[Senate Hearing 107-647]
[From the U.S. Government Publishing Office]
S. Hrg. 107-647
INDIAN TRUST ASSET AND TRUST FUND MANAGEMENT AND REFORM ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
ON
S. 2212
TO ESTABLISH A DIRECT LINE OF AUTHORITY FOR THE OFFICE OF TRUST REFORM
IMPLEMENTATION AND OVERSIGHT TO OVERSEE THE MANAGEMENT AND REFORM OF
INDIAN TRUST FUNDS AND ASSETS UNDER THE JURISDICTION OF THE DEPARTMENT
OF THE INTERIOR, AND TO ADVANCE TRIBAL MANAGEMENT OF SUCH FUNDS AND
ASSETS, PURSUANT TO THE INDIAN SELF-DETERMINATION ACT
__________
JULY 30, 2002
WASHINGTON, DC
U.S. GOVERNMENT PRINTING OFFICE
81-625 WASHINGTON : 2002
___________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON INDIAN AFFAIRS
DANIEL K. INOUYE, Hawaii, Chairman
BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman
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
S. 2212, text of................................................. 2
Statements:
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
vice chairman, Committee on Indian Affairs................. 20
Conrad, Hon. Kent, U.S. Senator from North Dakota............ 21
Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman,
Committee on Indian Affairs................................ 1
Jandreau, Michael, chairman, Lower Brule Sioux Tribe......... 26
Johnson, Hon. Tim, U.S. Senator from South Dakota............ 19
Manuel, Edward, chairman, Tohono O'odham Nation, Sells, AZ... 28
Martin, James T., executive director, United South and
Eastern Tribes, Nashville, TN.............................. 31
McCain, Hon. John, U.S. Senator from Arizona................. 19
McCaleb, Neal, assistant secretary for Indian affairs,
Department of the Interior, Washington, DC................. 21
Small, Geraldine, president, Northern Cheyenne Tribe and
chairperson, Montana-Wyoming Tribal Leaders Council, Lame
Deer, MT................................................... 23
Appendix
Prepared statements:
Daschle, Hon. Tom, U.S. Senator from South Dakota............ 39
Intertribal Monitoring Association on Indian Trust Funds..... 47
Jandreau, Michael............................................ 55
Johnson, Hon. Tim, U.S. Senator from South Dakota............ 41
Manuel, Edward,.............................................. 61
Marshall, Clifford, chairman, Hoopa Valley Tribe of
California................................................. 42
Martin, James T.............................................. 70
McCain, Hon. John, U.S. Senator from Arizona................. 41
McCaleb, Neal................................................ 45
Note: Other material submitted for the record retained in
committee files.
INDIAN TRUST ASSET AND TRUST FUND MANAGEMENT AND REFORM ACT
----------
TUESDAY, JULY 30, 2002
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to other business, at 11:35
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 on Indian Affairs meets again
this morning to receive testimony on S. 2212, the Indian Trust
Asset and Trust Fund Management and Reform Act of 2002.
This measure was introduced on April 18, 2002 by Senator
John McCain for himself and Senators Daschle and Johnson as a
discussion draft bill.
The stated purpose of this bill is to establish a direct
line of authority for the Office of Trust Reform Implementation
and Oversight to oversee the management and reform on Indian
trust funds and assets, and to advance tribal management of
those trust funds and assets.
[Text of S. 2212 follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Now, I am pleased to call upon a
distinguished member of the committee, the former chairman of
the committee, and the principal sponsor of S. 2212, Senator
John McCain.
STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA
Senator McCain. I thank you, Mr. Chairman, and Mr. Vice
Chairman. I thank you for scheduling today's hearing on S. 2212
that I sponsored with Senators Daschle and Johnson in response
to continuing problems plaguing the Department of the
Interior's management of Indian trust funds.
Mr. Chairman, since we have been discussing the same issue,
I would like to have my complete statement be made a part of
the record so that we can move forward with the hearing, except
a comment that Senators Daschle and Johnson and I recognize
that legislation can and should be modified and it was
certainly our intention to be open to proposed changes based on
the recommendations of the tribal task force and others.
Some of the recommendations require additional
deliberation, but I don't think we should hold back on
modifications. It is clear to even the most casual observers
that change in the underlying laws is needed and it is needed
now.
We have been through countless hearings, GAO
investigations, court battles, further delays in the changes we
know we can make now will continue the long and sorry history
of mismanagement and as has already been mentioned, in recent
days the Federal courts are finding it necessary to accept an
even larger role in dealing with the consequences of
mismanagement by the Department and Congressional inaction.
The bottomline is status quo is unacceptable and I hope we
can move forward on this very important issue.
I thank the witnesses for being here today. I thank Mr.
McCaleb and the other witnesses and I thank you, Mr. Chairman.
The Chairman. Your full statement will be made a part of
the record, Senator McCain.
[Prepared statement of Senator McCain appears in appendix.]
The Chairman. I will now call on Senator Johnson.
STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA
Senator Johnson. Thank you, Mr. Chairman for holding this
timely hearing. I want to commend my friend and colleague,
Senator McCain as well for the extraordinary leadership that he
has exhibited on this chronic and long-standing problem.
I want to acknowledge that on the panel today is Chairman
Mike Jandreau of the Lower Brule Sioux Tribe. Mike has served
on the Department of the Interior's Trust Fund Reform Task
Force. He provided outstanding leadership in a wide range of
Native American issues over the years in my State of South
Dakota and has brought his talent to bear on this particular
issue as well, and I am grateful for that.
Also I notice that in the audience is Phil Hogan. Phil is
another South Dakotan. We are proud of his work. He previously
was an U.S. attorney and is now with the Department of the
Interior. We appreciate his presence here as well.
I will submit a statement in full so we can get to the
panel. I apologize for having been late. Earlier today I had to
be at the White House at a bill signing for the Corporate
Accountability legislation on which I served on the Conference
Committee.
I very shortly need to leave to be on the floor of the
Senate, but I will submit a statement in full and simply
confirm some of the same views that Senator McCain has
expressed, that I think it is important that this legislation
be here as a starting point.
It is subject to some modification and we need to continue
to keep in mind that if we are going to make progress on this
issue it is going to be because we arrive at a resolution
through very close consultative process with tribes; that the
tribes role in all of this is as an equal, as part of a
government-to-government relationship and that there is no
resolution possible unless it comes through the tribes
themselves as a consequence of their discussions that they have
internally.
So, I think this task force is a very important entity. It
is my hope that we can at least break this gridlock through the
help of this legislation and modifications that will be forth
coming, that we can make some things happen.
I think it was very well said that we act very quickly when
there is a crisis on Wall Street, but our actions have not been
as expeditious when it has been a long-standing problem that
has been of devastating consequences in Indian country.
We need to change that and change that now. This hearing, I
hope, will move us in that direction.
Thank you, Mr. Chairman.
The Chairman. Your full statement will be made part of the
record. I thank you.
[Prepared statement of Senator Johnson appears in
appendix.]
The Chairman. Mr. Vice Chairman.
STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM
COLORADO, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
Senator Campbell. Thank you, Mr. Chairman.
Well, we have just heard from the four folks on the task
force that there is a lot of hard work that remains to be done
before we can have a concrete, workable proposal that has the
input and the blessing of both the administration and the
tribes.
I think all of us on this committee are interested in
making sure that we get a bill that we can get signed into law
and one that has broad-based support among the tribes, too.
I have said consistently, in fact, that I would oppose any
bill that didn't have involvement of the tribes in the drafting
of the legislation.
But I would like to commend Senator McCain, Senator
Johnson, and Senator Daschle for bringing this bill to us
because if nothing else, it has focused the attention on the
problem and I think it keeps the administration engaged with
the problem.
But I would maybe finally say that I am more interested in
doing things right than I am in doing things fast. Whatever
time it takes, we ought to bring this thing to a conclusion. If
we can do it this year, fine. I frankly doubt if we are going
to be able to do it in just the last few weeks.
But, hopefully, when we do pass something it will be the
kind of bill we are all going to be proud of.
Just as a side note, Mr. Chairman, I would like to note
that with the single exception of the panel that will be
testifying is the Geri Small, who is the first president of the
Northern Cheyenne and who is a woman. She has done a fine job
up there. She is also the chairman of the Montana-Wyoming
tribal leaders association. I am just delighted to see her
here. She is a good personal friend.
The Chairman. She is your boss.
Senator Campbell. She is my boss. In some respects that is
correct. Thank you.
The Chairman. Senator Conrad.
STATEMENT OF HON. KENT CONRAD, U.S. SENATOR FROM NORTH DAKOTA
Senator Conrad. Mr. Chairman, I just wanted to thank
Senator Johnson, Senator McCain, and Senator Daschle for coming
forward with legislation. We know that it is a work in
progress, that it is open to amendment and discussion. But I do
want to thank them for moving the ball forward because it
focuses the debate and the discussion and I think there are
many useful ideas in this bill.
As I have reviewed the major elements, I think it touches
on all those things that most of us share the frustration
expressed by Senator McCain and Senator Johnson. You know, this
has just been going on and on and on and it never seems to
reach a conclusion. Part of that gets before the courts and we
all know what happens there.
But it is really time to reach a conclusion on these
issues. It is only fair to the Indian peoples whose money is at
issue. It is their money. If ever there was a case where we
have a circumstances in which it really is the peoples' money,
this is it.
They deserve an answer and an accounting of what has
happened to their money. So, I want to commend our colleagues
for taking the initiative on this is matter.
