[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




 
THE CURRENT REORGANIZATION OF TRUST MANAGEMENT AT THE BUREAU OF INDIAN 
             AFFAIRS AND THE OFFICE OF THE SPECIAL TRUSTEE

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

                           OVERSIGHT HEARING

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                        Wednesday, May 12, 2004

                               __________

                           Serial No. 108-94

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
W.J. ``Billy'' Tauzin, Louisiana     Eni F.H. Faleomavaega, American 
Jim Saxton, New Jersey                   Samoa
Elton Gallegly, California           Neil Abercrombie, Hawaii
John J. Duncan, Jr., Tennessee       Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland         Frank Pallone, Jr., New Jersey
Ken Calvert, California              Calvin M. Dooley, California
Scott McInnis, Colorado              Donna M. Christensen, Virgin 
Barbara Cubin, Wyoming                   Islands
George Radanovich, California        Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Jay Inslee, Washington
    Carolina                         Grace F. Napolitano, California
Chris Cannon, Utah                   Tom Udall, New Mexico
John E. Peterson, Pennsylvania       Mark Udall, Colorado
Jim Gibbons, Nevada,                 Anibal Acevedo-Vila, Puerto Rico
  Vice Chairman                      Brad Carson, Oklahoma
Mark E. Souder, Indiana              Raul M. Grijalva, Arizona
Greg Walden, Oregon                  Dennis A. Cardoza, California
Thomas G. Tancredo, Colorado         Madeleine Z. Bordallo, Guam
J.D. Hayworth, Arizona               George Miller, California
Tom Osborne, Nebraska                Edward J. Markey, Massachusetts
Jeff Flake, Arizona                  Ruben Hinojosa, Texas
Dennis R. Rehberg, Montana           Ciro D. Rodriguez, Texas
Rick Renzi, Arizona                  Joe Baca, California
Tom Cole, Oklahoma                   Betty McCollum, Minnesota
Stevan Pearce, New Mexico
Rob Bishop, Utah
Devin Nunes, California
Randy Neugebauer, Texas

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on Wednesday, May 12, 2004..........................     1

Statement of Members:
    Kildee, Hon. Dale, a Representative in Congress from the 
      State of Michigan, Prepared statement of...................    47
    Pallone, Hon. Frank, Jr., a Representative in Congress from 
      the State of New Jersey....................................     2
        Letter and response submitted for the record.............    29
    Pombo, Hon. Richard W., a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     2
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia, Prepared statement of..........    68

Statement of Witnesses:
    Benjamin, Melanie, Chief Executive, Mille Lacs Band of 
      Ojibwe, `Minnesota.........................................    61
        Prepared statement of....................................    64
    Frazier, Harold, Chairman, Great Plains Tribal Chairman's 
      Association................................................    48
        Prepared statement of....................................    50
    George, Keller, President, United South and Eastern Tribes, 
      Inc........................................................    55
        Prepared statement of....................................    57
        Response to questions submitted for the record...........    60
    Gray, Jim, Principal Chief, Osage Tribe, Oklahoma............    51
        Prepared statement of....................................    53
    Martin, Aurene, Principal Deputy Assistant Secretary for 
      Indian Affairs, U.S. Department of the Interior............     4
        Joint prepared statement of..............................    14
        Response to questions submitted for the record by the 
          Bureau of Indian Affairs...............................    19
    Swimmer, Ross, Special Trustee for American Indians..........    22
        Joint prepared statement of..............................    14
        Response to questions submitted for the record by the 
          Office of the Special Trustee..........................    20


OVERSIGHT HEARING ON THE CURRENT REORGANIZATION OF TRUST MANAGEMENT AT 
  THE BUREAU OF INDIAN AFFAIRS AND THE OFFICE OF THE SPECIAL TRUSTEE.

                              ----------                              


                        Wednesday, May 12, 2004

                     U.S. House of Representatives

                         Committee on Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to notice, at 10:04 a.m., in 
Room 1324, Longworth House Office Building, Hon. Richard W. 
Pombo [Chairman of the Committee] presiding.
    Present: Representatives Pombo, Hayworth, Osborne, Renzi, 
Pearce, Pallone, Christensen, Kind, Inslee, Tom Udall and Mark 
Udall.

    STATEMENT OF HON. RICHARD W. POMBO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    The Chairman. The Committee on Resources will come to 
order. The Committee is meeting today to hear testimony on the 
current reorganization or trust management at the Bureau of 
Indian Affairs and the Office of the Special Trustee for 
American Indians.
    Under Rule 4(g) of the Committee Rules, any oral opening 
statements at hearings are limited to the Chairman and the 
Ranking Minority Member. This will allow us to hear from our 
witnesses sooner and help Members keep their schedules. 
Therefore, if other Members have statements, they can be 
included in the hearing record under unanimous consent.
    The purpose of today's hearing is to give members of this 
Committee an opportunity to examine a major reorganization that 
is underway at the Bureau of Indian Affairs and the Office of 
Special Trustee for American Indians. This reorganization is 
intended to implement a comprehensive approach for reforming 
and improving trust management on behalf of individual Indians 
and tribes.
    The significance of the reorganization cannot be 
understated. It affects the ability of the Federal Government 
to manage its fiduciary trust responsibilities to Indians. One 
of the most far-reaching lawsuits against the Federal 
Government over the last decade is one with which we are all 
familiar, the Cobell Indian Trust Fund case. No one will 
disagree that reforming and improving trust management in the 
Department is a necessary part of resolving the Indian trust 
fund problems.
    Reforming the Department's management of its trust duties 
is not only necessary to prevent another Cobell lawsuit, but to 
improve the lives of Indians. It is needed to promote more 
self-governance by the tribes, self-governance which can lead 
to economic development and economic freedom.
    Is the current reorganization launched by Secretary Norton 
the right approach? I think no one disputes the need for the 
Department to develop a comprehensive approach to trust 
management that is in line with the 21st Century standards and 
expectations. But having met with a number of tribal leaders on 
this matter, I think it is safe to say that in Indian country, 
there are strong concerns with the Secretary's plan and many 
Members here need to evaluate this plan in depth.
    I hope the witnesses from the Administration will provide 
Members with an overview of what started the reorganization, 
its current status, how it has attempted to consult with the 
tribes, and what expectations of success are. The Committee 
will then turn to several leaders in Indian country to share 
their perspectives with the reorganization and what must be 
done to improve it.
    I would like to now recognize Mr. Pallone for an opening 
statement.
    [The prepared statement of Mr. Pombo follows:]

          Statement of The Honorable Richard Pombo, Chairman, 
                         Committee on Resources

    The purpose of today's hearing is to give Members of this Committee 
an opportunity to examine a major reorganization that is underway at 
the Bureau of Indian Affairs and the Office of the Special Trustee for 
American Indians. This reorganization is intended to implement a 
comprehensive approach for reforming and improving trust management on 
behalf of individual Indians and tribes.
    The significance of the reorganization cannot be understated. It 
affects the ability of the federal government to manage its fiduciary 
trust responsibilities to Indians. One of the most far-reaching 
lawsuits against the federal government over the last decade is one 
with which we are all familiar: the Cobell Indian Trust Fund case. No 
one will disagree that reforming and improving trust management in the 
Department is a necessary part of resolving the Indian trust fund 
problems.
    Reforming the Department's management of its trust duties is not 
only necessary to prevent another Cobell lawsuit, but to improve the 
lives of Indians. It is needed to promote more self-governance by 
tribes, self-governance which can lead to economic development and 
economic freedom.
    Is the current reorganization launched by Secretary Norton the 
right approach? I think no one disputes the need for the Department to 
develop a comprehensive approach to trust management that is in line 
with 21st-century standards and expectations. But having met with a 
number of tribal leaders on this matter, I think it is safe to say that 
in Indian Country there are strong concerns with the Secretary's Plan, 
and many Members here need to evaluate this plan in depth.
    I hope the witnesses from the Administration will provide Members 
with an overview of what started the reorganization, its current 
status, how its has attempted to consult with the tribes, and what its 
expectations of success are. The Committee will then turn to several 
leaders in Indian Country to share their perspectives with the 
reorganization and what must be done to improve it.
                                 ______
                                 

 STATEMENT OF HON. FRANK PALLONE, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman. I didn't realize I 
would be giving an opening statement, but I would be glad to 
oblige in the sense that I think it needs to be said that I 
personally, and I know many of the members of the Native 
American Caucus and on this Committee are very, I would say, 
insulted by what the BIA and the Department have done in terms 
of the way they have handled the whole issue of trust reform, 
and I don't use the word insulted loosely and I don't mean it 
in a partisan way at all, because I don't think there is 
anything partisan about this.
    The problem that I see from the very beginning is that I 
felt that the issue of trust reform should have been primarily 
handled in total consultation with the tribes and that even 
though the BIA and the Department claim that they had meetings 
and hearings, and I heard Secretary Norton endlessly tell this 
Committee about all the forums that she has had, there was 
never really any serious consultation or any effort certainly 
to come to a consensus with the tribes on how to deal with 
trust reform.
    Given that there was a suit out there, the Cobell suit, and 
clearly the tribes and the national organizations that 
represent the tribes were not comfortable or didn't feel that 
they were having any say in terms of what the BIA is doing, I 
could never figure out why the BIA continued to proceed and 
every other year come up with a new way of reforming the system 
at the same time that Congress, certainly this Committee, which 
was never consulted, and the tribes and the courts were all 
saying that they shouldn't proceed in this fashion.
    It continues unabated. I mean, obviously, every year, you 
come before, and I am not saying you personally to the panel, 
but every year, the BIA and the Interior Department put in a 
budget, massive amounts of money to continue with a 
reorganization plan that takes money from other important 
concerns, whether it be education, housing, health care, and 
says, of course, now that they are negotiating and they are 
trying to work with the Cobell plaintiffs and the tribes to 
come up with a consensus. Meanwhile, every effort was made 
behind the scenes, and we were told that it wasn't true but we 
know that it was based on testimony before the Committee, that 
the Department was going to the appropriators or individual 
Members of Congress to try to get them to move legislation or 
reprogram money that would thwart the Cobell plaintiffs and 
what the tribes and this Committee wanted to do with trust 
reform.
    I have to admire your persistence in the sense that you 
paid no attention to this Committee or really to the tribes or 
to the courts, but I do think it is wrong and you are going to 
have a hard time convincing me that you should be proceeding at 
all with this. I frankly think there should be a total 
moratorium on the BIA and the Department proceeding with any 
trust reform until these negotiations with the Cobell 
plaintiffs and the tribes are resolved, and I think it is very 
wrong for you to continue with it, to take funding away from 
other issues that are important to Indian country.
    But most of all, Mr. Chairman, I go back to what I said 
before, which I think it is highly insulting for this process 
to continue without this Committee being informed about what 
you are doing, how you are doing it, and who is paying for it.
    So I do want to thank the Chairman for having this hearing 
today because I think this is very important, that they be 
brought here before this Committee and asked some serious 
questions about what they are doing. And so again, I want to 
thank the Chairman and I believe that we are acting in a 
bipartisan basis. This isn't Democrats versus Republicans. 
Thank you.
    The Chairman. Thank you.
    I would now like to introduce our first panel of witnesses, 
Aurene Martin and Ross Swimmer. Ms. Martin is the Principal 
Deputy Assistant Secretary for Indian Affairs and Mr. Swimmer 
is the Special Trustee for American Indians. Mr. Swimmer is 
accompanied by Mr. Henry Ware, the Fiduciary Trust Officer for 
the Concho Agency in Oklahoma.
    I would like to take this time to remind all today's 
witnesses that under our Committee Rules, oral statements are 
limited to 5 minutes. Your entire written testimony will appear 
in the record.
    If I could have our witnesses stand and raise their right 
hand.
    Do you solemnly swear or affirm under the penalty of 
perjury that the statements made and responses given will be 
the whole truth and nothing but the truth, so help you, God?
    Ms. Martin. I do.
    Mr. Swimmer. I do.
    Mr. Ware. I do.
    The Chairman. Let the record show they all answered in the 
affirmative.
    Thank you very much. Welcome back to the Committee. I think 
we are all very interested in the subject of today's hearing. 
It is something that we all have heard a lot about and to take 
this opportunity to hear from these panels here today, I think 
will be very informative for the Committee.
    So Ms. Martin, we are going to begin with you, and if you 
are ready, you can begin.

    STATEMENT OF AURENE MARTIN, PRINCIPAL DEPUTY ASSISTANT 
SECRETARY FOR INDIAN AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR; 
    AND ROSS SWIMMER, SPECIAL TRUSTEE FOR AMERICAN INDIANS; 
  ACCOMPANIED BY HENRY WARE, FIDUCIARY TRUST OFFICER, CONCHO 
                        AGENCY, OKLAHOMA

                   STATEMENT OF AURENE MARTIN

    Ms. Martin. Thank you, Mr. Chairman. Good morning, and 
members of the Committee. I would like to thank you first for 
the opportunity to appear today to discuss the Department of 
Interior's realignment of trust functions.
    As discussed by Congressman Pallone, this realignment has a 
lengthy and detailed history. We have undertaken tremendous 
efforts to try to work with tribes in coming to an agreement 
with regard to the realignment, but ultimately we were not able 
to and we did move forward with a realignment, trying to 
incorporate as many of the concerns the tribes had as possible.
    What I want to discuss today are the details of the 
realignment and the highlights of the realignment at the Bureau 
of Indian Affairs. We have provided Committee staff with 
several materials and I would just like to go through them for 
you because I will be referring to them throughout my comments.
    First of all, you have a color handout which is the new 
structure of the Bureau of Indian Affairs. It is the 8.5 by 14 
inch document.
    [The handout submitted by Ms. Martin follows:]

    [GRAPHIC] [TIFF OMITTED] T3632.001
    

    Ms. Martin. And then you also have a handout which has on 
the very top page where the locations of the trust officers for 
the Office of Special Trustee will be located, along with some 
organizational charts at the region and agency levels.
    [The information submitted by Ms. Martin follows:]

    [GRAPHIC] [TIFF OMITTED] T3632.002
    
    [GRAPHIC] [TIFF OMITTED] T3632.003
    
    [GRAPHIC] [TIFF OMITTED] T3632.004
    
    [GRAPHIC] [TIFF OMITTED] T3632.005
    
    [GRAPHIC] [TIFF OMITTED] T3632.006
    
    [GRAPHIC] [TIFF OMITTED] T3632.007
    

    Since establishment of OST, many of the functions that 
served OST offices and directed trust reform efforts evolved 
within OTFM. These functions--training, policies and 
procedures, information technology and records--were 
reorganized into their oven offices. OTFM was also divided 
between Field Operations staff and Trust Services staff to 
provide for a separation of duties and more dedicated service 
to fiduciary trust beneficiaries. The additional staff within 
the reorganization were Regional Fiduciary Trust Administrators 
and Fiduciary Trust Officers.

[GRAPHIC] [TIFF OMITTED] T3632.008

[GRAPHIC] [TIFF OMITTED] T3632.009


    Ms. Martin. In designing the realignment, the Department 
sought to achieve two goals, and these two goals were developed 
both prior to the discussions with tribal leaders and after as 
a result of discussions with tribal leaders. The first was the 
improvement of trust asset management at the Department and the 
second was, after discussing with tribal leaders through the 
task force discussions, their concerns with overall BIA 
management. So the second goal was to improve BIA management, 
as well.
    In order to improve overall trust management, we wanted to 
make sure that trust employees were able to focus on their work 
and trust services. In the past, throughout the BIA, individual 
employees had a tendency to assume duties that were outside of 
their scope of authority. That is, we would oftentimes have 
people who were responsible for working on trust matters, like 
forestry or other resource management issues, end up having to 
assume other job responsibilities, collateral duties, when 
there wasn't staff available to do that, things like 
administrative duties, answering the phone or assuming IT 
responsibilities. One of the things we wanted to do in doing 
the realignment was ensure that trust employees do trust work.
    We also wanted to make sure that there was focus on serving 
the beneficiary, be it tribal or individual. In the past, 
beneficiaries have had problems getting information about their 
accounts, about their assets, exactly what those were, and they 
have been having trouble getting that information on a timely 
basis and we wanted to concentrate on improving those services.
    We also wanted to improve the accountability of individual 
employees and the larger organization itself through better 
training and ongoing monitoring and review of performance. In 
going through our workforce planning efforts and our review of 
our human resources processes, we learned that we simply don't 
have the resources to train employees, nor have we established 
a consistent way of reviewing job performance.
    We felt also that it was important to keep decisions at the 
local level whenever possible and to look at ways--over the 
past several years, we have had a tendency to shift 
decisionmaking at the central office level and we wanted to 
look at ways to push some of those decisionmaking processes 
back out to the regions where they have the best expertise 
possible to make those decisions.
    The other goal of realignment was to improve the management 
of Indian affairs itself by consolidating support functions, 
making programs more consistent across the board, and providing 
effective management controls.
    Prior to the realignment, the Director of the Bureau of 
Indian Affairs, who was formerly known as the Deputy 
Commissioner, had 22 people who reported directly to him. As a 
result, he spent a lot of time managing personnel when he 
should have been dealing with policy issues.
    The BIA and the Office of the Assistant Secretary also had 
responsibilities that overlapped. That is, we would deal with 
an issue at the BIA and then it would be brought up to central 
office for the Assistant Secretary to deal with. We wanted to 
take care of some of those problems.
    We also had and continue to have two programmatic 
structures within Indian Affairs, the Office of Indian 
Education Programs, which is responsible for 184 schools in 23 
States, and the Bureau of Indian Affairs, which was responsible 
for program issues with regard to the whole other range of 
issues we handle--social services, roads, trust services, law 
enforcement.
    The BIA provided services to both of those structures, that 
is, the Office of Indian Education Programs and BIA, and this 
included human resources, facilities management, budget 
execution, those types of things, accounting services. There 
were consistent complaints throughout our organization that the 
other organizations weren't being served. The Office of the 
Assistant Secretary would sometimes have problems and the 
Office of Indian Education in getting accounting work taken 
care of, something as simple as that. We wanted to improve 
delivery of those services, as well.
    So in looking at all of those things, we have made a number 
of changes. With regard to some of the specifics of those 
changes, I will just go through the chart that we have handed 
out, the color chart. I will start at the very top with the 
Office of the Assistant Secretary and the box that is labeled 
Assistant Secretary of Indian Affairs.
    There was historically a Deputy Assistant Secretary who was 
senior at the Department or at the Bureau of Indian Affairs and 
who handled duties of the Assistant Secretary when he was out. 
We formalized that position in the Principal Deputy Assistant 
Secretary for Indian Affairs. That is my position. That person 
serves as operational officer for Indian affairs and assumes 
the duties of the Assistant Secretary when he is not available.
    At the very left-hand side of the chart, you will see some 
orange boxes. We created a new position in the Office of the 
Assistant Secretary who is responsible, the Deputy Assistant 
Secretary for Policy and Economic Development, responsible for 
economic development policies and self-determination policies. 
That office has also assumed responsibility for the Office of 
Indian Gaming Management, which was previously located in the 
Bureau of Indian Affairs. The reason for that change was that 
that office mainly dealt with the Office of the Assistant 
Secretary in the past and didn't have Bureau of Indian Affairs 
operations within the Bureau. So it was simpler just to have it 
moved to where they did all of their work.
    The yellow boxes as you move toward the right are the 
responsibilities or oversight of the Principal Deputy Assistant 
Secretary. That is the Office of External Affairs, which 
combine the former Offices of Legislative Affairs and the 
Office of Public Affairs. That is just combined into one office 
now. The Principal Deputy Assistant Secretary also assumed 
responsibility for the Office of Federal Acknowledgment, which 
was previously known as the Bureau of Acknowledgment and 
Research. That also was located previously in the Bureau of 
Indian Affairs and was moved up because their interaction was 
mainly with the Assistant Secretary's office, as well.
    New lines of authority were created--if you look at the 
green boxes, moving to the right--for management services. 
These are the services that are provided both to the BIA, to 
the Office of the Assistant Secretary, and to the Office of 
Indian Education Programs. These are the accounting, the human 
resources services I referred to earlier.
    And then finally at the Assistant Secretary's level, there 
was created a Deputy Assistant Secretary for Information 
Resources Management. This was highlighted because of the 
information technology problems that the Department, the Bureau 
of Indian Affairs specifically, has suffered in the past. We 
wanted to highlight those issues and make sure that there was a 
line of authority specifically responsible for dealing with IT 
issues.
    And then moving down, you will see that there are blue 
boxes. The blue boxes are all responsibilities within the 
Bureau of Indian Affairs. There were some changes made with 
regard to the Bureau of Indian Affairs. Their direct reports 
were reduced for the Director of the Bureau of Indian Affairs. 
Two new positions were created there, the Deputy Director of 
Field Operations, responsible for regional offices, and the 
Indian Land Consolidation Center, which is responsible for 
operating the Indian Land Consolidation program. That is the 
program responsible for purchasing fractionated interests.
    The rest of the boxes that you see are actually just 
extensions of the central office function and how they are 
organized in the field. So the light blue is at the regional 
level and the darker blue is at the agency level.
    We have--there has consistently been a criticism that this 
reorganization is very top heavy. I think the reason that there 
is some confusion about that is the chart that you see really 
focuses on the organization at the high level, but it is an 
organization which is replicated at both the regional and 
agency levels, and, in fact, at central office, there are only 
four new positions that have been created. The majority of all 
positions have actually been created out in the field at the 
regional and agency level. There are 12 new positions at the 
regions and I believe 47 positions out in the agency offices 
that are to deal with trusts.
    In speaking with some of the staff from the Committee, 
there was a concern about the detail that has been provided to 
the Committee in the past about the reorganization and that is 
why we submitted the organizational charts for the field and 
for the regional offices. I won't go into much detail. I just 
wanted to refer to a couple of items.
    We have placed Deputy Directors at the regional level and 
Deputy Superintendents at the agency level whose responsibility 
it is to oversee and personally handle trust issues at those 
levels. Those people are the officials responsible for 
coordinating with the Office of Special Trustee on those 
issues, for elevating issues of importance, or actually just 
personally resolving issues if they are not getting handled at 
the level that they are located, either at the agency or at the 
region.
    We have currently, up to now in 2004, hired four of our 
Deputy Superintendents at the agency level for trusts. We will 
be hiring 33 more persons this year. We expect to hire, as I 
said earlier, about 47 people at the agency level to handle 
trust duties. We expect to hire 12 at the regional level. We 
have six trust officers who are Deputy Regional Directors for 
Trust. I am sorry, we are hiring six more. We have a couple of 
openings at the central office. The Deputy Director for Field 
Operations is doing double-duty as Acting Director of the 
Bureau of Indian Affairs right now.
    That is the current status of the reorganization at the 
Department. We have largely completed the realignment 
organizationally. There are some tasks that we need to clean up 
within the Departmental manual with regard to law enforcement 
services and how that is organized, and also just some coding 
in our computer system to make sure that people continue to get 
paid.
    But we are largely completed with the reorganization and I 
would be happy to answer any questions if the Committee has 
any.
    The Chairman. Thank you.
    [The joint prepared statement of Ms. Martin and Mr. Swimmer 
follows:]

   Joint Statement of Ross O. Swimmer, Special Trustee for American 
   Indians, and Aurene Martin, Principal Deputy Assistant Secretary, 
            Indian Affairs, U.S. Department of the Interior

    Mr. Chairman and Members of the Committee, we are pleased to be 
here today to discuss the trust initiatives for the 21st Century of the 
Office of the Assistant Secretary--Indian Affairs, the Bureau of Indian 
Affairs (BIA), and the Office of the Special Trustee for American 
Indians (OST). The roadmap that guides the Department's trust 
initiatives for the 21st Century is the Comprehensive Trust Management 
Plan. The Comprehensive Trust Management Plan is being used to guide 
the design and implementation of the trust reform efforts. The first 
component of this plan was the alignment of trust functions within the 
Department.
    In January 2002, the Secretary of the Interior, through the Office 
of Indian Trust Transition (OITT), launched an effort to develop a 
comprehensive approach for improving Indian trust management. Working 
with the OST and BIA leadership, the OITT staff developed a set of 
goals, objectives, and tasks for reforming Indian trust management. 
This work was based upon statutes, regulations, guiding principles in 
the Departmental Manual, and reports prepared by an outside contractor.
    In May 2002, this effort was expanded and a DOI-wide strategic 
planning team was created that included representatives from national 
and regional offices of the OST, BIA, Minerals Management Service 
(MMS), and Bureau of Land Management (BLM). From May 2002 through 
December 2002, the DOI strategic planning team met regularly to review 
and update the goals and objectives. It also presented them to the 
Joint DOI/Tribal Leaders Task Force for review. After several meetings, 
the task force's subcommittee on planning approved the goals and 
objectives.
    The goals and objectives of the Comprehensive Trust Management Plan 
include:
      An organizational structure in the Office of the 
Assistant Secretary--Indian Affairs, the BIA, and the OST, to support a 
new service delivery model;
      The implementation of a new land title records system to 
keep ownership records accurate and current;
      The improvement of land and natural resource and trust 
fund asset management including a nationwide plan for eliminating 
fractionated interests of land that are burdening the trust and taking 
resources away from profitable activities;
      The promoting of Self-Governance and Self-Determination; 
and
      The review and improvement of our trust business 
processes (the As-Is/To-Be process).
    Through the examination of the ``big picture'' of the fiduciary 
trust management, the Department created a coordinated and integrated 
system in which all pieces of the fiduciary trust management function 
as a coherent whole. We recognize that strategic plans are dynamic and, 
therefore, we will regularly evaluate and update this plan to ensure 
its responsiveness to the ongoing needs of the Department's trust 
operations and to adapt to changing environments. We are confident that 
the goals and objectives of the Comprehensive Trust Management Plan 
will enable the Department to provide important services to Indian 
country more efficiently and effectively than in the past. We are sure 
that our trust initiatives under the plan will result in a positive 
enhancement to the level of service our organizations currently 
provide.
    The organizational realignment of the Office of the Assistant 
Secretary--Indian Affairs, BIA, and OST was one component of this plan. 
On April 21, 2003, Secretary Norton made effective an historic trust 
initiative by signing the Department of the Interior Manual 
establishing clear lines of responsibility by which BIA will provide 
trust services and OST will provide fiduciary trust oversight. In 
addition, the Secretary added OST staff at BIA agencies to support the 
work of BIA's Deputy Agency Superintendents for Trust. We are pleased 
to announce that our efforts to align Interior's staff to undertake our 
trust mission have largely been completed.

