[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.