    [Senate Hearing 111-631]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 111-631

                    S. 439, THE INDIAN DEVELOPMENT FINANCE
     CORPORATION ACT; S. 2802, THE BLACKFOOT RIVER LAND SETTLEMENT ACT OF
    2009; AND S. 1264, THE PINE RIVER INDIAN IRRIGATION PROJECT ACT OF 2009

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

                                    HEARING

                                   before the

                          COMMITTEE ON INDIAN AFFAIRS
                              UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 APRIL 29, 2010

                                   __________

             Printed for the use of the Committee on Indian Affairs

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                          COMMITTEE ON INDIAN AFFAIRS

                    BYRON L. DORGAN, North Dakota, Chairman
                     JOHN BARRASSO, Wyoming, Vice Chairman
    DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
    KENT CONRAD, North Dakota            LISA MURKOWSKI, Alaska
    DANIEL K. AKAKA, Hawaii              TOM COBURN, M.D., Oklahoma
    TIM JOHNSON, South Dakota            MIKE CRAPO, Idaho
    MARIA CANTWELL, Washington           MIKE JOHANNS, Nebraska
    JON TESTER, Montana
    TOM UDALL, New Mexico
    AL FRANKEN, Minnesota
          Allison C. Binney, Majority Staff Director and Chief Counsel
         David A. Mullon Jr., Minority Staff Director and Chief Counsel

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on April 29, 2010...................................     1
    Statement of Senator Dorgan......................................     1
    Statement of Senator Franken.....................................     2
        Prepared statement...........................................     2
    Statement of Senator Tester......................................    49
    Statement of Senator Mark Udall..................................    19
    Statement of Senator Tom Udall...................................    51

                                   Witnesses

    Allen, Hon. W. Ron, Treasurer, National Congress of American
      Indians; Tribal Chair, Jamestown S'Klallam Tribe...............     8
        Prepared statement...........................................    10
    Atencio, Lena, Director, Department of Natural Resources,
      Southern Ute Indian Tribe......................................    40
        Prepared statement...........................................    41
    Box, Hon. Matthew J., Chairman, Southern Ute Indian Tribe........    20
        Prepared statement...........................................    23
    Coby, Hon. Alonzo, Chairman, Fort Hall Business Council,
      Shoshone-Bannock Tribes........................................    13
        Prepared statement...........................................    14
    Parker, Alan R., Professor, Advanced Studies in Tribal
      Government, Evergreen State College............................     3
        Prepared statement...........................................     4
    Walker, Marion P., Spokesperson, North Bank Property Owners......    17
        Prepared statement...........................................    18

                                    Appendix

    Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared
      statement......................................................    55

                    S. 439, THE INDIAN DEVELOPMENT FINANCE
                         CORPORATION ACT; S. 2802, THE
      BLACKFOOT RIVER LAND SETTLEMENT ACT OF 2009; AND S. 1264, THE PINE
                                     RIVER
                     INDIAN IRRIGATION PROJECT ACT OF 2009

                                  ----------

                            THURSDAY, APRIL 29, 2010

                                           U.S. Senate,
                                   Committee on Indian Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:15 p.m. in room
    628, Dirksen Senate Office Building, Hon. Byron L. Dorgan,
    Chairman of the Committee, presiding.

              OPENING STATEMENT OF HON. BYRON L. DORGAN,
                     U.S. SENATOR FROM NORTH DAKOTA

        The Chairman. We are going to call the meeting to order.
    This is a hearing on bills to address tribal economic
    development, a lands claim settlement and an Indian irrigation
    project. We have been requested by our colleagues in the United
    States Senate to hold hearings on these pieces of legislation:
    S. 439, S. 2802, and S. 1264.
        S. 439 is the Indian Development Finance Corporation Act;
    S. 2802 is the Blackfoot River Land Settlement Act; and S. 1264
    is the Pine River Indian Irrigation Project.
        One bill brings a creative approach to increasing tribal
    economic development opportunities in Indian Country. One bill
    will resolve an ongoing land dispute. And the third bill will
    bring much-needed attention to an irrigation project.
        And we look forward to hearing from witnesses about each of
    these bills.
        The first two witnesses will present their views on S. 439,
    the Indian Development Finance Corporation Act. That bill will
    create an Indian Development Finance Corporation to give tribal
    businesses new sources of capital, financial services, and
    technical assistance. The goal of this bill is to increase
    economic development opportunities in Indian Country.
        Then we will hear testimony on S. 2802, the Blackfoot River
    Land Settlement Act. This would settle a longstanding land
    dispute between the Shoshone-Bannock Tribe, individual tribal
    landowners, and non-Indian landowners in the State of Idaho.
    The parties have reached a settlement on the land dispute and
    this legislation would codify that settlement. Congressional
    action is now needed to prevent a lengthy and costly legal case
    and to allow all of the parties full use of their land.
        Finally, S. 1264 is the Pine River Indian Irrigation
    Project Act. This bill will bring attention to the Pine River
    Indian Irrigation Project located on the Southern Ute Indian
    Reservation in Colorado.
        The irrigation project is one of nine projects highlighted
    in a 2006 Government Accountability Office report. The report
    found that this project is suffering from management issues and
    in need of critical repair. Estimates for repairing the project
    are between $20 million and $60 million. The legislation that
    we will hear today would require the Secretary of the Interior
    to develop a plan and to address the needs of this project.
        With that, I welcome the witnesses. I know that many of you
    have traveled a long distance to be with us today and we
    appreciate your willingness to testify. We have two witnesses
    for each bill, so I ask that you limit your remarks to five
    minutes. Your full written statement will be made part of the
    permanent record today, and that will also remain open for two
    weeks for any submission by others who wish to add their voices
    to the testimony at this hearing.
        We will also be asking the Administration for their formal
    views on each of the bills before we move forward with them
    following this hearing, although the Administration, I would
    say, will testify on one of the bills today.
        Are there any other Members of the Committee that wish to
    add something?
        Senator Franken?

                     STATEMENT OF HON. AL FRANKEN,
                      U.S. SENATOR FROM MINNESOTA

        Senator Franken. All these bills are of tremendous
    importance to Indian Country. The Indian Development Finance
    Corporation Act is one of importance to Minnesota tribes. I
    want to apologize because I am going to have to leave very soon
    to preside over the Senate. So I will just ask that my opening
    statement be inserted into the record.
        The Chairman. Without objection, and we thank you for being
    here. I understand that you have to preside.
        [The prepared statement of Senator Franken follows:]

       Prepared Statement of Hon. Al Franken, U.S. Senator from Minnesota

        I'd like to thank the Chairman for hold this hearing on several
    pieces of legislation that are important to Indian country. I apologize
    that I have to leave shortly to go preside on the Senate floor, but I
    want to say a few words and submit a couple of questions for the
    record.
        A broad range of challenges face Indian country today, and one of
    the major issues underlying these challenges is the need for economic
    development and job creation to pull people out of poverty.
        One of the bills we're considering is the Indian Development
    Finance Corporation Act, which would create a new federal corporation
    to promote business development in Indian Country.
        Indian reservations have unique challenges in attracting business
    investment, and aspiring Indian business owners often face difficulty
    accessing financing to start or scale up their business.
        In Minnesota, we have Tribes and community development institutions
    that are addressing these challenges head on.
        For example, the Leech Lake reservation in Minnesota has adopted
    the Tribal Secured Transaction Act into its Tribal Law. This provides
    the Tribal government with the legal structure necessary to facilitate
    borrowing for business and economic development from off-reservation
    lenders or other Tribes.
        There are also innovative examples from lenders and community
    development organizations. The Midwest Minnesota Community Development
    Corporation, based in Detroit Lakes, Minnesota, has launched a pilot
    program that provides forgivable loans to Indian entrepreneurs who
    complete an online training program and subsequently report on the
    implementation of their business plan. This is a spinoff of a program
    that Senator Tester's state of Montana has implemented, and it has
    promise to provide Indian business owners with the equity necessary to
    secure loans to invest in Indian country.
        These are the types of solutions we need to be looking for and
    scaling up to foster development of businesses by members of Indian
    tribes. This is absolutely critical to addressing the challenges of
    poverty and economic development that Tribal communities face across
    the country. I appreciate this Committee's attention to these issues
    today, and look forward to receiving responses to my questions. Thank
    you.

        The Chairman. Let me begin the witnesses' testimony today
    with Mr. Alan Parker, Professor of Advanced Studies in Tribal
    Government, Evergreen State College in Olympia, Washington.
        Mr. Parker, you may proceed.

      STATEMENT OF ALAN R. PARKER, PROFESSOR, ADVANCED STUDIES IN
                  TRIBAL GOVERNMENT, EVERGREEN STATE
                                COLLEGE

        Mr. Parker. Okay, thank you
        I would like to try to summarize my testimony by
    emphasizing a couple of key points. One is drawing a
    distinction between the role of a development bank as compared
    to investment banks or commercial banks, which is the ordinary
    bank you see up and down the streets of Main Street. Anyway, I
    am not sure about Wall Street.
        And also then to talk about the role of an IDFC,
    development finance corporation, in assisting tribes to work
    together. That is, it would create opportunities for business
    partnerships between our gaming tribes, who in many cases have
    been very successful with their casino gaming opportunities,
    which as we know are authorized under the Indian Gaming
    Regulatory Act, and the tribes that are located far from the
    marketplace where casino gambling can be carried on
    successfully.
        In my work over the years with many tribes, I know that the
    leaders within the successful gaming tribes are very interested
    in trying to assist their neighbors, their compatriots to
    develop their potential resource base or potential
    opportunities that are unique to them in their location, but
    they are very uncertain in how to proceed because there is a
    question of risk out there in Indian Country.
        So I think the development bank that Senator Inouye's bill
    proposes to establish provides some very important tools to
    help the investor, such as some of our successful gaming tribes
    predominantly, help them to essentially gain some comfort in
    terms of investing their own capital into the development of a
    project that is, say, in one of the Dakota States. Where maybe
    there is great potential for a windmill farm, but there is an
    up front investment of capital that would be required, or in
    other areas of Indian Country.
        I live now up on the West Coast and many of the tribes I
    think have been interested for years in trying to create their
    own commercialized fishing industries, making highest and best
    use of their rights to harvest 50 percent of the salmon which
    they gained under Supreme Court decisions.
        But yet, if you are a tribe, for example, one of my good
    friends is one of the leaders with the Makah tribe way up in
    the far northern tip of Washington State. They see a real
    potential for both creating a commercial fishery, as well as
    wave energy production. Their thoughts are that if we try to
    reach an agreement with a big commercial fishing company, we
    give up control. We want to be able to maintain a controlling
    position in any company that is created to make use of our
    commercial fishery harvest.
        Now, as to the opportunity for wave energy production, as
    you know, there is a huge interest all across the Country in
    alternative energy development, and as I mentioned a few
    minutes ago, opportunities to create windmill farm operations,
    solar cell banks, et cetera.
        I think those tribes who are near the areas where those
    might be good opportunities have nonetheless really been
    hindered in terms of trying to go forward with a bond issue or
    such because they have nowhere to turn to. Not only as good
    business partners that can bring some capital to the table, but
    also the technical expertise that is required to engage in a
    bond issue.
        So again, this is the role of the Development Finance
    Corporation that is envisioned in Senator Inouye's bill, to
    create opportunities for partnerships with those tribes who
    have achieved success.
        And as we know from the record that the numbers of tribes
    who have succeeded in casino enterprises do not represent a
    significant percent of the overall population in Indian
    Country. They are small tribes located near metropolitan areas
    on relatively small land bases. The larger tribes out in the
    Great Plains areas and the Rocky Mountain areas are the ones
    who have not benefitted from gaming opportunities.
        I think to find a way to effectively bring them together
    and to create successful partnerships would be a very worthy
    goal.
        Mr. Chairman, I see that my time has nearly run out, but
    again very much thank you for the opportunity and we hope that
    this bill can move ahead expeditiously in the time remaining in
    this session of Congress.
        [The prepared statement of Mr. Parker follows:]