The Chairman. Thank you very much.
We have a panel of five witnesses today. First is the
assistant secretary of Indian affairs, Neal McCaleb; president
of the Northern Cheyenne Tribe and chairperson of the Montana-
Wyoming Tribal Leaders Council of Montana, Geraldine Small; the
chairman of the Lower Brule Sioux Tribe of South Dakota,
Michael Jandreau; the chairman of the Tohono O'odham Nation,
Sells, AZ, Edward Manuel, and the executive director of the
United South and Eastern Tribes of Nashville, Tennessee, Tim
Martin.
I call upon Secretary McCaleb.
STATEMENT OF NEAL McCALEB, ASSISTANT SECRETARY FOR INDIAN
AFFAIRS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC
Mr. McCaleb. Thank you very much, Mr. Chairman and members
of the committee. I am very pleased to have the opportunity to
appear before you this morning along with the tribal leaders
arrayed before you at this table who I have been privileged to
work with since the first of the year on our tribal task force.
I think that is significant in consideration of the remarks
that I am going to make right now. First of all, the
administration is unable to support S. 2212 in its current form
and recommends, instead, that we look to the recommendations of
the Joint Tribal Task Force and the Department of the
Interior's efforts toward recommendations in those areas where
there is agreement.
While well-intended, and much appreciated, this bill does
not reflect the consensus of the opinions that have been
reached by the task force over the period of the last 7 months.
I want to express my appreciation to Senators McCain,
Johnson and Daschle for the initiative they have shown in
filing the bill because at our San Diego meeting in April, we
began the discussion of the bill along with 28 other proposals
that had been laid on the table for the task force members, a
different array of tribal leaders, and Indian organizations.
I pointed out that in Senator McCain's remarks, when he
introduced the bill, he stated that the bill was an initiative
to focus attention on this issue and that he fully intended to
give careful consideration to the recommendations of the task
force which was then in progress.
We have had four Tribal Task Force multi-day meetings since
April when the bill was first discussed along with the other 28
proposals that were laid on the table. The Tribal Task Force
has not endorsed the bill to this date. In fact, it has come up
with other recommendations that are in ways in tension with the
recommendations of the bill.
For example, the bill recommends the creation of a Deputy
Secretary position and after careful discussion of this matter
by the Tribal Task Force and the Department of the Interior, we
agreed by consensus last week at our meeting in Portland to
support the concept of utilizing an Under Secretary. It was
after a full discussion of what those two offices meant that
that consensus was reached.
As I indicated in my earlier testimony before this
committee, we did reach a consensus on the adoption of the
model for trust reform which was contained in option 5 of the
proposal that was presented on June 4. This had other aspects
that were in tension with S. 2212.
We have indicated earlier that we would be happy to provide
the committee with draft legislation that embodies the duties
upon which the department and the tribal leaders and the task
force have agreed upon.
We also object to the creation of the Office of Trust
Implementation and Oversight and the proposed 10-year Indian
Trust Fund and Asset Management and Monitoring Plans. There is
one specific recommendation in section 307(e)(3)(H) which
specifically says that the duty of this management reform group
is to ``ensure the greatest return on those funds and assets.''
This is in tension, I think, with the concept of tribal
self-determination. I will try to use an example that I have
used before. There is no question that in the management of
forest assets, which many of our tribes have, the greatest
return on the asset is clear-cutting.
Not one of the tribes that I am aware of that has timber
resources have opted to clear-cut. They have all been
supporters of selective cutting because of their perception
that clear cutting does great damage to the environment and to
the wildlife, although it yields the highest return on the
investment.
On the one hand, S. 2212 is encouraging tribes to develop a
plan under the self-determination option and I do support that
idea. That is the reason I am here to try to emphasize and to
optimize the opportunity for self-determination and self-
governance.
But on the other hand, when you vest in another separate
entity the responsibility statutorily to ensure the greatest
return on investment, that language is clear and unambiguous,
but it is in tension with the aspect of self-governance and
self-determination.
My point is that the tribes should decide whether they want
to maximize the investment or optimize the investment. There is
a substantial difference in those two.
In short, the administration recommends that the committee
put aside S. 2212 and consider instead the legislation that
reflects the recommendations of the task force. As I have said,
these recommendations include the consideration of an Under
Secretary position, the creation of a new Office of Self-
Governance and Self-Determination that reports directly to that
Under Secretary and the creation of a Director for Trust
Accountability.
With the permission of the chair, I will ask that my
complete written testimony be included in the record and answer
any questions when the time is appropriate.
The Chairman. Without objection, Mr. Secretary, your
statement will be made part of the record.
[Prepared statement of Mr. McCaleb appears in appendix.]
The Chairman. Now, may I recognize President Small?
STATEMENT OF GERALDINE SMALL, PRESIDENT, NORTHERN CHEYENNE
TRIBE AND CHAIRPERSON, MONTANA-WYOMING TRIBAL LEADERS COUNCIL,
LAME DEER, MT
Ms. Small. Thank you. Chairman Inouye, Vice Chairman
Campbell, and committee members, thank you for inviting me here
today to testify on S. 2212. I am honored to appear before you
today to testify on this very important legislation on trust
reform.
I am especially proud to be testifying by the Honorable Ben
Nighthorse Campbell, the tribe's most esteemed member. Besides
serving as president of the Northern Cheyenne Tribe, I also
serve as the chair of the Montana-Wyoming Tribal Leaders and as
a Delegate to the Trust Reform Task Force.
Today I am speaking to you as the president of the Northern
Cheyenne Tribe. I have not had time to consult with the tribes
from my region to get a consensus on my testimony.
As you know, S. 2212 was introduced on April 18, 2002 by
Senators McCain, Daschle, and Johnson at the urging of the
tribes from Great Plains region. I was at a meeting with the
Great Plains and Rocky Mountain region tribes on April 17, 2002
when I learned of the legislation.
The Great Plains and Rocky Mountain Tribes discussed the
legislation at length that day and worked feverishly to submit
a preliminary response generally supporting the legislation. I
understand that the introduction of S. 2212 was not popular
with the Department of the Interior, some of the Senators
sitting on this committee and some tribal leaders.
However, the introduction of legislation was needed to
impress upon Interior that legislation is absolutely necessary
to resolve trust management problems. I believe that S. 2212
has served that objective effectively and that it has provoked
lively discussion concerning trust reform legislation.
According, I thank Senators McCain, Johnson, and Daschle
for sponsoring S. 2212.
There are some issues that ascend above party lines and
personal agendas. Trust reform is such an issue. It is time to
roll up our sleeves and develop administrative and legislative
solutions to resolve the long history of mismanagement and
Indian trust assets.
With respect to the administrative solution, I have
attended every task force meeting and I am impressed by the
commitment by the tribal leaders and Interior officials on the
task force. I believe the task force is close to creating a new
organizational structure that will improve the management of
trust assets by the Bureau of Indian Affairs.
Consequently, I believe it is time for this committee to
start working closely with the task force to develop trust
reform legislation. Tribal leaders have advanced certain things
at the task force meetings that I believe must be supported by
trust reform legislation. These things are the creation of an
independent regulatory commission that will oversee Trust Fund
management including the sale and lease of trust resources.
The creation of a new position, either a Deputy Secretary
or an Under Secretary that reports directly to the Secretary
that will, among other things, coordinate trust reform efforts
of all effected agencies; the development of trust standards to
guide the BIA in managing trust accounts and resources; the
concentration of resources at the local agency level;
legislation that addresses the problem of land fractionation;
deference to tribal laws regulating trust resources; the
continuation of the task force or a task force to work out the
details of the implementation of the new organizational
structure and trust reform legislation; direct oversight of
BLM, BOR and MMS trust management.
Trust reform shall not restrict the tribe's ability to
compact. Most importantly, adequate funding.
I will address each of these themes and how S. 2212 deals
with them. The creation of an independent regulatory commission
that will oversee trust fund management, including the sale and
lease of trust management.
I believe that trust principles require that an independent
regulatory commission be created to oversee the management of
trust funds including the sale and leave of trust resources.
Congress needs to create a check and balance to ensure proper
trust management.
Tribes and Indian individuals should not have to run to
Federal court every time they suspect their accounts have been
mismanaged. Rather an independent regulatory commission should
be created to establish trust fund management regulations and
to investigate allegations of mismanagement and enforce
violations and conduct audits.
S. 2212 creates an Office of Trust Fund Reform
Implementation and Oversight that is not independent of
Interior nor regulatory in nature. An independent regulatory
commission that would oversee and enforce trust management is a
better alternative, in my view.
The creation of a new position, either Deputy Secretary or
Under Secretary that reports directly to the Secretary that
will, among other things, coordinate trust reform efforts of
all effected agencies.
S. 2212 creates a Deputy Secretary position that will
coordinate trust reform efforts throughout Interior and will
report directly to the Secretary. I believe that tribes would
prefer a Deputy Secretary as opposed to an Under Secretary,
however, Tribes may settle for the Under Secretary as long as
the Under Secretary reported directly to the Secretary of the
Interior.
S. 2212 is silent on trust standards, however the
jurisdiction of the Independent Commission and Trust Officers
are limited to trust fund management and the sale and lease of
trust resources. The standards for management should be the
highest fiduciary standard realized by normal banking
standards.
This standard should be confirmed in trust reform
legislation. The standard for the management of trust resources
is a more difficult question. If the standard is not developed
in the trust reform legislation, it should be developed in
separate legislation in the near future.
