[Senate Report 106-151]
[From the U.S. Government Publishing Office]
Calendar No. 271
106th Congress Report
SENATE
1st Session 106-151
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PROVIDING FOR REGULATORY REFORM IN ORDER TO ENCOURAGE INVESTMENT,
BUSINESS, AND ECONOMIC DEVELOPMENT WITH RESPECT TO ACTIVITIES CONDUCTED
ON INDIAN LANDS
_______
September 8, 1999.--Ordered to be printed
_______
Mr. Campbell, from the Committee on Indian Affairs, submitted the
following
R E P O R T
[To accompany S. 614]
The Committee on Indian Affairs, to which was referred the
bill (S. 614) to provide for regulatory reform in order to
encourage investment, business, and economic development with
respect to activities conducted on Indian lands, having
considered the same, reports favorably thereon with an
amendment in the nature of a substitute, and recommends that
the bill (as amended) do pass.
purpose
The purposes of S. 614 are multiple: to provide for a
comprehensive review of the laws, including regulations, that
affect investment and business decisions concerning activities
conducted on Indian lands; to determine the extent to which
those laws unnecessarily or inappropriately impair investment
and business development on Indian lands, or the financial
stability and management efficiency of Indian tribal
governments and to establish an Authority to conduct the review
and to report its findings and recommendations to Congress.
background
By the 1980's, it was apparent that the Federal
government's efforts in building healthy economies on Native
lands were failing. With the exception of a handful of Indian
tribes fortunate enough to be located near major metropolitan
areas and which had developed gaming operations, most Native
economies are still largely dependent on Federal transfer
payments, an array of Federal housing, education, and health
care services, and Federal employment opportunities.
After generations of vacillating and failed Federal Indian
policies, in 1970, President Nixon initiated what has proven to
be the most successful Federal Indian policy to date: Indian
Self-Determination. The twin pillars of this policy are
political self-government and economic self-sufficiency. In the
intervening years, the evidence shows that true self-government
flows from the ability of Native people to take control of and
master their economic lives.
Experience has shown that Federal intervention alone,
without corresponding private sector and tribal initiative, has
failed to raise the standards of living of Native Americans. In
fact, many Indian tribes have had positive and successful
experiences with contracting and compacting for Federal
programs and services pursuant to the Indian Self-Determination
and Education Assistance Act of 1975,\1\ with planning and
managing their own employment training programs under the
Indian Employment Training and Related Services Demonstration
Act of 1992,\2\ and with other programs designed to maximize
tribal decision-making and provide an appropriate role for the
Federal government.
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\1\ 25 United States Code 450, et seq.
\2\ 25 United States Code 3401, et. seq.
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For decades the Congress and the Federal government in
general have sought to improve the standard of living of
America's Native populations. These efforts include initiatives
to finance and develop physical infrastructure, increase Native
skills development and employment, assist Native communities in
attracting and retaining capital and outside investment, and
others.\3\
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\3\ See for example, Hearing Before the U.S. Select Committee on
Indian Affairs regarding Barriers to Participation in Federal Domestic
Assistance Programs, September 8, 1977; Oversight Hearings Before the
Committee on Interior and Insular Affairs on Indian Economic
Development Programs, June and July 1979; Hearings Before the Committee
on Indian Affairs regarding Economic Development on Indian Lands,
September 17, 1996; Hearing Before the Committee on Indian Affairs
regarding Indian Economic Development, April 2, 1998; and various
Hearings Before the Committee on Indian Affairs regarding Economic
Development, Regulatory Reform, and Related Matters, January-July,
1999.
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purpose
Despite these efforts, Native Americans suffer the highest
rates of poverty, unemployment, ill-health, and associated
social pathologies in the nation. The 1990 Decennial Census
shows that the national unemployment rate for Native people
hovers around 50%, with jobless rates in some areas such as the
Dakotas in the 80-90% range. The most recent national
statistics show that 51% of reservation Indians live below the
poverty line and that the per capita income for reservation
Indians is $4,478.\4\
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\4\ See, We, The First Americans, U.S. Department of Commerce,
Economic and Statistics Administration, Bureau of the Census,
September, 1993.
