[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
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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

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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.

                                 
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