ORGANIZATIONAL REALIGNMENT
    In August 2001, during our formulation of the FY 2003 budget, 
various proposals and issues were identified concerning the trust asset 
management roles of BIA, OST, and other Departmental entities carrying 
out trust functions. By that time, the Department had heard from many 
sources--e.g., the Special Trustee, the Court Monitor in Cobell v. 
Norton, and through budget review--and all recommended a multi-bureau 
consolidation of trust functions throughout the Department. In short, 
the Department realized it had to provide an organizational structure 
that focused on its responsibilities to both individual Indians and 
tribal beneficiaries.
    Tribal representatives agreed with the Department that the status 
quo was not acceptable, and that the Department's long-standing 
approach to trust management needed to change. Moreover, this change 
had to be reflected in a system that is accountable at every level with 
people trained in the principles of fiduciary trust management.
    After intensive review of five organizational proposals from 
tribes, the Secretary chose to realign the organization capturing as 
much as possible from the extensive consultation process. The resulting 
organizational alignment complied with the concepts developed during 
the consultation process that were determined to be critical to 
improving the delivery of fiduciary trust services, including:
      Keeping specific management decisions about trust assets 
at the agency level. This allows greater decisionmaking at the agency 
level where expertise and knowledge of a Tribe's or an individual's 
need is greatest;
      Creating a Trust Center and staffing it with trust 
officers. The realignment created an opportunity for increasing support 
at the local agencies by adding trust officers and expertise from the 
Office of the Special Trustee and Deputy Superintendents from BIA to 
the agencies dedicated to fiduciary trust management;
      Promoting the idea of Self-Governance and Self-
Determination. We created a new Deputy Assistant Secretary for Policy 
and Economic Development reporting to the Assistant Secretary, Indian 
Affairs. We moved the Office of Self-Governance under this Deputy 
Assistant Secretary and expanded the office's role to include policy 
development and coordination for all self-determination programs; and
      Creating a new Office of Trust Accountability. Within 
OST, the position of Deputy Special Trustee for Trust Accountability 
has been created to be responsible for trust training, trust 
regulations, policies and procedures, and a Trust Program Management 
Center. In addition, a new division of Review and Audit was created. 
This division reports directly to the Special Trustee and performs 
trust-related reviews of fiduciary trust administration to ensure the 
Secretary's trust principles are followed.
    In addition to ten months of meetings of the Joint Tribal Leader/ 
Department of the Interior Task Force on Trust Reform, there were over 
45 meetings held with Tribal leaders in which senior level officials 
from the Department were in attendance.

Initiatives of the Office of the Assistant Secretary--Indian Affairs 
        and the Bureau of Indian Affairs
    The Principal Deputy Assistant Secretary for Indian Affairs, who, 
subordinate to the Assistant Secretary, has line authority over the 
Deputy Assistant Secretary for Management, the Director of the Office 
of Indian Education Programs, the Director of the Bureau of Indian 
Affairs, a new Deputy Assistant Secretary for Economic Development 
Policy and a new Deputy Assistant Secretary for Information Resources 
Management. This structure elevates economic development and the 
federal acknowledgment process to the Assistant Secretary level. It 
separates the IT functions of BIA allowing for greater oversight and 
overarching management in these areas. In addition, consistent with the 
President's management agenda, administrative functions previously 
performed in a decentralized fashion at the central, regional and 
agency levels, have been consolidated under the management structure.
    Within the DOI structure, BIA retains all natural resource trust 
asset management. The management of the trust functions at the BIA 
regional and agency levels has been separated by creating the positions 
of Deputy Regional Director for trust services and Deputy Regional 
Director for tribal services. The Deputies report to their Regional 
Director who, in turn, reports to the Director, Bureau of Indian 
Affairs (formerly the Deputy Commissioner). A similar structure has 
been created at the agency level. Seven of our Regions have Deputy 
Regional Directors for trust services on board, and we are in the 
process of adding the additional five positions. Six of the twelve 
Deputy Regional Directors for tribal services have been named, and we 
are in the process of adding the six additional positions.
    At the Agency level, most Agencies will have a Deputy Agency 
Superintendent for trust, who will manage the trust functions. We have 
hired four Deputy Agency Superintendents, at Concho, Anadarko, Pima, 
and Pine Ridge Agencies, and have advertised for several more. The BIA 
is working in concert with the OST on this effort, so that we hire 
Deputy Agency Superintendents and Trust Officers at the same locations 
and at the same time. We expect to hire approximately 33 Deputy Agency 
Superintendents.

Initiatives of the Office of the Special Trustee for American Indians
    OST continues to be responsible for the management of financial 
assets and certain reform projects, and maintains its statutory 
oversight responsibilities. The Secretary has delegated operating 
authority, including line authority over regional fiduciary trust 
administrators and fiduciary trust officers to OST. These new positions 
are intended to be filled by skilled trust administrators and staff 
trained for these responsibilities. A staff of six trust administrators 
will oversee a staff of trust officers and trust account managers in or 
near BIA field office locations.
    We are pleased to report that the first recruitment efforts for 
these positions have been successful. Recruitment activity for the 
trust officer positions also began during FY 2003, and two were hired 
last year. We expect to have 50 Trust Officers and support positions on 
board by the end of FY 2004. A recent advertisement provided a 
certification list of several candidates. However, due to the 
difficulty of finding highly qualified candidates, OST plans to engage 
the services of an executive search firm to support the effort of 
recruiting fiduciary trust officers. A listing indicating where Trust 
Officers will be hired and where they will be located is attached as an 
exhibit to this statement. They will be co-located with BIA agency 
personnel, or in close proximity to these offices. Trust officers also 
will be located in urban centers that have large beneficiary 
populations. Trust officers will work together with BIA agency 
superintendents and staff and will eventually become the first line of 
contact for tribal and individual Indian beneficiaries for issues 
related to ownership of trust assets, account balances, and trust 
transactions. Trust Officers and associated support staff will serve as 
a resource to agency personnel in the performance of fiduciary trust-
related duties. They also will serve as a primary point of contact for 
local collections, and ensure that proper documentation for trust 
transactions and internal controls are followed. The majority of a 
Trust Officer's time is expected to be spent with beneficiaries, 
locating beneficiaries (particularly those whose whereabouts are 
unknown) supporting the BIA probate effort, distributing funds put into 
special deposit accounts, and offering counseling and advice on 
managing assets and answering inquires.
    We now place additional emphasis on the implementation of a 
comprehensive and coordinated audit and risk management function to 
improve overall fiduciary trust accountability. The Office of Trust 
Review and Audit is working with agencies to develop a rating system 
that indicates the level of compliance with fiduciary trust activities 
and measures our success in meeting the fiduciary responsibilities of 
the Secretary. It also will indicate those areas where additional 
oversight is required.

Coordination and Outreach
    Once a decision was made on reorganization, Indian Affairs and OST 
created Trust Initiative Implementation Teams consisting of staff from 
both organizations. The teams met regularly in 2003 to discuss the 
status of their respective reorganizations. These meetings allowed for 
the coordination and communication of internal organizational 
activities, which greatly aided our reorganization efforts. The strong 
working relationship that was created through these teams is ongoing. 
Indian Affairs and OST continue to closely coordinate ongoing trust 
initiatives. Tribal representatives selected by the 2002 Joint Tribal/
DOI Task Force on Trust Reform met with these teams and provided 
information to Tribes.
    In June 2003, Indian Affairs and OST jointly held presentations to 
explain the trust initiatives to BIA and OST staff and to Tribal 
leaders. A total of 45 presentations were held throughout the United 
States, particularly in the cities where Regional offices are located 
and in other cities where there are large concentrations of staff. In 
fact, three to four regional or agency offices received the 
presentation each week
    Three different types of outreach presentations were conducted. 
Some presentations were held just with Superintendents. Those meetings 
were designed to present the Superintendents with written information 
regarding the reorganization, so that they could in turn educate their 
Agency staff. Presentations were held for BIA and OST employees to 
answer their questions about the reorganization. In addition, 
presentations were held for Tribal Leaders and individuals in each 
Region. The regional offices distributed information and a schedule for 
those briefings to employees as well as to tribes. Unfortunately, in 
some Regions, Tribal Leaders chose not to participate and walked out of 
the presentations we had scheduled.
    Based on the questions we received during our presentations in June 
2003, we drafted a Frequently Asked Questions document, which was made 
available to all Indian Affairs and OST employees and to Tribal Leaders 
in October 2003.
    In addition to the presentations, Indian Affairs and OST held 
change-management meetings to help their affected staff plan for and 
deal with the changes in the organization. Both Indian Affairs and OST 
have also sent periodic e-mails to all employees, informing them of the 
status of the reorganization throughout the reorganization process.

Regional Consultations
    Prior to implementing the organizational changes at the Regions and 
Agencies, we wanted to have further discussions with Tribal Leaders 
about the specific changes that would be occurring in their Regions. 
We, therefore, held consultation meetings with the Tribal Leaders from 
each Region in September and October of 2003 regarding the new 
structure for their respective Region. We held the sessions for the 
Eastern, Eastern Oklahoma, Southern Plains, and Midwest Regions on 
September 24 and 25, 2003, in Tulsa, Oklahoma. We held the sessions for 
the remaining eight Regions the week of October 27, 2003, in Las Vegas, 
Nevada. We also took written comments from Tribes in each Region for 
several weeks following the Las Vegas meetings. Following these 
meetings, we made some changes to the proposed Regional and Agency 
charts to reflect comments we received at, or after, the meetings.

Pilot Agencies
    To begin implementing the trust initiatives, BIA and OST identified 
two ``Pilot Agencies'' during 2003. The two pilot agencies were at 
Concho and Anadarko. In FY 2003, both the Concho and Anadarko agencies 
realigned staff and added fiduciary Trust Officers as well as Deputy 
Agency Superintendents. These locations were chosen based on a number 
of criteria including: the number of beneficiaries served; the high 
volume of recurring trust income generated; and local workload 
indicators. The success is already apparent. A close working 
relationship is present between the OST and BIA staffs. Outreach 
meetings are now being held by the Trust Officers to become better-
connected with beneficiaries and more decisions are being made at the 
agency level. A major challenge is getting reconnected to the Internet 
and having the information technology systems fully operational so that 
information can be readily available to all personnel at the agency to 
solve problems, answer beneficiary questions, and assure correct 
ownership of assets.

Remaining Tasks
    Although most of the organizational realignment has been completed, 
some tasks still remain. The Indian Affairs Federal Financial System 
(FFS) is being modified to reflect the changes made to the organization 
and staffing. FFS will be fully converted on October 1, 2004, but this 
project will continue until December 2004 to ensure that FFS is 
functioning properly.
    As we mentioned above, several positions are still in the process 
of being filled. BIA and OST need to complete the hiring of Indian 
Affairs Deputy Regional Directors, the sixth OST Regional Fiduciary 
Trust Administrator, Indian Affairs Deputy Agency Superintendents for 
Trust Services, and OST Fiduciary Trust Officers. We anticipate hiring 
approximately 45 Trust Officers and 33 Deputy Agency Superintendents 
during the remainder of FY 2004 (including those currently advertised, 
as discussed above), with the rest to be hired in FY 2005.
    Finally, although the Secretary signed the revisions to the 
Department Manual on April 21, 2003, making the changes effective, we 
are currently preparing a further revision to some non-fiduciary trust 
operations. The revision will formalize the structure of Indian 
Affair's law enforcement program, create a separate Central Office 
Division for Tribal Courts as requested by Tribes, create a separate 
Central Office Probate and Estate Services Division to focus on 
reducing our probate backlog, clarify the reporting structure for our 
environmental programs, and make other technical changes.
    Organizational realignment, coupled with our other trust 
initiatives is enabling the Department to provide reliable beneficiary 
focused services. We are continuing to implement the Comprehensive 
Trust Management Plan. We are nearing the completion of the review and 
improvement of our business processes (``As-Is'' ``To-Be'') with 
implementation to follow; implementing a new land title records system; 
and improving our land, natural resource, and trust fund asset 
management through the reduction of fractional interests.

OTHER TRUST INITIATIVES
``As-Is''--``To-Be''
    As part of the comprehensive trust reform, the Department undertook 
a project to determine exactly how fiduciary trust business processes 
were being performed. Through this effort, various business processes 
were identified that were required to be performed to meet our 
fiduciary duties, including determining ownership of trust assets, 
accounting for the income from trust assets, putting trust assets to 
work such as leasing of land and harvesting timber, supporting the 
self-determination and self-governance goals of the Department, and 
providing direct beneficiary services. We met with representatives from 
every BIA region and many Tribes to determine how they conducted these 
processes at their locations. BIA agency employees, regional employees, 
and representatives from the BLM and the MMS were interviewed to 
collect this information. After a year's work, over a thousand pages 
were written that documented the ``As-Is'' business fiduciary trust 
processes.
    The next step was to develop a ``To-Be'' Model. The concept was to 
have many of the same people who provided information for the ``As-Is'' 
meet and offer suggestions on how the current process could be 
improved. Again, meetings were held during all of 2003 to glean 
information from BIA regions, agencies, and tribes to develop a model 
of best practices that could replace the ``As-Is'' way of doing 
business.
    The draft ``To-Be'' Model was completed on September 30, 2003. 
Since that time, it has been presented throughout Indian country for 
review and comment. Although comments were due by January 31, 2004, at 
the request of tribal leaders, the comment period was extended to March 
31, 2004. This model, now considered the Trust Initiatives for the 21st 
Century, will be a major improvement in the way fiduciary trust 
business is performed in the Department. Not only is it expected to 
improve the communications with beneficiaries, but also to streamline 
the management of fiduciary trust assets and result in a more efficient 
and effective trust organization. The final model is expected to be 
completed by May 31, 2004.

Title System
    The Department is currently working on establishing new technology 
to maintain a system of land title records using new software that 
should enable beneficiaries to obtain information regarding their 
Indian land trust assets in a timely manner. We also are working on 
ways to invest tribal and individual Indian trust funds to make the 
trust account productive for the beneficial owner consistent with 
market conditions existing at the time the investment is made. Through 
improvements to our record systems, we hope to be able to communicate 
better with beneficiaries regarding the management and administration 
of their trust assets.

Reducing Land Fractionation
    Addressing the rapidly increasing fractionation on Indian land is 
critical to improving management of trust assets. Purchase of 
fractional interests increases the likelihood of more productive 
economic use of the land, reduces record keeping and large numbers of 
small-dollar financial transactions, and decreases the number of 
interests subject to probate. The BIA has conducted a pilot 
fractionated interest purchase program in the Midwest Region since 
1999. As of March 31, 2004, the Department has purchased 78,321 
individual interests equal to approximately 49,155 acres. The 
Department is in the process of expanding this successful program 
nationwide. We also plan, where appropriate and to the extent feasible, 
to enter into agreements with Tribes or tribal organizations and 
private entities to carry out aspects of the land acquisition program. 
The 2005 budget request includes an unprecedented amount of money for 
this program.

CONCLUSION
    These trust initiatives are a major undertaking, and we expect the 
benefits to be widespread. The Department realized it needed an 
organization that focused on its fiduciary duties as trustee to both 
individual Indians and tribal beneficiaries. The completion of the 
organizational alignment effort provides a major step forward in our 
ability to provide an efficient and successful trust management system 
within the Department of the Interior for our individual and tribal 
beneficiaries. The completion of the ``To-Be'' business model will be a 
major improvement in the way fiduciary trust business is done in the 
Department. Improving our title systems and reducing fractionated 
interests will lead to better record keeping, an improved probate 
system, and a more productive and economic use of Indian land. We are 
confident that all these efforts, which are part of the Department's 
Comprehensive Trust Management Plan, will improve the performance and 
accountability of our management of the trust.
    This concludes our opening statement. We look forward to answering 
any questions the Committee may have.
                                 ______
                                 
    [Responses to questions submitted for the record by the 
Bureau of Indian Affairs follow:]

         Response to questions submitted for the record by the 
       Bureau of Indian Affairs, U.S. Department of the Interior

Follow-up Questions from Chairman Richard W. Pombo

    QUESTION 1: BIA's budget is shrinking, while the budget for the 
Office of the Special Trustee is growing. Are funds used for providing 
services to tribes being diverted from the BIA into funding the Office 
of the Special Trustee?
    ANSWER: Fulfilling our Trust responsibilities remains one of the 
Department's greatest challenges. The Department has responsibility for 
the management of approximately 100,000 leases for individual Indians 
and Tribes on a land trust that encompasses approximately 56 million 
acres. Revenue from leasing, use permits, sale revenues, and interest, 
totaling approximately $195 million was collected in FY 2003 for 
approximately 240,000 individual Indian money accounts, and about $375 
million was collected in FY 2003 for approximately 1,400 tribal 
accounts. In addition, the trust manages approximately $2.8 billion in 
tribal funds and $400 million in individual Indian funds. Interior 
maintains thousands of accounts that contain less than one dollar, and 
has a responsibility to provide an accounting to all account holders. 
Unlike most private trusts, the Federal Government bears the entire 
cost of administering the Indian trust accounts. As a result, the usual 
incentives found in the commercial sector for reducing the number of 
accounts do not apply to the Indian trust.
    The increases requested in the Office of the Special Trustee's 
(OST) budget relate to historical accounting and the purchase of 
fractionated interests of land. Addressing the rapidly increasing 
fractionation on Indian land is critical to improving management of 
trust assets. Purchase of fractional interests increases the likelihood 
of more productive economic use of the land, reduces recordkeeping and 
large numbers of small dollar financial transactions, and decreases the 
number of interests subject to probate.
    While increases for these programs appear in the OST budget, funds 
appropriated for these programs are ultimately transferred to the 
Office of Historical Trust Accounting and the BIA.
    The BIA is working closely with the OST on the Secretary's ongoing 
efforts to reform current trust systems, policies, and procedures. The 
BIA has proposed increases totaling $42 million for trust improvements 
in the areas of information technology, trust services, probate, 
forestry, and workforce improvements in the Department's FY 2005 
Unified Trust Budget, which incorporates all of the fiduciary Indian 
trust programs of the BIA and OST.
    In addition to the trust improvement increases, the BIA has also 
requested increases in FY 2005 for newly recognized tribal governments, 
new and expanded tribal contracting, tribal economic development, the 
Indian school program, tribal law enforcement, new tribal community 
colleges, and the tribal school construction demonstration program. 
From FY 2001 to FY 2004, the BIA's funding grew from $2.1 billion to 
$2.3 billion.

