[Senate Hearing 107-332] [From the U.S. Government Printing Office] S. Hrg. 107-332 MANAGEMENT OF INDIAN TRIBAL TRUST FUNDS ======================================================================= HEARING BEFORE THE COMMITTEE ON INDIAN AFFAIRS UNITED STATES SENATE ONE HUNDRED SEVENTH CONGRESS SECOND SESSION ON UNITED STATES'TRUST RELATIONSHIP WITH THE SOVEREIGN GOVERNMENTS OF INDIAN COUNTRY __________ FEBRUARY 26, 2002 WASHINGTON, DC U.S. GOVERNMENT PRINTING OFFICE 78-201 WASHINGTON : 2002 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON INDIAN AFFAIRS DANIEL K. INOUYE, Hawaii, Chairman BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman FRANK MURKOWSKI, Alaska KENT CONRAD, North Dakota JOHN McCAIN, Arizona, HARRY REID, Nevada PETE V. DOMENICI, New Mexico DANIEL K. AKAKA, Hawaii CRAIG THOMAS, Wyoming PAUL WELLSTONE, Minnesota ORRIN G. HATCH, Utah BYRON L. DORGAN, North Dakota JAMES M. INHOFE, Oklahoma TIM JOHNSON, South Dakota MARIA CANTWELL, Washington Patricia M. Zell, Majority Staff Director/Chief Counsel Paul Moorehead, Minority Staff Director/Chief Counsel (ii) C O N T E N T S ---------- Page Statements: Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, vice chairman, Committee on Indian Affairs................. 6 Cantwell, Hon. Maria, U.S. Senator from Washington........... 8 Cason, James, associate deputy secretary, Department of the Interior................................................... 28 Chambers, Reid, esquire, Sonosky, Chambers, Sachse, and Endreson................................................... 3 Endreson, Douglas, esquire, Sonosky, Chambers, Sachse, and Endreson................................................... 9 Gray, Don, esquire, Nixon, Peabody, LLP...................... 13 Hall, Tex, chairman, Three Affiliated Tribes of the Fort Berthold Reservation, and cochairman, Tribal Leaders Task Force on Trust Reform...................................... 42 Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman, Committee on Indian Affairs................................ 1 Marshall, Clifford Lyle, chairman, Hoopa Valley Tribal Council.................................................... 51 Martin, James T., executive director, United South and Eastern Tribes............................................. 59 Martin, William, first vice president, Central Council, Tlingit and Haida Indian Tribes of Alaska; and treasurer, Intertribal Monitoring Association on Indian Trust Funds... 66 McCaleb, Neal A., assistant secretary for Indian affairs, Department of the Interior................................. 31 Morishima, Gary, executive board member, Intertribal Timber Council.................................................... 56 Murkowski, Hon. Frank H., U.S. Senator from Alaska........... 26 Slonaker, Thomas, special trustee for American Indian trust funds, Office of the Special Trustee, Department of the Interior................................................... 33 Thomas, Edward K., president, Central Council of Tlingit and Haida Indian Tribes of Alaska.............................. 62 Appendix Prepared statements: Armenta, Vincent, chairman, Santa Ynez Band of Chumash Indians.................................................... 80 Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, vice chairman, Committee on Indian Affairs (with attachments)............................................... 69 Cantwell, Hon. Maria, U.S. Senator from Washington........... 285 Cason, James (with attachments).............................. 139 Chambers, Reid............................................... 86 Devers, Chris, chairman, Pauma-Yuima Band of Mission Indians. 83 Dorgan, Hon. Byron L., U.S. Senator from North Dakota........ 73 Endreson, Douglas............................................ 86 Gray, Don (with attachments)................................. 112 Hall, Tex.................................................... 164 Marshall, Clifford Lyle (with attachments)................... 174 Martin, James T. (with attachments).......................... 222 Martin, William.............................................. 254 McCaleb, Neal A. (with attachments).......................... 139 Morishima, Gary (with attachments)........................... 195 Navajo Nation (with attachments)............................. 261 Press, Daniel, counsel, Mandan Hidatsa and Arikara Nation (with attachments)......................................... 269 Slonaker, Thomas............................................. 78 Thomas, Hon. Craig, U.S. Senator from Wyoming................ 74 Thomas, Edward K............................................. 249 Williams, Susan M., attorney, Albuquerque, NM................ 74 Additional material submitted for the record: American Indian Trust Reform: The Challenge to Consenus, article by Gale Norton, Secretary of the Interior.......... 283 Blackfeet Nation, letters.................................... 279 MANAGEMENT OF INDIAN TRIBAL TRUST FUNDS ---------- TUESDAY, FEBRUARY 26, 2002 U.S. Senate, Committee on Indian Affairs, Washington, DC. The committee met, pursuant to notice, at 10:10 a.m. in room 106, Senate Dirksen Building, Hon. Daniel K. Inouye (chairman of the committee) presiding. Present: Senators Campbell, Cantwell, and Murkowski. STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS The Chairman. The committee will come to order. I want to welcome everyone to this hearing on the Federal Indian trust relationship and the management of Indian trust funds. The term ``trust'' is used in a variety of contexts. The U.S. Supreme Court has found that the treaties with Indian nations and the course of dealings between the United States and Indian tribal governments gives rise to the Federal Indian trust relationship. It is also commonly understood and accepted that the United States has assumed a trust responsibility for Indian lands and resources. There are trust functions performed by various agencies of the U.S. Government, and there are trust assets and trust resources and trust funds. These terms are sometimes used interchangeably, yet they each have distinct meanings and legal implications. So the committee has called upon two highly regarded professors of Federal Indian law to begin our hearing today, and to address the nature of the United States' trust relationship with the sovereign governments of Indian country. We are seeking an understanding of how this trust relationship and the United States trust responsibilities relate to the standards that apply to the Government management of individual and tribal trust funds. We have also asked an attorney who has expertise in the matter in which private trusts are administered by financial institutions to help us understand what other standards may be brought to bear on the management of the Indian trust funds. Beginning in 1978, this committee has called upon the General Accounting Office [GAO] to identify the challenges and systemic problems associated with the Government's management of individual Indian and tribal trust funds. The GAO reports issued over that time have repeatedly recommended that before any action is taken to reform the trust fund management system, there should be a comprehensive assessment of the needs the system must be designed to serve, the kinds of information that the system must maintain and update, as well as the services that are to be provided to trust fund beneficiaries. The committee assumes that this kind of comprehensive assessment was undertaken in the formulation of the Secretary's proposal to establish a new organizational structure for the management of Indian trust funds, trust assets, and resources. Although a process of consultation with tribal governments was initiated by the Department of the Interior to discuss the Secretary's proposal, there are members of this committee and likely many other members of the Congress who have not had the benefit of briefings on the proposal and who thus need to know more about what operating assumptions, fundamental principles, and what objectives went into the development of this Secretary's proposal. While the committee appreciates the sensitivity on the part of the Deoartment of the Interior's officials to the fact that other proposals are now the subject of joint review by the Task Force and the Department, and the Department's desire not to appear to be advocating for the Congress' approval of the Secretary's plan, the Department has agreed to respond to questions that members of the committee have on Secretary Norton's proposal, and for that the committee is most grateful. As a member of this committee for the past 22 years, I would be remiss, however, if I were to fail to address the past efforts of the Congress to respond to the problems identified in the landmark report entitled ``Misplaced Trust: The Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund.'' This report led to the enactment of the American Indian Trust Fund Management Reform Act of 1994, and I must observe that at that time, our objectives were very similar to those which we think the Secretary's proposal seeks to achieve. In the act, we sought to segregate those activities associated with the management of the trust funds from other responsibilities of the Department, and to establish an Office of Special Trustee in the Office of the Secretary to assure that attention would be given to those matters at the highest level of the Government. So it is natural, I think, that members of this committee will want to ask the Department's representative what is it about the act's provisions that have not worked, and what is different about the Secretary's proposal that you think will make things work better. The committee will also receive testimony today on a few of the tribal proposals that have been developed. Perhaps the most important fact is that the Department and the tribal governments have agreed to work together. We call upon the Task Force to provide the committee with a report on that work. Finally, I would say that the committee knows that there is considerable dissatisfaction with the consultation process and widespread opposition in Indian country to the Secretary's proposal. But this hearing is not intended to focus on those dynamics. They are behind us. What would be helpful to the committee, should tribal governments wish to submit such to us in writing, are the reasons why the Secretary's proposal is unacceptable, not from a process point of view, but in regard to the substance of the proposal. For that reason, the record of this hearing will remain open for 30 days, and we hope the tribal governments will respond. And with that, I would like to call upon the members of the first panel: Reid Chambers of Sonosky, Chambers, Sachse, Endreson, and Perry of Washington; Douglas Endreson of the same law firm; and Don Gray of Nixon, Peabody of San Francisco. So may I first call upon Mr. Chambers. STATEMENT OF REID CHAMBERS, ESQUIRE, SONOSKY, CHAMBERS, SACHSE, AND ENDRESON Mr. Chambers. Thank you very much, Mr. Chairman, and thank you for the invitation and the opportunity for my partner, Doug Endreson, and I to appear before the committee today. We will talk about three subjects--the origins of the vital trust responsibility of the United States to American Indians; the case law on how that trust responsibility has been interpreted over the last 200 years; and finally the scope and extent of the trust responsibility, both as defined by the case law and by enactments of the Congress, such as the statute that you spoke about, the 1994 Trust Management Reform Act. I will talk about the first two items, and Doug will talk about the third item. As you know, we have a common written testimony that will be much lengthier than my summary here this morning. Mr. Chairman, the trust responsibility originated in two decisions by the early Supreme Court--the Marshall Court--in the 1830's, the two Cherokee cases. The cases involved specifically the issue of whether Georgia had any authority over people and activities on Cherokee-reserved lands--lands reserved by treaty within the State of Georgia. The statutes that the State was trying to enforce would have destroyed the Cherokee Government. They would have required permits by all people entering Cherokee lands. They would have extended State criminal law over all the Cherokees and over all their lands. So it is hard to imagine more intrusive statutes than the ones that Georgia was trying to enforce in the late 1820's, early 1830's. The Cherokee Nation itself brought the first suit, Cherokee Nation v. Georgia, in the Supreme Court of the United States, and sought to bring suit originally before the court without going to any trial courts, any lower Federal courts. And to do that, the Cherokee Nation under the Constitution would have to show that it was a foreign state or a foreign nation, because only particular kinds of governments can bring suits in the original jurisdiction of the Supreme Court. In the first case, the Cherokee Nation was unsuccessful. Chief Justice Marshall, speaking for a majority of the court, held that the Cherokee Nation was indeed a state or a nation. So it was a government. He held it was a distinct political society. The Cherokee's right to be a distinct political society was protected by treaties between the nation and the United States, and by statutes of the United States. But the court held that the Cherokees were not a foreign nation; that rather, they were a domestic sovereign and that their relationship with the United States was similar to a guardian- ward relationship. The second Cherokee case involved a prosecution by the State of Georgia of people entering the Cherokee lands without complying with the State permit statutes. When that case reached the Supreme Court, the Supreme Court did have a case that it had jurisdiction over. It held that the Georgia laws were unlawful; that the Federal Government had exclusive authority under the Constitution over Indian matters and over Indian-reserved lands. The States had no authority. The opinion at great length discussed how the treaties with the Cherokees and statutes of Congress, the Indian Non-Intercourse acts prohibited dealing in Indian land by anyone other than the Federal Government. It completely preempted any State authority in the area, and also protected the rights of the Cherokee Nation both to its lands and to its right to function as a distinct political society. So the lesson to draw, I think, for present purposes from the two Cherokee cases is that there is no possible conflict between the trust responsibility of the United States, and the right of the tribe to be self-governing as one of the principal, if not the chief purposes, of the guardianship. The trust responsibility in the Cherokee cases was intended to protect the right of the Cherokees to function as a distinct political society. Now, I should add, and I know the committee knows this-- yourself and Vice Chairman Campbell know this well--that the Cherokee Nation in the 1820's and 1830's was in fact, as well as law, a distinct political society. It had a written constitution. It had a bicameral legislature. It had courts. It actually had a military. It had developed a culture where it had reduced the Cherokee language to written symbols, and had a higher adult literacy rate among the Cherokees than any State of the Union at that time. So it was a flourishing and prominent political and civil society. There is no sense that the trust relationship that was formulated by Chief Justice Marshall was premised in any way on the theory that the Cherokees were incompetent to manage their own affairs--quite the opposite. I want to turn now briefly to a survey of the case law dealing with the trust relationship in the next century and a half after the Cherokee cases. Around the turn of the century, there were cases of the Supreme Court that actually used the trust relationship actually as a basis for the power of Congress to enact statutes in Indian affairs, on the theory that the commerce power in the Constitution was not as extensive as we think of it today. Some of those cases even suggested, particularly the Lone Wolf v. Hitchcock case at the turn of the century, that the power of Congress to enact a statute might not be reviewable by the courts of the United States. But that suggestion has been rejected by modern cases. The standard clearly in the Mancari case and the Delaware v. Weeks in the 1970's is that the courts do have the power to review even statutes of Congress to determine whether the act Congress is tied rationally to the unique trust obligations of the United States to the Indians. So even Congress' power is not unlimited. It is constrained by the trust responsibility, but it is extensive and it is still seen as exclusive vis-a-vis States. So that means that Congress does end up ultimately being the manager of the trust responsibility, and Congress can, if it acts clearly and plainly, alter the terms of the trust because of the Lone Wolf v. Hitchcock case, which is unfortunately still good law today, does hold that Congress can even change the terms of a treaty, if it does it clearly and plainly. But the cases also hold that where Congress has not acted in a clear and plain fashion, then the trust responsibly continues in full force as a limitation on Federal power; that indeed statutes of the United States dealing with Indian matters where there is doubt about how they should be construed, where there is ambiguity, should be construed consistent with the trust responsibility, favorably to the Indians; that general acts of Congress do not operate to abrogate or alter Indian rights unless Congress has clearly and plainly stated that they do. And most importantly for the trust management issue that you have precisely before you today, the cases are very clear that where Congress has not clearly and plainly changed the rules, then executive officials who are dealing with the management of Indian property or Indian rights, must adhere to the trust responsibility and must adhere to the commonlaw trust standards of a private trustee. I know there has been some claim that the Cobell litigation, and we do testify in the shadow of that case as it proceeds in the Federal courts here in town, established some new or tougher standard dealing with executive management of Indian affairs. I want to refer in a little bit of detail to the controlling Supreme Court and other lower Federal court cases that show this is not so, and of course it is elaborated more fully than I can do here orally in the testimony Doug and I have submitted to the committee. The two Supreme Court cases I do want to talk about are the Seminole Nation case in 1942 and the Mitchell case--it is known as the Mitchell II case, because there were two Mitchell cases like the two Cherokee cases--in 1985. Seminole Nation is 6 decades old, 60 years old, those cases held clearly that in administer Indian trust money or trust property--and the Seminole dealt with money; Mitchell dealt with timber property--the United States is a trustee subject to the fiduciary duties attendant on the trust relationship. I want to quote from Mitchell II, because it reads: Where the Federal Government takes on or has control or supervision over tribal moneys or properties, the fiduciary relationship normally exists with respect to such moneys or properties unless Congress has provided otherwise, even though nothing is said expressly in the authorizing or underlying statute or the fundamental document--I would suppose sections of treaties--about a trust fund or a trust or fiduciary connection. Now, that is vintage Cherokee Nation. Cherokee Nation did not talk about a trust in treaties. It didn't say ``trust.'' It was a principle that Chief Justice Marshall articulated that has governed the relationship between the United States and the tribes ever since that was implicit in the treaties and implicit in the statutes of the United States at the time. And similarly in Seminole Nation, the court held that the conduct of the United States as trustee for the Indians should--and I am going to quote this-- ``be judged by the most exacting fiduciary standards, not honesty alone, but the punctilio of an honor the most sensitive.'' That is language quoting directly from Justice Cardozo when he was a judge on the New York Court of Appeals deciding a case dealing with a common law private trust. The same standards apply to private trustees that apply to government trustees. That was clear in Seminole Nation. That is clear in Mitchell. In Mitchell, the court looked to the Restatement Second of Trusts to find that all commonlaw elements of a trust relationship are present with regard to the Government's obligation to Indians, and following those principles, held in that case that the Government was liable if it violated them. These are the two major Supreme Cases on the subject, Mr. Chairman and members of the committee. The Court of Claims held shortly after the Seminole case, in the Menominee case in the 1940's, during the Second World War, that the ordinary standards of a private trustee govern the Government's dealing with Menominee property and Menominee trust funds. The Court of Claims held that again in the Cheyenne- Arapahoe case dealing with trust funds in the 1970's; the Eighth Circuit held the same thing in the Red Lake Band v. Barlow case dealing with management of tribal funds by the BIA in the 1980's; the Federal District Court Judge Renfrew, former Deputy Attorney General Renfrew in the Carter administration, held that in the Manchester Band of Pomo case in the 1970's. Other cases dealing with trust property hold the same--the 10th Circuit in the Hickory-Ashton Tribe v. Supron case; the Ninth Circuit in the Covelo case, also in the Assiniboine and Sioux Tribes v. Board of Oil and Gas Conservation; the Eighth Circuit in the Loudner case and the Blue Legs cases--all of those cases say that the United States is subject to the same standards as a private trustee in its dealing with Indian property. So there is nothing new in the Cobell case. We are not obviously the attorneys in the Cobell case. We have no dealings with the Cobell case professionally, but we have read the opinions by the Court of Appeals and by the District Court. Those opinions simply apply the common private fiduciary standards that are in Menominee, that are in Seminole Nation, that are in Mitchell II. They are in all these other cases from the past 6 decades. So there is no basis for claiming that there is some new or tough standard being applied, and there is no basis for changing the law as that case moves forward. Now, I take it you probably want to defer questions, Mr. Chairman. I yield to my colleague, Mr. Endreson, if that is agreeable to you, to talk about the scope of the trust responsibility. The Chairman. I thank you very much, Mr. Chambers. Your testimony is most enlightening, but before we proceed to Mr. Endreson's testimony, may I call upon the vice chairman for any remarks he may have. STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM COLORADO, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS Senator Campbell. Thank you, Mr. Chairman. I apologize for being a little bit late. I was over voting. And I am sorry that I missed Mr. Chambers' complete testimony. I think I got most of it. I am always delighted when he is here. He is certainly one of the leading authorities on the history of America and its relationship to Indian tribes, and it has always been a wealth of information to me when you appear here. So I am glad you are here this morning, Mr. Chambers, at this hearing. Mr. Chambers. Thank you very much, Senator. Senator Campbell. Unfortunately all of us who have chaired these kinds of hearings in the past at some point have dedicated enormous time and effort in trying to reform the Indian trust management systems. You have done it in the past, Mr. Chairman. I did it for 5 years. It is once again your turn. Very simply, I have to tell you it is beyond frustrating for me, and I am sure it is for the Indian beneficiaries as well, that this thing never seems to reach a conclusion. Let me start off by saying the issue is clearly a problem of historic proportions. I know Secretary Norton has been on the spot lately, but very clearly she inherited this mess, as did her predecessor. It has been going on for years. I am somewhat disturbed that very often when we do hearings when we hear from the Administration they tell us that if they only had more time or if they had more money or if they had new computer systems or if there was a different trust management staff, or on and on and on, we could get it fixed. And we don't get it fixed. We just seem to go around and around and don't get it fixed. In my own opinion and despite the 1994 act and the vigorous involvement and encouragement of this committee, the trust reform strategy of the last Administration was to litigate, lurch from hearing to hearing by putting on sort of a dog-and- pony show for us everytime they came over, and to make sure that the Federal funding spigot did not get turned off. The strategy, as we note and must recognize today, not only didn't work, but has led us to today's hearing, with no end in sight. Mr. Chairman, this thing reads like a bad soap opera. We have had several bills signed into law, documents lost, contaminated and shredded, Federal lawsuits filed, senior Department officials resign and being held in contempt by a Federal judge, and countless hours of legislative and oversight hearings. Just 2 weeks ago, we passed out of this committee legislation designed to discourage more litigation and encourage the tribes and the department to negotiate settlements, and I believe that bill was the best option for all parties at this juncture. Having said that, we are still at a crossroads at this historic moment. We recognize and admit that the litigation has served its purpose, but ultimately these issues have got to be resolved. I was interested in your statement, Mr. Chambers, that Congress can change the terms of a treaty. Let me tell you, the history of this Nation is that the United States has changed the terms of a treaty too much without tribal involvement, and just pulled the rug out from under tribes, which is basically what is being done right now by the Federal Government, in my opinion. But I, for one, are ready to write that bill and get involved in it and get this mess behind us. This committee, the chairman and I, have done and are doing and will continue to do everything we can to bring fair and equitable solutions to the issues, but it requires some healthy, honest and open debate. And I don't think it has really been held yet. Unlike many who have criticized the current Secretary's proposal, I believe she should be lauded, not criticized, for offering a proposal that may get this thing behind us. The only disagreement I have with her is that I think there was not enough tribal involvement. When the current Secretary came in to tell me about the proposal that she had, I don't think there was enough time for the tribes to be involved, and I think that there have been a number of hearings now around the country. She has been involved in at least one personally. There have been about eight or ten. There probably should be a lot more, and they should have been done a long time ago. But nevertheless, right to the present day, the Department of Justice and the BIA have proven themselves pretty much incapable of reforming the system. That is why I proposed in February 2000 the Indian Trust Resolution Corporation. I am not sure the Federal Government is ever going to be able to resolve this on its own, frankly, and under that draft legislation it would have turned the whole trust fund problem over to an independent commission with a sunset clause after people who are trained in straightening out trust responsibilities could have done it as well as anybody in the country, even with the missing documents, it could have then come back under the jurisdiction of the Bureau. But I firmly believe that we should analyze all options, whether it is legislation to take it completely away from the Federal Government and put it in the private sector for a while, or whatever the answer is. Let me also say that in the past, many times tribes have come in here to tell us that the Federal Government does not consult enough with them. But I hope that with this hearing, the committee can spark some kind of healthy and constructive dialog to make something happen to bring final justice for this whole problem that Indians have been waiting for so many years. Thank you, Mr. Chairman. The Chairman. Thank you very much. Senator Cantwell. STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON Senator Cantwell. Thank you, Mr. Chairman Thank you for the opportunity for the committee to examine the problem of trust fund mismanagement and the recent efforts toward reform. Obviously, the trust fund mismanagement marks a significant failure of the U.S. Government in its trust responsibility toward tribes and individual account members. As the chairperson of the Colville Tribes from Washington State framed it, one of the saddest chapters in American history is the long-term mismanagement of the trust resources, which were intended to benefit Native American tribes. Most recently, the class action suit of Cobell v. Norton has brought renewed urgency to the need to reform trust management. I share the dissatisfaction of the court on the failure of the U.S. Government's trust responsibilities, and I echo its call to reform trust management. However, it is critical that this reform be done with careful calculation and in ways that affirm, not diminish, trust responsibilities, tribal self-determination and self- governance. Numerous tribes are here from Washington State and have expressed serious concerns about the Department of the Interior's proposal to create a Bureau of Indian Trust Assets Management, and I share these concerns. In fact, several tribal leaders from Washington State are in attendance and I would like to thank them for their leadership in coming to Washington today to speak on this very important issue. The tribes agree that there is significant room for improvement in the management of trust functions. However, they are concerned both about the merits of Interior's plans to create a new Bureau, and the fact that the tribes were not consulted prior to the development of this proposal. Indeed, tribes and individual Indians are the beneficiaries of trust assets, and the United States has a responsibility to honor the government-to-government relationship that it has with tribes. Therefore, it is absolutely critical that tribes play a central role in any successful trust management reform. Representatives from Interior have advised the committee that the trust management would be improved by removing all trust management duties from BIA, therefore keeping the services BIA provides to Native Americans and trust management completely separate. Washington State tribes have expressed their serious concern that by removing trust functions from BIA, it would effectively dismantle the agency, which has been the foothold for tribes in the Federal Government. For example, many tribes have partnerships with BIA in the execution of several trust responsibilities, such as natural resource management, and tribes do not want to see their role in the management of their resources diminished if these trust fund actions are taken out of BIA. I intend to ask some of the witnesses today about their concerns. We will have the opportunity today to hear about a few of the proposals for trust reform designed by the tribal organizations. In addition, the Tribal Task Force is reviewing these proposals and several others that have been generated by various tribes. It is my hope that Interior will seriously consider the concerns, suggestions and the proposals from tribal communities, and also take advantage of the wisdom and insight the leaders who have been working hard to create a viable plan are putting forth. Again, any success at reforming this and the century-long problems must include input from the tribes. Again, thank you, Mr. Chairman, and I would also like to thank the witnesses that are here today and representatives from Washington State. I look forward to hearing their testimony and hearing more about what our committee can do to make sure that meaningful trust management reform takes place. Thank you, Mr. Chairman. The Chairman. Thank you very much, Senator. And now may I call upon Mr. Endreson. STATEMENT OF DOUGLAS ENDRESON, ESQUIRE, SONOSKY, CHAMBERS, SACHSE, AND ENDRESON Mr. Endreson. Thank you, Mr. Chairman, Mr. Vice Chairman, committee members. I, too, am honored to have the opportunity to speak with you about the trust responsibility. I would like to begin by summarizing very briefly what I want to talk to you about. Mr. Chambers has set out for you the law which demonstrates today that the trust responsibility applies to all actions of the Federal Government. This could not be clearer from the decisions that recognize that the constitutionality of Federal actions affecting Indians is to be measured by the trust responsibility itself. It is underscored by the cases that Mr. Chambers referred to that recognize that if Congress is to affect Indian rights, it must express its intention to do so clearly and plainly, leaving no doubt. The same point is underscored by the rules of construction that recognize that ambiguities, uncertainty as the Congress' intention won't result in Indians losing rights. Ambiguities, instead, are to be construed to the benefit of Indian tribes and Indian people. It is also clear that the trust responsibility applies to lands, natural resources, trust funds, other property. There is no dispute over that. What I want to talk with you about this morning is the trust responsibility in three other areas. First, I want to briefly pick up on and expand Mr. Chambers' discussion of the congruence between tribal self-determination and the trust responsibility. I then want to discuss the trust relationship in two related areas. First, the duty to provide services, which has been recognized by the courts and repeatedly recognized by Congress in health, education, housing, cultural rights, economic development--among other areas. I also want to discuss with you very briefly how the cases in services came to support and reinforce the duty to consult with Indian tribes when Federal actions that would affect their rights are under consideration. Let me begin by talking about the congruence of self- determination and the trust responsibility. It has been suggested that these two may be in conflict. Well, the self- determination policy, as Mr. Chambers indicated, has as its basic purpose furthering and protecting rights of self- government. That is the same purpose that Congress has acted on repeatedly since the self-determination policy was announced in 1970 by President Nixon, and Congress has made its intention abundantly clear. In enacting the landmark Indian Self- Determination Act, Congress stated: The Congress declares its commitment to the maintenance of the Federal Government's unique and continuing relationship with and responsibility to individual Indian tribes and to the Indian people as a whole through the establishment of a meaningful Indian self-determination policy. The same point underlies the 2000 amendments concerning the self-governance program, where Congress declared as its purpose to ensure the continuation of the trust responsibility of the United States to Indian tribes and Indian individuals. In addition, Congress has repeatedly recognized the trust responsibility as the foundation of Federal efforts to strengthen tribal governments. Most recently, in enacting the Indian Tribal Justice Support Act, Congress stated in its findings: The United States has a trust responsibility to each tribal government that includes the protection of the sovereignty of each tribal government. The same point was made by Congress just last year in enacting the Indian Tribal Justice Technical and Legal Assistance Act of 2000. These enactments, the Wooster and Cherokee Nation decisions, show a history of over 200 years of recognition that the trust responsibility's basic mission is to protect tribal rights of self-government. That mission continues and Congress has repeatedly recognized it. Let me now talk about a different area--services. The provision of services to Indian tribes and Indian people through the BIA and through other Federal agencies is part of the trust responsibility. The courts have recognized this. Congress has repeatedly confirmed it. Perhaps the best judicial statement of the origin of the trust responsibility and its role in providing services in particular comes from a decision by Diana Murphy, who was a District Court judge in Minnesota and subsequently joined the Eighth Circuit Court of Appeals, and as District Court judge wrote the Mille Lacs decision which was affirmed by the U.S. Supreme Court in 1999. In a case concerning the trust responsibility in the housing area, Judge Murphy wrote: The Federal trust responsibility emanates from the unique relationship between the United States and the Indians, in which the Federal Government undertook the obligations to ensure the survival of Indian tribes. It has its genesis in international law, colonial and U.S. treaty agreements, and Federal statutes, and Federal judicial decisions. It is a duty of protection which arose because of the weakness and helplessness of Indian tribes, so largely due to the course of dealings of the Federal Government with them and the treaties in which it has been promised. Its