[Senate Hearing 108-115]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-115

             REORGANIZATION OF THE BUREAU OF INDIAN AFFAIRS

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

        PROPOSED REORGANIZATION OF THE BUREAU OF INDIAN AFFAIRS

                               __________

                              MAY 21, 2003
                             WASHINGTON, DC



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                      COMMITTEE ON INDIAN AFFAIRS

              BEN NIGHTHORSE CAMPBELL, Colorado, Chairman

                DANIEL K. INOUYE, Hawaii, Vice Chairman

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

         Paul Moorehead, Majority Staff Director/Chief Counsel

        Patricia M. Zell, Minority Staff Director/Chief Counsel

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page
Statements:
    Berrey, John, chairman, Quapaw Tribal Business Committee, 
      Quapaw, OK.................................................    23
    Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, 
      chairman, Committee on Indian Affairs......................     1
    George, Keller, president, United South and Eastern Tribes 
      [USET], Nashville, TN......................................    26
    Hall, Tex G., president, National Congress of American 
      Indians, Washington, DC....................................    19
    Marshall, Sr., Clifford Lyle, chairman, Hoopa Valley Tribal 
      Council, Hoopa, CA.........................................    25
    Martin, Aurene, acting assistant secretary, BIA, Department 
      of the Interior............................................     2
    Sangrey, Richard, acting chairman, Intertribal Monitoring 
      Association, Alburquerque, NM..............................    29
    Swimmer, Ross, special trustee for American Indians, 
      Department of the Interior, Washington, DC.................     2

                                Appendix

Prepared statements:
    Berrey, John.................................................    36
    Conrad, Hon. Kent, U.S. Senator from North Dakota............    33
    Daschle, Hon. Tom, U.S. Senator from South Dakota............    34
    George, Keller...............................................    38
    Hall, Tex G..................................................    45
    Inouye, Hon. Daniel K., U.S. Senator from Hawaii, vice 
      chairman, Committee on Indian Affairs......................    33
    Marshall, Sr., Clifford Lyle (with attachments)..............    53
    Martin, Aurene (with attachments)............................    76
    Sangrey, Richard.............................................    70
    Swimmer, Ross (with attachments).............................    76

 
             REORGANIZATION OF THE BUREAU OF INDIAN AFFAIRS

                              ----------                              


                        WEDNESDAY, MAY 21, 2003


                                       U.S. Senate,
                  Committee on Committee on Indian Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:08 a.m. in 
room SR-485, Senate Russell Building, Hon. Ben Nighthorse 
Campbell (chairman of the committee) presiding.
    Present: Senators Campbell and Conrad.

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

    The Chairman. The committee will be in session.
    Welcome to the committee hearing on the reorganization of 
the Bureau of Indian Affairs [BIA] and the Office of Special 
Trustee for American Indians.
    Senator Inouye will try to be here; he has a conflict this 
morning. Senator Daschle sent a statement over that I will 
include in the record for him. Several Senators may be coming 
in and out during this morning, but we are going to go ahead 
and start.
    The BIA is no stranger to reorganizations. The 
Congressional Research Service tells us that since the issuance 
of the Merriam Report in 1928 there have been 18 major attempts 
to reorganize the BIA, including the current one. Anyone 
involved in Indian affairs knows that the current Indian trust 
management system needs to be updated and reformed.
    For decades the system was allowed to remain in place 
without reform, without improvement, and without much attention 
being paid to it. Only in the past 15 years or so have the 
tribes, the Congress, and the executives looked for ways to 
update the centuries old framework. I believe that we need to 
update the computer and accounting hardware, but we also need 
to revisit the basic principles of the trust, such as 
legislating appropriate standards for Federal and tribal 
performance in an era of Indian self-determination, expanding 
tribal control and decisionmaking for their own assets without 
saddling the United States with all the liability for the 
decisions, and bringing the discipline and advantages of the 
private sector to how Indian funds are managed and invested.
    From January 2002 to November 2002, the Joint Department of 
the Interior--Tribal Task Force on Trust Reform met in 
exhaustive consultations and meetings around the country but 
could not reach consensus on the issues it confronted. In 
December 2002, Congress gave the Department the green light to 
reorganize with $5 million to begin to carryout the 
reorganization. That is the subject of today's hearing.
    Our first panel will consist of the newly confirmed special 
trustee, Ross Swimmer, delighted to see you here, Ross, and the 
acting assistant secretary of Indian affairs, Aurene Martin. In 
the second panel we will hear from the National Congress of 
American Indians, the Intertribal Monitoring Association, the 
United South and Eastern Tribes, the Quapaw Tribe, and the 
Hoopa Tribe of California.
    Senator Inouye, as I mentioned, will not be here, maybe not 
at all, but certainly not until later. So his written testimony 
will be included in the record.
    [Prepared statement of Senator Inouye appears in appendix.]
    The Chairman. With that, Ross, if you would like to go 
ahead. Welcome to the committee. If you would like to depart 
from your written testimony, feel free to do so.

    STATEMENT OF ROSS SWIMMER, SPECIAL TRUSTEE FOR AMERICAN 
     INDIANS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC, 
   ACCOMPANIED BY AURENE MARTIN, ACTING ASSISTANT SECRETARY, 
                    BUREAU OF INDIAN AFFAIRS

    Mr. Swimmer. Thank you, Mr. Chairman. I appreciate this 
opportunity to appear before you today, and particularly in the 
capacity as special trustee. I thank the committee for its 
efforts in that regard as far as the confirmation is concerned. 
We do have prepared testimony and would like to submit that for 
the record.
    The Chairman. It will be included.
    Mr. Swimmer. Mr. Chairman, the primary purpose of the 
reorganization that we are to talk about today is to improve 
the Department's ability to fulfill its trust responsibilities 
to individual Indians and tribes. It is important that this 
committee recognize and understand that the Department has been 
held in breech of certain of its fiduciary responsibilities in 
what is known as the Cobell litigation. In this litigation, 
individual Indian account holders, as a class, have sued the 
Department. They have expressed dissatisfaction, extreme 
dissatisfaction, with the service they have received from the 
Department in the past and with the service currently, and they 
are claiming that they are owed tens of billions of dollars for 
the mismanagement of the trust. The judge, and I quote, has 
held that the Department:

    Has indisputably proven to the court, the Congress, and the 
individual Indian beneficiaries that it is either unwilling or 
unable to competently administer the IIM Trust.

