residing in utah eventually minerals were discovered on the land and royalties were received by the trust fund beginning in one nine hundred fifty s to fulfill its obligation the state of utah established the utah navajo trust fund over the years the state used the money to provide educational assistance drought relief road maintenance and other benefits and services to the individual navajos i'm not aware of another instance in which the federal government has directed the state to receive and expand money for the benefit of individual indians unfortunately the state no longer wants to administer the trust fund and that is disconcerting because without that can do it conduit the funds will cease to flow to the navajos i'd like to commend congressman jim matheson for bringing this to our attention this is a unique circumstance it has come to us in a way where there are a lot of questions about what we should do and as i said your you and your staff have been very helpful in terms of trying to help sort these issues  out and try to come up with solutions i just want to make sure we recognize that the funds that flow out of this trust fund to you know it's helping people on the ground utah novels and so i look forward to this hearing to learn about it but i i just as i said this is a this is an unusual circumstance we need to learn about what we can do as options and i hope the other day we do the right thing to make sure you tell navajos are still obtaining the benefits they've been benefit from the from the land if that opportunity arose and it was such that in the event that oil and gas were produced in paying quantities at least thirty seven and a half percent of the royalties from that would be paid into a trust for and that would be administered by the state of utah chairman mention one hundred fifty nine zero one gas wells were developed in the in ethics tension and they did produce properties are made directly to the navajo nation the only role right now that are part one of the interior is to do an accounting for the payments for the producers the producers of the oil and gas actually make the payments to the navajo nation the minerals management service than by all of the parties the state the navajo nation and the bureau of indian affairs with a report that producers thirty seven and a half percent of that is sent to the state of utah for the utah navajo trust fund and the balance is retained by the navajo nation in its own account this money does not flow through the office of the special trustee of the bureau o indian folks living there regarding the administration of the trust by the state of utah that's resulted in a link the lawsuit been going on now for several years and  probably will continue for some time it's our understanding that the state of utah all while acknowledging that the troll is trustee and certainly a lot of the work that it has done over the years  prefers not to continue to be a trustee for this trust and would like to see someone else become trustee that would have perhaps  closer ties to the folks the beneficiaries of the trust which are the navajos living in that area and living in the an ethics tension generally in looking at a successor trustee we understand that there's been some consideration for the department of the interior to undertake this role this is not something that we would prefer doing  currently legislation allows the office of the special trustee in the department of the interior to accept funds in troth and to administer those funds when they are sent to us from indian indian trust lands indian trust money this money technically is coming from indian trust land it is trust money but it's not been received into the indian trust it has been received directly by now the whole nation and then the thirty seven and a half percent sent directly to the state of utah we don't believe we have authority we of course could have authority if the congress so chose but currently the money that goes into the trust fund also is invested by the state of utah in various instruments most generally we are not permitted to invest in the special trustee and the department of interior allowed to invest trust funds from indian lands only in certain securities those guaranteed are backed by the federal government and this is statutory language latitude and in many cases would allow a greater return to the then we are permitted in the limitations that we have for investing so that also would have to be changed and  the statute would have to treat these funds as indian trust funds and they would be limited then in the manner in which they could be invested the other major issue that we would have with the we could determine what kind of benefit should be bestowed on in the end or on the navajos within this area i understand that some of the money now is being spent on educational benefits perhaps some on health care even believe that there are buildings other fixed assets that exist now that have been a product of this trust and also as a result of that substantial sums are used from the trust fund to take care of those buildings and and other properties that are involved in the trust so it's it's not something that the special trustee certainly would be capable of in ministering and i'm not sure that it really falls within the bureau of indian affairs  arena either as a way of managing this property the state may have some other state the navajo nation may have some things that they could work out as far as the disposition of these investment if it's solely the investing of the funds that's something that we could do but we would need to have some organization that could then do what the state of utah is doing now it's our opinion that it would be more  