broad purposes, as revealed by a thoughtful reading of the various legal sources, is to protect and enhance the people, the property and the self- government of Indian tribes. Continuing, Judge Murphy wrote: The trust relationship between the United Stats and the Indians is broad and far-reaching, ranging from protection of treaty rights to the provision of social welfare benefits, including housing. The history of the treatment of the Indians by the United States justifies this interpretation of the trust relationship and the case law and the legislative background support it. Other Federal courts have confirmed the trust responsibility's application in the area of services. A leading Eighth Circuit case, White v. Califano, affirmed that the United States has a trust responsibility to ensure that Indians have access to health care in cases where other sources such as the States are unwilling or unable to provide it. Similarly, the Ninth Circuit, MacNab v. Bowen, held that the Indian Health Service was obligated to provide necessary health care to an indigent Indian child, and further held that if the IHS believed that the State or county had a duty to provide such care, IHS itself had to advance that claim on behalf of the Indian. We recognize that the application of the trust responsibility in the services area is in many ways less well- defined than it is in the property cases. In Lincoln v. Vigil, the Supreme Court articulated a limiting factor, holding that the trust responsibility does not prevent a Federal agency from reallocating unrestricted funds from providing services to a sub-group of beneficiaries to the broader class of all Indians nationwide. But at the same time, the Supreme Court and other Federal courts have repeatedly held that the trust responsibility mandates a high degree of procedural fairness and protects against the failure of Government agencies to provide Indians with services authorized by Congress. This was the holding of the court in Morton v. Ruiz, a 1974 Supreme Court decision. The principal of Morton v. Ruiz, together with the force of the self-determination policy and its protection and promotion of self-government, have established the foundation for the Federal courts' recognition that the trust responsibility includes a special duty to consult with tribes or Indians to ensure their understanding of Federal actions that may affect their rights, and to ensure Federal consideration of their concerns and objections with regard to such action. That is the holding of Morton v. Ruiz involving the BIA. The 10th Circuit recognized the same point in HRI v. EPA; the Eighth Circuit in the Loudner case, to which Mr. Chambers referred; the District Court in Washington in Midwater Trawlers Cooperative v. U.S. Department of Commerce. These cases recognized that when Federal actions that would affect Indian rights are under consideration, the trust responsibility requires consultation with the tribes. Now, in addition, in the services area, while the courts have recognized that the duty to provide services is a part of the trust responsibility, Congress has gone even further. In health, education, housing, protection of Indian children and families, cultural resources--in all of these areas, Congress has enacted statutes that expressly and specifically recognize the trust responsibility as the basis for the enactment. Even those aspects, those services administered outside the BIA such as the IHS, are subject to the trust obligation. Congress through these enactments has demonstrated not only that the trust responsibility is the source of the duty to provide services, it is also specifically directed--not that there merely be some Federal presence, but that results or outcomes be achieved. In education, the trust responsibility was recently expressed by Congress in amending the Indian Education Act, where the Congress stated: It is the policy of the United States to fulfill the Federal Government's unique and continuing trust relationship with and responsibility to the Indian people for the education of Indian children. And it identified the goal of ensuring that programs that serve Indian children are of the highest quality and provide for not only the basic elementary and secondary educational needs, but also the unique educational and culturally-related academic needs of these children. The same point was confirmed in the Tribally-Controlled School Grant Act and the Higher Education Tribal Grant Authorization Act. The provision of educational services and the goals set out in these acts are in fulfillment of the trust responsibility. The same is true in health care. Indeed, in the most comprehensive measure addressing the unmet health care needs of Indian people, the Indian Health Care Improvement Act, Congress expressly stated: Federal health services to maintain and improve the health of Indians are consonant with and required by the Federal Government's historical and unique legal relationship with and resulting responsibility to the American Indian people. In the same act, Congress set out specific goals by which the fulfillment of the trust responsibility is to be measured, listing 61 specific health objectives, including coronary heart disease, cirrhosis, drug-related deaths, suicides, deaths from intentional injuries, infant mortality, fetal alcohol syndrome, diabetes, and others. More recently, in enacting the Indian Alcohol and Substance Abuse Prevention and Treatment Act, Congress made the same point. The Federal Government has a historical relationship and unique legal and moral responsibility to Indian tribes and their members. Included in this responsibility is the treaty, statutory and historical obligation to assist Indian tribes in meeting health and social needs of their members. So, too, in the housing area. Congress' enactment of the Native American Housing Assistance and Self-Determination Act expressly recognized that the Congress, through treaties and statutes and the general course of dealings with Indian tribes, has assumed a trust responsibility for the protection and preservation of Indian tribes, including improving their housing conditions. As I mentioned, the same responsibility has been recognized with regard to the care and protection of Indian children. In the Indian Child Welfare Act, Congress said: There is no resource that is more vital to the continued existence and integrity of Indian tribes than their children. The United States has a direct interest as trustee in protecting Indian children who are members of or eligible for membership in the Indian tribes. More recently, the same point was underscored in the Indian Child Protection and Family Violence Prevention Act. Congress' recognition of the trust responsibility in all of these areas leaves no doubt that the trust obligation includes the duty to provide service. It is equally clear that when Congress addresses the trust responsibility in these areas, it looks not simply to color the legislation with the flavor of the trust, but instead looks to define goals that will make a difference in the lives of Indian people. This trust responsibility, then, extends across the relationship between Indian tribes and the United States. Chief Justice Marshall's original intention that the relationship between Indian tribes and the United States, while not that of foreign nations and the United States, would be an enduring one in which the United States would act as the tribes' trustee. And as the range of tribal interests and concerns has expanded, as the threats to tribal interests have grown, the courts have continued to recognize that the trust responsibility defines this relationship--the trust funds, the property area, the treaty rights area, yes--but also, that the trust responsibility includes the duty to consult and the duty to provide services. And finally, it is made clear that as Indian tribes join hands with the United States in the pursuit of self-government, they do so in furtherance of that same trust responsibility. Thank you. [Prepared statement of Mr. Chambers and Mr. Endreson appear in appendix.] The Chairman. Thank you very much, Mr. Endreson. Mr. Gray. STATEMENT OF DON GRAY, ESQUIRE, NIXON, PEABODY, LLP Mr. Gray. Mr. Chairman, Mr. Vice Chairman, members of the committee, it is a very great pleasure to appear before you again. This is the second time in about 3\1/2\ years that I have had the honor of appearing before this committee. You know that this problem is going on too long when you see quotes that you have made 3 years before that you can hardly read on charts, which means I am getting old and the problem is getting old. It really is a pleasure to be before this committee, and it was 3 weeks ago when I had the pleasure to speak before the House Resources Committee on a similar subject. I think it is fortuitous and positive that I am able to speak after Mr. Chambers and Mr. Endreson who are acknowledged experts in the history of Indian law, and through the prism of legal precedent come to a very similar conclusion that I come to as a private trust fix practitioner, and that is that the overall basic trust standard that will ultimately be placed upon whoever or whomever solves this problem is going to be that of a commonlaw trustee, which is an extremely high standard indeed. Put as simply as it possibly can be put, it is a person acting prudently as they would with their own affairs, and that is a pretty high standard. There have been a lot of allegations of obstruction and defalcations in this problem in the last 5 or 6 years. My own personal feeling is that most of those were deserved by the prior Administration running the Department of the Interior [DOI]. It is also my personal opinion that they are not deserved with respect to the people who are running the DOI now. That does not mean that I approve of the Secretary's BITAM plan, but it does mean that the current DOI, the flavor of the current DOI and the atmospherics and the extent of potential cooperation is so totally different than it was 3 years ago that--including the willingness of both houses of Congress--and I also believe the court and the various tribal units offer us a very unique point in time to solve this problem, which is what led me to, in my written testimony, state that I think for the first time in eight years there is a light in the forest with respect to the resolution of this problem. For 3 years, I have testified as an outside trust expert who has been very involved in fixing historic, complex trusts with all the same problems--lost records, some stolen, some just lost, bad systems, the foolish alchemy of believing you can buy an off-the-shelf system and then put your practical problems around that system. I can remember very well about 3\1/2\ years ago sitting in a subcommittee room informally talking to the Appropriations staff, literally begging them not to appropriate the $40 million that was then a supplemental appropriation for Interior to purchase the last part of TAAMS. I do a lot of international financing and I know a lot about oil and gas law, and I know what that program is. That program could no sooner deal with fish in the Klamath or grazing lands or potato lands in Idaho or timberlands in the west than any of us could, knowing nothing about that system. That system was a total, complete failure before it was put on line, and it has never been fully put on line. That is how bad the prior Administration was. But again, I think things have changed. But in that 3 years of testimony, I have been somewhat resolute in three issues that I want to reiterate again. And that is, there has been a total lack of expertise. There have been complete and crippling conflict of interest. And there has been a lack of independence in the DOI. I think that the approach and the mental atmospherics of that Department have changed dramatically. But, I do not believe that any of these problems have changed at all. If you listen to Secretary Norton's testimony on the last day of the testimony in the current contempt trial in the Cobell litigation, she was very clear that she was not a statistician. She was not a forensic accountant. She was not an Indian legal expert. And she certainly had not, in the time that she had been in office, been well advised by anyone internally at DOI with respect to those matters and how they bear on Indian trust reform. They don't have the expertise. They never have and they never will. And that is a critically important thing for this committee to understand. Further, the conflicts problems, and I have to quote from my pad because I literally have trouble reading the chart up there, I said I guess 3 years ago, you cannot and should not try to operate on yourself, and that is exactly what we are asking well-intentioned BIA officials to do--to work on a problem and to solve a problem where they or their friends or their parents may have made mistakes. That is neither fair nor reasonable, and in the commercial context would never have been countenanced. I have officiated over, I don't know, 10 to 15 very large trust fixes that have involved more money, frankly, than this, and that have gone back as long as 20 years. The first thing you do is you separate day-to-day trust functions from the fix of the trust system where it has gone wrong. That has to happen here--that separation has to happen. As I said, I think we are in a new day, though. With all the problems that we have gone through, we have 1 moment in time to do something that is very constructive. This is a time of real crisis, real crisis, and real opportunity, and I want to try to describe what both of those are. I will start out being an optimist with the opportunity. In my written testimony, you will see a fairly detailed description of a government-sponsored enterprise [GSE]. GSE have had a pretty good history in Washington, DC. The Washington, DC GSE that looked over the administration of a number of departments of, especially the law enforcement departments of the District of Columbia some years ago, was a special purpose government entity that was time-limited. Nobody wants to create a new government agency. But one that is time- limited and specific for a purpose, and has just exactly the right expertise can be an enormous help to a problem like this, that has been left alone too long in an incompetent agency. And I don't mean the agency itself is incompetent with respect to what they do generally, I mean with respect to a highly bolloxed-up trust they simply don't have the expertise. There is nothing magic--I want to reiterate this--there is absolutely nothing magic about the government-sponsored enterprise form. The vice chairman did propose a couple of years ago this idea of the RTC, which I championed. I actually saw parts of draft legislation which I thought were very good ideas. It does not matter what you call this entity. What does matter a lot is what you try to do with this entity and who the constituent parties are. I would invite you and ask you to look hard at the constituency of the GSE and the mandate that I have tried to give it to solve the trust problem. The other thing that I will mention about this, without going into consummate detail which I did in the testimony, is that this is only a prototype. It requires and needs tribal and IIM account representative input. They have their own reasons for wanting things, and they are valid. They are the beneficiaries and they need to go over every aspect of this with a fine-tooth comb. If there is something in there they don't like, and they can validate it as not being positive for trust reform, you change it. There is nothing magic about this. What is magic, and the only thing that is magic, is that the trust fix, not day-to-day trust administration, the trust fix comes out of the DOI and into the hands of a blue ribbon panel of commissioners and their hired professionals who have absolutely no mandate and absolutely no conflicting interest with respect to doing anything but fixing the problem, fixing the trust. I believe that fixing the trust is possible, not to perfection--there is no such thing--but fixing it 90 percent better than it is running now I think is well within the ambit of possibility in a relatively short time, given how long this problem has been outstanding. The parameters for what I have suggested in this GSE have the following underlying philosophies. One is it is lean. What we don't need is the proliferation of bureaucracy. The problem with any government agency, and I have dealt with most of the major government agencies in my 30-year career, is that bureaucracy, like any company, is inevitable. What you don't want is a bureaucratized system. What you want are commissioners who have other jobs, but who have highly dedicated trust responsibilities to make sure this one is done correctly--who act as a board of directors--a very thin staff, maybe even just one director or executive director, and what I would say is a relatively small handful of trust professionals, which consist of lawyers, accountants, systems analysts who know how to look at a set of data and a trust cycle, in this case from revenue leasing of natural resources all the way to payment to the IIM beneficiaries, and conceptually understand how to get from one end to the other. And then and only then create systems that can get you from one end to the other, while training BIA officials and others to get you from A to B. Anyone that thinks that this is a quick fix by a machine has really been taken in by the computer culture. This is man, woman and machine. It is a combination of training and very carefully employed technology. What the last Administration did, and I think they did it to play for time, was that they bought a system that could not work. The other thing that I liked, obviously, about the proposal was that it included--well, it was lean in terms of money, in terms of the use of government money to get to its goal. It was fat in terms of expertise. I think you have to lever on outside professionals who have done this kind of thing before. You can't put them all on staff because you can't afford it, but you can hire them on an as-needed basis to go out and do specific tasks that are integrated with other people's tasks, and that would be the job of the executive director or chief professional. I have seen this happen in the private sector where the pressure is just as great as it is here, because you may have as much at stake 2 years ago, with a major, major money center bank, there was a problem where they were sued by 100,000 municipal entities because of problems like this. They didn't have a lot of time to fix that problem. Within a relatively short time, they did fix it, to the satisfaction of all, and there was a global settlement. The other aspect of this is that it involves neutral government financial experts. I am not just talking about outside forensic experts. I am talking about neutral government financial experts--a Governor of the Fed, a high-ranking official of the FDIC or the Controller of the Currency. If you don't think these people understand what trust responsibility is, they do. Because what they do for a living is monitor the entire private banking sector with respect to non-trust accounts and trust accounts, and they know the difference. The real problem is going to be getting those people to take on this job, knowing what kind of very, very high level standard of care is going to be imposed on them. That is another issue that if we have time maybe I can refer to later. Private sector experts are needed. I mentioned that. I believe that the commissioner board that I have suggested not only would include public officials who are highly regarded and untouchable in terms of their trustworthiness and their independence and neutrality, but also representatives of the IIM beneficiaries and the tribal units. I also think that there should be a representative of DOI. I think there is a problem here. I think there is a problem of focus. The Senator from Washington, Senator Cantwell, made a very good point, and that is this process means nothing unless the tribal entities feel as though it has integrity, which is why I am just saying my proposal is a starting point for people to tear apart and to make additions to or anything else. You have to have representatives of Indian country not only comment on it, but in this case they would actually be--there would be a commissioner or maybe two commissioners who were representatives of that group. And finally, I would make probably the Assistant Secretary for Indian Affairs at DOI a member of this commission. Certainly, that person is not going to run the commission. It is going to be predominated by other interests, but it does allow the by-play between the special purpose entity and the continuing trust efforts that would be going on within the BIA to be well-coordinated--it is as simple as this. Get your contesting bodies under one tent. Make them commissioners. Charge them with a fiduciary sense of duty. And make them come back to this committee and to the House Resources Committee or a select joint subcommittee on an every other month basis and account for themselves. Things would change if that accountability were set up. The next aspect of it that I want to explain is the separation of the trust fix from ongoing administration. A number of members of tribes have expressed to me personally their fear that if you take the trust function out of BIA, you have essentially gutted BIA. I think that my colleagues today have somewhat underscored that because there is a trust aspect to the social services and other aspects of what BIA does. I have no intention of doing that. I think that is a very bad idea. First of all, right, wrong or indifferent, checks have got to go out. Those checks may be wrong. They may have to be audited in the future. They may have to be adjusted in some fair way in the future. But you can't just stop this process until you have a complete, beautiful, elegant, rococo fix. You have got to have the BIA do what they are doing on a daily basis, but not try to fix a program that they may have made mistakes on and they are going to try to perpetuate in an historic, rather than in a new way. That is where you run into trouble. And the other thing, I mentioned before, is continual congressional oversight. When I said before I think that the paradigm here is off-kilter, asking the DOI to be more sensitive to tribal and IIM interests is a mistake, not because they are incapable of being sensitive to it, but in all due respect, it is passing the buck. It is not DOI's problem anymore. This is a governmental problem and every branch of government has got to cooperate in its solution. The DOI and BIA have shown time and time again that they are incapable of solving the trust fix. They cannot do it. There can't be any other compelling evidence that anyone needs to know that they can't fix this problem. You have got to have somebody else on the outside with expertise to do it. Ladies and gentlemen, the buck there stops with you and the House. This has got to be a legislative solution. To underscore that, I want to tell you about what I think is acute timing. Sometime in March, although I am not a party to this litigation either--I read the press clippings and I read the testimony, just as all of you I am sure to do--and there is one thing that comes out loud and clear to me. That is that in the month of March, there will not only be a decision on whether Secretary Norton and Assistant Secretary McCaleb will be held in contempt, there may very well be a decision to appoint a receiver for this program. That is not the right solution. And that is not because the court has done a bad job. It is because the court is running out of options. They don't know what to do. If you look at the testimony in the last week that has gone on, and you do nothing but highlight what the judge has said-- just forget everything everybody else has said and take a look at what the judge has said--the TAAMS failure showed that this case will go on forever. The court has no idea how to handle the scope of this problem. The DOI and what it has tried to do to date shows a total breakdown. I believe that either inadvertently or knowingly, this very smart court is asking Congress to do something. In the absence of Congress doing something, you may have a receiver appointed who does not have the power to be paid--at least in my mind, simply, I don't know how they do it--and he may not have the access to outside professionals to actually fix the problem. Whether the court has jurisdiction over continuing future modifications to the trust, as opposed to the historic trust defalcations, I don't have any idea. But that is a 6-month trial, and that is six months more we have to wait. I would implore Congress--not BIA, not DOI, not anyone else--I would implore Congress and the native consulting bodies to come up with at least a rudimentary independent structure, whether it is modeled after what I have put in the record or what the vice chairman has put in the record as chairman in the past. Get that out as an exposure draft, get that judicially noticed before the court is forced into a course of action which sets up a balance of power fight that is not necessary. There has got to be a way for the branches of the government to cooperate to get a solution. I think the court is inviting this body and the House to do just that. I may be wrong, but I don't think so. I think that is really the important part of what I have to say. Whatever you do in the next legislation, which I hope will include a neutral body to try to really fix this problem, because I think this is susceptible of a fix--and that is coming from somebody who has spent most of his life doing this kind of stuff--it needs to be flexible and it needs to have continuing oversight, so that this commission, board, whatever you want to call it--RTC-type unit--is back before Congress on a consistent basis, and if there is a change that needs to be made because it is not working, have the legislation flexible enough so that by changing regulations or whatever, you can stop the part that doesn't work. One of the problems with the 1994 Act is that it was supposed to be self-actuating. It was very well-meant, very well written, and destroyed by the DOI. And I think that more flexibility in that, in having regulatory power and things that you can do in terms of continuing oversight will keep it much more tightly linked to Congress. I have spent too much time, and I apologize for that, but I thank you very much for the opportunity to talk to you today. [Prepared statement of Mr. Gray appears in appendix.] The Chairman. Thank you very much, Mr. Gray. Because of the reality of time, I will be submitting most of my questions. However, I would like to ask certain general questions at this time. This panel has suggested that the trust responsibility is not only an exacting one, but an all-encompassing one. For example, Mr. Endreson identified some of the laws enacted by the Congress that protect the right of self-governance, protect the right of sovereignty, treaty rights, the rights to health care, education, housing, and the protection of tribal lands and resources. The Congress has gone to great lengths in legislating and authorizing and directing. For example, we have the Indian Health Care Improvement Act. We have the Indian Self- Determination and Education Assistance Act. And yet we find that Indian health is worse than many of the third world countries of this globe. In the area of Indian education, we find that there are greater numbers of drop-outs in the Indian education system than in any school system of this Nation. My question is, if it is the trust obligation of the United States to provide education, provide health services, et cetera, and where the Congress provides legislative authority, but there are no funds forthcoming, is there a cause of action on the part of the individual Indian or a tribal government to sue the United States? Mr. Endreson. I think there is, Mr. Chairman. It is difficult to describe in any detail what judicial remedy would be available without a set of facts. But I think when one looks to the availability of relief to address educational deficiencies in the general law that it is clear that courts have seen a role in providing and ensuring educational opportunities for people in this country. And when one adds to that general body of law the trust obligations and the specific statutory commitments that the Congress has made to Indian tribes in the legislation that has been enacted, I think it is clear that some form of relief would be available in circumstances in which a failure of that obligation were clear. As a judicial matter, the cases that the courts have addressed have been cases in which extreme circumstances were present. Some years ago, in 1983, the Government proposed to close down Indian boarding schools without any notice or having plans in place that would provide for the education of the children that attended those schools. The courts stopped the BIA from closing those schools and Congress then put in place a plan for dealing with proposed closures, addressing the Bureau's failure. The same has been true in the health care area in instances where in effect the government has thrown up its hands and said ``not us,'' the courts has said, ``yes, you,'' the Federal Government and the trust responsibility compels it. So I think the courts have been responsive when relief has been sought in the kind of circumstances that I have described. Now, one of the concerns that has been expressed about the existence of the trust responsibility generally, and that has been brought to bear on the services discussion, trust responsibility discussion, is the fear that the trust responsibility would set a standard that is too high, too expensive, too burdensome, would cost too much and take too much time. And I think your statement, Mr. Chairman, shows the irony, the inappropriateness, the kind of awkwardness that discussion has when in reality there is no threat of the trust responsibility standards controlling or consuming large amount of resources or setting standards that won't be attainable. The problem is at the ground level, with the failure to meet what most, perhaps all, would conceded are very minimal standards. So it is not that the trust responsibility is too demanding. It is that the level of services has been too limited and the relief that has been available has been too limited. The Chairman. Mr. Chambers, at the February 6 hearing before the House Resources Committee, a member of the committee asked the Secretary if tribal trust funds could be used to help defray the costs associated with the management of Indian trust funds. The Secretary replied that she found that to be an interesting idea and would give it consideration. My question is, in applying the principles of trusts as you have described it, do you believe that this would be an appropriate use of funds that are held in trust by the Government for individual Indians and tribes? Mr. Chambers. No; it certainly would not be, Chairman Inouye, and I would expect that the Secretary, as she thinks about it and reflects about it, would conclude the same thing. I suppose somebody might say that, SunTrust Bank could charge to administer a trust for my mother's estate or something like that, because the relationship between SunTrust and me or the beneficiaries of the estate would be commercial, would be arms length, would be private commercial relationships. The Federal Indian trust is nothing like that. The Cherokee Nation cases make that clear and all the cases dealing with the history of the trust responsibility make that clear. The statutes, for example, that Chief Justice Marshall analyzed in Cherokee Nation bar red transactions in Indian land, except between the United States and the Indian tribe. The reason for that is that the Supreme Court had recognized in another case in the Marshall Court, the Johnson v. Macintosh case, that Indian tribes hold title to lands. And so the treaties between the tribes and the United States were a necessary transaction for the United States to take lawful title to large parts of Indian lands and then Indians retained other lands that became their reservations. The Indians paid for the trust relationship by making those land cessions to the United States. The United States is not entitled to be paid twice, then, for administering a relationship where it protects lands reserved by the Indians, where it protects Indian property protected by those treaties, and where it protects the right of tribes to have a culture and to have a functioning, distinct political society. So no, it is not at all like a private commercial trustee administering someone's estate, and it would be totally inappropriate, really outrageous for the United States to make a charge on Indians, a second charge after all Indians have done for the country in those and transactions in the treaties that I am speaking of. The Chairman. Thank you. Mr. Gray, you have indicated that expertise is nonexistent and has never been available in the Department of the Interior, or for that matter any other place in the Government. Would the nonexistence of expertise be a violation of the trust obligation of the Government of the United States? Mr. Gray. Yes; I think it would. I will amend my statement to a certain extent because for a while, you actually did have one individual in DOI who did have a great deal of this expertise, Mr. Homan, who simply ran out of patience with being stonewalled at everything that he did. But he was a highly qualified RTC official and he had a stellar resume in terms of private sector, both financial--we call financial money flow, as well as trust expertise. He had the expertise, and in fact if you look at his report that was discarded or attempted to be obscured by the high-level implementation plan of the prior Administration, it was in terms of, it was as though a forensic accountant were actually thinking this problem through. What he said very simply, and it makes a lot of sense to anybody who has done this before, is there is no conceptual architecture here. This is not brain science. This is taking the functions of your trust cycle from grazing land leases to paying out Indian accounts, and there are a lot of phases in between--document custody, preservation of all kinds of things--and you just put it up on a big schematic. You know, here at the different functions. Here is how they are functioning now. Here is how they are not functioning now. And that is the way you come up with the next stage, which is the conceptual architecture of a system, and a system is both computers and people, not just a computer. It is computers and people, and how you get from one end to the other. And he was talking like a forensic accountant. He knew exactly what he was saying, and nobody in Department of the Interior wanted to hear anything about it. And if you look at the high-end implementation plan, it talks about those different functions as if they were little projects to be done with allocation of money to be done totally independently of each other, without any kind of connect. And if I remember correctly, out of I don't know how many hundreds of millions of dollars allocated to the overall problem, you got to the end and there was personnel training, and it was $2 million, out of hundreds of millions of dollars. Now, I have been in banks where banks have bought computer systems that are supposed to do things a lot more difficult than this. They are supposed to unwind derivative securities, or put together derivative securities. And I have gone into trust departments where very smart trust officials have been sitting there, and I am looking at them, and they are doing the calculations on a Lotus program. And I said, why aren't you using the system? Because it doesn't work. It was an off-the- shelf. It does 80 percent of the work, but the other 20 percent--and believe me, my investors, they don't want 80 percent. My investors are Merrill Lynch and Northwest Mutual Life Insurance Company--and 80 percent ain't even close to good enough. So I was wrong. There has been. But in order for the Government to discharge its trust function, you simply have got to get this expertise. The Chairman. My one final question, Mr. Endreson, you said that trust includes the protection of treaty rights. Mr. Endreson. Yes, Mr. Chairman. The Chairman. A long time ago, there was a treaty between the Sioux Nation and the United States Government involving the Black Hills. The treaty was violated, and Black Hills no longer belonged to the Sioux Nation. Is that a cause of action? Mr. Endreson. I believe it is, Mr. Chairman, and I think the question there that is enduring is after the Sioux Nation decision in the Supreme Court is what now can and should be done to bring the promise of the treaty, the meaning of the promise of that treaty to future generations of Sioux people. The Chairman. What would you do as a lawyer? Senator Murkowski. Never ask a lawyer. The clock is going to start running. [Laughter] Mr. Endreson. I think the first thing, Mr. Chairman, would be to assess where the law has put the parties today. By that I mean, examining the benefit of the courts that is reflected in the Sioux Nation decision, and then considering what further avenues may be available, I would suggest, by working with the Congress as one of the key avenues, and considering as well whether there are other means of bringing the promises of the treaty to bear on the question of what Congress ought to do. And I