    The Secretary takes these allegations very seriously. 
Regaining the confidence of the trust beneficiaries and 
ensuring that the Department is in full compliance with its 
trust obligations is as serious a challenge as the Department 
has ever faced. It is for this reason that the Secretary, with 
the support of the former Special Trustee, the Assistant 
Secretary for Indian Affairs, this Special Trustee, and this 
Assistant Secretary for Indian Affairs has gone through a long 
process toward creating what we believe is the right 
organizational framework and structure to make this happen. It 
has been a journey of some time. The reorganization is a 
critical part we believe in making the Department more 
accountable.
    What we have done over the past year, in addition to the 
reorganization, is develop the first comprehensive trust 
management plan to guide the Department's efforts, and, as I 
think the committee is aware, we have engaged in a long-term 
process of re-engineering our business processes and how we do 
trust, how we manage the trust, and how we account to the 
account holders and to the tribes. And this effort is 
continuing as well.
    All of these three efforts, the reorganization, the 
comprehensive trust management plan, and the re-engineering, 
are what it takes we believe to meet our trust responsibilities 
for our fiduciary trust for the fiduciary trust asset 
management and accountability to both Indian tribes and Indian 
account holders.
    At this time, I would like to call on Assistant Secretary 
Martin to give you some of the background of what it took to 
get to this point in our reorganization efforts.
    The Chairman. Okay. Ms. Martin.
    Ms. Martin. Good morning, Mr. Chairman. Thank you for the 
opportunity to appear before the committee today to talk about 
our reorganization efforts.
    As Mr. Swimmer stated, the reorganization of the BIA and 
Office of Special Trustee is a component of a larger plan to 
improve the delivery of trust services to tribes and individual 
Indians. Our strategic plan for improving trust services is 
outlined in our comprehensive trust management plan and that 
provides the overall framework of where we want to go with 
trust improvement and the improvement of trust services. It 
outlines our mission, our vision, our goals.
    The reorganization provides a structure for improved 
delivery of services and, as such, is a component of the larger 
overall plan. The ``To Be'' process, the next phase of the 
development in our overall reorganization, will result in re-
engineered processes that will ultimately provide the final 
component for improvement of trust services.
    As you mentioned in your opening remarks, the Department 
undertook massive efforts to consult with Indian tribes 
regarding options for reorganization following its proposal to 
establish the Bureau of Indian Trust Asset Management. Between 
November 2001 and December 2002, the Department has held 45 
meetings all over the country with tribal leaders to discuss 
the reorganization efforts. We spent over $1 million in trying 
to provide this consultation. We have done it at every level. 
We had a number of meetings, actually 12 meetings, a meeting in 
every region, to talk about, first, the Bureau of Indian Trust 
Asset Management, and after it initially became clear that 
there was overwhelming opposition to that, how we might better 
reorganize the Department.
    It was out of those first meetings that we developed the 
Joint Tribal Leader Task Force. And we had a number of joint 
meetings all over the country with regard to the Task Force. 
And as part of the larger reorganization, the Joint Tribal 
Leaders-DOI Task Force, we also held regional meetings with 
members of the Task Force in their own region to discuss the 
efforts of the Task Force and where we were going with our 
organizational options.
    While I am sure you will hear different perspectives today 
on the efforts and the results of the Joint DOI-Tribal Leader 
Task Force on Trust Reform, the Department worked very hard 
with respect to the agreements made with tribal leaders 
resulting from the discussions of the Task Force. It was our 
intent in designing the reorganization to try to abide by those 
agreements to the extent possible.
    In other cases where we have not been able to abide by 
those agreements, we have tried to fashion from existing lines 
of authority and existing authorities that we have delegated to 
the Secretary some way of trying to honor those agreements as 
well. For example, one of the recommendations of the Task Force 
was that we create a single executive sponsor who would oversee 
all trust projects. That recommendation was to either create 
another deputy secretary or an under secretary for Indian 
affairs. We lack the authority to create such a position 
without legislative authorization. So we have increased the 
authorities of the Office of Special Trustee to try to carry 
out some of those what the tribal leaders viewed as necessary 
powers for a single executive sponsor.
    In developing the new structure, we sought to highlight a 
number of things.
    First, we wanted to keep decisionmaking at the local level 
where expertise and knowledge within the Bureau was greatest 
and where tribal leaders have the most contact with the BIA and 
the Office of Special Trustee.
    We wanted to continue the prominent position that self-
governance plays in the BIA and we have expanded the role of 
self-governance and self-determination by elevating the 
responsibility for policymaking for all self-determination 
programs to the Office of the Assistant Secretary. I think the 
way we view it is that direct service, 477, self-determination 
contracting, self-governance are all part of a larger continuum 
that tribes kind of move through in becoming more independent. 
And we did not see that that was being looked at as one kind of 
whole progression that tribes make and we do not make policy 
that way. So we want to try to do that in the future.
    We also highlighted the need for accountability within the 
BIA by creating the Deputy Special Trustee for Accountability. 
This Deputy Special Trustee is responsible for creating trust 
training programs for BIA and OST staff, and for developing 
trust regulations, policies, and procedures for the operation 
of trust programs.
    Within BIA, we have restructured the lines of authority for 
the BIA, the Office of the Assistant Secretary, and the Office 
of Indian Education Programs. The most notable change is a 
separation of the fiduciary trust services from the operation 
of other Bureau programs. We hope to achieve improved 
performance of trust services by eliminating the collateral 
duties that have been performed by employees responsible for 
trust services, a problem which has long been cited as one of 
the biggest barriers to improved performance.
    Other highlights include the consolidation of direct 
reports to the Director of the BIA, formerly known as the 
Deputy Commissioner of Indian Affairs, from 21 direct reports 
to 5. We have consolidated a number of administrative functions 
performed by BIA into one centralized unit, making it more 
efficient.
    Many of the structural changes were developed as a result 
of the discussions with the Joint Tribal Leaders Task Force and 
the DOI. The actual realignment was developed by career and 
senior management of the BIA and the Office of Special Trustee.
    Reorganizations are never easy. They generate 
understandable anxiety and concern among the employees who are 
being asked to change and improve their performance and whose 
professional and personal lives can be significantly affected. 
We hope the explanation you receive today will accomplish these 
two things:
    First, we hope that it will generate enthusiasm for 
successfully meeting the challenges that face us in fulfilling 
our trust obligations; and
    Second, we hope that it will reduce whatever anxiety you 
may feel about how the necessary changes will affect you and 
what they will require from you. It is imperative, however, 
that you understand that change is necessary and that business 
as usual with respect to trust management is not acceptable. To 
properly serve the beneficiaries of the trust, we must, and we 
can, do better. I would like to note here that that was one of 
the main things that the Trust Task Force recognized at the 
very beginning of their discussions. The tribal leaders said 
the status quo was not acceptable, we need to change the way we 
do business. And we entered into negotiations and discussions 
to see how we could do that.
    As Mr. Swimmer said, the reorganization exists as part of a 
larger design and represents the structural changes necessary 
for the organization to improve the delivery of trust services. 
The reorganization is a realignment of the functions of the 
Office of Special Trustee, the Office of the Assistant 
Secretary for Indian Affairs, and the BIA.
    As part of the Joint DOI-Tribal Task Force, tribal leaders 
identified a number of factors necessary to any reorganization 
effort and which provided benefits to tribes. These included: 
Promoting self-governance and self-determination; ensuring 
trust accountability; focusing trust employees on trust duties; 
and personal and organizational accountability. The Department 
also felt that it was important to improve beneficiary services 
by supporting strong beneficiary-focused service delivery, 
promoting better uses for trust assets, and standardizing 
business practices.
    The reorganization also provides a number of benefits to 
the Department and its employees, many of which are also 
important to tribes. Decisions about trust assets continue to 
be made at the agency and regional levels; effective management 
controls will be provided; and performance will be measured, 
creating personal and organizational accountability.
    Mr. Swimmer. As we began this reorganization over 1 year 
ago, talking and consulting with the tribes about where we were 
going after the failed attempt at the Bureau of Indian Trust 
Asset Management, we reached a conclusion in early December of 
last year of the Task Force consultation meetings. At that 
time, essentially all the options that had been discussed from 
November 2001 all the way through the Task Force consultations 
and following were evaluated. We looked at where we were, where 
we had come from, what had been proposed, and what we could do 
within the context of the law as it stood. One of the items 
that the tribes proposed, as Ms. Martin had suggested, was that 
the Department have a deputy secretary or an under secretary, 
neither of which position could be done without an amendment or 
an action of the Congress.
    Following the conclusion, however, on the December 4, 2002, 
the Secretary approved the BIA/OST reorganization 
recommendations. Following that, on December 18, the submission 
was made to the Appropriations Committees for a very modest 
reprogramming that would take us through the reorganization at 
that particular time. And then in February, the BIA and the OST 
management met with the appropriate unions and the Department 
of the Interior advised them and it got through that phase. And 
then on the April 21, 2003, the reorganization was completed, 
with the appropriate amendments to the Department manual.
    The question obviously arises, how will the reorganization 
affect the BIA and the Special Trustee staff? One of the things 
that I think is important to recognize here is, what Ms. Martin 
just said, it cannot be business as usual. The status quo is 
not acceptable. The suggestion by the plaintiffs in the Cobell 
case is that we simply eliminate the 3,000 employees that are 
currently performing trust activities and replace them all. We 
all know that is a very impractical idea but it is one, 
frankly, that the court may accept. The court is interested in 
looking at a receiver of some kind. We have no idea how that 
might play out. But certainly, we believe that the 3,000 or so 
employees that are working within the BIA and the Special 
Trustee's Office are doing a pretty credible job and that there 
needs to be more training, better organizational structure, 
more focus on the trust activities, and, frankly, more people 
well trained in trust activities to help support the 
performance that they are doing now.
    In addition to the realignment of boxes, as we call it, 
within the reorganization, there is more to it than that. We 
will be adding new staff at the local level. That new staff 
comes in the form of deputy assistant superintendents and 
deputy regional directors within the BIA, and also within the 
Special Trustee's Office we will expect to have new staff, as 
many as 100 or more people, who will be placed at the local 
level who will be working directly with the agency 
superintendents and deputy superintendents who are responsible 
for delivering the trust services.
    Nearly 3,000 employees have already gone through a formal 
Trust Foundation's training course. There are going to be 
advancement opportunities for those people as they become 
certified in trust operations and trust activities. We will 
obviously look to people that are within the system now to 
become qualified to handle specific trust positions as well as 
recruit from the private sector to try to bring in people that 
have a private sector background in trust and can hopefully be 
quickly assimilated into the Indian trust business as well. So 
there is a considerable effort here that we intend to grow the 
organization, train people into the trust world, and establish 
a very strong focus on the trust operations and trust 
activities which we think is very critical and a critical part 
of this reorganization.
    Ms. Martin. We have designed templates for how we expect 
this reorganization to play out throughout the organization and 
for regional and agency organizations. Each region has had the 
opportunity to present justifications to deviate from the 
template, because we recognize that every region has different 
needs and requirements because tribes are different and every 
tribe has different needs and requirements itself. We are in 
the process of reviewing those proposed changes, but most 
regions will have the following organizational structure:
    We have divided, as I stated earlier, our fiduciary trust 
services into one direct line of authority, who will report to 
a deputy director for Trust Services at the regional level. And 
programs that are included in the trust services line of 
authority include natural resources programs--water resources 
programs, forestry, fire, agriculture, fish and wildlife 
programs, and also real estate services--land acquisition and 
disposal, land title records offices, probate, rights-of-way.
    The other line of authority that runs out of the regional 
office will be under the deputy director of tribal services. 
Programs included within that line of authority include 
transportation, planning and design, construction for 
transportation services, and other tribal services such as 
tribal government services, human services, and housing.
    We have separated out a lot of our administrative services 
into a separate organization which is responsible for providing 
those services to the BIA and to the Office of Indian Education 
Programs, so that the regional director can focus on two 
things--managing trust assets and providing services to tribes 
and individual Indians.
    The two deputies are there to concentrate on the specific 
areas for which they are responsible, one for trust and one for 
tribal services. The purpose of that is to have the trust 
people responsible only for trust services so that they can 
better deliver those services.
    The agency field offices mirror what the organization is at 
the regional level. Again, you will have a superintendent who 
is responsible for overseeing the activities of tribal services 
and the trust services, and then a deputy superintendent who is 
responsible for the tribal services line of authority and 
another who is responsible for the trust services line of 
authority. If an agency is particularly small or has no trust 
assets to manage, it will not need to have deputy 
superintendents.
    Mr. Swimmer. The Office of the Special Trustee will 
likewise go through some reorganization, although principally 
the addition of trust officers and trust administrators is 
where you will see the differences. The Office of Special 
Trustee is charged with the oversight responsibility of all of 
the Department of the Interior trust activities. That activity 
will continue. The oversight of those agencies within Interior, 
including such agencies as Mineral Management Service, Bureau 
of Land Management, Office of Surface Mining, and others will 
continue to have the oversight of the Special Trustee, 
particularly as it affects the delivery of trust services. This 
activity does not change. If we can put up the chart, out to 
the right you will see the Trust Review and Audit section, 
which is very similar, in fact, to what some of the tribes had 
recommended, that there be an independent review and audit 
function within the Department of the Interior or outside the 
Department of the Interior. The only way that we could see that 
being done was to create it within Interior and out of the 
Office of the Special Trustee.
    The Office of Special Trustee will continue its operational 
responsibility for the Office of Trust Funds Management and the 
managing of trust funds and trust assets, as well as the 
oversight of certain improvement projects. The Office of Trust 
Funds Management was moved under the direction of the Special 
Trustee several years ago and has established a very quality 
accounting system that is in effect today.
    As I mentioned earlier, the other change in the Office of 
Special Trustee is the addition of operating authority over 
regional and agency trust employees. As you will see from the 
chart, in the regional area, we will have the deputy for trust 
services, a deputy for field operations, and a deputy for trust 