The concentration of resources at the local agency level:
S. 2212 does not address this issue and I am not certain how
this issue can be addressed legislatively. However, I know that
trust funds and resources cannot be managed from afar. Human
resources must be available at the local agency level in order
to manage trust funds and resources.
Legislation that addresses the problem of land
fractionation: S. 2212 does not address the enormous problem of
the land fractionation. I understand that the separate
legislation is pending concerning land fractionation. It is
imperative that the fractionation problems be resolved
legislatively in order to make land and resource management
more manageable.
Deference to Tribal laws regulating trust resources: S.
2212 does not address this theme directly. However, Rocky
Mountain and Great Plains Tribes have identified situations
where the implementation of the highest trust standards and
trust resources could infringe on tribal regulations.
For instance, the Northern Cheyenne Tribe has set grazing
rates on the Northern Cheyenne Reservation. The Great Plains
and the Rocky Mountain Region Tribes are concerned that the
highest trust standards could require the BIA to obtain the
highest price for the resource. This could conflict with the
tribe's decision to subsidize tribal cattle operators.
Also, from an enforcement standpoint a trust officer
operating under the highest trust standards may remove an
operator from a tribal range unit he believes is being over-
grazed. The tribe may not agree with the trust officer's
assessment or believe that the trust standard is a lesser
standard.
In other words, the tribe would like to reserve these
decisions for themselves and avoid interference from the trust
officer. Trust reform should not interfere with the tribe's
right to regulate trust resources.
The continuation of a task force to work out the details of
the implementation of the new organizational structure and
trust reform legislation: S. 2212 creates an advisory board to
provide advice on all matters within the jurisdiction of the
Office of Trust Reform. The purpose of the task force after the
proposal is adopted is two-fold. The first reason is to work
out the details of the new trust reform organization and
regulations for the trust reform legislation. The second would
be to work with the independent regulatory commission on trust
fund management regulations.
Direct oversight of BLM, BOR, and MMS: S. 2212 provides
that the Office of Trust Reform would supervise the Director of
BLM and MMS the extent that they administer any Indian trust
assets or funds. This is consistent with what tribes would
like, except oversight responsibility would rest with the
Deputy Secretary or the Under Secretary, whichever position is
created, instead of the Office of Trust Reform. Tribes would
also like to have BOR included in the oversight to the extent
that it administers Indian trust assets.
Trust reform should not restrict a tribe's ability to
compact. Self-governance tribes are concerns that the trust
reform legislation will negatively impact their compacts with
the Federal government. S. 2212 supports a tribe's ability to
directly manage trust funds or assets themselves through self-
governance laws. Any legislation adopted by Congress should
provide the same support.
Adequate funding. Trust reform legislation and the efforts
of the task force will prove futile unless Congress commits to
adequately funding the BIA. In each task force session, I hear
tribal leaders state the resolution of this problem really
comes down to adequate funding. I agree with this assessment.
Funding is needed to employ additional quality people,
properly train all employees and to purchase the necessary
equipment. S. 2212 does not address this issue, as it isn't an
appropriations matter.
I raise it today to stress this point. Congress must
realize that mismanagement cost Congress money. We would be
better off paying what is necessary to manage properly than to
pay for the mistakes later.
This concludes my testimony. Thank you for your patience
and for allowing me to testify today.
The Chairman. Thank you very much, President Small.
May I now call upon Chairman Jandreau.
STATEMENT OF MICHAEL JANDREAU, CHAIRMAN, LOWER BRULE SIOUX
TRIBE, LOWER BRULE, SD
Mr. Jandreau. Hello. Chairman Inouye, Senator Campbell,
Senator McCain, it is my honor to address you today. It is my
hope that my testimony will be made a part of the record.
The Chairman. Without objection, it is so ordered.
Mr. Jandreau. I would like to informally address those
parts of my testimony that I wish to accent.
I have been involved in tribal government for 30 years now,
directly, as either a councilman or the chairman. For 23 of
those years I have been a chairman of my tribe. I was on the
first task force that was developed under President Bush,
Senior. I served on there approximately 1\1/2\ years.
I have had the opportunity to be appointed by my peers to
serve on this task force. This time I am the only one from
Sioux country. I am also chairman of the United Sioux Tribes.
The Sioux feel that a Deputy Secretary is essential to elevate
the position of Indian Affairs to a level that is commensurate
with their standing as citizens of the United States and as
individual tribal groups who have given much for the
development of this country.
We also feel that there should be Deputy Secretary of the
Interior that would handle the trust assets and the Indian
programs. There are many other issues in relationship to the
total development of S. 2212 that we need to occur.
But unless it is enacted into law, unless it becomes
something that we as tribes can build on, we really have
nothing but good faith.
I have attended every task force meeting, however, I missed
the one important one. As you know, I listened to the testimony
this morning and I was amazed because it seems like in Portland
when I wasn't there everything worked out. So, I got to feeling
a little guilty. Maybe I am a part of the impediment. I don't
really feel that way.
But there are many issues regarding 2212 that we have dealt
with in conversations in the Indian Caucus task force. One of
the matters was that in Bismarck we agreed to ask for hearings.
The tribal member portion of the task force caucus all agreed
to it. But when we went into joint session, there seemed to be
a huge confusion that pervaded the room.
Finally, we did get a letter from the chairman or one of
the cochairs sent to Congress saying that we did wish hearings.
We were told by the administration that we were jointly going
to have testimony prepared that would adequately reflect both
the administration and the tribal consultees' position.
You know, the ironic part is this last week or so there was
language attached to an appropriation bill in the House that
talked about some very interesting things in which none of the
administration knew anything about.
I find it very difficult, after all the years that I have
been involved, to say that we can really consistently develop
something that has a true tribal complexion, that has a true
tribal ideal that is not meant for and somehow ameliorating
what the administration wants.
I believe in self-determination. I work very hard on my own
reservation to make self-determination a reality. I find it
doesn't matter whether you are a Democratic or a Republican.
But if you are an Indian, your rights just seem to mean a
little less.
Thank you.
[Prepared statement of Mr. Jandreau appears in appendix.]
The Chairman. I thank you very much, Mr. Chairman.
Now I will call on Chairman Manuel
STATEMENT OF EDWARD MANUEL, CHAIRMAN, TOHONO O'ODHAM NATION,
SELLS, AZ
Mr. Manuel. Chairman Inouye, Vice Chairman Campbell, my
name is Edward D. Manuel. I am chairman of the Tohono O'odham
Nation which is located in south central Arizona. It consists
of 25,000 members and a land base of 2.8 million acres.
I am also a Western Region Tribal Representative serving on
the Tribal Leader/Department of the Interior Trust Reform Task
Force.
I am honored to be here and I thank you for the invitation
and I appreciate the opportunity to testify before the
committee on S. 2212. I will summarize my testimony, if I may,
and submit it for the record.
The Chairman. Without objection, your full statement will
be made part of the record.
Mr. Manuel. The first point I want to make on S. 2212 is
that it provides the incentive for the administration and the
tribes to stay engaged to bring about a much needed trust
reform. Reform of the Federal Government to meet its duty of
trust responsibility to American Indian tribes is a complicated
and difficult task. Previous efforts of reform have fallen
victim to one or a combination of political, financial, legal
or intellectual factors.
Everyone including Congress, the Executive, the Judiciary,
the tribes and individual beneficiaries recognize the need for
change. However, what that change should entail at times
creates disagreement among the parties involved.
One point is certain. S. 2212, along with other
Congressional interest shown in trust reform, has provided the
incentive to keep the Bush administration engaged with the
tribes on reform discussions. To this end, the active
participation of this committee and the Congress, whether
during this legislative session or the next, is crucial.
Continued Congressional participation is critical not only
with development of the trust reform plan, but in the
successful implementation of a plan as well. This committee is
encouraged to keep trust reform at the top of its agenda during
the next Congressional session.
S. 2212 serves as a basis to start the discussion of trust
reform and provides a foundation to keep the discourse
continuing.
The second point I want to make is that S. 2212 encompasses
many worthwhile ideas needed for legislation. As written, the
American Indian Trust Fund Management Act of 1994 may have been
successful in the implementation of trust reform. The act
contains many wonderful phrases and requirements.
Those requirements, amongst other things, are all elements
which the tribe wants to see implemented in the current reform
effort. The question is: What went wrong with the 1994 reform
act?
The tribes maintain that the lack of success of the 1994
Reform Act was that the inability of the Special Trustee to act
independently of the actions of the Department of the Interior.
Thus, difficult changes, crucial for reform, were never
identified, or if identified, never implemented.
While tribal leaders had input in the drafting of the 1994
reform act, the original intent was to place the Office of
Special Trustee outside of the control of the Secretary of the
Interior. The tribe wanted an independent external office with
authority to address the trust issue. This particular element
of the 1994 Reform Act was compromised politically and trust
reform was not successful as a result.
S. 2212 needs a provision that would create an independent,
external enforcement and oversight body to ensure the
Department of the Interior's proper performance of the Federal
Government's fiduciary or trust responsibility to the American
Indian tribes are carried out.
The tribal leaders of the Trust Reform Task Force believe
an independent body is absolutely necessary for successful
trust reform to occur. Should S. 2212 prove to be the vehicle
for trust reform, the bill should be amended to provide for
this independent body.
Another crucial problem of the 1994 Reform Act was the fact
that tribes, especially those who had the capability of
managing their own trust assets, funds and resources, were
forced to comply with national ``one-size-fits-all'' standards.