think the trust responsibility would be among the means that a lawyer would look to in those circumstances. The Chairman. Mr. Vice Chairman. Senator Campbell. Thank you, Mr. Chairman. As you have, I am also going to submit some of my questions for the record and would ask that the witnesses answer them for the committee. I am going to ask two or three questions related to today, but you did mention the Black Hills, Mr. Chairman. I would remind the committee that courts have said the Lakota have every right to get the Black Hills back. It was not taken by treaty, by sale, by anything. It was just taken to use as a bombing range in World War II, as you remember. When Senator Bradley was here, he introduced a bill to do just that. I was really interested in that bill. Unfortunately, we could not get the votes to move it. The South Dakota delegation to a man was opposed to that bill. And so sometimes what is righteous and fair can't get done here because of political constraints or partisan constraints or something else. But I just mention that in passing, that there has been some people here who recognize that land was not taken in any fair system at all and that the Lakota do have the right to get it back. Mr. Gray, you really said a mouthful, a lot of things, and you have testified before this committee before. You just reaffirmed my suspicions with your testimony today that the Department of the Interior simply does not have the expertise-- never had, never will. And really it has nothing to do with personalities, because I think there are many very goodhearted, good people there. I see Neal McCaleb sitting over here in the front row who will be testifying soon. I know him well--a man of integrity and honesty and I think a very, very fine person, as others have been in that place--Ross Swimmer, Kevin Gover, and a number of others. I just think it has to do with the bureaucracy and government in itself--that we are not qualified to do certain things. We have a constant turnover, new people coming and going all the time. We don't have the continuity to do it, and clearly we have made some big mistakes--that $40 million we spent for the TAAMS system. In my view, we could have taken that money out and set it on fire in the middle of the street for all the good it did. Maybe it would have drawn more attention to the problem, rather than finally just discarding the whole darned system. I don't think we are going to get it fixed within the bureaucracy, very frankly. Senator Murkowski is here with us today. As you know, I believe you testified once and in your testimony a few years ago gave us the opportunity to frame up an independent bill, an independent structure in the private sector. We didn't actually introduce that bill but simply circulated it in Indian country. Maybe the time is now, right now to do it, after we have had a couple of more years where tribes have seen how little can actually be done within the bureaucratic system. I, for one, am just fed up with it and ready to introduce a bill to take it away from the bureaucracy and to try and reach some kind of settlement with the people who are waiting for their money. I saw a movie not long ago, and I remember the byline--the byline in that movie was ``show me the money.'' Judgments don't mean a hill of beans if you don't get the dough. Isn't that right? I mean, what good is a judgment if you don't get the money in a judgment. Mr. Gray. Absolutely nothing. Senator Campbell. Absolutely nothing. Well, I think you are right. But there are two, to my mind there are two times in our recent history in which we have taken legislative action to try to fix some injustice that we did to a people. One of them was the Japanese-Americans of World War II. And if you remember, it has been about 10, 12 years ago now, we did pass a bill in which we tried to give them a monetary settlement--every Japanese-American. It wasn't nearly what they lost when many of them were taken and put into American camps, if you remember. But at least it was an attempt to do something right for people that had suffered an injustice on the part of the Federal Government. There is another time, too, called the ``Volcker Commission'' some years back. I am sure you are familiar with that. The U.S. Government created that commission to deal with the issue of bank accounts owned by Holocaust victims and held by Swiss banks. That situation was cleaned up pretty quickly, but I think there was some similarity, and that was missing documents, and clearly a bureaucracy that could not do it. Do either of those times in history, would they offer a model of something that we can do legislatively by introducing some legislation to rectify this with Indian people? Mr. Gray. I think one, yes; and one, no. I think the Japanese reparation issue was not one that was based upon or even tried to be based upon individual either pain and suffering or economic loss. It was done in a much more generic way. The Volcke Commission did attempt, to the extent they had records, to trace to individuals or families what they had lost or what had been stolen during World War II through these Swiss bank accounts. Now, the problem with Swiss bank accounts is--this is the same problem that Congress is grappling with and that I am working on also on the New Patriot Act. It is in a sense good money in, bad money out. I mean, money came in. It got commingled, and then it accrued enormous amounts of interest, and then how do you unwind it in a way that is allocable to the known accounts that you have, and then what do you do for unknown accounts. And the one piece of learning that I would take from that, and this is very important--you will find this, I think, in the Volcke Commission records--is that there is no way, and actually there was a question submitted to me--do you believe that it is possible to reconcile the trust accounts? The answer is in total, no, because there are too many lost records. There are too many disjoinders between individual Indian claimants and the lands that they really have claims to. Even if you know what the lands are, and they are now fully producing, who does it really go to? And then you have the dissent and devise issue, which is a real big issue. So perfection is not something that I think you are after here. I think what you are after here is when you do have the records, use them scrupulously. When you don't--and I know there has been a lot of talk about modeling and statistical analysis--and people's eyes start to glaze over when they hear those things, and figure, well, that is just some accountant or lawyer talking about some process we don't understand. It is not that mystical. Actually, the best example I can give you, if you want to hear it, is the private sector. For many, many years when you or I or someone else, someone old enough to remember this, bought a corporate bond, they had coupons attached to them--little tabs attached to them. And the way you got your interest--they were bearer bonds--and the way you got your interest payments every 6 months or every year was you took that thing into a bank, into a trust department, and said, ``here's my coupon, now give me my money.'' And the only record of ownership was holding onto that bond and having that coupon in your hand. Now, over the years that became an enormously cumbersome problem with the peripatetic nature of the world and the computerization of the world, so they changed about 20 years ago to a registry system, so that you would have a registered owner of a bond. You would have Ben Campbell, who resides at-- and they would just send you out your check for interest and record it. Well, in between those two things, many banks found that they didn't have records of the coupons before they were transmitted into registered accounts. When they had the registered accounts, they could show that checks were cut. But before that, they had lost the coupons. This goes back 20, 30, 40, 50 years. You know, big banks, big government, little coupons--zillions of them--they lost them. Now, what do you do in a case like that? What you do is you look at either other phases of time for the same transaction and you look at how many people really didn't come in with their coupons and how many did, and you analogize that to that situation, or you look at another bond deal--some completely separate bond deal at the same contemporaneous time, and see how many people just forgot to bring in their coupons. Because these claims are brought on the basis that nobody brought in their coupons, and therefore the banks owe $200 billion worth of interest for that time, which the bank knows it doesn't owe, which plaintiffs know they don't owe, because trust departments when they got the coupons usually gave the money away. They didn't just run away with it, but they don't have records of it. So that is when you get into this kind of statistical sampling. It is not anywhere near as--I don't know, it seems kind of mystical and haphazard, but it is not. These are the kind of things that have been going on for years. In fact, I am not privy to this because I am not privy to the litigation, but I have worked with Price Waterhouse on a number of very large fixes in the commercial sector. And Price, as you may or may not know, is the consultant, the forensic consultant to the Cobell plaintiffs. And I pretty much know what they have done to come up with the basis of the historic claim. They have used procedures that are tried and true in the private sector. I am not a part of that litigation. I am not saying the claim is correct to the dollar. I am saying I know what kind of rigorous procedures they use. So anybody who expects perfection out of this doesn't grasp the reality of the fact that you have got rat infestation and lost records and you have to do something about that. But the something isn't just magic that you create out of your hands. It is modeling on the basis of contemporaneous other deals or other time periods in the same deal. And that is very important in this for another reason. It is not just payment. The real problem in the historic Indian money accounts--not so much now, but historically--is that, let's face it, you can guess that there were times when Indian lands simply were not leased at all for their resources. Of if they were, somebody pocketed the money. And this is a long time ago. I mean, we are talking about the 1920's or 1910's or something like that. I am not saying anybody in current Administrations have done that. But when you have those kind of gaps, when you have 10 years of a grazing pastures, large grazing pastures--you are talking about a huge acreage here-- that have no money coming in, you have got to do some modeling of similarly situated privately owned grazing land and say, hey, if somebody were even half on the ball, they would have brought in---- Senator Campbell. Well, let me tell you that anybody looking for perfection is not going to find it around here. That just happens to be the system in Washington. But the more I think about it, the more I think the longer this goes and the more attorneys we involve, the more complicated it is going to get. Sometimes I think if you get two attorneys together, you can have three fights. It gets worse, the more they get involved. And I am not trying to denigrate the legal profession. Mr. Gray. Senator, you have already said something about the Congress that is true. You are never going to find perfection, and you are not going to find in me a proponent of the legal profession. I think they deserve the reputation they have, to a large part. But you do have three attorneys up here---- Senator Campbell. Whatever that means. [Laughter.] Mr. Gray. But you do have three attorneys up here with no clients, and it may be the last time you ever see anything like that. So there are some who will actually help you. Senator Campbell. I think so. But I think that you agree that what we need to do is get some checks in the hands of Indian people, and for the life of me I don't know how we are going to do that unless we reach an agreement with the people we owe the money to and do some kind of legislative relief, because I just don't think it is going to get ever cleared up within the bureaucracy. And thank you, Mr. Chairman. The Chairman. Thank you. Senator Murkowski. STATEMENT OF HON. FRANK H. MURKOWSKI, U.S. SENATOR FROM ALASKA Senator Murkowski. Thank you very much, Mr. Chairman. Mr. Gray, I want to thank you for your comments. Unfortunately, I did not hear the other gentlemen. I was at a hearing before the Judiciary Committee, where we have a new judge for Alaska, Judge Beistline, and his nomination hearing was taking place. But as the chairman and ranking member know, I have for a long time preached my belief as a former banker and one who has had the responsibility of a trust department, that we have a situation here where we have been kidding ourselves for a long time. We have had two Secretaries of the Interior in a row who have been held in contempt on this matter. So it is a bipartisan failing, and the question is, are the tribal units and those that are fearful that we are winding down the BIA ready to come aboard and admit that this is not working? I mean, Mr. Thomas, president of the Central Council of Tlingit and Haida, is with us today. He is going to be testifying. In reading over his testimony, I totally agree with a portion that states, the fatal flaw in the approach--and this is the approach back in 1994 when Congress set up the special trustees to take the steps to put forth solutions to the trust management problems--and the fatal flaw in the approach was that it left the Office of Special Trustee under the administrative authority of the Department of the Interior Secretary--Secretary Babbitt--who made it very clear, and he testified before this committee from the beginning that he did not feel that the Office of Special Trustee was necessary, nor did he support the work being performed under the authority. We had several discussions. He claimed that it would amount to basically the unraveling of the BIA's responsibility. Now, Secretary Norton has inherited this special trustee put in place by Secretary Babbitt. The point is, the process of BIA doing it has failed for the reasons that we have identified here today. They are not set up to do it. They are good people, but this is a very complex problem that is dealt with in the private sector all the time in a proficient manner. What we have here is a problem with, again, the tribal acceptance--that we are taking something away from the BIA that they are incapable of doing and putting it in the hands of the private sector who can do it right. For heaven sakes, a firm that takes on this responsibility, and I think the point was made by you, Mr. Gray, there might be some reluctance of the private sector to take this on because it is such a mess. On the other hand, I have a belief that the private sector will back up their efforts if they do take it up, with their reputation. They've got something to lose. So they are not going to take this lightly. So I would hope, Mr. Chairman, that once and for all, after 21 years on this committee dealing with this problem, which didn't occur overnight. We have seen pictures or the recordkeeping. It is disastrous. It is unacceptable. It is inappropriate. To face reality, and get on with the idea of giving it to some organization or groups of organizations collectively who are experts in the area. They have proven their expertise with satisfaction to their customers, and save the Federal Government a lot of money. As the Senator from Colorado said, get the checks out where they belong and quit fooling around. We are not trying to diminish the BIA's authority. We are just trying to get a job done that the BIA has shown that they are incapable of. If there is any question of evidence, let's look at the mess before us. I have no questions. I am just preaching. [Laughter.] The Chairman. Thank you very much. I would like to thank the panel for your patience and your wisdom. We will be submitting questions. I think all members of the committee will have questions to submit. Do you believe that 30 days will be sufficient? Mr. Chambers. Certainly for us it would be, Mr. Chairman. The Chairman. With that, I thank you very much, sir. Mr. Chambers. Yes, sir. The Chairman. May I now call upon the next panel--the assistant secretary for Indian Affairs, Neal McCaleb; the associate deputy secretary, Department of the Interior, James Cason; the special trustee for American Indian Trust Funds, Department of the Interior, Thomas Slonaker. Mr. Secretary, it is always good to have you before us, sir. Mr. McCaleb. Thank you, Mr. Chairman. Mr. Cason. Mr. Chairman, we discussed briefly beforehand and thought I would start our testimony today, and then each of us will have comments later on when we do the testimony. STATEMENT OF JAMES CASON, ASSOCIATE DEPUTY SECRETARY, DEPARTMENT OF THE INTERIOR Mr. Cason. It was very interesting to listen to the first panel, and I guess somewhat depressing when you hear that the problem is insolvable and it has been here forever and there is nothing you can do about it. I would not say that the folks in the Department are quite that pessimistic. We think there are things that can be done. What we want to do is come up today and visit with the committee regarding the major problems that we see at the moment, and some of our views on those problems, and begin a dialogue with the committee about how to address those. I do have testimony that I would like to enter into the record. Other than that, I would just like to make a few brief comments, and then the other two gentlemen here would like to make brief comments and then we will take questions. The Chairman. All of the prepared statements are made part of the record. Mr. Cason. Thank you, Mr. Chairman. In taking a look at the issues that we have before us, I think the committee in the last dialog that we just had recognized that there has been a long history of problems in trying to administer the trust on behalf of Native Americans, both tribes and individual Indians. We do have two classes of organizations that we have to deal with, that we need to keep on the table. One is tribes, and there are more formal relationships with tribes through treaty with the United States. And the other is with individual Indians. We have some responsibilities for both. As the committee heard, there is wide-ranging responsibilities that involve many parts of the Federal Government, both the judicial branch, the congressional branch and the executive. There are several organizations in the executive that manage tribal responsibilities, and the Department of the Interior has particular responsibilities in managing tribal responsibilities. Most of those are centered with the Bureau of Indian Affairs [BIA], but there are also responsibilities located throughout the Department, with the Office of Special Trustee, the Bureau of Land Management, the Minerals Management Service and others. One of the issues that has prompted the dialog that we are having here is the proposal made by the Department of the Interior to create a new organization to manage some of those responsibilities. It has been termed the BITAM, or the Bureau of Indian Trust Assets Management. When we were looking at the issues before the Department about how to manage some of these responsibilities, and particularly the trust assets, and the trust assets involve basically 56 million acres of property and about $3 billion that are in accounts. We were looking at the reports that have suggested that over time, these assets had not been managed properly. In looking at all of those reports, we were trying to come up with ways to address those problems and that discussion over the period of a couple of months involving the three of us and a number of other senior management people within the Department, led to the formation of a whole set of options that we considered within the Department of the Interior. The BITAM option, as it is called, was the option that we thought was best out of the ones that we had within the Department, to try and improve the management, integrity and security of managing Indian trust assets. The objective of that was to add profile to the issue by having another assistant secretary within the Department be responsible for those assets. It was not to undermine BIA in particular. It was to get a clear focus on the job that was there to be done, to make sure that there was an organization that had one sole purpose, and that was to ensure that the management of Indian trust assets was being done as well as possible. It was to permit us an opportunity to clarify the policies and procedures that were necessary to get that job done. And it was there to try to remedy some of the weaknesses that we have in the system within the Department. Would it be a panacea? No. It would not have been a panacea, but it was a step and we considered it merely a step in the right direction. We stopped our deliberations within the Department at a conceptual framework. We basically said, here is the problem, here is an organizational way to try and address it, and at that point in time started consultation with the tribes. We have had a number of tribal consultation sessions, and Mr. McCaleb is going to talk about the dialog that we have had with the tribes. We are very appreciative of the effort being made by tribal leaders to assist us in evaluating that proposal and a number of other proposals as to how best we can try to address this problem. As far as the Department is concerned, any and all options are possible except for just the status quo, because we feel like the status quo is not appropriate. But other options to address this problem, including a number of Indian-sponsored alternatives, the alternatives talked about by Mr. Gray, the alternative talked about by Senator Campbell--you know, we will take a look at any option and in the evaluation process what we are after is what is the best way to try and address the problem. So the Secretary and the Department are not in a position at this point to say the only option is the BITAM option. When we offered it as a conceptual framework, it appeared to be a good option, but it is not the only option. Another problem that we are dealing with right now that is important to note is the Cobell litigation that the Department is involved in. It is a difficult challenge for the Department. It is consuming a tremendous amount of resources to manage our part of this litigation. It is consuming a lot of resources with the Department of Justice. In the Cobell litigation, there has been several pieces that are noteworthy. One of those is trial one. Trial one is basically prospective trust reform. That trial ended with a decision by the U.S. District Court judge circa December 1999, and was later appealed to the Court of Appeals and in most parts affirmed by the Court of Appeals. The trial involves individuals as opposed to tribes, and we all have to recognize that as we go through our processes. There is a possibility for a trial two, and the trial two would be involved principally with historic accounting. And then we are currently involved in a contempt trial, as Senator Murkowski noted. The prior Administration was tried in contempt of court and Secretary Babbitt and Secretary Rubin were found to be in contempt of court on this issue, and our current Secretary Norton is being tried in contempt also related to issues here. The contempt trial I believe is nearing its end. I believe all the witnesses have given testimony, and it is basically up to the judge to decide what is appropriate in this case. Also, one of the issues involved with the Cobell litigation is the possibility of a receiver. That is something else that is being look at, has been looked at as an option. It is a tangential option to some of the things that we have talked about this morning already. In this case, the judge has sent signals or made comments that a receiver may be possible if we don't find the right kind of an environment is being pursued within the Department. One of the issues that is also an outcropping that we want to discuss with the committee is the possibility of historic accounting--let me re-phrase that--the task that we have to conduct a historic accounting. The judge in this case has made a determination that the Department is responsible to conduct a historical accounting. And historical accounting is generally defined as a transaction- by-transaction accounting without regard to when funds were deposited. So one could determine that this means since 1877, we are to account for all the funds that have been deposited on behalf of Indians since that point, on a transaction-by-transaction basis. The Department is preparing, planning to do that. We have told the committee and we have told Congress in general and the court that we would supply a plan as to how we would go about doing that accounting by June 30. There is an issue related to the complexities of doing that type of accounting, the relative costs that would be involved in doing the accounting, the methodologies that would be used and the relative satisfaction that one would get from doing it, because there is a problem with missing records over time, and that the further back in time one goes, the more you are going to find that there are missing records and that other assumptions or other methods would have to be used to fill in the missing data. Finally, there are two other small issues I would like to raise. One is fractionated interest. We do have an issue with fractionated interest on the part of the individual Indians. As generations pass, the relative level of undivided interest in properties continue to fragment to the point that they are becoming unmanageable. I have been told at this point that the BIA is now tracking these interests to 26 decimal places, and that they are preparing to rewrite their computer systems to be able to track to 42 decimal places. These are very, very small interests in property and it does complicate the management job within the Department to have to track these interests because you have to be able to identify them all in probate, record them all in title work, and you have to be able to manage the accounts that are associated with these fragmented interests and that there are some difficulties with this. They are so widespread and expanding exponentially now that we will have to come up with a broader solution than we have available. The last item, just to put it on the table, we have also experienced here in the last three months the shut-down of most of the computer systems within the Department under a temporary restraining order issued by the judge in the Cobell litigation. The Department has had to disconnect from the Internet virtually all of its computers. There have been a number of impacts associated with that. The reason for shutting down the computers was because the security of the data that was in our systems was inadequate, and the judge made a determination that we should shut down the computers and do the job to go back and take a look at where individual Indian data was located within the Department, and ensure the security integrity of that data. We are currently going through that process. At this point, we have about one-half of the computers of the Department hooked back up to the Internet and we are working on the remainder. That is a brief overview of what we have included in our testimony, and we would be happy to answer questions once these two gentleman have had an opportunity to comment. Thank you, Mr. Chairman. [Prepared statement of Mr. Cason appears in appendix.] The Chairman. I thank you very much, Mr. Cason. Secretary McCaleb. STATEMENT OF NEAL A. McCALEB, ASSISTANT SECRETARY FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR Mr. McCaleb. Thank you very much, Mr. Chairman, Mr. Vice Chairman, Senator Campbell. I am privileged to be here this morning. I thank you for the opportunity to discuss these very far-reaching problems affecting Indian country and Indian individuals. As Mr. Cason indicated, we had a fairly extensive and spirited debate within the Department about how to try to get our hands around this seemingly intractable problem of the effective management of the Indian trust asset in Indian country. The proposal that was agreed upon after considerable discussion and analyzation, and reaching a consensus, was the BITAM proposal. It is a conceptual proposal. It was not a detailed proposal. It embodied certain principles of central single-executive sponsor management under a new Assistant Secretary for Indian Trust Asset Management, and involved the removal from a variety of Departments, not just the BIA, but all Departments that involve trust asset management, including the BIA, BLM, MMS, and others to this new bureau. We took the concept on the road, if you please. It was clear from the outset that we absolutely needed an extensive consultation process. And in the spirit of the Indian policy of self-determination and self-governance, we began the consultation process after due public notice on the December 13 in Albuquerque. Secretary Norton chaired that first meeting herself and spent the entire day listening to all the comments that were made. And there were probably 500 people in attendance at that particular meeting in Albuquerque. We have since that time held seven other consultation sessions. There is some reluctance on the part of Indian country to refer to this as consultation. The term that is preferable to many of the Indian tribal leaders is ``scoping'' sessions. But we have held seven more of these throughout the country--in Minneapolis, Oklahoma City, Rapid City, San Diego, Anchorage, Washington, DC, and most recently in Portland, OR. These have been attended by various officials within the Department of the Interior. I personally have attended every one of them, and chaired them all except the initial one which was chaired by Secretary Norton. We conducted these eight meetings so far. We have listened to--there has been about 2,000 people in the aggregate attending these meetings. We have heard over 50 hours of testimony and received some 10 different defined alternative proposals from tribal leaders and tribal advisory organizations. Now, there were a number of repetitive themes that emerged from the consultation process. Some of them were, there was basically unanimous opposition to the BITAM proposal as it had been presented. Second, there was most notably concern that they had not been included, on the part of the tribal leaders, that they had not been included in the formulation of the BITAM proposal, which in my judgment was one of the underlying reasons of the out-of-hand rejection from the very start of the BITAM proposal. Clearly, the tribes wanted to be involved and have input into these very, very important discussions affecting their lives and their futures, to which they are absolutely entitled. In that respect, they recommended, since they perceived these as scoping sessions, another alternative method of having some input into the formulation of alternative proposals by the creation of a task force. This task force was developed in the next few subsequent meetings. The composition was determined to have two members from each of the 12 regions and one alternate member, or a total of the alternates and membership of 36. They were to be selected by the tribal leaders from each one of their respective regions from which they came. That has happened. That has been completed. And we in fact held our first complete task force meeting on February, beginning on the first, second, and third, at the National Conservation Training Center at Shepherdstown, attended by Secretary Norton, Deputy Secretary Griles, Mr. Cason, myself, Mr. Slonaker, and a variety of other of the top management in the Department of the Interior, to listen to and interact with the members of this task force, many of which by the way I have noticed are here in attendance in this room today, and most of the members of your panels three and four are members of that tribal task force. At the meeting at Shepherdstown in the first weekend in February, the task force presented to the Secretary four of what they thought were the most probable alternative proposals for her consideration, and also for their careful evaluation. They had developed a matrix for evaluating these different proposals, based upon criteria which they have also developed to determine which proposal or proposals are most likely to further consideration. In my judgment, the consultation process or scoping process, whatever you want to call it, in any event it was a communications process, and it was largely a listening process for me because, as chair, I largely listened to the recommendations, the concerns of the participants from all over Indian country who came to speak and responded to questions as they were directed to me. I believe this process and the creation of the tribally driven task force is very useful because whatever the solution is to this seemingly intractable problem, it needs to be done with the enthusiastic endorsement of Indian country, in my judgment. As indicated earlier, Mr. Chairman, in your opening remarks, the days have long since passed of the BIA and the United States Congress dictating unilaterally to the sovereign tribes of the United States what is best for them. They have demonstrated quite dramatically in the last 26 years, going on 27 years now, since the passage of the Indian Self- Determination and Self-Education Act and the subsequent titles, their ability to run their own businesses and to administer their own programs and to, in many instances, be very competitive in a market-driven economy. So there has to be the careful listening and response to the tribal initiatives in this. And that is the process that is ongoing right now. I am very pleased that many members of the task force are in attendance here. Will this joint effort between the Department of the Interior, the tribal task force, be frictionless and without debate? Absolutely not. Will we reach some kind of a unanimous opinion on what is best? Highly unlikely. But it is a mechanism that has to be tried and used and implemented. And I am maybe the last unreconstructed optimist in this process, but I believe in the efficacy of the tribal leadership to sort out these problems with us and to help define appropriate solutions. I would also say that the next meeting of the task force is set for March 8 and 9 in Phoenix. They have organized three sub-groups to assist in the segmentation and development, including a group to work on the protocols of how the mechanisms of how this organization is going to work and interact with the Department of Interior; also to help us define future scope of services for our consultant EDS and how to utilize their service most effectively; and thirdly to evaluate very carefully all the different proposals that have been put on the table so far. I think I will conclude my remarks at this point, and answer any questions that you may have at the appropriate time. [Prepared statement of Mr. McCaleb appears in appendix.] The Chairman. Thank you very much, Mr. Secretary. Mr. Slonaker. STATEMENT OF THOMAS SLONAKER, SPECIAL TRUSTEE FOR AMERICAN INDIAN TRUST FUNDS, OFFICE OF THE SPECIAL TRUSTEE, DEPARTMENT OF THE INTERIOR Mr. Slonaker. Thank you, Mr. Chairman. The last time I appeared before you was at my confirmation hearing and you offered your condolences for my taking this job, and I must tell you at this point that I appreciated that, but it has been very interesting and challenging. The Special Trustee's role in the Department is truly unique, and I suspect is unique throughout the Administration in the sense that it is an independent role. It is supposed to be an independent role. Some of my staff who were here when Paul Homan, the first Special Trustee was here, often joke about the Special Trustee's Containment Committee within the Department, but I think that in my time it has been apparent that the Department is willing to listen and think with me through a lot of these problems. But it is a role going forward that I think will be more and more critical. I have spent the last 1\1/2\ years-plus when I was confirmed trying to, I suppose you would say un-peel the onion and discover what the issues really were with the sub- projects under the HLIP in the first place. And then we got to the point where I felt that we needed to bring EDS, it turned out to be EDS, but bring in a firm to really look into the three major sub-projects which are at the heart of trust reform and also trust management. And then of course with the support of the Secretary, that EDS assignment was expanded to an even greater look at the entire trust reform process. So it has been an interesting time. Let me share with you very briefly some of my observations in terms of where I think problems are and where I think potential solutions may lay. First of all, I very much echo Mr. Endreson's comment in the first panel, distinguishing between what I call the fiduciary management and what might be called the broader trust obligations that the government has. By fiduciary management, I mean the management of the 56 million acres of land that are subject to being leased to produce income for Indian beneficiaries, both individual and tribal-- the accounting for all of that, the pursuit of the leasing activity, the payment of checks and everything that goes with it. All of that activity looks like nothing more or less than a significantly sized trust department. But there