accountability. The deputy for field operations will be the one 
responsible then for overseeing the regional trust 
administrators. These are folks who have a private sector or 
Indian trust background. They are expected to be at the SES 
level, the highest level in the Government. And we anticipate 
being able to recruit some very quality people for those 
positions.
    And the same is true for the trust officers. The trust 
officers will be located at the agencies. One of the primary 
functions of the trust officers, and I understand this has been 
a point of contention in some circles, but the trust officers I 
would estimate at this time that 80 percent of their work will 
be in addressing the needs of beneficiaries. It is things that 
we do now in an office similar to a call center where 
beneficiaries want to know and need to know is their land 
leased, how much has been coming in on it, what is my account 
balance, where am I, how are we making sure that we reduce the 
``whereabouts unknown'' as much as possible, how do we track 
people. When people come into the agency and need those kinds 
of services today, the BIA provides that but it may not be a 
single person. They may go to a realty officer one day, the 
superintendent the next day or someone else and whoever is 
available. It may take longer than it should to provide the 
services.
    What we are trying to create here is a trust officer who 
would be the beneficiaries point of contact for trust services. 
That trust officer has to have an intimate knowledge of the 
agency, we anticipate that they also have to work with and 
under the guidance of the agency superintendent, that their 
work is simply an extension of what that agency is already 
doing in the area of trust. It is additional staff. And if you 
listen to superintendents, they will tell you that what we 
really need are more people and more people that understand 
what this trust is all about. And so we are trying to fill that 
through these trust officers that we expect to have in the 
agencies.
    There will not be trust officers at every agency. What we 
are trying to do in placing these folks is to look at where our 
greatest need is, particularly in terms of IIM accounts, the 
asset base, revenue, and that sort of thing. In some of our 
agencies we have very few fiduciary trust activities.
    In the next slide you will see sort of an overview of what 
happens from the Office of the Secretary down through the 
organization. We do not repeat this slide but I would ask that 
you just put it to the side and kind of keep it available to 
you because, as we go through and discuss what is on this 
slide, I think it will help you understand these relationships 
that I have just discussed. In the Office of the Secretary, the 
Secretary has designated the Deputy Secretary as being that 
single executive sponsor for presence. So, my office reports to 
the Secretary, the Assistant Secretary for Indian Affairs 
reports to the Secretary. If you want to know where the buck 
stops, it is with the Secretary and the Deputy Secretary. So 
there is that accountable official. And they expect that both 
the Assistant Secretary and myself have got to work together 
very closely to make this organization work and to be 
responsive.
    The relationships between the BIA and the Office of the 
Special Trustee at the central level. You see the Deputy 
Director of Field Operations for the BIA and the Deputy Special 
Trustee for Field Operations of the Office of Special Trustee. 
As you will note from the previous slide, these simply parallel 
each other, as does, as you will see in the next slides, the 
regional and the agency. The deputy directors of our respective 
field operations basically provide that trust oversight 
management for the positions that are at the regional and the 
agency level as well.
    At the regional, which you see is the next slide, as Aurene 
mentioned, you have the Deputy Regional Director for Trust 
Services in the BIA, and we have a Regional Fiduciary Trust 
Administrator. While the chart that you saw earlier indicates 
the parallel nature of these reporting then up to the 
Secretary's office, the intent, again, is that while you have 
different reporting relationships in your line management, 
there is the dotted line crossover and that these offices are 
to be transparent to the tribes. When we have decisions that 
need to be made at a regional level, we are not expecting 
tribes to go to the regional trust officer or the regional BIA 
officer. We are expecting them to follow the system they follow 
now, which is going to the Regional Director of the BIA. If the 
Special Trustee's Office has issues that need to be worked out, 
it is up to our Regional Director there, the Special Trustees, 
to work that out with the Regional Director of the BIA and to 
have that not as part of the tribal responsibility. And the 
same thing at the agency. The activities of the tribes should 
essentially not differ from what they are today in terms of how 
they interact with the agencies and with the regional offices.
    If you go on down to the next slide, 14, you see at the 
agency level what we are talking about, where we have the 
Deputy Agency Superintendent for Trust Operations and the 
Fiduciary Trust Officer. As I said, the Fiduciary Trust Officer 
is there to provide beneficiary services primarily. He is also 
there to assist with the Superintendent, the Deputy 
Superintendent in those areas that one might call high risk. It 
is not unusual for a superintendent or a realty officer or 
another employee of the agency to be a member of the tribe over 
which the agency is acting. In those instances, a lot of times 
leasing issues, sale of assets, the use of the assets may be a 
conflict between the person at the agency making a decision on 
that particular subject and the beneficiary. There may be a 
relationship, a family relationship, there may be an ownership 
relationship. With fractionation as it is today, the average 
beneficiary that owns property has at least 10 parcels of 
property. It could be that they have co-owners that number in 
the thousands. It is up to the superintendent, realty officer, 
deputy superintendent then to call upon the Special Trustee and 
the agency trust officer when those kinds of conditions arise 
to ensure that there is impartiality and that the duty of 
loyalty is transacted between the agency and the beneficiary.
    Again, we expect that the agency BIA people, 
superintendent, deputy, whomever, would call upon the Special 
Trustee. It is not a situation where the trust officer will go 
in and say, wait 1 minute, you cannot make that decision, that 
is a conflict of interest. We would anticipate that through the 
training that we are providing to the people dealing with trust 
that they would know when there may be a conflict, they would 
know when there is a high risk to this transaction and they 
need to have a third party look at that. Again though, it is 
our opinion that this is a very small percentage of the trust 
officer's time and duty, that in fact the trust officer is 
going to spend more time working with the beneficiary.
    The Chairman. Ross, I hate to interrupt you, but we have 
already had one call to vote and we have got about 6 minutes 
left on this one. So I am going to have to recess for about 10 
minutes. Hopefully, you will stick with us because I do have 
some questions that I need to ask you. And if you are not done, 
we will continue with your testimony as soon as I get back.
    Mr. Swimmer. Sure.
    The Chairman. We will recess for about 10 minutes.
    [Recess.]
    The Chairman. The committee will be in session.
    Ross, would you like to continue? And how much more time do 
you think you need?
    Mr. Swimmer. We just need about 5 or 6 minutes. I am 
turning the next two slides at least over to the Assistant 
Secretary and let her review our timetable and BIA 
implementation.
    Ms. Martin. The authority to make the changes that we need 
to make to effect the reorganization was granted by the 
Secretary on April 21 of this year when she signed the 
departmental manual changes that changed the lines of authority 
for the BIA and the Office Special Trustee. Since then we have 
been working together, both the BIA and OST, to put together a 
timetable and to coordinate our efforts to get the 
reorganization done.
    Because our organizations are so different, the size of the 
BIA is so much bigger than the Office of Special Trustee, they 
are going to be able to do some of their activities before we 
are able to do ours. But we have a team that is working 
together to try to coordinate when we roll out the 
reorganization so that we roll it out in the same places as the 
same time.
    Implementation has begun in some small ways. One of the 
things we have begun to do is to take the existing employees 
that we have, look at where they are located, an develop what 
we call a crosswalk, putting them in the new organization in 
the correct line of authority. It is as simple as recoding them 
in the computer, but because we have over 9,000 employees, it 
takes a long time to do that manual work. We have also begun to 
change some of the names. The Deputy Commissioner of Indian 
Affairs name change was effective last week. He is now known as 
the Director of the BIA. The actual reason for that is because 
we wanted to make it standard with the directors of the other 
bureaus and the nomenclature that we use throughout the 
Department of the Interior.
    We are undertaking the following activities at the BIA to 
implement the reorganization right now:
    We have advertised a number of the positions that will 
report to the new Deputy Assistant Secretary for Information 
Resources Management. These positions are located at Herndon, 
VA, and Albuquerque, NM.
    We have completed our position descriptions for the Deputy 
and Regional Directors and the Deputy Superintendents for 
Trust. We anticipate advertising for our first agencies that 
will be rolled out very soon.
    We have received all of the reorganization charts, staffing 
plans, and crosswalk outlines from all of our regions and 
agencies and we are reviewing those now. We expect to begin 
transferring not location, but lines of authority and functions 
in two agencies, Concho and Anadarko, both located in our 
southern plains region, in July of this year. Other regions and 
agencies will follow and will coordinate with OST in their roll 
out so that we roll those out at the same time in the same 
areas.
    Mr. Swimmer. Now as the Assistant Secretary has said, we 
are going to do this as a team and we are going to try to 
continue that approach throughout the time it takes for 
reorganization and full implementation, and even after that, of 
course.
    The Special Trustee's timetable, we have appointed acting 
managers at all levels within the Special Trustee's Office. We 
expect trust officers to be first trust officers, which would 
perhaps be two or three to be hired later this year, perhaps as 
early as September or October. We have started recruitment 
activity with advertisements in various trade publications as 
well as the Government publications for the Regional Trust 
Administrator's positions, of which there will be six, the 
Chief Information Officer, Deputy Trustee for Accountability, 
and Trust Program Management Center.
    The remaining trust officers that would go into the 
regions, as I mentioned before, we expect to begin placing 
those after our two pilot agencies, which are anticipated to be 
Anadarko and Concho in Oklahoma, we will place these trust 
officers in accordance with certain conditions, particularly 
looking at the recurring income that comes into that particular 
agency, the number of IIM accounts they have, and the 
concentration of account holders in a particular agency, as 
well as just the general workload issues that affect that 
agency.
    So we are moving. Things are happening. There are an awful 
lot of things going on. Just to recap. We have the three major 
areas that we are working with, the comprehensive trust 
management plan that gives us a roadmap to going through a more 
effective management of the trust and meeting a lot of those 
concerns that have been voiced in the Cobell court, we have the 
``To Be'' re-engineering of the trust business processes to try 
to give us a standardized business process wherever possible, 
so that when we do introduce information technology systems 
that these will be workable and that they can handle the 
processes, and the reorganization, which we believe allows us 
to have the compatibility then to carry out the trust 
management plan and the re-engineering.
    So that concludes my remarks. I would be happy to respond 
to any questions that you may have.
    [Prepared statement of Mr. Swimmer appears in appendix.]
    The Chairman. Okay. Thank you. I do have some questions. 
Before I start though, we have been joined by Senator Conrad. 
Did you have an opening statement, Senator?
    Senator Conrad. I do. I would like to just put that in the 
record if I could, Mr. Chairman, so that we could get to 
questions.
    [Prepared statement of Senator Conrad appears in appendix.]
    The Chairman. It will be included in the record. Good.
    Well, it appears that you have put a great deal of thought 
and effort into this structure, Ross and Ms. Martin. Let me 
just ask you a couple of general questions first. You remember 
the ill-fated BITAM proposal a couple of years ago. To play the 
Devil's advocate, for those who might say this looks like BITAM 
in a different suit of clothes or something, can you quickly 
describe the differences? One, of course, was that tribes had 
little prior knowledge about BITAM. It looks like after 45 
meetings, I would not think that they could say that again. But 
tell me in a nutshell what the difference is when people say 
this looks like to separate structures just like BITAM.
    Mr. Swimmer. Go ahead.
    The Chairman. Aurene, go ahead.
    Ms. Martin. Well, it is actually significantly different 
from the Bureau of Indian Trust Asset Management proposal. I 
think the similarity is that the purpose behind the Bureau of 
Indian Trust Asset Management was to place an emphasis on the 
delivery of trust services. So there is an attempt to remove 
all of those services outside of the BIA so that there could be 
a concentration on providing them. But one of the things that 
came out of our discussions with the Joint DOI-Tribal Trust 
Task Force was the tribes felt vehemently that trust services 
should never be removed from the BIA, in fact, they even 
resisted the idea that we would separate out between two deputy 
assistant secretaries trust services and other tribal services 
or non-fiduciary trust services.
    What we have done is we have kept the structure of the BIA 
at all levels and all of those services continue to be offered 
at agency, regional, and central office levels within the same 
Bureau structure, but they have been separated within that 
structure so that people who do trust services will only do 
trust services, and the people who do other non-fiduciary 
tribal services provide those services only. So they are not 
separated into a whole other structure or bureau within the 
Department of the Interior, but they stay within the BIA. 
Budget and all of those other administrative items are 
developed cooperatively and together, which was our main 
concern with the Bureau of Indian Trust Asset Management.
    Mr. Swimmer. I think those are very key points. In addition 
to that, I would say that it continues the basic functions of 
the Special Trustee's Office and the BIA, continues those to 
separate organizations. It creates a focus that I think was the 
intent of the Secretary in the BITAM proposal, was to create a 
greater focus on the trust. And by the realignment within the 
BIA, I think that happens. And with the introduction of trust 
officers, that allows that oversight of the OST to be down to 
the agency level I think is accomplished.
    The other thing is that the oversight of the Special 
Trustee for the entire Department continues under the direction 
of the Special Trustee. It is not merged in any other 
organization. So you still have that independence within the 
Special Trustee's Office and the responsibility for providing 
oversight to the entire Department for trust operations.
    The Chairman. Okay. Thank you. This is not a real big issue 
but it did kind of just jump out at me. You know we have a 
terrible deficit in a lot of Government agencies are having 
tough times struggling this year because of the deficit. But on 
page 6, where it says we plan to grow, not shrink, I would be 
careful, you might want to reword that sentence because I think 
some of my colleagues may start worrying.
    On page 5, explain if you could just really quickly, this 
Memorandum of Understanding that you have agreed to with the 
Indian Educators Association, AFL-CIO, and so on, what does 
that consist of?
    Ms. Martin. Before we undertook the reorganization, we met 
with the unions for the employees for the Office of Indian 
Education and the BIA and got their agreement to move forward 
with the reorganization before we started it.
    The Chairman. And that was part of when you mentioned, or 
perhaps Ross did, about not losing any jobs?
    Mr. Swimmer. Well, in that instance, any time there is a 
reorganization of any type, the unions have to be consulted and 
these were the unions that were appropriate to the consultation 
and they basically signed off on it. Of course, they wanted 
assurances like that, is anybody being moved, are they going to 
lose their jobs, what else are you going to do. So that was all 
given to the unions and they were satisfied.
    The Chairman. Okay. Fine. Thank you. That is good. Also, 
because your organization is somewhat forward-looking, your 
testimony indicates that the thrust will be service delivery, 
and I certainly support that. But service delivery always has a 
cost to it. I am a little concerned about the funding to pay 
for any reprogrammed money from unexpended Bureau funds, or how 
