    [Senate Hearing 108-81]
    [From the U.S. Government Publishing Office]

                                                             S. Hrg. 108-81

                         INDIAN LAND CONSOLIDATION ACT

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON INDIAN AFFAIRS
                              UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                       ON

                                     S. 550

     TO AMEND INDIAN LAND CONSOLIDATION ACT TO IMPROVE PROVISIONS RELATING
                    TO PROBATE OF TRUST AND RESTRICTED LAND

                                   __________

                                  MAY 7, 2003
                                 WASHINGTON, DC

                         U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2003
    87-046 PDF

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                          COMMITTEE ON INDIAN AFFAIRS

                  BEN NIGHTHORSE CAMPBELL, Colorado, Chairman

                    DANIEL K. INOUYE, Hawaii, Vice Chairman

    JOHN McCAIN, Arizona,                KENT CONRAD, North Dakota
    PETE V. DOMENICI, New Mexico         HARRY REID, Nevada
    CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
    ORRIN G. HATCH, Utah                 BYRON L. DORGAN, North Dakota
    JAMES M. INHOFE, Oklahoma            TIM JOHNSON, South Dakota
    GORDON SMITH, Oregon                 MARIA CANTWELL, Washington
    LISA MURKOWSKI, Alaska

             Paul Moorehead, Majority Staff Director/Chief Counsel

            Patricia M. Zell, Minority Staff Director/Chief Counsel

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page
    S. 550, text of..................................................     2
    Statements:
        Berrey, John, chairman, Quapaw Tribal Business Committee,
          Quapaw, OK.................................................    68
        Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
          chairman, Committee on Indian Affairs......................     1
        Harris, Robert, Eastern Shoshone Tribe, Fort Washakie, WY....    72
        Lords, D. Jeff, acting deputy special trustee, Trust
          Accountability, Office of the Special Trustee, Department
          of the Interior, Washington, DC............................    59
        Nordwall, Wayne, director, Bureau of Indian Affairs Western
          Region, Department of the Interior, Washington, DC.........    59
        O'Neal, Ben, tribal council member, Eastern Shoshone Tribe,
          Fort Washakie, WY..........................................    72
        Stainbrook, Cris, executive director, Indian Land Tenure
          Foundation, Little Canada, MN..............................    74
        Thomas, Hon. Craig, U.S. Senator from Wyoming................    59
        Willit, Judge Sally, Indian Land Working Group, Albuquerque,
          NM.........................................................    77

                                    Appendix

    Prepared statements:
        Berrey, John.................................................    89
        InterTribal Monitoring Association...........................    93
        Nordwall, Wayne..............................................    87
        Nunez, Austin, chairman, Indian Land Working Group (with
          attachments)...............................................   105
        O'Neal, Ben..................................................    91
        Stainbrook, Cris (with attachments)..........................    95

                         INDIAN LAND CONSOLIDATION ACT

                                  ----------

                             WEDNESDAY, MAY 7, 2003

                                           U.S. Senate,
                                   Committee on Indian Affairs,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:03 a.m. in
    room 485, Russell Senate Building, the Hon. Ben Nighthorse
    Campbell (chairman of the committee) presiding.
        Present: Senators Campbell, Inouye, Thomas, and Craig.

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

        The Chairman. The Committee on Indian Affairs will be in
    session.
        Welcome to the committee's hearing on the American Indian
    Probate Reform Act of 2003. I reintroduced the bill in March,
    joined by my colleague and friend, Senator Inouye.
        For 200 years, the pendulum of Indian policy has swung from
    one extreme to another. Even today, one of the most damaging
    legacies of the Allotment Era of the 1800's is the continued
    fractionation of Indian lands. The allotment policy was
    designed to break up the tribal land mass and turn Indians into
    farmers. It resulted in millions of acres of Indian land lost
    to their Indian owners.
        By virtue of Indian probate rules and the steady march of
    time, millions of more acres have passed from the original
    Indian allottees to thousands of descendants with undivided and
    economically useless interests in the land. The fractionation
    problem is at the heart of the ongoing trust reform efforts.
        There are bright spots, however. The Department's land
    consolidation pilot has resulted in thousands of small parcels
    being returned to tribal ownership through a voluntary purchase
    program. I want all the people concerned to know that this
    committee will work on this measure for as long as it takes to
    get it right. In fact, that original pilot program was
    authorized by this committee. I believe the core concepts are
    solid. Hopefully the witnesses will offer some suggestions of
    how to make a bill that I think is a good bill, a better bill.
        [Text of S. 550 follows:]

        The Chairman. Senator Thomas, did you have an opening
    statement?

       STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM WYOMING

        Senator Thomas. Thank you, Mr. Chairman. I want to thank
    you for holding this hearing. Certainly it is one of the most
    important things to us in Wyoming. Last year, the Eastern
    Shoshone General Council created a working group. Ben O'Neal
    was a part of that group and was elected to the Council. He is
    here to testify. We are very pleased about that.
        Obviously it is important for us to deal with this issue.
    Individual land owners in Wyoming are concerned about the
    future and how they are going to go with their families.
    Without doing something, it is very limited in what we can do
    with the States.
        I know you have worked long and hard on this, Mr. Chairman.
    I want to join with you in seeking to find a solution. We did
    not get it done last year. We need to work on it this year.
        Thank you.
        The Chairman. Thank you. With that, we will go ahead and
    start with our first witness, Wayne Nordwall. He will be
    accompanied by D. Jeff Lords.
        Mr. Nordwall, let me ask you. Are you related to the
    Nordwalls around Reno somewhere? Adam Nordwall and that family?
        Mr. Nordwall. Yes, Mr. Chairman; he is my uncle.
        The Chairman. He is a good friend of mine. I have not seen
    him for years. We used to pow wow together a long time ago, 25
    or 30 years ago.
        Go ahead, Mr. Nordwall.

    STATEMENT OF WAYNE NORDWALL, DIRECTOR FOR THE BUREAU OF INDIAN
    AFFAIRS WESTERN REGION, DEPARTMENT OF THE INTERIOR, WASHINGTON,
        DC, ACCOMPANIED BY D. JEFF LORDS, ACTING DEPUTY SPECIAL
      TRUSTEE, TRUST ACCOUNTABILITY, OFFICE OF THE SPECIAL TRUSTEE

        Mr. Nordwall. Thank you, Mr. Chairman.
        I would like to submit our testimony for the record.
        The Chairman. Without objection, all written testimony will
    be included. You can divert from that if you would like.
        [Prepared statement of Wayne Nordwall appears in appendix.]
        Mr. Nordwall. Rather than read from that or deal with it, I
    made some notes last night to talk about some of the general
    issues that you just discussed.
        The Chairman. That will be fine.
        Mr. Nordwall. Probably one of the single most important
    measures pending in the Department of the Interior right now is
    trust reform. A key to getting trust reform accomplished is
    resolving this fractionated heirship issue.
        Without some sort of a resolution, any system that we could
    create in order to deal with these issues in the short term
    probably will not last very long because fractionation would
    rapidly outpace almost anything we could put in place.
        We support generally the concepts that are in S. 550.
    However, after having reviewed the latest draft, and having
    more experience on the ground in dealing with the Indian Land
    Consolidation Act [ILCA] amendments of 2000, we believe that
    the existing version is overly complex. We would like to work
    with the committee in order to make a bill that is a little
    more understandable and will be capable of being implemented in
    the field.
        At this point you have already gone over some of the
    history of the allotment process so I will not go over that
    again other than to say that the direct result of the allotment
    process was a loss of over 100 million acres of trust land. It
    is the side effects that we are concerned about at this
    hearing; principally, the fractionation itself and the problems
    we have in probating all these numerous estates.
        I was just looking in the room and I see many of the people
    that we worked with back in the 1970's that are still here and
    still trying to resolve this issue. I met with an old BIA
    realty officer. He said:

        You know, if we cannot solve this problem relatively soon,
    within a generation or two or three, all the land in Indian
    country will be so fractionated that it will become almost de
    facto communal land. Nobody will know who owns it. It will just
    be there and it will be a resource that nobody will really be
    able to administer.