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Those tribes that are achieving economic success have found
that for business and wealth creation to thrive, there must be
certain pre-conditions. As is the case with U.S. and
international efforts to build the economies of developing
nations, efforts to build healthy Native economies involve a
variety of factors including the development of physical
infrastructure, housing, health care, education, skill
development, access to capital, and a host of other
capabilities. At the same time, the availability and
effectiveness of Indian-related Federal spending is and has
been declining for the past 25 years.\5\ Exacerbating these
spending trends, there remain substantial levels of unmet
financial, technical and other needs in America's Native
communities.
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\5\ See generally, Indian Related Spending Trends, FY 1975-1999,
Congressional Research Service, Library of Congress, Washington, D.C.
1999.
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Some of the main obstacles to Native business and economic
development are: lack of capital and capital institutions; poor
physical infrastructure; a historical emphasis in Native
communities on employment rather than profit; the adverse
impact of tribal politics on tribally-owned and individually-
owned businesses; and the lack of reservation-based business
activities, leading to net outflow of those dollars that make
their way into Native communities.
An additional and recurring emphasis is on ``building
business friendly environments'' at the tribal and Federal
levels to provide confidence to investors and entrepreneurs
alike. Often referred to as providing ``legal'' or
``governance'' infrastructure, these activities include well-
established and operating tribal justice and dispute resolution
mechanisms, legal code development, and legal and regulatory
regimes that foster economic growth and risk-taking.\6\
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\6\ In February, 1998, the General Accounting Office (GAO)
published Native American Housing: Home-ownership Opportunities on
Trust Lands Are Limited, GAO/RCED-98-49, pointing out that
``uncertainty'' about tribal courts, court procedures, and Indian Trust
land status hinders private mortgage lending in Native communities
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The quality of the environment offered by tribal
governments to potential business operators has a direct and
significant impact on the level and success of economic
activities on Native lands. Similarly, and because of the
unique Federal-tribal relationship, the quality and efficiency
of the Federal bureaucracy plays a significant role in
determining which activities occur on Native lands.
Indeed, one of the key studies of economic development in
Indian country indicates that one of the main ingredients to
tribal success in building solid economies and becoming more
self-sufficient is not necessarily an abundance of natural
resources.\7\
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\7\ See What Can Tribes Do? Joseph Kalt and Stephen Cornell,
Harvard Project on American Indian Economic Development, 1992.
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Rather, the three main factors determining whether or not a
tribe will succeed are: (1) the degree of sovereignty \8\
exercised by the tribe; (2) whether the tribe has a ``capable
government''; and (3) whether there is a match between the type
of government a tribe has and the tribe's cultural norms
regarding legitimate political power.\9\
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\8\ ``Sovereignty'' as used in this work is said to be ``de facto''
sovereignty or genuine decision-making and control over tribal affairs
and resources. The pattern discerned in the study is that sustained
economic development is associated with tribal decision-making
replacing that of the Bureau of Indian Affairs or other ``outside''
decision-making. The authors maintain that economic development is a
consequence of the exercise of sovereignty, and stated that ``(o)ne of
the quickest ways to bring development to a halt and prolong the
impoverished conditions on reservations would be to further undermine
the sovereignty of Indian tribes.'' Testimony of Joseph Kalt, Director,
Harvard Project of American Indian Economic Development, Before the
Senate Committee on Indian Affairs, September, 1996, S. Hrng. 104-684,
at 6.
\9\ ``Capable governments'' are said to be those that efficiently
make and carry out strategic choices regarding development; provide a
political environment in which investors ``feel secure''; and mobilize
tribal institutional support for the development strategies chosen.
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The last two factors are prevalent in efforts many tribes
have launched regarding ``good governance'' and ``best
practices'' in order to help develop and diversify their
economies. These practices include constitutional revisions to
address contemporary challenges, the establishment and use of
commercial codes and rules of administrative procedure, and a
separation of powers within the tribal government.\10\ At
bottom, vibrant Native economies are those that are made
possible by governments that can separate politics from
business, and those with a mechanism to separate the exercise
of governmental powers.
