[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                        UTAH NAVAJO TRUST FUND
=======================================================================


                           OVERSIGHT HEARING

                               before the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                        Thursday, June 19, 2008

                               __________

                           Serial No. 110-78

                               __________

       Printed for the use of the Committee on Natural Resources



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                     COMMITTEE ON NATURAL RESOURCES

              NICK J. RAHALL, II, West Virginia, Chairman
              DON YOUNG, Alaska, Ranking Republican Member

Dale E. Kildee, Michigan             Jim Saxton, New Jersey
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii             Wayne T. Gilchrest, Maryland
Solomon P. Ortiz, Texas              Chris Cannon, Utah
Frank Pallone, Jr., New Jersey       Thomas G. Tancredo, Colorado
Donna M. Christensen, Virgin         Jeff Flake, Arizona
    Islands                          Stevan Pearce, New Mexico
Grace F. Napolitano, California      Henry E. Brown, Jr., South 
Rush D. Holt, New Jersey                 Carolina
Raul M. Grijalva, Arizona            Luis G. Fortuno, Puerto Rico
Madeleine Z. Bordallo, Guam          Cathy McMorris Rodgers, Washington
Jim Costa, California                Louie Gohmert, Texas
Dan Boren, Oklahoma                  Tom Cole, Oklahoma
John P. Sarbanes, Maryland           Rob Bishop, Utah
George Miller, California            Bill Shuster, Pennsylvania
Edward J. Markey, Massachusetts      Bill Sali, Idaho
Peter A. DeFazio, Oregon             Doug Lamborn, Colorado
Maurice D. Hinchey, New York         Mary Fallin, Oklahoma
Patrick J. Kennedy, Rhode Island     Adrian Smith, Nebraska
Ron Kind, Wisconsin                  Robert J. Wittman, Virginia
Lois Capps, California               Steve Scalise, Louisiana
Jay Inslee, Washington
Mark Udall, Colorado
Joe Baca, California
Hilda L. Solis, California
Stephanie Herseth Sandlin, South 
    Dakota
Heath Shuler, North Carolina

                     James H. Zoia, Chief of Staff
                       Rick Healy, Chief Counsel
            Christopher N. Fluhr, Republican Staff Director
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, June 19, 2008..........................     1

Statement of Members:
    Matheson, Hon. Jim, a Representative in Congress from the 
      State of Utah..............................................     2
        Resolution submitted for the record......................    42
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia.................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Downing, Tani Pack, General Counsel and Deputy Chief of 
      Staff, Office of the Governor, State of Utah, Salt Lake 
      City, Utah.................................................    10
        Prepared statement of....................................    12
        Timeline of Contacts with Representatives of Utah Navajos 
          and Navajo Nation......................................    13
    Filfred, Hon. Davis, Navajo Utah Commission Chair, and Aneth, 
      Red Mesa, and Mexican Water Chapters Council Delegate......    29
        Prepared statement of....................................    30
    Maryboy, Mark, Former County Commissioner, Former Navajo 
      Nation Council Member, Montezuma Creek, Utah...............    34
        Prepared statement of....................................    35
    Rockwell, Clarence, Executive Director, Navajo Utah 
      Commission, Red Mesa Chapter, Montezuma Creek, Utah........    30
        Prepared statement of....................................    32
    Shirley, Hon. Joe, President, Navajo Nation, Window Rock, 
      Arizona....................................................    16
        Prepared statement of....................................    17
    Swimmer, Ross O., Special Trustee for American Indians, U.S. 
      Department of the Interior, Washington, D.C................     3
        Prepared statement of....................................     5
Additional Materials Supplied:
    Black, James, President, Oljato Chapter, Statement submitted 
      for the record.............................................    40
    Manheimer, Leo, President, Navajo Mountain Chapter, The 
      Navajo Nation, Statement submitted for the record..........    41
    2008 Position Statement of the Navajo Nation on the Future of 
      the Utah Navajo Trust Fund.................................    21


            OVERSIGHT HEARING ON THE UTAH NAVAJO TRUST FUND

                              ----------                              


                        Thursday, June 19, 2008

                     U.S. House of Representatives

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to call, at 10:05 a.m. in Room 
1324, Longworth House Office Building, Hon. Nick J. Rahall, 
[Chairman of the Committee] presiding.
    Present: Representatives Rahall, Kildee, Boren, Bishop and 
Matheson.

STATEMENT OF THE HONORABLE NICK J. RAHALL, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF WEST VIRGINIA

    The Chairman. [Presiding.] Committee on Natural Resources 
will come to order. Before we begin, the Chair would ask 
unanimous consent that a distinguished colleague of ours, Mr. 
Jim Matheson, be allowed to sit at the podium and participate 
as if he were an actual member of this Committee today.
    All right. The Committee is meeting today for a hearing on 
the Utah Navajo Trust Fund, and this hearing is unique. In 
1933, Congress placed land into trust for the Navajo Nation but 
at the same time required that 37 percent of any mineral 
royalties be paid to the State of Utah to be expanded for 
certain individual Navajos residing in Utah.
    Eventually, minerals were discovered on the land and 
royalties were received by the trust fund, beginning in the 
1950s. To fulfill its obligation, the State of Utah established 
the Utah Navajo Trust Fund. Over the years, the state has used 
the money to provide educational assistance, drought relief, 
road maintenance, and other benefits and services to the 
individual Navajos.
    I am not aware of another instance in which the Federal 
government has directed a state to receive and expend money for 
the benefit of individual Indians. Unfortunately, the state no 
longer wants to administer the trust fund, and that is 
disconcerting because without that conduit the funds will cease 
to flow to the Navajos.
    I would like to commend Congressman Jim Matheson for 
bringing this to our attention and for his leadership on this 
issue and so many other issues. He asked for this hearing in 
order to focus on the future management of the trust fund. We 
have already received some information about various options, 
and hope to hear more about those options today.
    Most importantly, we look forward to hearing about the 
views of the individual beneficiaries and the actions this 
Committee needs to take to ensure that the beneficiaries are 
informed and consulted with on the future administration of the 
trust fund. With that, I will recognize, first, the 
distinguished gentleman from Oklahoma, Mr. Boren, if he has any 
opening comments, a member of our Committee.
    [The prepared statement of Chairman Rahall follows:]

       Statement of The Honorable Nick J. Rahall, II, Chairman, 
                     Committee on Natural Resources

    The Committee will come to order. Today's hearing on the Utah 
Navajo Trust Fund is unique.
    In 1933, Congress placed land into trust for the Navajo Nation but 
at the same time, required that 37 1/2 percent of any mineral royalties 
be paid to the State of Utah to be expended for certain individual 
Navajos residing in Utah. Eventually, minerals were discovered on the 
land and royalties were received by the trust fund beginning in the 
1950's.
    To fulfill its obligation, the State of Utah established the Utah 
Navajo Trust Fund. Over the years, the State has used the money to 
provide educational assistance, drought relief, road maintenance, and 
other benefits and services to the individual Navajos.
    I am not aware of another instance in which the Federal government 
has directed a State to receive and expend money for the benefit of 
individual Indians.
    Unfortunately, the State no longer wants to administer the trust 
fund. And that is disconcerting because without that conduit, the funds 
will cease to flow to the Navajos.
    I would like to commend Congressman Jim Matheson for bringing this 
matter to my attention.
    He asked for this hearing in order to focus on the future 
management of the trust fund.
    We have already received some information about various options and 
hope to hear more about those options today. Most importantly, we look 
forward to hearing about the views of the individual beneficiaries and 
the actions this Committee needs to take to ensure that the 
beneficiaries are informed and consulted with on the future 
administration of the trust fund.
    I look forward to the testimony.
                                 ______
                                 

 STATEMENT OF THE HONORABLE JIM MATHESON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    The Chairman. Mr. Matheson, you wish to make opening 
comments?
    Mr. Matheson. If I could, very briefly, Mr. Chairman.
    The Chairman. Sure.
    Mr. Matheson. First of all, I really want to thank you for 
scheduling this hearing, and I want to thank your staff 
because, as you mentioned in your opening statement, this is a 
unique circumstance. It has come to us in a way where there are 
a lot of questions about what we should do.
    As I said, you and your staff have been very helpful in 
terms of trying to help sort these issues out and try to come 
up with solutions. I just want to make sure we recognize that 
the funds that flow out of this trust fund, you know, it is 
helping people on the ground, Utah Navajos in San Juan County, 
Utah.
    I don't want to lose sight of that, but at the end of the 
day, this is about helping people, and we want to make sure 
that we continue to have a structure where those same folks are 
continuing to receive that assistance, so I look forward to 
this hearing to learn about it. As I said, this is an unusual 
circumstance.
    We need to learn about what we can do as options, and I 
hope at the end of the day we do the right thing to make sure 
Utah Navajos are still obtaining the benefits that they have 
been enjoying so long. Thanks for allowing me to be on the 
Committee, too, by the way, for this hearing. I will yield 
back.
    The Chairman. Thank you. Our first panel is Mr. Ross O. 
Swimmer, the Special Trustee for American Indians, United 
States Department of the Interior, Washington, D.C.
    Mr. Swimmer, welcome. We have your prepared testimony, and 
it will be made a part of the record as if actually read. You 
may proceed as you desire.

  STATEMENT OF ROSS O. SWIMMER, SPECIAL TRUSTEE FOR AMERICAN 
   INDIANS, U.S. DEPARTMENT OF THE INTERIOR, WASHINGTON, D.C.

    Mr. Swimmer. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here, members of the Committee and acting 
members of the Committee, I guess, at this point. It is an 
opportunity to discuss in some detail the Utah Navajo Trust 
Fund, its administration, its origins and what we might suggest 
could be done with the trust.
    As the Chairman mentioned, the Congress established the 
trust fund through legislation in 1933 when this land was 
transferred to the Navajo Nation from public domain land. It is 
in the area of San Juan County and is called the Aneth 
Extension.
    As part of the agreement for the transfer of this land to 
the Navajo Nation, it was determined that Navajos living in 
this particular area of Utah should receive some benefit from 
the land if that opportunity arose, and it was such that in the 
event that oil and gas were produced in paying quantities at 
least 37 and a half percent of the royalties from that would be 
paid into a trust fund that would be administered then by the 
State of Utah.
    As the Chairman mentioned, in 1959 oil and gas wells were 
developed in the Aneth Extension and they did produce oil and 
gas revenue in paying quantities, in fact, significantly so, to 
the extent I believe of several million dollars annually.
    Currently, payments from these oil properties are made 
directly to the Navajo Nation. The only role right now of the 
Department of the Interior is to do an accounting for the 
payments from the producers. The producers of the oil and gas 
actually make the payments to the Navajo Nation.
    The Minerals Management Service then provides all of the 
parties--the state, the Navajo Nation and the Bureau of Indian 
Affairs--with a report that reflects the royalties from the 
total production of oil and gas. Currently, the money that is 
collected by the Navajo Nation from the producers, 37 and a 
half percent of that is sent to the State of Utah for the Utah 
Navajo Trust Fund, and the balance is retained by the Navajo 
Nation in its own account.
    This money does not flow through the Office of the Special 
Trustee or the Bureau of Indian Affairs. In recent years, there 
has been criticism by the tribe and by some, I believe, in the 
Aneth Extension, some of the Navajo Indian folks living there, 
regarding the administration of the trust by the State of Utah.
    That has resulted in a lengthy lawsuit that has been going 
on now for several years, and it probably will continue for 
some time.
    It is our understanding that the State of Utah, while 
acknowledging its role as trustee and certainly a lot of the 
work that it has done over the years, prefers not to continue 
to be trustee for this trust and would like to see someone else 
become trustee that would have perhaps a closer tie to the 
folks, the beneficiaries, of the trust which are the Navajos 
living in that area and Indians living in the Aneth Extension 
generally.
    In looking at a successor trustee, we understand that there 
has been some consideration for the Department of the Interior 
to undertake this role. This is not something that we would 
prefer doing. Currently, legislation allows the Office of the 
Special Trustee and the Department of the Interior to accept 
funds in trust and to administer those funds when they are sent 
to us from Indian trust lands as Indian trust money.
    This money technically is coming from Indian trust lands 
and is trust money, but it has not been received into the 
Indian trust. It has been received directly by Navajo Nation 
and then the 37 and a half percent sent directly to the State 
of Utah. We don't believe we have authority. We of course could 
have authority if the Congress so chose.
    Currently, the money that goes into the trust fund also is 
invested by the State of Utah in various instruments that most 
generally we are not permitted to invest in. The Special 
Trustee and the Department of the Interior are allowed to 
invest trust funds from Indian lands only in certain 
securities, those guaranteed or backed by the Federal 
government, and this is statutory language.
    The State of Utah is currently, as I understand anyway, 
investing the funds that are not used or disbursed, they invest 
the funds in the trust in accordance with the prudent investor 
rule which gives them a lot more latitude, and in many cases 
would allow a greater return to the trust than we are permitted 
in the limitations that we have for investing.
    So that also would have to be changed, and the statute 
would have to treat these funds as Indian trust funds, and they 
would be limited then in the manner in which they could be 
invested.
    The other major issue that we would have with the 
administration of the trust itself is the language of the act 
essentially says that these monies are to be used for the 
health, education and general welfare of the Indians residing 
in the Aneth Extension, and then later amended to include all 
Navajo Indians living in San Juan County.
    We invest funds. We don't really have programs. We don't 
have a way in which we could determine what kind of benefits 
should be bestowed on Indians or on the Navajos within this 
area. I understand that some of the money now is being spent on 
educational benefits, perhaps some on healthcare.
    I even believe that there are buildings, other fixed assets 
that exist now that have been a product of this trust. Also, as 
a result of that, substantial sums are used from the trust fund 
to take care of those buildings and other properties that are 
involved in the trust.
    So it is not something that the Special Trustee certainly 
would be capable of administering, and I am not sure that it 
really falls within the Bureau of Indian Affairs arena either 
as a way of managing this property.
    The state and the Navajo Nation may have some things that 
they could work out as far as the disposition of these 
properties but it would not be a situation where the Department 
of the Interior believes it should be engaged in the 
administration of the funds after the investment.
    If it is solely the investing of the funds, that is 
something that we could do, but we would need to have some 
organization that could then do what the State of Utah is doing 
now. It is our opinion that it would be more appropriate to 
have the Navajo Nation manage the trust funds.
    They could do this through a third-party money manager, an 
investment firm, or even internally in accordance with rules 
and regulations, I am sure, that the Navajo Nation has or that 
could be developed in a trust agreement. This is an opportunity 
that has been given to all tribes in the 1994 Indian Trust 
Reform Act, the opportunity to withdraw funds from the Indian 
trust and administer those funds.
    This would be certainly in line with that, and as the 
government relationship with the tribe, we would encourage the 
Navajo Nation, as a sovereign government, to assume the 
management of these funds, and there are plenty of 
opportunities in the private sector to support that management.
    Then, I think it is also important that the Navajo and 
Indian folks living in the Aneth Extension have an opportunity 
to continue to determine how best to spend the funds on their 
behalf. It is important that they have a voice in this. Just as 
a suggestion, it could be a nonprofit organization, be created 
to actually administer the funds on behalf of the Navajo folks 
in that area, or some other organization within the Navajo 
Nation itself.
    Finally, recognizing that the State of Utah has been sued 
over its management of the trust, and that is a case yet to be 
resolved, we would of course encourage that that case be 
resolved before the State of Utah withdraw from the trust so 
that whichever successor trustee comes in has a clean slate, so 
to speak, when they take over that trust.
    Mr. Chairman, that concludes my testimony, and again, 
appreciate the opportunity to be here and will answer 
questions.
    [The prepared statement of Mr. Swimmer follows:]

  Statement of Ross O. Swimmer, Special Trustee for American Indians, 
                    U.S. Department of the Interior

    Good morning Mr. Chairman, Ranking Member, and members of the 
Committee. It is a pleasure to be here today to discuss the Navajo 
Nation Trust Fund. We understand that the Navajo Nation would like to 
take over and administer its fund. The Department supports the Nation's 
desire to manage its own account.
Background
    In 1933, Congress established the Utah Navajo Trust Fund (UNTF) 
through legislation (47 Stat.1418), which designated Utah as the 
trustee. The corpus of the UNTF comes from 37.5 percent of net 
royalties derived from exploitation of oil and gas deposits under the 
Navajo Reservation's Aneth Extension. According to the statute, the 
37.5 percent net royalties were to be paid to the State of Utah, which 
was to be used for the health, education and general welfare of the 
Indians residing in the Aneth Extension. In 1968, Congress expanded the 
beneficiary class to include all Navajo Indians living in San Juan 
County, Utah (Pub.L. 90-306, 82 Stat. 121).
    In approximately 1959, oil and gas wells in the Aneth Extension 
began producing in paying quantities, and the United States Department 
of the Interior, through oil and gas mining leases on the Navajo tribal 
land, began collecting oil and gas royalties. The leases are between 
the Navajo Nation and the producer, and are subject to approval by the 
Secretary of the Interior. 1 The State of Utah is not a 
party to the tribal leases.
---------------------------------------------------------------------------
    \1\ See, e.g., 25 U.S.C. Sec. 396a (provision in 1938 Indian 
Mineral Leasing Act allowing tribe to lease unallotted Indian land for 
mining purposes, subject to Secretary of Interior approval); 25 C.F.R. 
Pt. 211 (Leasing of Tribal Lands for Mineral Development).
---------------------------------------------------------------------------
    Currently, payments from lessees are sent directly to the Navajo 
Nation. The Mineral Management Service (MMS) receives the Report of 
Sales and Royalty Remittance (Form MMS-2014) from the royalty payor and 
prepares a monthly summary of the reported royalties for 21 Aneth 
leases. MMS sends the monthly summary to the Navajo Regional Office of 
the Bureau of Indian Affairs, the Utah Navajo Trust Fund, and the 
Navajo Nation.
    The Navajo Nation collects the Aneth lease royalties directly and 
remits 37.5 percent to the UNTF account administered by the State of 
Utah. The State, upon receipt of each check, deposits it into the Trust 
Fund and invests the unused royalty funds according to rules set forth 
in Utah's statutes.
    In recent years, Utah's administration of the UNTF has been 
criticized by some in the Navajo Nation, and there is currently 
litigation pending between beneficiaries of the trust and the State of 
Utah over the management of the trust. It is our understanding the 
State of Utah now wishes to sunset its administration of the UNTF, and 
the Utah Legislature has introduced legislation to that end. If the 
State of Utah will no longer act as the trustee of the UNTF, the 
question arises who should administer this fund. Some have suggested 
that the Department of the Interior--specifically the Office of the 
Special Trustee for American Indians (OST)--might be the most 
appropriate entity to assume this function, and we have been invited to 
testify before this Committee to express our views on this suggestion. 
We believe it is more appropriate for the Navajo Nation to administer 
its fund.
A Successor Trustee for the UNTF
    In the view of the Department, we would not be the appropriate 
entity to take over the trust functions currently being performed by 
the State of Utah, for a number of reasons. OST is constrained by 
statute and regulation as to what monies it can receive into its system 
and how those monies can be invested (25 USC Sec. 161 et seq.). The 
Special Trustee is not permitted to take money for investment that is 
not held as Indian or Tribal Trust money, and all current OST trust 
monies are invested in public debt securities.
    We have no capacity to expend those funds to carry out the intent 
of the1933 Act. These Utah Navajo trust funds are designated for a 
particular purpose: the health, education and general welfare of all 
Navajo Indians living in San Juan County, Utah and for Indians residing 
in the Aneth Extension. Interior is not aware of how decisions have 
been made to satisfy the intent of the trust.
    We believe it is more appropriate for the Navajo Nation or a 
nonprofit organization made up of Navajo citizens to contract with a 
private investment firm for money management and then create a process 
whereby the money collected and investment earned could be used to 
further the intent of the 1933 Act. Additionally, the Department is 
aware of the Navajo Nation's position expressing its desire to manage 
the trust and disburse the funds to the Utah Navajo beneficiaries 
consistent with the current disbursement and percentages. The BIA, 
consistent with our government-to-government relationship with the 
Navajo Nation, acknowledges and respects the position of the Navajo 
Nation as it pertains to the Utah Navajo Trust Fund.
    Finally, we suggest that no action be taken to relieve the State of 
Utah from its burden as trustee until the current litigation is 
resolved. The damages phase for failure to account and invest funds 
properly is still underway. Otherwise, the U.S. should ask to be 
indemnified by Utah for action the court might take.
    This concludes my statement. I would be happy to answer any 
questions the Committee may have.
                                 ______
                                 