     Prepared Statement of Alan R. Parker, Professor, Advanced Studies in
                   Tribal Government, Evergreen State College

        Chairman Dorgan, Vice Chairman Barrasso, and Members of the Indian
    Affairs Committee, I want to thank you for the opportunity to testify
    today on this important legislation that would establish a Development
    Finance Institution to serve the economic infrastructure needs of
    Tribal Nations across the United States.
        Historical Background to the IDFC Proposal: As you may know,
    Senator Inouye's bill, S. 439, was originally introduced in 1987 during
    the 1st Session of the 100th Congress. At that time, it was my
    privilege to serve as Staff Director of the Committee on Indian Affairs
    under the Chairmanship of Senator Inouye. Shortly after he appointed me
    to the position of Staff Director in the spring of 1987, I informed him
    that I had been involved with developing a proposal that grew out of
    the work of the Economic Development Task Force of the American Indian
    Policy Review Commission (AIPRC). The AIPRC was established by a Joint
    Resolution of the U.S. Congress in 1975 and completed its work in 1977.
        The Economic Development Task Force recommended that Congress adopt
    legislation to create a ``Development Bank'' type of institution to be
    modeled after the regional development banks created by the World Bank.
    The AIPRC recommendation was based on the analysis that the economic
    conditions that prevailed across Indian County were very similar to the
    conditions in so-called ``Third World Countries''. The World Bank,
    created shortly after World War II, was intended to help such ``Third
    World Countries'' recover from the War and the impacts of over a
    century of colonialism practiced by European Nations in those areas of
    the World. The World Bank created a model for ``development'' finance
    institutions that could assist its client nations in creating the
    economic infrastructure needed for the development of sustainable local
    economies.
        The development banks that the World Bank established to serve
    lesser- developed national economies, were empowered to address the
    lack of privately-owned networks of financial institutions, the lack of
    transportation infrastructure and energy development systems by
    creating an electric power grid and supply electricity for consumer
    needs and public institutions such as schools and hospitals. They also
    assisted with technical help in creating legal and political
    institutions that could serve as a foundation to support trade and
    commerce.
        The IDFC bill that was introduced by Senator Inouye in 1987, ( S.
    721) was based on the final report and recommendations of the American
    Indian Development Corporation (AIDC), a private non-profit
    organization staffed by a talented team of Native American business
    development experts, which had conducted research on the track record
    of World Bank-sponsored regional development banks. AIDC was funded by
    the Administration on Native Americans and conducted its work with the
    assistance of economists, academics and officials from development
    finance institutions. They summarized their study and recommendations
    by concluding that the bill should create an independent, mixed
    ownership, federal corporation, and the Corporation should be designed
    to function as a stock corporation empowered to issue stock with voting
    rights to every Native nation that wished to purchase the stock. Their
    thoughts were that the stock-shareholder relationship would serve as a
    method to ensure accountability of the IDFC to its tribal shareholders
    as well as, of course, the Federal agencies that would normally be
    assigned to exercise supervisory duties. It would be authorized to
    issue ``Capital Stock'' to the Federal Government in two increments,
    $20 million soon after the bill was enacted into law, and an additional
    $80 million as soon as there was a demonstration of willingness on the
    part of tribal nations to participate in the corporation as evidenced
    by the time when 10 percent of the authorized 500,000 shares of Tribal
    stock had been purchased by tribes.
        This initial group of ``tribal shareholders'' would be authorized
    to convene a shareholders meeting and elect their own governing board.
    In the interim period following passage of the bill, an initial
    governing board would be appointed by the Secretary of Interior, with
    recommendations from Tribal leaders, and the members of the governing
    board were expected to establish, with the help of the Secretary of
    Interior, an office within the Department of Interior that could
    organize itself to issue the initial tribal stock offering. They were
    also expected to appoint an Interim President for the IDFC and hire a
    small management team that could work on designing operational policies
    for the new IDFC. As the historical record shows, Senator Inouye and
    his counterpart in the House, Mo Udall, Chairman of the Interior
    Committee, held hearings on S. 721, both in Washington, D.C., as well
    as a number of field hearings in Indian Country. The testimony from
    these hearings led to some important changes in the bill and it was
    then passed in both the House and Senate at the end of the 100th
    Session. (See attached Committee Report on S. 721, 100th Congress which
    I have shared with your Committee staff).
        Once S. 721 was passed it was sent to President Reagan. He vetoed
    the bill, informing us that he could not support the creation of
    another GSE (Government Sponsored Enterprise) type of institution. He
    added that in his view, there were already sufficient federal
    authorities such as the Small Business Administration and the BIA Loan
    and Loan Guarantee program established under the 1975 Indian Financing
    Act. Congress had already adjourned for the year and there was no
    opportunity for Chairman Inouye and Chairman Udall to attempt an
    override of the President's veto. When President Reagan's successor,
    George Herbert Walker Bush, was installed into office, I called
    Interior Assistant Secretary Eddie Brown to discuss the IDFC bill and
    Reagan's veto. The Assistant Secretary informed me that he had been
    told by his White House contacts that the bill would be considered
    ``veto bait'' and advised me that it would not be productive to have it
    introduced again and seek its passage in the 101st Congress.
    Authorities and Functions of the IDFC
        The IDFC bill that you now have before you today, S. 439, is
    essentially identical to S. 721 as it was passed in the 100th Congress.
    The primary tools that it brings to the table include:

            1.)  Authority to make investments of seed capital into the
            business ventures of its tribal shareholders and,

            2.)  To provide federally-authorized guarantees for bank loan
            commitments and tribal tax-exempt development bond issues.

             The only limitation is that the business activities supported
            by the IDFC must be related to the development of economic
            infrastructure on behalf of the tribal shareholders'
            communities . That is, the business should not be an activity
            that simply exists within an established commercial market and
            is not otherwise connected to the economy of the tribal
            shareholder.

            3.)  The IDFC is also authorized to create a Technical Support
            and Business Research Office within the institution with
            expertise in designing and issuing development bonds.

             It should also be able to assist in providing the research for
            and designing business opportunities that appropriately take
            advantage of the unique position of U.S. Tribal Nations within
            the marketplace, such as alternative energy developments, broad
            band internet information services or natural foods produced in
            Indian Country and identified with tribal food production
            traditions such as the wild rice in the Great Lakes, the Wapato
            root potato from the northern plains, chili spices from the
            southwest and wild salmon from the pacific northwest.

        Mr. Chairman, as I am sure you and your colleagues are aware, there
    have been some significant changes in Indian Country since the IDFC
    bill was first introduced in 1987. Primarily, these changes result from
    the introduction of casino style gaming that was made possible through
    the 1988 passage of the 1988 Indian Gaming Regulatory Act. According to
    the most recent reports from the National Indian Gaming Commission
    (NIGC), in 2009, tribes collectively generated over $26 billion in
    revenue.
        The most successful tribal gaming operations are typically located
    near major cities and metropolitan areas in close proximity to Indian
    Country. For the tribes that are located in such areas in California,
    Connecticut, Florida and New York, the advantage of their location has
    proven to be critical to their success. However, as you are no doubt
    aware, almost all of these tribes have communities that are very small
    in population and are located on a relatively small land base as
    compared to tribes in the Great Plains and Rocky Mountain areas that
    you and your colleagues on this committee represent-namely North
    Dakota, South Dakota, Montana, Wyoming, and Minnesota. In New Mexico,
    Washington State and Arizona, the conditions are similar in that most
    tribes do not have ``large'' casino operations but there are a minority
    that do have successful operations. In Utah and Hawaii, state law
    criminally prohibits all forms of gaming.
        Thus, the record shows that casino style tribal gaming has not
    reached nor benefitted tribes in these states. Some tribes, such as the
    Shakopee Mdewakanton Sioux near Minneapolis, have been extraordinarily
    generous with their less fortunate neighbors, awarding over $40 million
    in contributions to worthy causes in 2008. In Washington State where I
    live and have served for seven years as a member of the Washington
    State Gambling Commission, the tribes have agreed in State Gaming
    compacts to set aside 1 percent of their net revenues for charitable
    contributions. In 2009, these charitable contributions reportedly
    amounted to approximately $3 million. Most Washington tribes give an
    informal preference to contribution requests coming from neighboring
    tribes for scholarship services delivered to Native Americans attending
    higher education programs. However, in no state that I am aware of have
    the successful gaming tribes found a way to share their excess capital,
    that is ``capital in excess of their own needs, and use this to invest
    in business ventures with other tribes.'' In a few instances, the
    Mohegan and Pequot tribes have helped other tribes in the development
    of their gaming operations in other areas of Indian Country that have
    sought out such Tribal Capital. Although I have not exhaustively
    researched the record of these practices, I can assure you that the
    successful gaming tribes invest their excess capital primarily to
    diversify their own economies and invest in business opportunities
    within their own region. I would suggest that this record shows that
    the majority of the 560 Indian Tribal Nations, particularly those with
    large land bases and large populations located far from commercial and
    trade centers, remain in conditions of extreme poverty that more than
    justify action by the Congress to enact legislation to establish a
    federally-chartered and funded IDFC as proposed by Senator Inouye in S.
    439.
        In my view, one of the primary goals of the IDFC to be created by
    S.439 would be to ``intermediate'' business investment opportunities
    between the successful gaming tribes and the non-gaming tribes. The
    IDFC would bring to the table the tools needed to make this type of
    inter-tribal economic development possible and much more likely to
    happen. The Bank's Technical Assistance and Business Research Office
    could conduct research on the potential for successful alternative
    energy resource development business development by tribes in the Great
    Plains and Rocky Mountain areas. Internet broadband development
    opportunities abound in the southwest and southern plains where many
    non-gaming tribes are located.
        The IDFC could create investment portfolios around such investment
    opportunities and take them directly to the tribal council chambers of
    those successful gaming tribes who have expressed an interest. They
    could include suggestions about the amount of seed capital that the
    IDFC should be prepared to inject into such inter-tribal economic
    opportunities. The IDFC would advise tribal governments as well as on
    the potential help the Bank could provide in securing an IDFC-authored
    federal guarantee for either a bank loan or investment bank-sponsored
    Tribal tax-exempt bond issue that would be part of the financing
    package. Likewise, where there is a potential to develop export or
    import trading opportunities between IDFC shareholders and indigenous
    nations who have a comparable legal and political framework such as the
    First Nations in Canada or Maori Tribal Nations in New Zealand, the
    IDFC could bring their intermediation skills to the table to assist
    such initiatives.
        Mr. Chairman, I have been advised that the IDFC proposal gives rise
    to a number of questions that are generated by our current national
    financial crisis. For example:
        Will the IDFC be able to engage in the kinds of practices that are
    so controversial today and which have given rise to calls for financial
    reform?
        The IDFC as provided for in Senator Inouye's bill, S.439, will
    simply not be able to engage in the kind of ``risky'' investments and
    banking practices that are cause of such public concern today. As we
    know, the primary reason that the world of banking is so entangled in
    these difficulties is due to their excessive and unwise reliance of the
    use of ``subprime'' mortgage-backed securities bundled together into
    large investment vehicles. The IDFC will simply not be engaged in
    mortgage lending. As you well know, on the great majority of Indian
    lands that are held by the Federal Government in trust status, private
    mortgages are rarely issued because the underlying real estate for a
    home site cannot be used as collateral. Under federal law, Indian trust
    property cannot be pledged as collateral for a private bank or even a
    development bank loan. In recent years, it has become possible to
    create an assignment of interest as a leasehold interest on trust
    lands. In these cases, the value that is being pledged to the lender is
    the property that rests on the land, the buildings and fixtures that
    constitute the residence. These leasehold assignments can be pledged by
    a tribal member who has the right to do so under their tribe's law.
    However, such an interest cannot be sold to another individual, even
    another tribal member. They may be transferred, if the tribal
    government approves such a transfer and the transfer is also approved
    by the BIA, but this cannot be used to create a ``market'' of such
    leasehold assignments. There is simply no way that the financial
    transactions that the IDFC will engage in can be used to create a
    market for negotiable securities that can be put into a larger market
    and become part of the financial scandals that have we have come to
    experience.
        How will the IDFC be ``supervised'' or ``regulated''?
        Banks that have a federal license operate under the supervision and
    regulation of the Office of the Comptroller of the Currency (OCC). The
    Comptroller conducts regular inspections of all banks' books and
    supervises them if they get into financial trouble. That is, the OCC
    may require them to write off bad loans and to change their lending
    practices or to be seized by federal Marshalls. If the bank experiences
    a Failure or Bankruptcy, the Federal Deposit Insurance Corporation
    (FDIC) has the authority to take over a bank's assets and sell them to
    public buyers. The FDIC may arrange for a financially-strong bank to
    purchase the failed bank's assets.
        The IDFC would be ``supervised'', in this sense of the word, by an
    agency of the Department of Interior or an office within the Treasury
    Department. Perhaps there is such a ``Supervisory'' office for the
    Community Development Finance Institutions housed within the Treasury
    Department, the CDFI group. I would like to suggest that Committee
    staff make inquiries into such arrangements prior to a ``Mark-up''
    session for the bill, S. 439.
        Mr. Chairman, before I conclude my testimony, I would like to
    address the question of language in the bill that provides that the
    stock to be issued to Tribal Shareholders be set at $50 per share. This
    was language drafted in 1987 when the great majority of tribes had
    virtually no disposable income or cash reserves. In this post-IGRA era,
    I would suggest that a price per share of $1,000 or even $10,000 would
    be more appropriate. In addition, such a price would mean that if all
    500 tribes purchased IDFC stock, it would create a pool of capital of
    either $5 million or even $50 million to augment the $100 million
    authorized for Federal Government Capital Stock.
        In addition, there should be a ceiling set on the number of shares
    one individual tribal nation should be able to purchase, Presumably,
    the Bank's Governing Board would write the initial operating policies
    to provide one vote per share for tribal shareholders if they are
    casting votes for the Governing Board or adopting or modifying
    important operating policies or considering investment decisions. If
    the U.S. Treasury Secretary has a deciding vote on key decisions for
    loan commitments or investment of IDFC capital into Tribal Shareholder
    projects, the Governing Board's decisions could still be overruled by a
    majority vote of tribal shareholders at an official shareholder
    meeting. A basic principle of democracy should be considered which
    balances the views and wishes of small shareholders and voting power
    with tribes who hold larger blocks of the voting stock.
        Mr. Chairman, it has been an honor to appear before you today and
    offer these comments on the IDFC authorizing legislation. I would like
    to close by pointing out to you that the IDFC is a ``visionary''
    proposal that originally came from the group of Visionary Tribal
    Leaders who served 40 years ago on the Economic Development Task Force
    of the American Indian Policy Review Commission. I believe that they
    were looking into the future and that they could envision a time many
    years later when Indian Country would be in a position to make use of
    the resources and powers assigned to the IDFC in a powerful and dynamic
    way to meld Indian County together into an integrated ``Indian Country
    Economy'' and, perhaps into an ``Indigenous Nations Economy''. The
    Development Bank has the tools and can mobilize the capital and
    technical resources to help tribal leaders across Indian Country create
    a healthy and economically-sustainable Indian Country Economy. They can
    overcome the preceding generations of colonialism and economic
    oppression imposed on U.S. Tribal Nations under the Allotment Acts and
    the termination-era policies of BIA domination and economic
    paternalism. It is an opportunity to bring about an economic
    transformation of Indian Country. This would be a fitting role for the
    IDFC to define as its mission. I thank you for your attention, and I am
    happy to respond to any questions you may have.

