[Senate Hearing 107-639]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-639

                      TRUST FUND REFORM TASK FORCE

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                   ON

  LEGISLATIVE PROPOSAL OF THE DEPARTMENT OF THE INTERIOR/TRIBAL TRUST 
                         FUND REFORM TASK FORCE

                               __________

                             JULY 30, 2002
                             WASHINGTON, DC


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                      COMMITTEE ON INDIAN AFFAIRS

                   DANIEL K. INOUYE, Hawaii, Chairman

            BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

KENT CONRAD, North Dakota            FRANK MURKOWSKI, Alaska
HARRY REID, Nevada                   JOHN McCAIN, Arizona,
DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
PAUL WELLSTONE, Minnesota            CRAIG THOMAS, Wyoming
BYRON L. DORGAN, North Dakota        ORRIN G. HATCH, Utah
TIM JOHNSON, South Dakota            JAMES M. INHOFE, Oklahoma
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.................     2
    Griles, J. Steven, deputy secretary, Department of the 
      Interior, Washington, DC...................................     3
    Hall, Tex, chairman, Three Affiliated Tribes, Fort Peck 
      Reservation, New Town, ND..................................    10
    Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman, 
      Committee on Indian Affairs................................     1
    Masten, Sue, chairwoman, Yurok Tribe of Indians of 
      California, Eureka, CA.....................................     6
    McCaleb, Neal, assistant secretary for Indian affairs, 
      Department of the Interior, Washington, DC.................     5

                                Appendix

Prepared statements:
    Griles, J. Steven............................................    27
    Hall, Tex (with attachments).................................    30
    Intertribal Monitoring Association on Indian Trust Funds.....    45
    Masten, Sue (with attachments)...............................    30
    McCaleb, Neal................................................    27
Additional material submitted for the record:
    Commission on Indian Trust Funds Concept Paper...............    52

 
 LEGISLATIVE PROPOSAL OF THE DEPARTMENT OF INTERIOR/TRIBAL TRUST FUND 
                           REFORM TASK FORCE

                              ----------                              


                         TUESDAY, JULY 30, 2002


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., in Room 
106, Dirksen Senate Building, Hon. Daniel K. Inouye (chairman 
of the committee) presiding.
    Present: Senators Inouye, Campbell, Conrad, Johnson, 
McCain, and Thomas.

 STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII, 
             CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    The Chairman. The committee meets this morning to receive 
testimony on the recommendations of the Department of the 
Interior/Tribal Trust Fund Reform Task Force as they relate to 
the reorganization of the Department to improve the management 
of funds held in trust by the United States for the benefit of 
individual Indians and Indian tribes.
    Last week the committee held a hearing on the Department of 
the Interior's July 2, 2002 Report to the Congress on the 
Historical Accounting of Individual Indian Money Accounts.
    The Department's Report projects that the conduct of a 
historical accounting of the accounts held in trust for 
individual Indians will take at least ten years and will cost 
at least $2.4 billion.
    Since the time the Department submitted its report, the 
House of Representatives overwhelmingly rejected a proposal 
contained in the Interior appropriations bill for fiscal year 
2003 that would have limited the accounting of individual and 
tribal accounts to a 15-year period.
    In addition, the U.S. District Court for the District of 
Columbia has agreed to consolidate with the class action 
lawsuit brought on behalf of individual Indian money account 
holders, the Cobell v. Norton litigation--the seven actions 
that have been brought by tribal governments seeking an 
accounting from the government of their accounts.
    The Department's Report and these recent developments serve 
to provide further context for the recommendations that the 
committee anticipates receiving this morning.
    While we understand that a full consensus has yet to be 
reached on a number of matters, including the powers and 
authorities of an independent Commission, and the establishment 
of statutory standards for the administration of the United 
States trust responsibility, the committee is encouraged by the 
progress that has been realized thus far and looks forward to 
working with the Task Force and the citizens of Indian country 
as we endeavor to bring long awaited resolutions to these 
matters.
    I will now call on the vice chairman of the committee, 
Senator Campbell.

 STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM 
      COLORADO, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    Senator Campbell. Thank you, Mr. Chairman.
    The Department and Tribal Trust Fund Reform Task Force has 
been meeting for quite a long time. It has reached agreement on 
a number of issues. There still look to be many areas of 
disagreement.
    Probably more than anything, the parties seem to be quite 
apart on the powers and authorities of what will be called the 
Independent Commission or how independent it should be.
    Here we are, 1 month later, and much has happened. On July 
2, the Department issues its report on Historical Accounting. 
On July 17 this year, the House defeated a provision to limit 
the United States accounting responsibility to post-1985, as 
you mentioned, Mr. Chairman.
    On July 21, as you also mentioned, Judge Lamberth assumed 
responsibility for several of the Tribal Trust Fund claims that 
have been filed against the United States. On July 25, this 
committee held a hearing on the Report on Historical 
Accounting.
    So, we are making some progress. At the last hearing, I did 
remind the parties that we have only about 4 or 5 weeks of 
actual work. We will be getting out this Friday as most people 
know, or I assume we may get out this Friday. It is still a 
little bit up in the air. We won't be back in session for 1 
month and I think we only have 4 weeks or a little over of 
actual work time.
    The task force still has three meetings scheduled for this 
fall. So, as I view it, they will not have finished their work 
before we get out.
    Nonetheless, I believe they are resolving many of the 
outstanding issues and that people of good faith from both the 
administration and the tribal groups can work to deliver this 
committee a proposal that not only has the support of all 
concerned, but there will be real reform and trust management 
for Indian people who have waited so long and something we can 
get signed into law.
    Thank you Mr. Chairman.
    The Chairman. The panel consists of the Deputy Secretary, 
U.S. Department of the Interior, J. Steven Griles; the 
Assistant Secretary for Indian Affairs, U.S. Department of the 
Interior, Neal McCaleb; the chairman of the Three Affiliated 
Tribes of the Fort Berthold Reservation of North Dakota, Tex 
Hall; and the chairperson of the Yurok Tribe of Indians of 
California, Sue Masten.
    Secretary Griles.

STATEMENT OF J. STEVEN GRILES, DEPUTY SECRETARY, DEPARTMENT OF 
                  THE INTERIOR, WASHINGTON DC

    Mr. Griles. Good morning, Mr. Chairman, and Senator 
Campbell, it is a honor to be with you again today to review 
where we have been since we last met and to report to you the, 
I think, significant accomplishments that we have made since 
that meeting.
    Last week the Task Force held its 7th meeting in Portland, 
OR. There were a number of earlier meetings that we discussed 
with you. As you know, the Task Force has been charged with 
reviewing options and proposals to provide, hopefully, a 
consensus approach to how we best deliver trust services to the 
American Indian and to tribes and individuals.
    On June 6, we had met before that, we, the department, had 
worked with recommendations of the Task Force. Those 
recommendations were submitted to Indian country for review. We 
held 11 or 12 consultation meetings throughout Indian country 
to go and look and listen to what people's concerns were.
    Mr. Chairman, if I could summarize what we heard, I would 
summarize those by saying the Federal Government's commitment 
to self governance and self-determination must not suffer as a 
result of Federal trust reform. This is what people were saying 
to us, tribal leaders.
    The trust reform must not result in the diminishment of the 
Government's trust obligations to Indian people. There is a 
need for creation of a high level position within the 
Department of the Interior who will be the primary individual 
responsible for ensuring that trust asset management 
responsibilities are carried out in an appropriate manner 
throughout Interior.
    The trust asset management issues must be addressed at the 
regional and at the agency level of the Bureau of Indian 
Affairs [BIA]. But that cannot be one-size-fits-all solutions. 
Trust reform must recognize that there are three models for 
receiving services, through self governance, compacts, self- 
determination, contracts, and direct services from the BIA.
    But there is no bright line between fiduciary trust asset 
responsibilities and other trust responsibilities. We must 
assure more accountability within the current BIA structure. 
Management of trust services and trust resources must be kept 
at the local level.
    We need a clear definition of the trust duties and 
responsibilities for management of trust assets. There must be 
an oversight of BIA by an entity that has authority to compel 
and enforce corrective action.
    As the above illustrates, Senator, reform of that current 
system is not an easy task.
    At the Task Force meeting last week, we did, however, reach 
agreement as a group to recommend that Congress establish a new 
position, an Under Secretary for Indian Affairs, who would be 
appointed by the President, subject to confirmation by the 
Senate, and would report directly to the Secretary.
    The Under Secretary would have direct line responsibility 
over all aspects of Indian affairs within the Department. This 
authority would include the coordination of trust reform 
efforts across relevant agencies and programs within the 
Department to assure those functions are performed in a manner 
that is consistent with trust responsibility, as well as a 
number of other duties carefully hammered out between the 
Department and the tribal leaders at the Task Force meeting 
last week.
    It was a very, very important meeting and a very, very 
successful meeting. We had some very, lengthy discussions, at 
times we had disagreements. But with disagreement, we put that 
aside and we reached out to each other, Senator, and I think 
have been able to reach agreement on the restructuring of the 
BIA as a work group.
    We had a work group that brought to the full Task Force a 
proposal which the full Task Force reviewed and asked a number 
of questions on. Some of the tribal leaders asked to have some 
more time to go back to Indian country and look at that and get 
some more tribal leadership input. We, of course, want that to 
happen.
    So, it was a really good consensus meeting on a number of 
issues. I think that though many of us have a different view of 
what changes were needed, the tribes' express concern that 
trust officers would become involved in the day-to-day 
activities at the agency level without being answerable to the 
Superintendent or Regional Directors.
    At times the differences between us seemed so great that we 
could never resolve it in the few days we had, but once we 
stopped talking concepts and we really rolled up our sleeves 
and took the time to put on the table the tribal real concerns 
and the Government's real concerns we were able to develop an 
organizational model that I think is to assure that the Federal 
Government can exercise its fiduciary trust duty and at the 
same time ensure that the tribal governments can be active 
managers to the degree desired of their own trust assets.
    A copy of the consensus reorganization proposal of the 
working group is attached to my testimony. The work of the Task 
Force is not complete, as you mentioned, Senator Campbell. We 
are exploring possibilities as a creation of a commission with 
oversight responsibilities of a trust fund and management and 
asset development.
    We have reached agreement on the agreement to have an 
independent commission, but we have not reached an agreement on 
how that will be and how and what the authorities and duties of 
that commission should be. We are working very diligently on 
that, on the qualifications for membership, on those duties.
    We plan on participating on the work group which the Task 
Force has set up to resolve these questions, hopefully to 
resolve these questions and continue to reach a consensus on 
how we move forward. It is our hope to reach that kind of 
consensus in our August meeting in Anchorage.
    We were also asked by the Task Force Members to work with 
the tribes on drafting statutory trust standards and they gave 
a draft to us at the meeting last week. These standards that 
were presented to us will be carefully reviewed within the 
administration in preparation for our next Task Force meeting. 
We haven't reached agreement on those trust standards, but we 
have looked at them and there is a lot of agreement with a lot 
of the ones that they have prepared. We are going to go forward 
and have those reviewed by our attorneys and by the Justice 
Department. That was an agreement we reached with the Task 
Force members.
    In closing, I would just want to say, Mr. Chairman, and 
Senator Campbell, that from my perspective the leadership that 
the cochairmen have shown from Indian country and Sue and Tex 
have been remarkable. There are a number of Task Force members 
here today who spent long hours and a lot of time discussing 
and analyzing and understanding. It is not something that has 
come without that kind of effort. But we all are committed to 
that effort and I am just very, proud to say that I am part of 
that effort.
    I have Mr. McCaleb with me, Mr. Chairman, if you would like 
for him to say anything.
    [Prepared statement of Mr. Griles appears in appendix.]
    The Chairman. Secretary Griles, I am certain the committee 
is most grateful to all of you for your participation. We 
commend you for your patience.