        So we began reviewing the past history of this thing. It
    has been well documented since at least the 1920's. The first
    big detailed report was the Miriam Report in 1928 which
    outlined all the problems with fractionation, with the
    allotment policy, and was a very detailed analysis of all the
    problems created. That was the foundation for the Indian
    Reorganization Act in 1934.
        Two of the cornerstones of the original Indian
    Reorganization Act were a title that dealt specifically with
    fractionation, and a complete separate title that dealt with
    probate. Like many things that have happened over the years, by
    the time it went through the legislative process, the two
    titles had been dwindled down to one or two paragraphs that
    were simply inadequate to address all of the problems.
        Had the original provisions been enacted, this problem may
    have been solved in the 1930's. That is past history. All
    through the 1950's and 1960's there were additional efforts to
    get a legislative solution to this problem. All of those
    efforts for various reasons failed. Either the allottees
    opposed it, or the tribes opposed it, or the Administration
    opposed it. There was never a solution worked out.
        We began working on this issue again in the early 1980s. At
    that point we were working primarily with the old House
    Interior and Insular Affairs Committee because they had Indian
    expertise over there. That expertise is now in this committee.
        We prepared the original draft of what became ILCA, the
    Indian Land Consolidation Act. Our original thought was that we
    would vest most of the authority to deal with this issue in the
    tribes by authorizing them to create tribal probate codes. In a
    sort of catchall, fall-back position in order to try to slow
    fractionation, the escheat provision was put in there that for
    the tiny fractional interests that were continuing to pass
    until the tribes enacted their codes, they would escheat to the
    tribes. As this committee is well aware, the act was amended in
    1984. There were two versions of ILCA, both of which have
    subsequently been struck down by the Supreme Court as
    unconstitutional.
        We started looking at the problem again in 1993. We revised
    ILCA substantially. Irvin had been decided. Youpee was pending.
    We essentially removed the escheat provision altogether. We
    tried to come up with a uniform probate code. Again, as is
    typical of the way these things work, by the time it went
    through the process, certain provisions were put in there that
    either do not directly address the problem sufficiently in
    order to resolve it, or they are so confusing that it literally
    cannot be implemented.
        We have a team that has been put together that consist of
    administrative law judges, members of the solicitors office,
    and tribal attorneys that have sat around trying to analyze how
    the probate provisions of the existing ILCA are supposed to
    work. They cannot agree on what exactly they say.
        Our employees in the BIA are supposed to go out and explain
    this to Indian country. We issued a notice to over 200,000
    people, as the act requires, to try to advise them of the
    terms. All this created was confusion and fear in Indian
    country because the provisions are basically unintelligible.
        So we started working with the committee starting almost
    immediately after the 2000 amendments were passed on what
    became S. 1340. Initially S. 1340 was a relatively simple bill
    that addressed only certain key probate issues. But it morphed
    into something that is a little more complicated in the
    existing version which has now been reintroduced as S. 550.
        It is far more complex than the original version. At this
    point the Administration just believes that it will not work
    again because it is simply too complex. It has this passive
    trust, active purchases, and inactive purchases. It has a
    variety of things in there that we cannot interpret and we know
    we cannot explain it to Indian country.
        Last year the Department held a 2-day conference where we
    invited members of Indian country. We also had the Secretary's
    office represented. Deputy Secretary Griles was there, as well
    as Jim Cason and Ross Swimmer. We invited members of the
    committee and they were present.
        The conference was to brainstorm some ideas on how to
    finally resolve this fractionated heirship problem and how to
    address probate. A lot of ideas were floated on the table. For
    those of us who have been working on this for a long time, it
    was old history because all the new people arrive at the table
    and think they have new ideas. They have actually been
    discussed many times before.
        One of the things that I did was ask the Deputy Secretary
    and other people from Interior to read a 1938 report that was
    drafted at the end of a meeting that was held in Glacier Park,
    MT. The people who ran this meeting were Felix Cohen and John
    Collier, who basically are the people who created the
    cornerstone of modern Federal law and modern Indian policy.
        I told them to think about the discussion that they had
    that day and to read this report. They would be shocked when
    they read this report. They came back the next day. I was
    surprised that they had actually read it.
        If you tear off the cover of this report and take away the
    date, and read the text, the ideas, the suggestions, and the
    problems that were facing the Department of the Interior and
    Indian country in 1938, they are exactly the same problems we
    are talking about now.
        If the committee does not have a copy, I will leave a
    couple here so that the staff can look at it. I urge them to
    look at this report. It is really something that is just truly
    amazing when you review this. Felix Cohen and John Collier are,
    of course, the fathers of modern Indian law.
        At any rate, where are we right now? We have S. 550 which
    we greatly appreciate the Committee introducing and to the
    extent we can, we will work with the committee in order to try
    to revise and create a better bill.
        The Department also has a work group in place right now
    that is working on a plan to expand the pilot project
    nationwide in order to begin acquiring fractionalized
    interests. A Federal Register Notice was published a couple of
    weeks ago inviting tribal leaders to participate on that in
    order to determine which tribes should be selected next in the
    process and how the process should actually be implemented out
    in Indian country.
        When we get to the end of this, we still believe that the
    most viable solution to most of these problems is to
    reconsolidate these fractional interests and invest them in the
    tribe. Then the tribe will be allowed to issue land assignments
    or deal with land issues under traditional tribal law.
        We also have in place a to-be initiative we are going
    through and trying to re-engineer all the Department's trust
    processes. One of the processes that is being re-engineered is
    probate. Again, we would like to point out that even though we
    are looking at this to-be process, that only addresses process,
    it does not address substance. That is what S. 550 addresses
    and that is what we need to work with. We need a substantive
    change in the law because no matter how we streamline the
    process this problem is just going to overwhelm anything we can
    put in place.
        Finally, we do have an informal meeting process. We have
    not become part of the formal group. The NCAI, the Indian Land
    Working Group, and others have been meeting periodically to
    discuss S. 550 and ways to correct ILCA. We have had members of
    our staff participating either in person, at the meetings, or
    on the telephone. We are trying to solicit ideas in order to
    collectively come up with better ideas.
        Why do we need this? We need this because we are literally
    at the point within another generation or two where this land
    is going to be so fractionated that we are not going to be able
    to know who owns it. We are not going to be able to account for
    income that comes in from it. It will become essentially almost
    worthless.
        We have situations in Arizona where we have 10-acre
    allotments. Many of the allotments in Arizona were made late in
    the allotment period and since they are irrigated they are
    quite small. We have some with over 500 owners.
        When we started the pilot project we selected that because
    one of the allotments there had over 1,000 owners which was the
    most in the country. We now have several allotments with over
    1,000 owners. When we started the pilot project that particular
    reservation had 87,000 fractional interests. We have acquired
    40,000 and yet we still have 87,000 fractional interests. It
    has grown by that much. If we had not purchased those
    interests, we would probably have 200,000 or 300,000 because a
    lot of those 40,000 would have had to be in re-probate.
        In 1992, the General Accounting Office [GAO] did a report
    trying to assess the significance of fractionation. They went
    out and looked at the 12 worst reservations that probably
    account for 75 or 80 percent of the total fractionation
    problem, although the problem is on multiple reservations
    around the country.
        We are attempting right now to generate an update to this
    report to show how much fractionation has grown. Because of the
    injunction from the Cobell Court, we do not have data after
    2001 because our computer systems are still behind. But in the
    9 years, from 1992 to the end of 2001, on these 12 reservations
    the number of fractional interests went up by 35 percent.
        This problem is serious. It is something that needs to be
    addressed. One of the things that is required by the existing
    act and also contemplated by S. 550, and one of the things that
    the Supreme Court found to be deficient in the original two
    versions of ILCA, was that we have to provide notice to Indian
    country about what these provisions mean. We have to assist
    them in drafting wills or doing estate planning.
        We have gone through and issued many of the things that are
    required for the Secretary of the Interior to issue that
    certification. One year after the Secretary certifies it, then
    the existing probate provisions become effective. S. 550 has a
    similar provision.
        Because the act has so many confusing and ambiguous
    sections in it, the committee asked us last year not to certify
    the bill. We did not certify that so that we could work with
    the committee on S. 1340. We are still in that same position.
    There are provisions of ILCA that are useful that we need to
    implement but we have not, as yet, certified the statute.
        We are hoping to work with the committee on S. 550, to
    create a bill that is understandable, comprehensive, and deals
    with this issue once and for all so we can go through a new
    round of notices. Anything that we do as far as an amendment
    will require more notices. We only want to do that one or two
    more times. The last time we did a mail out, there were a total
    of 210,000 notices issued.
        Again we are waiting to certify. But if we cannot get
    movement on S. 550 then the Secretary will probably have to
    certify the bill. There are other provisions in there that we
    do need in order to try to address other issues.
        Mr. Chairman, that is basically where the Department is
    right now. If you have any questions, I will be glad to answer
    them. Mr. Lords is here to talk about anything that OST is
    doing regarding the to-be process.
        The Chairman. Thank you.
        My morning started out pretty good until I came in here.
    [Laughter.]
        Let me ask you a couple of questions. I appreciate your
    working with the committee to try to find some solutions to a
    very complicated problem. You gave a very concise description
    of how complicated it is.
        When we talk about total funding, what amount of funding
    would be required, do you think, to undertake an aggressive
    national campaign to buy back all fractionated land? Do you
    even have a ball park figure? It must be in the billions.
        Mr. Nordwall. Well, we are doing a preliminary analysis
    right now. We have met with the Office of Management and Budget
    [OMB]. The Department has been discussing something on the
    order of $2 billion.
        What we are looking at on a per-project basis is that right
    now given our existing systems and what we can reasonably
    purchase using Land Records Information System [LRIS] and our
    existing computer systems, we can spend on a pilot $1 million a
    month, in other words, roughly $12 million a year.
        If we just address the 12 reservations in this report, that
    would take $144 million per year times however many years it
    takes in order to ultimately resolve this.
        The Chairman. We have already spent a lot of money on
    Cobell-related historical accounting exercises, as you probably
    know. What kind of a dent would $350 million make in buying
    back fractionated land?
        Mr. Nordwall. When we did the original projections in 1992,
    we estimated that with $300 million, spread out over 6 years,
    we could acquire virtually all of the land that I think was
    less than 10 percent in size. That would be all the 2 percent
    interests, up to 10 percent.
        That constitutes over 80 percent of the record keeping.
    Once we have addressed that, at that point I think viable
    consideration, either in families or the tribes or in something
    else, can take place. But with that amount of money, we could
    probably purchase the majority of the 2 percent, and maybe up
    to 10 percent interest.
        The Chairman. Your testimony is that an aggressive approach
    to fractionation needs to be taken and that the 4 million
    interests are going to be grown to 11 million by 2030. Given
    these figures, what do you call an aggressive approach?
        Mr. Nordwall. First we need to address the basic probate
    problems which is primarily what S. 550 was intended to do. We
    need to come up with a uniform probate code or something that
    is understandable by the majority of the people and that
    addresses the majority of the problem.
        We realize, given the last 75 years of history, that while
    everybody philosophically agrees there is a problem, there is
    always a disagreement as to the solution. At some point we are
    going to have to make some hard decisions about what exactly we
    are going to do. There will not always be 100 percent support
    for this, obviously, on any piece of legislation.
        We need to fix the probate process. Then we need to expand
    the pilot project and target particular reservations that have
    the most severe fractionation problems and the heaviest burden
    on the Department of the Interior and the number of the
    allottees as far as the number of Individual Indians Moneys
    [IIM] accounts.
        We have situations right now, particularly in the Great
    Plains, where virtually all the leasing is done under 25 U.S.C.
    Sec. 380. Most of the leasing statutes provide that the
    allottee can come in and lease their property subject to
    approval of the Secretary. But where the heirs are too numerous
    or they are undetermined under certain circumstances, the
    Secretary can issue a lease on their behalf in order to
    generate income and then try to distribute that.
        We are in a situation in the Great Plains and in the
    Billings area where 90 percent of the leasing is done under
    Sec. 380. Basically we pass on land owner base. They all own
    very tiny fractional interests. It costs the Administration
    $200, $300, or $400 to collect $10 or $20 in income. It is
    counter productive.
        The Chairman. You mentioned a group that you met with
    perhaps several times with tribal members and people of the
    Administration. You said someone of the committee was also
    there. Is that their view, too, that the most important
    problems are probate problems?
        Mr. Nordwall. I am sure there are many here who have their
    own perspectives, but I think the majority of the allottees in
    our region that we deal with are all concerned about this. A
    probate gets filed. Sometimes it takes 2, 3, or 4 years in
    order for it to be probated. There are a variety of reasons for
    that.
        There are problems getting deaths reported, and getting the
    information that we need from the allottees. Once we receive
    the information then it has to go to the Office of Hearings and
    Appeals. We have tried to create a streamlined process now,
    where, if it is a money estate only, we have created these
    attorney decisionmakers where they can adjudicate the small
    estates.
        One of the things perhaps we can examine as part of this
    probate reform initiative is the way that we conduct the
    appraisals. How formal does it have to be? How much of a record
    has to be created, depending on the value of the estate?
    Perhaps these are some of the things we can talk about with the
    administrative law judges, with some of the tribal attorneys,
    and with the allottees in order to speed up that process.
        The Chairman. According to your testimony, it costs about
    $1,400 on average to probate an Indian estate and that there
    are about 1,500 estates with a combined total value of $7,200.
    What ways do you propose to process or clear the books of these
    little tiny dollar estates ina way that does not violate the
    Constitution?
        Mr. Nordwall. That is the attorney decision-maker process
    that we came up with. For low dollar estates, it is an informal
    process. The way they deal with due process issues is that at
    any point during the process, if an allottee or an heir is
    concerned about the process, they can request a full blown
    hearing before an administrative law judge. For many of these
    small dollar estates, though, it has not been an issue. We have
    adjudicated several of those.
        We are also in the process right now of trying again to
    update our information, and get a better idea of the total
    number of pending probates. The number is far larger than I had
    thought it was. We are probably looking at probably about
    18,000 probates that are presently backlogged or pending.
        The Chairman. You spoke of this working group of tribal
    leaders, departments, and so on. Is it the Department's
    position that we should wait here at the committee level until
    they reach some kind of a consensus?
        Mr. Nordwall. I think most of them agree the existing bill
    needs to be refined. I think the committee should wait until
    the Department has had an opportunity to prepare a bill. We
    will work with these groups as best we can. I think the idea
    that we will have a consensus is one of the reasons why we have
    never had reform. It seems like in the non-Indian world if you
    get 51 percent of the vote it is a landslide, but in Indian
    country you have to have a consensus. In other words, everybody
    has to agree. You will never get everybody to agree.
        At a certain point we are going to have to work with the
    Committee. Some decisions will have to be made on how to
    address this.
        The Chairman. If we expand the buy-back alone without
    changes in the probate law, will that accomplish anything?
        Mr. Nordwall. The way we have always looked at this is
    this. This is a two-part scenario. We have to consolidate the
    existing fractions. We have to slow or stop further
    fractionation. Somehow if we could get far out in front of this
    problem to buy the fractionated interests back quick enough, it
    might give us enough time to try to resolve the probate issues.
    They really need to go together.
        It is a pilot project. The problem that we have had is that
    we have bought over 40,000 interests, but we are exactly where
    we started three years ago. We still have 87,000 outstanding
    interests.
        So if we could jump far enough in front with a large enough
    program, we might be able to put enough of a delaying action in
    there to address these other issues. If we can consolidate
    enough of these things into the tribe, it might do it. We
    always looked at this as being a two-pronged approach.
        The Chairman. Thank you.
        Senator Thomas, did you have some questions?
        Senator Thomas. As I listened to your describing the
    history of this, I think you almost indicated that this bill is
    no different than what was talked about in the 1930's. Is there
    is a clear remedy that is different than what you talked about
    in the last 30 years?
        Mr. Nordwall. No; I think that is why I suggested that this
    memo is surprising. Virtually every single issue that we have
    talked about is in there. I do not know that anybody has a
    magic bullet. Nobody has come up with that. That is part of the
    problem that we have. Everybody says, ``Gee, there must be a
    simple solution to this.'' The solutions are all complex.
        Had we done this in the 1930's, it probably would have cost
    us $800 or $900 million to resolve this problem in 1930
    dollars. Now it is going to cost us $2 or $3 billion to solve
    this problem. If we do not address it in the next 5 or 10
    years, it is liable to cost us $10 or $20 billion, plus the
    exposure to the United States on additional Cobell-type
    litigation. It is just going to expand as rapidly as the
    fractionation.
        Having dealt with this for years and met with lots of
    people, there are no magic bullets. I do not know of anybody
    that has thought of a solution that will address this problem
    cheaply, quickly, and without a lot of manpower involved. It
    just is not an easy thing to deal with.
        Senator Thomas. How do you divide the issue of resolving
    the operations in the future as opposed to settling the
    differences in the past? Which of those is most important?
        Mr. Nordwall. Do you mean as far as the Cobell litigation,
    the issues that are involved in that?
        Senator Thomas. Just the differences that are involved in
    the issue? If you took the money that I guess you and Griles
    are talking about and spending it here, would that solve the
    problem in terms of process in the future?
        Mr. Nordwall. There are some lands that are still in sole
    ownership. Some of the lands, such as the ones at Palm Springs
    have high value. Some of them have producing oil and gas wells.
    The families, in those cases have tended to not allow the
    fractionation to occur at quite the level that we have.
        Up at Crow there is a competent leasing statute where as
    long as the family keeps the number of owners at five or less,
    they can lease their property without the approval of the
    Secretary of the Interior. In those circumstances where they
    have done that, the Department would not initially be
    interested or target acquiring those.
        The other interests where there are thousands of owners in
    single tracks, we think the only long-term solution is to
    acquire them and turn them over to the tribes. At that point
    they cannot fractionate after the tribes own them. At that
    point, the tribes would issue land assignments or traditional
    use areas like they did under tribal law before the allotments
    were issued in the first place.
        Senator Thomas. What is going to be the benefit to 1,000
    owners over a relatively small and productive piece of land?
        Mr. Nordwall. What we have found is that these 1,000 owners
    own interest in more than one allotment. When we go out and we
    do the evaluation for the price, we find that they own multiple
    interests. We create an inventory that shows the value of each
    interest. While each interest may only generate a few cents,
    the value is a little higher. Usually it is a 10-to-1 rule. If
    the property generates $1 in income, it is usually worth $10.
        It usually adds up to a fairly significant amount of money,
    several hundred dollars and in some cases several thousand
    dollars. They get a direct benefit from this acquisition
    program that they would not get by getting one or two cents a
    year off the leasing income. They can use that for other useful
    purposes.
        Again, hopefully once this land is revested in the tribes,
    then as members of the tribe they will have a right to go to
    the tribe in order to seek a land assignment or some use right
    on that property.
        Senator Thomas. I understand. It just seems like it is a
    waste of effort to go out and spend a lot of money and spend a
    lot of time where each individual gets a few dollars. It is
    hardly worth it.
        Mr. Nordwall. That is one of the issues that we have talked
    about, too. In those circumstances where the inventory is
    small, if somebody only has $2 worth of land, they are not even
    going to drive to town in order to fill in the paperwork to
    sell the property.
        Senator Thomas. Or in your time dealing with them?
        Mr. Nordwall. Right. And whether or not we should offer a
    minimum price on some of these things. That is another issue.
        Senator Thomas. Just because issues are difficult does not
    mean that they can be prolonged forever. Someone has to step up
    and do something. The Department has not done a lot, it seems
    to me.
        Thank you.
        The Chairman. We appreciate your being here. We look
    forward to working with you on some amendments to the bill to
    try to make it understandable and acceptable to everybody.
        Thank you for being here, Mr. Nordwall.
        Mr. Nordwall. I will leave a couple of copies of the 1938
    report here. If the staff has time to look at it, I think they
    will find it very interesting.
        The Chairman. Good. Thank you.
        Panel two will be John Berrey, chairman, Quapaw Tribal
    Business Committee, Quapaw, OK; Ben O'Neal, tribal council
    member, Eastern Shoshsone Tribe, Fort Washakie, WY; Cris
    Stainbrook, executive director, Indian Land Tenure Foundation,
    Canada, MN; and Judge Sally Willit, Indian Land Working Group,
    Albuquerque, NM.
        All of your written testimony will be included in the
    record. As with the first panel, if you would like to
    abbreviate or divert from your written statement, that would be
    fine.
        We will start with Mr. Berrey first. Welcome.

