[Congressional Record (Bound Edition), Volume 152 (2006), Part 18]
[Senate]
[Pages 23595-23598]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        INDIAN TRUST REFORM ACT

 Mr. McCAIN. Mr. President, as chairman of the Committee on 
Indian Affairs, I rise today to speak in vigorous support of S.1439, 
the Indian Trust Reform Act of 2005, a bill I introduced in July 2005, 
with Senator Dorgan as an original co-sponsor, to address a broad range 
of Indian trust asset issues and trust management policies and 
practices. As introduced, this bill was intended only as a starting 
point for an extended dialogue with interested parties in Indian 
country and in the Government that would lead us, eventually, to 
legislation that brings real and lasting improvements in the way Indian 
trust assets are managed and that resolves the 10-year old class action 
lawsuit against the United States known as Cobell v. Kempthorne. I want 
to begin by extending my thanks and great appreciation to Senator 
Dorgan, who is vice-chairman of the committee and will soon be its 
chairman in the 110th Congress, for the extraordinary, tireless effort 
that he and his staff have made in working on this bill over the course 
of the past 2 years. In accordance with a long-standing tradition of 
bipartisanship within the Committee on Indian Affairs, Senator Dorgan 
and his staff have worked hand-in-hand with me and my staff in our 
attempt to reform the way in which Indian trust lands and resources are 
managed and to settle the Cobell lawsuit.
  By no means did trust reform begin with this bill. I myself have 
introduced similar legislation in prior Congresses, including S. 1459 
in the 108th Congress; in 2004 the Congress enacted the Indian Probate 
Reform Act, which brought significant reforms to the laws applicable to 
the probate of individual Indian trust and restricted land; and 10 
years before that the American Indian Trust Fund Management Reform Act 
of 1994 was enacted into law, which, among other things, created the 
Office of the Special Trustee for American Indians. While I truly 
believe that as a result of these and other enactments, and reform 
initiatives within the Department of the Interior--in part in response 
to court orders in the Cobell case--there have been improvements in at 
least some areas of trust management, we still have a very long way to 
go before the business of Indian trust reform is complete.

[[Page 23596]]