        The Chairman. Professor Parker, thank you very much.
        I should have mentioned that Professor Parker was
    previously a Staff Director for this Committee when Senator
    Inouye, back in the 1980s, was Chairman of this Committee. So
    the Committee appreciates your previous work. And I know this
    has had a long germination period, but nonetheless good ideas
    are good no matter when they are described or discussed, and I
    am pleased that we are discussing it now because this issue of
    economic development for tribes is very important, and the fact
    is, it doesn't happen without access to capital.
        Mr. Ron Allen has been with us many, many times. He is the
    Treasurer of the National Congress of American Indians and the
    Tribal Chair of the Jamestown S'Klallam Tribe in Washington
    State.
        Mr. Allen, thank you for being with us. You may proceed.

    STATEMENT OF HON. W. RON ALLEN, TREASURER, NATIONAL CONGRESS OF
                    AMERICAN INDIANS; TRIBAL CHAIR,
                       JAMESTOWN S'KLALLAM TRIBE

        Mr. Allen. Thank you, Mr. Chairman and Senator Franken.
        I appreciate the opportunity to come before you to talk
    about this particular bill which I think is very, very
    important. I am very honored to speak on behalf of the National
    Congress of American Indians, as well as my tribe, on this
    subject matter.
        As you and this Committee is well aware, self-determination
    and self-governance, self-reliance are fundamental pillars for
    the tribes. And when it comes to economic development to
    achieve self-reliance, it requires capital. And everyone knows
    that. It requires the capacity to be able to build your
    infrastructure, to build your economy, to be able to create
    jobs, and to be able to attract investment in your community
    wherever you are, whether you in the far reaches of Alaska or
    if you are down in the tip of Florida.
        So we have an opportunity. And yes, against a backdrop
    where you are exploring financial reform and exploring the
    fundamental tenets or principles that Wall Street should be
    administering, we are aware of that. We think that this is a
    good opportunity.
        We want to make sure that, you are well aware, as we are
    talking about this development bank idea, that right now we
    have literally tens of, if not hundreds of billions of dollars
    invested right now that are actually maturing. This year alone
    they estimate $50 billion. In four years, we figure that our
    loans are going to be probably maturing to the tune of, for
    refinancing, up to the $400 million range.
        So the banking industry is going to be exploring that, but
    it will cost us more. It is very costly for Indian Country to
    get access to capital to invest. There are lots and lots of
    opportunities, but what do we need out there? We need capital
    to invest in telecommunications or fundamental infrastructure.
    If we are going to explore the option of eco or tourism
    industries, how are we going to get there? We have to have
    investment in order to develop the infrastructure and the
    capacity to do that.
        We want to note to you that the ARRA Act, the Recovery Act,
    has made a big difference. I would like to show you the report
    that we at NCAI had produced to give you samples of examples
    how that kind of stimulus of investment in Indian Country made
    a difference. And I would ask that you would consider this for
    the record to give you examples of how capital investment in
    Indian Country can make a difference, and that we need more of
    it.
        It is a one shot deal that is making a difference. But even
    in it, even in the ARRA bill, $2 billion of that 4 plus billion
    dollars that was made available to Indian Country was for tax
    exempt bonds.
        Now, the issue is that all those bonds were identified for
    tribes. They capped them off at $30 billion for any particular
    proposal--$30 million, I should say--for any particular
    proposal by tribes. A long list of tribes submitted requests to
    be in the mix for those tax exempt bonds, but very few of them
    have been let. Why? Because the financing industry is not
    interested. They are not interested in investment in Indian
    County. They consider us high risk.
        So the issue is that there is a need for investment and
    tribes are ready to go out and secure them, but the industry is
    not willing and interested in investing because they consider
    us high risk. The due process, the confidence of doing business
    in sovereign territory like Indian Country is a big problem for
    Indian Country.
        Does this supplant or does this proposal intervene with
    regard to what the BIA is doing with the Loan Guaranty Program?
    No, it complements it. It complements the Indian banks out
    there. It complements the private sector out there. This
    proposal is intended to complement that opportunity.
        So NCAI would like to encourage the Committee to explore
    this idea with Indian Country with regard to how you would
    invest in this kind of a proposition for development and
    infusing capital in our communities.
        One, we would like to note to you that this bank needs to
    have access to the Federal Reserve. You need to have access to
    those resources so we can get that capital at an affordable
    levels, at affordable rates to be able to be extended out to
    Indian Country for the purposes of infrastructure.
        Two, it needs to, as outlined in it, it needs to enhance
    the training and the assistance that tribes need in order to
    access those resources. We also need assistance in developing
    the legal infrastructure so that when the financial industry or
    the developers want to do business on reservations, that they
    have confidence in the due process. So tribes need to
    strengthen that fundamental legal infrastructure of our
    governments so the private sector would do business.
        Third, structural integrity. The bank needs to have a
    structure so that it works. It has to make sense on how you
    provide the oversight. So you have to make sure there is no
    conflict of interest in terms of how you are going to get
    money, access money and get investors to invest in it, and that
    you will be able to get those monies out into Indian Country so
    that would happen.
        The last point I would like to make is that make sure that
    inside the legislation you have some provisions and conditions
    that is would enhance our ability, such as guarantees; such as
    insurance or other innovative issues, including surety bonding
    which can strengthen tribes' businesses to be able to go out
    and get jobs and get surety bonding that is sorely underfunded
    right now. We can't access that. It doesn't allow our
    businesses to be able to be effective and competitive in the
    market.
        So I will close, Senators, by saying thank you for the
    opportunity. We look forward to working with you and hopefully
    we will find a way to make this bill become a reality.
        Thank you, sir.
        [The prepared statement of Mr. Allen follows:]

     Prepared Statement of Hon. W. Ron Allen, Treasurer, National Congress
          of American Indians; Tribal Chair, Jamestown S'Klallam Tribe

        The National Congress of American Indians supports the proposition
    of a federally-guaranteed development bank to promote economic and
    community development in tribal communities. This idea has become
    especially significant during these difficult economic times where
    credit is scarce, unemployment is high, and the need to build tribal
    economies is great.
        The Senate Committee on Indian Affairs (Committee) is well aware of
    the difficult economic and social conditions plaguing Native
    communities. Without adequate investment in tribal communities, things
    simply will not change. We know this from the substantial and
    successful investments recently made by the Federal Government in
    tribal governments through the American Recovery and Reinvestment Act
    (Recovery Act). Tribes were able to access government funds for
    infrastructure and economic projects that were planned but left
    unfunded or under-funded, sometimes for decades.
        The federal investment through the Recovery Act yielded positive
    returns for tribal communities, including improved citizen services,
    strengthened institutions and infrastructure, and increased job
    opportunities. As a result health care facilities, schools, houses and
    senior care facilities were built to improve the health and well-being
    of tribal and surrounding community members. Airports, roads, and water
    treatment facilities were undertaken to improve market access and build
    the required infrastructure needed for economic and community growth
    well into the future.