are broader trust obligations, and he articulated some of those in terms of services from the Government to the tribes, and I thought he did a good job of it. But I think it is worth dwelling on that point because in the discussions that go on, I often find confusion between the two issues. The fiduciary trust clearly is a part of the trust obligation of the Government, but may require solutions to make it work properly that don't necessary have to impact in any way the broader trust obligations of the Government. I think the problems that I have observed are as follows. In the first place, I think the 1994 Act, with 20/20 hindsight provided the special trustee first of all with no line management capability. In the recognition of the fact that there are five separate bureaus and offices that have parts of the trust operation, you can begin to see that oversight, which is what the 1994 Act conveys to the Special Trustee, is oversight, but it is not line management, and what this takes is line management to get the job done. There is a very high lack, which has already been mentioned, severe lack of experienced trust managers within the Department of the Interior. In fact, I venture to say that those with actual private sector trust experience are relegated strictly to the Office of the Special Trustee at this point. There is also a lack of project management capability. It is just not there in any meaningful amount to get a lot of the projects done in appropriate manner, and these are large-size projects as they were sized in the high-level implementation plan. But regardless of what the organization looks like, regardless of whether it is outside the Department of the Interior, whether it remains part of the BIA, or whether it takes on some other configuration within the Department, what is really needed here is experienced management, clear line management, and accountability up and down the line. For example, it would not be necessary, really, to split this off from BIA at all, but it would be important to get the people who are responsible for delivering trust services to the beneficiaries, both individual and tribal beneficiaries, so that they don't have conflicting duties up and down the line. We have a lot of people on the ground, I have come to understand in the time I have been in this job, that really are doing and want to do a good job as far as their trust beneficiaries are concerned, but often they are conflicted with other responsibilities. I think it is very important that the middle management of the trust organization be carefully examined as well, because those people have to understand the trust obligation and they have to be willing and able to deliver the services. I concur with the Secretary's concept of a single trust organization. But as I have just mentioned, where it is placed, either inside or outside the Department, I think is a little bit less important than the fact that it is a single line of authority. There is accountability up and down that line, and there is a meaningful amount of trust experience, particularly in the management level, to carry off the job. In fact, you may remember that the 1994 Act also created an advisory board for the Special Trustee. That advisory board has, within the last couple of months, actually recommended that the trust function be put in a single organization and taken outside the Department. I am very sympathetic, as I have mentioned already, but I do think the point should be that it is a single organization with accountability. You may wonder what I think about the role for the Special Trustee going forward. I think in some fashion there needs to be oversight with teeth that has not been there, because the Special Trustee has to provide candid and informed guidance for the Secretary. That is the mandate. But in order to get anything done, there has to be teeth in there. There have to be appropriate resources provided for OST as an oversight, and in my opinion there continues the need to have the Office of the Special Trustee in charge of the funding which takes place on trust reform projects, which is the way it has worked up to this point. I would trust and expect that it would work that way going into the future. That is to say that anything to do with trust reform has to pass the test of good planning, good logical planning in order to get the funding which Congress has already provided through appropriations. As you probably know, my office has actually halted much of the funding and some of the projects for the lack of good planning. In conclusion, let me just mention a few things that I think are important going forward. I think that we get caught up in the Department, even my office gets caught up in trust improvement, trust reform. One of the things, actually two things that I think we are going to need to spend a great deal more time on and are making steps in that direction, one is we need to be assured that the Department, no matter how it is organized, is maximizing the returns on the assets we invest for the beneficiaries. I don't think I need to say much more than that because I think we are all aware that there are situations here and there in Indian country where the assets, the lease, is not being maximized for the benefit of the beneficiary. Also in the area of trust investments, we are relegated to U.S. Government securities only, and some Federal agencies, related Federal agency securities. I worry about, for example, the Indian child who will not receive moneys until they reach a majority, with those moneys being invested strictly in government securities. We need to think about how we offset the impact of inflation over many years. So those are important tasks I think we will need to work on. I think there is an important role for the tribes under the 628 contracts and the compacting arrangements. In fact, there is a vital role, but I think it is also important for somebody to say that there is also a very high standard of trust here, which was articulated pretty well I think in the first panel, that will apply to no matter who is involved with administering the trust. And with that, I would like to conclude, Mr. Chairman. [Prepared statement of Mr. Slonaker appears in appendix.] The Chairman. Thank you very much, Mr. Trustee. I just have a few questions, and I would like to, as I did with the other panel, submit my questions for your consideration. Mr. Cason, as you have indicated, trust management functions are performed by other bureaus, not just BIA, but the Bureau of Land Management, Office of Surface Mining, et cetera, et cetera. If that is the case, why is the Department's request for a reprogramming of funds only proposes to ore funds allocated to BIA and the Office of the Special Trustee, and not to others? Mr. Cason. Mr. Chairman, the initial reprogramming request was to establish the core of the new organization. The core was basically the operational portion of the Office of Special Trustee and the trust asset management portion of BIA. The Department also had intended to go agency by agency throughout the Department to evaluate all of the other organizations that contribute to trust assets management, and evaluate case by case what is the smartest thing to do in moving pieces of those into this new organization. At the time we submitted the reprogramming proposal to establish the core, we knew we had a ways to go before we would be prepared to move the other parts effectively, but the intention was to look at all parts of the Department and consolidate where it made sense. The Chairman. Mr. Cason, in your testimony you mentioned the Cobell case. In the Cobell case, the court found that the Department had breached certain fiduciary duties, and in fact they cited four of them--failure to provide an accurate accounting of all money in the individual Indian money accounts, failure to retrieve and retain all information necessary to render an accurate accounting, failure to establish written policies and procedures for retaining necessary documents and information, implementing computer and business systems architecture, and fourth, failure to ensure sufficient staffing of trust management functions. Will the Secretary's proposal address these breaches? Mr. Cason. The organizational proposal itself does not. The organizational proposal is just how we do work, who is assigned to do work. Instead, this is basically what work needs to be done. The Secretary and the Department is aware of the four breaches, are working on the four breaches. There are individual efforts going on under the four breaches. There is some influence between the breaches and the work that has been done and the organizational proposals. For example, Mr. Chairman, on the fourth issue of staffing for trust management functions, the Department had prepared a workforce staffing plan, but that staffing plan will be influenced as to what sort of organizational arrangement we have at the end of our consultation process. So that is basically in abeyance at the moment in large part, while we sort out what the organization is, and then we revise the staffing plan to meet the organizational expectations that we will have. So there are some influences between them, but they are not direct. The Chairman. Are you saying that there is no expertise available at the present time? Mr. Cason. No; I am sorry. That would not be an accurate way of looking at it. There are people throughout the Department who bring expertise into the job that we have to do. I think that there are some references here from the initial panel's experts and Mr. Slonaker, that there are particular skill types that are relatively rare within the Department, and that skill type is people that have a good resume on trust functions or fiduciary responsibilities management. That is a skill type that we would like to have more of. We don't have enough of. But there are other people that do other things like computer experts, management people, et cetera, that we do have some skill types within the Department that is useful. We just don't have enough of all of them. The Chairman. Thank you. And if I may ask Secretary McCaleb, Mr. Secretary, when you couple the proposal to strip all trust-related functions of your bureau, and the proposal in the President's budget request to turn all BIA-operated schools over to tribal governments and the private sector, it would appear that there is very little left for you to oversee. What do you view as the role of the Assistant Secretary to be if these proposals are implemented? This is a question that many of the tribal leaders have been asking. Mr. McCaleb. Well, first of all, in the education area, we already have over two-thirds of the schools that are operated under contract by local tribal school boards. I think that is a legitimate objective, just as I think it is a legitimate objective to have public schools operated by local school boards. The proposal to privatize some schools, and it is a pilot proposal within the budget, is to try to deal with some of the very difficult schools that are our lowest achieving schools, to try to bring them up to something approaching what our education goal which is 70 percent proficiency in reading and communications and mathematic skills. Will that work? I don't know. They are pilot programs. But the point is that the Office of Indian Education Program still has the responsibility for Indian education--its trust responsibility--just as at the State level there is usually a State Board of Education or an overall education agency responsible for all the local school boards. That is still the responsibility of the Office of Indian Education Programs reporting directly to the Assistant Secretary of the Interior. In addition to that, of course, there are many functions that are essential for the safety, health and welfare of the community, such as public safety, law enforcement, the court systems. Economic development is clearly a very, very important role, I think, of the Assistant Secretary and the BIA, because I think we will only solve some of our social pathology that exists in Indian country is a result of eliminating the despair and hopelessness that comes from poverty. And that can only be, in my judgment, done by developing market-driven economics-- self-sustaining market-driven economies. We are starting to see that develop in different tribal entities, and with great success. Roads, which is an element of economic development because all access to the market--well, not all access--all direct access of products to the market is with roads, but also the development of the essential telecommunications process that I think is useful--no, essential to economic emergence for tribes because of their remoteness of location--is an appropriate activity. Social services clearly are still the responsibility of the BIA. Other functions, while not great, are very important, like land trust activities and tribal recognition. We still have to build the schools and the Office of Facilities Management and Construction operates the school construction program and I think will continue to do so. We have a very ambitious school construction program. This is the third year of it, and it is a quantum--not a quantum jump, but a tripling of the investment that we have made in the replacement of outdated and in many cases unsafe school buildings. All those still remain under the purview of the Assistant Secretary of the Interior. The Chairman. The trust relationship exists between the Government of the United States and Indian Nations and Indian individuals. However, many in Indian country look upon the BIA as the trustee. Of course, that is where they focus their concerns, their desires and their needs. Do you believe that the Secretary's plan will diminish the importance of your bureau? Mr. McCaleb. Well, it would clearly diminish some of the functions that are placed under the new Assistant Secretary of the Interior for the Bureau of Indian Trust Asset Management. Whether it diminishes the importance or not is a matter of debate. I happen to think that it does not diminish the importance. I happen to think, my limited experience after seven months on the job is that it is a very consuming and demanding responsibility. The reorganization would let the Assistant Secretary for Indian Affairs focus on these other areas that are vital to the quality of life and the economic emergence in Indian country. I think that is very useful, and in my judgment extremely important. The Chairman. Thank you very much, Mr. Secretary. If I may now call upon the Trustee. If your office is provided teeth, as you indicated, and line management responsibilities and accountability, and the expertise that you need, would we need a new proposal or plan? Would you be able to carry out your functions? Mr. Slonaker. You mean, as an amendment to or in lieu of the 1994 Act? The Chairman. In addition to the 1994 Act. Mr. Slonaker. In addition to. I don't believe so. I think the 1994 Act, to begin with, can permit me to, or as the Special Trustee to make certain that trust reform and also ongoing trust operations take place to fulfill the trust obligation. I think the secret here is to get the line management capability or something very akin to it. The Secretary, I should tell you, in the summer of last year provided the Special Trustee with the capability to issue directives, which would be used presumably only in those cases where there was no other resolution, to correct a trust situation. The terms of the order provide that the people who are affected, or the organization that is affected, has a capability of appealing that to the Secretary. If she stands behind me, which I am sure she would, after a 30-day period, it has the effect, that directive of mine has the effect of becoming, in effect, a secretarial order itself. We have tried that, and we have not concluded whether it really works yet. It is, I must just tell you bluntly, but there is a bureaucracy that can defeat even such directives, or at least deter them. And so I am not convinced that that is the real answer. I think there has to be something stronger than that, and I don't see what that would be other than direct line authority. So I am not sure, Mr. Chairman, that the 1994 Act has to be touched at all. But there has to be the kind of resolution that I just mentioned and I think obviously there has to be a considerable amount of planning that has to go on to do this trust reform correctly, and also to ensure, going on, that the trust obligation is carried out properly. We have created, for example, in my Albuquerque office, an Office of Trust Risk Management, which is designed to be in effect the watchdog on making certain the trust operations are operating correctly; that the obligation is being carried out; that the maximization of income on the leases, that I mentioned before, is being carried out correctly. So there is a lot we are doing and can do a lot more of in that respect. I hope that answers your question. The Chairman. Do you support the Secretary's plan? Mr. Slonaker. I support the Secretary's plan in the sense, as I mentioned before, of addressing one critical question, and that is to actually separate those who are responsible for trust administration and operations, up and down the line, into a single organization. A single organization can be outside the DOI. It could be inside DOI. It could conceivably be inside BIA. But it has to be a single line management, undistracted from other responsibilities and with accountability up and down the line. The Chairman. Mr. Cason and Mr. McCaleb, I presume both of you would support the Secretary's plan. Mr. Cason. Mr. Chairman, we do support the Secretary's plan, but I would say the Secretary's plan is an option and that the Secretary and the Department are in a position that we are soliciting other options for how to better address our trust asset management responsibilities. We have received a good eight to ten proposals from the Indian community on how to do that. We are open to other proposals. We are continuing to work with the tribal leadership organization, the task force, to evaluate the proposals we have and to develop other proposals. So while we support the Secretary's plan and we helped formulate it--this group, we helped formulate it--we did not see that as a panacea; that it was a way to address the problems that we had and that we are open to other ways on how to address those problems. What we hope out of this consultation process is that we end up with even a better proposal than that one on how to manage it. If we come up with a better one, that would be terrific. The Chairman. So you are flexible and open to other suggestions? Mr. Cason. Absolutely, Mr. Chairman. The Chairman. I have two questions submitted by Senator Daschle, who could not be here. He has asked that I pose this to the panel here. What is the status on the shut-down of the Bureau's land records information system? When will this important automated trust land ownership system come back on line for data entry by the Land Titles and Records Office? Mr. McCaleb. The land titles records is of course computer based, and is connected to the Internet in order to retrieve. So it has been shut down as a result of the judicially mandated disconnect. It is not one of the systems that has been brought back up yet, because our first priority is to bring the systems back on line by which we can convey checks to the IIM accountholders and other beneficiaries of the trust. But it is a high priority behind those. The Chairman. How long will it take? Mr. McCaleb. That can only be determined by the judgment of the Special Master of the court. We work with him under the consent decree to determine or to satisfy him that the security measures that we have taken protect each system before we bring it back on line. The Chairman. Mr. Secretary, what is the Department's plan for the TAAMS title sub-system that is currently in use at the BIA Billings Land Titles and Records Office? Is it your plan to deploy this automated title system at all the BIA Land Titles and Records Offices? If so, how soon and how long will it take to fully implement this automated system? Mr. McCaleb. I am going to let you respond to that, Jim, since you have worked a little closer with EDS. [Laughter.] Mr. Cason. Did you see a short straw coming over here? [Laughter.] The TAAMS system, as we talked about earlier in the testimony, was developed over time. The Department's contractor, EDS, evaluated TAAMS along with BIA data cleanup in its initial effort. Our contractor basically concluded that the TAAMS system had not been developed to be successful in the long term, and recommended that we suspend two of the three basic modules of TAAMS. The module they thought would work was title, and then they suggested we suspend work on the realty and accounting portions of TAAMS, which we have done. The TAAMS program on title is being used in four areas of BIA, and it is being currently evaluated further for the relationship between the Legacy record system and the TAAMS system. And that over time, the expectation is that the TAAMS title portion can be used more broadly. I don't have a specific timetable, Mr. Chairman, of how long it is going to take to do that. As I understand it, there are differences in the way that each BIA region manages its land records and that that has been part of the problem that led to the, I will say, failure of TAAMS. What the Department tried to do was take a commercial off-the-shelf system and force it onto the Bureau as a means of standardizing work. That did not really work in the end, so we ended up with a 100- percent commercial modified system. So the issue that we have before us is to recognize that each of the regions do things slightly differently, take a look at the mechanisms of TAAMS between the current TAAMS system and the Legacy system, and see if we can make those work module by module, region by region--to do that deliberately. So I don't have a specific timeframe, but that is the basic idea about how to approach it. The Chairman. Thank you very much. As I indicated, the committee will be submitting questions for your consideration, and we will keep the record open for 30 days, and I hope your responses can come in before then. Mr. Cason. We would be pleased to do so, Mr. Chairman. The Chairman. Mr. Cason, Secretary McCaleb and Trustee Slonaker, thank you very much. Mr. Cason. Thank you. The Chairman. Senator Dorgan has asked that I extend his regrets that he cannot attend today's hearing because, as some of you know, he is chairing the Commerce Committee hearing on Enron's collapse. Senator Dorgan wanted to be here to introduce Chairman Tex Hall of North Dakota and to listen to the testimony of the Department of the Interior and tribal leaders. So on behalf of Senator Dorgan, his written statement will be included in today's record. [Prepared statement of Senator Dorgan appears in appendix.] The Chairman. Mr. Chairman Hall, my apologies from Mr. Dorgan. Our next panel is Tex Hall, chairman of the Three Affiliated Tribes of the Fort Berthold Reservation, cochairman of the Tribal Leaders Task Force on Trust Reform. Is Susan Masten here also? Mr. Hall. No, Mr. Chairman; she had recent surgery and will not be able to attend today. The Chairman. I am sorry to hear that. I hope she is doing better. Mr. Hall. Thank you. I will forward that on to her. The Chairman. Chairman Hall, the floor is yours. STATEMENT OF TEX HALL, CHAIRMAN, THREE AFFILIATED TRIBES OF THE FORT BERTHOLD RESERVATION, AND CO-CHAIR, TRIBAL LEADERS TASK FORCE ON TRUST REFORM. Mr. Hall. Thank you, Mr. Chairman. Again, my name for the record is Tex Hall, chairman of the Three Affiliated Tribes of the Fort Berthold Reservation and also the cochairman, along with Sue Masten, of the National Tribal Leaders Task Force. Just a couple of things I wanted to point out, Mr. Chairman, before I begin my formal presentation. I have submitted a written testimony. But in response to, and you had some very good speakers up here, but in response to Mr. Gray's testimony, obviously Mr. Gray has a great amount of expertise, but as tribes represent sovereign nations, we want to make sure that we counter what Mr. Gray has indicated about the commonlaw standards of a trust versus historical standards of a trust that go back to the 1800's. That was reiterated by the comments from Mr. Chambers and Mr. Endreson. We agree for the most part of that historical relationship, and that trust is all-encompassing based on treaty, statutes, executive orders and so on and so forth. We want to concur with the two attorneys and want to offer that that is what we think BITAM does not address that historical trust standard. That is one of the main points that the Tribal Task Force is really opposed to on that proposal of BITAM. We feel it does not address that. So I just wanted to say that from the onset, Mr. Chairman. In terms of the origination of the Task Force, Mr. Chairman, we really created ourselves by the tribes. The Task Force was created at a response of BITAM, as we call it. That was in Albuquerque on December 13. Tribes were very concerned and spent a good deal of 12 hours on the day before, on December 12, in anticipation for Secretary Norton coming to Albuquerque. We had just received notice on this mainly in person from Mr. Steven Griles and Assistant Secretary McCaleb at the annual NCIA convention and meeting in Spokane on November 29. So this really came as a lightning bolt to the tribes and we were very alarmed at the complete lack of consultation, the lack of regard to the beneficiaries, to the tribes, and the IIM accountholders. As sovereign nations, of course, that is who we have jurisdiction over, is our land and our people. And we know all too well that this is important for the past, for today and for the future. And as we heard today, some people, some government employees will talk about it has taken a lot of their time. Mr. Chairman, we want to reiterate as a Task Force of tribal leaders, this is our life. This is past, this is present, and this is for the future generations. So we need to be involved and we will take as much time as necessary to make sure that a plan is drafted that is tribally leader-driven. And so we, again back to the December 12 and December 13 meeting in anticipation with Secretary Norton, 80 tribes in Albuquerque, Mr. Chairman, by unanimous consent, and it took all of 12 hours the day before the--we call it ``scoping'' because we do not feel it was in compliance with Executive Order 13175, and that is that before any kind of a change and any kind of the operational changes that are being proposed must have full and meaningful consultation. So again, this was a lightning bolt and we spent all of the 12 hours and said we need to come up with some principles that we all agree on so the tribes are in unanimity, that we are unanimous in our position. And tribes are. And of course, the first principle, out of the seven that we developed, is that we were opposed to BITAM. But also, I want to reiterate, Mr. Chairman, for the record that tribes do support trust reform. We know all too well our people are the ones that are going without right now. I would hope that the Department is looking at some sort of compensation, Mr. Chairman, for those people. It has been 90 days now, that basically their credit is ruined for many of our IIM accountholders and tribes. Many tribes have also had to issue their GA checks during that month of December to get the checks to the poorest of the poor. In providing those GA checks, many tribes had to do it through their 638 contracts. So my tribe, for example, we had to expend $50,000 out of our 638 contract. We are still waiting for the BIA to refund our tribe's $50,000 contribution. It is promising to hear that some members--some of our tribal members are getting paid. I know at my tribe at Three Affiliated there is probably about 150, but of course we have a long ways to go. There are about 6,000 IIM accountholders. So there are some members being paid, but again I hope that the committee would look and work with the Department on some sort of compensation, Mr. Chairman, for those members who have basically lost their credit. The tribes, through its Task Force in working on its principles want to go back and reiterate some of the comments not only of Mr. Chambers and Mr. Endreson, but a Professor Charles Wilkinson, in a determination that all the functions that are all trust. And we again feel BITAM is very limited, and it actually breaches that trust because it separates those trust functions. It also does not address the breaches of the Cobell litigation. You will hear later on, Mr. Chairman, from--in the next panel, you will hear from a number of the tribal leaders that have spent a lot of time and diligence. Tribes are very sophisticated in this matter because they work on these issues every day. You will hear the plans that they are developing and how it encompasses all of that trust responsibility. Mr. Chairman, the Task Force as it was working through Albuquerque, and it worked through all of the eight scoping meetings--I attended all of the eight scoping meeting--and we feel that a lot of the time was wasted by the time we got to the February 14 and the eighth scoping meeting in Portland. It was wasted because BITAM continued to be placed on the table by the Secretary. If there is a commitment from the Secretary that she wants to work with the tribes in the Task Force in specific to come up with a plan collectively, then those eight scoping meetings would have been much more productive. In my opinion, Mr. Chairman, they were not that productive because every meeting in all eight regions continued to discuss the same proposal, and that was BITAM. And so again, there are four more regions to go, but as long as BITAM is on the table, that will continue to be a place of and a time of opposition, and not of constructive work. And meanwhile again, as we mentioned, the work needs to happen and it is not happening because the proposal is still on the table. It leads me to the Shepherdstown meeting, Mr. Chairman, on February 1-3. It took a great deal of effort to work with the Task Force. And the Task Force, I should say, is 36 tribal leaders made up from the 12 regions of the United States. So these are the leadership in Indian country that the tribes have elected to represent them on this Tribal Task Force. And so it was very hard, and I told this, quote-unquote, to Secretary Norton in Shepherdstown. I said: Good afternoon, Madam Secretary. What you have before you is 36 separate sovereign nations that are before you. This is like a tribal United Nations and it is very hard to get consensus. But the consensus we do have is trust reform, and secondly a plan must be tribally driven. And so it was very hard to get all of the 36 tribal leaders there. For one thing, there was a lot of uncertainty; a lot of lack of confidence in Secretary Norton to really consult with tribes because it had not happened initially. And so to come to Washington, DC and to go out to a retreat in Shepherdstown so to speak, to really dialog was difficult. But we all agreed, unanimously all 36 of us, that we needed to be at the table because these are our assets, these are our people, and these are our moneys. And so with reluctance, all 36 of us went. The other part of the reluctance was we were not able to take any staff with us. We could not take, as Mr. Gray indicated, you need systems analysts. The tribes, all of us, have systems analysts and attorneys and technical people. We were not able to bring those people. However, some of the tribes that did get a chance to present were able to get a few of their technicians with them later on, the next day on Saturday, and then finally on Sunday. But for the most part, most of us had to leave behind our technicians, and we felt that was unfair because the Department had all of their system analysts and their experts and their expertise there. And we thought this was a collective method and a collaborative way of doing adequate consultation. And we were just disheartened by that. So to make a long story short, Mr. Chairman, we went through the process. We heard from Charles Wilkinson. We heard from a private banker talking about common law trusts. And then we also got a chance to present our plans--our nine tribal plans. And we developed a matrix. And I thought our method of looking at the different plans was much more sophisticated because of the matrix that we developed. For example, some of the criteria, Mr. Chairman, in our matrix we listed the nine plans and we listed criteria. And the first criteria that we listed, we said, does any of these plans protect tribal self-determination? And again, with BITAM, it does not adhere to self-determination. And there are some tribes who are doing a wonderful job of managing their own assets. In the House Resources panel, the Salt River Tribe, for example, from Phoenix, AZ, and the Salish-Kootenai from Flathead, MT are both managing their own assets and are doing quite well. BITAM does not do that. So that is the first criteria we wanted to put in our matrix, is does it protect tribal self-determination. Do any of these plans comply with the treaties and Federal Indian law? Third, these plans should not compromise the broad trust responsibility. Fourth, would any of these plans set trust management standards to the highest fiduciary responsibility? Would they provide for external monitoring? Would they ensure appropriate trust accounting? Would they ensure appropriate management of natural resources? And finally, would they provide for historical account balance reconciliation? So in our matrix, we listed those in the left margin and we listed all nine, and we had a chance to present on Saturday and then on Sunday. We were also disappointed, Mr. Chairman, that when we arrived finally on Friday night, we were told by the Secretary that she could only spend a short amount of time. We went under the premise that she was going to spend a whole weekend working with us collectively to come up with a plan, because there was such a concern from the Department because of the Cobell litigation that we had to get moving, we had to be working on a plan ASAP. And so with all of that, we were very disappointed that she basically had supper with us and talked to us a little bit, made some comments about what she thought should be developed over the weekend. And we agreed with that. And part of that whole thing was to start beginning a trust relationship. The 36 members of the Tribal Task Force, we thought well, what better way than to begin a trust relationship with the trustee. And so we all agreed, let's stay and let's work through this. Finally, she on Sunday, February 3, the Secretary came back in late afternoon around 3-3:30 p.m. somewhere thereabouts. And the tribes had an opportunity to present a shortened version of their plans, just to demonstrate to the Secretary all of the criteria, all of the standards that the tribes wanted included in that matrix. And we also indicated as a Task Force that not only will be review nine of the tribal proposals, but it is open for any other tribal proposal. But we also are including in this matrix an examination of the IIM account receivership motion that is before the judge, and also BITAM itself. So we were putting actually all of these 11 plans in the matrix and we are working toward that. And we put a contract with the Secretary and Mr. McCaleb as Assistant Secretary. We put a contract proposal because the tribes felt that it is important that the tribes get the consent and the consultation with the entire Indian country, with all of the 569 tribes. We felt that is how important it is, because everybody is separate, everybody is sovereign, and we needed to get that consent. We wanted to have this contract, and most of this contract, Mr. Chairman, about 75 percent of it was just for travel alone. And then the other part of the contract was for dissemination of information and communication. We wanted to make sure it was tribally driven so that the tribes had control of, or at least a partnership in the agenda, and that it would not be provided by the Government, and then of course that falls under the Federal Act, and that means that it is not tribally driven. We did not want that to happen. Unfortunately, we have not had any resolution to that contract yet. And so our next meeting on March 8 and 9, again of course the Department is scheduling that meeting and of course we know with their computer shut-down, there is a lack of information that can go out, and it is difficult and it is trying. Of course, through NCIA, we have the database that can provide exactly that. So we left Shepherdstown on Sunday evening February 3 with fairly good thoughts, as the Secretary was starting to I think nod her head and started to think that--we started to get a feeling as a Task Force because she spoke to all of us personally and asked for comments, asked for suggestions. And I thought that we had started to get the feeling she was starting to understand her role as a trustee, and starting to understand the magnitude of the issue and how that in historical trust law that it is all-encompassing and that tribes and individual IM accountholders needed to be a part of it. And so we shook hands and left. Forty-eight hours later in her testimony on February 6 in the House Resources Committee--I personally testified, as well as many of the tribal leadership--Jonathan Windy Boy of Council Large Land-Based Tribes; Ivan Makil, president of the Salt River Maricopa Tribe; and Fred Matt, Salish-Kootenai