    [Senate Hearing 109-483]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 109-483

             INDIAN TRUST REFORM ACT OF 2005, TITLES II THROUGH VI

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON INDIAN AFFAIRS
                              UNITED STATES SENATE

                           ONE HUNDRED NINTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 1439

     TO PROVIDE FOR INDIAN TRUST ASSET MANAGEMENT REFORM AND RESOLUTION OF
                          HISTORICAL ACCOUNTING CLAIMS

                                   __________

                                 MARCH 28, 2006
                                 WASHINGTON, DC

                        U.S. GOVERNMENT PRINTING OFFICE
    26-805                      WASHINGTON : 2006
    _____________________________________________________________________________
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                          COMMITTEE ON INDIAN AFFAIRS

                         JOHN McCAIN, Arizona, Chairman

                  BYRON L. DORGAN, North Dakota, Vice Chairman

    PETE V. DOMENICI, New Mexico         DANIEL K. INOUYE, Hawaii
    CRAIG THOMAS, Wyoming                KENT CONRAD, North Dakota
    GORDON SMITH, Oregon                 DANIEL K. AKAKA, Hawaii
    LISA MURKOWSKI, Alaska               TIM JOHNSON, South Dakota
    MICHAEL D. CRAPO, Idaho              MARIA CANTWELL, Washington
    RICHARD BURR, North Carolina
    TOM COBURN, M.D., Oklahoma

                     Jeanne Bumpus, Majority Staff Director

                    Sara G. Garland, Minority Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page
    S. 1439, text of.................................................     3
    Statements:
        Cason, James, associate deputy secretary, Department of the
          Interior...................................................    75
        Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice
          chairman, Committee on Indian Affairs......................    78
        Hall, Tex, chairman, Three Affiliated Tribes Business Council    78
        Gray, Jim, chairman, Intertribal Monitoring Association......    80
        Marshall, Sr., Clifford Lyle, chairman, Hoopa Valley Tribal
          Council....................................................    83
        McCain, Hon. John, U.S. Senator from Arizona, chairman,
          Committee on Indian Affairs................................     1
        Nunez, Austin, chair, San Xavier District, Indian Land
          Working Group..............................................    85
        Russell, Majel, attorney, Elk River Law Office...............    86
        Swimmer, Ross, special trustee for American Indians,
          Department of the Interior.................................    76

                                    Appendix

    Prepared statements:
        Cason, James.................................................    93
        George, Keller, president, United South and Eastern Tribes,
          Inc........................................................    97
        Gray, Jim....................................................   108
        Hall, Tex....................................................   117
        Marshall, Sr., Clifford Lyle.................................   122
        Nunez, Austin................................................   129
        Russell, Majel...............................................   139
        Swimmer, Ross................................................    93

             INDIAN TRUST REFORM ACT OF 2005, TITLES II THROUGH VI

                                  ----------

                            TUESDAY, MARCH 28, 2006

                                           U.S. Senate,
                                   Committee on Indian Affairs,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 9:30 a.m. in room
    485 Senate Russell Office Building, Hon. John McCain (chairman
    of the Senate Committee on Indian Affairs) presiding.
        Present: Senators McCain and Dorgan.

       STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA,
                 CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

        The Chairman. Good morning.
        Senator Dorgan will be joining us shortly, so we will
    commence the hearing.
        Earlier this month, the committee held a joint hearing with
    the House Committee on Resources on the settlement of the
    Cobell v. Norton litigation, which is the subject of title I of
    S. 1439. There seemed to be a strong consensus among the
    witnesses that the Congress should step forward and resolve the
    Cobell lawsuit.
        We also heard from one of the witnesses that we should not
    resolve the funds mismanagement claims, but leave unresolved
    the resource mismanagement claims. I agree with the assessment
    that all funds mismanagement claims should be resolved, but I
    am troubled by the prospect of settling the Cobell case at a
    cost of billions of dollars to the taxpayers, while leaving a
    significant set of claims intact. Will there be a Cobell II
    filed on the heels of the settlement, thereby commencing
    another ten year run against the Department of Interior?
        I am sure my colleagues in the Senate are going to want to
    know whether that can happen before supporting a settlement
    with a multibillion dollar price tag.
        The hearing today focuses on the remaining five titles of
    S. 1439. Although, of course, if any witness has ideas on how
    to settle the Cobell matter, we would certainly like to hear
    from them. These titles deal with various aspects of Indian
    trust reform, creating a commission that would review trust
    practices within the Department of Interior and recommend
    changes; establish a novel demonstration project allowing
    greater tribal control and responsibility over trust asset
    management; restructuring the BIA and transferring Office of
    Special Trustee functions under a new Under Secretary for
    Indian Affairs; providing new mechanisms to deal with the
    problem of fractionation; and requiring annual GAO audits of
    individual Indian and tribal trust funds.
        Since the Indian tribes and tribal organizations, as well
    as individual Indians and organizations that represent trust
    reform, that there is interest. There are some differences in
    opinion in Indian country about some aspects of trust reform,
    but based on the comments I have received so far, I would say
    that there is a widespread view in Indian country that
    management of Indian trust assets does need to be reformed.
        Hopefully, our hearing today will give us further insight
    on how S. 1439 should be revised so that we can put it on our
    markup calendar as soon as possible.
        [Text of S. 1439 follows:]

        The Chairman. I welcome our witnesses and look forward to
    their testimony. Our first panel is James Cason, who is the
    associate deputy secretary at the Department of the Interior,
    and Ross Swimmer, who is the special trustee for American
    Indians, on their 200th appearance before this committee.
    [Laughter.]
        Mr. Cason, welcome. Do you want to go first?
        Mr. Cason. Sure.
        The Chairman. Thanks.

         STATEMENT OF JAMES CASON, ASSOCIATE DEPUTY SECRETARY,
                       DEPARTMENT OF THE INTERIOR

        Mr. Cason. Thanks, Mr. Chairman.
        Thank you for the opportunity to come before this committee
    to discuss titles II through VI of S. 1439, the Indian Trust
    Reform Act of 2005. We appreciate that this committee continues
    to advance legislation that attempts to provide a settlement of
    the Cobell v. Norton lawsuit, but also intends to address other
    challenges in managing the Indian trust.
        As we have testified on several prior occasions, the
    department supports the efforts of Congress, as the Indian
    trust settlor, to clarify Indian trust management duties,
    responsibilities and expectations. Since the passage of the
    American Indian Trust Fund Management Reform Act of 1994,
    Interior has made progress in trust reform. Today,
    beneficiaries have direct access to staff that is trained in
    fiduciary trust matters. New procedures are in place for the
    management of account information and the collection and
    distribution of trust funds. These reforms have been
    implemented to provide improved service to beneficiaries.
        We appreciate that titles II through VI of S. 1439 focus on
    other areas of trust management. However, we believe that it
    would take considerable adjustment of these titles to
    facilitate material improvement in the management reform of the
    Indian trust.
        If a restructuring of the Indian trust is desired, we would
    also ask Congress to address some other crucial issues,
    including the lack of a clear trust agreement to guide our
    responsibilities and Indian country expectations;
    appropriations that do not align with program trust
    responsibilities; the lack of an operative cost-benefit
    paradigm to guide decisionmaking; the challenges of addressing
    Public Law 93-638 contracting and compacting goals; and the
    impediments associated with Indian preference hiring practices.
        These issues have frustrated the department, Indian
    beneficiaries, administrators and Congress throughout the
    lifespan of the trust. We encourage Congress to speak clearly
    in developing such language and carefully consider the impacts
    it will have in allowing us to meet the expectations of our
    constituency.
        The new structures and business practices being put in
    place at the department have improved the management of the
    Indian trust for future generations. We must be careful to
    pursue constructive change and to address the structural
    problems that are impeding Interior's forward motion in trust
    reform.
        We look forward to working with you on meaningful
    legislation that addresses both the need to bring closure to
    this class action litigation before us, and the need to address
    some of the fundamental challenges we face.
        This concludes our statement. We would be happy to answer
    questions.
        Thank you.
        [Prepared statement of Mr. Cason appears in appendix.]
        The Chairman. Thank you.
        Mr. Swimmer, welcome.

        STATEMENT OF ROSS SWIMMER, SPECIAL TRUSTEE FOR AMERICAN
                  INDIANS, DEPARTMENT OF THE INTERIOR

        Mr. Swimmer. Thank you, Mr. Chairman.
        I appreciate the opportunity to be here as well, and
    certainly second what Mr. Cason has said.
        Just to bring to the committee's attention a few of the
    things that have happened and that are happening. As the
    committee knows, a couple of years ago, actually 3 years ago,
    we started a process called let's study the trust and see what
    is going on with it, and trying to come up with where we are
    today in the trust. This was three years ago, and we did what
    was called the ``as is'' study. We went out to Indian country
    with tribes, with individuals, with all of the players of the
    trust, and we put together the way the trust was operated. From
    that, we created what we called the ``to be'' model, eventually
    becoming the fiduciary trust model.
        If you were going to have a model of how the trust could
    operate, if you wanted to continue it as is, this would be a
    way of doing that. The model has been successful. It has been
    implemented. It is being implemented. It has been implemented
    in some places now. We have lease collection of funds, the
    trust funds accounting, distribution of funds and tracking of
    title ownership, all being tied together with conversion to the
    new software systems and business practices throughout the
    Bureau of Indian Affairs and the Special Trustee's Office.
        We have now beneficiary access to data and professional
    help available to Indian beneficiaries for the first time ever
    in the trust through the beneficiary call center and through
    the deployment of fiduciary trust officers throughout Indian
    country.
        We have included in the fiduciary trust model
    responsibility of both Minerals Management Service and the
    Bureau of Land Management. The Bureau of Land Management is now
    participating by having cadastral surveyors located in each of
    the 12 regional offices of the Bureau of Indian Affairs to help
    accelerate the process of doing surveys in Indian country and
    getting them correct.
        The tribal demonstration project has tremendous value. It
    is an extension of the self-determination and self-governance
    model that is already in use. I think the department certainly
    encourages continued management of the trust resources by the
    tribes that own those resources. The danger is, of course, that
    the Government's role changed from a trustee role to one of
    guarantor of tribes's performance. I think we have to be very
    careful of that in structuring how that kind of a situation
    would work.
        If a beneficiary and the trustee basically become one and
    the same, there is generally considered a merger of the trust
    and the trust goes away. Well, that is not intended to happen
    here, of course, but what the role of the Federal Government is
    going to be subsequent to a tribe assuming full responsibility
    for the management of its trust assets needs to be addressed.
        We have to answer the question of incompatible systems. We
    have to answer the question of retrocession if the tribe
    decides they don't want to manage their trust assets. And we
    also have to know how, in fact, the issues of conflicts of
    interest between tribal members and tribes themselves are going
    to be resolved. It is not unusual at all today, in fact it is
    more fact than not, that individual beneficiaries own property
    on reservations where they are not members of that particular
    reservation. In fact, today the average beneficiary owns about
    14 interests in land, oftentimes scattered among 1 to 14
    different reservations.
        So there certainly is merit in looking at moving forward on
    the trust self-governance concept, on self-determination, but I
    think we need to talk about what the role of the Government
    becomes after that happens. Certainly, there are a lot of
    options that should be satisfactory, both to tribes and to the
    Government.
        As far as the restructure, what I would suggest is that in
    the last 10 years, most of the reform that we have experienced
    today and are experiencing has been the result of the work of
    the special trustee in conjunction with the BIA in bringing new
    systems about; in doing the cleanup of processes in the BIA;
    putting trust officers out in the agencies; making sure that
    the records management programs is effective which is now,
    frankly, a state of the art records program, and listening to
    the folks from NRA, the National Archives, that manages the
    storage for us, it is state of the art, and better than any
    records management program in the United States.
        These are the kinds of things that the special trustee has
    brought about.
        The 1994 Act provides for a sunset of the Special Trustee's
    Office. I think that is appropriate. The question is when, when
    we finish with the complete conversion of systems work, the
    rest of the regions in the Bureau of Indian Affairs that need
    to be converted to the new systems, and we get the cleanup work
    done, and all of the encoding done, and the probate matters
    caught up, and some resolution to ILCA.
        We need to start looking at perhaps a different paradigm to
    how we manage the trust. The only thing I would suggest is that
    at that time, it might be appropriate for the Secretary to look
    at the management structure again, in consultation with tribes
    and individual beneficiaries. Determine what that should be and
    whether the special trustee goes away, gets merged into another
    structure within Interior, may be quite different than what we
    would be looking at today.
        Those are my comments today, Mr. Chairman, Mr. Vice
    Chairman. I appreciate the opportunity to be here. I believe we
    submitted our official comments for the record.
        [Prepared statement of Mr. Swimmer appears in appendix.]
        The Chairman. Thank you very much. Both of your written
    statements will be made a part of the record.
        Senator Dorgan.

      STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH
           DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

        Senator Dorgan. Mr. Chairman, first let me apologize for
    the delay. I was at a leadership meeting, and I appreciate the
    testimony. As always, Mr. Cason and Mr. Swimmer, thanks for
    your work on these issues. I think both Senator McCain and I
    believe that Congress has to find a way to resolve these
    issues. Going back for many, many, many years, we have had in
    some cases a shameful treatment of what should have been a
    trust responsibility for American Indians. We are now trying to
    find a way to respond to that and resolve it in a manner that
    is both fair and equitable.
        Mr. Chairman, I will defer and send some questions to the
    witnesses, but we have another panel, I understand, and I want
    to hear the second panel.
        Again, let me thank both of you. You have been to many of
    our hearings and described what you are now doing to try to
    respond this and resolve it. It certainly is our interest as
    well in trying to get a resolution.
        The Chairman. I thank you, Senator Dorgan.
        You have expressed certain reservations about some of the,
    both of you, on certain reservations or need for change, may be
    a better description, about some of the titles of the bill.
    What I would like from you, hopefully within days, are the
    specific language changes you would like to see made, and then
    we will see if we can incorporate those changes, if there is
    not any great difference. We are never going to pass this
    legislation unless we have agreement.
        And if we settle on a number as far as the Cobell issue is
    concerned, unless we have implementing legislation of the other
    aspects of it, it ain't going to work either. So I would ask
    both of you to submit to us specific language changes you would
    like to see made in the various titles of this bill. In that
    way, we will move forward with the final drafting language, if
    that is agreeable, in consultation with, of course, the
    witnesses on the next panel.
        Okay? Can we do that?
        Thanks very much, and thank you for your continued good
    work.
        Mr. Cason. Thank you.
        Mr. Swimmer. Thank you.
        The Chairman. Our next panel is Tex Hall, who is the
    chairman of the Three Affiliated Tribes Business Council; Jim
    Gray, who is the chairman of the Intertribal Monitoring
    Association; Clifford Lyle Marshall, Sr., who is the chairman
    of the Hoopa Valley Tribal Council; Austin Nunez, who is the
    chair of the San Xavier District in Tucson, AZ; and Majel
    Russell, who is an attorney, Elk River Law Office in Billings,
    MT.
        Please come forward.
        We will begin with our old friend, and again many time
    witness before this committee, Tex Hall. Chairman Hall, welcome
    back.

       STATEMENT OF TEX HALL, CHAIRMAN, THREE AFFILIATED TRIBES
                            BUSINESS COUNCIL

        Mr. Hall. Thank you, Mr. Chairman.
        Chairman McCain and Vice Chairman Dorgan, thank you for the
    opportunity.
        As everybody is aware, this is an issue that is 119 years
    old, 10 years of a lawsuit, and many, many countless hearings
    and many, many meetings. It is my hope that in our testimony
    today that we can come to some agreement on this issue of the
    Indian trust.
        This is my third time testifying before the committee. As a
    former NCAI president, I am here with one of my counterparts
    here, Chief Jim Gray. We formed in 2005 a working group, a
    national working group, bringing together tribes and allotees
    and accountholders. We went all over the country and held
    hearings for those IIM accountholders to be heard because this
    trust is really about the 500,00 allotees, the Indian
    individual money account holders.
        We did reach agreement on the 50 trust principles which we
    have submitted and work with the staff on. Recently, we had a
    meeting in Bismarck, ND at United Tribes College, and offered
    some specific comments. I won't get into the specifics, as we
    have already put those forward, Mr. Chairman.
        I just wanted to give some general overview, and then save
    my time for the questions that would come later.
        In the Great Plains, we comprise over 70 percent of the
    accounts, so we are very familiar with this trust system, the
    Indian trust system. I am an account holder myself, so clearly
    understand what happens in terms of the leasing, the grazing,
    of course, in our part of the country, and the distribution of
    the checks, and the appraisal of the trust assets, and the fair
    market value. I am very familiar with that.
        I just wanted to give one example, Mr. Chairman, of what
    this means to an individual on a reservation somewhere. The
    lady that I am just going to reference has passed on, but she
    was a diabetic. This happened a couple of years ago when she
    needed to get her IIM account. For many people, this is their
    401(k) and this is their 403(b). Otherwise, they don't have
    anything.
        She was an elder and she had both legs amputated. All she
    wanted was a used van that had a hydraulic lift so she could go
    and play bingo. So Carol was asking the agency for her check,
    and it was about the time that the District Court here in
    Washington, DC put an injunction because of the computer
    system. They were concerned about firewalls. So there was a
    freeze on all the distribution of checks.
        So normally, the checks come in December or January, and
    the checks finally came in May, but she passed away in April.
    So her children told me that there was approximately $1,500,
    and that is really what she wanted.
        So for many members, I use her as an example, for many
    members that fit into that category, they are waiting for the
    settlement of this trust system. They are waiting for those
    types of a standard so that way there is timeliness, so when
    their land is being leased out, that on such and such a date
    they get a check based on the fair market. And all she had was
    $1,500 and that is what she wanted.
        So we are very concerned about the standards and the
    timeliness to make sure that this does not happen again, so
    that the trust does not continue to be broken. So to this day,
    there still needs to be a fix of the trust, let alone the
    settlement that, of course, Indian Country can agree with.
        And then on the Title III, on the demonstration project, we
    fully support the demonstration project in that section. We are
    just concerned that it needs to have full funding, otherwise
    there will be no incentive for tribes to step into the
    Government's shoes and actually use the demonstration project
    where they can manage the assets themselves.
        And then, on the fractionation section, title IV, we are
    hopeful that we can get where, if there is an individual family
    or individuals that have an opportunity to purchase these
    fractionated lands. Otherwise, you have a competing interest if
    the tribe and the individual family has land holdings and the
    tribe buys it out.
        Of course, in our tribal constitutions, an individual
    cannot buy tribal land under our constitution. So this is a
    very important piece for keeping those family farmers and those
    family ranchers out on those school bus routes. So we are
    hopeful that our recommendation can be incorporated into that
    section.
        And then in regards to just the standards, and I will
    conclude with that, Mr. Chairman, is that I cannot emphasize
    enough the need to have the specific standards and the specific
    duties of loyalty and so on and so forth, so the trust
    responsibility is maintained. Because if we don't have that, we
    are going to come back to this issue again and another 10 years
    from now we will be going over this long saga issue again.
        In closing, we have submitted our comments, Mr. Chairman
    and Mr. Vice Chairman, and we are hopeful that they can be
    incorporated. We represent the national work group, working
    with all of the tribes in all the regions, and we are down to
    the end of the hearing process, and we are very hopeful, and
    appreciate the comments you made about the settlement figure
    and the reform have to go hand in hand. I agree with that 100
    percent, that we can't have one without the other.
        I look forward to working with the committee on the markup
    and getting this passed in the entire Senate.
        Thank you, Mr. Chairman.
        [Prepared statement of Mr. Hall appears in appendix.]
        The Chairman. Thank you very much.
        Mr. Gray, welcome.