    The Chairman. Thank you. Let me turn to Mr. Matheson first.
    Mr. Matheson. Well, thank you, Mr. Chairman. Mr. Swimmer, 
appreciate your testimony. You know, it seems to me we are 
scrambling to determine what to do to ensure that Utah Navajos 
are able to continue drawing benefits from the royalties that 
are due to them.
    This fund, this trust has a long and checkered history, but 
as I look over that history and that timeline since it was 
established first in 1933 it seems real clear that at every 
turn the Federal government and Federal action has ultimately 
determined how to manage and modify the trust fund, and yet, 
earlier this year the Utah Legislature enacted legislation to 
basically dissolve the trust fund, or at least its 
participation in this, taking away its responsibility for 
managing the fund.
    So the first question I have for you is, is the State of 
Utah permitted to unilaterally divest itself from the interest 
in this matter without any Federal action?
    Mr. Swimmer. That is a question that I have asked inside 
Interior with our own solicitors. I am not sure. I don't have 
an answer. I would be concerned that the state can unilaterally 
withdraw from its responsibility under the congressional act 
that created this trust and certainly not without consent of 
the beneficiaries and actually the settlor of the trust, which 
was the Congress.
    Mr. Matheson. Would it be possible to get the solicitor's 
opinion out of the Department of Interior about that issue if 
you have talked with them about that?
    Mr. Swimmer. I am certainly happy to request one.
    Mr. Matheson. I think that would be helpful for the 
Committee record to see that, so if we could make that request, 
that would be appropriate to do.
    Mr. Swimmer. Sure.
    Mr. Matheson. Second question. Set aside that first 
question, let us say it is determined the state can abdicate 
its responsibility without Federal legislation. Do you have any 
thoughts or proposals about how the funds should be managed 
between July 1, when the legislation of the State of Utah 
passed says they are out, and when we ultimately make a 
decision in Congress about what the next structure should be?
    I just don't think it is going to happen by July 1. So do 
you have a thought about how these funds should be managed 
until some new entity or new structure is put in place?
    Mr. Swimmer. Managing the funds is the easiest part of it. 
The disbursement of the funds would be my concern. I think 
logically the Navajo Nation--it invests now its 62 and a half 
percent that it retains--it could certainly invest, as I said, 
through various opportunities, private sector investment firms 
or whatever, the money that would go into the trust.
    The disbursement of the money, though, to ensure that it 
meets the obligations of the trust, which is the health 
benefit, education benefits, et cetera, to the Indians in the 
Aneth Extension and the Navajos living in San Juan County, that 
is the issue that really has to be addressed here as to who is 
going to do that.
    It seemed to me again that Chairman Shirley would have some 
ideas about making sure that the Navajo people living in that 
area are available on committee or a nonprofit organization 
where they would give guidance to the Navajo Nation on what the 
needs are in that area. As you say, trying to create such an 
organization by July 1 would be extremely difficult.
    However, I do believe that even now there are groups, if 
not formally organized groups, in the Aneth Extension made up 
of Navajo citizens there that could be brought together fairly 
quickly to come up with a plan of how this money should be 
disbursed or spent.
    Mr. Matheson. One more question. As this Committee, as we 
consider Federal legislation to deal with this issue, do you 
have any recommendations for how that legislation can be 
crafted to make sure we protect the integrity of the fund, 
particularly with regard to transparency and accountability?
    Mr. Swimmer. Well, again, the Navajo Nation I think is 
certainly a responsible party here and could be held to account 
for that and act as a trustee on behalf of the folks in that 
area. That is the real intent of the legislation is that this 
37 and a half percent of the money be spent for the welfare of 
Indian people living in that area.
    The Navajo Nation has a long record of, you know, managing 
projects on the reservation, taking care of folks, and I think 
they would be certainly the logical choice for, you know, 
administering this kind of a trust.
    Mr. Matheson. Thank you, Mr. Chairman.
    The Chairman. Mr. Boren.
    Mr. Boren. Thank you, Mr. Chairman. I have a quick 
question. I wanted to point out that our panelist is from the 
great State of Oklahoma, and a great friend and also has a 
lovely wife, Margaret, who is a super special lady. I just 
wanted to pass that along if he runs into Margaret.
    Anyway, I have a couple of questions. One deals with 
liability, you know, and this is something when we have been 
dealing with other pieces of legislation where the Federal 
government can be liable. I know you were kind of saying, 
``Well, we are not necessarily; we don't want this hot 
potato''--but if we do, what concerns do you have about 
liability for the Federal government for the Department? Could 
you share your thoughts on that?
    Mr. Swimmer. Well, I am sure that you know, and the 
Committee members know, that we are currently involved with 
over 103 tribal lawsuits which claim that we have not 
sufficiently or appropriately invested money, and collected 
money and disbursed money. You can also walk down to the 
Federal Courthouse where we are right now continuing a hearing 
on the Cobell matter which should come to an end here pretty 
soon.
    This is ripe for litigation, frankly, with anyone that 
administers the trust, except I think for the Navajo Nation. I 
think that is one of the things that we need to come to grips 
with, frankly, in Indian Country is that tribes, many tribes, 
not all of them, but many tribes now have the expertise and 
should be administering their income, particularly from these 
kinds of resources.
    While some of those tribes have taken on that 
responsibility, there are many more that still leave it to the 
Federal government, and there is still over $800 million a year 
that flows through our trust fund and $3.5 million that we 
manage on a regular basis. In spite of all of the lawsuits that 
are against us, it doesn't seem that the tribes are really 
interested in managing this money on their own.
    I believe that is something we need to look at, and I think 
the Navajo is responsible for that.
    Mr. Boren. Can you describe just kind of in laymen's terms 
a little bit about the prudent investment standard, because it 
is something that I have, you know, been concerned about 
because the last thing you want is all of this money that could 
be used for healthcare, and for housing, for whatever the 
issue, not just for this particular case.
    Could you kind of give us in laymen's terms what a prudent 
investment standard is and how it would be applied in this 
instance?
    Mr. Swimmer. Well, in normal trust law there are a whole 
set of trust duties and one of those, if it is not set out 
separately in the trust document, you follow those trust 
duties. In this case, a prudent investor rule simply means that 
you will invest your beneficiary's funds in a prudent and 
responsible way.
    It doesn't limit the investment, but, for instance, if you 
wanted to categorize, it is most likely that hedge funds would 
not be inappropriate investment. On the other hand, if you put 
everything into U.S. Treasuries, that wouldn't be appropriate 
either because you have the risk in return. Normally, you would 
look at a range of options that would be at least reasonably 
secure, not risk free, but with moderate risk.
    You can take a moderate risk as a trustee and increase the 
return, depending on length of time of the investment, the type 
of instrument, and that sort of thing. That is really what 
prudent investment means. That is giving you a range of 
opportunities to make investments that have moderate risk with 
a moderate return.
    You are not trying to get the highest, you are not trying 
to of course be the safest, which would result in the lowest 
return.
    Mr. Boren. Thank you. I have no further questions, and I 
yield back.
    The Chairman. Gentleman from Michigan, Mr. Kildee.
    Mr. Kildee. Thank you very much, Ross. It is good to see 
you.
    Mr. Swimmer. Good to see you.
    Mr. Kildee. We have been working together in matters in a 
very good fashion for many years now, and good to see you 
again. I have just one question. Is one solution or one method 
more sensitive to sovereignty than another or is that not an 
issue here, the sovereignty of the tribe? Is one method or one 
solution of handling this situation more or less sensitive to 
the sovereignty of the Navajo Nation?
    Mr. Swimmer. I would not see it as more or less related to 
the sovereignty issue. I like the idea of the Navajo Nation, as 
a sovereign government, having the responsibility to make the 
investment and then work with the people on the Extension to 
ensure that the benefit that they are entitled to is provided 
to them.
    As the Navajo Nation government, they are responsible for 
seeing that this happens. I don't see that the Federal 
government, particularly the Department of the Interior, should 
step into the middle of that and say, ``Wait a minute, Navajo 
Nation. We don't trust you. We don't think you are capable of 
ensuring that your people, your folks up there in this area 
that are entitled to this benefit are going to get it.''
    I don't like that. I think that the Navajo Nation is 
clearly capable and should be responsible for ensuring that the 
folks there get the benefit that was intended by Congress in 
1933, that 37 and a half percent of these royalties be used for 
the benefit of the people living in that area.
    Mr. Kildee. Thank you very much. Thank you, Mr. Chairman.
    The Chairman. Thank you. Let me just reiterate a point that 
Mr. Matheson brought up and that is the request made for an 
expedited solicitor opinion on the right of the State of Utah 
to unilaterally end its management of the Utah Navajo Trust 
Fund. If I could just reiterate and emphasize our desire for 
that report.
    Mr. Swimmer. I will ask for that. That is not something 
they perhaps would normally do because it is not an Interior 
matter, but I will certainly ask for an opinion on how they 
view a state's responsibility given that the act gave them this 
responsibility and they accepted it in 1933.
    The Chairman. Thank you.
    Mr. Swimmer. Thank you.
    The Chairman. Any further questions?
    [No response.]
    The Chairman. Thank you for your time this morning. We 
appreciate it.
    On Panel 2, we have Ms. Tani Pack Downing, Deputy Chief of 
Staff and General Counsel of the Office of the Governor, State 
of Utah, Salt Lake City; and The Honorable Joe Shirley, 
President, Navajo Nation, Window Rock, Arizona. We welcome you 
both to the Committee this morning. We do have your prepared 
testimonies and it will be made part of the record as if 
actually read. You may proceed as you desire.
    The Chairman. Ms. Downing, you want to start?

   STATEMENT OF TANI PACK DOWNING, DEPUTY CHIEF OF STAFF AND 
 GENERAL COUNSEL, OFFICE OF THE GOVERNOR, STATE OF UTAH, SALT 
                        LAKE CITY, UTAH

    Ms. Downing. Sure. Thank you. Good morning, Mr. Chair, 
members of the Committee and staff. My name is Tani Pack 
Downing. I am Deputy Chief of Staff and General Counsel for 
Governor Huntsman in Utah.
    Governor Huntsman sends his regrets that he was unable to 
come in person to thank you for holding this hearing in 
response to the State of Utah's request to be removed as the 
trustee over a portion of the oil and gas royalties from the 
Utah area of the Navajo Reservation.
    Last year, Governor Huntsman and legislative leadership met 
to discuss whether the state should petition Congress to 
designate a new trustee. They took into account the fact that:
    1] The State of Utah, to our understanding, is the only 
state administering a fund like this as management of Indian 
resources is typically a Federal responsibility.
    2] They considered the fact that there has been 40-plus 
years of nearly continuous litigation with four lawsuits by the 
Utah Navajos over the state administration of the trust fund, 
the cost of which has been born by the Utah citizens as a 
whole, and to what benefit?
    3] During that same 40-plus years, the Utah Navajo have 
repeatedly requested they be given increased control over 
expenditures of the fund.
    4] Utah Navajos have most recently repeatedly asked the 
Governor to appoint a Navajo beneficiary as a member of the 
Board of Trustees, which, in the state's opinion, increases the 
risk of another lawsuit.
    5] The Utah Navajo are valued citizens of the state and the 
litigious environment surrounding the state's administration of 
this fund harms the relationship between the state and the Utah 
Navajo and complicates the parties' ability to meet their 
needs.
    6] We believe there are several Navajo-related entities 
that are equipped to find a more effective way to administer 
the fund and determine its best use.
    In light of these considerations, the Governor and 
legislative leadership decided not to reauthorize the 
legislation governing the Navajo Trust Fund and to allow the 
legislation to sunset. This decision was discussed with the 
Utah Navajo on many occasions and I have provided a chronology 
of contacts with my written testimony.
    The decision was also discussed with the Navajo Nation. In 
place of the Navajo Trust Fund, Congressman Matheson had asked 
what is going to happen after July 1? The legislation that 
allowed the state to sunset the trust fund created a holding 
fund called the Utah Navajo Royalty Holding Fund.
    Effective July 1 of this year, the financial and real 
property assets of the Navajo Trust Fund will be transferred 
into that holding fund, as well as future royalties, and that 
will continue until Congress designates a new trustee. Just as 
an aside, at the Navajo Trust Fund Board's final meeting, which 
will be next Monday, the board and auditor will adopt a list of 
assets and liabilities of the Navajo Trust Fund and those will 
be posted online.
    I want to talk a little bit about what the holding fund 
will do. First, it will be managed through a management team 
that is led by the executive director of the Utah Department of 
Administrative Services. The holding fund will continue to make 
expenditures to complete work on all projects that were 
obligated by the Navajo Trust Fund prior to May 5 of this year.
    The holding fund will continue to pay for educational 
scholarships for Utah Navajo through 2010. The holding fund 
will also continue to make expenditures to protect the assets 
of the fund, such as building maintenance on some of the fixed 
assets, and also to protect and receive interest on the income 
of the holding fund. However, no new projects will be 
authorized through the holding fund.
    In conclusion, the State of Utah requests that Congress as 
soon as possible designate a new entity to succeed the state as 
trustee over the royalty funds after input from the Navajo. The 
state has no preference regarding which entity should be the 
new trustee.
    However, the state strongly requests that since 100 percent 
of the oil and gas royalties come from Navajo Reservation lands 
located in Utah that at least the 37 and a half percent of 
those royalties continue to be expended by the new trustee for 
the benefit of the Utah Navajo.
    I would like to thank you for the opportunity to provide 
input on behalf of the State of Utah, and I can answer any 
questions.
    [The prepared statement of Ms. Downing follows:]

          Statement of Tani Pack Downing, General Counsel and 
    Deputy Chief of Staff to Governor Jon M. Huntsman, State of Utah