       See attached ``Investing in Tribal Governments'' for
            examples of federal return on investments under the Recovery
            Act. *
    ---------------------------------------------------------------------------
        * The information referred to has been retained in Committee files
    and can be found at www.indiancountryworks.org/file/
    Investing%20in%20Tribal%20Governments%20-
    %20Case%20Studies%20From%20ARRA%20web.pdf

        These federal investments in tribal governments are important and
    need to continue; however, there is a role for the Federal Government
    in ensuring that capital finds its way to tribal communities. The
    Federal Government should serve a key role, through a tribal
    development bank, in mitigating early capital risk and perceived
    investment and political risk associated with financing tribal
    government projects.
        One of the main arguments against the formation of a government-
    backed development bank has always been that it would step on the toes
    of the private sector. But, as we are all keenly aware, private capital
    has not found its way into Indian Country on any substantial scale.
    This is the case (especially in the current downturn), even in maturing
    industries like gaming and energy where tribes are currently having a
    difficult time gaining access to credit or reasonably priced debt. In
    addition, because tribes, as a portfolio, have a relatively small
    impact on more sizable investment firms that are needed to underwrite
    the risk, there are relatively few firms making decisions to enter or
    support the tribal market. This often leads to higher-priced
    transactions with higher yields for tribes.
        As part of the Recovery Act, tribal governments were given access
    to $2 billion in tax-exempt debt for economic development purposes. The
    Department of Treasury, in an effort to ensure the greatest number of
    tribes would benefit, set an allocation cap of $30 million for each
    applicant. Both tranches of $1 billion each were over-subscribed making
    it very clear that the demand for reasonably priced debt is very high.
    This exercise also made it very clear that even though there was very
    high demand from tribal governments, there was very little appetite
    from the investment community to extend credit to tribal governments
    with less than a handful of tribal governments completing the
    underwriting process to date. Tribal leaders are now left wondering how
    if they will be able to use this one-time allocation.
        A well-designed development bank could help accelerate private
    sector investment in tribal economic projects. A well-designed
    development bank should serve as an incentive for private capital to
    invest alongside the bank and target areas where private capital has
    failed or is insignificant enough to drive rate or equity competition
    for the benefit of the tribe. All this should be done while being
    mindful of generating enough revenue to make the bank stand on its own
    with little support from taxpayers.
        The Indian Development Finance Corporation Act (IDFCA) [S. 439]
    introduces the development bank in Indian Country. In moving toward a
    successful introduction, Indian Country can learn from other
    government-backed development bank models, since many receive a high
    profile--like the World Bank or International Monetary Fund. We can
    also learn from other government programs that have successfully
    entered into the government-backed capital arena, like the Indian Loan
    Guarantee Program at the Office of Indian Energy and Economic
    Development within the Department of the Interior.
        In looking at other models and what has already proven successful,
    NCAI would like the Committee to consider certain aspects, some
    included in the legislation that is the subject of this hearing,
    including:

       Bank Self-Sufficiency and Borrowing Costs-The development
            bank should be able to access funds, for the purposes of
            extending and refinancing debt, from the Federal Government's
            Federal Reserve. Borrowing funds utilizing the discount,
            overnight, or inter-bank rates is essential to maximize
            taxpayer returns, and to generate revenue to offset losses and
            administrative expenses. Indian tribes are limited to issuing
            only debt for certain enterprises, making the low borrowing
            rates essential in providing cost-effective debt. This also
            reduces the amount of appropriated funds that need to be set
            aside for the purpose of backing loans, since only a fraction
            needs to be available for possible defaults.

       Training and Technical Assistance--The development bank
            legislation should provide specific authorization [of
            appropriations] for initial and on-going training and technical
            assistance. In other development bank models, it is essential
            that the right expertise be available to build upon and enhance
            the skills of the entrepreneur. Training and technical
            assistance integrated throughout the business start up and
            development stages improves the business success rate, and
            protects the development bank risk while building capacity.

             One of the reasons that a development bank is needed in Indian
            Country specifically is because the development community
            providing capital is reluctant to navigate diverse tribal
            codes. Tribes pay a premium when financial firms and investors
            assume this presumption of risk. Training and technical
            assistance should extend to developing effective tribal codes
            that can facilitate financial transactions while honoring
            tribal sovereignty in an effort to build investor confidence in
            the tribal market.

       Structural Integrity--A development bank should be
            structured in a manner that provides visibility and
            objectivity, and takes advantage of Indian Country capacity.
            Taking lessons from other banks may be helpful in developing an
            effective structure. One of the international banks has
            representatives from every member nation involved in the
            decision-making process. While this is inclusive, it has also
            created an unnecessary bureaucracy and politics. Short terms of
            service also tend to limit the capacity and effectiveness of
            the decision-makers. And an development bank in Indian Country
            should consider the lessons of the World Bank as a structure to
            avoid where the developed countries appear to be the decision-
            makers and by default the ones to blame when loan or equity
            financing is not advanced, or worse, when a business fails or a
            loan defaults.

             An Indian Country development bank may want to avoid equity
            buy-ins to the bank or a structure that provides the appearance
            that wealthier tribes that can afford to invest may be the
            decision-makers for those who may not be able to participate in
            the same manner. Keeping participation open and diverse is
            essential for objectivity and visibility. This arrangement also
            encourages the development of tribal governments as separate
            investors into investment bank projects, while avoiding any
            appearance of a conflict of interest.

       Tribal Government Alternative Needs-The development bank
            should also consider using guarantees, insurance, and other
            innovative structures to drive infrastructure investment and
            business development. Financing a large infrastructure project
            up front saves on construction and materials cost, adding value
            for the tax payer. Utilizing the bank to finance projects and
            use appropriations or grant revenues (similar to states) to
            repay the debt would help advance economic and community
            development. In addition to financing large infrastructure
            projects, the bank can be used to provide larger surety
            guarantees or provide short-term bridge financing for
            government contracts or pre-market financing.

        Indian Country needs a development bank now more than ever. Indian
    Country is well positioned to move into the new economy through the
    development of its vast and diverse natural resources, expansion of its
    telecommunication infrastructure, growth of maturing industries, and by
    adequately valuing our cultures for development of a local tourism
    industry.
        NCAI looks forward to working with the Committee as it continues to
    develop the development bank concept. Producing a model institution
    that will serve the immediate capital needs of tribal governments and
    entrepreneurs is of utmost importance to the future growth of tribal
    economies, while mitigating the investment risk of private capital
    partners.

        The Chairman. Chairman Allen, thank you very much, as
    always, for your testimony and your work.
        I am going to call on Alonzo Coby, the Chairman of the Fort
    Hall Business Council of the Shoshone-Bannock Tribes in Fort
    Hall, Idaho, but my colleague has joined us, Senator Udall. And
    I know, Senator Udall, you wanted to make an appropriate
    introduction.
        Are you able to stay or do you want to make that
    introduction now? Okay, why don't we just continue down the
    line.
        Senator Tom Udall. Oh, okay. You just mixed up Udalls. No
    problem.
        The Chairman. I did mix up Udalls.
        [Laughter.]
        Senator Tom Udall. Well, Mark Udall is coming, I believe,
    to make the introduction.
        The Chairman. And I do that constantly.
        Senator Tom Udall. No, no, no. This is the first time he
    has ever done it. The first time he has ever done it. He is
    brilliant.
        [Laughter.]
        The Chairman. Let the record show I do it constantly.
        [Laughter.]
        The Chairman. But I will never again mix up the Udall
    cousins here in the United States Senate.
        Senator Tom Udall. It is very easy to do.
        The Chairman. I am just going to call them Senator from now
    on, but I know which Udall I am talking about and I appreciate
    his work on this Committee.
        Mr. Alonzo Coby, Chairman of the Fort Hall Business
    Council, you are here to testify on I believe the Blackfoot
    River Land Settlement Act. Is that correct? Why don't you
    proceed.

      STATEMENT OF HON. ALONZO COBY, CHAIRMAN, FORT HALL BUSINESS
                    COUNCIL, SHOSHONE-BANNOCK TRIBES

        Mr. Coby. Good afternoon, Chairman Dorgan and Senator
    Udall.
        I am Alonzo Coby, the Chairman of the Shoshone-Bannock
    Tribes located in Fort Hall, Idaho. I am honored to provide our
    views on S. 2802, an Act to settle the land ownership issues on
    the Blackfoot River in Southeastern Idaho. We thank Senator
    Crapo and Senator Risch for introducing this bill.
        We also thank Mr. Marion Walker, a landowner affected by
    this legislation, for his efforts and for coming here to
    testify today.
        For over five years, these issues have been in litigation
    before a water master in Idaho. We have been working with
    tribal landowners, non-Indian landowners, the BIA, the Bingham
    County Commissioners and the State of Idaho to resolve these
    longstanding land matters that have clouded titles to these
    lands.
        The parties believe that the best way to settle these land
    issues is through legislation. We hope that Congress can enact
    this legislation as soon as possible, given that the court has
    a December 6, 2010 trial date on these matters.
        What this legislation does: one, it extinguishes title to
    non-Indian-owned lands on the south side of the river. This
    amounts to 31.01 acres which the tribes would gain under this
    legislation.
        Two, extinguish title to Indian and tribally owned lands on
    the north side of the river. This amounts to 37.04 acres which
    would be transferred to the non-Indians.
        Three, provide for fair compensation to those who lose
    their lands under the legislation and provide fair compensation
    to those who experienced trespass damages for over 45 years.
        Four, allow the affected landowners to gain farms and use
    their lands.
        Once the legislation is enacted, the tribes will dismiss
    their objections relating to the use of water they filed in the
    Snake River Basin adjudication. This will enable the landowners
    to secure their water right decrees in the Blackfoot River for
    irrigation and other purposes.
        These problems were created over 45 years ago when the
    Federal Government, acting through the Army Corps of Engineers,
    rechannelized the Blackfoot River. Given that the Federal
    Government created these problems, you should assist us in
    resolving them by enacting this legislation.
        The best way to understand the problems created by the
    rechannelization is by showing you some maps. Visual aid one,
    which is to your left, this is an aerial map of the Fort Hall
    reservation, which is in the corner. There is a diagram of the
    State of Idaho showing where the former reservation was
    located.
        The Blackfoot River is the Fort Hall Reservation's most
    northern boundary. The original reservation boundary and the
    Blackfoot River are shown in blue on this map. The stretch of
    the river is about 13.5 miles. The rechannelized Blackfoot
    River is shown in red. You can see various loops created by the
    channelization.
        BLM conducted a survey of the river and prepared plats
    showing the present course of the Blackfoot River. The
    Cadastral Survey lines are shown in yellow, the visual aid
    which is to your right. This map shows a close-up of one of the
    non-Indian land loops created by the rechannelization. This
    loop is Mr. Walker's land.
        After rechannelization, his land ended up on the south side
    of the river within the reservation. Again, the blue line is
    the original reservation boundary and the new rechannelized
    river is shown in red. This loop approximately is three acres.
        There are approximately 44 loops created by the
    channelization owned by Indians and non-Indians. Since the
    1960s, the parcels of land had remained idle because the
    landowners cannot gain access to the parts of the land without
    trespassing or seeking right-of-way across other owners' lands.
    We hope Congress can assist us in resolving these longstanding
    land disputes created by the Federal Government's actions in
    the 1960s.
        Please enact this legislation before this December, which
    is when the court has scheduled for this trial. Our hope is to
    resolve this through legislation, not litigation.
        Thank you.
        [The prepared statement of Mr. Coby follows:]

     Prepared Statement of Hon. Alonzo Coby, Chairman, Fort Hall Business
                        Council, Shoshone-Bannock Tribes