      STATEMENT OF JOHN BERREY, CHAIRMAN, QUAPAW TRIBAL BUSINESS
                         COMMITTEE, QUAPAW, OK

        Mr. Berrey. Good morning, Mr. Chairman. Thank you for
    inviting me. Senator Thomas, I am very honored to be here to
    speak here.
        I am here to give you and little idea of what probate looks
    like today and how the current problems regarding probate are
    not just probate-only problems. I will give a description of
    the complex interrelationships involved in the cash, the land,
    and the resource management processes that are currently
    administered by the Department of the Interior.
        Last year I was a member of the non-defunct Trust Reform
    Task Force. As part of that Task Force I was really fortunate
    to have a great opportunity to work on what is called the ``As-
    Is'' project. I spent over 204 days away from my family and
    tribe, traveling across the United States, interviewing nearly
    1,000 people that work in the Department of the Interior or for
    tribal governments in all 12 regions.
        We made a detailed and intricate study of how they actually
    do their processes. The processes that we analyzed were
    accounting, which is the co-actions and the management of that
    money, and the distribution of that money. We talked with
    everyone from superintendents to MMS people. We did a detailed
    study. We put it all down and we have a really good picture of
    how this works throughout the country and how there are
    different nuances, the way tribal laws work, tribal State laws,
    State regulations, and how they affect all these processes.
        We also looked at appraisal. We looked at what happens when
    someone wants an appraisal. Who do they ask? How do they get
    the appraisal started? Who does the appraisal? How is it
    reported? How is that information managed?
        We looked at what is called beneficiary services which is
    the contact between either a tribal member, a beneficiary, or
    the tribal government itself, and there interrelationship,
    whether it is OTFM, whether it is MMS, or BLM. How do they
    interrelate? How do they interact? How is that tracked?
        In some locations, particularly at my agency, you used to
    go to the superintendent and they would give you nothing. They
    would just blow you off. There are some agencies and some
    processes out there that really try hard to track that contact
    and follow it through all the way to where the answer the
    questions. Where is my check? What is going on with the
    enforcement on my lease?
        We also looked at the Cadastral Survey Services which is
    the identification of the true boundaries of any allotment or
    any piece of land that is managed by the Department of the
    Interior, of how that is ordered, how that is recorded, and how
    that information is managed.
        We looked at probate. We looked at it in detail. We looked
    at the three segments of probate. There are three distinct
    sections that you need to understand. That is where a lot of
    inherent problems in probate are. There is the case
    preparation, which is where all the documents are gathered for
    the adjudicator to clearly understand the cash ownership and
    the land ownership of the deceased person. They are able to
    come up with the people that are inheriting that land through
    that process. There is such a tremendous backlog in these
    records. That is where a lot of the problem is today: In
    probate.
        There is the adjudication process. There are three
    different adjudicating groups. There are the ADMs as Mr.
    Nordwall discussed, the ALJs, and the IPJs. We interviewed all
    those people. We talked with them from the very beginning from
    the moment a person passes away to the time the accounts closed
    and we documented every step of the way--what rules and
    regulations they follow, and the intricate processes they
    follow.
        We also looked at surface and subsurface management. We
    wanted to understand in detail how a lease is developed. If
    someone wants to look for oil and gas on a particular piece of
    property, how does that relationship work when that person goes
    to the superintendent? They talk about what they want to do,
    and how they go through the process of creating the lease. They
    talk about the compliance and enforcement of the lease. They go
    all the way to the point of when they release the bonds,
    reclamation is done and all the cash is distributed from that
    lease.
        We did it for timber, for agriculture, whether it was for
    crops or grazing. We did for the commercial businesses. We did
    it for surface minerals such as gravel and sand. We did it for
    subsurface which is oil, gas, and mining.
        Finally, we looked at the title. Typically in the non-
    Indian world you think of title of the plat book down at the
    county courthouse where everything is laid out, any liens and
    encumbrances upon that property. But under the Department of
    the Interior, their title system is a lot more broad. Because
    of fractionalization, it is a huge problem. That where we see a
    lot of the problems today. The management of probate circles
    around the title which is the ownership information related to
    a particular piece of property.
        There is a piece of land in the Great Plains that is 80
    acres. It has over 3,000 owners. It generates $100 of income a
    year. It is a huge problem just to manage those names and
    addresses, who they are and where they are from.
        We traveled all across the country. We had some people from
    the Department of the Interior and we had people from a group
    called EDS, our contract facilitators. We talked with people
    from BIA, MMS, BLM, OTFM, and OHA. Anybody that touched trust
    we interviewed them and we documented what they do. We went
    through 638 contracts, self-governance tribes, and direct
    service tribes. We went to all 12 regions. We talked with
    clerks, line officers, and managers. We interviewed everyone in
    the system if they were available. But we got to every position
    that was in the system.
        The beauty of this whole project is that for the first time
    in the history of the United States, we established a
    comprehensive understanding of the current trust business
    operations. We documented these variances--the difference
    between how it is done in Nashville versus how it is done in
    Anchorage or how it is done in Phoenix versus how it is done in
    the Great Plains.
        We have a detailed understanding of the differences between
    tribal laws, local laws, and State laws. We documented the way
    the people read the CFRs differently. We also identified all
    the opportunities for the re-engineering process. What does
    this have to do with probate? Over the years, Indian country
    has seen reform issues, reorganizations, plans, meetings,
    summits, work groups, task forces. All of these have been quick
    fixes, but none of it has really worked because they have never
    attacked the core problem, which is this fractionalization
    problem.
        The fractionalization is making it impossible to manage
    this information. The General Allotment Act of 1887 was
    designed to destroy tribal governments. I think it is time now
    that we reverse that and try to give the land back to the
    tribes to increase their land base in their jurisdiction.
        The DOI is pretty much a land management entity. If you
    look at their systems of record, in order for a probate package
    to be created, they have about 67 different title systems that
    they currently use. There is TAAMS, LRIS, MADS, GLADS, and
    TFAS. There are spreadsheets. There are different agencies.
    There are different software systems that agencies have
    developed.
        But the sad part is that 30 percent of the agencies today
    still use handwritten A&E cards. That is a huge problem. At my
    agency, in particular the Miami Agency in the Eastern Oklahoma
    region, they update title once a year. Once a year they update
    these 3x5 cards. They order pizzas. They bring everybody into
    this room and they all sit around and they fill out these
    little cards. Every evening this little old lady carries the
    box of cards back to the closet and if she drops it, our
    records are going to shoot across the room.
        There is a lot of overlapping and inconsistent information.
    Most of these systems are stand-alones. It creates a huge
    problem for probate. I have an analogy I like to use. I call it
    the Haskell effect.
        If you have a Navajo man to go to Haskell Indian School. He
    marries an Osage woman. They move to Minneapolis. They adopt a
    couple of kids from Northern Cheyenne. They die in a car wreck.
    The tragedy is not only the death, but the real problem is that
    the Department of the Interior has no way to identify that they
    have land in holdings in three jurisdictions. Because of the
    stand-alone systems, it is very difficult for them just to get
    the packet prepared in order for the adjudicator to make his
    decision.
        There is a bright light here in all this. The second phase
    is the re-engineering. It is the ``to be'' process. We are
    taking the information we found. I brought you copies of the CD
    version and one bound version of our ``As-Is'' report. There
    are ways to clean up this ownership information. There are ways
    to clean up these systems. It is a process that evolves through
    neglect, poor management, and all these other problems.
        But I believe that the Secretary and the Deputy Secretary
    are really dedicated to trying to fix these processes so you
    can do your job by helping us with a uniform probate code that
    will solve the fractionalization problem and help them get a
    handle on this huge title ownership problem.
        There are a few recommendations that I would like to put
    forward. We, from the Indian side, have gone from our work with
    the As-Is process. We have to respect the property rights of
    the individual owners. But within the framework we have to do
    everything possible to encourage consolidation of Indian land.
        That should be the single guiding light in any probate
    reform. Does it help consolidate the land? Does it help reduce
    fractionalization? Does it strengthen the tribe's land base and
    their sovereignty?
        The tribes are making big efforts in this process. My
    tribe, for instance, are trying to buy individual undivided
    interests in allotments with money that we receive through our
    economic development. It is a voluntary program. We just ask
    tribal members if they are interested in selling their land. We
    try to get a fair market for it and cut a deal with them. A lot
    of tribes are trying to work through those kind of ideas.
        We also understand that Indian land owners have the right
    to devise their land to whomever them want, but they must be
    compensated. That is where I think the key is, in making sure
    there is due process of compensation for these small fractional
    interests.
        This could be a giant step forward in this process. But we
    believe that they need to limit the testate provisions to the
    immediate family who are members of the tribe. If there are no
    such members, the land needs to revert back to the tribe
    itself.
        We need to promote estate planning; 95 percent of the
    Indians do not have wills. It is difficult for the average
    population to talk about their demise and to plan for it. Many
    of them do not even know where their land is. It makes it hard
    for them to divide it up. We need to work on some of those
    things and reduce fractionation. That would help.
        We believe adjudication should be put under one roof. The
    ADMs and the IPJs intimately know Indian law. They know the
    land. They know the people. They know the fractionalization
    problems. We think those should be the people that are doing
    the adjudication. It is difficult for young Indian attorneys or
    people who are interested in Indian country to be part of that
    process. We would like to see getting away from using the ALJs
    and going more to the IPJs and to the ADMs.
        Perhaps most importantly, like you talked about, you need
    to beef up this land consolidation pilot project. We totally
    support that. We think it is a great idea. It has to be pushed
    harder. It has to be funded better. But it has to be managed
    better by both the DOI and the tribes that are involved.
        In closing, I would like to pledge my assistance to any
    member of your staff or any members of this committee whenever
    you have issues related to the complex management of the Indian
    trust and Indian country, I would be more than happy to help
    you.
        When it comes to fractionalization problems, settlement of
    historical claims, or any of the historical accounting
    problems, I have spent the last year of my life buried in trust
    management issues. I love it. It is crazy work. But I really
    think I could bring some clarity to it.
        If you have any questions, I would be more than happy to
    answer them. I would like to submit our testimony for the
    record.
        The Chairman. Without objection, your testimony will be
    placed in the record in its entirety.
        [Prepared statement of John Berrey appears in appendix.]
        The Chairman. We will finish with the whole panel before we
    ask questions.
        We will now go to Ben O'Neal.