        STATEMENT OF JIM GRAY, CHAIRMAN, INTERTRIBAL MONITORING
                              ASSOCIATION

        Mr. Gray. Yes; Chairman McCain, Vice Chairman Dorgan,
    members of the committee, thank you for the invitation to be
    here today to represent the views of the Intertribal Monitoring
    Association on this important legislation.
        While I want to go over briefly some of my comments for the
    record, Senators, I want to reserve a portion of my time for
    some discussion on title I. I would just like to say a few
    words about that.
        S. 1439 is an important product that reflects many years of
    our work to achieve meaningful trust reform. We thank the
    Senators for introducing this bill and for working with Indian
    country to make sure it meets tribal trust priorities and
    objectives.
        We also appreciate working with the committee staff. We
    remain committed to developing a strong proposal that can be
    broadly supported by Indian country.
        ITMA strongly supports title IV, which addresses one of the
    most critical and plaguing problems in Indian country, of
    fractionation of Indian lands. This problem is a direct
    consequence of the United States's destructive policy initiated
    in the 1890's to break apart Indian reservations as a way to
    both assimilate and to gain ownership and control over valuable
    tribal lands and resources.
        This morally corrupt and unjust policy inflicted on
    American Indians has created a devastating legacy that now
    poses many modern day problems and challenges, including the
    Federal Government's inability to fully and properly manage and
    account for fractionated interests.
        Fortunately, title IV would establish meaningful incentives
    for purchasing and streamlining the process for consolidating
    fractional interests. We are fully supportive of this approach
    and make several recommendations. First, all land a tribe
    acquires within the boundaries of its reservation should be
    taken immediately into trust.
        Second, the automatic acceptance provision for an offer for
    the sale of lands with more than 200 owners should be removed.
    Third, the application of Federal liens on pre-purchased lands
    should be removed because the cost and administrative burdens
    of these liens significantly outweigh their value. Instead, the
    Secretary should be authorized to make land acquisition grants,
    given the compelling congressional policies and goals of
    eliminating further Indian land fractionation and consolidating
    tribal land bases.
        ITMA also strongly supports title V, which would
    consolidate all Indian Affairs functions under a single line of
    authority in the department. This is a fundamental component of
    trust reform we have advocated for and championed as a priority
    for many years. We also believe the creation of an Office of
    Under Secretary will elevate all Indian Affairs issues in the
    department and hopefully within the Federal Government
    generally.
        Our written statement includes a comprehensive listing of
    recommendations to strengthen title V, which I will briefly
    summarize.
        First, the Under Secretary's role as a tribal advocate,
    both within the department and when dealing with other
    departments and agencies should be clarified and strengthened.
    Second, the Under Secretary's authority to improve the
    organizational responsiveness to Indian Affairs and to bring
    coherence to the department's approach to developing and
    implementing strong Indian policy should be strengthened.
        The Under Secretary must be empowered to address budgetary
    matters to ensure maximum support for Indian programs. This is
    an absolutely critical piece of the restructuring reform. He
    should be able to retain counsel, and to defend and uphold the
    trust duties and obligations owed to any beneficiaries.
        With regard to title VI, ITMA has long advocated for
    auditing reform as an implementation of trust reform. We
    strongly support Title VI, with a couple of recommendations
    more fully outlined in our written statement.
        If I could, and finally with regard to title II, our
    written statement provides a couple of key recommendations,
    principally the formation and work of the commission should be
    triggered in relation to title V. This approach will ensure the
    commission considers and assesses all trust reform undertakings
    that occur as a result of title V's restructuring reforms.
        If I could just say a few words about the title I issue. We
    have long encouraged a settlement of the Cobell litigation. We
    work closely with NCAI, the counsel, the staff of this
    committee, in developing the 50 principles that were presented
    to this committee in anticipation of S. 1439. ITMA has tried to
    keep its own counsel on title I, hoping that the parties and
    the Congress would work out the details of legislation to
    settle the 10 year old lawsuit.
        When the Government chose to raid our appropriated funds to
    pay the costs assessed by the court, however, we concluded we
    had not only a right, but a duty, to be heard. The issue that
    has received the most attention to date has been the size of
    any settlement fund that might be established by the
    legislation. The bill as drafted contemplated the establishment
    of a fund in the billions of dollars, a level that has been
    endorsed by plaintiffs as well as by disinterested experts
    invited to testify at this committee's most recent hearing.
        The Government, on the other hand, has insisted that no
    amount in the billions of dollars is justified. One expert
    suggested that a process could be negotiated that could result
    in an actual calculation of a number for settlement purposes.
    ITMA suggests that the committee make clear in its legislation
    that all aspects of the Cobell case are disposed of in any
    settlement legislation.
        If asset mismanagement claims are to be included in
    settlement, then ITMA suggests the plaintiffs's concerns
    regarding administration of the settlement fund should be
    overridden and that the legislation provide clear and
    unequivocal direction to the executive branch for administering
    the settlement fund.
        ITMA suggests that any legislation provide an opt-out
    provision for any class members who choose not to participate
    in a mass settlement, and that a normal 6 year statute of
    limitation be included to accrue on the date of enactment of
    settlement legislation for any claims arising prior to that
    date.
        With respect to the size of any settlement fund, ITMA
    suggests it is well within the province of Congress to take
    into consideration the avoided costs of protracted litigation,
    as well as the known failures, losses, thefts, previous
    settlements and dozens of reports by Congressional committees,
    GAO and Inspectors General regarding the administration of the
    individual Indian trust portfolio, and to make a generous offer
    to achieve an honorable settlement with the hundreds and
    thousands of members of the Cobell class.
        Unless the plaintiffs's calculations can be demonstrably
    rebutted, they should be accepted for settlement purposes. Any
    doubts regarding the propriety of the number of the billions of
    dollars should be resolved in favor of the powerless class
    members, especially if their individual claims regarding asset
    mismanagement are extinguished by opting into a settlement
    plan.
        I thank you for the time to work on this, and I would be
    happy to answer questions.
        [Prepared statement of Mr. Gray appears in appendix.]
        The Chairman. Thank you very much.
        Chairman Marshall, welcome.

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

        Mr. Marshall. Thank you, Mr. Chairman, members of the
    committee. Thank you for this opportunity to testify before you
    today on S. 1439, the Indian Trust Reform Act.
        I would first ask that my written testimony be submitted
    for the record.
        The Chairman. Without objection.
        Mr. Marshall. The Hoopa Valley Tribe supports the bill's
    intent and purpose contained in each section of the bill. We
    also support many of the recommended modifications of S. 1439
    that have been offered jointly by the Alliance of Tribes of
    Northwest Indians and the United Southeastern Tribes, USET.
        Let me begin by saying that this piece of legislation is
    monumental in scope. Its purposes are to right the wrongs of
    mismanagement of trust funds on Indian lands during the 20th
    century; to restructure the BIA; to reaffirm the trust
    relationship between tribes and the United States; and to
    reaffirm the principles of self-determination and self-
    governance for the 21st century. S. 1439 lays the foundation
    for Indian affairs for the 21st century.
        We strongly support the restructuring of the BIA; the
    establishment of the under secretary for Indian Affairs; the
    transfer of functions from the assistant secretary; and the
    termination of the Office of Special Trustee as set forth in
    section 5.
        The Indian nations of this country never really warmed up
    to the Office of Special Trustee. The tribes simply did not
    trust that the Office of Special Trustee, as it implemented its
    program for trust reform, was actually acting in their best
    interests. The tribes never supported its expansion by moving
    trust functions from the BIA to itself, or centralization of
    operations away from their agencies and regions. This
    restructuring was perceived as actions taken to protect the
    interests of the United States from liability, but not in the
    best interests of Indian people.
        The Hoopa Valley Tribe also strongly endorses the Indian
    trust asset management demonstration project contained in
    section 3. Section 3 provides in section 131, Indian tribes
    shall be eligible to participate in the project. Section 131
    was part of last year's Interior Appropriations Act, which
    provided that 10 tribes would remain separate and apart from
    trust reform reorganization because they had proven to the
    Secretary that they were managing their tribal trust resources
    under the same fiduciary standards to which the Secretary is
    held.
        Hoopa was even cited as an excellent example of trust
    administration in furtherance of self-determination. The year
    prior, these same tribes were identified in the Appropriations
    Act in section 139. This year, the same tribes are identified
    in section 122 of the Appropriations Act.
        The section 131 tribes have longstanding agreements with
    their respective agencies and regional offices to manage their
    own trust assets, and originally approached Congress in 2003 to
    protect those agreements from trust reform reorganization. It
    is our position that trust reform should preserve what is
    working and should promote policies that allow tribes to
    address their own trust asset management issues.
        The Indian trust asset management demonstration project
    advances the policies of self-determination and self-governance
    by allowing 30 more tribes to submit proposals to manage their
    own trust assets. If the interest is greater than 30 tribes,
    the legislation allows an expansion of another 30 tribes.
        Section three we also believe is an appropriate way to
    showcase successful models of trust management that not only
    demonstrate to the United States how trust management can be
    implemented, but also encourage tribes to participate in the
    management of their resources. Like the section 131 tribes,
    tribes that participate in the demonstration project can be an
    example that local decisionmaking and combined efforts with the
    BIA can result in significant trust management improvements.
    Tribes can properly implement trust management even though they
    may use different practices and methods than the Department of
    the Interior.
        Section 3 maintains and encourages this concept by
    preserving the ability of tribes to, in our case, continue, or
    in the case of the 30 tribes expected to submit proposals, to
    begin their own successful trust resource management programs.
        I have purposely avoided section 1 and section 4 because I
    expect these two sections to be of the greatest concern to
    those Indian nations with large land bases containing many
    allotments with fractionated interests. Let me offer these
    brief comments.
        As we enter the 21st century, this Congress has an
    opportunity to right a historical wrong. Title I, in my
    opinion, is structurally sound. The only thing missing are the
    numbers, the actual settlement offer. We supported ATNI's
    proposal as an icebreaker to see if it would begin negotiations
    for an actual settlement offer. Whatever the number is, it will
    be a reflection of America's conscience. If the number is too
    low, it will leave Indian people feeling that they have been
    robbed again.
        I also believe that section 4 is legally and structurally
    sound, but the concerns I hear are concerns that Indian people
    will not have the legal counsel to help them understand what
    their responsibilities are to protect their interests.
    Providing legal advisors from private nonprofits or Indian law
    programs may help alleviate these concerns.
        In conclusion, I want to express on behalf of my tribe our
    appreciation for Chairman McCain's and Senator Dorgan's
    leadership demonstrated through the introduction of S. 1439.
    Trust mismanagement problems have afflicted tribes and Indian
    people for too long. Allowing these problems to remain
    unresolved for much longer will only create more injustices,
    conflict and delays in the services the United States is
    obligated to provide Indian people.
        We believe that S. 1439 is a solid foundation for such
    action, and we look forward to working with the Senate
    Committee on Indian Affairs, the House Resources Committee, and
    the administration to move this vitally important legislation
    through the process as expeditiously as possible.
        Thank you.
        [Prepared statement of Mr. Marshall appear in appendix.]
        Senator Dorgan. Chairman Marshall, thank you very much.
        Next, we will hear from Austin Nunez, the chair of the San
    Xavier District Indian Land Working Group, Tucson, AZ.
        Mr. Nunez, welcome.

     STATEMENT OF AUSTIN NUNEZ, CHAIR, SAN XAVIER DISTRICT, INDIAN
                           LAND WORKING GROUP

        Mr. Nunez. Thank you, Mr. Vice Chairman.
        I want to express our support and appreciation for your
    sponsorship of this important legislation. I would like to go
    directly to my comments.
        Trust reform means eliminating the double standard to which
    our lands are used and managed. For example, on the Fort Hall
    Reservation, land is leased for $80 an acre, while just off
    reservation, it goes for $350 to $400 an acre. I would like to
    offer recommendations to strengthen titles II through VI of the
    Indian Trust Reform Act of 2005. We want to assure that the
    records reflect ownership of our clients and are appraised or
    valued according to the federally accepted uniform standards of
    professional appraisal practices when leased.
        First and foremost, we recommend that S. 1439 include the
    negotiated rulemaking process as provided for in the Negotiated
    Rulemaking Act of 1990. ILWG believes that recordkeeping is at
    the foundational core of trust reform. Currently, the probate
    backlog is well beyond 22,000 cases and impacts thousands of
    Indian heirs. This is impeding recordkeeping.
        Currently, or originally, there were 10 attorney
    decisionmakers to be hired. Now, there are only 3. Seven
    positions are vacant. Recordkeeping is impeded by the 2 percent
    Youpee interest. Today, there are varying estimates ranging
    from 13,000 to 18,000 cases, which equals to about 40,000.
        In March 2006, the acquisition and disposable handbook was
    released by OST. It advises that land transactions may be
    implemented without certified title status reports. This is
    unconscionable and it is not trust reform. We were recently
    informed that the title plan in Albuquerque, NM has 10
    vacancies and is due to close in September of this year,
    September 2006.
        Title II, Indian Trust Asset Management Policy Review
    Commission. Candidates for this commission should be people who
    have knowledge of trust asset management, experience in the
    private sector trust departments, title or evaluation
    experience, persons familiar with mass trust system components
    that are involved with asset management, and familiarity with
    Minerals Management, BLM, or BIA operations. These type of
    people should be selected for this commission.
        On title III, Indian Trust Asset Management Demonstration
    Project Act, concerns situations where the tribe may find
    itself in actual competition with its own members with regard
    to use and development of resources. There needs to be some
    type of recourse to establish procedures for non-binding
    mediation or resolution of any dispute between an Indian tribe
    and the United States relating to the trust asset management
    plan. The ILWG recommends that individual landowners should be
    able to access this procedure as a possible means of resolving
    disputes related to a trust asset management plan.
        On title IV, Fractional Interest Purchase and Consolidation
    Program, the ILWG views title IV as a program that could be
    expanded to provide additional consolidation opportunities for
    tribes. I would now like to comment on the automatic purchase
    provision for lands with more than 200 owners. We know how our
    constituents react to something that they don't approve of.
    They do not respond, and continued fractionation occurs,
    discouraging consolidation within families.
        The ILWG proposes that title IV be implemented according to
    uniform standard professional appraisal practices standards. We
    were informed that the Office of Special Trustee appraisal
    services would no longer be doing individual lease appraisals.
    Market studies would instead be used. Market studies, however,
    do not take into account highest and best use for land
    according to its location.
        The only practical legal and cost-effective way to prepare
    appraisals for the Indian Land Consolidation Act Program is to
    use a mass appraisal, which is in compliance with standard six
    of the USPAP. Most important [remarks off microphone] by
    performing the mass appraisal to USPAP standards? The fiduciary
    obligations of the trustee would then be met.
        There are some charts that are here for your perusal which
    I will not go into.
        On title V, and in closing, restructuring of the BIA and
    Office of the Special Trustee, the ILWG supports the creation
    of the under secretary for Indian affairs within the Department
    of the Interior and strongly supports the termination of the
    Office of Special Trustee. We consider this restructuring as a
    step toward improving the administration of services and
    programs impacting tribes and Indian individuals.
        Finally, for title VI, Audit of Indian Trust Funds, the
    ILWG strongly supports title VI, which requires the Secretary
    of the Interior to prepare financial statements for individual
    Indians, tribal and other Indian trust accounts, as well as
    prepare an internal control audit. However, there is no
    provision for auditing the programs and processes such as
    leasing, acquisition and disposal, compliance improvements,
    irrigation title correction, which impacts trust resources,
    land, water and minerals.
        Thank you. I will entertain any questions.
        [Prepared statement of Mr. Nunez appears in appendix.]
        Senator Dorgan. Chairman Nunez, thank you very much.
        And finally, we will hear from Majel Russell, attorney for
    the Elk River Law Office in Billings, MT.
        You may proceed.