    I. Introduction
        Good afternoon Chairman Dorgan, Vice-Chairman Barrasso, Senator
    Crapo, and other Members of the Committee. My name is Alonzo Coby, and
    I am the Chairman of the Fort Hall Business Council, which is the
    governing body of the Shoshone-Bannock Tribes located on the Fort Hall
    Reservation in southeast Idaho. I am honored to be here today to
    provide our views on S. 2802, an Act to settle land ownership issues on
    the Blackfoot River in southeastern Idaho.
        We particularly appreciate that Senator Crapo, our Senator from
    Idaho, introduced this bill with Senator Risch. On the House side,
    Representative Mike Simpson along with Representative Walt Minnick
    introduced H.R. 4613, the companion bill to S. 2802. Our delegation
    understands the importance of resolving these historic land title
    issues in southeast Idaho that have created challenges for the Tribes
    and non-Indian landowners. We greatly appreciate Mr. Marion Walker, a
    landowner affected by the legislation, being able to come and offer his
    support. This legislation is supported by all the affected non-Indian
    landowners.
        For over five years, these issues have been in litigation before a
    water master in Idaho. We have been working with the Tribal landowners,
    non-Indian landowners, the Bureau of Indian Affairs, the Bingham County
    Commissioners, and the state of Idaho to amicably address and resolve
    these long-standing land matters. We know the importance of working out
    these issues that have clouded title to these lands. The parties have
    concluded that the best avenue to settle these land disputes is through
    this legislation. The parties hope that the Congress can enact this
    legislation as soon as possible given that the Court has set a December
    6, 2010 trial date on these matters.
        This legislation would once and for all clear up land title to the
    affected lands, enable the Tribes and non-Indian owners to farm or use
    the land, provide fair compensation to the parties, and enable the
    landowners' water claims to be decreed. The parties have lost valuable
    income due to the inability to farm these lands. These problems were
    created over 45 years ago when the federal government, acting through
    the Army Corps of Engineers, rechannelized the Blackfoot River. Given
    that the federal government created these problems, it should assist us
    in resolving them by enacting this legislation.

    II. Background of the Shoshone-Bannock Tribes and the Fort Hall
            Reservation
        The Shoshone-Bannock Tribes are a federally recognized Indian tribe
    organized under the Indian Reorganization Act of 1934. The Shoshone and
    Bannock people are comprised of several related bands whose aboriginal
    territories include land in what are now the states of Idaho, Wyoming,
    Utah, Nevada, Colorado, Oregon, and parts of Montana and California.
        In 1867, President Andrew Johnson by Executive Order designated the
    Fort Hall Reservation (``Reservation'') for various Shoshone and
    Bannock bands that occupied the area since time immemorial. On July 3,
    1868, the Shoshone and Bannock Tribes (``Tribes'') concluded the Second
    Treaty of Fort Bridger, which was ratified by the United States Senate
    on February 24, 1869. Article 4 of the Fort Bridger treaty reserved the
    Reservation as a ``permanent home'' to the signatory tribes. Although
    the Fort Bridger Treaty called for the Reservation to be approximately
    1.8 million acres, various ``surveying errors'' in 1873 reduced its
    actual size to approximately 1.2 million acres.
        One of the United States' purposes in setting aside the Fort Hall
    Indian Reservation was to protect the Tribes' rights and to preserve
    for them a home where their tribal relations might be enjoyed under
    shelter of authority of the United States. Subsequent cession
    agreements with the United States reduced the Fort Hall Indian
    Reservation to the present day size of 544,000 acres. Of the 544,000
    acres, 97% of the land is Tribal land or held by the United States for
    the benefit of the Tribes or its individual members. The Tribes'
    territory is the largest Reservation in Idaho and forms a large
    cohesive geographic area that supports a population of over 6,000
    people and provides an irreplaceable homeland for economic activity and
    cultural practices based on strong religious traditions premised on the
    sacredness of land. Our current Tribal membership is approximately
    5,300 members.
        The Fort Hall Reservation is blessed with an extensive biodiversity
    including rangelands, croplands, forests, streams, three major rivers
    (the Snake, Blackfoot, and Portneuf), reservoirs, springs, and wetland
    areas, an abundance of medicinal and edible plants, wildlife (elk,
    deer, moose, bison, big horn sheep, etc.), various species of fish,
    birds, and other animal life. The Reservation lands are mountainous and
    semi-desert, and overlay the Snake River aquifer, a large groundwater
    resource. The culture and continued existence of the Shoshone and
    Bannock peoples depend on these resources.
        The Blackfoot River is the Fort Hall Reservation's most northern
    boundary, established by the Executive Order of 1867. The Shoshone and
    Bannocks have an established long-standing and continuous dependence on
    riparian resources of the Snake and Blackfoot Rivers. While fish and
    fishing technologies constitute some of the strongest evidence of the
    dependence of Shoshone-Bannock people on riparian resources, the
    importance of these resources extend beyond fishing. Streams were a
    reliable water source for native people. The Rivers were rich in game,
    including mammals and water fowl. The best winter camps were along
    stream courses where ample vegetation provided firewood, forage and
    shelter. No place illustrates the varied resources and subsistence
    strategies of the Shoshone-Bannock people than the Fort Hall Bottoms,
    located at the Snake and Blackfoot Rivers. For centuries, Shoshone-
    Bannock have fished, hunted, processed game, built tools and lived.

    III. The United States' Rechannelization of Blackfoot River
        In the 1950s and early 1960s, the Blackfoot River annually flooded
    and caused damage to local homes and properties. The United States Army
    Corps of Engineers, in 1964, undertook a local flood protection project
    on the Blackfoot River authorized under section 204 of the Flood
    Control Act of 1950. The project consisted of building levees,
    replacing irrigation diversion structures, replacing bridges, and
    channel realignment. The channel realignment portion of the project
    altered the course of the Blackfoot River (``River'') and caused the
    land issues between the Tribes and non-Indians for over 45 years. The
    federal government moved segments of the River's ``bed and banks''
    entirely within the boundaries of the Fort Hall Reservation.
        Following the channelization, individually Indian owned and
    Tribally owned lands (approximately 37.04 acres) ended upon on the
    north side of the River, and non-Indian owned lands (approximately
    31.01 acres) ended up on the south side of the River within the
    boundaries of the Fort Hall Reservation. Since the 1960's the parcels
    of land have remained idle because the Tribal and non-Indian landowners
    could not gain access to the parcels of land without trespassing or
    seeking rights-of-way across other owner's land. As mentioned
    previously, the inability to farm these lands has deprived landowners
    of vital income.
        The Department of Interior, Bureau of Land Management, Cadastral
    Survey Office conducted surveys of the River in 1999 through 2003, and
    has prepared plats representing the surveys that show the present
    course of the Blackfoot River and identify the Fort Hall Reservation
    borders that existed at the time the Reservation was established. See
    67 Fed. Reg. 46,686 (July 16, 2002); 67 Fed. Reg. 64,656 (October 21,
    2002); 68 Fed. Reg. 17,072 (April 8, 2003); 69 Fed. Reg. 2,157 (January
    14, 2004); 70 Fed. Reg. 3,382 (January 24, 2005). Since the realignment
    of the River is considered an ``avulsive act'', a change resulting from
    the man-made channelization, survey law deems there is no change to the
    Reservation boundary. The original Blackfoot River bed remains the
    northern boundary of the Reservation. Additionally, this legislation
    does not change the original boundary of the Reservation as reserved by
    the Executive Order of 1867 and confirmed by the Fort Bridger Treaty of
    1868.

    IV. Litigation
        In the late 1980's the Snake River Basin Adjudication began in
    Idaho to decree water rights on rivers and streams, including the
    Blackfoot River. Several non-Indian landowners affected by the
    rechannelization claimed their place of use of water was on the Fort
    Hall Reservation. In 2006, the Shoshone-Bannock Tribes filed objections
    to these claimed water rights. After extensive meetings and multiple
    status conferences among the court, Tribes and non-Indian landowners,
    it was agreed the best way to resolve these land ownership issues is
    through federal legislation as the state water court does not have the
    ability to resolve the land issues. We have filed status reports to the
    court advising that federal legislation has been introduced.
        The Snake River Basin Adjudication court, however, has not stayed
    the trials in the water boundary cases to permit the parties to move
    forward with federal legislation. A trial scheduled in March 2010 on
    three boundary cases was postponed based on the Tribes reaching
    agreement with the parties. The court has scheduled trial on December
    6, 2010.

    V. The Legislation
        This legislation serves two primary purposes. First, it would
    resolve the land ownership issues on both sides of the realigned
    Blackfoot River by extinguishing title to non-Indian owned lands on the
    south side with the Tribes gaining ownership, and the title to Indian
    owned lands on the north side being extinguished with the non-Indians
    gaining ownership. Second, it would provide fair compensation to the
    Indian and non-Indian landowners for years of trespass for the value of
    their lands, and provide for final settlement of all claims arising
    from this land controversy.
        Under the legislation the Tribes and individual Tribal members
    would receive 31.01 acres on the south side of the River, and the non-
    Indians would receive 37.04 acres on the north side of the River in the
    legislation. This legislation addresses about 10 miles along the
    Blackfoot River. There are 44 loops created by the rechannelization in
    question, and land title would be resolved.
        The Department of Interior Office of Special Trustee conducted a
    market study of the value of the land and calculated the amount of
    trespass damages that would fairly compensate the non-Indians, Tribal
    members and Tribes for their lands.
        There are numerous benefits the landowners would receive from the
    proposed legislation. First, the ownership and title to non-Indian and
    Indian owned lands located on the north and south sides of the River
    would once and for all be determined. The legislation recognizes the
    numerous parcels held by non-Indians located on the Reservation.
    Second, the non-Indian landowners who currently own lands on the south
    side of the River on the Reservation would be monetarily compensated
    for their lands that they give up in the legislation. They would be
    compensated for the value of their lands and also receive trespass
    damages. Title to these lands would be transferred to the United States
    to be held in trust for the Tribes. Third, the legislation would
    extinguish title of the United States to lands held in trust for the
    Tribes on the north side of the River, and these lands will be
    transferred to non-Indian owners.
        Fourth, the non-Indians would not face any future challenges in the
    form of trespass actions by the United States and Tribes for their use
    of lands on the north side of the River. Finally, if the legislation is
    enacted, the Tribes would dismiss their objections relating to place of
    use of water they filed in the Snake River Basin Adjudication, which
    will enable the landowners to secure their water right decrees in the
    Blackfoot River for irrigation and other purposes.
        In conclusion, the Shoshone-Bannock Tribes, Tribal member
    landowners, and non-Indian landowners share a common interest of
    reaching a resolution of these historic Blackfoot River land issues
    without having to go to court. We have worked diligently on this
    legislation to meet the needs of all. We ask for quick enactment of
    this legislation in light of the impending trial date. Thank you for
    the opportunity to participate in this hearing on this important
    subject.

        The Chairman. Chairman Coby, thank you very much for being
    here and for your testimony. My understanding is you told me
    that you are leaving the Tribal Council after 10 years service?
        Mr. Coby. Yes, I am retiring.
        The Chairman. Retiring at a very tender age, I would say.
        [Laughter.]
        The Chairman. Next, we will hear from Mr. Marion Walker,
    who is a spokesperson for the North Bank Property Owners in
    Blackfoot, Idaho.
        Mr. Walker, welcome.

