[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

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                                                                   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

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              Additional Material Submitted for the Record

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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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