are you planning on handling the cost of delivering more 
services?
    Mr. Swimmer. The additional cost for the reorganization 
trust reform is in the fiscal year 2004 budget. It is, as all 
the other trust reform activities are, it is separately funded 
money. It does not come out of the existing program.
    The Chairman. It does not? Okay. Good. You recently 
solicited nominations for the Trustee's Advisory Board. What is 
the status of that effort?
    Mr. Swimmer. We are still receiving nominations. We have 
approximately I think seven or eight from Indian country that 
qualify for the various five positions. There are four that are 
private sector oriented positions, could come from Indian 
country as well but we do not have any specifically for those, 
but that is the two people who have the fiduciary trust 
background and an academic who has trust management experience.
    The Chairman. I see. Good. I know you were criticized some, 
as many people have been, about using private sector tools; 
that is, accountants, management, and so on, investment 
experience. But I think, frankly, that we almost have to do 
that in my view. I know that you have taken a little bit of 
heat about that, but let me share the heat with you. I do not 
think that we can do it just with Government entities alone, 
that we have got to rely on some experts outside of the 
Government agencies.
    Do you think that there will be under this restructuring 
plan any kind of turf problems, for lack of a better word, or 
if there is a disagreement, let us say tribal members disagree 
with the decisions of the Bureau or the OST, is there any 
possibility that we are going to get caught in a cross-fire, 
one being played off against each other?
    Mr. Swimmer. I do not think there could be any worse turf 
problems than we have had in the past.
    The Chairman. I will drink to that.
    Mr. Swimmer. The Assistant Secretary Aurene Martin and I 
both have a great deal of experience in Indian country and 
working on Indian issues, and particularly working on this 
particular trust issue. It is my belief that working together 
we are going to be able to put a lot of those turf battles 
aside and that, in fact, if anything, we are going to approach 
this as a team and, as I explained before, to the extent we can 
make this happen, there will not be the separation but rather 
it will be a team project between the Special Trustee's Office 
and the BIA to make the improvements that are necessary and to 
enhance trust operations throughout the system.
    The Chairman. Well I appreciate that team approach. 
Obviously, we are going to be part of that team, too. The 
members of this committee are very interested in resolving this 
problem. I look forward to working with you, and I know Senator 
Inouye does too, as we try to move forward.
    Senator Conrad, did you have any questions you would like 
to ask before we move to the next panel?
    Senator Conrad. I do. Mr. Chairman, thank you. First of 
all, I want to thank Mr. Swimmer and the Office of Special 
Trustee and representatives of the Bureau for being here. I 
appreciate the work that they have done. Let me just say, I do 
not know how many times I have been at this hearing dias and 
heard others present similar plans and all of it has come to 
naught. I will tell you honestly, it leaves me with zero 
confidence that anything fundamental is going to change here.
    Over and over, we have had plans with changes in 
organization charts and words about how they were going to 
finally get their arms around these problems. And over and 
over, we are left with the same old mess. It reminds me very 
much of rearranging the deck chairs on the Titanic. We just 
keep plunging ahead and somehow nothing fundamental changes.
    I look at this effort and it is impossible for me to know 
whether this has any prospect for success or not. But I have to 
tell you, my confidence has been so shaken by previous events. 
This is not directed at the two of you. I do not know whether 
you will be successful or not. I hope very much you will, but I 
have grave doubts. And the gravest doubt I have is that, to me, 
one of the fundamental problems is the fractionalization or 
fractionation, as some call it, of ownership interest. To me, 
this is right at the heart of the problem. And if we do not 
have a strategy and a plan to deal with that fundamental, I do 
not think we will ever catch up with this problem.
    My own conclusion is this, Mr. Chairman. I have a 
background in accounting and business management. I would say 
to you, I believe we have got a run away train on our hands. I 
believe the fractionation or fractionalization, as I call it, 
issue is going to swamp whatever system is devised. And if we 
do not find a way to address this issue, I do not think we can 
ever catch up with the problem. And I do not care how well-
intentioned the people are or how capable they are, we have got 
a dynamic occurring here where the interest gets fractionalized 
or fractionated and the result is a nightmare, an absolute 
nightmare for anybody to manage. You know, we just keep letting 
it go on. We do not go to what I think is right at the heart of 
the problem.
    So the question I would have for you is, do you have a plan 
to deal with that issue? And if not, why not? And if not, what 
can persuade you that we have got to attack that fundamental 
dynamic?
    Ms. Martin. Well, we do have a plan and we do recognize 
that fractionation or fractionalization is the problem that is 
plaguing the reorganization, any reorganization effort, because 
unless we address that, things will continue to go out of 
control. But one of the things we also are looking at is the 
fact that all of our systems are interrelated and fractionation 
affects our probate system, it affects our land title records 
system, and it affects our accounting systems.
    What we have done in past years is we developed an Indian 
Land Consolidation Pilot Project, which is located in northern 
Wisconsin, and it is a project whose purpose is to acquire 
fractionated interests of land. It has been very successful. We 
plan on expanding that project nationwide and looking at the 
types of parcels that we are purchasing, the fractionated 
interests, and trying to be wiser about the fractionated 
interests that we purchase and looking at purchasing more of 
them. For people who want to sell their fractionated interests, 
we have always had a number of willing customers, when we have 
been able to target our funding and get our funding as 
necessary, we have been able to buy as many parcels as we have 
money.
    Senator Conrad. Can I ask you, when do you intend to take 
this nationwide?
    Ms. Martin. As soon as we can. We are trying to finalize 
the plan for the national roll out now. But I think Mr. Swimmer 
also has some comments regarding fractionation.
    Mr. Swimmer. I would hope that we could see a national 
program using whatever moneys we have left from fiscal year 
2003 and the 2004 budget, keeping in mind that those are fairly 
minuscule amounts when we are talking about purchasing these 
fractionated interests. If we were to go down the track of 
simply that as the only solution is purchasing the interests, 
we are talking about a $1- to $2-billion expense or cost. The 
Indian Land Consolidation Act allows us to do that, to spend 
the money to buy it, and then transfer the title over to the 
tribes. We think there is also an element here for the tribes. 
We are working with tribes as we do the buy-outs that we can do 
with the limited funds available. In some instances, tribes 
have their own programs which we can dovetail into and expand 
on with the money that the Bureau has.
    The solutions to fractionation today are the same solutions 
that were announced in 1938 and actually were discussed in 
1900. We have articles that were written by scholars back then 
and it said fractionation is the Achilles heel, you are going 
to die from it. We know that, and we are. If it were not for 
the limited bit of computers that we have today, we would have 
more than the disaster we already have. Just to give a few 
statistics. We have currently as a result of the 1994 reform 
act, we have to maintain accounts for every interest holder. 
There are 4 million interests and 400,000 interest holders, 
each of those having an average of about 10 interests scattered 
all over the country. We have over 19,000 account holders today 
that have less than $1 in their account and no activity for the 
past 18 months, yet we have to maintain those on a set of books 
and report periodically to those account holders. We have 
people who we call ``whereabouts unknown,'' because, frankly, 
they are lost. We have returned envelopes from them with 
``addressee unknown,'' ``no forwarding address.'' And we have 
at least four different agencies and private sector companies 
that are looking for these people constantly. Over one hundred 
of these high accounts have hundreds of thousands of dollars, 
millions of dollars in them.
    Senator Conrad. Any of them named Conrad? [Laughter.]
    Mr. Swimmer. I will check the list.
    The Chairman. If you would yield for 1 moment, Senator.
    Senator Conrad. I would be happy to yield to the Chair.
    The Chairman. The cost for fiscal year 2004 is going to be 
about $21 million. I may have my numbers wrong, but I 
understand if this were done nationwide, which we need to do 
eventually, it will cost over $1 billion. Is that one of the 
things that is really holding it up, the fact that we are not 
providing enough money to be able to expand it?
    Mr. Swimmer. If that were the only solution. Congress has 
an opportunity here as well. And obviously working with your 
staff and others on the House side, there are several things 
that I think could be done that are currently under discussion.
    The Chairman. But the bottom line is that when you do the 
buy-outs, you have got to come up with an awful lot of money.
    Mr. Swimmer. That is right. If the buy-out is the plan, 
then in order to reduce the fractionation just with that one 
solution, it is in excess of $1 billion to bring it down to a 
reasonable level.
    Senator Conrad. That is exactly where I was headed. I want 
to say this, if I could. To me, we are going down a blind alley 
because we are not going to come up with $1 billion or $2 
billion for this purpose, not with the extraordinary needs that 
are out there for health care, for housing, for sanitation, for 
law enforcement. So that is not going to happen. And the 
Chairman is right, the Federal budget deficits, we are going to 
have a deficit on a unified basis of over $400 billion this 
year on an operating basis between $500 and $600 billion this 
year. So I do not think that is a fruitful promise of a 
solution. And I get a feeling, Mr. Swimmer, that you sense that 
as well. There has got to be some other creative things that we 
could do. I sense from your comments, Mr. Swimmer, that you are 
thinking of something that would involve the tribes and their 
resources as well and the resources of others who might be 
interested in the buy-out. I do not think this should just be 
on the Government's shoulders here. There is an economic 
interest in accumulating those fractionated interests and 
somehow we have got to capture the power of that. This is going 
to eat us alive. I do not care how big a computer one has or 
how powerful, the fundamental problem is--I heard you say you 
have got 19,000 accounts of $1 or less, I think we ought to 
give a legal notice, a generalized legal notice and we ought to 
close out those accounts. It does not make any sense to 
maintain 19,000 accounts with $1 or less. That serves no one's 
interest. It just complicates the situation. And I bet you we 
have got tens of thousands more that have less than $25. Would 
I be right?
    Mr. Swimmer. Absolutely.
    Senator Conrad. Do you have a number on that, Mr. Swimmer, 
on how many accounts would we have that have less than $25?
    The Chairman. If I might interject. I understand there are 
hundreds of thousands; is that correct? And by the way, those 
$1 accounts, that costs roughly about $200 a year to do all the 
paperwork to administer those $1 accounts.
    Mr. Swimmer. Yes; most of the accounts, frankly, are very, 
very small accounts, I mean in pennies. It is not unusual to 
have 2,000 people own an 80-acre tract. You lease it for $6 an 
acre, you divide $480 among 2,000 people, and you get less than 
a penny. Under the law, we are supposed to invest that less 
than a penny, pay interest on it, account for it, and send out 
a statement every quarter.
    There are some things that you can do, and the operative 
word is ``you,'' that we need. We need some relief and some fix 
on the 1994 act, because it gives the impression that there is 
this trust like a normal trust, that you actually have assets 
in this trust. Many of these fractional interests are worth 
less than a penny themselves. The piece of ground you could not 
even measure because it is so tiny if you were to partition in 
kind. But those are the kinds of things that I think we could 
through collaborative work with the committee and Congress and 
the Department perhaps fashion some solutions for some of it.
    Senator Conrad. I am going to complete on this note, if I 
could, Mr. Chairman. I would like for the committee to give a 
formal request to Mr. Swimmer to consult with tribes and to 
give us a recommendation on a series of action steps to be 
taken by us to alter the law to start to break through on this 
question. I just want to make clear, it may be controversial 
but I think it should not be controversial, we ought to take 
these very small accounts, we ought to give legal notice, we 
ought to give 90-days, we ought to spread the information 
widely, and then we ought to collapse those accounts, take the 
money and use it for broad Indian people's welfare. Because 
otherwise, this thing is going to eat us alive.
    The Chairman. It already is.
    Senator Conrad. And there is no way to then focus on the 
larger amounts of money and the larger problems to begin to 
solve this problem. We have got to cut the chaff.
    The Chairman. Yes; it is getting worse with every 
generation of youngsters that have an interest in the land.
    Senator Conrad. And it is in no one's interest. Nobody can 
benefit by an account with $18 in it. I think it is time that 
we really get serious about bold steps, bold steps to deal with 
these problems.
    The Chairman. We will take your recommendations off the 
tape. I will check with our vice chairman, Senator Inouye, and 
with his agreement, we will do that. We will send you a letter, 
Mr. Swimmer, asking for some recommendations on how you think 
it could be solved.
    Mr. Swimmer. If I could just quickly address this point, 
though. We have put together a working group at Interior and we 
have also put out a Federal Register Notice inviting tribes to 
send representatives to us who would be interested in working 
on this problem. That working group should be put together 
within the next thirty days or so and it would follow very much 
along the lines of what you are suggesting, it is to come up 
with those recommendations then to give the committee. We would 
be very happy to do that and look forward to working with you 
on this.
    The Chairman. And you might also look up S. 519 I believe 
it is that we just reintroduced, to establish a tribally-owned 
bank, the tribes themselves could belong to, that would be 
authorized to perform land repurchases, too.
    Senator Conrad. Could I ask one other question as part of 
this, Mr. Chairman.
    The Chairman. Yes.
    Senator Conrad. No. 1, I hope you put this on a fast track, 
not a slow track. That you ask this group to meet and make 
recommendations quickly, because otherwise the moments get lost 
around here. No. 2, that you also give us a recommendation--
again, $21 million and a $1- to $2-billion problem, we are 
never going to get the job done. We also need as part of the 
recommendation what creative ways could be devised using the 
economic interest of those who might acquire the fractionated 
interest to pay for this. I hope that that would be part of the 
recommendation.
    Mr. Swimmer. We will certainly take those under 
consideration. If I could, I would just make one caveat to all 
of this. That is, as long as we are involved in this litigation 
and the Cobell court is intent on going forward as it is, we do 
have issues regarding our responsibility as a trustee no matter 
how small the piece of property is. So we will continue working 
on that and at the same time continue working with the 
committee on ways in which we can carry out that trust more 
effectively.
    The Chairman. Okay. I thank you.
    Anything further, Senator Conrad?
    Senator Conrad. Nothing further, Mr. Chairman.
    The Chairman. Well thank you for appearing. I am sorry we 
had to hold you up because of a late start and the votes. But 
we will follow up with that recommendation after we talk to 
Senator Inouye.
    Mr. Swimmer. Good. Thank you.
    The Chairman. We will now move to the second panel and try 
and give them equal time, although we are going to be a little 
tight. We have five members on the second panel. Tex Hall, 
president, National Congress of American Indians; John Berrey, 
chairman, Quapaw Tribal Business Committee; Clifford Lyle 
Marshall, chairman, Hoopa Valley Tribal Council; Keller George, 
president, United South and Eastern Tribe; and Richard Sangrey, 
acting chairman, Intertribal Monitoring Association, from 
Albuquerque.
    Since we have so many, as I mentioned, I want to give equal 
time for the two panels, but because we have so many in the 
second one, I am going to have to ask you to abbreviate your 
comments down to about 5 or minutes so we do have some time for 
some questions. I do not have anybody to take the gavel for me 
here and I have a conflict, too, and I do not want to just 
leave you here talking to the wall. So try and abbreviate as 
best you can.
    We will start with President Tex Hall. Go ahead, Tex.

