STATEMENT OF MICHAEL JANDREAU, CHAIRMAN, LOWER BRULE SIOUX
TRIBE
Mr. Jandreau. I thought he wasn't going to share this mike
with me.
Mr. Hayworth, Ranking Member Rahall, it is a pleasure that
I come here before you today. My name is Michael Jandreau. I am
the Chairman of the Lower Brule Sioux Tribe, and I am Chairman
of the United Sioux Tribes. I am also a member of the task
force that has been recently created. I also was a part of the
original task force for the reorganization of the Bureau back
in 1990, in that era.
I have a statement that has been submitted to the
Committee, so I will speak of some things that affect me and
affect our region of the country.
I spent a weekend with a group of people who were very
intensely concerned about the problem that we have before us. I
had spent the previous week with our delegation, our entire
delegation, attempting to get a seat here to speak to you
today. On Monday morning, I was called and told my only living
blood uncle had passed away, and my family wanted me back home
because I am one of the older ones in the family.
Because of the difficulty, I wasn't able to go right away,
and so, you know, preparations were made for me to be able to
leave today and to return home.
My uncle also served as a chairman of our tribe and as a
council member. He dealt with many of the things that I find
myself dealing with today.
My statement will talk to you about our concerns, about the
many attempts to do things with the Bureau of Indian Affairs,
to make services more appropriate and more accessible to our
people.
My statement will also tell you that we don't need
Committees making decisions with the Office of the Special
Trustee or anyone else about the future of Indian Country.
My statement will also tell you about the hardships that
our people are enduring, in the Aberdeen area, the highest
death rate, where diabetes and alcoholism is prevalent.
My statement will tell you that we want to be a part of the
process to deliver services, that we want to be a part of the
process to correct the wrongs, to correct the inadequacies.
My statement will tell you that we want the Bureau of
Indian Affairs left intact, that we feel under the treaties
that were made with most of the tribes of my area, that those
treaties created this trust obligation.
We know that the treaties have not been honored to the
extent that they have been passed. But we know that we still
believe in the content.
My statement will tell you that our tribes are trying to
survive. Our tribes are dealing with those resources. On an
individual level, my particular tribe has the largest
irrigation project. We have a full-blown hunting and fishing
project. We are doing things with the computer industry to
create jobs. We are trying to take care of ourselves. We
believe in what we are doing, but we also believe not only in
the real but the moral responsibility that this country owes to
us, not from the point of being just a victim, but being a
victim whose real desire is to make life better for those
people on our reservation and reservations.
Again, thank you very much for giving me this opportunity.
[The prepared statement of Mr. Jandreau follows:]
Statement of Michael Jandreau, Chairman, Lower Brule Sioux Tribe
I would like to thank you, Chairman Hansen, and Ranking Member
Rahall for providing me with the opportunity to testify before this
committee on this extremely important issue. My name is Michael
Jandreau and I am the chairman of the Lower Brule Sioux Tribe in South
Dakota. I am here today representing the Great Plains Region, which
include the 16 tribes in North Dakota, South Dakota, and Nebraska.
Indian Country is facing many pressing issues that would be
excellent topics for a Congressional hearing. Indian health care is one
example. The Great Plains Region leads the country in almost every
negative health statistic available. We have the lowest life expectancy
of any group in the country, and alcoholism and diabetes are ravaging
our communities. There are also pressing economic development needs.
According to 2000 Census figures, South Dakota Indian Reservations are
home to five of the poorest counties per capita in the entire United
States. We have an average unemployment rate of 75% on reservations
throughout the Great Plains.
While these are issues that we look forward to working with this
committee to address, we are here today discussing BIA reorganization,
trust reform, and our concern about losing the already scarce resources
we have available to us at the local government level.
The issues of trust reform and reorganization within the BIA are
nothing new to us in Indian Country. We have endured many efforts--some
well intentioned and some clearly not--to fix, reform, adjust, improve,
streamline, downsize, and even terminate the BIA and its trust
activities. We have endured these efforts through both Republican and
Democratic administrations. Unfortunately, they have rarely sought
meaningful involvement from tribal leadership, nor recognized the
federal government's treaty obligations to tribes. These are both
critical if we hope to find a workable solution to this very real
problem.
The Bush Administration recently announced the latest effort to
reorganize these structures and shuffle responsibilities--this one
mandated by a federal court. The Administration responded to the
demands of the court by quickly drafting a plan to fix the trust mess.
However, it did so without consulting the very people who would be
affected by such a massive restructuring--Indians. Not surprisingly,
this proposal has been met with concern, suspicion, fear, and even
outrage from Indian people across the country. BIA reorganization has
become the most important issue on our reservations.
As in the past, this proposal did not seek early input from elected
Indian leaders. In fact, we were not consulted until the Administration
had devised and released a plan. It was only in response to our
unanimous rejection that a consultation process was devised and
instituted.
Open listening sessions have been held across the country, and now
a Tribal Task Force has been formed to meet with Interior Department
officials to discuss trust reform and the reorganization of the BIA. I
sit on that task force. This should have been the first step in the
process, not the last.
I am very concerned because the Court Monitor, Joseph S. Keiffer,
III, in his most recent report to the U.S. District Court for the
District of Columbia, stated that the Office of Indian Trust Transition
(OITT) will continue to pursue trust reform activities while the
consultation process continues. How can the Department of Interior be
meeting with tribal leaders to discuss the reform of the BIA, while the
OITT is simultaneously working implement trust reform measures that
have not been (and will not be) discussed with tribal leaders? Mr.
Chairman, if this is consultation then we are doomed even before we
start.
Another group, the Special Trustees Advisory Board has recommended
and supported the creation of an entirely new agency to be solely
responsible to manage the federal government's ``trust
responsibilities.'' It recommends that the new agency provide a
historical accounting of assets of individual Indians and tribes, data
cleanup and future management of these activities out side the BIA.
While these are not unimportant steps, they miss the bigger
picture. Tribal leaders have stressed that trust responsibility goes
much deeper than finding and implementing certain management tools. The
federal government must act in light of the moral obligation to tribes
that it has voluntarily assumed. This obligation is reinforced by the
fact that the federal government signed treaties with sovereign Indian
tribal governments, not individual Indians or members of any advisory
board. During the listening sessions and other dialog, this strong
belief has resonated throughout each conversation that tribal leaders
have with the administration and Congress.
If we want a solution that works, I feel all of the OITT's ongoing
activity must be stopped. Furthermore, it is not enough that a plan
simply be agreed to or endorsed by the Special Trustee's Advisory
Board. Elected representatives of tribal nations must be consulted
throughout the entire process, and their ideas must be incorporated
into any solution. Without this, we will end up with another reform
attempt that costs taxpayers millions of dollars, undermines local
tribal self-determination, and does nothing to solve the problem. Let's
not forget that we are here today because similar reform attempts have
failed in the past.
It is no secret that the federal government has failed in its
mission to correctly manage the assets of our Indian people. We need an
accountable entity that will find a solution and resolve the past
mismanagement problems. But any effort to find a solution should not be
at the expense of Indian people across this country. The lives of our
people are difficult on a good day. Our people must deal with poverty,
alcoholism, shortened life expectancy, inadequate housing, lack of
transportation, and other challenges. They look to tribal governments
for assistance, and we look to all levels of the federal government for
the resources we need to deal effectively with these problems. We will
only be successful if the lives of these people are bettered by the
outcome of this process. We are very concerned that taking
responsibilities, manpower, authority, prestige and massive resources
away from the BIA, while creating an entirely new, expensive, out of
reach bureaucracy, does nothing to better the lives of our Indian
people back home on our reservations.
For these reasons, we cannot support the idea of stripping the
``trust responsibilities'' from the BIA to create a new agency. For
Indian people, the BIA is synonymous with trust responsibility. We know
that trust reform management must be reorganized and consolidated under
one entity, but that entity should remain under one assistant secretary
within the BIA. This will drive a solution to the problem, but will not
pillage the resources that tribal governments need to govern
effectively and provide efficient services to their people.
You cannot take the heart out of a man and expect him to live. If
you take away the ``trust'' then we, as Indian people, will eventually
die. That is how we are viewing the reorganization plan by this
Administration. It takes our elders back to that dark time prior to the
Reorganization Act of 1934, when their land and assets were
disappearing because the government was not upholding its treaty
obligations. It is our hope that this administration does not seek to
destroy the reservation system as we know it and terminate of their
treaty responsibilities to tribal governments. I stand ready to work
with this committee and with all parties who are interested in finding
a solution to this problem that will help those who need it most--
Indian people.
Thank you and I am ready to answer any questions that the committee
may have.
______
Mr. Hayworth. Chairman Jandreau, we thank you very much for
your testimony here today.
Now we turn to our friend, Congressman Rehberg's
constituent, Ms. Cobell. Welcome once again.
STATEMENT OF ELOUISE COBELL, IIM TRUST BENEFICIARY
Ms. Cobell. Thank you for this opportunity to address the
Committee on the issue of reform of the Individual Indian
Monies, and I would like to state at the outset this is
different from the tribal trust monies.
I would also like to thank Congressman Rehberg for that
wonderful introduction, and I would also like to recognize
members of my tribe that are here with me today: Chairman Old
Person, Councilman James Sankador, and Councilman Irvin
Carlson.
The history of mismanagement of the IIM trust is long and
tortured, but it boils down to three must-do's: The IIM trust
system must be fixed; the IIM beneficiaries must be provided an
accounting; restitution must be made. The true trust reform
will require a restatement of individual Indian trusts. More
than $100 billion in trust deposits, interest, and accruals
remain unaccounted for. A senior trust official testified last
month in a court, stating that not yet have the Department of
Interior been at the starting gate as far as it goes for an
accounting.
Trust funds are not a handout or an entitlement program. It
is very important to keep in mind that this is our money--
revenue from leases for oil, gas, drilling, grazing, logging,
mineral extractions on Indian lands. This individual Indian
trust was devised by the U.S. Government and imposed on Indian
peoples more than a century ago. As trustee, the United States
and each branch of the Federal Government has the highest
legal, fiduciary responsibility to manage the individual Indian
trust in a professional manner, exclusively for the benefit of
individual Indian trust beneficiaries.
Unfortunately, this has been and remains a severely broken
trust. Hundreds of thousands of American citizens, the
individual Indian trust beneficiaries, have won decisively at
every stage of our litigation. Now we are in the middle of a
contempt trial for Secretary Norton and Assistant Secretary of
Indian Affairs Neal McCaleb for violating court orders and for
perpetuating a fraud on the court. I have no doubt that they
will be held in contempt. Meanwhile, tens of billions of
dollars have been appropriated by this Congress to defend the
fraud, deceit, and malfeasance of the Interior Secretary and
the Treasury Secretary.
Only yesterday the judge chastised Secretary Norton for her
totally improper request to circumvent a court order in order
to try to provide confidential financial information to this
Committee. The judge said, ``Secretary Norton has demonstrated
once again her total inability to understand the role of a
trustee in relationship to a beneficiary by seeking release to
Congress, knowing that it would be made public, the
confidential financial information of these beneficiaries.'' I
certainly agree with Congressman Rahall that nobody of this
Committee would like to have all their financial transactions
provided to the general public.
Despite being ordered by Congress and the courts to reform
the trust and provide a historical accounting, testimony in the
contempt trial going on now shows that the Secretary of
Interior has done nothing--nothing--to comply.
The administration's mindless battle to prolong this case
in the face of certain defeat is an indefensible waste of
judicial resources and an assault to the Native Americans,
taxpayers, and anybody with integrity.
Mr. Chairman, the individual Indian trust beneficiaries
have asked Judge Lamberth to strip control of the trust away
from the Secretary of Interior and place it in the temporary
hands of a receiver. The bottom line is that the Bush
administration is under a court order to account for more than
$100 billion in individual Indian trust monies and as utterly
refused to do so.
Judge Lamberth has appointed both a special master, Alan
Balaran, and a court monitor, Joseph S. Kieffer III, to help
force compliance with the court orders and to assess Interior's
true progress on trust reform and the validity of its quarterly
reports to the court. Four scathing reports by the court
monitor formed the basis of four contempt charges against
Norton and McCaleb. A separate report by the special master on
the utter lack of computer security for IIM accounting data let
the fifth court of contempt. Altogether, Mr. Kieffer has issued
six reports that amount to a searing indictment of Secretary
Norton, Secretary O'Neill, and Attorney General Ashcroft in
this matter.
Secretary Norton and her inner circle of senior officials
have now proposed a drastic reorganization of trust
responsibility into a new Bureau of Indian Trust Asset
Management. Because she has done this so late in the day and
suddenly and without proper consultation with tribes, as
required by law, her actions appear to be a desperate attempt
to stave off contempt. The proposal has met with very strong
opposition throughout Indian Country. Among its flaws, it would
merge the tribal trust with the IIM trust under one entity,
ignoring the trusts' two distinctly different functions,
constituencies, and histories. This plan will undermine not
protect tribal sovereignty. It will violate IIM account
holders' own direct relationship with the Federal Government,
established by law.
The most critical defect in the Secretary's proposal is
that it would leave the trust in the Interior control at the
mercy of the same inept managers. Mr. Chairman, it is our hope
that this Committee and Congress will terminate all
appropriations needed by Interior Secretary, the Treasury
Secretary, and Attorney General to continue their bad-faith
legal defense. Instead, we ask you to support the individual
Indian trust beneficiaries' request for appointment of a
receiver under the supervision of the judiciary as the only
rational solution for the Government to fix individual Indian
Trusts. Congress has appropriated more than $614 million for
trust reform since 1996, and it has gotten virtually nothing--
no accounting of individual Indian trust monies, no
rehabilitation of a woeful system, no improvements in
information technology.
As the court monitor stated, ``Who within the Department of
Interior will hold these officials accountable for past and
present harm caused to the IIM account holders for their
unprofessional conduct and misleading reports that covered up
and hid the most serious of their failures?'' Apparently no
one, because they remain in leadership positions, involved with
trust operations, and related management and legal activities,
or have moved on to equivalent senior positions within the
Department of Interior.
I believe strongly that further appropriations for trust
reform should be fenced in to be used by a receiver and not the
failed programs of the past defense of the indefensible
litigation. The individual Indian trust should be put in the
intensive care of a receiver supervised by Judge Lamberth until
it has been rehabilitated fully and restored to health.
In summary, instead of underwriting non-existent trust
reform, a skilled trustee for individual Indian trust--
protected from politics and funded with permanent and
indefinite appropriations--could hire proficient managers
desperately needed to ensure prudent management of the multi-
billion dollar trust. The goal here is simple: Stop playing
politics with our money and our people.
Our litigation has exposed an ugly story about arrogance
and ineptness. But with the help of this Committee, we can
begin to write a new chapter. I appreciate this chance to
testify before you.
[The prepared statement of Ms. Cobell follows:]
Statement of Elouise Cobell, IIM Trust Beneficiary
Thank you, Mr. Chairman, for this opportunity to address the
Committee on the issue of reform of the Individual Indian Monies (IIM)
trust.
The history of mismanagement of the IIM trust is long and tortured,
but it boils down to three ``must-do's'':
The IIM trust system must be fixed. The Secretary of the
Interior has ignored the will of Congress and misled Congress for
decades. Since December 1996, the Interior Secretary has ignored orders
entered by Judge Royce C. Lamberth of the U.S. District Court for the
District of Columbia. Nothing has changed. Since the Interior Secretary
continues to breach the trust duties owed by the United States
government to individual Indian trust beneficiaries and Congress
clearly is unable to compel an obdurate member of the President's
Cabinet to obey the law and discharge the trust duties conferred on her
by Congress, it is time for Judge Lamberth, with the support of
Congress, to place the IIM trust in receivership.
The IIM beneficiaries must be provided an accounting.
Reportedly, at least $500 million a year in trust revenues is generated
from individual Indian-owned lands. Where is the money? The Interior
Secretary has demonstrated through the fraud she has perpetrated on the
United States District Court and the United States Court of Appeals
that she no longer should be trusted to manage or account for
Individual Indian Trust funds.
Restitution must be made. True trust reform will require
a re-statement of the Individual Indian Trust. More than $100 billion
in trust deposits, interest and accruals remains unaccounted for. We
hope that this year, Judge Lamberth will set a trial date to determine
the full amount due to the individual Indian trust beneficiaries.
Mr. Chairman, the IIM trust is supposed to be the mechanism by
which revenues from Indian-owned lands throughout the Western states
are collected and distributed to approximately 500,000 current
individual Indian trust beneficiaries. This trust is a vital lifeline
for Native Americans, many of whom are among the poorest people in this
country. Where I live, in Glacier County, Montana, the home of the
Blackfeet Nation and one of the 25 poorest counties in the United
States, I can tell you that many people depend on these payments for
the bare necessities of life. These trust checks are not a luxury.
Trust funds are not a handout or an entitlement program. It is very
important to keep in mind that this is our money--revenue from leases
for oil and gas drilling, grazing, logging and mineral extraction on
Indian lands. This Individual Indian Trust was devised by the United
States government and imposed on Indian peoples more than a century
ago. As trustee, the United States and each branch of the federal
government has the highest legal and fiduciary responsibility to manage
the Individual Indian Trust in a scrupulously professional manner,
exclusively for the benefit of Individual Indian Trust beneficiaries.
Unfortunately--as you and many of the members of this Committee are
well aware, Mr. Chairman--this has been, and remains, a severely broken
trust. The mismanagement of the Individual Indian Trust by the United
States government for more than 120 years is a national disgrace. The
refusal of the Executive Branch to fix it is appalling. The failure of
Congress to act decisively to hold the Interior Secretary accountable
for her malfeasance is disturbing and indefensible. Since we initiated
class action litigation in 1996 to enforce the trust obligations owed
by the United States to individual Indian trust beneficiaries, I have
said many times to our legal team that the government's bad faith and
misconduct simply cannot get any worse. And each time I've been wrong.
It gets worse and worse and worse--in spite of humiliating courtroom
defeats, in spite of scathing reports by court-appointed watchdogs and
the government's own consultants and experts, in spite of shameful news
coverage and editorials in the media, and in spite of repeated warnings
and admonitions from the Congress. The Interior and Treasury
Secretaries' malfeasance strains the limits of our language. The courts
and Congress have used some of the strongest rhetoric I have ever seen
to describe the injustice being done to the individual Indian trust
beneficiaries, and still the Secretary of the Interior, the Secretary
of the Treasury and the Attorney General fight on against us and defend
the legally and morally indefensible. Why? Where has Congress been
while this mugging has gone on for nearly six years a few blocks away
from this hearing room? Where is the outrage from this body? Why has
Congress turned its back on Indian people again?
Mr. Chairman, I would like to make this clear at the outset to the
members of the Committee: Hundreds of thousands of American citizens--
the individual Indian trust beneficiaries--have won decisively at every
stage of this litigation. More than two years ago--in December 1999--we
won a landmark decision at the U.S. District Court. The Justice
Department appealed that decision, and we won unanimously at the
appellate level a year ago--in February 2001. Two members of President
Clinton's Cabinet--Messrs. Rubin and Babbitt--were held in contempt of
court in February 1999 for violating court orders and covering up their
violations, and the taxpayers paid their $630,000 fine. Now we are in
the middle of a contempt trial for Secretary Norton and Assistant
Secretary for Indian Affairs Neal McCaleb for violating court orders
and for perpetrating a fraud on the court, and I have no doubt that
they, too, will be held in contempt. Tens of millions of dollars have
been appropriated by this Congress to defend the fraud, deceit and
malfeasance of the Interior Secretary and the Treasury Secretary.
Judge Lamberth already has ruled that the Secretary's abject
failure to provide even minimal computer security protection for
individual Indian trust data and trust funds is contemptible on its
face. She also faces charges of failing to begin to provide an
historical accounting to the individual Indian trust beneficiaries
(more than seven years after Congress ordered them to do so and more
than two years after Judge Lamberth ordered them to do so), and
submitting false report after false report to the court. Despite being
ordered by Congress and the courts to reform the trust and provide the
historical accounting, testimony in the contempt trial going on now
shows that the Secretary of the Interior has done nothing--nothing--to
comply. The Administration's mindless battle to prolong this case--in
the face of certain defeat--is an indefensible waste of judicial
resources and an insult to both Native Americans, taxpayers and anyone
with integrity.
Mr. Chairman, the individual Indian trust beneficiaries have asked
Judge Lamberth to strip control of the trust away from the Secretary of
the Interior and place it temporarily in the hands of a receiver. If
Judge Lamberth finds Secretary Norton in contempt, as we hope he will,
it will clear the way for the judge to do just that. The judge has said
in court recently that he is proceeding carefully in this contempt
trial--giving the government all the rope it wants--because no court
has put an agency of the Executive Branch into receivership the history
of this nation. But that is exactly where we are headed. And it will be
a fine day when it happens, too. I would like to return to this subject
in a moment to explain why we have asked for receivership, why a
receiver is immensely preferable to Secretary Norton's ill-advised,
last-minute reorganization plan for the BIA, and why the support of
Congress for receivership is important.
If the Secretary is found in contempt and the Individual Indian
Trust is placed, at last, in the competent hands of a receiver, I hope
we can move to trial on the final issue--a restatement or correction of
the Individual Indian Trust balances--before the end of the year
(subject, of course, to the court's discretion and schedule). In 1999,
Judge Lamberth and the U.S. Court of Appeals ordered the Secretaries of
Interior and Treasury to provide individual Indian trust beneficiaries
with an historical accounting of ``all'' trust revenues, withdrawals
and accruals. However, Mr. Chairman, Interior has done nothing. A
senior trust official testified last month that Interior ``is not yet
at the starting gate'' on an accounting. In fact, he testified that
Interior officials are still debating internally what the term
``historical accounting'' means. Secretary Norton's most recent
Quarterly Report to the court acknowledges that her department's trust
reform master plan has been shelved. A $3 million consultant's report
to Interior advises starting over. Even if Interior and Treasury were
acting in good faith, they are unable to provide an accounting because
they have destroyed, and continue to destroy, the individual Indian
trust records (making the Enron debacle seem to be trivial in
comparison). They also have spent $36 million ``so far'' on a new trust
accounting computer system that does not work and will have to be
scrapped.
The bottom line is that the Bush Administration is under court
order to account for more than $100 billion in Individual Indian Trust
monies and has utterly refused to do so. Judge Lamberth will decide in
the upcoming trial how much of those funds must be restored to correct
the stated IIM trust balances. That figure is yet to be determined
finally, but if we go to trial it likely will be much more than $100
billion. Despite this impending financial train wreck and continuing
legal humiliation--despite the oaths that the government's lawyers take
as officers of the court--the Interior Secretary, the Treasury
Secretary and the Attorney General march on, too arrogant to enter into
good-faith settlement discussions that could cut this fiasco short,
spare the court's time and energy and somewhat soften the Executive
Branch's dishonor.
Mr. Chairman, I believe it would be helpful at this point to
summarize very briefly the history of the Individual Indian Trust and
how the Executive Branch has arrived at this state of disgrace while
Congress has turned its back on Indian people.
The IIM trust derives from the 1887 General Allotment Act (the
``Dawes Act''), which, as Judge Lamberth has noted, was ``driven by a
greed for the land holdings of the tribes.'' [Judge Lamberth's Dec. 21,
1999 decision in the Cobell case contains a concise history of the
trust. It is posted on the Cobell plaintiffs' web site at
www.indiantrust.com, under Court Rulings.] Under Dawes, tribes were
paid for their land and each head of household was allotted property,
usually 40-, 80- or 160-acre parcels. The land left over was opened to
``non-Indian'' settlement. The allotted lands were held in trust by the
United States for the individual Indians. For more than 120 years, the
Interior Department, and specifically the Bureau of Indian Affairs, has
overseen the leasing of these allotted lands on behalf of the original
allottees and their heirs. Revenues from these leases have been
collected by Interior and supposedly held, invested and disbursed to
the trust beneficiaries by the Treasury Department.
From the beginning, this system has fallen prey to abuse,
corruption, neglect and incompetence. As the U.S. Court of Appeals for
the District of Columbia Circuit said in its Feb. 23, 2001 decision
upholding Judge Lamberth, ``The trusts at issue here were created over
one hundred years ago--and have been mismanaged nearly as long.''
Incredibly, since 1887 the management of the IIM trust has not grown
steadily better, but steadily worse. It is worse today than it was in
1996, when we filed our lawsuit. Just to quote one brief passage from
Judge Lamberth's 136-page opinion:
``It would be difficult to find a more historically mismanaged
federal program than the [IIM] trust. ... The court knows of no
other program in the American government in which federal
officials are allowed to write checks--some of which are known
to be written in erroneous amounts--from unreconciled
accounts--some of which are known to have incorrect balances.
Such behavior certainly would not be tolerated from private
sector trustees. It is fiscal and governmental irresponsibility
in its purest form.''
The glaring mismanagement of the IIM trust was exposed (not for the
first time, or the last) by the House Committee on Government
Operations, in its landmark 1992 report entitled ``Misplaced Trust: The
Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund,''
which was spearheaded by the late Rep. Mike Synar (D-OK). Citing the
trust's ``appalling mismanagement,'' Mr. Synar likened the IIM trust to
``a bank that doesn't know how much money it has.''
The Synar Report led to passage by the Congress in 1994 of the
Indian Trust Reform Act. In an attempt to end Interior's chronic
incompetence in running the IIM trust, the act established a Special
Trustee for American Indians to oversee reform. A Level 2 position
filled by a presidential appointee who is subject to Senate
confirmation, the Office of Special Trustee was expected to provide the
leadership and accountability that trust reform had been lacking.
Sadly, that has not been the case.
On June 10, 1996--after years of run-arounds from Interior and the
BIA, and convinced that they would have to be forced to clean up the
IIM trust--we filed our class action lawsuit against the Secretaries of
the Interior and Treasury. Judge Lamberth split our complaint into two
issues--reform of the trust, and a re-statement of the accounts. On
Nov. 27, 1996, the judge also ordered Interior and Treasury to preserve
all existing IIM trust documents and to produce relevant documents and
records to the plaintiffs. In fact, destruction of records and
documents, including e-mails written by government lawyers in this
case, has continued throughout the life of the litigation. Secretaries
Babbitt and Rubin were held in contempt by Judge Lamberth in February
1999 for ignoring the document order, and the judge subsequently
appointed a Special Master, Alan Balaran, to oversee the government's
compliance. Unknown to all of us at the time, Treasury had destroyed an
additional 162 boxes of trust records during the contempt trial.
Treasury and Justice Department attorneys waited 13 weeks to inform the
court.
After a nine-week trial on the first issue--how to fix the system--
Judge Lamberth ruled on Dec. 21, 1999 that the United States must
provide an historical accounting for ``all'' IIM funds. He ordered
Interior and Treasury to reform the trust, and required quarterly
reports from Interior on its progress.
Testimony in the Norton-McCaleb contempt trial has shown that for
more than a year after Lamberth's decision, officials and lawyers at
Interior and Justice did nothing about an accounting and little about
trust reform. They believed that Lamberth had exceeded his authority
and hoped he would be overturned by the appeals court. What actions
Interior and Justice did take were driven by their litigation strategy
and in support of their appeal, with no regard for the IIM trust
beneficiaries. A senior trust official, Principal Deputy Special
Trustee Thomas Thompson, testified that today--more than two years
after Lamberth's decision--not a single IIM account has been certified
as accurate. (``It really makes you wonder why I'm sitting here,
doesn't it?'' said Judge Lamberth.)
On February 23, 2001, a three-judge panel of the U.S. Court of
Appeals for the D.C. Circuit unanimously upheld Judge Lamberth. The
same day, a senior Interior Department official sent a memo to the
Special Trustee exposing the department's trust reform efforts as a
sham. The department's trust reform plan, he wrote, was based on ``rosy
projections'' and ``wishful thinking.'' ``Posturing for the
court''.seemed to be the primary influence on objectives and
guidelines.'' Eventual disclosure of the memo by the Justice Department
led Judge Lamberth to appoint a Court Monitor to assess Interior's true
progress on trust reform and the veracity of its quarterly reports to
the court.
Four scathing reports by the Court Monitor, Joseph S. Kieffer III,
since his appointment in May 2001 form the basis of four contempt
charges against Norton and McCaleb. (Court-ordered trust reform, said
Kieffer, ``is a chimera. The trust reform ship has been scuttled'' A
cynical observer would go so far as to say it never left dry-dock;
rotting there.'') A separate report by Special Master Balaran on the
utter lack of computer security for IIM accounting data led to a fifth
count of contempt. (It is Balaran's report that Judge Lamberth found to
be a prima facie case for contempt.) This past Friday, Mr. Kieffer
issued two more reports. They only add to the searing indictment of
Secretary Norton, Secretary O'Neill and Attorney General Ashcroft in
this matter. The Kieffer reports document a shocking pattern of
misleading statements and outright lies to the court in the quarterly
reports submitted by the Interior Secretary. Starting with the 3rd
Quarterly Report in late summer of 2000, the Special Trustee, Thomas N.
Slonaker, began to include his own independent comments, suspecting
that project managers in the field were painting a false picture of
their trust reform progress. By the 7th Quarterly Report last fall,
Slonaker refused to verify the accuracy of the contents. Pressured by
Interior lawyers to verify the report, other senior trust officials
also refused because, they said, ``certifying the 7th Quarterly Report
would border on the foolhardy.''
No senior DOI official would touch that report with a 10-foot
pole,'' said Kieffer, who found that Norton had submitted to the judge
``an untruthful, inaccurate and incomplete'' report. Judge Lamberth has
since ordered Secretary Norton to sign all future quarterly reports
personally. (In her 8th Quarterly Report, submitted last month, Norton
says her signature ``reflects my belief that my personal observations
in the Report are true...'')
Balaran's report on the lack of computer security is equally
disturbing. With court permission, he hired experts who easily hacked
into the IIM trust accounting system and created a phony account
without being detected. Balaran has recommended to Judge Lamberth that
the system be placed in receivership.
With her credibility in tatters and faced with the virtual
certainty of contempt, Secretary Norton and her inner circle of senior
officials have now proposed a drastic reorganization of trust
responsibilities into a new Bureau of Indian Trust Asset Management.
Because she has done this so late in the day and so suddenly--and
without proper consultation with tribes, as required by law--her
actions appear to be a desperate attempt to stave off contempt. The
proposal has met with very strong opposition throughout Indian Country.
Among its flaws, it would merge the tribal trust with the IIM trust
under one entity, ignoring the trusts' two distinctly different
functions, constituencies and histories. This plan will undermine--not
protect--tribal sovereignty. It will violate the IIM account holders'
own direct relationship with the federal government, established by
law.
Ironically, Norton already has hired former Assistant Secretary for
Indian Affairs Ross Swimmer to head this effort. She ignores the fact
that Swimmer was sharply criticized in the Synar Report for management
failures involving the IIM trust. She ignores the fact that Swimmer--at
best--has a ``checkered'' personal financial history. His BIA
management included leading a misguided attempt to privatize the IIM
trust, spending $1 million on the project and getting nothing in
return. ``BIA eventually paid Security Pacific [the bank intended to
take over the trust] $934,512, but according to the Assistant Secretary
for Indian Affairs [Swimmer], did not obtain any benefits for the
government''.Far from ``excusing'' the waste of almost $1 million in
tax dollars, the Bureau's inept handling of the Security Pacific
contract simply underscores the reasons why it should not have been
awarded in the first place,'' the report concluded.
Swimmer's hiring points up the most critical defect in the
Secretary's proposal: It would leave the trust in Interior's control,
at the mercy of the same inept managers. It is crystal clear from the
long record of IIM trust mismanagement that it is time--past time--to
remove the trust from Interior's grasp and place it temporarily in the
hands of a receiver. The IIM beneficiaries deeply deserve a trust run
by competent and experienced professionals, with commercial standards
of accountability. Fixing the system is a crucial component of trust
reform, and becomes even more so as we draw closer to Trial Two and the
issue of re-stating the accounts. The two must go hand-in-hand.
Mr. Chairman, it is our hope that this Committee and the Congress
will terminate all appropriations needed by the Interior Secretary, the
Treasury Secretary and the Attorney General to continue their bad faith
legal defense. Instead, we ask that you support the individual Indian
trust beneficiaries' request for appointment of a receiver under the
supervision of the judiciary as the only rational solution for the
government to fix the Individual Indian Trust. Congress has
appropriated more than $614 million for trust reform since 1996, and it
has gotten virtually nothing in return--no accounting of Individual
Indian Trust monies, no rehabilitation of the woeful system, no
improvement in information technology. The court and the Congress have
not even gotten the truth from the Interior Secretary, in part because
she and her advisors do not know the truth and lack the qualifications
and skill to learn the truth before they inflict more irreparable harm
on individual Indian trust beneficiaries.
The Court Monitor's 6th Report to Judge Lamberth, which was made
public last week, captures the lack of accountability and the arrogance
that the individual Indian trust beneficiaries have experienced for
decades from their government. Kieffer said:
The Secretary's candor in the Eighth Quarterly Report is
refreshing. But the exacerbation of the ``ordinary human
inclination'' to report only good news and ignore the bad was
in the context of carrying out the highest fiduciary trust
duties imaginable owed to the American Indians by the United
States government. Compare this comment on the human
fallibility of DOI and BIA officials with the realization that
their reports were at the direction of and for the
consideration of a United States District Court. A District
Court that had previously held two Cabinet-level Secretaries
and one Assistant Secretary in civil contempt for their and
their subordinates' failure to overcome this ordinary human
inclination to lie or dissemble when bad news as well as good
was required by Court order to be reported by Defendants and
their attorneys.
The Secretary's admission that activities had been designated
completed when ``little material progress is evident'' is the
most telling comment in the entire Eighth Quarterly Report. The
Secretary, in attempting to prepare an accurate and complete
quarterly report, has now found what the Court Monitor has
reported in every single Report to this Court--the reports have
been untruthful. The only problem is that nowhere can be found
any indication that those who have committed or permitted these
actions constituting contempt on the Court have been or will be
held accountable. No indication whatsoever that they will be
forbidden to continue in supervisory or project manager roles
in the proposed BITAM and their conduct reviewed for
disciplinary action and possible dismissal from their present
positions. Who within DOI will hold these officials accountable
for the past and present harm caused to the IIM account holders
by their unprofessional conduct and misleading reports that
covered up and hid the most serious of their failures?
Apparently no one, because they remain in leadership positions
involved with trust operations and related management and legal
activities or have moved on to equivalent senior positions
within DOI.
Where also can be found the expressions of apology and remorse
by these same executives, managers and attorneys that should
now be substituted in the Eighth Quarterly Report for the
repeated arrogant stances taken by the Defendants in the past
seven false, inaccurate, and incomplete quarterly reports and
their legal defenses of them before this Court?
These Indian Trust duties were no ordinary responsibilities or
obligations of the United States; no APA administrative
functions; not a ``no harm, no foul'' badminton game or walk in
the park. The Secretary's understanding of these human failings
of her subordinates may fall on deaf hears in Indian Country
where the effect of these unreported failures has been and is
so severely felt.
Reference need only be made to the present IT Security failure
and Court-ordered shutdown. The resultant loss of the income
stream to the most needy IIM account holders and Indian Tribes
is a perfect example of the result of these ordinary human
inclinations. Who will be held accountable for the TAAMS''
failures or the failure to even address the IT Security lapses?
Failures made aware to the Defendants months if not years ago
by their own paid consultants, the GAO, and the Special Master.
What also will be the human inclination of Senators and
Representatives on oversight committees regarding the
appropriation of more monies for the Defendants to try to
correct this morass? And who will end up being harmed if the
Congress might--understandably--be reluctant to trust the
Defendants to perform any better in the future, further
delaying trust reform until a new agency can be created and
staffed? None other than those same IIM account holders who
have suffered so much for so many years at the hands and tender
mercies of the Defendants.
Candor about your subordinates' human failings is one thing,
demonstrating how you will hold people accountable for their
past and future nonfeasance, misfeasance or malfeasance is
quite another. This Court and Congress should require no less.
Now is the time for the Congress to send a clear signal that waste,
fraud and malfeasance are unacceptable and that it wants honorable,
fit, experienced managers in charge of fixing this badly broken
mechanism. This is a chance for all of us to stand up for financial and
professional accountability. I believe strongly that further
appropriations for trust reform should be fenced in, to be used by a
receiver and not the failed programs of the past or defense of the
indefensible litigation. The Individual Indian Trust should be put in
the intensive care of a receiver supervised by Judge Lamberth until it
has been rehabilitated fully and restored to health.
After the Court-appointed receiver rehabilitates the Individual
Indian Trust, it is crucial that the Individual Indian Trust remain
well-managed in conformity with the duties of a true fiduciary and,
therefore, is, above all, free of politics and bureaucratic fumbling.
The Individual Indian Trust already is one of the very few permanently
and indefinitely appropriated funds of the United States, similar to
the FDIC, the Federal Reserve Board and the Comptroller of the
Currency. Therefore, like the Office of the Comptroller of the Currency
vis-a-vis the Treasury Department, the Individual Indian Trust--after
rehabilitation by crisis managers appointed by the Court--could be
recast as an independent bureau within the Interior Department.
Independence within Treasury is reinforced because the Comptroller is
appointed by the President for a fixed five-year term, and the
Comptroller reports to the President, not the Treasury Secretary. And
there is little doubt that the Comptroller of the Currency model has
worked well under difficult circumstances since 1863. Instead of
underwriting nonexistent trust reform, a skilled Trustee for the
Individual Indian Trust--protected from politics and funded with
permanent and indefinite appropriations--could hire the proficient
managers desperately needed to ensure prudent management of this multi-
billion dollar trust. The goal here is simple: stop playing politics
with our money and our people.
Our litigation has exposed an ugly story about arrogance and
ineptness. But, with the help of this Committee, we can begin to write
a new chapter. I appreciate this chance to testify and I would be happy
to answer any questions.
______
[Ms. Cobell's response to questions submitted for the
record follows:]
SUPPLEMENTAL ANSWERS FROM ELOUISE COBELL PROVIDED TO THE U.S. HOUSE OF
REPRESENTATIVES COMMITTEE ON RESOURCES, WASHINGTON, DC
Q. You contend that Judge Lamberth should place the IIM trust in
receivership. Please explain the structure of the receivership you
envision and how it would function.
A. Plaintiffs' Consolidated Motion for a Receiver, filed with the
Court on Oct. 19, 2001, spells out how the receivership would function.
I have attached Appendix V of the motion for your review.
Q. What effect would placing IIM trust reform in receivership have
on the trust responsibility the federal government has to IIM account
holders?
A. We would have an IIM trust that would be under court
supervision, which would give account holders honest and competent
service. This type of service would reinforce the trust relationship
with the trustee and the beneficiaries. Accountability will be a must
and the court will enforce consequences if accountability is not
adhered to.
Q. Would a court-appointed receiver have any responsibility to
carry out consultation with account holders?
A. Not only would a receiver carry out consultation in a proper
fashion with accountholders but for the first time ever a proper
relationship with the trustee and beneficiaries would begin.
Q. If the trust functions were transferred to the court, how would
the court carry out the statutory trust duties that have been
established by Congress?
A. Trust functions would be carried out in the manner that Congress
had intended. The management of trust functions can only improve under
the court's supervision. Statutory trust duties rest with all three
branches of Government. The Court Monitor's and the Special Master's
reports provide a clear and honest analysis of the problems that exist
and what is needed to fix this horrible mess.
Q. Where would the court obtain the funding to carry out trust
functions and what standard would be applied to the relationship?
A. The IIM Trust has been set up as a permanent and indefinite
appropriation. Funds that have been appropriated and will be
appropriated should be utilized by the receiver to begin the task of
hiring crisis managers. Congress needs to provide the receiver with the
funding to fix this mismanaged trust.
Q. Please provide the Committee with a list of specific facts on
which you base your charge that Secretary Norton has perpetrated a
fraud on the United States District Court.
A. The six reports issued by the Court Monitor and the Special
Master's IT Security Report, along with 4,658 pages of contempt trial
transcripts.
______
APPENDIX V
the receiver
A. Background
The Individual Indian Trust has been managed with malfeasance for
114 years. For the past five years, to the detriment of individual
Indian trust beneficiaries, this Court has relied on material
misrepresentations of the Interior defendants and their counsel to
allow them without direct Court supervision to develop and implement
trust reform remedies that they claimed would ensure prudent
administration of the Individual Indian Trust. To encourage compliance
with Court orders and to verify the accuracy of representations made by
the Interior Defendants, this Court has employed such extraordinary
measures as contempt and the appointment of both a Special Master and a
Monitor.
These actions have enabled this Court to understand the true nature
and scope of defendants' deception and malfeasance; however, Interior
defendants' contemptuous conduct continues unabated and meaningful
trust reform is no closer today than when this action was brought to
enforce defendants trust duties. As demonstrated conclusively by the
Court Monitor and the Special Master, Secretary Norton and her counsel
continue to breach the trust duties owed by the United States to
individual Indian trust beneficiaries. Accordingly, to protect the
Cobell plaintiffs from further irreparable harm, to ensure that the
trust duties owed by the United States to individual Indian trust
beneficiaries are discharged prudently, and to ensure meaningful trust
reform is designed and implemented, this Court should appoint a
receiver for the Individual Indian Trust as follows:.
B. Qualifications
Receivers commonly are appointed by courts to oversee trusts,
bankruptcies, reorganizations and other matters where senior management
is incompetent, untrustworthy, or guilty of malfeasance as is the case
here. Unfortunately, the appointment of a receiver does not necessarily
ensure compliance with court orders. After appointment of some
receivers, the situation is not rectified--it actually becomes worse.
The temptation for some courts is to appoint an attorney or a former
government official with some general experience in subject matter of
the case. However, appointments of this nature are generally not as
effective. Successful receivers, or their Court appointed deputies,
tend to be turnaround and crisis management experts who specialize in
assuming positions of control on short notice, take immediate action to
install management and financial controls, and commence and implement
long term solutions for the collection and creation of reliable asset
and beneficiary data from which a trustee can prudently administer the
trust.
C. Duties and Responsibilities
The duties and responsibilities of a receiver are straightforward:
identify, account for, protect, and maximize the trust income and
allocate and distribute the correct amount of trust monies to the
proper beneficiaries. The mission of the receiver is to gain control of
the processes, marshal the assets and take whatever corrective action
is necessary to ensure that the collection, allocation, and
distribution of funds is accurate, complete, and accounted for
fully.\1\
---------------------------------------------------------------------------
\1\ A judgment regarding Phase II issues will resolve the
historical restatement or ``correction of accounts;'' therefore, the
appointed receiver should avoid involvement in this regard. Issues
relating to prospective management of the trust and future
distributions to the proper beneficiaries will be the most problematic,
and deserve the undivided attention of the receiver.
---------------------------------------------------------------------------
D. Authority
This Court may wish to retain the title and authority of receiver
or confer this title and authority on a court officer (e.g., the Court
Monitor or Special Master). Therefore, the appointed expert may take
the title of deputy receiver. In either case, the receiver should be
vested with the authority of a chief executive officer. As a chief
executive, he should immediately employ other qualified managers,
attorneys, and other professionals. One of the most critical aspects of
the receiver's authority is his ability to have the authority to hire
and fire personnel administering the trust. Therefore, the receiver, as
trustee-delegate, should be assigned Department of Interior personnel
engaged in IIM-related trust operations on a temporary duty basis.
However, as he identifies the dishonest, weak, or unproductive senior
managers, counselors, and other employees involved in the
administration of the Individual Indian Trust, he must have the
authority to relieve them of their temporary duty assignment and return
them to the department. The receiver must then have authority to retain
qualified professionals from the private sector who report to him
directly.
The court should hold status conferences with the receiver and
plaintiffs monthly to review most decisions post facto and justify
major decisions in advance. A written report by the receiver should
follow each such meeting.
E. Contract of the Receiver
The Court should accept proposals from leading turnaround
management firms. Obviously, the lowest bidder may not be the most
effective manager. Conversely, the highest bidder may only be that--the
highest bidder. Large multi-disciplinary firms, such as the Big Five
accounting firms seem to have no inhibition on amounts they charge.
Therefore, proposals should be prepared on a time and materials basis,
including the hourly rates of the various levels of professionals who
are anticipated to be required for the assignment. However, with a case
of this magnitude, the court may wish to consider only accepting bids
on a fixed fee per month or year. A reasonable proposal is expected to
be in the range of tens of millions of dollars annually.\2\ The
contract term should be at the pleasure of the court with a modest
termination fee. The court should also consider a success fee, which is
common, to encourage the most timely and effective rehabilitation. The
goal of receivership is to protect the trust assets, rehabilitate the
trust, and, ultimately, restore management of the trust to the
executive branch. Such action should occur only after the Court
determines that honest and competent trust management is in place
permanently and that all trust systems are operating properly.
---------------------------------------------------------------------------
\2\ While such sums are not insignificant, they must be viewed in
light of the comprehensive, specialized expertise that is not now
available in the government. Moreover, the complexity of this problem
and the obscene, on-going waste of taxpayer monies to date ($614
million appropriated for trust reform while the Individual Indian Trust
continues to deteriorate and trust assets continue to waste away)
requires competence or this matter will never be resolved..
---------------------------------------------------------------------------
F. Short Term Actions Necessary
While the appointed receiver should have great latitude in
establishing his own rehabilitation plan, several actions need to be
taken expeditiously:
Gain control of the cash inflows. Trust income is
currently being received at over 100 locations. These cash flows must
be identified and redirected to lock boxes under the control of the
receiver. The number of administrative cash collection centers should
be greatly limited and electronic systems must be secured or taken off-
line.
Identify all sources of the cash flows (including a
revenue generating lands), locate and validate current contracts under
which rents, royalties, and other funds are paid, determine if other
payments are due from the same vendor, and, if so, take action to
enforce such contracts.
Identify and contract an adequate interim trust asset and
accounting management system (e.g., an established operating trust
service bureau.)
Control and verify the accuracy of all allocations and
disbursements.
G. Long Term Actions Necessary
Longer-term actions are also required. Identifying and locating the
proper beneficiaries and their interests is the major task:
The genealogies of original allottees must be identified
and accurately traced to the current generation. The assistance of
experienced professionals from the private sector here is also
essential. This process may be the most time consuming and tedious of
all tasks. As accurate information is obtained, the system should be
revised to ensure accurate payments are made to each and every
beneficiary.
All income flows from the land must be identified,
tracked, collected and properly recorded to the trust, land records
must be updated and corrected, and related contracts reviewed and
updated. This will improve the data on the nexus between the sources of
revenues and the proper allocations and distributions to beneficiaries.
Identify and contract an adequate integrated permanent
trust asset and accounting management system.
Long term actions may take several years.
H. Funding
Contempt Sanctions: Inasmuch as appointment of a receiver
here--similar to the appointment of a Special Master and Court
Monitor--is a sanction for, or in lieu of, contempt, all costs
associated with the operation of a receiver should be included within
the scope of financial sanctions imposed by this Court, allocated
appropriately, and paid by Interior, Justice, and the contemnors,
individually and collectively.
______
Mr. Hayworth. And we thank you for your testimony. The
Chair would note that a 15-minute vote is on on the floor. I
will just briefly yield to the ranking member for a unanimous
consent request, and then we will recess and return.
Mr. Rahall?
Mr. Rahall. Thank you, Mr. Chairman. I have no questions of
this panel. I just want to thank Elouise Cobell for taking the
initiative that she has in seeking redress before the court.
Being a plaintiff in a high-profile case of this nature is
certainly not easy, and I am sure it has taken a toll on your
personal life and on your family life. But rest assured you are
involved in a noble cause. You are from Montana, but you have a
friend here from West Virginia, and I certainly commend you for
what you are doing.
Ms. Cobell. Thank you.
Mr. Rahall. Mr. Chairman, just real quickly to note the
presence of an individual that has been sitting motionless and
quiet all day during these proceedings in the very midst of us,
dressed in his travel attire, Mr. James Goddard, and I ask for
unanimous consent that his statement on behalf of the Blackfeet
Tribe be placed in the record at this point.
Mr. Hayworth. Without objection, and we welcome him as
well. Thank you for coming.
[The prepared statement of Mr. Goddard follows:]
[GRAPHIC] [TIFF OMITTED] T7526.028
[GRAPHIC] [TIFF OMITTED] T7526.029
[GRAPHIC] [TIFF OMITTED] T7526.030
[GRAPHIC] [TIFF OMITTED] T7526.031
Mr. Hayworth. Thank you, Mr. Rahall, for that statement.