this is something that was given an opportunity to spend given to all tribes in the one nine hundred ninety four indian trust reform act the opportunity to withdraw all funds from the indian trust and administer those funds this would be certainly in line with that is a government to government relationship with the tribe we would encourage you not the whole nation as a sovereign government to assume the management of these funds and there are plenty of opportunities in the private sector to support that  management then i think it's also important that the navajo and indian folks living in the an ethics tension have an opportunity to continue to determine how best to  spend the funds on their behalf it's important that they have a voice in this and that could be just as a suggestion it could be a nonprofit organization be created to state of utah has been sued over its management of the trust and that's a case yet to be resolved we would of course encouraged that that case be resolved before the state of utah  withdraw from the trust so that whichever successor trustee comes in has a clean slate so to speak when they take over that trust and mr chairman that kluge my testimony and again do to ensure that that utah novels are able to continue drawing benefits from the world these that are due to them this fund this trust has a long and checkered history but as i look over that history in that time line since it was established first in one nine hundred thirty three it seems real clear that at every turn the federal government and federal action has has alternately determined how to manage and modify  the trust fund and yet earlier this year the utah legislature enacted legislation to basically dissolve the trust fund or at least its participation in this and taking away its response ability for managing the sun so the first question i have for you is is is the state of utah permitted to unilaterally divest itself from this in the interest in this matter without any federal action that's that's a question that i have asked inside interior with our own solicitors i'm not sure i don't have a an answer i don't i would be concerned that the st unilaterally withdraw from its responsibility under the congressional act that created this trust survey not without consent of the beneficiaries and the at and of the trust which was a congress would it be possible to get the solicitor's opinion of the department interior about that issue if you talked with them about that i'm certainly happy to request one i think that would be helpful for the committee record legislation do you have any thoughts or proposals about how the fund should be managed between july one when the state of the legislation state of utah passes they're out and when we ultimately make a decision in congress about the next structure should be i just don't think it's going to happen by july once you have a thought about how these funds should be managed until some new entity or new structure is put in place  at sixty two and a half percent that it retains it could certainly invest as i said through various opportunities private sector investment firms or whatever it could invest the money that it would go into the trust in ethics tension in the navajos living in san juan county that's that's the issue that really has to be addressed here as to who's going to do that and and it seemed to me again that chairman surely would have some ideas about making sure that the navajo people living in that area are available on committee or nonprofit organization that where they would give guidance to the navajo nation on what the needs are in that area and as you say trying to create such an organization by july first would be would be extremely difficult however i do believe that even now there are there are groups if not formally organized groups in the and at the extension made up of navajo citizens there that could be brought together fairly quickly to come up with plan of how this money should be dispersed or or spent one more question as as this committee as we consider federal legislation to deal with this issue do you have any recommendations for how that legislation can be crafted to make sure we protect the integrity of the fund particularly with regard to transparency and accountability well again the navajo nation i think is certainly a responsible party here and could be held to account for that and act as a trustee on behalf of the folks in that area that's the real his super special lady had sworn to pass that along if he runs into margaret but anyway i have a couple of questions one deals with liability you know and this is something we've been dealing with other pieces of legislation where the federal government can be liable what what concerns do you have i know you're kind of saying well we're not necessarily we don't want this hot potato but if we do what what what concerns you have about liability for the federal government for the department could you share your thoughts on that well i'm sure that that you know in the committee members know that we are  currently involved with over one hundred three tribal lawsuits who claim that we have not sufficiently or appropriately invested money and collected money and disbursed money you can also walk down the federal courthouse where we're right now continuing  administering their their income particularly from these kinds of resources and while some of those tribes have taken on that responsibility there are many more that still leave it to the federal government and there's still over a hundred million dollars a year that flows through our trust fund and three and a half billion dollars that we manage on a regular basis in a spider of of all of the lawsuits that are against us it