 STATEMENT OF NEAL A. McCALEB, ASSISTANT SECRETARY FOR INDIAN 
      AFFAIRS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

    Secretary McCaleb. Mr. Chairman, Senator Campbell, I am not 
going to add a lot to the very good report that Secretary 
Griles provided you, except to make it clear that we did reach 
a consensus on option 5 that was contained in the June 4 
submittal.
    We had five organizational models. Pursuant to the review 
of those organizational models and the consultation process 
around the country between June 4 and this August meeting, we 
did reach a firm consensus on option 5 and defined the position 
to lead Indian affairs as the under secretary position.
    I would just say that I am continually impressed at the 
good work that can be done when the members of the Joint Task 
Force focus on a particular issue, which we did at this 
meeting. We were focused on the somewhat contentious issue of 
how the organization worked below the assistant secretary level 
at both the regional and the agency level in the delivery of 
the trust functions.
    As Secretary Griles indicated, there was a pretty 
substantial gap between the tribal Task Force members and the 
Department of the Interior members. But we work all day and 
into the evening and about 9 o'clock on Tuesday evening we 
began to come together. We had to get some traction on the 
issue and come together on it. The work group did, in fact, 
agree, both the Interior members and the tribal Task Force 
members.
    It was submitted to the tribal Task Force at home the 
following morning. Generally, consensus was deferred until 
there was an opportunity to vet this proposal before a much 
wider cross-section of tribal membership across the country. I 
think that is representative of how this deliberative process 
works, not only with the 24 members of the tribal Task Force, 
but the way they view their responsibility to gain broad 
consensus and support of agreements before they are actually 
reached.
    We are making substantial progress at each meeting, and 
although the differences sometimes seem large, at every 
instance we have focused on a particular issue, we have been 
able to reach some kind of an accommodation with each other, 
which I think speaks to the level of sincerity and commitment 
of all the members of the tribal Task Force as well as the 
members of the Department of Interior to reach--not only just 
find a solution, but find a solution which we can all embrace 
and which we so sincerely and prayerfully hope will find its 
fruition in the better management and the better keeping of the 
trust.
    Thank you.
    [Prepared statement of Mr. McCaleb appears in appendix]
    The Chairman. Thank you, Mr. Secretary.
    Chairwoman Masten.