There are lots of questions, and we will get to them, and
we thank the panel for its indulgence.
The Committee is in recess subject to the call of the Chair
after we conclude the vote.
[Recess.]
Mr. Hayworth. We thank our guests on panel two for their
indulgence, as well as others who join us today and the members
of the Committee, with the business afoot on the House floor.
When the bells ring, it's kind of like school. You have got to
go over there and take care of that, and then return to our
duties here in Committee.
I know a number of members have questions. Let me open with
Ms. Cobell, especially in the wake of the testimony where you
advocate a court-appointed receiver and the removal of all
trust functions from the Department of the Interior. Let's
amplify that a little bit. Could you tell us in a little more
detail how you envision that would work?
Ms. Cobell. Actually, it is not advocating everything out
of Interior. What we are asking for is somebody to be put in
charge. And we feel it is very important to put a person in
charge under the judiciary that would report to Judge Lamberth,
the receiver; a person that would have the ability to make sure
accountability is done, and make sure consequences are put in
place.
That has been the issue that we have been dealing with.
People get away with not having any consequences. They are
mismanaging funds. They are lying to the court and the Congress
about a big huge accounting system, TAMS. And so we are saying,
put a receiver in place that would be reportable to the
judiciary, but leave everything else in place.
Mr. Hayworth. So I want to really get in this concept of
the receiver. It sounds to me at first blush, Ms. Cobell, that
the receiver would kind of be an extension of the role of a
special trustee, because if it is accountable to the judiciary,
to Judge Lamberth, how does the receiver really differ from the
special trustee?
Ms. Cobell. Well, I wish I could have answered Mr.
Slonaker's question for him when it was asked, you know: What
was wrong with the 1994 Trust Fund Reform Act, and why did it
not work, and what do we need to do as a Congress to make it
more powerful?
The problem is the 1994 Trust Fund Reform Act gave special
powers to the special trustee, but absolutely had no teeth. So
as a consequence, the special trustee had to report to the
Secretary. And as you know, Secretary Babbitt just completely
ignored the plans that the special trustee put in place to fix
this system.
And so what happened is the 1994 trust fund did not really
go all the way. It should have gone all the way, and if it did
at that point in time we could have ended up with a person
powerful enough to fix the system. But we do not have that now.
And so that is why we are asking for a receive.
Mr. Hayworth. So the receiver would take this job and
really--And I am not trying to be cheeky about this, but the
phrase almost ``imperial potentate'' comes to mind. I mean, the
receiver has the authority to get things done and be
accountable to the judiciary.
Ms. Cobell. He would bring in crisis managers. That is what
has to happen: Bring in crisis managers. Do not continue--And I
think the discussion went really well from the Congressman. It
is the fact that: Do not bring in the same old people that have
been part of the problem. Work with crisis managers. This
happens every day in the private world. It is no rocket science
to fix this.
And I really want to make it clear, the receivership is for
individual Indian account holders. Because I think what the
Secretary has done is try to merge these two together. It just
does not fit. Because we heard from council member Matt where
they are contracting, and Ivan Makil, they are contracting, you
know, and everything is working fine. But this is for
individual Indian accounts.
Mr. Hayworth. There are some questions I would like to
pursue with President Makil. But I am just trying to nail down
the notion of the receivership, and now in terms of crisis
managers.
One of the things we have to do is to come up with a plan
that outlines all of this, whether it is done legislatively or
whatever remedy that comes up. Do you envision how many crisis
managers, as you put it, would be required to make this work in
conjunction with a receiver?
Ms. Cobell. Well, I bet you could do it under $614 million.
That is for sure.
Mr. Hayworth. Well, I understand. I am just wondering how
many people would have to staff this, in your mind?
Ms. Cobell. Well, you know, I do not think that there would
be probably more than ten people, crisis managers, that you
would have to bring in.
Mr. Hayworth. So a receiver, ten crisis managers--
Ms. Cobell. Well, and then you have the entire Department
of Interior. Because, you know, you keep alluding to the BIA.
There is more than the BIA involved in this. There is the
Minerals Management Service and there is the Bureau of Land
Management, that all have their hands in this trust reform.
That is why it is not working.
Mr. Hayworth. So all of these different lines of
jurisdiction. *** start here
Ms. Cobell. Yes. And I think that Mr. Kieffer's reports
that he has, and actually the EDS that has been hired by the
Department, all point to the same thing: Nobody is in charge.
And so that is the big issue here, is we have to put somebody
in charge. And if we do it under a judicial mechanism, then we
can force it.
Mr. Hayworth. OK. You would like the receiver to be
required to consult with Indian tribes, right, in this
restructuring?
Ms. Cobell. Well, this is individual Indians.
Mr. Hayworth. OK.
Ms. Cobell. Let me tell you, what I am talking about is the
court case for individual Indians. There are two separate
trusts we are talking about: the trusts that are held in common
by the tribes; and there are the individual Indian trusts. And
there are two separate entities, because the individual Indians
have a direct relationship with the Federal Government; the
tribes have a direct relationship with the Federal Government.
Mr. Hayworth. Just a couple of brief things, because you
touched on it a second ago. In terms of the cost of how to do
this and where the funds would come from, in your mind, how
should it be funded? And what type of cost would the
receivership and the crisis manager scenario--Any idea how much
that would be, or anything you would try to budget for it?
Ms. Cobell. Well, I certainly think it is going to be a lot
less money than what has been spent so far since 1996, but I
really do not have those totals. But I know that I think one
area that we discussed in our written testimony is what happens
to the temporary receiver? After the receivership, what
happens?
There is actually a mechanism that is already in place by
law. Individual Indian trusts have been permanently funded,
like FDIC, the Office of Comptroller of Currency. That is
already on the record.
Mr. Hayworth. OK.
Ms. Cobell. So I really think that in order to fix this,
Congress really has to face reality, the fact that the IIM
Trust should be permanently appropriated like the OCC is
permanently appropriated.
Mr. Hayworth. Ms. Cobell, I thank you for going into more
detail and amplifying. I also thank the indulgence of my fellow
Committee members, as I went a bit over time. My good friend
from Michigan has some questions.
Mr. Kildee. I appreciate your questioning. I think it was
very, very important. It would seem to me that there is an
inherent conflict in having the Secretary representing the U.S.
Government, and at the same time being the fiduciary for either
tribes or individuals. There is some type of conflict, and we
have to somehow resolve that conflict.
President Makil, you mentioned some type of commission, was
it you called it? Could you elaborate on that? And also--any of
you can answer this, too--elaborate on what you think of the
separation of the Bureau of Indian Trusts assets and
managements within the Department of Interior. Could you start
with that Ivan, or Mr. President?
Mr. Makil. Sure. I think it is important because of the
fiduciary responsibility to be able to have objectivity on a
commission. But also, you need the expertise. Because on the
financial end, as I said earlier in my comments, it is not just
managing the revenue or the money. It is not managing stocks
and bonds. It is also the land. So that expertise has to exist.
A separate commission that would have some authority: As
also was mentioned about the '94 legislation, it did not have
the teeth, did not give the authority so that it could oversee
and actually implement a financial accounting system or other
things. All it could do was make recommendations and if the
recommendations were not followed through, nothing happened.
So what you would do--Or at least a suggestion, one idea to
think about would be to have a commission that the Secretary
was responsible to, as well, but keeping all of those trust
responsibilities together, because they do work hand in hand.
If I could, in how a receiver relates to this, my
understanding is that a receiver would be temporary, also. You
still need a process or a system to be maintained. And if you
have a commission that oversees all of this that everyone would
report to and that has a specific task, which is the management
of those funds and all of the responsibilities along with it,
that is the way to do it. And the Secretary could be
responsible to that commission, as well.
Mr. Kildee. During the consultation which was ordered by
the Executive Order, were you consulted on anything like that?
Or was the consultation basically subsequent to their
decisionmaking?
Mr. Makil. It was subsequent to their decision.
Mr. Kildee. It was not at all concurrent with their
decisionmaking?
Mr. Makil. No, it was not. And furthermore, I am on the
advisory panel for the special trustee, and the advisory panel
consists of tribal leaders with experience--and not just
because I am there--but tribal leaders with experience,
extensive experience, on these issues, as well as people from
different financial institutions. So you have a good mix of
experience across the board.
Virtually, our recommendations--We have been told from time
to time, or reminded from time to time, that we are just an
advisory panel.
Mr. Kildee. Just knowing your own particular sovereign
tribe, you demonstrated your ability to handle finances very
well out there. And that expertise could very well be tapped,
could it not, by the Department of Interior?
Mr. Makil. There are examples across Indian country. And
Salt River, we have had a model for several years. We contract
through a self-governance compact for all of the services that
the Bureau used to provide. We do them ourselves through the
compact. And we have done it successfully.
We have offered to Interior to come look at our system,
because on our system we have been asked to demonstrate it
several times to other tribes. We maintain all of the records.
We can get a payment on a lease and turn it around in two to 3
days, and make the pay-out, and do it accurately.
We can even through our system produce maps and documents
which show where lands are located and show the fractionated
interests as severely as they have been fractionated. We have
that system, and we have built it internally.
Mr. Kildee. Let me ask one final question, and any of you
can answer. Should we let the Department do its own reform? Or
do we need additional legislation now to do some directing?
Mr. Makil. My opinion is that you need additional
legislation, because whether it is a commission or whatever
other instrument that might be appropriate, it needs to have
the ability to take the kind of action in an objective,
fiduciary way that is intended. That is how you are able to
eliminate those conflicts of interest.
Mr. Kildee. I thank you.
Mr. Hayworth. Thank you, Mr. Kildee. Would either of the
other two panelists care to respond?
Ms. Cobell. Oh, I agree that Congress has to enact
legislation to force some of these changes that we are
suggesting.
Mr. Hayworth. How about you, Chairman Jandreau?
Mr. Jandreau. I do not necessarily agree that the idea of
forcing anything is appropriate. I do believe that there is a
commission necessary that is empowered to do some things that
are beneficial to assuring that the Bureau is put back together
in a way that is responsive to all of the problems that have
been created. Forcing people brings tension and rejection. I
think if it is a cooperative effort, I believe it can work.
Mr. Hayworth. Thank you, Chairman Jandreau.
The gentleman from Tennessee joins us, and we thank him for
his time.
Mr. Duncan. Well, thank you, Chairman Hayworth. And I
appreciate Governor Rehberg letting me go out of order here. I
have an appointment coming over here to see me in just a
minute.
Miss--Is it ``Co-BELL,'' or ``CO-bell''?
Ms. Cobell. ``Co-BELL.''
Mr. Duncan. ``Co-BELL''? I have a first cousin who is a
radiologist, Dr. Steve Becker, in Libby, which is right next to
you. But let me ask you this. In your testimony--I apologize
that I was in other hearings and was not able to hear your
testimony, but you say here, ``The Interior Secretary has
demonstrated through the fraud she has perpetrated on the
United States District Court and the United States Court of
Appeals that she should no longer be trusted.''
I was a lawyer and a judge before I came to Congress, and I
can tell you, that is an extremely serious charge. In fact, I
have sat through hundreds of congressional hearings in the
years since I have been here, and I do not recall ever hearing
a charge quite that serious. Would you tell me specifically
what you mean by that? Because you are accusing the Secretary
of illegality, when you say she is perpetrating a fraud on
Federal courts.
Ms. Cobell. Right. There have been several reports that
validate exactly what I said.
Mr. Duncan. Well, like what? I want to know the specifics.
Ms. Cobell. Well, there were several court reports that
were not right that were submitted to the court but were not
full of the correct information that should have been.
Mr. Duncan. And you know that she is the one that
specifically--When you say ``perpetrated a fraud,'' you are
saying that she intentionally either put false information in
there or something to that effect. Is that what you are saying?
Ms. Cobell. Yes, that is what--We are in a contempt of
court trial right now, as we speak, on these issues. And one of
the issues, as you probably have read in the testimony, is the
fact that the seventh quarterly report was not accurate. And
the special trustee refused to sign it and said, ``This is not
accurate.'' But it went ahead anyway. And the Secretary, it is
my understanding, was thoroughly aware of the fact that it was
full of inaccuracies.
The issue that is before the court right now is the fact
that--It is not only my opinion; it is the opinion of several
reports that were inaccurate, it's the opinion of the court
monitor's report, it is the opinion of the special master's
report that is out there. This is serious, Congressman.
Mr. Duncan. Well, you know, I will say this. You cannot
base a criminal case on somebody's opinion. You have to have
facts. You have to have specifics. And what I wish you would do
is provide to this Committee a list of the specific facts that
you base that charge on. I cannot say that you do not have
those facts. I do not know.
Ms. Cobell. Yes.
Mr. Duncan. But I think it is such a serious charge that I
think you should have that, and not just be basing it on some
third-party, hearsay type statement. You need to have that kind
of knowledge yourself, because I am not sure that you
understand how serious the charge is that you are making there.
You are charging criminal illegality.
Let me ask all of the witnesses this. In one of the
briefing papers we are told that you feel the Secretary's
proposal would weaken the Bureau of Indian Affairs. Will you
explain to me how you feel that would occur? This is
something--In fact, Ms. Cobell, you say ``Where is the money?''
And I notice that there was a GAO report concerning this
problem as long ago as 1955. This is a mess that has been going
on for many, many years. In fact, the Secretary of the Interior
had a quote from Arthur Andersen, a report in 1988 and '89,
that said that some of these weaknesses are so pervasive and
fundamental as to render the accounting systems unreliable, and
said it would cost $440 million, or as much as $440 million, to
straighten out. What do you say about that?
Ms. Cobell. Well, I think that what the Secretary herself
talked about this morning is the fact that they do not have
records. They do not even know where the records are. And so it
seems to me that the logical--
Mr. Duncan. But those records were lost long before she
ever came in.
Ms. Cobell. Yes, well, I know, but she went in as the
Secretary of Interior, and she is our trustee. And so I think
the logical thing to do is settle the case; sit down with both
sides and settle. If you cannot provide a historical
accounting, do not pretend that you can. Settle the case.
And Congressman, I really want--With all due respect, I
want to tell you, this is serious. This is serious. And I would
not put anything in my testimony that I did not feel was
accurate and correct. You know, three of the four counts of the
current contempt proceedings that are going on right now are
the fraud on the court. And so we do have all the documentation
to back up what I said.
So I really want to let you know that we have all talked
about how long we have been involved with trying to reform and
getting accounting for the beneficiaries, to really have the
government understand what it is that you are supposed to be
providing as the highest fiduciary standard to our
beneficiaries. And this is very serious.
Mr. Duncan. And you do not believe the Secretary of the
Interior is trying to straighten out this mess that she
inherited?
Ms. Cobell. No.
Mr. Duncan. OK. Thank you very much.
Mr. Hayworth. Thank you, Mr. Duncan.
Let us turn to the lady from the Virgin Islands.
Mrs. Christensen. Thank you, Mr. Chairman. And I thank the
panelists for their testimony. I guess I would ask two
questions, the first one to President Makil. I think it is
pretty clear that everyone on the panel agrees that the BITAM
proposal would undermine the BIA, and that that is a bad
proposal. I had asked the Secretary about BITAM's impact on the
638 contracts and the self-governing tribes. And if I recall
her answer, she said that she thought both were compatible. But
I think, President, you seem to disagree.
Mr. Makil. There obviously would be a concern as to how
they would do that; you know, the process they would go
through. Two things: One is the funding of it and the funding
that they would use to support BITAM, and what that means to
the self-governance process. Because the way that it looks is
it would mean that it would take away not only the financial
arrangement we have under the compact, but it would also take
away the responsibility that we handle already ourselves quite
adequately. And so now we are being asked, and that is what is
even more important to us--Well, I should not say more
important, but as important. It is when you take away the
responsibility that we have already demonstrated we can handle
and put it in another system, just for the sake of creating a
new system to solve a problem.
Mrs. Christensen. And I agree with my colleague,
Congressman Kildee, that the model that you have provided, as
well as some others, should be able to serve as a model for us
to use as we move ahead from here.
I wanted to ask Chairman Jandreau and Ms. Cobell your
opinions on the proposal that was supported by President Makil
for an independent American Indian Trust oversight commission,
and to ask how does that compare to the receivership. Ms.
Cobell?
Ms. Cobell. I think that it would complement the
receivership. I think that what Chairman Makil has outlined is
something that has been discussed for quite some time with the
advisory board, that we really need to have independence. And
that would bring the independence of a commission outside of
the Department, and there would be somebody put in place, a
body put in place, that the Secretary would have to answer to.
Right now, the advisory board is ignored by the Secretary
and the Department. And I think that if we put the receivership
in for the individual Indian accounts, this will really
complement what the tribes are trying to do as an outside
commission. It certainly seems like one good idea to me, too.
I am still very hung up on the fact that we have to have a
receiver put in place for the individual Indian accounts,
because it is a separate situation than the tribal accounts.
Mrs. Christensen. OK. So it is complementary. I understand
now. Did Chairman Jandreau want to comment on that?
Mr. Jandreau. That has been a request that has been in
existence for at least the last 40 years that I am aware of,
that there be a commission or a Committee or something driving
this whole process, going back to even when the commissioner
position was there. And I believe it is necessary. I believe
that if that is in place and there is an allowance to recreate
the Bureau in its entirety with that body in place, I believe
that there would be no need for a receiver. But whatever
happens will happen.
Mrs. Christensen. Those are my questions. Thank you, Mr.
Chairman.
Mr. Hayworth. Thank you, ma'am.
We now recognize the gentleman from Montana.
Mr. Rehberg. Thank you, Mr. Chairman. I have been asked to
pass along the apologies of Chairman Matt. He had to catch a
plane back to Montana. And those of us from Montana know that
if you miss that one plane, you wait until tomorrow.
[Laughter.]
Mr. Rehberg. Yes, it is like the Virgin Islands. So he has
moved along.
But I would have asked him a question about his expertise
in being able to manage the real estate services within his
reservation. So I guess, perhaps, my question would be to Ms.
Cobell. And that is, are there contracts for the individual
Indian trust accounts separate from the BIA at this time,
similar to what Chairman Makil does with his contract and what
Mr. Matt does with his contract?
Ms. Cobell. No, not at Blackfeet. We do not have the IIMs
contracted. And I think Mr. Makil's tribe and Mr. Matt's are
unique. I think there are very few out there that have
contracted the management of the individual Indian accounts.
Mr. Rehberg. So you are not aware of any other individual
Indian account--
Ms. Cobell. I am not aware of it.
Mr. Rehberg. --separate contracts? It is all being done
within the BIA?
Ms. Cobell. Right.
Mr. Rehberg. I had wanted to ask the Secretary the
question, and did not, and perhaps you can answer the question
from your knowledge of the individual Indian accounts. Are
there situations that you know of, in looking at their numbers,
where the fractionalization of the ownership was so large that
the benefit was not anywhere close to the cost of administering
that trust? How do you propose under the receivership concept
of trying to bring that to a conclusion? Does it get to the
point where you finally say, ``Look, if you are 1/64th and
beyond, we cannot write you a three-cent check''?
Ms. Cobell. Well, no, I think it has to start even further
back than that. I think the EDS reports and all of the other
reports from GAO indicate the fact that we have to go back to
the land ownership originally. Because in the testimony through
the court, we had learned that probates were destroyed; that
nobody had actually verified the land ownership records. And I
think that if you talk to Ivan and to Fred, they actually had
to go back and do a lot of in-depth work before they could
verify the ownerships.
And the real issue that we are dealing with now is
ownership. Land ownership records are wrong. And so they really
cannot tell you what should be in your account. And that is a
real issue, but it is fixable.
When we talk about crisis management, I think that is where
we are going, is finding out what should people--what do they
really own?
Mr. Rehberg. Perhaps it is not a fair question, but can you
estimate the time that the receivership would be necessary? Are
we talking 5 years?
Ms. Cobell. Yes, I would think that it would probably at
least be 5 years. Five years would be my estimation. I think
that there is a lot of clean-up that has to be done. I think
Mr. Kieffer, the court monitor, identified on the data clean-up
they had not even started. But I think that if you get it under
a receivership where you have accountability and have
consequences if you do not do your job, that it could be done
in a shorter period of time.
Mr. Rehberg. President Makil, you might have said this and
I missed it. On your trust accounting system, did you design
the system, did your tribe? Or do you contract with a private
entity for that system?
Mr. Makil. We designed it in-house, our own people.
Mr. Rehberg. And did you share that design with the
Secretary or the Department of Interior and the BIA?
Mr. Makil. Many times we have offered.
Mr. Rehberg. You have offered it?
Mr. Makil. Many times we have offered. And the last time
that I recall, I do not remember if it was ITMA or the finance
directors group of people, but we were asked to make a
presentation. And representatives of the Bureau were in
attendance. They gave a presentation on TAMS. And then when we
came up to give our presentation, they left. So they have
missed it.
Mr. Rehberg. One final question, Ms. Cobell. And that is,
you know, I do not disagree with your comments and Mr.
Rayhill's comments about privacy and checking accounts and
such. But I do have a problem with not getting enough
information to make the right decisions. Is there not anything
within that Ernst and Young report that could protect the
privacy but provide us the information of the problems, and I
guess more specifically with what Mr. Duncan asked, some of the
fraudulent examples? Is there not a way that we can get some of
that information?
Ms. Cobell. Yes, well, the Ernst and Young is not really an
accounting. And I think everybody has said that through this
Committee, or at least I heard; that you cannot do an
accounting. There are lost records. You know, it ends up being
just a ticking and tacking of the debits and credits. So I
really do not think that it really shows what you want.
And I really think it is a violation, Congressman, of our
privacy rights as beneficiaries, you know. This is a trust
relationship, and I think that the information is just to go--I
really feel it is not fair. I think that we all know what is
missing here is the accounting. And this is not an accounting,
Ernst and Young. And I would love to spend more time with you
to talk about that.
Mr. Rehberg. Thank you, Mr. Chairman.
Mr. Hayworth. Thank you.
The gentleman from New Jersey.
Mr. Pallone. Thank you, Mr. Chairman. Let me just start out
by thanking the panel. You know, you have really been
substantive in, I think, giving us a better idea of what the
problems are and what needs to be done. And I know you have
been at it for a long time, but it was very helpful. I just
wanted to stress that.
The other thing, I wanted to address a few questions to
President Makil. First of all, I wanted to say I appreciate the
fact that in your written testimony you talk about how this was
an opportunity to right the wrongs of the past, because that is
kind of how I see it. I guess I am a little bothered with
Secretary Norton, because she seems to sort of suggest that,
``We are just going to try something here, and we hope it works
out,'' and I do not think really understands that this is
really an opportunity to show that by working with the tribes
that we can really accomplish something and build sort of trust
with each other.
But I wanted to ask, you talked about extending the
original deadline for consultation, and you thought it should
be extended again. And that is kind of what I said before. I am
fearful that she is trying to wrap this up very quickly, which
she kind of said. And I was just wondering if you would
initially tell us how long a period of time do you think you
need, and whether you think that the Secretary is spending
enough time. And she says she is meeting with the taskforce,
but my fear is that we are not getting enough time here and
that this is going to be wrapped up very quickly. How long do
you think we need?
Mr. Makil. It would be a guess on my part, but I think it
could be anywhere from six to 18 months. That would be a guess.
But obviously, if there was some form of legislation enacted to
create an independent commission, then that would define a
process for consultation that would be necessary to accomplish
the task.
Mr. Pallone. Now, did you comment, have the tribes and the
taskforce looked at your proposal, and have they commented on
your proposal at this point?
Mr. Makil. We have not had the opportunity because,
obviously, time has been short--
Mr. Pallone. Right.
Mr. Makil. --to present this idea to the taskforce. I did
personally present it to the western region representative,
which is representing the region that we are located in. I did
present this idea to that representative. I don't know the
results of that discussion over the past weekend, if it was
presented and to what extent there was comment.
Mr. Pallone. You still need time, obviously.
Mr. Makil. Right.
Mr. Pallone. Now, you said in your testimony, also, you
talked about how the Secretary's current proposal violates a
lot of things: treaties, executive orders. But then you said
even the Federal policy of tribal self-governance and self-
determination. You mean what she has proposed, or just the way
she is going about it? Why is the proposal a violation of
sovereignty or self-governance?
Mr. Makil. First of all, it takes the right to decide.
Mr. Pallone. Right.
Mr. Makil. For one thing. But the issue is that at least
one of the issues for us has been there are examples of models
out there that one ought to consider. If they are working, is
there not something that can be developed similar to those
models that will work on a larger scale?
Now, granted, you know, our model is specific to our tribe.
But all of the components necessary to develop an adequate
model that works I believe consist or exist in that model. And
so there has not been that consideration of these models that
are out there.
There also has not been--You know, it was obvious that
there was a decision made about how things should work, and
then consultation following to support that. To me, that is a
severe violation, when it has been the policy of the Federal
Government to consult with tribes, especially when you are
talking about something as significant as individual Indian
money accounts or trust responsibilities that the Bureau has.
Mr. Pallone. OK. Thank you very much.
Thank you, Mr. Chairman.
Mr. Hayworth. Thank you, Mr. Pallone.
The gentleman from American Samoa.
Mr. Faleomavaega. Thank you, Mr. Chairman. I certainly
would be remiss if I did not express my sense of appreciation
to you and the gentleman from Michigan, Mr. Kildee, as co-chair
of our Indian Caucus. And I sincerely hope, Mr. Chairman, that
not only the advent of the seriousness of this trust issue that
has now come before us, but it is my sincere hope that our
caucus will also address seriously the issues affecting Indian
health, education, the problem with education, all other areas,
the BIA also, in any way.
I am sorry that the Administration did not in any way at
least consult with this member and members of our caucus; and
hopefully, that we could have worked together on this issue.
I do not know if it was the humorist Will Rogers, who I
understand was part Cherokee, who said that the Federal
Government did a fantastic job by stealing land from Indians:
They did it fair and square. That is supposed to be a joke, Mr.
Chairman.
[Laughter.]
Mr. Faleomavaega. I do want to offer my personal and
highest commendation to Ms. Cobell for her leadership, for the
initiative and the tenacity to go against an 800-pound gorilla.
To think that this issue has been in place now for some 100
years, and now we come to a situation--And in all fairness to
the current Administration, this is not something that
Secretary Norton is responsible for. The fact is that both
Democratic and Republican administrations have failed miserably
in addressing the issue very seriously. And now it has taken
the Federal court to finally force the issue.
And for this reason, I have to offer my personal
commendation to Ms. Cobell and her team in making this effort.
Now we are in the square. And I wanted to ask the members of
the panel, and I had raised this issue earlier with Secretary
Norton, about the 1994 Act. I think Mr. Slonaker even admitted
that it does not have very much teeth in it--really, to address
the issue that has been on the books.
The OMB, the GAO, and I thought the fantastic work that
even the late Congressman Sinar from Oklahoma--It was at his
urging that we pass the 1994 Act. I wanted to ask the members
of the panel, do you think that maybe this could be a route
that Congress could make improvements in the current law and
literally put more teeth in, as opposed to the Secretary's
proposed executive order, and changing the landscape as far as
BIA is concerned? I open it to any members of the panel.
Ms. Cobell. I certainly think that the Trust Fund Reform
Act of 1994 could use some amendments to it to make it
stronger. I feel that you could encompass what Mr. Makil has
outlined in making a more powerful commission, but not to be
reportable to the Secretary; that it has to be outside. Because
that is what has failed.
If you remember, Paul Holman tried to implement change, and
was met by total--just a real not good attitude from the
Secretary; and basically took a lot of powers away from him and
ended up having the special trustee quit. So I think it is a
real opportunity to enforce the law to what it was intended to
be.
Mr. Faleomavaega. Please.
Mr. Makil. I would agree that it possibly could set up or
continue to advance that legislation to create an independent
commission. The intent, as we had discussed it, because many of
us have been doing this for a number of years and are working
on this issue for a number of years--The intent was to be able
to create the advisory board that was set up for the special
trustee, having that kind of expertise, the financial and the
tribal expertise, so that it could offer the solutions to
dealing with many of these issues.
Unfortunately, it is only an advisory Committee, and does
not have any authority. That is why it is important, if it was
going to be changed, that legislatively it needs to be done to
create the independent commission.
Mr. Faleomavaega. Well, I think one of the problems that we
were faced with when the court decision came out, there may be
an estimate on individual Indian accounts, monies of some $100
billion. I think this is where everything started shaking here,
as far as the Congress was concerned, as far as the
Administration was concerned. Then it became a political
problem.
It did not become a problem of justice and fairness. I do
not think there is any question in anybody here, Mr. Chairman,
that the money is there. All we have to do is account for it.
And I think this is where the problem lies. The money is there,
despite all the burnings and whatever, the misplaced records,
all of that. But collection continues to come into the pot in
the Federal Treasury, but we just cannot seem to make an
accounting.
The estimates, Ms. Cobell, if I may ask the question, it
has been estimated that the individual Indian account monies,
that there is about $100 billion there. Has there been any
estimate on the amount of monies that were used for the leases
and extraction of minerals from tribal lands? Any estimates
along those lines?
Ms. Cobell. No, I cannot answer on the tribal side. I have
just been working with the individual Indians.
Mr. Faleomavaega. How much has this litigation cost your
tribe and people that are involved in your lawsuit?
Ms. Cobell. Well, actually, I went out and fund-raised for
this litigation, and was not able to get any tribal funds
committed for it because they have their own initiative. They
have to fight for their tribal funds, tribal trust funds. That
has not even come before this Committee yet.
But I know that it has cost a lot of money. And I stated
that I hope that Congress stops this frivolous litigation on
the part of the Departments of Interior and Treasury, because
it has got to stop. You know, we have won every single way, but
they are refusing to implement the court orders. And we should
not have to fight this. And if you think about it, you know,
why should we have to fight for an accounting?
But it has cost a lot of money, and I have had to fund-
raise to fund this litigation.
Mr. Faleomavaega. I think there have been seven
consultations conducted throughout the country by Secretary
Norton or her staff. Do you consider this to be adequate, in
terms of consultations with Indian country?
Mr. Jandreau. No, it is not. But going back to your first
question about changing the legislation, adding to that, I
think it is very important that those areas that are not able
to speak but through one representative, who control 40 percent
of the account holders, who contain 60 percent of the trust
assets, that at least field hearings in those areas--and I am
talking about the Great Plains--be held to really allow those
people to speak to what kinds of changes and what kinds of
things that they would like to see happen with the legislation
to make it stronger.
And as far as the commission, I think that that is so
important. And, no, it has not been dealt with, a lot of the
ideas about tribal trust assets.
Mr. Faleomavaega. Thank you, Mr. Chairman, my time is up.
Mr. Hayworth. Thank you.
The gentleman from Oklahoma.
Mr. Carson. Thank you, Mr. Hayworth.
I would associate myself with my friend from American Samoa
in his comments about the tenacity and persistence of everyone
in this room in pursuing this litigation and making this issue
one that is aware for the public, as well.
Just a couple of questions, because we have touched on a
number of issues and you have explained your thoughts and the
positions at length to a number of the other members. Ms.
Cobell, let me ask you a question. I mean, much of the debate
and cause of concern on this issue has been about the temporal
scope of accounting, and how far back you are going to do an
accounting, and what is possible to reconstruct records.
In your earlier comments, you alluded to the fact that no
accounting was possible. I wonder whether you would expound on
that a bit more for all of us, and tell us to what extent you
think an accounting can be done, and kind of the scope of that
accounting if it can be done.
Ms. Cobell. Well, I think we all understand as individual
Indians that we are not going to get every penny that was owed
to us from our ancestors. And from 1887 forward, there has
never been an audit, or a reconciliation, or whatever you want
to call it, to individual Indians. But I believe that the
individual Indian account holders, we have come up with actual
figures that we think that we could offer in a settlement talk.
But the Department and Justice, I guess through the Justice
Department, refused to sit down and have settlement talks.
And I think that that could be very constructive. And we
would not have to continue, our Congress would not have to
continue to appropriate money to fight this case. And so I
think that that is where the resources should be spent, is
sitting down and talking about a fair settlement with
individual Indian account holders.
And we have had accountants working on this from day one,
since we started this litigation, to come up with an idea of
how much is owed individual Indians.
Mr. Carson. And what is that number that your accountants
have come up with?
Ms. Cobell. Well, it is above $10 billion, let me tell you
that. And we do not know exactly where we would be as far as
the--I guess I forgot about that, is that we had actually
shared a model with the Department of Interior, telling them,
``This is where we can start and where we can go, as far as
what is owed individual Indians.''
The $100 billion comes from 1887 forward, because there has
not been an accounting. And of course, there will probably have
to be some negotiations as far as allowance for disbursements
and whatever. But the figure is in the billions of dollars, and
I would say that $10 billion is a low-ball figure.
Mr. Carson. Very good. I do not have any further questions.
Let me just ask if the other panelists would agree with that
basic notion, that a settlement should be pursued in this
manner, rather than endless litigation about the proper scope
of accounting?
And perhaps, let me ask our first panelist, as well, who
brought up the idea of some alternative models for accounting
that you had thrown out there, in some of the discussions on
this you have talked about a Resolution Trust Corporation style
model. Tell me how that would be reconciled with much of the
concern in Indian country about the various rights and
obligations of self-governing tribes, and the fact that we do
not want to undercut the Bureau of Indian Affairs. And in many
ways, the Secretary's proposal is seen perhaps as the first
step in dismantling the historic trust relationship that the
BIA is the most obvious symbol of.
Mr. Makil. Sure. Because of the historic relationship, in
terms of the trust relationship, that must not be disturbed.
And the reason that this makes sense is that a commission that
is made up of members that would also have some tribal
representation is important, the knowledge of that is
important; and also, hopefully, that recommendations for
appointment to a commission would be done through a process
that would include recommendations from tribes or tribal
governments.
One of the things that is important in this process, and I
think is possible--and it goes to even part of the discussion
that occurs when you talk about consultation--is that it is
difficult to have consultation with tribes as a trustee for
tribes and only speak about the trust responsibilities, and not
be able to discuss the fact that it is not just individual
Indian money accounts where there are disputes that need
resolution. There are, or there will be, disputes on tribal
monies, as well.
And the Federal liability, in terms of the Federal
Government and its liability that exists out there in those
types of disputes--And it is not just one, you know. There are
557 different tribes in the country. And maybe not all of them
will have disputes, but a lot of them will.
And so the resolution of those disputes through a
commission that, hopefully, would be objective, would be
independent, a commission that would be--and I would like to
believe that it is possible--not politically motivated, could
deal with just the facts of the tasks that are at hand, and try
to find resolution. Because then, on the one hand, to resolve
some of these disputes you would have the tribes on one side,
and then you would have the Secretary on the other side of the
table. And so, you know, you cannot do that when the Secretary
has that responsibility to do it. You have to do it with
someone that is independent.
Our concern about the self-governance of tribes is that if
there is something that we believe can work, and works
consistent with our ability, it does not mean that you take
away what we are doing. It may mean that you create a model
that is consistent with what we are doing. You know, because
after all, the real issue here is making sure there is a proper
accounting system in place so that it accounts not only for the
financial side, but also for maintaining land interests and
activities of the land that bring in that revenue.
And the more that tribes can take on those responsibilities
themselves--Not all tribes are in a position, or have the
resources to do that. But as they develop the resources to do
it and there is a model out there, whether it is a commission--
And that was one of the reasons I mentioned the possibility
even of an exit strategy in the future. Because over time,
tribes will handle those responsibilities more and more
themselves, I believe.
Mr. Carson. Mr. Chairman, I see my time is up. If I could,
I would just offer, with unanimous consent, to introduce into
the record the testimony of Mr. John Berrey, an Osage and
Quapaw with significant expertise in these issues, that I would
like to offer for the record.
Mr. Hayworth. Without objection, so ordered.
[The prepared statement of Mr. Berrey follows:]
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Mr. Hayworth. Does anyone else have any questions for the
panelists?
[No Response.]
Mr. Hayworth. The bells have rung. We have another vote.
Just a brief question--the Chairman's prerogative--for my
constituent. President Makil, just briefly, as we listened to
the receivership plan, Elouise outlined and talked some about
that. And you have another thing. This is kind of an all-
purpose exam question, just based on what you have: Compare and
contrast. Are there any commonalities of views? Because Ms.
Cobell makes it very clear that she is concerned about the
individual accounts. You have done work with your tribe on the
tribal accounts, and done some things. Just at first blush, is
there any meeting of the minds on this, or just two alternative
notions here?
Mr. Makil. Actually, if you look at it from the larger
perspective, we are really asking for the same thing. And let
me explain why. In a receivership situation mandated by a
court, it would be something that has to be done. OK? I mean,
that is essentially what the court would mandate. So a receiver
has a responsibility to make it happen. It is not left open to
maybe coming up with a plan that works. They have to come up
with something that resolves the issue.
When I ask for legislation of an independent commission, it
is because we need something that is going to work. We need
something in place that is going to truly, truly represent a
fiduciary, or act as a fiduciary, or those responsibilities
that fall under the broad title of ``trust,'' on behalf of
tribes.
And it is not something that we can continue to do in an
advisory capacity. Because as has been demonstrated, for the
past eight, 10 years, it is that an advisory capacity does not
work. It is something that has to be mandated.
So in effect, we are asking for the same thing. Now, they
are two different situations, and they do respond to two
distinct areas. But I think that they can work in tandem.
Mr. Hayworth. I thank you, President Makil. Thanks to all
of the panelists. A vote is on. We will recess.
Mr. Faleomavaega. Mr. Chairman?
Mr. Hayworth. Yes, sir?
Mr. Faleomavaega. May I ask unanimous consent that my
statement be made part of the record?
Mr. Hayworth. Why, absolutely. Without objection, it will
be made a part of the record.
[The prepared statement of Mr. Faleomavaega follows:]
Statement of The Honorable Eni F.H. Faleomavaega, a Delegate to
Congress from American Samoa
The Chairman.
I want to thank you for scheduling this hearing today on the
Department of the Interior's proposal to re-structure its management of
Indian Trust Fund Accounts. I very much appreciate the willingness of
the Committee to look at this subject again in light of recent
circumstances, including a federal court order directing the Department
of the Interior to disconnect from the Internet all computer systems
through which individual Indian trust data could be obtained.
As we know, the Department of the Interior's management of Indian
trust assets is a complex problem with a long history. The Department
of the Interior has had the trust responsibility of managing both
individual Indian accounts and tribal accounts since the 1800s. This is
no small task. The trust is composed of 45 million acres of tribal
lands, 11 million acres of individually allotted lands, and $3 billion
in cash assets. Over $1 billion is received and disbursed by the
Department each year through various trust accounts.
There is general acknowledgment that these accounts are not now and
have never been satisfactorily managed in accordance with the fiduciary
responsibility owed by the government to the trustees. By saying this,
I do not mean to be any more critical of the current administration
than prior administrations, and I wish to acknowledge the efforts being
undertaken to reconcile the accounts by this administration and the
previous administration.
Mismanagement of Indian trust funds is not a new problem. Over the
years, numerous audits and reports on Indian trust funds have been
published by the Interior's Inspector General, the GAO, OMB, and
Congressional Committees. Former Representative Mike Synar conducted
five years of investigations into the problems and published a report
in 1992 entitled, ``Misplaced Trust: The Bureau of Indian Affairs'
Mismanagement of the Indian Trust Fund.'' The report detailed problems
associated with trust fund accounts that had never been reconciled,
tribes and individual Indians who did not receive regular statements
detailing the activity in their accounts, checks not being credited to
appropriate accounts in a timely manner, and irregular bookkeeping
practices. Today, ten years later, the same problems continue to
confront us.
I do not believe the executive branch of our government is solely
responsible for the mismanagement of Indian trust funds. Congress has
known about this problem for decades and could have provided additional
funding and recourse to address this problem. To its credit, however,
Congress has made efforts to get this mess straightened out.
In the 1990s, Congress appropriated $20 million and instructed the
BIA to reconcile the accounts. In 1994, the American Indian Trust Fund
Management Reform Act was enacted into law. This act set up new
financial criteria for the accounts, created the Office of Special
Trustee within DOI, and instructed the Department of the Interior to
report to Congress with recommendations to resolve the accounts which
were not reconciled. Despite these Congressional efforts, the
Department of the Interior failed to get the accounts under control.
Now the Department has more immediate concerns. I have been
following the considerable media reports on both the on-going
litigation concerning mismanagement of individual trust accounts and
the Secretary's proposed plan to improve the management of the trust
assets. The reports are that many Indian tribes have spoken out in
opposition to the proposal and want to be consulted on how trust reform
might best be accomplished. Although I can understand that the
Department wants to move expeditiously toward reform, I want to clearly
state for the record that I believe the tribes must be given full input
on how best to proceed.
I also hope to have the following questions answered today:
What action is the Department taking today to reconcile
Indian trust accounts?
Are there any actions the Department would like to take
to reconcile trust accounts but feels it cannot take without action
from Congress?
How many of the trust accounts have been reconciled over
the past ten years?
For the accounts which are not reconciled, when is
reconciliation expected?
Are there any accounts which the Department believes
cannot be reconciled?
If so, how does the Department propose to address this
issue?
And finally, what is the status of the on-going
litigation?
Mr. Chairman, I again want to thank you for holding this hearing. I
hope that the Committee will continue to do all it can to resolve this
long-standing problem and provide the oversight necessary to ensure
that the Department of the Interior lives up to its responsibility in
managing Indian trust funds.
______
Mr. Faleomavaega. Also, unanimous consent that the Montana-
Wyoming Tribal Leaders Council resolution and objection to
Secretary Norton's proposal, dated--Well, anyway, it is in
there.
Mr. Hayworth. Right, sir.
Mr. Faleomavaega. Unanimous consent, also, for the position
statement of the InterTribal Monitoring Association to the
Department of the Interior, dated December 11th, 2001.
Mr. Hayworth. Without objection.
Mr. Faleomavaega. Unanimous consent, that the tribal
chairmen's position statement of proposed reorganization that
was presented to Secretary Norton--This is a tribal
consultation of Indian Trust assessment management, dated
December 20, 2001.
Mr. Hayworth. Without objection, it is so ordered.
Mr. Faleomavaega. Unanimous consent, that the letter from
the Northern Arapaho Business Council to Assistant Secretary
Neal McCaleb, of December 18, 2001, also objecting to Secretary
Norton's proposal.
Mr. Hayworth. Without objection.
Mr. Faleomavaega. Unanimous consent, this statement dated
February 1, 2002, by the Assiniboine and Sioux Tribes,
counterproposal to the BIA's proposal for reorganization.
Mr. Hayworth. Likewise, it is so ordered.
Mr. Faleomavaega. And unanimous consent, that the trust
reform recommendations by the Chippewa-Cree Tribe presented by
Alvin Windy Boy, Senior, chairman, a consultation that was
conducted dated February 1, 2002.
Mr. Hayworth. Without objection.
Mr. Faleomavaega. And thank you very much, Mr. Chairman.
[The information submitted for the record can be found at
the end of the hearing]
Mr. Hayworth. And thank you. And we could tell toward the
end, I do not know if you grew misty-eyed, Mr. Faleomavaega,
but you certainly choked up there. And we are glad we got that
all worked in.
Mr. Faleomavaega. Thank you, Mr. Chairman.
Mr. Hayworth. We are happy to accommodate a variety of
views, as we will with panel three when we return from the
vote. So we thank you for your patience. Thanks to the second
panel. And again, if anyone has anything in writing, we have 2
weeks to get that in.
The Committee stands in recess, subject to the call of the
chair.
[Recess, 2:30 p.m.-2:50 p.m.]
Mr. Hayworth. The Committee will come to order. We have
asked for any documents in writing and asked for responses. And
the hearing record will be held open for those responses for 2
weeks from this date.
And so, with that, we thank panel three for hanging in. We
nickname you the ``Job panel,'' because of your patience, as we
approach ten till 3 Eastern Standard Time.
And again, we turn to our friend from Montana, who has the
privilege of introducing yet another constituent.
Mr. Rehberg. I thank you, Mr. Chairman. One of my
colleagues was ribbing me a bit, suggesting that perhaps nobody
was left in the State of Montana. I might point out that I do,
in fact, represent a district that spans the distance of
Washington, D.C., to Chicago, and has 902,000 residents. So the
six or ten that have been here did not even make a dent in our
district.
[Laughter.]
Mr. Rehberg. But I do have the pleasure of introducing
another good friend, a long acquaintance of mine. Jonathan
Windy Boy is a member of the Chippewa-Cree if the Rocky Boy's
Reservation in north central Montana, which is where my family
originally homesteaded in 1873.
In addition to serving as president of the Council of Large
Land Based Tribes, he is a very active member of both his local
community and, on a larger scale, across Indian country. I am
pleased to welcome Mr. Windy Boy here today, and appreciate all
of his efforts on behalf of his people and his community. And
he is entering into the political arena, running for the state
legislature for the first time this year. So we wish you well,
Mr. Windy Boy, in that, as well.
Mr. Hayworth. And we do thank President Windy Boy for
joining us, along with Charles O. Tillman, Junior, the Chairman
of the InterTribal Monitoring Association; and Tex G. Hall, the
president of the National Congress of American Indians; and
Donald T. Gray, Esquire, affiliated with Nixon Peabody.
And with that, we will hear first the testimony of Chairman
Tillman. Welcome.
STATEMENT OF CHARLES O. TILLMAN, JR., CHAIRMAN, INTERTRIBAL
MONITORING ASSOCIATION
Mr. Tillman. Thank you very much, Congressman Hayworth. It
is a privilege to be here. I did not know I was going to be
first, but I am now, so I might as well get started.
A couple of days ago, I was invited out to be one of the 24
or 36 that participated in the taskforce, and in that, Dr.
Williamson, University of Colorado, speaker of the
Sheperdstown, West Virginia: on the origin of trust. And, sir,
I think that that is where this all begins. We have to start at
the beginning. And I was told by an old, old-time lawyer years
ago that you start at the first, and not in the middle, or not
at the last; but at the first of the thing.
And the Indians started off with treaties, trust, case law.
Policies and procedures were developed from that; and then the
most important part, the accountability. Trust law appeared in
1831, under Chief Justice Marshall, in the Cherokee Nation
case. Marshall understood the treaty negotiations, and knew
what the tribes were asking for, and that was disease
protection against the white race; protection against trespass
on their land; protection for their land. That was 171 years
ago, and here we are today asking for protection, and living up
to what Congress said 171 years ago.
But Congress realized that tribal trust law is the most
direct, most private, and should be held at the highest
standard of all trust law.
The moral issue has been felt since the Nixon
Administration about its great importance, and hopefully to
every administration thereafter. We have not forgotten what
Justice Marshall said; that Congress was the ultimate trust
holder. And I am here today to ask Congress to flex its
authority, to abide by what our forefathers felt toward the
native people of this country.
Congress needs to make sure that the trust functions are
being carried out by the trustee, which is the Bureau of Indian
Affairs. And Congress should have its own oversight Committee
for this purpose.
Congressmen, I belong to a group called the ITMA, which is
the InterTribal Monitoring Association, which was started in
1990. Right now we have 53 tribes, and those 53 tribes consist
of the largest stakeholders. They are the ones like the Osage
Tribe of Indians. We have a 1.5 million acre reservation which
has, I think it is, 14,000 oil wells. And it is badly
mismanaged.
The ITMA represents those folks, and we oppose the
Secretary's plan for the new Bureau of Trust Management, called
BITAM. We totally, 100 percent, oppose that.
The second thing we do, we oppose the reprogramming of $300
million for that purpose, and respectfully request Congress to
reject the reprogramming of that request.
ITMA suggests the following issues, and they must be
addressed and considered in improving trust reform:
No. 1. Determine the trust duties to be discharged. And
that means to me, what are the duties to be performed on
accountability of our assets? That is the main and most
important thing of all.
The second thing that the ITMA would request in
highlighting some of the things is to disclose the known losses
and theft that have happened on these reservations.
The third thing is the reconciliation of settlement.
So what I am here today to do to you is to express the
proposal of the InterTribal Monitoring Association and who we
represent. We are the big stakeholders. We are the ones that we
look at tribal stakeholding, as well as IIM. So today that is
the reason why I am here.