No adjustments were allowed to account for the local variations
most tribes encounter when meeting the needs of local
constituents.
Many tribes ended up politically opposing the reforms
suggested by the Special Trustee due to this lack of
consideration for local concerns.
S. 2212 helps face this issue by allowing each tribe the
ability to create an ``Indian Trust Fund and Trust Asset
Management and Monitoring Plan.'' The plans, once approved,
will take local needs into account by providing for the
management and administration of funds and assets held in trust
by the Bureau and the tribes.
Furthermore, S. 2212 requires the Secretary to comply with
tribal law in relation to the management of trust funds and
assets unless prohibited by Federal law. This is tribal self-
determination at the most fundamental level. Such provisions
are critical to the success of any trust reform and must be
included in any legislation passed to address the situation.
My third point is that an independent oversight commission
is legally plausible. There was a lot of discussion this
morning regarding the independent oversight commission. We had
looked at the separation of powers of the three branches. We
looked at the court's past decisions. We looked at the unique
trust relationship, and guardianship principles. We looked at
the plenary powers doctrine and we believe that it would stand
judicial scrutiny in the creation of this independent body.
My fourth point is that the union and Civil Service
protections must not present obstacles to reform. During our
discussions in the Tribal Leaders/Department of the Interior
Joint Task Force, there were many issues brought out regarding
Bureau employees who hamper local tribal government self-
determination initiative.
We request that in the legislation dealing with trust
reform, the issue of Civil Service protection and incompetent
employees should be scrutinized to be sure that tribes and
their members are being provided trust services by individuals
who will be held accountable for their actions.
Further, this Civil Service protection should not be the
foundation for career oriented but non-dedicated employees to
derail trust reform. Employees need to have access to training
and experience to properly carryout their trust function. But
once that training and instruction is provided and employees
make the conscious choice not to perform properly or simply
cannot perform properly, then these employees should be
relieved of their employment and not be able to hide behind
Civil Service law or even union agreements to protect such
employment.
Tribes must continue to be involved with the implementation
of reform. Over the years, tribal leaders have participated in
many efforts to reorganize or reform the Federal Government's
provision of services to Indian country. Many of these plans
produced positive and concrete ideas which, if implemented,
would have resulted in greatly improved services. However, none
of these plans were totally implemented.
Tribal leaders must continue to have a voice in the trust
reform efforts in order to compel implementation of the plan,
thereby ensuring the successful reform of the Bureau of Indian
Affairs.
While S. 2212 calls for the creation of an Advisory Board,
the constituency of which will contain tribal people, the Board
will simply not have the authority to mandate implementation of
any particular aspect of reform should such be necessary. The
same now holds true for the Advisory Board created in the 1994
Reform Act. Complete change did not occur under the 1994 Trust
Reform Act because the Board did not have the proper authority
to make change happen.
The tribal leaders on the current Trust Reform Task force
are advocating for the creation of an independent oversight
commission having the authority to ensure the Federal
government's trust functions and fiduciary responsibilities are
properly performed.
This oversight mechanism will only become effective if
trust reform legislation is fully implemented. Tribes, as a
whole, must continue to be engaged, through the Task Force or
another body, to ensure that the entire reform plan, which
includes an independent oversight commission, is completely
implemented. Only thereafter can the independent oversight
commission take control and provide the continuous tribal input
needed for the successful provision of trust services.
In conclusion, the Tribal Leader/DOE Trust Reform Task
Force continues to develop the crucial elements needed to bring
about reform of the Federal Government's trust services to
Indian country.
Eventually, legislation will be needed to implement this
reform. The task force envisions that the position of Under
Secretary be created. This position will be the focal point and
responsible for the Federal Government's trust obligation. This
person will have line authority over all Department of the
Interior trust functions. This is similar to, but not identical
with what is contemplated in S. 2212.
The task force believes that all, not some, of the agencies
within the Department of Interior should be subject to the
Under Secretary's control in relation to trust responsibilities
for Indians.
Furthermore, the tribal leaders on the task force insist
upon the creation of an independent oversight commission. S.
2212 does not contain this element. If S. 2212 is the vehicle
to be used for trust reform, the task force requests that the
concept of an independent oversight commission as developed by
the task force, be placed in such legislation.
Thank you for the opportunity to provide testimony here
today on this very important topic. I will be happy to answer
any questions from the committee.
The Chairman. I thank you very much, Mr. Chairman.
May I now recognize Mr. Martin.
STATEMENT OF JAMES T. MARTIN, EXECUTIVE DIRECTOR, UNITED SOUTH
AND EASTERN TRIBES, NASHVILLE, TN
Mr. Martin. Chairman Inouye, Vice Chairman Campbell, Senate
Committee on Indian Affairs: I have submitted a written
testimony and I would like that to be made part of the record.
The Chairman. Without objection it is so ordered.
Mr. Martin. I would like to further comment on that
testimony and highlight some of the key components of that
testimony and some of the discussion that has already occurred
today and reflect on hopefully some of the discussion that
should occur in the future.
I am here today before you, James Martin, enrolled member
of the Poarch Band of Creek Indians. I serve as executive
director of United South and Eastern Tribes. As executive
director, I was appointed by the 24 member tribes of our region
to represent them on the tribal task force on trust reform.
Going to the task force meeting and working within that
task force, I was appointed by that task force along with Ross
Swimmer, to cochair a subcommittee of that task force on EDS
As-Is Business Process Modeling.
On behalf of our 24 member tribes, I would like to express
our appreciation to be able to come and to express our views on
Indian trust management reform. I would also like to express my
appreciation to the task force, both the tribal and Federal
members of that task force, for the work that has been done to
date to bring about a structure that protects the Government's
fiduciary responsibility to tribes and promotes accountability
at all levels of the Department of the Interior and the Bureau
of Indian Affairs.
I would like to thank Senators McCain, Daschle, and Johnson
for introducing S. 2212 as a mechanism to assist the task force
in this monumental task. This group, this panel, that is before
you today are here walking a tightrope.
I want to be able to honor my commitment to the task force
and honor the consensus that have been made in those
deliberations, but at the same time, be able to comment from
our tribe's perspective on S. 2212.
There are some differences and there are some similarities.
I would like to be able to highlight some of those. Before I do
that, though, I would like to talk about our region and our
perspective in our region.
The USET tribes vary differently. We have very wide
differences in population, the governmental infrastructures,
economic development. And the endowments of natural resources
vary widely. However, we are deeply committed to self-
determination.
We are committed to exercise our right to sovereignty
through the self-determination by 638 contract. In our region
over 95 percent of the resources that go into our region is
contracted out either by 638 contracting or by compact.
By and large, the only services rendered by the Bureau of
Indian Affairs at the regional level are the inherent Federal
functions. So, all of the functions that we are talking about
are being performed by the tribes. That is a testament to our
commitment to self-determination.
Our tribes have engaged frequently in conversations
regarding trust resource management, trust asset management,
and this reform effort, ever since the Secretary introduced it
last November.
Our tribes first expressed our recommendations to the
Secretary on February 1, when USET proposed an alternative to
BITAM. I also testified before this committee on February 26,
where I outlined our proposal.
Earlier this month, July 8, our tribes came together again
in consultation to deliberate over the task force's
recommendations at that time, the different 29 proposals that
had been dwindled down to four different options. Our tribes
deliberated over those options. We looked at our proposal and
we made adjustments to our proposal.
But our tribes unanimously and unequivocally asserted that
regardless of whatever structure is finally settled upon, that
a single point of decisionmaking authority still has to occur
at the local level for all Indian programs. And I want to
reiterate that point and emphasize that point from the outside
because the tribes of our region believe that it is getting
missed, that it should not be overlooked any longer.
Our tribes have the day-to-day experiences showing that
trust management systems are working. When it comes to
affective delivery of Indian trust services and the proper
execution of the fiduciary trust responsibilities, the current
bureau structure that unites both the trust accounting and
trust services personnel at the region and tribe agency level
that assures tribes have direct access and interaction with
decision makers responsible for the programs.
Based upon our experience in our region, this access is
essential whether those Federal responsibilities are
administered pursuant to self-determination contracts or
compacts or delivered directly by the Bureau of Indian Affairs.
This structure provides a bottom-up accountability that is
as important to the trust beneficiaries as the structure of the
single executive is to the Department of the Interior. This
point has been identified and articulated by our tribes from
day one as we learned about the Secretary's BITAM proposal.
At the local level we need to improve accountability and
eliminate inefficiencies. This can be done by the improvement
of trust standards, trust policies and trust procedures. A key
problem is excessive delay in working through the various
levels of the bureaucracy.
But to the extent tribes had administered 638 programs
through contracts and provided that the regional office is set
up to offer tribes one-stop shopping to contract those
programs, the system works.
Department of the Interior representatives on the task
force continue to demand additional layers of bureaucracy that
duplicate authority at the local level. Such a structure would
impede tribes' efforts by adding excessive, ineffective and
costly administrative procedures to a system that is overly
bureaucratized to date.
In order to maintain and expand tribal involvement and to
enhance opportunities for tribes and include individuals to
exercise bottom-up accountability, the Federal government needs
to streamline the trust asset management, not bureaucratize it.
Now to the key elements to which I believe the task force
and S. 2212 do agree on. The task force has reached consensus
on the senior executive leadership structure, consistent with
what was proposed in S. 2212. Both the task force and S. 2212
elevate the senior executive within the Department of Interior.