        STATEMENT OF BEN O'NEAL, TRIBAL COUNCIL MEMBER, EASTERN
    SHOSHONE TRIBE, FORT WASHAKIE, WY, ACCOMPANIED BY ROBERT HARRIS

        Mr. O'Neal. Mr. Chairman, Senator Thomas, and members of
    the committee.
        My name is Ben O'Neal and I am a member of the Business
    Council of the Eastern Shoshone Tribe of the Wind River
    Reservation. I am joined by Robert Harris, also from the
    Eastern Shoshone Tribe. It is with great pleasure that I
    present this testimony today on behalf of the Eastern Shoshone
    Tribe. Chairman Vernon Hill regrets that he could not be here
    today, but pressing issues kept him at home.
        The Eastern Shoshone Tribe of in Wind River Reservation is
    a federally-recognized Indian tribe with approximately 3,500
    members. The Wind River Reservation is located in Central
    Wyoming and is the home of two tribes--the Eastern Shoshone and
    the Northern Band of Arapaho. There are also approximately
    25,000 non-Indians living within the exterior boundary of the
    reservation.
        Many members of the Eastern Shoshone Tribe are deeply
    concerned with the fact that they may not be able to leave
    their land to their heirs. Provisions within S. 550 address
    this problem, and it is for this reason that we strongly
    support its passage.
        Title to land within our Reservation is held in various
    ways, including in trust, in fee patent, as tribal land,or as
    land held jointly in trust by the Eastern Shoshone and the
    Northern Arapaho Tribes. Our primary concern today is with
    property held in trust for individuals Indians. I would like to
    use myself as an example of one way in which S. 550 would bring
    relief.
        In 1955, I married my wife who is non-Indian. We were both
    from ranching families,, and in 1972, we started acquiring land
    and building our own ranch. The first 200 acres we purchased is
    held in fee patent. It is located on the Wind River Reservation
    and contains the home site where my family and I have lived for
    more than 30 years. We also lease several allotments adjoining
    this property, allowing us to run enough cattle and operate a
    ranch in such a way we have derived our living solely as
    ranchers.
        In 1989 we purchased an 80-acre track of trust land from an
    individual Indian. We paid fair market value for this land. The
    track adjoins our patent fee ground and adds significantly to
    our ranch. In 1994, my wife and I purchased 240 acres of patent
    fee land from my neighbors to allow for expansion and our son
    and daughter expressed an interest in being part of the
    ranching operation.
        At the same time we also purchased 200 acres of adjoining
    Indian trust land from multiple Indian heirs. These lands are
    all contiguous and even contain a creek that runs right through
    the middle adding further value to our property.
        Through additional acquisition, I currently own 1,200 acres
    of property within the Wind River Reservation. One-half of this
    property is held in trust. The other one-half is held in fee. I
    paid fair market value for all of it. Under current law, as a
    member of the Eastern Shoshone Tribe, and as a landowner, I can
    only will my trust property to an Indian or to my tribe; but I
    would like to leave to my family.
        I am not alone in the fact that my wife and my children are
    not members of the Eastern Shoshone Tribe. Despite the fact
    that they have stood by me over the years and have helped our
    ranch become a success, current law only permits me to leave my
    trust property to them as a life estate. I find this
    unacceptable.
        My only option is to remove the property from trust status
    and place it in fee, something I do not wish to do. Individual
    Indian land owners, such as myself, should have other options.
    We should be able to determine to whom we leave our land.
    Indian land owners should have the same rights as others within
    our country to keep property within our families for as long as
    we choose to do so.
        This right should not be based upon race or political
    distinction, just as it should not be based upon religion or
    other similar factor. I support the passive trust provisions
    within S. 550 because they allow me, and all others like me, to
    ensure that property stays within our families for the duration
    of our choosing.
        Let me be sure to point out that the Eastern Shoshone Tribe
    is not seeking to impose this option on everyone. If an Indian
    landowner wants to give their trust property to the tribe, they
    should be able to do so. Our position simply is that there
    should be an option added to those that current exist; that we
    should be able to choose who gets our land.
        In the future, if my descendants determine that it is time
    in their best interest to sell this property, the tribe should
    be given a period of time in which to exercise a first right of
    refusal. They should, however, be required to pay fair market
    value for it, just as I did.
        This raises another concern we have with existing law.
    Currently, there is little incentive for the tribe to pay
    anything of value for trust property. The tribe realizes that
    for individuals such as myself, who are restricted to leaving
    trust property to heirs as a life estate. It is only a matter
    of time before the tribe comes into possession of the property
    with no payment at all.
        This eventual outcome serves also to discourage use and
    improvement of the land. Why would I invest hundreds, even
    thousands, of dollars to improve the land when I know, in the
    end, I will not be compensated for my investment. Again, I find
    this unacceptable, and am pleased that S. 550 works to resolve
    this issue as well.
        As an aside, I find it important to mention our concern
    with the tribe's ability to purchase trust property, even if
    they wish to do so. While purchases on a limited basis would be
    feasible, financial assistance would be necessary for the tribe
    to make larger purchases. We encourage the Congress to ensure
    funds are available for this purpose.
        I also support the idea that should the tribe not wish to
    pay fair market value for trust property, the option should be
    available to sell it to someone who is. It is important to note
    that this should not be viewed as a reduction of tribal lands.
    Many people hear the term ``trust property'' and they think of
    ``tribal property.'' This, however, is not the case.
        My property is trust property. It is held in trust for me,
    Ben O'Neal. It is not tribal property. I have spent my entire
    life working and saving to buy what I have; to make a life for
    me and for my family. I should have the right to determine to
    whom this property is left. My descendants and I should have
    the right to be dealt with fairly.
        On behalf of the Eastern Shoshone Tribe, I again thank you
    for the opportunity to present testimony today. I encourage
    passage of S. 550.
        Mr. Harris and I are happy to answer any questions you may
    have.
        I would like to submit our testimony for the record.
        The Chairman. Without objection, your testimony will be
    placed in the record in its entirety.
        [Prepared statement of Ben O'Neal appears in appendx.]
        The Chairman. Is Mr. Harris your attorney?
        Mr. O'Neal. He is a member of the Shoshone Tribe. He is on
    the Land Committee for our tribe.
        The Chairman. Thank you.
        We will now go to Mr. Stainbrook.

     STATEMENT OF CRIS STAINBROOK, EXECUTIVE DIRECTOR, INDIAN LAND
                  TENURE FOUNDATION, LITTLE CANADA, MN

        Mr. Stainbrook. Chairman Campbell, thank you for extending
    the invitation to provide some testimony on S. 550. I would
    appreciate it, and my family would certainly appreciate it, if
    these hearings could be spread out over some time as I was here
    last week. The commute from here to Minnesota is getting a
    little strenuous.
        The Chairman. Try it every week from Colorado or Wyoming.
    [Laughter.]
        Mr. Stainbrook. There you go.
        As you will recall from last week's testimony, the Indian
    Land Tenure Foundation is a fairly new institution. We were
    created by Indian people from throughout the community that had
    an interest in land issues and land tenure issues throughout
    Indian country.
        We basically function as a community foundation within the
    Indian community, and received our initial capital of $20
    million from the Northwest Area Foundation which has now become
    essentially our corpus. The function and the focus of our work
    is in resolving land issues in a manner that really creates and
    maintains a higher level of self-determination in Indian
    country by Indian people and the tribes.
        One of the basic premises of that, of course, that Indian
    people need to be involved in designing and carrying out
    effective solutions. In fact, that is what led to the creation
    of the Indian Land Tenure Foundation. I believe over the long
    haul this will lead to an effective resolution of the
    fractionated ownership that we are talking about today.
        Last week in my testimony on S. 519, we talked some about
    the problems of the fractionated land base on the future
    economic development of Indian country. As you pointed out
    again this morning, it is a fundamental core piece and needs to
    be resolved.
        Let me assure you that Indian people understand that
    connection. They also understand the connection between other
    aspects of the fractionated land base such as the limitation of
    their own use of the land for situations like affordable
    housing or even a homesite at all. There is also the basic
    threat to sovereignty that exists by having this fractionated
    land base. They want effective solutions.
        The 2000 amendments to the Indian Land Consolidation Act,
    while they are essentially on hold at this point, they have
    really created a large amount of concern throughout Indian
    country and near panic in some situations, particularly with
    some of the older interest holders.
        People have begun to pull their land out of trust, fearing
    in fact that if they do not do that shortly, they will not be
    able to direct where those assets are going, and especially to
    their relatives that are not eligible for enrollment with the
    tribe.
        While this may reduce Federal management costs, it
    certainly does put Indian land in jeopardy of passing out of
    Indian ownership. The S. 550 amendments that are proposed here
    are an improvement on the 2000 amendments, we still believe
    that they contain some provisions that limit self determination
    and threatens the Indian land base.
        Two of those provisions in particular are the joint tenancy
    and the passive trust provisions. They both contain substantial
    legal issues that will probably be challenged. That, of course,
    causes concern.
        As was pointed out earlier, the provisions coming out of
    the Indian Land Consolidation Act, essentially through Indian
    country, have provided several years of discord within Indian
    country. When it comes to the data processing and the
    application of probate, you end up with considerable problems
    and backlog. In fact, that backlog, once the constitutionality
    of that provision was declared illegal, it left Indian country
    with about 13,000 interests that still need to be re-probated.
        Indian country basically cannot afford a repeat of that. We
    believe that the joint tenancy and the passive trust components
    have that potential.
        What we would offer instead is a different route to the
    committee. We would certainly invite the Committee to join the
    Indian Land Tenure Foundation in engaging the community in the
    crafting of some solutions.
        One of those solutions that we discussed last week with the
    committee was the Indian Land Capital Fund. This is a fund that
    we have been working to put together. It is basically designed
    to take the pilot project to a different scale where it can, in
    fact, begin to have an impact that changes the dynamic from
    marking time and not really getting ahead of the fractionated
    problems, but gets it up to a scale where, in fact, the number
    of ownership interests are reduced. I think Mr. Nordwall
    covered a fair bit of problems around that and how they
    continue to grow.
        The fund itself has two major components, one being a very
    large private capital investment pool that would serve us
    nationally. And are a number of affiliated local land
    consolidation acquisition programs with the tribes. This is
    based largely on the Rosebud Sioux Tribes Tribal Land
    Enterprise program.
        This is a corporate model, essentially, that has been
    operating on the Rosebud Sioux Reservation for approximately 50
    years. It buys undivided interests from tribal members as well
    as alienated lands. It uses their management capability to
    increase the amount of leasing coming in off that property. It
    then uses the income from the property to make more purchases.
    It has grown substantially.
        Tribal members, of course, maintain their interests through
    class A shares and others through class B shares. They are held
    essentially as stock in the enterprise. The shares can also be
    traded, bought, and used to ascertain surface use assignments
    from the program.
        We think it has a number of advantages. One, it reduces
    fractionation overall and, therefore, the cost of the Federal
    administration. It secures the tribal land base and, in fact,
    even expands it through its acquisition of some of the
    alienated properties.
        It maintains the asset and value for individuals. Indeed,
    we think it creates added value in that these shares are much
    easier to trade than if you were to do gift deeds or other
    pieces related specifically to land title. Therefore,
    consolidation becomes much easier over the long haul.
        The other pieces that would apply at local levels would be
    some variation on the model that Rosebud uses and also an
    adaptation to their own local tribal planning. Probably most
    significant at all, with enough capitalization, these programs
    can, in fact, become self sufficient over the long haul.
        This morning we have heard a number of people asking about
    the $2 billion. I was interested in that. As you will recall,
    last week we provided testimony where our estimate was $1.25
    billion to resolve the fractionated interest. I was interested
    to hear that the Bureau of Indian Affairs has a little higher
    number.
        The Chairman. That is how fast the problem is growing.
    [Laughter.]
        Mr. Stainbrook. Very good.
        I think probably it is worth noting that in fact many
    resources can be brought to bear from throughout Indian
    country. The Federal Government does not necessarily bear the
    brunt of the full $2 billion. As Chairman Berrey was pointing
    out, their tribe, in fact, has a program of buying undivided
    interests.
        Individual Indian people want to consolidate their land.
    The fact that they will be bringing their resources to bear to
    consolidate that land will also help offset some of that $2
    billion if, in fact, there is a mechanism there that allows
    that.
        Will the model that we have described work if S. 550
    passes? We think it will, but if it passes as it is, I think
    there are a couple of things that will happen. One, the demand
    for the services of the model will go up because people will
    remain scared of the process and will be looking for
    alternatives to it.
        As Mr. Nordwall pointed out, the Bureau staff simply do not
    understand this and the process will slow completely. That will
    create a problem for going forward with the model that we
    proposed and will be carrying out. We need those title
    processes to work, and work efficiently.
        As just a couple of final comments, we would advocate
    eliminating all the joint tenancy and passive trust provisions
    that are in place. We would advocate adopting a uniform probate
    code that is attached and accompanies the Indian Land Working
    Group testimony.
        Finally, in any piece of legislation that goes forward, we
    would encourage the Committee to make any action by the
    Secretary based on an affirmative action of 50 percent of the
    interest holders for any allotment as opposed to a lack of
    objection. This is the standard that has been applied for
    Indian people and the tribes in managing this land. We think
    the Secretary should also be held to that standard.
        Thank you, Senator Campbell, for allowing me to provide
    some testimony. I would like to submit our testimony for the
    record.
        The Chairman. Without objection, your testimony will be
    placed in the record in its entirety.
        [Prepared statement of Cris Stainbrook appears in
    appendix.]
        The Chairman. Thank you.
        Ms. Willit, I understand you will be speaking for Chairman
    Nunez; is that correct? Go ahead and proceed.