I thank you very much for letting me testify here. I
appreciate your hearing me. But I would like to make one more
comment. It is that when we take a look at our history, and we
take a look at Enron, and we take a look at the S&Ls, what
happened back in the '80's, that it cost this country $88
billion to fix, then we are in serious trouble. And what I
call, this is our ugly baby. And if it is our ugly baby, then
we need to fix it. Because these infractions go on and on and
on. They are a day to day thing, Congressmen, and we have to
stop it. Thank you very much.
[The prepared statement of Mr. Tillman follows:]
Statement of Charles O. Tillman, Jr., Chairman, Intertribal Monitoring
Association on Indian Trust Funds
The Intertribal Monitoring Association on Indian Trust Funds (ITMA)
is a representative organization of the following federally recognized
tribes: Central Council of Tlingit & Haida Indian Tribes, Kenaitze
Indian Tribe, Metlakatla Indian Tribe, Hopi Nation, Tohono O'odham
Nation, Salt River Pima-Maricopa Indian Tribe, Hoopa Valley Tribe,
Yurok Tribe, Soboba Band of Luiseno Indians, Southern Ute Tribe, Nez
Perce Tribe, Passamaquoddy-Pleasant Point Tribe, Penobscot Nation,
Sault Ste. Marie Tribe of Chippewa Indians, Grand Portage Tribe, Leech
Lake Band of Ojibwe, Red Lake Band of Chippewa Indians, Blackfeet
Tribe, Chippewa Cree Tribe of Rocky Boy, Confederated Salish & Kootenai
Tribe, Crow Tribe, Fort Belknap Tribes, Fort Peck Tribes, Northern
Cheyenne Tribe, Winnebago Tribe, Walker River Paiute Tribal Council,
Jicarilla Apache Tribe, Mescalero Apache Tribe, Pueblo of Cochiti,
Pueblo of Laguna, Pueblo of Sandia, Three Affiliated Tribes of Fort
Berthold, Turtle Mountain Band of Chippewa, Absentee Shawnee Tribe,
Alabama Quassarte, Cherokee Nation, Kaw Nation, Kiowa Tribe of
Oklahoma, Muscogee Creek Nation, Osage Tribe, Quapaw Tribe,
Thlopthlocco Tribal Town, Confederated Tribes of Umatilla, Confederated
Tribes of Warm Springs, Cheyenne River Sioux Tribe, Sisseton-Wahpeton
Sioux Tribe, Chehalis Tribe, Confederated Tribes of Colville, Forest
County Potawatomi Tribe, Oneida Tribe of Wisconsin, Eastern Shoshone
Tribe, and the Northern Arapaho Tribe.
ITMA is very grateful for this Committee's invitation to share our
thoughts today on the status of Indian trust reform within the
Department of the Interior. We believe we have addressed those issues
on which the Committee specifically requested our views. ITMA
emphatically:
Opposes the Secretary's plan for a new bureau of trust
management
Opposes the reprogramming of $300 million for that
purpose
Respectfully requests the Congress to reject that
reprogramming request
ITMA suggests that the following issues must be addressed and
considered in improving Indian trust reform:
Determination of the trust duties to be discharged
Consultation with tribal governments and Indian
individuals
Continuous, diligent oversight by Congress
Develop policies and procedures to execute acknowledged
trust duties
Develop internal controls to detect failures to follow
policies and procedures
Develop an enforcement system to preserve integrity
Develop an appropriate system of rewards and sanctions
Disclose known losses and thefts
Role of lawyers and budget officials identified
Deal in good faith
Avoid self-dealing or double standard
Reconciliation or Settlement
Consultation is not a gratuitous nicety
This Committee has heard much about the Secretary's lack of
consultation in developing her restructuring plan. ITMA wants to
emphasize that consultation is essential to the Department's own stated
goals of wanting to improve the delivery of trust services. This
Committee asks our views. The Senate oversight committee asks our
views, the appropriations committees in both houses have consulted with
us over the years, the General Accounting Office has consulted with us
over the years in the preparation of reports for the Congress, and the
press has requested our views in reporting trust fund matters to the
public. The Department of Interior alone, charged with the principal
duties of Indian trust administration, has almost never consulted us,
except to solicit our endorsement of a decision already taken behind
closed doors within the Department.
Had Secretary Norton consulted us, she would have been told that
her plan for an additional Bureau of Indian Trust Asset Management
would face enormous opposition if she unveiled it as a surprise. Such
an announcement would violate a written agreement entered into by Mr.
McCaleb's predecessor on the issue of consultation. The Secretary
recently attended one, and dispatched a team of Departmental level
officials to attend other tribal ``consultations'' throughout Indian
Country to convey the reorganization proposal. All these officials
heard first hand that Indian Country totally opposed the plan and lack
of consultation.
Her first personally signed report to the Cobell court, delivered
on January 16 of this year, gives us our first indication that the
present Administration just might, after all, bring that breath of
fresh air to Indian trust reform we have so long hoped for and awaited.
We are pleased with the report previously given us by her Director of
the Office of Historical Accounting that he has agreed to adopt the
approach we suggested six years ago by beginning with the judgment
accounts. ITMA can be helpful to that office in suggesting ways in
which the remainder of the IIM accounts can be similarly stratified for
examination in manageable portions. In her report the court, the
Secretary announced, among other things, her intention to adopt a few
of our other long-standing recommendations to her Department.
None of this suggests that she is in a position to implement such
sweeping changes as outlined sketchily in her November 14, 2001 memo
introducing the reorganization and creation of a new agency to carry
out trust reform successfully. We should not forget that the Department
was just as confident in its ill-fated, if short-lived announcement
that she intended to proceed with a ``statistical sampling'' of the IIM
accounts. We believe the Secretary could have avoided one of the
present contempt charges, had she simply chosen to confer with us,
rather than taking the ``statistical sampling'' decision behind closed
doors, which is the same way her reorganization plan appears to have
been conceived.
Successive Administrations going back to 1986 have announced bold,
sweeping proposals to reform Indian trust administration. None of these
proposals rose to the level that could meaningfully be called a plan.
Whether the proposal was to contract trust fund administration to
Security Pacific Bank, or with Mellon Bank, or to the Bureau of
Reclamation, or to transfer it to a whole new agency as Secretary
Norton now proposes, the result was the same and was totally
predictable. Indian country rose up in outrage not merely because they
were not ``consulted,'' but because they had no idea what would happen
to our money or service delivery, and no one could tell us. Career
employees whose principal contribution in retrospect turns out to have
been to buy time reaped scores of thousands of dollars in meritorious
bonuses. The failures and the losses and the national embarrassment
continued. After a decade and a half, this pattern should be clear.
Progress of ``Consultation'' on the Department's plan for a new Indian
Trust Agency
It is too early in the ``consultation'' process on the Secretary's
proposal to make any informed observations about the results. It is not
too early, however, to make some comments on the process itself, or to
offer some observations about improving the process. In very
significant measure, this particular consultation process has been
badly undermined from the beginning by both the Administration and the
Congress. Tribes and their organizations both have been admonished by
congressional staff either to come up with persuasive alternative
proposals or to persuade the Secretary to abandon hers. Otherwise, the
Department's current plan will almost certainly be approved when she
presents it again, this advice has continued. If that advice reflects
the true situation, then the present consultation process is very
probably not much more than a charade.
ITMA believes the consultation process should focus on the
objectives to be achieved in the various areas of trust administration
such as leasing, rights-of-way, extractive operations, investment, etc.
These collaborative deliberations should begin with the legal duties
required of the government as trustee, and the capabilities and
resources needed to perform those duties. Only when there has been some
consensus achieved on the nature and scope of those duties does it make
sense to focus on the systems and structures best suited to accomplish
their performance. Unless the Department is genuinely willing to put
its opening assumptions on the table, consultation in this matter will,
indeed, be simply a gratuitous nicety, to be endured by the Department
as part of the cost of proceeding with a predetermined course of
action.
In the Eighth Quarterly report to the court, the Secretary and her
contractor indicate what we hope is a commitment to return to first
principles and analyze the objectives to be achieved before turning
again to the systems best suited to achieving them. We note, for
instance, that in revising trust regulations, the previous
Administration acknowledged the need for an accounts receivable system,
but would not acknowledge any responsibility for collecting receivables
until the much vaunted TAAMS system was operational. Now that system
has been put on hold. Whether or not that disclaimer is effective is
another matter, but the example is instructive here.
We have heartily applauded the Secretary's apparent repudiation of
that systems-driven approach to performance of trust duties, but we
point out that the very same mistake can be made with respect to
organizational structure as with respect to systems. Her predecessor's
systems-driven approach has now left Indian trust beneficiaries stuck
with a regulatory regime that explicitly disclaims any responsibility
on the Department of the Interior to collect their receivables. This
Secretary appears to have repudiated that systems-driven approach.
Instead, she has apparently elected to proceed with an organizational
structure-driven approach, instead. If that is the case, we predict a
similar result. In both instances, the choice made represents a
decision to proceed publicly amid much fanfare with activities that
require a lot of motion, transfer and expenditure of funds, and
generally mesmerizing movement. This flurry of activity in the name of
reform is well known to the Department as a tried and proven formula to
forestall embarrassing questions from oversight Committees and eat up
the calendar allotted to any Administration in large chunks.
Finally, we have to note that since this hearing was called, the
Secretary and her top officials have not only agreed to meet, but have
spent a week-end in intensive talks with a task force put together by
tribal leadership from across the nation, and have committed themselves
to seek a mutually acceptable approach to further trust reform efforts.
ITMA believes that this approach offers greater promise than any
approach previously taken, but this promise remains unrealized in these
early days.
Interior Secretary Norton's Plans for Restructuring Trust
Administration
ITMA strongly opposes Secretary Norton's plan to create a Bureau of
Indian Trust Asset Management or otherwise dividing the Bureau of
Indian Affairs into two separate agencies. ITMA's opposition does not
stem from pique over not having been consulted. Rather, our opposition
stems from the fact that this announcement fits the very pattern
described above. This is the current Secretary's first sweeping
proposal for reform, and it, too, was conceived behind closed doors,
and no one in the Department has been able to tell us just what it
means for either our money or our other trust assets. It has not been
lost on us that the apparent architects of this proposal were deeply
involved in some of the Department's brilliant inventions of the
1980's, when large meritorious cash bonuses were paid to career
employees but no improvement resulted.
This proposal contains within it the same seeds of likely failure
that attended the software acquisition called TAAMS. So far as anyone
in the Department has been able to tell us, little thought has been
given to the ability to state the objectives to be achieved, beyond the
catchall term of improvement. The Secretary's team has not been able to
tell us just what functions, positions, resources, facilities, or other
capabilities she proposes to transfer. Her team has not shared with us
any of the planning, if any, that went into this proposal, or what it
portends for the remaining agency and its capabilities. She has not
been able to tell us why she thinks current employees could perform
their duties better if they were located in a new agency. We
respectfully suggest that she and her team have not given sufficient
attention to the necessary first step of determining just what those
duties are.
Further, we note that the BITAM proposal contains within it the
explicit assumption that determining the nature and scope of those
duties is solely within her purview. ITMA categorically rejects that
assumption. We are aware that the Congress is reluctant to ``tie the
hands'' of the Executive Branch officials who are charged with
discharging those duties, and that deference to agency ``expertise'' is
a long-standing tradition. In the present situation, our reluctant duty
is to advise this Committee that the weight of recent history counsels
against honoring either of those traditions without carefully examining
the underlying assumptions.
While we take some comfort in Secretary Norton's candid concession
that this proposal was driven in large measure by a desire to avoid
interference in her administration of the trust by the federal court in
Cobell, we simply find that explanation totally inadequate for the
purpose claimed, fraught with far too many uncertainties, and more
likely than not to be counterproductive even for her stated purposes.
As we have noted, this proposal offers no explanation why a realty
clerk having difficulties performing his duties would be better
disposed or equipped to perform those duties under a new agency than
under the present one. If the person is the problem, it is a personnel
problem and not an organizational one. If the person is not receiving
adequate supervision, it is a management problem and not an
organizational one. If, as we suspect, the problem is that insufficient
attention has been given to determining the nature and scope of the
duties themselves, placing the person's position in a different box or
the person in a different agency will contribute absolutely nothing to
improving the situation. If that person is left in the same location,
but transferred administratively to a new agency the Department will
have created an entirely new administrative and budgetary regime that
contributes absolutely nothing to achieving the original objective,
which remains the delivery of realty services. The Cobell court's
Special Monitor's reports abound with such examples of bureaucratic
shuffling that have exacerbated, rather than alleviated, problems in
Indian trust administration. A wholesale restructuring of the
Department without a responsibly developed plan for what is to be
achieved would be somewhat like catching air in a net. Prodigious
amounts of energy can be expended. The movement can be mesmerizing. But
in the end, nothing will have been changed.
ITMA respectfully urges this Committee not to ignore the lessons of
recent history in carrying out is own oversight responsibilities to
evaluate Secretary Norton's restructuring proposal.
Impacts of Court Order to Shut Down Internet Access for Trust
Activities
More than 40,000 individual Indians went through the winter month
of December and the holidays without access to their own money as a
result of the court-ordered shut down of automated systems connected to
the internet. Some 43,000 individuals did not receive checks that would
otherwise have been written during that period. ITMA hopes that the
lesson in unintended consequences from this episode is not lost on
either the court or the Department, or the Congress for that matter, in
considering the Secretary's reorganization plan. We have been told by
tribal leaders throughout the country that Indians throughout the
country are facing repossession of family vehicles, telephone and other
utility disruptions, harassment from creditors and collection agencies,
and other indignities they are powerless to avoid simply because their
own money is not available to them. Elderly Indian people have been
evicted from nursing homes. One tribe has performed a service to the
government by issuing general assistance checks for eligible families
throughout the Pacific Northwest because the Bureau of Indian Affairs
has been unable to do so. Another tribe has drawn down hundreds of
thousands of dollars of tribal money in an effort to help families
weather the shut-down period. The impacts of this shut down cannot be
overstated, and they have been cataclysmic for those most directly
affected. Not one employee of the Department or the court has missed a
paycheck during this period, however.
In addition, other unforeseen consequences of this shut down period
should not be overlooked when full service resumes. We presume, for
instance, that the government will pay interest to those individuals
whose money it held rather than paid out during the period of the
shutdown. How will the interest be calculated, or from where will it be
paid? Was the money that was held rather than paid out invested as part
of the entire IIM investment pool? If it was invested as part of the
pool, will others in the pool, such as minors and judgment account
holders, be credited with a portion of the interest so earned? The
effect on individual Indians who went without their only source of
income during the winter months and the holiday seasons should not be
lost on anyone.
This issue raises other questions that the Secretary's proposal to
separate ``trust'' and ``non-trust'' functions seems to ignore,
including the connection between the BIA's trust services and its other
service delivery responsibilities. Tribes never considered the extent
to which trust service delivery has come to depend on the internet. The
recent shutdown has caused us to wonder how many initial lease payments
were received, along with the administrative fees the BIA now charges.
That situation would raise the question of whether the government was
paying into its own account, but not into Indians' accounts, monies
charged for the use of Indian land. We do not know whose responsibility
it is in the current situation to ensure that all the payments that
were withheld are paid, and paid in full, including interest. All the
monies withheld, together with accrued interest, should be paid
immediately, and should not take months to work through the backlog.
IIM Security
ITMA shares the concern of the Cobell plaintiffs, the court, and
the Department for security of information relating to IIM accounts. We
point out in passing that during the period of the Cobell litigation,
the Pentagon, the FBI, and the Central Intelligence Agency have been
hacked into, and none of them was shut down as a result. Nevertheless,
there is probably no area of Indian trust administration that has
generated more consensus among all the interested parties than that,
``The security of individual Indian trust data is inadequate,'' in the
words of the current Associate Deputy Secretary.
This issue has received detailed attention from the Special Master
appointed by the court in the Cobell litigation and his contractors, as
well as from the Department and its contractors. No doubt, the court-
ordered shut down did much to focus the Department's attention on this
matter, and this focus does appear to have resulted in a candid self-
appraisal of its shortcomings in this arena.
The Department has now acknowledged, for instance, that it simply
does not have in place either the comprehensive plan for establishing
and continuously improving data integrity systems, or the staff
required to develop one, as required by the Government Information
Security Reform Act, and OMB Circular A-130. Both supervisory and
technical support positions such as those for a Chief Information
Officer and Information Technology Specialists for security assistance
and oversight remain vacant. In the absence of an overall plan, the
Department's efforts in this area continue to be driven by its
immediate needs, court orders, and contractor-identified priorities.
ITMA does note in the area of IIM data security where the
Department itself is in trouble and the Secretary on trial for contempt
of court, the Department has adopted an approach long recommended by
ITMA for the overall trust reform effort. Because the Department is in
trouble for noncompliance in performing its duties, it has not charged
ahead with either a huge systems procurement or a wholesale
reorganization of the boxes on organizational charts. Rather, the
Department has undertaken an inventory of its duties as they are found
in statutes, regulations, OMB-Circulars, court orders, treaties, and
directives from Congressional appropriations Committees. In the absence
of qualified staff dedicated to this effort, the Department will charge
one of its contractors to develop guidance in designing business models
and systems specifications to perform those duties. This is precisely
the approach ITMA has long insisted the Department adopt to achieve
trust reform, and not just data integrity in systems designed to
perform historic functions more efficiently. If the Department would
exercise similar care in designing trust service delivery that is given
to keeping its top officials out of jail, prospects for meaningful
trust reform would be significantly improved.
ITMA Recommendations
Continuous, Diligent Oversight by Congress. ITMA believes that true
reform of the administration of the Indian trust must begin with the
proposition that not this Secretary nor any Secretary alone can be
permitted to determine the scope of her own duties. Recent history
demonstrates conclusively that those tasks that appear easy to perform
will be given prominent attention, and those that will eat up large
portions of any Secretary's term in office will be held forth as
progress to shield against continued oversight by the Congress. We
recognize the natural inclination of the Congress not to appear to be
interfering with pending court proceedings, or to ``tie her hands'' in
carrying out her responsibilities.
For the reasons that follow, however, ITMA respectfully suggests
that this traditional deference has been misplaced in this context and
that continued oversight by the Congress is necessary for effective
reform of Indian trust administration. Even Judge Lamberth appears to
have overlooked so far the Department's continued intention to violate
the express command of Congress in the Royalty Simplification and
Fairness Act of 1996 by implementing that Act on Indian lands, despite
the plain language of the statute that it shall not apply to Indian
lands.
As we have noted, in the absence of effective oversight, the
Department will determine the scope of its own duties and this alone
violates the first principle of the law of agency. Secondly, without
the kind of oversight represented by this hearing, the Secretary would
already have committed some $300 million to the expensive, highly
visible, and time-consuming task of reorganizing the trust functions of
the Department without having shown any evidence that it would result
in improvement.
Determination of the Duties to be Discharged. Although the
Secretary cannot be permitted to determine unilaterally the scope of
her legal and fiduciary duties, no one disputes that existing duties as
set forth in treaties, statutes, and case law have not been adequately
carried out in the past. Neither is it disputed that the Secretary's
trust duties extend well beyond simply the management of physical
assets. To date, however, no significant effort been made even to
identify those duties, except in the area of automated data security
where the exercise appears to be motivated by the threat of a contempt
citation. Notwithstanding that this underlying failure to perform legal
duties is itself the basis for the entire trust reform effort, no one
to date outside the Office of Trust Funds Management has attempted to
set forth with clarity just what those duties are. ITMA believes that
any improvements resulting from reorganization or successful automation
of current practices would be a result of sheer happenstance if those
initiatives are not driven by a comprehensive understanding of the
duties to be performed. Every one of the hundreds of millions of
dollars paid in settlements and judgments over the past fifteen years
has been paid because of a failure to perform existing duties required
by law. In presently pending litigation, the Executive Branch continues
to deny the existence of those duties. Almost every conceivable avenue
has been explored, except to identify them, acknowledge them, and then
to design policies, procedures, and systems to discharge them
honorably. No one is more familiar with the treaties and statutes
affecting each tribe than the tribes themselves, and ITMA believes
their participation in this effort is essential for success.
Any serious attempt to determine the duties to be performed in
carrying out the nation's trust duties to Indian tribes and individuals
will encounter early the Self-Governance Act of 1994 (P.L. 103-413).
Under that law, some tribes have chosen to undertake many of those
duties themselves. ITMA is hopeful this Secretary will find those
tribes' experiences to be useful and instructive, and will not view the
self-governance policy embedded in our nation's laws as simply a
frustrating obstacle to her ``global'' approach to trust reform.
Develop Policies and Procedures to Execute Acknowledged Trust
Duties. Once the duties to be discharged are determined and
articulated, then the Department should develop policies and procedures
designed to facilitate and promote the discharge of those duties. Such
matters as segregation of duties, development of written policies and
desk operating procedures, and defining job qualifications, etc., can
meaningfully be addressed only when the underlying duties to be
performed have been identified and articulated. BIA data cleanup
provides a good example of a massive undertaking that preceded, rather
than followed, a clear definition of the duties to be performed and
development of policies and procedures developed to improve the
performance of those duties. ITMA applauds Secretary Norton's decision
to put this initiative on hold until this kind of analysis can be
conducted. This is precisely the approach the government seems to have
chosen when the matter at issue is the liberty of its executives. As a
trustee, those same executives should be held to no less stringent a
standard when the matter in issue is our property for which they hold a
solemn and legal trust obligation.
Develop Internal Controls to Detect Failures to Follow Policies and
Procedures. No human enterprise is immune from failures and attempts to
defraud it. Indian trust administration is no exception. It is not the
duty of the Secretary to achieve perfection. It is her duty to
recognize this reality and to design internal controls to detect these
occasional mistakes or failures and to correct them. There will be
human mistakes; there will be errors in the best of systems; and there
will be the occasional criminal attempt. Once appropriate policies and
procedures are in place, a system of internal controls should be
designed to permit managers to exercise quality control, maintain
system integrity, and correct those deficiencies noted. This concept is
not foreign to the Department. For many years, voucher examiners
reviewed travel and other reimbursement claims submitted by the highest
level officials of the Bureau of Indian Affairs to protect the
government from overpaying for mileage or per diem rates. On the other
hand, throughout this period, oil and timber companies were permitted
to take billions of dollars of resources from Indian lands, and no
employee was assigned to review the self-generated reports of their
operations. Similarly, no one was assigned the duty of monitoring
transactions in trust accounts, as the Special Master in the Cobell
case has so dramatically demonstrated in recent months.
Develop an Enforcement System to Preserve Integrity. The present
system of enforcing policies, procedures, and internal controls focuses
on easily accomplished ``successes.'' The backgrounds and character of
lower level employees are thoroughly screened. Some with bad credit
records are relieve of their duties. In the meantime, thefts from trust
funds are concealed. New hires are brought in at the highest levels and
given operational authority over trust reform activities with neither
the civil service review given to voucher examiners or the advice and
consent of the Senate. When defalcations or thefts are discovered, no
publication invites other account holders similarly situated to review
their accounts. No auditor is asked to pay particular attention to
transactions from that location. Confirmation letters are not directed
to others who were equally vulnerable to the same pilferage. The
current system of enforcement, insofar as there can be said to be one,
is not designed to enforce compliance, but to avoid liability.
Develop an Appropriate System of Rewards and Sanctions. As noted
earlier, during much of the last fifteen years, scores of thousands of
dollars have been paid to career employees of the Department for
assisting one Administration after another to create the illusion of
active reform efforts, while underlying problems were not addressed at
all. Justice Department lawyers have received publicized rewards for
the meritorious representation of the government in trust funds
litigation, only to be removed ignominiously from the case months
later. The government itself has been sanctioned or rebuked in trust
litigation arising from California to New Mexico to South Dakota to
Washington, D.C., and the attorneys responsible continue the same
pattern of practice. In the Cobell case alone, the government has paid
more than $600,000 in sanctions, three Presidentially appointed
officials have been held in contempt of court, and another is presently
on trial. In none of these instances has there been an effective
incentive to alter the behavior of career employees of the Interior or
Justice Departments. On the other hand, the government faces serious
accusations of retiring, firing, or retaliating against employees who
have disclosed failures, challenged unauthorized access, and told the
truth when questioned under oath.
A system of rewards and sanctions should be designed that will
effectively discourage cover-ups, falsifying records, giving false
testimony, dissembling, and otherwise providing materially misleading
writings or utterances. Such a system should reward those who discover
problems and bring them to light. It should reward those who discover
and disclose losses, waste, or thefts from the trust corpus. It should
reward those who come forward with solutions. It should reward those
who tell the truth. It should reward those who place problems squarely
on the table for deliberation and resolution.
Under the current system, losses from nearly a generation are
tallied neatly with accrued interest owed, but not made whole. ITMA
respectfully suggests Congress has a responsibility here as well. The
Department requested $12,668,000 for fiscal year 1996 to make good some
known losses to IIM accounts, and ITMA believes the Congress declined
to provide it. No Committee of Congress has so much as made an inquiry
about it in the intervening years. After the Cobell case was filed, the
Department has never again even intimated that there may have been
losses to the IIM portfolio. Institutional memory is entrusted to
career employees at management and attorney levels who reap rewards for
covering up and dissembling. The entire nation and its financial press
in recent weeks have raised a huge public outcry about the lack of
transparency, the apparent dissimulation, the rewards to management
while account holders suffered losses, and the failure of analysts to
discern underlying problems associated with the collapse of Enron. All
those very same issues attend the current system of Indian trust
administration.
Disclose Known Losses and Thefts. Other than possibly the
appearance of self-dealing, no issue arising from the travesty of the
Enron collapse has received more attention than the lack of
transparency in its financial statements. ITMA firmly believes that
disclosure of known losses, waste, fraud, and theft is an essential
underpinning of any trust operation. When such events are discovered in
a commercial trust operation, the legitimate expectation of
beneficiaries is that some honorable individual will step forward,
disclose the event, and offer to make restitution. This attitude is
conspicuously and defiantly absent in the government's administration
of the Indian trust estate. ITMA has discovered evidence of the theft
of more than $7.75 million in a single episode in 1984. No Secretary of
the Interior and no Assistant Secretary of Indian Affairs has ever
disclosed that theft to account holders. When ITMA brought its
awareness of the matter to the Department in the mid-1990's, the
Department calculated the amount required to make good the unrecovered
money plus accrued interest and requested appropriations to do so.
Congress declined to provide the money, and the matter has not been
heard of again. ITMA believes the Department does maintain a running
tally of the amount presently due, but only against the day when the
matter may be brought to light again. It is virtually impossible to
repose trust in a system that knows, but fails to disclose and make
whole, losses it has allowed to occur. ITMA believes in the adage that
sunlight remains the best disinfectant known to the operation of
government in a free society.
Role of Lawyers and Budget Officials. ITMA believes the failure to
disclose known losses is often the result of the role of government
lawyers and budget who see their role not as officers of the court, or
as protectors of the integrity of government, but as defenders of the
public fisc. Even those officers appointed by the President to run the
Executive Branch of government are often hamstrung in their efforts by
the advice of career employees who effectively direct trust operations
from their unseen positions in the service of successive
Administrations. ITMA believes this cloak must be removed, and the role
of these officers subjected to the same scrutiny we give to those in
front offices. Even a cursory review of the government's record in
trust litigation over the past twenty years will convince any reviewer
of the importance of this issue. But no one in a position of authority
in Interior, Justice, or Congress is even aware of this record.
Deal in Good Faith. ITMA believes that neither trust reform nor
consultation will be successful unless both sides consent to deal with
the other openly and in good faith. ITMA notes the wildly varying
explanations provided by the Interior Department to explain the genesis
of Secretary Norton's reorganization proposal as an example of our
concern that we are not being dealt with in good faith. Department
officials have explained to us that her reorganization proposal was
developed largely out of a concerted desire to avoid court intervention
in her administration of the trust, and to avoid receivership. We
understand from conferences with Congressional staff that she has made
much the same explanation privately to Congress. ITMA notes that her
explanation to the court suggests an entirely different rationale and
history of the development of this proposal. Consultation on this or
any other matter will be utterly meaningless unless the real reasons
for her positions are put forth straightforwardly for discussion. In
this matter, ITMA notes that the Secretary's recent report to the court
explains tribal opposition to her reorganization proposal as centered
on the consultation process itself. If she really believes that, and
that there are not substantive issues that need to be addressed, and
that her assumptions as well as ours are not on the table for
discussion, then the consultation process is merely a procedural
hurdle, and not a meaningful forum.
Avoid Self-Dealing or Double Standard. ITMA believes that
meaningful collaboration in trust reform will require the Department to
give as much attention to honorable trust administration as to
protecting the government from liability for past mistakes or keeping
the Secretary out of jail. No one expects the government to operate
flawlessly. We accept that everyone wants to improve the future
performance of the government in trust administration. But failures of
the past that are known or discoverable should be faced squarely and
dealt with honorably. Of course, those that are known should be
disclosed. None of this is happening, however. The government to date,
including Secretary Norton's team, has admonished us to let bygones be
bygones, and to focus on the future. ITMA notes that this government
has operated vigorously at the highest level and exerted pressure on
dozens of governments around the world in recent years to face
honorably obligations owed as a result of the Holocaust. ITMA notes
that our government has paid some one billion dollars in recent years
in settlement of past failures in Indian trust administration. ITMA
further notes that a recent $20+ million effort to ``reconcile'' tribal
trust accounts resulted in a major accounting firm's disclaimer of
either opening or closing balances in its reports. ITMA remains
convinced that the government must agree to deal honorably with past
failures, even as it focuses its efforts on future reforms, if real
reform is to have any meaning. Any other approach means that even
future obligations may be ignored with impunity.
ITMA also notes that when Secretary Norton created the Office of
Historical Accounting in her office, she provided the officer in charge
with 60 days merely to develop a timetable for developing a plan of
operations. She further afforded him 120 days merely to determine what
he thought he could do ``immediately.'' In light of that schedule--60
days merely to develop a timetable for developing a plan--her recent
abbreviated schedule for nation-wide tribal ``consultation'' on a
vastly more ambitious undertaking is both an outrage and an insult.
ITMA fears that this careful and deliberative approach where she is
faced with contempt proceedings, compared to her cavalier treatment of
tribes' opportunity to proceed deliberately, reflects a mentality of
self-dealing and a double standard that is totally unacceptable.
Likewise, where she is also facing contempt proceedings in the
matter of IIM data security, she is proceeding by carefully
inventorying and articulating her duties, tracing them to treaties,
statutes, case law, regulations, OMB directives, and Congressional
reports. In the much larger matter of overall trust reform, however,
she proposed to make a $300 million overhaul. By at least one of her
accounts, her proposal to uproot all trust functions was made within
two days of receiving a list of options, a list that did not even
contain the prospect of beginning with an analysis of the duties to be
performed.
ITMA believes that the Secretary must agree to approach trust
reform by giving Indian beneficiaries the same level of consideration
she is giving to her far more personal concerns.
Reconciliation or Settlement. The Department will never be in
compliance with the 1994 Indian Trust Funds Management Reform Act until
it can report accurate account balances. In addition, it will never be
able to report accurate account balances until it deals with the issue
of historic balances. If the Arthur Andersen reports of the mid-1990's
demonstrate the impossibility of a global, transaction-by-transaction
reconciliation of tribal accounts, then other methods must be found to
achieve ``accurate balances.'' This is neither the impossibility nor
the meaningless one-quarter billion-dollar exercise it has been
presented to be. It is an exercise that will require cooperation. It
will require a willingness to accept responsibility for past failures,
a determination to deal in good faith, and to avoid self-dealing. ITMA
has suggested approaches to this matter that have been successful in
litigation and negotiation for years. The Executive Branch has so far
been unwilling to participate in any substantive discussions that would
require it to admit the very systemic failures that it presently
acknowledges in open court. Career attorneys in the Department of
Justice have been able to give effective ``direction'' to Presidential
appointees in Interior to avoid even discussions on settlement
proposals. ITMA continues to recommend discussions designed to achieve
negotiated or stated balances where actual reconciliation is not
possible. In those instances where a full reconciliation is possible,
there is no excuse for not proceeding.
Legislative Recommendations. Last month, at least three lawsuits
were filed against the government, in large part to protect the tribes
against possible claims that the Arthur Andersen reports provided
nearly six years ago sufficed to end the Congress' tolling of the
statute of limitations. Even though those reports explicitly disclaimed
the accuracy of either opening or closing balances, Justice Department
lawyers have indicated they will interpose those reports in any claim
against the government as evidence of both any accounting that might be
ordered, and as evidence of account balances. The Congress should act
to eliminate the possibility of either of those uses over the objection
of any tribe. A tribe that knowingly chooses to accept the report for
its own accounts, of course, should be free to do so. Congress should
also affirmatively address the statute of limitations issue by making
it clear that no tribe is barred from bringing suit until Congress has
expressed its agreement that an adequate accounting has been provided.
Such a provision would likely forestall, rather than prompt, lawsuits
such as those filed last month as protective measures.
No matter what organizational structure is ultimately adopted, or
what systems acquired or developed, there are a number of areas where
substantive legislation is needed. The present method of investing IIM
monies in a pool has returned hundreds of millions of dollars in
increased earnings over the past generation, and saved tens of millions
in administrative costs. This method does not have affirmative
authorization in law. The method of computing interest for individuals
is unnecessarily complex and, in fact, has to be contracted out even by
the trust accounting systems contractor. Both these matter should be
addressed in legislation. ITMA respectfully suggests that Congress
consider authorizing a par value fund structure for this pool.
The Congress should act to repeal the blanket authority presently
available to the Secretary unilaterally to impose administrative fees
on Indian trust assets to recover the costs of administering the trust.
This provision has never until January of last year been incorporated
into regulations, making it a duty of BIA officials now to make two
collections for every lease of Indian lands, one for the government and
one for the Indian landowner. When the Indian payment system was shut
down in December, presumably the government was paying itself, but not
Indians for any leases issued during that period. There is neither
rhyme nor reason disclosed for the ``formula'' now contained in
regulations for computing the government's fee for processing leases,
assignments, extensions, modifications, renewals, etc. ITMA believes
the Congress provides resources for the discharge of trust duties and
is largely not even aware that the Department is supplementing its
appropriations with these fees. ITMA also thinks it is an outrage that
a Department that is in so much trouble for its inability to collect
for Indians should take it upon itself to double the number of
transactions to be processed solely for the purpose of augmenting its
Congressional appropriations. Put more bluntly, ITMA fears that the
Department has dusted off this antiquated statute and wielded it in
retaliation for the embarrassments and slights it feels it has suffered
in trust reform.
Restore Honor and Decency. There is a moral element in trust
administration. ``Not honor alone, but the punctilio of an honor the
most sensitive, is the standard of behavior for a trustee,'' Justice
Cardozo wrote. President Bush campaigned the length and breadth of the
nation on a platform to restore honor and decency to the highest levels
of government. ITMA continues to hope the moral tone he has set for the
country will filter into the administration of the Indian trust estate.
We believe that control of this effort must be wrested from the career
employees who have directed it, and taken firmly in hand by those
officers appointed by the President under the watchful oversight of
Congress and the beneficiaries themselves. Those officers must set the
tone for honor and decency in administering the trust.
ITMA takes no pleasure whatsoever in our government's
embarrassment. In numbers out of all proportion to our own, our men and
women continue to fight for this country whenever it sends our forces
upon foreign shores. We do no particular honor to their service when we
rebuke the government they serve in the face of foreign shot and shell.
It is our government, too. It does not belong to those who occupy its
seats of power. We desperately want to be able to believe our
government as much as we believe in it. We stand ready to provide
whatever assistance we can offer the Department or this Committee in
this important enterprise.
On behalf of all the 53 tribal members of the Intertribal
Monitoring Association on Indian Trust Funds who hold individual
accounts, we express our profound gratitude to this Committee for its
dedication to providing oversight to Indian trust reform. Thank you for
affording us this voice in the operation of our government.
______
[ITMA Position Statement submitted for the record follows:]
Position Paper of the InterTribal Monitoring Association on Indian
Trust Funds
december 12, 2001
POSITION STATEMENT
OF THE
INTERTRIBAL MONITORING ASSOCIATION
ON THE
DOI's PROPOSED REORGANIZATION OF BIA TRUST FUNCTIONS
this document does not constitute official tribal consultation with
doi)
The Intertribal Monitoring Association on Indian Trust Funds (ITMA)
is a representative organization of the following federally recognized
tribes: Central Council of Tlingit & Haida Indian Tribes, Kenaitze
Indian Tribe, Metlakatla Indian Tribe, Hopi Nation, Tohono O'odham
Nation, Salt River Pima-Maricopa Indian Tribe, Hoopa Valley Tribe,
Yurok Tribe, Soboba Band of Luiseno Indians, Southern Ute Tribe, Nez
Perce Tribe, Passamaquoddy-Pleasant Point Tribe, Penobscot Nation,
Sault Ste. Marie Tribe of Chippewa Indians, Grand Portage Tribe, Leech
Lake Band of Ojibwe, Red Lake Band of Chippewa Indians, Blackfeet
Tribe, Chippewa Cree Tribe of Rocky Boy, Confederated Salish & Kootenai
Tribe, Crow Tribe, Fort Belknap Tribes, Fort Peck Tribes, Northern
Cheyenne Tribe, Winnebago Tribe, Walker River Paiute Tribal Council,
Jicarilla Apache Tribe, Mescalero Apache Tribe, Pueblo of Cochiti,
Pueblo of Laguna, Pueblo of Sandia, Three Affiliated Tribes of Fort
Berthold, Turtle Mountain Band of Chippewa, Absentee Shawnee Tribe,
Alabama Quassarte, Cherokee Nation, Kaw Nation, Kiowa Tribe of
Oklahoma, Muscogee Creek Nation, Osage Tribe, Quapaw Tribe,
Thlopthlocco Tribal Town, Confederated Tribes of Umatilla, Confederate
Tribes of Warm Springs, Cheyenne River Sioux Tribe, Sisseton-Wahpeton
Sioux Tribe, Chehalis Tribe, Confederated Tribes of Colville, Forest
County Potawatomi Tribe, Oneida Tribe of Wisconsin, Eastern Shoshone
Tribe, and the Northern Arapaho Tribe.
The Intertribal Monitoring Association on Indian Trust Funds (ITMA)
unequivocally:
opposes Interior Secretary Norton's present proposals to
reorganize Indian trust functions within the Department,
opposes the establishment of a new Bureau of Indian Trust
Asset Management within Interior,
opposes the reprogramming of $300 million from
appropriated funds available in Fiscal Year 2002, for the purpose of
establishing the new Bureau.
ITMA requests the appropriations Committees of Congress to reject
the Secretary's request of November 20, 2001 to reprogram $300 million
for these purposes.
ITMA recommends that the Secretary agree, instead, to a meeting
early in 2002 to discuss reasonable timelines to engage tribes in a
meaningful consultation process for Indian trust reform. With her
acknowledgment that her reform efforts will benefit greatly from tribal
participation and that the past several years of unilateral trust
reform efforts have failed, ITMA hopes that tribes and the Department
might reach some agreement on a collaborative process for trust reform
to report at that hearing. In the interim, ITMA insists that the
Secretary designate an official with authority to ensure that essential
trust functions are not interrupted, and Indian beneficiaries do not
suffer unnecessarily in the name of improving services to them, by
disrupting cash flow, per capita payments, timely access to funds, and
payments for the use or disposition of Indian trust assets.
On November 14, 2001, Secretary of the Interior Gale Norton
proposed establishing a separate agency, a Bureau of Indian Trust
Assets Management, to address the debacle of federal mismanagement of
Indian trust assets. For the reasons that follow, ITMA believes that
such a move at this time is fraught with far more danger and
uncertainty than likely benefits.
This decision presumably followed the same-day joint recommendation
of the Special Trustee for American Indians and the Assistant
Secretary--Indian Affairs that such an organization be created and
headed by an additional Assistant Secretary for Indian Trust Assets,
and based in part on a report and recommendation of the Department's
contractor, Electronic Data Systems (EDS). Unfortunately, the EDS
report cited for support of these plans is not available to tribes, and
access to it is barred by the federal court's order to shut down the
Department's internet connections.
In the first place, ITMA believes that carving a separate agency
out of the single Interior agency now totally dedicated to Indian
services would create great uncertainty because Indian tribes and
individuals cannot know what either agency will look like, or what
capabilities either will have. In fact, ITMA suggests that the
Department cannot at this time even identify the programs, functions,
responsibilities, or resources that would come under the new Assistant
Secretary or the new agency. ITMA insists that any such effort to
identify ``trust functions'' is emphatically not the province of the
Secretary or the Department alone. There was enormous dysfunctionality
caused by separating trust funds management from the Bureau, and those
problems have not been resolved yet, notwithstanding the Department's
promises for more than two years of an inter-agency MOU, or a BIA/OST
Handbook to resolve them.
ITMA notes that the General Accounting Office, the Department's own
consulting contractor (EDS), the plaintiffs in the Cobell litigation,
and ITMA have roundly criticized the Department's previous, fitful
starts at trust reform because boxes have been drawn and systems
acquired before giving adequate thought to the duties to be fulfilled
or the objectives to be achieved. ITMA suggests the Secretary makes the
same mistake by proposing a new organization before giving adequate
thought to the duties to be fulfilled, or the objectives to be achieved
by the new organization, much less giving any apparent thought
whatsoever to what such a move portends for the overall delivery of
Indian services from the Department of the Interior.
ITMA suggests that before any major functions are moved, budgets
disrupted, reporting regimes confused, infrastructure (building,
vehicles, utility systems, hard drives, equipment and furnishings)
further divided, and responsibilities shifted that the Congressional
oversight and appropriations committees should demand that all
interested parties be afforded an opportunity to provide the counsel
that the Secretary indicated will ``greatly benefit'' the Department.
Her view was that the Department's ``refinement'' of the new
organization would benefit from such counsel. ITMA suggests that
history, especially the Department's recent history, coupled with the
Department's acknowledged timing of this announcement in an effort to
forestall court intervention, compels the conclusion that a move as
startling as this not be made precipitously or without careful
scrutiny.
ITMA suggests that the Department be required to identify to the
Congressional committees precisely those functions, duties,
responsibilities, programs, and resources that the Secretary proposes
to transfer. ITMA further suggests that her effort to do so will result
in surprisingly vigorous debate. If the Secretary wishes to bring in a
political appointee to oversee the present reform activities that are
at issue in litigation or otherwise under the supervision of the
courts, ITMA does not object to that effort. On the other hand, ITMA
suggests that such a move demonstrates that the Secretary and the
Department are continuing to miss the real point of trust reform. ITMA
suggests that the Department must begin with an analysis of the duties
that are required to be performed in the management of those assets.
Such an analysis has not been undertaken, and has, in fact, been
strenuously resisted by the Department. ITMA insists that failures of
the past, including known instances of mismanagement, loss, trespass,
and theft, for instance, must be acknowledged and disclosed. It is
impossible for trust beneficiaries to accept that the Department has
learned from any mistakes that it refuses to acknowledge.
Once those duties are acknowledged, and known mistakes of the past
disclosed, then the Department will be in a position to devise policies
and procedures that are designed to correct those mistakes and to
effectively and efficiently discharge those duties. Only when policies
and procedures are designed to carry out acknowledged duties can the
Department and its appropriating and oversight Committees of Congress
make decisions regarding the organization of the agency charged with
the performance of those duties. To agree beforehand to a new agency
that will under any conceivable scenario result in enormous turmoil,
without a common understanding of what either the new agency (or the
old one) will have responsibility for, is simply to repeat the mistakes
of the past dozen years. The DOI with the acquiescence of Congress has
proposed one plan after another to buy time throughout the last decade.
ITMA urges in the strongest possible terms that the new Century not
begin with a similar, temporizing ruse. That is to say, ITMA urges
tribes and the Congress not to accept one more bureaucratic shuffle as
a substitute for intellectual honesty and full disclosure.
ITMA suggests the trust duties to be carried out be identified, and
policies and procedures designed to achieve the performance of those
duties. Then a discussion of the organization, budget, and resources
required by those policies and procedures will be in order. ITMA
further suggests that this organization will require carefully
instituted internal controls to ensure that those policies and
procedures are followed, and that the underlying duties are faithfully
executed. Finally, ITMA suggests that a revised trust management
regime, designed from the bottom up, beginning with the duties to be
performed rather than with names in bureaucratic boxes, must include an
enforcement mechanism to ensure that violation, failures, and mistakes
are timely identified and corrected. ITMA further suggests a rigorous
analysis of the Department's trust program from the perspective here
recommended will implicate broader reaches of the government and the
Department than are suggested by the Secretary's current proposal.
Decisions will be required regarding rewards and punishments for
concealing or acknowledging mistakes which reverse the historical
pattern which has too often rewarded those who cover up and punish
those who disclose the truth.
Decisions regarding the ultimate lodging of authority for trust
decisions must be made that examine the current practice of allowing
mid-level attorneys in the Office of the Solicitor or the Department of
Justice to give orders to those senior individuals who have been
appointed by the President and his officers to run the Executive Branch
of our government. The duties of those other Interior agencies outside
the BIA presently charged with monumental Indian trust asset management
responsibilities must also be critically examined. In particular, the
present role of the Assistant Secretariat for Policy, Management, and
Budget must be critically examined. In addition, the Department must
carefully examine the different scopes of its duties regarding direct
service tribes, contract tribes, and compact tribes.
ITMA suggests that any examination of ``trust assets'' will
necessarily be incomplete if conducted by even the most senior officers
of government who have less than five years of collective experience in
the arena. ITMA further suggests that this examination will be even
more seriously compromised if guided by career employees of Interior
and Justice who have been rewarded in the past for concealment, cover
up, dissimulation, and denial of even the existence of duties that have
been repeatedly declared by the courts of our land. In short, ITMA
suggests that this examination is doomed to failure without
participation of the beneficiaries themselves, who may well have the
most to offer and certainly have the most to lose as a result of these
deliberations. The Congress has recognized this for more than 20 years
when it placed such requirements into the black letter of the federal
Indian laws of the United States, beginning with the Federal Oil and
Gas Royalty Management Act of 1982.
ITMA urges tribes and the Congress to impress upon the Secretary
the extent to which her current proposal violates the spirit if not the
letter of such laws of the United States as the Royalty Simplification
and Fairness Act; the Indian Trust Fund Management Improvement Act of
1994; the Federal Oil and Gas Royalty Management Act of 1982, and the
Indian Self-determination and Education Assistance Act (P.L. 93-638),
as well as numerous federal regulations, Executive Orders, and
Secretarial orders. ITMA stands ready to be welcomed to the ensuing
deliberations and to a constructive engagement with the Department and
the Congress in the important, and too often in the past nationally
embarrassing issue of Indian trust reform.
There will be time enough in the deliberative process ITMA
recommends to determine whether or not a new Bureau of Indian Trust
Asset Management is appropriate, or even whether such an agency can
ever succeed in the Department of the Interior. The Secretary herself
has recognized that the Department will benefit from tribes'
participation. It is clear from discussions to date that the Department
has given no thought whatsoever to just what it means by trust assets,
that it has not considered duties attendant upon inchoate or
unquantified assets such as water rights; treaty rights to hunt, fish,
gather, pass over others' lands, rights to chose in action against
trespassers, underpaying tenants, or thieves; duties to assert or
protect rights; or any number of other trust ``assets,'' which the
government has paid billions of dollars for its failures to protect in
the past. ITMA insists that any successful trust reform must begin with
a collaborative effort to establish a process along the lines suggested
here.
Finally, ITMA points out that the Secretary's current proposal, far
from being the breath of fresh air we had hoped for from the present
Administration in its first year, is simply a continuation of a long
string of Secretary-level organizational proposals to buy time by
rearranging boxes while leaving past wrongs uncorrected and failing to
deal with fundamental issues. In this vein, ITMA points out that the
Secretary's proposals and the current process by which she further
proposes national ``consultation'' meetings within the space of two
months violates the express policy of tribal consultation negotiated
and executed in writing between the Bureau of Indian Affairs and Indian
tribes less than one year ago. ITMA is obliged by its responsibilities
to put these views on record in light of the Secretary's undisclosed
plan to proceed with her plan by redirecting $300 million of
appropriated funds, but vigorously asserts that this exercise does not
constitute tribal consultation in any meaningful sense of the term.