Follow-up Questions from Ranking Member Nick J. Rahall, II
    QUESTION 1: Did BIA request that these OST trust officers be placed 
in BIA Agency and Regional offices? Is there a justifiable need to have 
both BIA and OST employees in Agency offices? How will this speed up 
responses to Individual Indians and tribal requests?
    ANSWER: The Comprehensive Trust Management Plan is being used to 
guide the design and implementation of the trust reform efforts. The 
first component of this plan was the alignment of trust functions 
within the Department.
    In January 2002, the Department launched an effort to develop a 
comprehensive approach for improving Indian trust management. In short, 
the Department realized it had to provide an organizational structure 
that focused on its responsibilities to both individual Indians and 
tribal beneficiaries.
    Tribal Representatives agreed with the Department that the status 
quo was not acceptable, and that the Department's longstanding approach 
to trust management needed to change. Moreover, this change must be 
reflected in a system that is accountable at every level with people 
trained in the principles of trust management.
    After intensive review of five organizational proposals from 
tribes, Secretary Norton chose to realign the organization capturing as 
much as possible from the extensive consultation process. Over 45 
meetings were held with Tribal leaders in which senior level officials 
from the Department were in attendance during the Joint Tribal Leader/
Department of the Interior Task Force on Trust Reform. The Department's 
trust reorganization plan is closely aligned with, and is a product of, 
the insight gained from the intensive consultation process.
    Trust officers are an integral part of improving beneficiary 
services at the local level. The Special Trustee for American Indians 
and the Assistant Secretary for Indian Affairs jointly agreed on the 
manner in which the trust officers would interact with the Bureau of 
Indian Affairs (BIA) staff and the locations where these staff persons 
would be placed. The BIA staff will continue to manage the land and 
natural resources. The Office of the Special Trustee (OST) staff will 
provide an additional resource for working directly with the 
beneficiaries and will assist BIA in making decisions that affect the 
fiduciary well-being of the beneficiaries. Co-locating OST and BIA 
staff at the Agency offices will allow for enhanced communication 
between the staff and more thorough and efficient responses to 
beneficiary questions and requests for information.
    QUESTION 2: Since most, if not all, agencies have severe backlog 
problems. For example, in some areas there is a great need for on-site 
field appraisals not more managers in the office. Please explain why 
your plan is not top heavy with managers and how you will have enough 
staffing and budgeting authority to meet the needs of the tribes?
    ANSWER: As discussed above, the Department, after extensive 
consultation with Indian country, felt that decision making at the 
agency level where expertise and knowledge of a Tribe's or an 
individual's needs is greatest was an integral part of effective trust 
management. The realignment created an opportunity for increasing 
support at the local agencies by adding Trust Officers and expertise 
from OST and Deputy Agency Superintendents from BIA to the agencies. 
Although they may perform some managerial functions, we expect them to 
be providing and improving our ``on the ground'' service to the 
beneficiaries.
    QUESTION 3: Is BIA planning to use roll over funds for its portion 
of reorganization and, if so, how will you fund the plan in years to 
come?
    ANSWER: No, the BIA is not planning on using roll over funds for 
its portion of reorganization. Under the Secretary's approved 
reorganization plan, the BIA is planning for a total of 104 Deputy 
Superintendents over a span of several years. To date, thirty-five 
Deputy Superintendent positions have either been filled or are at some 
stage of being filled. In addition, OST provided start-up funds to 
assist with the initial reorganization implementation. The FY 2005 
President's Budget includes a request for $5.5 million in appropriated 
funds in General Trust Services for filling 25 additional positions.
                                 ______
                                 
    [Responses to questions submitted for the record by the 
Office of the Special Trustee follow:]

  Response to questions submitted for the record by the Office of the 
         Special Trustee (OST), U.S. Department of the Interior

Follow up Questions from Chairman Richard W. Pombo, House Committee on 
        Resources

    QUESTION 1: One criticism of the reorganization plan is that the 
Office of the Special Trustee will handle certain trust functions even 
though the Office is only specifically authorized by Congress to 
conduct oversight of the BIA's administration of such functions. What 
is the statutory authority for assigning OST its trust duties under the 
Department's plan?
    Answer: In addition to the statutory responsibilities for the 
Office of the Special Trustee as outlined in the American Indian Trust 
Fund Management Reform Act of 1994, the Secretary of the Interior has 
delegated certain functions and operating authority to the Special 
Trustee. This was in conjunction with the FY 1996 appropriations 
language.
    QUESTION 2: Between the OST and BIA plans, 78 new officers will be 
added in the field. 45 OST trust officers and 33 BIA Deputy 
Superintendents for Trust. Who is in charge? When a decision on trust 
resources is made in the field--for example, approval of a farming 
lease--does the chain of command go up to the Assistant Secretary for 
Indian Affairs, or to the Special Trustee? Or both? Will the two really 
be able to work effectively together?
    Answer: The OST Trust Officers and BIA Deputy Superintendents for 
Trust are expected to work constructively and closely together to 
address the vast majority of tribal and individual Indian matters at 
the local level and in a more timely manner. BIA will continue to 
manage all natural resource trust asset functions, including the 
approval of leasing activities. OST Trust Officers manage the financial 
aspects of the fiduciary trust. OST Trust Officers will be a resource 
to support the BIA Deputy Superintendents for Trust, and will serve as 
the first line of contact for tribal and individual Indian 
beneficiaries for issues such as those relating to ownership of trust 
assets, account balances, trust transactions and local collections. The 
chain of command for the OST Trust Officer ultimately ends with the 
Special Trustee, and the chain of command for the BIA Deputy 
Superintendent for Trust ultimately rests with the Assistant 
Secretary--Indian Affairs. In those locations where a Trust Officer and 
Deputy Superintendent for Trust already have been hired, a close 
working relationship has developed between the OST and BIA staff.
    QUESTION 3: Under the comprehensive trust management plan, who sets 
the standards that self-governance tribes must meet in managing trust 
assets under a self-governance compact? How are the standards set?
    Answer: Consistent with P.L. 98-638, compacts with self-governance 
tribes for the management of federal programs are negotiated between 
the tribe and the BIA or OST, as appropriate. Self-governance tribes 
must meet the same standards for the management of trust assets as 
those in effect for the Department. The Department Manual outlines 
those principles. Standard auditing practices also review accounting 
activities for proper documentation that supports management of 
fiduciary assets and timely receipt and disbursement of trust funds.
Follow up Questions from Ranking Member Nick J. Rahall, II
    QUESTION 1: Each agency and region has its own needs and 
requirements. How will placing over 75 BIA and OST trust officers in 
the field meet the individual needs of Indian tribes? Have you 
incorporated enough flexibility in your plan to meet tribal needs?
    Answer: It is precisely because each agency and region has 
individual needs and requirements that placing additional OST and BIA 
personnel in the field is a critical component of this reorganization 
effort to assure accountability. OST and BIA agency and regional 
personnel are expected to work closely with tribes and individual 
account holders so that they can meet their individual needs 
appropriately and efficiently. One goal of these local BIA and OST 
personnel is the timely formulation of decisions at the local level, 
where these personnel will be familiar with any special needs and 
circumstances that are apparent.
    QUESTION 2: As I understand the reorganization plan, there will be 
some 78 new officers placed in the field--45 OST Trust Officers and 33 
BIA Deputy Superintendents for Trust. How will the chain of command 
work for example when an agriculture lease needs to be approved? How 
will reorganization speed up the process from how it is handled now?
    Answer: The OST Trust Officers and BIA Deputy Superintendents for 
Trust are expected to work constructively and closely together to 
address the vast majority of tribal and individual Indian matters at 
the local level and in a more timely manner. Clarifying 
responsibilities and providing beneficiaries definite points of contact 
we hope, in turn, will speed up the process. BIA will continue to 
manage all natural resource trust asset functions, including the 
approval of leasing activities. OST Trust Officers manage the financial 
aspects of the fiduciary trust. OST Trust Officers will be a resource 
to support the BIA Deputy Superintendents for Trust, and will serve as 
the first line of contact for tribal and individual Indian 
beneficiaries for issues such as those relating to ownership of trust 
assets, account balances, trust transactions and local collections. The 
chain of command for the OST Trust Officer ultimately ends with the 
Special Trustee, and the chain of command for the BIA Deputy 
Superintendent for Trust ultimately rests with the Assistant 
Secretary--Indian Affairs. In those locations where a Trust Officer and 
Deputy Superintendent for Trust already have been hired, a close 
working relationship has developed between the OST and BIA staff.
    QUESTION 3: As Special Trustee, how will you meet your important 
oversight functions authorized under the Trust Fund Reform Act of 1994 
now that you have all these additional programmatic duties added on?
    Answer: I intend to continue to meet the oversight obligations 
authorized by statute, and will utilize the new funding and staff 
provided to perform the additional duties delegated by the Secretary of 
the Interior to OST. As in any organization, both private sector and 
government, at some point within the organization we have review, 
oversight and operations reporting to the principal. The Special 
Trustee has these individuals reporting through separate chains of 
command to him.
    QUESTION 4: OST's budget is growing rapidly while BIA's budget is 
shrinking. Over 30% of the OST budget is earmarked for historical 
accounting connected to the Cobell lawsuit. Where is this funding 
coming from and how can you assure this Committee and Indian country 
that funds for trust fund reform is not coming out of other Indian 
programs?
    Answer: Each budget year the Administration looks at the merits of 
program needs and makes decisions based on this review. The increases 
requested in the OST budget for the historical accounting and purchase 
of fractionated interests of land are consistent with the January 2003 
Historical Accounting Plan for Individual Money Accounts filed with the 
district court and trust fund reform. Funding for all programs must 
come from Interior appropriations budget, and the appropriations 
subcommittee addresses the Interior budget within the allocation they 
receive. In fact, from 2001 to 2004, the BIA's funding grew from $2.1 
billion to $2.3 billion.
    QUESTION 5: BIA has clearly defined rules and regulations setting 
up its responsibilities and accountability to Indian people. Most of 
these have been worked out over decades with much input from Indian 
tribes. OST has none of this. How can those you serve have a comfort 
level that OST will be accountable to them?
    Answer: OST Trust Officers and Regional Trust Administrators will 
be working with Indian tribes and individual account holders on a daily 
basis and are expected to develop a constructive relationship with 
these beneficiaries. OST and BIA are expected to provide full 
transparency in their decisions to beneficiaries, which will increase 
their comfort level and ensure accountability. OST is bound by the same 
trust principles as BIA. OST has established regulations, policies, 
procedures, interagency handbook and Desk Operating Policies in 
coordination with BIA. In addition, the OST works closely with its 
Advisory Board pursuant to section 306 of the American Indian Trust 
Fund Management Reform Act of 1994.
    QUESTION 6: Can Indian tribes compact under the Indian Self-
Determination Act programs under OST in the same manner they can BIA 
programs?
    Answer: Yes. Tribes can enter into compacts or contracts with OST 
for trust fund management and/or appraisal functions.
    QUESTION 7: Who will have final authority at the agency level an 
OST staffer or a BIA staffer?
    Answer: It is anticipated that OST and BIA at the regional level 
will work closely together and agree upon the vast majority of trust 
asset management decisions. If an agreement cannot be reached at the 
agency level, decisions will be appealed up the OST and BIA respective 
chains of command, ultimately to the Special Trustee and Assistant 
Secretary--Indian Affairs, for resolution. This is due to different 
roles, one being financial and beneficiary and the other being land and 
natural resource based. The majority of the time we are finding that 
appropriate delegations are now at the agency level with adequate 
authority to resolve issues without the elevation to a higher level 
decision maker.
                                 ______
                                 
    The Chairman. Mr. Swimmer?

                   STATEMENT OF ROSS SWIMMER

    Mr. Swimmer. Thank you, Mr. Chairman and members of the 
Committee. I appreciate the opportunity to be here today and 
present some information to the Committee. I will try to be 
brief, but thorough. I am anxious to hear questions that the 
Committee might have.
    I also want to recognize to my left the Trust Officer, Mr. 
Henry Ware, from the Concho Agency in Oklahoma. He is one of 
the first hired trust officers to be placed at the local level 
and I think he can also enlighten the Committee a lot on the 
function of the Trust Officer and what they see from day to day 
as far as their duties and how that is impacting positively the 
operations at the BIA agency level.
    In just a quick review of the trust reform efforts, in 
1994, the Trust Reform Act was enacted by Congress which 
provided for the Office of the Special Trustee. As part of the 
duties of the Special Trustee at that time, it was to produce a 
comprehensive trust reform plan that would take all of the 
various operations of the fiduciary trust, basically where the 
Federal Government holds the land interest and financial 
interest of the individual Indians and tribes in trust and 
manages on their behalf. We were charged with doing a plan for 
that. We were also charged with preparing an accounting as 
provided for in the Act. These two items have been the subject 
of, primarily the subject of the work of the Special Trustee 
since that time.
    The comprehensive Trust Management Plan was produced. This 
was done after the consultation on the organizational concepts 
took place in 2002. We worked through 2002, having meetings 
with what was called the DOI Tribal Task Force made up of 
approximately 24 tribal representatives and alternatives and 
senior management of the Department. That consultation process 
was completed toward the end of 2002, and 2003 in March, we 
developed the comprehensive plan. Some of the planning elements 
had been discussed during that consultation process, including 
the concept of trust officers and the reorganization concepts 
that were developed and were included, to the extent possible, 
in the comprehensive plan.
    As Ms. Martin has testified, the organizational alignment 
was essentially completed last year with the Special Trustee's 
Office organizing itself with a Principal Deputy and three 
major categories of effort, one being trust accountability, 
that would be a group leading the reform, meeting the 
requirements of the comprehensive plan to help restructure the 
way that the trust services were offered and all of the 
business processes, if you will, the management systems, the 
leasing systems, the financial systems, probate, and all those 
items tied into the trust, how they would be reengineered to be 
more efficient and more effective.
    The second was in the financial area, and this is an area 
that the Special Trustee was directed to assume. In 1996 under 
Secretarial order, they were directed to assume the 
responsibility of the Office of Trust Funds Management, which 
had then been in the Bureau of Indian Affairs. The Office of 
Trust Funds Management at that time and currently is 
responsible for the investment and accounting of the trust 
funds that are received from the resources of the land and 
financial resources belonging to individual Indian people and 
the tribes. We continue in that road today, and as part of the 
reorganization effort continue to work in the financial area 
primarily, that is the effort that the Special Trustee has that 
they did not have as part of the 1994 Act.
    And the third area is in the area of field services, which 
is the implementation and the deployment of the trust 
administrators and trust officers.
    This is, we think, essential, and it was discussed. It has 
been discussed at length with the tribes over the past 2 years. 
The essence of the trust officer is to provide what you would 
normally see in a private sector trust relationship. You would 
have a trust officer. If you went to a trust company and you 
asked them to manage your assets, for instance, financial, 
land, oil and gas, timber, whatever, you would be talking to a 
trust officer who would help lay out a plan for you and 
determine how best those resources might be managed for your 
best interest.
    This is a concept of a trust officer at the agency level, 
is to work directly with the beneficiaries to let them know 
what is happening to their trust resources. This is not a 
position that has ever been there before with the Bureau of 
Indian Affairs, with the Department or any agency in the 
Department. In the past, if someone wanted to know about their 
oil and gas, they would either go to the Minerals Management 
Service, to the BLM, or the BIA, or wherever they might go to 
try to find out what it is. If they wanted to deal with their 
financial resources, they could go to the Bureau of Indian 
Affairs. Sometimes they would go to the agency level. Sometimes 
they may have to go to the Washington level. If they wanted to 
try to find out what the status of probates are, what the 
status of their investments are, they would again go to 
multiple resources.
    What we believe is that the concept of a trust officer 
being there on the ground at the agency allows that information 
to be provided to those beneficiaries. It also provides a 
higher level decisionmaker at the agency level so that instead 
of having either the superintendent or others in the Bureau 
have to move decisions to a regional office or even to the 
central office, decisions are able to be made right there on 
the ground at the agency level. There is no need to go to 
Albuquerque, as we have heard, or to go to Washington or even 
go to the regional office because the decisions can be made 
right there by the trust officer.
    The role of the Special Trustee has been discussed many 
times in many meetings by tribes and there has been a concern 
that the role of the Special Trustee has been expanded greatly 
and that all the money, or a lot of the money, anyway, is being 
moved from the BIA budget to the OST budget. That is simply a 
mistake. It is not true. It is not happening.
    Our budget, as you will see from some of the documents we 
have submitted, is approximately $100 million. Our budget does 
add to that some monies that we do receive through 
appropriations that are transferred to the Bureau of Indian 
Affairs. For instance, this year, the BIA will spend 
approximately $30 million on the Indian Land Consolidation 
program, purchasing fractionated interests. This money is 
coming out of our budget, but we move it directly to the BIA's 
budget. Likewise, $10 to $15 million in information technology 
resources is again moved from our budget to the BIA budget.
    The largest amount of money, I might add, that is being 
spent in this area of trust today that is different, new money, 
is in the accounting that has been directed by the court, 
ordered by the court, and it is an effort that the Department 
is making to do the historical accounting. It is estimated that 
our plan for this historical accounting will cost in the 
neighborhood of $300-plus million. We have, in fact, asked in 
the 2005 budget for $109 million. Of that, approximately a 
third of that money to move the accounting forward. We had 
asked for a substantial increase last year and the 
Appropriations Committee had reduced that in the 2004 budget.
    But that money also shows up in our budget. That is in the 
Special Trustee's budget. I don't consider that our money. That 
is a Department initiative actually directed by the U.S. 
District Court. We have little choice but to comply, subject to 
whatever the Congress may choose to do with that. Or, if our 
mediation efforts are successful or if there is something else 
that happens, obviously, that money would not be spent in that 
manner.
    The Special Trustee's Office primarily is engaged, in 
addition to the financial effort, into the oversight. What we 
are doing is trying to look over the trust reform effort. We 
were charged with putting together not only the comprehensive 
plan, but the execution of the plan. We have done a major study 
of all of the trust business processes that I mentioned 
earlier. We called it the ``as is'' study. We are moving now 
into a ``to be'' phase.
    We are working jointly with the Bureau of Indian Affairs, 
and I think this is the most significant thing that has 
happened in trust reform in the last several years, is that I 
consider the Special Trustee's Office and the BIA to be linked 
at the hip. We are working together. Whatever money is spent in 
the Special Trustee's budget is spent in the BIA's budget. 
Whatever the BIA is doing in trust reform is what we are doing 
in trust reform. There is not an ``us'' and ``they.''
    We are moving down this path together and the comprehensive 
plan allows that to happen. In fact, it directs it to happen, 
so that when we add trust officers and they add the Deputy 
Superintendents, they are able to work jointly on all of the 
issues that are out there, and we will hear from tribes and we 
have heard from tribes that our members of our tribes have 
problems getting information. They have problems getting their 
money distributed to them. They have problems getting their 
land leased. It is all these things, and that is what the 
purpose of these Deputy Superintendents and trust officers are 
there to address.
    There are intractable problems and this Committee needs to 
understand that because it makes our life difficult as it makes 
your life difficult. The intractable problems stem primarily 
from fractionation. We have approximately $4 million interest 
dealing with approximately ten-plus-million acres of land that 
are owned by over 400,000 individual Indian people. We have 
land the size of 80 acres that may--it is not unusual for that 
land to be owned by 100 to 1,000 individual people. Even though 
that land interest may be a one-one-thousandth of an interest, 
for instance, in 80 acres, that interest has to be probated.
    Our probate cost for doing a normal, average probate is 
about $3,000. We are distributing land interest through that 
probate that costs us $3,000 when that interest is worth maybe 
$5 at most and sometimes five cents.
    These are things that we have to deal with on a daily 
basis, and not often do the tribes even understand that we are 
going through those kinds of issues and having to make critical 
decisions about where we spend our money. Because of that, 
probate in the past didn't take a high priority. We got backed 
up on probates. There are over 20,000 probates that are in 
backlog status now and we are having to make a major effort to 
do that, because even if it is a one-one-thousandth interest 
that is going to go to seven heirs, we have still got to 
determine who those seven heirs are and distribute the money.
    The title system, we are dealing and the BIA is dealing 
with antiquated IT systems. These systems go back 30 years. We 
don't have a title system that can tell us at one glance who 
owns what property where. We can tell you who owns what 
property where, but it is on an individual basis, one on one, 
and we may have to go to four different title systems to do 
that. That is being brought up and that is a significant cost.
    The recruitment--
    The Chairman. Mr. Swimmer, I am going to tell you to wrap 
it up.
    Mr. Swimmer. Yes, sir. The recruitment and placement of 
trust officers has been difficult because we have been looking 
for trust officers that are highly qualified in the area of 
trust, either through legal or financial experience. Just 
bringing these people on board is a major effort that we are 
going through today.
    We appreciate the Committee's interest in this and we want 
to work with the Committee to do what we can to satisfy your 
concerns about where we are going with the trust reform effort. 
Thank you very much.
    The Chairman. Thank you.
    Ms. Martin, one of the major complaints that I have heard, 
one of the things that has been brought up repeatedly to the 
Committee is the level of consultation between the tribes and 
the individual tribal members and the Department on this 
reorganization. Can you give me an idea of what kind of 
consultation process you went through and how did that 
influence the final recommendation that we are talking about?
    Ms. Martin. Well, I think that the Department has undergone 
a tremendous amount of effort in attempting to work with tribes 
to come to some kind of a consensus vehicle on the realignment, 
reorganization.
    Several years ago, in late 2001, the Department announced 
its plans to reorganization the Bureau of Indian Affairs with a 
proposal called BITAM. Prior to announcing that proposal, they 
had not spoken with tribal leaders and they took the proposal 
out for consultation with tribal leaders and they unanimously, 
universally opposed it.
    After hearing about this opposition, the Secretary formed a 
task force that was charged with looking at realignment 
proposals and making recommendations to the Department with 
regard to those proposals. They held, I think the list that I 
looked at was about 40 meetings with the full task force in 
every region, every BIA region. They held regional meetings to 
inform tribal leaders about the progress of the task force. But 
ultimately, the task force could not come to consensus on a 
vehicle for reorganization and--
    The Chairman. Let me stop you right there. Who was on the 
task force?
    Ms. Martin. There were 24 tribal leaders who were on the 
task force and there were 12 alternates. There were two--
basically three people from each region. Two members of the 
task force, I think are testifying today, Ms. Melanie Benjamin 
and Mr. Keller George, to name a few--
    The Chairman. And they participated in these meetings?
    Ms. Martin. Yes, they did.
    The Chairman. And at the 40-plus meetings, all of the 
members of this task force participated in that, or as many as 
they could attend?
    Ms. Martin. It really depended. I think that there were 
seven meetings, I want to say, of the full task force, and not 
all of the members always attended all the meetings, but for 
the most part, they did. They were also attended by some of the 
alternates. But then we also had regional briefings and the 
members from those regions largely attended only the meetings 
in their region.
    Unfortunately, we could not come to consensus on a vehicle. 
Some other issues were brought into the discussion and 
discussions broke down. At that point, the Department felt that 
it needed to move forward with realignment and put together a 
proposal based on the discussions with the task force and with 
tribal leaders over time and that resulted in the Departmental 
manual changes that the Secretary adopted in April of last 
year.
    After that, we felt very strongly that we needed to let 
tribal leaders know about what the reorganization plans were 
and we embarked on a process of information sessions. We had 
about 45 information sessions, 15 specifically for tribal 
leaders, the remainder for BIA staff.
    And then finally, before implementing the reorganization at 
the regions, late last year, in September and October of last 
year, I felt it was very important to go out to let tribal 
leaders know what the plans were for their specific region, 
present the charts to them, and give them an opportunity to 
make changes or make comments on the reorganization as it 
pertained to their region and their agencies, and those were 
held in Oklahoma, Tulsa, and in Las Vegas in October of last 
year. There were 12 meetings then.
    Then we implemented the reorganization at the field level--
    The Chairman. And with that input that you got in those 
meetings, did the plan change?
    Ms. Martin. The overall direction of the reorganization, 
the realignment, did not change, that is, the--well, with 
regard to BITAM, we changed and that proposal actually 
separated trust outside of BIA. After the discussion with the 
task force, we kept trust in BIA, but separated it out so that 
it had its own line of authority.
    With regard to the fields, we did make a number of changes 
based on tribal comments, but we did not have a lot of comments 
from tribes on changing the structure at the field or regional 
level.
    The Chairman. All right. In looking at your chart, we have 
two major issues. One is the trust responsibility and the other 
is the bureaucracy and how difficult it is to get something 
approved and to go through that process. Isn't there a way to 
eliminate a bunch of these steps in this thing? I mean, is it 
absolutely necessary to have this many steps to go through if 
somebody wants to get something approved?
    It seems to me, and maybe you are addressing this, and if 
you are you can tell me, but there ought to be a way to get a 
decision made faster on stuff. I think this Committee deals so 
much with delays and tribes or individual Indians going through 
years of waiting for an approval on something. Isn't there a 
way to speed up that process?
    Ms. Martin. Well, the reorganization doesn't specifically 
address that issue--
    The Chairman. But it should, shouldn't it?
    Ms. Martin. Well, the structural. Some of the other things 
we are doing with trust reform and reorganization deal with 
that, but there are really two things at issue here. One is 
that, over time, we have brought decisionmaking more and more 
to the central level and we are looking at ways to push 
decisionmaking back out to the regional level, things like fee-
to-trust applications, tribal constitutions, liquor ordinances. 
Those all come to myself or Mr. Anderson for signature now. 
They should stay out at the region. We are looking at pushing 
those kinds of decisions back out so that they don't take so 
many years.
    The other problem, though, is simply a resources issue. We 
don't have the personnel to process some of the paperwork that 
we have to complete to get something done, even if it is pushed 
out at the regional level. For example, one of the problems we 
have in the Midwest region is fee-to-trust applications and the 
fact that they take years and years to be processed. Well, part 
of the problem is--
    The Chairman. I am going to have to stop you. I have gone 
way over my time. But one of the things I hear all the time is 
that we don't have enough people to do this. If you didn't take 
years to make a decision, those people could be making a lot of 
decisions. But you have got one guy who spends 5 years to make 
a decision, so he is busy for 5 years making that decision. Why 
doesn't he just make the decision and go on to the next one? 
You guys have enough people. Just make the decisions.
    It is real frustrating for me. You know, I had one group in 
here that has been waiting for 30 years for a decision on 
something and they have been dealing with two people over 30 
years. Well, if they had made the decision 30 years ago, they 
could have made another 100 decisions in the meantime.
    You guys need to work on the process that is in place. If 
you are going to go through all this reorganization, work on 
the process that is in place so that you make the decisions and 
get it over with. Don't spend years talking about it. It either 
works or it doesn't work. It either fits or it doesn't fit. 
Tell them yes or no and move on to the next decision. If you 
are going to go through a reorganization, let us get something 
out of it.
    I mean, I know we have got some very complicated and big 
issues here that you guys are trying to handle and trying to 
deal with and I respect that and I understand that. But if we 
are going to go through all of this, let us change the system 
so the decisions get made.
    I am going to recognize Mr. Pallone.
    Mr. Pallone. Thank you, Mr. Chairman, and let me associate 
myself with your remarks 100 percent.
    It disturbed me that Mr. Swimmer claims that the money, or 
the extra money that is going to OST is not being moved from 
other tribal needs. Now, I understand that there is not a 
transfer slip that says, take money from IHS, transfer $2 
million to OST. But the bottom line is that that is what is 
happening effectively.
    I sent a letter, Mr. Swimmer, to you last week and I would 
ask if I could--it is about the money and how the money is 
divided, and I would ask unanimous consent to have it included 
in the record. I would hope that you could respond to it in a 
timely fashion.
    [Mr. Pallone's letter to Mr. Swimmer and his response 
follow:]

[GRAPHIC] [TIFF OMITTED] T3632.010

[GRAPHIC] [TIFF OMITTED] T3632.011

                                ------                                


                United States Department of the Interior

           Office of the Special Trustee for American Indians

                         Washington, D.C. 20240

                              June 8, 2004

Honorable Frank Pallone
House of Representatives
Washington, D.C. 20515

Dear Mr. Pallone:

    Thank you for the opportunity to respond to your May 6, 2004, 
letter concerning the budget of the Office of the special Trustee 
(OST). I am happy to provide you with some details on the OST 
reorganization and the activities funded by the OST budget. First, 
however, I would like to address the following assertions included in 
your letter:
      The OST budget was substantially increased to better 
implement its plan to reorganize Bureau of Indian Affairs (BIA) trust 
responsibilities.
      Funds are being transferred from existing BIA programs to 
pay for OST increases.
      The Department of the Interior should request new funding 
to support trust reform.
      OST has no plan to work with Tribes or individuals whose 
accounts are at stake.