  I will not even try to recount here the difficult history of the 
relationship between the United States and its native peoples. But I am 
pleased to say that the past 25 years have brought significant 
advancements in the lives of many Indian people as a result of better 
access to education, health care and housing, and because of economic 
development in some parts of Indian Country. However, there are still 
many unacceptable disparities between conditions in many Indian 
communities and those of non-Indian communities in this country. S. 
1439 represents an attempt to address one particular component that 
affects the economic well-being of many Indian people: the way in which 
Indian trust and restricted assets--land, minerals, water, timber, 
crops, and the revenues derived from these resources--are managed by 
the United States.
  The performance of the United States over the past 125 years in its 
capacity as trustee and manager of Indian trust and restricted lands is 
not something to be proud of. The policy of allotting Indian tribal 
lands, which had become the general Federal Indian policy in the 1880s, 
was one of several federal ``experiments'' in Indian matters that have 
had regrettable results both for the Indian tribes and for the 
Government. This policy of the 19th Century has come back to haunt us 
now in the form of fractionated ownership of allotted lands--where some 
parcels of land are owned by dozens, often hundreds and in some cases 
even over a thousand different individual Indian owners. This 
fractionation of ownership has led to a proliferation of individual 
Indian money accounts, ``IIM accounts'', which now number in the 
hundreds of thousands of separate accounts and many of which have very 
small balances and annual income, all of which the Federal Government 
has a trust obligation to track and manage--at considerable expense.
  The staggering number of tiny fractionated interests--along with 
decades of mismanagement on the part of Government officials--
contributed to the conditions that led to the filing of the Cobell 
class action here in the District of Columbia. A lot has happened in 
that litigation since it was filed 10 years ago, much of it reported in 
newspapers across the country, but I think it is fair to say that one 
thing the case has shown is that the United States has not lived up to 
its duty as a fiduciary to the thousands of Indian beneficiaries of 
trust lands and funds.
  Between 1993 and 2006, the Committee on Indian Affairs has held at 
least 17 hearings on the matter of Indian trust reform or 
reorganization of the Bureau of Indian Affairs. In 1994, Congress 
passed into law the American Indian Trust Fund Management Reform Act, 
25 U.S.C. Sec. 4001, et seq., to reform the management of Indian 
assets, accounts, and resources held in trust and managed by the United 
States. The 1994 Act was not the final word on trust reform, even in 
the limited context of Indian trust funds management. Two years after 
that Act was passed, a class action based in part on the requirements 
of the Act was filed in the United States District Court for the 
District of Columbia: the case of Cobell v. Babbitt--redesignated 
Cobell v. Norton with the appointment of Gale Norton as Secretary of 
Interior, and again Cobell v. Kempthorne with the appointment of Dirk 
Kempthorne as Secretary.
  In November 2001, in response to the Cobell litigation, the 
Department of Interior submitted a reprogramming request to the Senate 
and House Appropriations Subcommittees on Interior and Related Agencies 
to establish a new ``Bureau of Indian Trust Asset Management'', BITAM, 
within the Department to be administered by a new appointed official, 
an ``Assistant Secretary--Indian Trust Asset Management.''
  The BITAM proposal was very poorly received by Indian country, and 
soon thereafter the Senate Appropriations Subcommittee on Interior and 
Related Agencies asked the Department to resubmit its reprogramming 
request at a later date pending further consultation and further review 
of the management and organization of the Department's trust program.
  Over the course of 2002, the Department convened and participated in 
a series of consultations and other meetings with Tribal officials and 
representatives across the country to discuss Indian trust asset 
management and reform. The principal mechanism for this consultation 
was a ``Joint Tribal Leader/Department of Interior Task Force on Trust 
Reform'' composed of Tribal leaders from around the country and 
Department officials. The joint task force reviewed and documented 
trust asset management functions and processes at all levels within the 
Bureau, and eventually identified numerous features of the Bureau's 
trust system and organization that required reform. The joint task 
force also studied several restructuring proposals developed by Indian 
tribes around the country.
  Ultimately, the joint task force reached an agreement in principle on 
a restructuring proposal that would create a new position of Under 
Secretary for Indian Affairs. The Under Secretary would report directly 
to the Secretary of Interior and have authority over all aspects of 
Indian affairs within the Department, including the management of 
tribal and individual Indian trust assets, including both financial and 
natural resource trust assets. Under this proposal, the Office of the 
Special Trustee would eventually be phased out. However, although 
Tribal leaders and Department officials on the task force also reached 
agreement on other significant matters relating to trust reform and 
restructuring, they were unable to agree on certain key elements of the 
legislative proposal. In October of 2002, the joint task force was 
disbanded.
  Mr. President, I wish I could say that our efforts in the 109th 
Congress bridged all of the gaps between the Government, the tribes and 
individual Indians, but I cannot. That does not mean that we did not 
make significant progress. In the course of the past 18 to 20 months 
all parties have acquired a much better understanding of the issues and 
of each other's positions. The Committee and its staff have also 
acquired a better understanding and appreciation of the issues as well. 
Again, I want to thank Senator Dorgan for his insights, efforts, and 
commitment of time and staff in this truly bi-partisan effort. The 
majority and minority staff of the Committee on Indian Affairs met 
extensively with representatives of Indian tribes, tribal organizations 
and individual Indian organizations in an effort to get a solid 
understanding of what Indian country wants to get out of trust reform. 
The staff of both sides of the committee also met and conferred 
extensively with various components of the administration and 
representatives of the plaintiffs in the Cobell case to discuss S. 1439 
and the settlement of claims in the lawsuit. I know this outreach and 
the information it produced will be extremely useful to this body as 
the Indian trust reform initiative goes forward in the 110th Congress.
  One significant outcome of our efforts during this Congress is the 
fact that the administration made a counter-proposal in October of this 
year which spells out its views of what should be done to reform the 
management of Indian trust assets, and I am submitting a summary of 
that proposal along with this statement. Their proposal has four major 
components: consolidation of ownership of fractioned tracts within the 
next 10 years; a transition to beneficiary-managed ownership of trust 
lands within the next 10 years; resolution of tribal trust claims--in 
addition to individual Indian trust claims; and some limitations on the 
liability of the Government for claims that may arise during and after 
the 10 year transition period to a system of beneficiary management.
  Not surprisingly, the reaction of Indian country to the 
administration's proposal was, for the most part, quite negative. Much 
of the opposition focused on the timing of the proposal: it was made 
with only weeks of legislative days left in our calendar, not nearly 
enough time to consider, debate or even understand the far-reaching 
implications of the administration's ideas.