   STATEMENT OF TEX G. HALL, PRESIDENT, NATIONAL CONGRESS OF 
 AMERICAN INDIANS, WASHINGTON, DC, ACCOMPANIED BY JOHN BERREY, 
    CHAIRMAN, QUAPAW TRIBAL BUSINESS COMMITTEE, QUAPAW, OK; 
  CLIFFORD LYLE MARSHALL, Sr., CHAIRMAN, HOOPA VALLEY TRIBAL 
COUNCIL, HOOPA, CA; KELLER GEORGE, PRESIDENT, UNITED SOUTH AND 
  EASTERN TRIBES [USET], NASHVILLE, TN; AND RICHARD SANGREY, 
     ACTING CHAIRMAN, INTERTRIBAL MONITORING ASSOCIATION, 
                        ALBUQUERQUE, NM

    Mr. Hall. [Greeting in native language.] Senator Campbell, 
Senator Conrad, members of the committee, thank you for giving 
me an opportunity to testify on the proposed reorganization of 
the BIA. I listened very intently to the comments and the 
questions from the Department of the Interior, BIA. As the 
committee knows, I am also the chairman of my tribe, the Mandan 
Hidatsa and Arikara Tribe, a large trust asset tribe with a 
large amount of IM account holders, and I am also from the 
Great Plains or the Aberdeen area where 40 percent of all of 
the trust accounts in the country are in the Aberdeen area. But 
today I am going to testify on behalf of the National Congress 
for American Indians.
    I would like to express my continued appreciation to you, 
Chairman Campbell and Senator Conrad, for all your hard work 
and your dedication to protect the rights of tribes and 
individuals. Among the most important of these rights is the 
Federal trust responsibility. When we signed our treaties we 
gave up millions of acres of land, our economic engine, many of 
which were our sacred homelands. And for more than a century we 
have been forced to put the management of our trust resources 
in the hands of the United States Federal Government. And we 
know so far the situation has been a mess. In our eyes, it 
shows that it is hard to trust the Department, the agency based 
on this historical mismanagement. In many instances, like 
today, we have to turn to our friends in Congress for your 
help. You have stood by us in the past, and today we are asking 
you to stand by us again.
    The proposed reorganization of the BIA we believe is an 
affront to our sovereignty. It is an affront to the fundamental 
concept of consultation. And it violates the very essence of 
government-to-government relationship. We had a Task Force and 
the Government walked away from the Task Force last fall and we 
have not met since. I would like to state for the record that 
on May 29 the tribes will be convening a task force. If it is 
by ourselves, it will be by ourselves, because we have a vested 
interest--there are assets in our accounts.
    Tribal leaders, more than anyone, understand that the BIA 
must change the way it conducts business. We are invested in 
their process because it affects us like no one else in 
America. We not only want but need to see successful change and 
improvement within the BIA. So we come to you today with a 
simple message, a straightforward request, and an alternative 
approach for Congress to consider.
    First, our message is that the Interior Department's 
attempts to reorganize are wrong. Our request is that Congress 
stop it. The reorganization is wrong for a number of reasons. 
The foremost concern to us is the fact that we were not 
consulted since last fall. And as you know, the Department went 
ahead with the reorganization plan by approaching the 
Appropriations Committee. Only later did we find out about 
their plan. We believe this is a breech of the duty to consult, 
and they have an executive order that requires them as a 
trustee to consult, and given that it is our trust resources 
that are at stake, a possible breech of that trust 
responsibility in itself.
    Second, the plan will not work. As the committee knows, the 
Department has already invested millions of dollars to produce 
an ``as is'' study of trust services, a study which is supposed 
to drive the ``to be'' phase of re-engineering of those trust 
services. Now, however, the Department wants to cut out the re-
engineering phase and just start reorganizing, as we have seen 
in the charts today. I ask, what was the point of the ``as is'' 
study? Of the millions of dollars that were spent? It seems to 
us the Interior Department and the BIA could have saved 
Congress and Indian country a whole lot of money and headache 
by telling us that trust management cannot have been and never 
will, we are not going to listen to you.
    Surely, it makes no sense to go ahead with the 
reorganization before getting the results of its own management 
study. The new BIA organizational structure must be driven only 
after the tribes and the Department officials have at least had 
the chance to study this ``as is'' study. Anything else is 
putting the cart before the horse.
    Then there is the fact that the Department's reorganization 
plan is too expensive, as was echoed by your comments. So not 
only do we think the Department's reorganization plan will not 
work, but to add insult to injury, we, the tribes, are being 
asked to pay for it. Right now, Interior is asking Congress to 
nearly double the budget for trust management in the Office of 
Special Trustee--$123 million increase to a projected annual 
budget in fiscal year 2004 of $275 million. Some $71 million of 
that comes right out of tribal pockets, $32 million comes out 
of school construction. You could not ask for a more symbolic 
and ironic example of the Government's callous indifference to 
our needs. We are literally being asked to pay for the 
Government's mistakes with our children's education money. We 
do not think this is right that our children should be forced 
to continue to study in aging and crumbling school buildings in 
order to pay for the reorganization plan. If the Department 
needs more resources, then, at the very least, they should not 
come out of BIA programs.
    In our view, an effective organizational change must 
contain the following three elements:
    No. 1, a clear definition of core business processes 
accompanied by meaningful standards for performance and 
mechanisms to ensure accountability. You have to have 
standards, otherwise it does not matter.
    No. 2, responsive systems that fit with service delivery at 
the regional and local level where tribal governments interact 
with the Department.
    No. 3, continuing consultation, an effective and efficient 
means for on-going tribal involvement in establishing the 
direction and the substance of trust reform.
    The multitude of organizational charts that accompany the 
plan, as we saw, shows trust officers at nearly every level of 
the BIA's agency offices. The role and authority of these 
officers has yet to be fully explained. The fact is that Indian 
country has not had the chance to digest and understand what 
exactly is the BIA doing. I would respectfully ask, can the 
committee ascertain what is happening with their reorganization 
plan, because we cannot.
    Today there is a great cry going up across Indian country 
saying we gave away our land for this, for this reorganization 
and this mismanagement and lack of consultation? We gave up 
millions of acres of land for that?
    Last, in my testimony NCAI makes a number of specific 
recommendations regarding title, leasing, and accounting 
issues. We also restress the need for accountability. It is our 
money. We also offer an alternative approach to reorganization 
that would create a structure with three major divisions under 
the Assistant Secretary: No. 1, trust funds and trust resource 
management; No. 2, trust services such as law enforcement, 
social services, and road; and No. 3, Indian education. We also 
recommend the Office of Fund Management and other offices under 
the Office of the Special Trustee be phased out and moved back 
to the BIA. This is what the 1994 Indian Trust Reform Act says.
    So in conclusion, we are not opposed to reorganization, we 
simply want to do it right and be at the table. We request that 
Congress put an immediate stop to the Department's 
implementation of its reorganization plan. We would further 
request that Congress consider placing language in the fiscal 
year 2004 appropriation bill that prevents the Department from 
spending money on any reorganization effort unless it has 
consulted with Indian country. When Indian Country has been 
consulted and we have rolled up our sleeves, we have been able 
to come up with a solution together. We will do that. All we 
are asking today, Mr. Chairman and Senator Conrad, is for 
Congress to give us that opportunity. Give us that opportunity 
to re-engage. Have the Department re-engage in consultation 
with the tribes. I thank you for this opportunity to present 
testimony and I will be happy to answer any questions after the 
panel has presented.
    [Prepared statement of Mr. Hall appears in appendix.]
    The Chairman. Thank you.
    Senator Conrad. Mr. Chairman, might I just make one comment 
before we go on?
    The Chairman. Sure.
    Senator Conrad. I am going to have leave for another 
appointment. I would just like to rivet the point that Chairman 
Hall has made. My own experience with Chairman Hall is 
extensive and we have dealt with some incredibly complicated 
and controversial issues. Without exception, sitting down 
together we have been able to work things out, without 
exception. And when he says he is ready to sit down and others 
are to work things out and to come up with a solution, my 
experience is he is good to his word. And so I would hope that 
we would take that very seriously. I thank the Chairman.
    The Chairman. I agree. The committee has worked with Tex 
Hall a long time and I know he is a person of conscience and 
commitment. As long as we have stopped, before we go on, let me 
say, and I am not trying to defend the Bureau, but the Bureau 
is caught between a rock and a hard place. They are caught 
between the tribes wanting more input, even after 45 
consultations, apparently those consultations did not deal with 
this reorganization, but they have been held in contempt twice 
by the Lamberth court and they have been prodded pretty hard by 
the courts to do something. And so when they do something, they 
run into a buzz saw. When they do not do anything, they also 
run into a buzz saw with the courts. So, I know that it has not 
been easy for them.
    It seems to me we have got to focus time on this problem of 
the trust funds, but we are spending more and more time also on 
fractionation. I do not know how, if the litigation keeps being 
as contentious as it is, how we focus on one unless the 
lawsuits are stayed or held up for a while. What is your 
position, and maybe you do not have one, on putting a stay on 
that litigation so that they can focus on fractionation?
    Mr. Hall. Senator Campbell and Senator Conrad, I think that 
possibility exists if there is mutual consultation. We cannot 
do it if we are miles apart. And right now, we are miles apart. 
We are not talking to each other, we are not consulting with 
each other, and we are not coming up with that possibility you 
just recommended. If we would jointly do that and that was a 
joint recommendation, I think we could actually come up and 
move that.
    The Chairman. Out of all of the consultations they have 
had, I heard the number 45, I certainly was not at any of them 
although staff was at some, you mentioned none since last fall, 
did any of those consultations deal with reorganization that we 
are hearing today?
    Mr. Hall. They dealt with reorganization, you know, like we 
talked about the Under Secretary, we talked about the trust 
officers, and then we started talking about standards, we 
started talking about oversight accountability, and then it 
went South.
    The Chairman. Okay. I may get back with you, Tex, to ask 
some more questions.
    But let us move on now to John Berrey. John, same thing, 
your complete testimony will be in the record, if you could 
condense your statement, I would appreciate it.