    Mr. Chairman and members of the Committee, my name is Tani Pack 
Downing and I serve as the General Counsel and Deputy Chief of Staff to 
Governor Jon M. Huntsman of the State of Utah. I am here today to 
discuss the decisions made recently by the State concerning what is 
known as the Utah Navajo Trust Fund.
    The State of Utah, through a federal statute passed in 1933 which 
enlarged the Navajo Reservation, was assigned responsibility to manage 
a percentage of oil and gas royalties produced on the Utah portion of 
the Navajo Reservation for the health and welfare of the Navajo 
residents residing on the newly created part of the reservation. The 
land was previously federal land located within San Juan County Utah, 
and as such, 37-1/2% of any oil and gas royalties produced on the land 
would have been transferred to Utah.
    In 1968, Congress amended the 1933 Act to redefine the beneficiary 
class as ``Navajos residing in San Juan County'' and to expand the 
purposes of the fund ``for the health, education, and general welfare 
of the Navajos.'' Importantly, the 1968 Amendment also defined Utah's 
accounting responsibility as being limited to ``[a]n annual report...to 
the Secretary of the Interior...for the information of said 
beneficiaries.''
    The State of Utah is the only state in the Nation administering a 
Fund like this, as management of Indian resources is typically a 
federal responsibility. The current net assets of the Fund are 
approximately $25 million.
    The Utah Navajo Trust Fund has been the subject of numerous 
lawsuits over the 75 years since its creation. Each lawsuit has 
challenged Utah's management of the royalty fund and has requested an 
accounting. The 1961 case of Sakezzi v. Utah Indian Affairs Commission 
concluded that the 1933 Act created a fiduciary trust with Utah as the 
trustee. In the 1970s, the case of Jim v. State of Utah ordered an 
accounting. In the 1980s, the court in the case of Bigman v. State of 
Utah again ordered an accounting. The state is currently litigating the 
case of Pelt v. State of Utah which alleges mismanagement of the Fund. 
This case is currently awaiting a decision from the 10th Circuit Court 
of Appeals on procedural matters.
    Since 1992, the state has managed the Fund though a three-person 
Board of Trustees which oversees a trust administrator and staff. This 
management team is advised by a committee of Navajo residents from each 
of the eight relevant chapters, known as the Dineh Committee. The Board 
sets the annual operating and capital budgets, and approves 
expenditures for housing, water, powerline projects, equipment 
purchases, building construction and maintenance, supplemental 
education assistance, and the like. Annual expenditures, outside of 
capital expense, average about $2 million per year. In addition to this 
amount, the state made the decision some years ago to invest a portion 
of the state severance tax from production of oil and gas on the 
reservation back into the area. Today, the Navajo Revitalization Fund, 
a more traditional state-government expenditure program, provides about 
$2 million per year for various capital improvement programs on the 
Navajo Nation lands.
    Over the years, the Navajo residents of San Juan County have asked 
the State for more representation in the decisions concerning 
expenditures from the Fund. In response, the State tried to find a 
Navajo who met the State requirements to sit on the Board of Trustees. 
Unfortunately, court mandated fiduciary requirements for management of 
a trust do not allow beneficiaries of the trust to make such decisions, 
so it proved impossible to find a Navajo who qualified.
    In light of the desire of the Utah Navajo residents to have more of 
a role in management of the Fund, and in light of the history of nearly 
continuous litigation, the state determined it was best not to continue 
in the role as trustee. The state decided to resign as trustee and 
allow another entity to take over those duties. Because the duty to 
manage the Fund was given to the state by Congress, only Congress may 
determine an alternative. This decision was discussed with the Navajo 
residents of San Juan County on many occasions (see attached list of 
meetings). In the interim, however, the state has made the decision to 
wind down active management of the Fund, and to simply protect the Fund 
and other assets until a successor is determined.
    Utah has a general policy of legislative provisions which sunset 
various state agencies on a periodic basis, unless specifically 
reauthorized. The Utah Navajo Trust Fund is one of those agencies, and 
was set to be reviewed in the 2008 General Session of the Legislature. 
Rather than continue the existing Board of Trustees, the state, through 
legislation, established the Utah Navajo Royalty Holding Fund and 
associated management provisions. This Holding Fund will take effect 
July 1 of this year, and will contain all the financial and real 
property assets owned by the former Utah Navajo Trust Fund. The Trust 
Fund will cease to exist as a management entity. (See resolution at 
http://le.utah.gov/2008/bills/hbillenr/hb0352.pdf and legislation at 
http://le.utah.gov/2008/bills/hbillenr/hcr004.pdf )
    The Holding Fund will continue to make expenditures to protect the 
assets of the Fund such as building maintenance and efforts to protect 
the income of the Fund. The management team, now headed by the 
Executive Director of the Utah Department of Administrative Services, 
will work to complete all projects approved before May 5, 2008, such as 
housing projects, and will continue to fund the supplemental education 
costs for eligible Navajo students in a postsecondary education 
program. However, no new projects may be authorized. The Holding Fund 
will continue until Congress appoints a new management entity, and 
instructs the state concerning disposition of the assets within the 
Holding Fund.
    The State of Utah has no preference for a successor management 
entity, other than a desire to see that the royalties continue to flow 
to the benefit of the Navajo residents of San Juan County. The State 
has also encouraged the Navajo residents to participate in the process 
of determining a new trustee to manage the funds.
                                 ______
                                 

                       Timeline of Contacts with 
           Representatives of Utah Navajos and Navajo Nation

           Re: State of Utah Resigning from Navajo Trust Fund

 For additional documentation contact Tani Downing at [email protected]

    November 1, 2007--Gayle McKeachnie, representative of the 
Governor's Office, traveled to Aneth and met with the Navajo Utah 
Commission (NUC) to discuss the State's decision to resign from the 
Trust Fund. Members of the NUC were present at the meeting, including 
Kenneth Maryboy, Katherine Benally, and Charles Long, Assistant to the 
Speaker of the Navajo Nation.
    Concurrently with the delivery of the information to the NUC, the 
State Lt. Governor Gary Herbert spoke with President Shirley of the 
Navajo Nation by phone about the State's decision to resign from the 
Trust Fund.
    November 5, 2007--The idea of the State's desire to ask Congress to 
find a new trustee was discussed just after a meeting of the Navajo 
Revitalization Fund (NRF). The NRF meeting was held at Goulding's 
Lodge, and members of Oljato Chapter came to ask questions.
    November 6, 2007--Navajo Nation Council Speaker issues press 
release acknowledging that representatives of the Governor's office 
delivered the ``exciting news'' in person on November 1, that the State 
of Utah wishes to remove themselves as the trustee of the Navajo Trust 
Fund.
    November 8, 2007--Navajo Trust Fund Board of Trustees Meeting, 
Mexican Water Chapter. Trustee, John Reidhead provided information 
regarding the State's decision to sunset the trust and ask Congress to 
designate a new trustee.
    November 13, 2007--The Governor and Legislative leadership issues a 
joint press release about allowing the NTF to sunset and asking 
Congress to create a new disbursement system for the royalties.
    November 15-16, 2007--A joint meeting of the Dineh Committee and 
the Navajo Utah Commission was held in the Salt Lake City area. John 
Reidhead, Navajo Trust Fund Board member and John Harja, representative 
of the Governor's office, attended. John Harja answered questions from 
members of the Dineh Committee, NUC and Chapter (Aneth) presidents and 
other officials for three hours.
    November 16, 2007--Members of the Dineh Committee traveled to Salt 
Lake City to discuss the issue of the State's decision to resign as 
trustee. Those involved in the meeting included Gayle McKeachnie, 
Amanda Smith, and John Harja representing the Governor's office, 
Patricia Owen and John Cannon representing staff to the Utah 
Legislature, and a representative from Congressman Matheson's office. 
Clarence Rockwell and representatives from all the Chapters were 
present. They had requested the meeting to hear reasons behind the 
current action, future plans, and to hear the instructions necessary to 
execute the shut down as well as provide comments.
    November 16, 2007--Leonard Lee, Chair of the Dineh Committee, sent 
a letter to the Governor, Lt. Governor and the Legislature in which he 
states ``The Utah Navajos support the Transition Legislation that is 
being drafted at this time and requests for additional provisions to be 
implemented.'' The bill that ultimately passed the Legislature included 
one of the two provisions requested.
    November 18, 2007--Oljato Chapter Resolution. Regarding their 
desire to give input about the transition plan for the Trust Fund and 
selection of another trustee.
    November 20, 2007--Gayle McKeachnie, Amanda Smith and Tani Pack 
Downing, representing the Governor's office, traveled to Window Rock. 
They had conversations there about the State's decision to resign from 
the trust with Clarence Rockwell and sat in on break out sessions where 
representatives of the Chapters voiced concerns about the State's role 
in the trust.
    November 27, 2007--The Native American Legislative Liaison 
Committee heard testimony from Tony Dayish, Leonard Lee, and Marie 
Holiday regarding the sunsetting of the current structure of the Navajo 
Trust Fund.
    November 30, 2007--John Cannon, legislative staff, by email 
informed NUC/Clarence Rockwell that Representative David Clark would be 
the sponsor of the legislation.
    December 2, 2007--Representatives of the Oljato Chapter sent a 
letter to the Governor requesting he provide information on the State's 
decision to resign as trustee. The Governor's General Counsel, Tani 
Pack Downing, responded to the Oljato representatives in a letter dated 
December 13, 2007 which outlined other contacts made to the Utah 
Navajos regarding this issue and encouraging the Utah Navajos to 
quickly contact the federal Congressional delegation members and work 
with them to get the federal law changed to reflect the trust 
management and disbursement mechanism preferred by the Utah Navajo, and 
to provide input to their state legislative representatives, 
Representative Brad King and Senator Dmitrich concerning any issues 
that the Legislature should address during the transition period 
beginning January 21, 2008.
    December 7, 2007--Navajo Trust Fund Board of Trustees meeting by 
teleconference between Blanding and Salt Lake City. Discussion 
regarding the sunset of the trust fund and new entity taking over.
    December 10, 2007--Utah Dineh Committee Special Meeting, Red Mesa 
Chapter. Discussion occurred regarding ceasing of the trust fund.
    December 13, 2007--Tani Pack Downing, Governor's Office, sent 
letter to James Black, James Adakai, Shirlee Bedonie, Herman Daniels, 
Sr., Oljato Chapter Administration, thanking them for their offer of 
the Governor to speak at the Oljato Chapter on December 14, but 
indicating he would be unable to attend on the short notice. Ms. 
Downing explained the contacts made by the Governor's office with Utah 
Navajo up to that date on the issue of the State's plan to sunset the 
Navajo Trust Fund and asking Congress to designate a new trustee, the 
need for the Navajo to play a role in that determination, and 
recommending the Navajo give input to their Congressional 
representatives and State Legislators.
    December 21, 2007--Representative Clark, sponsor of the legislation 
to permit Utah to resign as trustee, traveled to Montezuma Creek and 
met with Navajo Utah Commission members. In attendance were members 
from various chapters and the Dineh Committee, a representative from 
President Shirley's office, Andrew Tso, and the Speaker of the Navajo 
Legislature. The meeting was chaired by Dennis Filfred, Chairman of 
NUC. There were at least 5 NUC commission members at the table. The 
Chairman of the Dineh Committee, Leonard Lee attended the meeting, and 
at least three other members of the Dineh Committee. Other Chapter 
officers also attended from Oljato and Aneth. Tony Dayish, 
representative of the NTF also attended. The State's decision to resign 
as trustee was discussed. Minutes were kept and a sign up roll was 
passed around.
    Senator Mike Dmitrich spoke with Kenneth Maryboy and Andrew Tso 
about their concerns regarding who would administer the trust fund. Mr. 
Tso indicated he would fax Senator Dmitrich a letter from President 
Shirley opposing the legislation, but Senator Dmitrich never received 
such a letter.
    January 11, 2008--Tani Pack Downing, Governor's office, responded 
to Clarence Rockwell's request for information on the status of the NTF 
legislation. She sent Clarence an email giving him the name of the 
legislative attorney drafting the legislation, her email address and 
telephone number, and told Clarence to also discuss the legislation 
with the sponsor of the bill, Representative David Clark or with the 
legislative representatives for the area, Senator Dmitrich and 
Representative King.
    January 11, 2008--Navajo Trust Fund Board of Trustees Meeting, 
Teecnospos Chapter. Discussion occurred regarding sunset of the trust 
fund and new trustee. Leonard Lee reported that the Dineh Committee had 
attended several meetings on this issue at the Navajo Utah Commission 
Board meetings and has made presentations at the Oljato and Navajo 
Mountain Chapters. He said they will continue to work on these issues 
and the federal legislation. Lynn Stevens reported that a meeting was 
held in Montezuma Creek on December 21 with Utah Navajos and 
Representative David Clark. He reported Representative Clark had said 
he would meet with the BOT individually with their concerns if they 
wanted. Tony Dayish, Trust Fund Administrator, reported UNTF has been 
involved in numerous meetings regarding the sunset of the trust fund on 
Nov. 15, Dec. 10, Dec. 14, Dec. 18, Dec. 21, Jan. 9 and Jan. 10.
    January 14, 2008--John Cannon, legislative staff, by email provided 
to NUC/Clarence Rockwell a copy of the bill, resolution, and a summary 
of the legislation. Clarence followed up with a telephone call to 
Patricia Owen, legislative staff, regarding questions he had about the 
language in the bill or resolution.
    January 23, 2008--John Cannon, legislative staff, received an email 
from Andrew Tso raising concerns about the language in the legislation 
which led to the resolution being changed to remove a reference to the 
Paiute Strip.
    January 24-25, 2008--The Dineh Committee and the NUC held a meeting 
in Cortez, Colorado where it was discussed how to respond and put 
together a new group to manage the trust. Tony Dayish, Administrator of 
the NTF was in attendance and gave input to the group and listened to 
their concerns.
    January 25, 2008--A representative from the Blue Mountain Dineh 
contacted the State asking where to get information about the bill and 
resolution. He was advised that the best place to get information or 
provide input at this point would be to contact his State legislators, 
Representative King and Senator Dmitrich whose information can be found 
at www.utah.gov.
    January 29, 2008--The final bill and resolutions were posted on the 
website for the public. See the following web links for a whole history 
on the bill and resolution as well as links to the actual language.

        HCR 4--Concurrent Resolution Encouraging Congressional Action 
        to Designate a New Recipient Of Royalties From Navajo 
        Reservation Lands in Utah http://le.utah.gov/2008/htmdoc/
        hbillhtm/HCR004.htm

        HB 352--Amendments Related to Monies Derived from Navajo Nation 
        Reservation Lands in Utah http://le.utah.gov/2008/htmdoc/
        hbillhtm/HB0352.
        htm
    January 30, 2008--During the American Indian Caucus Day legislative 
staff assisted Clarence Rockwell in the distribution of legislative 
recommendations and spoke with Tony Dayish regarding comments and 
possible changes to the legislation. Tony indicated that he had 
received comments about the legislation, but was reviewing them because 
many appeared confused about what the legislation did and he wanted to 
consolidate them. We encouraged him to provide us the information as 
soon as possible, but we did not receive any further information.
    During the session Representative Clark received at least one fax 
from the NUC.
    February 4, 2008--The issue was discussed briefly again at the 
meeting of the NRF, with Leonard Lee and Katherine Benally present.
    February 5, 2008--Tony Dayish was asked to attend a meeting with 
Kenneth Maryboy, Mark Maryboy, Davis Filfred, Leonard Lee, Earl Lee, 
Clarence Rockwell, Robert Billie Whitehorse and other officials of the 
Aneth Chapter. Tony heard their concerns and discussed options for them 
to consider for a new trustee.
    February 8, 2008--Navajo Trust Fund Board of Trustees Meeting, Salt 
Lake City and Blanding Teleconference. Ed Tapaha reported that the 
Dineh Committee had been discussing options for a new trustee and 
making plans for next step.
    February 12, 2008--Bill and resolution discussed in the House 
Government Operations Committee--public notice of the meeting and the 
agenda was posted on the Legislature's website at http://le.utah.gov/
asp/interim/Commit.asp?Year=2008&
Com=HSTGOC.
    February 15, 2008--Utah Dineh Committee Special Meeting, City of 
Cortez Council Chambers. Reports included review of NRF Legislation 
that includes the UNTF transition and new trustee proposed legislation.
    February 22, 2008--Utah Dineh Committee Meeting, Mexican Water 
Chapter House. Reports regarding H.B. 352 NRF Legislation Revisions 
Update and new trustee federal legislation update given and discussion 
had.
    February 22, 2008--Bill and resolution discussed in the Senate 
Government Operations and Subdivisions Committee--public notice of the 
meeting and the agenda (See Attachment 17, agenda) was posted on the 
Legislature's website at http://le.utah.gov/asp/interim/Commit.asp/
Year=2008&Com=SSTGOP
At least one Navajo attended and testified in the Senate Standing 
Committee.
    February 28, 2008--Navajo Trust Fund Board of Trustees Special 
Meeting, Teleconference between Blanding and Salt Lake City. Update 
given on the status of H.B. 352 which provided for the transition of 
the trust fund until a new trustee is determined by Congress.
    March 5, 2008--Clarence Rockwell called John Cannon, legislative 
staff, indicating that in tracking HB 352 he saw that the bill was 
recalled. John informed him that there was a technical problem that 
needed to be resolved.
    Before the Utah Legislative Session ended, Senator Dmitrich spoke 
on the telephone twice with Mr. Maryboy and twice with Andrew Tso to 
his recollection regarding the sunset of the NTF legislation and other 
related issues.
    Throughout this time period, Gayle McKeachnie, Governor's office, 
spoke on the phone several times with Clarence Rockwell and Kenneth 
Maryboy and met with Kenneth Maryboy once or twice at the State 
Capitol. The main topics of conversation were:
      Whether the Governor would come to Monument Valley and 
meet about what was going to happen?
      Would the state consider a two-year extension before 
sunset of the trust fund?
      Who could they talk to about what was going to be in the 
state's legislation to sunset the trust fund and transition to a new 
trustee?
    Mr. McKeachnie referred them to Senator Dmitrich and Representative 
King, their state legislative representatives, and to legislative 
staff. In addition, Mr. McKeachnie referred them to Congressman 
Matheson's office to discuss Congress designating a new trustee.
    March 21, 2008--Navajo Trust Fund Board of Trustees meeting 
minutes, Red Mesa Chapter House, reports that the Governor has signed 
H.B. 352.
    March 28, 2008--Utah Dineh Committee agenda, Montezuma Creek, 
update given on HB 352 to committee members.
    April 25, 2008--Utah Dineh Committee agenda, Aneth Chapter House, 
report on fixed assets and projects audit as required by HB 352.
                                 ______
                                 
    Mr. Boren President Shirley?