STATEMENT OF SUE MASTEN, CHAIRWOMAN, YUROK TRIBE OF INDIANS OF 
                     CALIFORNIA, EUREKA, CA

    Ms. Masten. [Remarks in native tongue]. Good morning, 
Chairman Inouye and Vice Chairman Campbell. I am honored to 
appear before you again today to discuss the progress of the 
Tribal Leader/Department of Interior Trust Reform Task Force.
    I would like to take the time to introduce the members of 
the Task Force. The tribal leader cochair, chairman and 
president Tex Hall; Alvin Windy Boy, chairman Ed Manuel, 
president, Jerry Small, Governor, Bill Anoatubby and Tim 
Martin, chairman Mike Jandreau, chairman Ron Allen.
    From the Department of the Interior, cochair, Assistant 
Secretary Neal McCaleb, cochair, Deputy Secretary Steven 
Griles, Deputy Assistant Secretary, Aurine Martin, Phil Hogan, 
Tom Slonaker, Ross Swimmer, and David Bernhardt. These are the 
members that are with us today as we address you.
    I also would like to take the opportunity to introduce to 
you the Yurok counsel members and staff that are with me this 
morning, if they could please stand.
    I want to begin by thanking Deputy Assistant Secretary 
Aurine Martin and especially Deputy Secretary Steven Griles and 
Assistant Secretary Neal McCaleb for the extraordinary effort 
and commitment that they have made in working with the Task 
Force on trust reform. We feel that we are beginning to develop 
a cooperative partnership with the Department of the Interior 
and without the joint commitment and the dedication of the 
tribal leaders and the department we would not have made the 
progress that we have made.
    To begin, we would like to point out several significant 
events that have occurred since the last time we spoke to you. 
Last week, Congress reached resolution on the Corporate 
Accounting Reform Bill, H.R. 3763. The President is signing the 
bill into law today.
    Among other things, this legislation creates an independent 
commission that will establish standards and have the power to 
enforce those standards to force corporations to report 
honestly their financial affairs to their shareholders.
    The rapid passage of this new law shows that Congress can 
move quickly to address problems. We believe that Congress 
should make a similar effort on trust reform. We believe it is 
just as important to hold the Department of the Interior 
accountable for the funds and resources that the Department 
holds in trust for Indian tribes, American Indians and Alaska 
Natives as it is for corporations to be held accountable to 
their shareholders.
    If an independent commission can be created by Congress to 
create corporate accountability for the benefit of 
shareholders, then Congress can just as well create an 
independent commission that will hold the Department of the 
Interior and the Department of Treasury accountable for the 
trust assets they control.
    Tribes have the right to expect no less of our trustee than 
shareholders expect from corporate executives.
    Second, just 2 weeks ago, the House of Representatives 
voted overwhelmingly against a proposal that would have, among 
other things, limited the time period for accounting of trust 
accounts for individuals and tribes to 15 years.
    We believe this vote sends a strong signal that Congress 
supports trust reform and a full accounting for Indian trust 
funds and trust assets.
    The time for moving trust reform legislation is now and we 
believe that it can be done before Congress adjourns.
    Third, and still another important development, just last 
week the Court, in the Cobell litigation, agreed to treat cases 
filed recently by tribes as related to the trust fund 
accounting class action that is being pursued on behalf of the 
individual Indian account holders.
    In essence, this means that tribes that filed these cases 
can rely on the rules made in the Cobell case and can expect 
the Departments of the Interior and Treasury to be held to the 
same standards of trust funds management for their tribal funds 
as have been applied to those departments in the Cobell case.
    This event should also a signal the Department of the 
Interior that it is in everyone's interest to work with us 
toward the development of both internal and external mechanisms 
that will provide for full oversight of the management of trust 
funds and trust resources.
    The Task Force has discussed at length what needs to be 
done to create true trust reform. Although many details remain 
to be worked out, candid dialog, perseverance and mutual 
accommodation have enabled us to develop a comprehensive 
proposal that holds the promise of vastly improving 
accountability for management of funds and resources held in 
trust by the United States.
    We are developing a system of internal and independent 
checks and balances, capacity building, technical support and 
standards to create a management structure that greatly 
advances accountability in trust administration, protects the 
rights and interests of tribes, whether they receive direct 
services from BIA or contract or compact, and provides the 
flexibility necessary to respond to the varied tribal needs 
throughout Indian country.
    While much remains to be done, we are optimistic that the 
thousands of hours of hard work and dedication, which have been 
invested in the Task Force, will ultimately produce positive 
results.
    At this stage we recommend that legislative efforts focus 
on the creation of an independent Oversight Commission, 
establish the position of an Under Secretary for Indian 
Affairs, and codification of principles to guide the department 
in its administration of trust funds and resources.
    In addition, we would like to discuss the agreement we are 
working on with the Department regarding the organization of 
the Bureau of Indian Affairs [BIA].
    I will discuss the first two matters and Chairman Hall will 
discuss the remainder.
    No. 1, the creation of an independent commission with 
oversight of all aspects of trust funds management. As we 
testified at the last hearing, we have proposed that an 
independent commission be created. The commission, which in the 
tribal proposal exists outside the Department of the Interior, 
would be composed of five members, three of whom would be 
members of federally-recognized Indian tribes.
    All of the commissioners would be full-time and would have 
experience in administration, regulation, accounting or legal 
aspects of trust management or have comparable experience in 
tribal government.
    The commission should have the power to, among other 
things, ensure that regulations are enacted that set minimum 
requirements which the Department must meet in carrying out its 
responsibility for all aspects of trust funds, management 
including the sale and lease of trust assets;
    Investigate acts or omissions to act by the Department that 
are in violation of the minimum trust standards.
    Order the Department to take specific actions to correct 
any acts or omissions to act regarding trust funds management;
    Audit any and all trust accounts as managed by the 
Departments of the Interior and Treasury; and
    Review the adequacy of the Department's budgets to carryout 
its trust funds responsibility.
    The Department of the Interior agrees that we need an 
independent commission, but has questions and concerns about 
the regulatory and enforcement authorities. Also, at this 
point, they do not want the commission to be created outside of 
the Department of the Interior.
    The Department does agree that the commission should be 
able to perform audits and report to Congress about the 
adequacy of the Department of the Interior budgets. Last week 
the Department made a new proposal to the Task Force that the 
tribal members of the Task Force are still reviewing.
    The Department has proposed that the office of Comptroller 
of Currency within the Department of Treasury be given the 
authority to investigate whether the Department is managing 
trust funds according to the standards that the OCC generally 
sets for commercial banks.
    The Task Force is considering the proposal made by the 
Department but we need more information about their ideas. The 
key to the discussion about an independent commission is 
adequate authority to enforce trust standards that set forth 
what must be done by the Department to carryout its 
responsibilities to trust beneficiaries.
    We have also agreed that we do not want the independent 
commission to interfere with the right of a tribe to manage and 
govern its own resources, and we want the commission to protect 
tribal self-determination.
    Our discussions lead us to believe that the primary failure 
of the 1994 Trust Reform Act was that it did not provide the 
Office of Special Trustee with sufficient powers to fully 
carryout trust reform.
    This perhaps is the main reason we are still here 
discussing this issue today. This problem must be corrected 
once and for all if Congress really wants trust reform to 
occur.
    We have attached a discussion draft of the tribes' 
legislation for the commission. As we continue our negotiations 
with the Department, we are requesting your input, as well as 
the input of tribes on this critically important issue.
    No. 2, the creation of the position of Under Secretary for 
Indian Affairs.
    General consensus was reached with the Department about the 
need to create a new position within the Department of the 
Interior above the level of the Assistant Secretary for Indian 
Affairs who would answer to the Secretary on Indian matters.
    This represents a part of option 5 proposed by the Joint 
Task Force in the report provided to the Secretary on June 4, 
2002. The Department and tribal leaders have reached consensus 
that the new position should be created as an under secretary 
rather than a deputy secretary.
    The position of under secretary fulfills the management 
need of the Department to have a full-time official who is 
responsible for coordinating trust efforts across all Interior 
agencies, including the Bureau of Indian Affairs, Minerals 
Management Service, the Bureau of Land Management, the Office 
of Special Trustee, the Bureau of Reclamation and the Office of 
Hearings and Appeals.
    We are close to a consensus on a full specification of the 
duties of the under secretary and they are listed in our 
testimony. The essence of this position is that it will have 
the direct line authority over all aspects of Indian affairs 
within the department, including the responsibility for trust 
reform across all the relevant agencies and programs to ensure 
that functions are performed in a manner that is consistent 
with trust responsibility.
    This includes accounting, records management, establishing 
policies and systems, budgets and strategic planning.
    In conclusion, as we turn now to Chairman Hall for his 
testimony, I would like once again to thank Secretary Norton, 
Deputy Secretary Griles, and Assistant Secretary McCaleb for 
all the hard work that they and their staff have put into the 
trust reform effort of the Task Force.
    In addition, I would like to thank the tribal leadership on 
the Task Force and their tribes for the money, time and energy 
they have put forth.
    If we maintain this serious level of effort, we firmly 
believe that we can reach some policy decisions that will put 
the reform effort on track to a successful conclusion. I would 
like to also thank the committee as always for your continued 
interest in the concerns of Indian Country.
    Thank you.
    The Chairman. Your statement gives us much hope.
    [Prepared statement of Ms. Masten appears in appendix.]
    The Chairman. Chairman Hall.