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

    Mr. Berrey. Okay. I will. Mr. Chairman and Senator Conrad, 
I appreciate your inviting me to speak to you today. Like you 
said, my name is John Berrey, I am the chairman of the Quapaw 
Tribe of Oklahoma and I am also the vice chairman of the 
Intertribal Monitoring Association. I believe my role today is 
to provide a perspective of the current reorganization in light 
of my active collaborative involvement in this ``as is'' and 
now the ``to be'' re-engineering phases of trust reform. I want 
to make it clear that I have a positive outlook, I am also 
engaged, and I have committed much of my life to creating a 
better system. I am not a rock thrower, I am not negative; I do 
not always agree, but I have been taught by my folks that when 
change is coming about and you do not agree, you provide 
positive input and hard work to try to work things out. I 
believe that Indian country is married to the Department of the 
Interior for life and the only way we can work these things out 
is to work together.
    So what is ``As Is''? The ``As Is'' project was last year's 
documentation of current trust management business practices. I 
was on a team of dedicated people that travelled throughout 
Indian country interviewing over 1,000 hard working people who 
provide trust services to Native Americans and tribes at every 
level, every day. We basically took a snapshot of how the DOI 
and some tribes are performing trust services. We identified in 
detail how they do their jobs and how the business processes 
vary from region to region and agency to agency. It was tough 
work. I was away from my family and my tribe 204 days last 
year, but I met a lot of dedicated people who are dedicated to 
serving the Native American people. The detailed ``As Is'' work 
product has provided us a map and a basis for the ``To Be'' re-
engineering project.
    So what is ``To Be''? This is the current project that will 
redesign the processes and workflows that make up much of the 
services provided by the United States to Native Americans. 
This re-engineering will create a massive change and I believe 
congressional oversight is necessary at each phase to ensure 
that the trustee delegate, the DOI fulfills the trust 
responsibility of the United States to Native American tribes 
and individuals.
    I am a leader of the tribal representatives of this re-
engineering team. We have a great responsibility not only to 
participate in the development of these new processes, giving 
our perspective, our expertise, and our input, but the added 
responsibility to inform Indian country of our progress and any 
impact these massive management changes may have on the daily 
life for the beneficiary. To date, we have had several meetings 
and we have really just begun the task. Re-engineering is not 
just duct taping or cobbling a system together with bailing 
wire, it is a total analysis and rebuilding where needed. It 
requires that we use our imagination to create as well as our 
ability to extract the best practices identified in the ``As 
Is'' model and implement those practices in a redesigned 
beneficiary centric service delivery model.
    So what is beneficiary centric service? For us, it is our 
mission as tribal representatives to the ``To Be'' team, it is 
the mission of the ``To Be'' team. I believe that beneficiary 
focus is a mission of tribes, individuals, Secretary Norton, 
Deputy Secretary Griles, the Special Trustee Chief Swimmer, his 
deputy Donna Erwin, and all the respective employees. The 
definition of beneficiary in this context is: Tribes and 
individuals, and not just individual IIM account holders, but 
also those families that stand behind those account holders and 
the unborn future beneficiaries that we are trying to provide 
stewardship for.
    So why reorganize before we re-engineer? That is a question 
that people ask me daily and I think my answer can shed some 
light on it. Last year while documenting the current DOI 
management, it was very clear that the DOI has a systemic 
problem causing much of the delays in trust service delivery. 
It was not caused by a single decision or individual, but it 
was created over a long evolutionary process that developed 
over time. The problem we identified was that the DOI wears so 
many different hats and has so many conflicting 
responsibilities it often has problems making critical and 
final decisions on a timely basis. The regional directors had 
developed over time kind of an autonomy that resembled small 
fiefdoms and the central office was extremely disconnected with 
the needs of the regional staffs as well as the beneficiary.
    So, after this long last year that we went through and 
partially fruitful discussions with the Task Force, I think the 
DOI decided that they had to make some changes. Are the changes 
that are described in the new Department manual going to help? 
I think in some ways they are. In this line authority, this 
accountability, it is the right step. But there are a lot of 
issues that still concern me. What are the effects on the 
promotion of self-governance and self-determination? What are 
the effects at my agency that desperately needs resources? When 
is the issue of lease compliance and enforcement going to 
result in action at the local level? When can I get the 
backlogs in probate for my people caught up? When are my fee-
to-trust applications going to be signed? Without new trust 
land, my tribe is condemned to live in America's largest EPA 
superfund site. When is the DOI going to replace the old and 
worn out LRIS system with the updated version of TAAMS, the 
1.49, so we can at least have a consistent platform that we can 
transition to a better systems architecture?
    These are just a few of my concerns. But I commit that I am 
willing to engage and diligently work with the tribes, the 
individuals, and the Department of the Interior to address 
these issues. I am willing to work and work hard at fixing 
these problems. I think it is also important that we not only 
improve the lives of the beneficiaries, but we need to create a 
better Department of the Interior so young Indian people in 
this country who have interest in participating in the 
stewardship of Native America are willing to work at the 
Department, because the bench strength at the Department is 
weak, they are having trouble finding people to apply for jobs 
there, and if we create a better Department, we could create 
some opportunities for Indian people to participate in the 
stewardship.
    So with that, I will finish. If you have got any questions, 
I will answer them afterwards.
    [Prepared statement of Mr. Berrey appears in appendix.]
    The Chairman. Thank you. We will just go as you are listed 
on the witness list. So we will now go to Clifford Lyle 
Marshall.

   STATEMENT OF CLIFFORD LYLE MARSHALL, Sr., CHAIRMAN, HOOPA 
                VALLEY TRIBAL COUNCIL, HOOPA, CA

    Mr. Marshall. Thank you, Mr. Chairman, members of the 
Committee. I would like to submit written testimony for the 
record.
    The Chairman. It will be included in the record.
    Mr. Marshall. My name is Clifford Lyle Marshall and I am 
the chairman of the Hoopa Valley Tribe of California. It is an 
honor and a privilege to testify before you today. I am here 
representing the Pacific Region Tribal Trust Reform Consortium, 
created by seven tribes in 1997. These tribes are the Hoopa 
Valley Tribe, the Karuk Tribe of California, the Big Lagoon 
Rancheria, the Yurok Tribe, the Redding Rancheria, the 
Guideville Rancheria, and the Cabazon Band of Mission Indians.
    This Consortium has worked together with the BIA Pacific 
Regional Office to create a unique, successful, and mutually 
beneficial relationship. The Pacific region, or California, has 
historically been the lowest funded BIA region in the United 
States. This historical reality has compelled tribes wanting to 
develop their governments and provide much needed services to 
rely on flexibility in budgeting, to find other sources of 
income to supplement under-funded budgets, and, basically, to 
do more with less.
    I am here today to ask that the relationship and the 
agreements among the Consortium tribes and with the Pacific 
Regional Office be preserved and, if I may say so, protected by 
establishing a pilot project that maintains the working 
relationship with the Consortium tribes and the regional 
office. In 1997, the Consortium tribes sought to work together 
with the regional office to address many of the issues that the 
Department of the Interior is still wrestling with today in its 
attempts to address trust asset management. A key component of 
this successful relationship is the BIA's reliance on the 
tribe's capabilities to manage trust programs and provide trust 
services to their members. An agreement between the Pacific 
Regional Office and the Consortium was signed in 1998 that 
defined the roles and responsibilities of the regional office 
as it related to the Consortium tribes and a process for 
participation in the Consortium. It created a BIA employee 
selection and evaluation process, a funding process through the 
regional office, a joint oversight advisory council, a process 
for developing ``measurable and quantifiable trust management 
standards,'' methods for resolving disagreements and disputes, 
and, finally, a participatory process for annual trust 
evaluation. These processes were further defined in March of 
this year.
    I am not suggesting that the BIA system remains status quo. 
But the BIA today is not the BIA that existed when the breaches 
of trust occurred that are the basis of the Cobell case. In 
many parts of Indian country the BIA has evolved, as tribes 
have evolved, over the past 30 years. This evolution has 
occurred because the Self-Governance Act and the 1994 
amendments to the Indian Self Determination Act provide 
flexibility in developing tribal budgets to meet tribal 
priorities and give the BIA the flexibility to address those 
budget requests with the limited funds that are provided. 
Tribes then have the added flexibility of matching those funds 
with tribal funds or other funds.
    The DOI trust reform proposal, however, appears to be in 
direct opposition to this flexibility that has allowed for the 
development of the most progressive reform of trust asset 
management to date under self determination and self-
governance. I cannot imagine that any Member of Congress that 
supported the Trust Fund Management Reform Act of 1994 could 
have foreseen that the OST would become a department with a 
$141-million budget and a projected $300-million budget next 
year, with trustee offices for every region and agency, or that 
the OST would be allowed to take BIA service dollars and 
personnel.
    The successes resulting from the development of working 
relationships in California through compacting and contracting 
are successes not unique to California either. We have 
discussed this proposal with other tribes, including Salt 
River, Salish-Kootenai, and Rocky Boy, each having demonstrated 
progressive leadership to address trust issues. They have 
expressed their concern that their unique agreements in their 
respective regions and the flexibility needed to develop new 
proposals not be undermined by OST's trust reform proposals. 
Interior officials have often responded to us by saying that we 
may be doing it right but the rest of Indian country needs to 
be fixed.
    But real trust reform solutions to date have come from 
Indian Country and they have come when tribes take it upon 
themselves to create their own solutions.
    I implore the committee not to discard a flexible process 
that has such a proven successful track record in a large part 
of Indian country. Self determination and self-governance are 
measurably very successful pieces of legislation that have 
achieved great things in a relatively short period of thirty 
years. Tribes like the ones I have mentioned stand at the door 
ready to take the next step forward toward real social and 
economic independence. It would be a disaster if Congress were 
to allow that door to be closed.
    On behalf of the Consortium and other tribes in support of 
this proposal, I ask you to consider creating a pilot project 
like the one that started self-governance and allow tribes like 
the members of the Consortium to continue to work with BIA to 
find their own solutions regarding trust reform if, for no 
other reason, than to analyze the OST proposal against the 
success of self-determination and self-governance. Included 
with my testimony is draft legislative language that would 
create such a pilot project.
    Thank you. I am happy to answer any questions.
    [Prepared statement of Mr. Marshall appears in appendix.]
    The Chairman. Thank you, Mr. Marshall.
    Now we will go to Keller George.

STATEMENT OF KELLER GEORGE, PRESIDENT, UNITED SOUTH AND EASTERN 
                  TRIBES [USET], NASHVILLE, TN

    Mr. George. Thank you, Mr. Chairman. I appreciate the 
opportunity to come before you and testify on behalf of the 
United South and Eastern Tribes. I am an old member and on the 
council at the Oneida Indian Nation of New York and also serve 
as president of United South and Eastern Tribes.
    USET agrees that the trust and other functions need to be 
separated. However, in the BIA reorganization structure, two 
competing organizations have developed--the OST and the BIA. 
They must compete against each other for authority, resources, 
and manpower. We believe that this struggle will always exist 
unless certain issues are addressed.
    Tribes have made it clear that DOI should not use program 
dollars to help fund the mistakes of the Administration. Tribes 
have stressed that the BIA's funding should not be diminished 
in order to fund the trust efforts of the OST. The BIA is in 
dire straits and must have additional funds in order to 
accomplish a truly successful reorganization. Limited funding 
would be extremely detrimental to the efficiency of the 
processes within the BIA's new organization.
    An attempt was made by the DOI and Tribal Trust Reform Task 
Force to work through many of the current reorganization issues 
and hold consultation meetings with these tribal leaders 
regarding the suggestions of the task force. This has failed 
due to road blocks in the negotiating process. I was a part of 
that task force and some of the things that we worked out we 
agreed with, but when we started talking about having standards 
and trust principles, it seemed to all fall apart, and that was 
in December. The DOI officials have stated that they have 
consulted with the tribes on various reorganization issues that 
are being instituted. However, this is not totally true. 
Consultation is not throwing out an idea into Indian country, 
seeing a negative response, and moving forward with the idea 
regardless. Consultation is listening to tribal concerns and 
taking these comments into account.
    Two main points tribes wanted addressed, the Under 
Secretary position and trust principals, still, this remains 
untouched. Tribes have stated from the beginning of the process 
that these two items must be incorporated into any 
reorganization effort in order to establish a sense of 
accountability within the BIA. Tribes are still waiting to see 
these very important priorities given attention.
    It all comes down to the issue that the tribes must be re-
engaged if the reform process is going to be successful. Tribes 
are receiving confusing information about the reorganization 
activities, which is extremely frustrating. Tribes must be 
involved in the entire process, not just shown the end product. 
We fear that without meaningful consultation and clear 
information the new reorganization structure will be perceived 
in the same negative light that has plagued the BIA for years.
    Trust principals. Recent Supreme Court decisions have 
concluded that the Federal Government has avoided fiduciary 
trust responsibility and operated with ``bad faith'' in its 
business relationships with Indian tribes. The tribal 
leadership of the Trust Reform Task Force made a concentrated 
effort to get DOI to incorporate a list of general trust 
principals that could be used as reference points for all trust 
activities. This suggestion was adamantly opposed by DOI and 
members of the task force. Both the White Mountain Apache and 
the Navajo Nation cases have had opinions written and both 
reaffirm, now more than ever, the need for a standardized set 
of trust principles.
    Indian country should not be held at bay any longer by 
pending cases in the Supreme Court. The time is now for the 
Federal Government and the Secretary of the Interior to be held 
accountable for their trust responsibilities. It is critical 
that continuity and accountability be established as 
cornerstones of the reorganization effort. There can be no 
oversight of the trust relationship without a standardized set 
of general trust principles in place. Indian country must have 
a way to hold their trustees accountable for actions taken that 
may be contrary to the advancement of Indian people.
    Under the Under Secretary position, USET tribes have 
stressed from the beginning of the reform process the need to 
have Indian Affairs authority elevated to a secretary level 
within the Department of the Interior. There is a strong need 
for an Under Secretary of Indian Affairs position to be 
established in order to remedy the ambivalent attitude toward 
Indian affairs that has been so apparent within the DOI.
    Through legislation, USET feels that the creation of an 
under secretary could greatly benefit Indian people. Once 
again, USET stresses trust principles and oversight must be 
part of the establishment of an Under Secretary for Indian 
Affairs. This is the only way that Indian issues will receive 
the attention, resources, and respect it deserves from the 
trust relationship.
    Many hypotheses are circulating throughout Indian country 
as to how the reorganization of the BIA will actually work. 
There has been little direct discussion between the Federal 
Government and tribal leaders regarding this level of 
reorganization despite repeated requests from Indian country. 
The new Department manual once again is not clear as to all the 
multiple and complex relationships expected at the regional 
level and below. The leaders are confused and need 
clarification.
    Some of the things that need clarification: Will there be 
trust officers at every regional office? Who will they answer 
to directly? What will be their relationship with other BIA 
regional staff? What will the relationship be like between the 
trust officers and BIA officials? Who will have final 
determination authority? These are the types of questions the 
tribes need answered in order to understand the complexity of 
the situation.
    On the Cobell litigation, it is widely perceived as being 
the catalyst which first sparked trust reform discussions and 
exposed gross mismanagement of Indian trust assets by the 
Department of the Interior and the BIA. USET recognizes the 
need of the Cobell plaintiffs to seek resolution and obtain an 
adequate remedy at law. The litigation, however, is reaching 
the dangerous point where the court has threatened to appoint 
receivership over BIA and trust assets. The plaintiffs have 
argued that while they appreciate tribal input, Cobell is an 
individual Indian plaintiff's case. If receivership is 
appointed, then it becomes everybody's case. Receivership could 
negatively affect numerous Indian programs and service delivery 
to all tribes.
    We believe that it is time to introduce legislation that 
will bring a fair settlement to the ongoing litigation and to 
work with Congress to develop a resolution of the case. 
Congress should appoint a body of legal and financial scholars 
to recommend a fair and reasonable settlement along with Indian 
input. The Cobell litigation is a drain on the Federal 
Government and is depleting funding that could go to other 
Indian programs or to enhance reorganization efforts. We must 
get beyond Cobell in order to realize true and lasting reform.
    USET thanks you for this opportunity to testify before you 
today, and we are prepared to answer any questions that you may 
have.
    [Prepared testimony of Mr. George appears in appendix.]
    The Chairman. Thank you, Mr. George.
    We will go on now to the last testimony from Chairman 
Sangrey.