        STATEMENT OF MARION P. WALKER, SPOKESPERSON, NORTH BANK
                            PROPERTY OWNERS

        Mr. Walker. Thank you, Chairman Dorgan.
        I appreciate this opportunity to represent those residents
    residing on the north side of the Blackfoot River channel.
    Since you, as I understand, already have a written report from
    me, I will not go through the process of reading that, but I
    will just address my comments to the issue affecting, as an
    example, my land which represents all non-Indians affected on
    the north side.
        As you look at the diagram before you, the parcel that is
    in the hatched red, represents my farm. At the top corner of
    that property, you will find the loop that has been represented
    on both maps. This is one parcel which I have lost which is
    just over three acres, and another parcel a little further
    downstream, just over a half acre which I lost.
        Because of that, we have not been able to farm that land
    that has been cut off from us. We can't get equipment across
    the river to that land without building separate bridges to
    each parcel, which is really not cost-effective and may not
    even be acceptable to the Water Resource Department.
        Therefore, because these and other loops have been lost
    from members on the north bank, there has been a loss of income
    on all of these properties. Mine represents just a small
    portion of many of them.
        As we looked at this and just kind of rummage this through
    our minds today, over the past 45 years if this land were put
    into effective hay production, which is one of the crops that I
    produce, it would equate to anywhere between $50,000 and
    $90,000 over this period of time.
        There are several different crops, and some crops are more
    productive and more economical than others, but people up and
    down the river use their lands for the production of alfalfa,
    grain, potatoes, and some of this is in pasture land.
        We would suggest that also the loops on the north side of
    the river that are on my property down toward the bottom end of
    that little sliver, that represents tribal land, which two
    loops are on my side of the river, which I have been farming,
    but this is a loss of production for the tribal members of the
    Fort Hall Reservation.
        And so in both respects, as we look at this from all
    aspects, all parties have lost and it is a lose-lose situation
    for all involved. We are proposing that this legislation be
    passed so that it can become a win-win situation by the
    transfer of lands and the people on the north side can continue
    to use the lands which then would become entitled to them or
    deeded and the portions on the south side, that the reservation
    would just go ahead and use for their production and benefit.
        There are also other issues that are involved. That is, if
    this Act does not go through, then there are several places
    further on down the line which are not represented on this map
    where farmers have pivot lines. These pivot circles, and at the
    top of the map you will see one example, there is a center
    point in which a long arm goes out and reaches to the edge of
    the circle. Water is distributed and it irrigates the whole
    portion.
        If there were loops of Indian land on those portions which
    the non-tribal member would use and were not supposed to use,
    they would have to draw their pivot line in somewhat and result
    in a loss of more acreage, which is not very productive.
        As a result of this, we are asking that the bill be moved
    forward. We feel that it is the best way in which to resolve
    the differences on both sides in which everyone can share
    equally and have productive and successful use and management
    of these lands.
        Thank you for your time.
        [The prepared statement of Mr. Walker follows:]

       Prepared Statement of Marion P. Walker, Spokesperson, North Bank
                                Property Owners

        As appointed spokesperson for the affected residents residing on
    the north bank of the re-channelized portion of the Blackfoot River in
    and near the city of Blackfoot, Idaho, I present this written statement
    in support for the ongoing legislation entitled ``Blackfoot River Land
    Settlement Act of 2009.''
        Due to the perpetual flooding problem which existed along this
    portion of the Blackfoot River, the Flood Control District No. 7 was
    created and with the help of the U.S. Army Corps of Engineers, the
    Blackfoot River was re-channeled, deepened, widened and levies were
    placed to prevent future flooding. This work was completed in 1964. It
    was a very successful project which has benefited the entire community
    on both sides of the river. Due the natural meandering of the river it
    was necessary to straighten the channel to successfully complete the
    project. This caused twenty-five loops of Fort Hall Reservation land to
    be cut off from access and effective productivity for members of the
    Shoshone-Bannock Tribes. Nineteen loops were also severed from the non-
    Indian land owners creating the same problem for them. At the time of
    this project, land owners on both sides of the newly formed channel
    recognized the problems created by these severed loops. To resolve this
    issue it was generally agreed upon at the time by those land owners
    involved to simply have the land owners with properties contiguous to
    the respective loops use, manage and farm these isolated parcels of
    land. No one seemed to worry much about this arrangement for the next
    forty plus years, until 2003 when the Bureau of Land Management
    conducted a survey at the request of the Bureau of Indian Affairs.
    According to my understanding, this was all part of the results of the
    Snake River Basin Adjudication project in establishing water rights. As
    a result, the Shoshone-Bannock Tribes, feeling that this verbal
    agreement was no longer satisfactory, brought lawsuits against the non-
    Indian land owners who were using the Reservation land which fell on
    the north side of the newly formed channel. This conflict of interest
    brought both parties to the negotiation table. It was proposed by the
    north bank residents that a simple land exchange of Tribal land for
    non-Tribal lands, with just compensation for any discrepancy, be
    implemented.
        It was brought to our attention that, according to United States
    treaty with the Shoshone-Bannock Tribes, reservation land cannot be
    sold or traded without a Congressional Act. It was decided that we
    would pursue such action. Both parties have met together since December
    2006 working out the language for this proposed piece of legislation.
    The ``Blackfoot River Land Settlement Act of 2009'' is a result of
    these negotiations. Both parties are in agreement with this proposed
    legislation As to why this land use dispute was never appropriately
    resolved at the time of the completion of the project is now a moot
    issue. The fact remains that in order to avoid further discord and
    frustration between Tribal members and the non-Indians, this
    Congressional Act is imperative since, for all practical purposes, we
    believe this to be the best way for both parties to use and manage
    these ``cut-off loops''. We, as north bank property owners, are
    urgently requesting your support for the passage of this legislation.

        The Chairman. Mr. Walker, thank you very much. I appreciate
    hearing your description of this proposed settlement.
        We have been joined by Senator Mark Udall from the State of
    Colorado. He joins his cousin, Senator Tom Udall from the State
    of New Mexico. Senator Mark Udall is here because he wishes, I
    think, to say some good things about witnesses from the State
    of Colorado to talk about the next piece of legislation that we
    are considering.
        So Senator Udall, you may proceed.

                     STATEMENT OF HON. MARK UDALL,
                       U.S. SENATOR FROM COLORADO

        Senator Mark Udall. Thank you, Mr. Chairman.
        Senator Tom Udall. Chairman Dorgan, I am going to loan it,
    since this is the generic Udall family, I am going to loan that
    to him while he is here.
        [Laughter.]
        The Chairman. But don't give up your first name.
        [Laughter.]
        Senator Mark Udall. It has been said in the West that
    Udalls are a dime a dozen, and that is the best thing they can
    say about us out there.
        But thank you, Mr. Chairman, for giving me an opportunity
    to briefly speak to the important legislation you are
    considering today and to make a couple of introductions.
        We have an opportunity to hear today about the Pine River
    Indian Irrigation Project Act. This irrigation system was built
    in the late 19th century with the intention of encouraging
    farming on the Southern Ute Reservation in southwest Colorado.
    Today, the system is not fulfilling its original intent as a
    result of deferred maintenance that has put immense stress on
    old and severely deteriorated infrastructure.
        Mr. Chairman, for far too long water users have gone
    without the water necessary to sustain their crops, and for too
    long individuals who depend on the system for water have
    foregone opportunities to bring idle lands back into
    agricultural production and continue as good stewards of the
    land.
        The need to rehabilitate this irrigation system is long
    overdue and the need for the Bureau of Indian Affairs to act,
    equipped with the proper resources, I believe is now.
        With that, although I believe that most of you have already
    met Chairman Matthew Box at previous Committee hearings, it is
    my great honor to be able to reintroduce to you an important
    figure in Colorado Indian Country. Chairman Box was first
    elected to the Southern Ute Tribal Council in February, 2005
    and has served in his current capacity as Chairman since
    November of 2008.
        Prior to his position on the Tribal Council, Mr. Box was
    the owner and operator of an Indian-owned construction company
    specializing in earthwork. I am pleased that he is joining us
    here in Washington to share his testimony and I welcome him, as
    I always do. He always brings a smile to my face.
        I would also like to welcome and introduce Lena Atencio,
    who serves as the Southern Ute Tribe's Natural Resources
    Director. Lena has an intimate knowledge of the technical
    aspects of the Pine River Indian Irrigation Project.
        I am positive that both Chairman Box's and Ms. Atencio's
    testimony today will not only highlight the urgent need in
    southwest Colorado, but also raise questions about the
    management, operations and funding of all Indian irrigation
    projects. This is an issue that I hope this Committee reviews
    further.
        Again, thank you, Mr. Chairman. Thanks to Vice Chairman
    Barrasso as well, and to my cousin for always having my back. I
    know this will be a productive hearing.
        Thank you.
        The Chairman. Senator Udall, thank you very much.
        Chairman Box is not a stranger to this Committee. It is
    nice to see you back again, and you may proceed.

    STATEMENT OF HON. MATTHEW J. BOX, CHAIRMAN, SOUTHERN UTE INDIAN
                                 TRIBE

        Mr. Box. Thank you, Chairman Dorgan.
        Thank you very much, Senators, both of you, and especially
    for the introduction.
        My name is Matthew James Box. I am the Chairman of the
    Southern Ute Indian Tribe in southwest Colorado. It is a great
    honor to be here, of course, and I thank you for this
    opportunity to be here.
        On Tuesday, my written testimony was submitted to the
    Committee, it is very conclusive and in detail, and will be
    able to provide great information. But my testimony here will
    be not verbatim of that, but will highlight certain areas of
    what we call the Pine River Indian Irrigation Project, or
    PRIIP.
        The PRIIP continued to be built throughout the late 1800s
    and early 1900s. Construction of the Vallecito Dam which was
    completed in 1941 provided a storage facility for the water
    from our treaty rights, which could then be delivered via the
    PRIIP. The PRIIP itself intends to serve nearly 12,000 acres
    and approximately 170 miles of ditches and laterals. Most of
    this acreage belongs to the tribe and tribal members, but of
    nearly 400 individual users, approximately 100 are non-Indian
    who benefit from this project, the PRIIP.
        In addition, the town of Ignacio, the municipality within
    our boundaries, also is served from the PRIIP.
        Of all the users, we have all, especially us, but all users
    have witnessed the deterioration of the PRIIP because the
    maintenance on the project has been inadequate for decades, and
    in more of a crisis-style management mode. As you can see from
    some of the pictures that were submitted as part of the record,
    and as my colleague, Ms. Atencio, will note in her statement,
    which has also been submitted as part of the record, the
    PRIIP's condition is close to failure. Ditches are overgrown.
    Delivery structures still in service are cracked, leaking or
    eroded, and diversion ditches are sometimes inoperable. And the
    unaddressed erosion threats of these ditches affect access
    roads and all of these other facilities.
        The PRIIP users cannot count on the consistency of the
    water being delivered, and in some cases may never even see
    water, and yet they will continue to pay O&M fees, and
    historically in some cases, like I mentioned, do not see any of
    the water at all during the irrigation season.
        Of course, the climate conditions in southwest Colorado
    make agriculture difficult enough when the irrigation water is
    a dependable resource. But for the PRIIP users, the deficiency
    of this system makes it nearly impossible. The Tribe has been
    told that the Government's fiscal constraints on the resources
    are to blame for the maintenance failures on the PRIIP, but we
    do not believe those excuses justify the current state of the
    PRIIP. The Tribe is committed to look at this new approach. And
    we recognize that without it, the project would continue to
    deteriorate until it was completely unusable.
        Therefore, again we are here today to show our passion and
    commitment to support the Pine River Indian Irrigation Act
    which would provide a path to bring forward the PRIIP back into
    an acceptable service.
        Since I have explained the problems facing the PRIIP, I
    would like to take this time now, too, to look at and explain
    the ways in which the PRIIP Act addresses them.
        First, the Act recognizes the numerous benefits that would
    flow from a rehabilitated and repaired project. Aside from the
    obvious benefits the PRIIP users would receive from a repaired
    irrigation system, this would also benefit the environment,
    other water users, the Tribe, and on a different note,
    conservation of water that we recognize through gopher holes
    and prairie dog holes and seepage. Thousands of acre feet are
    lost. And of course, the local community would benefit.
        To help realize these benefits, the Act calls upon the
    Secretary of the Interior to conduct a comprehensive study of
    the PRIIP with a goal of developing priorities of
    rehabilitation and repair projects. Although some preliminary
    studies have been done, they have not been as comprehensive to
    the magnitude of the PRIIP's problems. We believe it requires
    an entirely new comprehensive study.
        Also, the development of priorities, in consultation with
    the Tribe and other Federal agencies, will ensure that when it
    comes time to put money into the PRIIP that it will be spent
    well and justified accordingly.
        After the Secretary completes his study and reports back to
    Congress and the Tribe, the Secretary will direct to develop
    projects based on priorities he has identified. These projects
    can be carried on a cost share basis where the Federal share is
    up to 75 percent, or the Secretary could waive those
    provisions. The Act authorizes $4 million in appropriations to
    cover the study and $10 million annually over six years to
    complete this project.
        The Act's approach to fixing the PRIIP is reasonable,
    efficient and makes addressing the PRIIP's massive
    rehabilitation needs feasible. Despite the Federal Government's
    responsibility for the PRIIP and its problems, the Tribe is
    committed to assisting in order to ensure that the project does
    not continue to fall into further disrepair. Through our
    coordination and cooperation to fix the PRIIP, I believe that
    once again we could fulfill a longstanding goal of development
    of sustainable agriculture on the reservation.
        In conclusion, I do thank you and I do carry the weight of
    many users of this water project, as I have many promises to
    keep and many miles to travel before I myself can sleep. So
    this is very important and has become somewhat of a career
    project.
        Thank you for your time.
        [The prepared statement of Mr. Box follows:]