STATEMENT OF TEX HALL, CHAIRMAN, THREE AFFILIATED TRIBES OF THE 
            FORT BERTHOLD RESERVATION, NEW TOWN, ND

    Mr. Hall. Senator Dan Inouye, Senator Ben Nighthorse 
Campbell, and Senator Craig Thomas, thank you for this 
opportunity to present testimony on behalf of the Tribal Task 
Force. I am now cochair of the Task Force. I would also like to 
begin by reiterating the testimony in support for our cochair, 
Sue Masten, for the creation of an independent commission to 
oversee trust reform.
    I would also like to thank the Department, Deputy Secretary 
Griles and Assistant Secretary McCaleb, for the work they are 
doing. It is because of that work that we are making progress 
and we have them to thank for that as well as Secretary Norton. 
We are also heartened that this administration understands that 
there needs to be an independent oversight mechanism for the 
Indian trust.
    The Indian trust within the Department of the Interior is 
the only trust in the United States that is not subject to any 
type of independent regulation or oversight. We believe that an 
independent commission must have the authority to set specific 
standards when the Department's standards are deficient and to 
enforce the trust standards when needed.
    Mr. Chairman, we cannot have a trust system where the 
duties of the trustee are self-defined by the Department that 
most often is concerned only about defending against liability. 
We need an independent commission to perform this task because 
it is very clear that the Department will not do it on its own.
    In regards to trust standards, we, the Task Force also 
firmly believe that Congress should provide direct guidance to 
the Department and to the commission about the fundamental 
trust responsibility to Indian tribes and the specific 
responsibility for trust funds and trust resource management.
    The right way to solve this problem is to first clearly 
delineate the duties and responsibilities and then to create 
the systems, the policies, staffing and training that will be 
necessary to carryout those duties and functions.
    Moreover, we are very concerned about the tendency of the 
Department to constantly await the outcome of some pending 
litigation before they will begin to address those 
responsibilities.
    In the previous administration, it was the Cobell and the 
Department's response was, We will work with you when Cobell is 
resolved in court. In this administration, it is the White 
Mountain and the Navajo cases. We will know what our 
responsibilities are after the Supreme Court decides.
    Time and time again in our discussions we have bumped up 
against this wall where the department waits the outcome of 
some future litigation that will relieve them of their trust 
responsibilities.
    Mr. Chairman and committee members, there will always be 
litigation. It is part of the American system. So, we can not 
wait for the end to all litigation before Congress takes action 
to fix the Indian trust system. Moreover, we do not want to 
wait around to find out if the lawyers at the Department of 
Justice can convince some court to undermine that trust 
responsibility.
    Congress should act now to define the trust 
responsibilities and legal principles that the Department must 
follow in carrying out its management of Indian trust funds and 
Indian trust assets that generate those funds.
    Attached to our testimony you will find a discussion draft 
for legislation that contains general findings on the broad 
trust responsibility to Indian tribes and also specific 
language on the duties for trust asset management. The general 
findings are taken from the case law and are important to show 
the origin of the trust responsibility.
    The specific duties are taken from the trust principles in 
Secretarial Order 3215, called Principles for the Discharge of 
the Secretary's trust responsibilities which has been 
incorporated into the Department's manual. In fairness to the 
Department, we should note that we have only recently begun 
given this proposed language and giving it to them.
    In addition, the language is still under discussion by the 
Task Force members and tribal leaders in general. The language 
comes from an existing source within the department and has 
already been through the review process at least one time in 
the past.
    Moreover, these principles are not new, but have been 
applied in the private sector for many years. We expect that 
this proposal will have to be discussed and refined as part of 
the ongoing process, but felt it was important to begin 
discussing this issue today with the committee.
    In regards to the oversight of the trust responsibility at 
the regional local level, another essential component of trust 
reform is internal oversight of the Department of the Interior 
as it carries out its trust responsibilities.
    We do have charts that are listed there that show that 
proposed reorganization. This reorganization is at the heart of 
the discussion about the Department's proposal to create BITAP, 
the Bureau of Indian Trust Assets Management in November that 
resulted in the formation of the Joint DOI-Tribal Trust Reform 
Task Force.
    The principal goal of the Task Force is to have a single 
point of decisionmaking at the level at which the tribe 
interacts with the BIA. Whether that is at the local level or 
at the regional level coupled with an adequate internal 
oversight mechanism which will seek to ensure that trust funds 
management functions are being carried out appropriately.
    To accomplish this, we propose that the organizational 
realignment will involve all levels of the Department of the 
Interior. At the highest level, the Task Force proposes to 
establish a new under secretary for Indian affairs to 
coordinate and unify policy direction for the BIA and to all 
other agencies operating programs or providing services to 
Indians within the Department of the Interior as discussed 
above.
    An Office of Self-Governance and Self-Determination report 
to the Under Secretary to advance long-standing policies that 
support greater involvement of Indian tribes and managing 
programs for the benefit of tribal communities.
    A new Office of Trust Accountability would report to the 
Under Secretary to provide internal control and quality 
assurance in trust administration throughout the department as 
well as ensuring timely resolution of problems.
    Within the BIA, a trust services section will provide 
technical support for field operations, trained services for 
BIA and tribal staff and controls to ensure that programs are 
administered in accordance with the defined standards for trust 
administration, and to help avoid problems before they reach 
serious proportions.
    The trust services section would also be responsible for 
operating trust fund accounting, cash management, appraisal and 
accountability functions. The structure will retain a single 
line of authority for delivering programs and services to 
tribal communities in accordance with overwhelmingly tribal 
preferences.
    However, substantial changes to current operations will 
have to occur. Adequate staffing and funding levels will have 
to be sought. Personnel will be well qualified to perform these 
responsibilities and technical assistance will need to be 
readily available and performance standards reflecting modern 
practices of trust administration will need to be established 
and enforced.
    This is the proposal that has been developed by a small 
working group that was mentioned involving tribal 
representatives and Department of the Interior representatives. 
The proposal needs to be fully considered by all the tribal 
members of the Task Force before a full consensus can be 
obtained.
    However, our differences are now relatively narrow on these 
issues. As we pointed out at the last hearing, the key to this 
issue has been the tensions created by a lack of resources in 
both trust management and in tribal services. While we cannot 
fix all the resources issues, we do believe the proposal under 
consideration by the Task Force provides the most economical 
way to resolve the problem while still providing adequate 
oversight authority to ensure that trust reform in this area is 
carried out.
    Future efforts: We fully recommend that we cannot resolve 
all the issues in trust reform in what is left of this 
legislative year. A future effort, with the assistance of this 
committee and Congress, will be needed to stem the tide of 
including fractionalization of ownership that exponentially 
increases the complexity and cost of Federal administration and 
deprives Indian beneficiaries of the full potential benefit of 
those resources and undermines the ability of tribes to protect 
communal resources like water, fish, wildlife and jeopardizes 
the security of our reservation homelands by eroding tribal 
sovereignty.
    The Task Force needs to continue its efforts to resolve our 
differences in the proposed legislation. We will next be 
meeting in Anchorage in late August, just before the end of the 
Congressional recess and will seek to exchange or refine our 
proposals on the independent commission, on our statement of 
trust responsibilities and legal obligations and make the final 
adjustments to the duties and responsibilities of the Under 
Secretary.
    In the meantime, we are placing our trust in the expertise 
and the political acumen of the Senate Committee on Indian 
Affairs to assist us to move legislation forward this year. We 
believe it is certainly possible to get this legislation passed 
by Congress yet this Session. If Congress can pass, in a few 
short days, a bill creating an independent board providing for 
financial accountability of corporations, it can certainly help 
us pass legislation or provide for accountability by the 
Department of the Interior and the Department of Treasury to 
American Indians and Alaska Natives.
    We look forward to working with you and your staff to move 
this effort forward as quickly as possible.
    Mr. Chairman, the tribal leadership is encouraged by the 
progress of the Task Force and recognizes that this process is 
far from complete. As the department and tribes face the 
challenge of implementation of trust reform, we urge your 
support to ensure the necessary resources are available to 
support and complete the work of the Task Force and to continue 
this throughout the trust reform transition period.
    So, in conclusion, we believe we made significant progress 
toward a legislative package since the last hearing held on 
this issue and the tribes believe they have most of the 
legislation ready to go and trust that the committee will use 
its best judgment to assist us in moving this forward.
    We also believe that we have reached consensus or at least 
close to consensus with the Department on a number of issues. 
We most respectfully ask that you consider how we can yet 
resolve these issues in this session of Congress and again we 
thank you for the opportunity to present this.
    Mr. Chairman, in closing, I am just concerned about a lot 
of the older folks, a lot of the tribal members that are 70, 
75, 80 years of age and those that are passing on every months 
throughout Indian country. This has been over 125 years since 
this trust has been resolved.
    We urge Congress to move with this session to help us 
create this legislative proposal so that many more elders do 
not pass on without this trust being fixed for them. And we 
have the capacity within ourselves.
    Thank you.
    [Prepared statement of Mr. Hall appears in appendix.]
    The Chairman. As we go on to statutorily establish trust 
standards, would you recommend that we embrace the standard 
applicable to private fiduciary. If not, what sort of standard 
would you suggest?
    Mr. Griles. Mr. Chairman, I think that we would like to 
work with you and the tribal leaders in taking the draft of 
trust principles as well as some of the findings that they have 
prepared and use that to try and articulate what would be those 
appropriate standards within the context of how you move 
forward.
    We believe, I think the four of us sitting here, believe 
that we have an opportunity to come back to you with a 
consensus approach on how to best do that. There are many 
issues that are raised as we discuss these. We need other 
parties who are not at this table here, but other tribal 
leaders as well as others in government to assist us to assist 
you in defining that.
    That is my request. I think we can do that. I really 
believe we have bridged a lot of water. We bridged a lot of 
gaps and there is a lot of trust among all of us that we can do 
that.
    The Chairman. Chairwoman Masten, do you think we could 
resolve this in Anchorage?
    Ms. Masten. I think that as we presented this for the first 
time for consideration at our last session that there was 
general agreement in the principles, in the general principles 
that was the specifics in having the opportunity to fully look 
at them from the tribal perspective as well as the department. 
That was the only issue at hand.