The senior trust executive reports directly to the
Secretary and has direct line authority over the assistant
secretary of Indian affairs and over the assistant secretaries
of each of the bureaus that perform functions and/or
administered trust assets. This line authority would serve to
protect the full range of trust funds and assets managed by the
Federal Government and institute the call for a single
executive to ensure that the trust obligations are met.
The task force has selected the concept of an Under
Secretary rather than a Deputy Secretary based on the view that
establishing an Under Secretary would run into political
objections that might arise with proposing what appears to be
an unprecedented second Deputy Secretary within the Executive
Department.
Now, to ensure that trust policy is properly implemented at
the regional and agency level, USET has suggested that five
commissioner positions be established as Civil Service posts
under the Assistant Secretary for Indian Affairs. These five
commissioners would have the responsibility to ensure the
proper execution of trust responsibilities at the regional and
tribe agency level.
The Commissioner for Indian Services and the Commissioner
for Trust Management would have quality assurance and oversight
authority with respect to the trust functions pertaining to the
regional director.
This authority over trust functions at the central office
to regional office level would parallel the Under Secretary's
authority over trust functions pertaining to the Assistant
Secretary in the other Department of Interior bureaus.
Meanwhile, the line of authority over the operational
responsibilities of the regional director would run from the
Assistant Secretary to the Commissioner of Regional Operations.
All 12 regional directors would answer directly to the
Commissioner from Regional Operations. For reasons I have
mentioned above, the Eastern Region Tribes urge that all trust
services and resources remain at the regional level under the
direction of a single line of authority.
Below the regional directors is where the performance and
authority over trust services and trust resources would divide.
For example, through a deputy regional director for trust
services and another for trust resource management, the agency
supervisory level would replicate the same structure, one
single line of authority, the agency superintendent, with
authority over all trust services and trust resources at the
agency level.
You separate the functions. You separate the personnel. But
there is nothing to date to indicate that those separated
personnel cannot still report in to a single line of authority
when you have clearly delineated out the policies, the
procedures and the standards that those two sets of personnel
have to adhere to.
A key point is to have one individual decision maker at the
level of the bureaucracy to whom the tribes have access to
agree on. Another component that both the task force and S.
2212 involves corresponding elevation of the policy of Indian
self-determination.
Both the task force and S. 2212 proposals place
responsibility to self-determination contracting and compacting
within the domain of the senior trust executive.
While S. 2212 authorizes the deputy secretary to enter into
self-determination contracts, the task force proposes the
establishment of an Office of Self-Determination Policy in the
Office of Under Secretary.
At the strong request of tribal representatives, the task
force agreed that while policy formulation regarding self-
determination shall be elevation to the under secretary level,
the implementation of self-determination agreements must remain
at the level most appropriate to ensure the tribe's greatest
access.
Independent oversight: Both S. 2212 and the Trust Reform
Task Force coincide in the view that establishing
accountability for the Department of the Interior trust
management requires independent oversight. However, the task
force has not reached a consensus regarding the scope and
powers to be delegated to this independent commission.
Both the tribal and Federal representative agree that the
commission should have powers to audit trust accounts,
investigate allegations of accounting failures, and agency
action inconsistent with the trust responsibilities, and
analyze budget needs.
There also appears to be, however, general agreement that
the oversight commission would perform quality assurance and
accountability through the under secretary and on down the
chain of command. Quality assurance is understood to be trust
management oversight functions, not administration and
implementation.
One of the failures that our tribes see in the functions to
date is that the people and offices that were put into place to
oversee the dealings of trust management actually got involved
in performing them. To me, that is a fundamental flaw of all of
the transactions and the reorganizations that have appeared to
date.
The main disagreement on the commission is to tribal and
Federal representatives disagree to the nature of the
commission's enforcement authority and regarding the delegation
of rulemaking authority.
I have agreed to cochair a task force sub-work group to
seek resolution to these differences. To sum up these
differences, the Federal representatives have suggested that
the commission should exercise its enforcement authority by
referring findings of non-compliance to the Treasury
Comptroller of the Currency for it to determine what sanctions
and/or remedies to apply.
The tribes wish to empower the commission with the range of
enforcement mechanisms available to the Comptroller, so as to
retain full discretion and authority to independently take
actions and bring about corrective actions on whatever issue is
at hand.
As regards to rulemaking, the tribes want the commission to
be able to promulgate rules. The Federal representatives have
objected to having a commission take the rulemaking outside of
the Secretary's own discretion of rulemaking.
Let me also note that S. 2212 retains and rebuilds the
Office of Special Trustee [OST]. The view of the tribes in the
eastern region is that the commission would assume most of the
functions now changed to OST.
We believe legislation will be required to provide for a
transition of functions from the Special Trustee to the
independent commission.
Establishing clear trust standards: In testimony before
this committee last month, the Deputy Secretary of the
Department of the Interior stated that he was not able to
define the standards governing Indian trust responsibility. The
tribal members of the task force and the Eastern Region Tribes
urge this committee and Congress that it is time for Congress
to establish statutory standards governing the trust
responsibilities.
If the senior officials from the Department of the Interior
responsible for overseeing the trust responsibility is not able
to articulate the standard, then the Department of the Interior
is not well positioned to execute that responsibility.
Our tribes believe a starting point for legislating this
definition can be found in the Department of the Interior's own
policy manual which provides under part 303, section 2.7, it
delineates out the secretary's responsibility.
I will not go into that. That is in my written testimony.
It has already been articulated. It had also captured in the
secretarial order, talking about trust principles. I would
refer the committee to both the manual and the secretarial
order.
The tribal representatives on the task force believe that
the secretary's accountability for trust responsibility would
markedly improve if legislation modeled on these guidances in
the departmental manual were enacted into law to provide a
basic definition for trust responsibility and the secretary's
corresponding duties to carryout that responsibility.
Under standards, the tribes and the Secretary have
disagreed on different views about standards and how far that
these standards should go.
The tribes have discussed the possibility of permitting the
development of standards governing tribal implementation of
trust duties. The idea that tribal standards might be different
from the Secretary's does not imply that the standards would be
lower. Rather, the separate standards simply knowledge that
different policy considerations are at play. For instance,
rather than a standard requiring that the resources be leased
for their highest market value, a tribal standard may be to
assure the resource's protection and preservation in order to
fully reflect the asset's cultural and spiritual value.
From the perspective of USET tribes, the proper execution
of the trust responsibility is achieving a balance that
maximizes the utilization of trust resources and protects those
trust resources for future generations.
No structure can work without sufficient resources to drive
it. Lack of funding and personnel, particularly at the regional
level, account for a significant portion of the Secretary's
failure to properly discharge the Federal Government's trust
duties.
We ask this committee, in reviewing the Task Force's
proposal, to bear in mind that new structures and functions
will be replacing the existing offices within the Department of
the Interior. The President has proposed significant budget
increases for trust reform. We believe they should be targeted
to the trust reform efforts currently being proposed by the
Task Force.
In closing, I would like to reflect and express our tribe's
sincere appreciate for the Department of the Interior, Deputy
Secretary Griles, Assistant Secretary McCaleb, and their staffs
for engaging in an unprecedented historic level of consultation
on this issue.
Have we had problems? As Senator Inouye said, ``Is it a
lovefest?'' No, it is not. These last meetings have been hard.
They have been gut wrenching. I believe, though, I can say with
sincerity that both parties are sincere in trying to accomplish
something and we stand on the brink of an opportunity for that
to come out.
I would sincerely ask this committee to continue to engage
your staff in coming to the meetings and offering solutions to
these problems as we engage them.
I would invite, and I hope you have reserved all the good
questions for us.
The Chairman. I thank you very much, Mr. Martin.
[Prepared statement of Mr. Martin appears in appendix.]
The Chairman. The Task Force was established in January
this year. Since its establishment, seven formal meetings have
been held. The eighth will be in Anchorage, AK in late August.
Between these formal meetings numerous caucuses and
conference calls, and subcommittees of the task force have met.
Many hours have been expended. I gather that all of you are
members of the Task Force. Am I not correct?
The general tone of the testimony I have heard among the
Indian witnesses is that you approve of the process and
procedure adopted by the Task Force in carrying out its mission
to resolve these long standing issues; am I correct?
Mr. Martin. Chairman Inouye, I think you are correct in
those things. I think I can say to you on behalf of the other
people here that we are in agreement on the recommendations
that have been made thus far from the tribal and Department of
the Interior Task Force.
The outstanding issues, as in any give and take and
deliberations of parties coming from different viewpoints, even
though they are few in number, we are still in monumental
disagreements on some of the issues. But I believe that we have
the mindset, we have the people at the table, that we can come
back to this committee with some concrete recommendations on
the outstanding issues.
Is it going to solve all of the problems? Is everybody
going to be 100 percent unanimous for it? No, sir. I don't
believe that was ever envisioned by anybody who sat down at
those tables when we began.
The Chairman. I gather that this Task Force is an historic
one in the sense that there has been more consultation and
joint work than any other task force in the history of Indian
relationship with the Government of the United States.
This, but this committee has held more meetings than any
other committee in the Congress of the United States. In the 21
weeks of legislative work, we have already held 48 meetings,
including this one. We have held five on the work of the Task
Force. We look forward to the next one.
I can assure you that we are intent on bringing forth the
statute that will incorporate your recommendations. So, we are
serious in our work.
We have two measures before us, S. 2212 and the work of the
Task Force. But I gather that if the Task Force carries out its
mission, all of you will be satisfied.
I thank you all very much.
Mr. Martin. You would be welcomed, Senator.
The Chairman. The hearing is adjourned.