       Prepared Statement of Hon. Matthew J. Box, Chairman, Southern Ute
                                  Indian Tribe

        The Chairman. Chairman Box, thank you very much. We
    appreciate your testimony.
        Finally, we will have testimony from Lena Atencio, who is
    the Director of the Department of Natural Resources at the
    Southern Ute Indian Tribe in Colorado.
        Ms. Atencio, you may proceed.

      STATEMENT OF LENA ATENCIO, DIRECTOR, DEPARTMENT OF NATURAL
                  RESOURCES, SOUTHERN UTE INDIAN TRIBE

        Ms. Atencio. Thank you, Chairman and Senators, for hearing
    my testimony today.
        As Chairman Box indicated, I am here mainly to talk about
    the technical reports that have been provided that cover some
    of the aspects of what maintenance and non-maintenance has been
    done on the Pine River Irrigation Project.
        As was discussed earlier, the project was actually
    established in the early 1900s to provide agriculture to those
    tribes not only on Southern Ute, but other tribes within the
    Nation, to become more agricultural farmers. With that, there
    was around 18,000 acres at that time that was indicative of
    what should have been included on the PRIIP project. But when a
    report was finally done in 1969, the Redesignation Survey, it
    showed that agriculture was on the increase from the 3,500 to
    the 7,500 acre.
        And there are miles that were built beyond the early 1900s,
    which was 170 miles with 1,263 structures which includes
    flumes, ditches, head gates, drop structures, and the 12,000
    irrigable acres on the system today, with an anticipated
    possible increase to 17,000 acres should delivery get to the
    end point of where we need to go.
        But right now as of today, there is only around 75,000
    irrigable farmed acres because of the incapacity of the system
    to carry the water from the beginning of the system near
    Vallecito all the way down south towards our southern borders
    of the reservation.
        In 2006, there was a GAO audit also done, reviewing not
    only our project, but other projects in the Nation, showing
    that there is the deterioration of the irrigation systems based
    on no activity or low maintenance, because the Bureau I don't
    think has the capacity to realize what type of maintenance
    needs to be done, so that was one of the issues in the 2006
    study.
        And then in 2009, the Bureau of Indian Affairs had an
    engineering firm, HKM, come in an reevaluate our system. They
    were only able to evaluate 13 percent of the structures that
    were identified. And of the actual canals, 54 percent of those
    were reviewed. So there was only a partial review of the entire
    system, which does not give us an entire view of what the costs
    would be.
        The HKM study, based on their review, showed that there was
    a $20 million deferred maintenance backlog. And looking at a
    2001 Central Office review that was done, there was a $60
    million deferred backlog. So there is a difference between the
    $20 million and the $60 million.
        And as Chairman Box indicated, we are looking at should we
    be authorized for the $4 million to be able to do the study,
    that will give us an idea of actually between where the $20
    million and $60 million deferred maintenance falls.
        And that is all I have.
        [The prepared statement of Ms. Atencio follows:]

      Prepared Statement of Lena Atencio, Director, Department of Natural
                      Resources, Southern Ute Indian Tribe

        The Chairman. All right. Thank you very much.
        Senator Udall? Or either of the Udalls? Do you have any
    questions?
        Senator Mark Udall. Mr. Chairman, if I might, I would ask
    Ms. Atencio. Did you say 75,000 acres are what can be irrigated
    today? Can you share what acreage might be able to be farmed?
        Ms. Atencio. Actually, it is 7,500.
        Senator Mark Udall. Seventy five hundred acres.
        Ms. Atencio. Right.
        Senator Mark Udall. That was my mistake. Do you have an
    amount of acreage that perhaps could be irrigated and turned
    into productive farmland? We should say when the project is
    enhanced.
        Ms. Atencio. The anticipated total amount would be 17,000
    acres.
        Senator Mark Udall. Seventeen-thousand acres.
        Ms. Atencio. So an increase.
        Senator Mark Udall. It was very significant, a 20-fold
    increase. Senator Dorgan is great with numbers. He may have to
    help me, as is his colleague Senator Conrad.
        I have to note for the record that you clearly have lived
    this situation. You repeated and shared all of those facts and
    figures with us without a prepared statement. The Chairman is
    nodding. You care, I am sure deeply, about getting this right,
    and I want to thank you for that testimony, and thank Chairman
    Box as well.
        If there is anything that you didn't have a chance to share
    with the Committee, we would be happy to hear it at this point.
    But I look forward to working with you and bringing this piece
    of legislation to fruition and keeping our promise to the good
    people of southwestern Colorado.
        The Chairman. Senator Udall, thank you very much.
        My understanding, if I might just inquire, S. 2802, the
    Blackfoot River Land Settlement Act that was introduced by
    Senator Crapo, Senator Crapo was going to try to be here. I
    think he has been delayed. But my understanding is that this
    legislation is a relatively small piece of legislation. It
    authorizes $1 million of compensation and resolves the property
    issue.
        I was just asking the staff, who was trespassing? The word
    trespass is used in the Committee staff memo here, and they
    indicated to me that this is, as you say, boundaries that have
    been changed by the Corps of Engineers and have caused
    difficulties. So the result is that you have now reached some
    agreement and have reached a settlement that has been widely
    agreed to.
        So we have to have a hearing on these pieces of legislation
    to proceed. We will seek the Administration's views. It seems
    to me that the work that has been done to reach agreement
    locally is very important here and is good work.
        Let me just also say that on the bill that is the Indian
    Development Finance Corporation, as I mentioned earlier, that
    has been kicking around for a long, long time. Senator Inouye
    has great credibility, as you know, in this Congress on these
    issues. And I think that that, by contrast to the rather small
    fix that is required in the previous bill, this is a very
    significant piece of legislation. It will require significant
    action by the Committee and the Congress. I am going to seek
    the advice and the recommendations of the Administration as
    well as we go forward, and I appreciate the work.
        Chairman Box, my understanding from your testimony and the
    Committee memo is that this irrigation project was begun in the
    1800s and has fallen into substantial disrepair. My further
    understanding is the substantial benefit of it, of course, is
    to the Indian tribe, but there is some benefit to non-Indians.
        And so this has a long, tortured history, and I think it
    would be wise for all of us to understand the responsibilities
    and the need to proceed, number one, on the planning side; and
    number two, to make a commitment to try to fix the things that
    are wrong here.
        Senator Tester, you have just joined us. Did you have any
    comments or questions?

                     STATEMENT OF HON. JON TESTER,
                       U.S. SENATOR FROM MONTANA

        Senator Tester. I did, if I might, Mr. Chairman.
        The Chairman. Yes, of course.
        Senator Tester. And I apologize for being late. I got
    waylaid in traffic.
        The Chairman. Not at all.
        Senator Tester. I have a few questions for Alan that deals
    with the bill that the Chairman was talking about. And I am
    sorry I missed your opening statement. You may actually have
    addressed some of these in the opening statement as you went
    through it.
        As the Chairman pointed out, President Reagan vetoed a
    predecessor bill to this bill in 1988 because he said, ``The
    bill would create an expensive and unnecessary new bureaucracy
    and duplicate current existing programs and would not have
    addressed the underlying problem of economic development in
    Indian Country. Finally, the legislation places the Government
    at risk of substantial financial loss and does not provide
    sufficient authority for governmental oversight of the
    financial activities that can result in such a loss.''
        How do you respond to that? Do you see it creating a new
    and expensive bureaucracy?
        Mr. Parker. Thank you for the opportunity to respond,
    Senator Tester.
        Obviously, I can't speak for Senator Inouye, but I think
    that it was our view at the time that this would not create a
    huge new bureaucracy. It would be a rather slimmed-down, highly
    specialized organization. It is modeled after the successful
    record of development finance institutions that have been
    created by the World Bank over the years.
        Senator Tester. Have they been pretty slimmed down
    themselves?
        Mr. Parker. I am not really sure how to answer that
    question. I think I can really envision how the Development
    Finance Corporation that is being proposed here would operate,
    and I think it would operate with a relatively small
    organizational overhead.
        Senator Tester. Are there existing programs that this bill
    would duplicate?
        Mr. Parker. I know that at the time they pointed to the
    Indian Financing Act Program as an example of something that is
    already out there. I think that the key difference between what
    is being proposed here is a development bank that the tribes
    have a stake in, because it would create a stock corporation
    that would issue shares of stock to every tribe that wants to
    participate.
        Now, that is entirely different from what the BIA does
    simply as a loan guarantee program with a very small loan
    budget.
        Senator Tester. And that is the Indian Financing Program
    that you talk of?
        Mr. Parker. Yes, and the BIA.
        Senator Tester. How effective has that been?
        Mr. Parker. I think, given the resources they have to work
    with, I think they have a moderately successful record.
        Senator Tester. But you need more of an investment, is what
    you are saying, or at least capacity for more of an investment?
        Mr. Parker. If I can add to that, Senator, the vision that
    is really behind this proposal is that it would enable the
    tribes to effectively work with each other and together so that
    you bring those tribes who have some capital to bring to bear
    with those tribes who are far from the commercial trade centers
    of the Country, but yet have a resource base that has not been
    developed.
        Senator Tester. Why can't commercial lenders accomplish
    this?
        Mr. Parker. Well, I think that the commercial lenders in
    theory could accomplish this, but there are significant
    obstacles to their getting involved, again similar to what the
    World Bank's institutions have faced. The way to really
    overcome those obstacles is to bring in the tribes so that they
    are participating and finding ways to put the financing
    together, negotiate agreements where the tribes are willing to
    commit themselves to it. I just think that kind of working
    organization simply can't be done by some commercial bank.
        Senator Tester. Last question.
        Go ahead, Ron. Go ahead.
        Mr. Allen. Thanks, Senator.
        If I might add to it, a lot of the investment we are
    looking for such as energy development, telecommunication
    infrastructure and enticing other kinds of industries onto our
    reservations, the financial industry is not interested in
    investing. And so the vehicles and the capacity is simply not
    there.
        Senator Tester. They are not interested in investment in
    Indian Country.
        Mr. Allen. No. I can tell you right now, as a tribe who has
    reached out for those kinds of ventures, it is not there at any
    cost.
        Senator Tester. I think we see that in a lot of energy
    development in particular, as a matter of fact.
        Last question. Will the bill place the Federal Government
    at any sort of financial risk?
        Mr. Parker. I think that the bill certainly would have the
    Federal Government in a position to make commitments that
    include some risk, particularly if you are providing a Federal
    guarantee to both bank loans and when the tribe issues a bond
    if it goes forward. If that bond was guaranteed by the Federal
    Government in the way that the Indian Financing Act, for
    example, guarantees a bank loan, there certainly is a risk
    there.
        I don't think it is an unreasonable risk, given what you
    are making possible happen.
        Senator Tester. Got you.
        Ron, did you have any comments on that?
        Mr. Allen. Yes, Senator. I agree with Alan's assessment.
    The risk is there, but it is a low risk. It is an investment by
    the United States into a vehicle that will address an unmet
    need with respect to capital investment on Indian reservations.
    We think that there has been a lot of lessons learned by past
    experiences and by what is even going on in the current
    financial industry.
        So we think that the bill has the good makeup. We would
    like to explore refinements to it that would minimize those
    risks. And we think it is very doable.
        Senator Tester. Minimal risk--does the bill contain
    adequate oversight and regulation?
        Mr. Allen. Yes.
        Senator Tester. Okay. Thank you very much. I appreciate you
    all being here for the hearing.
        Chairman Box, do you live here?
        [Laughter.]
        Senator Tester. You are here for almost every one of them.
        [Laughter.]
        Senator Tester. It is good to have you all here.
        The Chairman. Senator Udall, do you have any questions?