and others. So we thought that this was a great opportunity because we just left a very good retreat until we heard the Secretary's testimony. Two things of the testimony were very disheartening, Mr. Chairman. Of course, one of them was the testimony, quote- unquote, said that although the tribes are developing their plans and we are working with them, she felt BITAM, her plan, was far superior. And it was disheartening after working hard as tribal leadership, first of all, to go into the meeting and then to spend 30 hours working Friday evening, Saturday and all day Sunday in a collective, collaborative manner to have the Secretary read that testimony was very disheartening. I really think it set us back even further. And then the other part of the testimony that was disheartening, Mr. Chairman, was the part of, one of the congressmen asked her about her role, and of how in her role why she just submitted BITAM without the consultation of Indian tribes. And she said, of course, because of the Cobell litigation, but mainly because of her role as a manager that she felt that she needed to do that. And again, Mr. Chairman, we all know, as Indian country, and you, Mr. Chairman, I know agree that the role of the Secretary is a trustee to protect the Indian and individual Indian account lands and natural resources. And so we think that the Secretary perhaps has confused her role in her testimony. And I have not seen her--we have not seen as a Tribal Task Force a retraction from that. And again, it has kind of put the tribes back a little bit because of the February 6 testimony. I was hoping she would testify here today, so that she could have said that in front of the committee and on the record, Mr. Chairman. The Task Force is still open, and I appreciate the comments from Mr. Cason and Mr. McCaleb and Mr. Slonaker about they are still open and want to work with us. But I believe, Mr. Chairman, in all honesty, there is some reluctance now because of the testimony on February 6. I believe there has to be a retraction from Secretary Norton. And I think we all make mistakes at times, and I think if it was just to say that I made a mistake; I know my role. It is the trustee and I am committed to working with the Task Force and I am committed to working with a plan collectively with you. And I think the tribes would come back to the table. It might take a lot of work to do that again, Mr. Chairman, but I think we can do that. That is the commitment of the Task Force, the National Tribal Leaders Task Force, Mr. Chairman, because I want to reiterate again this is not a part-time job for us. This is not something that we're dismayed if we work 60 hours or have to work 30 hours on a Friday and Saturday and Sunday in a retreat. This is our life, and we are settling historically back to, of course, back into the 1800's, and we are trying to settle forward once and for all. And you will see in the next panel again, Mr. Chairman, tribes are committed. They are sophisticated. They know the historical trust law better than anybody. To go on without including the Tribal Task Force would be a major mistake. We want to commend the committee for the stopping of the reprogramming. I know Senator Johnson was very critical in that; Senator Daschle--I have seen letters from both of them, Mr. Chairman, that had talked about the reprogramming. Before any reprogramming would go on of the $300 million that was proposed that there be adequate and meaningful consultation. And I would offer that again to you, Mr. Chairman, that that committee that action for any future. Again, we were dismayed that the President's budget of, I think it is around $83 million, again did not include tribal consultation. In determining that budget, I really think that is a low figure, though, Mr. Chairman. I think it is much higher, but again there is really no plan that is fleshed out. We have done a lot of work and I think we are getting a lot further there, but it has got to be a collection. The Department must work with us. We also agree that ultimately Congress is the ultimate trustee. If the Department does not want to work with us, I think it is a relationship that we want to go to Congress, and the Task Force is committed to do whatever it takes to get true and meaningful trust reform that has a tribally driven plan. And with that, Mr. Chairman, I would be happy to answer any questions in any regard on the Task Force or otherwise. [Prepared statement of Mr. Hall appears in appendix.] The Chairman. Thank you very much, Chairman Hall. You were here when the Associate Deputy Secretary, Mr. Cason, testified. In his testimony, he made a commitment, and I believe on behalf of the Secretary, that the Department will be open-minded and flexible, and that the BITAM proposal is one proposal on the table. Would that suffice? Mr. Hall. That is a very good question, Mr. Chairman. I would have to honestly say there would be some reluctance on the Task Force because of the comments from the Secretary, who is Mr. Cason's boss. The Secretary's comments are on the record and she has not retracted that. I would say in all honesty there would be some reluctance. However, the Task Force is optimistic if there was some kind of a letter or some kind of a communication to say, I am committed to working with the Task Force; I am committed to-- and if I said that my plan is superior, I take it back and I want to work with all of the plans. We don't want--even in our nine tribal plans--we don't want to say, this tribe's plan is better than this tribe, until we have conducted our work with the matrix, Mr. Chairman. And the same with BITAM. That is part of that matrix. And so I would say that there is some reluctance, but we are still open as well. The Chairman. Do you believe that you are at this moment in a negotiating posture with the Department? Mr. Hall. For the alternative plans? The Chairman. Yes. Mr. Hall. When we left February 3, Shepherdstown, Mr. Chairman, we were very optimistic. When we went in, we were reluctant to cautiously optimistic. When we left we were a lot more optimistic. After February 6, it went back to I think reluctance. The Tribal Task Force is still open, but I think until that commitment from the Secretary comes, there is going to be some reluctance. I think it is important that the Secretary come back and meet with the Task Force. I think if the Secretary was to do that either on or before March 8 and 9, which is our next scheduled Task Force meeting in Phoenix, Arizona, the tribes are ready to roll up their sleeves and work all weekend again, another 30 hours in just a little over two days, because we are going to caucus on the 7th again, because we feel that we need to devote that amount of time and we need a contract as well in order to get our technicians, to get that expertise, to be able to negotiate fully government-to-government. And so again, I think there is reluctance, but I think that in terms of the negotiations, it is kind of stalled since February 6. But again, if the Secretary would come back--she herself I believe has to do that, Mr. Chairman. She has to come back and do it herself. I think we can take off again. The Chairman. Chairman Hall, obviously I cannot speak for the Secretary, and I am not authorized to do so. But isn't it possible that the Secretary's presentation on February 6 was part of the negotiation? When one negotiates, you put your best foot forward, and obviously not admit weakness. Isn't that correct? Mr. Hall. You are absolutely correct, Mr. Chairman. One of my points that I have made in my testimony is I think that her proposal breaches that trust responsibility and it is a legal question. And I think the Secretary and her staff have to go back to where it began, and that is the historical Indian trust law. We feel that if she does, she will see that her plan breaches that and it also does not address the breaches of Cobell. It only barely gets to where it is not even encompassing as I think the tribal plans do. And I think then she would recognize, get it off the table, and let's get all the proposals together and develop criteria and standards so we can come up with a plan collectively, or a couple of plans. The Chairman. Mr. Cason, may I ask a question of you? Would I be correct in stating that your commitment to be open-minded and flexible is the Secretary's commitment? Mr. Cason. That is my understanding, Mr. Chairman. We are open to all proposals, and the spectrum is very wide as to what one could suggest all the way from one end of the spectrum of we could patent all the property to the tribes and individuals and disseminate the trust fund to the rightful beneficiaries, all the way to the other end of having an organization outside the Department of the Interior where all of these functions are packaged up and sent to another organization. And proposals that we looked at were principally proposals within the Department of the Interior and how we would organize to do the job, assuming that it stayed within the Department. So we are open to suggestion, and if there is a better proposal on how to manage these processes, we would like to have that. And hopefully, we find something that is better than BITAM. And we would very much like to be in a position where the Department and the beneficiaries, both tribes and individuals, would agree upon how we would do this job, frankly because it is a lot easier to do the job if everybody is on the same page. So we are open and I am sure the Secretary is open. The phrasing in the hearing that Mr. Hall talks about certainly can be interpreted to be a difficulty, but I don't think it was meant to be that way. And Mr. Chairman, I think you made a good point that that is the proposal we put out. It is a proposal that we felt is an appropriate one, but it is not the only one and we are looking for other options. The Chairman. Mr. McCaleb, can I ask a question of you? Do you concur with Mr. Cason that the commitment of open- mindedness and flexibility expresses the Secretary's commitment? Mr. McCaleb. Yes, Mr. Chairman; I would like the privilege of reading an excerpt from an editorial that was published yesterday in the Indian country Today authored by Secretary Norton. I am not going to read the whole thing, but I will read one short paragraph: I am optimistic that together we can agree on a reorganization---- Meaning the Task Force. That we can agree on a reorganization plan that will enable us to address the major longstanding issues in trust reform. These issues are not new either to American Indian communities or to Interior officials. As trustee, the Department is responsible. The important sentence is her commitment and her optimism about reaching a reorganization plan in concert with the Task Force. The Chairman. Thank you very much, Mr. Secretary. Chairman Hall, would that suffice? Mr. Hall. Mr. Chairman, I appreciate the comments. I have a question, though, and maybe they can answer. The Chairman. Fair enough. Mr. Hall. The EDS proposal--is the EDS proposal contracted out--further contracted out? And the reason I ask that of the Department, Mr. Chairman, is that in our meeting in Shepherdstown, the Department was contemplating an additional contract. Of course, EDS just finished a report on January 24 which was barely seen at that time. But there was another contract to implement the business model, and that was to implement a plan into the business model. My understanding, Mr. Chairman, it was a $7.3-million contemplated contract. We as a Task Force said now wait 1 minute now. You can't put BITAM into this business model and spend $7.3 million until we come up with a plan that we all agree on. Because the tribes, we just now are presenting our nine plans. So my question to the Department, Mr. Chairman, is have you signed a contract to continue at a $7.3-million without allowing the tribes to come up with a plan and the Department collectively? The Chairman. Secretary McCaleb can you respond to that? Or Mr. Cason, can you respond? Mr. Cason. Mr. Chairman, we did enter into a new contract with EDS. If I can take you back just a little bit to give context, the Special Trustee mentioned in his testimony that the Department had hired EDS to come in and take a look at the Department's status of trust reform and trust assets management. It started off with a review of the TAAMS system and the BIA data cleanup sub-project that we had. Then we expended the scope to look at all of the trust reform sub- projects that we are operating in. The EDS has given its report to the Department, and one of the recommendations of the EDS report was to evaluate the current business processes being used by BIA to support its trust responsibilities or to fulfill its trust responsibilities. The contract that the Department entered to do that is on the order of $2.5 million, as opposed to $7 million. So I think that is just a communication problem between the parties here. It is in the order of $2.5 million, and our intention in having EDS do the business processes is to involve the Tribal Task Force representatives in that process to provide guidance to EDS as to who they should talk to in the tribal community. We have asked EDS to discuss their project with the leaders in the Tribal Task Force, as well as a number of other leaders in the Indian community. The timeline in getting it done has not worked perfectly because we did enter the contract to get EDS working on it prior to getting a sub-team of the Task Force to take a look at the contract itself. But our intention is still basically the same--to have EDS look at the business processes and to involve tribal leaders in helping us evaluate what those business processes are, so that we know clearly what work is being done and how it is being done, and see if we can come up with better ways with our beneficiaries, the tribal leaders, in how to do the work in the future. The Chairman. Chairman Hall, does that suffice? Mr. Hall. Not really, Mr. Chairman, with all due respect. I think this negotiation is a one-way street. We have not talked to EDS. We have not been consulted about that, and just only at the retreat in Shepherdstown we met EDS and they gave a presentation about the January 24 final report document. But again, we talked about the new contract, the $2.5 million. It was $7.3 million that was contemplated. They must have scaled it down, Mr. Chairman, to $2.5 million. So they scaled it down only to look at the business principles. But again, no matter what, if this negotiation or consultation is a two-way street, we have not been involved and been a party to that. And we are still waiting for a contract to be able to fund the Task Force. We still haven't got an answer on that, and that has been almost a month now. We have lost a month, and we keep I guess reading newspaper articles or hearing that we are looking at real consultation, but we are still waiting for it. The Chairman. Would a letter from the Secretary suffice? Mr. Hall. I think that would be very helpful, Mr. Chairman, if we had a letter from the Secretary and her commitment to fund and to work with the Task Force on coming up with a plan that is in consultation and collaboration acceptable to the tribes. I think then the tribes would--again, we would have to work hard again just like we did in Shepherdstown. There is going to be some reluctance, but I think that letter is critical for the success of the Task Force and the Secretary and her staff to continue. The Chairman. Mr. Cason, don't you think that a letter of what you just said can be suggested by you to the Secretary? Mr. Cason. I would be happy to make a suggestion to the Secretary that we prepare a letter back to the Tribal Task Force regarding our intentions to work with the Tribal Task Force, both on a reorganization proposal and on the EDS contract. We would be happy to do that, or I would be happy to that with the Secretary. The Chairman. Thank you very much, Mr. Cason. Mr. Cason. Thank you. The Chairman. I hope that we can all get back to work again. Mr. Cason. We would be very interested in that, Mr. Chairman. The Chairman. Chairman Hall, I thank you very much. It was not my intention to be a mediator, but I felt that things have to move along. [Laughter.] Mr. Hall. Thank you very much, Mr. Chairman, again for your commitment to working with Indian tribes in Indian country. The Chairman. I will do my best, sir. And now the final panel, the chairman of the Hoopa Valley Tribal Council, Clifford Lyle Marshall; executive board member of the Intertribal Timber Council of Portland, OR, Gary Morishima; the executive director of the United South and Eastern Tribes of Nashville, TN, James T. Martin; the president of the General Council of Tlingit and Haida Indian Tribes of Alaska, Edward K. Thomas; and the principal chief of the Osage Nation, Charles O. Tillman, Jr. Chairman Marshall. STATEMENT OF CLIFFORD LYLE MARSHALL, CHAIRMAN, HOOPA VALLEY TRIBAL COUNCIL Mr. Marshall. Thank you, Mr. Chairman, members of the committee. My name is Clifford Lyle Marshall, and I am the chairman of the Hoopa Valley Tribe of California. I appreciate this opportunity to testify in opposition to Secretary Norton's BITAM proposal, and request the committee persuade Secretary Norton to seriously consider alternatives to BITAM, some of which you will hear today. Let me backup for 1 minute, because the last testimony is disconcerting to me. I have attended a number of the consultations. The consultations were called, they were published after a publication in the Federal Register, and we received this press release. My first question to anybody who is here, is has anybody seen the BITAM plan other than this 2- page press release and 1-page flow chart? That is what the tribes have been asked to comment on in the last 3 months. The substance of BITAM is something that we have not seen and we do not know. In the consultations that I have attended, starting in Albuquerque--excuse me, starting in Spokane, which was called the informal consultation, the National Congress of American Indians in Spokane, of which Chairman Hall is the President of, voted unanimously, with 193 tribes rejecting the BITAM proposal and asking that the Secretary withdraw it and work with the tribes to develop a new proposal. The first formal hearing was in Albuquerque--again, 80 tribes to a tribal leader testified before the Secretary in opposition to the plan and ask that she withdraw it so that we could work together to develop a trust reform proposal together. Every consultation has been the same and every tribal leader, to a man, has unanimously stood up and said: We oppose the BITAM proposal. Will you please withdraw it so that we can start with a clean slate and begin to develop a trust reform plan. I am fortunate today that I am being allowed to testify, but this room is full of tribal leaders. Each one of them has testified at a consultation within their region across this country, and they have stood up and said: Withdraw the BITAM proposal so that we can sit down and work together to develop a new plan. I cannot, as a representative of my tribe or as a representative on the Task Force or the Self-Governance Advisory Committee, nor can any member of that Task Force change the charge, the direction that their region or organization has given them. And every region has unanimously opposed BITAM. To ask us to come back and sit down and say that is an option on the table is something that I cannot do. And I don't believe that Mr. Hall or any other member of the Task Force can make that concession without going back first to the tribal leaders that have already rejected the proposal. We implore the Senate committee--I implore on behalf of my tribe to reject the Secretary of Interior's proposal to create a new agency within the Department known as BITAM, and to stop the reprogramming and appropriation of funds for the development of this new agency. BITAM, in my opinion, will undermine and undo 27 years of progressive Federal Indian policy that has been developed to create the opportunity for self-determination and self- governance. It circumvents the laws of Congress. In the first instance, BITAM is a plan that is not in compliance with the American Indian Trust Fund Management Reform Act of 1994. That Act was enacted, Congress passed, you are all a part of and well aware of it, that created the Office of Special Trustee to address the issues of mismanagement of trust funds. It is called the Trust Fund Management Reform Act, not the Trust Asset Management Reform Act, not the Management of All Natural Resources, All Lands on the Reservation, or All Programs. That Act required that the Special Trustee--it still calls for it--that the Special Trustee develop a comprehensive strategic plan to be brought back to the House Committee on Natural Resources and the Senate Committee on Indian Affairs for your review and approval. That plan is supposed to be comprehensive and strategic and set forth the express duties of the Secretary of Interior on behalf of Indians. We are still waiting for that plan. But in spite of not receiving a plan, we see an implementation of a plan that is not being presented. And we are fearful of that because we don't believe that it is in our best interest. When this plan was first proposed to us in November, before the press release came out, it was announced the same day that the press release came out in a self- governance conference on the Quinault Indian Nation in Washington State. And it was presented this way, and I appreciate that the rhetoric has changed, but it was presented this way: There is an inherent conflict between sovereignty and trust responsibility, and therefore we must reestablish trust control over all trust assets. What did that mean, we asked. Does that mean trust funds, not trust resources? Natural resources? They said, we think it means everything. The audience that it was being presented to were the self- governing tribes in this country that have compacted to manage trust assets. And since 1988, my tribe and the tribes that were present at that conference have managed not only adequately, but exceptionally, on limited funding and resources, in my opinion. We can talk about the past and we can talk about the mismanagement of the Bureau. No one knows that better than the Indian Nations. But when the opportunity came in 1975, and that is 25 years of this country's history--it is a blip in time. And up until that time, the Bureau managed everything. I was barely graduated from high school at that time. The opportunity came for tribes to reclaim their right to determine their own future and manage their own lands and develop their own economies and teach their children. And they contracted. They seized the opportunity. Many tribes did not. Many tribes did. And they have created success--not to their mismanagement. They have managed the programs. They have run the programs--the programs that were designed by the Bureau. But in 10 years time, the tribes who were being successful outgrew that. They realized that the next step was design their own programs, and that is where self-governance came from. And the tribes then entered into a negotiation and the term ``government-to-government relationship'' emerged. And they began to plan not only the management of reservations, but the regulation of reservations, resources, land, property, programs and people. Those have been success stories of the last 25 years, and I believe that I am preaching to the choir because you have played such a dramatic role in seeing that progressing take place. You have helped Indian people move forward educationally, economically, governmentally in developing their lands, their resources, the governments and their programs. This is a taking back. This is a taking back. We must manage our own resources, because the BIA is getting sued by Cobell, but this plan does not address the breaches in Cobell. There are insidious aspects to this plan that tribes are very fearful of, and that is the impact on laws that Congress has passed pertaining to the BIA. Because this won't be the BIA. It will be a new Federal agency. And so in the Indian Reorganization Act, the requirement of Indian preference of hiring of Indians who work within the Indian Office, which is the BIA, will be given preference if they are qualified. Moving it out eliminates that requirement. The whole process of contracting and compacting under the Self-Determination Act and the self-government program is premised on Section 458--I think it is double-A--that says you can contract BIA programs under the Snyder Act, the Indian Reorganization Act, the Indian Health Service Act and other programs outside of DOI. By moving them into another agency within the Bureau, it is questionable that the tribes will still be able to contract and compact those trust functions. And the scariest thing about this proposal is that it was proposed that it would draw a bright line between trust and non-trust functions. And the question was, what is a non-trust function? And they said well, trust is trust assets, trust resources, the money in the resources, and the land. Non-trusts are things like education, health care, social services, Indian child welfare, housing. Well, you have heard today from learned scholars who will tell you that everything that the Bureau does is trust. And the problem in dividing this department into two--it does not create a clear line of authority. It creates two lines. And so if I want to build a house on my reservation and I have a tribal program for credit, and I have a HUD housing program, and I need to build a road, and so I need a title search. I need an appraisal. I need easements. I need right-of-ways. This proposal moves realty and appraisals to another agency. And so the difficulty is doubled in doing those projects because you have to then go through two separate agencies. The other problem that we see with this program is the process of compacting and contracting is moved to the new agency of BIA programs. I know of no where else where that exists--where one agency contracts the programs or the functions of another agency. Those are the things that are scary in the BITAM proposal and I cannot accept it. However, under self-determination, those principles, those concepts--self-determination and self-governance--tribes can fix and address their own problems. You have heard today of 11 proposals. My tribe, my staff sat down, because it has always been said to the Indians, well, this is what was said to us in Albuquerque--we don't have any other proposal; we've got to go with the one we've got. We presented new proposals. There are very many similarities in the proposals that we have presented. There is much among us that is of like mind. We see a direct line of authority that can be established within the BIA for the management of natural resources and the management of income from those resources. We believe that the management of the income from those resources can be done within a trust fund management program or OTFM. I think the key difference that we have in our proposals is where the standards should be set for management of resources. Our greatest fear is that the standards are going to be set somewhere else. A comment was made today about leasing property. When do you lease it? If a trustee's sole interest is earning income, you lease it whenever you can. If an Indian person's interest is more than just income, then you don't always lease it whenever you can. You don't always log a forest whenever you can for maximized profit. There are places that we say are sacred. There are places we say we don't use. There are places where we say we go to gather food, medicine. There are places where we say we have to protect for habitat. And we set those standards for ourself, our own life, our own quality of life. We set the standards. We believe that it is our right as sovereign nations. Creating a Federal agency to set standards and then manage our resources for our benefit as a common law trust, rather than a special trust relationship within the parameters of the trust relationship with the United States and tribes takes away our authority to govern. It circumvents our jurisdiction. We are very fearful of BITAM. We cannot allow it stay on the table as it is written. And we implore this committee, the members of this committee to ask the Secretary to withdraw it in good faith and sit down at a table in good faith and start from the beginning. We were told in Albuquerque that the train had already left the station and our only option was to jump on and go with this proposal. I am asking this committee to ask them to bring the train back to the station. [Prepared statement of Mr. Marshall appears in appendix.] The Chairman. Thank you very much, Mr. Chairman. I have been advised by staff that the panel has been asked to present your proposals. Mr. Marshall. I have a really good one. I am sorry I did not have a chance to present it. The Chairman. I would like to advise you that I have other responsibilities, and lunch is not one of them. I can forego that. But I am due at another meeting at this time, but I will just hold on for a while. Before I proceed, may I ask a question of Mr. Cason again? Chairman Marshall has made a charge, a rather serious one, that all they have received is a 1-page press release on BITAM. Is that correct? Mr. Marshall. It is 2-pages. The Chairman. Two pages. Is that the proposal that was presented to the Indian Nations? Mr. Cason. Mr. Chairman, as I commented before, BITAM is no more than a conceptual framework at this point. We recognized early in the process that we needed to go through consultation and that we did not take the BITAM proposal down to specifics of what offices there would be, how we would subdivide that organization, what individuals would move into BITAM and what individuals would stay where they were in BIA or in OST. We did not do any of that. We basically just got to a conceptual framework that said, this seems like an interesting concept, a way to approach the problem, and we started consultation at the concept stage. So it is true there isn't a lot of details on BITAM, and we did not go through the process of laying out in great specificity exactly how BITAM would work because we approached it from the standpoint that in the consultation process we would get a lot of advice on how to go through that. So there are not a lot of details about BITAM. The Chairman. Thank you very much, Mr. Cason. Mr. Cason. You are welcome. The Chairman. May I now call upon Mr. Morishima. STATEMENT OF GARY MORISHIMA, EXECUTIVE BOARD MEMBER, INTERTRIBAL TIMBER COUNCIL Mr. Morishima. Thank you, Mr. Chairman. My name is Gary Morishima. It is my pleasure to appear before you today. I am here on behalf of the Intertribal Timber Council at the request of our President Nolan Colegrove to present our suggested approach for accountability in trust reform. In a nutshell, three concepts lie at the core of our proposal. The first is an independent, presidentially appointed American Indian Trust Oversight Commission. The Commission would be comprised of individuals nominated by tribal governments and experts in fiscal and resource management, with ex officio representation from the Interior Department. It would have four primary functions. The first would be to develop a strategic plan and performance standards for trust reform. The second would be to formally certify the functionality and accountability of trust fund management and reporting systems. The third function would be to evaluate issues and management performance on both topical and reservation-specific levels. And the last function would involve reporting. The topical investigations would be selected from suggestions provided by tribal governments and individuals. Performance would be evaluated against a set of fundamental criteria for management of trust resources. Reservation- specific studies would compare management against standards and criteria that are embodied in the values that are reflected in tribally developed and departmentally approved management plans. And lastly, the reporting function provides for periodic information to be provided to the Secretary, the beneficiaries of the trust and to the Congress on the progress of trust reform. There is ample proof that the Department of the Interior is incapable of providing adequate oversight for its own efforts as trustee. The independence of the Commission is critical to both credibility and accountability. We understand full well that legislation will be required to establish the Commission and provide the necessary powers and authorities to the Commission, while protecting the beneficiaries of the trust from public access to private and sensitive information. The second concept involved in the Intertribal Timber Council proposal is the temporary centralization of responsibility for the development of fiscal accounting systems within the Office of the Special Trustee. A single entity must be vested with necessary authority and responsibility for implementing the strategic plan for developing and deploying fiscal management systems to ensure accountability. But once these fiscal management systems are certified by the Commission, operational responsibility would be transferred back to the BIA. The Office of the Special Trustee would then sunset as envisioned by the American Indian Trust Fund Management Reform Act of 1994. The last concept of the ITC proposal is to retain ultimate responsibility for management of trust fund accounting, trust resource management and the delivery of trust services to tribal communities within the BIA. It is at the BIA regional agency office level that working relationships are largely maintained between the Department of the Interior and tribal governments. This is where the unique circumstances of individual tribes, their treaties, applicable executive orders, statutes and case law are accommodated. By retaining the BIA tribal interface, transaction costs of Federal trust administration can be minimized and tribal governments will have the maximum flexibility to meet the needs of their own communities as they elect to exercise self-determination by designing and operating their own programs. The Commission would provide continuing evaluation and oversight for both BIA and tribal programs by conducting periodic audits to ensure that performance continues to meet operational standards. We fully appreciate that our proposal for trust reform is only one among many. Over the course of the past few weeks, several worthy ideas have come forward from the tribal community as viable alternatives to BITAM and undoubtedly more will be forthcoming in the future. But the process for addressing trust reform must not be permitted to become trivialized as an exercise to promote divisiveness within the tribal community, or as an exercise of shuffling boxes around in organization charts. The goal of trust reform must be accountability. To do that, we must focus on requirements--the what, the why, the how and the when of trust reform, not the who. Tribal approaches to trust reform consistently share a common characteristic that prominently distinguishes them from BITAM: The focus on maintaining legal, political relationships between tribal governments and the United States. Over the past few weeks, I have read with dismay media accounts of the contempt trial in the Cobell case, where Secretary Norton and Judge Lambert are seemingly lamenting in unison that the tribes just don't get it with regard to the needs of trust reform. It should come as no surprise that tribes have vehemently and adamantly opposed BITAM. Besides the consultation issue, the conceptual nature of that plan itself makes it prone to conjecture and speculation, so nobody really knows what BITAM is or what it is intended to do. But with all due respect, I contend that it is the judge and the Secretary who fail to get it, because they seem oblivious to the important distinction that commonlaw trust duties to individuals does not encompass the full scope of trust obligations of the United States toward Indian tribes under Indian trust law. By submitting thoughtful proposals of their own, tribes have clearly demonstrated that they are not opposed to trust reform per se. They have been clamoring for it for decades. But rather, they are opposed to any form of trust reform which threatens to undermine or destroy their unique government-to-government relationships with the United States. It is useful to remind ourselves that the Interior Department's current inability to properly administer the trust is of the Federal Government's own making. Congress and the Administration have never provided the funding necessary for the Department to fulfill its responsibilities for managing the Indian estate. Indeed, the very origins of the accounting mess involving individual Indian money accounts lie in the passage of the Dawes Act over 100 years ago. And since the Dawes Act, the trust responsibility has been extended to both individuals and the tribes. But with each passing generation, the difficulty of managing the resources and income generated from those allotments has become increasingly worse as the number of undivided trust, fee, tribal and individual property interests has escalated. Unless and until an effective solution is found to the Indian inheritance problem, the magnitude of the challenge confronting trust reform will continue to expand exponentially. Having worked with Indian tribes for more than 30 years, I have learned many lessons. Principal among them to be always cognizant of history and to view major initiatives such as trust reform with somewhat