[Whereupon, at 12:47 p.m. the committee was adjourned, to
reconvene at the call of the Chair.]
=======================================================================
A P P E N D I X
----------
Additional Material Submitted for the Record
=======================================================================
Prepared Statement of Hon. Tom Daschle, U.S. Senator from South Dakota
Chairman Inouye, Vice Chairman Campbell and members of the
committee, thank you for holding this hearing on S. 2212, the Indian
Trust Asset and Trust Fund Management Reform Act of 2002. Trust reform
is a critical issue for the Native American community nationwide, and I
am pleased to have joined with Senators John McCain and Tim Johnson in
sponsoring this legislation.
Indian country has faced many challenges over the years. Few,
however, have been more important, or more difficult, than ending the
mismanagement of the Indian trust fund and restoring integrity to this
administrative process. The Indian Trust Asset and Trust Fund
Management Reform Act is intended to focus attention on solutions to
the longstanding problem of inefficient management of the assets and
funds held by the United States in trust for federally recognized
Indian tribes and individual American Indians.
For over 100 years, the Department of the Interior has been charged
with the responsibility of managing a trust fund containing the
proceeds of leasing of oil, gas, land and mineral rights for the
benefit of Indian people. Today, that trust fund may owe as much as $10
billion to as many as 500,000 Indians.
To give some perspective, the 16 tribes of the Great Plains in
South Dakota, North Dakota, and Nebraska comprise 10 million acres of
trust lands representing over one-third of the trust accounts. Many
enrolled members of the nine South Dakota tribes have trust accounts.
How these trust funds have been, and will be managed is being
litigated in Cobell v. Norton, and the resolution of this lawsuit will
have far-reaching ramifications throughout Indian country. It is
impossible not to evaluate potential legislative responses in the
context of this lawsuit.
There is clear consensus in Indian country that the current
administration of the trust fund is a failure. The vexing question has
always been how to reform it.
Last fall, the Secretary of the Interior unveiled plans to
reorganize the Bureau of Indian Affairs [BIA] and segregate the
oversight and accounting of trust-related assets in a new Bureau of
Indian Trust Asset Management [BITAM]. In testimony before the U.S.
District Court, she acknowledged that, ``We undoubtedly do have some
missing data--and we are all going to have to find a way to deal with
the fact that some information no longer exists.''
The Secretary's controversial reorganization proposal was presented
to the court with minimal consultation with the tribes or individual
Indian account holders, not to mention Congress. In South Dakota,
tribal leaders communicated to Tim Johnson and me their concern that
the Secretary's solution appeared to be a fait accompli, conceived
without meaningful participation of the stakeholders most directly
affected by it. They felt strongly that this proposal should not be
implemented without further consultation with the tribes.
Earlier this year, in the face of Administration assurances that
its reorganization plan was not set in stone, the Interior Department
requested that $200 million from the BIA and $100 million from the
Office of the Special Trustee, be reprogrammed to ``a single
organization that will report to the Secretary through an Assistant
Secretary, Indian Trust.'' This contradiction set off red flags in
Congress, and a clear and direct message was sent to Secretary Norton
by Senators Inouye, Campbell, Byrd, Johnson, and others that no action
should be taken to implement her proposed reorganization plan
administratively.
Given these developments, Senators McCain, Johnson, and I felt that
Congress should be more assertive in forcing discussion of what role
Congress might play in ensuring that tribes and individual Indian
account holders have a voice in shaping trust reform policy. It is our
hope that this bill will stimulate better dialog among the Congress,
the Department of the Interior, and Indian country on this problem.
With that goal in mind, the Indian Trust Asset and Trust Fund
Management Reform Act was reviewed by representatives of the Great
Plains tribes at a meeting in Rapid City in April. Mike Jandreau,
chairman of the Lower Brule Sioux Tribe, has been an effective advocate
and champion of trust reform, not only for his tribe, but for all
Indian people. Mike and Tom Ranfranz, chairman of the Flandreau-Santee
Sioux Tribe and president of the Great Plains Tribal Chairmen's
Association, led a very productive working session with tribal leaders
from South Dakota, North Dakota, Nebraska, Montana, and Wyoming that
both raised awareness of the stakes of this issue and built support for
the McCain/Johnson bill.
I commend the willingness of tribal leaders to be a part of a
public process that will hopefully will not stop until Indian country
feels comfortable with a final trust reform product. The McCain-
Johnson-Daschle bill is intended to be a starting point for promoting
greater understanding of what needs to occur to achieve meaningful
trust reform and for focusing attention on concrete solutions to the
problem.
At this point, I would like to share with my colleagues some
initial observations on this proposal that were raised by participating
South Dakota treaty tribes and tribes of the Great Plains and Rocky
Mountain regions. These comments demonstrate how thoughtfully Indian
leaders are approaching the trust problem, and I encourage the
committee to consider their suggestions as it addresses the trust
reform challenge.
The following issues are of great importance to the Great Plains
Tribal Chairman's Association:
Providing the Deputy Secretary with sufficient authority to ensure
that reform of the administration of trust assets is permanent; They do
not believe the bill at present gives the Deputy Secretary the full and
unified authority needed;
Including cultural resources as a trust asset for management
purposes;
Incorporating the Office of Surface Mining and Bureau of
Reclamation and other related agencies within the Department of the
Interior and the Federal Government under the purview of the Deputy
Secretary;
Assuring that the legislation not infringe on tribal sovereignty by
interfering with tribal involvement in the management of individual
trust assets or tribal assets, or both;
Maintaining the Bureau of Indian Affairs's role as an advocate for
tribe;
Providing in law that Bureau of Indian Affairs funds not be used to
fund the Deputy Secretary appointed by the legislation;
Stressing the importance of appropriating adequate funding allow
reform to succeed;
Reflecting in the legislative history that much of the funding
needed for real trust reform be allocated at the local agency and
regional levels of the Bureau of Indian Affairs;
Since bill introduction in April, revelations of corporate
mismanagement and its consequences for the pensions of individual
American workers have sent shockwaves through the country. Lawmakers,
economists and academics, appalled by the Enron and MCI/WorldCom
experiences, have called for swift and decisive action to strengthen
corporate accounting practices and protect employee pension accounts.
And Congress has responded. Earlier today, in the East Room of the
White House, with great fanfare surrounded by congressional leaders,
President Bush signed corporate accountability legislation.
Unknown to many of these lawmakers, economists and academics, a
similar injustice is occurring out of the public spotlight to many
American Indians. And the responsible party is not corporate
management, but rather the Federal Government.
The issues of trust reform and reorganization within the BIA are
nothing new to members of the committee, or to Indian country.
Collectively, we have endured many efforts--some well intentioned and
some clearly not--to fix, reform, adjust, improve, streamline,
downsize, and even terminate the Bureau of Indian Affairs and its trust
activities.
These efforts have been pursued in both Republican and Democratic
administrations. Unfortunately, they have rarely sought meaningful
involvement from tribal leadership, or recognized the Federal
Government's treaty obligation to tribes.
Both meaningful consultation and acceptance of tribal status are
essential if we expect to find a workable solution to the very real
problem of trust management. The bill Senators McCain, Johnson, and I
have introduced reflects this conviction.
There is no more important challenge facing the tribes and their
representatives in Congress than that of restoring accountability and
efficiency to trust management. And nowhere do the bedrock principles
of self-determination and tribal sovereignty come more into play than
in the management and distribution of trust funds and assets.
This measure recognizes that the only effective long-term solution
to the trust problem must be based on government-to-government dialog.
I am hopeful the discussion the Indian Trust Asset and Trust Fund
Management Reform Act generates today will not only provide the
catalyst for meaningful tribal involvement in the search for solutions,
but also form the basis for true trust reform. I look forward to
participating with tribal leaders in pursuit of this important
objective.
Thank you.
______
Prepared Statement of Hon. Tim Johnson, U.S. Senator from South Dakota
Chairman, Inouye, Vice Chairman Campbell, and members of the
committee, thank you for holding this hearing. Also, thank you,
Chairman Inouye, for your leadership on this issue. First, I'd like to
welcome all the tribal leaders who have traveled to Washington, DC to
address this committee on these important issues of trust reform. I'd
like to especially thank Chairman Jandreau of the Lower Brule Sioux
Tribe for giving his insights into this critical issue. Chairman
Jandreau is from my home State of South Dakota and has served the
Department of the Interior's Trust Fund Reform Task Force. Mike is the
longest serving tribal chairman in South Dakota. As always, Mike has
risen to the occasion and offered outstanding leadership, this time on
the issue of trust reform.
I apologize for missing today's earlier hearing pertaining to the
Tribal/Interior Trust Fund Task Force's findings. I was unable to
listen to the testimony in person because as a senior member of the
banking committee and chairman of the financial institutions sub-
committee, I was pleased to serve on the accounting reform and
corporate responsibility conference committee. The President signed
that legislation into law today and I attended that signing. I find it
ironic, that fixing private sector corporate mismanagement was viewed
with such urgency, yet fixing public sector mismanagement of funds has
yet to be done.
As I've said again and again, the issue of trust fund mismanagement
is one of the most urgent problems we are faced with in Indian country.
It is also one of the most complex and difficult. But the time to act
is now. This has gone on for far too long. I hope that the Trust Fund
Task Force will soon put forth recommendations that the Congress can
take to heart, review, and act on. I look forward to reading the
testimony and the report issued by the Task Force and listening to the
testimony of the witnesses here today.