[[Page 23597]]

  On the other hand, while many tribes and individuals criticized the 
proposal taken as a whole, many were not completely opposed to all 
aspects of the proposal and, indeed, some even agreed with certain 
aspects of the administration's ideas. For example, there was 
widespread acknowledgment that fractionated ownership of individual 
Indian lands has been a real, ever-worsening problem that has plagued 
the system for many decades--one that Indian country must confront and 
deal with now and not later--and that dealing with the problem will 
require solutions that are not altogether pleasant. And even though 
some commentators seemed to oppose any system of beneficiary-driven 
management decisions for trust lands, others recognized that the Indian 
tribes and Indian landowners can and will make better decisions 
regarding the use of their own lands than the Bureau of Indian Affairs 
if they are given the appropriate resources to do so. I am also 
submitting for the record a copy of a recent editorial that appeared in 
a widely read Indian periodical, Indian Country Today. The editorial 
suggests that certain aspects of the administration's proposals are in 
fact reasonable, including the idea that Indian beneficiaries will make 
good managers of their land, and it challenges Indian country to engage 
with the administration on its ideas and ``come back with an improved 
set of proposals based on them'' rather than just reject them out of 
hand.
  So indeed, Mr. President, while I am disappointed that S. 1439 was 
not passed into law, I am also encouraged by the progress we have made 
in our understanding of trust management problems and in the 
willingness of the Indian tribes, individual Indians, representatives 
of the class action plaintiffs and the administration to engage in 
meaningful discussions on how to fix this system. I am hopeful that in 
the 110th Congress the Committee begins where we left off in this bill 
and that it will not shy away from the difficult issues of Indian trust 
reform.
  Mr. President, I ask that the aforementioned documents be printed in 
the Record. The documents follow.

Newly Proposed Provisions for Senate Bill 1439 The Indian Trust Reform 
                                  Act