doesn't seem that the tribes are really interested in in managing this money on their own but i believe that that's something we need to look at and i think the navajos responsible for that can you describe this kind of in layman's terms a little bit about the prudent vestment standard because it's something that i've been concerned about because the last thing you want is all this money that's could be is for health care and for housing for whatever the issue is not just with this particular case could you kind of give us in layman's term what a prudent vestment standard is and how it would be applied and this instance well in normal trust law you're a whole set of trust duties and one of those if it's not set out separately in the trust document  you follow those trust duties in this case a putin investor rule simply means that you will invest your beneficiary's funds in a prudent and responsible way it doesn't limit the investment but for instance if you wanted to categorize it's most likely that hedge funds would not be an appropriate investment on the other hand if you put everything into u s treasuries that wouldn't be appropriate either because you've got  the risk in return normally you would look at a range of options that would be at least reasonably secure and and risk not risk free but  with moderate risk and you can take a moderate risk as a trustee and increase the return depending on linked the time of the investment type of instrument that sort of thing and that that's really what prudent investment means that it's giving you a range of opportunities to make investments that have moderate risk with a moderate return you're not trying to get the highest or not try course be the safest which would result in the lowest return thank you i have no further questions and you know back john with michigan guilty thank you very much ross it's good to see sovereign government having the responsibility to make the investment and then work with the people on the extension to ensure that the benefit that they're entitled to is provided to them and navajo nation government they're responsible for seeing that this happens i don't see that the federal government particularly the department of interior should step into the middle of that and say wait a minute navajo nation we don't think we don't trust you we don't think you're capable of ensuring that the people your folks up there in this area that are entitled to this benefit or going to get it and i don't like that i think that the navajo nation is clearly capable and should be responsible for ensuring that the folks there get the benefit that was intended by congress in one nine hundred thirty three that these royalties thirty seven half percent of the royalties be used for the benefit of the people living in that area thank you very much thank you let me just reiterate point mr madison brought up and that is the request made for an expanded expedited for that that's not something that they perhaps would normally do because it's not an interior matter but i will certainly ask for an opinion on how they view the state's responsibility given that the act gave them this miss tawney pac downing deputy chief of staff and general counsel of the office of the governor state of utah salt lake city and the honorable joe surely president navajo nation window rock arizona we welcome you both to the committee this morning we do have your prepared testimonies and it will be made part of the record as if actually read you may proceed if you desire it's down to us start sure thank you good morning chair members of the committee and staff my name is tony pac downing i'm deputy chief of staff and general counsel for governor huntsman and utah governor huntsman sent us regrets that he was unable to come in person to thank you for holding this hearing in response to the state of utah its request to be removed as a trustee over a portion of the oil and gas royalties from the utah area of the navajo reservation last year governor huntsman and legislative leadership met to discuss whether the state should petition congress to designate a new trustee they took into account the fact that one the state of utah to our understanding is the only stated ministering a fund like this as management of indian resources is typically a federal responsibility number two they considered the fact that there has been forty plus years of nearly continuous litigation with four lawsuits by the utah navajos over the state administration of the trust fund the costs of which have been borne by  utah citizens as a whole and to what benefit number three during that same forty plus years the utah navajo have repeatedly requested they be given increased control over expenditures of the fund number for  valued citizens of the state and the litigious environment surrounding the state's administration of this fund harms the relationship between the stay and the utah navajo and complicates the party's ability to meet their needs and number six we believe there are several now before related entities that are equipped to find a more effective way to administer the fund and determine its best use in light of these considerations the governor and legislative leadership decided not to re authorize the legislation governing the new the now the whole trust fund and to allow the legislation to sunset this disc decision was discussed with the utah navajo on many occasions and i have provided a chronology of contacts with my written allowed the state to sunset the trust fund created a holding fund called the utah navajo royalty holding fund effective july first of this year the financial and real fund boards final meeting which will be next monday the board and the auditor will adopt a list