OST Budget
    The President's FY 2005 budget for OST does not call for any 
increase in OST's operational funding. In fact, under the FY 2005 
request, OST's operational funds would decrease by 3.24 percent in 
comparison with the FY 2004 enacted level. This decrease is larger than 
the 2.24 percent decrease proposed for the BIA. I have attached a 
comparison of OST's FY 2004 enacted level and the FY 2005 proposed 
level.
    The areas of OST's budget where there are funding increases are the 
areas where funds pass through OST and are then controlled by other 
organizations within Interior. Included within this category are the 
funds for the Office of Historical Accounting. The FY 2005 budget does 
include a 146.14 percent increase for that office, with funding in the 
amount of $109.4 million, to cover the cost of historical accounting 
ordered by the Cobell court.
    Another increase in ``pass-through'' funding is the increase to $70 
million for the Indian Land Consolidation Program managed by the BIA. 
One of the greatest problems facing the administration of Indian lands 
is the fractionation or continuing subdivision of individual Indian 
interests in the land that the Federal government holds in trust for 
them.
    With each successive generation the individual interests in the 
land become further divided and subdivided among heirs, each of whom 
get smaller and smaller interest in the land. As the number of 
fractionated interests increase, the cost and difficulty to manage 
those interests increases each year. As this number of ownership 
interests grows, the cost of federal resources necessary to undertake 
accounting and management responsibilities grows accordingly. As these 
interests pass to successive generations, the estate of the decedent 
interest holder is processed through the DOI probate process, a quasi-
judicial procedure which transfers title and funds from the estate to 
the heirs. In addition to determining the holdings of the decedent, the 
Department must track down all heirs of the decedent, and either 
establish new IIM accounts for them or add interests to their current 
accounts.
    In FY 2004, the Bureau of Indian Affairs (BIA) and the Office of 
the Special Trustee for the American Indian (OST) are estimated to 
spend about $220 million on activities related to fractionation. These 
costs are expected to grow 6-fold in 20 years, to almost $1.2 billion 
annually. Based on the lessons that Interior has learned through a 
pilot acquisition program, Interior intends to initiate an expanded 
national program with the requested increase in funds.
    Trust reform is one of the Department's highest priorities. We are 
making real and substantial progress on both reforming our trust 
management practices and on moving forward with an appropriate 
accounting. With regard to the issue of ``new money'' for trust reform, 
the allocation of funds within the Interior and government-wide budget 
is ultimately a question for Congress, not the Office of the Special 
Trustee.

Trust Reform
    Interior does have a plan for trust reform. In January 2002, we 
began a meticulous process to develop an accurate model of our current 
trust business processes. Through this process, we gained a 
comprehensive understanding of our old trust business operations, the 
areas where we needed improvements, the variances of practice that had 
grown over the years among different geographic regions, and the causes 
for those variances. Using this knowledge and an examination of 
standard industry practices in trust management, we are carrying out 
our Comprehensive Trust Management Plan, which embodies a coordinated 
and integrated system in which all pieces of trust management function 
as a coherent whole. We are confident that the goals and objectives of 
the plan will enable us to provide efficient and effective trust 
services to Indian country.
    On March 31, 2004, the extended comment period closed on the draft 
``To-Be'' Model, the model system under which the Department will 
operate. As a result of tribal requests, an additional sixty days, was 
provided for receipt of comments. The final model will represent nearly 
two years' worth of work. When implemented it is expected to result in 
notable improvements in the delivery of fiduciary trust services.
    With the steady support of the Congress, the Department has made 
great improvements since 1994 in the overall services provided to 
Indian beneficiaries. Prior to 1994, no statements of account were sent 
on a regular basis to account holders. Today, quarterly statements of 
account are sent to all account holders with known addresses. Prior to 
1994, the accounting system used by the Bureau of Indian Affairs was 
not auditable, nor could it be reconciled and balanced on a regular 
basis. Today, the trust accounting system in place, Trust 3000, is used 
by many of the largest trust companies in the United States. It 
provides the opportunity to reconcile and balance the system to the 
penny on a daily basis with Treasury, which we do. Prior to 1994, there 
was no fiduciary trust training provided by or available at the 
Department. Today, every person involved with fiduciary trust, over 
3,000 employees, has had a trust foundations course. Executive-level 
personnel have taken a course given by the Cannon Financial Institute 
on the principles of fiduciary trust and the Indian trust. Cannon is 
the leading trust organization for private sector banks and trust 
companies. These are just a few of the many changes we have made. We 
have also recruited new employees with extensive private trust 
experience, instituted an annual audit, and, as mentioned above, 
undertaken a total reengineering of our trust business processes.

Trust Realignment
    There has been much discussion about the Secretary's realignment of 
personnel within the Indian programs of the Department. A major element 
of this has been the concept of placing trust officers at the agency 
level. This is not a new idea. The first Assistant Secretary for Indian 
Affairs, Forrest Gerard, convened a BIA Reorganization Task Force in 
1977. That task force included representatives of the National Congress 
for American Indians and the National Tribal Chairmen's Association. In 
fact, Mr. Earl Old Person, as a representative of the National Tribal 
Chairmen's Association, signed the transmittal letter to the Secretary 
conveying the Task Force's report. Recommendation 23 of the report was 
as follows:
        ``The Bureau and Department trust responsibility functions 
        should be strengthened and extended in Washington and the 
        field.''

It then went on to specify:
        ``...Rights Protection units should be established in the field 
        with trust advocates at each agency.''
    The concept of providing trust officers at the local level should 
be embraced by the Congress. These trust officers will be the first 
point of contact for individuals and tribes with concerns related to 
asset ownership, account balances, and trust transactions. This will 
relieve the BIA program staff from those duties and will allow them to 
focus on their primary functions, including providing the expertise 
necessary for the maintenance of trust assets.
    I hope this response serves to assist you in better understanding 
Interior's mission with respect to trust reform. I would be happy to 
meet with you personally to discuss these matters further.