ITMA respectfully urges the appropriate Committees of Congress to
withhold automatic consent to this far-reaching and likely permanent
proposal of Secretary Norton until it has been thoroughly examined.
ITMA urges the Congress to exercise its oversight role and not to
subject the nation's American Indian and Alaska Nation trust
beneficiaries to a unilateral determination of the Secretary as to what
her trust duties are and are not. ITMA particularly urges the U.S.
House of Representatives, with an oversight hearing scheduled on trust
reform on February 6, 2002, not to agree before it begins its inquiry
to a $300 million, far-reaching and permanent plan hatched behind
closed doors by the Department alone. More than 30 years of
Congressional policy dictate that these are national decisions
involving the beneficiaries themselves, and not merely Secretarial
ones. There are far too many of our men and women presently on duty
beyond the seas in the name of this nation for us to take lightly our
responsibilities to them and their families while they are defending
us.
______
Mr. Hayworth. Thank you very much, Chairman Tillman.
One housekeeping note: Since we have the lower dais clear,
and I see some folks who are back here standing up, and maybe
some have been standing up most of the time, you are certainly
welcome. You can join us here on the lower dais. Please do not
try to ask questions or count votes.
[Laughter.]
Mr. Hayworth. But if you would like to come up and sit and
be a pseudo-Congress observer for the day, I cannot give you
the Committee status, but we certainly are happy to have you
come up. Or if you want to be shy, and your legs are good and
strong, then you can certainly stand in the corner.
And sure enough, just like the dance floor after some
initial reticence, some folks are kind enough to come up and
take chairs, and you can continue to do that.
So with that housekeeping note, and the voice of bipartisan
agreement from my friend from Michigan, we turn now to
President Hall, from the National Congress of American Indians.
Mr. President, welcome, and we look forward to your
testimony.
STATEMENT OF TEX G. HALL, PRESIDENT, NATIONAL CONGRESS OF
AMERICAN INDIANS
Mr. Hall. Chairman Hayworth and Congressman Kildee, being
the co-chair of the Native American Caucus. We appreciate also
all of the members that are here remaining to hear this most
important issue in Indian country.
My name is Tex Hall. My Indian name is Red Tip Arrow. I am
the president of the National Congress of American Indians, and
also the tribal chairman of the Fort Berthold Indian
Reservation of North Dakota, the Mandan, Hidatsa, and Arikara
Nation. I am also co-chair of the newly developed tribal
taskforce. So I will try to spend part of my time talking about
the taskforce and some of the work that it has done.
But I want to concur with Chairman Tillman's points about
Professor Wilkenson's concept about starting from the
beginning, and that is trust.
And NCAI, of course, opposes the BITAM. We call it ``Bite-
Em.'' And the tribes want to come up with their own plan. We
want to call it ``Fight-Em.''
So I went to all of the scoping meetings. And we feel the
Secretary is not following Executive Order 13175, which
mandates consultation government-to-government. And we feel
that it was disheartening. I just want to say this, Mr.
Chairman, in all due respect. It was disheartening to hear the
Secretary's comments again trying to allude to BITAM as a
preferred plan.
The tribes took the time--We have had 6 days, by the way,
to work on a tribal plan. And EDS took 60 days--or 6 months.
EDS took 6 months. And I want to reference the Committee to
page 14. This is a January 24 EDS report that talks about there
must be government-to-government, a new plan, or BITAM must be
beneficiary-approached. It must be beneficiary-based. And who
the beneficiaries are are the tribal governments and the
individual Indian beneficiaries.
So again, this is their own contractor that they have
contracted and spent millions of dollars working with. And it
is very disheartening, again, to not allow the tribes to come
up with another plan.
The tribes have received nine proposals, and we developed a
matrix. And I will forward this on to the Committee. We do have
a written testimony. But we put all of the nine tribal
proposals, and we put standards and principles, like
maintaining trust, responsibility, separation of trust--which
none of the tribes want to do. And it is all here, and it is
all checked off.
So this is a great start. We also want to put BITAM, and we
want to put the Cobell receivership motion on here, so we have
all of the tribes' plans, BITAM, and then the individual Indian
money account plaintiffs, their motion for receivership; so we
have a matrix that evaluates every single plan.
I think that is a must, and it is critical. And it is in
not only the EDS report, but it is also in the January 16th
eighth monitoring report that the Secretary has to provide to
the judge. So all of that is in place.
I just want to emphasize, again, my disheartening of the
Secretary's testimony about her preferred plan. That was the
whole intent of the taskforce, made up of 36 representatives,
36 tribal leaders who took the whole weekend, from Friday to
Sunday. We missed the Super Bowl, not that the Super Bowl is--
It was a good game and all that. But this issue is so critical
to all of us that we sacrificed a whole weekend to work with
the Secretary. She spent about 4 hours working with us, and
talked about her commitment to working with us. And of course,
the beneficiary has to trust the trustee. And to not have them
to come back and say BITAM is a better plan and all that, we
think is totally wrong.
Let me just summarize some of the matrix and some of the
tribal plans. First of all, the taskforce is not going to be a
rubber stamp for BITAM. We will simply not be a rubber stamp,
because these are our assets, these are our monies. And if we
have to come back to Congress--Because we agree that Congress
is the ultimate trustee and you have just entrusted the
Secretary to carry that function out.
But we said that, first of all, all tribes are opposed to
BITAM, but all tribes want trust reform. There is no tribe that
says, ``We do not want reform.'' I do not know where that came
from, but the Secretary's comments said that. We all want trust
reform.
We have nine proposals. The heart of the tribes' concerns
is that they do not want land management separate from the
local level, when they have no control and daily
decisionmakings are taken away. This is critical. We want
direct authority from the Secretary on down to the local agency
superintendent.
We would like to have our own accounting system. It is like
a corporation not having your CPA being right across the hall
from you. We have to have our own accounting system, our access
to accountants that have CPA level in the field. We feel that
most of this money should be done on the field level.
There are some key differences in the proposals that the
tribes have submitted. And tribes, again, do not want to
separate the land, but would separate the accounting, banking,
into an independent office at the local level.
And the tribes have a focus on accountability and external
monitoring. That is really one of our critical points.
And we want reform, but a different kind of reform. We want
land management at the local tribal level, top-quality
accounting, and accountability. And that is the difference, Mr.
Chairman. So I think you can draw the line.
We feel we want to work with the Secretary, if she gives us
the time to work with her, in true and meaningful consultation
according to 13175. But if we are not, Mr. Chairman and members
of the Committee, we may have to come back to you with our
preferred tribal plan, because you are the ultimate trustee.
So I realize my time has run out, Mr. Chairman, but I would
refer to my written statements. And I will be happy to answer
any questions later on.
Mr. Hayworth. And we thank you very much, President Hall.
And it again goes without saying, your complete testimony will
be entered into the record, as you offer your synopsis in the 5
minutes we provide.
[The prepared statement of Mr. Hall follows:]
Statement of Tex G. Hall, President, National Congress of American
Indians
Mr. Chairman, members of the Committee, Tribal leaders and members
of the public: thank you for the opportunity to provide testimony to
you today on issues that Indian Tribes and Nations believe are of
critical importance throughout Indian country. My name is Tex Hall, and
I am providing testimony on behalf of the National Congress of American
Indians, the oldest and largest organization representing Indian Tribes
and individual Indians, founded in 1944 and representing more than 200
Tribes. I am also the Chairman of the Mandan, Hidatsa and Arikara
Nation (the Three Affiliated Tribes), a Nation with an area of
approximately 1500 square miles located along the Missouri River in
northwest North Dakota.
Summary
1. LTribes throughout the United States are unanimously opposed to
the creation of a separate Bureau of Indian Trust Assets Management
(BITAM) within the Department of Interior and have strongly urged the
Department to withdraw the proposal for creation of BITAM made to the
court in the case of Cobell v. Norton now pending in U.S. District
Court for the District of Columbia. Tribes believe that the proposal of
DOI as filed with the Court goes far beyond what was necessary to
comply with previous Court orders and that it contradicts the Indian
Self Determination Act, including the provisions of that Act for self-
governance, and that it violates Congressional intent in passing the
American Indian Trust Fund Management Reform Act of 1994. Tribes
further have requested that Congress take such steps as are necessary
to prevent the BITAM from being created.
2. LTribes are in the process, through a 36 member Task Force
selected by the Tribes, of developing alternative mechanisms for
ensuring effective reform of trust asset management that will carry out
the mandates of the American Indian Trust Fund Management Reform Act of
1994 without the need for a separate Bureau within the Department.
3. LTribes welcome the support DOI has expressed for the Task Force
process, provided that any alternative mechanism for trust asset
management that is developed by the Task Force and implemented by the
Department must receive the full support of all affected Tribes.
4. LTribes recognize that in order to ensure that necessary trust
asset management reforms are carried out by the Department, legislation
may need to be enacted by Congress that among other things, may provide
for the establishment of trust standards and provide for a permanent
oversight mechanism to ensure compliance by the Department with those
standards.
5. LTribes urge the Congress to appropriate adequate funds to
address the issues of trust management and accounting in Indian
Country. We believe that funding for tribal land repurchase programs
should be seriously considered by Congress as a cost effective solution
that will decrease the problems and costs related to fractionation of
land title.
6. LTribes remain highly concerned about the slow progress by the
Department in installing necessary security systems on the networked
computers the DOI uses for accounting for the assets of Tribal members
contained in Individual Indian Money (IIM) accounts. We understand that
some checks have begun to be processed, but a great deal of work
remains to be done while individual tribal members are suffering
because income from their assets upon which they depend for everyday
needs has not been paid to them since early December.
7. LTribes request that Congress pass a modest one-year extension
of the statute of limitations that arguably can be used to defeat
Tribal claims against the United States stemming from trust asset
mismanagement that arise because of the issuance in early 1996 to
Tribes of the admittedly inadequate Arthur Andersen reconciliation
reports required by the American Indian Trust Fund Management Reform
Act of 1994.
Background
This Nation's Indian Tribes have a special and unique relationship
with the United States. The relationship is one rooted in the history
and rooted in the sovereign nature of the federally recognized Indian
Tribes, which all possess inherent sovereignty over their own affairs
and are recognized as separate, sovereign governments by the United
States through treaties and various other forms of Federal recognition.
How this relationship is to be recognized and handled has been formally
recognized by the President of the United States in Executive Order
13175, outlining how the executive departments of the United States
government should interact with the Tribes on the basis of a
``government-to-government'' relationship.
Because of the great sacrifice that the Indian tribes have made to
the United States of much of their homelands, by conquest, taking, or
by ceding those lands through treaties and otherwise to the United
States, the United States has become a trustee of much of the lands and
assets that have been set aside for the tribes. See, e.g., Memorandum
Opinion, Cobell v. Babbitt, Civil No. 96-1285, District Court for the
District of Columbia, December 21, 1999 and the affirmance of that
opinion by the Court of Appeals for the District of Columbia, February
23, 2000 for a more complete outline of the origin of the trust
responsibility of the United States.
The trust responsibility of the United States to the Indian tribes
within its borders is carried out on the basis of the statutory
mandates of Congress, often guided by opinions of the courts of the
United States. In 1994, Congress explicitly recognized these
fundamental trust obligations, and also recognized the government's
failure to adequately carry out its trust responsibility to Indian
tribes by passage of the ``American Indian Trust Fund Management Reform
Act of 1994'', P.L. 103-412 (the ``Act''). That Act stated in Title I,
Section 101 that the Department of Interior needed to act to carry out
its responsibilities for discharging its trust responsibilities in an
affirmative fashion, and described the functions the Secretary must
carry out as follows:
``(d) The Secretary's proper discharge of the trust
responsibilities of the United States shall include (but are
not limited to) the following:
(1) Providing adequate systems for accounting for and
reporting trust fund balances.
(2) Providing adequate controls over receipts and
disbursements.
(3) Providing periodic, timely reconciliations to assure
the accuracy of accounts.
(4) Determining accurate cash balances.
(5) Preparing and supplying account holders with periodic
statements of their account performance and with balances
of their account which shall be available on a daily basis.
(6) Establishing consistent, written policies and
procedures for trust fund management and accounting.
(7) Providing adequate staffing, supervision, and training
for trust fund management and accounting.
(8) Appropriately managing the natural resources located
within the boundaries of Indian reservations and trust
lands.''
The Act further created an Office of Special Trustee (OST) whose
job it was to develop a plan for the establishment or reform of all
necessary systems for Indian trust fund management, and to ensure that
these reforms were in fact carried out by the Secretary of the
Department of Interior (DOI, or the ``Department'') who in general has
been given by Congress the responsibility to manage assets held in
trust by the United States for the benefit of Indian tribes and
individuals. The Congress, since 1994, has held many hearings regarding
the progress made by the OST and by DOI, and has appropriated
considerable sums to ensure that the necessary reforms have been
carried out.
Nevertheless, at least in the case of individual Indians, efforts
were seen to be inadequate and against the backdrop of the American
Indian Trust Fund Management Reform Act of 1994, litigation was filed
in 1996 in the U.S. District Court for the District of Columbia by a
group of individuals representing the class of all those persons who
have rights to Individual Indian Money (IIM) accounts. Their complaint
against the Department of Interior sought, among other things, an
accounting of their assets and affirmative relief against the
Department to ensure the Department's compliance with the Act. This
case is known now as Cobell v. Norton, Civil No. 96-1285, still pending
in the U.S. District Court for the District of Columbia.
The Court in Cobell has issued a series of rulings and orders, and
has appointed a special Court Monitor who is required to report back to
the court the progress the Department has made in carrying out its
trust reform responsibilities, particularly in relation to the IIM
accounts which is the focus of the Cobell plaintiffs' complaint. In
recent months, the Court Monitor has issued several reports highly
critical of the failure of the Department to complete the required
reform efforts and has cited the Department for issuing to the Court
false and misleading reports about its progress in making necessary
reforms to the trust management systems.
Because of these reports, the plaintiffs in Cobell have argued to
the court that the performance of the Department in carrying out the
orders of the Court, which incorporate the requirements of the American
Indian Trust Fund Reform Act, and which have identified specific
breaches of the trust responsibility, is grossly inadequate and that a
receiver should be appointed to oversee trust reform efforts concerning
the IIM accounts that are the subject of the litigation. The plaintiffs
have also sought to have the Secretary of Interior and several other
officials, and their attorneys, to be held in contempt of court for
making false statements to the court about the progress of trust
management reform, among other things.
On November 14, 2001, attorneys from the Department of Justice
(DOJ) filed on behalf of DOI a response to the Order of the District
Court for the District of Columbia in the Cobell case to show cause why
the Secretary of Interior and others should not be held in contempt of
court for failing to comply with the Court's previous Orders. The Court
had particularly wanted to know why the Secretary had failed to comply
with the Court's order of December 21, 1999 which required, among other
things, that the Department carry out its High Level Implementation
Plan (HLIP) as the Department had previously promised to the Court it
would do in its filings with the Court, and which also identified four
specific breaches of the trust responsibility that should be corrected
by DOI with the assistance of the Office of Special Trustee and the
Department of the Treasury, which handles distribution of earnings from
trust assets to the individual Tribal member beneficiaries.
The response outlined a planned division of the functions of the
Bureau of Indian Affairs (BIA), with a new Bureau to be created called
``Bureau of Indian Trust Assets Management'' (BITAM) to be headed by a
new, as yet unnamed, Assistant Secretary of the Interior. The new
Bureau would be in charge of the all trust asset management functions
of DOI now handled by the BIA and would eventually handle those trust
functions of the Office of Trust Funds Management (OTFM), as well,
including management of Tribal trust assets, despite the fact that
Federally recognized Indian tribes are not parties to the Cobell
litigation and the fact that the Court does not have the subject of
Tribal trust assets before it. Exactly what constitutes ``trust
management functions'' was not defined in the response presented to the
Court and to the Tribes.
The DOI response as filed on November 14, 2001 with the Cobell
court has vast implications for the provision of all trust services to
Tribes and their members. Yet, this response was filed without any
notice to the affected Indian tribes, as required by EO 13175. Instead,
DOI indicated shortly after filing its response with the Cobell court
that it was beginning to conduct ``consultations'' with the affected
Indian tribes to get their reaction to the reorganization.
In the DOJ filing, the reorganization was not presented as a
proposal. It was presented as something that the Department would be
implementing as soon as possible. DOI indicated that it already had
appointed someone to head a ``Trust Transition Office'', namely Ross
Swimmer, a former Assistant Secretary for Indian Affairs who served in
the Reagan Administration. In other materials filed with Congress, DOI
indicated that it would have to reprogram as much as $200 million for
fiscal year 2002 in order to effectuate the transfer of the trust asset
management functions to the new BITAM. It did not indicate that it
needed any additional funds in order to carry out the reorganization.
As the reason for its reorganization effort and the creation of the
BITAM, the noticed filed by with the court by DOI cited a recent report
from a consultant firm, EDS, that DOI had hired to analyze its progress
on implementing the HLIP. However, nothing in the EDS report had
indicated that forming a new BITAM was necessary, and nothing in the
Court's previous orders had indicated that forming a new agency was
necessary.
Position of NCAI Concerning the Reorganization
At its Annual Meeting on November 25-30, 2001, in Spokane,
Washington, NCAI passed unanimously the attached Resolution, No. SPO-
01-006, which opposed the reorganization plan proposed by the Secretary
on several fundamental grounds: 1) That the Secretary of Interior has
made the reorganization plan without adequate consultation with the
affected Indian tribes, in violation of EO 13175; and 2) That the
reorganization raised many questions that troubled Tribal leaders,
including whether it was authorized by law; whether it was in
compliance with Court orders, whether the proposal would do anything to
help manage trust assets better, the effect it would have on tribes who
contract or compact for trust functions, and whether it would end up
reducing the services provided by the BIA to Tribes.
Beginning on December 13, 2001, in Albuquerque, New Mexico, the
Secretary of Interior began a series of meetings with Tribal leaders
from throughout the United States. Her meetings, called
``consultations'' in the Notice published in the Federal Register were
to be conducted according to a published schedule and were to allow
Tribal leaders to comment on the reorganization plan, but these
meetings were only to be held in selected regions of the United States,
and did not include meetings in all of the BIA Regions affected by the
reorganization. To date, there have been meetings, which the Assistant
Secretary for Indian Affairs, Neal McCaleb, has publicly called
``scoping'' meetings, a term Tribal leaders believe is more consistent
with EO 13175, in Albuquerque, NM(12-13-01); Oklahoma City, OK (1-3-
02);Rapid City, SD (1-10-02); San Diego, CA (1-17-02); Anchorage, AK,
(1-23-02), and Washington, D.C. (2-1-02).
At every meeting to date, Tribal leaders have been unanimous in
their opposition to the BITAM and the Department's plan as presented to
the Court. Tribal leaders protested the lack of consultation, the
effect the proposal would have on provision of trust services of the
BIA, the illegality of the proposal, the failure of the plan to request
more funds for its implementation, the failure of the Department to
provide for security in its computer programs and its slow response in
fixing the problem, the possible affect the changes would have on
tribes that compacted or contracted for trust services, the failure of
the plan to provide for historical accounting of trust assets as
required by the American Indian Trust Fund Management Reform Act, the
weakening of the BIA as a result of taking trust asset management from
it, the waste of time represented by such a far-reaching reorganization
without establishing substantive mechanisms for reform of trust asset
management, the failure of the plan to address real conflicts of
interest among agencies providing some of the trust asset management
and accounting functions, and the fact that the plan went far beyond
what is required of the Department by the Cobell litigation, among
other things.
In Albuquerque, the Tribal leaders developed a position paper
outlining the basic principles that should govern any trust asset
management reform effort. These principles have guided tribes as they
have testified at the various ``scoping'' meetings that have been held
so far. The principles include: 1) opposition to BITAM for the reasons
stated above; 2) requiring the Department to engage in true
consultation on a government-to-government basis pursuant to EO 13175;
3) ensuring that there are adequate resources to carry out trust
reform; 4) establishing a mechanism for determining historical account
balances; 5) doing no harm to established self-determination and self-
governance programs for management of trust assets; 6) providing Tribes
the flexibility to assist the Department to manage trust resources
consistent and develop different systems consistent with each Tribe's
unique resources and circumstances in such areas as grazing, timber,
oil and gas, commercial real estate, agriculture, fisheries and hunting
and fishing; 7) recognition of the need for trust assets to be managed
in a way that protects and allows the continuance of each tribe's
unique culture on a long term basis, consistent with Tribal control of
the use and development of their lands, including recognizing a strong
role for enforcement or leases by the Department.
Development of a Tribal Task Force on Trust Reform
During the initial ``scoping'' meeting in Albuquerque on December
13, 2001, and continuing at each of the scoping meetings thereafter,
Tribal leaders have developed a Tribal Leader's Trust Asset Management
Reform Task Force, composed of 2 representatives and one alternate from
each of the 12 BIA Regions in the United States. Each of the Regions
have now submitted names to the Task Force, and at the invitation of
the Department of Interior, the Task Force has held its first formal
meeting over the weekend of February 1-4, 2002 at DOI's National
Conservation Training Center in Shepherdstown, West Virginia. The Task
Force is committed to developing in a deliberative manner an
alternative approach to the BITAM developed by DOI and has requested
that the Department accept the plan developed by the Task Force instead
of the BITAM. The Secretary of Interior has stated that the Department
is interested in considering the proposal developed by the Task Force.
The Task Force has elected from its members two co-chairs, including
myself, Tex G. Hall, and Susan Masten, Chairperson of the Yurok Tribe
in California. The Task Force also has developed a draft protocol of
its operations
Already the Task Force has under consideration nine separate
proposals for trust asset management reform as outlined by various
Indian Tribes and organizations. As more proposals are received,
further refinements will be made. Among the common themes of these
proposals are: 1) keeping all trust management functions within the
Bureau of Affairs; 2) creating an independent commission to develop
trust asset management standards and ensure compliance with those
standards; 3) providing for all necessary trust asset management
functions within the BIA; 4) ensuring complete and full consultation on
a government-to-government basis on issues affecting Tribes and their
members; and 5) recognition and protection of Tribal sovereignty and
the ability of Tribes to manage their affairs and their resources. The
Task Force has now appointed a subcommittee to review the various
proposals and I am confident that the Task Force will develop a final
proposal that meets the trust management needs of all Tribes, while at
the same time satisfying the requirements of the Cobell court and other
court decisions regarding the responsibility of the United States for
trust asset management for Indian tribes and their members; the
American Indian Trust Fund Management Reform Act of 1994, and the
various trust asset management obligations imposed on the United States
by Treaties and statutes as illuminated by the common law principles of
trust management.
Task Force members are aware of the need to communicate effectively
their work product to all Federally recognized Indian Tribes, and to
have their meetings open to all Tribes and their advisors so that the
maximum input and ideas from Tribes may be received. They also
certainly expect that Task Force meetings will be held in the various
Regions of the United States to make their deliberations as accessible
as possible. They expect that their work will be long and difficult,
and that all Tribes will have to work hard to build consensus among
them for a final proposal to be acceptable to the Department of
Interior, to the Courts, to Congress, and finally, and most
importantly, to all of their members.
The Task Force members are well aware of the great responsibility
thrust upon them. They have spoken candidly to Secretary Norton at the
meeting in Shepherdstown, West Virginia this past weekend about their
desire to see a Department of Interior that consults on a government-
to-government basis, that takes their concerns seriously, that fully
funds trust asset management reform, that will implement meaningful
trust reform, withdraw the BITAM plan, that will honor the Treaties and
that will respect their sovereignty.
Congressional Assistance
There are a number of steps Congress can take to assist the
Department of Interior and the various Indian Tribes in this Nation
achieve real trust asset management reform.
1. Congress should ensure that no funds are reprogrammed during
fiscal year 2002 for the BITAM proposal and that for fiscal year 2003,
all funds aimed at trust asset management reform remain within the
Bureau of Indian Affairs and the Office of the Special Trustee.
This is critical because DOI has already notified Congress of it
intent to reprogram funds to implement the BITAM plan. Tribes are
unanimously opposed to the BITAM proposal and know it will not work
because it so radically changes the way services are provided to
Tribes. There is no reason to spend money on a planned reorganization
that does not serve the interests of the affected Indian Tribes.
Congress should also make it clear to the DOI that it would prefer
that their BITAM proposal be withdrawn and that a new alternative
acceptable to Tribes be developed. DOI has committed to making the Task
Force process work, but that must include an adequate commitment to
ensure the opportunity for participation in the process by all Tribes,
through regular communication, a sufficient number of meetings and
sufficient resources devoted to this effort for it to meet all of the
Task Force objectives.
2. Congress should be prepared to assist Tribes to develop
meaningful legislation that will likely, among other things, establish
enforceable trust asset management standards that allow the needs of
all Tribes to be met consistent with each Tribe's unique resources;
that will establish a mechanism for oversight of compliance with the
standards; and that will provide a structure for trust asset management
that balances the needs of Tribes to be involved with trust asset
management with the overall trust asset management responsibilities of
the United States.
Tribes, including the Tribes represented on the Tribal Leaders
Trust Reform Task Force, are working hard to develop a proposal, or
perhaps proposals, that will provide a superior alternative to the
BITAM plan already advanced by the Department. Exactly what is to be
contained in that proposal is not yet clear, but almost certainly the
proposal will have a legislative component to it to ensure that the
Department will enact meaningful trust asset management reform. The
elements of such legislation may include the establishment of trust
asset management standards and an independent commission or other
mechanism to ensure compliance with those standards. This legislation
must also respect the individual and unique needs of each Tribe,
consistent with the ability of Tribes and their members to manage their
own assets and affairs through such things as self-governance compacts
and self-determination contracts. Finally, the legislation must
recognize the need for meaningful government-to-government consultation
as the legislation is implemented by the Department.
3. Congress should be willing to pass legislation extending any
potential statute of limitations that would affect the filing of
lawsuits against the United States by the Tribes for trust asset
mismanagement.
The issue of a statute of limitations defense that could be raised
by the United States in any lawsuit brought by Tribes against the U.S.
for trust asset mismanagement arises because of the requirements of the
American Indian Trust Fund Management Reform Act of 1994 that
reconciliation reports be completed by the Department of the Interior.
The Department contracted with Arthur Andersen, one the big five
accounting firms, to prepare the overall report and the reports for
each tribe with trust funds under management of the Office of Trust
Funds Management (OTFM), for the years 1972-1992. Arthur Andersen
concluded that the Department lacked the necessary records and systems
for a complete review and accounting of Tribal trust accounts, a fact
generally acknowledged by the Department.
However, the reports were issued to Tribes beginning early in 1996,
and the Department made offers of reconciliation to Tribes based on
those reports. Tribes universally rejected the vast majority of these
offers as being inadequate because of the inadequacy of the accounting
by Arthur Anderson. To the extent the reconciliation reports provide a
basis for a lawsuit being commenced by any particular tribe against the
United States, the receipt of such reports by any particular tribe may
start the statute of limitations on tort related lawsuits against the
United States to run for that tribe. The statute of limitations can,
and should be extended for at least one year for several reasons:
1) The Arthur Andersen reconciliation reports are woefully
inadequate, cover a limited period of time, and do not form a
good basis for indicating the extent of mismanagement of Tribal
trust assets by the Department;
2) Extending the statute of limitations may well induce
settlement discussions between Tribes and the United States for
past mismanagement of Tribal trust assets, and may well spur
discussion in Congress for settlement options;
3) The number of possible lawsuits that may be filed by Tribes
is quite large and the burden on the courts and the Department
of Justice will become larger than necessary.
The proposed legislation for which we would request consideration
is similar to S. 1857, now pending in the United States Senate.
The Computer Shut-Down Problem
Just after DOI announced its BITAM plan by filing it with the
Cobell court on November 14, 2001, the Court Monitor in the Cobell case
issued a scathing report concerning computer systems security issues.
The report indicated that DOI's computer systems could be breached, or
``hacked'', and that records of trust asset management, including the
financial records of IIM account holders, could be altered by
``hackers'' relatively easily.
The Court issued an order that required the Department to fix the
security problem on its computers before using the system again. The
Court subsequently allowed the Department, on application to the Court
Monitor, to use its computer systems for the purpose of issuing checks
to IIM account holders representing the proceeds of their trust assets
as managed by the BIA, but that process has not yet occurred and there
is still no firm date when IIM account holders will receive their
checks.
This situation is totally unacceptable to the Tribes and their
members. While we are aware and appreciate that DOI officials are
working very hard to fix this problem which was many years in the
making, we also know that prior to the special effort of the Court
Monitor to ``hack'' the system, checks had been sent out using the
computer accounting system for IIM accounts for a number of years
without significant incident. We are still hopeful of getting the
checks issued very soon. We urge Congress to devote such resources as
are necessary to make sure the problem is completely fixed and to
ensure that the IIM account holders receive the funds they are owed,
including interest, as soon as humanly possible. The Department and the
Court Monitor must work together to find an acceptable and immediate
solution to this problem.
Summary
NCAI fully supports the implementation of meaningful trust asset
management reform. In rejecting the BITAM approach NCAI and its members
Tribes, and indeed, Tribes nationally, are not rejecting the effort
needed to make trust reform to happen. NCAI's leaders look forward to
working with the Department of Interior to develop a true alternative
to the BITAM proposal that meets the needs of all Tribes, is acceptable
to all Tribes, and which will truly bring about the many needed changes
to the Department of Interior for trust asset management reform.
We also pledge to Congress to ensure that in every way possible for
us, Tribes and their leaders will be made aware of the trust asset
management reform process as it goes forward. The only way a proposal
for trust reform can be implemented is for it to receive broad support
from Indian country.
We also urge the Congress to assist us as we develop our
alternative proposal the BITAM approach, especially as we more fully
develop any legislation that will be needed to fully implement the
proposal. We believe that this year very well could be the year that
true trust reform is put into place and this issue can begin to be
brought to closure. Finally, we would ask Congress to pass legislation
that will extend the statue of limitations for Tribal lawsuits that
allege mismanagement of trust assets by the United States. Masehgedataz
(Thank you).
______
[A resolution attached to Mr. Hall's statement follows:]
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Mr. Hayworth. President Windy Boy, welcome, and we
appreciate hearing your testimony.
STATEMENT OF JONATHAN WINDY BOY, PRESIDENT, COUNCIL OF LARGE
LAND BASED TRIBES
Mr. Windy Boy. Thank you very much, Chairman Hansen.
[Speaks in Indian language.]
Thank you very much, members of the Committee. Thank you
for giving me this opportunity to come before you. I thank all
of the members and the people that have traveled many distances
and all of the people who have traveled throughout Indian
country and the seven areas to follow this dog-and-pony show.
First of all, I would like to point out something, and keep
this in mind. The first thing I want you to keep in mind is in
the last week we have been watching the Enron hearings on TV.
The Enron hearings have been mismanaged. Billions of dollars.
We have the IIM account holders over here with the tribes.
Billions of dollars over hundreds of years, monies in exchange
for resources that we have that we have given up as Indian
people. There are billions of dollars that are owed to our
people because of this.
On the other hand, you take the Enron case. It is a big
scandal. People are going to prison for it. More likely, they
probably will not. On the other hand here, what is the
difference? Billions of dollars on the left hand; billions of
dollars on the right hand unaccounted for. The only difference
here that I see between Enron and the IIM account is the
Indians did not gamble their money. It is still owed to us. And
as soon as that time comes when my people will receive their
checks in the mail, then we can talk about fairness.
And one of the many things that we have been talking about,
two things that I see come across the country in these
hearings. No. 1, all of the tribes are opposing BITAM. BITAM is
a proposal that has been devised that has been pushed on us.
The specifics have not been brought out, have not been
explained.
We are talking about different areas of the laws that are
being impacted here. We are talking about the laws that are
already in place. And those laws that we talk about are the
Indian Self Determination Act. We talk about the Act of '94. We
are talking about the Indian Self Determination Act. These are
already acts and laws that you have already put in place to
assure the tribes that we have this opportunity to come to the
table to present our case to you.
There are many things that are in question here, as far as
the tribes and our abilities on a local level. The tribal
nations throughout this country, all 578 tribes across the
United States are subject to the Single Audit Act. So you
cannot tell me that each of these tribes does not have that
ability to take care of our own back yard, because that is a
farce, if that has ever been brought to our attention.
Another thing about the thing is we are talking about IIM
receivership. And the gentleman behind me, Mr. McCaleb, I asked
this question specifically to him when he met with us in
December in Billings, Montana. On IIM, these individual
accounts, what percent of the total trust accounts for that?
And you can correct me if I am wrong, Mr. McCaleb, but it
amounted to 11 to 12 percent of the total trust. So if you take
11 to 12 percent of the total trust of the whole issue that we
are talking about, what is going to happen to the other 88
percent?
There are a lot of things when I say these two issues, why
I impress upon you the importance of keeping the IIM
individuals and the IIM accounts and the trust accounts of the
tribes separate.
And another thing, too, in the same sentence there, since
December a lot of my people in my area have been being held--
All of their checks have been held from them. Why do we have to
make them suffer, when they are the receivers, they are the
ones who have had this coming for 2 months? And there is no
telling how much longer that the court case is going to be
moving forward. Why can't they just get something that is due
them?
And I know that my time is up here, but I am more than
willing to be here. And I also have a lot of my other tribes
who were not present for the comment on the record, and there
are others.
Two things, also, I would like to make as recommendations.
I recommend that all the proposals from the tribes be
considered on this reform, be recommended from the
consultations, to be submitted for congressional record as a
matter of congressional record.
And furthermore, to field hearings on all tribal policy;
not just this trust issue. Because our issues are broad. Our
issues are broad because the administrations change every 4
years--every 8 years, sometimes. But the policies change. And
we are always the ones that are always holding the bag here.
So with that, I, too, will be available for questions.
Thank you.
[The prepared statement of Mr. Windy Boy follows:]
Statement of Jonathan Windy Boy, President, Council of Large Land Base
Tribes
Good morning, Chairman Hansen and honorable members of the House
Committee on Resources. My name is Jonathan Windy Boy, Business
Committee Member, Chippewa Cree Tribal Council and I am testifying
today in my capacity as President of the Council of Large Land Base
Tribes. The Council of Large Land Base Tribes was formed in 2001 to
advocate on behalf of a number of Indian tribes that have trust,
allotted lands and other lands in the states of Montana, Wyoming,
Arizona, New Mexico and Utah. The Council member tribes govern
approximately 60% of the roughly 54 million acres in Indian Country.
The members of the Council of Large Land Base Tribes express their
appreciation to the honorable Chairman and members of the House
Committee on Resources for this opportunity to address the Committee.
I am here today to address the following matters, trust management
reform, the Cobell litigation, the plan of the Department of the
Interior to establish a new Bureau of Indian Trust Assets Management
(BITAM) and the associated hardships which Indian tribes are now
experiencing because of the current shutdown of the systems within the
Department of the Interior for payment of oil and gas allotment
revenues and interest to the members of Indian tribes. These matters
are causing extreme distress and hardship for members of all Indian
tribes, including those Indian tribes that are members of the Council
of Large Land Base Tribes. See Appendix A, Statistics on Trust
Resources for the Rocky Mountain Region.
The Council of Large Land Base Tribes agrees wholeheartedly with
Judge Royce Lamberth in the Cobell litigation that the Department of
the Interior has failed dismally in its fiduciary responsibilities to
Indian tribes and individual Indian allottees. Trust management by the
Department of the Interior has largely been a sorry history of
negligent, and in some cases, intentional trust mismanagement that has
resulted in the loss of billions of dollars to Indian tribes and
individual Indian allottees. However, the Council is extremely
concerned with the current actions of the Department of the Interior to
perform a radical reorganization of the Bureau of Indian Affairs
through the establishment of the BITAM. See Appendix B, affected full
time equivalent positions (FTEs) in the Rocky Mountain Region. The
Council is concerned that the proposed BITAM does not address the five
breaches of trust already found by Judge Lamberth and is not designed
in a manner which will lead to the effective reformation of the trust
management system. Further, the Council is not convinced that the harm
now confronted by individual Indian allottees are being effectively
addressed by the Department of the Interior.
The Council of Large Land Base Tribes by its Resolution CLLBT-08-
01, attached as Appendix C, has supported the concept of trust reform.
However, the Council does not support the BITAM. Sometime in November
2001, the Department of the Interior developed BITAM entirely without
consultation with the Indian tribes and individuals who are the
beneficiaries of the trust obligations. The Department of the Interior
has never provided a detailed description or plan for the BITAM, other
than a single sheet organizational chart. The Indian tribes have
traveled from Spokane, to Albuquerque, Minneapolis, Oklahoma City,
Rapid City, San Diego, Anchorage, and finally, Washington D.C. in
pursuit of information which has never been provided.
Without consultation with Indian tribes, on November 20, 2001, the
Department of the Interior submitted a request for reprogramming of
$300 million to Congress in order to establish BITAM. The Council, in
Resolution CLLBT-08-01, rejected the BITAM and requested that Secretary
Norton withdraw her request for the reprogramming of $300 million that
was intended for the immediate establishment of BITAM.
The Senate Committee on Appropriations responded to Secretary
Norton's request for reprogramming of $300 million by its letter of
December 20, 2001 signed by Chairman Robert C. Byrd and the Honorable
Conrad Burns. The Committee declined approval of the reprogramming, in
spite of its recognition of the need for trust management reform. The
Committee ``wholeheartedly approved the Department of the Interior's
announced plans for full consultation'' with Indian tribes. In doing
so, the Committee acknowledged that ``an open and positive dialogue
with those most directly affected by this reorganization is
fundamental'' to the success of the consultation process. The Committee
recognized that ``[q]uestions concerning the exact structure of the new
Bureau, the ramifications of a reorganization on the remaining
functions of the Bureau of Indian Affairs, and potential outyear costs
of the reorganization are of special interest to many Senators.'' The
Committee expected that the Department of the Interior would
incorporate ``additional information, conclusions and recommendations''
of both the Department of the Interior and the Indian tribes in any
further reprogramming request.
In Resolution CLLBT-08-01, the Council also requests that a number
of principles be embraced by the Department of the Interior in
proceeding with trust management reform. The Council requests that any
trust reform effort preserve, enhance, and in no way diminish the trust
responsibility that the United States owes to Indian tribes and
individuals. Any trust reform effort shall affirm and support tribal
sovereignty, self-governance, and self-determination as recognized in
treaties, statutes, executive orders and regulations. Trust reform
shall encompass all aspects and functions that the United States
performs on behalf of the Indian tribes.
The Council requests that any reform implement the goals of
decentralization, flexibility for each reservation or service area to
tailor programs to the needs of individual Indian tribes, and the
creation of well-defined duties of each federal official and employee
relative to trust management. Centralized record-keeping systems should
track information needed on a nationwide basis. But these records must
be maintained in a manner consistent with trust responsibilities and
managed in a manner which will avoid their destruction or loss, and
ensure that they are available to the federal government, the tribal
government, and the affected individual Indian allottees. The Council
requests that Indian hiring preference be applied in all trust reform
activities.
The Council requests that any cost savings generated by any
proposed reorganization go directly to increase direct services at the
local level, including those provided by direct federal services, self-
determination contracts and grants, and self-governance compacts.
Rather than being driven by perceptions of administrative convenience
at the central level, increased funding for trust reform should be
designed to address the need to improve services at the reservation
level. No funds should be expended for trust reform or payment of
damages in a manner that would detract from the quality or quantity of
services currently provided to Indian tribes and individuals.
With regards to the need to compensate Indian individuals or tribes
for trust mismanagement, the Council requests that assessment of
damages determined in the Cobell or any other litigation for past
mismanagement of trust resources be separately funded and proceed on a
parallel track to funding for trust reform. The Council supports the
extension of any statute of limitation which might be argued to apply
to any and all past mismanagement of trust assets, to allow all efforts
to be exhausted to identify all past mismanagement of trust resources,
including but not limited to physical trust assets and financial
resources derived from such sources.
It is notable that in each of the scoping meetings held by the
Department of the Interior in Spokane, to Albuquerque, Minneapolis,
Oklahoma City, Rapid City, San Diego, Anchorage, and Washington D.C.
the Indian tribes attending the meetings unanimously rejected the
proposal for establishment of the new BITAM. The rejection by the
Indian tribes of the Department's proposal for the establishment of the
BITAM were based on unanswered questions by the Indian tribes relative
to the proposed structure of the BITAM, the impacts of the creation of
the BITAM on the remainder of the BIA, the affect of the proposed
reorganization on the delivery of direct services to members of Indian
tribes, including services provided by federal agencies, and by the
Indian tribes through self-determination contracts and grants, as well
as self-governance compacts. As well, the Indian tribes questioned the
decision of the Department of the Interior to place its BITAM
transition activities in the control of Ross Swimmer and Steven Griles,
Deputy Secretary of the Interior, both long-time Department of the
Interior officials whose lack of leadership and effectiveness in trust
management have been instrumental in the continued mismanagement of
individual and tribal Indian trust assets.
However, the Indian tribes remain dedicated to effective trust
management reform. In this effort, member tribes of the Council of
Large Land Base Tribes, including The Chippewa Cree Tribe of the Rocky
Boy's Reservation, The Confederated Salish and Kootenai Tribes of the
Flathead Nation, and The Navajo Nation participated last weekend,
February 1--3, 2002, in a meeting of tribal leaders at the National
Conservation Training Center in Sheperdstown, West Virginia. This
meeting was scheduled and hosted by Secretary Norton, who visited
briefly with the group of tribal leaders late on Friday and late on
Sunday afternoon.
The group of tribal leaders who met at Sheperdstown last weekend
was not an inclusive meeting. The National Conservation Training Center
was managed as a secured federal facility, accessible only to certain
named individuals through a security gate. Only two representatives,
and one alternate, from each of the twelve BIA Regions were included in
the group of tribal leaders. While the group was initially planned to
have included technical representatives from ten organizations in which
Indian tribes are members, including the Council of Large Land Base
Tribes, these technical representatives were later excluded from the
group. There were tribal leaders from over one hundred Indian tribes
who were not provided the opportunity to participate in that retreat at
Sheperdstown. They were left behind at the Hyatt Regency Crystal City
to wonder what the Department of the Interior and the small group of
tribal leaders might decide, on behalf of the entirety of all 575
Indian tribes, during that one weekend of closed meetings. The tribal
leaders who were closed out of the meeting did not have that crucial
opportunity to be included in an open and positive dialogue with the
Department of the Interior. This failure must not be repeated in future
meetings of the tribal leaders group.
The tribal leaders from the Council of Large Land Base Tribes who
were admitted to the Sheperdstown retreat as representatives from the
twelve BIA Regions reported back about the discussions held there.
There were nine alternative proposals to BITAM that were received and
subjected to preliminary review, including proposals from The Chippewa
Cree Tribe of the Rocky Boy's Reservation, The Confederated Salish and
Kootenai Tribes of the Flathead Nation, The Cheyenne River Sioux Tribe,
The Oglala Sioux Tribe, and The Hoopa Tribe. There were also proposals
submitted by the Intertribal Timber Council, the United Southern and
Eastern Tribes, and the Van Ness Feldman Law Firm. All of these
alternative proposals address matters that would be significant
improvements over the BITAM proposal. Although the tribal leaders
discussed the proposals and internal organizational issues, they were
unable to reach a consensus by the end of the weekend. The tribal
leaders have agreed to three committees who have set a meeting next
week in Portland, Oregon to perform an in-depth analysis of these
proposals, along with others that may be submitted by tribes and other
organizations, and to discuss the internal organizational issues.
There are a number of general guiding principles that were common
to the alternative proposals. There was strong support within the group
to keep BIA as a viable agency, to provide a mechanism for
establishment of trust standards that can be tailored by Indian tribes
to their individual needs and values, for the establishment of a trust
management system that is consistent with principles of self-
determination and self-governance, and for the provision of resources
and expertise at the local tribal, BIA Regional and Agency levels.
While these general guiding principles must be incorporated into any
trust reform plan, there obviously must be much more work performed
with open and full consultation with all Indian tribes prior to the
determination of a plan for real, sustained, and effective trust asset
management reform.
This is not a process that can or should be conducted in haste or
in secret. The Congress passed the Indian Self-Determination and
Educational Assistance Act, the Self-Governance Act of 1988, and the
American Indian Trust Fund Management Reform Act of 1994 following
extensive hearings and consideration of the concerns and interest of
the Indian trust beneficiaries. The proposal of the Department of
Interior to establish the BITAM, as understood by the Council, would
administratively amend these laws without action by the United States
Congress. The Council is concerned about such a process and believes
that laws passed by the United States Congress should not be undermined
by administrative actions. The gains made by Indian tribes in the areas
of self-determination and self-governance compacts should not be
reversed or jeopardized by an administrative reorganization which is
contrary to the spirit, if not the letter, of the law.
I would like to emphasize that the crucial matter of trust asset
management reform must not be driven by the current exposure of the
Department of the Interior or the Secretary of the Interior to
sanctions in the Cobell litigation. These matters must be separated, to
the maximum extent, from the much larger matter of trust asset
management reform in order for the interests of both the Individual
Indian Money (IIM) account holders and Indian tribes to be effectively
and adequately addressed. The IIM account holders who have had their
primary or sole income halted by the Department of the Interior
computer shutdown are being harmed, physically, emotionally, and
spiritually, as well as financially. They are unable to buy food,
shelter, clothing, and other household items. They are unable to make
payments on vehicles, houses, and business equipment. All of these
harms are a direct result of the failure of the Department of the
Interior to make payments to these IIM account holders from funds
earned from their own allotted lands. The Department of the Interior
must be required to make estimated payments to these IIM account
holders, based on historical payments, in order to decrease the
unnecessary suffering and harm that they are sustaining.
In its 2002 Winter Session, the Navajo Nation Council had to
appropriate over $527,000 to assist Navajo IIM account holders whose
lives have been disastrously affected by the failure of the Department
of the Interior to issue checks for income due to them. This is only
the latest instance wherein the trust beneficiary Indian tribes have
been forced to undertake significant financial detriments because of
the failure of the Department of the Interior to adequately address its
trust responsibilities. The Council of Large Land Base Tribes requests
that this Committee assist its members, and all Indian tribes and
peoples to correct this deplorable situation. Thank you, Mr. Chairman.
______
[Appendices A, B, & C attached to Mr. Windy Boy's statement
follow:]
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Mr. Hayworth. And we thank you very much, President Windy
Boy.
Mr. Gray.
STATEMENT OF DONALD T. GRAY, ESQ., NIXON PEABODY LLP
Mr. Gray. Thank you, Mr. Chairman and members of the
Committee.
My name is Donald Gray. I am a forensic trust expert. And
what that means in simple language is, I fix broken trusts. And
I have done so for about 26 years with some of the nation's and
world's largest financial institutions.
I think I am the token private-sector person on these
panels.
[Laughter.]
Mr. Gray. I also have followed this problem intensely for
about 10 years, and have testified before Senate Committees,
and have helped draft legislation--without a client. Which
makes me the closest thing you will ever see to an altruistic
lawyer.
I do care about this issue, and I do have some very
definite ideas that I bring from the private sector, and I hope
they are helpful.
The first is expertise. Secretary Norton talked a lot.
Actually, I think it was Mr. Carson who asked a very direct
question about, ``Do you have the expertise to do it?'' And
there was an answer about, ``There will be training programs
that will go on.'' In all fairness, having followed this and
read everything about it for 10 years, that is the blind
leading the blind.
There is no expertise of the caliber that is required for
trust processing, forensic fixes, land asset management,
conceptual architecture, systems architecture, trust
consolidation, modeling, and all of the things that have to go
in--and I am now speaking about the IAM accounts--that will
have to go into any kind of historic fix, much less a fix of
the systems to go forward.
They do not have the expertise. And that is one of the
reasons that prior administrations have never been able to
grapple with this problem, even though they spent over $500
million in the process of doing it. And just a change of
management inside the DOI does not do a thing. You have to have
the expertise. And I will speak in a moment about how you get
that expertise.
The second thing is conflict of interest. You have--and I
think any lawyer will see this--you have an incredible conflict
of interest, in having the BIA fix this problem. I want to give
you an example from the private sector.