       STATEMENT OF MAJEL RUSSELL, ATTORNEY, ELK RIVER LAW OFFICE

        Ms. Russell. Thank you. Thank you, Vice Chairman Dorgan. My
    name is Majel Russell. I am an enrolled member of the Crow
    Tribe. I really greatly appreciate the opportunity to be here
    today.
        Trust reform has dominated the list of critical Indian
    issues for several years, to the detriment of individual Indian
    land owners and others. I commend this committee for taking the
    sincere effort to resolve trust land and asset management
    issues and allow Indian country to focus on other critical
    issues, critical needs of Indian people, including health care,
    economic development, education and protection of tribal
    sovereignty.
        I am an attorney with the Elk River Law Office. My career
    has been spent representing Indian tribes. However, today I am
    here as an individual landowner. I own interests in 46 tracts
    of trust land. I own land with my mother and my aunt and
    various other extended relatives. I own land in accordance with
    the Crow Competency Act that allows me to manage my own land
    with my family.
        I, like a lot of other Crow people who own land in
    competency status, strive to be active landowners. We know
    where our land is at. We know what it is worth. We negotiate
    all our own leases. There are two services that the BIA
    provides for us. One is that they maintain the trust status of
    the land; and number two is that they record all of our lease
    documents.
        I guess I am here today because I promote opportunities for
    Indians to be active landowners. I believe Indian people, given
    the opportunity, can be the best protectors of their land and
    assets.
        In terms of the policy review and restructuring, I am a
    strong advocate of tribal government. I believe that this
    Policy Review Commission needs to maintain the government-to-
    government relationship that has been established between the
    United States and tribes. Recent restructuring has often
    overlooked tribal government and has been intended to benefit
    the individual Indian. I do not believe that restructuring
    should occur in a way that changes the standard that we have
    worked so hard for, which is a government-to-government
    relationship.
        As an individual Indian, I still believe that the best
    advocate to protect my rights and my assets is my strong tribal
    government. I believe that it is only through membership in my
    tribe that I have the right to own land and the right to
    administer the assets that I do.
        I am still an old fashioned person that believes in the one
    stop shopping concept. When I go to the BIA in Crow Agency, I
    would prefer to see one person at the local level who can
    assist me with all the land services I need. Over the years, my
    family and I, my grandparents before me, we were all served by
    people right at the BIA agency, and most of them we were
    related to and we knew. I have never believed that those people
    had any intention to steal from us, from our family. I believe
    the problem has always been there has been a lack of funding, a
    lack of training. That is the problem today.
        I believe that in order to exercise true trust reform
    administration in this country, we need to have more money. We
    need to have money to train people at the local level who can
    be responsive to the Indian people, and for those people who
    want to manage their own lands.
        In that regard, information access is critical. I do
    support the national title system. I think that we need to
    complete that project so that we can have accurate land
    ownership records. That will also allow for the best orderly
    and expeditious disposition of land, and to properly distribute
    revenues.
        The Indian Trust Asset Management Project in title III I
    believe is a very progressive and forward-thinking concept. I
    support that. I work with the Crow Tribe and we actually have
    legislation drafted which is similar to this demonstration
    project in this bill. I believe that a tribe needs to set its
    own standards on how the trust lands on its reservation should
    be managed. The tribe needs to have that opportunity to
    undertake management and try to maximize those assets for the
    benefit of the tribe. I think that the demonstration projects
    do promote the longstanding policies of self-determination and
    self-government.
        One caveat I would say is that I do not think that there
    should be broad discretion in the Secretary to disapprove
    management plans that don't meet certain standards that are not
    yet developed. I think that if this demonstration project is
    going to be real, it needs to go all the way and let the tribe
    decide for itself what should work for the tribe and there
    shouldn't be an opportunity to pull it back.
        On land consolidation efforts, the Crow Tribe has been
    surveyed three times, once in the 1960's, again in the mid-
    1980's, and finally in 2003, about their willingness to sell
    their fractional interest in land. All three surveys
    overwhelmingly indicated that the Crow Indians who own small
    fractional interests preferred to sell their lands, and some
    even were willing to donate those lands to the tribe.
        So I believe that the emphasis on land consolidation
    efforts is appropriate. I would like to see those land
    consolidation efforts expanded to allow individual Indians like
    myself to purchase out other fractional interests that are
    within the lands that I own, or even other interests available
    on the reservation. I also promote the concept of family trusts
    as a way to minimize fractionation and as a way to consolidate
    land.
        In summary, I understand that this is a very tough and
    difficult issue, and often I think the people who are out
    actually living on the land, working the land, and utilizing
    the land are overlooked. There are many of us Indian landowners
    who are not just owners of small fractional interests, but who
    need real services from the Bureau of Indian Affairs. We need
    to be able to go into the Bureau of Indian Affairs and ask
    about a right of way to get to land that we are locked out of;
    to ask about appraisals. Those are the services that will
    benefit Indian people who are trying very hard to make the best
    of the land that they have. I think restructuring needs to
    focus on those efforts also.
        Thank you.
        [Prepared statement of Ms. Russell appears in appendix.]
        Senator Dorgan. Ms. Russell, thank you very much.
        Let me ask a question about title III, the demonstration
    project. Chairman Hall, you indicated that you would like to
    have that expanded, in your testimony. I assume you support the
    provision of the demonstration project.
        Mr. Hall. Yes.
        Senator Dorgan. Tell me what kind of interest you think
    will exist among tribes and the Indian nations for this
    project?
        Mr. Hall. We definitely support the concept of the
    demonstration project, Senator Dorgan. We are just concerned
    that there is not adequate funding to really have a tribe
    really step in place of the Government and manage the trust
    assets.
        For example, in the Fort Berthold agency on our
    reservation, we have one lease compliance officer. With the
    Garrison Dam flooding and fractionating the reservation, it is
    over 110 miles from the southern district to the headquarters
    up in New Town. There is no way that one lease compliance
    officer can fully fund it. So when we ask about more lease
    compliance officers, their answers are there is not enough
    budget. There is not enough adequate funding. The budget does
    not allow for any more lease compliance officers.
        And then when we ask about appraisals to get fair market
    value, I think it was Chairman Nunez who talked about market
    studies. That is what we end up with is market studies versus
    appraisals. There are no standards with market studies. They
    are what they are. They are a study, not an appraisal, because
    we have one appraisal officer in the Aberdeen area and Rapid
    City, SD. What you end up with is a desktop appraisal, not a
    reservation, onsite appraisal.
        The list goes on and on, Mr. Chairman, about the lack of
    funding and the lack of a budget to really have a tribe, if it
    steps in as a demonstration project, adequately manage these
    resources. Otherwise, we are going to end up, if a tribe
    manages these resources with limited budget, we will end up
    like the BIA. Everybody will say, hey, the tribe is not
    adequately managing.
        Senator Dorgan. So you are saying that if we have a
    demonstration project and do not provide the resources for the
    tribe to be able to have a management project that is credible,
    it won't work, just as you say it doesn't work now, because you
    don't have the resources there that you need from the Federal
    Government.
        Mr. Hall. That is correct.
        Senator Dorgan. Ms. Russell, is your property fractionated?
        Ms. Russell. At Crow, if you have land with less than five
    owners, it is owner managed. There is a Federal act from 1948.
        Senator Dorgan. Less than five owners?
        Ms. Russell. Less than five owners. So the larger
    landholdings I have are less than five owners. I have some
    land, one parcel with up to 41 other owners. So the largest
    fractionation in my landownership is with 42 owners total on a
    parcel of land.
        Senator Dorgan. So you are not managing that, are you?
        Ms. Russell. No; everything over five owners is managed by
    the BIA. However, you do go into the BIA and you ask them if
    you can get everyone to agree to pull your land from the
    advertisement, and allow you to do some of your own
    negotiation. That is something that we have done.
        Senator Dorgan. But the fractionated nature of much of the
    lands, or at least a fair amount, especially in my part of the
    country, is so dramatic that it would be impossible for someone
    to come and sit and testify and say, ``Well, I can easily
    manage that myself.'' You can't do that.
        Ms. Russell. No; you can't do that. That is correct. At
    Crow, we are still somewhat salvageable if we can still come up
    with some solutions to address the fractionation problem. We
    are about one generation behind Fort Berthold in terms of
    allotment, which is why we don't have quite as many owners at
    Crow.
        Senator Dorgan. Mr. Cason, just briefly, you had at a
    previous hearing described, I think you described a parcel on
    the Wahpeton Sisseton Reservation and the number of owners,
    fractionated interests in that parcel. Can you give me that
    number off the top of your head?
        Mr. Cason. We have parcels that have over 1,000 owners
    [remarks made off microphone]. And we have on the order of
    2,000 plus parcels that have more than 200 owners.
        Senator Dorgan. And they don't necessarily have to be large
    parcels to have that kind of fractionated ownership.
        And that is why this has become just an impossible
    situation. It is why the legislation itself is attempting to
    see if we can find ways to deal with that, because if we don't
    deal with that, we will never get all of this straightened out.
        Mr. Nunez, you raised the problem with the backlog in the
    probates of Indian trust estates, in your testimony.
        Mr. Nunez. Yes, sir.
        Senator Dorgan. One of the factors I understand that
    contributes to that is the fact that many Indians don't have
    wills governing how their estate should be distributed. I
    understand the BIA is no longer helping Indians draft wills. Is
    that correct?
        Mr. Nunez. That is correct, sir.
        Senator Dorgan. So what do we do about that? What is your
    recommendation there? Does the lack of wills, is that part of
    the contributing problem here?
        Mr. Nunez. Yes; I believe it is because with the will, it
    is clear how the land will be transferred to family members. I
    believe that there ought to be some consideration of providing
    resources to the tribes to be able to offer the individual
    Indian allotees the ability to hire legal counsel to develop
    their own wills. I know that on our particular reservation at
    San Xavier that there have been some families that have done
    so. The lawyer that they dealt with did it on a pro bono basis.
    I wish there were more lawyers out there to do that kind of
    work.
        Senator Dorgan. Chairman McCain raised the issue today of
    possibly including in the legislation settlement of individual
    Indian claims for mismanagement of lands. Let me ask each of
    you your thoughts about including land mismanagement claims in
    this bill. Let me start with you, Mr. Hall.
        Mr. Hall. Senator Dorgan, I guess I am kind of hesitant to
    include the mismanagement of resources because that is a whole
    other issue that would take extensive time to research and to
    provide an answer based on the resource and based on the fair
    market value, based on the money that went through the trust
    account system. I think that would probably end up delaying
    this action on S. 1439.
        So in the interest of time, I would say unless there are
    those kind of answers readily available, that I think for the
    most part we would have to say no on it.
        Senator Dorgan. Chairman Gray.
        Mr. Gray. Senator Dorgan, I think what we have also heard
    in the past is that the Senators had, from Indian Country's
    response, is that we want to put the Cobell settlement to a
    legislative solution here. We support that effort. But I think
    the committee must first decide what is being resolved by this
    and other legislation in the past where plaintiffs have been
    insistent that they are seeking only equitable relief in the
    form of an accounting, and an equitable decree to restate
    individual account balances.
        In other words, plaintiffs have been very careful not to
    assert any claim for damages that might result in transferring
    the case to the U.S. Court of Federal Claims.
        On the other hand, we note that at least one witness at a
    recent hearing was quite insistent that any legislation should
    include settlement of any asset mismanagement claims that the
    plaintiff class might bring. Otherwise, Mr. Eizenstat insisted
    that there will be renewed litigation that might well be as
    seemingly endless as does the current case.
        Senator Dorgan. Other comments?
        Mr. Nunez. I would just agree with Mr. Hall and Mr. Gray.
    But I do believe that it is an item that does need to be
    addressed at a later date.
        Senator Dorgan. Well, we have introduced this legislation
    because we believe there needs to be some settlement here.
    Senator McCain and I are not unmindful of the century plus
    years of difficulties and problems, mistakes, mismanagement,
    incompetence, among other things.
        We also understand that if no one does anything at this
    moment, this is in the courts and will likely be there for some
    long while, perhaps with or without satisfactory resolution. We
    don't have any idea, but we think that working together to
    provide a thoughtful and reasonable settlement and then a
    process going forward is the right thing to do.
        We especially appreciate, Chairman Hall and Chairman Gray,
    the work that you did. We know that you travel all across the
    country to bring stakeholders together and hold meetings, which
    I think is really very important. You did that in consultation
    with us as you began that process. That was very helpful to
    this committee because it developed a body of knowledge, and
    also permitted the development of information going out to
    folks in Indian country as well about what this process is and
    allowed them to have a voice in this process.
        So I want to, on behalf of myself and Senator McCain, thank
    you for all the work you have done. I thank all five of you for
    coming to the committee today.
        The purpose of this, and I think we have accomplished the
    purpose, is to have you give us your specific thoughts about
    the six titles of this bill as it is now written; what kinds of
    adjustments; what kinds of approaches do you think might be
    made to better refine or alter if necessary some provisions. I
    think you have done that in your testimony.
        Senator McCain and I, with our staffs, will work with other
    members of the committee to take the best of these
    recommendations. Of course, at the end of the day, the issue is
    also a number, but we recognize that even finding a number will
    not necessarily resolve all of these issues if we don't include
    with the number that is agreed upon, if we can find a number
    that is agreeable, if we don't resolve these other issues, all
    we are doing is postponing the day of reckoning as well.
        So that is why the bill intends to be a comprehensive bill
    and one that is attempting to address a very knotty, difficult,
    thorny problem that has existed for a long time and really begs
    to be resolved.
        Chairman Hall, your story about the member of your tribe,
    Carol Young Bear, I assume that story could be replicated all
    across this country many, many, many times, of people who died
    waiting for some satisfaction of money that was owed them. And
    yet, because all of us understand that, I think we are coming
    here today and have done so on a number of other occasions to
    try to find ways to solve this problem.
        It must be solved, if it is outside of the court system,
    with legislation. It is not easy to do, but it is not
    impossible. I think the work that we are attempting to do with
    your help can, if all of us work in good faith, bear fruit.
        So on behalf of Senator McCain and myself, I want to thank
    all of you for coming to this hearing.
        The committee is adjourned.
        [Whereupon, at 10:30 a.m., the committee was adjourned, to
    reconvene at the call of the chair.]