   STATEMENT OF THE HONORABLE JOE SHIRLEY, PRESIDENT, NAVAJO 
                  NATION, WINDOW ROCK, ARIZONA

    Mr. Shirley. Chairman Rahall, Congressman Matheson, members 
of the Committee, good morning. Ya'at'eeh from Navajo land. It 
is always an honor to be invited to share with you a few 
thoughts from the heart on behalf of my people. I am Dr. Joe 
Shirley, Jr., President of Navajo Nation. I wanted to share a 
few thoughts with you about what is on the table this morning. 
The written testimony has been submitted to you, gentleman, and 
Committee members, so you have that.
    I am here to reiterate some of what is in there on behalf 
of the Navajo Nation and which is basically to share with you 
the Navajo Nation's official position gotten through the 
Intergovernmental Relations Committee of the Navajo Nation 
Council, and I am here as President to expand on that and to 
reinforce that, and that is to have the Navajo Nation be 
designated as trustee for these trust funds on behalf of the 
Navajos living in the State of Utah and for which the 37 and a 
half percent is set aside on an annual basis.
    I believe that the Navajo Nation governmental structure is 
set up in such a way to where we are in a position to 
administer these funds on behalf of the Utah Navajos. We have 
been administering our own Navajo Nation funds, some of which 
has been shared with the Navajos living in the State of Utah. 
We also get Federal funds and state funds which were 
administered through the Navajo Nation government.
    So I feel like the Navajo Nation government as it is set up 
is very competent. The governmental structure is in place to 
administer these trust funds on behalf of all Navajos living in 
the San Juan County of the State of Utah. Certainly, we need to 
do right by all of the Navajo Nation constituents living in 
Utah.
    I believe, again, like I said, the Navajo Nation 
government, working with the leadership of the San Juan County 
Navajos, we can make that happen. I do want to see as the 
government goes toward the designation of a new trustee that 
the Navajo Nation leadership needs to be at the table full-
time.
    We need to have a hand in all of this. Like Mr. Swimmer has 
pointed out, we consider ourselves a sovereign nation. We are a 
sovereign nation. I believe the U.S. Government has laws, you 
know, in place to acquiesce in our self-determination. It is 
that law by which I make the request on behalf of the Navajo 
Nation to be designated as the trustee for these trust funds.
    As far as the prudent investment of these funds so that the 
funds can grow on behalf of the Utah Navajos, we have, like I 
said, an Investment Committee in place, working with the Budget 
and the Finance Committee arm of the Navajo Nation Council. We 
have our own trust funds that we are administering, making it 
to grow, and we have been very successful with that.
    I don't see us doing any different with these trust funds 
if it were to be put in our trust. I do like to see, also, the 
dispute that has arisen over some of the mismanagement and the 
misappropriation by the State of Utah, I would like to see that 
gotten behind us before we move forward toward the new 
designation of a trustee.
    Like Mr. Swimmer has alluded, we would like to start with a 
clean slate, and I agree with that position. Last, I am very 
interested in what the U.S. Solicitor would have to say about 
the State of Utah letting go of its trust responsibility for 
these funds on behalf of the Utah Navajos.
    So having said that, Mr. Chairman, members of the 
Committee, I am here for also to answer questions. Thank you 
very much.
    Mr. Boren. [Presiding.] Thank you for your testimony.
    [The prepared statement of Mr. Shirley follows:]

             Statement of The Honorable Joe Shirley, Jr., 
                      President, The Navajo Nation

    Good Morning Chairman Rahall, Honorable Members of the Committee. 
My name is Joe Shirley, Jr., President of the Navajo Nation. The Navajo 
Nation is a sovereign Native Nation located in the southwestern United 
States with territory in the States of New Mexico, Arizona and Utah. 
Numerous Executive Orders, Acts of Congress and Treaties have 
guaranteed the rights of the Navajo People to the surface use, and the 
subsurface mineral resources, of much of our traditional lands.
Self-Determination and the Trust Responsibility of the Federal 
        Government
    Over the last forty years, the federal government has made a 
significant shift in its policy toward the Native Nations. The federal 
government's shift from a policy of paternalism, assimilation and 
termination, to a policy that respects the sovereignty of Native 
peoples, and promotes tribal self-determination on matters relating to 
internal and local affairs. It is essential to the sovereignty and 
self-determination of the Navajo Nation that our government maintains a 
government-to-government relationship with the United States in 
deciding matters that concern and affect Navajo lands, resources and 
citizens. The Navajo Nation has its own laws that authorize particular 
parties and individuals to give testimony to Congress on behalf of the 
Navajo Nation, and to negotiate with the federal government over 
matters that affect our Nation. As President of the Navajo Nation, I am 
honored to appear before this Committee on behalf of the Navajo Nation 
and its citizens, and especially on behalf of the Navajo citizens who 
are beneficiaries of the Utah Navajo Trust Fund (hereinafter ``UNTF''). 
I thank you for your invitation to provide testimony to the Committee 
and I am pleased that the Committee plans to consult with the Navajo 
Nation regarding future federal legislation affecting the UNTF. I also 
trust that the United States Congress will not pass any legislation 
that directly affects the lands, resources and citizens of the Navajo 
Nation without first obtaining our consent.
Utah Portion of the Navajo Nation and the Utah Navajo Trust Fund
    The Utah portion of the Navajo Nation has a complex history of 
additions, withdrawals, restorations and exchanges. The United States 
added the lands in the Utah Territory that lay south of the San Juan 
and Colorado rivers by Executive Order on May 17, 1884. Navajo People 
have a historic tie to this area and have continuously occupied this 
land since long before the captivity of Navajos in 1864. On November 
19, 1892, four years before Utah was awarded statehood, then President 
Benjamin Harrison, by executive order, took back those lands in the 
Utah portion of the Navajo Nation which lay west of the 110+ parallel 
(what is called ``the Paiute Strip''), and placed those lands back in 
the public domain. Navajo lands in the Utah Territory which lay east of 
the 110+ parallel remained part of the Navajo Nation. On May 15, 1905, 
by executive order, President Theodore Roosevelt added the Aneth area 
in Utah to the Navajo Nation. In 1908, the Department of the Interior 
made an administrative withdrawal of the Paiute Strip from the federal 
public domain, designating those lands again for exclusive use by the 
Navajo. In 1922, the Department of the Interior again took the Paiute 
Strip away from the Navajo, and put the lands back into the public 
domain. The Paiute Strip was again withdrawn from the public domain in 
1929.
    It is important for the Committee to understand that the federal 
legislation that created the UNTF was the result of negotiation and 
agreement between the Navajo Nation, the State of Utah, and the United 
States Government. In 1930 and 1931, the Navajo Tribal Council asked 
the Commissioner of Indian Affairs to negotiate on its behalf to 
permanently restore the Paiute Strip to the Navajo Nation, based on the 
previous set asides of this area by the federal government and on 
historic Navajo occupation. On July 7 and 8, 1932, at its annual 
meeting in Fort Wingate, the Navajo Nation Council gave its support to 
proposed federal legislation which would restore the Paiute Strip to 
the Navajo Nation and to add lands to the Aneth area of the Nation, 
between Montezuma Creek and the Colorado border (what is referred to as 
the Aneth Extension).
    After Utah citizens voiced opposition to the proposed addition of 
the Aneth Extension and the Paiute Strip to the Navajo Nation, the 
Commissioner of Indian Affairs negotiated on behalf of the Navajo 
Nation with a Utah committee made up of San Juan County representatives 
to satisfy their concerns. In order to gain the Utah committees' 
support for the 1933 Act, the Commissioner of Indian Affairs made 
several concessions to the Utah committee. These concessions included 
prohibitions on further Native American homesteads or allotments in San 
Juan County, fencing of Native allotments outside the new Navajo Nation 
boundaries, fencing of the Aneth Extension's northern boundary, and 
agreement that state game laws would apply to Navajos hunting outside 
the Nation's boundaries. The proposed legislation also included an 
unusual provision that in the event oil and gas was discovered in the 
Aneth Extension and the Paiute Strip, instead of all net oil and gas 
royalties going to the federal government to administer on behalf of 
Navajo citizens, 37 1/2 % of those royalties would instead go to the 
State of Utah to be administered for ``the tuition of Indian children 
in white schools and/or in the building of roads across [the newly 
added lands], or for the benefit of the Indians residing therein.'' A 
final concession to Utah in the proposed legislation provided that Utah 
could exchange any state school trust lands inside the Aneth Extension 
and the Paiute Strip for equivalent federal lands, and that any fees or 
commissions for the exchange would be waived. The federal government 
enacted the legislation Congress in 1933, as Pub. L. No. 403, 47 Stat. 
1418 (1933) (``1933 Act'').
    In 1958, by Act of Congress, the Navajo Nation was further expanded 
within San Juan County. Under the 1958 Act, the Navajo Nation and the 
United States government exchanged Navajo Nation lands at Glen Canyon 
Dam and Page, Arizona for federal lands northwest of and adjacent to 
the Aneth Extension, including the McCracken Mesa area. In 1949 and 
1998, with the Navajo Nation as party to the negotiations, state school 
trust lands within the Navajo Nation were made Navajo Trust Lands in 
exchange for other federal lands given to Utah. Currently, negotiations 
are under way to exchange school trust lands in the Aneth Extension 
with other federal lands under authority of the 1933 Act.
    In 1968, Congress amended the 1933 Act, redefined the purposes of 
the UNTF, and expanded its class of beneficiaries to include all 
Navajos in San Juan County. The amended legislation provided that trust 
monies can be used ``for the health, education and general welfare of 
the Navajo's residing in San Juan County.'' The 1968 Amendments also 
provided that trust funds could be used for projects off the Navajo 
Nation provided that the ``benefits'' were proportional to the 
expenditures from the trust. This vague term ``proportional'' provided 
one of the main vehicles for mismanagement of the trust monies, 
discussed below.
Potential Breach of Fiduciary Duty Concerning the UNTF
    There is substantial evidence that the State of Utah has not 
fulfilled its fiduciary duties under the 1933 Act. In a 1991 report, 
Legislative Auditor General for the State of Utah raised serious 
allegations of mismanagement and misappropriation of trust funds by the 
State of Utah and other entities that were entrusted with UNTF monies. 
The State of Utah has yet to make a full accounting of the UNTF, and is 
in ongoing litigation with the beneficiaries concerning these issues. 
Now, the State of Utah has declared its desire to withdraw as trustee 
of the UNTF. The State of Utah passed legislation this year that will 
effectively freeze most disbursements from the UNTF, end the trust fund 
administration, and move the trust assets to a new fund pending 
selection of a new trustee. The Utah legislation specifically calls on 
Congress to appoint a new trustee for the UNTF. In the meantime, Navajo 
Nation will no longer have a role in the planning of expenditures from 
the UNTF, as is mandated under the 1933 Act.
    The Navajo Nation remains concerned over the potential for abuse of 
trust by a new trustee. For example, recently, the current UNTF 
Administrator along with members of the Dineh Committee, a now defunct 
State of Utah advisory committee to the UNTF, used UNTF monies to pay 
their travel expenses to Washington D.C., where they lobbied Congress 
on legislation for a preferred new trustee and system for management of 
the royalty funds. Neither the State of Utah nor the UNTF Board of 
Trustees authorized these travel and advocacy expenditures. The 
Governor of the State of Utah has chastised these individuals for 
engaging in personal political activities using UNTF monies, and for 
professing that they represent Utah in an official capacity. Although 
the Governor has promised to repay these monies to the trust fund, the 
incident highlights the importance of carefully choosing an appropriate 
new trustee, and drafting fair and legitimate trust terms through a 
lawful process.
    The Navajo Nation is very concerned that there is a rush to 
designate a new trustee, especially where that trustee may be an alter 
ego of an entity or individuals who have been involved in mismanagement 
and misappropriation of trust monies in the past. The trust must be 
grown and managed successfully not only to pay for needed expenditures 
in the short term, but for the benefit of future generations of Navajos 
in San Juan County as well. The trust should be administered in a 
manner to ensure its survival in perpetuity, and so that trust fund 
monies shall continue to be available to San Juan County Navajos long 
after Navajo Nation oil and gas resources in Utah have been depleted. 
In other words, the trust fund should be managed in a way that ensures 
long-term viability of the fund and not merely a funding source for 
short term disbursements.
Selection of a New Trustee
    The Navajo Nation believes that, consistent with federal policy, 
the Navajo Nation should be the new trustee of the UNTF. The UNTF is 
capitalized by royalties generated from Navajo Nation oil and gas 
leases on Navajo Nation Trust Lands for the benefit of Navajo Nation 
citizens. In 1933, when the UNTF was created, the Navajo Nation tribal 
government was only 10 years old. Today, the Navajo Nation is the 
largest and most sophisticated Native American government, with a 
substantial body of statutory and decisional law that complements the 
fundamental law of our People. The Navajo Nation has a proven record of 
acting as a trustee. Currently, the Navajo Nation manages, and has 
successfully increased, its own trust fund monies through the expert 
guidance of its Investment Committee and outside consultants. The 
Navajo Nation has a well-developed annual comprehensive budgeting 
process for appropriation of all Navajo Nation funds, which should be 
followed in utilization of all Navajo Nation generated funds, including 
the proceeds from the UNTF. Importantly to this Committee, designating 
the Navajo Nation as trustee of the UNTF is the only position 
consistent with the policy established by the United States Congress to 
recognize the sovereignty of the Navajo Nation and the right of the 
Navajo Nation to self-determination in matters which concern the 
Nation's lands, resources and citizens.
Appropriate Consultation and Development of Legislation Regarding UNTF
    Like any government, the Navajo Nation has many elected officials 
at various levels of government, all of whom have individual agendas 
that may or may not coincide with the broader goals and policies of the 
Navajo Nation. As I explained above, the Navajo Nation has its own law 
that governs who may speak on behalf of the Navajo Nation as 
representatives of our People. Under Navajo Nation law, the Navajo 
Nation Council is ``the governing body of the Navajo Nation.'' 2 N.N.C. 
Sec. 102 (A). ``All powers not delegated are reserved to the Navajo 
Nation Council.'' 2 N.N.C. Sec. 102 (B). The Navajo Nation 
Intergovernmental Relations Committee (IGRC) has been delegated by the 
Navajo Nation Council all powers necessary and proper ``[t]o ensure the 
presence and voice of the Navajo Nation.'' 2 N.N.C. Sec. 822(B); 2 
N.N.C. Sec. 824(A). The IGRC has many specific powers in the area of 
intergovernmental relations, see 2 N.N.C. Sec. 824, and has been 
specifically delegated the authority to ``[t]o assist and coordinate 
all requests for information, appearances and testimony relating 
to...federal legislation impacting the Navajo Nation.'' 2 N.N.C. 
Sec. 824(B) (emphasis added). Importantly, the IGRC must coordinate 
``all Navajo appearances and testimony before Congressional 
committees.'' Id. (emphasis added). It is essential that the Navajo 
Nation speak with one voice in its government-to-government 
relationship with the United States. Any requests for official 
testimony that represents the position of the Navajo Nation government 
by any federal body by Navajo Nation officials which are not 
coordinated through the IGRC, or other designee of the IGRC, or the 
Council are contrary to Navajo Nation law, and an affront to Navajo 
Nation sovereignty and self-determination in its own political affairs.
    The Navajo Nation has an official position and legally delegated 
representatives who are authorized to provide testimony in regard to 
the UNTF. On May 19, 2008, the IGRC passed a Resolution ``Relating to 
Intergovernmental Relations; Approving the 2008 Position Statement of 
the Navajo Nation on the Future of the UNTF.'' IGRMY-107-08 (See 
Attached). In addition to adopting an official position of the Navajo 
Nation in regard to key terms for future federal legislation affecting 
the UNTF, see Exhibit A (attached), the Resolution authorizes only the 
President of the Navajo Nation, the Speaker of the Navajo Nation, the 
Navajo Utah Commission, and their designees to advocate with the United 
States Congress in regard to the future of the UNTF. IGRMY-107-08. 
These are the only individuals and entities with authority under Navajo 
Nation law to represent the Navajo Nation and its citizens in any 
official capacity in this matter. Moreover, that advocacy must be 
consistent with the official policy and position of the Navajo Nation 
in regard to the UNTF, as outlined in its position statement.
    The official position of the Navajo Nation in this matter are the 
result of careful research, analysis and compromise between the varied 
interests of current beneficiaries, and represent what the Nation 
believes is the fairest outcome for all Navajo beneficiaries involved 
and the best means to avoid the mismanagement and misappropriation of 
trust funds that have occurred in the past.
    In addition to myself, in my capacity as the President of the 
Navajo Nation, the Speaker of the Navajo Nation Council, and the Navajo 
Utah Commission, the only other Navajo Nation entities that are 
designated to represent the Navajo Nation on this matter are the Navajo 
Nation Washington Office and the Navajo Utah Commission. The Navajo 
Nation Washington Office is an agency of the executive branch 
established by the Navajo Nation Council to function as our federal 
intergovernmental relations office. Under Navajo Nation law, the 
Washington Office is an extension of the Navajo Nation government, 
represents the Nation to the United States Congress and federal 
agencies, and reports back to the Council through the President's 
office. One of the central purposes of the Washington Office is to help 
ensure Navajo Nation sovereignty by emphasizing and maintaining a 
government-to-government relationship with the United States. In the 
matter of the UNTF, the Washington Office has the express delegated 
authority as my designee to advocate on behalf of the Navajo Nation in 
regard to the UNTF.
    Likewise, the Navajo Utah Commission is an official advocate for 
the Navajo Nation in this matter under oversight of the 
Intergovernmental Relations Committee. The Navajo Utah Commission has 
been delegated this authority because of its considerable expertise in 
the issues which are central to future management of the trust as well 
as providing local representation of the Navajo beneficiaries.
Conclusion
    Chairman Rahall, Honorable Members of the Committee, on behalf of 
the Navajo Nation, I wish to express my deep appreciation for this 
opportunity to provide testimony to the Committee on Natural Resources. 
The Navajo Nation looks forward to working with the Committee on a 
government-to-government relationship as we move forward with this 
important legislation concerning the future of the Utah Navajo Trust 
Fund.
    Thank you.
                                 ______
                                 