I've indicated previously that S. 2212 can be the vehicle for
implementing needed change. 1, along with my distinguished colleagues
Senator Daschle and Senator McCain, want this bill to be the starting
point. I look forward to working with other members of this committee,
the Department of the Interior, and the tribal leaders in reaching an
appropriate solution to this critical problem. I feel strongly that we
need to work at getting some resolution by the end of this Congress. I
hope today's hearing on S. 2212 and the testimony of our witnesses will
play a role in passing these important reforms. Thank you again for
holding this hearing today.
______
Prepared Statement of Hon. John McCain, U.S. Senator from Arizona
Mr. Chairman and Vice Chairman, I thank you for scheduling today's
hearing on S. 2212, legislation I sponsored along with Senators Daschle
and Johnson, in response to continuing problems plaguing the Interior
Department's management of Indian trust funds. I would also like to
thank the witnesses for appearing today and for their commitment to
work toward a meaningful legislative reform proposal.
As I stated upon introduction of this bill in April, the purpose of
this legislation is to serve as a ``place-holder'' bill that can be
modified or expanded as the dialog to consider reform alternatives
ensued between the Interior Department, the Tribal Task Force and the
Congress. I, as well as Senators Daschle and Johnson, thought it
critically important to voice the concerns of the Congress in this
process and to stand ready with a legislative remedy. I don't think
there can be any doubt that a legislative remedy is required.
S. 2212 focuses on two primary changes to the 1994 American Indian
Trust Fund Management Reform Act, the underlying law governing Indian
trust funds management. First, it creates a single line-of-authority in
the Interior Department by establishing a Deputy Secretary for Trust
Management and Reform; and second, the bill strengthens provisions for
Indian tribes and beneficiaries to directly manage or comanage with the
Interior Secretary trust funds and assets, based on successful self-
determination policies.
Obviously, this legislation does not address every issue or problem
inherent in trust funds or trust assets management, but it deals with
two of the primary issues that are important to true reform--a single,
high-level policy official responsible for oversight of trust funds and
assets management and, authorizing the Secretary to contract with
Indian tribes to directly manage trust funds or assets themselves
through self-governance laws--concepts embraced by tribes, the Congress
and eight presidents of both parties for more than three decades.
I, along with Senators Daschle and Johnson, recognize that S. 2212
as currently drafted, can and should be modified--it was certainly our
intention to be open to proposed changes based on the recommendations
of the Tribal Task Force and others. As the discussions between the
Task Force and the Department have matured, it has become clear that
this legislation responds in a very appropriate way to the structural
and policy changes needed in the Interior Department's management of
trust funds. The changes that need to be made in the bill can now be
made rather quickly and should enable us to move the bill prior to
adjournment of the 107th Congress.
Some of the major policy recommendations of the Task Force,
including establishment of an independent trust commission and
development of fiduciary standards, obviously require additional
deliberation, as stated by the Tribal Task Force cochairs in the
hearing earlier this morning. While most generally agree that
independent oversight is necessary, including myself, the best way to
structure that oversight is still open to considerable debate. If such
a proposal can be readied for enactment this year, I will do everything
in my power to support that action.
However, I do not believe we should hold back on modifications to
S. 2212. It is clear to even the most casual of observers that change
in the underlying law is needed and it is needed now. We have been
through countless hearings, GAO investigations, and court battles on
this matter. Further delay in the changes we know we can make now will
only continue the long and sorry history of mismanagement.
In recent days the Federal courts have found it necessary to accept
an even larger role in dealing with the consequences of mismanagement
by the Department and Congressional inaction. In the absence of
congressional action this year, the Courts will become increasingly
more involved and exercise more authority in areas entrusted to the
Congress under the Constitution.
The bottomline is, the status quo is unacceptable. S. 2212 provides
significant reform and a framework for the tribes, the Department and
the Congress to continue to work toward a full solution to the problems
involved in the management of Indian trust funds and assets. S. 2212
embodies a structural reform proposal that can be modified and enacted
this year. I, along with Senators Daschle and Johnson, stand ready to
work with you to make it happen.
______
Prepared Statement of Clifford Marshall, Chairman, Hoopa Valley Tribe
of California
I am Clifford Marshall, chairman of the Hoopa Valley Tribe. I
appreciate the opportunity to submit my testimony for the Senate
Committee on Indian Affairs hearing record regarding the trust reform
and related matters. Because trust reform will effect the ability of
tribes to develop stable governments for the next several decades, I
urge the committee to take the necessary time to assess the impacts on
Indian country before moving forward with proposals that are based on
vague short term concepts rather than addressing longstanding problems.
There have been two forms of trust reform that have been underway
for the past several years, one initiated by tribes and the other by
the Federal Government. These are two very different approaches. The
tribal approach focuses on Indian country, while the Federal approach
has been one focused on inside the Beltway using consulting firms that
have little experience in Federal Indian trust and tribal government
matters.
Regarding tribal efforts, tribes have been involved in various
forms of trust reform activities since the first treaty was entered
into and the trust relationship was established. At least part of the
tribal trust reform efforts have been designed to address problems
associated with the underfunded BIA Indian programs. For example,
comparisons between the budgets of Indian programs to those for
federally owned lands and resources demonstrate that Indian forest
programs receive only 35 percent of the funds appropriated for
management of the United States' own lands and that Indian roads
maintenance programs only receive 30 percent of Indian road maintenance
needs. It was this type of underfunding, coupled with the lack of local
tribal control over management of reservation affairs, that led to the
development of such laws as the Indian Self-Determination and Tribal
Self-Governance Acts.
Information that was submitted to the Task Force by the tribe
demonstrates that tribal and individual Indian beneficiaries, as well
as the United States, receive a benefit of $3 of non-BIA funds for
every $1 of BIA compacted/contracted funds as a direct result of the
tribal efforts in furthering tribal trust reform activities (SEE
ATTACHMENT). Clearly, this information indicates that the Tribal Self-
Determination and Self-Governance initiatives are very beneficial to
the goals of reforming Indian trust programs.
Regarding Federal trust reform efforts, it has been both
frustrating and costly for tribal governments over the past few years
to chase around Indian country the most recent recommendations of
consulting firms who've been awarded multi-million dollar contracts by
DOI. It certainly is very revealing of the Federal efforts to have
spent over $760 million thus far, but we have yet to find meaningful
solutions and many of the consultant proposals have been universally
rejected by the tribes. Unfortunately, the most recent Federal trust
reform efforts have focused almost entirely on restructuring or
eliminating the BIA's trust management functions without spending any
time to analyze whether the new organization will simply fall into the
same old problems that brought us to where we are today.
DOI officials say that status quo of the BIA is unacceptable, and
restructuring is necessary if trust reform is to be successful,
including ``realignment'' of the lower levels of the BIA. (Task Force
Report, p. 27). This proposed realignment initiative includes the
probability of segregating trust asset management functions and budgets
from the BIA Regional, Agency and Sub-agency offices for transfer to a
trust service centers. While there has been discussion about the local
BIA Regional and Agency offices ``contracting'' with the trust service
center to maintain local trust asset management functions, it is more
likely that these functions will be permanently removed from the local
offices since the budgets will no longer be available to support them.
The American Indian Trust Funds Management Reform Act of 1994
(Reform Act) established the Special Trustee for American Indians and
gave that position a significant amount of control over trust reform
efforts. Despite the fact that Office of Special Trustee (OST) was
supposed to only provide an oversight function--not a program
implementation function, Congress began appropriating substantial
amounts of funds for the OST budget. OST then assumed control over the
BIA Office of Trust Funds Management, then assumed control of the
historic accounting functions, most recently appraisals, and probates
are expected to follow. Today, OST has stopped being the oversight
function as originally contemplated in the Reform Act and has now
become part of the problem. In effect, OST is now what the BIA was 12
years ago--and the problems continue to escalate and few are being
resolved. For example, it was the failures of the OST's Office of Trust
Funds Management system that resulted in the complete shut-down of the
DOI computer systems that were connected to the OTFM systems. In
effect, the DOI computer systems had to be disconnected because proper
safeguards were not incorporated in the OTFM systems that would prevent
outsiders from improperly accessing trust information. Clearly, OST has
now become a major part of the problem that must be fixed if trust
reform is ever to be successfully implemented.
Congress mandated in the Reform Act that a comprehensive plan be
developed, in consultation with tribes, and submitted to the House
Resources and Senate Indian Committees for review. To complete the
framework for trust reform, the Reform Act also contains a mandate that
the Special Trustee certify in writing the adequacy of the trust reform
budgets. of the BIA, BLM, and MMS. Unfortunately, neither of these,
statutory requirements has been complied with. I believe that the
present state of the Federal trust reform is in the state of chaos that
we see today largely because of these critical failures by OST in
complying with these legal mandates.
To address trust asset management, DOI has proposed to fragment
Indian services into two or more agencies. If one fully implemented
these proposals, Indian country would become the only place in the
Nation where a tribe or individual Indian will be required to go to
multiple agencies just to get permission to start businesses, create
employment, implement welfare reform programs, build roads, have
adequate housing fight fires, use resources and lands, and so on.,
Despite the fact that Indian people today are more regulated than any
other group around the Nation, separating BIA functions into multiple
organizations will require a substantial amount of new funds just to
maintain the same level of services that are being provided today.
Indian services will be reduced in favor of paying for more Federal
bureaucracy. Unfortunately for tribes, none of the proposals analyzes
what impacts will occur to the regional and agency offices where 95
percent of the services in Indian country are provided.