  STATEMENT OF RICHARD SANGREY, ACTING CHAIRMAN, INTERTRIBAL 
            MONITORING ASSOCIATION, ALBUQUERQUE, NM

    Mr. Sangrey. Good afternoon, Mr. Chairman. Thank you for 
inviting ITMA to testify today. I request permission to submit 
my remarks for the record.
    The Chairman. Your complete testimony will be included in 
the record.
    Mr. Sangrey. My name is Richard Sangrey. I am chairman of 
ITMA. My written testimony has been submitted separately and 
will discuss these issues in more detail.
    ITMA's primary objective in the trust reform process is the 
strengthening of tribal sovereignty and tribal self-governance 
while holding the U.S. Government to their fiduciary 
obligations in the administration of the Indian trust. ITMA 
firmly believes these principles can and do co-exist. We are 
working on a legislative proposal to incorporate these 
principles in the trust reform process. Before discussing our 
proposal, I will first address various aspects of the 
Department's plan.
    The Department is rolling out its plan in stages, from 
defining goals and objectives, to organizational realignment 
and changing of management, to implementation of the trust re-
engineering plan. The trust re-engineering will be based on the 
``to be'' and ``as is'' studies, which includes input and 
participation from Indian country. ITMA's Vice Chairman John 
Berrey has been very active on this front, and we will be 
involved in the re-engineering process.
    The Department has acknowledged that the Cobell v. Norton 
case is the driving factor in the development of its plan. As 
such, we believe that the Department has avoided tribal 
involvement and tribal consultation. We also note that while 
the Department's plan recognizes a commitment to self-
determination and self-governance, it does not include any 
specific plans for tribes to assume more management, control, 
or authority over the management of trust resources. Most 
glaring is the lack of clear trust standards in the plan. The 
plan only references the accounting requirements in the 1994 
Trust Reform Act. The plan does not recognize Supreme Court 
case law establishing enforceable trust standards.
    The plan also lacks substance on addressing the 
fractionation problem. The legacy of the Allotment Policy has 
created numerous modern day trust problems. Any trust reform 
proposal must address the fractionation problem.
    The Department's realignment and fiscal year 2004 budget 
request expands the authority of the Office of Special Trustee 
from an oversight function to include operational duties of 
trust management. This expansion raises questions about the 
effectiveness of OST's oversight role, and the need for 
concrete independent review of its performance.
    By contrast, the plan places no emphasis on tribal 
resources management. The enhancement of these programs are 
critical to the entire trust reform process. Tribal resources, 
our land, timber, oil, gas, coal, and other resources comprise 
the trust corpus. Properly managing these resources forms the 
basis of the trust. In this regard, the Department's plan and 
fiscal year 2004 budget request ignores the importance of 
tribal resources management.
    The Department's plan also disregards the tribe's continued 
request for a single line of authority at the local level for 
trust management programs. The plan proposes that OST will 
develop a regional and agency presence to ensure that trust 
standards are followed in the management of these assets. OST 
will also retain the responsibility for financial asset 
management. This approach raises concerns over the assignment 
of responsibilities between OST and BIA and how disputes will 
be resolved between the agencies.
    One of the largest concerns is the cost of the plan. The 
plan does not address this issue and ITMA is adamant that 
Congress not allow the Department to deplete funding from 
existing programs and services to pay for its trust reform 
proposal.
    ITMA supports the plan's establishment of a trust training 
unit within the OST reorganization. Training in the new BIA 
organization is unclear. ITMA supports agency-wide trust 
training as part of the overall trust reform.
    The legislative proposal developed jointly by ITMA and 
NCAI, along with our member tribes, addresses some of our key 
concerns.
    Our approach would require the secretary to develop an 
integrated land and resources recordation and title system as 
an immediate step to focus on the fractionation problem. In 
addition, we believe the secretary should request more 
resources to make available for tribes to consolidate land 
holdings on an allotment-by-allotment basis. Tribal attempts to 
consolidate small fractionated interests are not keeping pace 
with the current speed of the land fractionation problem.
    Our bill would establish general trust standards regarding 
the management of trust funds and assets. Our approach 
accommodates tribal participation in the development of 
standards particular to each reservation.
    Our proposal creates a statutory framework to allow tribes 
to manage tribal trust funds and assets. Our intent is to give 
tribal governments greater control over management of trust 
funds and resources. We believe that promoting tribal self-
governance is consistent with the trust responsibility the 
United States owes to tribes. Our intent is to elevate the 
resource management needs of our member tribes and to make sure 
the tribal resource management plans receive adequate funding 
and attention.
    A provision is included in our proposal making clear that 
the Federal trust responsibility to the beneficiaries of the 
Indian trust shall not be diminished. We are working on 
provisions specifying the United States trust obligations, and 
trust oversight and compliance issues.
    ITMA appreciates the dialogue we have shared with committee 
staff on our bill and we welcome further collaboration with the 
committee. This concludes my remarks. Thank you.
    [Prepared statement of Mr. Sangrey appears in appendix.]
    The Chairman. Thank you. I have about 30 questions. I have 
to tell you, this thing gets more complicated and more 
difficult all along. We have been working on it steadily for a 
couple of years now and it seems like every avenue we explore 
we run into some opposition or a brick wall. We just cannot 
seem to get all the players involved and going in the same 
direction to find some solution to it. I know it is 
complicated, but, as several people have already testified, 
including the Administration, it is getting worse, not better, 
and it is going to get much more expensive.
    I do not even know where to start with some of these 
questions I have. So what I am going to do is put these in 
writing to you. I will keep the record open longer than we 
normally do, we normally keep it open for about 2 weeks, but I 
will keep it open 4 weeks and would ask that you get back to us 
in writing because some of these are rather complicated 
questions. If you could do that, I would appreciate it.
    With that, we will just go ahead and adjourn the hearing. 
Thank you.
    [Additional statements submitted for the record appear in 
appendix.]
    [Whereupon, at 12:10 pm, the committee was adjourned, to 
reconvene at the call of the Chair.]
=======================================================================


                            A P P E N D I X

                              ----------                              


              Additional Material Submitted for the Record

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


Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii, 
               Vice Chairman, Committee on Indian Affairs

    I want to thank my chairman for scheduling this hearing today, for 
everywhere I have traveled in Indian country in recent days, there has 
been a keen interest expressed in the reorganization plan and what new 
responsibilities will now be delegated to the Office of Special 
Trustee.
    There are many detailed questions about this plan, for instance the 
role of the trust officers at the local level--many of which we have 
sent to the Department as part of this committee's role in addressing 
the President's request for Indian programs for fiscal year 2004.
    We look forward today to developing a better understanding of the 
issues those questions address.
    I want to join the chairman in welcoming our old friend, Ross 
Swimmer, and the assistant secretary, Ms. Martin, back to the 
committee.

                                 ______
                                 

 Prepared Statement of Hon. Kent Conrad, U.S. Senator from North Dakota

    Mr. Chairman, thank you for holding this important hearing on the 
reorganization of the Bureau of Indian Affairs and Office of the 
Special Trustee.
    Last year, the Department of the Interior and Indian leaders 
undertook a series of meetings and consultations on trust management 
reform and restructuring in an effort to develop an alternative to the 
ill-conceived Bureau of Indian Trust Assets Management [BITAM] 
proposal. Unfortunately, those meetings ended abruptly and, instead, 
the Department slipped its proposal under the door.
    I am disappointed that the Department has not been forthright about 
keeping the committee informed on this reorganization plan. Even though 
I am a member of this committee, which has jurisdiction over this 
matter, I was not informed of the Department's December 4 reprogramming 
request for this effort or its subsequent approval on December 18. What 
is of even more concern to me is that the Indian leaders on the joint 
tribal/DOI Task Force, who were heralded as the Department's partners 
in an effort to craft a solution to the trust management problem, were 
not informed of it until it was nearly a done deal. Now we are faced 
with a reorganization plan that is already in motion, leaving tribes 
with little opportunity to effect any changes.
    There have been more than 1 dozen attempts to reorganize the Bureau 
of Indian Affairs over the years. I am not yet convinced that this 
latest attempt, which repackages and reshuffles positions and creates 
new lines of authority, will get at the root of the problems in the 
management of the trust funds.
    An important item that is missing in this reform discussion is one 
of the underlying factors that contributes to the challenges in the 
trust management system--land fractionalization. Let me just give you 
two examples that we have found on our reservations in North Dakota. At 
the Standing Rock Reservation, one 320 acre tract of land has so many 
owners that the percentage ownership is only.0000025. If this land was 
divided among the owners, each individual would be entitled to a piece 
7.1 inches square. At Turtle Mountain Indian Reservation, one 7.5 acre 
tract of land has so many owners with undivided interests that each 
person has a .0000192 percentage ownership in the tract; if divided, 
this would yield a land equivalent of 2.9 inches square. Until this 
problem is addressed, no reorganization plan will effect the 
fundamental change that is needed in the trust management system.
    Finally, I am concerned about the budget implications of this 
reorganization plan. The Office of the Special Trustee is requesting an 
82 percent increase in its budget while other important programs for 
education, health care, and housing are being cut or level funded. This 
reorganization effort cannot and must not come at the expense of the 
Government's other trust obligations.
    I recognize that the situation we face was not created overnight. 
For decades we have seen evidence that the accounting and recordkeeping 
processes for these trust accounts have been in disarray. It is my hope 
that as this reorganization moves forward the Department will actively 
consulate with tribes. Consultation must be a key element of the plan's 
implementation. If it is not, I am afraid that this plan will be doomed 
to failure.
    Thank you again, Mr. Chairman, for holding this hearing.

