[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.

                                  
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