of assets and liabilities of the navajo trust fund and those will be posted online i want to talk a little bit about what the holding fund will do first it will be managed through a management team that's led by the executive director of the utah department of administrative services the holding fund will continue to make expenditures to complete work on all projects that were obligated by the navajo trust fund prior to may fifth of this year the holding fund will continue to pay for educational scholarships for utah navajos through two thousand  the holding fund will also continue to make expenditures to protect the assets of the fund such as building maintenance on some of the fixed assets and also to protect and receive interest on the income of the holdings of the holding fund however no new projects will authorized through the holding fund in conclusion the state of utah requests that congress as soon as possible designate a new entity to succeed the state as trustee over the royalty funds after input from the navajo the state has no preference regarding which entity should be the new trustee however the state strongly request that since a hundred percent of the oil and gas royalties come from n reservation lands located in utah that at least thirty seven and a half percent of those royalties continue to be expanded by the new trustee for the benefit of the utah navajo i'd like to thank you for the opportunity to provide input on county state of utah and certainly we need to do right by all of the no one nation constituents living in utah and i believe again like i said the no condition government working with the at the i do like to see also the dispute that has arisen over some of the mismanagement and the misappropriation by the state of utah all i'd like to see that gotten behind us before we move forward again thank you mr chairman thank you both for your testimony and for being here today in this town and i want to ask you if you could describe how the trust fund has operated and if you could describe the accountability measures that were employed by the state during the years when the state was that during the time the state's been a trustee i'm not familiar with the day to day operations of the trust fund but i i'd be happy to provide that information back to the committee ok that'd be great another question could you could you also numerate the administrative costs associated with managing the funded it appears the administrative expenditures made for scholarships on if you're familiar with that issue if you could get back to us with information on that i will thank you mention the whole i'm glad you elaborate on the issue of what happens post that or do you know how the holding fund is dried out now but i will find out that would be great thank you very much and you said this holding fund will have some structure for decision making authority is it different than whe includes the director of finance which has been on the familiar with the asset ok that's helpful president surely first of all welcome it's always good to see you you represent all of navajo nation i have the honor of representing part of the navajo nation which happens to be the utah navajos which are central to this discussion today you stated in your submitted testimony in the context of your desire that the navajo nation be the trustee how do you ensure  what what how do you set up your funds or what have you done to it ensure accountability within your trust funds you familiar with could you give us some insight into how you would approach that issue of accountability well we have our budget and finance com programs within the government or structure as well as the chapters that are out there in this case would be the utah navajos and then we have also general in place if there's any complaint in this case coming from the navajos living in the state of utah  and this budget the finance committee how do you how is that structured is that set up by how many people are on it or how does that get appointed or how does that work only the eight member arm of the ideas that might be considered to come forward from the novel who's living in the state of utah i appreciate that mr chairman i yield back i just want to acknowledge again president shirley's been a good partner to work with my whole time i've been in congress and i appreciate him taking the time to come here again today yes to that and qualify saying that this is consider our sort of a sovereign nation congressman kildee and as such we're very sensitive to to go outside and try to bring other people in to try to mine our affairs  and if you can work with us and keep it within the house so to speak you know within the navajo nation that this that that's my position and that's my testimony you know it's interesting and i came in here late so i didn't get the first part of this but you know that the trust responsibility of the federal government came into being a great extent maybe primarily to protect really the various indian nations sovereign nations  it recognizes that so as to retain sovereignty i'm always very careful that we don't sometimes inadvertently do anything that might diminish that sovereignty and i always look at that is that there's a bottom  i do especially from astounding unfortunately those are personal i can't actually do them and here we go way back to the state of utah when you were working for the legislature to be honest i don't have any additional questions for this panel i'm going to look forward to reading the testimony this is an issue that came up when i was still in the legislature well before it was only goes back to the one nine hundred thirty s as an issue but we dealt with it when i was in the utah legislature and i'm