of a jaundiced view. It is difficult to escape the disturbing parallels between allotment and current efforts related to trust reform. I cannot help but wonder if the Administration's paternalistic attempt to impose BITAM upon tribes for their own good may become transformed into a subtle, insidious reincarnation of the Dawes Act. Through this legislation, the United States sought to dismember tribal communities by breaking up reservations and allotting lands to individuals. There is a danger that the trust responsibility owed the tribal governments may likewise become a casualty of the Interior Department's seemingly single-minded focus on applying principles of common law trust to provide proper accounting services for individuals, while ignoring tenets of Indian trust law. Will trust reform, with its emphasis on fulfilling fiduciary obligations to individuals, prove to be the means through which the United States attempts to absolve itself of the duties and obligations owed to Indian tribes? We hope not. This disturbing specter can be readily vanquished by ensuring that Indian tribes have a substantial role in trust reform, now and in the future. Long-lasting and effective solutions to the problems confronting the BIA's administration of its trust responsibilities must be developed collaboratively with tribal beneficiaries of the trust. The Task Force, which includes tribal and Interior participants and which has the capacity to draw upon support and outside expertise as needed, presents a rare and a valuable opportunity for methodical evaluation and reform of the Federal trust. It is vitally important that this opportunity not be squandered. The Task Force must be given the chance to do its job, allowing leadership from the tribal community and the Interior Department to work together to craft a mutually acceptable and effective approach to accomplish true trust reform. The central message I wish to leave the committee with today is that trust reform is serious stuff. A great deal of money is involved, to be sure, but at its heart the issues go to the capacity of the United States to properly discharge its fiduciary obligations within an evolving unique government-to- government relationship with Indian tribes. Trust reform must be a commitment, akin to a covenant, to ensure accountability in the management of trust funds and in the programs that manage trust resources and provide trust services. It must be built piece by piece in accordance with a thoughtfully developed strategic plan and measurable performance standards which are developed in concert by the Trustee and the beneficiaries of the trust. Mr. Chairman, that concludes my testimony. Thank you for the opportunity to appear before your committee. We are pleased to be involved in the deliberations on trust reform, and we hope that we can constructively contribute to the deliberations before us. [Prepared statement of Mr. Morishima appears in appendix.] The Chairman. I thank you very much, Mr. Morishima. And now may I call upon Mr. James T. Martin. STATEMENT OF JAMES T. MARTIN, EXECUTIVE DIRECTOR, UNITED SOUTH AND EASTERN TRIBES Mr. James T. Martin. Thank you, Senator Inouye. It is a pleasure again to be before this distinguished body to provide testimony on such an important matter to Indian country. I am an enrolled member of the Poarch Band of Creek Indians. I also serve as executive director of United South and Eastern Tribes. As such, I have been afforded the opportunity to represent my tribes on the Trust Reform Task Force. A few minutes ago was a perfect example of why I personally wanted to come before this committee to testify this afternoon. It is vitally important that this committee, the entire Congress, the true trustee, to get involved in this situation. Call it mediation? Call it strong-arm tactics? Whatever we call it, we have got to get something done. I have sat patiently listening to all of the speakers beforehand, and I will attempt to, out of respect for you, sir, to go directly to our proposal. Our tribes took the Secretary at her word. BITAM, if you don't like it, show us something better. I believe USET brings forward a proposal that does do it better. I believe the USET proposal addresses the concepts that are the full breaches in the Cobell case. Our proposal calls for minimal standards to be set to protect trust assets. I believe in setting minimum standards not only can you protect the assets, but you can work with tribes on a government-to- government relationship to maximize the asset. But you can maximize that asset in a balanced with that tribe's concerns for the environment, for sacred sites, for the future generations--not simply a monetary improvement. One of the things that is unanimous as I have sat through the collaboration, the consultation, the scoping meetings is that the tribes, the Congress, the Department of the Interior are all committed to the fact that they know trust reform has to come about. It is simply how are we going to do it. The Secretary says take all of the trust functions and move them out of the current BIA and set up a new bureaucracy--I believe in direct contradiction to the Indian Self-Determination Act. But even the Administration, the Republican management plan for downsizing of the Federal Government, it would in a sense create a new bureaucracy. It will fundamentally change the scope as we understand the BIA to be currently today. I believe that the functions are total trust functions-- examples from the chairman and the previous speakers; that the trust functions are so interrelated at the local level, if we attempt to segregate them out and put one somewhere else and one over here, both will be diminished, irreparable harm will be done to both of them. I have submitted written testimony for the record. A lot of my written testimony reiterates the things that have already been spoken today. I then would turn our attention to what does the USET proposal provide. The USET proposal would consolidate tribal functions under an executive supervision of a Commissioner for Tribal Trust Asset Management. The Commissioner would serve in the Office of the Assistant Secretary and be guided by a tribal advisory board consisting of tribally designated representatives. Our proposal is a proposal that would be beneficiary- driven. If you want to do it right, ask the people who it is going to affect. Let those people that it is going to affect be a part of the decisionmaking process of the systems, of the controls, the personnel, hardware, software, that you are going to put in place to provide assistance to those beneficiaries. That is vitally important. The USET proposal, however, separates the duties. Through the consultation process, we have heard the Department of the Interior talk about a bright light, a dividing of the trust functions from non-trust functions. We disagree in the fact that it is a dividing of trust and non-trust functions. We believe all are trust functions. But we absolutely agree that you have to separate the duties of the individuals to make sure that a system that is in place is transparent from top to bottom; that it is above reproach; that if you apply industry standards, when any reasonable person who looks at the transactions that have occurred can say that the Secretary put into place a system that showed due diligence that the assets were protected, they were not diminished, and could be construed to be maximized based upon the agreements that would be entered into between the tribal governments and the Secretary. Those types of things would be above, though, the minimum standards that would be brought to bear all across Indian country. The Secretary points to the EDS report as to give her instruction and the leeway to fashion the framework that has been considered to be BITAM. But nothing in the EDS report indicates that the creation of a new bureau has to come about to achieve the functions necessary they call for in the EDS. What I would pose to this committee and Indian country as a whole, take us back 20 years. BITAM was in place. But BITAM went through the same downsizing and less resources on a year- to-year basis that the current Bureau has existed for the last 20 years. Would we not be here talking about a change of BITAM to something else, and to say, put to this new structure what the EDS calls for--business principles 101. Any organizational structure that is going to succeed has to have adequate funding. It has to have adequate human resources, and those human resources have to be experts in their fields. Any type of organizational structure, whether it be the USET proposal or any other type of hybrid proposal that is developed has to still have those fundamental premises to them. We believe in our proposal we do address those things. With the separation of the duties--we call for the creation of a Commissioner for Indian Programs. The example the chairman gave beforehand of the individual who wanted to build a house, build a road out to his or her house. Those functions that have to occur at the local level are so intertwined that they cannot exist independently. And it is beyond comprehension of our tribes to say that you would go out and create a new structure, a double administration to force our Indian people to go to one set of administration to look at particular items and make sure they get it checked off on, and go to a separate administration to literally do the same thing. You are talking about the same people. You are talking about the same house. You are talking about the same road, but you would be going to two separate administrations to literally get a lot of the same information. We don't believe that has to occur. I believe that you can draw distinguished lines between the duties of all of the trust functions that exist in the current Bureau, with adequate resources given to the human and monetary aspects, that those functions can be separated; that they could function independently. And the most important thing that we call for in our proposal is the ongoing monitoring of the trust functions, the trust system from top to bottom. We envision the Commissioner for Trust Management to employ individuals that would be on an ongoing basis, would look at the structure that would be developed under the BIA, under the Assistant Secretary. And all of the transactions from top to bottom would receive periodic review. And then they would be signed off on as being certified that they were separation of duties and no conflict of interest did occur in the transactions. I believe our proposal calls for those types of frameworks to be able to come about. We heard testimony earlier about the independent commission. Our proposal would be a proposal that could easily be modified to bring in that independence of experts in the industry, experts within the BIA, experts from the governmental sector, from this committee or other committees of jurisdiction, to be brought to bear to set the policies, the principles that the Secretary would have to adhere to in the performance of her trust responsibility. Our proposal calls for the extraction and setting aside of the Indian member money accounts and in setting up of an independent commission to look at those. Our tribes believe to put together the interest of the individual Indian money accounts and the interests of tribal assets is too complex; that independent commissions could be set up to review and consider the interest of those individuals and make recommendations to the structure that is put in place to manage both tribal assets as well as the individual Indian assets. The critical part of our proposal, though, lies in the establishment of minimum standards. Our proposal does not call for the segregation of the BIA down to only the types of programs that were alluded to earlier; that it should take all trust things and separate the duties. But it could be done at the regional level. Our Eastern Region serves almost like a super-agency. The majority of our tribes contract. Over 92 percent of the resources going to Indian tribes in our region are already contracted either by 638 contracting or self-governance. We simply do it better than the government could do it. The most reluctance we see in the BITAM proposal is that it would throw the process of 638 and self-governance totally in reverse. There is no need for that to happen. Even the EDS report when we listened to them, their presentations, they said some of the best practices they have found thus far in trust management has been at the tribal level that has already contracted the management of the trust resources. Why then should we contemplate a proposal that would reverse those types of processes? Certainly, we should complement the process that envisions the responsibility of the beneficiaries to be a part of the decisionmaking process. Our proposal would bring about accountability. It would bring about with the identification of a single executive, the Commissioner for Trust Management, as the single person in responsibility for the administration and carrying out the duties to protect and maximize the assets. As I said, I have attended the consultation meetings. I have read the transcripts when I have gotten them from the other meetings. One thing is unanimous: All tribes are against BITAM. But the other thing that is unanimous is all tribes, the court, the DOI, the Congress agree that trust reform needs to come about. Therein lies the key. We talked about timing earlier, from one of the speakers. I truly believe the timing is correct right now to bring about true trust reform. And I implore this committee to get involved in the deliberation about trust reform, if nothing is monitoring it, mediation-- whatever form that necessarily has to come about, so that we can go forth and develop a new organization for trust management that can be bought in by all of Indian country, by the Department of the Interior, by the Congress, and most of all by the American Indians and Alaska Natives that are out there that need the services that we are here to render to them. I submit my testimony. I submitted my proposal in its entirety for you to review and would be open to questions. Thank you, Mr. Chairman. [Prepared statement of Mr. James T. Martin appears in appendix.] The Chairman. I thank you very much, Mr. Martin. May I now call on Mr. Thomas. STATEMENT OF EDWARD K. THOMAS, PRESIDENT, CENTRAL COUNCIL OF TLINGIT AND HAIDA INDIAN TRIBES OF ALASKA Mr. Thomas. Thank you very much, Mr. Chairman. My name is Ed Thomas. I am the President of the Central Council of Tlingit-Haida Indian Tribes of Alaska. Our tribe has 24,000 members. I have been the President for a little over 17 years and have managed BIA programs since 1975. I started when I was 12. I am honored to be here in speaking to this committee, and I commend you for your effort in sticking in out with us. I realize you have a very busy schedule and I will very much summarize my comments. But I want to point out that from my point of view and from the point of view of your first panel, that as long as these systems are broken, we are jeopardizing and we are undermining the trust relationship that this Federal Government has to the tribes and to the individual accountholders. And so as I make my comments, I hope that my comments are not offensive to anybody. They probably could be construed that way, but it is intended to talk about the issue, and I realize that many of the tribes have put forth some proposals that they have worked very hard on. I commend them for that and I want to make it clear that I am not here to lead into a process of BIA-bashing, as we talked about 1 decade ago. But let me make it clear that ever since I got involved in this process, which was way back in the 1990's when we were still on the Joint Task Force on BIA Reorganization. We noticed that not only was their acknowledgement of these problems and that they need to be fixed, but there was lack of willingness, delegation of authority and delegation of resources to fix the problem. Now, our board is very fortunate that we have some very respected tribal leaders on our board. We also have three professional bankers with a lot of history in trust management. We are very much aware that commercial trust management is a lot different than the Federal trust management or Federal trust relationship to tribes. Way back when we first started talking about this in the early 1990's, I always felt that the best approach was the approach the Federal Government used in fixing the savings and loan scandal. They set up the quasi-governmental agency, the Resolution Trust Corporation which had unlimited authority to do what was necessary to fix the problem. And when our Nation through our Congress and the President put politics aside and put the interest of our citizens first, I was very proud to see that our leadership went forth. They fixed the savings and loan scandal. They restored a lot of the money to the people who lost their life savings, and moved on. And now we are back to where we have savings and loans functioning and the banking institute is healthy, and the people have their life back in order. We are not seeing that happening in the 1994 Act. A lot of people celebrated the 1994 Act. I almost did, but I was disappointed because it fell short of what happened in the savings and loan issue or problem. It fell short and it put us back into the Department of the Interior under a hostile Secretary. Now, people can say what they may. I can assure you that Secretary Babbitt was not in favor not only of the trust reform movement, but he was not in favor of the Office of the Special Trustee and he did everything in his power, while I was around anyway, to undermine the efforts of the Special Trustee and many of the activities that were necessary to happen within the BIA and the Department of the Interior to fix many of the problems. Now, I realize that there are many well thought out proposals out there, and I don't want to diminish them in any way. Some of these proposals call for going as far as pulling the entire BIA out of the Department of Interior, all the way to just leaving things the way they are and let's kind of tweak things and move some boxes around. Now, I am going to reiterate that the Special Trustee Board went on record quite recently that because of the way things were happening, they wanted to go on record again as saying we need to really take the trust asset management portion out of the Department of Interior and be very forceful about fixing those problems. Now, on the one hand I agree with that concept, on the matter of principle and let's get the job done. On the other hand, I am leery from the point of view that maybe that is not achievable--achievable because of the lack of commitment for resources; achievable because of the political realities that we must face. And so therefore if we are not going to ever make the step of even getting into what is called BITAM, we need to talk about what is really going to happen. Now, we say in the record or in the newspapers I read where we are talking about a project that will cost $400,000 to $500,000 dollars. Then I see the budget amendments for 2003 and they only add about $60 million. I meant to say millions, I'm sorry. I wish it was only thousands. But when we see that once again you are proposing something up here, and then you put a budget down here--that is what caused the problem in the first place--not enough resources to do the job that is being proposed. And so I think it is important and I respectfully request this committee, let's put some reality back into what is achievable under this political climate. What will the President agree to and what will the Congress agree to? If we have proposals out there to set up the BITAM and there is no money being asked for it, then we are talking about something that is not going to happen no matter what we say. And it is just a big waste of time. Not only is it a waste of time, but it is distracting from the orders of the day--not only the orders of the day within the Department dealing with this program, but many of us have to set aside many other important issues so that we can weigh in on this important issue. We should be talking about the indirect costs where it falls, and enhancement of tribal economies, weaknesses to the tribal welfare programs, land and trust issues. We really should be having hearings on those things. And important to Alaska tribes, there is a very serious threat on the status and the power of Alaska tribes floating around Washington and in Juneau. We should be spending more time on that, and we certainly will. But when it comes to this issue, I really feel it is necessary for us to talk in terms of what is achievable, and we are not going to do so by just saying, well, we have a whole bunch of concerns and we have a whole bunch of problems and it is going to take a lot of money, and then people request half or a third or a fourth of what is necessary. I don't think that is wise. I don't think that is fair to anybody. I think it is very much a distraction for me because I look at these proposals and I think some of them are great. But I don't think you are going to fund them. I have not seen that kind of appetite in this Congress or the President to fund a lot of these proposals. So I think we have to got to talk, really, on what is achievable. Now, one of my final points I am going to make here is that people have thought or have stated that we should pull out these trust asset management functions out of the Bureau. You are stripping the trust component out of the Bureau, and I commend you for having the first panel because they most definitely put that issue to rest, that all of these programs that are available to Indian people and the tribes are there because of the Federal Government's trust relationship to tribes and their people. And that is why, even though we do not have a trust asset management component within IHS, our needy people still get IHS services; same way with HUD. And so I really appreciate your methodology in bringing these scholars to the table here and clarifying that issue because I, for one, feel that it is just the reverse. As long as we have this mismanagement of the absence of management of the assets of our tribes and individual Indians, as long as that is not done properly and unaccounted for, that is a breach of trust and it is weakening the relationship that we as Native Americans have with the Federal Government and our trust relationship is being compromised. Even after saying that, however, I believe it is imperative that if you come up with a piece of legislation that endorses any alternative proposals, that there be language very specifically stating that the trust relationship that this Federal Government is not compromised by moving a box from over here to over here, one agency to another, or even formulating a quasi-governmental agency. Because I think it is important for the comfort of the tribes that when language is in legislative action that the issue of trusts is preserved and that you understand the value of those trust relationships and have language in the legislation. In closing, I once again commend you for your time. I commend you for your interest and the leadership that you bring to this very important issue. I recommend that if you are going to have either the Special Trustee like we have it now, or you are going to do the BITAM or you are going to go along with Tim's proposal, that you have member of members of Congress appointed to those oversight boards. I realize that in your busy schedule you can't attend meetings, but I think your administrative assistant people, people who are knowledgeable about it, could represent you very well in these meetings. But without that, it just becomes, well, we can give good advice, but if they feel good 1 day, they will listen; if they don't the next, they won't. That is just the way it has been. That is the way life is, and I don't know how to say that nice, but it really is a matter that when we debate the issues, we talk about alternatives, we talk about the wishes of the tribal people, nothing happens because they don't agree and therefore they don't have to listen because we are just advisory. An example is that when President Tex Hall was talking about the resources, it is very hard to have any of these proposals compare with even the EDS reports, the series of reports that are out there, because they don't have the technical support that either the Trustee or the BIA has. And I believe that if we are going to be honest about looking at them and we are going to work together, then EDS needs to come in and say, well, let's look at Tim's report. Let's look at the Hoopa report--any of them. Maybe they don't want them to look at it, I don't know, but the resources need to be there to come up with a joint plan that tribes may have that lay out the principles that Tim was talking about in his testimony and others. I really feel it is critical and I think it could be very easily done, and I think we can amend the EDS report and get the money out there to help people. Maybe they want to have their own consultants, I don't know. But we have got to come up with a strategy to get the resources to the Task Force so they can be competitive, they can get their wishes better articulated in writing. Without that, I think they are always going to be a disadvantage. And with that, I thank you again, Mr. Chairman, and I will be happy to answer any questions, and this is the shortest speech any Tlingit has ever given. Thank you. [Prepared statement of Mr. Thomas appears in appendix.] The Chairman. Thank you very much, President Thomas Chief Tillman. STATEMENT OF WILLIAM MARTIN, FIRST VICE PRESIDENT, CENTRAL COUNCIL, TLINGIT AND HAIDA INDIAN TRIBES OF ALASKA; AND TREASURER, INTERTRIBAL MONITORING ASSOCIATION ON INDIAN TRUST FUNDS Mr. William Martin. Thank you, Mr. Chairman. ITMA is pleased to be given the opportunity to testify today. However, Chief Tillman was not able to make it, and with your permission, I will offer the highlights of our testimony. Mr. Chairman, members of the committee, my name is William Martin. I am the elected First Vice President of the Central Council, Tlingit and Haida Indian Tribes of Alaska. I am also serving as the Secretary-Treasurer to the Intertribal Trust Fund Monitoring Association. Accompanying me here today are some of our board members, Richard Wilnett, chairman of the Turtle Mountain Chippewa; Charles Jackson of the Confederate Tribes of Warm Springs; Mark Fox, council member for Three Affiliated Tribes; Paul Neiman of the Oneida Wisconsin. Also accompanying us is ITMA Technical Consultant David Harrison. Mr. Chairman, ITMA is a 12-year-old tribal organization comprised of the 53 federally recognized tribes which are virtually interested in continuing efforts to reform the administration of the Indian trust estate of the Federal Government. We believe strongly that the current attention focused on reorganization of functions within the Department of the Interior is premature and not likely to result in meaningful reform unless more fundamental underlying values and issues are first addressed. Arcana has uncovered some things the Department has never acknowledged as an example of vest and failures. We think no reform will work as long as there is a culture of secrecy around these failures. Hopefully, Secretary Norton's new reporting of failures as well as successes will represent a turnaround. We fear that the Department of Justice, however, will prevent this kind of full disclosure that we need. I would like to address two or three important points in the limited time today. First, with respect to the competing reorganization plans, we think focus on reorganization distracts from the policies being implemented without being examined. We believe reform should happen in a way that clarifies and enhances the Federal Government's trust responsibility and liabilities, and not diminish it. We believe the focus on reorganization is premature without determining duties to be performed, including oversight of the Department's trust duties by Congress or an independent body. The Department resists this approach. It appears Justice does not want to acknowledge any specific duties either. With respect to EDS engagement by the Interior, we think benchmarking against industry standards is an illusory exercise designed to report that the Department's trust standards are impossibly high. We think any benchmarking must include analysis of corporate culture regarding mistakes and losses. No system is perfect. There are going to be mistakes and failures. How these are handled will determine the success of any trust reform. To date, this remains the biggest single failure and made it impossible for previous Administrations to admit mistakes with TAAMS. So far, it makes it impossible for this Administration to acknowledge mistakes in the reorganization plan. Finally, with respect to charging fees for administering the Indian trusts, this trust was paid for along ago by tribes in treaties, of land cessations and promises of peace. Any fee by the government that cannot be avoided is really a tax, no matter what you call it. We have no say in our choice of provider of trust services. We cannot take our business elsewhere. To impose a Government fee is to tax it. The Congress should repeal the existing authority for the Secretary to impose such a fee. It has been used arbitrarily and capriciously. The Government should not be collecting for its own account until it demonstrates it can collect appropriately for our trust account. ITMA suggests that this committee exercise its oversight authority to forestall widespread reorganization of trust functions until the trust duties to be performed by any organization are well understood by those charged with both their performance and their oversight, as well as those rights and properties of the estate. ITMA suggests that the Congress should act swiftly to pass legislation tolling the statute of limitations on claims arising from the administration on Indian trust estate until such time as Congress has convincing evidence that the beneficiaries of this trust have not been denied in good faith, a fair hearing and full disclosure demanded by a trustee generally. ITMA suggests that Congress should act swiftly to repeal the current statutory authority of the Secretary unilaterally to collect fees to cover the costs of administering to Indian trusts, at least until such time as the Congress is satisfied that the trust is being honestly, prudently and competently administered. ITMA respectfully requests this committee to urge the strongest possible terms that any benchmarking of current trust practices by the Department of the Interior be rejected. The Department should require the property, identify its legal obligations as the trustee arising out of existing treaty, executive order, statutes, case law and contractual documents authorized under the authorities such as grazing, mining leases, et cetera. The Department should be required to also include a review of the Department's current practices regarding losses, mistakes, errors and omissions, thefts and other defalcations, and disclosure of material facts. While the private trust industry might provide useful models after the relevant legal duties are identified, ITMA submits that the most modern, efficient and competent regime of trust administration known to man will fail by its business culture. It is characterized by the determination to hide losses, cover up theft and bury mistakes in buzz words and blizzard of promises. In conclusion, ITMA takes no pride or pleasure in expressing such dissatisfaction with our government agencies. It is our government, too. We continue to have faith that those in charge of it will step forward to restore the faith and the honesty of what Thomas Jefferson once called the last best hope of mankind on Earth. Toward that end, we earnestly seek the diligence of this committee in continuing to champion the goal. We stand ready to provide whatever additional information the committee might request of us. Thank you for your consideration. [Prepared statement of William Martin appears in appendix.] The Chairman. I thank you very much, Mr. Martin. As chairman of this committee, it should be noted that I am part of the Government of the United States. And I hope that all of you would believe me when I say that I take my responsibilities and my trust obligations to Indian country very seriously. As chairman of this committee, let me assure you that this committee will not consider any proposal that is not the product of open and free negotiation and consultation. I will be conferring with the Secretary of the Interior. I have met her several times. She is a good woman and I am certain her heart is in the right place. I hope that all of you will take this role responsibly, those of you on the Task Force, because the time is now. If we don't resolve this now, it will be another 10 years. And I have no idea who will be sitting here 10 years from now. So with that, I thank all of you for your patience, for your testimony, and for your suggestions. And we will be do our part, I can assure you of that. With that, the record will be open for 30 days if you want to submit addendum or corrections, please feel free to do so, and I invite all tribal leaders if they have statements they wish to have placed in the record, it will be done. I have a request from the Secretary, Mr. McCaleb that the statement of Secretary Norton be made part of the record, an article entitled ``American Indian Trust Reform: The Challenge to Consensus.'' Without objection, that statement is made part of the record. [Referenced document appears in appendix.] The Chairman. With that, the hearing is adjourned. [Whereupon at 1:18 p.m., the committee was adjourned, to reconvene at the call of the Chair.] ======================================================================= A P P E N D I X ---------- Additional Material Submitted for the Record ======================================================================= Prepared Statement of Hon. Ben Nighthorse Campbell, U.S. Senator from Colorado, Vice Chairman, Senate Committee on Indian Affairs Good morning and thank you Mr. Chairman for convening this important hearing. Unfortunately, all who have chaired this committee at some point must dedicate enormous time and effort in trying to reform the Indian Trust Fund Management systems. You have done it in the past, Chairman Inouye, I did it for 5 years and now it's your turn once again. It's beyond frustrating for me and for the Indian beneficiaries as well. Let me start off by saying that this issue is clearly a problem of historic proportions: It is not Secretary Norton's creation. When I chaired this committee I acknowledged the same fact to Secretary Babbitt. Nonetheless, what Congress passed in 1994 to reform this system was enacted over the objections of the last Secretary of the Interior. My own opinion is that despite the 1994 Act and the vigorous involvement and encouragement of this committee, the trust reform strategy of the last Administration was to litigate, lurch from hearing to hearing by putting on a brave face and a dog and pony show, and do everything they could to make sure the Federal funding spigot didn't get turned off. That strategy, as we all know and surely must recognize today, not only didn't work, Mr. Chairman but has in fact led us directly to where we are today. Mr. Chairman, this reads like a bad soap opera: We have had several bills signed into law; documents lost, contaminated and shredded; Federal lawsuits filed; senior department officials resign and being held in contempt by a Federal judge; and countless hours of legislative and oversight hearings. Just 2 weeks ago we passed out of committee legislation designed to discourage more litigation and encourage the tribes and the Department to negotiate settlements which I believe is the much better option for all parties. Having said that, we stand at a cross-roads here--a historic moment where I think if we recognize and admit that the litigation has served its purpose, but ultimately these issues should be, and I think will be, resolved here in Congress through a settlement bill. Frankly, this committee--and the chairman and I--have done, are doing, and will continue to do everything we can to bring fair and equitable resolution to these issues but it requires some healthy, honest and open debate and one that may not have been held before. Unlike many who have criticized her proposal, I believe the Secretary should be lauded, not criticized, for making a proposal to reform the way the United States handles Indian money and Indian assets. There are tribal proposals as well and we'll hear a little about them today too. Some fundamental realities we all need to acknowledge are: No. 1. The status quo is unacceptable: It's unacceptable to the Secretary, to the tribes, to the court and to this committee. No. 2. Right to the present day, the current system is not meeting the standards of performance that it should be--that's why I proposed an independent ``Indian Trust Corporation'' in February 2000. No. 3. Whether the answer lies in the Secretary's idea, in receivership, in the trust corporation or in any other form, I firmly believe we should analyze them without passion or prejudice and get in place a system that brings justice to Indians which, after all, is what this should be all about. In closing, let me say something about ``Consultation''. When the Secretary informed me of her proposal to reform the trust, I encouraged her and the