When we are asked to go into a bank and fix a 30-year-old
trust problem that may involve 20 or 30 billion dollars, we
take the trust staff that has administered that for the last
five or 6 years, and we separate them. And we immunize them,
unless they have done something criminal. And we say, ``You are
going to sit on the sidelines. We are going to fix this. And we
are going to come to you and we are going to ask you a lot of
questions. And you are going to help us. And at the end of the
day, you are going to look like heroes, we are going to look
like heroes, and the bank is not going to get sued.''
But the first thing you do is to separate the people who
have been working on these accounts from trying to fix the
accounts, because they are going to run across mistakes they
made, their father made, their brother made, or someone else.
And that is a terribly unfair thing to do to anybody in the
BIA. And it is not done in the private sector.
The other thing that is admitted by Ms. Norton is that
leaving accounting outcome to a defaulting agency does not make
any sense at all. I mean, what the court has done is say,
``Give us an accounting.'' They are the ones who are on the
defensive. They are the ones that cannot come up with the
accounting. How in the world are they going to come up with an
accounting that is fair and reasonable and that takes into
account the interests of the Indian beneficiaries?
The people who have worked on this--Ernst and Young; and
Pricewaterhouse (which was an expert for the plaintiffs.) I
have worked with both of those on numerous bank fixes. They
know how to model. And what I mean by ``model'' is, when you
have a 30-year gap in records, you go back in and you see what
somebody else did; you stitch it together; and you come up with
the best guess you can. And that was the basis of beginnings of
settlement talks that the government wanted no part of.
The third thing is independence, which is related to
conflicts of interest. If you do not have independence from a
DOI who is heavily conflicted, then you will never get this
problem fixed.
Whether it is a receivership or a GSE, this problem has got
to come out of the DOI. Or you will put another few hundred
million dollars into absolutely nothing. It has got to come
out.
I would suggest to you that there is a sub rosa agenda here
by Judge Lamberth. The judge is begging the Congress to offer a
solution. He does not want to appoint a receiver. He has had
enough trouble with trying to correct the problems of the past
in accounting, much less a receiver with respect to how to go
forward. And they are intimately linked, if you are a trust
fixer. He is absolutely begging the Congress to come in there
and do something; which is why I believe that some kind of GSE/
receivership is the answer.
In fact, if you combine Ms. Cobell's testimony with
President Makil's testimony, you will see that there is an
answer here that Congress can implement to solve this problem.
But it will never be solved by the DOI. The judge is
begging Congress to get into it. You need expertise. It does
not have to last forever. It can be three to 5 years. But you
have got to create an agency that has the money to hire the
expertise and get the problem done.
And at the same time, train BIA people whom you have set
aside as trust experts. At the end of the day, they will be
able to be trust experts in Indian land banks or in commercial
banks. So it is not leaving the BIA behind. And after that
time, give it back to the BIA, because it is fixed.
I have gone over my time, and I apologize.
[The prepared statement of Mr. Gray follows:]
Statement of Donald T. Gray, Nixon Peabody LLP, San Francisco,
California
My name is Donald Gray. I am a partner with the law firm of Nixon
Peabody LLP in San Francisco. For 26 years, I have specialized in
matters concerning commercial trust and institutional fiduciaries. I
appreciate the opportunity to testify before you, and to bring what I
hope is a helpful and fresh perspective to the Indian Trust Fund reform
effort.
For many years, my practice--and the practice of Nixon Peabody's
Trust and Financial Rehabilitation Group (the ``Group'')--has centered
on working with institutional trustees and other professionals in
establishing, administering, reconciling and rehabilitating long-term
complex trusts. My work has given me extensive exposure to active asset
management, trust administration and operations, investment, complex
cash flow and risk control problems of trusts involving billions of
dollars of managed assets of every variety. Our Group, which I lead,
has represented some of the nation's largest financial institutions in
these matters. One example of our work is our recent representation of
a major money-center bank concerning trust funds of over one thousand
governmental agencies, and hundreds of millions of dollars of claims
relating to unclaimed trust monies, recordkeeping, investment and fees
dating back many years. Simply put, our business is largely devoted to
``fixing'' broken trusts.
Although my experience is predominately in the commercial sphere, I
have also been involved in trusts that touch both the public and
private sectors. For example, in the mid-1980's, I authored the series
of master and subsidiary trust agreements implementing the settlement
between the United States Department of Commerce and the Native
American corporations representing the Pribilof Islands of Alaska.
Those trusts helped form the basis of the Islands' new economy, as it
emerged from more than a century of U.S. Government oversight.
I was pleased to accept Chairman Hansen's invitation to testify on
trust funds management by the Department of the Interior (DOI). I
believe I bring a perspective which, except for the significant efforts
of Mr. Homan during his tenure as Special Trustee, seems to be
completely lacking in the current process. That is, the perspective of
an independent person or group with significant private sector trust
and financial institutions expertise. The key concepts here, and
throughout my comments are ``independence'' and ``expertise.''
INTRODUCTION
The problems facing Indian Trust Fund reform are admittedly multi-
faceted. Understandably, there are micro-economic, institutional,
political, cultural and emotional concerns involving the DOI and the
American Indian people, which have and will continue to manifest
themselves throughout the process. I am not an expert on Indian
affairs, nor on the intricate workings of the governmental agencies
with responsibilities in these areas. I am a trust lawyer. But after
significant research, I have reached the inescapable conclusion that
the Indian Trust Fund reform effort cries out for the kind of detached,
independent expertise that exists among professional trust
administrators, accountants, lawyers and other professionals in the
private sector. These are persons who have spent most of their careers
dealing with trust problems comparable to those addressed in the GAO
Report No. B-280950.
I reach this conclusion because the Indian Trust Fund problems are,
first and foremost, financial trust problems based on issues frequently
encountered by private sector trust institutions, such as inadequate
policies and procedures and poorly planned systems conversions
resulting in ineffective recordkeeping. It appears to me that, if the
Indian Trust Fund problems are to be effectively dealt with, the
resolution process needs to be removed from the vestiges of 150 years
of U.S. Government/American Indian relations, with solutions fashioned
primarily through the prism of historic structures and viewpoints. In
my view, effective reforms will never be accomplished until the
fiduciary and financial reporting aspects of Indian Trust Fund
management is separated from the DOI's other role in overseeing the
social and economic development and political concerns inherent in the
U.S. Government/American Indian relationship. These latter concerns,
which are an important aspect of DOI's mission, and the persons
responsible for such matters, must, in my opinion, be separated
completely from the management of the Indian Trust Funds with the
latter function placed in the hands of persons with commercial and
financial trust expertise who can identify and implement the systems
and resources essential to real trust reform. I am convinced that
without such independence and expertise, the affected American Indian
people will be deprived of the same high level of money and asset-
management services, as well as legal protections, that are available
to every citizen of the United States, who puts his or her financial
affairs in the hands of another.
THE GAO REPORT
The GAO extensively studied one aspect of the DOI's High Level
Implementation Plan (HLP)--the planning and acquisition of a new trust
asset and accounting management system (TAAMS). The GAO concluded that
the DOI had not developed an overall information systems architecture
for the entire business cycle of the trust funds functions--including
land ownership and appraisal, utilization and income management, trust
fund accounting, investment, custody and records control, and
disbursements. Without this architecture, there can be no assurances
that isolated systems purportedly providing one function will interact
and interconnect properly with systems developed for all other
important trust functions. The GAO also found that the DOI, by
purchasing the TAAMS off-the-shelf software, had not done enough to
assure that all aspects of asset management data (involving complex oil
and gas, timber, crop, fishing and other asset pricing, leasing and
money flow information) would be accommodated.
The DOI acquired TAAMS, at a reported cost of $60 million, without
regard to the GAO's warnings of the need for overall information
systems architecture in correspondence with the DOI in 1997 concerning
the Special Trustee's Strategic Plan issued in compliance with the
American Indian Trust Fund Management Trust Reform Act of 1994 (``1994
Act''), and in its general guidelines on systems architecture
development issued in 1992. The DOI also seemed to ignore the highly
integrated approach for trust fund clean-up, rehabilitation and
implementation recommended by the Special Trustee in his April 1997
Strategic Plan issued in compliance with the 1994 Act. Similarly, the
DOI appears to have overlooked the specific directives of that statute
(the governing document for all trust reform) to accomplish all aspects
of reform in an integrated, coordinated and properly interactive
process. The DOI also seems not to have heeded the advice of Macro
International Inc., consultants to the Office of Special Trustee (OST),
which found in 1997, after significant research into the personnel and
training deficiencies of DOI's reform effort, that any implementation
of a technologies infrastructure to solve the manifold trust problems
first required the foundation of well thought-out practices and
procedures relating to overall integrated reforms that would assure a
comprehensive output consistent with commercial standards. In other
words, without accurate data collection and input, no software system,
even the most sophisticated, can achieve the required objective of
providing accurate financial reporting.
As an outside trust expert, I must question why the DOI staff would
apparently ignore the GAO, a highly qualified finance expert, former
Special Trustee Homan, outside consultants, and finally, the governing
statute, by purchasing an off-the-shelf system, at enormous expense,
without any clear assurance that it will be integratable with other key
aspects of trust reform, or even that it will be able to process all
data variables inherent in the vast array of Indian Trust Fund assets.
One theory is that such an extraordinary action is a symptom of a
larger problem. The symptom, which I have seen in the commercial
context, is the almost frantic attempt, when existing procedures fail,
to grasp for a quick fix, even if the fix merely creates the appearance
of a solution.
As explained below, any asset management system must be extremely
agile and have the ability for constant modification to accommodate all
the data variables inherent in the IIM assets. I believe it has been
convincingly demonstrated that the TAAMS system is a failure in this
regard and there are serious questions as to the compatibility of the
system with other systems, or its consistency with an overall
architecture, which does not yet exist.
The larger, and much more fundamental problem, is that the DOI and
its internal Bureaus are encumbered by serious conflicts-of-interest,
although not of their own making. It is highly probable that such
extreme conflicts-of-interest will inevitably drive the DOI, its
captive OST, and the Bureau of Indian Affairs (BIA) to actions that are
not directed solely at rehabilitating and correcting accounting for all
trust assets properly creditable to the Individual Indian Monies (IIM)
accounts, the only true goal of the 1994 Act. The very essence of
trustee status and integrity, and of fiduciary responsibility, is the
absence of conflict-of-interest.
WHAT IS SYSTEMS ARCHITECTURE?
If I may be permitted a small digression, I suspect that some of
the Committee members may be a bit confused with the overly technical
jargon used by the DOI, the GAO and, admittedly, trust professionals
like me. It may be helpful to decipher what ``systems architecture''
means, at least to me.
When professional trust experts approach the original set-up or
historic reconciliation of a complex income asset/money flow/investment
trust, they first start with a comprehensive listing of all possible
data input, incorporated into a conceptual diagram of how that data
must flow through each and every phase of the trust accounting system
(appraisal, leasing, accounts receivable, accounts payable, any special
cash flow allocations like reserves, posting to proper accounts,
investment accounting, account ownership records and disbursements). In
addition, assessments are made of the personnel expertise needed to
keep track of, analyze and control all such information. Finally, there
is a narrative conceptualization of how information/technology (i.e.,
computer) systems can facilitate the above processes as well as an
identification of so-called ``inflection points,'' where one technical
system's data is downloaded to people for analysis and re-uploaded to
other systems, or where two technical systems can and should interface
to transmit critical data. This process must be substantially complete
before any one automated system is specified or purchased.
Put another way, seasoned trust professionals in the commercial
context first apply simple common sense to the problem. This sounds
obvious and easy, but it is far from it. In a trust rehabilitation
context, this foundational process involves what we call in the
industry ``scrubbing.'' That is, the architects of a workable system
must roll up their sleeves, review thousands of potential data input
variations (past and future), conceptually design how trust data flows
through a multi-phase system, perform calculations on trust data and
explain what people should do, and what computer hardware and software
should do, to implement the system.
This is some of the hardest work in professional trust management
and requires expertise in all facets of commercial trust accounting
and, typically, legal interpretation of trust instruments and governing
laws. First and foremost, administrators must resist the sometimes
inexorable urge to look at computer systems as panaceas for any complex
problem. Computer systems do not think. Hopefully, they are designed by
people who do think, and who are intimately familiar with processes and
calculations which are being automated. They gain this knowledge by
working intimately with such a multi-disciplinary trust team for
countless hours. After flowcharting the desired processes or
calculations, they write or procure a software program (or package of
programs) embodying them. If the software is designed and programmed
well, a computer system can then perform such processes and
calculations in bulk and at great speed.
Also, computer systems do not self-correct and expand themselves to
create new capabilities for handling information/data with which they
were not designed to cope. I have seen highly sophisticated trust and
asset management commercial systems that do a splendid job with 90% of
complex data or analysis, but utterly fail to accommodate, or be
modified to accommodate, 10% of the required data or analysis.
Unfortunately, 90% correctness for millions or billions of dollars of
managed assets does not sit well with investors and other
beneficiaries.
Although seemingly reasonable to the lay person, the former DOI
Secretary's comments concerning the selection of a ``near enough'' off-
the-shelf asset management system, by selecting a system developed not
for the IIM trust reform, but for an ``analog'' problem, is a bit
frightening to a trust professional.
As the GAO report indicates, instead of the ``intricate and complex
coordination process'' of all facets of the reform effort called for by
the former Special Trustee in his Strategic Plan, the DOI's HLP leaves
the IIM effort with a disjointed, potentially non-integratable mish
mash of project initiatives, and the occasional ``big splash'' computer
system for one element of the task that may work only for highly
selective data. But the current trust reform effort, as evidenced by
the DOI's HLP, contains features far more troublesome than a potential
functionally deficient, or non-integratable TAAMS product.
INDEPENDENCE, EXPERTISE AND AN INTEGRATED APPROACH
Although both the HLP and the Special Trustee's Strategic Plan
admittedly contain similar, and undeniably necessary, tasks essential
to account clean-up, reform and new systems building (including data
clean-up, records retention and proper custody, workable trust
accounting and asset management procedures, investment, accounts and
land title, appraisal and probate clean-up), these are no more than
static descriptions of jobs to be performed on a coordinated basis.
What is of ultimate importance is the philosophy, mission goal and the
resulting and overriding ``how'' to attack all these deficient areas.
Respectfully, while the former Secretary plucked out independent
projects that are undeniably important to trust reform, he specifically
and dramatically gutted the Special Trustee's Strategic Plan of its two
essential cornerstones for such an overriding mission and goal--
independence and expertise. Without these elements, which create both a
reform environment and give it its essential tools, meaningful trust
reform will not occur.
The Special Trustee's Strategic Plan, in its first two pages, could
not have been clearer on this all-important ``how.'' First, with some
courage, Mr. Homan called for a completely independent and neutral
body, a Government Sponsored Enterprise (GSE), to take over the trust
rehabilitation process, under the supervision of government agencies
expert in commercial finance and modern trust procedures. He
continually cites the ongoing conflict within the DOI in failing to
separate its special trust reform fiduciary goals from its general
responsibilities in education, housing, law enforcement and a multitude
of other welfare programs and other American Indian services provided
by the DOI and its Bureaus. In short, Mr. Homan concluded that, in the
competition for the limited funds appropriated to DOI, when a choice
must be made between a department's general responsibilities and trust
fund reform, the latter program would inevitably suffer.
What is also obvious from the HLP's allocation of responsibility
for its 13-category, piecemeal approach to reform, is that there is at
least an unconscious attempt to employ the other internal Bureaus of
the DOI, especially the BIA, in these processes, regardless of a proven
lack of expertise, since only two of the projects are reserved to the
OST. This foreshadows two very negative results. First, it displays a
lack of appreciation for the expertise, and long-term training required
for trust rehabilitation and administration, and suggests that
involving these internal DOI Bureaus is of greater importance than
solving the trust fund problems. The DOI's loyalty to one of its
Bureaus, the BIA, is laudable, but completely inappropriate in the IIM
trust reform process. Second, the misguided piecemeal methodology of
the HLP permits agency employees, no matter how much they may wish to
act in good faith, to attempt to solve the trust fund problems by
purchasing an expensive new software system, creating the impression
that by do doing they are attempting to obscure past mistakes with an
easy, but ineffective fix. This is not intended to be an indictment of
such personnel, it is simply a recognition that human beings, no matter
how fair-minded and well-intentioned, should never be asked single-
handedly, in isolation and without expert advice to rehabilitate a
process which has gone seriously awry during their historic involvement
in the process.
For a commercial trust practitioner, deeply involved in the
activities of bank trust departments, and a veteran of dealing with the
Office of the Comptroller of the Currency (OCC), and other federal
agencies, state banking authorities, accountants and rating agencies in
connection with audits of trust and fiscal agency procedures, the
equally apparent inability of the DOI staff to appreciate the level of
expertise required for the rehabilitation and modernization of a trust
problem as vast as the IIM accounts issues is surprising to me. I
cannot put this any more clearly than former Special Trustee Homan did
in his Strategic Plan, and I fully concur with his conclusions.
Regarding the lack of trust managerial resources within the DOI, and
the BIA specifically, Mr. Homan states:
Managers and staff of the BIA have virtually no effective
knowledge or practical experience with the type of trust
management policies, procedures, systems and best practices
which are so effective, efficient and prevalent in private
sector trust departments and companies. The BIA area and field
office managers do not have the background, the training, the
experience, the financial and trust qualifications and skills,
necessary to manage the Federal Government's trust management
activities according to the exacting fiduciary standards
required in today's modern trust environment. Thus, and through
no fault of their own, and even assuming financial resources
were made available, they are not capable of managing
effectively the Federal Government's trust management
activities on a par with that provided by private sector
institutions to their customers. . .--[emphasis added]
If your or my bank or trust company were to handle our assets with
completely unqualified personnel, in a manner that can be described
metaphorically as a ``shoe box'' approach to accounting, we would be in
court, or at the steps of the OCC or other appropriate regulator the
next morning. That was one of the great lessons of the financial
institution crises of the 1980's.
The independent contractors, Macro International Inc., Larson Slade
Associates, LLC and Arrowhead Technologies, in cooperation with project
resource firms (such as Riggs Bank, NationsBank and State Street Bank
and Trust) echoed Mr. Homan's conclusions after hundreds of DOI
personnel interviews. Their goal was, in part, to identify any gaps
between the current Indian trust systems and trust departments in the
commercial sector. These consultants concluded in 1997 that the
accepted legal and procedural standards of fiduciary responsibility to
manage trust assets and accurately report on their status to
beneficiaries were not being met. Without properly trained personnel,
and without a ``single-point management responsibility'' like a GSE,
the current system falls far short of commercial trust standards. What
is needed, these consultants found, is a single trust organization,
with complete control over both resource and financial assets utilizing
tried and true commercial applications. Finally, they concluded that
all of these tasks will fail to improve the Indian Trust Fund reform
process unless an effective and efficient staff is able to carry out
the tasks.
A quick look at previous DOI budgets demonstrates with clarity the
Agency's historic opinion of these expert findings. Although these
numbers have since been inflated, the previous Administration's HLP,
for combined fiscal years 1999 and 2000, called for a budget for
computer software ``systems'' of $51.1 million. For the same years,
this budget for ``training'' is a meager $7 million, and even that
relates solely to on-the-job training for BIA officials (which the
consultants found generally ineffective) rather than for the hiring of
experienced commercial trust administrative staff. So much for
expertise.
With the growing complexity of investment vehicles, asset-backed
securitizations and their correspondingly complex cash flows (not
unlike the IIM accounts), modern trust administration requires a level
of financial and technical expertise that was unheard of twenty years
ago. What once required a few accounting courses and on-the-job bond
payment training, now frequently requires advanced degrees in money
management, fiduciary standards and laws, complex cash flow analysis
techniques (called ``analytics'' or ``modeling''), dexterity on PC-
based spreadsheet and database systems, a complete understanding of
permitted investments, overnight ``float'' investments, special cash
accounting systems and the use of complex computer programs. Even with
this training, and with the constant support of expert supervisors, tax
specialists, accountants and attorneys, it takes years to develop the
intuitive expertise to perform proper trust accounting. To my
knowledge, not one person from the commercial sector with such a
background is presently on the staff of the DOI.
Again, I must ask why the DOI has completely ignored the critical
need for such independence (i.e., lack of conflicts-of-interest) and
expertise. One might guess that this answer would be the very
``special'' nature of U.S. Government/American Indian relations, and
the ultra-sensitivity the BIA and the other DOI Bureaus bring to this
special problem. But from the outside this rather looks more than
suspiciously like institutional self-perpetuation, obfuscation of past
mistakes, and at worst, the kind of paternalism that should have gone
with the wind many years ago.
A PROFESSIONAL TRUST APPROACH
How would a team of commercial trust experts approach a problem
like IIM reform, and how does the DOI's course of action compare to
such a commercial approach?
Although admittedly a long time in the making, commercial trust
entities have tackled efforts just as daunting as the IIM problem,
especially when they have inherited active asset trusts which have been
mismanaged.
An overview of a typical step-by-step approach to a major
``fiduciary fix'' of a private sector trust organization follows:
Step 1. Assemble a Team.
The first step is to assemble a team consisting of highly
experienced trust professionals, accountants who specialize in detail
analysis of trust accounts, cash flows, investments and control
procedures, legal experts knowledgeable about the governing law,
documents and the practical general industry practices, and computer
systems analysts, specifically trained to translate conceptual
architecture developed by the other team members into software systems
requirements. We are not talking about hundreds or even dozens of
people. Although they may all require expert staff assistance, at the
core, we are talking about four to six trained professionals. I and my
colleagues in the industry have worked successfully with many such
teams.
Step 2. Assure the Project Team's Independence.
The next step is to establish the absolute independence of the
project team. As I have mentioned to many interested people on the Hill
during the past three years, establishing independence for the team
responsible for either fixing a broken trust, or creating an entirely
new trust system for a complex array of assets, money flows and
beneficiary variables, is essential. That team would initially meet
with personnel historically involved in the trust, or trust asset
process. Those people will be separated and protected in the trust fix
process. By this I mean that there will be the immediate recognition
that those involved in a historic process where mistakes have been
made, whether or not they personally have made them, are exactly the
wrong people, at least at the initial phases, to be actively engaged in
rehabilitation or designing replacement systems. The natural urge of
all of us is to mitigate, gloss over and in extreme cases, hide past
mistakes, and that urge can frequently take precedence over sound
reform efforts. And yet these people, in this case DOI personnel, must
be protected. Their institutional historic knowledge of problems, where
data is to be found, what external pressures have been brought to bear
at the expense of proper functioning, and a multitude of other
essential information, resides in the memories of these people. If they
are told that they will not be fired or otherwise punished for human
errors and mistakes (short of criminal self-dealing, which I doubt is a
serious concern here), they can be of tremendous help. But if they are
left alone to fashion all reforms, they are being required to do the
impossible--protect themselves and their families while being asked to
single-mindedly protect the interest of IIM beneficiaries. Again, all
efforts, at all levels, must be employed to eliminate such fatal
conflicts-of-interest.
Step 3. Establish Document Custody and Control.
The next step of the team is to establish the strictest document
custody and security measures possible. Every piece of historic data
that is contaminated or disappears diminishes the integrity of any
reconstruction effort, and eliminates data variables, and potential
problems that may likely recur, and therefore should be collected,
solved and input into a system that can accommodate all data variables
and similar problems in the future. Past reports by the Department of
Justice and the Special Master in the class action litigation regarding
BIA document destruction and general substandard condition of trust
record maintenance make this step an obvious priority.
Step 4. Identify Data Elements.
Next, the data elements relevant to all phases of the trust
business cycle must be identified, whether relating to land records/
ownership, asset management or trust accounting functions of proper
crediting, investment and disbursement. Further, an analysis of how
that data has, and may change over time is critical. Systems,
especially automated systems, do not usually adapt well to data
changes. Significant experience, knowledge and creativity in the ever-
changing nature of land resource exploitation, investment parameters
and ownership variables are required at this stage.
Step 5. Develop a Schematic Diagram.
Then comes the hardest part, the development of a narrative,
logical but highly complex non-automated schematic diagram (which could
cover the walls of this hearing room), demonstrating how all collected
data must move, interface, inter-relate and be re-analyzed,
recalculated and otherwise re-assessed to assure that all functions of
a highly integrated lease-to-beneficiary disbursement system will, at
least conceptually, work. For lack of a better term, this is the
conceptual model, or overall architecture of any complex trust problem.
In the end, if an experienced commercial trust administrator, with the
aid of only an HP or a simple PC-based spreadsheet system, cannot track
financial data from lease billing to beneficiary disbursement,
throughout all the intervening trust business functions, then all the
elaborate personnel task forces and isolated pieces of systems
software, no matter how sophisticated, will be worthless. All the
functional elements of the business cycle must be analyzed
simultaneously and interactively at this conceptual architecture phase,
or hundreds of millions of dollars in ``magical fix'' systems will be
purchased, and ultimately wasted.
Step 6. Design Architecture.
Next, experienced trust systems analysts, capable of fully
comprehending the conceptual architecture, and fully knowledgeable
about the universe of commercial off-the-shelf (COTS) trust accounting
systems and custom applications providers, can begin to design an
interactive systems architecture to accommodate all functions. This
does not mean such an expert independently develops separate, or fully
integrated software components. What is does emphatically mean is that
one person, or a group of extraordinary trained people, is fully
cognizant of both the overall goals and the intricate conceptual plan
based on actual data and the universe of automated solutions that might
be brought to bear to facilitate the conceptual design. Then, and only
then, are requirements developed, and systems pre-tested and finally
purchased, and then only with extensive warranties, retrofitting and
modification undertakings and extensive service, support and back-up
packages.
Step 7. Recruit Permanent Trust Administration Staff.
Automated systems are only as good as data input performed by
skilled trust administrators. Further, if multiple automated systems
are used, such administrators must constantly monitor whether the
systems are correctly interfacing and exchanging information, since
this is an area of frequent difficulty given the ever-expanding
universe of data variables and money calculations which flow through
those systems. This requires knowledge of the basic functions these
systems perform. Data variables, and sometimes simple automated systems
breakdowns (or ``crashes''), or failures due to viruses, require trust
administrators to constantly test the validity of systems calculations,
usually by ``shadow'' calculations mimicking the essential tasks of any
automated systems, performed on single stand-alone spreadsheet PC
systems. This is painstaking work, and requires significant experience.
I have read the Special Trustee's Strategic Plan, the HLP, the GAO
report referred to above and countless preceding GAO reports, hundreds
of pages of court transcripts and Congressional testimony, outside
consultants reports, and press releases and studies of the DOI and its
internal Bureaus. And yet, I am far from an expert on all IIM reforms
to date. However, I respectfully ask the DOI, the former Special
Trustee, the Advisory Board established by the 1994 Act, the members of
this Committee--what kind of a report card would you give to the DOI
during the past few years based upon the above model of a well thought-
out, rehabilitation approach?
The following hypothetical, admittedly from a different but similar
context, may help to put the current state of affairs in perspective.
After growing up through the New York City public school system in the
1950's and 1960's, this hypothetical has meaning to me, and hopefully
to others present.
Suppose a blue-ribbon group of local merchants, professionals and
workers in an inner-city environment decided to establish a multi-
faceted urban redevelopment project, aimed at dramatically improving
the lives of the low income majority living in the area. The group
engages the help of health professionals to set up clinics, educational
professionals to establish remedial programs and vocational education
to augment a perpetually underfunded public school system, artists and
musicians to establish creative centers as counters to drugs and crime
and off-duty police to assure an atmosphere of security rather than
fear. Assume the group also sets out to develop an investment and asset
management program to help the populace invest their hard-earned
savings, budget their household funds to maximize the best life style,
and to manage income-producing property that belongs to individuals or
civic associations. Suppose this group over time, through successes,
attracted local, state, federal and private non-profit funding to
facilitate its programs.
Now, assume five solid years of demonstrable success. The streets
are safer, drug use among the young is down, educational achievement
and job retention is higher, and health benefits have reached homes
never reached before. But also assume that the organizing group, simply
due to lack of time and resources, neglected the asset management and
investment functions with respect to potentially millions of dollars of
poor people's money. Records were literally kept in shoe boxes, or
lost, pending the engagement of financial professionals, or deposits in
regulated financial institutions, that the group always intended to do,
or to make, but simply failed to do given the enormity of the task it
had undertaken. The result is millions of dollars of unrecoverable
losses for citizens, and no adequate program in-place to manage the
assets or invest the money, assuming the group even knows or can locate
current balances.
As a citizen, or a state regulator, what would you do? Would you,
out of anger and frustration, seek to punish the individuals who had
formed the redevelopment project, or end the project itself? I doubt
it. But would any sane person, in their wildest dreams, allow the
control persons, who are now heavily conflicted and who lack any
financial expertise, to continue to manage the assets and money out of
the shoe boxes, and to spend fabulous amounts of other people's money
to buy computer systems, with grand but empty promises to solve all
problems? I do not believe so. Any responsible person would take what
money they could find and deposit it in a bank, and transfer what
assets they could find to a bank trust department. Then, under proper
regulatory guidance, true experts would be employed to reconstruct
proper balances, probably on a modeled test case basis given the
paucity of records, and true reform would begin.
Why should the American Indian beneficiaries of the IIM accounts be
treated with any less reasonableness and fairness?
CONCLUSIONS AND RECOMMENDATIONS
The leaders of the DOI and the BIA, and the rank and file of those
entities in Washington and in the field, no matter how well-
intentioned, are seriously conflicted in the process of Indian Trust
Fund Reform. If fiduciary integrity means anything, it means the
absence of such conflicts-of-interest posed by concerns of job
security, political survival, institutional longevity and self-
protection against blame for historic errors. People of good faith can
argue about the meaning of the prudent investor rule, or other high
fiduciary standards of care. But after a professional lifetime of
attempting to reconcile textbook standards of care for trustees with
real work capabilities of human beings like you and me, I (along with
many courts, bank regulators and the Federal Securities Acts) have
concluded that professional fiduciaries must, at the very minimum, be
trained in state-of-the-art money management, completely free from
conflicts-of-interest, and must treat the assets of others in their
care as though they were the personal assets of the trustee, his or her
spouse, and children. When the former Secretary of the Interior chose
to backburner Mr. Homan's concerns about trust standards of care, along
with the Special Trustee's concerns about independence and expert
staffing, in the HLP, it became clear that the only governing standard
would simply be the best the DOI/BIA could do, hampered as they are by
a void of necessary expertise and in the face of serious conflicts.
This is not a fiduciary standard. This is capitulation to the status
quo, with a correct accounting for the IIM accounts at best only a
secondary or tertiary concern.
I strongly believe that the only viable answer to the present trust
reform problems is the creation of a neutral body, independent of the
DOI, with both public and private support and input. The GSE suggested
by the former Special Trustee Homan in his Strategic Plan is one such
vehicle. The Indian Trust Management Reform Authority recommended by
the Chairman of the Intertribal Monitoring Association on Indian Trust
Funds could also serve such a purpose.
Ideally, such an independent body would be sponsored by, or have
some connection with a banking or other financially sophisticated
federal regulatory or quasi-governmental body. Obvious candidates would
include the OCC or, perhaps, one of the federally sponsored entities,
such as Ginnie Mae or Freddie Mac (or its related entity, the Federal
Housing Finance Board), which are intimately familiar with complex
active asset/cash flow trusts. It is also essential, in my mind, that
oversight be retained by this Committee as well as the Senate
Committees on Indian Affairs and the Energy and National Resources
Committee.
The structure of the neutral body need not be complex. In its
simplest form, it would be administered by a financially sophisticated
person with experience dealing with inter-governmental agency issues.
In addition to government financial input, such an entity must have the
ability to engage trust experts from the private sector, representing
the disciplines referred to above in connection with a proper
commercial approach to solving the IIM trust problems. It is my belief
that such an entity would be able to obtain the services of highly
qualified trust administrators, accountants, lawyers and systems
experts who would be willing to work on this problem. Believe it or
not, there are many people in the private sector who understand how
important this problem is, and would be willing to devote extraordinary
effort to help forge a real solution.
The budget for such an enterprise could be a fraction of the DOI's
expected Indian Trust Fund reform requests. Its mission would be to
develop the critical conceptual and systems architecture described
above, and called for by the GAO, in order to assure that future
spending is actually aimed at viable solutions. No input would be
ignored. The cognizant Congressional Committees, the GAO and the DOI/
BIA would be consulted on an ongoing basis. The entity should be task
specific, and should have a sunset timeline coordinated with trust
reform progress, although some viable means of continuing trust
supervision, or progressive privatization, would be required. Such a
small, well-controlled, highly dedicated and expert group, if given the
cooperation of the DOI, could not only accelerate implementation of a
properly integrated trust function for the entire IIM business cycle,
but would also go a long way to relieve the unhealthy pressure that has
built up around the historic approach to this problem.
A few years ago, the head of the BIA cited a concern about
potential independence for the IIM trust function that is very telling.
He voiced a serious concern that wresting this problem from the BIA
might spell the end of that Bureau as a viable governmental body.
Although his concern has nothing to do with the Trust Reform Act's
primary purpose of assuring IIM trust reform for the Indian
beneficiaries, one can certainly be sympathetic with a concern that
hundreds of people, many of whom are American Indians, may not have
viable work in the future. But I would respectfully suggest that the
kind of neutral body I and others are recommending might present an
opportunity of a lifetime for many American Indians, within and outside
the BIA. With the tremendous growth of retirement assets and the use of
complex trust structures as investment vehicles, this country needs
more qualified trust administrators. Given the increasingly high
qualifications required for such professionals in the private sector,
many move on quickly to other financial positions, such as investment
banking. The staff of any neutral body would constantly be interfacing
with many of the BIA staff who are currently working on the problem,
and who would continue to do so in cooperation with the neutral body.
The opportunities for real, commercial level trust administration
training is obvious. Whether an affected BIA staff person chose to use
such training in government service, or in working with Indian-owned
independent banks or any independent bank or trust company, his or her
prospects for the future could be far brighter than continuing to work
on any single-purpose project.
The most important observation I can make, as a dispassionate
outside professional, is for all major players in this process--
including the DOI, the American Indian groups, the U.S. Congress and
the Federal courts, to take advantage of the opportunities inherent in
the present state of affairs.
This problem has been a long time in the making. The present staff
of the DOI did not make the problem, and, in fact, have made some
valiant efforts to solve it. But the DOI has already lost control of
the process. This is because the historical accounting, reconstruction
and rehabilitation of the IIM accounts is currently in the hands of the
Federal courts, and will be played out in some kind of court-mandated
accounting, a receivership or a consensual settlement process, in each
case requiring outside trust professionals to determine how history is
to be reasonably reconstructed. I can state with some assurance that in
a trust problem of this magnitude, the validity of the systems designed
to take care of future trust and asset accounting will depend in large
part on what is learned in that historic accounting and reconstruction
process, even if that process is accomplished largely on a sample
modeling basis. Simply put, most if not all of the variables involved
in complex asset leasing and accounting, in beneficiary succession and
in custody problems have already presented themselves in the protracted
history of the IIM accounts. Those data variables are the building
blocks for any future systems or procedural architecture. The
intricacies of leasing potato land in Idaho, as opposed to oil and gas
deposits in Oklahoma, and what has gone wrong in the respective
accounts payable/accounts receivable histories of such leasing, is
vital information for any new asset management system.
What I am suggesting is that the two processes--historic
accounting/reconstruction and future systems development are
irrevocably linked. The experts of any independent body charged with
future asset and trust accounting design, unless they are to duplicate
effort, must talk with the experts involved in the reconstruction
process. Ideally, at some point those processes should be combined. But
the point is that one portion of the ``fix'' process, historical
accounting, is already in the hands of a neutral body, the court. It
makes little sense, then, since both aspects of the fix must be
irrevocably linked, to leave the largely derivative portion, new
systems, to a governmental agency, steeped in the knowledge of Indian
welfare, but devoid of any trust expertise and heavily conflicted. This
makes even less sense since the entity currently working on the future
systems fix, the DOI, is in a legally adversarial posture in the
current Federal court proceedings where the historical fix is being
played out.
When the recommended independent body is formed, serious
consideration should be given to combining any court-mandated
accounting or receivership reconstruction effort with new systems
development tasks of that neutral body.
Politics and institutional self-preservation aside, it is time for
the DOI to let go, to the extent it has not already been forced to do
so by the pending class action litigation.
I would also hope that all those involved, given the nature of the
interests of the American Indian beneficiaries at stake, would take a
strictly non-partisan approach to the trust reform process.
Finally, and briefly, I would like to remark on past published
statements reportedly made by DOI officials in defense of their various
reform efforts. Purported statements branding constructive critics of
the DOI's efforts as ``anti-Indian'' are very regrettable. So are
suggestions that anyone opposing the DOI/BIA reform effort, and the
proposed additional funding for that process, are simply motivated by a
desire to keep money from the Indians.
As a seasoned business lawyer, I am unfortunately inured to even to
this kind of name calling. People say unfortunate things when they are
on the defensive. If these labels are put on me because of my
testimony, so be it.
______
EXHIBIT A
testimony of donald t. gray before the senate committee on indian
affairs regarding indian trust fund management
february 26, 2002
My name is Donald Gray. I have testified as an expert previously
before this Committee, and I appreciate the opportunity to do so again.
I have also recently testified before the House Resources Committee on
the same topic. I bring what I hope is a helpful and fresh independent
perspective to the Indian Trust reform effort at a time when I believe
real change is possible.
I am a partner in the law firm of Nixon Peabody LLP. For 26 years I
have specialized in working with institutional trustees and other
financial institutions in establishing, administering, reconciling and
rehabilitating long-term complex trusts and other money flow
arrangements involving billions of dollars of managed assets. Simply
put, my business is largely devoted to ``fixing'' broken trusts in the
private sector. The clients of Nixon Peabody's Trust and Financial
Rehabilitation Group, which I helped found, include some of the largest
money-center banks in the world. I am also an international logistics
and shipping expert, and in this area am well-known to the Alaska and
Hawaii Congressional delegations as well as all government agencies
with jurisdiction in the area.
When I testified previously in July of 1999, the atmosphere for
potential change was very different, and not nearly as positive as I
believe it is today. Yet, because there has been so little progress in
the intervening time on trust reform, much of my prior testimony,
especially concerning the precise methods and architecture for true
trust rehabilitation in the IIM accounts, remains relevant. Therefore I
re-submit that testimony, with minor updating revisions, as Exhibit A
hereto.
In short, after following this process for many years and reading
all relevant DOI, GAO, outside expert reports and court transcripts,
and while I do not claim any panacea for one of this nation's most
vexing problems, I believe for the first time there is a light in the
forest. There is hope for a truly viable IIM trust fix.
I summarize the reasons for that belief, and the organizational
methodology I believe to be essential to the trust fix below:
1. The Need for an Independent Body. What has been missing since
the passage of the American Indian Trust Fund Management Reform Act of
1994 is the essential trust fix expertise within the DOI, with the
exception of Mr. Homan, whose efforts were consistently thwarted by DOI
officials. The other irreconcilable obstacles to trust reform have been
the flagrant conflicts-of- interest within the BIA in attempting to fix
a broken system it has helped to perpetuate. My conclusion, and the
only conclusion I believe a private sector expert can come to, is that
the fix must be under the auspicious of a body independent of the DOI
and the BIA. The issues of lack of expertise, crippling conflicts-of-
interest and the need for an independent body for the required trust
fix are discussed in detail in Exhibit A. My suggestions for the form
such an independent body should take--a time- limited, government-
sponsored entity (``GSE'')--and its Congressional mandate, are set
forth below.
2. The Continuing Role of the DOI and the BIA. Before continuing to
outline an alternative structure, I want to be clear about the positive
role the DOI and the BIA can play in this process. With the exception
of the highest-ranking DOI officials of the previous Administration, I
do not believe any DOI or BIA employee has deliberately bogged down the
process, obfuscated with respect to critical records, or intentionally
wasted vast sums on computer systems that were ill-conceived and did
not work. There is still a very important job for these BIA officials
and employees to do.
The key here is to separate the trust ``fix'' problem from the day-
to-day administration of trust funds. The BIA still needs to perform
the basic collection and trust allocation and payment functions as best
they can, while trust fixes are developed by the independent body and
made a part of the existing trust function over time. However, the BIA
employees can no longer be put in the impossible position of attempting
to fix a system they and their parents have helped to create and
perpetuate, especially since they lack the specific expertise to effect
the fix.
In addition to day-to-day administration, such BIA employees would
be available to the independent body suggested below, since they
possess valuable information about past and present asset management
and trust payment procedures. Their input is critical, especially in a
case like this where some records have been lost or destroyed. As fixes
are developed by the independent body, these employees would be
essential in putting them into effect. The law changes required to
establish the independent body must permit the full and open
participation of these employees in the fix process, as mandated by the
independent body, and must protect these employees from internal
retribution and/or legal actions for good faith mistakes made in the
past.
The interaction of the independent body and its professionals with
the BIA trust employees in the fix process also offers a unique
training opportunity for the BIA personnel involved. The BIA would
learn the new system and proper trust functions from the best experts
in the field. Such training can be used by the BIA employees in the
years to come within the BIA, in connection with the IIM accounts or
other similar trust functions in which the BIA is involved, or in the
private sector, as they choose.
3. Inter-Branch Governmental Cooperation. The reason I believe
there is hope for a true trust fix now has to do with what I perceive
to be the posture of the major participants at this point. Most
importantly, both houses of Congress appear willing to take dramatic
action on a non-partisan basis. That did not appear to be the case
three years ago. Also, despite the characterization of the current DOI
officials in the Cobell litigation and the press, it does not appear to
me that they (unlike Mr. Babbitt and his top aides) are bent on
obstruction, nor dead-set against external, independent assistance in
reaching a trust fix. Respectfully, Secretary Norton's internal
reorganization plan, although well- intentioned, will not work, and
pouring another $200 million into that reorganization rather than a fix
by real experts is a very great mistake. This is the only sound
conclusion that I can reach after watching the waste of hundreds of
millions of dollars over the past eight years on internal
reorganization and inept systems, and assessing the lack of proper DOI
expertise that Secretary Norton apparently admitted recently in her
testimony in the Cobell litigation. Again, without the proper
expertise, lack of conflicts-of-interest, and independence, an internal
reorganization will do nothing. But the DOI's participation in an
independent body structure, like the one outlined below, through Mr.
McCaleb or another reform- minded DOI official, is essential.
Finally, there is the court. I cannot imagine that anyone would
take the position that the heroic efforts of Ms. Cobell, and the
tenacity of Judge Lamberth and his assistants, have not been an
essential ingredient in shining light on, and narrowing the issues
concerning the historic trust defalcations. But, as a purely practical
matter, a court-appointed receiver does not appear to be the best
answer as to future trust reform. For instance, how will that receiver
be paid? How will proper trust fix experts be made available to the
receiver? Will that receiver obtain the proper, timely and essential
input and cooperation of the BIA officials and employees currently
engaged in the trust administration function? As to these matters, I
would hope the court and Congress would both seek to find a way to
cooperate on the establishment of an independent body charged with that
fix.
4. The Independent Body. I believe the best vehicle for effecting a
viable trust fix is the creation of a GSE, with a mandate and structure
as outlined below. However, except for the independence of this entity,
which is essential, there is nothing magic about any part of the
following structure. I would invite the Committee, and all interested
parties, to suggest structural alternatives if they can be shown to
better reach a trust fix in a timely fashion.
a. The GSE would have three levels of participants. This structure
would be very lean, and would leverage on outside professionals on an
``as- needed'' basis.
At the top, all trust fix policies and procedures would be the
ultimate responsibility of a ``blue ribbon'' board of Commissioners
drawn from specific public and private sector sources. At least two
Commissioners would ideally be acting officials in federal financial
institution agencies or bodies, specifically a Governor of the Federal
Reserve, a senior official of the Office of Comptroller of the Currency
or the Federal Deposit Insurance Corporation. These agencies have a
great deal of trust and related financial expertise, as well as
regulatory oversight responsibility for the private banking sector.
There should also be a representative of the IIM beneficiaries who is
viewed in Indian County as financially sophisticated and completely
trustworthy. In addition, given the extent of cooperation required
between the GSE and the DOI (including the Special Trustee and the
BIA), the board should include a high-ranking DOI official acceptable
to the other Commissioners and Indian County. The Assistant Secretary
for Indian Affairs would, in my judgment, be a likely candidate for
this position. Finally, if the mandate of the GSE were broad enough to
include Tribal trust issues, a representative approved by the various
Tribal organizations should be a Commissioner.
The Commissioners would meet regularly, and should be paid for
their time and expenses, but with recognition that they are serving as
a very active board of directors, who have primary jobs and
responsibility elsewhere. The Commissioners would have the direct and
continuing oversight of the Senate Committee on Indian Affairs and the
House Resources Committee.
The next level of the GSE would be an Executive Director (``ED''),
with as lean a support staff as possible. This person should have
``hands on'' trust or other financial fix expertise, such as a former
RTC official. The ED would manage professionals, be the liaison between
such professionals and the Commissioners on all aspects of reform
(e.g., document and records custody and control, identifying and
maintaining critical data elements, developing a schematic diagram and
design architecture for all aspects of the assets/trust systems,
developing and implementing a systems design), be responsible for
liaison with BIA trust administrators, and be a ``plain language''
interpreter for the oversight committees on what will be at times
complex procedures employed by the professionals.
The last element would be trust professionals who work constantly
in detailed trust accounting and reconciliation, cash flows,
investments, control procedures, computer system analysts and
implementators. This would include legal trust fix experts, trust
administrators, forensic accountants and computer specialists, all of
whom have worked on trust reformation and fixes in the past. It would
be impossible, and economically prohibitive, to have all such
specialists on staff. They may, for periods, be used intensively, but
only on an ``as-needed'' basis. Ideally, there would be a lead
professional who would help the ED choose and coordinate the efforts of
all other professionals to avoid overlap and promote efficiency.
b. The mandate of the GSE would be to design and implement a viable
trust accounting and reporting system inclusive of the entire cycle,
from resource leasing to IMM account-holder payments. The GSE would
have authority to implement new systems and procedures, if possible on
a progressive, partial basis. The GSE would have authority over BIA
trust administrators for implementing the fixes and training BIA
employees and officials as to proper implementation and maintenance.
c. The GSE would be time-limited. It is suggested that a initial
life of five years would be adequate, with authority in Congress to
extend this sunset provision, if necessary.
d. Ideally, the GSE would be able to coordinate its efforts with
any trust professionals used by the Cobell court, or by the parties
litigant therein, in accomplishing an accounting or reaching a
settlement on past trust practices. As explained in Exhibit A,
reconciliations, modeling and findings regarding past practice and
mistakes are usually part and parcel of any future trust fix because
the latter gleans so much information on proper (and improper) trust
accounting from the former. Also, having worked with the plaintiffs'
accounting professional on other significant large, historic trust and
similar financial fixes, their input, if possible, into designing a
suitable program for the future is almost indispensable.
In conclusion, it is ironic and telling that just such an GSE was
recommended by Special Trustee Homan in his report (contested by then
DOI officials) after several years of frustration in attempting to
accomplish an IIM trust fix within the DOI.
______
Mr. Hayworth. Mr. Gray, we thank you for that testimony.
And as is the case with all of the testimony, it leads to some
questions. Amplify a bit what you were saying, Mr. Gray. You
believe there should be created a governmental agency. This
could not be, for example, farmed out to a private entity, in
your mind? This needs to be a new type of agency, but it has to
be outside of the Department of the Interior?
Mr. Gray. No, I think total privatization has its own
problems, in terms of oversight. I think that Congress has the
responsibility, and the ability, to oversee some kind of
limited commission or GSE. And I think Elouise was the one who
actually told you who the members of that ought to be.
The members ought to be representative of the Indian
community, definitely; forensic trust experts; land management
experts; systems analysts; architectural analysts. I have
watched this thing for 10 years, and I have watched them pour
in over $500 million into mainly computer software. No one has
ever come up with the conceptual--not computer--conceptual
architecture of what are all of the tasks, from land leasing,
to the check to the beneficiary. What are they? Just write them
on the wall. No one has ever done it.
They do not even know what conceptual architecture is. And
until they know that, it is not a panacea for this problem.
This problem has at least 80 different parts to it. It could
not work. And what I got back from a very sympathetic
Appropriations Committee about 3 years ago was, we have no
choice. If we do not appropriate the money, we will be called
anti-Indian.