     STATEMENT OF JUDGE SALLY WILLETT, INDIAN LAND WORKING GROUP,
                            ALBUQUERQUE, NM

        Ms. Willett. Thank you. I am Judge Sally Willett. I am
    going to borrow a phrase from one of our Working Group members.
    I am older than dirt. I have been doing this forever.
        I would like, if at all possible, to hand charts to you
    that I think that will address the substantive probate code and
    core issues that people have referred to. I would like to give
    you and Senator Craig a copy, on behalf of the Indian Land
    Working Group, the Indian veterans calendar. I have copies for
    everyone on the dais.
        The Chairman. Thank you. That has a solution to this
    complicated problem in very simple language; is that correct?
        Ms. Willett. It has a picture. This can be as deep or as
    superficial as we would like.
        I am going to introduce myself briefly and then I am going
    to make the two comments that I need to make that I have been
    asked to give. Then, I am going to get into the nuts of bolts
    of what we need to do.
        I am a member of the Cherokee Tribe. I entered the
    threshold of Indian law 32 years ago. All but 4 of those years
    have been involved in Indian probate, Indian estate planning,
    anti-fractionation measures, and educating individual Indians.
    I have structured a non-fractionating estate plan within my own
    family that walks the fine line of benefiting heirs who are
    non-Indian and benefiting those who are.
        I have conducted thousands of Indian probate proceedings
    and in each and every one of them I explained Indian land
    ownership and I explained how to estate plan to each and every
    one of the people present using charts. We cannot give
    information to people who have an average sixth to eight grade
    education in high-minded language that nobody understands.
        The Chairman. Let me interrupt you for 1 moment.
        Is this a descendency and ascendancy chart of a real
    person?
        Ms. Willett. That is how you determine degrees of
    relationship.
        The Chairman. Do you know anybody that fits into that
    category?
        Ms. Willett. Yes; we are not going that far.
        I did what Mr. Berrey did in 1999 for the Department of the
    Interior. I would say that many of Interior's wounds are self-
    inflicted. What I would like to say at this point is that
    progress is being made.
        I listened to Wayne Nordwall whom I have known for more
    than 30 years. I listened to Mr. O'Neal, Mr. Stainbrook, and
    Chairman Berrey. It seems to me that we are all on the same
    sheet of music. If things were understood properly, we can get
    there faster.
        We oppose intestate joint tenancy. We oppose passive trust
    interest. We oppose the confusing language of both ILCA 2000
    and S. 550. People have already commented about the meat of my
    presentation.
        I am going to restrict my comments to two areas. First, the
    definition of Indian and second, how to fix the problem. It
    requires that we stop fractionation in the future by limiting
    inheritance and that we acquire a Fifth Amendment protected
    property rights with compensation. We work from both ends
    toward the middle in reducting the problem.
        The Indian Land Working Group, the Department of the
    Interior, the National Congress of American Indians, California
    Legal Services, and I believe the Indian Land Tenure Foundation
    are all working very heavily and making progress on many of
    these issues. We would like for you to encourage the Department
    of the Interior to join in this effort.
        We would also like for you to ensure that they do not
    certify the ILCA amendments 2000 until this mixed effort has
    had a fair opportunity to reach some of the more distracting
    issues that are involved.
        I am going to basically go to the definition of Indian and
    point out what Mr. O'Neal has described as Interior's influence
    into the ILCA Amendment 2000. It accomplished shooting the
    wrong horse. Anti-fractionation addresses how you approach the
    land. When you cut out legitimate heirs, the lineal descendants
    which account for 65 percent of all inheritance, you are
    unfairly impacting a particular population.
        Probate laws are founded upon the common human experience
    and that is people look down to dependents. [Pointing to
    chart]. If none, they go up to ascendants and, then, they go to
    collaterals, to the side.
        Lineal descendancy inheritance accounts for approximately
    65 percent of all inheritance. All human beings have this
    expectation and rightfully so. When you make that heir pool
    non-Indian by giving a political definition to who is Indian,
    you are wiping out the legitimate heir pool for most human
    beings.
        There are four points I wanted to make to this in this
    regard. A membership definition: ``orphans'' millions of
    people. There is an out-marriage rate in Indian country of 75
    percent. You have most tribes pegging their membership to a
    blood quantum. Blessedly my tribe does not. It recognizes its
    people.
        In 1980, 40 percent of all tribes had no approved
    organizational. I do not know what it is now. But there will be
    large numbers of tribes that do not enroll. You are orphaning
    them. According to the GAO report of 1992, just the northern
    tier, the most fractionated region, one-seventh of that
    population ok unenrolled land owners.
        ILCA orphans them. You now have non-Indians owning trust
    lands. There is another problem. You have--idiosyncratically,
    the membership definition hurts people of high blood quantum of
    multiple tribes more than people of low quantum who are mixed
    with white or non-Indian blood.
        For example, it takes three generations to get to a
    quarter-blood which is the most common blood quantum. If you,
    as in my case, have grandmother, full-blood; mother, half-
    blood; and me, quarter-blood. Let us say you have a Pima/
    Shoshone, Paiute/Sioux, they were half-bloods of each tribe,
    the two parents. Your first generation is quarter-blood. So
    people who are higher blood quantums suffer under that
    definition.
        The more people you make non-Indian, the more
    jurisdictional problems you have. The more non-Indians, the
    more this aggressively hostile Supreme Court will apply its
    unusual new wave of law that has existed since Oliphant and
    United States v. Montana.
        We are begging you. There is panic in Indian country. What
    Mr. O'Neal describes is absolutely true. They tried to reduce
    fractionation by eliminating who can inherit. They are taking
    away, in many instances--because of the high out-marriage
    rate--the people's right to leave property to their children.
        This is not right. If you will look at the ascendancy/
    descendancy chart that you have in front of you, I would like
    for you to go to the middle where you see the term
    ``decedent.'' I would like for you to count down to two and
    three. Then, go up one. Next go out to two. I am sorry. I had
    thought the chart was with our presentation. I apologize to
    those in attendance.
        One through three accounts for 65 percent of all
    inheritance. My experience in Indian probate explaining to non-
    Indian spouses what their inheritance meant produced 100
    percent disclaimer rate, in many instances with a retention of
    a life estate. The life estate is inappropriate as applied to
    real people of real Indian blood. The problem with ILCA 2000
    was the alteration of the ethnicity of real people of Indian
    blood, not with the life estate.
        I covered Palm Springs. My territory was the Southwest. I
    covered the big ticket property. Do not imagine that the big
    ticket property was just Palm Springs. At San Xavier District
    of which Mr. Nunez is the District Chairman, the largest estate
    I ever probated had $80,000 in the IIAM account just from
    fractional interests in copper. It is a boom or bust
    proposition. Copper is hot or it is not. It was all
    fractionated interests.
        Essentially, what I want you to know, and bring it down to
    a very small picture, is that we need a code that legitimately
    recognizes the right of people--and Indians specifically who
    are very lineal-descent focused--to benefit their own progeny.
    We think that you can go to the collateral second degree.
    Beyond that is where explosive fractionation kicks in. It goes
    wild after that point.
        Look what you are cutting out on this picture. If you go
    through one through three, down, and go to two, out, you have
    cut out all of the fat, all the difficult to find and manage
    interests. You are very basically restricting it to a fair
    opportunity for ordinary human beings--and in case Indian human
    beings--to benefit people who legitimately have an expectancy
    to receive.
        We have a code submitted that addresses all of these
    issues. The addressing fractionation chart is the next I want
    to refer you to. I was sitting around talking to myself, as I
    am inclined to do at times, and said, ``Willett put up or shut
    up. You are always talking about not fractionating. How would
    you do it?''
        I sat down and said the first thing I would do is that I
    would de-politicize it. I was in the Office of the Secretary.
    We were the cash cow. Indian probate did not fail. It was
    pushed to failure.
        The next is to provide adequate resources. On the
    reinvention task force that I was on we provided for that. In
    implementation, it went nuts.
        Provide cultural sensitivity. Interior got rid of all of
    its Indian-knowledgeable people and, now, wonders why it has
    problems.
        Provide maximum adjudicative protections. This is where
    Chairman Berrey and I would disagree. I do not think holders of
    interest in public lands should have greater adjudicative
    rights than people to whom a trust responsibility is owed. That
    situation exists now.
        The Uniform Probate Code. Under 25 U.S.C. Section 348 which
    was part of the General Allotment Act, they thought Indians
    were going to be gone and assimilated in 25 years and that the
    States were going to take over. That is why 50 State laws were
    applied. We need to get rid of that and make it simple.
        Limit inheritance. I have already described that. Give
    people a fair opportunity for their real family to take. Do not
    change the ethnicity of people as an anti-fractionation device.
    It is inappropriate. That is what I call shooting the wrong
    horse.
        Limit non-Indian inheritance. With an out-marriage rate of
    75 percent, your herd is thinning; 100 percent of the spouses I
    dealt with were horrified when they realized that if they took
    their interest, it collapsed the trust and that it would not be
    restored automatically. They could not disclaim fast enough. I
    had to convince them to take life estates.
        Maximize knowledge. I believe that I may have been the only
    person who ever consistently did Indian estate planning and
    fractionation education as a part of the probate process as an
    integrated system. But there were many non-Indians who did it
    with me. My wave was the group that did it.
        Tribes need to know about it. They were not allowed to
    tamper with allotted land issues for a long time, especially
    the IRA tribes. Land owners simply have never been given
    information even about the 1984 amendments to ILCA.
        Dollars for consolidation. If we limit fairly to the second
    degree at the collateral level, and we start buying up the
    small stuff--I was thrilled to hear Wayne Nordwall say that.
    Then, you can get to the point of real consolidation.
        There is a lot of commonality here. I think we need to
    approach those things about which we have common ground. We
    need to quit coming up with exotica. There is no more room for
    exotica. A lot of money has been burned off that could have
    applied to good hard acquisition. There is no room for any more
    exotic experiments. Stick with meat and potatoes.
        The Chairman. I appreciate your testimony, but we are going
    to run out of time in just 1 minute or 2.
        Ms. Willett. I am done. I would like to submit our
    testimony for the record.
        The Chairman. Without objection, your testimony will be
    placed in the record in its entirety.
        [Prepared statement of Ms. Willit on behalf of Chairman
    Nunez appears in appendix.]
        The Chairman. Thank you.
        I am going to submit a number of questions in writing to
    you, if you can answer those in writing.
        Let me ask you a few questions to start with. I will also
    ask Senator Craig if he also has questions.
        Let me just start with John Berrey. Thank you for being
    here.
        Your testimony sounds like you are a no-nonsense kind of
    person. You said you did over 1,000 interviews, as I remember
    your testimony. If we are going to try to get away from the
    exotica, as Sally had mentioned, what would you say we can do
    to stop the hemorrhaging? What do we have to do as the central
    focal point to try to resolve the problem?
        Mr. Berrey. I think I agree with Sally that it has to be a
    multi-pronged approach. I think the Uniform Probate Code is big
    first step. A simple, clear, unified probate code. Second, I
    think the resources on the Interior side need to be targeted
    and focused on title ownership, record cleanup, maintenance,
    and systems integration.
        The Chairman. As I understand your testimony, you would
    limit heirship to tribal members?
        Mr. Berrey. You have to understand that I come from a tribe
    that does not have a blood quantum. It is lineal descendancy. I
    am in agreement with Sally in that regard.
        The Chairman. The Census Bureau last time estimated over
    4.4 million Americans claim to be of Indian ancestry. The
    Bureau says that is 2.2 million. There is a big disparity of
    about 2 million people out there who say they are Indian.
        About 15 or 18 years ago Senator Kyl and I revised the
    Indians Arts and Crafts Act. We were on the House side. He was
    from Arizona. We did some hearings on that to try to define who
    should be legally Indian from the standpoint of being able to
    market their arts and crafts as legitimately Indian rather than
    imported from Taiwan.
        We had one man that was 100 percent Indian. He was eight-
    eighths. Every single one of the eights was of a tribe that
    required that you had to be 25 percent or more. You had to have