Based on an analysis of BITAM submitted earlier by the tribe, any
option that separates the BIA functions into multiple organizations
will cost at least $10 million of new or reprogrammed funds just to
hire additional supervisors, assuming that the same level of BIA
employees will be maintained. Additional funds will likely be necessary
once the new organization determines what service it will provide to
tribes and individual Indians. With respect to contracting and
compacting with tribes, there will likely need to be amendments to
various Federal statutes, including the Indian Self-Determination and
Self-Governance Act, to provide for mandatory contracting/compacting
requirements for any new non-BIA organization.
Restructuring of the any Federal agency must be done in accordance
with pre-determined plans, with identified and measurable goals and
specific timeframes, none of which presently exist for restructuring
Indian affairs today. Restructuring for the sake of restructuring is
typically not the best use of limited resources, funds or time. Quite
simply, changing employee name tags and agency addresses will not fix
trust problems. Over three-quarters of a billion dollars have been
spent by Federal officials and numerous consultants in the name of
trust reform and little benefits have been demonstrated from the
results. Yet tribes continue to struggle with underfunded programs,
largely because of the unwillingness of Federal officials to provide
funding and resources at the local tribal government levels, where
clear progress is being made as tribes have consistently corrected
problems and brought stability to local trust services under the Self-
Determination and Self-Governance Acts. It seems clear that the Federal
Government has simply been investing in the wrong solutions.
With respect to the DOI consultation process for the Task Force
report, we are concerned that the process is not proceeding in a manner
that will provide meaningful input from tribes and individual Indians
regarding trust reform activities. Quite simply, DOI cannot expect that
having just over 30 days for review and comment on such a major effort
provides any level of reasonable consultation with tribes across the
Nation, even if the Task Force report were to be expanded to include
sufficient information with which to make an independent assessment of
the Task Force's recommendations. It has also been explained that the
EDS contract is supposed to provide additional substantive information
regarding how the options will impact the local levels of the BIA.
Further, no explanation has been provided to reconcile the fact that
the Task Force's report to the Secretary will be submitted in July
while the EDS analysis won't be completed until December.
Trust Reform Budget Requests. The tribe does not believe that DOI
has given fair consideration of budget needs to implement trust reform
measures. Past needs-based budgets submitted to tribes during national
budget meetings indicate that there is a need of approximately $7.0
billion to adequately fulfill the trust obligations to tribes and
individual Indians, as compared to the existing BIA budget of
approximately $2.2 billion. Instead of dedicating more limited funds
and resources toward reorganization of the BIA, the Hoopa Valley Tribe
believes that DOI must aggressively work toward securing adequate funds
and resources to implement the Federal trust obligations to tribes and
individual Indians. Without both adequate funds and commitment to
engage tribes into every phase of the trust reform efforts, no trust
reform plan can be successfully implemented.
With respect to S. 2212, the tribe strongly believes that there
must be a legislative solution to trust reform problems if they are
ever going to be resolved. Quite simply, there is presently
insufficient legal guidance and authority to address the trust
management issues that we are confronted with today. S. 2212 provides a
sound beginning point for the legislative package.
Our comments on S. 2212 are as follows:
No. 1. We agree with S. 2212 that the BIA structure must be kept in
tact. Besides not having the time or funds to construct a new Indian
agency, the exercise of separating trust functions between resource
management and other trust services will undoubtedly become an
insurmountable task. The Hoopa Valley Tribe opposes DOI proposals that
fragment the BIA into two or more agencies because we believe that it
will ultimately lead to the destruction of Indian services and
diminishment of trust responsibilities owed to tribes and individual
Indians by the United States.
No. 2. We disagree with section 307 of the bill that there is a
need for a new Deputy Secretary for Trust Management and Reform. We
believe that the bill correctly defines the trust duties for trust
asset management and that the existing Assistant Secretary for Indian
Affairs can appropriately address trust reform issues provided that the
necessary funding and resources are made available to the BIA.
No. 3. We wholeheartedly agree with the provision contained in the
bill that provides for the development of resource management plans. We
believe that this is one of the key cornerstones to ultimately
resolving the differences between tribes, individual Indians and the
United States with respect to management of trust lands and resources.
Again, adequate funding must be made available to accomplish this goal
and adequate flexibility must be provided to tribes and individual
Indians to contract for the development of the plans.
No. 4. We recommend that a provision be added to the bill that will
facilitate the development and submission of adequate budgets necessary
to properly manage trust assets and to fulfill the trust
responsibilities of the United States to tribes and individual Indians.
We suggest that language be included that mandates that the annual BIA
Unmet Needs budget be reviewed so that annual budgets provide a
reasonable method of increasing the funding levels of the BIA on a
regular basis to meet the unmet needs.
No. 5. We recommend that a section be added that would establish a
new Division of Indian Claims within the DOI Office of Hearings and
Appeals. Throughout the years of tribal deliberations regarding trust
reform, tribes have expressed frustration from not having access to
information that is controlled by the United States that would help to
facilitate the development of claims, in order to resolve these claims
through mediation, negotiation, litigation or legislation.
No. 6. We recommend that provisions be added to the bill that would
facilitate resolution of the breaches of trust that have been
identified by the Cobell Court.
______
Prepared Statement of Neal McCaleb, Assistant Secretary for Indian
Affairs, Department of the Interior, Washington, DC
Mr. Chairman and members of the committee, I am here today to
provide to the committee the Administration's position on S. 2212, the
proposed `` Indian Trust Asset and Trust Fund Management and Reform Act
of 2002'' sponsored by Senators McCain, Johnson, and Daschle.
The Administration is strongly opposed to the enactment of S. 2212,
and recommends instead that the recommendations of the Joint Department
of the Interior/Tribal Leaders Task Force on Trust Reform be enacted,
where there has been agreement. While well intentioned, S. 2212 does
not reflect the consensus of the Tribal Task Force.
In the remarks Senator McCain made when the bill was introduced, he
stated that Congress should give careful consideration to the
recommendations of the Task Force. The Department learned a valuable
lesson last year when it proposed the formation of a new Bureau of
Indian Trust Asset Management prior to consulting with the tribes. This
proposal was soundly rejected by tribal leaders. They were particularly
concerned that the Department and the tribes had not sat down together
to discuss the concept before it was proposed.
Similarly, S. 2212 was introduced in the Congress without any
discussions or review by the Department of the Interior or the broader
tribal community. The provisions of S. 2212 are at odds with the work
of the Task Force. Enactment of these provisions after the Department
and tribal leaders have met at multi-day meetings in seven different
locations over the past 7 months would seriously undermine the
consultation process and the work of the Task Force.
The Administration is strongly opposed to creating another Deputy
Secretary position within the Department of the Interior. No other
Department within the executive branch has more than one Deputy, or a
Deputy with a particular mission other than the overall responsibility
of the Secretary. We have reached agreement within the Task Force to
recommend the creation of an Under Secretary for Indian Affairs who
would be appointed by the President and confirmed by the Senate, the
creation of a new Office of Self-Governance and Self-Determination that
reports directly to the Under Secretary, and the creation of a Director
for Trust Accountability.
The Under Secretary would have direct line authority over all
aspects of Indian affairs within the Department. This 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. This
reorganization will require narrowly tailored legislation. We would be
happy to provide to the committee draft legislative language that
embodies the duties agreed upon by the Department and the Tribal
Leaders on the Task Force.
We also object to the creation of an Office of Trust Implementation
and Oversight. This is not the model we have developed in our
consultation with the tribes through the Task Force. Also, we do not
believe that the proposed 10-year Indian Trust Fund and Trust Asset
Management and Monitoring Plans authorized by the bill will meet their
goal of assisting tribes in moving toward self-governance and self-
determination.
In addition, we have concerns with the list of duties of the Office
of Trust Reform Implementation and Oversight enumerated in section
2(b), which adds a new section 307 to the American Indian Trust Fund
Management Reform Act of 1994. Many of the duties in section 307(e)(3),
as currently drafted, are overbroad and imprecise, and serve only to
further confuse the issue of what obligations the trustee has. For
example, section 307(e)(3)(H) imposes the duty to ``ensure. . .the
greatest return on those funds and assets.'' The proposed language
arguably does not permit the Government to analyze the claimed
liquidity needs or to consider the compound interest needs of any
particular individual or tribal owner of trust funds before it invests
such funds. Additionally, the proposed language appears intended to
extend the Government's responsibility regarding trust asset management
beyond that established by Supreme Court precedent, with the potential
to affect ongoing litigation over the scope of the government's
fiduciary duties.
We also have concerns regarding the obligation to manage the funds
in accordance with all applicable tribal laws. This requirement carries
the possibility of altering the trust duties of the Secretary in
differing ways depending on which tribe's plan was involved, which
could make the Department's administration of its ``inconsistent
responsibilities'' practically very difficult and subject to litigation
risk.
For these reasons, we recommend that the committee put S. 2212
aside, and consider instead legislation that reflects the
recommendations of the Task Force. Those recommendations include
creation of the Under Secretary position mentioned above, creation of a
new Office of Self-Governance and Self-Determination that reports
directly to the Under Secretary, and creation of a Director for Trust
Accountability. The Task Force has also agreed on the concept of
creating an independent commission that would provide oversight on the
management of trust funds and other issues. Our work on that proposal
is not yet complete. We are hopeful that we will finalize the
commission proposal in August. We look forward to working with the
Committee on these provisions during the next few weeks.
This concludes my statement. I would be happy to answer any
questions the committee might have at this time.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]