       Senate bill 1439, the Indian Trust Reform Act of 2005, 
     would resolve the Cobell v. Kempthorne case and make reforms 
     to the way the United States manages Indian trust funds and 
     assets. The bill was introduced in July 2005 and Committee 
     staffs have been meeting with representatives from the 
     plaintiffs, the Administration, and Indian tribes to decide 
     what changes, if any, should be made to the bill. This paper 
     highlights several proposals that have come out of some of 
     those discussions.
       To gain support for a multi-billion dollar bill, it may be 
     necessary to incorporate significant changes to the 
     management system for Indian trust assets. As proposed, these 
     changes would not remove the trust status of Indian lands, 
     but would reallocate significant decision-making authority 
     and legal responsibility from the Federal government to the 
     Indian tribes and individuals. The proposed changes are 
     generally described below.
       The Chair and Vice-Chair of the Committee have not approved 
     these proposed changes to S. 1439, but have asked their 
     respective staff to seek input from Indian Country before 
     they make a decision on these proposals and how to proceed 
     with the bill.
     Land fractionation--consolidate all 128,000 individual Indian 
         allotments into ownership of no more than 10 individuals 
         per tract of land within 10 years
       The highly fractionated nature of many individual Indian 
     lands has made it difficult for the United States to manage 
     these lands and the revenues generated from them. There are 
     currently 128,000 individual Indian allotments and 3.6 
     million fractionated interests. One proposal to address this 
     issue has been to develop aggressive mechanisms to 
     consolidate all allotments into 10 or fewer owners for each 
     tract of land within the next 10 years.
       All land would remain in Indian title with individual 
     Indian or tribal owners.
       Consolidation would include voluntary and involuntary 
     mechanisms, but large interest owners would have a first 
     opportunity to buy out the smaller interest owners would have 
     a first opportunity to buy out the smaller interest owners 
     before an entire tract is put up for sale to either the tribe 
     or a member of that tribe.
       Consolidation of tracts with 100 or more owners would be 
     prioritized.
       Funding for the proposed consolidation mechanisms would be 
     assured by inclusion in the funding levels of the bill.
     Beneficiary-managed trust--transition of all individual 
         Indian and tribal land to a beneficiary-managed trust 
         system within 10 years
       After fractionated lands are consolidated, it is proposed 
     to convert the current management system for all individual 
     Indian and tribal land into a new system within a 10 year 
     timeframe. The lands would remain in trust and not be subject 
     to taxation, but the individual or tribal owner of the lands 
     would have most of the privileges and responsibilities of 
     property management.
       The landowners would make nearly all decisions on land use 
     within certain broad parameters.
       All revenues generated from the land would go directly to 
     the landowners (direct pay).
       The landowners would negotiate their own long-tern leases 
     and land use agreements, without Secretarial approval.
       The BIA would provide ``management'' financial support and 
     technical assistance during a transition period to assist 
     owners in becoming efficient property owners and managers.
       The federal government would remain responsible for: 
     preventing involuntary alienation of land; approving 
     transfers of land title; maintaining land title records; and 
     probating trust estates.
     Resolution of tribal claims related to the mismanagement of 
         trust funds, lands and resources
       In addition to resolving all individual Indian claims 
     related to the United States' mismanagement of trust funds, 
     lands and resources, it has been proposed to resolve all 
     tribal claims for the same matters. Possible suggestions for 
     addressing this issue include:
       All mismanagement claims for tribal monies, lands, and 
     resources would be resolved and settled.
       A settlement fund would be established and each tribe would 
     receive a distribution based on a formula that would take 
     into account the amount of land a tribe owns and the amount 
     of revenues that were generated from that land for a 
     specified period of time.
       All historical accounting claims against the United States 
     would be settled.
       Account balances for Indian trust accounts would be deemed 
     accurate as of the date of passage of Senate bill 1439.
       The bill would not settle takings claims for land or 
     related resources, claims to establish the right to possess 
     or the ownership of tribal land, or claims arising under 
     Federal environmental laws.
     Limitation on liability of the United States during and after 
         transition period
       In order to facilitate the proposed reforms, it has also 
     been proposed that during the period of time for land 
     consolidation and transition of the trust management system 
     into a beneficiary-managed trust there would be some 
     limitations on the liability of the United States in regard 
     to the management of trust resources.
       After the transition period, the Federal government would 
     remain responsible for correcting errors, but without damage 
     claims against the government for its residual 
     responsibilities.
                                  ____


                 [From Washington Watch, Nov. 30, 2006]

     Trust Funds Settlement Should Not Be Left to the Fossil Record

       The Individual Indian Money trust remains a troubled realm, 
     and it is likely to stay that way well into the next 
     Congress.
       Indian country was right to reject the case settlement 
     concepts offered by the administration. But as spelled out by 
     the next Senate Committee on Indian Affairs chairman, Sen. 
     Byron Dorgan, D-N.D., failure to resolve the IIM litigation 
     ``overhangs everything else'' in federal Indian affairs, on 
     the funding front above all.
       That overhang, 10 years in the making, isn't likely to get 
     any less severe under a Democratic Congress over the next 
     couple of years. Another leading figure on the issue, Sen. 
     John McCain, R-Ariz., has stated outright that he will not 
     vote for a bill to settle the IIM litigation if it does not 
     also settle as many subsidiary trust claims as may be 
     possible. He wants a ``whole'' settlement, in contrast to an 
     IIM-only settlement that would be considered ``partial.'' As 
     a Republican of high stock right now and a probable 
     presidential candidate in 2008, McCain's views will take many 
     lawmakers along with him.
       So for now, any hope of an IIM-only, ``partial'' settlement 
     is out.
       So is any hope of the huge settlement described as fair by 
     the IIM plaintiff class. Remember, the litigation itself is 
     only about an accounting. When the frail pages of the lawsuit 
     are found among other fossils many centuries from now, they 
     may show that a court has ``settled'' the mismanaged accounts 
     for a larger sum than the government will agree to, left to 
     its own devices. But the government can litigate for decades 
     yet at a cost still light-years from the settlement figure(s) 
     the plaintiffs have initiated.
       The starting figure of $176 billion, though never actually 
     sought, was off-putting; $27.5 billion proved another non-
     starter; $13 billion also struck the administration as 
     unrealistic; $8 billion to $9 billion, considered a