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                                A P P E N D I X

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                  Additional Material Submitted for the Record

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

    Prepared Statement of James Cason, Associate Deputy Secretary and Ross
       Swimmer, Special Trustee for American Indians, Department of the
                                    Interior

        Thank you for the opportunity to come before this committee to
    discuss titles H through VI of S. 1439, the Indian Trust Reform Act of
    2005. We appreciate that this committee continues to advance
    legislation that attempts to provide a settlement of the Cobell v.
    Norton lawsuit, but also addresses other challenges faced by the
    Department of the Interior in managing the Indian trust. As we have
    testified on several prior occasions, the department supports the
    efforts of Congress, as the Indian trust settler, to clarify Indian
    trust management duties, responsibilities, and expectations.
        Since the passage of the American Indian Trust Fund Management
    Reform Act of 1994, Interior has made great strides in trust reform.
    Today, beneficiaries have direct access to staff that is trained in
    fiduciary trust matters. New procedures are in place for the management
    of account information and the collection and distribution of trust
    funds. These reforms have been implemented to provide the best service
    to beneficiaries. We appreciate that titles H through VI of S. 1439
    focus on other areas of trust management. However, we believe that it
    would take considerable adjustment for these titles to facilitate
    material improvement in the management and reform of the Indian trust.

    Title II-Indian Trust Asset Management Policy Review Commission

        Title II of the legislation would establish the ``Indian Trust
    Asset Management Policy Review Commission'' to review existing trust
    asset management laws, regulations and practices. Within 2 years of its
    creation, the commission would report to Congress on its findings and
    recommendations to improve trust management.
        This title raises concerns. For instance, it includes language that
    would allow the commission's authorization to ``secure [information]
    directly.'' The department is concerned with the commission having the
    power to subpoena the personnel and documents of the Federal
    Government.
        While the department supports the idea of drawing on the
    considerable expertise in Indian country to generate solutions to the
    longstanding problems associated with Indian trust management, we must
    observe that reports similar to those described in this title have been
    commissioned or published on numerous occasions both by external and
    internal parties. More reports and commissions are not needed at this
    time.
        As you know, recently the department undertook, and Congress
    funded, an extensive and expensive effort to examine current fiduciary
    trust business processes at all BIA agency and regional offices. This
    was all done with extensive involvement from tribes and other Indian
    representatives. Based on the results of this ``As-Is'' study, the
    department developed a model that included recommendations for new
    business practices to improve, streamline and add consistency to the
    performance of these trust activities nationwide. This new model for
    trust reform, called the Fiduciary Trust Model [FTM], serves as our
    roadmap for trust reform today.
        The department is currently implementing the FTM, and developing
    regulations to support the new practices. We are uncertain about the
    benefit of conducting another study that would likely result in the
    same analysis or point out seemingly intractable issues that have been
    known long but remain unresolved. Therefore, we believe it is not in
    the best interest of taxpayers to finance a commission to develop
    another report for future action. I also understand that a commission
    like this one, with members appointed by both the legislative and
    executive branches, raises separation of powers concerns.
        Much reform has occurred since ``Misplaced Trust'' was published in
    1992 and the American Indian Trust Fund Management Reform Act was
    enacted in 1994. Funds would be better spent on supporting ongoing
    activities required to fully implement the FTM and explore legislative
    solutions to persistent challenges, such as the administration of small
    balance accounts, hindrances to leasing trust land and unclaimed
    property.

    Title III-Indian Trust Asset Management Demonstration Project Act

        This title would establish a demonstration project to further the
    authority and flexibility for tribes to manage their trust assets
    outside of the department. To participate in the project, tribes would
    submit to the secretary an Indian trust asset management plan outlining
    how they would manage the assets and allocate funding. If approved,
    Interior would provide funding for the tribe to carry out the plan.
        Interior has long supported increased tribal self-governance and
    self-determination. Today many Indian trust assets are managed by
    tribes through Public Law 638 contracts and compacts. Self-governance
    tribes currently have the authority to implement Federal programs to
    provide services to their membership based on tribal priorities. Tribes
    also have the authority to withdraw funds from trust for self-
    management through the 1994 Reform Act. What this title appears to do
    differently is transfer the authority and funding for trust asset self-
    management, without appropriately transferring the responsibility for
    results, and liability for mismanagement.
        We believe the United States should not remain liable for losses
    resulting from a tribe's mismanagement of an Indian trust asset. The
    bill would allow tribes to develop and carryout trust asset management
    systems, practices, and procedures that are different and potentially
    incompatible with those used by Interior in managing trust assets. In
    considering this provision, we ask you to establish performance
    expectations that are reasonable, consistent with available resources
    and designed to constrain the need for litigation.
        Title III also requires further discussion on issues such as how
    the department would take back program responsibilities if it were
    required to re-assume responsibility, or the kind of monitoring that
    will have to be conducted to ensure the tribe is adhering to the
    commitments in its plan.
        The department is in the process of implementing new trust IT
    systems and processes to improve the administration of trust assets. It
    is our hope that tribes will seek to utilize these systems and related
    benefits including access to nationwide trust data, which will be
    useful in providing services to tribal members, wherever they, or their
    assets, may be located. If tribes develop individual systems,
    administrative support costs are likely to increase and gaps in the
    data for both the Federal and tribal systems could result, and neither
    entity would be able to serve its beneficiaries in the best way. As
    well, it is more common than not for individual Indian beneficiaries to
    own assets on more than one reservation. Thus, systems that are used by
    a single tribe to manage its reservation resources do not work well
    when trying to manage individually owned resources of nonmembers who
    may be located far away from that reservation. Finally, any
    incompatibility in systems or practices would stress our ability to
    monitor or reassume the management of assets or funds if a tribe
    relinquished its self-management role.
        While we support the objectives of self-governance and self-
    determination, the implementation of the objectives runs counter to a
    traditional trust model. We look forward to discussing this title with
    the committee as it raises many issues that would need further
    discussion.