             2008 Position Statement of the Navajo Nation 
              on the Future of the Utah Navajo Trust Fund

History of Utah Navajo Trust Fund.
    Executive Order of May 17, 1884, ``withheld from sale and 
settlement and set apart as a reservation for Indian purposes'' land in 
the Utah Territory that lay south of the San Juan and Colorado rivers. 
This land has been historically and continuously occupied by Navajo 
people since long before the captivity of Navajos in 1864. Four years 
before Utah was awarded statehood, Executive Order of November 19, 
1892, put Navajo lands in the Utah Territory west of the 110+ parallel 
(``the Paiute Strip'') back in the public domain. Lands in the Utah 
Territory east of the 110+ parallel remained part of the Navajo 
Reservation. Executive Order of May 15, 1905, added the Aneth area in 
Utah to the Navajo Reservation. In 1908, the Department of the Interior 
withdrew the Paiute Strip from the public domain for use of the Navajo. 
In 1922, the Department of the Interior again put the Paiute Strip back 
into the public domain.
    In 1930 and 1931, the Navajo Nation Council asked the Commissioner 
of Indian Affairs to negotiate on behalf of Navajo Nation to 
permanently restore the Paiute Strip to the Navajo Reservation, based 
on the previous set aside in the Executive Order of 1884 and historic 
Navajo occupation of the area. On July 7 and 8, 1932, at its annual 
meeting in Fort Wingate, the Navajo Tribal Council gave its support to 
proposed federal legislation which would restore the Paiute Strip and 
add land between Montezuma Creek and the Colorado border to the Aneth 
area of the Reservation. This legislation was passed by the United 
States Congress in 1933, as Pub. L. No. 403, 47 Stat. 1418 (1933) 
(hereafter ``1933 Act'').
    The 1933 Act was the result of an agreement between three parties: 
the Navajo Nation, the State of Utah, and the United States Government. 
After Utah citizens voiced opposition to the proposed addition to the 
Navajo Reservation, the Commissioner of Indian Affairs negotiated on 
behalf of the Navajo Nation with a Utah committee made up of San Juan 
County representatives. Several concessions were made to the Utah 
committee in order to gain its support for the 1933 Act, including 
prohibitions on further Indian homesteads or Indian allotments in San 
Juan County, fencing of Indian allotments outside the new reservation 
boundaries, fencing of the Aneth extension's northern boundary, and 
agreement that state game laws would apply to off reservation hunting 
by Navajos.
    The 1933 Act provided that ``should oil or gas be produced in 
paying quantities,'' the State of Utah would receive 37 1/2 % of net 
oil and gas royalties derived from Navajo Tribal Leases on the newly 
added Navajo Trust Lands. In return, the State of Utah would act as 
trustee of the funds, and expend the funds ``in the tuition of Indian 
children in white schools and/or in the building of roads across [the 
newly added lands], or for the benefit of the Indians residing 
therein.'' The 1933 Act also provided that Utah could exchange state 
school trust lands inside the new Reservation boundaries for equivalent 
federal lands and that any fees or commissions for the exchange would 
be waived.
    In 1968, Congress amended the 1933 Act, redefining the purposes of 
the trust and expanding the class of beneficiaries. The amended 
legislation provided that the trust be used ``for the health, education 
and general welfare of the Navajo Indians residing in San Juan 
County.'' The 1968 Amendments also provided that trust funds be used 
for projects and facilities in San Juan County that were not of 
exclusive benefit to the designated beneficiaries provided that the 
benefits to the beneficiaries were in proportion to the amount of trust 
funds used for the projects and facilities.
    Over the course of the last 75 years, through legislation, 
executive acts and other governmental conduct, the State of Utah 
accepted its federally appointed role as trustee of the Utah Navajo 
Trust Fund (UNTF). During Utah's tenure as trustee, funds from UNTF 
have been used to create and/or acquire significant fixed assets on 
state lands. These assets include two medical buildings, a government 
services building, two housing subdivisions, and fairgrounds.
    Substantial evidence exists that Utah failed to properly administer 
Utah Navajo Trust Funds over many decades, and Utah has yet to make a 
full and complete accounting of its administration and use of trust 
funds, as required by law. Utah, as UNTF trustee, has been the 
defendant in several lawsuits. In 1991, serious allegations of 
mismanagement and misappropriation of trust funds by Utah and other 
entities using trust monies were made in a 1991 report by the State of 
Utah, Legislative Auditor General. In Pelt v. Utah, the State of Utah 
is the defendant in a class action lawsuit brought on behalf of UNTF 
beneficiaries over these issues.
    In 2007, the State of Utah announced that it wished to resign as 
trustee of UNTF. On March 17, 2008, Bills HCR4 and HB352 (``Sunset 
Act'') were signed into law. This legislation purports to cause the 
resignation of Utah from its role as federally appointed trustee of 
UNTF effective June 30, 2008. The Sunset Act provides that from March 
17 until May 5, 2008, the UNTF administrator can only commit to new 
projects capped at $100,000, and only to projects that will be 
completed by January 1, 2010. From May 5 until June 30, the UNTF 
administrator cannot commit any monies to new projects. After July 1, 
2008, all assets of the trust after liabilities are paid will be placed 
in a New Fund created by the Utah Division of Finance. The New Fund 
will be managed according to the Utah State Money Management Act. No 
disbursements will be made from this fund except to pay for maintenance 
of the fixed assets of the expired UNTF and to continue any educational 
scholarships awarded through June 30, 2010. The Sunset Act also 
provides that the State of Utah shall purchase the fixed assets of the 
Navajo Trust Fund, existing as of May 5, 2008, consistent with the 
trust obligations of the state in ``arms length'' transactions and 
providing ``fair market compensation'' to the trust. Based on 
provisions in the Sunset Act and Utah Code 63-55-104 and 63-55-263, the 
UNTF Administrator probably can continue to function until January 1, 
2010. It is expected that the UNTF will maintain a small staff to 
administer existing UNTF projects until they are completed.
    The Fiscal Year 2008 budget for UNTF is $3,879,300.00. 
Administrative costs are approximately 14.5% of the entire budget at 
$551,800.00. $650,000.00 is earmarked for chapter projects. Nearly 
$595,000.00 is budgeted for higher education, primarily scholarships. 
The remainder of the 2008 budget goes to a variety of specific 
projects, as well as providing matching grants for housing 
construction.
The Navajo Nation is an Independent Sovereign Nation.
    The Navajo Nation is an independent sovereign nation. The Navajo 
Nation has the right to self-determination, to freely determine its own 
political status and to freely pursue its economic, social and cultural 
development. In exercising its right to self-determination, the Navajo 
Nation has the right to autonomy and self-government in matters 
relating to its internal and local affairs, as well as a right to the 
ways and means for financing its autonomous functions.
    In 1933, when the Navajo Utah Trust Fund was created, the Navajo 
Nation tribal government was only 10 years old. Today, the Navajo 
Nation is the largest and most sophisticated American Indian 
government. The Navajo Nation has developed a substantial body of both 
statutory and decisional law to complement the fundamental laws of the 
Dine. The Navajo Nation has a well-developed annual comprehensive 
budgeting process for appropriation of all Navajo Nation funds which 
should be followed in utilization of all Navajo Nation generated funds, 
including the proceeds from the Utah Navajo Trust Fund.
1.  New Federal Legislation Affecting the Utah Navajo Trust Fund Should 
        Be the Result of Government to Government Negotiations Between 
        Navajo Nation, United States Government, and State of Utah and 
        Should Require Consent of Navajo Nation.
    Federal legislation amending or repealing the 1933 Act and 
designating a new trustee for the Utah Navajo Trust Fund should be the 
result of good faith government to government negotiations between the 
Navajo Nation, the State of Utah, and the United States Government. 
Consistent with the Navajo Nation's status as an independent sovereign 
nation, any federal legislation that affects royalties generated by 
Navajo Nation Trust Lands must be made with the consent of the Navajo 
Nation.
2.  Beneficiaries Should Remain ``Navajos in San Juan County'' Subject 
        to Certain Conditions.
    The beneficiaries of the Utah Navajo Trust Fund should remain 
Navajos in San Juan County, through the Navajo Nation annual budget 
process. Provided; that special consideration should be made in the 
annual budget process to use Utah Navajo Trust Fund proceeds for the 
benefit of Navajos residing within the Aneth Extension for mitigation 
of environmental impacts and other negative impacts associated with the 
development and production processes of oil and gas resources located 
within the Aneth Extension, and for development of needed 
infrastructure. Navajos living outside of Navajo Indian Country shall 
be eligible for educational assistance from Utah Navajo Trust Fund 
proceeds. Capital outlay funding and housing assistance shall not be 
provided from Utah Navajo Trust Fund proceeds for projects locating 
outside of Navajo Indian Country. Provided; that all existing and 
future health facilities funded by Utah Navajo Trust Fund proceeds and 
any other facilities funded by Utah Navajo Trust Fund proceeds located 
outside of Navajo Indian Country shall continue to be operated for the 
benefit of all Navajos.
3.  Consultation of Beneficiaries.
    Negotiations to designate a new trustee shall be in close 
consultation with the existing beneficiaries through the chapters, 
keeping the best interests of the beneficiaries in mind at all times.
4.  New Federal Legislation for Allocation of Royalties Shall Maintain 
        the Status Quo.
    The beneficiaries of the Utah Navajo Trust shall continue to 
receive the benefit of 37 1/2% of all royalties generated by oil and 
gas production from leases on Reservation lands added in 1933. 62 1/2% 
of all royalties generated by oil and gas production from leases on 
Reservation lands added in 1933 shall continue to go to the Navajo 
Nation.
5.  Disposition of Trust Assets on State Lands.
    Negotiations must address UNTF assets on state lands and provide 
either for fair market value purchase of the assets by Utah, or for 
acquisition of the state lands in question by Navajo Nation. The Sunset 
Act provides that the State of Utah Division of Facilities Construction 
and Management can purchase UNTF assets on state land. Because 
acquisition of state lands by Navajo Nation could implicate a land 
exchange involving the federal government, all three governments should 
be involved in negotiations to dispose of these assets and/or convey, 
exchange, or purchase lands. In addition, negotiations currently under 
way to exchange Utah School Trust Lands in the Aneth extension with BLM 
lands outside the reservation, pursuant to Section 2 of the 1933 Act, 
should be coordinated with the disposition of UNTF assets.
6.  Navajo Nation Would Be Best Trustee.
    As a sophisticated tribal government, the Navajo Nation has the 
resources and expertise to administer the UNTF on behalf of Utah Navajo 
beneficiaries. The UNTF is generated by royalties from leases entered 
into by the Navajo Nation on Navajo Nation Trust Lands. Trusteeship of 
these funds by the Navajo Nation on behalf of the Utah beneficiaries 
would be consistent with principles of sovereignty and self-
determination. The Navajo Nation, through management of its own trust 
funds, has proved its fiduciary capabilities. The Controller of the 
Navajo Nation is the general fiduciary of Navajo Nation funds, and 
trust funds should be invested consistent with the recommendations of 
the Investment Committee. A Trust Fund Administrator should be 
centrally located in San Juan County and trust fund administration 
should provide for local decision making in how funds are spent.
7.  State of Utah Navajo Trust Fund Administrator Should Remain in 
        Existence Until It Winds Up Its Affairs.
    The UNTF Administrator has the legal authority under Utah law to 
continue to administer existing projects until January 1, 2010. The 
UNTF Administrator should continue to administer existing projects and 
programs to prevent any gaps in existing services until an interim 
administrator is designated or a new trustee has been selected.
8.  Where Aneth Chapter Suffers Environmental Harms Disproportionate to 
        Its Receipt of Trust Funds, Special Monies Should Be Allocated 
        to Aneth Chapter to Mitigate Environmental Impacts and Develop 
        Needed Infrastructure.
    On the Aneth Extension, oil and gas development and production 
processes that generate royalties for the UNTF cause environmental and 
other negative impacts. The new terms of the trust should ensure that 
separate monies are specifically allocated to Aneth Chapter to mitigate 
the environmental impacts of oil and gas extraction on the Aneth 
Extension. Additionally, infrastructure needs at Aneth Chapter have not 
been adequately funded in the past. Future trust administration should 
provide sufficient funds to develop needed infrastructure at Aneth 
Chapter.
9.  Trust Fund Monies Should Not Be Used in Off-Reservation Projects 
        ``Proportional'' to the Benefit Received.
    Under the 1968 amendments, UNTF monies were allowed to be used in 
off reservation projects if they were allegedly ``proportional'' to 
benefits enjoyed by beneficiaries. This provision has been one of the 
causes of mismanagement and waste of trust funds. Except for 
educational endowments, no trust funds shall be used outside Navajo 
Indian Country without at least 50% matching funds provided by other 
participating entities.
10.  Funds from the Sale of Utah Navajo Trust Fund Administrative 
        Offices Should be Designated Specifically For New Trust Fund 
        Administration Facilities.
    One of the goals of the Navajo Nation is to provide for centralized 
administration of Navajo Nation service providers in the Utah portion 
of the Navajo Reservation through a Regional Navajo Nation Office 
centrally located in Montezuma Creek. At present, Navajo Nation 
services are scattered and not as efficient as they could be in a 
centralized space.
    The State of Utah generally limits its services to the county seat 
in Monticello. A Regional Navajo Nation Office should be a shared 
facility for the new UNTF Trust Administrator, Navajo Nation service 
providers, and state programs. Along with Navajo Nation and state 
funds, UNTF should provide matching funds from the sale of the current 
UNTF administrative offices to help fund the construction of a Regional 
Office Facility. A Regional Office Facility would improve coordination 
of projects involving the UNTF Trust Administrator, Navajo Nation 
service providers, and state entities.
11.  Full Accounting by State of Utah.
    The State of Utah should provide a full and complete historical 
accounting of the Utah Navajo Trust Fund before a new trustee is 
designated. A full and complete historical accounting will specify how 
all UNTF funds were used by both state and non-governmental entities 
and not merely what entities received UNTF funds and in what amounts.
12.  Settlement of Existing Lawsuits.
    The State of Utah should use its best good faith efforts to settle 
the litigation in Pelt v. Utah before a new trustee is designated.
                                 ______
                                 
