[Senate Report 104-349]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 559
104th Congress                                                   Report
                                 SENATE

 2d Session                                                     104-349
_______________________________________________________________________


 
  TO REPEAL CERTAIN PROVISIONS OF LAW RELATING TO TRADING WITH INDIANS

                                _______
                                

                 August 1, 1996.--Ordered to be printed

_______________________________________________________________________


    Mr. McCain, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 199]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 199) to repeal certain provisions of law relating to 
trading with Indians, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                Purpose

    The purpose of S. 199 is to repeal the Trading with Indians 
Act (18 U.S.C. Sec. 437).

               Background on the Trading With Indians Act

    S. 199 repeals the Trading with Indians Act. The Trading 
with Indians law was originally enacted in the 1800's to 
protect Indians from unscrupulous Indian agents and other 
Federal employees who were using their positions of trust to 
engage in private business dealings that exploited Indians. The 
original 1834 Act, codified at 25 U.S.C. 68, imposed a complete 
ban on any person employed by the Federal government in Indian 
Affairs from having any interest in transactions with Indians 
except on behalf of the United States government. The penalty 
for conviction of a violation of this Act included a $5,000 
fine and removal from Federal employment. In 1874, the Congress 
enacted a law, which was codified at 25 U.S.C. 87 and has since 
been repealed, that applied restrictions on all employees of 
the United States or its agencies involving contracts with 
Indians or the Federal government for purchases, 
transportation, or delivery of goods or supplies for Indians or 
for the removal of Indians.
    In 1939, these laws governing trade with Indians were 
amended to permit Federal employees, pursuant to Secretarial 
regulations, to purchase arts and crafts from Indians, so long 
as a purchase was not for the purpose of resale. These 
amendments were intended to make clear that the laws governing 
trade with Indians were not intended to prevent Indian 
employees of the Federal government from receiving benefits 
made available to Indians either by the Federal government or 
by their tribe. In 1948, the Congress imposed severe 
restrictions on all Federal employees, whether employed in 
Indian Affairs or not, from having any interest in contracts 
for the purchase or delivery of supplies or goods to Indians. 
This law superseded the provisions of the 1874 Act and was 
codified at 18 U.S.C. 437. The penalties established under the 
1948 law included a fine of up to $5,000, up to six months' 
imprisonment, and removal from office.
    In 1980, the Congress replaced all existing laws relating 
to ``Trading with Indians'' by repealing both the 1834 and 1939 
Acts, and by modifying the 1948 Act. Under current law, 
employees of the Bureau of Indian Affairs (BIA) and the Indian 
Health Service (IHS) are prohibited, with limited exceptions, 
from engaging in trade with Indians except where such trade has 
been authorized by the President by regulation.
    The current provisions of the ``Trading with Indians'' 
laws, including the criminal prohibitions against commercial 
trading with Indians, have had a significant adverse impact on 
employee retention within the Indian Health Service and the 
Bureau of Indian Affairs. Because the prohibitions in current 
law also apply to the spouses of BIA and IHS employees, these 
adverse impacts are far-reaching. If a spouse is engaged in a 
business which is wholly-unrelated to matters affecting the 
Indian Health Service or the Bureau of Indian Affairs, they are 
in violation of the Trading with Indians Act. In addition, a 
Federal employee can violate the Trading with Indians Act by 
simply selling their used car to another Indian. Although these 
statutes served an admirable purpose when enacted in the 
1800's, they are now relics of a very different era. The 
important public purposes served by the original Trading with 
Indians Act are now adequately protected by the Standards of 
Ethical Conduct for Employees of the Executive Branch.

                          Legislative History

    S. 199 was introduced by Senator Kyl, for himself and 
Senator McCain, on February 1, 1995 and was referred to the 
Committee on Indian Affairs.

            Committee Recommendation and Tabulation of Vote

    In an open business session on July 24, 1996, the Committee 
on Indian Affairs ordered the bill to be favorably reported to 
the Senate without amendment, with the recommendation that it 
do pass.

                      Section-by-Section Analysis

                           section 1. repeal

    Section 1 of the bill repeals Section 437 of title 18, 
United States Code, the Trading with Indians Act.

                   Cost and Budgetary Considerations

    The cost estimate for S. 199 as calculated by the 
Congressional Budget Office is set forth below:
                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 1, 1996.
Hon. John McCain,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S. 199, a bill to repeal certain provisions relating 
to trading with Indians, as ordered reported by the Senate 
Committee on Indian Affairs on July 24, 1996. CBO estimates 
that enacting this bill would have no significant impact on the 
federal budget. The bill contains no private-sector or 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act of 1995 (Public Law 104-4) and would impose no costs 
on state, local, or tribal governments. Because enactment of S. 
199 could affect direct spending and receipts, pay-as-you-go 
procedures would apply to the bill. However, CBO estimates that 
any impact on direct spending and receipts would be negligible.
    S. 199 would repeal section 437 of Title 18 of the United 
States Code. Section 437 prohibits any employee of the Bureau 
of Indian Affairs or the Indian Health Service from purchasing 
any service or any real or personal property from any person of 
Native American descent.
    Since S. 199 would repeal certain criminal penalties, the 
government might collect fewer fines if the bill is enacted. We 
estimate, however, that any fine collections would continue to 
be negligible, as they have been to date. Collections of such 
fines are recorded in the budget as governmental receipts, or 
revenues. They are deposited in the Crime Victims Fund and 
spent in the following year. Because the decrease in direct 
spending would be the same as any loss in the amount of fines 
collected with a one-year lag, the change in direct spending 
also would be negligible.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Rachel 
Robertson.
            Sincerely,
                                         June E. O'Neill, Director.