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\10\ Kalt and Cornell's study indicates that ``an independent
judiciary'' added 5 to 10 percentage points to the rate of job creation
in Native communities. This key factor influences both the outside,
non-Indian investment sector as well as the Indian entrepreneurial and
business sectors, Supra note 6, at 15.
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the need for legislation
``Regulatory reform'' as one proposed component in a larger
strategy to revitalize Native economies is not a new
phenomenon. Over the past 15 years there have been no fewer
than six (6) major studies undertaken that include elements of
regulatory reform in their focus.\11\ There are, however,
several factors that lend urgency to both regulatory reform and
economic development efforts in Native communities.
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\11\ The Presidential Commission on Indian Reservation Economies,
Report and Recommendations (November, 1984); Department of Interior,
Report of the Task Force on Indian Economic Development (July, 1986);
The Report of the Special Committee on Investigations--Select Committee
on Indian Affairs November, 1989); What Can Tribes Do? Strategies and
institutions in American Indian Economic Development (1992); Sar
Levitan and Elizabeth I. Miller, The Equivocal Prospects for Indian
Reservations (May, 1993); The Report and Recommendations of the Joint
Tribal/Bureau of Indian Affairs/Department of Interior Task Force on
Reorganization (August, 1984).
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First, is the 1996 Personal Responsibility and Work
Opportunity Reconciliation Act, better known as ``welfare
reform'' which is now being implemented in communities across
the nation.\12\ Though the Act will present tribal governments
with opportunities and resources to address employment
training, child care and other welfare-related matters, the
focus of the welfare reform statute is on employment and
employment opportunities. For communities with high
unemployment rates and difficulties in generating value-added
activities and job opportunities, such as rural and Native
populations, the success of welfare reform hinges on
revitalized rural economies.
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\12\ The Personal Responsibility and Work Opportunity Act of 1996,
Pub. L. 104-193.
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Success in raising the standards of living of Native
Americans depends on the ability of tribal governments, the
Federal government and the private sector to build business-
friendly environments in which business can thrive.
The goal of S. 614 is to maximize the participation of
Indian tribes and the private sector in a newly-established
``Regulatory Reform and Business Development on Indian Lands
Authority'' to undertake a comprehensive review of the legal
and regulatory regime that governs activities on Indian lands
and to recommend changes in that regime to help tribes build
strong tribal governments and more vigorous economies.
section-by-section analysis of S. 614
Section 1. Short title
Section 1 sets forth the title of the bill as the Indian
Tribal Regulatory Reform and Business Development Act of 1999.
Section 2. Findings, purposes
Section 2 provides the Findings and the Purposes for the
Act in which the Congress finds that though many Indian tribes
have abundant natural resources, Native Americans suffer rates
of unemployment, poverty, ill-health, substandard housing, and
related social ills at rates greater than any other group in
the United States. The growth and development of tribal
economies is hindered by the tribes' inability to engage
outside communities and entrepreneurs alike and encourage them
to conduct business activities on tribal lands. Grounded in the
government-to-government relationship, the United States has an
obligation to assist Indian tribes in the creation of
appropriate economic and political conditions to encourage
outside investment and facilitate development on Indian lands.
The purposes of the legislation are to provide for a
comprehensive review of the laws and regulations that affect
investment and business decisions concerning activities on
Indian lands; to determine the extent to which those laws
unnecessarily or inappropriately impair investment and business
development on Indian lands, or the financial stability and
management of Indian tribal governments; and to establish an
authority to conduct the comprehensive review and report the
findings and recommendations resulting from the review to
Congress and the President.
Section 3. Definitions
This section defines the terms ``Authority'', ``Federal
Agency'', ``Indian'', ``Indian Lands'', ``Indian Tribe'',
``Secretary'', and ``Tribal Organization''.