                                 ______
                                 

 Prepared Statement of Hon. Tom Daschle, U.S. Senator from South Dakota

    Mr. Chairman, Mr. Vice Chairman and members of the committee, thank 
you for holding this hearing on the Secretary of the Interior's plan to 
reorganize the Bureau of Indian Affairs and the Office of the Special 
Trustee.
    This hearing is long overdue. Frankly, it is a hearing I had hoped 
could have been held before the House and Senate Appropriations 
Committees approved the Secretary's reprogramming request, which they 
did late last year.
    I don't make that statement to be critical, but rather to echo the 
concerns of my South Dakota tribal constituents who expressed to me 
their frustration upon learning that a reorganization of the Bureau of 
Indian Affairs [BIA] and the Office of Special Trustee [OST] had been 
approved without a Congressional hearing or full tribal input. They had 
been operating under the understanding that they would be involved in 
the construction of a solution to the trust management problem, only to 
discover that the Department officials and Appropriations committee 
staff cut an ``under the radar deal'' to move forward without their 
fall partnership.
    While executive, legislative, and judicial branch officials were 
discussing different strategies for coming to closure on the trust 
management issue, one principle upon which all parties had seemingly 
agreed was that the trust problem, which affects tribal leaders and 
their members so significantly, must be resolved with the full 
involvement of the Native American community. I was, therefore, both 
surprised and disappointed to learn from South Dakota tribal leaders 
after the fact that, on December 4, the Department of the Interior had 
sent a reprogramming request to Congress without the knowledge of 
tribal leadership.
    I was also told that Deputy Secretary Steven Griles and other 
senior Interior Department officials did not even raise the 
reprogramming request at its 2 day meeting with the Trust Reform Task 
Force on December 16 and 17 until late on the second day. Adding insult 
to injury, I understand that neither the membership of the Senate 
Committee on Indian Affairs, nor the Senate leadership were informed 
that a reprogramming request had been received and approved by the 
Appropriations Committee.
    Tribal leaders in my State believe strongly that the Department's 
plan moves in the wrong direction. Instead of integrating the trust and 
``non-trust'' functions of the Department, it separates the functions 
even further.
    In terms of process, they ask what happened to the ``consultation'' 
that was so trumpeted by Interior Department officials earlier in the 
year?
    Mr. Chairman, Mr. Vice Chairman and members of the committee, I 
acknowledge your sincere desire to solve the trust management problem 
in a way that ensures that stakeholders receive what is due to them in 
a timely manner. And I greatly appreciate the attention you are 
devoting to this matter. However, given the recent history of the trust 
reform debate, I have no credible answer to tribal leaders' lament that 
the Department appears more interested in affecting the reaction of the 
Court in the Cobell v. Norton lawsuit than in considering the opinion 
of Indian country.
    Since the Department formally unveiled its reorganization proposal 
6 months ago, numerous questions have been raised about exactly how 
this reorganization, which is currently being advanced 
administratively, will improve the present trust fund management and 
accounting procedures.
    What is the role and responsibilities of the trust officers who 
will be dispatched throughout Indian country, and how will these 
positions relate to the local and regional BIA offices?
    Who has oversight over these positions, and what accountability 
mechanism is in place to monitor their performance?
    Will Indian preference apply to any new positions that are created 
by the reorganization and the expansion of the Office of Special 
Trustee's responsibilities?
    Why is the reorganization effort affecting the Office of Indian 
Education Programs when the court mandate affects only trust fund 
management reform?
    Does the plan violate the BIA amendments to the Elementary and 
Secondary Education Act reauthorization statute?
    This list of questions is long and incomplete. Suffice it to say 
that there is much more to be explained to my tribal constituents and 
to me than can be gleaned from the 18 pages of organizational boxes 
that the Department has provided to explain the rationale for their 
reorganization plan.
    I think it is extremely important for this committee, and indeed 
the fall Senate, to reflect on two central facts about the Indian trust 
debate as they consider this proposed reorganization of the BIA and the 
OST.
    First, residents of Indian country have been victimized by 
persistent mismanagement of trust assets by the Federal Government for 
generations--through administrations of both political parties. Far too 
many families for far too long have been denied trust assets to which 
they are entitled because of Federal mismanagement. And this situation 
has adversely affected their quality of life.
    Second, frustration with the Federal Government's failure to come 
to grips with this problem has not only lead to litigation [Cobell v. 
Norton], it has also solidified the tribes' determination to be part of 
the solution to the problem. Effective trust management reform will 
remain an elusive goal if the tribes are not fall participants in this 
exercise.
    Mr. Chairman, Mr. Vice Chairman and members of the committee, the 
tribes understand that the Interior and Treasury Departments, the BIA, 
and Special Trustee for American Indians must be their allies in the 
search for a solution, not independent actors balancing other agendas. 
The bottomline is that trust beneficiaries deserve trustees in whom 
they can have confidence to restore sound accounting principles and 
integrity to the Federal Government's management of trust assets.
    Last year, Senator Tim Johnson and I worked with Senator John 
McCain on a bipartisan alternative to the controversial proposal 
announced by Secretary Norton in November 2001 to establish a new 
``Bureau of Indian Trust Asset Management'' [BITAM] within the 
Department of the Interior. Our effort featured the establishment of a 
single line of authority within the Department of the Interior for 
trust management, trust standards, and the option of co-beneficiary 
management of trust assets, all principles I still believe make sense 
today.
    Meanwhile, as BITAM drew a sharp negative reaction, Secretary 
Norton announced an aggressive outreach program designed to solicit 
input on trust reform from Indian country. Regional meetings were held 
around the country with Indian leaders and affected stakeholders, and 
emotions cooled. Yet, abruptly, last Fall, it all came to a halt. Then, 
quietly, in mid-December, the phoenix rose from the ashes.
    I clearly remember the resounding opposition expressed to me about 
BITAM 1 year ago, and the main elements of the case against that plan 
have been raised about the current reorganization scheme. The proposal 
this committee is reviewing today appears to be a reincarnation of 
BITAM, so I am interested to hear the Department's explanation of the 
differences between the two approaches, in substance and in process.
    In my opinion, this debate about the reorganization has been a 
distraction and a side-show from the more fundamental challenge of 
providing a full and fair accounting to Indian people, and ultimately 
payment of the money that is owed to them and the Tribes.
    Now that the Department has been given authorization to proceed 
administratively with its reorganization plan, I hope the Department 
will submit to the Congress a legislative proposal on how to address 
the underlying, substantive problem that we have been wrestling with 
for far too long.
    We still do not have a historical accounting, we still do not know 
if records exist, and we still do not know how much the United States 
of America owes to Indian people and to the Tribes. There has been no 
proposed mechanism to get to an ultimate solution of this trust 
debacle. The United States of America continues to fail Indian people 
every single day, and to compound the problem by its inaction.
    Finally, Mr. Chairman, Mr. Vice Chairman, and members of the 
committee, we need to recognize the human dimension and consequences of 
trust mismanagement. The lack of an accounting and payment of what is 
owed prevents the tribes from addressing the very real human needs that 
we are all so painfully aware of in Indian country.
    The bottomline is that the tribes do not have the resources they 
need to adequately address health care, education, unemployment, 
infrastructure, and the full range of socio-economic needs. The issue 
is not simply boxes on an organizational chart, but lives that 
literally hang in the balance.
    As you can see, I am thoroughly frustrated by this issue. The 
history of trust management has been a travesty and, without a 
concerted effort to address the issue, the future will not be any 
better. The United States has a fiduciary responsibility to Indian 
country based on numerous treaty obligations. We must satisfy our 
obligations. We must work together to craft a solution to the 
underlying trust problem.
    I look forward to working with all of my colleagues, the 
Administration, and representatives of Indian country on this important 
challenge.
    Thank you.

                                 ______
                                 

Prepared Statement of John Berrey, Chairman, Quapaw Tribe, Oklahoma and 
           Vice Chairman, Inter-Tribal Monitoring Association

    Mr. Chairman and distinguished members of the committee thank you 
for the invitation to speak to you today. 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 believe that my role today is to 
provide a perspective of the current reorganization in light of my very 
active collaborative involvement in the ``As Is'' and ``To Be'' re-
engineering phases of Trust Reform. I want to make it clear that I have 
a positive outlook, I am also engaged and I have committed much of my 
life to creating a better system. I am not a rock thrower; I am not 
negative, I don't always agree but I have been taught by my folks to 
help guide change with positive input and hard work. I believe that 
Indian country is married for life with the DOI and the only way to 
make it work is to work together.
    What is ``As Is''? The ``As Is'' project was last year's 
documentation of current Trust management business practices. I was on 
a team of dedicated folks that traveled throughout Indian country 
interviewing over 1,000 hard working people who provide Trust services 
to Native Americans and tribes at every level, every day. We basically 
took a snapshot of how the DOI and some tribes are currently performing 
Trust services. We identified in detail how they do their jobs and how 
the business processes vary from region to region and agency to agency. 
That was tough work; I was away from my family and tribe for 204 days 
but I met so many people who are dedicated to the Native people that 
they serve. This detailed ``As Is'' work product has provided us with a 
map and basis for the ``To Be' Trust re-engineering project.
    What is the ``To Be'' re-engineering? This current project will be 
the redesign of the processes and work flows that make up much of the 
services provided by the United States to Native Americans. This re-
engineering will create a massive change and I believe requires 
congressional oversight at each phase ensuring that the trustee 
delegate, the DOI fulfills the trust responsibility of the United 
States to the Native American Tribes and individuals. I am the leader 
of the tribal representatives of which we have five members to this re-
engineering team. We have a great responsibility to not only 
participate in the development of these new processes giving our 
perspective, expertise and input but we have the added responsibility 
to inform Indian country of our progress and any impact these massive 
management changes may have on daily life for the beneficiary. To date 
we have had several meetings and we have really just begun the task. 
Re-engineering is not just duct taping or cobbling a system together 
with baling wire; it is total analysis and rebuilding where needed. It 
requires that we use our imagination to create as well as an ability to 
extract the best practices identified in the ``As Is'' model and 
implement those practices in a redesigned beneficiary centric service 
delivery model.
    Beneficiary centric Trust service is the mission of the tribal 
representatives and the ``To Be'' team. I believe that beneficiary 
focus is a mission shared by tribes, Individuals as well as Secretary 
Norton, Deputy Secretary Griles, The Special Trustee Chief Swimmer and 
his deputy Donna Erwin including all their respective employees. The 
definition of beneficiary in this context is: Tribes and Individuals, 
and not just Individual Indian Money Account holders [IIM] but also the 
families that stand behind those folks and the unborn future 
beneficiaries.
    So why reorganize before re-engineering? That is a question that 
many people have asked me and I believe my answer may shed some light. 
Last year while documenting the current DOI management it was very 
clear that the DOI had a systemic problem causing much of the delays 
in: Trust service delivery. A single decision or individual did not 
create the problem but it was the result of a long evolutionary process 
developed over time. The problem we identified was that the DOI wears 
so many different hats and has so many conflicting responsibilities it 
often has problems making critical and final decisions on a timely 
basis. The regional directors had developed over time a sort of 
autonomy that resembled small freedoms and the central office was 
extremely disconnected with the needs of the regional staffs as well as 
the Beneficiary. So, after 1 year of time consuming and difficult but 
partially fruitful discussions with the Tribal Task Force, I believe 
that the DOI decided to implement some necessary changes. Are the 
changes described and implemented in the recently signed Department 
Manual going to help? I think in some ways the answer is yes but I am 
not yet sure; there are so many issues that concern me. What are the 
effects on the promotion of self-governance and self-determination? 
What are the effects at my agency that desperately needs resources? 
When is the issue of lease compliance and enforcement going to result 
in action at the local level? When can I get the backlogs in probates 
for my people caught up? When are my fee-to-trust applications going to 
be signed? Without new Trust land my Tribe is condemned to live in 
America's largest EPA superfund site. When is the DOI going to replace 
the old and worn LRIS system with TAAMS 1.49 so we can have a 
consistent platform that we can transition from to a better systems 
architecture? These are just a few concerns that I have and I commit to 
you that I will engage with and work diligently with tribes, 
Individuals and the Department of the Interior to address these issues 
and I will not throw rocks. We, tribal leaders, Individuals, 
Congressional Representatives and the DOI must work together to not 
only create a better system but to provide opportunities for our young 
people who may have an interest in participation in the stewardship of 
Native America.
    Thank you for this opportunity to, provide input and I also offer 
myself to the committee and its members my help whenever asked.

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