    It was the first time we had a place at the table before 
us. I believe that we will make substantial progress the next 
session, or at least I am optimistic that we will.
    The Chairman. Mr. Secretary, Secretary Griles, your 
prepared statement speaks of restructuring the Bureau of Indian 
Affairs. What is the nature of the restructuring that you speak 
of?
    Mr. Griles. I am looking to see if that is the right chart 
that is up there.
    The Chairman. I cannot see it from here. We have been told 
there is something in here.
    Mr. Hall. It should be in the attached testimony as well, 
Mr. Chairman.
    Mr. Griles. Mr. Chairman, this is an overview chart, if you 
will. It doesn't have all the complete details, but I think 
fundamentally what this chart reflects is on the left side, 
under the Under Secretary, we have the Director of Trust 
Accountability. This is an office with something that the 
tribal work group, individual members of the work group came up 
with and this is their idea.
    We have endorsed this kind of approach. Attached to this, I 
think, are some duties and responsibilities that talk about 
what each of these members are to represent.
    The fundamental thing, I think, below there, if you will, 
is the Office of Trust Services and the trust evaluation that 
we put on here. What we are attempting to do is assure that in 
the IMM account holders and the tribal trust responsibilities 
that we have qualified individuals as a trustee who, you know, 
with a high degree of care and skill and loyalty; that they are 
administering our trust obligations to Indian country.
    We think that with this approach and with the consensus we 
have reached that we can make that responsibility defined in 
such a manner that the future will be fundamentally different 
than the past. That is what we set out to accomplish here with 
the tribal Task Force.
    The Chairman. Am I correct to assume that the Under 
Secretary is the Under Secretary of Indian Affairs?
    Mr. Griles. That's correct, sir.
    The Chairman. Chairwoman Masten, do you go along with this?
    Ms. Masten. We have agreed in consensus between the 
Department of the Interior and the tribal leadership for 
everything above the Assistant Secretary of Indian Affairs. We 
have agreed in concept for everything below, but we are still 
fleshing out the duties and responsibilities, so we are still 
working on that. It is an on-going process.
    The Chairman. In your best calculation, how much would this 
cost?
    Mr. Griles. That is a very good question, Senator. We are 
evaluating that. If I could answer the question this way: We 
have two things ongoing that are part of the Task Force effort. 
We have maintained and kept the consulting group, EDS on board 
to help us look at what is the business that we are currently 
conducting in Indian country today, that is, as is business.
    We have set up a task group of tribal leaders and experts 
within Interior. I call them experts because they are becoming 
extraordinarily knowledgeable about all of those aspects. Out 
of that group will come a report to us, the Task Force, and we 
will hopefully have process changes. Out of those process 
changes will also come a resource need identified as to what 
our total resource needs are, but specifically to these offices 
of trust services and trust evaluation.
    I don't have a number, but I don't see it being a huge 
number in the sense of government. I see it being a number of 
trust evaluators that could be in the range we have 85 agency 
offices; I don't think we need a trust evaluator in every 
office. We have to evaluate each of those and determine if we 
need one there or can we work with the regional structures and 
set up some trust centers, maybe three or four trust centers 
that would be around the country that would provide the 
resources and activities.
    So, we are formulating that as we speak. We are working and 
we are going to present some plans to the Task Force about how 
we see this working, duties, responsibilities, and resource 
needs. I don't see it being a very large number in the 
traditional sense. I think it is a number that hopefully you 
and the rest of Congress will believe it is very important to 
do.
    One of the things we have been able to do, Senator, is that 
Office of Management and Budget has been at each of our Task 
Force meetings. They have sat there. They listened. They 
comprehend it. They have made great input. So, we hope that we 
are making those kinds of steps also as we go forward so the 
administration in totality is working with the tribal Task 
Force in identifying these resources and functions and duties.
    Ms. Masten. And Senator, it is one of the priorities for 
the Anchorage meeting, to review the budget.
    The Chairman. In your statements this morning, for example, 
Ms. Masten, you spoke of the importance of the independent 
commission and felt that the Congress should immediately focus 
ourselves upon the enactment of such a measure to establish 
this.
    Are you suggesting that we move as you progress or do we 
wait until the whole package is ready?
    Ms. Masten. I would ask that you work closely with us 
because we are adamant that an independent commission is 
necessary. I don't know that we will make any further progress 
with Interior on whether that position should be advisory or 
inside or outside of Interior.
    But the tribal leadership believes strongly that this 
commission needs to be outside of the Department and that it 
needs to have sanction and enforcement capabilities.
    The Chairman. I realize that position, but do you want the 
Congress to establish this separately and proceed with other 
facets of the measure or do you want the whole package?
    Ms. Masten. We would want you to move as quickly as you can 
on the issue. If it is before we complete the other items, then 
we would request that you do that.
    The Chairman. Do you have any thoughts on that, Secretary 
Griles?
    Mr. Griles. Well, Senator, I think that there are some 
fundamental questions of both legal, constitutional as well as 
pragmatically about how sanctions could be issued against a 
government agency from another government agency. We just have 
to work our way through this.
    We need your help. We need the staff's help in thinking 
through other ways. We have been trying to be very creative. We 
haven't even talked to the Department of Treasury about the 
idea we presented last week to the Task Force and the Task 
Force has agreed to consider that.
    So, one of the things we are going to do between now and 
Anchorage is come back and say, okay, we spent a little bit of 
time talking with Treasury about this. Does this have merit? 
Because that is where the banking industry and all gets its 
monitoring and standards that are adopted. So, we are trying to 
be creative. We understand the essence of what the Indian 
country wants, and that is assurance that the past is not 
repeated in the future.
    Mr. McCaleb and I and the Secretary would not be dedicating 
this time to this if we thought that was going to happen. So, 
we, too, are looking for the best means to assure that the 
future is much different than the past.
    The Chairman. Secretary Griles, two cases were mentioned, 
the Navajo case and the White Mountain case, both pending in 
the Supreme Court. Would the Department of the Interior be 
willing to stay the case until we resolve this trust matter?
    Mr. Griles. Senator, I don't represent the U.S. Government 
in its totality. That is a decision that the Justice Department 
makes on our behalf. I think one of the briefs has been filed 
already. The other one is scheduled for briefing, I believe, in 
the next few weeks or maybe the end of the month or early 
September. I am not sure what the correct answer from the 
government is on that, Senator, I would be happy to explore it 
and get back and talk with you about it.
    This is not something that I am in a position to respond to 
today, sir.
    The Chairman. I am certain the committee would like to 
know. At this point, may I yield to the Vice Chairman?
    Senator Campbell. Thank you, Mr. Chairman.
    You said right from the beginning of this that we shouldn't 
move any faster than the Task Force moves. Those things that 
the Task Force agreed on we have been trying to frame up in 
some bill. But I have to say that we are going to be out and we 
are coming back around September 2 and we are out about 4 weeks 
after that.
    You have one more meeting while we are in session and two 
more after we are out. If you think we can move forward and get 
a bill signed in that amount of time, you have more confidence 
in this place than I have. I have been here for a while. But I 
am looking forward to the results of the Alaska meeting.
    I was looking at the organizational proposal. Since we have 
been talking so much about the commission, if we were going to 
diagram the commission and put it on there, where would it be, 
right up here above the secretary?
    Mr. Hall. Senator Campbell, she will flip the other chart 
and it will show.
    Senator Campbell. Oh, I see, okay, top right. As I 
understand the tribal position, this commission would have 
oversight, so I assume some enforcement authority, subpoena 
authority, I believe I read that in the notes, be able to 
promulgate rules and regs and other powers.
    I would like to ask Mr. Griles, what specifically is the 
disagreement with this? Does this detract from the authority of 
the Secretary?
    Mr. Griles. I think it has that potential to distract from 
the authority of the Secretary in the sense of within normal 
course of business, who and what are those standards that one 
has to respond to? We are talking about sanctions against 
individual government employees who have multifaceted duties 
and responsibilities today.
    Unlike, say, a banker or an accountant who has a defined 
duty, it is defined as being what it is, a single duty, when a 
government agency holds the responsibility, it is accountable 
to the Congress, we are accountable the courts in some 
instances.
    Senator Campbell. Tell me the difference, in your view, of 
what other commissions have, like the Federal Home Loan Bank 
Board or the Comptroller of the Currency. I believe there was 
something in your testimony that dealt with that, that might be 
a model.
    Mr. Griles. I think the fundamental difference is they are 
regulating a private entity whereas here we are trying to 
regulate a government entity which has responsibilities. But, I 
think, Senator, we, too, are looking for how to accomplish the 
objectives that Indian country has told us they would like to 
see us accomplish and as the Task Force has.
    Senator Campbell. The June 4, 2002 report for the Secretary 
prepared by the Task Force contains some of what were called 
cross-cutting principles. One of the principles seeks a 
definition of exactly what the Department's fiduciary 
responsibility would be.
    Is it your view that the tribes and the Congress should 
await the decisions of the Supreme Court this fall? Senator 
Inouye, I think, alluded to that, before we take any action?
    Mr. Griles. I think that Congress always has the power to 
act, to define what our trust obligations and responsibilities 
are. We are guided by the previous statutes. We are guided by 
the treaties, the laws, the rules and regulations. We are 
guided by the departmental handbook that has been put in place 
that defines trust principles. So, Congress obviously has that 
authority if it wishes to define that trust relationship 
differently.
    Senator Campbell. Maybe to Chairman Hall and Chairwoman 
Masten, since November 2001, how would you compare the amount 
of consultation that has occurred since then? More sparks in 
the beginning and more cooperation now, I would hope?
    Mr. Hall. Sparks in the beginning, cooperation now and a 
little bit of sparks now.
    Senator Campbell. A little bit of sparks now.
    Mr. Hall. Yes, Senator Campbell; it is ongoing. It is a 
relationship. We are not going to agree on everything.
    Senator Campbell. Yes; and I guess that is one of my 
concerns about trying to push a bill too fast before we have 
most things in agreement because you are going to have to go 
back and speak to somebody else. I mean let us face it, all 
tribes are not in agreement with all points the Task Force 
agrees to.
    It is going to be difficult, I think, if we try to move 
this too fast, and then you go back to the people you have to 
consult with or be accountable to, individual tribes, are you 
confident that they are going to support the decisions that you 
have agreed to as a member of the Task Force.
    Mr. Hall. One hundred percent confident, Senator Campbell, 
that the tribes have agreed because we had consultations and 
they all wanted an independent oversight commission. The Task 
Force agreed in consensus, as was mentioned, from the Assistant 
Secretary forward.
    The tribes want legislation and they want to move it in 
this Session.
    Senator Campbell. There is the law of possibility and the 
law of probability. Anything is possible, but I have to tell 