                               Sincerely,

                            Ross O. Swimmer

                  Special Trustee for American Indians

Enclosure
                                 ______
                                 
    [NOTE: The attachments to Mr. Swimmer's letter have been 
retained in the Committee's official files.]
    The Chairman. But in the letter, it says that according to 
the Administration's budget request, outlays for OST in Fiscal 
Year 2005 would be a 54.4 percent increase over Fiscal Year 
2004. At the same time, under the President's budget, BIA 
receives a net decrease of $52 million. Specifically, contract 
support costs are decreased by $2 million, BIA education 
decreased by $4.8 million, tribal colleges and universities 
receive a $5 million cut. The list goes on and on.
    So I understand what you are saying, that you are not 
transferring money from these other needs to the OST, but 
effectively speaking, that is what is happening because of the 
fact that there is less money for these other things and there 
is more money going to OST.
    I don't want to ask a question about that. I would just 
like if you could answer this letter maybe in the next few 
weeks, if possible. I would appreciate that.
    What I did want to ask, though, and this is just the one 
question, Mr. Chairman, I have thanked the former Special 
Master in the Cobell case, Alan Baleran, who, as I think many 
of you are aware, brought out the gross mismanagement by the 
Department of the Interior in the leasing of Indian lands to 
oil and gas companies. He did an investigative report that said 
that private oil and gas companies paid Native Americans just a 
fraction of the amounts they paid private land owners for the 
right to run pipelines across their property.
    Mr. Swimmer, you previously stated that these inequities 
exist because Indian trust lands will likely be less valuable 
to utility companies because of the bureaucracy involved in 
leasing land with the Federal Government. But it just seems to 
me that what you are saying here is that the government takes 
Indian land in trust and with it comes a ton of red tape that 
devalues the land, and it just seems like it is another example 
of where the Federal Government fails to live up to its trust 
responsibility.
    So I wanted to ask, considering this case with the 
pipelines coupled with the overall mismanagement of the trust 
accounts, what is the benefit of having the Federal Government 
manage Indian lands? It would seem to me that beneficiaries 
would be better served by managing the properties themselves, 
having the tribes manage the properties themselves, maybe with 
some Federal Government oversight. I mean, we know the tribes 
have taken over other services, such as health services, TANF. 
We have had hearings on it.
    Wouldn't we have more success if we just allowed the tribes 
to administer their own trust fund accounts, maybe with some 
Federal oversight, and manage their own lands? What do we need 
OST for at all? Why don't we just forget about it, let the 
tribes manage their own lands. You can have a little oversight. 
I mean, I listen to this bureaucracy and I am just amazed 
because it just seems to go on and on and on without any 
positive outcome that anybody in Indian sees is beneficial to 
them.
    Would you advocate simply letting them manage their own 
trust funds? What would be your answer to that?
    Mr. Swimmer. I certainly would. In fact, the 1994 Trust 
Reform Act specifically permits Indian tribes to remove their 
funds from the trust fund that is managed by the Secretary and 
to manage it themselves. I have advocated that for many years 
because I think that they could probably get a better return on 
it. We are limited in what we can invest their funds in to 
government securities or the equivalent. With a modest amount 
of risk, they could probably make 50 to 100 basis points more 
on their money.
    I don't know why the tribes haven't taken advantage of 
that. There is about $2 billion that the tribes could take and 
manage on their own.
    In regard to the management of their own resources, the 
statutes provide that the individual beneficiaries actually do 
have control. They can tell us what they want to do.
    Mr. Pallone. But what if we did it en masse? In other 
words, rather than have them individually apply, we just 
abolish the OST and we just said you are going to have to do it 
on your own?
    Mr. Swimmer. It is not the OST that does that--
    Mr. Pallone. No, I understand.
    Mr. Swimmer.--Natural Resources in BIA--
    Mr. Pallone. Right. What about if we just did it carte 
blanche? Do you support that?
    Mr. Swimmer. Personally, I would have no problem with that. 
I think that the Indian community would have a lot of problem 
with that and you would receive a lot of push-back from tribes 
because they look at the Bureau of Indian Affairs as the 
protector more than an obstacle in their resources. As many of 
us have seen in litigation over this issue, oftentimes, the 
Department is sued because we allowed individuals or tribes to 
make their own decisions and that comes back to haunt us. I 
don't think the tribes would support that, but if they would, 
we would certainly support it. I would support it.
    Mr. Pallone. Thank you.
    The Chairman. Mr. Hayworth?
    Mr. Hayworth. Thank you, Mr. Chairman. Let me thank Ms. 
Martin, Mr. Swimmer, and Mr. Ware for coming down this morning.
    Maybe we are arriving at a point of consensus here, because 
many of you have heard me talk about this before and Mr. Renzi, 
now given the realignment of districts, has spent a lot of time 
with the Sovereign Navajo Nation, as did I before him in what 
was the old Sixth Congressional District. As I hear the 
discussion, I go back to what a tribal elder told me at a town 
hall meeting when he said, ``Congressman, as far as we are 
concerned, BIA stands for 'Bossing Indians Around.'''
    I know that is not the intent. There are a lot of well-
meaning people, and Ms. Martin, I appreciate the energy it took 
to deal with something that seems to be a problem that doesn't 
have solutions, but hearing the comments of the Chairman and my 
friend from New Jersey, again, it invokes reminiscence of a 
remark in an earlier Congress from the gentleman who is now the 
Governor of New Mexico, who used to share the Navajo Nation 
with me back in the previous incarnation, and that is former 
Congressman Richardson.
    We said, well, here we have yet another reorganization, and 
I realize you are dealing with the pressures of court cases, 
and let me thank Secretary Norton and others at the Department 
who have been serious, in stark contrast to some other folks 
who said, well, let us just let it ride when we had contempt 
citations proffered by a Federal judge.
    But Ms. Martin, I guess you touched on this before and 
maybe you can amplify it for me. How does the creation of trust 
officers in BIA and separate trust officers in OST really 
differ from the BITAM, or some said the ``bite 'em'' proposal, 
which the tribes rejected, which Secretary Norton later 
renounced? Maybe you can articulate that, but it leads to the 
second question. Wouldn't it be easier to streamline the 
services provided and put the other monies into direct services 
rather than into a lot of Federal salaries, which are typified 
here by the reorganization plan?
    Ms. Martin. Well, first, with regard to how this is 
different from the BITAM proposal, the BITAM proposal proposed 
to create a entirely different bureau within the Department of 
Interior which would deal with Indian trust services, and it is 
significantly different in that the trust function remains in 
the Bureau of Indian Affairs.
    I know one of the biggest fears that tribes had with regard 
to BITAM was they thought it was just another way to do 
termination. That is, once you take the trust services out, 
eventually, the other services would stop being funded and they 
would never be provided to Indians anymore. That is the first 
difference.
    But what adding the trust people in the regions and in the 
field does is it puts more bodies out there to do trust 
services, to provide those direct services to the 
beneficiaries, and that is our main goal. We want to make sure 
that things happen out in the field. So I think that is really 
what our main purpose is here. We like to promote self-
governance. We want tribes to take those things on, but we also 
want to be able to do what we need to do effectively.
    Mr. Hayworth. So from the view of BIA, this reorganization 
gets the people out, whether in Washington, or in our case, 
gee, we have got to wait on Albuquerque--I think Mr. Swimmer 
brought that up again in his testimony--because it seems like a 
lot of times, we are waiting on regional offices.
    Again, though, we need a bottom line. How many new 
employees are being created and what is a rough estimate of the 
total cost of these new employees?
    Ms. Martin. Well, for the Bureau of Indian Affairs, there 
are four at central office here in Washington. There are 12 at 
the regional offices, 12 regional offices, and then there are 
47 in the field at agencies. The rough estimate is between $12 
and $15 million annually, and that is the cost of salaries for 
those staff. That is at the BIA.
    Mr. Hayworth. OK, so $12 to $15 million. Forty-seven folks, 
I guess in the field is what you are telling me, right? OK.
    I have got a lot more questions, Mr. Chairman, but I don't 
know where the clock is. I am probably in my final 30 seconds. 
I thank the Chair for this indulgence.
    We are looking at yet another reorganization, and I 
appreciate and we have traveled through that before. But we 
talked about the Self-Governance Act. Allow the tribes that 
have proven their ability to successfully manage their own 
resources and stand in the shoes of the DOI to do so. Most 
often, these tribes had to contribute their own monies to 
augment those provided by DOI.
    An example in my own district, Salt River Pima-Maricopa 
Indian community. They contract out their trust management 
system from DOI, and frankly, I have to tell you, I appreciate 
the attempts, but the Salt River Pima-Maricopa folks are doing 
a better job. Their system has become a model for not only 
other tribes, but I believe for the Department as it studies 
wholesale trust reform.
    One example I will leave you with. The tribe can cut checks 
to allottees in seven to 10 days. The same checks can take 
months and sometimes a year for the Department to process. One 
question I will leave with you, and thanks, Mr. Chairman. Why 
are these tribes being included in any reorganization of the 
Federal systems when they have proven they are doing as good a 
job, I think even a better job, than the Department? Why do we 
see these tribes folded in with everybody else in this 
reorganization?
    Ms. Martin. Well, I believe that Salt River is specifically 
excluded from the reorganization, but self-governance tribes, 
the reorganization doesn't really affect them because they take 
their money out of the BIA and they provide those services in 
the way that they see fit. So the reorganization does not apply 
to self-governance tribes because they take that money out of 
the BIA.
    Mr. Hayworth. Thanks for that clarification. I guess, Mr. 
Chairman, in closing, we have got an example where if you want 
to get it done, do it yourself, and I think that may be a point 
we agree on here across the aisle.
    The Chairman. Mr. Tom Udall?
    Mr. Tom Udall. Thank you, Mr. Chairman, and I thank the 
panel for being here today. Let me also associate myself with 
your frustration, Mr. Chairman, in terms of the decisionmaking 
over there at the Department and the comments you made earlier.
    I also want to thank the Chairman for holding this hearing, 
because I think that the way the Department has handled this is 
really an affront to the authorizing committee. As Mr. Swimmer 
knows, when everything broke down with the task force meetings, 
you all waited for the Congress to adjourn and then you came 
over here to the appropriators and went in and reprogrammed 
this when we were out of town, completely ignoring the 
authorizing committee. And the first time the authorizing 
committee has even heard about any of this has just been in the 
last couple of days. I mean, this stuff has been going on for 2 
years. So I applaud the Chairman for weighing into this and 
asserting some authority in terms of the authorizing committee 
here.
    Now, the issue that I would like to ask you about, first 
make a little statement about, has to do with consultation. I 
think, Mr. Swimmer, you know that there is nothing more basic 
to be done than consult with the tribes when you are talking 
about a major, major reorganization of the Department, 
especially when you are dealing with the BIA, which has been 
the main agency in the government that deals with the tribes 
and has dealt with the tribes over the years.
    This, to me, this consultation that Ms. Martin described 
here looks to me like a charade and I want to ask you about 
that, because here you convene a task force, you have 40 
meetings. Ms. Martin, your comment was the meetings broke down. 
I mean, the other side of the coin from--I had constituents 
that were in those meetings and served in them. They said the 
Department walked out--walked out. They had the 40 meetings and 
just rejected everything that was being recommended.
    These task forces had very, very specific things that they 
were asking for which have now been completely ignored in the 
reorganization. And to just give you a couple of examples, they 
asked that you not take the programs out of the BIA. They asked 
that you not cut other programs in the Department. There is now 
a big education cut of tens of millions of dollars and you are 
moving money over into this reorganization. They asked for some 
kind of outside oversight of the Department's activities. None 
of the things that this task force was trying to get done have 
been followed.
    None of the recommendations have been followed, and that is 
why I say, and it is probably a strong word to say ``charade,'' 
but I don't see how you--I think it needs a strong word, 
because I don't see how you can call this a consultation. You 
have 40 meetings. You have tribes from all over the country 
participating. They make all of these recommendations, and then 
you walk out of the meetings and you go on and do what you are 
going to do and then you don't even tell this Committee and you 
go over to the Appropriators Committee and get it reprogrammed 
and you put out a press release that says, Congress approves 
historic reorganization plan for the Bureau of Indian Affairs. 
To me, that is an outright affront to this Committee.
    So can you tell me, Mr. Swimmer, if you did all of this 
consultation, you know, this great consultation where you 
reached out and you tried to hear from the tribes and what the 
tribes wanted, why is there just so much opposition out there 
to this reorganization proposal? Could you tell me that?
    Mr. Swimmer. I probably can't tell you why there is so much 
opposition. I am not sure myself. We--
    Mr. Tom Udall. I think it is because you didn't do a 
consultation. The consultation was a charade. Why would you 
engage in a consultation that was a charade?
    Mr. Swimmer. Well, it was certainly not intended, 
Congressman, to do so. As Aurene, Ms. Martin, explained, we did 
start off and we admitted that shortly before I came to the 
Department, the Secretary and some folks had decided that a way 
of dealing with the issues at hand was to create a separate 
department within DOI, within Interior, to house all of the 
trust functions so it could be addressed. The court, frankly, 
had indicated it needed to be.
    The first Special Trustee's plan, I might add, was to 
remove the fiduciary trust, what we have talked about here, 
totally from the Department and to create something analogous 
to the Resolution Trust Corporation, where all of the trust 
items would be taken out of DOI, the Bureau of Indian Affairs, 
and the Special Trustee's Office and put into a separate 
agency.
    The Secretary believed at that time that the concept of 
BITAM, which was a separate agency within Interior, would make 
more sense. The tribes didn't receive consultation on that. As 
a result of that, I think that was really why the tribes 
opposed that concept, because they never really heard that 
concept. And so the Secretary immediately thereafter, in 
January of 2002, convened this task force and asked for 
representatives from each of the 12 regions to be available to 
meet and discuss.
    A lot of things did come out of that task force. That was 
consultation. The first thing that happened was that the tribes 
came together and presented their plans to the Secretary. There 
were approximately 40 different plans, maybe a few more than 
that, that were submitted on how best to reorganization the 
Department of Interior and the Bureau of Indian Affairs. Those 
plans eventually were winnowed down to about five.
    The essence of the reorganization and those plans was 
captured in the subsequent reorganization that was done. One of 
the key points was, we want to ensure that the Bureau of Indian 
Affairs retains the responsibility for all of the resource 
management functions in the Department, the oil and gas, land, 
timber, and those things. The financial side of it would remain 
in the Special Trustee's Office. That was adopted. There were 
other things, the assurance that the self-governance tribes 
would not be impacted, that they would continue to operate, be 
able to run the programs as they had before.
    The things where it broke down were on demands made by 
tribes--some tribes, not all of them, but some of them--toward 
the end of the consultation process when we thought we had 
reached agreement on one of those five plans, and I think that 
was at our Alaska consultation. The things that were not on the 
agenda but caused the breakdown were about three items.
    One was that a group of tribal leaders said, we want the 
U.S. Government to give us an unlimited waiver of immunity from 
suit. We want the U.S. to stand liable for any breach of trust 
that might happen and just give us a general waiver of 
sovereign immunity to sue the U.S. Government. We want these 
trust principles, these trust standards, common law standards. 
So any time you violate what we consider to be the duty of 
loyalty, we can sue.
    The other thing was, and it was mentioned, that we want 
outside control over the Secretary. We want an external agency 
that says if the Secretary of Interior is not following the 
mandates of the statutes in administering the trust properly, 
then this outside agency can, again, hold her accountable, or 
the Secretary accountable. Well, we have got constitutional 
issues with that and determined that that was not appropriate.
    None of these items had anything to do with reorganization, 
and that is why we had these task force meetings. We got to the 
point where we had the reorganization. We thought we had the 
principles down that the tribe wanted, and we felt that we went 
forward with that after these consultation sessions to put that 
together.
    We then went back to the tribes in multiple meetings at all 
of the regional offices, sending out newsletters, sending out 
information, inviting the tribal leaders in to talk about this. 
Frankly, I think that the organizational alignment that was 
done, which did not cost a great deal of money--as Ms. Martin 
explained, they are spending about $15 million on new employees 
and about the same amount in the Special Trustee's Office--but 
what we achieve in this organization is tremendous. It is 
putting decisionmaking at the agency level. It is improving the 
management of the natural resources, trust resources.
    I just feel strongly that we believe that we did achieve 
through those consultation sessions in 2002 what we felt the 
tribes and what we heard from the tribes that they wanted in 
the ultimate organization within these agencies.
    The Chairman. The gentleman's time has expired.
    Mr. Rehberg?
    Mr. Rehberg. Thank you, Mr. Chairman, and thank you for 
your outrage, and to Mr. Udall, yours, as well. There is an old 
joke about the definition of a bureaucrat is a Democrat that 
has a job that a Republican wants, and sometimes you feel that 
way when you finally get a Republican Administration that can't 
do anything but create another bureaucracy. It certainly does 
make you angry.
    I have the advantage, perhaps, over some of my colleagues 
of having served in the executive branch as a Lieutenant 
Governor in the State of Montana and have had the experience of 
reorganizing many agencies and trying to fix problems. And what 
I find unique or perhaps indefensible on the part of this 
reorganization, and certainly you can label any prior 
Administrations that haven't solved the problem and prior 
Congresses, but this is our opportunity to change it.
    My question to you, Mr. Swimmer, is did you bring business 
into this at all? Did you ask anyone outside of government for 
any advice as to how to set up an agency that can, in fact, 
manage this kind of a problem? Ms. Martin, I would ask you the 
same thing. First of all, what is your background? Are you 
outside of government, come in to save the Bureau of Indian 
Affairs from themselves, or are you from within, trying to 
create the same government solution to the same problem that 
has existed since the 1800s?
    Mr. Swimmer. Is that addressed to me?
    Mr. Rehberg. Yes. First of all, what is your background? 
Are you from government or from business?
    Mr. Swimmer. It is a little bit of everything. I started in 
1967, practicing law in the State of Oklahoma. I went into the 
banking business in the early 1970s and became Principal Chief 
of the Cherokee Nation of Oklahoma in 1975. I served there 
for--
    Mr. Rehberg. OK. Then let me ask you, from a business 
standpoint, would you run a business the way this agency is 
being run now?
    Mr. Swimmer. Absolutely not.
    Mr. Rehberg. Then I guess the second question is to Ms. 
Martin. I would ask your background, as well. Do you come from 
business or do you come from government?
    Ms. Martin. I come from mainly government. I graduated from 
law school in 1993, represented the Oneida Tribe of Indians of 
Wisconsin for 6 years before moving to the Senate to work for 
Senator Campbell.
    Mr. Rehberg. I respect the desire to bring the tribes in, 
because that is important. You have got to have ownership by 
the people that are truly affected. Did you bring anybody else 
into the discussions on the structure so that you could create 
a situation that could deal with the fractionalization, because 
I don't find any recommendations coming to us to solve the 
problem, and the problem is the fractionalization.
    When we tried to deal with the same exact issue in Montana, 
albeit on a much smaller scale. The same issue of 
fractionalization of mineral rights came up and we didn't just 
look for a government solution. We went back and said to 
business, what would you do to try and change it? They made 
tremendous recommendations to the State Legislature and to us 
in the executive branch to fix it.
    What have you guys done to bring things to Congress, 
because we don't deal with this other than we have oversight 
hearings. We need ideas from you. Have either one of you 
brought ideas forward to us to deal with the fractionalization 
issue?
    Mr. Swimmer. Do you want me to do that? The 
fractionalization issue has, in fact, been addressed, is being 
addressed currently by the private sector. We have hired 
several months ago, a year ago, Booz Allen to study the issue 
and they have been working with the BIA lead person on 
fractionalization to see if there are some solutions.
    We do have some proposals on the table for Congress. Right 
now, they are being considered in the Senate. I believe the 
Senate Indian Affairs Committee is bringing forth a bill that 
will help on some of the structural issues that are dealing 
with fractionation. But tied into fractionation, of course, is 
the probate issues, the title issues, a lot of other things 
that have to be considered.
    We are burdened by statute on fractionation. Right now, the 
solution to the fractionation is to purchase those fractionated 
interests and then turn them back to the tribe, in essence, re-
tribalize those lands. That is, right now, the interim 
solution. As you, I am sure, know, have--Congress has helped in 
the past and tried. We tried to escheat small interests and the 
Supreme Court said you can't do that, so we have gone back to 
trying to pay for these very small interests and purchase them 
so that we can have tracts of land back under a single 
ownership of the tribe, make it a lot easier for us to manage 
or the tribe to manage.
    In terms of private sector support also in our 
reengineering of the business processes that we have gone 
through in the last couple of years and are getting ready to go 
through now, the adoption of those, we have invited two private 
sector trust companies. We talked to probably five private 
sector trust companies about how best to set up a trust 
organization and whether or business processes that we go 
through now in leasing land, collecting money, investing money, 
whether these make sense and how they would change it, and then 
we try to look at that compared to what we can and can't do.
    For instance, I mentioned on the investment, we do have 
limitations on what kinds of investments we can make with the 
trust money. It can only be--
    Mr. Rehberg. Mr. Chairman, could I ask one other quick 
question? I have a background in banking, as well, and so I 
clearly understand the concept of accounting, computers, and 
government audits.
    So my question is, if your computers are out of date, don't 
come back to us and ask for more computers. Why don't you 
contract the service out? There are entities that are available 
that can do this so much faster and better than you ever could 
possibly do within the government. For those of us who own 
stocks and have fractionalization, as well, we may have ten 
stocks in Coca-Cola. That is a pimple on their back, and yet 
they can figure out how to get hold of us. Why don't you 
contract that service out with a private entity?
    Mr. Swimmer. Some of that work is, in fact, being done. 
When the Special Trustee's Office was charged with assuming the 
accounting responsibility for the trust fund and the throughput 
of the money, the Special Trustee did go to the private sector, 
a company called SEI, and they now have working for them 
basically the major trust system that is used by private sector 
and we call it the Trust Funds Accounting System, or TFAS. It 
is a system of the private sector managed by the private 
sector. It works very well. We are able to account. We balance 
to the penny every day. We are able to--someone mentioned that 
checks get paid out by some tribes in 7 days. We pay out within 
24 hours of receipt of the money.
    So it is working quite well, and I think that the same 
concept is being adopted by the BIA in trying to bring other 
systems up that they have to have to replace their legacy 
systems. In fact, I know it is. The title system again is from 
the private sector and we are looking at a realty system and a 
probate tracking system and those kinds of things. They are all 
being contracted by the private sector.
    Mr. Rehberg. Thank you, Mr. Chairman.
    The Chairman. Mr. Udall?
    Mr. Mark Udall. Thank you, Mr. Chairman. I wanted to 
acknowledge, Ms. Martin and Mr. Swimmer, you have done 
something that rarely happens on this Committee which is to 
create unanimity. This Committee normally goes at issues hammer 
and tong and we seldom agree. But today, you hear across party 
lines and on different sides of the dais grave concerns about 
what is unfolding and what has unfolded in the past.
    In saying that, I understand you all are working hard and 
doing everything you think that we can possibly do, but Mr. 
Swimmer, when I hear you talking about an intractable problem, 
I then wonder if this Gordian knot has to be sliced by some 
other government agency or some other effort. I did, I think, 
hear you suggest a few minutes ago that possibly some 
legislative approach may be necessary, and I have had 
conversations with my colleague, Mr. Hayworth, and my 
colleague, Mr. Udall of New Mexico, and Mr. Renzi and others 
about our feelings of frustration and that at some point, with 
100-plus years of this situation, we are going to have to step 
up and solve it.
    We spend enormous amounts of money and time just trying to 
understand, as my colleague, Mr. Rehberg, just pointed out, 
what the accounts look like. At some point, all of us have to 
be held accountable by the American people for the amount of 
money that has gone out the door, not to the tribes and not to 
the individuals but to our friends in the legal community and 
other administrative undertakings.
    In that context, I wanted, if I could, just to talk a 
little bit about a bill I introduced last year that deals with 
the Interior Department's handling of trust accounts. The 
Ranking Member of the Committee, Mr. Rahall, cosponsored it, 
and probably it is also worth noting that in the Senate, the 
bill was introduced, an identical bill, by Senators McCain, 
Daschle, and Johnson. Are you familiar with the legislation 
that has been introduced, the McCain-Daschle-Johnson bill?
    Mr. Swimmer. It has been some time since I did review it, 
Congressman. I think it was last year, and I am not familiar 
with the conditions of it.
    Mr. Mark Udall. If I might, I would like to ask you a 
couple of questions. Before I do that, on the general theme of 
the bill, it would make some changes in the organizational 
structure of the Interior Department. It would also do two 
other things. It would spell out the standards that would apply 
to the discharge of trust responsibilities, and it would, 
second, set up a commission to review the Federal Government's 
handling of the trust responsibilities and submit a report and 
a recommendation to Congress and the Administration. Do you 
have a comment on any of those three pieces of the legislation?
    Mr. Swimmer. On the first, on the standards, we believe 
that the standards are pretty well set forth in statute. There 
are thousands of provisions that apply to the trust that give 
us direction on what we have to do. Any time we see that there 
is a gap in those duties, then we can apply common law 
standards to fill those gaps. I am not sure that we need a lot 
more direction on standards.
    I am sorry, what was the--
    Mr. Mark Udall. Let me ask you, if I could, to focus on 
some of the specific standards and see if you would agree that 
they would be appropriate. The bill says that the Interior 
Department should protect and preserve Indian trust assets from 
loss, damage, unlawful alienation, waste, and depletion. Would 
you agree with those?
    Mr. Swimmer. Yes. We have that by statute now.
    Mr. Mark Udall. How about a second set of standards. The 
Interior Department should ensure that any management of Indian 
trust assets promotes the interest of the beneficial owner and 
supports to the maximum extent practicable, in accordance with 
the trust responsibility of the Secretary, the beneficial 
owner's intended use of the assets.
    Mr. Swimmer. For the most part, I think that is 
appropriate. In the trust world, you get into a lot of issues 
between beneficiaries that may--taken in the context of trust 
law, that is a standard that is probably acceptable. Where we 
have conflicts with joint owners and individuals and tribal 
owners in the same plot of land and we have to make decisions 
that are in the best interest of both parties.
    Mr. Mark Udall. The bill also says, third, that the 
Interior Department--this is standards--should promote tribal 
control and self-determination over tribal trust land and 
resources without diminishing the trust responsibility of the 
Secretary. Do you see a problem with that?
    Mr. Swimmer. I don't see a problem with that, but it does 
present the conflict because obviously if the tribe is given 
the full control over the asset and the Secretary still have to 
approve what the tribe has done, then it does leave the 
Secretary responsible for decisions that she or he has no 
control over. So it can be a problem.
    I like the first part. I am not sure I like the second. And 
we do--are very much in agreement on the self-governance. We do 
encourage that and will continue to do so.
    Mr. Mark Udall. If I might, Mr. Chairman, I have other 
questions that I would like to extend to the witnesses for them 
to answer outside the Committee hearing today.
    And again, I want to thank you for holding this hearing. I 
want to associate myself with your comments and commitment to 
solving this and also your frustration. I think enough is 
enough, and maybe this is something the whole Committee could 
work together on solving with your leadership, my cousin's 
leadership, Mr. Hayworth, Mr. Renzi, and others who are so 
intimately involved with this.
    The Chairman. We will leave the record of the hearing open 
to allow written questions to be submitted to the witnesses.
    Mr. Renzi?
    Mr. Renzi. Thank you, Mr. Chairman. I am not going to join 
in the chorus today on the frustration because I think Ms. 
Martin, as far as my experience goes, I am going to hold back 
and show you patience and deference, because the personal 
experience that we have had in my office has been one of a 
first-class work ethic.
    We came to you within 30 days with a problem of a school 
that the roof had collapsed. You found shelter for those 
children and we will now have a new school, have five new 
schools on Navajo, both Republican and Democrat districts. We 
will have a new hospital for the San Carlos, who had children 
with abscessed teeth and with disease that were 30 days in 
seeing. I can normally be a pretty tough guy but I am going to 
show you deference and patience because your work ethic has 
been phenomenal.
    We were up on Navajo Nation with a bipartisan committee, 
Jim Matheson out of Utah, and we had a good time going through 
all of the different kinds of issues that are affecting Native 
American Indian housing. One of the things that came out was 
the fact that there is a backlog of 113 staff years as it 
relates to title searches on trust land. We talked to banks and 
we talked to Realtors. We talked to people in the housing 
industry who typically will close land that is in fee title, 
but when it comes to closing or going through the escrows or 
the title searches as related to trust land, they are looking 
at a 2-year backup.
    Now, 113 staff years at the BIA, even though you guys have 
done a decent job of decentralizing that, I am told, and it 
goes down to the regional offices, means we would have to hire 
113 people to get it done in a year, just to get it done within 
a year, cleaning it all up.
    In addition, we have got this issue that was talked about 
earlier that I think Mr. Pallone talked about as it relates to 
economic development and what I call this business site leasing 
approvals, which is even over 2 years. We are seeing a two- to 
3-year backlog as it relates to economic development, small 
businessmen and women.
    We had a situation up on the Navajo Nation. An individual 
had the money to open a Denny's restaurant. It took two or 3 
years to get the business site leasing approved on trust land 
so he could open the restaurant, hire Navajos, and it is really 
the only restaurant up there near Window Rock that we all go 
to.
    And so I would ask, please, and give you a moment here to 
talk about the improved effectiveness, the improvement for 
efficiency that you see, particularly within the area of 
economic development, and I am guessing here in the Division of 
Real Estate Services, which I am thinking is where this title 
search and the backlog will be.
    Ms. Martin. Thank you for your comments, sir. With regard 
to title searches specifically, we are talking today about the 
restructuring of the BIA and OST, but there are also a number 
of other projects. We are changing our processes and we are 
trying to improve our systems, make them more modern.
    One of the problems we have with title searches is we have 
to update title when we have a probate and we also have to, 
when we have a probate, we actually have to check all 12 
regions separately to find out if title is current because of a 
probate. So it takes a long time to do a title search. We are 
trying to improve our system so that we have one central system 
so that when we do a title search, we just have to go to one 
computer terminal and do that title search. So that should 
significantly shorten the amount of time that that takes, and 
we expect to roll that system out within the next 15 months. It 
is in the process of being rolled out and will be complete in 
15 months.
    With regard to business leases, we are trying to improve 
that process, as well, make it easier to do business leases, to 
push those decisions out to the field so that they don't have 
to come to the central office or take as long as they take now.
    Mr. Renzi. I appreciate your comments. I am going to hold 
off and look forward to seeing the new rollout on the 
technology. I would lend my position in support to the idea 
that at some point, we are going to need to turn over, within 
the idea of self-determination, the idea of economic 
development, business leasing approval, I think, to the Native 
American people themselves at some point, even if it is 
gradually so there isn't a real shock there. I think it is 
something we have to work toward and I appreciate your comments 
and your hard work especially.
    Ms. Martin. Thank you.
    The Chairman. Mr. Inslee?
    Mr. Inslee. I have no questions.
    The Chairman. Mr. Pearce?
    Mr. Pearce. Thank you, Mr. Chairman. I would express 
similar frustrations on the decisionmaking process. I think 
that issue had come up previously and would return to that.
    The tasks, I know, are just exceptional, and though I don't 
agree with all the findings that we are seeing here, I would 
tell you that, Mr. Swimmer, when you make your comments about 
the unreasonable request for immunity, unlimited right to sue, 
outside control over the Secretary, I think you will find me 
supportive on your position there, even though I have got some 
observations about the whole process that I think are 
applicable.
    The Mescaleros are in my district and they had submitted in 
October and November of last year about seven pages of concerns 
about the changes, and those were not addressed and I would 
appreciate it if you could address these, Ms. Martin. It gives 
the perception that the opinions were not listened to by the 
Native Americans, and these are not those unreasonable requests 
that you are referring to. These seem to be balanced concerns.
    One of the concerns that they express is that this 
reorganization is going to require that the timber sales go 
into trust rather than tribal services, and I will tell you 
that the Mescaleros have been my example to the Forest Service 
of what to do in the forest that they are exceptional. And so 
when the crown fires have been raging in New Mexico, they get 
to the Indian lands and they drop down and burn on the ground 
because they have done properly. And yet we are going to take 
that timber sales department away from them. Right now, if my 
understanding is correct, they have a timber sales department 
of two, and in the same area, the Forest Service has 20, so you 
are going to undo the very positive thing that they are 
succeeding at and that concerns me greatly.
    Also, the expression that they have removed themselves out 
of the management plans, they have taken their funds or 
whatever out and so it looks like the fiduciary Trust Officers 
are going to be sent to them anyway even though they don't have 
any disbursements. So those are problems that they have 
expressed.
    I guess the Offices of Trust Services and Tribal Services, 
the two new Deputy Superintendents that appear to be placed out 
with the tribe, the tribe has expressed that they feel like 
they are doing many of the management things OK. They need more 
things on the worker bee level and they wonder if there is any 
flexibility in your program here.
    So those are my concerns. If you would address those, I 
would appreciate it.
    Ms. Martin. With regard to the timber sale issue, timber 
sales were always in trust, so I don't know that that 
necessarily would have been moved, but I will look into that 
specifically.
    I will let Mr. Swimmer address the Trust Officer question, 
but with regard to the Deputy Superintendents, those people are 
expected to perform some management activities, but we expect 
them to be hands-on in resolving beneficiary concerns. So they 
should be dealing with people every day and being hands on with 
regard to solving problems, also coordinating with any Special 
Trust Officer who might be located in the area. But we also at 
some point expect those, if they are compacted or contracted by 
the tribes, to be able to be compacted or contracted, as well.
    Mr. Pearce. Your information that the timber sales have 
always been in trust is in direct opposition to what my staff 
has said, that they show those to previously have been in 
travel services, that the new categorization will put them into 
trust and therefore will take the responsibility away from the 
tribe. So we need clarification on that, if you would.
    And again, I guess the understanding of exactly what 
tangible benefits does the OST reorganization provide when the 
tribe doesn't have any fractional interests and has removed its 
trust funds from the Department.
    Mr. Swimmer. The Trust Officers are placed at the local 
agencies to support those trust activities, whether it is 
tribal beneficiary, individual beneficiary. We are trying to 
place those Trust Officers at the agencies where the greatest 
amount of trust work is, and if that is a fact that at 
Mescalero agency there are no individual beneficiaries, then we 
are not likely to put a Trust Officer there right away. The 
Trust Officers generally are responding to the beneficiaries' 
request.
    For instance, at the Concho Agency, Mr. Ware can tell you 
that we had nearly 1,000 phone calls a month that come in there 
for issues on oil and gas properties and service leasing. They 
have special deposit accounts that need to be distributed to 
individuals. We have whereabouts unknown. The Trust Officers 
are going out to the community, trying to work with the 
individual beneficiaries to help locate people, help get their 
money to them quicker, make sure that the questions get 
answered.
    Mr. Pearce. Thank you, Mr. Chairman, and I will submit the 
rest of my questions and this document from the tribe. Thank 
you.
    The Chairman. Thank you.
    [NOTE: The information submitted for the record by Mr. 
Pearce has been retained in the Committee's official files.]
    The Chairman. Before I excuse this panel, I wanted to give 
Mr. Ware an opportunity to address the question that Mr. Pearce 
just asked in terms of what is happening on the ground and 
possibly get an idea from you, since you are doing it right 
now.
    Mr. Ware. Yes, I am, Mr. Chairman. I would like to thank 
the other members of the Committee for allowing me to be here 
today to give you some idea about what my responsibilities have 
been since becoming a Trust Officer. I have been a Trust 
Officer for 6 months now at the Concho Agency. We deal with a 
substantial number of oil and gas leases there. We have farming 
and grazing leases that are ongoing all the time.
    We have anywhere between 1,000 and 1,500 calls a month to 
our IM staff that have to be answered. Many of them are just 
routine calls. Others require research and getting, doing all 
kinds of work to try to get these answers taken care of. We 
polled the realty people and the Bureau of Indian Affairs 
agency folks and they estimated that close to 35 to 37 percent 
of their time up to recent times have been dealing with the 
beneficiary calls and referrals and things like that.
    I am a person who--I am a worker bee. I know somebody 
mentioned something about a worker bee. My primary 
responsibility is beneficiary services. What I am doing is I am 
dealing face-to-face with the constituents that come in, 
beneficiary folks. I am taking telephone consultations. I am 
taking referrals from the IM staff and also the Bureau of 
Indian Affairs realty people.
    We discuss things from the probate process, people wanting 
to know what the status of their probate is, to things such as 
wanting to know what their remedies were if they thought there 
was something wrong with the oil and gas payments. We can get 
some of the information together, and then other times we work 
with the other agencies, Bureau of Land Management, Minerals 
Management Service. So there is a lot going on every day at the 
agency.
    We have questions that come up specifically about IM 
accounts. Beneficiaries will call in. We even have sometimes 
folks will call about tax questions, things like that.
    My background is that I worked as a legal services lawyer 
for 7 years and I was also in private practice for an 
additional 7 years. I would say anywhere from 90 to 95 percent 
of my practice was dealing with Indian people, so I feel right 
at home dealing with Indian people and I think that is 
important, that when you are dealing with Indian people, you 
have to--they have to have some trust in you. I am developing 
that relationship with the Indian beneficiaries, at least 
within the Cheyenne-Arapaho Reservation in Oklahoma.
    One of the big things that we have been able to accomplish, 
what we have had is we have had a number of community meetings 
within the original reservation boundaries of the Cheyenne-
Arapaho Tribes. We realized that some of our Indian people 
don't have the resources to be coming to the agency all the 
time, so what I have done is I have gone out there to see them. 
I have set up meetings out there to talk about issues. We have 
brought the Bureau of Land Management, Minerals Management 
Service to go along with our group of people to inform the 
public about what services were available.
    During this process, too, we are learning about some of the 
issues that are of great concern to our beneficiaries and we 
are planning to have a series of these community meetings as we 
go along. I expect that we will have one sometime during the 
summertime when we will go back out again.
    One of the big responsibilities, and Mr. Swimmer alluded to 
it, is we want to make sure that the IM accounts are paid out, 
the monies are paid out promptly. One of the responsibilities I 
have is to watch over the staff, the people who are the worker 
bees who make sure that everything is done correctly. I 
supervise them. I review transactions, and the whole idea is to 
try to present these--the paperwork that needs to be presented 
one time so that the payments can actually be done on an 
expedited basis.
    What I have also done is I have worked with the 
superintendent there at Concho Agency and her name is Galila 
Johnson. She is a wonderful person to work with. We sit down 
every week to talk about some of these special deposit accounts 
that we have to deal with, supervised accounts. We meet with 
the realty people. It is an open-door policy, so if I am out at 
some point, out of the office doing something, then when I get 
back in, there are usually requests made for technical 
assistance by agency staff.
    Some of these requests that come in to the realty staff 
would take a lot of time away from them processing their daily 
work, so what I have been able to do is I have been able to 
take some of these larger issues that actually will take days 
to deal with. I am taking on those functions and helping the 
agency on that end.
    And, of course, the other function that I am doing, too, is 
helping the Office of Special Trustee with the special programs 
that are going on. We are trying to deal with the probate 
backlogs. We are trying to deal with the special projects, 
whereabouts unknown. We have--in the future, what we are 
planning to have is we are going to have some estate planning-
type seminars and forums for our beneficiaries.
    So we have a lot. We have a lot to do. I feel like that I 
am a worker bee out there and I work real hard. I have only 
been on here for 6 months, but I can tell you that there is a 
lot of work to be done. Beneficiaries need someone to advocate 
for them, and I feel like I am able to do that. If there are 
any questions, I will be glad to answer them at this time.
    The Chairman. Thank you. I want to thank this panel for 
their testimony. Obviously, there is some frustration on the 
Committee in trying to deal with this issue and I look forward 
to working with all of you to hopefully smooth out this process 
as we go through it, so thank you very much.
    I would like to call up our second panel, Chairman Harold 
Frazier of the Great Plains Tribal Chairman's Association; 
Keller George, President of the United South and Eastern 
Tribes; Principal Chief Jim Gray of the Osage Tribe; and the 
Honorable Melanie Benjamin, Chief Executive of the Mille Lacs 
Band of Ojibwe Indians.
    I ask unanimous consent that the statement of Mr. Kildee be 
entered into the record at the appropriate point, without 
objection.
    [The prepared statement of Mr. Kildee follows:]

Statement of The Honorable Dale E. Kildee, a Representative in Congress 
                       from the State of Michigan

    Good morning. Mr. Chairman, I want to thank you for scheduling this 
hearing today.
    For more than a century, the United States Government has done a 
poor job managing the Indian trust. Congress has attempted to rectify 
the many bureaucratic practices that had stalled the proper 
administration of trust fund accounts.
    In 1994, we passed a law to reform the management of trust funds 
and established the Office of Special Trustee for American Indians 
within the Department of Interior. The purpose of this office is to 
oversee trust fund management reform among the other departments within 
the Interior Department.
    In 1996, Eloise Cobell filed a federal class action lawsuit against 
the Department of Interior over the trust fund mismanagement of 
individual Indian money accounts.
    The Federal court ruled that the Federal Government breached its 
trust responsibilities to the Indian account holders.
    And last fall, the judge ordered the Department of Interior to 
conduct a full historical accounting of the Indian trust.
    As a result of the Cobell litigation, the Department has been 
compelled to develop a trust reform plan. In 2001, the Department 
attempted to create a new Bureau of Indian Trust Assets Management 
(BITAM), which was met with strong opposition.
    The Department abandoned that proposal and created a tribal task 
force.
    Despite not having a consensus of the tribal task force, the 
Department submitted a $5 million reprogramming request to the House 
and Senate appropriators during the December 2002 holiday recess so 
that it could go forward with another reorganization plan.
    The appropriators approved that request despite the fact that the 
Department failed to share details of the plan with the authorizing 
Committee.
    Simultaneous to the Department's efforts, this Committee has 
repeatedly fought attempts by the appropriators to limit the 
Department's responsibility to provide a full historical accounting of 
the Indian trust and diminish the rights of Indian trust beneficiaries.
    Mr. Chairman, while I agree that there is an urgent need for trust 
reform, tribes have raised numerous concerns about the plan. I look 
forward to developing a better understanding of the plan and of the 
tribes' concerns. Thank you.
                                 ______
                                 
    The Chairman. I want to welcome our second panel. I know 
that this has been a long hearing so far. I appreciate your 
patience, but obviously this is an extremely important issue to 
all of us and the Committee does need to spend the time 
necessary to fully understand and make recommendations on this.
    Before I begin with this panel, I would like to ask you to 
stand, raise your right hand.
    Do you solemnly swear or affirm under the penalty of 
perjury that the statements made and the responses given will 
be the whole truth and nothing but the truth, so help you, God?
    Mr. Frazier. I do.
    Mr. George. I do.
    Mr. Gray. I do.
    Ms. Benjamin. I do.
    The Chairman. Thank you very much. Let the record show they 
all answered in the affirmative.
    Welcome. Mr. Frazier, we are going to begin with you.