    one grandfather and grandmother as a full-blood to be included
    in the roll.
        Here was a guy that was 100 percent Indian. He could not
    get on anybody's roll. I just mention that to emphasize how
    complicated the whole roll system is. We know for a fact that
    there are other people on rolls, because they were put on rolls
    during a time when there was not very much detail given to
    authenticating. There are people on the rolls now who are not
    Indian at all. But legally they are Indian, as you probably
    know.
        I do not know how to fix that. It is a very big complicated
    problem that we are having with Interior now. In fact, in the
    last Administration, they wanted to put a moratorium on any
    more tribes being enrolled until they found a better way of
    determining who is and who is not Indian. I do not know if
    anybody knows since each tribe determines their own membership.
        This is something with fractionated land the Cobell case
    and so on that is going to get worse. With the advent of so
    much casino money, we are getting more people that want to be
    enrolled as tribes, as you probably know. Sometimes there are
    only two or three people and they want to have their own tribe.
    That is really not uncommon now.
        We had a disagreement between some family members here in
    front of the committee about 6 months ago. After 1 hour of
    listening to the attorneys on both sides, and the people on
    both sides, I asked them how many members there were in the
    tribe and they said ``12.'' Just recently one member was found
    in California who did not know she was Indian. She was the only
    one left of her tribe who is going to be included in the new
    millionaire list since she has already signed a deal with some
    casino development company to build a casino for them, but she
    will be the front, so to speak.
        The advent of all the money that is now out there floating
    around in casino businesses, certainly complicated how we look
    at enrollment. Believe me, I do not have the answer and I do
    not think anybody else does either, that is fair and impartial
    and gives those people who are really Indian an opportunity to
    be reinstated if they want to and still have a system by which
    the people who want to be Indian because it is convenient or
    lucrative, making sure that they do not. We know the answer to
    that.
        John, do you favor a system that relies on purchase of the
    shares by either the tribe or the government for tribal members
    only?
        Mr. Berrey. In Oklahoma there is a lot of undivided
    interest owned by non-Indians that is interrelated and
    restricted fee with fee-simple land. I think those people
    should have the opportunity as well to have their land
    purchased by the tribe.
        The Chairman. Was it your testimony that mentioned 3,000
    members in an 80-acre piece of ground?
        Mr. Berrey. Yes, sir.
        The Chairman. That sounds like something out of control by
    ``pi squared''. I do not know how in the world we ever get to a
    point to resolve it. It sounds to me like it is getting almost
    too big to do anything about. If we wait another generation or
    two, it might be so out of control that we might not be able to
    do anything about it. Would you like to comment on that?
        Mr. Berrey. There are two ways to look at it. It is either
    your cup is one-half full or one-half empty. I think if you sat
    down and really looked at that piece of property, a lot of
    those people, like Mr. Nordwall said, have multiple
    fractionated interests and multiple allotments. Many of them do
    not really care about it. They do not get much income. It is
    more of paying for them.
        I think if someone would actually sit down and go through
    the work and the process to contact them and give them the fair
    market value and assured them that it is helping protect the
    land base of the tribe, that their families are members of or
    once were members of, then it is not as big a problem as it
    really sounds. I think money talks. If it is targeted right, it
    will work.
        The Chairman. I have one last question. You probably know
    from hearing me speak in the committee before that I am on
    record as favoring some kind of a voluntary buy-back program or
    an opt-out program. The Cobell case and the fractionated lands
    are certainly related. Do you support that concept?
        Mr. Berrey. I do support any concept that tries to bring
    some closure to Cobell. My tribe, for instance, is suffering
    worse from Cobell than probably anybody that is working at the
    DOI or any members of the attorneys for the plaintiffs' class.
        Last quarter, 80 percent of the FTEs in realty were spent
    on document production for litigation. That means that 80
    percent of the money that my tribe relies on for realty
    functions, like economic development, getting land put into
    trust, acquisitions--all that is not happening.
        The two parties that are there say they represent me.
    Stephen Griles gets his paycheck every week or every 2 weeks. I
    think Dennis Jengold has been getting his check. The people
    that both of them represent are not getting anything. I think
    this era of throwing rocks at the Department of the Interior
    needs to come to an end. We need to try to resolve this using
    an open mind. I think that the plaintiffs' counsel need to have
    full input in any kind of solution. I just do not see them
    coming to the table right now. It is very frustrating.
        The Chairman. I tend to agree with you. I do not think it
    is in their best financial interests to come to the table. I
    have been criticized a couple of times for saying that. We have
    Indian people out there who are dying, waiting for fairness and
    waiting for the money the Federal Government owes them. We do
    not have it to them yet because of all this ongoing litigation.
        Senator Inouye and I and Mr. Griles met the other day. I
    think we are going to frame up a bill that does let people opt
    out of that Cobell decision.
        Mr. Berrey. My tribe currently has a huge piece of
    litigation in the Northern District of Oklahoma. Our land once
    had the largest mining operations in the United States. It is
    now the home of the largest superfund site in the United
    States.
        Even though we are in litigation, we have stayed our
    lawsuit. We have actively pursued alternative dispute
    resolution with the Department of the Interior and the
    Department of Justice.
        We believe that because of Cobell, there are better ways to
    solve these problems than just burning down the house. We are
    willing to do everything that we can to be open-minded and work
    with the Department of the Interior and the Department of
    Justice. Stephen Griles has been very impactful on our attempt.
    We are the only tribe in the United States currently involved
    in a formal alternative dispute resolution process.
        The Chairman. Thank you.
        Mr. O'Neal, as I understand your testimony, your children
    are not eligible to enroll. Under the 2000 ILCA amendments, you
    can only leave them a life estate in the trust land portion of
    your land. You could put that land in fee status; is that
    correct?
        Mr. O'Neal. That is right.
        The Chairman. Why would you oppose to be putting it in fee
    status as opposed to trust status? Is it because of
    jurisdictional problems, or taxes, or something else?
        Mr. O'Neal. Yes; taxes on our land. I do not pay them now.
    I want that to continue as my land base on my ranch. The kids
    ought to have that.
        The Chairman. Is that a common situation on your
    reservation?
        Mr. O'Neal. Yes; it is.
        The Chairman. What would you guess is the number of people
    who are in the same position that you are at Wind River?
        Mr. O'Neal. At Wind River right now, I think there were 105
    who filed for fee patents right away.
        The Chairman. How many?
        Mr. O'Neal. I think 110, or somewhere around in there, that
    filed automatically. Those are just families that I know of.
        The Chairman. Well, if changes are not made in the ILCA
    amendments, and if they go into effect, have you thought about
    what you are going to do so that your children can inherit your
    whole ranch?
        Mr. O'Neal. That is what I am saying.
        The Chairman. Are you familiar with a man named Abraham
    Spotted Elk up there?
        Mr. O'Neal. No.
        The Chairman. Mr. Stainbrook, you talked about a private
    fund. We visited with it a little bit about it the last time
    you were here. Is this in some way going to rely on Federal
    funds, a private fund? You mentioned a land capital fund?
        Mr. Stainbrook. I think there is the potential that Federal
    funds will be needed to at least subsidize those deals that
    won't cash flow immediately. On the other hand, once the
    initial capitalization was put in place at Rosebud, that was
    all that was really needed to kick it off.
        One of the drawbacks in not having some Federal dollars, at
    least in the initial capitalization to cover those subsidies,
    is that the pool grows much slower. As you have pointed out,
    all of the discussion today has been that if something does not
    happen on a scale now, this thing is over.
        The Chairman. Your testimony mentioned the Native American
    Bank as perhaps becoming involved someday in land
    reconsolidation. Have they been involved in it at all yet?
        Mr. Stainbrook. We have been working with the Native
    American Bank, CDC, the Community Development Corporation. If
    you will look on the back of the written testimony, there is a
    rough schematic there of bringing in the CDFI to help with
    affordable housing financing. That is the role that CDC will be
    playing.
        The Chairman. All right. I will look at that.
        You also mentioned $1.25 billion perhaps to purchase all
    fractionation lands. Who did that analysis for you or for your
    committee?
        Mr. Stainbrook. Our consultant, Gerald Sherman, did that
    for us.
        The Chairman. Do you have a map for that?
        Mr. Stainbrook. I could probably get you one of those.
        The Chairman. I would appreciate it if you would.
        Sally, you gave me so much extensive testimony between your
    written comments and the little scribblings I have made. I am
    not quite sure where to start. You are certainly a wealth of
    information.
        Have you worked with other groups or organizations that
    have been working on these same problems that we are
    discussing?
        Ms. Willett. Yes.
        The Chairman. Did you reach any kind of a consensus with
    those other groups?
        Ms. Willett. Yes; that a uniform probate code is essential.
    It has to be simple and usable. It has to be fair.
        The Chairman. Have you reached any accord with tribal
    organizations?
        Ms. Willett. We are doing that now with NCAI and individual
    tribes who have members attend. There is a larger working group
    that is a consolidated group of multiple interests.
        The Chairman. I understand from your testimony that you
    think that S. 550 is too complicated and might be difficult to
    understand by the average person; is that correct?
        Ms. Willett. It is too difficult to understand by the
    average lawyer who specializes in the subject matter.
        The Chairman. Okay. Then hopefully you will offer some
    suggestions. I know you did in your testimony. You will
    continue to work with us to try to make it a little easier to
    understand.
        Your organization advocates the right of lineal descendants
    to inherit land in trust status even if the descendants are not
    members or even eligible for membership in an Indian tribe.
        Under new Federal law, that would deem them to be Indians
    for the purpose and require the Secretary to manage the land.
    Does that create jurisdictional problems?
        Ms. Willett. No, sir; it did not. From 1887 to 1934, there
    had never been a membership requirement. Then, from 1934 to
    1980, membership was only for IRA tribes as to Indian wills.
        These jurisdictional issues that we are seeing are coming
    from the aberrant strain of Indian law that is being crafted by
    the Supreme Court. We are in free-fall now. Essentially, part
    of our proposal is having the Congress declare fractionation a
    preempted subject matter. When you balance State and tribal
    interests, tribes lose. We want consolidation declared a
    preempted subject matter so that we can keep all the
    inappropriate interests out. I agree that consolidation has to
    include the interest of non-Indians. Otherwise, it is
    incomplete.
        The Chairman. Your organization is on record as stating
    that the pilot program being carried out by the Department,
    ``Provides for random purchase of fractionated lands from
    willing sellers.''
        How should the program work if it is not based on willing
    seller provisions?
        Ms. Willett. I was speaking with Gila River about this. It
    is not the willing seller side of it. It is the random
    selection. The ILCA Act of January 12, 1983, provides for land
    consolidation plans. Tribes today have not really become
    heavily involved in true ILCA consolidation plan planning. They
    need to.
        Then, what they would do is possibly target zoned areas of
    importance rather than willy-nilly buying little tiny interests
    everywhere that might not produce a return that would help them
    pay it off.
        What we are saying is do consolidation planning as provided
    by ILCA and make it real. Right now the pilot project is
    focused on particular areas, which I agree is appropriate. But
    acquisition is random. We think that people need to look at it
    as a genuine exercise.
        The Chairman. Okay. Thank you. I appreciate it. I have no
    further questions, but I may submit some in writing as others
    may, too. If you could answer them, we would appreciate it.
        We will keep the record open for 2 weeks. If anybody in the
    audience would like to provide comments in writing, if you will
    submit that to the committee, we will also review that and
    include that.
        The Chairman. With that, thank you once again. This hearing
    is adjourned.
        [Whereupon, at 11:41 a.m., the committee was adjourned, to
    reconvene at the call of the Chair.]
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                                A P P E N D I X