you, I think it is improbable that we will be able to get it 
done.
    Ms. Masten. Senator, I just wanted to add that there has 
been more consultation with the tribes since November on trust 
reform than has occurred in the past. But you are correct, 
although we heard loud and clear from Indian country on several 
of the points that we reported to you today, there is still a 
lot of work that we accomplished in the last session and that 
we will accomplish in the next session that we also need to go 
out to Indian country for consultation on.
    Senator Campbell. What if you can't reach a resolution on 
the commission and we put something like that in a bill and we 
get a veto threat of something? Have we accomplished anything?
    Mr. Hall. Senator, the Task Force is committed to working 
on this. This has got consensus in Indian country. It is a 
tribal caucus proposal. It has the independent commission. It 
has been debated with the tribal folks throughout all these 
months, so we are 100 percent.
    Senator Campbell. I understand that, but the Task Force 
doesn't sign the bill into law. That is why I think if we don't 
reach some consensus, we are going to run into a brick wall 
even if we could get it passed through the Senate and the House 
and get it downtown.
    Mr. Hall. The Task Force is committed to working and 
helping with the political process.
    Senator Campbell. I see. Thank you, Mr. Chairman.
    Ms. Masten. But Senator, I would also hope the President, 
as he considered the commission for the corporations and being 
responsible to the shareholders, would also have the same 
commitment to the tribal leaders and to the individuals on 
trust assets in accountability.
    Senator Campbell. Thank you, Mr. Chairman.
    The Chairman. Thank you. Although it might be convenient to 
equate the commission that we are discussing now with the 
commission that Congress enacted, in the case of the 
Congressional enactment of the recent commission, it was in 
response to an unstable and volatile market, that if something 
had not been done immediately, we would have had some real 
problems on Wall Street.
    Second, with the almost never-ending parade of misdeeds, 
something had to be done immediately. I, for one, on a measure 
of this magnitude, join my vice chairman in trying to suggest 
that we be a bit more careful here.
    I know that you want legislation before we adjourn, but the 
time is not on our side. One of the worst things we can do is 
to have a lame duck session coming back after the elections. 
Then you will have members who may not be responsible to their 
constituents participating in policy making and the passage of 
measures.
    So, it might take a little while longer, thus my question: 
Mr. Secretary, you spoke of the Anchorage meeting. Do you have 
any timeline as to when this committee or this Congress may be 
able to study a finished product that the Task Force has come 
forth with?
    Mr. Griles. Mr. Chairman, I think the Anchorage meeting 
will give us a real indication of how many daylight there 
continues to be between us and the tribal representatives. I 
think on the legislation, if one wanted to enact the under 
secretary, we would be in a position to provide the drafting 
services to the committee this week and some of the other 
things.
    As far as the remainder of the organizational change, 
besides the commission, I don't think you would want to put in 
legislation below the Assistant Secretary. I would think you 
would want to keep that out of statute and let that be part of 
the administration of how it organizes it with the concurrence 
of Congress that we submit organizational proposals up here and 
the committees review them, but you don't enact those into 
statute.
    So, we think that the only issue that is probably keeping 
us from reaching a consensus is the commission, its duties, 
roles and responsibilities and maybe some of the findings and 
trust principle issues that we have got to review and look at.
    So, it really is dependent upon the committee's desire, as 
to how much you want to enact. If there are other things we 
need, the Task Force at the last meeting identified other 
legislative issues, the fractionalization issue that Chairman 
Hall spoke to. We really need your assistance and help to get 
that very complicated issue addressed in the future, because no 
matter what we do on trust reform, no matter how hard we try to 
work, if we don't deal with that issue, Senator, this program 
will never be in a position where it can truly be administered 
in a manner that is efficient and effective and we have really 
good accountability.
    The Chairman. I gather from this discussion that a major 
problem may be the commission. Does the Department of the 
Interior have an alternative proposal?
    Mr. Griles. Senator, we have suggested to the tribal 
members some duties and responsibilities that we have agreed 
on, auditing, reporting to Congress, those kinds of things. So, 
there are things, we believe, that can pass the necessary 
standards that we believe within the executive branch----
    The Chairman. Can we study your proposal in writing, say 
what would constitute the membership, the duties and 
responsibilities and powers? We would like to compare that with 
the one the tribal leaders have come forth with.
    Mr. Griles. I think within a few days we could give you 
that. It is not quite as clean a presentation as it needs to 
be. But we will endeavor to do that before you go home, sir.
    The Chairman. Who knows, the cochairman of this committee 
may look it over and come up with a solution.
    Mr. Griles. We hope you can, sir.
    The Chairman. You can never tell.
    Senator Campbell. Mr. Chairman, may I interject one 
question?
    The Chairman. Please do.
    Senator Campbell. Perhaps Mr. Griles does not know, and I 
certainly don't, perhaps you do. But is there in any other 
Federal agency in the Federal Government, of all the 
departments, is there any commission in place now that has this 
similar authority or latitude?
    Mr. Griles. Senator, I am not aware of one that has that 
kind of latitude and authority over another Federal agency as 
this is envisioned. We have searched, along with the tribal 
reps and the tribal reps have attorneys who have been looking.
    So, we have looked for models throughout the Government to 
see. Some of the things we have fashioned come from some that 
we have found. So, the things we will be presenting to you will 
be based on some of the previous successes that have been 
adopted.
    Senator Campbell. So, the committee, I guess, can assume 
that your opposition really isn't to a commission; it is the 
authority of the commission. You seem to be of the mind that a 
commission that has an advisory capacity is not bad, but one 
that has the authority to oversee, direct and so on is much 
worse. Is that correct?
    Mr. Griles. That's correct, Senator. I think an advisory 
commission, that is not an issue. We could do that and concur 
in that easily. It is the expanded role of sanctions and the 
ability to take enforcement actions against employees that 
concerns us. How do you do that as an independent body within 
an executive branch?
    We are trying to figure that out.
    The Chairman. Mr. Secretary, do we need legislative 
authority to establish the office of under secretary and the 
office of self-governance and self-determination or can the 
Secretary, Ms. Norton, do that right now?
    Mr. Griles. We need the authority for the under secretary, 
Senator. We have, and I am going to use a number, six or seven 
assistant secretaries that are established by statute and one 
or two which are named specifically to that title, but we do 
not have the authority, as we have been told by a legal review 
of this, to establish the under secretary position without 
statutory inclusion.
    The Chairman. Should the life of this Task Force be 
extended?
    Mr. Griles. Mr. McCaleb and I have found this to be a 
useful dialog and I think I can speak for him on this and it 
has been a very, very worthwhile effort. There is so much more 
work to be done. I mean we have only scheduled three more 
consultation meetings, but there are about three or five, maybe 
more than that, subcommittees that are working as we speak 
today throughout Indian country.
    So, this new Task Force can and should probably have a 
longer life than this review of the organization. Once we get 
an organization agreed to, it is the whole level of how you 
manage it, what are the principles, what is the staffing? We 
have the fractionation.
    We have a new group. A new subcommittee of the Task Force 
that has been set up on fractionalization. They are going to 
meet next week, I believe it is, or the week after next. There 
is just a lot of work that the tribal leaders have dedicated. I 
mean they are not leaving home and spending a huge amount of 
time to do this for us and with us. We have a lot of employees 
who are away from home also.
    The long answer to your short question is, yes, I think we 
do.
    The Chairman. Chairwoman Masten, do you agree or disagree?
    Ms. Masten. We agree. It was a principle that the 
Department and the Task Force agreed to a couple of months ago 
that it is important as we move forward with the implementation 
of trust reform that tribal leadership be actively engaged and 
we insure that consultation occurs in Indian country.
    The Chairman. Senator Conrad, do you have any questions?
    Senator Conrad. I do, Mr. Chairman. First of all, I thank 
you and our cochairman for holding this hearing. I thank the 
witnesses, and a special welcome to Chairman Tex Hall of my 
home State, somebody that we have high regard for and we are 
very pleased is actively involved in the search for a solution.
    I would like to turn the attention of the witnesses' to the 
question of the individual Indian money accounts. Perhaps, you 
could give us, Mr. McCaleb, if that is appropriate, an update 
on where we are.
    I would like to preface your response by talking about the 
events that occurred at Standing Rock where they had been doing 
the inputting of the documentation for those accounts with 
respect to that tribe and then were told that was all going to 
be centralized and taken away from them, leading to a loss of 
jobs and a very strong negative reaction from the tribal 
leadership there as well as, I think, the tribal membership.
    I think it was not well received. My understanding is all 
of that has been put on hold by the lawsuit. But perhaps there 
is more to know than that. Could you give us an update on where 
things are with the individual accounts?
    Mr. McCaleb. Yes, Senator; one of the things that the Task 
Force has done is create a special subcommittee on as-is 
business processes. It is done in cooperation with Electronic 
Data Services to determine exactly how we are doing business at 
the agency level right now and the regional level in the 
delivery of these services.
    We are translating that into areas that we see that need to 
be improved or enhanced. The report of this committee will be 
very influential of any changes that are done at the agency 
level.
    We have agreed in the tribal Task Force on two guiding 
principles. One is that our organization within the BIA needs 
to be such that trust review and trust services are delivered 
at the level where they originate. That is largely at the 
agency, as you have indicated about Standing Rock.
    Second, that there must be full and timely accountability. 
Those are two broad principles. We are trying to incorporate 
that. There is a management organization chart over there that 
represents some tentative agreements that have been reached by 
the tribal Task Force and the department participants in this 
joint committee.
    We came to that agreement in a work group last week, very 
late in the evening. It has been submitted to the tribal Task 
Force at large for approval. They wanted to vet that before a 
wider cross-section of leadership.
    I guess the shorter answer is, I think that is what this 
Task Force is about, trying to determine the most effective way 
to deliver these services at the agency level where the work 
originates.
    Senator Conrad. Has there been any further update of the 
funds that could not be identified? That is, with the 
individual money accounts there were funds that could not be 
accounted for. Is there an update with respect to those funds 
that could not be specifically accounted for?
    Mr. McCaleb. The special trustee has been working with the 
BIA and the Office of Trust Funds Management to define the 
extent of that. I am not aware of the outcome of that at this 
point, but that is an ongoing effort on the part of the special 
trustee.
    Senator Conrad. Mr. Chairman, if I could ask one other 
question on a subject that is related, I held a hearing on what 
happened to the J Tech funds of the Standing Rock Tribe. During 
the course of that hearing, we were advised that money had been 
drawn down for the purpose of building schools, $12 million for 
the stated purpose of building schools. We found out in fact 