    Mr. Boren. At this time, I would like to yield to Mr. 
Matheson once again.
    Mr. Matheson. Thank you. Thank you for your testimony 
today. Ms. Downing, I want to ask you if you could describe how 
the trust fund has operated, and if you could describe the 
accountability measures that were employed by the state during 
the time the state has been the trustee?
    Ms. Downing. I am not familiar with the day-to-day 
operations of the trust fund but I would be happy to provide 
that information back to the Committee.
    Mr. Matheson. OK. That would be great. Another question. 
Could you also enumerate the administrative costs associated 
with managing the fund? It appears the administrative costs 
have been nearly equal to the expenditures made for 
scholarships. I don't know if you are familiar with that issue 
or if you could get back to us with information on that?
    Ms. Downing. I will.
    Mr. Matheson. Thank you. I am glad you elaborated on the 
issue of what happens post-June 30 and the holding fund that 
will be set in place. So that holding fund will be structured 
such that you can manage the assets, including the buildings 
and the real estate, after?
    Ms. Downing. Right. It will be managed as a trust fund.
    Mr. Matheson. OK. Great. Will there be an administrative 
cost collected on that or do you know how that holding fund is 
going to address that issue?
    Ms. Downing. I don't know, but I will find out.
    Mr. Matheson. That would be great. Thank you very much. You 
said this holding fund will have some structure for decision-
making authority. Is it different than where the trust fund was 
set up now in terms of what will happen with funds or 
expenditures to maintain real estate assets? How are those 
decisions going to be made by the holding fund?
    Ms. Downing. Those decisions will be made through a 
management team set up in the Utah Department of Administrative 
Services that includes the Director of Finance, which has been 
on the Board of Trustees for the Navajo Trust Fund, so he is 
very familiar with the assets.
    Mr. Matheson. OK. That is helpful. President Shirley, first 
of all, welcome. It is always good to see you. You represent 
all of Navajo Nation. I have the honor of representing part of 
the Navajo Nation, which happens to be the Utah Navajos which 
are central to this discussion today.
    You state in your submitted testimony in the context of 
your desire that the Navajo Nation be the trustee. How do you 
ensure that the 37 and a half percent goes back to the Utah 
residents of the Navajo Nation? If we shift this over where the 
Navajo Nation is the trustee, how do we have certainty that the 
37 and a half percent goes back to the Utah Navajo?
    Mr. Shirley. For one thing, I think the way the language is 
crafted, you know, going toward the designation of a new 
trustee, if the U.S. Government is agreeable to making the 
Navajo Nation trustee for these funds, I think the language 
would be crafted to assure that. Then, I think we have been 
working with these funds all this time, and I don't believe any 
time we didn't do right by the Navajos living in the State of 
Utah.
    So, you know, I feel very sure, you know, because of our 
governmental structure, the way it operates, that it is 
guaranteed.
    Mr. Matheson. With the nation's experience in administering 
a number of funds, how do you set up your funds or what have 
you done to ensure accountability within your trust funds? Are 
you familiar with or could you give us some insight into how 
you would approach that issue of accountability?
    Mr. Shirley. Well, we have our Budget and Finance Committee 
in place. It is meeting on a regular basis, at the very least 
two times a month and oftentimes more, to zero in on how the 
Navajo Nation funds are being expended, how it is being 
received and how it is being divvied out at the different 
programs within the governmental structure, as well as the 
chapters that are out there. In this case, it would be the Utah 
Navajos.
    Then we have, also, our Auditor General in place. If there 
is any complaints, let us say in this case coming from the 
Navajos living in the State of Utah, the Auditor General will 
get out there and do an audit. If there are any misgivings 
there or if there is any misuse of funds, you know, that is 
zeroed in on, you know, just immediately.
    That is how corrections are made, and sometimes sanctions 
come into play. You know, before the sanctions were lifted. We 
have the structure in place, Congressman, to really zero in on 
accounting for all of the funds that are coming in to Navajo 
and being expended on behalf of the constituents.
    Mr. Matheson. That is great. And this Budget and Finance 
Committee, how is that structured? How many people are on it? 
They get appointed or how does that work?
    Mr. Shirley. I believe that it is an eight-member arm of 
the Navajo Nation Council at the beginning of a new 
administration. The committee members are appointed by the 
Speaker of the Navajo Nation Council. They come from all 
agencies of Navajo land, you know, so we are trying to make 
sure that everybody from all the corners of Navajo land are 
represented on that committee.
    They have rules and regulations by which they operate and 
are answerable to the Navajo Nation Council. Of course, the 
Navajo Nation Council is the governing body of the Navajo 
Nation, so the committee is answerable to that governing body.
    Mr. Matheson. Just one more question I wanted to ask you. 
Would you be open to considering other entities that could 
serve on a board of trustees?
    Mr. Shirley. Come by again, Congressman? I am sorry.
    Mr. Matheson. I know you state in your testimony that the 
Navajo Nation would be the one trustee, but would you consider 
other entities that could serve on a board of trustees? It is 
kind of an open-ended question.
    Mr. Shirley. Certainly, you had also heard me to say, 
Congressman, that we would like to be at the table. I think 
that is one of the discussion points. I do have the Navajo 
Nation position, you know, that says we would like to be 
designated as a trustee. How far we want to go with it as far 
as going outside of that, I am not exactly sure.
    I think, like I said, we would like to be at the table as 
these discussions move forward, you know? Certainly, I would 
like to hear your ideas about it and some of the ideas that 
might be constituted to come forward from the Navajos living in 
the State of Utah.
    Mr. Matheson. Well, I appreciate that. Mr. Chairman, I will 
yield back, but I do just want to acknowledge again, President 
Shirley has been a good partner to work with my whole time I 
have been in Congress and I appreciate him taking the time to 
come here again today. I yield back.
    Mr. Shirley. Thank you, sir.
    Mr. Boren. [Presiding.] I thank the gentleman from Utah and 
recognize Mr. Kildee from Michigan.
    Mr. Kildee. Thank you very much, Mr. Chairman. Mr. 
President, Ya'at'eeh.
    Mr. Shirley. Ya'at'eeh.
    Mr. Kildee. It is an honor, sir. I had the privilege many 
years ago of being in Window Rock and being asked to formally 
address the Tribal Council.
    Mr. Shirley. You are always welcome.
    Mr. Kildee. I felt very honored by that. Let me ask you 
this. I asked the same question of Mr. Swimmer. Is there one 
method, or process, or solution that is more sensitive to your 
sovereignty than another?
    Mr. Shirley. I would say yes to that, and qualify it by 
saying that we consider ourselves a sovereign nation, 
Congressman Kildee, and as such, we are very sensitive to go 
outside and try to bring other people in to try to mind our 
affairs. If you could work with us and keep it within the 
house, so to speak, you know, within the Navajo Nation, that is 
my position and that is my testimony.
    Mr. Kildee. You know, it is interesting. I asked that, and 
I came in here late so I didn't get the first part of this, but 
the trust responsibility of the Federal government came into 
being to a great extent, maybe primarily, to protect really the 
various Indian sovereign nations from state interference.
    You know what happened to the Eastern Band of Cherokees, 
right, or the Cherokees who were pushed to Oklahoma and places 
in between. My bottom line very often, every step I take is to 
make sure we don't interfere, or diminish, or demean tribal 
sovereignty. The Navajo Nation has really firmly held onto its 
sovereignty. A good example for others.
    I have helped some Indian nations, tribes, in my state get 
their sovereignty reaffirmed, not granted. It is a retained 
sovereignty, not a granted sovereignty. The U.S. Constitution 
doesn't grant that sovereignty to you; it recognizes that 
sovereignty, so it is a retained sovereignty.
    So I am always very careful that we don't sometimes 
inadvertently do anything that might diminish that sovereignty. 
I always look at that as the bottom line on this. I appreciate 
very much your testimony and look forward to coming back and 
see you and your Tribal Council again out there as I did 
several years ago. Thank you, Mr. President.
    Mr. Shirley. You are always welcome, Congressman.
    Mr. Kildee. Thank you. Thank you.
    Mr. Boren. Thank you, Mr. Kildee, the great champion of 
Indian Country. I want to yield to Mr. Bishop if he has any 
questions for our panel.
    Mr. Bishop. I do, especially for Ms. Downing. 
Unfortunately, those are personal. I can't actually do them in 
here. We go way back to the State of Utah when you were working 
for the Legislature. To be honest, I don't have any additional 
questions for this panel. I am going to look forward to reading 
the testimony.
    This is an issue that came up when I was still in the 
Legislature. Well, that is well before I was. It goes back to 
the 1930s as an issue. We dealt with it when I was in the Utah 
Legislature. I am looking forward to seeing if we can come up 
with a final solution that is profitable for everybody right 
now, so I will be very much interested in looking to what the 
testimony actually is.
    I appreciate that the Congressman, whose area this is, is 
here and was already asking questions of this panel. Thank you.
    Mr. Boren. Thank you, Mr. Bishop. I have a few questions 
before we go to the next panel. For Ms. Downing, you mentioned 
something about the list of assets that you were going to 
provide at the next meeting, the state meeting. Could you 
provide the Committee with a copy of the list of those assets?
    Ms. Downing. I will.
    Mr. Boren. OK. Great.
    Ms. Downing. Do you want the liabilities as well? Assets 
and liabilities?
    Mr. Boren. Yes, that would be great. Second question I have 
got, the Committee has received various options for the future 
administration of the trust fund. Several options have proposed 
that the State of Utah or Navajo Nation pay future 
administrative costs. Is the State of Utah willing to pay the 
administrative costs for the future administration of the trust 
fund?
    Ms. Downing. I can't speak on behalf of the Governor or the 
legislative leadership, but I can ask that question and get the 
information back to you.
    Mr. Boren. Could you provide the Committee with that in 
writing?
    Ms. Downing. I will.
    Mr. Boren. Thank you. And then a final question for Ms. 
Downing is do you have any suggestions or actions that the 
Committee should take to ensure that the views of the 
beneficiaries are considered in drafting this Federal 
legislation?
    Ms. Downing. I agree with President Shirley that the Navajo 
Nation should be at the table and that I am convinced that he 
will include the San Juan County Navajo, the Aneth Extension 
Navajos, in that discussion.
    I think it is important for them to be able, I mean that is 
one of the things that the Governor and the legislative 
leadership have looked at is that we feel that the Navajo are 
better equipped to decide who is a better trustee to manage the 
funds the way they would like them to be managed and to receive 
the benefits the way they would like to receive them.
    So I think it is important for this Committee and Congress 
to keep in mind what their interests would be.
    Mr. Boren. Thank you very much for your testimony.
    Ms. Downing. Thank you.
    Mr. Boren. President Shirley, actually, you know, coming 
from Oklahoma, we are a state rich in tribal history and also 
an energy state, and one of the questions I have is about oil 
and gas. You know, so many of these fields that we have in the 
United States are maturing and they are actually depleting in 
their resources.
    Can you tell us a little bit about the revenue stream that 
is coming from these wells, and is this a declining source of 
revenue? For instance, for Congressman Matheson's constituents, 
do you see this as a dwindling resource, or are there new wells 
to be drilled, or what do you know about the field that we are 
talking about?
    Mr. Shirley. Thank you, Chairman. Certainly, they are 
maturing, they are declining. Right now with the cost of oil, 
actually, we are doing good getting revenues, you know, from 
some of the oil reserves that we have still underground. 
Otherwise, in the long term, they are a dwindling resource and 
I think that is the reason why it is very important how these 
trust assets are managed.
    They need to be invested and made to grow so that after the 
depletion, and after the oil and the gas is all gone we would 
like to believe that there is still going to be funds to help 
out the Navajos living in the State of Utah in San Juan County. 
The oil reserves are depleting, yes. Not very much more to go.
    Mr. Boren. Thank you, President Shirley. One more question. 
Currently, the beneficiaries have the option of suing the 
trustee in Federal Court for accountings and mismanagement. Mr. 
Swimmer, we talked a little bit about liability earlier.
    If the Navajo Nation is appointed as trustee of the Utah 
Navajo Trust Fund, is the Navajo Nation willing to waive its 
sovereign immunity in Federal Court so that the beneficiaries 
can continue with the same remedy option? You might want to 
think about that and not necessarily answer today but what are 
your thoughts there?
    Mr. Shirley. I was just going to say that I need to get 
back to our experts and our leaders of Navajo to talk about 
that. You know, waiving sovereign immunity is something we 
don't want to do. It is a humongous discussion that we take on 
when we do talk about that, so I need to get back to the 
leadership to talk just about that.
    Mr. Boren. Well, thank you all very much for your 
testimony. I think we are going to bring on the third panel.
    Mr. Shirley. Thank you.
    Ms. Downing. Thank you.
    Mr. Boren. OK. I want to thank our third panel for coming. 
I want to introduce The Honorable Davis--and correct me if I am 
wrong--Filfred, Council Delegate, Mexican Water Chapter of the 
Teec Nos Pos in Arizona. Is that correct pronunciation?
    Mr. Filfred. The last name is correct but the 
representation is Aneth Red Mesa and the Mexican Water, not 
Teec Nos Pos.
    Mr. Boren. OK. Thank you. And then Mr. Clarence Rockwell, 
Executive Director, Navajo Utah Commission, Red Mesa Chapter, 
Utah; and then Mr. Mark--help me with this--is it Maryboy? 
Former County Commissioner, former Navajo Nation Council 
Member, Montezuma Creek, Utah. Your testimonies have been 
received by the Committee and will be placed in the record in 
its entirety.
    I ask that you summarize your statement to us now. With 
that, I turn to The Honorable Mr. Davis Filfred.

     STATEMENT OF THE HONORABLE DAVIS FILFRED, NAVAJO UTAH 
COMMISSION CHAIR, AND ANETH, RED MESA, & MEXICAN WATER CHAPTERS 
                        COUNCIL DELEGATE

    Mr. Filfred. Mr. Co-Chair, members of the Committee, 
Congressman Matheson, Congressman Bishop and the staff, good 
morning. Again, my name is Davis Filfred. Currently, I am the 
Navajo Utah Commission Chair, also Council Delegate from Aneth 
Red Mesa and Mexican Water. I have with me the Navajo Nation 
Intergovernmental Relations Resolution; also, the position 
statement that was put together by the Navajo Utah Commission.
    My comments are very brief. The beneficiary are concerned 
about the Navajo Nation being appointed as the trustee. They 
are afraid that the Navajo Nation might change the allocation, 
change the beneficiary or divert trust money elsewhere. It is 
therefore important that this is consistent with our position 
statement and that the Federal legislation maintains the status 
quo.
    Federal legislation should ensure that the beneficiary 
remain the same, that the 37 and a half percent of the 
royalties continue to go to the beneficiaries, and that the 
beneficiaries have local decision making and control over 
disbursement. It is also important to set aside monies in order 
to grow the trust fund.
    My constituents are very concerned that they are suffering 
higher environmental costs, and we breathe the polluted air and 
treat the contaminated water and the EPA are not doing anything 
about it. My constituents want to receive the 100 percent of 
the royalty in order to deal with these concerns.
    While this may not be the right solution, special money 
should be specially allocated to the Aneth to mitigate 
environmental impact and to develop the needed infrastructures 
in the Aneth Chapter. Although it is important to minimize 
disruption of the service happening under the Utah sunset, we 
need to make sure that progress is thoughtful and orderly and 
that the best interests of the beneficiaries are always the 
priority.
    We come here to seek your full support in the position 
statement that came from the Navajo Utah Commission. I thank 
you for the opportunity. Further, and the question that you 
posed earlier to the President of the Navajo Nation, the oil is 
depleting. We have about a good 10 year life in it. In the 
Aneth area, there is no more drilling. The drilling that is 
there is all we have left. Again, thank you.
    Mr. Boren. Thank you, Mr. Filfred.
    [The prepared statement of Mr. Filfred follows:]

    Statement of The Honorable Davis Filfred, Navajo Nation Council

    Good morning Honorable Chairman Rahall, honorable members of the 
committee. I am Davis Filfred, Navajo Utah Commission Chair, and Aneth, 
Red Mesa, & Mexican Water Chapters Council Delegate. I have a Navajo 
Nation Intergovernmental Relations Committee Resolution and Position 
Statement.
    The beneficiaries are concerned about Navajo Nation being appointed 
as a trustee. They are afraid that Navajo Nation might change the 
allocation, change the beneficiaries, or divert trust money elsewhere. 
It is therefore important, and this is consistent with our position 
statement that federal legislation maintains the status quo. Federal 
legislation should ensure that beneficiaries remain the same and that 
37 1/2 percent of royalties continue to go to the beneficiaries and 
that beneficiaries have local decision making and control over 
disbursement. It is also important to set aside monies in order to grow 
the trust fund.
    My constituents are very concerned they are suffering higher 
environmental costs and we breathe the polluted air and drink the 
contaminated water and the EPA are not doing anything about it. My 
constituents want to receive 100% of the royalty in order to deal with 
these concerns. While this may not be the right solution, special 
monies should be specifically allocated to Aneth to mitigate 
environmental impacts and to develop needed infrastructure for Aneth 
Chapter.
    Although it is important to minimize disruption of services 
happening now under the Utah Sunset Act, we need to make sure that this 
process is thoughtful and orderly and that the best interest of the 
beneficiaries are always the priority. Thank you.
                                 ______
                                 
    Mr. Boren. Mr. Rockwell recognized.

STATEMENT OF CLARENCE ROCKWELL, EXECUTIVE DIRECTOR, NAVAJO UTAH 
      COMMISSION, RED MESA CHAPTER, MONTEZUMA CREEK, UTAH

    Mr. Rockwell. Good morning, members, and presiding Chair, 
Congressman Matheson, Congressman Bishop. My name is Clarence 
Rockwell, and I am the Executive Director for the Navajo Utah 
Commission. I am also a resident of the Utah portion of the 
Navajo Nation. I would like to express my appreciation for this 
opportunity to appear before the Committee on behalf of my 
people.
    The Navajo Utah Commission was created by the Navajo Nation 
Council and Intergovernment Relations Committee in 1992. The 
purpose is to maintain and develop efficient governmental 
services to the Utah area of our reservation. Our intent here 
today is to present our position statement. Our IGR resolution 
I mentioned delegated certain people to advocate on behalf of 
our people pertaining to this important matter.
    The Navajo Nation President, the Speaker of the Navajo 
Nation Council and the Navajo Utah Commission was given the 
authorization to represent the interests of the beneficiaries. 
The Navajo Utah Commission's position statement does support 
the selection of the Navajo Nation as the trustee for the trust 
fund for several reasons.
    The main reason is probably the congressional policy to 
respect sovereignty and the right to self-determination of 
Indian tribes. Second, we know that the Utah Navajo Trust Fund 
is capitalized by royalties from Navajo Nation oil and gas 
leases on Navajo Nation trust lands. The 1933 Act was created 
by Congress when the Navajo Nation government was only 10 years 
old.
    Presently, the Nation has grown in sophistication and we 
have a substantial body of statutory and decisional law, as 
well as customary and fundamental laws. The Navajo Nation has 
grown its own trust fund and has the expertise, guidance of the 
Navajo Nation's Investment Committee, and also financial 
consultants.
    As a member of the beneficiary, we always support the point 
that the funds should be invested wisely, a percentage set 
aside for growth and used by future generations. They are 
reverent to resources producing. The royalties are depleting, 
as mentioned.
    As far as the Navajo Nation serving as trustee, the Navajo 
Nation has a well-developed annual comprehensive budgeting 
process for appropriation of Navajo Nation funds, and we would 
like to see the trust fund administered in that manner. Another 
point is the Navajo Nation is already serving as the fiscal 
agent for monies that we obtain from Federal sources and State 
of Utah allocations.
    As far as the concern from the Utah chapter areas, there is 
a concern that local control be maintained, that the seven Utah 
chapters still receive the royalties as it currently is 
established. We think this is accomplished by working with 
chapters directly and the beneficiaries that they serve.
    One avenue we would like to look at is establishing a 
central governmental office or a regional governmental office 
in the Utah area to serve that benefit. We would also like to 
give some special consideration for the Aneth Extension area 
because it has seen environmental impact and there is issues 
related to that.
    We would like to see a separate allocation of monies to 
mitigate the issues in that region. Finally, the issue with the 
current litigation in Utah. We would like to possibly have the 
State of Utah encouraged to address settlement at Cobell v. 
Utah lawsuit. We recognize there is issues pertaining to 
Federalism, but we do like to see some sort of settlement be 
considered.
    As far as appropriate consultation, as I mentioned, the 
Navajo Nation has given us the authority, the Navajo Utah 
Commission, to help assist in advocating on this important 
issue. I tried to highlight some of the terms, but we have 
submitted the actual position statement for you to review. I 
hope you do that.
    So with that, I would like to close, and like to thank the 
Chair and the honorable members of this Committee in hearing 
our concerns. Thank you.
    Mr. Boren. Thank you, Mr. Rockwell.
    [The prepared statement of Mr. Rockwell follows:]

          Statement of Clarence Rockwell, Executive Director, 
                         Utah Navajo Commission