  STATEMENT OF HAROLD FRAZIER, CHAIRMAN, GREAT PLAINS TRIBAL 
                     CHAIRMAN'S ASSOCIATION

    Mr. Frazier. Good morning, Mr. Chairman and honorable 
members of the Committee. I am honored to be here today to 
testify on the Department of Interior's reorganization and I 
thank you for holding this hearing.
    I also want to thank you, Chairman Pombo, for coming out 
and visiting Sioux country out on the Rosebud Reservation. I 
really appreciate you coming out there.
    I am here today not only representing the Cheyenne River 
Sioux Tribe, but the Great Plains Tribal Chairman's 
Association. There are 16 tribes in the Great Plains Region. 
They encompass the States of North Dakota, South Dakota, and 
Nebraska. We are treaty tribes and many of us have large land 
bases and we know that we will suffer greatly under the current 
reorganization plans of the Department of Interior. We tribes 
are unique and we know that one size does not fit all.
    Trust comes from treaties, and it is time that our treaties 
are honored. The current Department of Interior reorganization 
is a waste of money and resources which are much needed at the 
local agency level to provide trust management. The Trust 
Officers that are planned to be located on reservations is one 
example. They will be only duplicating services that are now 
being provided by the agency superintendents. Why do we need 
$100,000-a-year positions at our agencies when we could better 
utilize the funding to hire appraisers, range techs, range 
conservationists, accountants, surveyors to better manage our 
lands and our assets.
    Another example is the Deputy Superintendents. Their 
positions are being funded from Fiscal Year 2003 carryover 
dollars. That funding for their salaries will not be there next 
year, so we question, where are they going to get their 
salaries funded from, education, social services, road 
maintenance? Our people cannot take any more cuts from our 
programs to fund this reorganization. And also question, is 
this good management practices, to fund permanent positions 
with carryover dollars, knowing that the next fiscal year, 
there will be no longer any funding from that source?
    For these reasons, we ask Congress to immediately halt this 
reorganization and look to Indian country for alternative 
solutions. We in the Great Plains Region have agency-specific 
lands that are more cost effective and that would benefit our 
people more.
    More tribes and associations have passed resolutions 
calling for a halt to this reorganization until their concerns 
are addressed. There are probably more tribes joining this 
effort, especially since Senator Johnson is requesting the 
General Accounting Office to investigate the entire management 
and administrative system of the Office of Special Trustee.
    We feel that it is crucial that an examination be made of 
the Office of Special Trustee's ever-increasing role in the 
reorganization and the circumstances that have led it to go far 
beyond the statutory duties given it by Congress. We strongly 
believe that the Office of Special Trustee has overstepped its 
statutorily mandated role of overseeing reform by implementing 
measures that would shrink the BIA's management functions at 
the agency level.
    Mr. Chairman and Committee members, for these reasons, I 
urge you to join Senator Johnson in requesting a formal General 
Accounting Office investigation of the Office of Special 
Trustee.
    In closing, the idea of reforming the trust management is a 
good one. I believe all tribes, not only my own, realize that 
the system is flawed. It is not change that tribes fear, it is 
change without consultation or consideration for each region's 
unique assets that we dispute.
    I, too, can sympathize with the Mescalero Tribe. In the 
consultation in Las Vegas in October 2003, we in the Great 
Plains submitted a letter to Aurene Martin. To date, we have 
heard no response. If any of our comments are going to be taken 
into consideration, thrown out, we haven't had any response.
    On behalf of the Cheyenne River Sioux Tribe and the Great 
Plains Tribal Chairman's Association, I want to thank you for 
the opportunity to testify here today and I look forward to 
answering any questions you may have.
    The Chairman. Thank you.
    [The prepared statement of Mr. Frazier follows:]

  Statement of Harold Frazier, Chairman, Cheyenne River Sioux Tribe, 
          Chairman, Great Plains Tribal Chairman's Association

    Good Morning, Mr. Chairman, Mr. Vice Chairman and honorable members 
of the Committee. I am honored to be here to testify regarding the 
Department of Interior's ongoing reorganization of the Bureau of Indian 
Affairs and the Office of the Special Trustee for American Indians. I 
am here today representing not only the Cheyenne River Sioux Tribe, but 
also the Great Plains Tribal Chairman's Association. The Great Plains 
Tribal Chairman's Association represents 16 tribes in the Great Plains 
region, encompassing the states of North Dakota, South Dakota and 
Nebraska. The Great Plains Tribes--Cheyenne River Sioux, Standing Rock 
Sioux, Crow Creek Sioux, Turtle Mountain Band of Chippewa, Lower Brule 
Sioux, Three Affiliated Tribes, Yankton Sioux, Spirit Lake Sioux, 
Oglala Sioux, Rosebud Sioux, Santee Sioux, Sisseton-Wahpeton Oyate, 
Winnebago, Flandreau Santee Sioux, Omaha and Ponca--are major 
stakeholders in the Department of Interior's efforts to ``reorganize'' 
the Bureau of Indian Affairs and the Office of the Special Trustee for 
American Indians.
    On March 10, 2004, I testified before the Senate Committee on 
Indian Affairs on the very same issue: reorganization. In that 
testimony, I underscored that a majority of Indian tribes were against 
reorganization, not only because it was put into effect without 
meaningful tribal consultation, but also because a ``one size fits 
all'' approach to trust management reform is certain to fail. Since 
that time, there has been little progress toward resolution of many of 
the problems I highlighted in my testimony, including the problematic 
expansion of the OST, imposition by trust officers with dubious 
authority at the local level, and shrinking of the BIA's presence on 
the reservation, among other concerns. However, there has been a 
positive development, at least from the tribal perspective: More tribes 
have voiced a desire to take a hard look at how they would reform the 
system in their region, based on factors that are unique to them.
    For instance, the Great Plains Regional Proposal for Trust Reform, 
which I presented for the first time before the Senate Committee in 
March this year, is a viable alternative to reorganization that fits 
our needs as a region. Our detailed plan for our region, along with 
specific legislative language to accomplish it, is attached to my 
written statement. The Great Plains region has developed a proposal for 
a pilot program, similar to that set up by the legislative rider in the 
FY 2004 Interior Appropriations bill for Self Governance tribes. 
Differences between regions in population, employment, revenue 
foundation and even geographic location impact how trust reform 
measures should vary and be flexible to fit the needs of the particular 
region. Three of the Great Plains region tribes have developed plans: 
Cheyenne River Sioux Tribe, Three Affiliated Tribes and Winnebago. 
These agency-specific plans compare costs associated with the 
Department's proposed changes and our own assessment of current and 
future needs for reforming the trust asset management system. The plans 
present a simpler, clearer and more cost-effective use of already 
scarce resources.
    I am pleased to report that the Great Plains Region has been joined 
by the Montana-Wyoming Tribal Leaders Council and the Fort Peck Indian 
Tribe in our effort. These organizations have passed resolutions 
renouncing reorganization in its present form and demanding a halt to 
any reorganization activity until tribal concerns are considered. 
Moreover, I am quite optimistic that more tribes from other regions 
will be encouraged to join our efforts in light of Senator Tim 
Johnson's request that the Government Accounting Office (GAO) 
investigate the entire management and administrative system of the OST, 
including its implementation and budget process. We think that it is 
crucial that a fair and impartial examination be made of the OST's ever 
increasing role in reorganization, and the circumstances that have led 
it to go far beyond the statutory duties given it by Congress. We 
strongly believe that the OST has overstepped its statutorily-mandated 
role of overseeing reform by implementing measures that would 
significantly shrink the BIA's management functions at the agency 
level. Mr. Chairman, for these reasons, today I encourage you to join 
Senator Johnson in requesting a formal GAO investigation of the OST.
    In sum, the idea of reforming the trust management system is a good 
one. I believe all tribes, not only my own and those in my region, 
understand that the system is flawed. Despite reports to the contrary, 
it is not change that tribes fear--it is change without consultation or 
consideration for each region's unique trust assets, including those 
tribes' ideas for change, that we dispute. The Department's plan for 
reorganization, including the ``To-Be'' reengineering process, has 
noteworthy goals. No one disputes that land consolidation is essential 
if Indian lands are to be prudently managed, nor is there any 
disagreement with the idea that there is a need to establish better 
systems to keep track of leases and receivables. Upgrading the computer 
systems in use would be of substantial benefit, however, going forward 
with the present program without addressing fundamental deficiencies in 
basic services provided at the agency level is doomed to be a useless 
exercise.
    We would like to work with the Department to put into effect those 
elements of reform that we believe will benefit our region. Our 
legislative proposal would allow that to be done on an expedited basis. 
We would welcome a cooperative effort to develop regional systems that 
both region-tribes and the Department can agree upon. We can work 
together to effectuate positive change for the benefit of all. I am 
happy to report that on April 26, 2004, Special Trustee Ross Swimmer 
met with a number of tribal leaders here in Washington to explain the 
present process and to listen to tribal concerns. While no agreements 
were reached at that meeting, there are future plans for similar 
meetings. I sincerely hope that we can resolve some of the issues of 
concern through further dialogue.
Conclusion
    On behalf of the Great Plains Tribal Chairman's Association and the 
Cheyenne River Sioux Tribe, thank you for the opportunity to present my 
views on reorganization. I look forward to answering any questions you 
may have.
                                 ______
                                 
    The Chairman. Mr. Gray?

            STATEMENT OF JIM GRAY, PRINCIPAL CHIEF, 
                     OSAGE TRIBE, OKLAHOMA

    Mr. Gray. Chairman Pombo, members of the House Resources 
Committee, I am Jim Gray, Principal Chief of the Osage Tribe 
based in Pawhuska, Oklahoma. I am honored to be here today to 
testify today before this Committee and provide the vies of the 
Osage Tribe.
    Before I begin, I would like to thank the Committee for 
voting out the Osage membership and government form legislation 
last week. The legislation would be an enormous step forward 
for the Osage people.
    Mr. Chairman, I appreciate the Committee holding this 
important hearing on trust reform and the efforts of the 
Department of Interior to implement trust reform through the 
reorganization of the Bureau of Indian Affairs and the Office 
of the Special Trustee. I appreciate your willingness to take a 
close look at these serious issues. You have already held 
several hearings over the last year in different parts of the 
country on trust management and trust fund issues, including 
the Indian trust fund lawsuit, which is the reason that we are 
all sitting here today.
    The Cobell case served as a wake-up call to the Federal 
Government about its gross mismanagement of trust assets and 
trust funds that Indians have known for over 100 years, but 
whose efforts to rectify or reform the system were met with a 
deaf ear. The Cobell case set off a chain reaction of events, 
including the reorganization at the Department of the Interior 
that will reverberate for decades to come.
    The issue of trust reform strikes close to the heart of the 
Osage. The Osage Tribe continues to receive nearly all Federal 
services directly from the Bureau of Indian Affairs and the 
Office of the Special Trustee, not through self-governance 
contracts or compacts. While I am firmly of the view that the 
Osage Tribe should take over many of these functions, there are 
reasons why our tribe has not done this on a significant scale.
    First, because of the environmental damage from minerals 
production on our reservation and the Federal Government not 
enforcing or cleaning up this pollution as it should. There may 
be significant environmental liabilities associated with 
contracting certain Federal programs.
    Second, these programs are so badly underfunded that taking 
them over only places an expensive obligation in our lap we do 
not yet have the resources to supplement and make work as they 
should. With reference to Congressman Udall's position or 
concerns that he has raised I think in the Salt River example, 
I think you also see a situation where you have a tribe that 
has the resources to be able to supplement these programs, and 
that is certainly not the case with other tribes across the 
country.
    Third, over a century of the Federal Government operating 
through the BIA in the daily lives of our people have created a 
conditioning, a mindset, that a pervasive BIA role is more 
comfortable than the unknown. These are difficult problems for 
a tribe with very limited tribal resources to ensure efficient 
service delivery to our people. Nonetheless, the movement 
toward a greater tribal role in decisionmaking and 
administration of services is a concept I wholeheartedly 
embrace.
    I also agree with the view of the National Congress of 
American Indians that the determination of how to best manage 
trust obligations to tribes and Indians should focus on the 
most local level, BIA agencies. The BIA Osage Agency is an 
example of an agency specific plan tailored to meet the 
specific minerals production needs of the Osage. One hundred 
percent of the Osage Reservation's sub-surface is held in trust 
for the Osage Tribe. Income from minerals production purports 
to be paid into the Federal trust fund system, then out 
primarily to individual Indians.
    Although non-Indians and corporations also receive funds 
from our trust asset, because of the tribal and Federal 
priority of Osage minerals production, the BIA Osage Agency 
administers all Osage minerals development without the 
involvement of the Minerals Management Service or other 
agencies. We believe that this focus of the Osage Agency leads 
to greater efficiencies in Osage minerals production.
    It remains to be seen whether the BIA and OST 
reorganization will refocus on providing better front-line 
trust services to tribes and Indians at the local level rather 
than hunkering down against potential trust liability. 
Effective choosing and placement of trust officials are 
critical.
    My private and public sector experience informs me that 
service providing can only be as good as the people you put in 
those positions. I am disappointed that the tribes have had so 
little input in the hiring of key Federal positions. I am 
concerned that avoiding trust liability may be overcoming the 
commitment to proper administration of moral and legal trust 
obligations to tribes and Indians.
    But focusing on trust reform only through the lens of BIA 
and OST reorganization risks losing sight of the big picture of 
trust reform. Real trust reform begins with Congress. The 
United States Constitution specifically empowers Congress to 
regulate commerce between the different sovereigns, States, 
foreign nations, and Indian tribes. The United States Supreme 
Court has established that Congress has enormous powers over 
Indians and tribes. Working with the tribes, it is Congress 
that must unshackle the BIA and OST from statutory directives 
requiring BIA officials to look over the shoulders of tribal 
leaders and post-judge tribal decisionmaking.
    The shameful Federal policies of yesteryear that presumed 
Indian and tribal incompetence and sought to control Indian and 
tribal resources and decisions are still found in today's laws, 
and therefore, also, the daily obligations of Federal 
employees. The easy route for both Congress and the tribes is 
to scold the BIA and OST in harsh terms, which both usually 
deserve when it comes to trust management. The more difficult 
step in this task is stepping back, taking a broader look at 
the problems, and seeking consensus from possible solutions. 
This is in the political environment of dealing with tribes who 
have learned the hard way to fear what Congress might do.
    The Osage Tribe offers several ideas. Revisit anachronistic 
laws--the BIA and OST continue to do what Congress has told 
them to do when it comes to pervasive control over the lives of 
Indians and second-guessing tribal decisionmaking. Congress 
recently freed both the tribes and the BIA of most contract 
approvals under 25 U.S.C. 81. Furthermore, the new Navajo 
leasing statute limits the BIA role in Navajo leasing 
decisions. These are excellent examples of assisting both 
tribes and the Federal agencies, reliving them of unwanted and 
unnecessary duties that have nothing to do with the core 
missions of either entity. Reforming the broader leasing 
statute and enacting the Indian energy provisions that were 
negotiated last year would be steps in the right direction.
    Fractionation--enact a new law addressing fractionation of 
Indian lands, with the policy of tribal self-governance guiding 
this law.
    Accountability--there must be ways to hold Federal 
decisionmakers accountable for failure to properly administer 
trust obligations. For too long, Congress has treated the BIA 
and OST as welfare distributors and overseers rather than 
agencies with more legal duties to tribes and Indians.
    Funding--appropriate the funds the agencies need to do 
their jobs effectively and maintain the treaty and moral 
obligations of the United States to Indians and tribes.
    We believe Congressional initiatives in this direction 
would help create a more efficient, more effective reform of 
the BIA and OST.
    Thank you for the opportunity to testify today. I would be 
pleased to answer any questions you may have.
    The Chairman. Thank you.
    [The prepared statement of Mr. Gray follows:]

       Statement of Jim Gray, Principal Chief of the Osage Tribe

    Good morning, Chairman Pombo, Ranking Member Rahall, and other 
members of the House Resources Committee. I am Jim Gray, Principal 
Chief of the Osage Tribe based in Pawhuska, Oklahoma. I am honored to 
be here to testify today before this Committee and provide the views of 
the Osage Tribe. Before I begin, I would like to thank the Committee 
for voting out the Osage membership and government form legislation 
last week. This legislation would be an enormous step forward for the 
Osage people.
    Mr. Chairman, I appreciate the Committee holding this important 
hearing on trust reform and the efforts of the Department of the 
Interior to implement trust reform through the reorganization of the 
Bureau of Indian Affairs and the Office of the Special Trustee. I 
appreciate your willingness to take a close look at these serious 
issues. You have already held several hearings over the past year in 
different parts of the country on trust management and trust fund 
issues, including the Indian trust fund lawsuit, which is the reason 
that we are all sitting here today. The Cobell case served as a wake-up 
call to the Federal government about its gross mismanagement of trust 
assets and trust funds that Indians have known for over a hundred years 
but whose efforts to rectify or reform the system were met with a deaf 
ear. The Cobell case set off a chain reaction of events, including the 
reorganization at the Department of the Interior that will reverberate 
for decades to come.
    The issue of trust reform strikes close to the heart of the Osage. 
The Osage Tribe continues to receive nearly all Federal services 
directly from the Bureau of Indian Affairs and Office of Special 
Trustee, not through self-governance contracts or compacts. While I am 
firmly of the view that the Osage Tribe should take over many of these 
functions, there are reasons why our Tribe has not done this on a 
significant scale. First, because of the environmental damage from 
minerals production on our Reservation and the Federal government not 
enforcing or cleaning up this pollution as it should, there may be 
significant environmental liabilities associated with contracting 
certain Federal programs. Second, these programs are so badly 
underfunded that taking them over only places an expensive obligation 
in our lap that we do not yet have the resources to supplement and make 
work as they should. Third, over a century of the Federal government 
operating through the BIA in the daily lives of our people has created 
a conditioning, a mind-set, that a pervasive BIA role is more 
comfortable than the unknown. These are difficult problems for a Tribe 
with very limited tribal resources to ensure efficient service delivery 
to our people. Nonetheless, the movement toward a greater tribal role 
in decisionmaking and administration of services is a concept I 
wholeheartedly embrace.
    I also agree with the view of the National Congress of American 
Indians that the determination of how to best manage trust obligations 
to tribes and Indians should focus on the most local level, BIA 
agencies. The BIA Osage Agency is an example of an ``agency specific 
plan'' tailored to meet the specific minerals production needs of the 
Osage. 100% of the Osage Reservation subsurface is held in trust for 
the Osage Tribe. Income from minerals production purports to be paid 
into the federal trust funds system then out primarily to individual 
Indians, although non-Indians and corporations also receive funds from 
our trust asset. Because of the tribal and federal priority of Osage 
minerals production, the BIA Osage Agency administers all Osage 
minerals development, without the involvement of the Minerals 
Management Service or other agencies. We believe that this focus of the 
Osage Agency leads to greater efficiencies in Osage minerals 
production.
    It remains to be seen whether the BIA and OST reorganization will 
refocus on providing better frontline trust services to tribes and 
Indians at the local level rather than hunkering down against potential 
trust liability. Effective choosing and placement of trust officials 
are critical. My private and public-sector experience informs me that 
service providing can only be as good as the people you put in those 
positions. I am disappointed that the tribes have had so little input 
on the hiring of key federal positions. I am concerned that 
overreaching to avoid trust liability may be overcoming the commitment 
to properly administering moral and legal trust obligations to tribes 
and Indians.
    But focusing on trust reform only through the lens of BIA and OST 
reorganization risks losing site of the big picture of trust reform. 
Real trust reform begins with Congress. The United States Constitution 
specifically empowers Congress to regulate commerce between the 
different sovereigns: states, foreign nations, and Indian tribes. The 
United States Supreme Court has established that Congress has enormous 
powers over Indians and tribes. Working with the tribes, it is Congress 
that must unshackle the BIA and OST from statutory directives requiring 
BIA officials to look over the shoulders of tribal leaders and post-
judge tribal decisionmaking.
    The shameful federal policies of yesteryear that presumed Indian 
and tribal incompetence and sought to control Indian and tribal 
resources and decisions are still found in today's laws and therefore 
also the daily obligations of federal employees. The easy route for 
both Congress and the tribes is to scold the BIA and OST in harsh terms 
(which both usually deserve when it comes to trust management). The 
more difficult task is stepping back, taking a broader look at the 
problems, and seeking consensus from possible solutions. This in the 
political environment of dealing with tribes who have learned the hard 
way to fear what Congress might do.
    The Osage Tribe offers several ideas.
      Revisit Anachronistic Laws. The BIA and OST continue to 
do what Congress has told them to do when it comes to pervasive control 
over the lives of Indians and second guessing tribal decisionmaking. 
Congress recently freed both the tribes and the BIA of most contract 
approvals under 25 U.S.C. Sec. 81. Furthermore, the new Navajo leasing 
statute limits the BIA role in Navajo leasing decisions. These are 
excellent examples of assisting both tribes and the Federal agencies 
through relieving them of unwanted and unnecessary duties that have 
nothing to do with the core missions of either entity. Reforming the 
broader leasing statute and enacting the Indian energy provisions that 
were negotiated last year would be steps in the right direction.
      Fractionation. Enact a new law addressing fractionation 
of Indian lands, with the policy of tribal self-governance guiding this 
law.
      Accountability. There must be ways to hold Federal 
decisionmakers accountable for failure to properly administer trust 
obligations. For too long, Congress has treated the BIA and OST as 
welfare distributors and overseers, rather than agencies with moral and 
legal duties to tribes and Indians.
      Funding. Appropriate the funds the agencies need to do 
their jobs effectively and maintain the treaty and moral obligations of 
the United States to Indians and tribes.
    We believe Congressional initiatives in this direction would help 
create a more efficient, more effective reform of the BIA and OST.
    Thank you for the opportunity to testify today. I would be pleased 
to answer any questions you may have.
                                 ______
                                 
    The Chairman. Mr. George?