looking forward to seeing if we can come up with a final solution that's probable for everybody right now so i'll be very much interest in looking to what the testimony actually is my appreciate the congressman who's area this is here and was already asking questions of this panel thank you thank you mr bishop i have a few questions before we go to the next panel for mrs downey can you mention something about the list of assets that you were going to provide at the next meeting the state meeting could you provide the committee with a copy of the list of those assets i will ok great the liabilities as well yes that sound level of that would be great second question i've got the committee has received various options for the future administration of the trust and several options have proposed at the state of utah or navajo nation pay future administrative costs is the state of utah willing to pay the administrative costs for the future administration of the trust fund i can't speak on behalf of the governor or the legislative leadership but i can ask that question and get the information back to you could you provide the committee with an riding i will thank you and then then the final question for for mrs downing is do you have any suggest any suggestions or actions that the committee should take to ensure that the views of the beneficiaries are considered in drafting this federal legislation i agree with president surely that the navajo nation should be at the table and that i'm convinced that he will include san juan county navajo an extension navajos in that discussion i think it's important for them to be able to announce one of the things that the governor and the legislative leadership of looked at is that we feel are better equipped to decide who is a better trustee to manage the funds the way they'd like them to be managed and to receive the benefits the way they'd like to receive them so i think it's important for this committee and congress to keep in mind what their interests would be thank you very much for your testimony and present surely one of the questions i have actually coming from oklahoma we are  state rich and travel history and also an energy state and one of the questions i have is about oil and gas you know so many of these fields that are that we have in the united states are maturing and they're actually  their resources can you tell us a little bit about the revenue stream that's coming from these wells and and is this a declining source of revenue do you see in the future for instance for congress and matheson's with presence here lee i won one more question currently the beneficiaries have the option of suing the trustee in federal court for accounting to mismanagement and mr swimmer we talked a little bit about liability earlier if the navajo nation is appointed as trustee of the utah navajo trust fund is the navajo nation willing to waive its sovereign unity in federal court so that the beneficiaries can continue with the same remedy option very much for your testimony and i think we're going to bring on the third panel tha pause in arizona is that correct executive director navajo utah commission red mesa chapter utah and then mr mark help me with this is it mary boy former county commissioner your testimony has been received by the committee and will be placed in the record and its entirety that you summarize your statement to us now and with that i turn to the honorable mr davis s also the position statement that was put together by the navajo you took commission i my comments are very brief the beneficiary are concerned about the navajo nation being appointed as the trustee they are afraid to down the navajo nation might change the allocation change to beneficiary trusts money elsewhere it is therefore important  is consistent with our position statement and that the federal legislation maintain the status quo federal legislation should ensure did the beneficiary move main the same that the third seven happens the royalties continue to go to the beneficiary and the beneficiary have local decision making and control over disbursement it is also in perth important to set aside monies in order to grow the trust fund my constituents are very concerned that they are suffering higher environmental costs and we breathe the polluted air and treat the contaminated water and the a p a are not doing anything about it my constituents want to receive the one hundred percent of the royalty in order to deal with these concerns while this may not be the right solution special money should be specially allocated to and to mitigate environmental impact and to develop the need and infrastructures in the end of chapter although it is important to minimize disruption to service happening now under the sun said we need to make sure that progress is thoughtful and orderly and that the best interests of the beneficiaries are always the priority we come here to seek your full support and the position statement that we that came from the navajo he took commission and i thank you for the opportunity further and the question that you pose earlier to the president the navajo nation the oil is depleting we have about a good ten year life in it good morning members and presiding chair congressman matheson congressman bishop my name is clarence rockwell and i'm the executive director reasons the main reason is probably the congressional policy to respect sovereignty and the right to self determination of indian tribes and secondly we know that the utah now navigation government was only ten years old presently the nation has grown to in sophistication and we have a substantial body of statutory and concerned from the utah you to chapter areas there's a concern that that local control