    Title IV-Fractional Interest Purchase and Consolidation Program

        Title IV amends the Indian Land Consolidation Act to enhance the
    ability of the department to purchase interests of fractionated lands.
    It provides authority to the secretary to make available additional
    monetary incentives to beneficiaries who sell their interests.
        As you know, the problem of fractionation--and its solutions--are
    not new. In 1938, at a conference on Indian allotted and heirship land
    problems in Glacier Park, MT, Commissioner Collier said, ``We have
    simply gone on, wondering from time to time what to do. We have taken
    occasion before the budget and before appropriations committees to
    bring up the problem; to show the waste of millions of dollars a year
    in these unproductive operations, and the effort taken out of positive
    human services; and that this type of expense was bound to increase
    every year. Another attendee of the same meeting said, ``I think we all
    have in mind three objectives in our discussion of land program: We
    want to stop the loss of land; we want to put Indian lands into
    productive use by Indians; we want to cut down unproductive expenses in
    administering Indian lands.''
        That was almost 70 years ago.
        The Indian trust is a fractionation engine, churning out more and
    more fractionated land interests, of smaller and smaller sizes with
    each generation, requiring more resources to manage every year. This
    was not Congress' original intention in creating the trust, but it is
    without question what the Indian trust had evolved into. During a 15-
    year period, from 1985 to 2000, leasing payments were divided into
    approximately 36 million transactions that were posted to Indian
    accounts; 25 million of those transactions were for less than $1. The
    department now finds itself in the absurd position of being responsible
    for tens of thousands of accounts with $1 or less.
        Public Law 108-374, the American Indian Probate Reform Act [AIPRA],
    which was signed into law by President Bush on October 28, 2004, has
    provided new tools to reduce the rate of fractionation. March 2005 data
    from the BIA showed that 126,079 tracts of land are owned by 223,245
    individual owners, equaling nearly 3.2 million interests on
    approximately 13 million acres. Based on the information currently
    available, approximately 85 percent of all interests, roughly 2.7
    million, are less than 5 percent of the undivided ownership. Under the
    new provisions contained in AIPRA, unless the interest owner chooses
    through a will to bequeath their interests to more than one individual,
    these interests should not continue to fractionate. The remaining
    nearly 500,000 interests of more than 5 percent will continue to
    fractionate.
        The 2007 budget requests $59.4 million for Indian land
    consolidation, an increase of $25.4 million, or 75 percent, above the
    2006 enacted level, which should be sufficient to purchase an estimated
    80,000 interests. The estimate of the number of interests to be
    acquired are based on historical average cost to date, and as
    acquisition activities continue and additional targeted interests are
    acquired, the average cost per acquisition, cost per interest, and
    amount of interests acquired will likely change from the experience to
    date.
        The Indian Land Consolidation Office has shown significant progress
    with its pilot projects, and recently the department made the decision
    to focus our land consolidation efforts on the most fractionated tracts
    in Indian country. As part of this proposal, the Department of the
    Interior will implement a tiered acquisition strategy, targeting
    selected highly fractionated tracts. There are 2,173 fractionated
    tracts that have 200 or more interests per tract. A focus on these
    tracts will begin in 2006 and target approximately 1,557 of these
    fractionated interests currently owned by 64,055 individuals who
    collectively own 520,685 individual interests located in ten geographic
    locations. In addition, partnership efforts will continue with tribal
    land consolidation efforts to leverage funding where appropriate.
        S. 1439 places a priority on an aggressive program, with
    incentives, for the purchase of interests in individual Indian land--
    with the intent of restoring those interests to the tribes. These steps
    could help; however, care must be taken to ensure that the language in
    this title does not work as an inducement for individuals to
    fractionate their land, thereby becoming eligible for incentives. As
    well, we have concerns about the costs of this title. In addition, some
    provisions of the bill could needlessly complicate the process of
    addressing this difficult problem. We also request clarification
    regarding the apparent public policy of retaining individual Indian
    land within Indian country ownership versus the trust responsibility to
    obtain fair market value for each interest.

    Title V-Restructuring Bureau of Indian Affairs and Office of Special
        Trustee

        Title V would restructure the Bureau of Indian Affairs [BIA] and
    the Office of the Special Trustee for American Indians [OST], and
    create an under secretary for Indian Affairs within the department.
        OST was created because Congress believed that Indian trust
    management reform would not happen under the previous structure. In
    fact, the past decade has seen effective reforms implemented-under the
    supervision of OST--including the hiring of much needed fiduciary trust
    officers, regional trust administrators, and cadastral land surveyors
    across the Nation. We have also seen the opening of a toll-free call
    center for all beneficiaries, the purchase and integration of new
    technology to streamline and standardize all title, accounting, and
    asset management, a records-management program now considered one of
    the best in the Nation, and a Fiduciary Trust Model now being
    implemented in all BIA regions.
        This title includes concepts that have been previously discussed by
    the Joint Department of the Interior/Tribal Leaders Task Force on Trust
    Reform in 2002. This group was formed when Interior was examining ways
    to restructure trust functions to provide for greater accountability in
    response to the trust reform elements of the Cobell case. The task
    force ended in an impasse, and was unable to support legislation
    because of matters that were unrelated to organizational alignment.
    With no legislation enacted, Interior implemented an administrative
    reorganization plan that accomplished the majority of the task force's
    goals.
        Interior is receptive to the concepts of establishing an under
    secretary position and merging Indian programs under new leadership. We
    would suggest that rather than mandating the creation of this position
    at the department, Congress simply direct the Secretary of the Interior
    to create an appropriate management structure for Indian Affairs. This
    will allow the secretary the independence to establish a management
    structure that best implements Indian program requirements.
        If a restructuring is desired, we would also ask Congress to
    address some other crucial issues including: The lack of a clear trust
    agreement to guide our responsibilities and expectations,
    appropriations that do not align with all program trust
    responsibilities, the lack of an operative cost-benefit paradigm to
    guide decisionmaking priorities, the challenges of addressing Public
    Law 93-638 compacting and contracting goals, and the impediments
    associated with Indian preference hiring policies.
        These issues have frustrated the department, Indian beneficiaries,
    administrators, and Congress throughout the lifespan of this trust. We
    encourage Congress to speak clearly in developing such language and
    carefully consider the impacts it will have in allowing us to meet the
    objectives of our constituents.

    Title VI-Audit of Indian Trust Funds

        The last title of this legislation requires the secretary to
    prepare financial statements for Indian trust accounts in accordance
    with generally accepted accounting principles of the Federal
    Government. The Comptroller General of the United States is then
    required to contract with an independent external auditor to audit the
    financial statements and provide a public report on the audit.
        For the last 10 years, the trust funds have been audited by
    independent public accounting firms. For fiscal year 2004 and fiscal
    year 2005, OST's Inspector General contracted with KPMG to audit OST's
    financial statements. The contract required KPMG to ``conduct its audit
    in accordance with auditing standards generally accepted in the United
    States of America, and the standards applicable to financial audits
    contained in the Government Auditing Standards, issued by the
    Comptroller General of the United States.'' The audit also includes an
    examination of the department's internal controls over financial
    reporting, compliance and other matters. The results of this audit of
    the tribal and individual Indian moneys trust funds financial
    statements are made widely available. In fact, the law requires that an
    annual letter reporting the results of the audit be sent to each
    account holder.
        All fiduciary trusts are accounted for on a cash basis. The
    departmental systems currently in place would not support the
    preparation of financial statements in accordance with generally
    accepted accounting practices on an accrual basis, as this title of the
    legislation requires. Such statements would be misleading to the
    reader, as they would include information about assets that are not
    currently in a trust account. We prepare financial statements on a cash
    and modified cash basis, just as private sector trust companies do. We
    look forward to working with the committee to discuss and clarify this
    requirement.

    Conclusion

        The new structures and business practices being put in place at the
    department have greatly improved the management of the Indian trust for
    all future generations. We must be careful to pursue constructive
    change and to address the problems that are impeding Interior's forward
    motion in trust reform. We look forward to working with you on
    meaningful legislation that addresses the fundamental challenges we
    face. This concludes our statement. We would be happy to answer any
    questions you may have.

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       Prepared Statement of Tex G. Hall Chairman, The Mandan, Hidatsa &
          Arikara Nation, Cochairman, Tribal Workgroup on Trust Reform

        Dosha. Good morning.
        This is my third time testifying before you Chairman McCain, Vice
    Chairman Dorgan and committee members this Congress on the issue of
    Trust Reform. I am glad to say that each time we I have met, we have
    done so under circumstances which have brought us all closer to our
    goal.
        I am here not only as chairman of the Mandan, Hidatsa & Arikara
    Nation, but also as the cochairman of the National Tribal Work Group on
    Trust Reform and Cobell Settlement. On this panel, I am joined by the
    cochairman of the Work Group, Chief Jim Gray, of the Osage Nation.

    Background

        In March 2005, we testified before this committee that we had
    organized a workgroup comprised of the largest group of tribes with
    trust assets, individual allottees, and individual trust account
    holders. The purpose of this workgroup was to bring together Indian
    tribes, allottees, and account holders and provide Congress with a
    clear and concise roadmap to a trust reform that works, and a
    settlement that is fair. We did so, and in June 2005, we released the
    50 principles for trust reform and Cobell Settlement.
        Those 50 principles remain today as the most definitive statement
    of the will of Indian country on this matter.
        Eight months ago, we testified before this committee that we were
    pleased with the general thrust of the S. 1439, the Indian Trust Reform
    Act of 2005, and that many of the bills provisions adhered to the 50
    principles.
        Later, we hosted further meetings of Indian tribes to review the
    Indian Trust Reform Act of 2005 and discuss amendments and settlement
    figures. Earlier this year in Bismarck, ND, I hosted a regional meeting
    of Great Plains Tribes with staff from the Committee on Indian Affairs.
        I believe that as we gather again today, many more of the pieces
    have fallen into place and we are nearing the finish line. The
    committee's hearing earlier this month shed a great deal of light on
    reasonableness of picking a settlement number similar to the way sums
    were determined in both the Holocaust Survivors' claims and the
    Japanese American Internment claims. In the case of the 120,000
    Japanese American Internment victims, Congress passed the Civil
    Liberties Act of 1998 which provided for an apology and a sum of
    $20,000 to each surviving Japanese American victim for reparations, as
    well as $12,000 to each Alaska Native survivor.
        The point is that the United States because of its greatness and
    because of its courage, has been strong enough to own up to its
    mistakes and provide redress compensation when its laws were broken.
        This is such a time. This is the time for our country, once again,
    to demonstrate its capacity for justice and wisdom. This is our chance
    to reform the system, once and for all, so it finally works. This is
    our chance to provide a historic justice to those who lost the chance
    to go to college, to get medical care, to open a store, or to pay their
    mortgage simply because the U.S. Government failed to take care of
    their money.
        We can forge a legacy of justice, or we can leave a legacy of
    neglect.

    The Indian Trust Reform Act of 2005

        As I mentioned, I have worked over the years, as chairman of my
    tribe, as NCAI president, and as cochairman of the Tribal Trust Reform
    Workgroup. Together we worked with tribes from across the country and
    held consultations in every single region of the country. And now, with
    the support of organizations like the Inter-Tribal Monitoring
    Association and the Council of Large Land Based Tribes, we represent
    approximately 70 percent of all tribal trust assets and the majority of
    all tribal trust account holders. As I have mentioned many times--I am
    one of those trust account holders.
        But more importantly, like most tribal leaders, I have a
    constituency of thousands of Indian people who are dependent on their
    trust account payments coming through.
        I want to take 1 minute to describe what happened to one of my
    tribal members. Her name was Carol Young Bear and she had diabetes. She
    was also an individual trust account holder. For a long time, her trust
    account checks never arrived. She used to come visit me and ask me what
    was happening with those checks. The reason is that she was in poor
    health and needed assistance getting around on her wheelchair. What she
    really wanted was to use those checks to buy an automated lift for her
    van that would allow her to get out of the house and travel around our
    beautiful reservation and visit her friends and family. I called and
    tried to get an answer for Carol with our local and regional and
    finally national BIA officers. By the time they had gotten back to me
    with their answer, poor Carol had passed away from her diabetes.
        Every tribal leader here knows tribal members and even family
    members with similar stories. People who cannot afford to wait. People
    who need a system that they can depend upon. So what I am calling for
    on behalf of people like Carol and everyone in Indian country who is or
    knows someone like them is this--``A Reform That Works.'' In other
    words, I am talking about a reform of the United States trust system
    that does not require revisiting every 10 years. I am saying, that in
    order for this to work, it has to be done right.