            STATEMENT OF KELLER GEORGE, PRESIDENT, 
             UNITED SOUTH AND EASTERN TRIBES, INC.

    Mr. George. Good morning, Mr. Chairman, and thank you for 
this opportunity. Honorable members of the Committee, my name 
is Keller George. I am a member of the Oneida Indian Nation 
Men's Council and President of the United South and Eastern 
Tribes, known as USET. On behalf of the 24 member tribes of 
USET, I thank you for this opportunity to present our 
perspective on the reorganization of Indian trust management.
    The Administration, in our view, has taken it upon 
themselves to make drastic and sweeping changes in the Bureau 
of Indian Affairs in programs and services, functions and 
activities, regardless of the opposition from Indian country. 
DOI officials stated that they had consulted with tribes on 
various reorganization issues that are being instituted. 
However, this is not totally true. DOI has made consultation a 
mere ritual they must go through to push their agenda. USET 
believes that currently, there is still time to implement 
tribal needs into the process and to gain tribal support.
    We heard this morning that there was over 40 meetings with 
the tribal task force working in trust reform. I was a member 
of that task force and only missed one of those meetings during 
the entire almost a year process. In my view, we in the Indian 
country viewed this as negotiation, not consultation, because 
we were there trying to come up with a plan that could be used 
for reorganization in the trust management.
    That is why there was great opposition to the BITAM process 
that was brought forth by the Secretary of Interior. We made a 
lot of progress as we went through this. There were over 25 or 
30 plans put forth. We got down to either between two and five 
plans that we could support.
    However, after a whole year of meetings, in December of 
2002, we had put forth an initiative to create a position of 
under secretary. The DOI officials, Federal officials that were 
at table agreed with that. The problem was that we wanted 
oversight and trust principles or standards put in place, which 
they were opposed to doing, and that was the breakdown in 
December of 2002 of that almost a year long process.
    After that meeting in December, we didn't meet again. The 
next notice I get is there is a roll-out of the reorganization 
that was going to be presented to the Eastern tribes in 
Nashville, Tennessee. The decisions about the reorganization 
were made. I will agree, however, that there was a lot of 
issues that were agreed upon by consensus, and I don't see a 
whole lot of those issues in this reorganization that we have.
    These are some of our recommendations, solutions, and to 
make these changes for smoother and more effective change. No 
funds should be diverted from the BIA's programs, finances, to 
finance the reorganization efforts in regards to the expansion 
of OST's programming. Tribes have made it clear that DOI should 
not use program dollars to help fund the mistakes of the 
Administration. Further, there has been little discussion 
between the Federal Government and tribal leadership regarding 
the level of reorganization, despite repeated requests from 
Indian country.
    Rehabilitating the trust requires the DOI to address 
financial management and land and natural resource management. 
The current reorganization only addresses financial management 
issues and will have little impact on DOI's ability to offer 
improved trust services to tribes that have not allotted 
substantial portions of their reservations.
    Additionally, the reorganization does not provide for the 
staffing necessary to address the appraisal, surveys, and 
compliance abilities required to improve the management of land 
and natural resources.
    Carryover funds from previous years should be not used for 
the reorganization effort. As Chairman Frazier has pointed out, 
these trust officers are being funded with carryover money. 
What happens in the next year when that money runs out? Is it 
the usual way it happens, borrow from Peter to pay Paul? Well, 
quite frankly, Indian tribes throughout this country are tired 
of being Peter, and it is true that every time the tribes are 
denied money to administrative programs that are so vital to 
Indian country to pay for other programs that have not been 
allotted in the budget. Is this going to happen again if 
Congress does not, the appropriators do not have the funding 
for these trust officers and Deputy Aministrators throughout 
the country? There have been over 47 hired already. Where is 
that money coming from?
    So that is what our concerns are. The ``to be'' process 
must be passed into the reorganization effort. The ``to be'' 
process determines the best practices for business processes 
and resources needed to accomplish these goals. USET suggests 
that one process be introduced per year over a 5-year period, 
allowing the Department to refine processes as they are 
introduced. This allows the BIA to request multiple-year 
appropriations instead of a single-year appropriation from 
Congress.
    Tribes must know how the reorganization is going to affect 
the regional agency level operations and once and for all. The 
regional reorganization chart currently in place does not 
accurately portray the current situation at the local level. 
Further, tribes cannot be expected to comment on the 
reorganization where there is no information available on which 
to base comments. Tribes are not being fully informed of 
pending changes.
    It is time for the Federal Government to be held 
accountable for their trust responsibility. Indian country must 
not be held at bay any longer by pending cases in the courts. 
Recent Supreme Court decisions have concluded that the Federal 
Government has avoided fiduciary trust responsibilities and 
operated with bad faith in its business relationship with 
Indian tribes. Tribes no longer should be forced to find 
remedies through the courts.
    USET tribes support reform and understand reorganization is 
necessary for the government to fulfill its fiduciary 
responsibilities. Tribes must no longer receive ambiguous and 
confusing information about the reorganization process. Future 
generations of Indian people are depending on tribal leaders to 
take a stand and to approach reform with a united voice.
    I would be happy to answer any questions that you may have.
    The Chairman. Thank you.
    [The prepared statement of Mr. George follows:]

Statement of Keller George, President, United South and Eastern Tribes, 
                 Inc., and Member, Oneida Indian Nation

    Good morning, Mr. Chairman and Honorable Members of the U.S. 
Committee on Resources.
    My name is Keller George. I am a member of the Oneida Indian 
Nation's Men's Council, and President of United South and Eastern 
Tribes, Inc. (USET). On behalf of the 24 member tribes of USET, I thank 
you for this opportunity to present our perspectives on the current 
reorganization of Indian Trust Management.
    USET has played an extremely active role in and continues to 
monitor the reorganization process since the Administration first 
approached Tribes with the Bureau of Indian Trust Asset Management 
(BITAM) vision. At that point, we stood with all Tribes across the 
country in opposition to BITAM in the hopes of finding a better plan 
that would more effectively meet the needs of Indian Country. USET 
spent many hours analyzing the various issues of reorganization and 
trust reform in an effort to provide insight and tribal perspectives on 
the changes that are currently taking place and those that are forecast 
in the years to come. While USET does not agree with everything that is 
being implemented, we recognize that the ``status quo'' is no longer an 
acceptable way of doing business.
    The Administration has taken it upon themselves to make drastic and 
sweeping changes to the Bureau of Indian Affairs (BIA) Programs, 
Services, Functions, and Activities (PSFA's) regardless of the 
opposition from Indian Country. Tribes want to participate in a joint 
effort that can benefit everyone, but those attempts have been 
suppressed time and time again. DOI officials stated that they have 
consulted with the Tribes on various reorganization issues that are 
being instituted; however, this is not totally true. Consultation is 
not throwing an idea out into Indian Country, seeing a negative 
response, and moving forward with the idea regardless. Consultation is 
listening to tribal concerns and taking those comments into account. 
DOI has made consultation into a mere ritual they must go through to 
push their agenda. Negotiation is an essential part of consultation and 
while you will never be able to please everyone, the majority opinion 
must prevail in the end. USET believes that currently there is still 
time to implement Tribal needs into the process and gain Tribal 
support.
    It is USET's belief that the BIA restructuring has been based more 
on the National Association of Public Administration (NAPA) report of 
several years ago than on the research conducted through the As-Is and 
now the To-Be Process. The OST build-up is leaving very little room for 
the BIA to achieve adequate staffing levels due to funding going into 
OST and not into the BIA. These issues must be addressed now before the 
Administration inadvertently creates a BIA so weak that it would be 
easy for the Office of Special Trustee (OST) to fill the vacuum, 
thereby, by taking over all trust functions and dissolving the BIA 
completely.
    We would ask for your consideration of the following areas of 
concern and recommended solutions to make these changes soother and 
more effective:
    No funds should be diverted from BIA PSFA's to finance the 
reorganization efforts in regards to the expansion of OST PSFA's. From 
the beginning, Tribes have made it clear that the DOI should not use 
program dollars to help fund the mistakes of the Administration. 
Reorganization must be contingent upon new appropriations from 
Congress. Taking money from BIA PSFA's will only damage the level of 
service that the reform process is designed to protect. USET Tribes are 
very concerned about the future of the regional office, and would 
emphasize once again how important the regional level is to the daily 
operation of programs. Because 90% of the eastern Tribes contract for 
services from BIA, the regional office is extremely important and acts 
in place of an agency level office. Many hypotheses are circulating 
throughout Indian Country as to how the regional reorganization of the 
BIA will actually work. There has been little direct discussion between 
the federal government and Tribal Leaders regarding this level of 
reorganization despite repeated requests from Indian Country. The new 
Departmental Manual once again is unclear as to the entire multiple and 
complex relationships expected at the regional level and below. Tribal 
leaders are confused and need clarification. Will there be Trust 
Officers at every regional office? Who will they answer to directly? 
What will be their relationship with other BIA regional staff? What 
will the relationship be like between the Trust Officers and BIA 
officials? Who will have final determination authority? These are the 
types of questions that Tribes need answered in order to understand the 
complexity of the situation. Both Trust Services and Trust Resources 
must be funded at the appropriate levels to maintain a satisfactory 
level of business. USET urges the Administration not to hire new 
management staff without having basic operational in place. USET is 
perplexed and asks, ``How can a Trust Officer effectively oversee the 
trust obligations of an agency that doesn't have the manpower and 
resources to carry out those trust obligations?''
    USET suggests that the staffing/hiring initiatives of OST be 
paralleled with a build up of the BIA regional/agency offices in order 
to bring those offices up to certain standards regarding adequate 
staffing and adequate funding levels to diminish backlogs of PSFA's. 
USET suggests that instead of OST hiring all the trust oversight 
positions immediately, they only hire one-half of those positions in 
FY2005. The Department should take the remaining funds from those 
unfilled positions and ``invest'' it in the regional/agency offices. 
Trust officer positions are for oversight, not management, of the 
Trust. Rehabilitating the Trust requires the Department of the Interior 
(DOI) to address financial management and land and natural resource 
management. The current reorganization only addresses financial 
management issues and will have little impact on the DOI's ability to 
offer improved trust services to Tribes that have not allotted 
substantial portions of their reservations. The reorganization is being 
driven by the number of IIM account holders in an area, not the total 
volume of trust work that is being performed. Only the OST Trust 
Officers have been funded, BIA Deputy Superintendents have not yet been 
authorized. The reorganization does not provide for the staffing 
necessary to address the appraisals, surveys and compliance activities 
required to improve the management of land and natural resources. 
Reorganization is a slow process involving more than just ``staffing 
up.'' USET fears that the vacuum created by the large OST staff versus 
the small, inadequate BIA staff will lead OST to try to fill those 
positions through their organization, thus taking the Tribes back to 
the BITAM plan which has been strongly opposed by Indian Country.
    Carryover funds from previous years should not be used for the 
reorganization effort. The President's FY05 Budget Proposal has a 
reduction of $5.4 million in program operations to ``redirect funds'' 
to high priority programs. USET believes that the thought process is 
that the Administration can take the $5.4 million cut and use it for 
``high priorities'' such as reform because the anticipated FY04 
carryover funds can help sustain the operation of programs. Once again, 
the Administration's ``high priorities'' are not necessarily the ``high 
priorities'' from Indian Country. The Administration must not take from 
the programs in hopes that there will be enough carryover to cover the 
loss. Tribes must have the carryover funds for the already unfunded or 
underfunded programs they administer. USET believes that the 
Administration must make a concerted effort to gain new appropriations 
for their ``high priorities'' rather than take from the operation of 
programs.
    The To-Be Processes must be phased into the reorganization efforts. 
The To-Be process determined the best practices for business processes 
and the resources needed to accomplish these goals. In the March 8, 
2003, Federal Register Notice, OST asked for comments on The To-Be 
Trust Business Model which identified five processes. Indian Country 
and Tribal Leaders are unable to comment on how these multiple changes 
will affect them. USET again will stress that while we support change 
from the ``status quo,'' the implementation or reengineering and 
reorganization must be slowed. USET suggests one process be introduced 
per year over a five -ear period. allow the Department to refine 
processes as they are introduced. This will also allow BIA to request 
multiple year appropriations instead of large single year 
appropriations from Congress.
    Tribes must know how the reorganization is going to affect the 
regional/agency level operations once and for all. The Administration, 
the To-Be Process, and the OST have yet to determine how these upper-
level changes are going to affect the regional and agency levels. The 
regional organization charts currently in place do not accurately 
portray the current situation at local levels. USET Tribes were 
notified of positions at the Eastern Region that will be changing their 
reporting relationship directly to Central Office. No organizational 
charts show these new relationships, the impact on the region, impacts 
to tribal shares and budgets, and impacts to future funding levels. 
Tribes cannot be expected to make comments on the reorganization where 
there is no information available on which to base the comments. Tribes 
are not being fully informed of impending changes. USET would propose 
to work with the Administration to put into place an organizational 
system that works with the unique needs of the Eastern Region.
    It is time for the Federal government to be held accountable for 
their trust responsibility. Indian Country must not be held at bay any 
longer by pending cases in the Courts. It is critical that continuity 
and accountability be established as a cornerstone of the 
reorganization efforts. Indian Country must have a way to hold their 
trustee accountable for actions taken that may be contrary to the 
advancement of Indian people. Recent Supreme Court decisions have 
concluded that the Federal government has avoided fiduciary trust 
responsibilities and operated with ``bad-faith'' in its business 
relationships with Indian Tribes. In United States v. Navajo Nation, 
the Supreme Court stated that the Mitchell I and Mitchell II analysis 
must focus on a specific right-creating or duty-imposing statute or 
regulation. In this case, the Court held against imposing a trust 
obligation on the government. It reasoned that the existence of a trust 
relationship alone is not sufficient to support a claim for damages 
under the Indian Tucker Act (28 U.S.C. ss 1505). Conversely, in United 
States v. White Mountain Apache, the Court acknowledged the Statue at 
issue did not expressly subject the government to fiduciary duties of a 
trustee. Nonetheless, the Court determined that the Fort Apache 
property was expressly subject to a trust. In so doing, the Court drew 
a ``fair inference'' to find an obligation on the part or the 
government to preserve the property as a trustee, and determined that 
its branch of trust was enforceable by damages.
    From these cases, we have learned that unless a statute or 
regulation imposes a specific fiduciary obligation on the part of the 
government toward Tribes and their resources, the Court will look 
unfavorably on the imposition of such a duty. We have also learned that 
trust principals must be clearly defined in order for the government to 
be held accountable for a breach of trust duties. In a sense, Indian 
Country was fortunate that the Court felt compelled to infer a trust 
obligation in the White Mountain Apache decision; Indian Country was 
not so lucky in Navajo Nation. The dichotomy of rationales created by 
these decisions indicates that without clear guidelines and definition 
of trust principles, the Court will continue to infer--or ignore as the 
case may be--the government's fiduciary responsibility toward Indian 
Tribes. Indian Tribes must be allowed to hold their trustee accountable 
for mismanagement of their resources. We must begin by defining trust 
principles that create consistency in application across all trust 
activities. Tribes should no longer be forced to find remedy through 
the courts.
    USET Tribes support reform and understand that reorganization is 
necessary for the government to fulfill its fiduciary responsibilities. 
Many Tribes feel that efforts to this point have been futile and DOI is 
moving forward with their own agenda. Tribes must no longer receive 
ambiguous and confusing information about the reorganization process. 
USET recognizes the urgent need for Tribes to be actively engaged in 
the reorganization process, not just shown the end process. Future 
generations of Indian people are depending on Tribal Leaders to take a 
stand and approach reform with a united voice.
    Once again, I would like to emphasize the great importance of 
proper trust accountability and the federal trust obligation. 
Efficiently operated trust programs could benefit Indian Country 
greatly and we have all seen what a poorly operated trust system can 
produce. Indian people have given so much to the Federal government 
based on the promise of adequate management of assets through the 
Trustee relationship. That relationship has been severely damaged, and 
must be mended. USET stands ready to assist in the processes of mending 
relationships, establishing accountability of trust, and reorganization 
of the BIA. USET Tribes have the experience and knowledge to work 
through these issues.
    USET Tribes understand the political pressures associated with 
completion of the reorganization, but we ask that the Administration 
look at the far-reaching effects these changes will have on Indian 
Country today and in the future.
    Thank you and I would be pleased to answer questions at this time.
                                 ______
                                 
    [Mr. George's response to questions submitted for the 
record follows:

   Response to questions submitted for the record by Keller George, 
 President, United South and Eastern Tribes, Inc., and Member, Oneida 
                             Indian Nation

Responses to Chairman Richard Pombo's Questions
    1. Can you expand on your comments regarding how the reorganization 
is driven by the individual Indian money account holders, and why it 
doesn't work for Eastern Tribes?
    The current re-organization of the BIA is completely reactionary to 
the IIM Account Holders and the Cobell case. The Bureau has made no 
attempts to be forward-thinking or proactive in their implementation of 
the re-organization. On-going procedural structure research plans have 
been ignored in the process and the BIA continues to push their ideas, 
not the Tribes' ideas forward. An example would be that the ``To-BE'' 
process is currently funded by the Office of the Special Trustee (OST) 
to study the best practices for business processes within the BIA and 
what staff would be needed to operate at ultimate capacity. The ``To-
BE'' study has not been complete, yet the BIA continues to move forward 
with their reorganization implementation. This is not a cost effective 
policy and proves that the reorganization is purely driven by 
reactionary tactics and the Cobell case.
    USET would like to see meaningful, long lasting change through a 
reorganization of the BIA. While we recognize the importance of 
identifying IN Account holders and their proper payment for the use of 
their land, this is not the only issue that needs to be addressed. The 
Eastern Region Tribes do not have the numerous IIM Accounts like those 
areas in the-West and thankfully do not have to deal with the many 
problems caused by fractionated land interests. USET wants to ensure 
that all important aspects of reorganization are identified and 
discussed.
    2. Many Tribes want to develop trust reform plans based on factors 
that are unique to them. Such trust reform plans would then be 
implemented on a tribe-by-tribe or region-by-region basis, through the 
local BIA agency, through a self determination contract, or through a 
self governance compact. Under such a proposal, the Secretary 
ultimately bears a trust responsibility for this. To what extent should 
a tribe be able to develop and implement its own trust reform plan and 
still hold the Secretary fully liable if something should go wrong with 
its implementation?
    USET has always maintained that there needs to be a set of 
standardized overarching trust principles. The BIA continually refuses 
to put trust principles in legislation because that would make the 
Secretary directly responsible to the Tribes in a more defined way. 
USET believes that as long as the overarching principles are in place, 
and the Secretary's responsibilities are finally clearly defined by 
law, then Tribal/ Regional implementation plans could be instituted. 
The Tribal/ Regional implementation plans would need to, at the least, 
meet the standards defined in the over arching principles in order for 
the Secretary to maintain the trust responsibility. Of course, USET 
believes that any principles developed and/or Tribal/Regional trust 
plans implemented should be incorporated through meaningful 
consultation with the Tribes.
Responses to Ranking Member Nick Rahall, II, Questions
    QUESTION: In order for any of this reorganization plan to work 
there must be excellent communication between OST staff and the BIA 
staff at all levels. Do you agree? Have you seen a good working 
relationship between OST and BIA thus far? For example, when Tribes 
recently met with the Department on reorganization matters, how did the 
Special Trustee and the Assistant Secretary for Indian Affairs 
communicate with the Tribes in attendance?
    It is true that the OST and BIA must learn to communicate in order 
to make the reorganization a success, but the level of communication 
needed depends on to whom you speak. The OST was brought into existence 
for the purpose of monitoring the trust activities of the BIA. This 
oversight function does not always foster great communication. There is 
no protocol for communicating between agencies and many times 
information about meetings is not communicated between the two 
agencies, causing Tribal leaders to show up at meetings with no sign of 
the important people they came to meet and discuss issues with. This 
was the case at the recent DOI/Tribal leaders meeting regarding the 
reorganization. Neither the Assistant Secretary nor the Deputy 
Secretary for Indian Affairs were in attendance, because of a lack of 
communication. The Deputy Assistant Secretary, Aurene Martin, when 
asked by Tribal Leaders why she was not in attendance, stated that she 
was not aware that any meeting was even going on that day. The only 
person attending the meeting from the BIA was Mr. Brian Pogue. This is 
just a single example of the lack of communication between BIA 
officials internally and between the two organizations.
    In the current reorganization process, communication between the 
two offices has been viewed more as a necessary evil. Neither the OST 
nor BIA have really communicated what reorganization actions they are 
taking with each other. It is like they are working on two separate 
projects instead of one reorganization effort. In fact the BIA, moved 
forward with the reorganization effort despite the ongoing ``TO-BE'' 
trust reengineering efforts of the OST. The BIA has said that they are 
moving forward with their plan for reorganization regardless and 
whatever OST and the ``TO-BE'' recommendations come back with, they 
will try to implement those changes as best they can. This is a 
wasteful and sporadic method of implementing true change in the BIA. 
USET believes that the BIA needs a structured and thoughtful process, 
based on tribal input and good communication, in order to have a 
successful BIA reorganization.
    Should your office have any further questions regarding these 
responses, please contact the USET office at (615) 467-1553. Thank you 
for the opportunity to comment and have the USET Tribal views 
considered ire this process.
                                 ______
                                 
    The Chairman. Ms. Benjamin?