Mr. Hayworth. If it were up to you, Mr. Gray, in your mind,
the numbers of people needed, the cost, any ballpark figures?
Mr. Gray. Yes, I do. I do. I mean, Arthur Andersen, when
they first tackled this problem in the late 1980's, they came
up with, and this is fairly typical of Arthur Andersen. I am
not just picking on them because they are down, but it is
somewhat typical in my experience. They were paid 20-something
million dollars to say that we really need another $500 million
to solve the problem, and I do not think that is true.
I do think that it would take--it would take the $150
million that will be, and I promise you it will be,
appropriated this year simply to set up this, what do they call
it, ``bite em.'' That is a great acronym.
[Laughter.]
Mr. Gray. To set that up, to defend the lawsuit that they
have already lost 20 times and to do whatever else they are
going to do, they will get, through direct and supplementals
this year, at least $150 to $175 additional million. If you
took that money and you had a commission that had six to seven
people who were national experts on the issue, including tribal
and IMM members who really, at the land level, really know what
they are talking about, what would happen is that those people
would not do all the work. At various stages in the process,
they would go out and they would hire maybe 30 or 40
professionals to say, all right, here is the stuff. Now, here
are the important things we need from it. Go through it and get
it out, and they would do that.
So it is not a case that you have got ten people working 24
hours a day. You would have ten people who had the access and
the knowledge, and there are two accounting firms already in
this process who are absolute, dead-on experts at doing this
thing. I have worked with both of them and gotten some very
large banks out of some very bad situations.
Mr. Hayworth. One final question, just going back for the
record, under a commercial trust, what is the normal input that
beneficiaries have?
Mr. Gray. Well, they have a lot of input, and it is usually
in the sense of an accounting, an action for an accounting. I
mean, it would take--everybody here has already admitted,
including, I think, the Department of Interior, that a trustee
has a higher standard of care than just a bank does with a
depository account, which is true under U.S. law, commercial
law. If you add to that the increased standard of care under
U.S. Indian aspects of history, you have one of the highest
standards of care in the world.
When there is a breach of trust or somebody thinks there is
a breach of trust, they file a breach of trust action. I do not
know of any State anywhere where that breach of trust action
would not be heard on an expedited basis within six to 8 months
because it is a trustee action, and it would be resolved one
way or the other. This has been going on forever and nothing is
resolved.
Mr. Hayworth. Just one final note here, to follow up on it.
How would the Department, and again, taking into account what
you are saying, but just take a look at the record, if the
Department still had involvement, how would it even have to
change its current trust relationship to make it operate more
like a commercial trust, or is that even desirable?
Mr. Gray. At this point, it is not desirable. What is very
desirable is that the BIA stick to their knitting and what they
really know, and what they really do know is social services
and welfare and other things. What they do not know is anything
about fixing a trust that is this bolloxed up, and not because
they bolloxed it up but because it has been messed up for years
and years. First, they stick to the things that they really
know well.
Second, they are delegated by whatever law you hopefully
can put together on this thing, they are delegated the
responsibility to cooperate with the Commission so that --A)
they are immunized in a fair way; B) they can get information
so people can really get at things, because if you go out to
Billings, Montana, and get stonewalled, nothing is going to
happen; and C) they are trained, they are trained in forensic
trust.
This used to be a small industry. Twenty years ago, when
the financial industry was nothing but stocks and bonds, a high
school graduate could go out and be a trust officer. Now, what
you have are the most complex securities that you have ever
imagined, derivatives on top of derivatives, I mean, just
things that would boggle most people's minds that flow through
trust offices. They are MBAs; the first jobs that most MBAs
have are trust officers for these large banks because these
things are so complicated, and the training opportunity for
people in the BIA who have a financial proclivity, I think is
one of the missed opportunities of all time.
Now, all they are doing is running around trying to hide
mistakes and worried that if they are a whistleblower, they are
going to get punitive action. If they try to do the right thing
or they are told what they are to do, they do not know whether
they are doing something that is right or whether it is wrong.
I mean, they are working in a total vacuum of knowledge. It is
not their fault. It is not what they were trained to do.
Mr. Hayworth. Thank you, Mr. Gray.
Let me turn to the gentleman from Michigan.
Mr. Kildee. Thank you, Mr. Chairman, and thank all the
witnesses. Today, I was called upon to attend two different
hearings. I serve on two Committees, Education and Labor, and
we take care of pensions over there and they are having
hearings on Enron, and then I had this responsibility over here
on Indians and I figured there was a lot of attention being
paid to Enron right now and not enough to Indians, so I spent
the day over here.
I really appreciate your testimony. You would think that
the public relations of the Department of the Interior would
have thought through that new acronym, BITAM, before they
changed that.
[Laughter.]
Mr. Kildee. They did not run it by public relations, but
maybe it was a Freudian slip over there.
Mr. Tillman, you mentioned that this trust responsibility
is the oldest trust responsibility in the U.S. Government. As a
matter of fact, it antedates even the Constitution. The
Northwest Ordinance clearly specifies our responsibility, and
it is not a trust as I think some people through the years have
thought, a trust for minors. It is a trust for people, for
tribes who have a civilization and a language and a land. Very
often, they were treated as if these were minors they were
taking care of, and they should take care of them, too, but
very often, it has been a certain patronizing role, which is
unfair. That is one of the reasons I established the Native
American Caucus, because of some of the unfairness I hear.
It is rooted in, as I say, our responsibility to you. It is
in the Constitution. Your sovereignty is not given to you in
the Constitution, it is only recognized in the Constitution,
right. It is a retained sovereignty, but Article I, Section 8,
talks about it.
Mr. Tillman. Right.
Mr. Kildee. It is a retained sovereignty, and it is rooted
in the fact that the loss of so many of your assets taken by
the Federal Government and promises made.
When I first got elected to the State legislature back in
1964, I read the Treaty of Detroit and read what was promised
to the Ottawa and the Chippewa and the Potawatomi in Michigan
and was not delivered. So it is well rooted. It is very well
established and we have an obligation, and that trust
responsibility, and I preach this all over, resides with the
entire U.S. Government. It is not just with the Interior
Department. It is with the Congress. It is with the courts, the
entire U.S. Government, and we have a responsibility. That is
why we are having these hearings today. We passed a bill in
1994 which is not working well enough.
I have 12 tribes in Michigan. We used to have about five.
We got some of their sovereignty recognized. They have been
dropped from the rolls, even their sovereignty. You could not
even keep the trust responsibility of who is a sovereign tribe.
They were dropped from the rolls and we have had legislation.
So we have an injustice out there and we have to respond to
that injustice.
Let me ask you this question, and I will ask it of all of
you, the courts are involved now, and very often the courts and
the Congress will act when the executive branch is not acting
properly. If we amend or scrap and start over again the 1994
law and really try to address this well, will we in any way be
interfering in a negative way with what the court progress may
be now? Maybe I will ask Mr. Gray that question.
Mr. Gray. I think you are at a real historic moment. Up to
this point, I would have said yes, because what the court's
mandate was was past foul-ups, and what always bothered me
about a forensic fixer was how in heaven's name do you put
together a future fix if you do not know what has gone wrong in
the past, and that future fix was left with TAAMS and with the
Interior.
Now, they have come together. Judge Lamberth is a very
intelligent man and he looks at this down the road, not just
one motion to the next. He had the historic problem and now he
has ordered an accounting. Second, he had an opportunity to
take jurisdiction, which can be challenged, but he took
jurisdiction over the current fix because of the security
problem. So now he has brought those two ends together, but I
believe in my heart and with my legal reasoning that he
believes he has done what he can do and he really needs the
help of Congress.
Before this point, it would have been inter-meddling. I
think it would have been seen as inter-meddling because there
was not enough information out. Now he has seen all the
information he can stand. But at this point in time, I really
believe that the judiciary which is involved in this would
really welcome Congress's participation and maybe cooperation.
Maybe you have a receiver who is cooperating with a special
purpose entity.
I do not have the magic bullet. I would love to write it
for you, because it is coming together in my mind. But the fact
of the matter is, I think it is a historic moment to do that,
and I also believe--I went through 8 years with a Secretary of
Interior, and I am an Independent, but I have to tell you, the
former Secretary of Interior deserves the reputation for
arrogance and stonewalling, period. I do not believe that
Secretary Norton has been in the job long enough to deserve
those epithets and I think she is trying to grapple with this
problem the best way she can.
And frankly, I think if it were taken out with her advise
and consent, I mean, she would be part of the process of
saying, I want the BIA involved, I want my people trained, I
want you to get the accurate information--you do not have many
situations come together like this right now, but somebody has
got to act and I think it is the Congress.
Mr. Kildee. Maybe we can find some way we can mesh the two,
because the executive branch of government for over 100 years
has not done a good job. We are where we are because of the
executive branch of government of both parties. So maybe we can
mesh well our gears between the judicial branch and the
legislative branch.
The 1994 law, which I voted for, probably passed virtually
by a landslide, maybe unanimously--the 1994 law was written not
on Mount Sinai but on Capitol Hill, right, so it is not
perfect. We know it is not perfect. We see the imperfections. I
am willing to work with particularly this group right here,
because the three of you, along with your counsel here,
represent groups of sovereign nations, so you can speak with
great authority when you talk to this Committee. I would like
to work with you to see what we can do to really resolve this,
because justice delayed we know is justice denied, and this has
been delayed and delayed and delayed and delayed. People have
died who could have lived much better had this government kept
its trust responsibility.
I am talking too much, but Chippewa Cree, are they related
to the Chippewas in the Midwest?
Mr. Windy Boy. Actually, they got lost.
[Laughter.]
Mr. Windy Boy. That is where I come from. I would like to
respond to that, if I may.
Mr. Kildee. OK.
Mr. Windy Boy. You know, you are talking about reforming or
amending the 1994 law. There are a couple of things I would
like to keep in mind here. No. 1, you are the trustee as the
U.S. Government. No. 2, when we are having these government-to-
government consultations as far as governments, my
interpretation of a government is a tribal leader as chairman
and tribal leaders sit up here as you sit up there and are
considered as heads of state, and we are the ones that have
been elected by our people to move forward and make decisions
that are going to affect them positively to make their lives
better. That is why we are here.
And if anything is going to come forward as far as any
amendments toward that law, there should be a consultation.
That is why I recommend this to you. Have these hearings, not
just on trust, on all policy, because our policy that is going
to be considered in the White House right now is going to have
great impact on the Indian country right now as we see it.
Mr. Kildee. Thank you.
Mr. Hayworth. I see one more comment here, and then we need
to let the other members go.
Mr. Tillman. I would like to say one thing about what
Congressman Kildee had to say about the three groups that
represent the total assets of Indian country, and we do. The
InterTribal Monitoring Association has 53 tribes in it that are
large stakeholders. The National Congress of American Indians
has a certain amount of tribes that are stakeholders. And the
Council of Large Land Based Tribes have also a great asset of
millions and millions of acres.
So not only this diversification of assets, which include
oil, gas, timber, millions and billions of board feet of
timber, but fisheries and land-based tribes and leases and
grazing, this goes on and on to when you line up all these
assets, you are going to have a tremendous amount of assets to
look after.
Now, how do you do that? The Osage Tribe at one time in
1992 hired Cooper Lybrand to come to the Osage Agency, which is
a single-tribe agency, to assess that agency because they
thought that they were the Cadillac of all of oil and gas
operations. We hired Cooper Lybrand at a large amount of money
to come to that agency to do that work for us, and they did.
And after their report was given to the tribal council that
they were operating back in the 1950's and 1960's, in 1996, we
spent $50,000 more and brought the same company back in to
check it and to make sure that we knew what we were talking
about. They came back and told us the same thing, that, yes,
they have new equipment, yes, they have this, yes, they have
that, but they are still operating back in the 1960's.
So here we are in 2002 and we are sitting here at this
plateau today and we are sitting down here in the Bureau of
Indian Affairs. Now, how do you bring that back up to standard?
I am not talking about above standard, but just standard.
The Osage Tribe has 1,600 tank batteries that exist on its
reservation. Those tank batteries consist of 5,000 tanks. Those
tanks are being purchased every day as they fill up with oil.
Do you know how many gaugers that the Osage Tribe has? Four. We
have four to see over that asset.
Now, that is why I say that this is very critical to us
today. It was an honor to be here today to tell you the horror
stories that are going on out there. Yes, the trust
responsibility that Congress has, is the ultimate trust holder,
is true and that is why I came here. I came 1,400 miles to tell
you that, that you can oversee the Bureau of Indian Affairs.
You have the authority to oversee, to create a commission or a
Committee made up of us people to overlook the BIA and become
part of that, to make sure that our asset is being well taken
care of. Thank you very much.
Mr. Kildee. Thank you. Let me say to Chief Windy Boy, with
my Michigan accent and Chippewa, I'll say, ``Migwich'' [ph.].
[Laughter.]
Mr. Hayworth. Thank you, Mr. Kildee.
The gentleman from New Jersey.
Mr. Pallone. Thank you, Mr. Chairman. I have to apologize.
I missed most of this panel's testimony because I was at the
Enron hearing and then I had to go to the floor on a bill that
I had sponsored, but I wanted to say this.
My concern throughout today has been that the Secretary is
just going to move forward with this proposal that she has, and
even though she is saying, and there has been some consultation
now at the late stage, that she wants to wrap this up fairly
quickly and move on, I am not really asking this question, but
at least there seems to be in her mind that she has the
authority to set up a separate agency and not have to wait for
Congressional action to do so. There might be some legal
question there about whether she can do that and maybe you
might want to comment on that. But she seems to think that she
can do it on her own.
So I keep trying to push, and I guess my question is what
you think maybe we need to do as Congressmen or as a Committee
to try to make sure that that does not happen. In other words,
we need to press for more time, we need to raise the issue of
whether it can be legally done.
I understand that President Hall said in his testimony
today that you were somewhat concerned about this meeting that
was held over the weekend with the task force. She obviously
told us that there was a split of opinion. Some were in favor
of her proposal, others were not. That is, at least, the way I
think she said it, and yet you seem to think that really nobody
is in favor of it.
So I just wondered what you think we should be doing short
of legislation, because that takes time, to press to make sure
that this does not just pass by without proper input.
Mr. Hall. Thank you, Congressman. Just a couple of points.
I appreciate your coming back.
In all of the plans, and I am sure Mr. Gray has the
expertise as being a forensic trust expert, but no matter who
it is, it has to be tribally driven. The tribes on our task
force put together a matrix. Here are all the proposals, nine
tribal proposals in lieu of BITAM, and here are the standards
that we want to adhere to. We want to include BITAM and the
individual plaintiff Cobell on this. But the task force had 6
days. Secretary Norton had 6 months with EDS and spent millions
of dollars. And so that way, the computer system matches up
with the records of the land, just like Mr. Gray was
indicating, so we do not have another TAAMS fiasco.
So that is what we are saying, is that there is an
executive order. If tribes are sophisticated, as we heard many
of the speakers today, they have got great models that they are
utilizing already, if given the time, the tribes will come up
with--if the Secretary is not going to listen to the tribes, we
will come up with our own plan and we welcome and we want to
work toward legislation. Our task force does not want to be a
rubber stamp.
It is really disheartening to spend a whole weekend, 30
hours from Friday to Sunday, trying to gain a trust with the
Secretary and the 36 tribal leaders represent Indian country,
and then we have to go back and sell that to Indian country,
and we are committed to do that, but we have to have the trust
of the Secretary that she is going to abide with consultation
and with her word.
We told the Secretary before we went in, because a lot of
tribes did not want to go in there because they did not trust
the Secretary and her word, but we said, no, let us begin this
relationship. Let us go in with an open mind and an open heart.
Let us go in and work with our trustee and establish a
relationship. She wants to be involved with the task force. She
supports the task force. Let us sit down and see if she will
consult with us throughout and let us come up with an
alternative plan, because she knew we opposed BITAM.
It was in every seven consultation meetings. We opposed
BITAM. She knew that. So we went in and we said, let us come up
with an alternative tribal plan to BITAM. And then to hear that
the Secretary may want to continue with BITAM and to say that
some supported her plan, no tribe supported her plan in
Shepherdstown, West Virginia, over the last week.
And so I am very disheartened by it, but I do see light at
the end of the tunnel. I think there can be some merger here.
If tribes will--if we are given the time to come up with our
own preferred alternative, because we feel BITAM separates
trust and is a potential breach of trust and we would not want
to support a concept or a model that potentially breaches trust
all over again.
We do not want to go back into litigation. We want to come
back and find a solution. But in the report, again, it must be
beneficiary-based approach plan, and to leave out the
beneficiary, either tribal or individual, and just, no offense
to Mr. Gray, but let a commercial expert do it, it could again
breach a trust responsibility that Congress has to Indian
tribes.
So I think I am confident that the tribes can get there
because we want reform, and whoever says we do not want reform
and want the same old BIA as it is is completely wrong. That is
false, Congressman. We do want reform. We just, because it is
our assets and money, we want to be at the table to help be a
solution to it and to have the resources to come up with it,
and I really like the examples that were made.
President Makil talked about the independent review
commission. I think that is an excellent example. As a matter
of fact, the task force is starting to consider that. We want
external auditing. We want to consider that. And we want to
look at, again, a tribal-driven plan that can put the focus at
the local level, not in Washington but at the local level so
that the tribal government and its IM account holders has the
resources right in the field as they are looking to leasing for
grazing, looking for appraisals, oil and gas, all of that. We
need to have those accounting experts. We need to have those
people and those resources right there, and I think it can
happen, but we are going to need the assistance of Congress,
clearly. I think there is no question about it.
Mr. Pallone. Thank you. Thank you, Mr. Chairman.
Mr. Windy Boy. Can I respond? My response to that is
simple. The point that you brought up, all of the above should
be adhered to, should be pursued. Make sure that it is legal.
No. 2, in order to put a stop to this, make a reprogramming
request. How can the Department make any moves without any
money? How can you operate a Department without any money? It
is simple.
Mr. Gray. That is simple.
[Laughter.]
Mr. Gray. Do that, and I have a slightly more moderate
suggestion, and that is if this Committee, in connection with
and in tandem with the Senate Energy and Senate Indian Affairs
Committee, were to send a letter to the Secretary and say that
these hearings have brought to light issues that call into
question her plan and that before she implement that plan, it
is important for you to hear more from her as to the--or to
answer the questions that have been here today about the
viability of that plan as a trust fixer and also the legality
of creating a new bureau within an agency.
I do not know the answer to that, but it would give the
Committees time to look to their counsel to get a handle on
that. It would put some pressure on them to come up with their
legal reason for it. And it would also have a substantive
basis, which is we have heard enough to really question whether
or not that makes a whole lot of sense.
I was here for 8 years, but I never considered myself a
Washington lawyer, so you know how things work and I do not,
but I have worked with those Committees and one of the things
that is, having come 3,000 miles for this little adventure, I
can tell you that I am amazed at the bipartisan approach of
these Committees toward this issue. I mean, I really am and it
is a credit to everybody in this room and it is a credit to the
Senate side, because I know those Committees very well.
I think it is time to take some action. Ms. Cobell may do
it anyway, but having done that under the umbrella of a
perfectly reasonable request from Congress, that would be a
bold act, indeed.
Mr. Pallone. Mr. Chairman, maybe the Chairman and the
ranking member and we could look into that more and see if
maybe they would be willing to do something like that.
Mr. Hayworth. I think there are a variety of things, and
the chair would just point out something here today. There have
been some differences of opinion, honestly expressed, but I
think I would be remiss if I did not point out that the
Assistant Secretary and the Associate Deputy Secretary have
stayed here the entire time. This was not a cameo appearance.
This was not, oh, gee, we have got to run off somewhere else.
I can speak from personal experience with the
bipartisanship or the nonpartisanship. When I first came to the
Congress, there was inherent distrust of one of the new guys
coming in, and when we finally get past this, and yes, the
philosophers who say, is it not a shame that youth is wasted on
the young, and to a certain degree we can say, is it not a
shame that policy is not always related to politics.
But in fairness, I think we ought to be compelled to say
that stepping into a difficult situation, the Secretary of the
Interior deserves the benefit of the doubt and honest and open
and unbridled and unvarnished criticism, and that is going on
today, but let us try to deal with this in a positive manner,
and whether it is written communication or whether it is
transmitted face-to-face or taken back by her representatives,
I think there is a chance to build trust based on this type of
hearing and the constructive things we can do.
So we can take a look at letters, but I just want to point
out for the record, I appreciate very much the fact that Mr.
McCaleb and others have stayed here for the entire hearing to
take into account what is being said. I think we can move
forward in a positive, constructive way. It will not mean there
will not be differences of opinion down the road. Consensus
differs from unanimity. But I think we can hammer this out, and
so I appreciate the suggestion you offered, Mr. Pallone, and we
will see where we can go.
Of course, the gentleman from Michigan and I, as co-chairs
of the Native American Caucus, have done a number of things,
and I want to work proactively with everyone in here. So I
appreciate the spirit of that remark.
I see my good friend from American Samoa who has been here
who has worked with us on so many of these issues and I know he
may have some questions or thoughts.
Mr. Faleomavaega. Thank you, Mr. Chairman. I think some of
the people have raised the question, why am I interested in the
issues dealing with Native Americans? I consider myself as a
member of the Samoan tribe. I do not know if some of our Native
American friends here have ever heard of Samoans. We are very
small numbers, although we do have 16 that play in the NFL
right now.
[Laughter.]
Mr. Faleomavaega. I keep asking my good friend, Windy Boy,
when are we going to get one of Sonny Six Killers and the
famous Jim Thorpes. I do have a very strong feeling for Native
American people because I think there is a cultural
relationship with those of us who come from the islands.
I do want to offer my personal welcome to my good friend,
Jonathan Windy Boy, President of the Council of Large Land
Based Tribes, and certainly Mr. Hall, this is the first
opportunity I have had in meeting you, President of the NCAI,
and Mr. Tillman and Mr. Gray.
I think there has been no question, Mr. Chairman, and I do
thank you in all sincerity, in our efforts in trying to work
this on a bipartisan basis. Over the years, you and I have
known that it has been very difficult even to have a
Subcommittee on Indian Affairs established. I wish we could
have taken the tack and the initiative that the Senate has
taken and now the Senate Committee on Indian Affairs is a full
standing Committee. It is a very difficult situation, and not
taking anything away, the sincerity of all the members that
want to do for their constituents, but this has always been the
problem.
And whether we like it or not, what Ms. Cobell has done
really has now forced the issue before the Congress and before
the administration to resolve the issue. As you said, Mr.
Chairman, and I could not agree with you more, Secretary Norton
and members of her staff have taken on the responsibility. It
has only been a year. I would be the last person to pass
judgment in terms of what she has tried in her attempts to
resolve this very difficult problem.
It is always easy for us to look at hindsight and to say
what we have done to the S&L and the $87 billion that we were
able to focus and how sad it is that here we have the issue
with Enron and just about every major media company, television
and all the networks are focusing on this issue, which is
before three or four Committees. I do not even see C-SPAN
taking an interest in this $10 billion debacle on issues
involving the needs of some four million Native Americans. I
think there is no question where our hearts are and how we feel
about the needs of our Native American brothers and sisters.
Mr. Gray, you made a very provocative statement about the
situation. You say BITAM. I would say ``chew it and spit it
out.''
[Laughter.]
Mr. Faleomavaega. But with all respect to what Secretary
Norton is trying to do, I certainly do not want to second-guess
her efforts in wanting to do this, but I sincerely hope that
before implementation, and I doubt very much that she can
implement it anyway because she cannot get the authorization or
even any funding allocated for doing this. I think she was
wanting $300 million and I think the Appropriations Committee
from the Senate side did not approve this request.
So there is a question of structure and how we are going to
fund this $300 million effort to address the issue. Mr. Gray, I
want to ask you, you made it very clear that this issue should
not even be involved--BIA should not even be in it. You
suggested a third party or whatever organization that we put
up, a trusteeship, a receivership, whatever it is. In your
honest opinion, this is probably the best procedure that we can
go about in resolving this 100-year-old issue once and for all?
Mr. Gray. Yes, I think it is, but with a qualification on
that. I think that when people think about GSEs, they think
about a bunch of government officials, some of them very good.
I mean, if you look at the D.C. Commission and the enormous job
that they did, I mean, that was really a wonderful job, but
that is not really what I am talking about.
I am talking about a commission, whatever you call the
name, I am talking about a group that is made up of Native
American experts on this, because one of the things that you
never hear when the Department of Interior talks about this
thing is where it all starts, and that is what is happening
with the land and whatever the natural resource is that is
being leased. Historically, I know it has been mismanaged
horribly, but I just wonder, now, other than when it is in the
hands of the actual beneficiaries themselves and they know what
they are doing, I just wonder about that.
I think that Indian participation on that commission,
direct participation, is absolutely essential. I think that
well-respected government officials who have--I am sorry, I
have forgotten her name now, but the person from the Fed who
ran the D.C. program for a long time, but there are people in
government who are highly respected who could be on this, with
financial backgrounds, people from finance-type agencies who
understand, I think, not only the business aspect of it but who
are sympathetic to the fact that you have got a major cultural
sovereignty issue here. So it would be an unusual body, but if
you do not get agreement among those people about what you want
to do, then it is not going to go anywhere.
The second thing I would say is I do not think the BIA
should be left totally out of this. I think the BIA is an
enormous resource for this, but to ask them to fix a problem
where they are inherently conflicted and have no expertise is
absolutely insane. I mean, if you did that in the commercial
sector, they would blow you right out of court. You would be in
jail. I mean, you cannot do that. It does not make any common
sense, much less legal sense.
But if they are there and they are protected, they are a
wealth of information. You cannot do it without them. You could
even consider having them on the commission. I mean, I have not
come up with a perfect fix on this thing, but have somebody--I
think the Special Trustee has done a remarkable--the new
Special Trustee has done a remarkable job at keeping his
independence within an agency that can slap him down at any
time. I think Mr. Holman showed disarming restraint in not
walking out of the door the second year he had the job. He held
onto it for a long time in the face of much more demonic
opposition than Secretary Norton is capable of.
So I would not take them out of the process. I am just
saying you need an independent group that is ultimately
responsible to the Congress of the United States and the courts
that brings these people together. I am not for division here.
The idea is to bring them together and say, you have got to fix
this, and we are going to give you the resources to hire the
professionals who can. It is not that hard.
Eloise Cobell told you the truth. She is a banker and a
good one. It is not that hard to fix. I am not sure I would
agree with her that it is not brain surgery, because I like to
kind of think of it that way, but she is right. If you get the
right professionals, you can fix it.
Mr. Faleomavaega. Mr. Windy Boy--I am sorry, I think the
time is--
Mr. Windy Boy. I would like to have a slight difference of
opinion of that as far as receiverships. I think when you are
talking receiverships, you have got to keep in mind, though,
that there has got to be the difference of the individual and
tribal, because the individual accounts are separate, and that
is what this whole litigation is based upon. And then we are
talking about the trust assets on the tribal side, that is
where the tribal leaders have control, with the tribes within
themselves of the land within the boundaries of their nations.
That is why I say this issue has got to be separate.
Mr. Gray. By the way, I agree with that. Most of my
comments--all of my comments are directed to the IIM accounts.
It is not the tribal accounts. I am not an expert on that.
Mr. Hall. Congressman, can I just add one point on what has
been made here? There is a unique situation, though, oil and
gas, for example. Chief Tillman comes from oil and gas. Many
times, a tribe will own the mineral but an individual will own
the surface. So there is an interweaving here. There is an
interweaving because the tribes and individuals still have to
go back to the same agency, the same department, when it comes
to leasing, appraisal, grazing, and oil and gas extraction. So
to totally separate, now, that is going to take some work here
to do that. And there are some tribes, also, that have some IMM
accounts.
So just to say there is total separation is not quite true.
So there is going to have to be some strategy and to get with
some experts to look at those unique situations where a tribe
owns the oil and gas, an individual owns the surface, and the
tribes own some--some, not a whole lot, but some IMM accounts.
I just wanted to clarify that.
Mr. Gray. I think you need representatives of both on a
commission like this.
Mr. Windy Boy. Then you get into more issues there, when
some tribes have a lot of water rights issues. So there are a
lot of things here, I think, whole complexities.
Mr. Hayworth. President Windy Boy, I think we are finding
just how, again, just how interrelated and how challenging this
may be.
My good friend from Michigan had a final note.
Mr. Faleomavaega. Mr. Chairman, I just want to say again to
thank Mr. McCaleb for his patience in being here with us all
day and thank you for your patience and the gentleman from
Michigan. I sincerely hope that this is not the end of this
whole process and I sincerely hope that our Indian Caucus could
perhaps collaborate with our friends from the Department of the
Interior and with as many of our Indian tribal organizations.
Let us see if we can consult and see if we can do anything by
way of legislation or help Secretary Norton beef up or improve
whatever she started in her proposal at this point in time.
But I sincerely want to thank you and thank the gentleman
from Michigan for your diligence in pursuing this on behalf of
our caucus. Thank you.
Mr. Hayworth. The gentleman from Michigan?
Mr. Kildee. Just one comment. President Hall, your point
was very good that we have to recognize that in solving these
things, we have to deal with sovereign-to-sovereign, and that
is very, very important. That is fundamental to this. Whether
it be Congress, whether it be the Secretary, they have to
recognize that you are chief executives of sovereign nations
and that status is very important.
Let me tell you just one quick story on that. Several years
ago, I helped three tribes in Michigan get their sovereignty
recognized and reaffirmed, not given, it is retained
sovereignty. So I asked President Clinton to have a bill
signing ceremony in the Oval Office for that. So we went over
there to the Oval Office and we had the three chairmen of the
tribes whose sovereignty has just been reaffirmed. And
President Clinton after the signing likes to wander around the
Oval Office, talking. The office was filled.
And I turned to the three chairmen of the sovereign tribes
that had just had their sovereignty reaffirmed. I said, ``Sit
down in the President's chair.'' And there was a U.S. Senator
there and he said, ``Dale, I do not think we can do that.'' I
said, ``That is right, we cannot do that, because we are not
chief executives of sovereign nations, but these guys are.''
[Laughter.]
Mr. Kildee. So they all three sat down in the President's
chair, because they were co-equal with the sovereign.
Mr. Hayworth. That is a good story.
Mr. Kildee. As a matter of fact, on the way out, I turned
to Frank Ettawageshik, who was the Chairman of the Little
Traverse Bay Band of Odawa, and I said, ``Frank, you know, all
I have ever had in that chair was my eye.''
[Laughter.]
Mr. Hayworth. Thank you, Mr. Kildee.
Ladies and gentlemen, we thank all of you, those who came
to testify today, those who have joined us to pay close
attention to what is transpiring here, the aforementioned
friends from the Department of Interior. Many things have been
said and I just thank everyone for making what I hope will be,
I do not know if this is so Churchillian, the beginning of the
end so we can bring this to a conclusion and working closely
with everyone concerned.
Mr. Kildee. One more unanimous consent, to put something
from the Tribal Council of the Northern Cheyenne Tribe in the
record.
Mr. Hayworth. Without objection, it is so ordered.
[The resolution of the Tribal Council of the Northern
Cheyenne Tribe follows:]
[GRAPHIC] [TIFF OMITTED] T7526.032
[GRAPHIC] [TIFF OMITTED] T7526.033
Mr. Hayworth. This hearing is adjourned.
[Whereupon, at 4:05 p.m., the Committee was adjourned.]
[The opening statements of Members submitted for the record
follow:]
[The prepared statement of Mrs. Christensen follows:]
Statement of The Honorable Donna M. Christensen, a Delegate in Congress
from the Virgin Islands
Thank you, Mr Chairman.
I appreciate your holding this hearing, but we have all been at
hearings on this issue before and are not any closer to a resolution of
the problem of the trust. As a matter of fact, at one of the last
hearings which was a joint one for the Senate and the House, for the
better part of the hearing, I was the only member present.
So I am here today and I may or may not have a lot of questions
because this is an over 120 year problem. Looking at how long it has
gone unaddressed, despite investigations, reports and acknowledgments
of the travesty that it has been, I have already concluded that we, as
a country, do not have the requisite will to fix it.
Is it that we do not in our hearts do not believe that Native
Americans should get this kind of money ( and trust me as a member from
a territory we have been there, so we know it happens and we know how
it feels)?
The other possible conclusion is that no matter what the law says,
many states, and even our federal government still does not fully
respect the sovereignty of the recognized tribes.
This country owes the first Americans a debt we can never repay.
Even in health care, which is my field, we see glaring disparities in
the health of all of the indigenous peoples of this country. Just as in
African Americans they are an outcome of long term neglect, so the
issues that have yet to be rectified are many--not just this trust
fund.
My maternal grandmother was part Chocktaw, and even though I don't
know my Native American family or if her tribe or my ancestors have
lands or money in this trust, I come to this hearing on her and their
behalf.
Today we need to go beyond the hearing stage to action. It is long
overdue and only right that we pay up.
______
[The prepared statement of Mrs. Cubin follows:]
Statement of The Honorable Barbara Cubin, Chairman, Subcommittee on
Energy and Mineral Resources
For more than a century the federal government has been the trustee
of funds for Indian tribes as well as individual Indians. These trust
funds, generated from rights and leases, have become a significant
source of funding for many Indian tribes all across the nation.
This is especially the case on the Wind River Reservation, which
lies within the borders of my state of Wyoming. Wyoming has two
resident tribes, the Eastern Shoshone and the Northern Arapaho. As is
the case in most of Wyoming, these large land based tribes have been
blessed with a substantial amount of natural resource interests,
particularly oil and gas production. Because of their substantial
financial interests in how the federal government resolves this issue,
and because of concerns regarding Internet accessability, I too have a
great interest.
I would like to emphasize in my previous statement the phrase,
``how the federal government resolves this issue,'' because the
responsibility to find a workable solution is borne not only by the
Department of Interior, but by the Administration, Judiciary and
Congress. It is essential that each branch work together to find the
fair and equitable solution that has eluded Indians for well over 100
years. I pledge my energy to this effort and highly encourage my
colleagues to do the same.
______
[The prepared statement of Mr. Kildee follows:]
Statement of The Honorable Dale E. Kildee, a Representative in Congress
from the State of Michigan
Good morning. Mr. Chairman, as a senior member of the Resources
Committee and as Co-Chair of the Congressional Native American Caucus,
I am pleased to have the opportunity to speak to the issue of Indian
trust funds. I remain deeply concerned that the government is not
living up to the high standards the law demands of the Federal
trusteeship over Indian and tribal trust funds. The Interior Department
is legally bound to manage and prudently invest individual Indian and
tribal income from judgments, grazing and farming leases, timber sales,
oil and gas royalties, mineral leases and investments from Indian
lands.
For more than a century, Interior has done a poor job maintaining
trust fund records. This issue dates back to more than 180 years when
the Federal Government first began its policy of holding tribal funds.
It has managed funds for individual Indians since the passage of the
1887 General Allotment Act. Allotment laws were designed to break up
tribal lands by providing 40, 80, and 160 acre tracts to individual
Indians. Congress stopped the allotment process in 1934, after a loss
of millions of acres of tribal lands and hundreds of thousands of acres
that were lost to taxes that Indians did not know they owed.
Unfortunately, these injustices of the past still remain as the
problems of today.
Because of the allotment policy, Indian allotees face the complex
problem of owning fractionated interests in allotted land. Today, it is
common for hundreds of owners to hold an interest in one tract of land.
These owners are heirs of the original allotment holder whose land can
become more fractionated as the number of beneficiaries increases. This
means that hundreds of beneficiaries could own shares in income derived
from one tract of land. This situation has added to the complexity of
this problem and has served to undermine reform efforts.
In 1994, Congress passed a law to reform the management of trust
funds for individual Indians and tribes. The law was intended to
rectify many bureaucratic practices that had stalled the proper
administration of these accounts and to restore what rightfully
belonged to Indian people. Sadly, the Interior Department has yet to
restore old land records and the income derived from the land.
in 1996, Congressman J.D. Hayworth and I led the Resources
Committee's Task Force on Indian Trust Fund Management. The result was
that the Committee held four hearings on the issue in 1996. That same
year, Elouise Cobell, a beneficiary of an Individual Indian Money (IIM)
account and a witness at today's hearing, filed a class-action lawsuit
against the Secretary of Interior on behalf of approximately 300,000
IIM account holders seeking an accounting of the money owed to the
account holders and to bring permanent reform to the trust fund system.
During the previous administration, a U.S. District Court judge
found Interior and Treasury officials in contempt of court for their
failure to produce trust documents for IIM account holders. In the
current administration, Interior and other officials face contempt
charges in the Cobell v. Norton case. With respect to tribal trust
funds, Interior cannot reconcile $1.9 billion in tribal trust funds
because of missing documents.
On November 14, 2002, in response to the Cobell v. Norton case, the
Department of Interior developed a reorganization plan. Interior's plan
would strip the BIA of all its trust functions and consolidate those
functions into a new Bureau of Indian Trust Assets Management (BITAM).
Overseeing this new agency would be a new Assistant Secretary who would
report directly to the Secretary of Interior.
Interior began its tribal consultation sessions subsequent to the
reorganization proposal rather than create a plan concurrently with the
tribes. In addition, Interior submitted a $300 million reprogramming
request to the House and Senate Appropriations Committee to fund the
reorganization proposal. Both the House and Senate appropriators
agreed, however, to put the request on hold until Congressional
hearings and tribal consultation sessions were conducted.
Another issue stemming from the litigation includes a computer
shutdown at the Department of Interior that has prevented tribal and
thousands of individual trust beneficiaries from receiving payments.
This situation is simply unacceptable. The notion that the Federal
Government cannot do its job sends the clear message that Native
Americans are considered to be second-class citizens.
Decade after decade, this problem has plagued both Democratic and
Republican administrations, but none more than the Indian people and
tribes. Indian people and tribes have the right to know about all
transactions and ownership interests in their land. These trust
beneficiaries also have the right to create a plan concurrent with the
administration to address the issues raised in the Cobell litigation
and to develop an alternative plan to the Department's reorganization
plan. I strongly urge the Department of Interior to continue its
dialogue with the tribal task force on trust reform.
In the end, we would all do well to remember that those in Indian
country who are caught in this web of mismanagement are not asking for
any privileges or handouts. This money belongs to them. The Federal
Government's involvement was meant to give legal and technical support
only. There is no doubt that, up to this point, the government has
failed. The only question is whether or not we will now rectify these
accounts for the future and in the process restore some dignity to the
past.
I look forward to hearing the testimony today. Thank you.
______
[The prepared statement of Mr. Pallone follows:]
Statement of The Honorable Frank Pallone, Jr., a Representative in
Congress from the State of New Jersey
The United States Government committed to a trustee relationship
with the Indian Nations. Defined by treaties, statutes and interpreted
by the courts, the trust relationship requires the federal government
to exercise the highest degree of care with tribal and Indian lands and
resources. At first, the federal trust responsibility served to protect
tribal lands and tribal communities from intrusion.
However, in a push to acquire tribal land and turn Indians into
farmers, the federal government imposed reservation allotment programs
pursuant to the General Allotment Act of 1887. Under these policies,
the selling and leasing of allotted lands and inherited interests
became primary functions of the Bureau of Indian Affairs. Tribes lost
90 million acres and much of the remaining 54 million acres was opened
to non-Indian use by lease. In sum, the federal government took the
trust responsibility for Indian land upon itself in order to gain the
benefit of vast tribal lands and resources that were guaranteed by
treaty, Executive Order, and agreements for exclusive use by the
tribes.
It is widely known that the BIA has grossly mismanaged the
remaining tribal lands and has squandered billions of dollars worth of
resources that should have gone to the benefit of often impoverished
American Indians. Today, the Secretary of the Interior is faced by a
mandate from Congress to clean up the accounting and management of
Indian trust funds, and by a lawsuit alleging a great failure of the
Secretary's trust responsibility for Indian lands. In response, the
Secretary has proposed a plan to create a new Bureau of Indian Trust
Asset Management and remove the trust functions from the Bureau of
Indian Affairs.
This proposal will profoundly effect the BIA's management of 54
million acres of Indian lands, the administration of trust funds
derived from those lands, and nearly every aspect of economic
development, agriculture, and land management within Indian Country.
I am greatly concerned that this plan is repeating the failures of
the many past trust reform efforts. Recently, 193 Indian tribes
unanimously adopted a resolution opposing this reorganization and
transfer of the responsibilities of the Bureau of Indian Affairs. I
strongly believe that this reorganization effort cannot go forward
until the Department consults with Indian tribes in the development of
a business processes plan for trust reform--a clear plan for performing
the basic trust functions of accounting, collections, record keeping,
inspections, enforcement and resource management. The plan must include
policies, procedures and controls. The fundamental and consistent
criticism of the Department's trust reform efforts over the last decade
has been the failure to develop a plan for these business operations of
trust management. Instead, the DOI has a well-documented record of
making short-term cosmetic changes in response to court imposed
deadlines or Congressional inquiries.
It is notable that this criticism, a lack of structural foundation,
is exactly the same as has been leveled against the Department's
development of the Trust Asset and Accounting Management System. All
tribal leaders strongly support trust reform and want to work
constructively with the Department and with Congress to ensure sound
management of tribal assets. In fact, it is the tribes that have the
greatest interest in ensuring that tribal assets and resources are
properly managed.
To complete my statement, I just want to raise concerns regarding
today's hearing. Similar to Mr. Rahall, I do not concur in the request
made by Chairman Hansen to Secretary Norton of the Department of the
Interior, by letter dated January 15, 2002, to submit to the Committee
a report compiled by the auditing firm Ernst & Young that is under seal
by the Court as part of the Cobell v. Norton lawsuit.
Striving to maintain the integrity of the federal government's
trust responsibility of Indian tribes, and thereby tribal assets, is a
commitment that the United States first made as part of the Cherokee
Nation v. Georgia lawsuit in 1831. Making the individual trust accounts
a matter of public record is not adhering to the spirit of the federal
trust responsibility. Ironically, if such account records were opened,
the public would have more information about the monetary balances of
Indian accounts than the actual Indian account holders themselves.
Trust responsibility to the individuals in question requires that this
report not be placed into the public domain unless they concur.
The Tribal Leaders Task Force on Trust Reform, comprised of 24
appointed tribal leaders from throughout the United States and Alaska,
convened here in Washington this past weekend to discuss the trust
reform issues. Indian tribes and their representatives are continuing
to interface between their separate governments in order to put forth
their recommendations for Indian trust reform. Proper consultation
between Indian tribes and the federal government must occur to ensure
that decades of Indian trust mismanagement ends.
In conclusion, I do not believe--and I think much of Indian country
would agree with me--that creating a new agency to manage existing
Indian trust accounts is the solution for government reform. Especially
given that proper consultation between the federal government and
Indian tribes did not occur. I am disappointed with the Department of
Interior concerning this government reform issue and believe that DOI
needs to do a better job in exercising the trust responsibility to
Indian tribes and Alaska Natives.
______
[The prepared statement of Mr. Rehberg follows:]
Statement of The Honorable Dennis R. Rehberg, a Representative in
Congress from the State of Montana
Thank you Mr. Chairman. I would like to join my colleagues in
thanking the Committee for holding this very important hearing. Indian
Trust Reform has been on the back burner long enough.
The more I learn about this issue, the greater appreciation I have
for the complexity of the situation. Montana is proudly the home to
seven tribes. I know that in my experience the needs of different
tribes can be very specific and diverse in nature. Several
representatives from Montana's tribes have traveled far to be in
attendance. I am privileged to have three Montanans here to testify--
each in different capacities. Their respective roles here today are
representative of the various needs of tribes across our nation. I
would like to take this opportunity to let the tribes in my state know
that I admire their commitment to work together on proposals for trust
reform, and I look forward to assisting them in their efforts.
I appreciate the efforts of the Secretary on this issue. Many have
come before her and despite their efforts they failed to produce
meaningful reform. I know there are a lot of concerns relating to the
BITAM. Regardless of what you think of the plan, Secretary Norton
should be applauded for her commitment and willingness to tackle this
issue. I know she is committed to working with stakeholders to come up
with the best final product possible.
I know this will not be easy. Trust management reform is severely
overdue. The circumstances that brought us to this crisis situation are
nothing we can be proud of, but I hope that the final product--of what
promises to be the result of a lot of hard work--is something we will
be proud of.
Thank you all for being here and I look forward to a productive
hearing.
______
[The prepared statement of Mr. Young follows:]
Statement of The Honorable Don Young, a Representative in Congress from
the State of Alaska
I would like to thank Chairman Jim Hansen for scheduling this
oversight hearing on the Trust Fund accounts of American Indians and
Alaska Natives. Since the l980's, I have been an active member on this
Committee with Trust Fund reform and am pleased to see that Chairman
Hansen has set a high priority to try and resolve this issue in this
Congress.
For more than ten years, Congress has given the Department of the
Interior (DOI) the funding and the flexibility to try to resolve the
problem with the DOI's accounting of IIM and tribal accounts. Obviously
this has not worked. While I believe that this current Administration
should be given the opportunity to try to resolve the problem, it has
always been my belief that tribes need to be consulted to help find a
resolution to the problem with the accounting of their IIM and Tribal
account funds. I am hopeful that the consulting process will continue
with Tribes and that the DOI will take their recommendations seriously
and implement some of these recommendations in the effort to finally
resolve the Trust Fund issue.
In the past, I have worked with the InterTribal Monitoring
Association (ITMA) and have made a verbal commitment to continue a
dialogue to develop, if necessary, further reform legislation to
finalize the accounting problems with the IIM and Tribal accounts. I
would like to take this opportunity to welcome my Alaskan on the board
of ITMA, Bill Martin, and to offer my continued commitment to work to
resolving the Trust Fund issue.
______
The following information was submitted for the record:
Addison, Anthony A., Chairman, Northern Arapaho
Business Council, Statement submitted for the record
Addison, Anthony A., Chairman, Northern Arapaho
Business Council, Letter to the Department of the Interior
submitted for the record
Anoatubby, The Honorable Bill, Governor, The
Chickasaw Nation, Statement submitted for the record
Assiniboine & Sioux Tribes, Counterproposal to
Bureau of Indian Trust Assets Management submitted for the
record
Bradley, Carman, Chairman, Council of Energy
Resource Tribes, Statement submitted for the record
Bourland, Gregg J., Tribal Chairman, Cheyenne
River Sioux Tribe, Statement of the Great Plains Tribal
Chairmen's Association submitted for the record
Hoopa Valley Tribe, Tribal Self-Governance Trust
Reform Proposal submitted for the record
Mille Lacs Band of Ojibwe, Letter submitted for
the record
Montana Wyoming Tribal Leaders Council,
Resolution submitted for the record
Nez Perce Tribe, Statement submitted for the
record
Tribal Chairmen's Position Statement submitted
for the record
Windy Boy, Alvin, Sr., Chairman, The Chippewa
Cree Tribe of the Rocky Boy's Reservation, Statement submitted
for the record
[A statement submitted for the record by Mr. Addison
follows:]
Statement of Anthony A. Addison, Chairman, Northern Arapaho Business
Council
The Northern Arapaho Tribe wishes to express its concerns with
respect to the proposed reorganization of the Department of the
Interior, removing trust-related responsibilities from the Bureau of
Indian Affairs and placing them in a proposed Bureau of Indian Trust
Assets Management. Let there be no doubt: the Northern Arapaho Tribe
fully supports trust reform. As a land-based Tribe with substantial
natural resource interests ``'' most notably oil and gas production
``'' the Northern Arapaho Tribe would undoubtedly benefit from a
reformed and fully functioning trust system.
However, the Northern Arapaho Tribe is deeply concerned about the
manner in which the current attempt at reform has been put forth.
Foremost among the Northern Arapaho Tribe's concerns is the lack of
meaningful consultation between the United States and any sovereign
Tribe ``'' particularly the Northern Arapaho Tribe. Although both you
and the Secretary were present for the consultation meeting in
Albuquerque on December 13, 2001, this meeting can hardly be considered
meaningful consultation. First, the failure of the Department of the
Interior to be more forthcoming with information about the proposed
Bureau made it impossible for any Tribal leader to make meaningful and
insightful suggestions or comments. Second, the after-the-fact nature
of the event itself created considerable resentment among many of the
attendees, effectively eliminating the possibility of meaningful
dialogue. At a breakfast meeting with the Council of Large Land Based
Tribes, Deputy Assistant Secretary Wayne Smith represented that the
Albuquerque meeting would be nothing more than a ``listening session.''