[[Page 23598]]

     reasonable ``rough justice'' number by the SCIA, might have 
     been reachable two years or so ago, but now the 
     administration considers a much lower figure justice enough.
       Nonetheless, according to Interior Secretary Dirk 
     Kempthorne, it is willing to invest ``billions'' in a kind of 
     omnibus bill on trust claims. The key verb is not ``to 
     settle'' or ``to reimburse'' but ``to invest,'' and in the 
     short term there is no getting around it.
       Indian country should engage with the administration's case 
     settlement concepts, then, and come forward with an improved 
     set of proposals based on them.
       It's a steep order, but the case settlement concepts do 
     provide some footholds. For starters:
       The administration foresees ``voluntary and involuntary'' 
     mechanisms for consolidating fractionated lands. Given the 
     history here, the concept of an involuntary taking of land to 
     be consolidated is troublesome, to say the least. But 
     assuming economic use is the goal of consolidation, there is 
     no other way. Land tracts with hundreds of owners cannot be 
     managed for profit, period. Consolidation that requires 
     consent from all owners is impossible for many reasons. 
     Tribes should be able to propose sensible limits on 
     involuntary consolidation mechanisms that don't also torpedo 
     the purposes of consolidation.
       The administration foresees a ``beneficiary managed trust'' 
     that would grow the trust estate. This was dangerous at the 
     time of the Dawes Severalty Act, a century and some years 
     ago, but nowadays it simply isn't a new concept. In fact, 
     it's a solid, tested concept that can help prosperity along 
     by goading individuals and tribes toward the aggressive 
     management of their own resources. After a 10-year period for 
     technical assistance as financed in the law itself, 
     individuals would manage their own lease property, with 
     payments going direct to individuals instead of being 
     lightened along the way by the government. The original trust 
     funds reform law of 1994 foresaw every bit of that. But the 
     government would still fulfill vital residual roles, 
     maintaining the land as inalienably tribal land, in trust and 
     tax-exempt, as well as probating estates, correcting errors 
     in the accounts, transferring titles and keeping title 
     records. A proposal like this should not be rejected with 
     outrage, but embraced with care. Again, tribes can certainly 
     offer proposals for the longer-term protection of their more 
     vulnerable members.
       Tribes have especially reviled the idea of limits on 
     federal liability, should IIM beneficiaries choose to manage 
     their own lands. But already, the U.S. Supreme Court has 
     established limits on federal liability in cases where 
     statutory language does not assign liability. Tribes should 
     be willing to propose strictly limited statutory language 
     that assigns certain modified federal liabilities, but 
     without going so far as to convince McCain and company that 
     the settlement is therefore ``partial.''
       Tribes also seem to despise the idea of an alteration in 
     the trust relationship. But Elouise Cobell, lead plaintiff in 
     the IIM case, suggests the same and then some every time she 
     declares the IIM trust should be taken from Interior and 
     placed in receivership. This could never be done because no 
     bank could responsibly take on the liabilities, but if it 
     were done it would profoundly alter the trust relationship. 
     So let's alter it already, not through receivership but by 
     participating and directing. It really is too important to be 
     left to lawyers and individuals.
       Finally, tribes have objected to the idea that tribal 
     claims should be included in any settlement that approaches 
     the $8 billion range. But the guessing here is that if tribes 
     genuinely got behind a ``whole'' settlement at some realistic 
     cost, providing their own serious counterproposals with a 
     minimum of posturing, billions more might be found.

                          ____________________