Section 4. Establishment of authority
Section 4 establishes the ``Regulatory Reform and Business
Development on Indian Lands Authority'' to conduct the
comprehensive review of the legal and regulatory regime and to
facilitate the identification and subsequent removal of
obstacles to investment, business development, and the creation
of wealth in Native economies. The Authority is to be composed
of 21 members as follows: 12 representatives of Indian tribes,
4 representatives from the private sector, and the remaining 5
to be chosen by the Secretary of Commerce. A chairman is to be
selected by the representatives of the Authority. Not later
than 90 days after enactment, the Authority is to meet to hold
its initial meeting.
Section 5. Report
Section 5 requires the Authority to prepare and submit to
the Senate Committee on Indian Affairs, the House Committee on
Resources, and to each Federally recognized Indian tribe a
report containing its findings and any recommendations
concerning the laws and regulations that are subject to review
by the Authority.
Section 6. Powers of the authority
Section 6 outlines the activities that the Authority may
conduct including holding hearings, taking testimony, and
receiving evidence as it considers advisable. The Authority is
authorized to secure from any Federal department or agency
information the Authority considers necessary to carry out the
duties of the Authority.
Section 7. Authority personnel matters
Section 7 provides authority for the compensation of
members of the Authority, allowable travel and per diem
expenses, and the selection of Authority staff and temporary or
intermittent services.
Section 8. Termination of the authority
Section 8 provides that the Authority is to terminate 90
days after the date on which it has submitted a copy of the
report to the Congressional committees and the Indian tribes as
required by section 5.
Section 9. Exemption from Federal Advisory Committee Act
Section 9 exempts the activities of the Authority from the
Federal Advisory Committee Act (5 U.S.C. App.).
Section 10. Authorization of appropriations
Section 10 authorizes the appropriation of such sums as are
necessary to carry out the Act, with such funds to remain
available until expended.
legislative history
The Indian Tribal Regulatory Reform and Business
Development Act (S. 614) was introduced on March 15, 1999, by
Senator Campbell, for himself and for Senator Inouye, and
referred to the Committee on Indian Affairs. On June 16, 1999,
Senator Orrin G. Hatch was added as an original co-sponsor.
committee recommendation and tabulation of vote
The Committee on Indian Affairs, in an open business
session on June 16, 1999, by voice vote, ordered an amendment
in the nature of a substitute to the bill reported to the
Senate, with the recommendation that the Senate pass the
substitute amendment.
cost and budgetary considerations
The cost estimate for S. 614, as amended, as calculated by
the Congressional Budget Office, is set forth below:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 24, 1999.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 614, the Indian
Tribal Regulatory Reform and Business Development Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Megan
Carroll.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 614--Indian Tribal Regulatory Reform and Business Development Act of
1999
CBO estimates that implementing S. 614 would have no
significant impact on federal spending. Because enacting the
bill could affect direct spending and governmental receipts,
pay-as-you-go procedures would apply, but CBO estimates that
any such effects would be insignificant. S. 614 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act and would impose no costs on
state, local, or tribal governments.
S. 614 would direct the Secretary of Commerce to establish
a Regulatory Reform and Business Development on Indian Lands
Authority to review all laws and regulations that affect
economic development in Native American communities. The bill
would require this new authority to prepare a report on its
findings and recommendations within one year of enactment. S.
614 would authorize appropriation of the amounts necessary to
implement the bill and would allow the authority to accept and
use gifts or donations of services or property. Based on
information from the Department of Commerce, CBO estimates that
the total cost of implementing S. 614 would be less than
$500,000 and that the total value of any gifts or donations
accepted and used by the authority would be negligible.
The CBO staff contact is Megan Carroll. This estimate was
approved by Paul N. Van de Water, Assistant Director for Budget
Analysis.
regulatory impact statement
Paragraph 11(b) of rule XXVI of the Standing Rules of the
Senate requires that each report accompanying a bill to
evaluate the regulatory paperwork impact that would be incurred
in carrying out the bill. The Committee believes that S. 614
will have de minimis regulatory or paperwork impact in the
short-term and that the long-term regulatory or paperwork
impact of S. 614 will be beneficial.
executive communications
The Committee has received no official communication 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, changes in existing law made by
the bill are required to be set out in the accompanying
Committee report. The Committee finds that enactment of S. 401
will not result in any changes in existing law.