    Chairman Rahall, Honorable Members of the Committee,
    My name is Clarence Rockwell, and I am the Executive Director of 
the Navajo Utah Commission, and a resident of the Aneth area of the 
Utah portion of the Navajo Nation in San Juan County, Utah. I am 
appearing here today in my official capacity, but I am also a 
beneficiary of the Utah Navajo Trust Fund. I am honored to have this 
opportunity to appear before the Committee on Natural Resources on 
behalf of the Navajo Utah Commission, the Navajo Nation and its 
citizens, and especially on behalf of the Utah Navajos, including 
myself, who are beneficiaries of the Utah Navajo Trust Fund.
Navajo Utah Commission
    The Navajo Utah Commission is an arm of the legislative branch of 
the Navajo Nation Government and was created by the Navajo Nation 
Intergovernmental Relations Committee to give a voice to the Utah 
Chapters in the administration of local Navajo Nation programs. 
Specifically, the Commission is ``to provide policy and administrative 
guidance to the development, implementation and operation of the Navajo 
Utah Office of the Navajo Nation,'' and ``to develop and maintain 
efficient governmental services to the Navajo people residing in the 
Utah portion of the Navajo Nation.'' The Navajo Utah Commission is made 
up of eight Commissioners, either Utah Chapter delegates or other Utah 
Chapter officials, who have been democratically elected and 
subsequently appointed to the Navajo Utah Commission by the Utah 
Chapters. The Navajo Utah Commission has an Executive Director and 
administrative staff who work out of an office in San Juan County, 
Utah.
    The Navajo Nation seeks to ensure that our government speaks with a 
single voice in its relations with the United States Congress on this 
important issue. To that end, on May 19, 2008, the Intergovernmental 
Relations Committee of the Navajo Nation Council passed a Resolution 
``Relating to Intergovernmental Relations; Approving the 2008 Position 
Statement of the Navajo Nation on the Future of the Utah Navajo Trust 
Fund.'' IGRMY-107-08. By this resolution, the Navajo Nation adopted an 
official position of the Navajo Nation in regard to key terms for 
future federal legislation affecting the Utah Navajo Trust Fund. See 
Exhibit A (attached). This resolution also delegated specific authority 
to the Navajo Utah Commission, the Speaker of the Council and the 
President, to advocate with the federal government and the State of 
Utah in regard to the future of the Utah Navajo Trust Fund, in 
accordance with the terms of the official Navajo Nation position 
statement. The Navajo Utah Commission was integrally involved in 
formulating the terms of the official Navajo Nation position statement. 
The Commission firmly believes these terms represent the best and 
fairest outcome for all Navajo beneficiaries involved and the best 
means to avoid mismanagement and misappropriation of trust funds, while 
recognizing Navajo Nation sovereignty over its lands, resources and 
citizens.
    Since the Utah Navajo Trust Fund was reorganized in 1992, the 
Navajo Utah Commission has had a successful working relationship with 
the Utah Navajo Trust Fund Administration, the Dineh Committee advisory 
board and the Board of Trustees. The Navajo Utah Commission has 
considerable expertise in grant acquisition and project management, and 
has partnered with the Utah Navajo Trust Fund Administration and its 
boards, other State of Utah agencies, numerous federal agencies and 
other Navajo Nation entities in providing community development 
facilities, housing, and other local services to Utah Navajos. In 
addition to Navajo Nation funds, the Navajo Utah Commission has 
independently sought out and secured upwards of $18 million dollars of 
matching federal and state funds to be used for projects in conjunction 
with Navajo Trust Fund disbursements.
Navajo Nation as Trustee
    The Navajo Utah Commission supports the Navajo Nation as the new 
trustee of the Utah Navajo Trust Fund. The Navajo Nation manages and 
has successfully grown its own trust fund monies through the guidance 
of its Investment Committee. It is imperative that the Utah Navajo 
Trust Fund be grown and managed successfully not only to pay for needed 
expenditures in the short term, but for the benefit of future 
generations of Navajos in San Juan County as well. The trust must be 
administered so as to survive in perpetuity, and trust fund monies must 
continue to be available to San Juan County Navajos long after Navajo 
Nation oil and gas resources in Utah have been depleted. There is 
substantial evidence of mismanagement and misappropriation of trust 
funds by past entities entrusted with Utah Navajo Trust Fund monies. 
The need for accountability by the new trustee is essential; other 
entities or individuals who have been involved in mismanagement and 
misappropriation of these and other trust monies in the past must not 
be involved in future investment and administration of the Utah Navajo 
Trust Fund.
    Additionally, the Utah Navajo Trust Fund is capitalized from 
royalties paid from Navajo Nation oil and gas leases on Navajo Nation 
Trust Lands. The Navajo Nation has a well-developed annual 
comprehensive budgeting process for appropriation of all Navajo Nation 
funds, which for principles of sovereignty and self-determination 
should be followed in utilization of proceeds from the Utah Navajo 
Trust Fund. For years, the Navajo Nation has been the fiscal agent for 
the pass-through of not only Navajo Nation funds to the Navajo Utah 
Commission, but also for state and federal grant funds used in 
conjunction with Utah Navajo Trust Fund monies in local community 
development projects in Utah. The Navajo Nation has proved its 
fiduciary capabilities and should be the new trustee.
Local Control and Decision Making
    The Navajo Utah Commission is also keenly aware of the importance 
of local control and decision making in the disbursement of trust fund 
monies. How this will be best accommodated should be worked out in 
close consultation with the beneficiaries through the Chapters. One of 
the goals of the Navajo Nation is to provide for centralized 
administration of Navajo Nation service providers in the Utah portion 
of the Navajo Reservation through a Regional Navajo Nation Office 
centrally located in Montezuma Creek. The Navajo Nation and Navajo Utah 
Commission envision a Regional Navajo Nation Office that will be a 
shared facility for the new Trust Administrator, Navajo Nation service 
providers, and state programs. A Regional Office facility would improve 
coordination of projects involving these entities, and provide greater 
access and participation by local citizens.
Special Considerations for the Aneth Extension
    The Navajo Utah Commission and the Navajo Nation believe that 
special consideration for the Aneth Extension is crucial where oil and 
gas development and production processes that generate royalties for 
the trust fund cause environmental and other negative impacts. Under 
the new terms of the trust, separate monies should be specifically 
allocated to Aneth Chapter to mitigate the environmental impacts of oil 
and gas extraction on the Aneth Extension, and to meet its unfunded 
infrastructure needs.
Utah Concerns
    The Navajo Utah Commission and the Navajo Nation are aware of 
federalism concerns as we move forward in replacing Utah as trustee for 
the Utah Navajo Trust Fund. However, the Utah Navajo Trust Fund was the 
result of an agreement between three parties, the Navajo Nation, the 
federal government, and the State of Utah. Utah must be involved in 
this process as we move forward in relieving Utah of its fiduciary 
responsibilities. The Navajo Nation and the Navajo Utah Commission hope 
that this process will encourage a full accounting of the trust by the 
State of Utah and lead to a fair and appropriate settlement of 
unresolved litigation. Incidentally, the Navajo Nation, the State of 
Utah, and various agencies of the federal government have recently 
begun negotiations to exchange school trust lands in the Aneth 
Extension for other federal lands. This exchange is taking place under 
authority of the 1933 Act that created the Utah Navajo Trust Fund. This 
highlights the government to government relationships that underlie 
this federal legislation, and the need for government to government 
consultations in resolving the new trust terms.
Appropriate Consultation
    In closing, the Navajo Utah Commission would like to emphasize that 
the Navajo Nation has an official position and legally delegated 
representatives who are authorized to provide testimony to this 
Committee on behalf of the Nation and its citizens, and to advocate on 
behalf of the Nation for the terms of new federal legislation in regard 
to the Utah Navajo Trust Fund. As an official representative of the 
Navajo Nation appearing before you today, I have highlighted many of 
the terms that the Navajo Nation believes are critical components of 
new federal legislation in regard to the Utah Navajo Trust Fund. 
However, I also encourage The Honorable Chairman and Honorable Members 
of this Committee to read the official 2008 Position Statement of the 
Navajo Nation on the Future of the Utah Navajo Trust Fund, attached to 
this testimony as Exhibit A. The position statement provides an 
historical backdrop to these issues, as well as fleshing out further 
details and other terms that the Navajo Nation believes are vital for 
our governments to move forward with fair and effective legislation.
    Chairman Rahall and Honorable Members of the Committee, on behalf 
of the Navajo Utah Commission, the Navajo Nation and its citizens, and 
myself as a trust beneficiary, I express my deep appreciation to the 
Committee for this opportunity to provide testimony today. Through 
coordination with the Navajo Nation Washington Office, the Navajo Utah 
Commission looks forward to working with the Committee on Natural 
Resources in a government to government relationship as we move forward 
with this important legislation concerning the future of the Utah 
Navajo Trust Fund.
    Thank you.
    [NOTE: The 2008 Position Statement of the Navajo Nation on the 
Future of the Utah Navajo Trust Fund can be found on page 21.]
                                 ______
                                 
    Mr. Boren. Mr. Maryboy?

 STATEMENT OF MARK MARYBOY, FORMER COUNTY COMMISSIONER, FORMER 
      NAVAJO NATION COUNCIL MEMBER, MONTEZUMA CREEK, UTAH

    Mr. Maryboy. Good morning, Mr. Chairman and members of the 
Committee. As stated in my testimony, I am Mark Maryboy. I am 
from Montezuma Creek. I served as the County Commissioner from 
the State of Utah for 16 years, and I also served on the Navajo 
Nation Council. During my tenure on the Navajo Nation Council, 
I also served as the Chairman of the Navajo Nation Budget and 
Finance Committee and also the Transportation and Community 
Development Committee.
    Today, I am here with a colleague of mine, Mr. Phil Lyman, 
and also my brother, Kenneth Maryboy, who is now the County 
Commissioner and the Navajo Nation Council. I retired from the 
public office as of last year after serving 32 years. 
Gentlemen, my position is somewhat different from the statement 
made by President Shirley and also position made by Mr. 
Rockwell, with all due respect for the gentlemen.
    The reason why I made the statement is because the Utah 
Navajos are somewhat very unique and different from the rest of 
the Navajos on the Navajo Reservation. The reason why I say 
that is the Utah Navajos live in a ``no man's land'' where they 
sometimes don't get the support that they need from the Navajo 
Nation and the State of Utah.
    For that reason, I believe that the Utah Navajos are the 
poorest Navajo tribe on the Navajo Reservation. They do have 
oil and gas. They live in the quaint of the Navajo Nation. They 
have oil wells. Million and millions of dollars have come out 
of the Aneth Extension, but today, a lot of those Navajos in 
Utah still don't have running water, electricity in their 
homes.
    For that reason, I have a proposal, a separate 
recommendation, from the President. That would be to have a 
private nonprofit organization be a recipient of the oil 
royalty that is coming out of the Aneth Extension. That 
particular organization was called Utah Navajo Development 
Council.
    Due to mismanagement and some of the problems, it is an 
organization that no longer handles any of the trust fund. 
Recently, I have been working on that organization with Mr. 
Lyman, and we have reorganized the organization. We believe 
that this particular organization would be in a situation to 
handle the funds and to effectively serve the needs of the Utah 
Navajos.
    It certainly has the backing and the relationship of 
various funding institutions to provide effective services. 
That would be my recommendation to you this morning. Thank you 
very much.
    Mr. Boren. Thank you for your testimony.
    [The prepared statement of Mr. Maryboy follows:]

        Statement of Mark Maryboy, Former County Commissioner, 
                  Former Navajo Nation Council Member

    Mr. Chairman and Members of the Committee, it is my pleasure to 
submit testimony to your committee today and I hope that my testimony 
will help the committee in making some important decisions related to 
the Utah Navajo Trust Fund, namely selecting a suitable new trustee.
Introduction
    My name is Mark Maryboy, I'm from Montezuma Creek, Utah, I was born 
and raised in Bluff, Utah and a resident of the area all my life. I 
graduated from San Juan High School in Blanding, Utah and graduated 
with a degree from University of Utah.
    I was the first Native American elected to a public office as a 
County Commissioner in the State of Utah, where I served as for 16 
years and retired in 2002, I also served as Navajo Nation Council for 
16 years and retired in 2007. During my tenure with the Navajo Nation 
Council, I served as the Chairman of the Budget and Finance Committee 
and also served as Chairman of Transportation and Community Development 
Committee.
    I'm here with Phil Lyman a friend and colleague and an agent during 
this presentation; I'm also accompanied by my brother Kenneth Maryboy 
who is now the San Juan County, Utah County Commissioner and also a 
member of the Navajo Nation Council.
    Congress, in the Utah Navajo Trust Fund Administration and Self-
determination act of 2008, emphasized the right of the Utah Navajo to 
self-determination and self-governance.
    Self-determination and self-governance are the central guiding 
doctrines of the act, and are vital to the success of any program 
intended to meet the objectives set forth by Congress and by the 
Supreme Court.
    What are the objectives?--Quoting the Supreme Court--``to provide 
for the health, education, and general welfare of the Navajo Indians 
residing in San Juan County.''
    When the act was created in 1933, Congress mandated the percentage 
of royalties that would be held in trust and the purposes for which 
those funds would be expended. At the time there were no known oil or 
gas resources on the ``Aneth Extension'' and so there was no trust fund 
to worry about.
    The later discovery of Oil should have been a tremendous stoke of 
good fortune for Utah Navajos. And, in fact to some extent, it was. 
However, as is often the case, conflicts arose. Personal agendas got in 
the way. Programs designed to provide valuable and needed services were 
poorly run. Mismanagement was a common allegation. What should have 
been a source of hope for the intended beneficiaries of the fund, 
namely the Navajos living in San Juan County, became a source of 
frustration.
Utah Navajo Development Council:
    Much of the controversy that surrounds UNDC was not created solely 
by UNDC. The fiduciary duty that the state had to the beneficiaries was 
being subrogated, at least in part, to UNDC. The State argues that UNDC 
was an agent of the beneficiaries. The beneficiaries argue that UNDC 
was an agent of the state. While money was being poured into programs 
administered by UNDC, neither the state nor the beneficiaries were 
taking responsibility for the management of UNDC. Lacking were the 
internal controls that should have been in place to help the management 
of UNDC to withstand the onslaught of unqualified and self serving 
administrators and key employees that began to have free reign. Those 
close to UNDC could see the collapse coming long before it actually 
occurred, yet the state could not change the management without the 
vote of the chapters and the chapters lacked the ability to act quickly 
and decisively to correct the problem.
    The solution now is not to divide the fiduciary roles of the 
Trustee but to identify a Trustee that can be accountable to all 
parties concerned. This trustee needs the support of the State, the 
County, the Tribe, the beneficiaries. It needs to be empowered with 
control in order for it to be fully accountable. The Trustee 
organization needs the tools to succeed. It needs financial 
institutions and money managers that are willing to advise and oversee 
investments. It needs the State of Utah with its resources to take a 
vested interest in its activities; after all the beneficiaries of the 
trust are Utah citizens. It needs the blessing and support of the 
Navajo Nation Administration. It needs to allow the beneficiaries to 
have a voice. The Chapters must recognize the trust as a vital asset 
and take a vested interest in selecting quality board members who will 
cooperate and put personal agendas aside for the sake of the greater 
community.
    In the early 1990s, UNDC was stripped of its funding. Since then, 
it has struggled to maintain a few programs. Currently UNDC is a shadow 
of what it was in the 70's and 80's. It owns some important real estate 
in Monument Valley. It runs a Tribal education program which is small 
but vital to the community of Montezuma Creek. Quite recently the board 
had contemplated winding down UNDC's affairs and dissolving the 
corporation once and for all.
    It was at this time that Mr. Phil Lyman Contacted me, and expressed 
his interest in restructuring UNDC with a fresh board of directors and 
a with proper accounting controls to set the organization back on firm 
footing.
    Mr. Lyman is the owner of a local CPA firm. He has had some 
involvement with UNDC over the last 12 years or so and wished to see 
UNDC resume a few of the programs that had fallen by the wayside during 
that time. He and I both agreed that we only wanted to be involved with 
UNDC if the entity was completely restructured.
    We wanted to be a part of an organization that was designed to 
succeed, not designed to fail. With my past leadership experience and 
education, and Mr. Lyman's past CFO experience and education, we 
determined to move forward. I contacted several of the Utah Navajo 
Chapters to see if there was an interest in reorganizing UNDC. The 
sentiments were overwhelmingly in favor of re-creating UNDC to be an 
organization that could truly ``serve'' the people.
    Several of the Chapters have put forth the name of their candidates 
for the Board. These candidates are young, educated people who are 
dedicated to their people. They have learned from the mistakes of the 
previous generation. They are willing to be involved and want to make a 
difference.
    So now we have a UNDC with roots in the past and a vision for the 
future. UNDC is the oldest existing Navajo corporation in Utah. 
Restoring UNDC means more than just restructuring an organization. It 
means keeping old promises. It means reclaiming lost hope. It sends the 
message that a new generation can pick up the plow and continue the 
work of their fathers.
    In light of the changes that are currently being made with the Utah 
Navajo Trust Fund, UNDC seems poised to take on a role much greater 
than we anticipated. UNDC is not without significant supporters and 
backing. Key members of the banking community have stood by UNDC 
through the ups and downs and have expressed confidence in the new 
organization. They have expressed an interest in and a commitment to 
working with UNDC in whatever capacity they can to help UNDC succeed. 
We have contacted several key organizations that have provided funding 
for past programs. With the changes we are making they are thrilled to 
re-establish relations with us.
    With oil at its current price levels and with the Aneth Oil fields 
at a high level of production, the Utah Navajo Trust Funds should be 
growing. The corpus of the trust fund should be conservatively 
invested. We have relationships with several institutional money 
managers. All investments decisions will be made with utmost care and 
prudence.
    If this fund is managed properly and with frugality, program 
spending can be increased, management costs will be reduced, and the 
corpus of the fund will still grow. Using only the investment income of 
the fund, we hope to be able to match money from other grants to 
increase the effect of the trust fund and the programs we oversee.
    There are tremendous opportunities for education on the reservation 
right now. Education has been my greatest interest since graduating 
from College and returning home. I created many of the programs that 
UNDC has been involved in over the last thirty years. In my community, 
we have good schools, but our people need better support. Our families 
need assistance to integrate into the educational system. It takes work 
and it takes resources, but most of all it takes an understanding of 
the people.
    The same is true of Healthcare and economic development. To make 
real progress requires an understanding of the culture of the Navajo 
People living in San Juan County and of the challenges they face. There 
is no one more qualified to address these challenges than the people 
themselves. And no one who understands those challenges better than I 
do.
    Additionally, UNDC is committed to working closely with the Navajo 
Tribe. We welcome the input of tribal administration.
    This debate is not about UNDC. It is truly about the beneficiaries 
of the trust and what can be done to best serve them. The Utah Navajos 
are among the poorest people in our country today. We need economic 
development. We need education. We need health care. But if this is all 
that the money from the trust provides it will have fallen far short of 
its real purposes.
    Self-determination; Self-governance; these are the real objectives. 
These are ideals that can actually shape a community, that give hope 
and self respect, that build trust, that help to develop a sense of 
pride and ownership. In truth these are ideals that cannot be granted 
or denied. They exist in each one of us. How we conduct ourselves will 
determine if we retain those rights.
    Thank you for allowing me to be heard today. I trust that this 
committee will make a good decision. I hope that my remarks have been 
clear and helpful.
                                 ______
                                 