                                  ----------

                  Additional Material Submitted for the Record

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

    Prepared Statement of Wayne Nordwall, Director, Western Region, Bureau
         of Indian Affairs, Department of the Interior, Washington, DC

        Mr. Chairman, Mr. Vice Chairman and Members of the Committee, I am
    pleased to be here today to provide the Administration's views on S.
    550, a bill to amend the Indian Land Consolidation Act to improve
    provisions relating to probate of trust and restricted land. The
    Department commends the efforts of this Committee in the work that you
    and your staff have done over the years concerning the trust reform
    activities. We appreciate the support you have provided us. However,
    much work remains to be done.
        While we support many of the concepts embodied in S. 550,
    specifically the creation of a uniform probate code, we would like to
    work with you to further refine the bill. In particular, we believe
    more work must be done on the bill to ensure that the probate
    provisions of ILCA are clear, concise, predictable and comprehensive.
    The history of fractionation legislation has been that key provisions
    are deleted because of minority opposition. Hard decisions must be made
    that will benefit the majority of Indian country.
        Addressing the many problems associated with fractionated lands is
    a high priority within this Administration. We must find better ways to
    consolidate Indian land ownership in order to restore full economic
    viability to Indian landowners of their assets, and to reduce the
    tremendous administrative burden for the management of these assets. In
    fact, the President's fiscal year 2004 budget proposal includes a
    request for $21 million for Indian land consolidation, an increase of
    $13 million.
        We welcome the opportunity to work closely with the Committee to
    craft legislation that would better meet the dual goals of probate
    reform and the consolidation of fractionated land.
        The Department has responsibility for the management of 100,000
    leases for individual Indians and tribes on trust land that encompasses
    approximately 56 million acres. Leasing, use permits, sale revenues,
    and interest of approximately $226 million per year are collected for
    approximately 230,000 individual Indian money accounts, and about $530
    million per year are collected 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.
        There are approximately 230,000 open individual Indian money
    accounts, the majority of which have balances under $100 and annual
    transactions of less than $1,000. Interior maintains thousands of
    accounts that contain less than $1, 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. As a result, the usual incentives found in the commercial sector
    for reducing the number of accounts do not apply to the Indian trust.
        Over time, the system of allotments established by the General
    Allotment Act (GAA) of 1887 has resulted in the fractionation of
    ownership of Indian land. As original allottees died, their heirs
    received an equal, undivided interest in the allottee's lands. In
    successive generations, smaller undivided interests descended to the
    next generation. Fractionated interests in individual Indian allotted
    land continue to expand exponentially with each new generation. Today,
    there are approximately four million owner interests in the 10 million
    acres of individually owned trust lands, a situation the magnitude of
    which makes management of trust assets extremely difficult and costly.
    These 4 million interests could expand to 11 million interests by the
    year 2030 unless an aggressive approach to fractionation is taken.
    There are now single pieces of property with ownership interests that
    are less than 0.000002 percent of the whole interest.
        In 1983 and 1984, Congress attempted to address the fractionation
    problem with the passage of the Indian Land Consolidation Act (ILCA).
    The Act authorized the buying, selling and trading of fractional
    interests and for the escheat to the tribes of land ownership interests
    of less than 2 percent. The United States Supreme Court held the
    escheat provision contained in ILCA as unconstitutional. See Hodel v.
    Irving (481 U.S. 704 (1987)) and Babbitt v. Youpee (519 U.S. 234
    (1997)). As a result, Committee staff, the Department, tribal leaders,
    and representatives of allottees worked together to craft new ILCA
    legislation. This cooperation led to enactment of the Indian Land
    Consolidation Act Amendments of 2000.
        The 2000 amendments established uniform rules for the descent and
    distribution of interests in allotted lands. The amendments contained
    provisions preventing lands from being taken out of trust when
    inherited by non-Indians by creating a life estate for those
    beneficiaries with a remainder in interests going to close Indian
    family heirs (with conditions depending on the percentage of interest)
    or, if none exist, the tribe having jurisdiction over the parcel. The
    legislation also contained provisions for the consolidation of
    fractional interests. Tribes and individual allotment owners can
    consolidate their interests as well as purchase, sell, or exchange
    them. The legislation also enhanced opportunities for economic
    development by laying out a formula specifying the percentage of owners
    of fractional interests that must consent to leasing agreements.
    Finally, the amendments extended the Secretary's authority to acquire
    fractional interests through the Indian land acquisition pilot program,
    establishment of an Acquisition Fund, and the authorization of annual
    appropriations to help fund the acquisitions. Under ILCA, the Secretary
    is required to certify that she has provided certain notices about the
    probate provisions of the 2000 amendments before they become effective.
        There is a clear need for probate reform. As it currently stands,
    the Department applies 33 different State laws when probating
    individual trust estates. By using 33 separate State laws, there is a
    lack of consistency and predictability in administering probates in
    Indian country. In addition, we must probate for all interests
    regardless of the size of the account. For example, we have to probate
    a decedent's estate (at an average cost of $1,400 a probate) and
    identify and locate all heirs regardless of the value of the estate. As
    of December 31, 2002 there were 1,522 open estate accounts where the
    funds derive only from per capita or judgment payments (and not income
    from land interests) with a combined, total value of $7,194. This
    averages out to under $5 per account.
        Last Congress, former Assistant Secretary Neal McCaleb testified in
    support of the enactment of a uniform intestate code for trust and
    restricted estates. However, because of the complexity that S. 550
    would build into the proposed uniform code, we would like to work with
    the Committee to try to simplify these provisions. The Department's
    employees are expected to administer the provisions of ILCA and to
    encourage tribal members to draft wills, and eventually to probate
    those wills and estates. Therefore, the provisions must be clear.
        The benefit to the heirs of a uniform probate code for trust and
    restricted estates is that the same law will be applied to all the
    trust and restricted estates of the decedent no matter where the real
    property is located. A uniform intestate probate code will allow the
    entire estate to be probated under one set of laws, and those laws will
    be the same throughout the United States. The Indian tribes and
    individuals holding interests in allotted lands in the 33 States will
    benefit from the clarity, consistency and predictability of using a
    uniform probate code. A uniform probate code, built upon current State
    probate practices and the Model Uniform Probate Code, will help the
    Department decide cases and issue orders in a more timely manner,
    resulting in fewer appeals. If a uniform probate code is enacted, the
    Department will no longer need to research the laws and legal decisions
    of 33 individual States. It will therefore take less time to issue an
    order determining heirs. Finally, a uniform probate code will serve as
    a model for tribes to develop their own tribal probate codes.
        The Indian Land Consolidation Pilot Program is a high priority for
    this Administration. The President's 2004 Budget requests $20.98
    million for Indian land consolidation through the acquisition of
    fractionated ownership interests. This $13.1 million increase will
    support our plans to expand the program to new Indian reservations.
        The BIA has been conducting the pilot program since fiscal year
    1999 in the Midwest region. These pilot projects have successfully
    demonstrated that large numbers of owners are willing to sell
    fractionated ownership interests, and that a purchase program can be
    administered at a reasonable cost. When the projects started, there
    were approximately 87,000 interests on three reservations. To date, we
    have purchased over 40,000 interests on those three reservations.
    However, because of the runaway growth of fractionation we still have
    the same number of outstanding interests as when the projects began.
    Without this pilot program, the number would be far higher than 127,000
    since the interests purchased would have further fractionated. As
    reflected in the Administration's Program Assessment Rating Tool (PART)
    review, the pilot program has taught valuable lessons about the need to
    target purchases to maximize the return of the land to productive use
    and to reduce the number of Individual Indian Money (IIM) accounts.
        This year, the Department is developing a strategic plan to guide
    program expansion, target purchases to reduce future costs of trust
    administration, and enhance tribal economic development opportunities.
    A national program office has been established to coordinate and
    oversee the program expansion and standardize business practices, which
    may use contractual arrangements with Tribes or private entities to
    purchase individual interests on behalf of the Department. The fiscal
    year 2003 budget, together with carry-over balances, will provide
    approximately $20 million for the BIA to put in place the necessary
    infrastructure and contractual arrangements to support our planned
    expansion in fiscal year 2004. Our strategic plan, including
    legislative proposals, will be provided to the Committee later this
    summer.
        Last year, the Department held a 2-day meeting of a subgroup of the
    DOI/Tribal Task Force on Trust Reform to address the Indian Land
    Consolidation Act and to encourage a dialog on potential solutions to
    the fractionation issue. Participants were encouraged to develop
    creative ideas, and a number of possible legislative and administrative
    solutions were discussed. Many of the ideas developed merit further,
    serious consideration by the stakeholders.
        To provide a forum to continue this dialog, the Department
    published a notice in the Federal Register on April 22, 2003 requesting
    nominations for Tribal officials to participate in a Working Group on
    Land Consolidation (Working Group). We are seeking participation by
    Tribal officials from tribes with highly fractionated lands or those
    who have a strong interest in resolving the problem of fractionated
    lands to discuss the problems caused by fractionation and to examine
    the universe of possible solutions. This Working Group will meet
    throughout the summer. We anticipate that the Working Group will
    provide important input on recommendations for legislative action to
    address solutions to fractionation.
        Thank you, Mr. Chairman, Mr. Vice Chairman and Members, for taking
    the lead on these important issues for Indian people and the trust
    reform. This concludes my statement. I will be happy to answer any
    questions you may have.
                                     ______

           Prepared Statement of John Berrey, Chairman, Quapaw Tribe

        Mr. Chairman and distinguished members of the committee thank you
    for the invitation to speak to you today on such a critical problem in
    Indian country. My name is John Berrey, I am the Chairman if the Quapaw
    Tribe of Oklahoma and Vice Chairman of The Inter-Tribal Monitoring
    Association. I have been asked to describe the current problems
    regarding Indian probate and the complex interrelationships involved in
    the cash, land and resource management processes administered by the
    Department of the Interior.
        I have had the great opportunity to be part of a historic project,
    under the direction and guidance of Secretary, The ``As Is'' Business
    model now complete, identified in detail the current DOI Trust Business
    Processes. The processes that are the subject of this scientific
    analysis are:

       Accounting (collections, management and distribution
            of cash)
       Appraisals (ordering, practice, reporting)
       Beneficiary Service (Tribal and Individual contact
            with DOI)
       Cadastral Survey Services (identification, recording
            and management of land boundary information)
       Probate (case preparation, adjudication, case closing)
       Surface Asset Management (lease development,
            compliance, enforcement) Timber, agriculture, commercial
            businesses, surface minerals
       Subsurface Management (lease development, compliance,
            enforcement) Oil, gas, mining
       Title (acquisitions & disposals, rights of ways, title
            management)

        ``As Is'' Overview. I was the leader of the five Tribal
    Representatives selected by last years Tribal Task Force working with a
    project team with DOI process experts and contract facilitators from
    EDS. I traveled over 200 days last year crossing the country
    interviewing nearly 1,000 individuals involved in all the activity that
    is Indian Trust business management and documenting in detail the work
    that is performed at every level, every day. We interviewed employees
    from BIA, MMS, BLM, OTFM, OHA, Direct Service Tribes and tribes with
    638 contracts, and Self-governance tribes.
        We interviewed every level of staff from all 12 BIA Regions,
    numerous BIA agencies and several Tribal Reservations. We talked to
    clerks, line officers, managers and directors, if an office had any
    activity regarding Indian Trust Management we studied it in some form.
    This intense project has had the following benefits:

       Established a comprehensive understanding of current
            Trust business operations
       Documented variances among geographic regions, and
            their causes (e.g., due to Federal, tribal, state or local
            laws, treaties, court rulings, local practices)
       Identified current issues and opportunities for
            improvement so as to provide a basis for a ``To-Be'' process
            reengineering of the Indian Trust.

        Over the decades Indian tribes have witnessed a multitude of trust
    reform initiatives, reorganizations, plans, meetings, summits, work
    groups, task forces, computer systems, software, out sourcing
    contracts, and other efforts to fix the problems with management of
    Indian trust funds. To date, none of these efforts have proven
    successful. The reason, we believe, is that we have been seeking quick
    fixes rather than focusing on the root of the problem. And the root of
    the problem is: The fractionation of title ownership is making the
    system impossible to manage. The General Allotment Act of 1887 was
    designed to destroy tribal governments, that did not work and it is
    time we reverse the act and protect and restore tribal land bases and
    jurisdiction.
        The DOI is pretty much a land management entity and any land title
    and ownership information system is the most fundamental aspect of the
    trust system. DOI cannot accurately collect and distribute trust funds
    if it does not have correct information about the beneficial owners of
    the trust assets. This is the starting point for any effort to fix the
    trust system. Currently, the BIA is using as many as 67 different
    ownership title systems in the various Land Title Record Offices,
    regional offices, agencies and tribal locations around the country,
    both manual and electronic. There is TAAMS, LRIS, MADS, GLADS, TFAS and
    several individualized spreadsheets and other software systems, the sad
    thing is over 30 percent of all agencies, still use the old paper 3X5
    A&E cards.
        At my agency, The Miami Agency in Miami, Oklahoma they update Title
    once a year. They order Pizza and the whole gang sits around and
    updates these little cards. Each night a little old lady carries the
    records back to the closet, God forbid she drops the box and our
    records shoot across the floor.
        These systems contain overlapping and inconsistent information. The
    systems are largely ``stand alone'' in that they do not automatically
    reconcile the ownership information in the agency offices, in tribal
    records, or in the lease distribution records that are used for daily
    operations. Because records management standards and quality control
    procedures are lacking, there is no assurance that title records are
    accurate. These inaccuracies result in incorrect distribution of
    proceeds from trust resources, questions regarding the validity of
    trust resource transactions, and the necessity to repeatedly perform
    administrative procedures such as probate. Consequently, a large
    backlog of corrections has developed in many of the title offices, and
    this has compounded the delays in probate, leasing, mortgages, and
    other trust transactions that rely on title and ownership information.
    In turn, each of these delays compounds the errors in the distribution
    of trust funds.
        What does this mean? I like to describe what I call the Haskell
    effect. If a Navajo man goes away to Haskell Indian School and meets a
    Woman from Osage, they marry and move to Minneapolis where they adopt a
    couple of young children from Northern Cheyenne and they all get killed
    in a car wreck. Besides the obvious tragedy the added problem is the
    DOI has no way to know that there is land in three separate regions
    managed with systems that do not communicate. It creates a nearly
    impossible Probate case preparation nightmare.
        Cleaning up the ownership information and implementing an effective
    title system that is integrated with the leasing and accounting systems
    is a primary need for the Indian trust system. However, the BIA will
    never be able to complete this task if Congress does not address the
    fractionation problem. In 1998, just 5 years ago, the BIA reported that
    it was managing just over I million fractionated ownership interests on
    trust lands in Indian country. Just last month, the BIA reported that
    it is now managing over 4 million ownership interests. This explosion
    in the number of ownership interests comes when the land passes from
    one generation to the next generation of children by the automatic
    operation of state intestacy laws.
        The fractionation problem has already grown wildly out of control.
    But if Congress fails to act now to address it, it will continue to
    compound.
        Even if we built a wonderful computerized system to keep track of
    all the millions of ownership interests, we would soon have to scrap it
    and build a newer, bigger one. In a couple of generations we could have
    billions of interests. How many people, how much time would it take to
    keep track of all of those interests?
        The As-Is Study and its findings show that we need to focus our
    trust reform efforts on the title system. That means that Congress
    needs to focus on reducing fractionation, as the single most important
    thing in order to address trust reform:
        My recommendations would be:
        No. 1. We have to respect the property rights of the individual
    owners. But within this framework, we have to do everything possible to
    encourage the consolidation of Indian land. That should be the single
    guiding principle for judging each and every provision in S. 550. Does
    it help us consolidate land and reduce fractionation?
         No. 2. The tribes are making huge efforts on consolidation. This
    bill needs to make sure that tribes have the tools to write their own
    probate codes.
        No. 3. Indian landowners must have the right to devise their land
    to whomever they want, or they must be compensated if they are not able
    to. The Uniform Federal In testate Code that is proposed in S. 550
    could be a giant step forward to reduce fractionation but it needs
    focus. I would like to see us limit the in testate provisions to
    immediate family who are members of the tribe, and if there are no such
    members, then it should pass to the tribe itself.
        No. 4. Promote Estate Planning; provide adequate funding and
    training to get individuals to write wills. 95 percent of Indians die
    without a will.
        No. 5. Put adjudication under one roof. Create an Office of Indian
    Probate made up of Indian Probate Judges (IPJ's) and Attorney Decision
    Makers (ADM's) removing the Administrative Law Judges (ALJ'S)
        No. 6. Finally, and perhaps most importantly, Congress should beef
    up the Indian Land Consolidation Pilot Project and make it permanent.
        In closing, I would like to pledge my assistance to the Indian
    Affairs Committee and its members in any issues related to the complex
    management of the Indian Trust, if it is fractionalization, settlement
    of mismanagement claims, or historical accounting, I can provide an
    clear science-based description and understanding of the multi-agency
    cash and resource management provided to Native people by the United
    States.
        Thank you
                                     ______