                      Regulatory Impact Statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that S. 199 will 
have a minimal regulatory or paperwork impact.

                        Executive Communications

    The Committee has received no official communications from 
the Administration on the provisions of the bill.

                        Changes in Existing Law

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
enactment of S. 199 will result in the following changes in 18 
U.S.C. section 437, with existing language which is to be 
deleted in black brackets and the new language to be added in 
italic:

                             18 U.S.C. 437

Sec. 437. [Federal employees contracting or trading with Indians

    [(a) Except as provided in subsection (b), whoever, being 
an officer, employee, or agent of the Bureau of Indian Affairs 
or the Indian Health Service has (other than as a lawful 
representative of the United States) any interest, in such 
officer, employee, or agent's name, or in the name of another 
person where such officer, employee, or agent benefits or 
appears to benefit from such interest--
          [(1) in any contract made or under negotiation with 
        any Indian, for the purchase or transportation or 
        delivery of goods or supplies for any Indian, or
          [(2) in any purchase or sale of any service or real 
        or personal property (or any interest therein) from or 
        to any Indian, or

colludes with any person attempting to obtain any such 
contract, purchase, or sale, shall be fined under this title or 
imprisoned not more than six months or both, and shall be 
removed from office, notwithstanding any other provision of law 
concerning termination from Federal employment.
    [(b)(1) Notwithstanding the provisions of subsection (a) 
and in accordance with paragraph (2) of this subsection, the 
President or his designee may prescribe rules and regulations 
under which any officer, employee, or agent of the Bureau of 
Indian Affairs or of the Indian Health Service may purchase 
from or sell to any Indian any service or any real or personal 
property or any interest therein.
    [(2) No rule or regulation prescribed pursuant to paragraph 
(1) of this subsection shall permit any officer, employee, or 
agent referred to in that paragraph--
          [(A) to make any purchase from or sale to an Indian 
        of any real or personal property (or any interest 
        therein) for the purpose of commercially selling, 
        reselling, trading, or bartering such property; or
          [(B) to have any interest in any purchase or sale 
        involving property or funds which are either held in 
        trust by the United States for Indians or which are 
        purchased, sold, utilized, or received in connection 
        with a contract or grant to an Indian from the Bureau 
        of Indian Affairs or the Indian Health Service, if such 
        officer, employee, or agent is employed in the office 
        or installation of such Bureau or Service which 
        recommends, approves, executes, or administers such 
        transaction, grant, or contract on behalf of the United 
        States: Provided, That such officer, employee, or agent 
        may have such an interest if such purchase or sale is 
        approved by the Secretary of the Interior in the case 
        of a Bureau of Indian Affairs officer, employee, or 
        agent, or by the Secretary of Health, Education, and 
        Welfare in the case of an Indian Health Service 
        officer, employee, or agent, or a designee of such 
        Secretary who is not employed at such office or 
        installation: Provided further, That (1) any such 
        designee may not be a relative by blood or marriage of 
        the officer, employee, or agent engaging in such 
        purchase or sale; (2) with respect to purchases or 
        sales by any officer, employee, or agent employed at 
        the reservation, agency, or service unit level, such 
        designee must be employed at not less than one grade 
        level higher than such officer, employee, or agent at 
        the Washington, District of Columbia, central office or 
        at an area office installation other than that with 
        authority over such reservation, agency, or service 
        unit; (3) with respect to purchases or sales by any 
        officer, employee, or agent employed at the area office 
        level, such designee must be employed at not less than 
        one grade level higher than such officer, employee, or 
        agent at the Washington, District of Columbia, central 
        office; and (4) the Secretary must approve purchases or 
        sales by any officer, employee, or agent employed at 
        the Washington, District of Columbia, central office; 
        or
          [(C) to acquire any interest in property held in 
        trust, or subject to restriction against alienation 
        imposed, by the United States unless the conveyance or 
        granting of such interest in such property is otherwise 
        authorized by law.
    [(c) Except as provided in subsection (b)(2), nothing 
contained in this section shall be construed as preventing any 
officer, employee, or agent of the Bureau of Indian Affairs or 
the Indian Health Service who is an Indian, of whatever degree 
of Indian blood, from obtaining or receiving any benefit or 
benefits made available to Indians generally or to any member 
of his or her particular tribe, under any Act of Congress, nor 
to prevent any such officer, employee, or agent who is an 
Indian from being a member of or receiving benefits by reason 
of his or her membership in any Indian tribe, corporation, or 
cooperative association organized by Indians, when authorized 
under such rules and regulations as the Secretary of the 
Interior or the Secretary of Health, Education, and Welfare, or 
their designee shall prescribe.
    [(d) For purposes of this section, the term ``Indian'' 
means any member of an Indian tribe recognized as eligible for 
the services provided by the Bureau of Indian Affairs who is 
residing on a Federal Indian Reservation, on land held in trust 
by the United States for Indians, or on land subject to a 
restriction against alienation imposed by the United States. 
The term shall also include any such tribe and any Indian owned 
or controlled organization located on such a reservation or 
land.
    [(e) For purposes of this section, the term ``Bureau of 
Indian Affairs'' means the Bureau of Indian Affairs and the 
Office of the Assistant Secretary for Indian Affairs, both in 
the Department of the Interior.]