    Title II--The Indian Trust Asset Management Policy Review Commission

        This section would create a commission to review all Federal laws
    and regulations and the practices of the Department of the Interior
    relating to the administration of Indian trust assets. The commission
    would recommend to Congress changes to Federal law that would improve
    the management and administration of Indian trust assets. Importantly,
    the commission must consult with Indian tribes and organizations
    representing individual Indian owners of trust assets.
        The MHA Nation recommends that the entire, rather than two-thirds,
    of the commission be appointed by Congress. Instead of four
    presidential appointments, we would recommend that the chairman and
    vice chairman of the Senate Committee on Indian Affairs make one
    appointment each, and so should the chairman and ranking member of the
    House Committee on Resources.
        We also recommend that the commission reflect the importance of
    trust assets and management to Indian country by requiring that at
    least 8 members of the commission be members of an Indian tribe.
        Because grazing, timber, fishing, and mineral rights are so
    important to the continued economic survival and growth of tribes, we
    strongly recommend that the committee retain the requirement that at
    least one-half the commission be from tribes with reservation lands
    managed for trust assets. At the January Great Plains roundtable on
    trust reform, the tribes recommended that at least three tribes be from
    large land-based tribes.
        The tribes also voiced their strong recommendation that Congress
    and the administration consult with tribes on the nomination process
    and that, further, the individuals have experience in trust asset
    management or ownership.
        We also recommend that the committee amend the bill to ensure that
    the commission is bi-partisan in nature, with six members of each party
    serving.
        Furthermore, we recommend that section 204(a) be amended at the end
    to include the authority of the commission to review and assess the
    responsiveness of the Department of the Interior to the trust needs of
    Indian tribes and individuals.
        We also recommend that the commission review and assess the
    progress and implementation of the Indian Trust Asset Management
    Demonstration Project authorized under title III of the bill.
        In section 205, we would recommend providing the commission with
    subpoena power to obtain documents, records, and information, if
    necessary.
        Finally, we would strongly recommend that the committee add a new
    section 206 to this title that provides authority for the commission to
    make specific resource-specific, generic standards where possible much
    like the sustained yield requirements for Indian timber provided in the
    National Indian Forest Resources Management Act. This is in accordance
    with recommendations 15 and 31 of the 50 principles.

    Title III--The Indian Trust Asset Management Demonstration Project

        This section creates a demonstration project so that an Indian
    tribe establish its own ``trust asset management plan'' that is unique
    to the trust assets and situation of the tribe and its reservation. The
    plan would identify the trust assets, establish objectives and
    priorities, and allocate the available funding.
        This section adheres to the goals and visions of the 50 principles
    and we strongly support this title.
        The MHA Nation, however, strongly recommends that the committee
    increase the number of tribes that can participate from 30 to 50. In
    the Great Plains Region alone, I believe that all 17 tribes that I
    believe would be willing and ready to submit their own trust asset
    management plans. Furthermore, the demonstration project should reflect
    the varied nature of tribes with large trust resources as well as their
    varied locations. Thus, the committee may wish to provide that, in
    addition to timeliness, the secretary may consider tribal size, land
    base, amount of resources, and region in selecting participants under
    section 303(b)(2)(B)(ii)(II).
        The MHA Nation strongly supports the streamlined model for
    submission and approval of tribal plans under the bill.
        The MHA Nation makes the following recommendations that it believes
    will enable tribes to more fully embrace this opportunity.
        First, in the event that the secretary disapproves a trust asset
    management plan under section 304(b)(2) then the secretary's notice
    should specifically identify and offer assistance to the tribe to
    overcome the deficiency, similar to the self-governance and self-
    determination procedures.
        Second, and in keeping with the self-governance and self-
    determination procedures, the secretary should afford the tribe a
    hearing on the record to determine whether or not the tribe's
    application should be approved.
        Third, and this is critical, if the secretary does not approve or
    disapprove a tribe's application within 120 days, the tribe's
    application should be deemed approved, not disapproved, under section
    304(b)(3). This is exactly how self-governance and self-determination
    works and we see no reason to deviate from these processes.
        Fourth, under section 304(b)(4), a tribe should have immediate
    access to judicial relief and not be forced to exhaust administrative
    remedies. Thus, this section should be amended to provide tribes with
    immediate access to the Federal district courts which should be
    authorized to hear disputes arising under this act and be further
    authorized to provide all necessary relief.
        Fifth, we recommend that the committee provide a burden of proof of
    ``clear and convincing evidence'' on the department the secretary when
    defending a decision to reject a tribe's application.
        Sixth, we have performed our own needs assessment on the Fort
    Berthold Reservation and the results point to a clear need for more
    natural resource officers. For instance, we have not had a range
    assessment since 1982. Providing more local officers would not only
    assist with the actual trust management responsibility, but it would
    also enable the tribe to grow economically faster and more efficiently.
    But, as you know, officers cost money and therefore the MHA Nation
    strongly recommends that Congress specifically authorize a level of
    funding of at least $20 million annually for tribal assistance and
    local resource officers under this title.
        Seventh, the management plans in section 304(a)(2) should include
    specific functions such as appraisals.
        Eighth, we recommend that all tribes, not just self-governance
    tribes be allowed to utilize the redesign provisions of section
    304(a)(3) as long as the new elements meet the trust requirements of
    section 304(c). As you know, many large land-based tribes, which
    control a majority of the trust resources, are not self-governance
    tribes. They should not be penalized for their decision to adhere to
    direct service programs.

    Title IV--Fractional Interest and Purchase Consolidation Program

        This section would amend the Indian Land Consolidation Act to
    expand the program for acquisition of fractionated interests. As you
    know, there are about 4 million owner interests in the 10 million acres
    of individually owned trust lands. Moreover, there are an estimated 1.4
    million fractional interests of 2 percent or less involving 58,000
    tracks of individually owned trust and restricted lands. We believe
    that an investment in land consolidation is critical to a reform that
    works.
        We strongly support the new incentives for voluntary sales of
    fractionated interests by allowing the secretary to offer more than
    fair market value.
        We also recommend that the committee consider adding an additional
    subsection that authorizes the issuance of guaranteed or low-interest
    loans to individuals to purchase fractionated land.
        Based on testimony received at the January Great Plains Tribes
    roundtable, the MHA Nation further recommends that Indian families
    should have an opportunity to purchase lands under this title. We
    recommend that the committee consider directing the department to
    establish a national ownership data bank and provide assistance to
    Indian families who wish to consolidate their land interests.
        And that the notice requirements are not sufficient. Section 401
    should be amended so that the notice provisions in section 213(e)(3)(B)
    of the Indian Land Consolidation Act include an express consent form.
    An offer should not be considered accepted simply because of the
    offeree does not sign the rejection notice. Rather the offer shall be
    considered rejected under section 213(e)(4)(B) if the offeree does not
    sign the consent form included in the notice package.
        Finally, the MHA Nation recommends that the title should include a
    provision that ensures that the premium price for fractionated land
    shall not have an effect on the appraisal value which would otherwise
    place Indian tribes who want to buy back land at a disadvantage. The
    legislation should not unintentionally place tribes in a weaker
    position to buy lands than the Federal Government. We believe that
    ultimately, Indian tribes, not the Federal Government, make better
    landowners out West.

    Title V--Restructuring Bureau of Indian Affairs and Office of Special
        Trustee

        This title executes most of the actual reform at the Department of
    the Interior. This title would create a new under secretary for Indian
    affairs who would replace the assistant secretary for Indian affairs.
    The title would also sunset the Office of Special Trustee for American
    Indians at the end of 2008 and transfer the functions of the special
    trustee to the under secretary.
        This title of the bill meets many of the goals of our 50 trust
    principles for reorganization, including the creation of a single line
    of authority and clear responsibility and accountability.
        The MHA Nation has a number of additional recommendations to offer.
        First, the MHA Nation supports the creation of the position of
    under secretary with the caveat that the under secretary be given clear
    authority over everyone in the department except the secretary, and
    deputy secretary. The under secretary should not be a glorified
    assistant secretary. Otherwise, the MHA Nation recommends that this
    position be created as one of deputy secretary.
        Second, we recommend that the under secretary be given authority
    under section 503 over the U.S. Fish and Wildlife Service, the National
    Parks Service, the U.S. Geologic Service, the Office of Surface Mining
    and the Office of Surface Mining. The reason is that there are trust
    assets that are affected by these agencies and there is often conflict
    between Indian tribes and these agencies.
        Third, we strongly recommend that the under secretary be charged
    with managing tribal trust assets in accordance with certain common law
    trust principles. Specifically, we recommend that the committee include
    a new section in title 5 that sets the standards for the administration
    of trust funds.
        The importance of the trust responsibility to all Indian tribes
    cannot be overstated. Almost nothing can be considered more sacred.
        In 1985 the U.S. Supreme Court said in the Mitchell case:
        ``Where the Federal Government takes on or has control or
    supervision over tribal moneys or properties, the fiduciary
    relationship normally exists with respect to such moneys or properties
    unless Congress has provided otherwise, even though nothing is said
    expressly in the authorizing or underlying statute or the fundamental
    document.''
        And in the 1942 Seminole case the Supreme Court said that the
    conduct of the United States as trustee for the Indians should ``be
    judged by the most exacting fiduciary standards, not honesty alone, but
    the punctilio of an honor the most sensitive.''
        Thus, it is clear to me and to all the tribes who created the 50
    Trust Principles that trust standards should apply. We reviewed the
    Restatement of Trust, case law, and sought expert advice from
    academics, litigators, and judges. Based on the advice we received, we
    recommended that Congress enact a number of well-known and understood
    trust standards that govern nearly all trust transactions.
        These standards should be added in a new section 503 (10) and
    include the
    following:

       \\\\\\Duty of Loyalty and Candor
       \\\\\\Duty to Keep and Render Accounts
       \\\\\\Duty to Exercise Reasonable Care and Skill
       \\\\\\Duty to Administer the Trust
       \\\\\\Duty not to Delegate (this does not negatively impact
            compacting or
            contracting.)
       \\\\\\Duty to Furnish Information
       \\\\\\Duty to Take & Keep Control
       \\\\\\Duty to Preserve the Trust Property
       \\\\\\Duty to Enforce Claims and Defend Actions
       \\\\\\Duty to Keep Trust Property Separate
       \\\\\\Duty with Respect to Bank Deposits
       \\\\\\Duty to Make Trust Property Productive
       \\\\\\Duty to Pay Income to Beneficiaries
       \\\\\\Duty to Deal Impartially with Beneficiaries
       \\\\\\Duty with Respect to Co-Trustees
       \\\\\\Duty with Respect to Persons Holding Power of Control