     Prepared Statement of Ben O'Neal, Member, Shoshone Business Council,
                             Eastern Shoshone Tribe

        Mr. Chairman members of the committee. My name is Ben O'Neal and I
    am a member of the Business Council of the Eastern Shoshone Tribe of
    the Wind River Reservation. It is with great pleasure that I present
    this testimony today on behalf of the Eastern Shoshone Tribe. Chairman
    Vernon Hill regrets that he could not be here today, but pressing
    issues kept him at home.
        The Eastern Shoshone Tribe of the Wind River Reservation is a
    federally recognized Indian tribe with approximately 3,500 members. The
    Wind River Reservation is located in central Wyoming, and is home to
    two tribes, the Eastern Shoshone and the Northern Band of the Arapaho.
    There are also approximately 25,000 non-Indians living within the
    exterior boundary of the Reservation.
        Many members of the Eastern Shoshone Tribe are deeply concerned
    with the fact that they may not able to leave their land to their
    heirs. Provisions within S. 550 address this problem, and it is for
    this reason that we strongly support its passage.
        Title to land within our Reservation is held in various ways,
    including in trust, in fee patent, as tribal land, or as land held
    jointly by the Eastern Shoshone and the Northern Arapaho Tribes. Our
    primary concern today is with property held in trust for individual
    Indians, and I would like to use myself as an example of one way in
    which S. 550 would bring relief.
        In 1966, I married my wife, who is non-Indian. We were both from
    ranching families, and in 1972, we started acquiring land and building
    our own ranch. The first 200 acres we purchased is held in fee patent.
    It is located on the Wind River Reservation and contains the home site
    where my family and I have lived for more than 30 years. We also lease
    several allotments adjoining this property, allowing us to run enough
    cattle and operate a ranch in such a way as to have derived our living
    solely as ranchers.
        In 1989, we purchased an 80 acre tract of trust land from an
    individual Indian. We paid fair market value for this property. This
    tract adjoins our patent fee ground and added significantly to our
    ranch. In 1994, my wife and I purchased 240 acres of patent fee land
    from our neighbors to allow for expansion as our son and daughter
    expressed an interest in being a part of the ranch operations. At the
    same time, we also purchased 200 acres of adjoining Indian trust lands
    from multiple Indian heirs. These lands are all contiguous, and even
    contain a creek that runs year round, adding further to the value of
    our property.
        Through additional acquisitions, I currently own 1,200 acres of
    property within the Wind River Reservation. Half of this property is
    held in trust; the other half is held in fee. I paid fair market value
    for all of it. Under current law, as a member of the Eastern Shoshone
    Tribe, and as a landowner, I can only will my trust property to an
    Indian or to my Tribe; but I would like to leave it to my family.
        I am not alone in the fact that my wife and my children are not
    members of the Eastern Shoshone Tribe. Despite the fact that they have
    stood by me over the years, and have helped our ranch become a success,
    current law only permits me to leave my trust property to them as a
    life estate. I find this unacceptable. My only other option is to
    remove the property from trust status and place it into fee; something
    that I do not wish to do.
        Individual Indian landowners, such as myself, should have another
    option. We should be able to determine to whom we leave our land.
    Indian landowners should have the same right as others within our
    country to keep property within our families for as long as we choose
    to do so. This right should not be based upon race or political
    distinction, just as it should not be based upon religion, or any other
    similar factor. I support the passive trust provisions within S. 550
    because they allow me, and all others like me, to ensure that property
    stays within our families for a duration of our choosing.
        Let me be sure to point out that the Eastern Shoshone Tribe is not
    seeking to impose this option on everyone. If an Indian landowner wants
    to give their trust property to the Tribe, they should be able to do
    so. Our position simply is that there should be an option added to
    those that currently exist; that we should be able to choose who gets
    our land.
        In the future, if my descendants determine that it is in their best
    interest to sell this property, the Tribe should be given a period of
    time in which to exercise a first right of refusal. They should,
    however, be required to pay fair market value for it, just as I did.
        This raises another concern we have with existing law. Currently,
    there is little incentive for the Tribe to pay anything of value for
    trust property. The Tribe realizes that for individuals such as myself,
    who are restricted to leaving trust property to heirs as a life estate,
    it is only a matter of time before the Tribe comes into possession of
    the property, with no payment at all. This eventual outcome serves also
    to discourage use and improvement of the land. Why would I invest
    hundreds, even thousands, of dollars to improve the land when I know,
    in the end, I will not be compensated for my investment. Again, I find
    this unacceptable, and am pleased that S. 550 works to resolve this
    issue as well.
        As an aside, I find it important to mention our concern with the
    Tribe's ability to purchase trust property, even if they wish to do so.
    While purchases on a limited basis would be feasible, financial
    assistance would be necessary for the Tribe to make larger purchases.
    We encourage the Congress to ensure funds are available for this
    purpose.
        I also support the idea that should the Tribe not wish to pay fair
    market value for trust property, the option should be available to sell
    it to someone who is. It is important to note that this should not be
    viewed as a reduction of Tribal lands. Many people hear the term
    ``trust property'' and they think of ``tribal property.'' This,
    however, is not the case. My property is trust property. It is held in
    trust for me, Ben O'Neal. It is not Tribal property. I have spent my
    entire life working and saving to buy what I have; to make a life for
    myself and for my family. I should have the right to determine to whom
    this property is left. My descendants and I should have the right to be
    dealt with fairly.
        On behalf of the Eastern Shoshone Tribe, I again thank you for the
    opportunity to present testimony today and I encourage passage of S.
    550.
                                     ______

          Prepared Statement of the InterTribal Monitoring Association

        Good Morning, Mr. Chairman, Vice Chairman and honorable members of
    the Committee. I am honored to be here on behalf of the 54 federally
    recognized Tribes that comprise the InterTribal Monitoring Association
    (ITMA). ITMA was established in 1990 to monitor the trust reform
    efforts of the United States Department of Interior. In the last year
    and a half, ITMA has been actively involved in the Tribal/DOI Task
    Force, has drafted trust reform legislation in coordination with NCAI
    and has entered into a dialog with DOI to develop a settlement process
    for Indian Tribes who have claims against DOI for trust fund and asset
    mismanagement. ITMA has been actively monitoring S. 550 as the
    organization believes that trust reform cannot effectively occur
    without addressing tribal land issues including fractionated ownership
    and consolidation of tribal and individual lands. Further, the
    continued diminishment of tribal lands results in the continual
    diminishment of tribal governance authority.
        The vast array of problems created by fractionated land ownership,
    as a result of the General Allotment Act of 1887 and individual Tribal
    Allotment Acts, for Tribes, individuals and the DOI have been well-
    documented. The Indian Land Consolidation Act (ILCA), attempting to
    curtail the devastation of the allotment era, was amended in 2000 to
    address the significant amount of Indian land passing out of trust
    during the probate process. The 2000 amendments to the ILCA limited
    non-Indian heirs and beneficiaries to life-estates only. However, this
    limitation resulted in an unexpected backlash of individuals converting
    trust lands to fee lands in order to devise more than life-estates to
    non-Indian spouses and children.
        S. 550 attempts to further amend the Indian Land Consolidation Act
    to allow trust landowners to devise more than life-estates to non-
    Indian heirs and devisees through the creation of a ``passive trust''.
    A passive trust is a new form of land ownership, a creative remedy to
    the life-estate restriction. The passive trust provision would allow
    land to remain in trust, free from state tax liability, remain within
    tribal jurisdiction and remain within the BIA probate system. A holder
    of a passive trust would be able to lease the land without BIA
    approval, would be able to mortgage land without BIA approval, could
    devise the land to the Tribe or to Indians or other eligible
    descendants of the original holder of the land. In essence, the intent
    of the passive trust is to retain the land in trust yet allow the
    holder to manage the land as if it were fee. The passive trust is
    proposed as an alternative to trust landowners converting trust lands
    to fee. For Tribes, the passive trust would prevent a diminishment of
    landbase acreage totals.
        However, numerous unanswered questions arise about the passive
    trust concept. First, the passive trust is a newly created form of land
    ownership, no precedent for such a form of long-term ownership exists.
    Thus, no data regarding passive trusts exists to allow a knowledgeable
    assessment of problems that may occur. Second, serious questions arise
    about tribal jurisdiction over the non-Indian holders of a passive
    trust. Although the land is to remain within tribal jurisdiction, the
    Tribe's jurisdiction over the non-Indian holder of the passive trust is
    questionable. Third, the BIA currently has welldocumented problems
    tracking current owners of trust land including joint tenants of land,
    restricted fee holders, and other forms of ownership. A question arises
    regarding how the BIA will track non-Indian holders of passive trusts
    to keep the land within the BIA probate system. Although the BIA would
    not have approval obligations for passive trust uses, it would have to
    record them to effectively probate the land. The general complexity and
    costs of recording holders of passive trusts, including the
    encumbrances of the land and disposition, render the passive trust a
    questionable alternative. Further, no guarantee exists that states will
    give non-Indian holders of passive trusts a tax exemption. Finally, a
    concern exists that the passive trust may devalue Indian land since no
    investigation has occurred regarding whether a title company would
    issue title insurance if a passive trust was in the chain of title.
    Similarly, any taxation issues that are litigated for any length of
    time may result in a devaluation of Indian land .
        Although the passive trust concept appears a creative remedy to the
    problem of land passing out of trust status at probate when the spouse
    and children of the Indian land owner are non-Indian, many questions
    exist about its viability. Until more of the questions raised above can
    be answered, ITMA cannot support the passive trust concept. ITMA has
    been focused on the improvement of DOI land title and recordation
    systems as a starting point for effective trust reform. A new form of
    land ownership that would complicate the recordation process further
    causes concern for ITMA.
        S. 550 promotes the development of a uniform probate code for use
    in Indian country. The concern has been the application of state laws
    to Indian probates and with different states, different laws apply,
    resulting in no uniformity throughout Indian country. However, the
    reality is that most states have adopted the Uniform Probate Code,
    thereby probating cases uniformly from State to State. The real problem
    appears to be that the application of the State adopted Uniform Probate
    Code does not protect Tribal land bases when an Indian dies intestate
    and when no restrictions exist as to disposition of land by will.
    Therefore, the application of the State laws result in further
    fractionation and land passing out of trust either by intestacy or by
    will. A uniform probate code for Indian country will protect Tribal
    land bases only if it adopts the above questionable passive trust
    concept or limits the devisees and heirs to enrolled Indians. Frankly,
    since the passage of ILCA, few tribes have developed probate codes with
    disposition and intestacy restrictions that would protect Tribal land
    bases. If Indian country accepts the passive trust concept or is
    willing to limit heirs and devisees to enrolled Indians, then a uniform
    probate code for Indian country would be viable.
        S. 550 provides a mechanism to partition undivided fee interests
    for purchase by Tribes. Currently, no process exists for a Tribe to
    request that the BIA partition out undivided fee interests since the
    BIA has no responsibility to manage fee interests. The undivided fee
    interests limit Tribes from encumbering the land and selling or
    purchasing other undivided:interests. The provision in S. 550 would
    allow the fee interest to be partitioned out from the other undivided
    trust interests promoting a purchase of the fee interest. Further,
    partitioning the fee interest would allow the Tribe or individuals to
    encumber, sale or purchase the remaining trust interests. The proposed
    language in S. 550 is necessary to promote land consolidation via
    tribal or tribal member purchase of fee interests.
        In conclusion, ITMA believes that tribal land consolidation is
    critical to trust reform. ITMA is unable to support the complex passive
    trust concept and believes that Tribes must respond to heir and devisee
    limitations before a uniform probate code for Indian country will be
    viable. ITMA does support the language in S. 550 for partitioning
    undivided fee interests as a necessary step to land consolidation.
    Finally, ITMA believes the most viable solution to land consolidation
    is sufficient funding for Tribes to purchase the fractionated
    interests. In addition to the allotment of Indian lands, Indians were
    not allowed to devise lands through wills until 1910, thereby creating
    the framework for the fractionation problem. Sufficient funding should
    be available for Tribes to purchase undivided interests at fair market
    value. The current BIA budget falls short of a realistic attempt to
    address the fractionation problem. More funds for this purpose are
    critical for land consolidation and true trust reform.
        Thank you.

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