                     STATEMENT OF HON. TOM UDALL,
                      U.S. SENATOR FROM NEW MEXICO

        Senator Tom Udall. Yes, thank you, Chairman Dorgan, and
    thank you for holding this hearing.
        Mr. Parker and Mr. Allen, it is my understanding that a
    version of S. 439 was introduced in the 100 th Congress in
    response to a 1977 study by the American Indian Policy Review
    Commission that recommended the establishment of this, as we
    have been discussing, World Bank-type institution to meet
    economic development needs in Indian Country.
        The World Bank has changed significantly over the last 20
    years and has received some serious criticism, a lot of it
    directed towards the sustainability of projects and those kinds
    of things.
        What changes have been made in the ensuing years to ensure
    that this proposal is not outdated or inappropriate for Indian
    Country?
        Mr. Parker. Thank you for the question, Senator Udall.
        I think that apart from the success of the tribes in the
    business of operating gambling casinos, which is a very
    specialized form of business, the economic conditions that
    prevail all across Indian Country are still very extreme,
    extreme poverty and extremely limited opportunities.
        And I think that there needs to be an institution like this
    that can put together the resources, mobilize the resources to
    begin to really make progress at overcoming those problems,
    overcoming those economic conditions.
        I wanted to add, if I could please, that the Council of
    Energy Resource Tribes organization, I am sure you are familiar
    with who they are. I spoke with David Lester yesterday. He is
    very anxious to get his testimony on the record as a written
    statement, as well as the National Indian Gaming Association.
    Again, they recognize that this allows those successful gaming
    tribes to be able to put some of their capital to work with
    their colleagues across those areas of Indian Country which
    gaming has not provided any benefit to because there is no
    market for it.
        And I think finally the Native American Finance Officers
    Association will be coming in with a statement of support. The
    Native American National Bank based in Denver, their board is
    made up of tribal shareholders, and they are coming in with a
    statement saying that they agree and support this legislation.
        Senator Tom Udall. And I am sure Chairman Dorgan will leave
    the record open for a little bit, I assume, to get in those
    statements. I don't see any of them today except the National
    Congress of American Indians.
        Mr. Allen, do you have any thoughts?
        Mr. Allen. Yes, Senator, if I might add to Alan's response.
        We believe that as you explore the bill, explore the
    structure of this proposed development bank, that it needs to
    be tied very closely to the Federal Reserve System and the
    Department of Treasury. We are thinking outside the box here.
    We are not proposing the old DOI-BIA approach in terms of how
    this proposal thing would be advanced.
        This is a venture that would complement what the commercial
    industry is doing. This is a venture that would complement what
    DOI-BIA's Loan Guaranty Program provides. It addresses a
    serious unmet need. It will not solve all of our problems, but
    it will provide a vehicle where you have stable programs. You
    have solid revenue generation by tribes who can use those
    revenue sources to go out and develop the infrastructure to
    change their economies.
        Telecommunication, the tele-industry and website industry
    are changing. We want to be in on the action. We don't want to
    be the last one in the door.
        And so this vehicle is different from the original version.
    The risk is there, but it is a low risk, and if we tie it to
    the industries and the standards that the Federal Reserve and
    the Treasury Department expect, then there will be very
    stringent guidelines in terms of how you would invest and the
    due diligence process.
        Senator Tom Udall. Would either of you consider the Indian
    Development Finance Corporation outside of or in addition to
    the Government's trust responsibilities?
        Mr. Allen. As a tribal leader, I would argue that it is
    complementary to it. The Federal Government has made a
    commitment to enhance the tribes' ability to become self-
    reliant, to become self-governing, to develop our own
    economies. And we have had many, many examples of failure.
        What this venture would do, the Indian Development Finance
    Act will do is strengthen our capacity as governments and
    provide us the same equitable, fair opportunity to access
    capital, to infuse that capital into our reservations and our
    economies to become self-reliant, create industries, create
    jobs, and create revenue, not just for our people, but for our
    governments.
        Senator Tom Udall. Thank you to all of the panel. It has
    been very good testimony today.
        Thank you, Chairman Dorgan.
        The Chairman. Thank you very much.
        Let me ask, my understanding is that the bill would have
    the Secretary of the Interior purchase stock, and yet it seems
    to me it is probably more logical to have the Treasury involved
    as opposed to the Secretary of the Interior. Why do you have
    the Secretary of the Interior in the legislation?
        Mr. Parker. Senator, I think that the Secretary of
    Interior's role is to create an office within the Department of
    Interior that could then organize itself to issue the stock to
    the tribal shareholders, as well as retain a supervisory
    function in terms of the activities of the organization.
        But the Department of Treasury certainly could have a role
    to play if the Committee wanted to write that into the
    legislation.
        The Chairman. Would it be the case that the oversight for
    an Indian Development Finance Corporation Act, the oversight
    for an enterprise of that type would be more likely to be
    successful in the Treasury Department? Would it not? What
    particular expertise would the Secretary of the Interior have
    to provide oversight to a finance corporation development
    enterprise?
        I would just ask the question.
        Mr. Allen. That is my view. I differ with Alan's
    perspective on that agenda, and that is something I think that
    the Congress should take up on deliberation.
        Our relationship is with the Federal Government, so where
    should we look to for the expertise in any particular area we
    are dealing with? If it is energy, we will go to Energy.
        We are talking finances now. So in my opinion, the
    Department of Treasury has a key role and an expertise that
    Interior doesn't. In the old days, you expected Interior to
    solve all Indian problems. We can't go there anymore.
        The Chairman. And when you talk about in the testimony
    mitigating risks for the private sector, that mitigation of
    risk is because of Federal guarantees. Is that not correct?
        Mr. Parker. Primarily.
        The Chairman. So the assumption of risk that otherwise
    would exist is an assumption by the Federal Government.
        Mr. Parker. Yes.
        The Chairman. This is I think an idea that is very worthy
    of this Committee and the Congress to consider. It is quite
    clear to me that, for example, in energy there is so much
    untapped potential for development of energy across the Country
    on Indian lands, and there is very little capital available to
    do it.
        So I think there is clearly a need to do this. I don't know
    how likely it is going to happen right now, but I wanted to
    hold the hearing now at Senator Inouye's request so that the
    Committee can begin to sink their teeth into this question and
    evaluate what is possible to be done now and also in the
    future, because I think we would ignore the unmet capital needs
    at the peril of the economic health of tribes and members of
    tribes who expect to participate in this Country's economic
    largesse and the recovery from this recession and so on.
        So I think this is a good time for us to discuss it, and we
    will have to try to determine what we are capable of doing and
    what kind of a timeline might exist for doing it.
        To the other four of you who have come, Mr. Coby and Mr.
    Walker, I am pleased that we could have you come and describe
    to us what you have negotiated. It seems perfectly reasonable
    to me to resolve this with a relatively small amount of money,
    and yet provide some certainty.
        To Chairman Box and Ms. Atencio, I think you have done an
    excellent job of making your case. This is a project of
    longstanding, but it needs attention and it needs attention
    now.
        So the Committee will take action on these issues. We will
    consider them and evaluate what action is needed to be taken in
    the coming weeks.
        In the meantime, we will keep the record open for all three
    bills for two weeks for anyone who wishes to submit additional
    testimony.
        This hearing is adjourned.
        [Whereupon, at 3:20 p.m., the Committee was adjourned.]

                                A P P E N D I X

     Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii

        Mr. Chairman thank you for holding this legislative hearing on S.
    439, the Indian Development Finance Corporation Act. I introduced
    similar legislation on March 11, 1987 during the 100th Congress. This
    legislation establishes an Indian Development Finance Corporation as an
    independent, federally-chartered corporation that is modeled after the
    family of Development Banks that have been established by the World
    Bank in lesser developed countries around the world.
        Over the years, I have spent some time visiting Indian country. I
    have seen that in many parts of Indian country, the economic and social
    conditions are equally as dire as those found in ``lesser developed
    countries'' around the world. And although we have seen some economic
    success in recent years across Native America as a result of the Indian
    Gaming Regulatory Act, most Native Americans are not engaged in the
    conduct of gaming, or do not have the means to overcome the challenges
    associated with their remote locations from population centers and
    market places that serve the commercially-successful tribal gaming
    operations.
        In these rurally and isolated areas, there is real potential to
    succeed in developing viable local economies based on agricultural and
    fishery resources, and the development of the vast energy resources
    that are located on Indian lands. There is definitely a need in Native
    communities for development of financial services that could include
    small leveraged capital investments, economic infrastructure
    development to support tailored industrial programs, internet-based
    communication services, national and international trade agreements,
    and economic research capabilities. An Indian Development Finance
    Corporation could provide these kinds of services.
        Under this bill, the Corporation would be authorized to issue
    shares of stock to an Indian tribe or the federal government. The
    Corporation would be managed by a Board elected by the Tribal
    shareholders and the Board would be charged with hiring a President and
    a team of managers as well as set operating policies. Initially, $20
    million in start-up funds would be invested and after the majority of
    common stock was purchased by Tribes, another $80 million would be
    authorized.
        This legislation is one model that has been proved to be successful
    and one that could potentially provide and promote economic development
    among Indian country by providing financial services, technical
    assistance, and the necessary capital to tribally owned business
    enterprises.
        Given that this legislation was originally drafted back in 1989 I
    am open to making necessary changes that might be more reflective of
    current times. I look forward to continuing discussions with the
    National Congress of American Indians and working with my colleagues in
    order to address any concerns that might arise.
        Again, thank you Mr. Chairman.