        Fourth, we recommend that the committee provide access to the
    Federal courts by authorizing a cause of action in Federal district
    court for breach of fiduciary duties and granting of equitable and
    legal relief The importance of this recommendation lies in the fact
    that it provides IIM account holders accountability and redress for
    failure. We understand that the department strongly opposes this
    provision on the grounds that it could create the ``Son of Cobell'' and
    so on. We believe, however, that liability could be phased in over a
    period of years, in accordance with the recommendations of the Policy
    Commission and the independent review agency discussed below. At a
    minimum, the committee should authorize the Federal courts to order
    prospective relief when necessary.
        Fifth, we recommend that the committee amend title 5 at the end to
    provide for an independent agency or office with the authority to
    review and report on the department's administration of its trust
    management responsibilities.
        Such an agency or office could be located an independent agency or
    could be housed in an investigative arm of the Justice Department. The
    important point is that there is an inherent conflict in self-
    regulation by the Department of the Interior, no matter how well
    meaning it may be. Thus, an independent entity with oversight and
    enforcement authority over the Department of the Interior is needed.
        In addition, the 1994 Trust Reform Act provides that the special
    trustee is to review the Federal budget for trust reform and certify
    that it is adequate to meet the needs of trust management. As you know,
    the special trustee has no independence, and simply certifies whatever
    budget is submitted by the administration. It is likely that the under
    secretary would simply continue this practice. Thus, we strongly
    support the need for an independent agency or office vested with the
    responsibility to review the Federal budget for trust management and
    report to Congress on the budget's adequacy.
        Sixth, we recommend deletion of subsection 503(b)(2) which would
    allow the new under secretary to avoid Senate confirmation and public
    scrutiny. The importance of this new position is such that all of
    Indian country must be given an opportunity to have a voice on his or
    her appointment.
        Seventh, Congress should direct the new under secretary to revise
    the current tribal consultation model within 100 days of enactment of
    the bill by amending section 503(c)(6).
        Eighth, Congress should include tribe in a negotiated rulemaking
    process that guarantees that Indian tribes have a say in exactly how
    the under secretary reorganizes under sections 504(e), promulgates
    rules and regulations under section 504(f), and recommends new
    legislation under section 504(m). Congress should also create a similar
    rulemaking process for the reorganization of the functions of the
    Office of Special Trustee under section 505(f), promulgates rules and
    regulations under section 505(g), and recommends new legislation under
    section 505(n).
        The message our recommendations send is clear--in order to have a
    reform that works, there have to be standards, accountability, and a
    price for failure to meet those standards. If our collective experience
    has taught us anything, it is that the Federal bureaucracy is not going
    to reform the system if they don't have to. That means, tribes should
    have access to the courts if necessary to compel compliance with trust
    reform and trust standards.
        But there is a bigger picture here. This is about justice and
    treating Indian people with fairness. Standards go to the very nature
    of the Trust Responsibility itself. Standards stand for the fact that
    Indian treaties are still the law of the land and that the United
    States' promises mean something.

    Title VI--Audit of Indian Trust Funds

        We support this title and recommend that the committee direct the
    Comptroller General to enter into the contract with the independent
    auditor within 120 days of passage of the bill.

    Conclusion

        I am glad to be able to say that I have been privileged to work
    with the chairman, vice chairman, members and staff of this committee
    on this most important of issues.
        This is an issue that has a direct bearing on our tribal resources
    and assets--in other words, the bedrock for our future economic growth
    and opportunity. Today, we are not simply considering bank statements,
    checkbooks, and empty BIA desk drawers. What we are talking about is
    the chance to restart the economic engine of Indian country. And what
    we are also talking about is--at the same time--to bring justice home
    to Indian country.
        This is the chance to say that, at the crossroads, we were men and
    women of vision and hope. That we worked together to make Indian
    country a place of hope and that we honored the humanity and dignity of
    our Indian people.
        As I have pledged before, I will work with you day and night to
    ensure that we get legislation that all of Indian country can support.
        Thank You.

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    Prepared Statement of Majel M. Russell, Member, Crow Tribes of Indians
                           and Individual Landowners

        Greetings, Honorable Chairman McCain, Vice Chairman Dorgan and
    members of the committee. My name is Majel Russell. I am an enrolled
    member of the Crow Tribe of Indians and own trust lands on the Crow
    Indian Reservation in Southeastern Montana. I thank you for the
    invitation to provide testimony today and am honored to participate
    with the other prestigious members of today's panels. Trust reform has
    dominated the list of critical Indian issues for several years to the
    detriment of individual Indians, landowners and others, who rely on the
    services of the Bureau of Indian Affairs [BIA]. I commend Senator
    McCain and the committee for this sincere effort to resolve trust land
    and asset management issues that will allow Indian country to focus on
    the many other critical needs of Indian people, including health care,
    economic development, education and protection of tribal sovereignty.
        I am an attorney and have represented Indian tribes, primarily the
    Crow Tribe, for most of my legal career and have been familiar with
    various efforts over the last 5 years to reform trust administration by
    the Department of the Interior [DOI]. However, my comments today are
    from my personal viewpoint as an owner of trust land within the
    exterior boundaries of the Crow Indian Reservation. I own interests in
    46 tracts of trust land. Tracts of land that I own with less than four
    other owners, my mother and aunts, are managed by us as competent
    landowners in accordance with the Crow Competency Act of 1948. We
    decide who will utilize our land, what it will be used for, negotiate
    leases of our land at rates we determine fair, and collect payments
    directly from the lessees. For the lands we self-manage, the BIA
    provides two critical services; to insure that the land remains in
    trust and to record our leases.
        I have interests in other tracts of trust land with varying numbers
    of owners and one tract with 41 other owners. All lands with more than
    five owners are managed by the Crow Agency BIA, including advertisement
    of the lands for lease, accepting bids from lessees, negotiating and
    approving leases, collecting rental payments, distribution of payments
    to owners, and recording of lease documents.
        With my family members, like many other Crow people who own land in
    competency status, we strive to be active landowners, to know where our
    lands are located, what the lands are worth and how best to utilize and
    protect the lands. I endorse efforts that will allow other Indian
    landowners to become active, engaged landowners as the best means of
    protecting Indian reservation lands.

    Policy Review and Restructuring

        Recent restructuring of the Department of the Interior to reform
    trust administration has been driven by the on-going, contentious
    Cobell litigation rather than by Indian tribes and the users of the
    beneficiary services of the BIA. Thus, the department has been forced
    to restructure in a manner that is focused on avoiding liability rather
    than on a more effective, efficient delivery of services to individual
    Indians and tribes. Settlement of Cobell must occur to prevent
    continued restructuring in a manner that diminishes the United States'
    veil of protection over trust assets.
        Further, restructuring of the Department of the Interior for trust
    administration must occur in a manner that strengthens the government
    to government relationship between the United States and tribes.
    Restructuring should not shift the long-standing, hard fought standard
    of government to government relationships to a government to individual
    Indian standard. Although the General Allotment Act and other allotment
    acts altered the relationship between tribes and their members, trust
    reform efforts should not follow suit.
        I believe strong, effective tribal governments will insure that
    Indian people remain distinct political groups in this country rather
    than becoming another of the many racial groups in the United States.
    Only through my tribal membership do I have rights as an individual
    Indian, including the right to own trust land. I believe that my tribal
    government is the best advocate to protect my interests as a trust
    landowner. Tribe's must be actively engaged and in the ``driver's
    seat'' on developing policy and reviewing regulations for trust asset
    management. The proposed Policy Review Commission must be formed and
    focused to insure that tribal desires for reform are paramount.
        As an individual utilizing the BIA for land services, I remain
    interested in the ``one-stop shopping'' concept. Services to assist
    landowners with various land transactions must be accessible,
    streamlined and with one entity at the local level. The current
    framework of various entities for different beneficiary services is
    confusing and often counterproductive when the roles for the various
    entities are not clearly defined. Presently, confusion exists as to the
    decisionmaking authority of the various entities available to trust
    beneficiaries. Over the years, my family and I and my grandparents
    before me [who were original allottees] were served at the BIA by
    people we knew and were related to. These Crow people had no desire or
    intent to steal, lie or cheat to deprive landowners of revenue. Their
    services were simply subjected to an extreme lack of funding, resources
    and training. Today, the problem remains the same--the local agency BIA
    simply needs sufficient funding to best deliver services rather than
    the creation of new and different entities.
        Information access, specifically access to title records is of
    critical importance both to tribes and individual Indians. Thus, I
    support the efforts to improve title records and believe a national
    title system must be completed to insure the orderly and expeditious
    disposition of lands to heirs and devises, to properly distribute
    revenues and to access landownership information.
        In the last several years, incredible amounts of limited DOI
    resources have been spent on trust accounting. While I understand that
    system flaws must be addressed, resources must also be applied to
    services that assist landowners with the beneficial use of their lands
    including access to title information, timely processing of land
    exchanges, partition applications, completion of appraisals, and
    approvals of rights-of-ways. In addition, DOI resources should be
    available to assist landowners with accessing trust lands and to
    address trespass issues. Presently, without efforts to improve and
    streamline these services within the available budget, DOI is proposing
    that fees be assessed for many of these services. I support a
    reprioritization in budgeting that accommodates land related services.

    Indian Trust Asset Management Project

        The Indian Trust Asset Management Project in S. 1439 will allow a
    tribe greater control over the management of trust assets on each
    particular reservation and facilitate a unified management approach for
    tribal and individual trust assets. Allowing tribes to establish
    particularized trust management plans enhances the long-standing
    policies of self-determination and self-government. However, this
    effort to endorse tribal control must be sincere and not derailed by
    broad discretionary authority of the Secretary of the Interior to
    disapprove a tribal asset management plan based upon yet to be
    developed overall standards. Tribes should be empowered to develop
    applicable standards for trust administration on their particular
    reservations.

    Land Consolidation Efforts

        Owning fractionated lands defeats the goals of land ownership.
    Fractionated lands usually cannot be actively managed or utilized by
    the owners. The proposed amendment to the Indian Land Consolidation Act
    to purchase fractionated interests at more than fair market value would
    likely be most attractive to owners of fractional interests. The Crow
    Tribe has been surveyed three times, once in the 1960's, again in the
    mid-1980's and finally in 2003 about the willingness of individuals to
    sell their fractional interests in land. All three surveys
    overwhelmingly indicated that Crow Indians who owned small fractional
    interests of lands preferred to sell the lands and in some cases to
    even donate the interests to the tribe.
        As an individual landowner, I propose expanding land consolidation
    efforts to include financing for individuals to purchase fractionated
    interests. Developing mechanisms for individuals to consolidate lands,
    invest capital and practice good stewardship of land would most
    effectively protect trust land while also benefiting tribes through
    stabilizing and protecting the reservation land base. However, to
    promote the efforts of individuals, the current DOI proposal to deny
    fee to trust applications by individuals must be revisited.

    Conclusion

        In summary, true reform of trust administration involves the
    daunting task of balancing competing interests and will likely be an
    evolving process. S. 1439 illustrates this committee's commitment to
    take on this task and provides a positive starting point. Thank you.