[Senate Report 106-151]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 271

106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-151

======================================================================



 
   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.

                                
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