Department to consult early and often with the tribes. Three months later, close to 10 consultation meetings have taken place. The Secretary herself attended the first meeting in Albuquerque. Nonetheless, Secretary Norton is being criticized for not conducting more consultations. In 1 year, this Secretary and high-level Department officials have met and consulted with the tribes more often on Indian Trust Reform issues that the past Administration did in 8 years. That--ladies and gentlemen--is a fact. I do hope, Mr. Chairman, that with this hearing the committee can spark the kind of healthy and constructive dialog that is so needed at this point in time. With that, I ask unanimous consent that my formal statement be included in the record along with some additional materials. Thank you Mr. Chairman. ______ TRUST FUNDS TIME-LINE Acronyms AITFMRA--American Indian Trust Fund Management Reform Act, P.L. 103-412 (October 25, 1994) DoI--Department of Interior GAO--General Accounting Office SCIA--Senate Committee on Indian Affairs Important Events September 8, 1982, ``Major Improvements Needed in the BIA'' Accounting System,'' (GAO/AFMD-82-71). January 11, 1984, Price Waterhouse, ``In-Depth Review of the Indian Trust Funds for the Bureau of Indian Affairs, Task V Recommendations.'' (Discussed in April 22, 1992 report ``Misplaced Trust'' from House Committee on Government Operations at the text accompanying footnote #53.) April 15, 1987, BIA publishes Request for Information for transferring Indian trust fund management to the private sector. More than 100 responses were received. December 27, 1987, Supplemental Appropriations Act, P.L. 100-202 and P.L. 100-446, September 27, 1988, include a directive preventing the BIA from transferring trust accounts to a private institution until they are reconciled. October 26, 1989, Secretary Lujan, issues Secretarial Order 3137, Establishment of the Office of Trust Funds Management, BIA. May 11, 1990, Arthur Andersen & Co., ``Tribal and Individual Indian Monies Trust Funds, Report of Independent Auditors,'' Financial Statements as of September 30, 1989 and 1988. July 2, 1990, Secretary Lujan, issues an amendment to Sec. Order 3137; material to be included in the Departmental Manual by January 1, 1991. November 5, 1990, Interior Appropriations. Act, P.L. 101-512 tolls statute of limitations until reconciliation ordered by Committee is scheduled to be completed. The Act also requires independent certification that reconciliation results are the most complete reconciliation possible. April 11, 1991, ``Bureau of Indian Affairs Efforts to Reconcile and Audit the Indian Trust Funds,'' (GAO/T-AFMD-91-2). May 20, 1991, ``Bureau of Indian Affairs Efforts to Reconcile and Audit the Indian Trust Funds,'' (GAO/T-AFMD-91-6). April 2, 1992, ``Financial Management: BIA Has Made Limited Progress in Reconciling Indian Trust Funds and Developing a Strategic Plan,'' (GAO/AFMD-92-69). April 22, 1992, House Government Operations Committee approves and adopts a report from its Subcommittee on Environment, Energy, and Natural Resources: ``Misplaced Trust: The Bureau of Indian Affairs Mismanagement of the Indian Trust Fund,'' H.Rep. 102-499. July 2, 1992, SCIA oversight hearing, S. Hrg. 102-856, on land fractionation and BIA financial management with the GAO as the principal witness testifying on its reports: ``Profile of Land Ownership on 12 Reservations,'' (GAO/RCED-92-96BR) February 1992, and ``Problems Affecting BIA Financial Management,'' (GAO/T-AFMD-92-12) July 2, 1992 (``The bulk of problems are internal to BIA ``things such as poorly designed accounting systems, weak internal control, and trained staff.''). August 12, 1992, SCIA oversight hearing, S. Hrg. 102-939, on Indian Trust Fund Management, S. Hrg. 102-939. Financial Management; BIA Has Made Little Progress in Reconciling Trust Accounts and Developing a Strategic Plan, (GAO/AFMD-92-38) June 1992. (``The unreconciled accounts are only a symptom and not a cause of BIA's trust fund financial management problems.'') June 22, 1993, SCIA hearing, S. Hrg. 103-225, on S. 925 Native American Trust Fund Accounting and Management Reform Act of 1993, (companion bill to Representative Synar's bill, H.R. 1846). September 22, 1994, ``Financial Management: Focused Leadership and Comprehensive Planning Can Improve Interior's Management of Indian Trust Funds,'' (GAO/AMD-94-185). (``Interior continues to develop piecemeal management improvement plans that do not provide the comprehensive approach to correcting fundamental problems in the way Interior agencies carry out their trust fund functions.'') October 25, 1994, President signs American Indian Trust Fund Management Reform Act of 1994, (AITFMRA) P.L. 103-412. March 8, 1995, GAO Testimony; ``Indian Trust Funds Cannot Be Reconciled'' (GAO/AIMD-T-95-94) (Before the House Committee on Appropriations). September 13, 1995, SCIA hearing, S. Hrg. 104-340, on nomination of Paul Homan to be Special Trustee. September 29, 1995, GAO Letter Report, draft legislative proposal on reconciliation and settlement of tribal trust funds (GAO/AIMD/OGC- 95-237R). February 9, 1996, Secretary Babbitt issues Secretarial Order 3197, Establishment of the Office of Special Trustee and Transfer of Trust Funds Mgt. Functions from the BIA (Order terminates on October 1, 1997). June 10, 1996, Cobell v. Babbitt filed in the U.S. District Court for the District of Colombia, referred to Judge Royce C. Lamberth. June 11, 1996 SCIA Hearing, 104-514, Indian Trust Funds 1995, the primary witness is the GAO, which presented testimony on its report: ``BIA's Tribal Trust Fund Account Reconciliation Results,'' (May 3, 1996, GAO/AIMD-96-63) (``[B]ecause [the] BIA's report package did not explain or describe the numerous changes in the reconciliation scope and methodologies or the procedures that were not performed, the limitations of the reconciliation were not evident.''). January 1997, Senator Campbell assumes chairmanship of SCIA. February 4, 1997, Judge Lamberth certifies the named plaintiffs in Cobell v. Babbitt as representative of a class consisting of all resent and former IIM account holders. April 1997, Special Trustee submits his proposed Strategic Plan, as required by AITFMRA. May 21, 1997, Sec. Babbitt writes letter stating that the proposed Strategic Plan ``fails to meet the objectives of the AITFMRA.'' May 23, 1997, GAO, Letter Report, ``Tribal Account Holders'' Responses to Reconciliation Results'' (GAO/AIMD-97-102R). July 28, 1997, SCIA holds hearing S. Hrg., 105-295, on Special Trustee's Strategic Plan, Special Trustee Paul Homan testifies. August 22, 1997, Sec. Babbitt issues memorandum on Trust Improvement Project Definition: ``Notwithstanding my reservations about certain aspects about certain aspects of his Plan, selected trust systems improvements and data cleanup efforts in the Plan can and should proceed as soon as possible within the organizational structure of the Department.'' Secretary Babbitt calls for the creation of a ``high level implementation plan.'' November 13, 1997, DoI issues press release on a proposal for the settlement of tribal accounting claims against the United States. April 16, 1998, DoI submits Settlement Proposal for tribal trust funds to Congress. Introduced at the end of the month by Congressman Miller (by request) as H.R. 3782. July 22, 1998, SCIA hearing, S. Hrg. 105-815, on H.R. 3782, To Compensate Certain Indian Tribes for Known Errors in Their Tribal Trust Fund Accounts, to Establish a Process for Settling Other Disputes Regarding Tribal Trust Fund Accounts, and for Other Purposes. (The proposal was roundly criticized by Indian tribes and others for ``tilting the playing field'' in favor of the United States and effectively, if unintentionally, preventing Indian tribes from asserting certain claims.) May 5, 1998, Judge Lamberth issues a discovery and scheduling order. July 31, 1998 High Level Implementation Plan issued. November 5, 1998 Cobell v. Babbitt, 30 F. Supp.2d 24 (D.D.C. 1998) ruling denying Interior's motion for summary judgment, etc. and refusal to impose a statistical sampling upon the case as a means of providing an accounting. December 18, 1998, Cobell v. Babbitt, order to show cause why Sec. Babbitt should not be held in contempt. January 5, 1999, Secretary Babbitt issues Secretarial Order No. 3208, Reorganization of the Office of the Special Trustee. January 7, 1999, Special Trustee Paul Homan resigns. January 28, 1999 Secretary's Office provides defense of Order No. 3208 and status report on High Level Implementation Plan February 1999, GAO provides draft report entitled: ``Interior Lacks Assurance that Trust Improvement Plan will be Effective,'' issued as a final report in April 1999 (GAO/AIMD-99-53). February 22, 1999, Cobell v. Babbitt, (1999 WL 101636) Judge Lamberth issues order finding Secretaries Babbitt and Rubin and Assistant Secretary Gover in contempt. March 3, 1999 SCIA holds a joint hearing with Senate Energy and Natural Resources Committee on Secretarial Order No. 3208, S. Hrg. 106- 12. Secretary Babbitt is principal witness. With respect to the contempt citation, Secretary Babbitt stated: ``[L]et me just say we apologize to the court for the Government's failures in this litigation.'' March 25, 1999, Senator Murkowski introduces S. 739 (to direct the Secretary of the Interior to contract with qualified financial institutions for the investment of certain trust funds) with Senator Campbell as an original cosponsor. (At the request of the bill's sponsors, the Inspector General sought to determine whether Departmental communications constituted illegal lobbying after published reports indicating such lobbying may have ocurred.) April 3, 1999, SCIA holds hearing on BIA Capacity and Mission, S. Hrg. 106-79. April 1999 ``Interior Lacks Assurance that Trust Improvement Plan Will Be Effective,'' (GAO/AMD-99-53). June 7, 1999, Cobell v. Babbitt, 52 F.Supp.2d 211 (D.D.C. 1999) Judge Lamberth rules on Defendant's motions for summary judgment. June 25, 1999, Secretary Babbitt ``unveils'' TAAMS at Billings, Montana. June and July 1999, Bench trial in Cobell (Phase I) case. According to the Court Monitor's second report, at this trial: ``Without question, the Federal Government indicated that trust reform was underway and TAAMS was the framework and infrastructure for effecting trust reform.'' July 14, 1999, Joint Hearing SCIA/Senate Committee on Energy and Natural Resources, Trust Fund Reform, S. Hrg. 106-146. ``Indian Trust Funds: Interior Lacks Assurance That Trust Plan Will be Effective,'' (GAO/AIMD-99-53). (GAO report: ``Until Interior develops an information systems architecture addressing all of its management functions, it can not (sic.) ensure that its information systems will not be duplicative or incompatible or will optimally support its needs across all business areas.'') (Don Gray, Esq. ``You can not and should not try to operate on yourself, and that is exactly what we're asking well-intentioned BIA officials to do-to work on a problem and to solve a problem where they or their friends . . . may have made mistakes. That is neither fair not reasonable and in the commercial context would never be countenanced.'') September 8, 1999, According to records revealed to the Court Monitor, a high level meeting was held within the Department concerning TAAMS (``Discuss current TAAMS status and agree on Departmental Policy Position.'') Meeting attended by Secretary Babbitt's Chief-of-Staff Ann Shields, Kevin Gover, Daryl White, John Berry, Bob Lamb, and Dom Nessi. (This meeting and the failure to inform either Judge Lamberth or Congress about TAAMS implementation problems are addressed extensively in the Court Monitor's Second Report dated August 9, 2001.) September 22, 1999, SCIA hearing, Trust Management Reform Act, hearing on S. 1587 (Amending the American Indian Trust Fund Management Reform Act of 1994 to establish within the Department of the Interior an Office of Special Trustee for Data Cleanup and Internal Control) and S. 1589 (Establishing a Indian Trust Fund Reform Commission). According to Secretary Babbitt: ``Senator [Murkowski], if you go to Billings, Montana today you will see the TAAMS system running in parallel with the old system.'' November 18, 1999, Interior Appropriations Conference report language limits deployment of TAAMS: until and unless the Secretary, ``advise[s] the Committees on Appropriations that, based on the Secretary's review and analysis, such systems meet TAAMS contract requirements and user requirements.'' December 21, 1999, Cobell v. Babbitt, 91 F. Supp. 1 (D.D.C. 1999), decision of Judge Lamberth based on June/July bench trial. The court rules that the Government had a duty to (1) provide an accounting of funds held in IIM trust; (2) create written plans for collection and retention of IIM trust documents, computer and business systems architecture, and staffing of trust management functions; (3) delay was a breach of trust. February 8, 2000, Chairman Campbell sends copies of an draft bill entitled Indian Trust Resolution Corporation Act to all Indian tribes. February 29, 2000, DoI issues second High Level Implementation Plan March 22, 2000, SCIA hearing on the nomination of Thomas Slonaker to be Special Trustee. March 30, 2000, DoI issues its draft Secretarial Order concerning ``trust principles''. April 3, 2000, BIA publishes notice of request for Comments on the Settlement of IIM claims. April 12, 2000, Chairman and Vice Chairman of SCIA and Chairman of Energy and Natural Resources write to ask the Department to reconsider its draft ``trust principles.'' Confirmation of Special Trustee is blocked over draft ``trust principles.'' April 28, 2000, Secretarial Order on Trust Principles is issued after it is modified to meet most concerns. Senate confirms Tom Slonaker as Special Trustee. June 22, 2000, SCIA hearing on draft bill Indian Trust Resolution Corporation Act. July 14, 2000, DoI proposes regulations concerning the leasing and grazing of trust lands and the management of IIM funds and probate (65 FR 43874). September 22, 2000 Chairman Campbell and Vice Chairman Inouye and 16 other Senators write to Secretary and ask him not to proceed to finalize most of the July 14, 2000 draft regulations. September 29, 2000, Interior Appropriations Conference Report, H. Rep. 106-914 on H.R. 4578 (FY ``01 Interior Approps.) ``[W]hile approving the request to begin an IIM sampling approach, 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.'' December 1, 2000, plaintiffs in Cobell v. Babbitt file motion to re-open trial I. They assert that the Government presented false and misleading evidence to support its claim that trust reform was underway. December 29, 2000, Secretary Babbitt issues Memorandum to proceed with statistical sampling. January 20, 2001, over the September 22, 2000 objections, the DoI finalizes draft July 14, 2000 regulations. (Regulations are allowed to go into effect by Bush Administration.) February 23, 2001, U.S. Court of Appeals for the D.C. Circuit issues opinion in Cobell v. Norton, 2001 WL 17299 (D.C. Cir.). The decision affirms Judge Lamberth's ruling that the plaintiffs may proceed with their suit against the United States for breach of trust arising out of the government's failure to manage its trust activities. The panel also rules that the Government's duty to account does not arise out of the AITFMRA of 1994. February 23, 2001, Dom Nessi writes two memorandum raising concerns about the DoI's project for both Trust Reform and Data Cleanup. February 27, 2001, Secretary Norton issues Memorandum on statistical sampling. February 28, 2001, Secretary Norton appears before SCIA, announces decision on statistical sampling. April 16, 2001 Judge Lamberth appoints Joseph S. Kieffer, III as Court Monitor. July 10, 2001, Secretary Norton issues Secretarial Orders creating Office of Trust Reform and Historical Accounting (Sec. Order 3231) and augmenting the authority of the Special Trustee (Sec. Order 3232). July 11, 2001, Court Monitor issues his first report on Historical Accounting. August 9, 2001, Court Monitor issues his second report on TAAMS. This report confirms that the Department misled Congress and the court with respect to trust reform efforts. November 12, 2001 EDS submits DoI Trust Reform: Interim Report and Roadmap for TAAMS and BIA Data Cleanup November 20, 2001 Office of Indian Trust Transition (OITT) through Secretary Order 3235. January 16, 2002, DoI submits Status Report #8. January 17, 2002 First Meeting of Tribal Leaders Task Force January 24, 2002, EDS publishes DoI Trust Reform: Final Report and Roadmap ______ Prepared Statement of Hon. Byron L. Dorgan, U.S. Senator from North Dakota Mr. Chairman, I want to thank you for convening this hearing on the Department of the Interior's management--or perhaps mismanagement would be a better term--of Indian trust funds. As my colleagues know, the United States has a fiduciary responsibility to uphold with respect to the 225,000 individual Indian money accounts and 315 tribal accounts that it holds in trust for Native Americans. Unfortunately, as has been well documented, the Departments of the Interior and Treasury cannot properly account for billions of dollars in Indian trust fund accounts. Clearly, the Federal Government simply must do a better job of upholding its trust responsibilities to Native Americans. In an attempt to live up to the Federal Government's obligations, Interior Secretary Gale Norton proposed to reorganize some of the trust assets management responsibilities of her Department. I can understand why Secretary Norton might feel a dramatic reorganization is warranted, but, as I have expressed to her in a letter, I have concerns about such a reorganization. First and foremost, I am concerned that a proposal with such important ramifications was put forward without consultation with tribes and their members. I appreciate that the Department has subsequently conducted a series of regional consultation meetings with tribes, but more meaningful discussion needs to occur. Tribal leaders, the Administration and Congress should work together to make substantive reforms in the trust asset management process. To that end, I am pleased that we are having this hearing today and will be receiving testimony from Interior Department officials and tribal leaders. I especially want to acknowledge the leadership and contribution of North Dakota tribal Chairman Tex Hall, who is the president of the National Congress of American Indians and cochair of the Tribal Leaders Task Force on Trust Reform. Mr. Chairman, thank you again for calling this hearing, and I look forward to reading the testimony of the many witnesses. ______ Prepared Statement of Hon Craig Thomas, U.S. Senator from Wyoming Thank you, Mr. Chairman. Let me begin thanking the committee for holding this hearing to discuss Indian Trust Management. Throughout my time in Congress and as a member of this committee, I have been involved with efforts to remedy the existing problems with the current management system. It continues to be my hope that we can develop a dependable system. As we are all aware, the Cobell v. Norton litigation has prompted an intense reevaluation of our Government's trust responsibility. Consequently, Secretary Norton has put forth a proposal to restructure the Bureau of Indian Affairs, thereby creating a new agency solely charged with managing Indian trust accounts. This new agency has been referred to as the Bureau of Indian Trust Asset Management [BITAM]. I understand this proposal has been met with opposition throughout areas in Indian country. I also understand the tribes' frustration with the Department's consultation process. However, I strongly believe that we must not lose focus in our efforts to resolve this long-standing problem and move forward to establish an accountable system of trust management. The Department of the Interior is not the only agency to bear the burden of finding a solution or addressing the problem. Each branch of our Government continues to shape the future outcome of Indian trust management. The history of mismanagement must be eradicated and replaced with a renewed commitment to providing a fair, accountable system. I look forward to working with my colleagues as we proceed in this difficult task. Thank you, Mr. Chairman, I look forward to hearing from our witnesses. ______ Prepared Statement of Susan M. Williams, Attorney, Albuquerque, NM Mr. Chairman and members of the committee, my name is Susan M. Williams. I am an attorney in Albuquerque, NM. I represent Indian tribal governments throughout the country and have broad experience in matters relating to the U.S. Government's trust responsibility to Indian tribes and individual Indian people. Through many years of experience, I have acquired a wide-ranging understanding of the Federal Government's attempts to fulfill its trust duties through the day-to- day operations of the Department of the Interior [Department] and, particularly, the Bureau of Indian Affairs [BIA]. I am pleased to present a written statement to this distinguished body regarding the Department's management of Indian trust resources and Secretary Norton's current proposal to transfer management of those resources out of the BIA and into a new Bureau of Indian Trust Asset Management [BITAM]. I submit this testimony on behalf of two Arizona Indian tribes, the Hualapai Nation and the Yavapai-Apache Nation of the Camp Verde Reservation. Notwithstanding the problems inherent in the Department's present system of Indian trust asset management, the Secretary's plan to reorganize the Department in an effort to eliminate the problems is a bad idea that will not work. Financial account management and natural resource management are linked inextricably. The Secretary's plan, however, does not address critical issues related to natural resource management. Rather, the plan focuses exclusively on financial account management issues raised by the Cobell litigation. Natural resource management, in contrast, includes the actual day- to-day oversight and protection of the land, forests, water, and other resources held in trust by the United States for Indian tribes and individual Indians. The Federal Government holds approximately 11 million acres in trust or restricted status for individual Indians and 45 million acres for tribes. The BIA and, in certain circumstances, the Bureau of Land Management [BLM] and the Minerals Management Service [MMS], have management responsibility for these resources. Those responsibilities include, among other activities, the leasing and valuation of trust lands, the maintenance of land ownership records, forest management, fire suppression, and the collection and verification of oil, gas, and other mineral royalty payments. The Secretary's plan does not address the substance of, or propose improvements to, these critical natural resource management functions. The Secretary's proposal also ignores the unique position that the BIA occupies in the context of the Federal Government's relations with the Indian tribes. To Indian people, the BIA is synonymous with the trust responsibility, and for good reason: There is little, if anything, in which the Bureau is engaged that is not connected to our government's fulfillment of its trust duty to Indian people. Indeed, the Secretary's reorganization plan is controversial because it proposes to take away from the BIA natural resource trust asset management responsibilities without articulating a valid set of reasons for doing so. Trust reform will not be complete until all the agencies within the Department responsible for either financial account management or natural resource management are in compliance with relevant laws and the Federal trust responsibility to Indian tribes. At the core of the problem with the proposed reorganization is Secretary Norton's failure to address (or at least articulate) how both the management of natural resources performed by BIA (as well as the BLM and the MMS) and the financial account management operations performed by the Office of the Special Trustee [OST] and Office of Trust Funds Management [OTFM] will be improved substantively by merely moving those functions to the new BITAM. In addition, such a move, which is both drastic and costly, fails to address how tribal trust beneficiaries will continue their participation in trust management as contemplated by the American Indian Trust Fund Management Reform Act, the Indian Self-Determination and Education Assistance Act, and other Federal laws that authorize tribes to manage their own trust resources. Instead of BITAM, we recommend that the Congress and the Secretary undertake trust reform as follows: A. Organization--New Deputy Secretary and a Unified Chain of Command. We urge the Congress to authorize and establish within the Department a new Deputy Secretary position reporting directly to the Secretary. This new Deputy Secretary would direct a unified chain of command and would possess line authority over all of the Department's trust responsibilities for natural resource management and financial account management regardless of the location of those functions within the Department's various bureaus and agencies. Specifically, the new Deputy Secretary would have authority to direct all trust functions in the BIA, BLM, MMS, OST, OTFM, and the Office of Hearings and Appeals, including the duty to establish policies, procedures, systems, and practices that comply with the Secretary's trust responsibility to individual Indians and Indian tribes.\1\ For the non-trust functions of the BLM and the MMS, the existing Deputy Secretary of the Interior and the Assistant Secretary for Land and Minerals Management, as well as the respective agency directors, would retain direct authority. The new Deputy Secretary also should have the authority to hire a small staff of additional, highly qualified trust, management, and organization professionals to design and oversee trust reform. This approach would allow the financial account management reforms in progress at OTFM to continue, but would add additional oversight, direction, and accountability for that reform process as well as implement necessary reform measures related to the natural resources held in trust for Indian tribes. In other words, the new Deputy Secretary would direct the implementation of all necessary reforms and would provide a clear line of authority and accountability for reform efforts and ongoing operations. --------------------------------------------------------------------------- \1\ This trust duty is discussed later in this statement. --------------------------------------------------------------------------- To ensure that the new Deputy Secretary has the necessary qualifications of trust experience and organizational and management leadership, and to ensure that meaningful reform continues between changes in Administrations, the Congress should provide that the President appoints the new Deputy Secretary, with the advice and consent of the Senate, for a fixed term of 6 years. There is ample precedent for statutorily fixed terms of office for officials who occupy high levels of trust and responsibility in the Federal Government.\2\ The tribes should have substantial input into this selection process during Senate confirmation of the appointment, and the Congress should establish in law standards for removal of an appointee during a term of office, similar to the standards established for the Comptroller General of the United States.\3\ --------------------------------------------------------------------------- \2\ See, e.g., 28 U.S.C.A. sec. 532, note (term of office of the Director of the Federal Bureau of Investigation is 10 years); 31 U.S.C. sec. 703 (the Comptroller General of the United States is appointed by the President for a term of 15 years); 12 U.S.C. sec. 241 (the President appoints members of the Board of Governors of the Federal Reserve System for terms of 14 years). \3\ See 31 U.S.C. sec. 703. --------------------------------------------------------------------------- B. Standards of Performance--The Trust Responsibility. The trust responsibility for Indian trust asset and trust funds management is well established in the legal decisions. A legally enforceable trust obligation is owed by the United States to the individual Indian and tribal trust beneficiaries based on treaties, agreements, and statutes. The Congress has broad authority over Indian affairs, but its actions must be ``tied rationally to the fulfillment of the Congress'' unique obligation toward the Indians.'' Morton v. Mancari, 417 U.S. 535, 555 (1974). The trust responsibility is more than just following requirements in statutes and regulations but imposes common law fiduciary standards on executive branch management of Indian trust resources and trust funds similar to duties imposed on private trustees. United States v. Mitchell, 263 U.S. 206, 225 (1983) (``Mitchell II'') (the ``undisputed existence of a general trust relationship between the United States and the Indian People'' is well established). That fiduciary standard has been described as an obligation to act in the ``best interests'' of the Indian beneficiary. Jicarilla Apache Tribe v. Supron Energy Corp., 728 F.2d 1555, 1563 (10th Cir. 1984) (Seymour, J. concurring in part and dissenting in part), adopted as majority opinion as modified en banc, 782 F.2d 855 (10th Cir. 1986), cert. denied, 479 U.S. 970 (1986) (holding that the Secretary's duties in the mineral leasing context are not limited to compliance with administrative laws and regulations, but are subject to the ``more stringent duties demanded of a fiduciary;'' when faced with a decision for which there are several ``reasonable'' choices, the Secretary must select the one that best serves the Indians'' interests). Lower courts have applied these common law trust principles to the government's management of Indian trust assets. In other contexts, it has been stated that the ``most fundamental duty owed by the trustee to the beneficiaries of the trust is the duty of loyalty. . . to administer the trust solely in the interest of the beneficiaries.'' Pegram v. Herdrich, 530 U.S. 211, 224 (2000) (quoting 2A A. Scott and W. Fratcher, Trusts at 311 (4th ed. 1987)). The commonlaw fiduciary standard has been modified in two respects when the government deals with Indians. First, the United States may represent interests conflicting with the tribal trust interests, but the United States may be liable for money damages for failure to protect the ``best interests'' of the Indian trust beneficiaries in such circumstances. Nevada v. United States, 463 U.S. 110 (1983) (``mere existence of a formal ``conflict of interest'' does not deprive the United States of authority to represent Indians. . . . If, however, the United States actually causes harm through a breach of its trust obligations the Indians should have a remedy against it.'') (Brennan, J., concurring). Second, under existing law, tribal trust beneficiaries have a right to manage their own tribal trust resources. The American Indian Trust Fund Management Reform Act of 1994 gives Indian tribes the opportunity to manage tribal trust funds currently held in trust by the United States. See 25 U.S.C. secs. 4021-4029. In the event a tribe chooses to manage its own funds, the United States'' trust responsibility respecting those funds ceases once the funds are withdrawn from the government's accounts. Id. sec. 4022(c). Similarly, the National Indian Forest Resources Management Act and the American Indian Agricultural Resource Management Act provide Indian tribes the opportunity to participate in the management of their forest and agricultural lands and resources, respectively, through the self- determination contracting and self-governance compacting provisions of the Indian Self-Determination and Education Assistance Act. See 25 U.S.C. secs. 3104 (forest lands and resources); 3711 (agricultural lands and resources). Unlike the situation under the Trust Fund Management Reform Act, active tribal participation in trust resources management under both the Forest Resources Management Act and the Agricultural Resource Management Act does not diminish in any way the United States'' trust responsibility toward those resources. Id. secs. 3102 and 3120 (Forest Resources Management Act); 3702 and 3742 (Agricultural Resource Management Act). C. Process--Full Evaluation of Trust Management Activities. Before the Secretary is permitted to move ahead with her current proposal to reorganize the Department's management of natural resource trust assets and trust funds management, or any such proposal, for that matter, Congress should require the Department to engage in a detailed, ``ground up'' examination of the way the Department currently manages Indian trust assets. The Department should first commission an outside, independent program compliance audit of all of Interior's trust management activities. Indeed, the Department's trust functions should undergo such an audit periodically in order to ensure that all standards and controls are implemented and operating as effectively as possible and in accordance with relevant requirements and standards. We are unaware if the trust management programs of the BIA, BLM, or MMS have ever been subjected to such an audit. These agencies'' management of trust resources must undergo a systematic critique to gauge the relative strengths and weaknesses of the operations and to suggest means for improvement. That the agencies'' operations may never have undergone an independent program compliance audit is nothing short of extraordinary and may go a long way toward explaining why the inadequacies in the management of Indian trust resources have never seriously been addressed. In contrast, since passage of the 1994 Reform Act, the OTFM periodically undergoes such audits. There are good reasons to think that the outstanding issues related to financial account management can be responsibly addressed by the existing OTFM. After the passage of the American Indian Trust Fund Management Reform Act of 1994, the trust account management duties of the Department were removed from the BIA and placed under the supervision of the Special Trustee for American Indians (``Special Trustee''). Since that time, great strides have been made in the management of both IIM and tribal trust accounts. A key reason for the progress appears to be the methodology employed by the OST and the OTFM to implement necessary changes into the trust account management system. A concerted effort has been made to build from the ground up: first, to understand the duties and responsibilities inherent in the management of Indian trust accounts; second, to identify the functions and tasks that must be undertaken to satisfy those trust duties and responsibilities; third, to develop uniform standards by which those functions and tasks are to be undertaken; and finally, to procure commercial, off-the-shelf systems necessary to successfully perform the requisite duties, at the same time providing that internal controls are in place to ensure the integrity of operations. Notwithstanding the great strides that the Special Trustee and OTFM have made in the management of the IIM and tribal trust accounts, there remains a tremendous amount of work to do. To ensure the successful completion of that work, the OTFM should be permitted to continue along its current path of reform, subject to the authority of the proposed new Deputy Secretary and contingent on the results of the outside audit and a comprehensive evaluation as proposed below. The ``ground up'' examination of trust operations mentioned above should build upon the completed audit of existing operations and follow the steps briefly outlined earlier concerning the operations of the Special Trustee and OTFM, specifically: 1. Duties and responsibilities. Before any trust reform proceeds, we must have a clear understanding of the goals of such reform, both in terms of financial account management and natural resource asset management. This would involve development of a specific mandate of precisely what the Federal trust responsibility requires with regard to the management of financial accounts and natural resources such as land, water, minerals, and forests. The mandate necessarily would require a review of the relevant treaties, statutes, regulations, policy and guidance documents, and court decisions. We discussed earlier the general trust duty established in the applicable court decisions. We note one previous attempt to catalog the Department's trust responsibilities: Interior Solicitor Leo Krulitz's letter of November 21, 1978, to Assistant Attorney General James W. Moorman, concerning the case of United States v. Maine. In that letter, Solicitor Krulitz set out the Department's view of the United States'' trust obligation with respect to Indian property interests. \4\ --------------------------------------------------------------------------- \4\ See also Secretarial Order 3225, ``Principles for the Discharge of the Secretary's Trust Responsibility,'' issued by former Interior Secretary Babbitt on April 28, 2000. --------------------------------------------------------------------------- 2. Functions and tasks. The Department must develop a comprehensive catalog of the activities in which the Department must be engaged in order to fulfill the trust responsibility mandated above. This effort should benefit from the results of the completed audit critiquing how well current activities are being performed. 