The Northern Arapaho Tribe respectfully suggests that meaningful
government-to-government consultation requires actual dialogue between
governments, not one government listening in silence to the grievances
of another.
That stated, the Northern Arapaho Tribe believes Secretary Norton
can and should undertake reform of the current trust system. However,
such reform can only work if undertaken in a deliberate and
comprehensive manner. Second, Secretary Norton must agree that not only
will any trust reform in no way diminish the current trust obligations
owed by the United States to Tribes and individuals, but will also
preserve and enhance that trust relationship. Third, trust reform
should affirm and support Tribal sovereignty, self-government and self-
determination, and should not undermine any treaties or executive
orders between Tribes and the United States. Fourth, in any trust
reform, the concerns of the present and the future need to take
precedence over the failures of the past. The Northern Arapaho Tribe is
confident that Secretary Norton is mindful of these basic principles,
and will diligently observe them in any trust reform she undertakes.
As stated above, trust reform is impossible without consultation.
So far, the Secretary's attempts at consultation have been
unsatisfactory. However, this is not to say that meaningful
consultation cannot be accomplished. The first step in a meaningful
consultation process is to give all concerned parties a common base of
information. This means that the Secretary needs to tell Tribes ``''
specifically the Northern Arapaho Tribe ``'' exactly what she intends
to do with respect to trust reform, including how this proposed reform
will result in measurable improvements over the services currently in
place on the Wind River Reservation Without specific information, the
meaningful dialogue between sovereigns embodied in government-to-
government consultation simply cannot be accomplished.
Additionally, as the Committee and Secretary Norton are both
undoubtedly aware, Congress tasked the Department of the Interior with
trust reform in 1994. Although the Northern Arapaho Tribe understands
that many of the problems facing the Secretary now with respect to
trust reform were inherited from past administrations, we would like to
know why the requirements and recommendations made pursuant to the 1994
Act have not been implemented, or if implemented, have not been
successful. The Northern Arapaho Tribe requests that the Secretary
publish an account of why each of the reforms proposed in 1994 has
failed, either in implementation or effect. We are confident that the
Secretary agrees that without a frank and thorough examination of the
failures of the recent past, no progress can be made in trust reform.
With respect to the actual effect of trust reform, the Northern
Arapaho Tribe strongly recommends the Secretary consider the following:
any reform of the Bureau of Indian Affairs should increase the ability
of each reservation or service area to tailor programs and services to
the specific needs of that reservation or service area; any cost
savings realized from trust reform in any way should go directly to
increased services to the trust beneficiaries themselves; any system
implemented to track trust activity needs to be flexible enough to both
provide necessary trust accountability and meet the unique needs of
specific geographical areas; trust reform should not come at the
expense of any services or programs currently provided to Tribes or
individuals; and Indian hiring preference of qualified personnel must
be continued in any trust reform. Finally, while the mistakes of the
past should not prevent trust reform, neither can they be ignored.
Trust reform should not preclude any recovery of damages by Tribes or
individuals for past trust mismanagement, nor should it create a
statute of limitations or other bar to recovery for such mismanagement.
In closing, the Northern Arapaho Tribe is committed to meaningful
trust reform, and as a large, land-based Tribe with extensive natural
resources would benefit from such reform. Secretary Norton is certainly
correct in recognizing the problem with the current trust system;
however, without further details of her current plan for reforming this
system, she cannot engage in meaningful, government-to-government
consultation and dialogue with Tribes. Any group or committee called
upon by the Department of Interior for consultation must be comprised
of elected Tribal leaders.
Additionally, it is extremely important that any reorganization--
whether it be within the BIA, or through the development of a new
agency--it is important that it be clearly established that all aspects
of the Federal Government's responsibilities to Indian Tribes are trust
responsibilities. It is just as important that members of the Northern
Arapaho Tribe receive adequate health care, for example, as it is that
their land and minerals be properly administered. However the
reorganization occurs, it cannot be emphasized to greatly that all
aspects of the Federal Government's duties be properly classified as
trust responsibilities.
It is also important that the Indian preference be continued within
any agency that has trust responsibilities to Indian Tribes. Just as it
is critical that there be government-to-government communications
between Tribes and the Federal Government, it is also critical that
qualified Indian people fill the jobs that have the most interaction
with Indian Tribes. Additionally, no monies can be taken from existing
programs to fund any new or reorganized agencies. Almost all programs
on the Wind River Reservation are presently under funded, and any
further reductions would be devastating.
The Northern Arapaho Tribe would like to engage in discussion with
the Secretary and provide whatever assistance possible in furthering
meaningful trust reform, but first the Secretary must let us know what
we would discuss.
______
[A letter submitted for the record by Mr. Addison follows:]
December 18, 2001
The Honorable Neal McCaleb
Assistant Secretary for Indian Affairs
U.S. Department of the Interior
1849 C Street NW
Washington, D.C. 20240
Dear Assistant Secretary McCaleb,
This letter is to express the strong concerns of the Northern
Arapaho Tribe with respect to the proposed reorganization of the
Department of the Interior, removing trust-related responsibilities
from the Bureau of Indian Affairs and placing them in a proposed Bureau
of Indian Trust Assets Management. Let there be no doubt: the Northern
Arapaho Tribe fully supports trust reform. As a land-based Tribe with
substantial natural resource interests--most notably oil and gas
production--the Northern Arapaho Tribe would undoubtedly benefit from a
reformed and fully functioning trust system.
However, the Northern Arapaho Tribe is deeply concerned about the
manner in which the current attempt at reform has been put forth.
Foremost among the Northern Arapaho Tribe's concerns is the lack of
meaningful consultation between the United States and any sovereign
Tribe--particularly the Northern Arapaho Tribe. Although both you and
the Secretary were present for a purported consultation meeting in
Albuquerque on December 13, 2001, this meeting can hardly be considered
meaningful consultation. In the first place, the failure of the
Department of the Interior to be more forthcoming with information
about the proposed Bureau made it impossible for any Tribal leader to
make meaningful and insightful suggestions or comments. In the second
place, the after-the-fact nature of the event itself created
considerable resentment among many of the attendees, effectively
eliminating the possibility of meaningful dialogue. At a breakfast
meeting with the Council of Large Land Based Tribes, Deputy Assistant
Secretary Wayne Smith represented that the Albuquerque meeting would be
nothing more than a ``listening session.'' The Northern Arapaho Tribe
respectfully suggests that meaningful government-to-government
consultation requires actual dialogue between governments, not one
government listening in silence to the grievances of another.
That stated, the Northern Arapaho Tribe believes Secretary Norton
can and should undertake reform of the trust current trust system.
However, such reform can only work if undertaken in a deliberate and
comprehensive manner. This means first and foremost that Secretary
Norton must withdraw--if not already withdrawn--the request before
Congress to reprogram funds for the proposed Bureau. Second, Secretary
Norton must agree that not only will any trust reform in no way
diminish the current trust obligations owed by the United States to
Tribes and individuals, but will also preserve and enhance that trust
relationship. Third, trust reform should affirm and support Tribal
sovereignty, self-government and self-determination, and should not
undermine any treaties or executive orders between Tribes and the
United States. Fourth, in any trust reform, the concerns of the present
and the future need to take precedence over the failures of the past.
The Northern Arapaho Tribe is confident that Secretary Norton is
mindful of these basic principles, and will diligently observe them in
any trust reform she undertakes.
As stated above, trust reform is impossible without consultation.
So far, the Secretary's attempts at consultation have been
unsatisfactory. However, this is not to say that meaningful
consultation cannot be accomplished. The first step in a meaningful
consultation process is to give all concerned parties a common base of
information. This means that the Secretary needs to tell Tribes--
specifically the Northern Arapaho Tribe--exactly what she intends to do
with respect to trust reform, including how this proposed reform will
result in measurable improvements over the services currently in place
on the Wind River Reservation. The Northern Arapaho respectfully
request this information, in writing, no later than January 15, 2002.
Without specific information, the meaningful dialogue between
sovereigns embodied in government-to-government consultation simply
cannot be accomplished.
Additionally, as you and Secretary Norton are both undoubtedly
aware, Congress tasked the Department of the Interior with trust reform
in 1994. Although the Northern Arapaho Tribe understands that many of
the problems facing the Secretary now with respect to trust reform were
inherited from past administrations, we would like to know why the
requirements and recommendations made pursuant to the 1994 Act have not
been implemented, or if implemented, have not been successful. The
Northern Arapaho Tribe requests that the Secretary publish, by February
1, 2002, an account of why each of the reforms proposed in 1994 has
failed, either in implementation or effect. We are confident that the
Secretary agrees that without a frank and thorough examination of the
failures of the recent past, no progress can be made in trust reform.
With respect to the actual effect of trust reform, the Northern
Arapaho Tribe strongly recommends the Secretary consider the following:
any reform of the Bureau of Indian Affairs should increase the ability
of each reservation or service area to tailor programs and services to
the specific needs of that reservation or service area; any cost
savings realized from trust reform in any way should go directly to
increased services to the trust beneficiaries themselves; any system
implemented to track trust activity needs to be flexible enough to both
provide necessary trust accountability and meet the unique needs of
specific geographical areas; trust reform should not come at the
expense of any services or programs currently provided to Tribes or
individuals; and Indian hiring preference of qualified personnel must
be continued in any trust reform. Finally, while the mistakes of the
past should not prevent trust reform, neither can they be ignored.
Trust reform should not preclude any recovery of damages by Tribes or
individuals for past trust mismanagement, nor should it create a
statute of limitations or other bar to recovery for such mismanagement.
In closing, the Northern Arapaho Tribe is committed to meaningful
trust reform, and as a large, land-based Tribe with extensive natural
resources would benefit from such reform. Secretary Norton is certainly
correct in recognizing the problem with the current trust system;
however, without further details of her current plan for reforming this
system, she cannot engage in meaningful, government-to-government
consultation and dialogue with Tribes. The Northern Arapaho Tribe would
like to engage in discussion with the Secretary and provide whatever
assistance possible in furthering meaningful trust reform, but first
the Secretary must let us know what we would discuss.
Sincerely,
Anthony A. Addison,
Chairman,
Northern Arapaho Business Council
______
[A statement submitted for the record by Governor Anoatubby
follows:]
Statement of Chickasaw Nation Governor Bill Anoatubby submitted for the
record
It is a pleasure, on behalf of the Chickasaw Nation, to provide
this written testimony to the U.S. House of Representatives Resources
Committee on the topic of trust funds management reform. This is a
topic of much concern throughout Indian Country, and it is one which
has the potential to affect every single Native American in this
country.
The Chickasaw Nation is strongly in support of trust funds
management reform. For far too long, assets of tribes and private
citizens have been relegated to a ``back room'' of accounting. The
tribes have entrusted the federal government with those funds for
safekeeping. That trust has been violated over and over again,
compounded by the federal government's inability to account for those
dollars--dollars which rightfully belong to the tribes and to their
citizens. Reforming the system of management of those funds is not only
a necessity, it is a moral obligation which should be addressed
thoroughly and as efficiently as possible.
We ask the Committee's understanding in stating that we oppose any
court-appointed receiver in the matter of accounting for and/or
managing individual trust funds accounts. It has always been the
obligation of the U.S. Department of the Interior, through the Bureau
of Indian Affairs, to manage and account for these funds. It should
remain that way, in order that a clear and extant line of
responsibility remain in place for the monumental task which lies
ahead.
The process for correcting the current situation while satisfying
the concerns of the federal court, should be independent of the
Department of the Interior, conducted by independent advisors with
private-sector expertise in financial trust rehabilitation. We most
impressed with the testimony before the Committee of Donald Gray, Esq.,
who has over 25 years experience in reconciling and rehabilitating
long-term complex trusts and other money flow arrangements involving
billions of dollars of managed assets with some of the most prestigious
financial institutions in this country. The Department of the Interior
simply lacks this kind of expertise. We recommend and advocate a
legislative solution.
Further, we wish to affirm our support for tribal consultation in
this process. As one of two representatives to the task force for
Oklahoma, I am keenly aware of how vital tribal consultation is to the
success of this process. Tribes must have a role in the administration
of the new sovereignty and the study of restructuring trust asset
management.
We urge the Congress to take expeditious and decisive initiative to
propose a plan for revamping federal accountability for individual
Indian trust monies. The process for management of tribal trust funds
should not be disturbed.
We appreciate being given the opportunity to provide these
comments, and wish the committee every success in its deliberations.
______
[A counterproposal submitted for the record by the
Assiniboine & Sioux Tribes follows:]
Assiniboine & Sioux Tribes Counterproposal to Bureau of Indian Trust
Assets Management (BITAM); BIA Reorganization Advisory Group, Draft 12/
12/01
In response to the reform proposals submitted by the Department of
the Interior and Bureau of Indian Affairs Advisory Group, the
Assiniboine and Sioux Tribes submits the following counterproposal
which is designed to achieve a lasting and comprehensive trust reform
in the management of Indian trust assets.
The counterproposal includes infusion of additional resources where
they are needed to provide true lasting trust reform--at the
reservation level. It is the level and location where protection and
management of trust assets occur. It is also where the Bureau of Indian
Affair's legal responsibilities on behalf of the Federal government for
accountability and responsibility originates.
This counterproposal does not create additional levels of
bureaucracy that do nothing to enhance or improve the quality of
fiduciary performance but rather provides the professional staff,
facilities, and equipment where all documents and transactions
originate which enhances the quality of fiduciary performance. It also
returns those functions which have been fractured from the Bureau of
Indian Affairs--OST, OTFM, MMS--to one entity control.
It maintains the basic structure of the Bureau of Indian Affairs by
retaining a Central Office operation in oversight, legislative, and
management assurance facets but requires meaningful consultation with
the local levels prior to any legislative proposals. In this
reorganization image, regional offices are virtually expendable with
professional staffing and funding resource reassigned to the field
offices at the agency level. Central Office operations remain with
policy and regulation functions, however direct contact with the field
offices are envisioned for clear working principles and impacts prior
to any formal proposals being adopted.
In support example, currently 62 positions at the Fort Peck Agency
consists of 50 full time and 12 career seasonal positions. The funding
support for these positions totals $2,202,958 with $122,019 agency
operational costs for over 15 baseline program functions handling
approximately 2,112,000 trust acres with an estimated $11,100,000
annual trust fund disbursement. Of the 50 full time positions at Fort
Peck, only 12 are professional level with a surprising gap in
professional accounting, information and records management and
technology, let alone not considering the various specialized fields
required at the agency level management of trust assets. Professional
services were to be provided by regional/central office staff for any
problem areas in field operations, a cumbersome unworkable procedure
that has resulted in enormous delays in all services, including long
term management dysfunctions.
The following proposal envisions the Assiniboine and Sioux Tribes'
full service Agency operations only. As such, it is intended to be a
blueprint for further development in other levels of operations as well
as use by other Tribes to develop as their unique operations require.
FORT PECK AGENCY REFORM PROPOSAL
FUNCTIONAL REORGANIZATION STATEMENT
The Fort Peck Agency is located at Poplar, Montana. The Agency
jurisdiction lies in the northeast corner of the State of Montana. It
is responsible for the delivery of all Bureau of Indian Affairs
programs, administration and management services (1) to the tribal
government, individual tribal members, and trust resources of the
Assiniboine and Sioux Tribes of the Fort Peck Reservation; (2) to the
trust resources owned by individual tribal members of the Turtle
Mountain Tribe of Chippewa Indians in North Dakota which are located in
northeastern Montana outside of the external boundaries of the Fort
Peck Reservation; and (3) individual Indians who are members of other
tribes but reside in the Fort Peck Agency jurisdiction.
Two separate tribal groups, the Assiniboine and the Sioux, have
maintained a single tribal government entity on the Fort Peck
Reservation since its establishment in 1888. The two tribes rejected
the Indian Reorganization Act of 1934 but operate under a constitution
approved by the Commissioner of Indian Affairs in 1960. Tribal business
is conducted through an Executive Board comprised of a Chairman, Vice-
Chairman, Sergeant-at Arms, and twelve Members. All are elected at
large in elections held in odd numbered years. Although a single joint
tribal membership roll is maintained, each tribe exercises control and
supervision over its own enrollment.
Members of the Turtle Mountain Tribe of Chippewa Indians in North
Dakota own trust land allotments situated outside of the boundaries of
the Fort Peck Reservation in northeastern Montana which are
administered and managed by the Fort Peck Agency. These Indian
landowners are not affiliated with or represented by the Assiniboine
and Sioux Tribes. Their business is transacted individually directly
with the Fort Peck Agency staff.
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[A statement submitted for the record by Mr. Bradley
follows:]
Statement of Carman Bradley, Chairman, Council of Energy Resource
Tribes
On behalf the Council of Energy Resource Tribes (``CERT'') I extend
my appreciation to the Resources Committee and Chairman Hansen and
Ranking Member Rahall for providing CERT the opportunity to submit
testimony on Indian trust management reform. My name is Carman Bradley
and I am Chairman of CERT and also Chairperson for the Kaibab Paiute
Tribe.
CERT was formed in 1975 by twenty-five energy resource-owning
Tribes who shared the philosophy that collectively Tribes could manage
and responsibly develop their natural resources in a manner that
reflects Tribal priorities and values. Tribes owning energy resources
collaborated to rewrite the federal law and policy with respect to
Indian minerals and royalty accounting with the Indian Mineral
Development Act of 1982 and the Federal Oil and Gas Royalty Management
Act. Tribes themselves have developed sophisticated capabilities in
resource management and development as well as in revenue accounting
and auditing that in many cases exceed those of private industry and
government agencies charged with similar responsibilities for public
resources. Each CERT member Tribe's chief elected official sits on the
CERT Board of Directors. Because of vast resource ownership and sizable
income generated from energy minerals, each Tribe individually, and
Tribes collectively in CERT, has a great stake in trust management
reform.
The Bureau of Indian Affairs, Office of Trust Fund Management,
states that 77 percent of the Fund assets are held by 8 percent of the
Tribes 1. CERT member Tribes own vast quantities of oil,
coal, natural gas mineral resources and vast quantities of land and
other natural resources that contribute the greatest part of the income
flow through the tribal trust fund accounts. Energy mineral production
from Indian lands in 2000 was 9.3 million barrels of oil, 299 billion
cubic feet of gas and 21.4 million short tons of coal. Energy minerals
from Indian lands remain significant at greater than 10% of total
federal on shore production 2. Any trust reform measures
taken by the Department of the Interior (DOI) will significantly impact
CERT member Tribes. The trust income goes to support the discharge of
Tribal governmental responsibilities from education to law enforcement
and from resource management to economic development. For many of the
energy resource Tribes, this income represents the majority of their
non-federal income for investing in their own social and economic
development.
---------------------------------------------------------------------------
\1\ Misplaced Trust: The Bureau of Indian Affairs Mismanagement of
the Indian Trust Fund, Committee Reports 102d Congress, House Report.
102-499.
\2\ Minerals Management Service 2000 Year End Report.
---------------------------------------------------------------------------
CERT applauds Secretary Norton's desire to address trust management
reform within the DOI. However, CERT has grave concerns about the
procedure that Secretary Norton has followed in development of a reform
plan and the Department's proposal to transfer fiduciary trust services
to a new Bureau in an attempt to separate fiduciary trust
responsibilities from other trust services provided by the Bureau of
Indian Affairs (``BIA''). CERT strongly opposes the DOI's Bureau of
Indian Trust Assets Management (``BITAM'') reorganization proposal and
the reprogramming of BIA Fiscal Year 2003 appropriations to support the
development of the Department's proposal.
The DOI's proposal is incomplete and does not address critical
elements that prevent the Department from enacting effective trust
management reform. CERT contends that the Department must work with all
stakeholders including Tribes, Tribal organizations, Indian
individuals, and Congress, to develop a comprehensive, transparent
trust management reform plan. Participatory methodologies in roundtable
style, open dialogue, collaboration and problem solving on a regional
level will ensure full Tribal participation. CERT suggests that the
Bureau define the regional areas according to Tribal regions and not
confined to BIA administrative regions. The role of Tribal organization
should be recognized by the Bureau as a valuable information source
providing important subject matter expertise to supplement, but not
replace the important Tribal work at the regional level.
The atmosphere between the DOI and Tribes is poisoned with distrust
and suspicion. The Secretary of the Interior will fail in her attempts
to bring positive change until she and the Department as a federal
institution addresses the lack of faith and confidence with their
Tribal constituencies. ``No government policy toward Indians can be
fully effective unless there is a relationship of trust between the
Federal government and the Indian people.'' 3 Recent actions
taken by Secretary Norton and her senior officials at the DOI reduce
the little confidence Tribes hold in the DOI. Secretary Norton must
answer how she intends to establish the conditions necessary for the
Department and the Tribes to work together to solve the crisis that
their mismanagement of their responsibilities to the Indian Trust
created.
---------------------------------------------------------------------------
\3\ Nixon, Special Message to Congress on Indian Affairs, July 8,
1970.
---------------------------------------------------------------------------
CERT challenges the Secretary's testimony presented to the
Resources Committee on February 6, 2002 in which she states that Tribes
are opposed to change and would like to see the BIA continue with the
current trust management practices. Tribes support trust management
reform to ensure Tribes are getting paid on time, at fair market value,
royalty payments; and the Department develop an accurate accounting
system that will interface with Tribal computer systems. Tribes have
unified in a single voice to oppose the Secretary's BITAM proposal for
reform. Tribal opposition to the Department's reorganization plan
should not be, and cannot be, misconstrued for opposition to trust
management reform.
Inadequacies of BITAM Proposal
The BITAM proposal is fatally flawed as it fails to address several
barriers that have prevented the Department from successful trust
management reform. CERT does not support any proposal that does not
address the issues outlined below.
DOI Secretary's Conflict of Interest as Trustee
The Federal Government's trust responsibility includes the
protection of Indian lands and natural resources, provision of
social, medical, and education and other essential services
necessary for survival of Tribal members, and protection of
Tribal political and territorial integrity. The DOI is to act
on behalf of Tribal interests in conflicts and disputes that
arise from the protection and the development of Tribal lands
and natural resources. Former President Nixon recognized this
conflict of interest on behalf of the United States. He said,
``[T] he Federal government is faced with an inherent conflict
of interest. The Secretary of the Interior and the Attorney
General must at the same time advance both the national
interest in the use of land and water rights and the private
interests of Indians in land which the government holds as
trustee.'' 4
---------------------------------------------------------------------------
\4\ Nixon, Special Message to Congress on Indian Affairs, July 8,
1970.
The conflict of interest described by President Nixon cannot be
more evident than in the Department's handling of the Cobell
litigation and its response to the demand that it reform its
management of the Indian trust. The Department of Justice
represents the Department of the Interior and the Department of
Treasury on behalf of the federal government against the
Indians with whom it has a trust obligation. Litigation in the
trust mismanagement debacle seems to be driven by DOJ's desire
to minimize the government's liability to its trust
beneficiary. Management reform has been frustrated even after
---------------------------------------------------------------------------
an act of Congress mandated its reform.
Another example of DOI and DOJ's conflict of interest is
evident in their use of the Arthur Andersen report. The BIA
contracted Arthur Andersen to reconcile both the Tribal
accounts and a random sampling of some 17,000 IIM accounts.
Arthur Andersen was only able to reconcile the 2,000 Tribal
accounts for a short time period from 1973 to 1992. For this
20-year period alone, the auditor noted that at least $2.4
billion in Tribal trust accounts was unaccounted for and
billions of dollars more were virtually untraceable because of
the questionable nature of the government records. Arthur
Andersen was unable to reconcile any of the IIM accounts and
further estimated that to begin such a process would cost
upwards of $281 million. ``The accounting firm claimed that the
government had destroyed, never created or otherwise did not
maintain, the records necessary to conduct a reconciliation.
Even if the full IIM audit were performed, the firm said the
costly information would be of little or no value when it came
to providing IIM account holders with any real assurance that
their balances are correct.'' 5 Although the Arthur
Andersen report plainly illustrates difficulties to full trust
fund reconciliation, the Department of Justice has indicated
their intention to enter a motion for the Arthur Andersen
report marking the starting point for statute of limitations
for Tribes and individuals to file claims for damages against
the Department of the Interior. And yet, it is the Department
of Justice that should litigate against the Department of the
Interior on behalf of the Tribes and Indian individuals for
damages against the DOI.
---------------------------------------------------------------------------
\5\ Joel Dyer, ``Billions Missing From U.S. Indian Trust Fund.''
The inherent conflict of interest creates an ethical impediment
for the Secretary of the Interior to unilaterally develop and
implement a plan for reforming the management of Indian trust
resources in ``good faith''. The Secretary must demonstrate
that her plan resolves this inherent conflict of interest.
Basic Standards for Trust Management Reform
First Principles of the Federal Indian Trust
Trustee deals in good faith.
Trustee cannot engage in self-dealing. The Trustee
cannot have a conflict of interest with the beneficiary of the
trust nor can it place its administrative convenience before
the trust.
The Trustee makes FULL DISCLOSURE of all known
losses, thefts, and errors past and present.
Tribal resource information is proprietary, not
public information, and is not subject to freedom of
information disclosure.
To assure that the Trustee is adhering to the reform
systems principles and that the systems continue to have
integrity over time and that there is oversight by an
Independent Regulatory Body.
That the Trust management and accounting system is
based on the terms of the organic documents that give rise to
the fiduciary trust responsibility.
Requirements that a new management system must exhibit:
Legal documents from which the trust arises--
treaties, statutes, executive orders, purchases and documents
that created the trust lands--from the foundation for the
information systems;
Agreed upon land/resource management responsibilities
are accounted for;
Tribal and individual land description records are
integrated;
Surface and subsurface resources are integrated in
the data base;
Contracts, leases, rights-of-way agreement terms and
conditions are used in the system;
Monitoring of activities such as mineral production
to assure compliance to terms of the agreements, applicable
regulations and environmental standards are integrated;
Accounting based on legal requirements created by
court decisions, statutes, regulations and contract terms are
adopted;
All Tribal resources management ordinances, zoning,
and land use that affect Tribal resources management,
protection and development are integrated into the system; and,
Management and information systems design are
compatible with local Tribal administration.
Violation of Executive Order 13175--Consultation and Coordination with
Indian Tribal Governments
Secretary Norton did not follow guidance for consultation with
Indian Tribal Governments on Departmental actions that affect Indian
Tribes. By not consulting with Tribes, the DOI was unable to completely
develop their plan and therefore announced BITAM with only a skeleton
sketch of the new Bureau and its functions. The DOI cannot completely
answer or fill in the blank spaces of the plan without seeking advice
from Tribes. Again, this dilemma was anticipated by President Nixon
when he said, ``The Federal government needs Indian leadership if its
assistance is to be effective in improving the conditions of Indian
life.'' Secretary Norton forgot this important advice from past
leadership of her Party who knew in 1970 that only with Tribal support
and advice could effective policy be developed. It seems that she also
forgot that the basis of democracy is that government can only govern
with the consent of the governed. CERT advocates that DOI consult with
all Tribes on a government-to-government basis. CERT does not recognize
the series of meetings DOI is currently convening around the country as
``government-to-government'' consultation.
Implementation of Cost Analysis for BITAM
The BITAM proposal cannot be seriously analyzed. One undisputable
factor that can be substantiated is that implementation of BITAM will
be very expensive, confusing and will cripple BIA and Tribal operations
beyond current inconveniences. The major objective of the Norton plan
is to establish, through consolidation of management responsibilities
of Indian trust assets, a single Office responsible for trust
management. The BITAM plan does not explain how adequate funding and
staff resources will be made available to the Special Trustee and the
new management; how another, separate and distinct Bureau will be
adequately funded to complete all of its assigned duties; how duties
between the field BIA employees will be separated and reassigned with
minimum confusion and loss of services to Tribal members. The very real
risks to not only the Trust beneficiaries but to entire Tribal
communities associated with the new Bureau far outweigh any potential
benefit BITAM might provide.
Full Review of DOI's Implementation of The American Indian Trust Fund
Management Reform Act of 1994
CERT calls on Congress to conduct a thorough review of DOI's
implementation of The American Indian Trust Fund Management Reform Act
of 1994 (PL 103-412) and the failure of the Office of Special Trustee
to bring about the necessary measures within the Department for trust
management reform. CERT asserts that Secretary Norton has not closely
analyzed the problems of implementing the Reform Act of 1994. In some
respects, the idea behind the OST and BITAM are similar in theory,
however the OST has been largely unsuccessful in any reform measures
for the accounting systems or implementing policy change within the
involved Bureaus for accurate accounting or reconciliation of the IIM
or Tribal accounts. The Secretary has not been responsive to the
Special Trustee and OST has never been adequately funded or staffed to
perform the required duties under law. Neither the Secretary nor her
predecessor ever vested any authority to the Special Trustee preventing
the Special Trustee from implementing policy change in a timely manner.
This failure must be explained.
Perceived Threat of Termination of the Bureau of Indian Affairs
Tribes across the Nation have expressed concern about a hidden
agenda of the Secretary to terminate the BIA after BITAM has been
completely established. The DOI perceives BIA programs and funding that
are not directly related to the fiduciary trust obligations as
``services'' to Indian people based upon the concept that Tribes cannot
function without federal government help, or in short, welfare for the
Indians. All functions of the BIA are trust obligations and are
integral to the Federal Indian Trust as services to Indians because of
Indian status. Since the 1970s with the advent of Indian Policy based
on Tribal Self-determination, the Executive and Legislative Branches of
government have acknowledged that the trust obligations are based upon
agreements and solemn obligations between the United States and Tribes.
Tribes surrendered claims to vast tracts of land and submitted to
forced lifestyle changes in exchange for essential services such as
health, education and public safety to ensure a quality of life enjoyed
by other Americans. BIA services such as education, construction,
environmental permitting, and recent congressional laws such as Indian
gaming, Indian Child Welfare Act, and environmental regulatory
authority and others are based upon the U.S. constitution, treaties and
court decisions affirming that the federal trust obligation includes a
social contract, protection of political autonomy as well as a
fiduciary responsibility.
While the responsibility for land, resources and revenues derived
from them make the fiduciary the more tangible of the three trust
obligations and, in theory the easier to fulfill and to fix, the
fiduciary trust obligation is inseparably linked to the social contract
and political protection aspects of the trust obligation. Any proposal
for trust reform that does not recognize the full federal obligation to
Tribes will fail and perpetrate the specter of termination of federal
trust obligation to Indian people.
Separating the fiduciary trust obligation from the other trust
responsibilities will not bring about trust management reform. The
Secretary has not addressed how the Minerals Management Services and
the Bureau of Land Management fiduciary trust management services will
be integrated into the BITAM proposal. Tribes are validated in their
concerns of DOI dispelling their all trust responsibilities not related
to the fiduciary trust obligation. CERT asks Congressional support to
ensure that all trust obligations are preserved and honored.
Alliance with the Intertribal Monitoring Association on Indian Trust
Funds
CERT has a long history and close working relationship with the
Intertribal Monitoring Association on Indian Trust Funds (``ITMA'').
Many of CERT member tribes are also members of ITMA. CERT has worked
with ITMA on trust management reform efforts and will continue to
support their recommendations and position on trust management reform.
Conclusion
The Council of Energy Resource views Secretary Norton's decisive
action to fix the trust management problems as an opportunity to reform
the Trust to fulfill the federal government's fiduciary obligation and
bring the concept of Trust Protection Responsibility into the twenty-
first century based upon modern American ideals of a government-
government relationship with Tribal control over Tribal trust resources
and funds and away from the eighteenth century concepts of Federal
control over Indian. CERT looks forward to working with the Resources
Committee to develop legislation that will meet this goal.
______
[A statement submitted for the record by the Great Plains
Tribal Chairmen's Association follows:]
Statement of the Great Plains Tribal Chairmen's Association to the
Senate Committee on Indian Affairs on Management of Indian Trust Funds,
February 26, 2002
Mr. Chairman, Honorable Committee Members, and others present.
Thank you very much for allowing us this opportunity to testify today
on the very important matter of Trust Fund Management Reform. The Great
Plains Tribal Chairman's Association consists of sixteen tribes in
three states that include: The Cheyenne River Sioux Tribe, The Crow
Creek Sioux Tribe, Three Affiliated Tribes, Spirit Lake Tribe, Lower
Brule Sioux Tribe, Oglala Sioux Tribe, Rosebud Sioux Tribe, Sisseton-
Wahpeton Sioux Tribe, Standing Rock Sioux Tribe, Turtle Mountain Band
of Chippewa, Omaha Tribe, Santee Sioux Tribe, Winnebago Tribe, Yankton
Sioux Tribe, Ponca Tribe of Nebraska, and the Flandreau Santee Sioux
Tribe.
According to federal statistics, the Great Plains Region accounts
for almost half of the total Native American land-base and over half of
the total trust accounts. Additionally, the Great Plains Region
accounts for the majority of the tribal trust funds, with the largest
being the Sioux Nation Trust Fund of over six hundred million dollars,
and several tribal settlement funds or JTAC funds, with hundreds of
millions of dollars.
As the majority of these trust funds are managed by the Bureau of
Indian Affairs (BIA) and the Office of the Special Trustee (OST), we in
the Great Plains Region have a very large interest in the outcome of
federal trust management reform.
HISTORY
The majority of the tribes in the Great Plains Region are treaty
tribes. These tribes have been promised by the United States Government
that their interests and assets would be protected. We were promised
that our money and assets would be safeguarded and that the federal
government would provide us with full fiduciary and trust services.But
history has shown that the exact opposite has been true. Native
American money has been squandered, misspent, stolen, and mismanaged
while Native American assets have been lost, swindled, and mismanaged
by the federal government. Trust is the predominant job of the Bureau
of Indian affairs since it was conceived over 150 years ago. But,
unfortunately, they have a long and sordid history of mismanaging that
trust for Native Americans and their resources and assets.
For many years tribes, tribal members, and organizations have been
reporting these facts to the Department of Interior, the Bureau of
Indian Affairs, and Congress. We have heard many promises. As a result,
organizations like the Inter-tribal Monitoring Association on Tribal
Trust Funds (ITMA) have made it their mission to bring to the attention
of Congress, the Administration, and the world, this federal
mismanagement of tribal assets and funds.Congress took charge and began
to investigate the allegations against the federal government of this
mismanaged trust. In 1992, Congress mandated that a reconciliation and
audit of select trust fund accounts be done. A CPA firm, Arthur
Anderson & Company, was hired for this very daunting task. The outcome
was as ITMA had expected. The BIA could not account for over two
billion dollars of Native American tribal trust money.
This was not even counting all of the trust fund accounts in the
BIA, nor the IIM (Individual Indian Money) accounts. And the
reconciliation only went back a few years. Estimates are that the total
unaccounted for in Indian Trust Money's could be in the billions of
dollars. And that is not even including the trust lands and assets that
have been taken from us.In late 1993 ITMA put together the Indian Trust
Fund Reform Act in hopes of the Federal government truly reforming the
federal trust program. Instead, after much opposition by the Department
of Interior, Native America was given half- hearted legislation in the
Indian Trust Fund Reform Act of 1994. And since then, Native America
has faced opposition from the Department of Interior at any meaningful
attempt at true trust management reform.
Congress thankfully did attempt to make the Department of Interior
improve Indian trust asset management and provide basic fiduciary
services to trust beneficiaries in the 1994 Indian Trust Fund Reform
Act.
A new department within Interior was created, as a result of this
act; the Office of Special Trustee. A Special Trustee for American
Indians was hired. An investment banker by the name of Paul Homan took
this job. Under Mr. Homan, the Office of Trust Fund Management was
transferred over to OST. The BIA kept all other trust functions.
Mr. Homan also instituted a new plan for trust, called the High
Level Implementation Plan (HLIP). This HLIP included several major
components, two of which are the most controversial; TAAMS (Trust Asset
Accounting Management System) and TFAS (Trust Fund Accounting System).
TAAMS is under the BIA and TFAS under the OST.
But, then Secretary of Interior Babbitt continually interfered and
undermined his efforts. Mr. Homan resigned as a result of the negative
politics and constant interference from the Department of Interior.
Additionally, as a result of the consistent failure on the part of
the Department of Interior, Eloise Cobell of the Blackfeet Nation filed
a class action lawsuit on behalf tribal allottees in United States
Federal Court. This has resulted in a huge amount of media attention to
the issue. And the previous Secretary of Interior, Secretary of
Treasury, and Assistant Secretary of Indian Affairs were all held in
contempt of court for failing to protect native trust and records.The
current Special Trustee for American Indians, Mr. Tom Slonaker, has
tried unsuccessfully to get the HLIP in working order. There have been
many problems in TAAMS. This led Secretary Norton, to do an independent
study of the HLIP and trust reform efforts in June 2001. The Department
of Interior contracted with EDS (Electronic Data Systems Corporation)
to conduct this study. EDS was to do an assessment of TAAMS and the BIA
Data Cleanup Project. (A project that would ensure that only good clean
data was inputted into the system).
EDS published a ``confidential'' report titled: DOI Trust Reform,
TAAMS/BIA Data Cleanup Recommendations: ``For Comments'' Report dated
October 31, 2001. 1 Concurrently in Federal Court DOI
Secretary Gayle Norton was on the verge of being declared in contempt
of court.
---------------------------------------------------------------------------
\1\ This information is available on the Internet on the DOI
website.
---------------------------------------------------------------------------
As a result, the Department of Interior put pressure on EDS to
publish their interim report on TAAMS and BIA Data Cleanup. As stated
on page seven of that report: ``Subsequent to the release of the
``Recommendations: For Comments Report'', the DOI asked EDS to
accelerate the development and publication of a roadmap.'' What this
means is DOI was worried about the Court and hurried EDS to get their
report out so they could use it as a means for filing in court.
In collaboration with the DOI, EDS shortened the comment period
that was to be provided to tribes on the October 31st report and
prematurely published the report entitled ``Interim Report and Roadmap
for TAAMS and BIA Data Cleanup,'' dated November 12, 2001. 2
This report said, and I quote:
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\2\ This information is also available on the Internet at the DOI
website.
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``The EDS Report contains the following key Recommendations for
improving Indian trust asset management:
Immediately appoint a single, accountable Trust Reform
Executive Sponsor
Develop an overarching trust operations business model
Adopt an overall business and computer systems
architecture
Adopt a consistent information systems acquisition
strategy
Implement consistent technology frameworks, methods, and
tools
Establish a trust program management center
Execute comprehensive staffing plans for all
participating organizations.''
This report led the Special Trustee, Tom Slonaker, and the
Assistant Secretary of Indian Affairs, Neal McCaleb, to immediately
issue a joint memo to Secretary Norton recommending, ``a dramatic
change in organization and management structure for Indian trust reform
and trust operations.'' 3 (See Tab A) Secretary Norton
concurred with their recommendations and directed Interior staff to
begin the process of reorganizing DOI's Indian trust asset management
systems. 4 (See Tab A)
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\3\ Tab A..Nov. 14, 2001 Memo from McCaleb and Slonaker to Norton,
included Tab B
\4\ Tab A..Nov. 14, 2001 Memo from Norton to McCaleb and Slonaker
---------------------------------------------------------------------------
This prompted Steven Griles, Deputy Secretary of DOI, to
immediately file in Federal Court a document outlining the
reorganization on November 14, 2001. 5 This reorganization
would, in Griles own language:
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\5\ Federal Court filing: Declaration of Steven Griles
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``consolidate/s Indian trust asset management functions in a
single agency separate from the OST and BIA: the Bureau of
Indian Trust Assets Management. Segregating these trust
functions is intended, as in the private sector, to facilitate
the development of performance measures, processes, controls,
and systems that are designed to meet Interior's fiduciary
obligations.
The Bureau of Indian Trust Assets Management will report to an
Assistant Secretary for Indian Trust Assets Management. This
new Assistant Secretary will have authority and responsibility
for Indian trust asset management, The Special Trustee will
continue to perform oversight for Interior's trust reform
efforts. BIA, under the supervision of the Assistant Secretary
- Indian Affairs, will continue to provide those services to
Indian tribes and individuals that are not related to trust
assets.'' (Griles court filing-DOI-11/14/01)
The Department of Interior goes on to say:
``The proposed reorganization impacts many interested parties.
Interior has begun consultation with Indian tribes and with
Congress. Appropriate notification to departmental employees
and union representatives will occur on November 15, 2001.
Also, candidates for the Assistant Secretary and the Bureau
Director must be found. The Assistant Secretary must be
nominated and confirmed.
Trust reform activities will continue during this transition
process. The final organization structure will depend upon the
results of the consultation process. Implementation will
progress as soon as it becomes final. In the meantime, three
key subprojects (TAAMS, BIA Data Cleanup, and Probate) will be
supervised by Ms. Donna Erwin, previously Deputy Special
Trustee for Trust Systems and Projects, under a newly created
Office of Trust Transition in the Office of the Secretary.
Planning for the transfer of the remaining subprojects is
underway. Project resources needed in the short term are being
identified and work with EDS to develop a business model is
underway.
Meanwhile, OHTA (Office of Historical Trust), created by
Secretarial Directive on July 10, 2001, has proceeded on its
announced schedule with its task of planning, organizing,
directing and executing the historical accounting of EM
accounts. On September 10, 2001, OHTA issued a `Blueprint for
Developing the Comprehensive Historical Accounting Plan for
Individual Indian Money Accounts,' which sets forth a
description and timetable for completion of all steps necessary
to staff and develop the plan for the historical accounting.
On November 7, 2001, OHTA issued its `Report Identifying
Preliminary Work for the Historical Accounting.' It identifies
work that is underway and work that can begin immediately to
constitute an historical accounting and pilot test possible
methods and assumptions about how to conduct the historical
accounting, among other tasks. In the, proposed reorganization,
OHTA will be a line organization under the new Assistant
Secretary.''
On November 15th, 2001 the Department of Interior released a
document entitled ``Reorganization to Improve Indian Trust Asset
Management''. 6 This was the closest thing to a plan that
they had at that point. In December 2001, the National Congress of
American Indians passed a resolution in Spokane, Washington asking for
consultation with Native America and also asking for the creation of a
task force to study the proposed reorganization by an overwhelming
unanimous vote.
---------------------------------------------------------------------------
\6\ Reorganization to Improve Indian Trust Asset Management
---------------------------------------------------------------------------
On January 8th, 2002, Keith Beartusk, BIA Rocky Mountain Regional
Director, sent an email that had a draft alternative proposal from the
BIA Regional Director Reorganization Advisory Group. This document
makes clear that the BIA will not be able to survive if all trust
functions are taken away from it. 7
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\7\ 1-8-02 Keith Beartusk..includes: Draft memo 12-12-01 Version
6.1
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Since mid-December, Secretary Norton and Assistant Secretary
McCaleb have convened ``consultation'' meetings around the country and
have heard overwhelming opposition from Tribal Nations and Tribal
people to the creation of BITAM.
21OPPOSITION TO BITAM
First it is important to understand that we support trust
management reform. But, not under these circumstances! Trust reform
should be for the sake of Native America, not for the sake of
Department of Interior Secretary Gayle Norton! On November 14th, 2001,
Secretary Norton introduced to the Federal Court the concept of
creating the Bureau of Indian Trust Asset Management. This was in
response to a threat from the court to be held in contempt. The
Department of Interior used as its excuse the Electronic Data Systems
Corporation report of November 12th, 2001.
It is very clear as to the intent of Secretary Norton. Take all
trust functions away from OST and BIA and create BITAM. Do it with
little consultation from the tribes, BIA, OST, Congress or anyone else.
And keep in mind that this is not for the sake of Indian Country. No,
it is purely being done for her sake. And why is this being done? Has
the Interior Department suddenly decided it was time to ``fix'' 150
years of mishandled Native American trust? No, it is in response to the
Cobell court case. If Secretary Norton did not respond as she had, the
Court may have taken this trust authority and placed it under a
receivership. And of course there was still the contempt of court
charge hanging over her head.
And by doing this, Secretary Norton is able to shift attention from
the fact that TAAMS has been a scandalous nightmare for the BIA, having
spent tens of millions of federal dollars on a system that does not
work. They have misled the Court, Tribes, and Congress about the
``success'' of TAAMS knowing full well it does not do the job it was
intended to do. 8
---------------------------------------------------------------------------
\8\ See Nov. 14, 2001 EDS Interim Report and Roadmap for TAAMS and
BIA Data Cleanup Page 31-33
---------------------------------------------------------------------------
And finally, by creating a new agency, there is also the
possibility that the BIA could be completely gutted and have to compete
with the new agency for valuable resources. It has also been proposed
that all contracting and compacting functions be placed under BITAM.
This may make the ``638'' contracting of Roads, Social Services,
Education, Police, Courts, etc. very difficult as they would stay under
the BIA.
Additionally Assistant Secretary Neal McCaleb said at the Spokane
NCAI meeting that the DOI was going to transfer all trust functions
from the BIA over to BITAM. He said that all ``empowerment'' programs
like roads, welfare, law enforcement, etc. would stay with the BIA.
This potentially could have a critical impact in years to come as these
programs may be declassified as ``trust'' programs by the Federal
government.But, in fact, all trust functions do not transfer over to
BITAM. The Minerals Management Service, BLM, and other federal agencies
within the Department of Interior remain intact and free to continue
their mismanagement of Native American Trust while not being placed
under BITAM.
And Secretary Norton has yet to provide Native America with a
sufficient plan or ``Trust operations business model''. In contrast she
has declared that the HLIP was obsolete, when in fact it has never been
implemented to any sufficient degree.DOI has yet to prove that their
computer nightmare, TAAMS and TFAS, can ever interface with a myriad of
other DOI ``Trust computer systems''. The DOI has failed to adopt a
``consistent information systems acquisition strategy'', implement
consistent technology frameworks, methods and tools, and ``establish a
trust program management center''.
As a blunt matter of fact, all the DOI has done is to shuffle
existing federal employees around, while bringing in ex-federal
officials who were part of the problem to begin with. A far cry from
executing a ``comprehensive staffing pattern'' as suggested by EDS.
SOLUTION
The Solution is simple and to the point. Keep in mind that the DOI
is basing this reorganization and creation of BITAM on the EDS report,
and the EDS report says:
Immediately appoint a single, accountable Trust Reform
Executive Sponsor;
Develop an overarching trust operations business model;
Adopt an overall business and computer systems
architecture;
Adopt a consistent information systems acquisition
strategy;
Implement consistent technology frameworks, methods, and
tools;
Establish a trust program management center; and
Execute comprehensive staffing plans for all
participating organizations.
BITAM cannot do this because it does not consolidate all trust
activities under a ``single trust reform executive sponsor''. The
intent of DOI Secretary Norton is to take all trust functions away from
OST and BIA and create BITAM, thereby giving this new agency those
functions, but the Secretary's plan does not transfer any authority
from MMS, BLM nor any other agency of the DOI. This in itself falls far
short of the EDS report.
The Great Plains Tribal Chairman's Association respectfully
requests the United States Senate, through the Senate Committee on
Indian Affairs, to consider the following recommendations for trust
management reform:
Consolidate all trust activities from within DOI such as
OTFM, MMS, and others under the Bureau of Indian Affairs;
Place all above activities under the existing Director of
Trust or a like agency within the BIA;
Allow tribes input into the architecture of the High
Level Implementation Plan. (Trust Operations Business Model);
Implement the High Level Implementation Plan under the
newly consolidated trust management program under the Director of Trust
in the BIA;
Implement all other EDS recommendations as per the
report;
Amend the Indian Trust Reform Act to authorize the Office
of the Special Trustee to act as a separate agency apart from the
Department of Interior, with the responsibility of oversight over all
trust activities within the BIA.
Authorize the Office of Special Trustee the power to
impose sanctions on any government agency or department that fails in
it's responsibility for proper administration of Native American trust
programs; and
The Office of Special Trustee should report to Congress
and Native America of all trust activities.
While the solution is simple and to the point, it allows the full
EDS recommendations to be carried out. We see this as the simple, cost
effective solution to trust fund reform. It keeps the BIA totally
intact while strengthening the BIA's trust management capability. It
allows for the creation of one centralized system under the BIA for
Trust Fund Management. And it ensures that the BIA will be held
accountable.