        STATEMENT OF MELANIE BENJAMIN, CHIEF EXECUTIVE, 
              MILLE LACS BAND OF OJIBWE, MINNESOTA

    Ms. Benjamin. Chairman Pombo and members of the Committee, 
my name is Melanie Benjamin and I am the Chief Executive of the 
Mille Lacs Band of Ojibwe. Mille Lacs Band is a federally 
recognized tribe located in East Central Minnesota and has 
enrollment of approximately 3,600 members.
    It is our pleasure to provide testimony before the 
Committee this morning on the Bureau of Indian Affairs' trust 
reform process from the perspective of a self-governance tribe. 
This morning, I will talk briefly about tribal self-governance 
policy, the Federal trust responsibility, and the interplay of 
the current BIA reform as it relates to the self-governance 
policy and practice.
    In 1990, the Mille Lacs Band of Ojibwe was one of the first 
tribes to participate in a tribal self-governance demonstration 
project authorized by the Indian Self-Determination Act. We 
first compacted for 30 programs from the Bureau of Indian 
Affairs, and today, we are compacted for all authorized BIA 
programs through our annual funding agreement and provide 
direct services to our membership.
    We were likewise among the first tribes to negotiate a 
self-governance compact for programs in the Indian Health 
Service. As a general matter of policy, the Mille Lacs Band has 
strongly advocated for the self-governance of all federally 
supported Indian programs. The United States Federal trust 
responsibility to Indian tribes has been established through 
our treaties with the United States, Federal statutes, 
executive orders, Supreme Court decisions, and the general 
course of dealings with tribes. The Federal trust 
responsibility extends a trust obligation from the United 
States to Indian tribes and further recognizes a unique 
government-to-government relationship between each federally 
recognized tribe and the United States.
    Within the Indian Self-Determination Act, provisions of 
Tribal Self-Governance Act of 1994, and the Tribal Self-
Governance Amendments of 2000 provides specific statutory 
protection for the trust responsibility by prohibiting the 
Secretary from waiving, modifying, or dismissing the Federal 
trust responsibility of the United States. The intent of 
Congress to uphold its Federal trust responsibility to and the 
government-to-government relationship with self-governance 
tribes have not been changed by further Congressional action to 
date.
    The BIA exists to advance tribal interests in broad Federal 
Indian policy matters and has a specific duty to administer 
programs and services for the benefit of all federally 
recognized tribes and their members. While self-governance 
tribes like the Mille Lacs Band believe we can do a better job 
to administer the same program and services to our members 
through our self-governance compact, the fact remains that the 
BIA has a continuing obligation to advance self-governance 
interests the same as other tribes.
    While the Mille Lacs Band and other self-governance tribes 
have assumed more authority and control over compacted 
programs, it is important to remember what self-governance laws 
provide. The Federal trust responsibility of the United States 
continues to apply to all tribal resources and programs, not 
just those specific to trust resources or management of trust 
resources.
    In November 2000, President Clinton signed Executive Order 
13175 that established the Federal policy of consultation and 
coordination with Indian tribal governments, the policy 
extended to all Federal agencies. The purpose of the 
consultation policy was and is to allow for tribal input on all 
matters that affect tribal interests.
    When the trust reform process first began, tribes were 
involved through a tribal task force, on which I was a member. 
The Department suddenly dissolved the task force in late 2002 
and proceeded with the trust reform without any further tribal 
involvement. The action has set the tone for the trust reform 
process as we see it playing out today.
    Although the BIA and the new Office of Special Trustee, 
OST, have conducted tribal consultation sessions throughout 
Indian country on the trust reform, these sessions take place 
following major policy decisions. Tribes are told what changes 
have been made and what to expect from those changes. From the 
tribal perspective, when a consultation takes place after the 
fact of a major decision affecting tribal interests, it is not 
consultation.
    Last fall, a consultation was scheduled for a combined 
council of the BIA regions in the Central United States. 
Because the notice was very late, the Mille Lacs Band was just 
about the only tribe in attendance out of the entire Midwest 
United States. One has to ask what meaning tribal consultation 
has if most of the affected tribes cannot be present to receive 
any information.
    This lack of meaningful tribal consultation is illustrative 
of the mixed message that come from Interior and the BIA. On 
one hand, we are told that the BIA wants to work with tribes. 
On the other hand, the Department is overhauling an entire 
agency and creating a new one in the process without working 
with tribes at all. To tribes, the Departmental action without 
tribal consultation indicates a shift back to the paternalistic 
policies that appear to replace tribal self-governance and 
tribal self-determination. In a trust reform process, the 
consultation policy has become meaningless to tribes.
    The Office of the Special Trustee was first authorized as 
an oversight body for trust reform 10 years ago. Today, the OST 
is a new agency with new duties and responsibilities beyond 
trust reform oversight. Transferring BIA trust functions to OST 
is a major component of the latest trust reform effort, which 
is a quick fix to an old problem. To achieve this quick fix, 
most tribes believe we were removed from the trust reform 
process so the Interior could implement its changes as quickly 
as possible without any interference.
    For the Mille Lacs Band and other self-governance tribes, 
it seems that the proposed transfer of the BIA function limits 
the scope of trust responsibility in a number of ways. The 
following are a few examples.
    First is the fee to trust land acquisition of tribes. There 
is a distinction between tribal fee lands and trust lands. 
Unless land is in trust status, its treatment as a trust 
resource is questionable.
    Second, we will not have direct access to the proposed 
integrated data system. We are told we can access the data 
system if we adopt the Federal model. The Federal trust 
responsibility would have the OST provide access to this data 
to us in one manner or another.
    Third, our annual funding agreements are with the BIA and 
not the OST. We wonder whether our access to funding would be 
affected when a BIA program is now under OST. As a result, 
self-governance tribes face uncertainty as to the terms of our 
funding agreements. One solution is to authorize self-
governance tribes to compact with OST.
    These examples illustrate specific problems for self-
governance tribes which have not been fully addressed by either 
BIA or OST. Under the current trust reform, the Mille Lacs Band 
seriously questions what measures of Federal trust 
responsibility can be expected when we believe self-governance 
concerns and interests are overlooked as changes take place.
    Self-governance policies and laws were designed to move the 
U.S. Government away from the paternalistic policies and 
practices in the administration of Indian programs. The current 
trust reform is taking us back to the paternalistic policies 
that leave tribes out of the process. Self-governance is being 
dismantled by the changing processes by not allowing tribes to 
adapt as they see fit. As it is, changes are being forced upon 
tribes that we were told we must live with. This policy from 
the Department of Interior is not consistent with self-
determination or self-governance policies established by law.
    If the BIA and the OST were serious about wanting to work 
with tribes, our concerns would be given consideration prior to 
a decision, not after the fact. Working with us would result in 
tribes gaining increased authority to compact for more 
programs. Instead, tribes are frequently told that we cannot 
compact for certain programs because they are an inherent 
Federal function. As stated earlier, the Mille Lacs Band 
strives to compact all of our Federal dollars for all programs. 
Increased authority to compact additional programs would allow 
us to work toward that goal.
    The Mille Lacs Band and other self-governance tribes 
continue to assert that we are willing to work together and 
assist with the trust reform process. Tribes must be part of 
the solution that addresses the problem involving our 
interests. Until then, the paternalistic actions and policies 
that are evolving under the current trust reform are moving 
tribal self-governance in a direction that Congress did not 
envision when it enacted self-governance.
    Finally, the trust reform means taking administrative 
action to limit the Federal trust responsibility of the 
Department of Interior over tribal resources and assets. That 
action is inconsistent with the existing Federal Indian laws 
and policies that define that responsibility. The Mille Lacs 
Band asserts this action amounts to a significant diminishment 
of Federal trust responsibility.
    On behalf of the Mille Lacs Band of Ojibwe, thank you for 
your consideration.
    The Chairman. Thank you.
    [The prepared statement of Ms. Benjamin follows:]

            Statement of Melanie Benjamin, Chief Executive, 
                       Mille Lacs Band of Ojibwe

    Good Morning Chairman Pombo, Ranking Member Rahall, and members of 
the Committee. My name is Melanie Benjamin and I am the Chief Executive 
of the Mille Lacs Band of Ojibwe. The Mille Lacs Band is a federally-
recognized tribe located in East Central Minnesota and has an 
enrollment of 3,602 members. The Mille Lacs Band was one of the first 
tribes to have entered into a self-governance compact with the United 
States government. It is our pleasure to provide testimony before the 
Committee this morning on the Bureau of Indian Affairs (BIA) trust 
reform process from the perspective of a self-governance tribe. This 
morning I will talk briefly about early self-governance policy, the 
federal trust responsibility, and the interplay of the current BIA 
reform and reorganization as it relates to self-governance policy and 
practice.

Early Self-Governance Policy
    The Mille Lacs Band of Ojibwe has struggled for many years under 
changing federal Indian policies. From the beginning of the Indian 
Self-Determination and Education Act of 1975, and with the shift to 
tribal governments operating federal programs, the Mille Lacs Band saw 
the importance of implementing these concepts. In the early 1980s, the 
Mille Lacs Band government implemented a new approach to dealing with 
these changing policies. Following a full review of the Band 
governmental structure, the Mille Lacs Band adopted a separation of 
powers governmental structure.
    At the 200th anniversary of the signing of the United States 
Constitution, ten tribal leaders from across the United States 
recognized the importance of reviewing the tribal relationship with the 
United States government. Through a series of national tribal meetings 
in 1986 and 1987, it became clear that tribal governments prioritized 
the reestablishment of a government-to-government relationship with the 
United States, very much like the relationship in the treaty-making 
era. This new direction in federal Indian policy would treat tribal 
governments more like brothers with the United States, rather than 
children of the great white father.
    At the request of Congress, tribes developed an improved framework 
and system that would better meet tribal needs at the local level. The 
Mille Lacs Band and several other tribal governments responded by 
developing the Tribal Self-Governance Demonstration Project, which 
Congress supported and subsequently adopted into federal law. Tribes 
understood this federal legislative action to mean that a more formal 
relationship would exist to discuss and improve issues for tribes and 
their reservations. In effect, tribes would be recognized as sovereign 
governments that could address their respective education, health, 
social, and economic needs. Implicit in this recognition of tribal 
self-determination and self-governance was that the new federal law 
would not diminish the treaty or trust obligations of the United States 
to the Indian tribes.
    In 1990, the Mille Lacs Band of Ojibwe was one of the first tribes 
to participate in the Tribal Self-Governance Demonstration Project 
authorized by the Indian Self-Determination Act. We first compacted for 
thirty (30) programs from the BIA and today we are compacted for all 
authorized BIA programs through our Annual Funding Agreement and 
provide direct services to our membership. We were likewise among the 
first tribes to negotiate a self-governance compact for programs in the 
Indian Health Service. As a general matter of policy, the Mille Lacs 
Band has always strongly advocated for the self-governance of all 
federally-supported Indian programs.

Federal Trust Responsibility
    The United States' federal trust responsibility to Indian tribes 
has been established through our treaties with the United States, 
federal statutes, Executive Orders, Supreme Court decisions, and the 
general course of dealings with tribes. The federal trust 
responsibility extends from the United States a trust obligation to 
Indian tribes and further recognizes a unique government-to-government 
relationship between each federally-recognized tribe and the United 
States.
    The federal trust responsibility has long been interpreted to be 
very broad in scope and is expressly acknowledged in self-governance 
laws whose policies strive to maintain, improve, and ensure the 
continuation of the United States' relationship with and responsibility 
to Indian tribes. These broad policies underlying the self-governance 
laws make clear Congress' intent in promoting tribal self-governance as 
one of the primary means to strengthen the federal trust responsibility 
to tribes.
    The Tribal Self-Governance Act of 1994, Title IV to the Indian 
Self-Determination Act provides specific statutory protection for the 
trust responsibility in Sec. 403(b)(9) by prohibiting the Secretary 
from waiving, modifying, or diminishing the federal trust 
responsibility of the United States. Later, Congress reaffirmed its 
commitment to upholding the federal trust responsibility in the Tribal 
Self-Governance Amendments of 2000 to the Indian Self-Determination 
Act, by providing that ``[t]he Secretary is prohibited from waiving, 
modifying, or diminishing in any way the trust responsibility of the 
United States with respect to Indian tribes and individual Indians that 
exists under treaties, Executive orders, other laws, or court 
decisions.'' 25 U.S.C. Sec. 458aaa-6. Clearly Congress intended to 
uphold its federal trust responsibility to and government-to-government 
relationship with self-governance tribes, a policy which has not been 
changed by further congressional action to date.
    The BIA exists to advance tribal interests in broad federal Indian 
policy matters, and whose specific duty is to administer programs and 
services for the benefit of all federally-recognized tribes and their 
members. While self-governance tribes like the Mille Lacs Band believe 
we are better able to administer the same programs and services to our 
members, via our self-governance compacts, the fact remains that the 
BIA has a continuing obligation to advance tribal self-governance 
interests on par with those of all other tribes.
    While the Mille Lacs Band and other self-governance tribes have 
assumed more authority and control over compacted programs, we must 
emphasize what the statute itself emphasizes: The federal trust 
responsibility of the United States continues to apply to all tribal 
resources and programs, not just those specific to trust resources or 
management of trust resources. Only on this condition, and based upon 
this understanding of the federal trust responsibility, has the Mille 
Lacs Band chosen to enter into self-governance compacts in order to 
better serve our members.
Trust Reform and Reorganization Impacts to Self-Governance
Tribal Consultation
    In November 2000, President Clinton signed Executive Order 13175 
that indicated a federal commitment to tribal sovereignty and the 
formalizing of a government-to-government relationship between 
federally-recognized tribes and the United States. The policy of 
consultation and coordination with Indian tribal governments extended 
to all federal agencies. Where it concerns tribal consultation, the 
Executive Order provides the following:
        Sec. 3. Policymaking Criteria. [A]gencies shall adhere, to the 
        extent permitted by law, to the following criteria when 
        formulating and implementing policies that have tribal 
        implications:
        ...
          (c) When undertaking to formulate and implement policies that 
        have tribal implications, agencies shall:
          (1) encourage Indian tribes to develop their own policies to 
        achieve program objectives;
          (2) where possible, defer to Indian tribes to establish 
        standards; and
          (3) in determining whether to establish Federal standards, 
        consult with tribal officials as to the need for Federal 
        standards and any alternatives that would limit the scope of 
        Federal standards or otherwise preserve the prerogatives and 
        authority of Indian tribes.
    The trust reform process and reorganization seem to be in a 
perpetual state of motion as a result of Cobell litigation. Initially, 
tribes were part of the process through a task force of which I was a 
member of. Although that task force attempted to develop a tribal 
solution, the Department of Interior suddenly dissolved the task force 
and proceeded with the trust reform process without any further tribal 
involvement. That action has since set the tone for the trust reform 
and reorganization as we see it playing out today, creating an 
atmosphere of distrust, sporadic paralysis, and uncertainty. 
Consequently, the Interior and BIA tribal consultation policy has 
become, with all due respect, meaningless to tribes who reasonably 
expect to have a voice in policy matters and decisions that affect us.
    Although the BIA and the new Office of Special Trustee (OST) have 
conducted ``consultation'' sessions throughout Indian Country on the 
trust reform and reorganization, the sessions are more accurately 
characterized as informational updates that tell tribes what changes 
have been made (as the result of prior policy decisions) and their 
effects upon tribes. From the tribal perspective, if a ``consultation'' 
takes place after the fact of a major decision that directly affects 
tribal interests, it is not a consultation. At most, it is an 
informational briefing.
    In many instances, federal notices to tribes for BIA and OST 
consultations have been so late that tribal attendance was abysmal. On 
one such occasion last fall, a consultation was scheduled for a handful 
of the BIA regions in the central United States. The Mille Lacs Band 
was just about the only tribe in attendance out of the entire Midwest 
region. One has to ask what meaning tribal consultation has if most of 
the affected tribes cannot be present to receive any information.
    This lack of meaningful tribal consultation is illustrative of the 
mixed messages that come from Interior and the BIA. On one hand, we are 
told that the BIA wants to work with tribes. On the other hand, the 
Department is overhauling an entire agency, and creating a new one in 
the process, without working with tribes at all.
    Where it concerns the BIA's management of trust resources, the 
Cobell litigation has shown that the Interior and BIA have failed to 
properly manage resources held in trust for tribes. It is ironic that 
tribes are being asked to blindly trust Interior and BIA decisions on 
how to repair the damage to trust assets when the original damage was 
caused by Interior and the BIA. It makes no sense at all, unless the 
policies of federal paternalism have returned to replace tribal self-
determination and self-governance.

The Office of the Special Trustee
    The Mille Lacs Band first points out that Congress never intended 
for the Office of Special Trustee (OST) to be a permanently-funded 
operational program. The OST was initially authorized by the American 
Indian Trust Fund Management Reform Act of 1994 (Public Law 103-412) as 
an oversight body that would oversee and coordinate departmental 
reforms. Today, the OST is assuming all trust functions and will 
administer a number of programs. It is from this that the OST has drawn 
its statutory authority, and the expansion of OST duties and 
responsibilities is being created through administrative rather than 
legislative action.
    Despite this lack of congressional authority, a major component of 
the latest trust reform effort is based on a transfer of many BIA 
functions to the Office of Special Trustee. In the opinion of many 
tribes, this transfer of functions to a new agency with new duties and 
responsibilities amounts to a quick fix to a long-standing problem 
within Interior and the BIA that is taking place too quickly for any 
real effective change to occur. It is the further opinion of many 
tribes that this is why tribal involvement was removed from the 
process, so that the Department could implement its changes as quickly 
as possible to satisfy the Cobell sanctions imposed through court 
orders.
    Caution must be considered with this latest BIA reorganization. 
History tells us that the latest trust reform and reorganization 
proposal is the most recent in a long line of failed proposals. Dozens 
of reorganization plans have been unfurled with great fanfare over the 
years and countless millions of dollars have been consumed studying and 
procuring and preparing them. None have been implemented with any 
measure of success. None. No one has considered that it may be the 
tribal beneficiaries themselves who may ultimately develop a successful 
solution to the trust mismanagement problem. This would be consistent 
with the premise of tribal self-governance--that those who govern best 
are those who govern closest to the people most affected.
    One concern to the Mille Lacs Band and other tribes is that the 
transfer of functions proposed by the Department also appears to be 
limiting the scope of the trust responsibility to more limited duties 
and to promoting paternalistic policies. An example of this is the fee-
to-trust land acquisition of tribes. Land acquisition is a major 
objective for many tribes, yet under the trust reform process there is 
a distinction between tribal fee lands and trust lands. The problem is 
that until a piece of tribal land acquires trust status, it would not 
fall under the OST's responsibilities and its treatment as a trust 
resource is very questionable.
    Placing tribal lands into trust has become very difficult for 
tribes in recent years, and so there is a growing concern for the Mille 
Lacs Band and other tribes that Interior is working to minimize its 
overall trust responsibility to tribes (i.e., less trust resources to 
manage means less trust responsibility to that resource and its 
beneficiary). The net effect of separating fee lands and trust lands 
between the BIA and OST is that tribal priorities of land acquisition 
and increased self-governance of those lands is undermined and 
generally not being supported by the very agencies charged with acting 
in our best interests.
    A second concern to the Mille Lacs Band concerns the proposed 
Integrated Data System which the OST is relying upon as the basis for 
this entire trust reform process, a system that the Mille Lacs Band and 
other self-governance tribes will not have access too. The OST 
officials have told compacted and contracted tribes that we do not have 
to adopt the proposed model, but that doing so will ensure access to 
the system and the information within that system. A recommendation of 
this sort requiring self-governance and contracting tribes to adopt a 
system in order to have information access undermines self-
determination policies and promotes a paternalistic policy that leaves 
tribes with no choice in data information access. Surely the technical 
capacity is available for a variety of tribal models and approaches 
that can create access to the data.
    A third concern for the Mille Lacs Band is the fact that our Annual 
Funding Agreements are with the BIA and not the OST. We have questions 
whether our access to funding will be impacted if a program used to be 
under the BIA but is now in the OST. This issue has not been addressed 
by either the BIA or OST, and consequently self-governance tribes face 
uncertainty as to the terms of our funding agreements when a program 
has been transferred to the OST.
    Related to the matter of our funding agreements is that Central 
Office funds have been withheld from our Annual Funding Agreements, and 
therefore self-governance tribes will not be able to participate in the 
trust reform efforts insofar as they involve an expansion of funding 
for Central Office programs, functions, services, and activities. These 
problems raise questions about the trust reform's effect upon the self-
governance process as a whole. Again, the issue is not being directly 
addressed.
    A fourth concern for the Mille Lacs Band and other self-governance 
tribes is that we want the option to compact with the OST in light of 
the repeated messages that changes made under trust reform will 
continue to move forward and will remain so. If true, self-governance 
policy must remain consistent and authorize tribes to compact for the 
same programs that were once in the BIA but have been transferred to 
the OST. In this manner, self-governance policies and interests would 
be preserved rather than undermined.
    With these examples illustrating specific problems for self-
governance tribes, the Mille Lacs Band seriously questions what measure 
of federal trust responsibility can be expected from a new departmental 
agency with our trust resources and assets under our self-governance 
compacts. Because these issues, and others, have not adequately been 
addressed by the BIA and OST, self-governance tribes have come to 
believe this latest trust reform process is bypassing our particular 
concerns and interests as changes continue to be implemented.

Conclusion
    Self-governance policies and laws were designed to move the United 
States government away from paternalistic policies and practices in the 
administration of Indian programs. Today, self-governance is being 
dismantled by the changing processes under the ongoing trust reform and 
reorganization. Self-governance was designed to allow tribes to adapt 
to changes as they see fit, but the latest trust reform is imposing 
changes upon tribes that we are told we must live with. Such a policy 
from within the Department of Interior is not consistent with self-
determination or self-governance and the reorganization is removing 
tribal participation out of the entire trust reform process.
    If the BIA and OST were serious about wanting to work with tribes, 
our concerns would be given consideration prior to a decision, not 
after the fact. Working with us would result in tribes gaining 
increased authority to compact for more programs. Instead, we are 
frequently told that certain programs are not compactable due to their 
status as an untouchable, inherently federal function. As stated 
earlier, the Mille Lacs Band strives to compact all of our federal 
dollars for all programs. Increased authority to compact additional 
programs would allow us to work towards that goal.
    The Mille Lacs Band and other self-governance tribes continue to 
assert that we are willing to work together and assist with the trust 
reform process. Tribes must be part of the solution that addresses the 
problem involving our interests. Until then, the paternalistic actions 
and policies that are evolving under the current reorganization plan 
are moving tribal self-governance in a direction that Congress did not 
envision when it enacted self-governance.
    Further, any administrative action taken to limit the federal trust 
responsibility of the Department of Interior as part of the trust 
reform process is also inconsistent with existing federal Indian laws 
and policies that define that responsibility, which the Mille Lacs Band 
would assert amounts to a significant diminishment of the federal trust 
responsibility in effect.
    On behalf of the Mille Lacs Band of Ojibwe, thank you for your 
consideration.
    Mii Gwetch.
                                 ______
                                 
    The Chairman. I thank this entire panel for your testimony. 
It was extremely informative.
    I know I have a number of questions for this panel, but in 
lieu of the fact that we have been called over to the Floor for 
a series of votes, I will submit those to you in writing, and 
if you can answer those in writing for the Committee, I will 
hold the Committee record open.
    With the indulgence of my colleagues, because this hearing 
did run longer, we have been called for a series of votes. It 
is probably going to be about an hour to an hour and a half 
before we are back. Seeing that, I am going to request that if 
my colleagues ask their questions in writing, as well, those 
can be submitted to the panel.
    Mr. Pallone. That is fine, Mr. Chairman. I appreciate it. 
If I could just say, though, that I know Mr. Frazier mentioned 
this GAO request for a study of certain practices at OST that 
Senator Tim Johnson has requested, and I just wanted to say 
that I would like to join that and I will talk to Senator 
Johnson about joining that, because I think that that makes a 
lot of sense. But I would like to ask some additional questions 
in writing and I appreciate the opportunity.
    The Chairman. Thank you, and I want to thank the panel for 
your testimony. I apologize for the length of the hearing, but 
I tried to give you all a lot of time for your oral testimony. 
The questions will be submitted to you in writing, if you could 
answer those in a timely fashion so they can be included in the 
record.
    Thank you very much. The hearing is adjourned.
    [Whereupon, at 12:16 p.m., the Committee was adjourned.]

    [A statement submitted for the record by Mr. Rahall 
follows:]

  Statement of The Honorable Nick J. Rahall, II, a Representative in 
                Congress from the State of West Virginia

    Mr. Chairman, it is with eager anticipation that I believe we all 
wait to hear more about the latest, greatest, be-all, end-all, fix to 
the Indian trust fund mismanagement saga.
    The Interior Secretary has decided she will take a chunk of 
authority from the BIA and slide it over to the Special Trustee, then 
move some management boxes around at the agency offices, create several 
new one-size-fits-all boxes, and pull some strings to direct different 
line authorities.
    Keep an eye on those boxes and that moving authority because 
somewhere under this shell game lies the trust responsibility, self-
governance contracting, and the government-to-government relationship 
worked on and fought out for over one hundred years.
    I am here to suggest that magic wands or sleights of hand will not 
adequately address the problem. And without the strong support of 
Indian country, this reorganization is bound to fail.
    It is true that after being prodded by Congress several high-
ranking officials of the Department spent months working with Indian 
tribes on reform matters.
    It is also true that these officials walked away from these 
negotiations, waited until Congress adjourned, and then sought a 
reprogramming of $5 million to support the reorganization.
    Reaching consensus with Indian country on this issue is something 
that I feel strongly about.
    These tribal leaders are not wide-eyed children holding cotton 
candy, ready to accept the next administrative ruse as pure magic. They 
are hardworking, elected governmental leaders who know what the 
specific needs are of their tribe and expect nothing less than the 
right to have those needs addressed and respected by our Federal 
government.
    Moving full speed ahead with this massive restructuring of the 
trust relationship will no doubt get the Administration through to the 
next election busily claiming it is fixing the trust fund management 
problems.
    But when the political leaders of this Department fold up their 
tent and move on, the mess left behind will once again be left to those 
affected by this situation in Indian Country to try and clean up.

                                 
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