that none of the money had been used for building schools, but 
instead was being used to backstop accounts that were 
individual loans that were made, unsecured loans in that 
amount.
    In fact, we are now being told it may be much more than 
that. It went out by the way of individual loans, unsecured.
    In that circumstance, we learned that Cora Jones, who was 
the representative of the BIA that had the authority to release 
those funds, had released them without any evidence that they 
were going to be used for the purposes indicated. That is, 
there was absolutely nothing that demonstrated the money was 
going to be used for the purposes intended by the legislation 
that passed here.
    Mr. McCaleb, can you assure us today that Ms. Jones is not 
in a position of authority over any of those funds going 
forward?
    Mr. McCaleb. The answer to your question is yes.
    Senator Conrad. There is an ongoing investigation by the 
Department, is that correct?
    Mr. McCaleb. Yes; by the Office of Inspector General of the 
Department of the Interior.
    Senator Conrad. By the Office of Inspector General? Can you 
give us any update with respect to that investigation?
    Mr. McCaleb. No; not really while the investigation is 
still in progress. I received a preliminary report at the 
launching of the investigation which basically supports 
everything that you determined in your hearings; that these 
funds which were dedicated for other purposes were utilized to 
collateralize or secure individual loans, which was completely 
beyond the investment plan on which the funds were released.
    Senator Conrad. Well, I would just say that was a hearing 
by this committee in which we discovered this. I would hope 
that follow-up would be provided to this committee. This 
committee played a central role in securing those funds. Those 
funds were secured for very clear purposes.
    I think it is essential to the working of the committee 
that they be advised upon the outcome of that investigation.
    Can you assure us today that will be done?
    Mr. McCaleb. Yes, sir; as soon as I have a substantive 
report from the Office of Inspector General, I will share that 
with this committee.
    Senator Conrad. Well, I thank you. I would just say to the 
chairman, Mr. Chairman, this is a matter of significant concern 
to me, to, I think, to this committee. It is of grave concern 
to the members of the Standing Rock Sioux Tribe, because we 
provided, you will recall, $90 million in compensation for land 
that was taken and never appropriately compensated for. But we 
provided the compensation pursuant to the recommendation of a 
commission during the Reagan Administration.
    Now we find out that some of that money has been used for 
purposes other than those intended, and perhaps a very 
substantial part of the money. This is something that we simply 
must pursue.
    I want to thank the chairman and I want to thank Mr. 
McCaleb for those answers. We will be looking forward to your 
additional report.
    The Chairman. Thank you very much.
    Chairman McCain.
    Senator McCain. Thank you very much, Mr. Chairman. Thank 
you for holding this hearing.
    Mr. McCaleb, Mr. Griles, are you aware that Judge Lambeth 
has said that he will take on the various suits by the 
individual tribes? Are you aware of that?
    Mr. Griles. Yes, Senator McCain.
    Senator McCain. Does that lend any urgency to you and the 
tribes coming to some kind of agreement?
    Mr. McCaleb. Senator, in addition to the Task Force meeting 
that we held in Portland last week, we also held a meeting with 
the Inter-Tribal Monitoring Association, which is a group of 50 
tribes, most of whom are litigants in these lawsuits.
    We are trying to educate both ourselves and the tribes 
relative to this.
    Senator McCain. What education is necessary?
    Mr. McCaleb. Well, it has to do with most of the suits, of 
the 20 suits that have been filed, all but 3 are asking for an 
accounting, which they are absolutely due.
    We are going to involve the Office of Historical Accounting 
in a seminar with these tribes so that we can go forward on the 
same fact basis. They had agreed to do that in early October.
    Senator McCain. You have been having discussions for 6 
months with the tribal leaders?
    Mr. McCaleb. With the tribal Task Force. We had our first 
meeting with the ITMA in May.
    Senator McCain. Well, I have to tell you that a lot of us 
have sat here with various witnesses over many years and we 
have gone around and around on this issue, previous 
administrations, previous witnesses, previous Task Forces, 
previous BIA officials, and as far as I can tell, we are no 
different than what we were 10 years ago.
    That is incredibly frustrating. I have often said that if 
this were being done to any other Group of Americans outrage 
would prevail throughout this country.
    Yet, we now seem to be unable, again, to come to an 
agreement. We are hung up on a chart of who is responsible for 
what. I think that some of us may feel unless there is some 
agreement that Judge Lambeth and other judges throughout the 
Nation will be making decisions which will probably, in the 
end, cost the taxpayers one heck of a lot more, just in legal 
fees, than it would be if there was some kind of orderly way of 
adjudicating these claims.
    It seems to me that would lend some urgency to you all 
coming to some agreement. I am not against reorganizing the 
BIA. I think the first hearing I ever appeared in was the 
reorganization of the BIA in 1987. That is fine. I mean after a 
while it gets a little boring, but it is fun to move different 
boxes around and call people deputy secretary or under 
secretary and have little lines going out in different 
directions.
    But tell me what in the world that has to do with settling 
these pressing claims that have been around for 100 years.
    So, my admonition to you is that I hope that you could 
agree with the tribal Task Force, you could agree with any 
other tribal organization there is, come to some agreement, 
come to the Congress and say, We need this statutory authority, 
or don't waste time away from home for some of your employees, 
and just say, Let us let the courts decide it.
    I think I have a reasonable legislative proposal. I would 
like you to examine it. I would like for the tribes to examine 
it. If you want to change it, change it. If you want to reject 
it out of hand, reject it out of hand.
    But let's not fool around with reorganizing the BIA. And by 
the way, the previous administration is more culpable than you 
are. You have only been in office for 1 year or perhaps less in 
your appointed positions. The other administration had 8 years.
    But the way I see the progress going, 8 years from now we 
will be having another hearing, perhaps not with the same 
Senators, but certainly the same subject.
    So, all I can say is please don't come to us with another 
reorganization of the BIA. Come to us whenever you want with a 
reorganization of the BIA. As I say, it is a fun academic 
exercise. But please come to us with a proposal to settle the 
issue where Native Americans are deprived of billion of dollars 
that is rightfully theirs.
    If we can't do that, if we can't get action through the 
Congress, then I wish Judge Lambeth and all of the other 
Federal judges across America a great deal of success because 
maybe they will be able to do something that we in the 
administration have been unable to do over 100 years, roughly.
    I would be glad to hear any response that Mr. McCaleb and 
Mr. Griles have or Ms. Masten or Mr. Hall.
    Thank you, Mr. Chairman.
    Would you like to make any comments? Please go ahead.
    Mr. McCaleb. Mr. Chairman, if I may, I would like to point 
out that our meeting with the ITMA has been for the purpose of 
seeing if we can develop a model for alternative dispute 
resolution as an alternative to mass litigation on the issue of 
historical accounting on the tribal accounts.
    The individual Indian money accounts are already at issue 
in a class action suit, as you indicated, before Judge Lambeth 
in his court.
    That is the historic aspect of this equation, looking back. 
Another equally important aspect is looking forward and asking 
what do we do in the future, so that the mistakes and the 
mismanagement of 115 years is not repeated.
    The cooperation between the tribal Task Force and the 
Department of the Interior, which we have been discussing, is 
substantial. This organizational chart is one aspect of that. 
But there are fundamental concepts upon which we have agreed 
that will profoundly affect the administration of the trust in 
the future.
    There are aspects we have not yet agreed upon that we have 
discussed here today. But that is precisely, Senator, what our 
goal and ambitious objective is, that is, to prevent the 
reoccurrence or the continuation of the mismanagement and the 
concerns of the Indian people that you have expressed.
    Senator McCain. Mr. Griles.
    Mr. Griles. I think Secretary McCaleb has responded. I want 
you to know as Deputy Secretary, he and I have spent thousands 
of hours and many, many days working to find solutions to the 
very problems you speak to.
    We are not reorganizing for the sake of reorganizing. We 
are meeting with the tribal leaders hopefully to define the 
future so that the future is fundamentally different than the 
past. The past is unacceptable. The future has to be different.
    So, within the context of that, as Mr. McCaleb says, the 
Indian tribal leaders, on the tribal lawsuits, have agreed to a 
process and we are making progress to try to find a better 
solution than having a number of suits around the country. We 
owe them an accounting. We are not arguing that. That has been 
argued by the previous administration. We are not arguing that.
    We came to this committee and to this Congress and 
suggested legislation in the spring that was enacted by 
Congress to extend the opportunity for us to enter into these 
discussions and negotiations in order to try to resolve an 
historical problem that we inherited. I appreciate your 
recognition of that.
    So, we are going to continue to work with the tribal 
leaders, the tribes, and this committee to look for other 
solutions to these problems. We need your help. We are going to 
need your advice and your help in how to resolve some of these 
questions as we develop what the real problems are with the 
individual tribal accounting.
    We are going to, hopefully, Senator, come forward with a 
process that will allow the tribal governments to understand 
what has been done, why it was done, what is wrong with it and 
give them an accurate accounting of those accounts.
    Senator McCain. I think we know all of everything but the 
last. We know how it was done. We know why it was done. We know 
what happened.
    Please go ahead, Mr. Hall.
    Mr. Hall. Thank you for the question and for the comments, 
Senator McCain. We are fundamentally working together on a 
number of issues, the tribes and the Task Force, but we 
fundamentally have a difference on the legislation.
    The tribes do want to put forward legislation. I am 
concerned that with the remaining time, that we are short on 
time, but you know, Senator, on trust standards and trust 
responsibilities there are two cases pending before the Supreme 
Court, the White Mountain Apache case and the Navajo Nation 
case.
    The tribe Task Force doesn't want the Supreme Court to make 
those determinations on that trust responsibility. We would 
like to include that in this legislation, as well as an 
independent oversight commission and the authorization of those 
new positions that you see from the Assistant Secretary up, 
which includes the Under Secretary and the Director of Trust 
Accountability, which really is the internal mechanism to 
oversight on trust. The independent commission is the external.
    So, the tribes are looking to the Senate Committee on 
Indian Affairs to proceed with this type of legislation in the 
remaining days of the 107th Congress.
    Senator McCain. Don't bite off more than you can chew, Mr. 
Hall.
    Go ahead, Ms. Masten.
    Ms. Masten. Senator, I personally have been involved in 
trust reform for the past 12 years and have seen no progress to 
date. At least today we are sitting down at the same table with 
the Department of the Interior and we are consulting with 
tribal governments across Indian country.
    I do expect, though, if Congress and the administration can 
act quickly to address the corporate shareholders needs, then 
they ought to be able to act quickly to be accountable to 
Indian country.
    Senator McCain. Thank you very much, Mr. Chairman.
    The Chairman. I thank you very much. With that, I would 
like to thank the panel for helping us. We look forward to your 
report of the Anchorage meeting.
    [The July 24, 2002 Commission on Indian Trust Funds Concept 
Paper appears in appendix.]
    [Whereupon, at 11:34 a.m., the committee proceeded to other 
business.]
=======================================================================