    Mr. Boren. At this time, I would yield for questions to Mr. 
Matheson.
    Mr. Matheson. Well, thank you, Mr. Chairman. It is pretty 
clear, you know, this is a panel of folks from the Utah portion 
of the reservation and you have heard a desire to maintain the 
funding stream of the 37 and a half percent of the royalties to 
Utah Navajos. I also have a resolution passed by the San Juan 
County Commission in Utah for the whole county, not just the 
Navajos, this is the county government, indicating that same 
desire.
    It is a resolution passed in April of this year. If I could 
just ask unanimous consent to have that put in the hearing 
record.
    Mr. Boren. Without objection.
    Mr. Matheson. Thank you. I appreciate that. Again, as a 
representative of the Utah portion of the Navajo Reservation, I 
have the interest in ensuring that the flow of royalties goes 
to the beneficiaries on the Utah portion of the reservation, as 
was first designated back in 1933 in the Federal legislation.
    Mr. Maryboy, I appreciate your testimony. In your testimony 
you said the trustee would need the blessing and support of the 
Navajo Nation. Do you believe your proposal would get the 
blessing of the Navajo Nation?
    Mr. Maryboy. Thank you, Congressman Matheson. The reason 
why I make that statement, as you heard, I was also the 
Chairman of the Navajo Nation Budget and Finance. I know that 
the distribution of funds when given, the Utah Navajos are 
always the last priority in receiving funds from the Navajo 
Nation.
    The fear is that if the funds should go to the Navajo 
Nation they will go into a black hole and you will never see 
it. The Navajo Nation has 88 members of Navajo Nation Council. 
Really, if you look at it, Utah, the Navajo Nation, only has 
two representatives from Utah serving on the Navajo Nation 
Council.
    As we speak today, the Navajo Nation is going through some 
changes. It is proposing to reduce its membership of the Navajo 
Nation Council from 88 to 24 members. When that happens, I 
believe that the Utah Navajos will have no seat, no voice 
within the Navajo Nation government because the Navajo Nation 
government is a huge government.
    That is a real concern from the Utah Navajos as far as 
receiving goods and services from the Navajo Nation. Thank you.
    Mr. Matheson. Appreciate that. Mr. Filfred, if I could ask 
you a quick question. What would your suggestion be for who 
should be the trustee?
    Mr. Filfred. The people of Aneth wanted the 638 in 
Montezuma Creek, the Utah Navajo health system, to be the 
trustee. I believe we did pass a resolution to that regards. As 
far as I am concerned, I think that would be--see, the people 
want to be their own trustee. They want to manage their own 
money. Thank you.
    Mr. Matheson. OK. Mr. Chairman, that is all my questions 
right now.
    Mr. Boren. OK. I remind both of our members here that we 
have four votes coming up on the Floor. At this time I would 
yield to Mr. Bishop for questions.
    Mr. Bishop. Let me just ask a couple more. If I could 
follow up on what Representative Matheson asked Commissioner 
Maryboy. The Utah Navajo Development Council concept, how far 
have you actually vetted that with the Navajo Nation? Have you 
had discussions with them? There goes the vote right now. Have 
you had discussions with them formally as to this concept or 
this idea?
    Mr. Maryboy. Thank you, Mr. Bishop. Thank you for that 
question. For your information, President Shirley has not 
conducted any public hearing, nor has he made any official 
visit to the Utah chapters or the Utah governments to discuss 
this particular issue so I was somewhat surprised to hear his 
statement.
    Furthermore, I believe that the legislative branch has a 
different position than what he was proposing this morning. 
Thank you.
    Mr. Bishop. Thank you, Mark. Mr. Rockwell, if I could ask 
just one other question. We have talked about special 
considerations for the Aneth Extension. Are we talking in this 
case about just maintaining the percentage of royalties or are 
we talking about other elements that you think should be going 
toward or should be considered by the Aneth Extension or the 
Utah Navajo portion?
    Mr. Rockwell. Mr. Bishop, thank you for the question. I 
think the response might be that, as I indicated, there should 
be a separate allocation of funds to address those issues from 
that particular area. I think with the funds we would like to 
see probably a combination coming some from the 37 and a half 
percent itself and the rest from the 62 and a half percent 
going to the Navajo Nation. I think that would be the 
distribution of costs.
    Mr. Bishop. I thank you. There are other questions, but I 
think as we proceed with this issue we can address that, 
especially with the vote coming up there, although I would 
simply remind the Chairman, they said it properly. If you are 
going to say it in Utah language, it is ``crick,'' not 
``creek.''
    Mr. Boren. Thank you, Mr. Bishop. I have just a couple of 
questions, and then we will adjourn, for Mr. Rockwell and Mr. 
Filfred. As you know, the Navajo Nation does not, and never has 
had any legal interest in the trust fund. Do you have any 
suggestions or ideas as to how the Committee can best determine 
the views of the beneficiaries residing in the Utah chapter?
    Because, as was mentioned before, there are only two 
members from Utah, I guess, on the Council. If the Nation is 
able to manage this fund, how do you get the input from the 
people from Utah?
    Mr. Filfred. The people from Utah, like I stated earlier, 
are afraid that if the Navajo Nation was the trustee, they 
don't want to jeopardize that. So the Navajo Utah Commission 
has stated their position, but then a lot of other people are 
wanting to be the trustee. So I think the money should stay 
within the Utah portion and the local people should have some 
control over it.
    The closest one that we have is that 638, the UNHS, that I 
alluded to earlier. Thank you.
    Mr. Boren. Mr. Rockwell?
    Mr. Rockwell. I would like to go back to the representation 
part of it first. Our commission consists of seven chapters, 
and these chapters are located along the border of the Utah and 
Arizona state line. Each of the communities have an opportunity 
to elect who they want. Sometimes it is Utah Navajos; sometimes 
they are Arizona delegates.
    I have been with the Commission since 1992 and we have 
always had unanimous votes on resolutions addressing our 
issues. There has never been, as far as I can see, any 
detrimental impact for Utah chapters, although some are, in 
fact, represented by Utah or Arizona delegates.
    As far as the eventual selection of a trustee, I think what 
we like, what we are emphasizing, is local control but some 
sort of overall oversight by the Navajo Nation. That is 
basically what we are implying. We are not saying the Navajo 
Nation should be directly administering the funds at the local 
level. I think that choice should be left up to the chapters 
and the community from the Utah areas. Thank you.
    Mr. Boren. Thank you, Mr. Rockwell. One question for Mr. 
Maryboy, and in the interest of time, we will move to 
adjournment. You mentioned that you have spoken to the chapter 
leaders about your future administration of the trust fund, but 
what actions have you taken to garner the support of the 
individual beneficiaries with your proposal?
    Mr. Maryboy. We are currently in the process of selecting 
new members from the seven chapters to serve on the new 
nonprofit organization that we are reorganizing at this point 
in time, so that is what I am doing right now.
    Mr. Boren. OK. Thank you for your answers, for your 
testimony. I want to say a specific thank you to the Committee 
staff for allowing me to chair. This is my first time to ever 
be able to chair a committee. So for panelists, the Committee 
may have questions we will submit to you in writing. We ask 
that you respond to them as quickly as possible.
    The hearing record will remain open for 10 days for anyone 
who wishes to submit comments or materials to the Committee. I 
want to thank all of you for your participation in the hearing, 
and this Committee is adjourned.
    [Whereupon, at 11:24 a.m., the Committee was adjourned.]

    [Additional material submitted for the record follows:]

    [A statement submitted for the record by James Black, 
President, Oljato Chapter, follows:]

          Statement submitted for the record by James Black, 
                       President, Oljato Chapter

    Yaat'eeh, Greetings to everyone, especially to Honorable Chairman 
Mr. Nick J. Rahall, II and to Honorable Congressional Committee members 
on Natural Resources for inviting Oljato Chapter and Utah Chapters' 
leadership to present their testimony at today's historic hearing on 
Utah Navajo Trust Fund. My name is James Black, I am Oljato Chapter 
President. I was born and raised in Monument Valley Pass, Utah. It is 
an honor to come before you to present the following testimony on 
behalf of Trust Fund beneficiaries of Oljato Chapter, Utah:
1.  The Oljato Chapter requests by chapter resolution to U.S. Congress, 
        including Utah Congressional Delegation, The Honorable 
        Congressman Jim Matheson and Senator Orrin Hatch and Senator 
        Robert Bennet to provide equal opportunity for all Utah Navajo 
        Chapters to freely express their input, recommendations, 
        concerns to future discussions of transition plan of Trust Fund 
        responsibility in selecting a new entity since the State of 
        Utah has decided to cease operations of the Trust Fund as of 
        June 30, 2008. Also, the Oljato Chapter respectfully requests 
        that 1933 Congressional Act, as Amended in 1968 [Pub.L. No. 90-
        306, 82 Stat. 121 1968] which stipulates Utah Navajos living in 
        San Juan County, Utah, particularly those living within Utah 
        chapter boundaries, are entitled to 37 1/2 percent royalties to 
        be perpetually valued and honored for the future of all Utah 
        Navajo beneficiaries.
      In the upcoming transition phase of designating which 
entity will be given trust responsibility beyond June 2008, the Oljato 
Chapter recommends that by all means, when U.S. Congress re-writes the 
language of 1933 Congressional Act, as amended in 1968, to maintain the 
egalitarian concept of distributing Trust Fund monies on equal basis to 
all Utah Chapters as it has been demonstrated this responsibility since 
inception of 37 1/2 oil and gas royalties by 1933 Congressional 
authority.
      All Trust Fund beneficiaries of Utah Chapters including 
Oljato to be provided a fair, equal, impartial opportunity to 
participate and play a major role in all aspect of the planning and 
development phase of the transition process until and beyond the 
establishment of a new entity. This involvement of Utah Chapters in the 
preliminary planning of identifying and selecting the preferred entity 
and the structuring of the new organization is extremely critical. 
Further, this will allow greater participation in the service delivery 
process and coordination plan between Utah Chapters and the new 
responsible entity. Most importantly, to provide a community-based, 
democratic process in the distribution, sharing, allocation of the Utah 
Trust fund.
      The geographic location of new administrative building 
for the new Trust Fund operations should also be carefully decided 
among all Utah Chapters with equal voice and without any bias or 
favoritism be involved in this decision making process.
2.  The Oljato Chapter hereby requests by chapter resolution to The 
        Honorable U.S. Congress including Congressman Jim Matheson and 
        Senator Orrin Hatch and Senator Robert Bennet to designate a 
        non-Navajo Tribal government entity to serve as new Trustee for 
        Utah Navajo beneficiaries to ensure continuance of equal share 
        of Trust fund distribution to Utah Navajos without political 
        interruptions.
      It is the position of Oljato Chapter that the any 
political branches, departments or subdivision of the Navajo Nation 
government should not be designated as new Trustee because of past 
practices of the Legislative branch in diverting funds elsewhere away 
from what was intended for and has practiced waiving tribal fiscal 
policies to achieve their political agenda and interests without any 
sound fiscal plan. Further, the leadership of executive branch is 
currently unsteady where it's clashing with the legislative branch due 
to proposed council reduction initiative by the Navajo Nation 
President's office of executive branch. Although the Oljato Chapter 
upholds the respect of continuing partnership efforts with the central 
Navajo government on other levels of essential services and programs, 
the chapter is in the state of mistrust and doubt for the Navajo Nation 
government to be given new trust responsibility. Further, by keeping 
the 37 1/2 percent oil and gas royalties outside of the coffers of 
Navajo Nation treasury will certainly allow the Utah Navajos to have 
greater control and oversight of its trust fund; and will provide an 
opportunity to demonstrate self-determination by Utah Navajo Chapters 
in the administration and management of the trust fund. Most 
importantly, the values, interests and beliefs of the beneficiaries 
will no longer be represented and respected if there is to be any major 
political influence and interference with the future distribution of 
trust fund; and thereby deviating from its original intent under 1933 
Congressional Act. It is in Oljato Chapter opinion that a majority of 
Utah Chapters holds a similar view on this particular issue.
3.  The Oljato chapter hereby requests to U.S. Congress the desires of 
        its community members to modify the language of the criteria 
        for the beneficiaries to receive trust fund assistance. The 
        current language states that all Navajos living in San Juan 
        County Utah are eligible to receive assistance regardless of 
        having no ancestral connection to Navajos living in Utah 
        portion of the reservation. Further, current laws require a 
        requesting Utah Navajo to reside in San Juan County Utah two 
        years prior on the date of request in order to qualify for 
        trust fund assistance regardless of having an ancestral 
        relationship to Utah Navajos. For example, a Utah Navajo who 
        has relocated outside the Utah Chapter boundary for over two 
        years to seek employment, education or training would not meet 
        the two-year threshold requirement to receive benefits 
        including Utah trust fund scholarships. The language change 
        will certainly allow accurate distribution of Trust fund monies 
        to most accurate eligible Utah Navajos and to avoid 
        controversy, it will provide assistance to Utah Navajos who 
        have true-direct ancestral ties to the boundaries of Utah 
        Navajo chapters.
    There are other issues associated with Utah trust fund but these 
are the highlights that have been discussed with other Utah chapters 
and beneficiaries within the past few months. Please keep us informed 
and involved of any future hearings on this important matter. Your 
sincere consideration and assistance with the above mentioned issues is 
greatly appreciated. Thanks for inviting us to share with you the 
Oljato Chapter's testimony statement on today's hearing as it is one of 
the most significant moments in the history of Utah trust fund and its 
beneficiaries.
                                 ______
                                 
    [A statement submitted for the record by Leo Manheimer, 
President, Navajo Mountain Chapter, The Navajo Nation, 
follows:]

    Statement submitted for the record by Leo Manheimer, President, 
               Navajo Mountain Chapter, The Navajo Nation

    The Honorable Members of the Natural Resources Committee, it is an 
honor to submit to you a written testimony on behalf of my constituents 
who reside within the Navajo Mountain Chapter of The Navajo Nation, 
Navajo Mountain, Utah. These people are beneficiaries of the thirty-
seven and a half percent (37 1/2 %) of the Utah Navajo Trust Fund, 
which are funds generated from oil wells on the Utah portion of The 
Navajo Nation.
    The community of Navajo Mountain is the most isolated area in the 
State of Utah, geographically isolated from the State of Utah, with the 
surrounding Lake Powell and the San Juan Rivers, and having no direct 
roads connecting it to the rest of the State of Utah.
    The Utah Navajo Trust Fund has been very beneficial to this 
community in terms of housing, education, health services, assisting 
the local community government, and various other social programs 
funded in part by the Trust Fund. The community of Navajo Mountain and 
its people are far better off then their counter parts residing in 
Arizona and New Mexico chapters, in the areas of housing, education, 
and health services, to name a few, due to the Trust Fund's funding and 
services.
    Recently, there has been a lot of uncertainty and great 
anticipation as to the future of the Utah Navajo Trust Fund since the 
State of Utah announced its plans to end its role as the Trustee. Upon 
notification of this proposed change, the Navajo Mountain Chapter has 
had the opportunity to discuss, at lengths, the various plans or 
options as to the future of the Utah Navajo Trust Fund. We have also 
had several presentations at various meetings by people who have first 
hand knowledge as to the fund's administration and policies.
    The people of Navajo Mountain appreciate the current model or 
process of administration, in which the funds are administered by a 
separate entity that does not assess overhead or indirect costs, and 
not channeled through the Navajo Nation government. We believe this is 
the only way that the beneficiaries have and will continue to receive 
the most returns in direct services. Based on how the current unique 
setup is with the State of Utah, there is great apprehension as to what 
changes will occur in fund administration and mode of service to the 
Utah Navajos who depend on the Utah Navajo Trust Fund for basic 
services such as health, education, and housing.
    I want to give you an account of what the people of Navajo Mountain 
would like to see happen with the Utah Navajo Trust Fund, the 
administration of it, and who might be the next Trustee.
    The people of Navajo Mountain, during its regular chapter meetings, 
have repeatedly expressed the need for the State and Federal 
Governments to recognize the rights of Indian Nations to self-govern 
and the need for this process to be supported, accommodated, and 
legislated by leaders of this great country, The United States. 
Further, they believe that The Navajo Nation should also support and 
share in this concept by allowing local Navajo Nation Chapters, like 
Navajo Mountain, to have the latitude in deciding how gas and oil 
royalties should be administered and who the Trustee of such funds 
should be. The Navajo Mountain Chapter hopes that these same sentiments 
are shared by the seven (7) Utah Navajo Chapters in San Juan County, 
Utah.
    These discussions, based on this concept, have pointed us in one 
direction--the need for each Utah Chapter to become Local Governance 
Act (LGA) certified and becoming direct recipients of the thirty-seven 
and a half percent (37 1/2%) of Utah Navajo Trust Fund Oil Royalties, 
recognizing that this can only come about when chapters become LGA 
certified. If the Utah Chapters concentrate their efforts on becoming 
LGA certified, Trust Fund money can be administered at the local level 
and utilized for direct services, eliminating outside influence or 
administration. This approach of self-governance will ultimately 
encourage the Utah Chapters to be accountable for the use of Trust Fund 
money, as indicated in their Five Management Policies and Procedures 
(FMS), and approved by the Auditor General of The Navajo Nation. The 
use of Trust Fund money will be monitored as any other organization. 
Thereafter, the Utah Navajo Trust Fund policies can be incorporated 
directly into the Chapter's LGA policies and procedures. Most Utah 
Chapters have been developing and practicing their LGA policies and 
procedures over the past few years, and they are on the threshold of 
becoming LGA certified.
    The people of Navajo Mountain highly favor this concept although it 
may not be an immediate solution that can be implemented within each 
Utah Chapter. In the meantime, the only option that the people of 
Navajo Mountain would like to see is to have the Utah Navajo Trust Fund 
be administered by a separate entity that does not assess overhead or 
indirect costs. This option will provide the people with continued 
services in the areas of housing, education, health care, and local 
government.
    Thank you for providing us the opportunity to express our position 
on the Utah Navajo Trust Fund. If you have any questions or wish to 
respond to this submittal, please contact our Chapter Administration at 
(928) 672-2915 or email the Community Services Coordinator at 
[email protected].
                                 ______
                                 
    [A resolution submitted for the record by The Honorable Jim 
Matheson, follows:]

  RESOLUTION PROVIDING THE POSITION OF THE SAN JUAN COUNTY COMMISSION 
   REGARDING THE FUTURE OF THE UTAH NAVAJO TRUST FUND AND TRUSTEE(S)

    WHEREAS, the State of Utah has given notice that effective June 30, 
2008, it will no longer act in the capacity of Trustee for the Utah 
Navajo Trust Fund and the 37-1/2% royalties for oil and gas production 
on the Utah portion of the Navajo Nation; and
    WHEREAS, the Congress of the United States of America will have to, 
by law, determine who will act in the future as the Trustee of this 
fund; and
    WHEREAS, the State of Utah has determined that the State will not 
recommend a future Trustee; and
    WHEREAS, the County of San Juan, Utah, also has determined that it 
will not recommend a future Trustee; and
    WHEREAS, ``[t]here is created a private-purpose fund entitled the 
Navajo Trust Fund. The fund consists'' partially ``of revenues received 
by the state that represent the 37-1/2% of the net oil royalties from 
the Aneth Extension of the Navajo Reservation required by P.L. 72-403, 
47 Stat. 1418, to be paid to the state.'' Section 63-88-102, et seq., 
Utah Code Annotated (1953, as amended).
    WHEREAS, the residents of the Utah portion of the Navajo Nation saw 
nor realized the benefits for the remaining 62-1/2% of the royalties 
that were collected by the Navajo Nation; and
    WHEREAS, the needs for the residents of the Utah portion of the 
Navajo Nation continue to require significant amount of funds.
    THEREFORE, BE IT RESOLVED, the official position of the County 
Commission of San Juan County, Utah, concerning the future Trustee of 
the 37-1/2% of oil and gas production is as follows:
    1.  They County Commission will not recommend a future Trustee.
    2.  That neither the 37-1/2% royalties nor the responsibility of 
the Trustee be given to the Navajo Nation or any of its divisions, 
departments, or agencies.
    3.  That the future Trustee(s) not be a beneficiary of the 37- 1/2% 
royalties.
    4.  All registered Utah Navajos who reside within the boundaries of 
San Juan County, Utah, be eligible for the health, welfare and 
educational benefit programs funded by the Trust Fund.
    5.  That the new Trustee(s) be requested to work closely with the 
Utah Navajo Chapters and San Juan County, Utah.
APPROVED this _ day of April, 2008, by the San Juan County Commission.
[Signed] Bruce B. Adams, Chairman, San Juan County Commission
THOSE VOTING YES
    Commissioner Adams
    Commissioner Maryboy
    Commissioner Stevens
THOSE VOTING NO
    [None]

    A motion to approve the resolution was made by Commissioner Lynn 
Stevens. Commissioner Kenneth Maryboy seconded the motion. None 
opposed. Commissioner Bruce Adams declared. The motion carried.

                                 
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