CONCLUSION
We also feel that the ultimate solution would be to create a
Department of Indian Affairs. The above structure could be placed under
this department. It is long overdue for Native American to have it's
own cabinet level position. It is our hopes and prayers that your
honorable Committee and honorable Senators will find the power and the
will to convince the President to implement a plan to establish a
Department of Indian Affairs.Until then, prompt passage of our
recommendations would be appreciated.
We thank you for your time and consideration of this testimony.
Written by:
Gregg J. Bourland
Tribal Chairman, Cheyenne River Sioux Tribe
______
[A statement submitted for the record by the Hoopa Valley
Tribe follows:]
[GRAPHIC] [TIFF OMITTED] T7526.015
Statement of the Hoopa Valley Tribe submitted for the record
SGProp-03
TRIBAL SELF-GOVERNANCE TRUST REFORM PROPOSAL
BACKGROUND.
The origin of federal trust responsibilities to Indian tribes began
when the United States began negotiating and entering into treaties and
agreements with sovereign Indian nations. Those treaties and agreements
accomplished a number of key goals, including: 1) allowing for the
transfer of billions of dollars worth of assets, rights and territories
to the United States, 2) providing provided for a number of guaranteed
programs and services available to tribes in exchange for lands and
rights ceded, and 3) providing for the preservation of inherent tribal
self-governing powers. The Federal trust responsibilities to individual
Indians began with the enactment of the General Allotment Act in 1887.
Since then, many laws and court cases have further defined those
responsibilities, including clarifying management standards and
agreeing to pay liabilities when those standards are breached. It is
this legal and political framework that mandates that tribes and the
Federal Government will conduct their affairs in a government-to-
government like fashion. Many federal officials do not seem to
understand or possibly appreciate the fact that treaties and agreements
are two party contracts, between tribes and the Federal Government. And
today, now more than 2 centuries later, the Federal Government still
struggles to define what these responsibilities really consist of.
When the U.S. Congress passed laws that authorized the sale, use or
disposition of resources being held by the U.S. for the benefit of a
tribe or individual Indians, they also imposed management
responsibilities on the agency that carries out that function. For
example, when the BIA forestry branch sells tribal or allotment timber,
they must incorporate land management practices that will ensure that
the tribe's or Indian's lands will remain productive. This requirement
is what creates the federal forest management standards that apply to
tribal and Indian lands. Similar standards have been developed for land
leasing, grazing permits, water uses, roads, etc. Likewise, when a
Federal agency is charged by law with the responsibility to ``manage''
tribal and Indian money accounts that were generated from the sale or
use of resources, or from breach of trust lawsuits and the like, then
the Federal Government is responsible for carrying out the prudent
management requirements of those accounts. When applying standards to
``trust responsibility'', the courts have defined the United States'
responsibilities as being similar to ``how a prudent person would
manage their own resources''. Basically, this means that if the BIA or
another agency, or their employees would not in their course of doing
business destroy, diminish the value of or otherwise improperly use
their own assets, then neither should they do so with tribal or
individual Indian resources and funds that they are charged with
overseeing.
Interior Secretary Norton recently announced a proposal to reform
the manner in which the Department of the Interior manages trust assets
that are being held for the benefit of individual Indians and Indian
tribes. The Secretary's proposal includes the establishment of a new
Assistant Secretary for Trust Assets Management and the transfer of all
activities presently being managed by the BIA to this new bureau.
Obviously, undertaking the process of developing a new bureau within
any Federal agency will be expensive, time consuming, difficult to
staff and ``carving out'trust related functions from the existing BIA
offices may prove to be a quite complex undertaking. Furthermore, the
Self-Governance tribes believe that other options should also be
considered that will accomplish the same level, if not more, of the
intended objectives outlined for the trust reorganization proposal.
Therefore, the Self-Governance Tribes offer the following approaches to
addressing the Department's trust reform concerns:
BITAM--WHAT IS IT?--SCENARIOS A & B--APPENDIX 1.
In November, 2001, Secretary Norton proposed a plan to create a new
Bureau of Indian Trust Asset Management (BITAM). The proposal is
reported to be an effort to transfer all trust related functions
presently being carried out by the BIA to the new BITAM agency. Since
the announcement of the BITAM proposal, Tribal leaders have also been
asked to comment of the plan, which is yet to be defined or explained
with any level of detail. Without anything to analyze, input on the
BITAM proposal seems fruitless. Therefore, in an effort to provide
constructive analysis of the concept, Appendix 1 attached hereto
contains Scenarios A and B of what BITAM could be. Each scenario also
contains an impact analysis of the concepts outlined therein. These
scenarios also provide a baseline proposal from which alternatives can
be analyzed.
INDIAN TRUST VS. COMMON TRUST.
Since development of the Trust Management Improvement Project, an
issue at the heart of the trust reform effort has been how to establish
a process that integrates both the common law principles of financial
management with the unique and fundamental principles of Indian trust
law. Within the arena of management of Indian affairs today, both
common law and Indian trust law principles are critical and necessary
parts of successful implementation of any trust reform plan. Under
common law standards, courts have ruled that the U.S. must manage trust
assets and financial accounts in a prudent manner as if an official
were to be managing their own assets and accounts. This is an essential
and fundamental part of the U.S.'' management of tribal and individual
financial accounts. Obviously, the courts would hold the U.S. liable if
they were to manage tribal and individual Indian accounts in a manner
that is not consistent with banking industry standards. However, when
dealing with the management of tribal and individual Indian trust asset
management, the emphasis naturally must shift to employing the
fundamental principles of Indian trust law.
Under Indian trust law principles, tribal and individual Indians
must be an integral part of both setting standards and carrying out the
management activities related to their trust assets. In fact, without
such direct involvement, the legal and political framework of tribal
self-government and the U.S/Tribal government-to-government
relationship is rendered meaningless. It has been consistently upheld
in case law and Congressional and Administration policy that one of the
most fundamentally important inherent principles of tribal self-
government is for tribes to be able to exercise authority to plan and
administer activities related to their territorial jurisdiction,
including being directly involved with the management of their trust
assets. A similar inherent authority is retained by individual Indians
that are the owners of trust assets that were acquired under the
authority of the General Allotment Act.
Therefore, any trust reform effort of the U.S. must necessarily
integrate the principles of both common law and Indian trust law if it
is to be successful. Anything less will result in reversing more than
200 years of laws, policies and principles upon which the U.S./Tribal
government-to-government relationship is based.
PART I
TRIBAL SELF-GOVERNANCE TRUST REFORM PROPOSAL
IMPROVEMENTS IN TRIBAL/FEDERAL RELATIONS AND TRUST ASSET MANAGEMENT
UNDER SELF-GOVERNANCE AND SELF-DETERMINATION.
The Indian Self-Determination Act was inspired from tribal
dissatisfaction of the Federal Government's management of Indian
affairs. Following decades of Federal agencies disregarding tribal
concerns and priorities regarding the management of their treaty-
protected properties, resources, and other Indian programs, in 1974,
Congress enacted the first Indian Self-Determination and Education
Assistance Act. The Act was designed to establish legal contracting
obligations on Federal agencies charged with carrying out Indian
functions to contract with interested tribal governments and transfer
those functions to tribes to carry out. The Act also allowed the Tribal
Governments to plan, prioritize and administer many of the programs to
which their members were the intended beneficiaries. Throughout the
years, the provisions contained in the Act has been expanded and to
where today, most Indian programs of the BIA and IHS are being carried
out by tribes under Self-Governance compacts and 638 contracts. In
effect, the Indian Self-Determination Act have been always been in the
forefront of federal trust reform efforts and have been demonstrated to
be possibly the most cost effective and efficient means for the Federal
Government to carry out functions that benefit Indians.
Self-Governance and Self-Determination Acts has resulted in broad
Tribal assumption of trust-related programs from the BIA under the
Tribal for more than the last decade. One of the most fundamental basis
for these efforts is to design an evolving process whereby the Tribes
could continue to assume and carry out trust related activities with
the greatest degree of flexibility at the reservation level while, at
the same time, the Federal Government could effectively carry out its
fiduciary trust obligations to tribes and individual Indians that are
required under treaties, agreements, statutes and regulations.
Under Self-Governance and Self-Determination agreements, tribes
have become integral parts of the federal system to fulfil the U.S.''
fiduciary and legal obligations to Indian Tribes. It is most unlikely
that any federal trust reform efforts will ever be successful unless
they fully incorporate the philosophies and ideals of the Tribes and
individual Indians, the true intended beneficiaries of the Federal/
Indian relationship. Anything less that full integration of Self-
Governance and Self-Determination objectives in trust reform will
simply not be consistent with the government-to-government relationship
between Indian tribes and the U.S., upon which the trust
responsibilities are based.
SELF-GOVERNANCE/FEDERAL AGENCY STRUCTURE.
An important part of the Self-Governance Act is the ability of
tribes to negotiate with Federal agencies for the transfer of all non-
Inherent Federal Functions to tribal agreements. This provision has
served as a very useful means for tribes and Federal agencies to
establish positive working relationships at both the reservation and
agency levels. Under Self-Governance, many tribes have assumed broad
trust and not-trust functions, which in turn has transferred most of
the program administrative functions to tribal governments. In other
cases, tribes have agreed to leave functions to be carried out by the
agency. In all cases, Self-Governance has created a method for tribes
and federal agencies to establish meaningful working relationships,
including for activities involving trust resources and other programs,
including the ability for tribes to negotiate to determine the
administrative level that the agency will use to carry out various
federally-retained functions.
A part of the Federal/Tribal working relationships include
developing agreements on how trust transactions are processed, the
types of supporting records that will be required to complete a trust
transaction, how a trust activity will be monitored, and how annual
trust evaluations will be carried out. Since Self-Governance was
implemented in 1990, not a single unresolved trust problems within any
trust programs assumed by a Self-Governance tribe has been identified.
Further, the number of breach of trust complaints against the U.S. by
Self-Governance tribes and those of individual Indians that associated
with Self-Governance tribes has been significantly reduced since Self-
Governance was initiated in 1990.
Therefore, the ability of Federal agencies and tribes to resolve
longstanding trust management concerns has been significantly
strengthened under the Tribal Self-Governance Act. In addition, even
though tribes have assumed responsibilities for trust programs as a
lower funding level that was even utilized by the BIA when they
administered the trust program, Self-Governance has demonstrated the
dedicated commitment of tribes to address difficult and complex trust
issues by the Act's authority to consolidate, redesign and prioritize
programs activities to address the needs and concerns of the true
beneficiaries of the trust functions at the reservation level.
TRUST MANAGEMENT STANDARDS.
There can be no ``one size fits all'' approach to management of
trust assets around the Country because each tribe may have a number of
individual issues, concerns or trust obligations that must be address
in carrying out trust transactions. For example, Douglas Fir timber may
have one monetary value on one reservation because a tribe has a
sawmill and will recover a higher return on sales after processing,
while another tribe may not and seeks only the highest monetary return
on the logs being sold. Another example may be that a tribe may allow
the use of tribal lands for land leases to members for virtually no
monetary return while still requiring nonmembers to pay fair market
commercial value for a lease. Each of these trust transactions can
create a federally-managed trust account which has a specific monetary
return based on a tribally-defined ``beneficial use'' for each trust
asset.
Under Self-Governance, the Tribe and BIA can develop agreements
whereby the management standards for trust assets can accommodate both
the requirements of 25 C.F.R. or other appropriate Federal statutes and
regulations. As a result, each tribe, as beneficiary of the trust
relationship can work with the BIA to develop trust management
standards on a resource-by-resource basis that will also be used in
approving trust transactions. In cases where tribal management
standards have not been developed, a tribe and BIA utilize applicable
federal standards for trust transactions. In the event of a potential
conflict between tribal and federal trust management standards, the
tribe and BIA meet to develop mutually-acceptable methods for resolving
the conflict. In areas where ongoing statutory and regulatory concerns
may be required, such as compliance with the Endangered Species Act and
Clean Water Act, both Self-Governance tribes and the BIA work with
other tribes to develop mutually-acceptable management standards that
are applicable to each effected trust transaction.
TRUST RECORD KEEPING.
Under Self-Governance, tribes carry out many governmental functions
in addition to those that are required for BIA trust transactions.
Therefore, all records developed by a tribe that are not needed for BIA
approval of a trust transaction are the property of the Tribe. However,
all documents developed and submitted by the Tribe for BIA approval of
a trust transaction become the property of the BIA and recorded on the
title, as appropriate. Under Self-Governance, it is the responsibility
of the BIA to ensure that all records necessary to approve and monitor
a trust transaction are secured and maintained by the BIA. Under this
arrangement, the Tribe is free to developed internal centralized files
for BIA and non-BIA activities, while also providing the BIA with the
necessary records to ensure its trust obligations to the tribe and
individual Indians are carried out. Under Self-Governance, the
responsibility to approve all trust transactions is maintained with the
BIA, as required by the Self-Governance Act.
TRUST FINANCIAL ACCOUNTING.
Self-Governance tribes and the BIA continue to work cooperatively
with the Office of Trust Funds Management (OTFM) in the financial
accounting of all trust transactions, however, it is necessary for OTFM
expand its activities to include program experts who will provide
oversight in the programmatic accounting of all trust accounts. It will
be the responsibility of OTFM to work with the BIA and appropriate
Self-Governance tribes to ensure that all necessary documents are
provided to assure the proper accountability of trust transactions.
There is a need for OTFM, the BIA and tribes to work out procedures
to ensure that proper and efficient management or trust transactions
and their resultant trust financial accounts are reconcilable. Self-
Governance tribes believe this is best worked out during the typical
negotiations between the Tribe and BIA. For example, if a tribe
compacts an OTFM activity, then that tribe would be required to develop
and maintain the required internal procedures and checks and balances
that are required in its Self-Governance agreement. Monitoring of this
requirement can be incorporated into the annual trust evaluation
process that is required by the Self-Governance Act.
SUMMARY.
There are many reasons that led to the situation that the Federal
Government finds itself in today in the Cobell litigation, many of
which stem from the inherent problems that exist solely within the
confines of its own infrastructure. Attempts to simply move the same or
similar functions from one office to another, or from one agency to
another, quite often do not achieve the intended results. Furthermore,
no agency shuffling efforts result in creating one of the greatest
tools necessary to guarantee success, which is establishing a vested
interests in the activity to be performed. However, it is ``tribal
vested interest'' that has been the fuel that has made Self-Governance
both successful and effective in addressing longstanding problems that
the Federal Government has experienced in managing Indian programs for
over 200 years. Likewise, Tribal Self-Governance is the fuel that is
necessary to make trust reform both successful and effective in the
future.
PART II
SELF-GOVERNANCE TRUST REFORM IMPLEMENTATION AND ORGANIZATION PLAN
The following contains detailed proposals and organizational
structures, as well as their supporting justifications, for
implementing trust reform activities within the Department of the
Interior.
FOUR COBELL BREACHES.
The Cobell Court has identified the following four breaches of the
Courts Orders, as described by the BIA Regional Director:
Reorganization Advisory Group (Memorandum of 12-12-01)
A. The Secretary has no written plan to gather missing data;
B. The Secretary has no written plan for the retention of IIM trust
documents;
C. The secretary has no written architecture plan; and
D. The Secretary has no written plan addressing the staffing of
trust functions.
INTERIOR AGENCIES INVOLVED IN TRUST REFORM AND THEIR PURPOSE.
The following are brief descriptions of Interior agencies that are
involved in trust reform and their purposes:
1. Office of Special Trustee. The Office of Special Trustee (OST)
was established under Title III of P.L. 103-412, the American Indian
Trust Fund Management Reform Act of 1984. Under Section 302 (c) of the
Act, OST is designed as a temporary agency that is to be phased out
after the components of trust reform are developed and implemented.
Under the Act, OST is to provide oversight and coordination of trust
reform activities which are being carried out by the Bureau of Indian
Affairs, Bureau of Land Management and Mineral Management Services.
2. Bureau of Indian Affairs. The BIA is one of the primary agencies
of the Federal Government that is empowered to specifically carry out
the U.S.'' trust obligations to Indian tribes and individual Indians,
which includes those associated with both trust resources and other
legal obligations. The BIA, through Regional, Agency and Sub-Agency
offices work with Indian tribes and individual Indians to implement the
U.S. obligations that are protected by treaties, Executive orders and
federal statutes.
3. Office of Self-Governance. The Office of Self-Governance is
charged with implementation of the Tribal Self-Governance Act, P.L.103-
413, the Tribal Self-Governance Act, as amended. The OSG typically
functions in an oversight role ov er Tribal/Federal Self-Governance
negotiations and is responsible for implemented Self-Governance
agreements once the are completed.
AUTHORITY OF P.L. 103-412 TO RESTRUCTURE THE BIA.
Questions have arisen about whether implementation of federal trust
reform measures require the creation of a new trust agency within the
Federal Government. This Implementation and Organization Plan is based
in part on provisions contained in P.L. 103-412 that specifically
provides that improvements are to be made in the systems of the Bureau
of Indian Affairs and other Interior agencies. Relevant parts of the
Act relating to improvements in the BIA trust-related systems are as
follows:
Sec. 202(a)--...held in trust by the United States and managed by
the Secretary through the Bureau [of Indian Affairs].
Sec. 202(b)--...the Director of Office of Trust Funds Management
within the Bureau [of Indian Affairs].
Sec.301(2)--...and that reforms of policies, practices, procedures
and systems of the Bureau [of Indian Affairs]...
Sec.303(a)(2)(A)--Identification of all reform to the policies,
procedures, practices, and systems of the Department, the Bureau [of
Indian Affairs]...
Sec. 303(b)(1)--The Special Trustee shall oversee all reform
efforts within the Bureau [of Indian Affairs]...
Sec. 303(b)(2)(A)--...trust accounts to ensure that the Bureau [of
Indian Affairs]...
Sec. 303(b)(2)(B)--The Special Trustee shall ensure that the Bureau
[of Indian Affairs]...
Sec. 303(b)(2)(C)--The Special Trustee shall ensure that the Bureau
[of Indian Affairs]...
Sec. 303 (c)(1)(A)--...the policies, procedures, practices, and
systems of the Bureau [of Indian Affairs]...
Sec. 303 (c)(2)--The Special Trustee shall ensure that the Bureau
[of Indian Affairs]...
Sec. 303 (c)(3)--...and that they are adequate to support the trust
funds investment needs of the Bureau [of Indian Affairs].
Sec. 303 (c)(4)(A)--...the land records system of the Bureau [of
Indian Affairs]...
Sec. 303 (c)(4)(B)--...interface with the appropriate asset
management and accounting systems of the Bureau [of Indian Affairs]...
Sec. 303 (c)(4)(B)(i)--...and disburse to the Bureau [of Indian
Affairs]...
Sec. 303 (c)(4)(B)(ii)--...the Bureau of Land Management and the
Bureau [of Indian Affairs]...
Sec. 303 (c)(5)(A)--...with the advice of program managers of each
office within the Bureau of Indian Affairs...
Sec. 303 (d)--...and in implementing reforms to Department, Bureau
[of Indian Affairs]...
Sec. 303 (f)--...each year on the progress of the Department,
Bureau [of Indian Affairs]...
ORGANIZATIONAL STRUCTURE.
Attached is a proposed organizational structure to implement trust
reform within the BIA and other Interior Agencies that is based on the
legal framework outlined in P.L. 103-412. The trust reform functional
components of the organization are briefly outlined as follows:
Chart--Bureau of Indian Affairs--Office Organization.
Office of Special Trustee. The Office of Special Trustee is
provided oversight capability, which is to be phased out once trust
reform is successfully completed. In addition, responsibility for
oversight of implementation of the the Cobell Court's four breaches has
been assigned to OST.
Assistant Secretary-Indian Affairs/Central Office. The Assistant
Secretary-Indian Affairs is also assigned responsibility of
implementing the Cobell Court's four breaches. A Division of Trust
Accounting (see separate chart) is incorporated as a subordinate office
of the Assistant Secretary-Indian Affairs so that direct oversight and
control can be assured over this new Division.
Regional/Agency Offices. Within each Regional Office, a new Deputy
Director of Trust management is established whose responsibilities
include implementation of trust reform at the Regional, Agency and Sub-
Agency levels, as well as responsibility to implement the four Cobell
Court breaches. As has been carried out by the Pacific Regional Office
for decades, the Regional Office Appraisal functions are under the
direct control and oversight of the Deputy Director of Trust
Management. This structure will ensure that the integrity of the
Appraisal Office is maintained by segregating their functions from
those of Real Estate Services. Also as contemplated in P.L. 103-412,
the Division of Trust Accounting (possibly a Regional Office
counterpart to OTFM) is made part of the responsibilities of the Deputy
Director of Trust Management. This structure will ensure that proper
and timely accounting and reconciliation of trust functions and trust
accounts takes is maintained.
Another important part of the proposed organizational structure if
the ability to coordinate, through the Regional Director, the functions
of both the Deputy Director of Indian Programs with those of the Deputy
Director of Trust Management. The objective of this structure is to
streamline the administrative functions of both offices so that
important BIA services, such as economic development and road
maintenance and construction, each of which must necessarily be
coordinated to be successful, has the greatest opportunity of providing
the intended benefits to Indian Country.
SINGLE ADMINISTRATIVE OFFICIAL RESPONSIBLE FOR TRUST REFORM.
In their critique of trust reform, EDS stated that significant
problems have been encountered in both developing the trust reform
measures and implementing them because there has not been a single
authority charged with trust reform improvements. While this has been a
problem within the BIA for years, it has been compounded with the
creation of the Office of Special Trustee under P.L. 103-412 in 1994.
Since then, trust management has in effect been divided between two
separate agencies. This Self-Governance proposal addresses this
problems, consistent with the provisions of P.L. 103-412 by
establishing a clear line of authority from the Secretary of the
Interior, through the Assistant Secretary of Indian Affairs, the BIA
Regional Directors and to the Deputy Regional Director for Trust
Management. The Deputy Regional Director for Trust management is
directly responsible for the actions of all Regional, Agency and
Subagency personnel. Under this streamlined structure, an
understandable process is established whereby each progressive line of
authority can monitor and evaluate the actions of their subordinate
official (See attached organizational charts).
MECHANISM TO ESTABLISH TRUST VALUATION STANDARDS.
Important events always lead up to the filing of breach of trust
cases against the U.S. by Indian tribes and individual Indians. Also,
systems such as TAAMS and federal trust record keeping systems are less
useful if they do not also contain information that helps all parties
concerned to understand the reasons why various components were
included, or not included in a specific trust transaction. Again, many
of these ``unknowns'' can result in a breach of trust claim against the
U.S.
To address this situation, the Department of the Interior, through
the BIA Regional Office structure, should develop a plan to work with
tribes and individuals to establish formal management standards for
each trust asset and money account. This process would entail
conducting an inventory of all trust assets and accounts that would
need to be managed under these standards. Each BIA Regional office
would be charged with the responsibility to work with each tribe and
individual Indian owner to establish formal management standards for
those resources and assets.
For areas where the BIA and Tribe/individual Indian do not develop
formal management standards, the BIA shall only process a trust
transaction under the control of an ``Informed Decision Process'' (IDP.
The IDP would consist of a checklist of required questions that must be
affirmatively answered before the BIA can proceed with completing a
trust transaction. The questions would include such things as, was the
owner informed of the resource value, does the owner agree with the
values included in the trust transaction and were any difference
explained, were they provided copies of support documentation
(appraisals, timber cruises, gas and oil estimates, market values,
etc). The IDP documentation will be made part of the BIA decision
making process for the trust transaction.
Timefames and funding will be provided to the BIA and tribes/
individual Indians to complete this process.
RECONCILIATION OF TRUST ACCOUNTS.
Questions continue to be raised regarding how the U.S. will
reconcile the trust accounts held by the Federal Government with the
trust transaction that crated the account, then ultimately reach
agreement with the tribe or individual owner(s) of the account.
To address this, the Department of the Interior should sponsor
legislation that would allow an individual tribe or Indian account
holder to select an option for conducting an accounting. These options
could include:
a. LA transaction-by-transaction accounting;
b. LA random accounting of selected accounts; or
c. LA process for selecting existing accounting information.
Each option have specific timeframes and costs assigned. Under the
accounting process, the BIA and tribe/individual Indian could negotiate
how the accounting process would be completed, including the option for
tribes to contract/compact that function.
Once the accounting is completed, either the Federal Government or
tribe/individual Indian could contest the accounting results in a forum
established for that purpose.
PROS AND CONS OF PROPOSAL.
Pros:
More timely and less expensive to implement
Has broad support among Tribal and the BIA
Doesn't require federal employee union or GSA involvement
to implement
Is consistent with both the Trust Reform Act and Tribal
Self-Governance/Self-Determination
Facilitates resolution of potential conflicts between
Tribal and Federal trust asset management standards which led to Cobell
and other breach of trust cases
Responds to the Cobell Court issues in a timely manner
Does not require a second restructuring plan for BIA
retained function that would follow BITAM implementation
Integrates Tribal and BIA directly into Federal trust
reform efforts
Cons:
Does not address perceptions that BIA cannot do the job
Requires legislation to implement Cobell related
reconciliation issues
Will require re-integration of OST functions back into
BIA structure
Reconciliation process would require added work to
resolve Federal/Tribal/individual Indian reconciliation related issues
APPENDIX NO. 1
BITAM--WHAT IS IT?--SCENARIOS A & B..
In November, 2001, Secretary Norton proposed a plan to create a new
Bureau of Indian Trust Asset Management (BITAM). The proposal is
reported to be an effort to transfer all trust related functions
presently being carried out by the BIA to the new BITAM agency. Since
the announcement of the BITAM proposal, Tribal leaders have also been
asked to comment of the plan, which is yet to be defined or explained
with any level of detail. Without anything to analyze, input on the
BITAM proposal seems fruitless. Therefore, in an effort to provide
constructive analysis of the concept, Appendix 1 attached hereto
contains Scenarios A and B of what BITAM could be. Each scenario also
contains an impact analysis of the concepts outlined therein. These
scenarios also provide a baseline proposal from which alternatives can
be analyzed
BITAM ORGANIZATION--SCENARIO A
Assumption.
A. LThat the BIA consists of approximately 50% trust asset related
activities and 50% other programs.
B. LThat all trust-related staff of the BIA personnel of the
Central, Regional, Agency, and Field Offices will be physically
relocated and reassigned to BITAM.
C. LThat there will be established a comparable (mirror) structure
under BITAM as existed under the BIA.
Implementation Impacts.
1. LEmployee related impacts- Existing BIA trust related employees
would need to be offered a job at the BITAM office at a different
location. For employees who choose not be relocate, there would have to
be severance pay provided. For each BIA employee who did not relocate,
a new employee would have to be hired and trained. This scenario would
entail working with the federal employee union and effected employees
to implement. All administrative manuals of the BIA would need to be
revised.
2. LFacilities and equipment impacts: Before the BITAM could be
implemented, the General Services Administration would need to
negotiate and enter into a facilities agreement for the Agency. At
least 2 options could be involved, including:
a. LEstablishing BITAM offices in each pervious BIA location.
This concept would entail ``duplicating'' the BIA offices and
staff in each of the separate Central, Regional, Agency and
Subagency locations. In addition to office space negotiations
and agreement, this concept would require that office equipment
and other support functions also be relocated and/or
purchased.. Also, there would be a need to remove all trust
related files, records and manuals from the BIA to be relocated
to the new BITAM offices; or
b. LConsolidate BITAM offices in locations different from the
BIA offices. This concept would probably require all of the
activities identified in ``a'' above, but would also require
significant additional consultation with tribes and BIA
employees regarding where and how to select the locations for
the new BITAM consolidated offices.
Implementation Timeframes Impacts.
Scenario A will likely take the longest amount of time and will be
the most costly to implement. This scenario will likely take more that
a year, even under the best of circumstances, to implement (assuming
that tribes and the Congress give up their objections to BITAM). Given
the pressures of the Cobell Court for Secretary Norton and Assistant
Secretary McCaleb to get something done, this scenario will not meet
the needs of DOI.
BITAM ORGANIZATION--SCENARIO B
Assumption.
1. LThat the BIA consists of approximately 50% trust asset related
activities and 50% other Indian programs.
2. LThat all trust-related staff of the BIA personnel of the
Central, Regional, Agency, and Field Offices will be retained in the
existing BIA offices but reassigned to BITAM.
3. LThat there will be established a comparable (mirror) structure
under BITAM as existed under the BIA.
Implementation Impacts.
A. LEmployee related impacts- Existing BIA trust related employees
would need to be offered a job in the BITAM offices. For employees who
choose not be reassigned, there would have to be severance pay
provided. For each BIA employee who did not agree to be reassigned, a
new employee would have to be hired and trained. This scenario would
entail working with the federal employee union and effected employees
to implement. Additionally, it is conceivable that each of the Central,
Regional, Agency and Subagency offices will need to hire separate BITAM
department heads, regional directors, agency superintendents and
subagency directors in order to effect a ``separation'' of BIA
functions from those of BITAM. One must assume that this action must be
undertaken in each of the 12 Regional, 58 Agency, 1 Subagency, 28 Field
Station and 3 Irrigation Project Offices, which would probably require
around 125 new federal positions.
b. LFacilities and equipment impacts: Under Scenario B, it is
assumed that the same BIA offices will be utilized for BITAM, however,
it is probable that some equipment that is presently being shared
within BIA offices will have to be replaced in order to physically
separate the different agency functions. All existing administrative
manuals of the BIA would need to be revised to separate the trust-
related functions from the BIA. Supervision of BIA vs. BITAM personnel
would be interesting because ``co-mingled staff'' would be working for
completely different agencies. At least conceptually, there may have to
be ``green'' doors and lines on the floor for BITAM personnel and
``red'' door and lines on the floor for other Indian program staff.
Also, there would be a need to move all trust related files, records
and manuals from the BIA to the new BITAM offices.
Implementation Timeframes Impacts.
Scenario B will be easier to implement that Scenario A, but is
still required hiring a significant number of new BITAM and other
support needs. Because of the increased implementation costs, it is
unlikely that this concept can be implemented in less than a year. In
both Scenarios A and B, the most limiting factor that will negatively
impact the implementation schedule will be finding personnel who are
familiar with Indian trust and related requirements. The difficulties
in implementing Scenario B is also likely to strain the patience of the
Cobell Court.
______
[A letter submitted for the record by the Mille Lacs Band
of Ojibwe follows:]
[GRAPHIC] [TIFF OMITTED] T7526.034
[GRAPHIC] [TIFF OMITTED] T7526.035
[A resolution submitted for the record by the Montana
Wyoming Tribal Council Leaders follows:]
[GRAPHIC] [TIFF OMITTED] T7526.026
[GRAPHIC] [TIFF OMITTED] T7526.027
[A statement submitted for the record by the Nez Perce
Tribe follows:]
Position of the Nez Perce Tribe Opposing Transfer of Trust Asset
Management Responsibilities to the ``Bureau of Indian Trust Asset
Management'' in the Absence of Tribal Consultation and a Comprehensive
Reorganization Plan
The Nez Perce Tribe has serious concerns with the decision of the
Department of the Interior to create a new federal agency, the Bureau
of Indian Trust Assets Management (BITAM), and remove certain trust
responsibilities from the Bureau of Indian Affairs (BIA). To strip the
BIA of its core trust responsibilities and transfer them to an entirely
new agency casts into doubt over 100 years of well-established Tribal-
federal policy.
Beginning with the passage of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. Sec. 450 et seq.) and subsequent
legislation, the United States government has repeatedly recognized the
need to work closely with Tribes on a government-to-government basis
and to support tribal self-determination and self-governance. In 1968,
President Lyndon B. Johnson stated that ``Indian must have a voice in
making the plans and decisions in programs important to their daily
lives,'' so that the relationship between Tribes and the federal
government would be one of the ``full partnership--not dependency.''
Two years later, President Richard Nixon reaffirmed this policy stating
that ``the time has come . . . for a new era in which the Indian future
is determined by Indian acts and Indian decisions. After similar
statements from Presidents Regan and Bush, this process culminated with
Executive Order 13175 which required all federal agencies to consult
with Tribes prior to formulating and implementing policies or other
actions which may have a substantial affect on a Tribe or tribal
resources. In a letter sent to the Nez Perce Tribe in August 2000,
then-Governor George W. Bush recognized and reaffirmed the unique
government-to-government relationship that exists between our two
sovereign nations and promised to work with Tribes to strengthen the
federal trust relationship.
Despite these mandates and promises, and in violation of the
consultation Executive Order, Secretary Norton released a decision to
reorganize the BIA without prior consultation between the Department of
the Interior and Indian Tribes. The failure of the Department to
consult with Tribes prior to announcing this decision represents a
complete abdication of the federal trust responsibility and a refusal
to abide by the unique government-to-government relationship that
exists between Tribes and the federal government. As the primary agency
dealing with Tribes on a daily basis, any BIA reorganization plan will
immediately impact Tribes. Considering that the proposed reorganization
will remove a core group of BIA's trust responsibilities, the need for
early, meaningful consultation could not be greater. For Tribes to find
out about this reorganization through the Washington Post is simply
unacceptable. Moreover, the decision to reorganize was made without
input from BIA regional management, further undermining the
reorganization proposal. Consultation is not a process you endure
before moving forward with predetermined plans.
The proposed reorganization will not, in itself, solve the numerous
problems of trust reform. The proposal, as outlined to date, is vague
and incomplete, and raises more questions than answers as to the future
of trust reform and the tribal-federal relationship. These are complex
problems which require well-reasoned thoughtful plans. Absent
consultation with affected parties, the proposed action by the
Department will fail to resolve the problems with Individual Indian
Money (IIM) accounts.
The Nez Perce Tribe, nearly two months after the decision to
reorganize the BIA was announced without regard to the dramatic impact
the reorganization would have on trust asset management and the entire
trust relationship itself, has neither received any detailed
substantive information about the proposed reorganization, nor any
guarantees that, like the BIA, the BITAM will honor the government-to-
government relationship, Indian preference, or other fundamental
principles of Indian self-determination. In order to obtain additional
information, the Nez Perce Tribe recently filed a Freedom of
Information Act request with the Office of the Secretary and the BIA to
obtain any documents describing the process and procedure for trust
reform and BIA reorganization. The Nez Perce Tribe strongly believes
that the reorganization effort cannot go forward until all Tribes have
participated in meaningful consultation to develop a comprehensive plan
for trust reform, including clear policies, procedures, and controls.
It is widely known that the BIA has grossly mismanaged tribal trust
assets since the inception of the Bureau. It is clear that the
Secretary of the Interior is faced with a mandate from Congress, dating
back to the 1994 Indian Trust Reform Act, to clean up the accounting
and management systems of Indian trust accounts. It is also clear from
the Cobell v. Norton litigation that the Secretary has failed to meet
the mandates that Congress established for her. In fact, the report
contracted for by DOI from EDS which serves as the basis for the trust
reform proposal freely admits these failures. Without a doubt, a
comprehensive, sweeping response is needed; however, the proposed
reorganization of the BIA is not the answer.
The proposed reorganization of the BIA will profoundly effect the
BIA's management of 54 million acres of Indian lands, the
administration of trust funds derived from those lands, and nearly
every aspect of economic development and land management within Indian
Country. The Nez Perce Tribe is greatly concerned this proposal is
simply repeating the failures of many past trust reform efforts by
providing a short-term cosmetic fix to a much more serious problem.
Trust reform must not come as a response to court imposed deadlines or
Congressional inquiries. Trust reform must be based on a long-term,
well-reasoned plan, complete with comprehensive policies, procedures,
and guidelines which will truly reform the trust management system.
Without this type of proposal, the scheduled consultation meetings are
no more than initial scoping meeting which does not and cannot qualify
as meaningful consultation. A good faith effort must be made to include
Tribes and IIM account holders in the reform effort.
Creating a new agency does not create trust reform. The proposal to
create the BITAM would strip a majority of the BIA's trust
responsibilities, leaving the Bureau to function as a social service
agency. The responsibility for billions of dollars of trust assets
would be handed over to a new office, with no congressional
authorization, no appropriations, and at present, no support from
Tribes. The same understaffed and undertrained employees will not be
able do for BITAM what they could not do for the BIA. Moreover, a
proposal to artificially divide ``trust'' from ``services'' is simply
unworkable. While it is often criticized, the BIA is only voice for
Indian issues in the Executive Branch, and is critical to the
functioning of our government-to-government relationship. Stripping the
BIA of trust responsibilities would de-emphasize the importance of
these relationships.
The proposal is also too broad and unmanageable. The reorganization
plan goes far beyond the situation in Cobell where solely Individual
Indian Money accounts are involved. The proposed formation of BITAM
goes decidedly beyond the management of funds at issue in the trust
fund litigation to reach all trust assets, including those belonging
solely to tribal governments. If the BIA cannot properly manage the
accounts that were under their control, what makes the Secretary
believe that the BITAM can take on an even greater responsibility--one
that should rest with the Tribes that control those resources. Trust
reform must focus solely on the four trust breaches identified by the
Cobell court.
Over the past twelve years, the Department of the Interior has paid
more than a billion dollars on judgments and settlements for its
repeated failures to protect and properly manage trust assets. The
costs of continued failure will far outweigh the costs of finally
fixing the system. Trust reform must cease to be reactive. Therefore,
the Nez Perce Tribe also opposes any reprogramming of monies within the
fiscal year 2002 BIA budget to fund the proposed BITAM until Congress
and Tribes have had an opportunity to review the final trust reform
proposal. Funneling monies will not provide accountability and will
only threaten those programs which remain under BIA oversight.
The future of trust management must include increased protection
and tribal control over Indian lands and resources, and a federal
system that provides technical assistance and trust oversight--not
additional federal bureaucracy. This system, driven by self-
determination rather than a paternalistic regime, must meet the unique
needs of individual Tribes in each part of the country. The role of the
federal government as trustee is to protect the long tern viability of
tribal lands and resources and to ensure that any action is consistent
with tribal control and tribal needs. The current BIA reorganization
plan encompasses none of these goals.
The Nez Perce Tribe is not opposed to trust reform. In fact, the
Tribe strongly supports the need to make major changes to the trust
asset management system. However, Secretary Norton's plan is not the
answer. Therefore, the Nez Perce Tribe urges the Department of the
Interior to withdraw the proposed reorganization plan until full
meaningful consultation has occurred with Tribes and urges Secretary
Norton to redefine the goals of trust reform to better meet the needs
of Tribes and Indian people without sacrificing the federal trust
relationship.
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[A position statement submitted for the record by the
Tribal Chairmen follows:]
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TRUST REFORM COMMENTS AND RECOMMENDATIONS BY THE CHIPPEWA CREE TRIBE
presented by
alvin windy boy, sr., chairman
on behalf of the chippewa cree tribe of the rocky boy's reservation
tribal consultation on indian trust asset management
february 1, 2002
washington, d.c.
I. INTRODUCTION
Trust reform is nothing new for Indian Country. This is
particularly true for Self-Governance tribes since our efforts began
with our frustration of the BIA's mismanagement with carrying out
Bureau programs on our respective reservations. The Chippewa Cree Tribe
supports trust reform, however tribes need to play a substantial part
in defining, developing and delivering any meaningful attempt at trust
reform within the Bureau of Indian Affairs (BIA).
We believe the first thing we need to do is not buy into this
``divide and conquer'' mentality of the current administration. We need
to strategize with our friends in Congress to slow this ``court-
driven'' trust reform effort by the current administration and
strategize with our legal people so that the Cobell litigation cannot
be used by the Department as this driving force for their trust reform
efforts. In order to do this we need to operate on parallel tracks and
continue with the trust reform efforts which are currently incomplete:
1. CONGRESSIONAL INTERVENTION
1. House Resource Hearing (2/6/02)
2. Senate Indian Affairs Committee Hearing (2/26/02)
3. Legislative initiative:
a. trust reform legislation
b. Lappropriations rider to prohibit DOI fiscal year 2002
or 2003 funds to be used for the BITAM proposal
2. LEGAL INTERVENTION
1. LTribal Leaders Task Force file a statement or notice to
Judge Lamberth regarding the Task Force's support of the
litigation and concerns with the DOI's proposed reorganization
plan and its potential impacts on tribal trust reform
2. Amicus brief in Cobell litigation; and
3. Tribal trust mismanagement lawsuits
3. LDEVELOPMENT OF A TRIBALLY-DRIVEN TRUST RESOURCE AND ASSET
MANAGEMENT REFORM PLAN
II. KEY ISSUES IN TRUST REFORM
The Chippewa Cree Tribe supports trust reform, however tribes need
to play a substantial part in defining, developing and delivering any
meaningful attempt at trust reform within the Federal Government, in
particular within the Department of the Interior (DOI), Bureau of
Indian Affairs (BIA). As such, we need to ask ourselves two (2) very
important basic questions:
a. WHAT IS TRUST REFORM?
i. LTrust reform concerns both TRIBAL TRUST RESOURCES AND
TRIBAL TRUST ASSETS and the reform is the management of the
trust resources and trust assets by the FEDERAL GOVERNMENT
(DOI) and the TRIBES.
ii. LAnd within TRIBAL TRUST RESOURCES AND TRUST ASSETS are
INDIVIDUAL TRUST RESOURCES AND TRUST ASSETS and the reform is
the management of the individual trust resources and trust
assets by the DOI and the Tribes.
iii. LTrust reform will concern many aspects in the management
of both tribal trust and individual trust resources and assets.
The key will be to reconcile the roles of DOI and the TRIBES in
the management of the trust resources and assets while taking
into consideration the INDIVIDUAL'S interest in context of the
larger tribal interests.
iv. LA key issue will be reconciling the roles of the FEDERAL
GOVERNMENT (DOI), The TRIBAL GOVERNMENT (TRIBES) and the
INDIVIDUALS in the management of the trust resources and
assets. Our tribe is not an allotted reservation so we do not
have many of the issues other allotted reservations have,
however we do have IIM accounts for our people as well as the
Tribe.
v. LWe believe that key to successful trust reform will be
between the FEDERAL GOVERNMENT and the TRIBES. This is because
the TRIBES govern over the INDIVIDUAL trust resources and to a
limited extent over the management of the trust assets as well.
vi. LIn summary, tribal trust resources and assets are the
larger of the pie, if you will, containing approximately 89% of
the pie while individual trust resources and assets contain 11%
of the pie. We have a classic case of the tail wagging the dog,
so to speak, when INDIVIDUAL TRUST RESOURCE AND ASSET
MANAGEMENT is leading the charge as in the COBELL litigation.
This is fine and trust reform still needs to occur, however we
need to understand that trust reform must first occur at the
TRIBAL TRUST RESOURCE AND ASSET level.
1. LTribal trust resource and asset management (89%)
2. LIndividual trust resource and asset management (11%)
b. HOW DO WE ACHIEVE TRUST REFORM?
1. LOnce everybody is on the same page on what is trust reform,
then need to agree on a process to achieve trust reform. We
have seen many tribes and organizations propose organizational
structures and reform measures. This is great and we need to
incorporate all recommendations and other relevant information
into our process for trust reform.
i. LThe process as we understand is to work with the
Tribal Leader's Task Force and develop a trust reform plan
that is conducive to Indian Country's needs. And in order
to do this we need set the agenda and gather the necessary
information and technical resources.
ii. LRight now, the process is being driven by the
litigation. This is okay because sometimes litigation is
necessary to stimulate the parties to do something. In
fact, the litigation has brought all the interested parties
to the table to achieve trust reform because prior to this
DOI hired EDS to tell them how to achieve trust reform. Now
we have the necessary parties at the table and now we can
go forward and take EDS recommendations into consideration
with all the other relevant information and recommendations
as well.
iii. LNext, we need to gather and distribute all the
necessary information and recommendations from everyone
including:
a. LTreaties, statutes, agreements, and anything else which delineates a
trust responsibility or trust duty upon the federal government to the
tribes;
b. LTribal recommendations; and
c. LAll other DOI information such as HLIP (old and new), EDS reports and
any other relevant reform plans and initiatives.
III. COBELL V. NORTON--IIM TRUST MANAGEMENT REFORM
We agree with the Dear Tribal Leaders Letter, dated January 5, 2002
from the Native American Rights Fund (NARF) which expresses concerns
with the DOI proposed reorganization plan. Basically, the NARF letter
states that
``DOI's proposal to reorganize is not a good faith effort to
improve trust management, but rather a last minute and poorly
thought out attempt to convince the Court (Judge Royce C.
Lamberth) that appointment of a receiver to reform the IIM
trust in unnecessary.''
Unfortunately, the DOI's legal strategy is to conquer and divide
tribes over the IIM litigation. We agree that Tribes definitely have a
concern with the impact of the appointment of a receiver for the IIM
accounts and the trust reform efforts by the DOI in relation to IIM
trust resources and trust assets. However, we must keep in mind that
the Cobell litigation concerns issues related to IIM funds.
IV. DOI TRUST REFORM REPORTS
The Tribal Leaders Task Force should take the EDS reports under
advisement and consider how reliable they are and the separately
analyze issues reviewed by EDS. This will require EDS to present their
findings and recommendations to the Task Force and allow Task Force
members to ask questions in regards to the reports and outcomes by EDS.
In addition, the Task Force should consider other trust reform efforts
in the past such as the report generated by the 1990 BIA Reorganization
Task Force.
a. TAAMS & BIA DATA CLEANUP ASSESSMENT
b. TRUST REFORM ASSESSMENT
V. RECOMMENDATIONS TO INCLUDE IN TRIBAL TRUST REFORM EFFORTS
The Chippewa Cree Tribe recommends the following outline as a start
to true, meaningful trust reform of the BIA. We firmly believe that no
reorganization of the BIA can take place until we have reviewed all
previous trust reform efforts which have occurred in at least the last
ten (10) years and thoroughly evaluated the impacts of these efforts on
our trust resources and trust assets.
Here are our recommendations to include in the process of achieving
an alternative trust reform plan to present to the Secretary rather
than the overhaul of the BIA which is currently be proposed by the
Department.
A. LTRIBAL SOVEREIGNTY, SELF-GOVERNMENT AND TRUST
RESPONSIBILITY
1. LSECRETARY OF INDIAN AFFAIRS TO HAVE CABINET STATUS
2. LDELEGATION OF AUTHORITIES TO TRIBAL/AGENCY LEVEL
3. LNO REDUCTION OF CURRENT FUNDING LEVELS AND EXEMPTION OF
ANY BUDGET REDUCTIONS BY OMB
4. LANY SAVINGS DUE TO TRUST REFORM WHICH RESULT IN
REDUCTIONS TO EITHER CENTRAL OR REGIONAL OFFICES MUST BE
TRANSFERRED TO TRIBAL/AGENCY LEVEL
B. LORGANIZATIONAL REFORM
1. LRE-EVALUATE THE OFFICE OF SPECIAL TRUSTEE SINCE THE
OFFICE HAS BEEN INEFFECTIVE SINCE ITS INCEPTION
2. LRE-EVALUATE THE OFFICE OF TRUST FUNDS MANAGEMENT
3. LBRING AS MUCH RESOURCES AND RESPONSIBILITIES TO THE
TRIBE/REGION/AGENCY LEVEL
4. LCONSIDER MOU'S BETWEEN TRIBES AND BIA IN THE MANAGEMENT
OF TRIBAL TRUST RESOURCES AND TRUST ASSETS
C. LREGULATORY REFORM
1. LDEVELOP TRIBAL TRUST RESOURCE AND TRUST ASSET
MANAGEMENT STANDARDS
2. LFORMULATE TRIBAL TASK FORCE TO IDENTIFY TRUST FUNCTIONS
(INHERENT AND NON-INHERENT) AND FUNDING ASSOCIATED WITH
SPECIFIC TRUST FUNCTIONS
3. LIDENTIFY COMPACTABLE TRUST FUNCTIONS ASSOCIATED WITH
TRUST RESOURCE AND TRUST ASSET MANAGEMENT
4. LAPPROVE TITLE IV AMENDMENTS
D. LBUDGET REFORM
1. LCOMPLETE TRIBAL SHARES PROCESS INCLUDING CENTRAL OFFICE
SHARES
2. LTRIBAL MEANINGFUL PARTICIPATION IN BUDGET FORMULATION
3. LBUDGET REQUESTS BASED ON UNMET NEEDS
4. LEXEMPTION FROM MANDATORY BUDGET REDUCTIONS
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