be maintained that the seven utah chapter still receive give some special consideration for the end of extension area because it has seemed environmental impact and and there's issues related to that we like to see a separate allocation of monies to mitigate the issues in that versus utah lawsuit we recognize there's issues pertaining to you federalism but we do like to see some sort of settlement be considered as far as  year after serving thirty two years gentlemen my position is somewhat different from the statement made by ethics tension but today a lot of those navajos in utah still don't have running water or electricity in their homes and for that reason i have a  proposal a separate recommendation from the president that would be to have a private nonprofit organization  i've been working on that organization with mr lyman and we have reorganized the organization we believe that this particular organization would be in the situation to handle the various funding institutions to provide effective services and that would be my recommendation to you this morning thank you very much thank you for your testimony desire to maintain the funding stream of the thirty seven a half of the royalties to utah navajos i also have a resolution passed by the san juan county commission in utah for the whole county not novel's this is the county government indicating that same desire it's a resolution passed in april of this year and if it could just as you know sent out that put in the hearing record without objection thank you appreciate that  reservation as was first designated back in one nine hundred thirty three in the federal legislation mr merivale i appreciate your testimony i wanted in your testimony you said the trustee would need the blessing  some changes it's proposing to reduce its membership of the nomination calls from eighty eight to twenty four members and when that happens i believe that the utah navajos will have no seat no voice within the navajo nation government because in our nation government is a huge government that's a real concern from you to navajos as far as receiving goods and but as far as i'm concerned i think that would be see the people want to be their own trustee they want to manage their own money they can ok mr chairman that's all my questions right our mind both our members here that we have four votes coming up on the floor at this time i would yield to mr bishop for questions let me just ask a couple more and if i could follow up on what represent matheson ask commissioner mary boyd how far now development council sept how far have you actually vetted that with the navajo nation have you have you had discussions with them have you pushed their goals of all right now have you had discussions with conducted in the public hearing nor has he made any official visit to the chapters or the you took governments to discuss this particular issue so i was somewhat surprised to hear his statement furthermore i believe that the legislative branch has a different position than what he was proposing this morning thank you thank you mark  rockwell if i could ask just one of the question we talked we talked about special considerations for the an oath extension are we talking in this case about just maintaining the percentage of royalties or are we talking about other elements that you think should be going towards or should be considered by the end of the they're probably sure as i indicated there should be separate allocation of funds to address those issues from that particular area but i think with the funds we would like to see probably a combination coming think as we proceed with this issue we can address as specially with the with the with the vote coming up there although i would simply remind the chairman they said it properly if you're going to say it in the utah language it's correct not creek  thank you mr bishop i have just a couple of questions and then and then will adjourn for mr rockwell and mr phil for as you know the navajo nation does not and never has had any legal interest in the trust fund do you have any suggestions or ideas as to how the committee can best determine the views of the beneficiaries reciting in the utah chapter because as was mentioned before there are only two members from utah gets on the council how do you do you best if you're able to if the nation's able to manage this fine how to get the input from the people from utah navajo utah commission has stated their position but then lot of other people are wanting to be the trustee so i think the money should stay within the utah portion and the local people the border up to utah and arizona state line and each of the communities have an opportunity opportunity to elect who they want sometimes it's utah navajos sometimes arizona community from the utah area thank you thank you mr rockwell one question for mr merry boy and of interest of time will move to germany you mention that you have spoken to the chapter leaders about your future administration of the trust fine but what actions have you taken to guard the support of the individual beneficiaries with your proposal currently in the process of selecting new time so that's what i'm doing right now ok thank you for for your answers for your testimony want to say a specific thank you to the staff the committee staff for allowing me to chair this is my first time to ever be able to chair a committee so the four panelists the committee may have questions we will submit to you in writing and we ask that you respond to them as quickly as possible during record will remain open for ten days for for anyone who wishes to submit comments or materials to the committee i want to thank all of you for your participation in the hearing and