3. Develop uniform standards. Any trust reform plan must include an explanation of how natural resource asset management and trust funds management will be administered in accordance with trust principles. To that end, the Department must develop, refine, and articulate uniform standards by which both financial account management and natural resource asset management activities are to be undertaken and measured. 4. Implement necessary systems. The next step would be for the Department to implement operational and accounting policies and procedures, based on the uniform standards according to which the necessary functions and tasks are to be performed. Such systems must include internal controls to ensure the quality of operations. 5. Integration of Tribal Self-Determination in Trust Assets Management. In the context of the existing trust management regime, as detailed above, an emphasis has been placed on ensuring that Indian tribes, consistent with the principles of self-determination, can manage, if they so choose, their own trust assets. These self-determination opportunities must be permitted to continue. Accordingly, great care should be exercised to integrate the program and policy principles of the Trust Fund Management Reform Act, the Forest Resources Management Act, and the Agricultural Resource Act into the revamped trust management structure, and to expand the concept of trustee/beneficiary comanagement to all appropriate areas of trust management. D. Conclusion--Responsible and Cost-Effective Trust Reform. The trust reform proposal outlined above is efficient as it does not require the costly expenditures to transfer and realign agencies and agency functions. The proposal is effective because it establishes a clear line of authority over all Interior trust management activities with a highly qualified person to direct the organizational and operational performance reforms needed to meet the United States'' trust responsibility to Indians. And, finally, by maintaining the BIA and the OTFM intact (albeit under the new Deputy Secretary's ultimate authority over trust functions), the proposal continues the strong partnership established by the tribes and the Department consistent with the principles of self-determination and self-governance. Thank you for this opportunity to express the views of the Hualapai Nation and the Yavapai-Apache Nation of the Camp Verde Reservation. ______ Prepared Statement of Thomas N. Slonaker, 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 been 22 years since the Office of Management and Budget first identified the financial management of Indian trust assets as a high-risk liability to the United States. It has been approximately 8 years since the enactment of the American Indian Trust Fund Management Reform Act, which clarified some of the existing trust responsibilities of the Secretary. That act established the Office of the Special Trustee for American Indians and required the Department to bring about the ``more effective management of, and accountability for, the proper discharge of the Secretary's trust responsibilities to Indian tribes and individual Indians. . . '' In August 1997, in response to the comprehensive strategic plan required by the Act to be prepared by the Special Trustee ``for all phases of the trust management business cycle,'' the Secretary authorized that ``selected, trust systems improvements and data cleanup efforts. . . should proceed as soon as possible.'' I was confirmed by the Senate as the Special Trustee 21 months ago. 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, and, 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 the trustee for Indian tribes and individual Indians. Similar to a private sector trustee, 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 basic trust duties are Federal trust duties. Today the Department cannot perform its trust duties at the level required by the Reform Act. Trust reform to date has not achieved an acceptable level of success, and, indeed, to speak of trust reform is misleading. The implementation of selected trust systems and data cleanup efforts is only the prelude to trust reform. It is the acquisition of the basic tools to do what needs to be done. It is selecting and buying the plow. Cutting the furrows lies far ahead. Actual trust reform must be accomplished. By properly serving the best interests of these Indian beneficiaries, the trustee--the Government-- protects itself from the high risk of liability that OMB spoke to in 1980. 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 in the private sector. Additionally, there is a critical need for senior level, project management skills applicable to large trust operations projects. The execution of those Federal fiduciary obligations must be rationalized. 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 clearer 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 one not diluted by intersecting other Departmental chains of command, can work better than the present organization. The devil, however, is in the details, and the new organization must have the best trust executive direction and actually hold people accountable. I also believe that the trust organization needs to be separated from other activities of the Bureau of Indian Affairs and placed on its own footing. At its last meeting on December 7, 2002, the Special Trustee's Advisory Board, a Board required to be created by the 1994 Reform Act, adopted a formal proposal that the entire Indian asset trust function be removed from Interior and lodged in a self contained organization to be created by Congress. This proposal is an initiative of the Board, and it is based in large part on the Department's inability over the many years to identify and cure its management problems. It 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 its present organizational locations. I believe that organizations are not well motivated to make necessary changes if they know that 1 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 must have the opportunity to provide candid and informed guidance directly 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. Last July, the Secretary authorized the Special Trustee to issue written directives requiring the adoption of appropriate changes in existing policies that hinder trust reform. Although such directives may be overruled by the Secretary on appeal, the authority to issue such directives can prove to be a valuable tool. However, it is not as effective as active direct line authority over those in the Department who implement trust policies and practices. Also, I am concerned about the inherent conflicts that can arise between our responsibility to individual Indian beneficiaries and our need to consult with tribes on matters affecting Indians in general. Currently, 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 allocation procedure has proven helpful to the trust reform process and has given the Special Trustee a useful and independent voice in the Department's implementation of trust reform. The procedure is consistent with OST's oversight responsibilities under the 1994 Reform Act. It is important to achieving lasting trust reform and should continue to be a part of the reform effort We speak about organizing for trust reform within the Department, but it is important to recognize that today there are ongoing trust functions that require attention. For example, we need to review with the Congress the restrictions that now apply to the investment of trust cash concern here is the ability to offset inflation for those beneficiary trust funds that are expected to remain with the trustee for a matter of years. One example of this is the investment of cash for the benefit of a young Indian until such time that it may be distributed upon reaching their majority age. I also believe that it is critical to trust reform to confirm that Indian trust land assets are earning a competitive market rate of royalty or lease income. This is the Trustee's obligation on behalf of the beneficiaries, tribal or individuals. We have created in OST a risk management unit which, when fully operational, will help assure the Secretary that the assets are properly managed. Finally, let me comment on the notion advanced by some parties these days that the administration of the Government's trust can be split into two seemingly separate organizations, one for individual Indians and one for the tribes. I understand that litigation issues prompted this alternative. It is highly impractical in my opinion, however, to split administratively and operationally those trust responsibilities that have virtually identical characteristics of accounting, beneficiary reporting, land management (sometimes overlapping), investment management, and tribal distributions to individuals. Its only result would be to create two similar organizations that would be at odds with each other. In conclusion, Mr. Chairman, proper trust reform can be put in place with the right leadership, the right trust skills, and accountability up and down the chain of command. Thank you for this opportunity to be with you. ______ Prepared Statement of Vincent Armenta, Chairman, Santa Ynez Band of Chumash Indians Chairman Inouye, Vice Chairman Campbell and members of the committee, thank you for holding this oversight hearing on the Department of the Interior's management of Indian trust funds and for the opportunity to provide you with my testimony on behalf of the Santa Ynez Band of Chumash Indians. We appreciate the efforts of Congress, especially the Senate Committee on Indian Affairs, to identify, analyze, address and evaluate the continuing needs throughout Indian country. The Santa Ynez Band of Chumash Indians has 161 members, many of whom reside on the Santa Ynez Reservation, located in Santa Barbara County in Southern California. The Santa Ynez Reservation is a mere 128 acres and consists of a long and narrow parcel which is mostly in creek bed areas. The composition, terrain and absence of other natural resources on our reservation have not afforded the Santa Ynez Band or our individual members with lease, royalty, or other resource income that is managed by the Department of the Interior in tribal trust accounts and Individual Indian Money [IIM] accounts. However, the proposed reorganization of the Bureau of Indian Affairs [BIA], creation of the Bureau of Indian Trust Assets Management [BITAM], and transfer of BIA trust management to BITAM causes us great concern because it appears that the proposed BITAM would manage more than the tribal trust accounts and IIM accounts and would impact our trust programs and activities. As referenced above, the composition and terrain of our reservation have presented us with many challenges, have limited our ability to provide housing and other governmental services for our members, and have also limited our ability to take advantage of diverse economic development opportunities. Tourism and agriculture continue as the primary industries in the surrounding communities and members of the Santa Ynez Band are actively considering ways to participate more fully and equitably in the region's development as well as contribute to its prosperity. Despite the many challenges we face, the Santa Ynez Band has developed tribal housing through HLJD programs, including NAHASDA, provides health care at the Santa Ynez Tribal Health Clinic through 638-compacting, established the Santa Ynez Chumash Environmental Office through the EPA's General Assistance Progran, provides higher education scholarships to our members, and developed the Chumash Casino. This is just the beginning as we have many long-neglected unmet needs to address. While we strive to develop our governmental infrastructure and achieve financial independence, we look to the Federal Government as a partner and resource. Our future as a self-governing sovereign Indian nation requires our mutual commitments to a strong government-to- government relationship. We look to Congress, the Administration and the courts to reaffirm the Federal Government's commitment as we, the Santa Ynez Band of Chumash Indians, reaffirm our commitment to work with you. Concerns with the Department of the Interior's Proposed Trust Management Reorganization The proposed trust management reorganization has caused great concern throughout Indian country. This is due in large part to the vague and inconsistent language that has been used and the lack of clarity regarding the scope of the Secretary of the Interior's proposal. We have received reports that Interior officials have declined to respond to many direct questions and have said that they will wait until the conclusion of the consultation/scoping meetings before issuing any written responses or clarifications. While we certainly appreciate and support Interior conducting more meetings throughout Indian country, we believe that we would all derive great benefit from Interior's clarification which tribes have sought from the very first meeting. With better information, tribes and Congress would have the information with which to assess exactly what the impacts of the Secretary of the Interior's proposal would be. Though we oppose the BITAM proposal, we emphatically support the need for trust reform as the current systems and programs fail to meet our cumulative and growing unmet needs. Furthermore, the greater distribution of trust responsibilities throughout the various departments and agencies demand a clearer and more focused direction and strong leadership that must originate from the one agency seen as ``the'' agency that should do this--the Bureau of Indian Affairs. Secretary of the Interior Gale Norton says that the Bureau of Indian Trust Assets Management [BITAM] proposal was quickly announced and advanced due to the proceedings of the Cobell litigation which focuses on the Department's mismanagement of IIM accounts only. However, we have received reports that the plaintiffs in the Cobell litigation reject the BITAM proposal as it fails to address the concerns of the litigation. Tribal leaders from throughout Indian country have emphatically rejected Secretary Norton's proposal. Thus, we do not understand Secretary Norton's continuing push for the plan. With the limited information that we have at this point, we can only speculate that the BITAM proposal is intended to erode and potentially eliminate the BIA. It appears that the Bureau of Indian Trust Assets Management proposal would affect the existing structures, programs, services, and trust obligations, duties, and responsibilities of the Federal Government. The Draft Organizational Chart for the BITAM proposal, dated November 14, 2001, shows that the proposed reorganization will affect self-governance, 638-compacting, contracting and direct service tribes in a variety of ways. However, we have received reports that changes to that Draft Organizational Chart have already been considered and that some activities and functions will remain with the BIA. Secretary Norton has said that the creation of a new Bureau with another Assistant Secretary to oversee trust reform and trust assets management will free up Assistant Secretary McCaleb to concentrate on the other programs within the Bureau of Indian Affairs to improve the delivery of services. The Santa Ynez Band would like to know exactly which programs will remain with the Bureau of Indian Affairs, what will remain of the BIA's organizational structure, and what the BIA's plans are for improving the delivery of their services. We view this as being very critical because we see this move to ``reorganize'' as an erosion of the BIA rather than a reinforcement of the BIA. We would like, to see a clear plan and vision for the future Bureau of Indian Affairs from Secretary Norton and Assistant Secretary McCaleb. Everyone involved--tribes, individual Indians, Congress, the Department of the Interior, the courts--would benefit from clarification regarding what Interior intends the scope of ``trust assets'' and ``trust funds'' as used in its proposal to mean. Tribes are especially concerned about what is being excluded and whether the exclusion of any assets, funds, programs or services from the ``trust'' umbrella is an indication of a change in the administration's view of its trust obligations, duties and responsibilities. Funds flowing from the Federal Government and through Federal programs may be viewed as ``trust'' funds as they are in furtherance of the trust responsibilities of the Federal Government and in furtherance of the trust policy of the Federal government to promote the self- determination and self-governance of our Indian nations. The Draft Organizational Chart would support this view. When Interior characterizes or categorizes trust v. non-trust functions, it appears as though Interior is redefining its trust obligations, duties and responsibilities. However, if Interior intends to separate its fiscal management of trust moneys only, and this is the only distinction Interior intends, then it should clarify that. Some Interior officials have said that BITAM is intended solely as a fiscal management reorganization. These same officials do not believe that BITAM will, nor should, affect natural resources management, land into trust applications and other BIA functions that are better informed at the regional and field office levels. We are concerned with the characterization of such natural resources as ``non-trust'' assets by an Interior official, though we assume that a very narrow definition of ``trust'' was intended. We would appreciate a clarification with regard to the above concerns. We hope that Secretary Norton and Assistant Secretary McCaleb are willing and able to provide direct responses soon. We are otherwise concerned that the lack of clarity is intentional and intended to veil purposes that can only be adverse to our interests. Concerns With General Distribution of Trust Responsibilities and Lack of Leadership We have great concern over the distribution of program management outside of the Bureau of Indian Affairs, whether that is indeed the intent or the unintended, though foreseeable, result. We are already grappling with the efforts of Departments outside of Interior who are relatively new to administering Indian programs and are for the first time responsible for effecting the implementation of Federal trust obligations, duties and responsibilities. While Interior has not been as effective as Indian country deserves, it causes us great concern to have to work with new and much less knowledgeable, experienced, or committed departments of the Federal Government. Secretary Norton, in her testimony before the House Resources Committee on February 6, 2002, entitled ``Native American Trust Issues and Ongoing Challenges, stated one of the Department of the Interior's trust management challenges is that ``Trust responsibilities are spread throughout the Department. Thus, trust leadership is diffuse.'' We strongly agree with that statement and do not understand why Secretary Norton proposes to keep Interior's trust responsibilities spread across two different bureaus. Further, the proposal would require creating many completely new positions within the Department that will be staffed by individuals who can not have any experience fulfilling the duties required by those positions. Beyond the serious questions raised by this lack of experience, the net increase in the personnel costs of trust administration, we fear, will run into many millions, if not tens of millions, of dollars. Given the lack of clarity in the Secretary's proposal, and the already staggering amount of other unmet needs throughout Indian Country, the proposal does not satisfy the Secretary's fiduciary obligation to ensure that monies set aside for the benefit of individual Indians and Indian tribes is used wisely. We cannot repair one breach by creating another. The alternative proposals offered by various Indian nations and inter-tribal organizations suggest the focused management and leadership Secretary Norton seeks. The Federal Government's trust responsibilities are spread throughout various departments beyond the Department of the Interior, including the Department of Health and Human Services, the Department of Housing and Urban Development, the Department of Agriculture, the Environmental Protection Agency, and the Department of Justice. Some of these departments have looked to the Department of the Interior and the Bureau of Indian Affairs for their trust leadership and have found them woefully lacking. We also understand that programs and services remaining under the Bureau of Indian Affairs will remain under close scrutiny and that any failure of the Bureau of Indian Affairs to meet certain minimum performance standards will result in that program being shifted to another department. It is critical that we reinforce and dramatically improve the Bureau of Indian Affairs. Thank you Chairman Inouye, Vice Chairman Campbell and members of the committee for this opportunity to provide testimony on behalf of the Santa Ynez Band of Chumash Indians. If you have any questions or wish to discuss our concerns and interests and how we might work together to address them please do not hesitate to contact us. Thank you. ______ Prepared Statement of Chris Devers, Chairman, Pauma-Yuima Band of Mission Indians Chairman Inouye, Vice Chairman Campbell and members of the committee, thank you for keeping the record open for the committee's oversight hearing on the Department of the Interior's management of Indian trust funds and for the opportunity to provide you with written testimony on behalf of the Pauma-Yuima Band of Mission Indians. We appreciate the efforts of Congress; especially the Senate Committee on Indian Affairs, to identify, analyze, address and evaluate the continuing needs throughout Indian country. The Pauma-Yuima Band of Mission Indians has 200 members, a majority of whom reside on the Pauma and Yuima Indian Reservations, located in northern San Diego County in Southern California. The Pauma and Yuima Indian Reservations consists of approximately 5,800 acres most of which is on Palomar Mountain, an important tribal and cultural resource which we continue to strive to protect and preserve, leaving approximately 275 acres for housing, governmental services, and economic development. All of the reservation lands are held in trust for the Pauma-Yuima Band. While our members do not have Individual Indian Money [IIM] accounts, the tribe has significant settlement funds held in trust and managed by the Department of the Interior. The proposed reorganization of the Bureau of Indian Affairs [BIA], creation of the Bureau of Indian Trust Assets Management [BITAM], and transfer of BIA trust management to BITAM causes us great concern because it appears that the proposed BITAM would manage our tribal trust accounts as well as impact our trust programs and activities. We are especially concerned that the issues and concerns of small tribes with precious limited resources may be once again overlooked. We have overcome many challenges, though there are also many that remain. As mentioned above, the composition, terrain and location of our Reservations have presented us with many challenges, have limited our ability to provide housing and other governmental services for our members, and.have also limited our ability to take advantage of diverse economic development opportunities. Agriculture continues as the primary industry in the surrounding community. The tribe has developed and maintained orange and avocado groves. However, during some years, the cost of picking the fruit and getting them to the market have exceeded the price that we could obtain for the fruit. The tribe and our members continue to actively consider different ways in which we may participate more fully and equitably in the region's development as well as contribute to its prosperity. Despite the many challenges we face, the Pauma-Yuima Band has developed tribal housing through HUD programs, including NAHASDA, provides health care as a part of the Indian Health Council consortium, established the Pauma Natural Resources Department through grove income and the EPA's General Assistance Program and other EPA grants, provides after-school care and educational services, and developed Casino Pauma in 2001--We are hopeful that Casino Pauma will generate income that will enable us to provide additional services to our members and community as we have many long-neglected unmet needs to address. While we strive to develop our governmental infrastructure and achieve financial independence, we look to the Federal Government as a partner and resource. Our future as a self-governing sovereign Indian nation requires our mutual commitments to a strong government-to- government relationship. We look to Congress, the Administration and the courts to reaffirm the Federal Government's commitment as we, the Pauma-Yuima Band of Mission Indians, reaffirm our commitment to work with you. Concerns with the Department of the Interior's Proposed Trust Management Reorganization The proposed trust management reorganization has caused great concern throughout Indian country. This is due in large part to the vague and inconsistent language that has been used and the lack of clarity regarding the scope of the Secretary of the Interior's proposal. We have received reports that Interior officials have declined to respond to many direct questions and have said that they will wait until the conclusion of the consultation/scoping meetings before issuing any written responses or clarifications. While we certainly appreciate and support Interior conducting more meetings throughout Indian country, we believe that we would all derive great benefit from Interior's clarification which tribes have sought from the very first meeting. With better information, tribes and Congress would have the information with which to assess exactly what the impacts of the Secretary of the Interior's proposal would be. Though we oppose the BITAM proposal, we emphatically support the need for trust reform as the current systems and programs fail to meet our cumulative and growing unmet needs. Furthermore, the greater distribution of trust responsibilities throughout the various departments and agencies demand a clearer and more focused direction and strong leadership that must originate from the one agency seen as ``the'' agency that should do this--the Bureau of Indian Affairs. Secretary of the Interior Gale Norton says that the Bureau of Indian Trust Assets Management [BITAM] proposal was quickly announced and advanced due to the proceedings of the Cobell litigation which focuses on the Department's mismanagement of IIM accounts only. However, we have received reports that the plaintiffs in the Cobell litigation reject the BITAM proposal as it fails to address the concerns of the litigation. Tribal leaders from throughout Indian Country have emphatically rejected Secretary Norton's proposal. Thus, we do not understand Secretary Norton's continuing push for the plan. With the limited information that we have at this point, we can only speculate that the BITAM proposal is intended to erode and potentially eliminate the BIA. It appears that the Bureau of Indian Trust Assets Management proposal would affect the existing structures, programs, services, and trust obligations, duties, and responsibilities of the Federal Government. The Draft Organizational Chart for the BITAM proposal, dated November 14, 2001, shows that the proposed reorganization will affect self-governance, 638-compacting, contracting and direct service tribes in a variety of ways. However, we have received reports that changes to that Draft Organizational Chart have already been considered and that some activities and functions will remain with the BIA. Secretary Norton has said that the creation of a new Bureau with another Assistant Secretary to oversee trust reform and trust assets management will free up Assistant Secretary McCaleb to concentrate on the other programs within the Bureau of Indian Affairs to improve the delivery of services. The Pauma Band would like to know exactly which programs will remain with the Bureau of Indian Affairs, what will remain of the BIA's organizational, structure, and what the BIA's plans are for improving the delivery of their services. We view this as being very critical because we see this move to ``reorganize'' as an erosion of the BIA rather than a reinforcement of the BIA. We would like to see a clear plan and vision for the future Bureau of Indian Affairs from Secretary Norton and Assistant Secretary McCaleb. Everyone involved--tribes, individual Indians, Congress, the Department of the Interior, the courts--would benefit from clarification regarding what Interior intends the scope of ``trust assets'' and ``trust funds'' as used in its proposal to mean. Tribes are especially concerned about what is being excluded and whether the exclusion of any assets, funds, programs or services from the ``trust'' umbrella is an indication of a change in the administration's view of its trust obligations, duties and responsibilities. Funds flowing from the Federal Government and through Federal programs may be viewed as ``trust'' funds as they are in furtherance of the trust responsibilities of the Federal Government and in furtherance of the trust policy of the Federal Government to promote the self- determination and self-governance of our Indian nations. The Draft Organizational Chart would support this view. When Interior characterizes or categorizes trust v. non-trust functions, it appears as though Interior is redefining its trust obligations, duties and responsibilities. However, if Interior intends to separate its fiscal management of trust moneys only, and this is the only distinction Interior intends, then it should clarify that. Some Interior officials have said that BITAM is intended solely as a fiscal management reorganization. These same officials do not believe that BITAM will, nor should, affect natural resources management, land into trust applications and other BIA functions that are better informed at the regional and field office levels. We are concerned with the characterization of such natural resources as ``nontrust'' assets by an Interior official, though we assume that a very narrow definition of ``trust'' was intended. We would appreciate a clarification with regard to the above concerns. We hope that Secretary Norton and Assistant Secretary McCaleb are willing and able to provide direct responses soon. We are otherwise concerned that the lack of clarity is intentional and intended to veil purposes that can only be adverse to our interests. Concerns With General Distribution of Trust Responsibilities and Lack of Leadership We have great concern over the distribution of program management outside of the Bureau of Indian Affairs, whether that is indeed the intent or the unintended, though foreseeable, result. We are already grappling with the efforts of Departments outside of Interior who are relatively new to administering Indian programs and are for the first time responsible for effecting the implementation of Federal trust obligations, duties and responsibilities. While Interior has not been as effective as Indian country deserves, it causes us great concern to have to work with new and much less knowledgeable, experienced, or committed departments of the Federal Government. Secretary Norton, in her testimony before the House Resources Committee on February 6, 2002, entitled ``Native American Trust Issues and Ongoing Challenges, stated one of the Department of the Interior's trust management challenges is that ``Trust responsibilities are spread throughout the Department. Thus, trust leadership is diffuse.'' We strongly agree with that statement and do not understand why Secretary Norton proposes to keep Interior's trust responsibilities spread across two different bureaus. Further, the proposal would require creating many completely new positions within the Department that will be staffed by individuals who can not have any experience fulfilling the duties required by those positions. Beyond the serious questions raised by this lack of experience, the net increase in the personnel costs of trust administration, we fear, will run into many millions, if not tens of millions, of dollars. Given the lack of clarity in the Secretary's proposal, and the already staggering amount of other unmet needs throughout Indian country, the proposal does not satisfy the Secretary's fiduciary obligation to ensure that moneys set aside for the benefit of individual Indians and Indian tribes is used wisely. We cannot repair one breach by creating another. The alternative proposals offered by various Indian nations and inter-tribal organizations suggest the focused management and leadership Secretary Norton seeks. The Federal Government's trust responsibilities are spread throughout various departments beyond the Department of the Interior, including the Department of Health and Human Services, the Department of Housing and Urban Development, the Department of Agriculture, the Environmental Protection Agency, and the Department of Justice. Some of these departments have looked to the Department of the Interior and the Bureau of Indian Affairs for their trust leadership and have found them woefully lacking. We also understand that programs and services remaining under the Bureau of Indian Affairs will remain under close scrutiny and that any failure of the Bureau of Indian Affairs to meet certain minimum performance standards will result in that program being shifted to another department. It is critical that we reinforce and dramatically improve the Bureau of Indian Affairs. Thank you Chairman Inouye, Vice Chairman Campbell and members of the committee for this opportunity to provide testimony on behalf of the Pauma Band of Mission. If you have any questions or wish to discuss our concerns and interests and how we might work together to address them, please do not hesitate to contact us. 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______ Prepared Statement of Hon. Maria Cantwell, U.S. Senator from Washington Mr. Chairman, thank this opportunity for the committee to examine the problem of trust fund management and recent efforts toward its reform. Trust fund mismanagement marks a significant failure of the U.S. Government's trust responsibility toward tribes and individual account holders. As the chairperson of the Colville Tribes from Washington State framed it, ``One of the saddest chapters in American history is the long-term mismanagement of trust resources'' which were intended for the benefit of Indians and tribes. Most recently, the class action lawsuit, Cobell v. Norton, has brought renewed urgency to the need to reform trust fund mismanagement. I share the dissatisfaction of the court in the failure of the U.S. Government's trust responsibilities, and I echo its calls to reform trust management. However, it is critical that this reform be done with careful calculation and in a way that affirms, not diminishes, trust responsibilities, tribal self-determination, and self-governance. Numerous tribes from Washington State have expressed serious concerns about the Department of the Interior's proposal to create a new Bureau of Indian Trust Assets Management, and I share these concerns. In fact, several tribal leaders from Washington State are in attendance today, and I would like to thank them for their leadership on this issue. The tribes agree that there is significant room for improvement in the management of trust functions; however, they are concerned about both the merits of Interior's plans to create a new Bureau and the fact that tribes were not consulted prior to the development of its proposal. Indeed, tribes and individual Indians are the beneficiaries of trust assets, and the United States' has responsibility to honor the government-to-government relationship it has with tribes. Therefore, it is absolutely critical that tribes play a central role in any successful trust management reform. Representatives from Interior have advised the committee that trust fund management would be improved by removing all trust management duties from BIA, therefore keeping the services BIA provides to Native Americans and trust management completely separate. Washington State tribes have expressed their serious concern that removing trust functions from the BIA would effectively dismantle the agency, which has been the foothold for tribes in the Federal Government. for example, many tribes have partnerships with BIA in the execution of several trust responsibilities, such as natural resource management, and tribes do not want to see their role in the management of their resources diminish if these trust functions are taken out of the BIA. I will ask the witnesses to speak to these concerns today. I understand that we will have the opportunity today to learn about a few of the proposals for trust reform designed by tribal organizations. In addition, the Tribal Task Force is reviewing these proposals and several others that have been tribally generated. It is my hope that Interior will seriously consider the concerns, suggestions, and proposals from the tribal community and also take advantage of the wisdom and insight from the leaders who are working hard to create a viable plan for reform. Again, any successful attempt at rectifying this complex and centuries-long problem must include the experience of the tribes. Again, thank you Mr. Chairman, and I would also like to thank the witnesses and the representatives from Washington State for being here today. I look forward to hearing the testimony and learning more about what we can do to assist in the effort of meaningful trust management reform.