                            A P P E N D I X

                              ----------                              


              Additional Material Submitted for the Record

=======================================================================


 Prepared Joint Statement of J. Steven Griles, Deputy Secretary of the 
Department of the Interior, Washington, DC and Neal McCaleb, Assistant 
 Secretary for Indian Affairs, Department of the Interior, Washington, 
                                   DC

    Mr. Chairman and members of the committee, it is a pleasure for the 
two of us to appear before you again on a panel with the two cochairs 
of the Joint Department of the Interior/Tribal Leaders Task Force on 
Trust Reform, Sue Masten, chairwoman of the Yurok Tribe of Northern 
California, and Tex Hall, chairman of the Three Affiliated Tribes of 
North Dakota. We are here today to brief the committee on the status of 
the work of the Task Force.
    Last week, the Task Force held its seventh meeting in Portland, OR. 
Earlier meetings were held around the country in Shepherdstown, WV, 
Phoenix, AZ, San Diego, CA, Minneapolis, MN, and Bismarck, ND. The Task 
Force was formed last December in response to the Department's proposal 
to create a new organizational unit called the Bureau of Indian Trust 
Asset Management, which envisioned the consolidation of most trust 
reform and trust asset management functions located throughout the 
Department into a new bureau. This proposal was subsequently strongly 
opposed by the tribes.
    The Task Force is charged with providing proposals to the Secretary 
on organizational alternatives for the management of trust services 
within the Department. The Task Force's purpose is to evaluate 
organizational options and to submit to the Department one or more 
alternatives to reorganize the trust asset management system. The 
composition of the tribal membership of the Task Force was determined 
by all the tribes and represents a broad cross-section of tribal 
interests on a regional basis. The Task Force consists of two tribal 
leaders from each region, with a third tribal leader, from each region, 
acting as an alternate. Members of the Federal team consist of senior 
Department officials, including myself and Assistant Secretary McCaleb.
    The members of the Task Force have all come a long way personally 
and professionally as participants in this group. The two of us have 
attended every one of these meetings, as have our cochairs here with us 
today. As we talk about the future of the Bureau of Indian Affairs and 
work together to resolve issues related to how the Federal Government 
carries out its trust responsibility to Indian people, we are building 
another kind of trust among ourselves.
    While we have reached agreements on many key issues related to the 
organization of the Department of the Interior and management of our 
trust functions, our work is not done. We will be meeting in August in 
Anchorage, AK, and have other meetings scheduled.
    On June 6, at a meeting of the National Congress of American 
Indians, the Department at the recommendation of the Task Force 
solicited comments on various options proposed by the Task Force for 
restructuring of the Department with respect to trust. We received back 
from the Tribes detailed and thoughtful comments. We heard the 
following themes:
    The Federal Government's commitment to self-governance and self-
determination must not suffer as a result of Federal trust reform.
    Trust reform must not result in diminishment of the government's 
trust obligation to Indian people.
    There is a need for creation of a high level position within the 
Department who will be the primary individual within the Department 
responsible for ensuring that the trust asset management responsibility 
is carried out appropriately throughout the Department.
    Trust asset management issues must be addressed at the regional and 
agency level of the Bureau of Indian Affairs [BIA].
    There can be no one-size-fits-all solution. Trust reform must 
recognize that there are three models for receiving services: Through 
self-governance compacts, self-determination contracts, and direct 
services from the BIA.
    There is no bright line between fiduciary trust asset 
responsibilities and other trust responsibilities.
    We must ensure more accountability within the current BIA 
structure.
    Management of trust services and trust resources must be kept at 
the local level. We need a clear definition of the trust duty and 
responsibility for management of trust assets.
    There must be oversight of the BIA by an entity that has the 
authority to compel and enforce corrective action.
    As the above illustrates, reform of our current system is not an 
easy task. At the Task Force meeting last week, we reached agreement as 
a group to recommend that Congress establish a new position, an Under 
Secretary for Indian Affairs, who would be appointed by the President, 
subject to confirmation by the Senate, and would report directly to the 
Secretary. The Under Secretary would have direct line authority over 
all aspects of Indian affairs within the Department. This authority 
would include the coordination of trust reform efforts across the 
relevant agencies and programs within the Department to ensure these 
functions are performed in a manner that is consistent with our trust 
responsibility, as well as a number of other duties carefully hammered 
out between the Department and the Tribal Leaders on the Task Force. We 
believe reaching consensus on the creation of this position and the 
duties of this new senior official was a major accomplishment of the 
Task Force.
    We have also reached agreement on creation of an Office of Self-
Governance and Self-Determination within the Office of the Secretary, 
reporting directly to the new Under Secretary for Indian Affairs. This 
will enhance the abilities of the tribes that are interested in moving 
toward more compacting and contracting to carry out the services due to 
Indian tribes. Similarly, we have agreed that any legislation should 
also include the creation of a Director of Trust Accountability 
reporting directly to the Under Secretary who will have the day-to-day 
responsibility for overseeing the trust programs of the Department.
    Perhaps most importantly, last week in the working group we reached 
agreement on a restructuring of the Bureau of Indian Affairs. The 
Department and the Tribes agree that our trust duty requires a better 
way of managing than has been done in the past. The Department's 
longstanding approach to trust management needed to change, and this 
change must be reflected in a system that is accountable at every level 
with people trained in the principles of trust management. When the we 
arrived in Portland last week, the Department brought a proposal to 
create Trust Centers at the regional level within the Bureau and trust 
officers at the agency level. It was the best way we could see to 
ensure that decisions made at the regional and local level were 
reviewed to ensure that we were meeting our fiduciary trust 
responsibility to both tribes and individual allottees.
    4 Our tribal counterparts on the Task Force had a very different 
view of what changes needed to be made within the Bureau. The tribes 
expressed concern that these trust officers would involve themselves in 
most of the day-to-day activities at the agency level without being 
answerable to the Superintendent or the Regional Directors. The 
differences between us seemed too great to resolve in just a few days. 
However, once we stopped talking in concepts, rolled up our sleeves, 
and took the time to put on the table our real concerns, we were able 
to develop an organizational model that does its best to ensure that 
the Federal Government can exercise its fiduciary trust duty, and, at 
the same time, ensure that tribal governments can be active managers, 
to the degree desired, of their own trust assets. A copy of the working 
group consensus reorganization proposal is attached to this testimony 
for your information. This reorganization can be done administratively 
and does not require additional legislative authority. We believe that 
it is likely to have the greatest positive impact on the future 
management of trust assets.
    As we mentioned above, the work of the Task Force is not complete. 
We are exploring the possibility of creating a commission with 
oversight responsibilities for trust funds management. We have reached 
agreement within the Task Force to recommend creation of an independent 
commission on Indian trust funds within the executive branch. While we 
have mutual agreement on many of the functions this commission should 
have, we have mutual disagreements as well. We are not in agreement on 
the Commission's duties and we have not discussed the Commission member 
qualifications or term of service. We have presented a number of 
commission ideas that we plan to discuss with the Task Force at the 
upcoming meeting in August. We plan to participate with a working group 
set up by the Task Force whose charge it is to try to resolve these 
differences and reach consensus on the details of this commission's 
duties and responsibilities. Our goal is to have an agreement on this 
issue at our August meeting in Anchorage.
    5 Finally, we were also asked by the tribal members of the Task 
Force to work with the tribes on draft statutory trust standards 
presented at our meeting last week. These standards will be carefully 
reviewed within the Administration in preparation for our next Task 
Force meeting. We have not reached any agreement on the trust 
standards. However, we will be having both our attorneys and attorneys 
at the Department of Justice look at them.
    This concludes our statement. We would be happy to answer any 
questions the committee might have at this time.
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