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99–967 PDF 2005

S. HRG. 109–16

INDIAN TRUST REFORM

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

VIEWS OF THE ADMINISTRATION AND INDIAN COUNTRY OF HOW THE

SYSTEM OF INDIAN TRUST MANAGEMENT, MANAGEMENT OF FUNDS

AND NATURAL RESOURCES, MIGHT BE REFORMED

MARCH 9, 2005

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

JOHN McCAIN, Arizona, Chairman

BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

MICHAEL D. CRAPO, Idaho

RICHARD BURR, North Carolina

TOM COBURN, M.D., Oklahoma

DANIEL K. INOUYE, Hawaii

KENT CONRAD, North Dakota

DANIEL K. AKAKA, Hawaii

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

JEANNE BUMPUS, Majority Staff Director

SARA G. GARLAND, Minority Staff Director

(II)
(III)

C O N T E N T S

Page

Statements:

Cason, Jim, acting assistant secretary for Indian affairs, Department

of the Interior ................................................................................................ 3

Colombe, Charles, president, Rosebud Sioux Tribe ....................................... 15

Dorgan, Byron L., U.S. Senator from North Dakota, vice chairmanm,

Committee on Indian Affairs ....................................................................... 2

Gray, Jim, chairman, board of directors, Intertribal Monitoring Association ................................................................................................................. 12

Hall, Tex, president, National Congress of American Indians ..................... 10

Harper, Keith, Native American Rights Fund ............................................... 19

Hillaire, Darrell, chairman, Lummi Nation ................................................... 17

McCain, Hon. John, U.S. Senator from Arizona, chairman, Committee

on Indian Affairs ........................................................................................... 1

Swimmer, Ross, special trustee for American Indians, Department of

the Interior .................................................................................................... 3

APPENDIX

Prepared statements:

Cason, Jim (with attachment) ......................................................................... 30

Cobell, Elouise, C., Lead Plaintiff in Cobell v. Norton .................................. 81

Colombe, Charles (with attachment) .............................................................. 98

Gray, Jim .......................................................................................................... 27

Hall, Tex ............................................................................................................ 107

Hillaire, Darrell (with attachment) ................................................................. 117

Hoopa Valley Indian Tribe (with attachment) ............................................... 204

Swimmer, Ross (with attachment) .................................................................. 30

(1)

INDIAN TRUST REFORM

WEDNESDAY, MARCH 9, 2005

U.S. SENATE, COMMITTEE ON INDIAN AFFAIRS, Washington, DC.

The committee met, pursuant to notice, at 11 a.m. in room 485,

Senate Russell Building, Hon. John McCain (chairman of the committee) presiding.

Present: Senators McCain, Akaka, Cantwell, Dorgan, Inouye,

Johnson, Murkowski, Smith, and Thomas.

STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM

ARIZONA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. We will now begin our hearing on trust reform.

Our first witness is Jim Cason, who is the acting assistant secretary for Indian affairs. He is accompanied by Ross Swimmer, special trustee for American Indians, Department of the Interior.

The subject of Indian trust management reform has been an

issue of considerable issue to Congress and to this committee for

over a decade. In 1994, Congress enacted the American Indian

Trust Fund Management Reform Act with the expectation of bringing order to at least one aspect of the Federal Government’s trust

responsibility to Indian people, the management of tribal and individual Indian moneys held in trust accounts.

About 2 years later, the Cobell case class action lawsuit was

filed. In the years since then, we have all learned just what a sorry

state the trust fund management system was in. The reasons for

this are manifold, I am sure, but most people would agree that for

many decades the Federal Government has not been held accountable for its management practices.

This hearing is not directly about the Cobell lawsuit, although

trust reform should be a component of any legislation to resolve the

case and problems that led to it. The purpose of today’s hearing is

to listen to the views of the Administration and Indian country of

how the system of Indian trust management, management of funds

and natural resources, might be reformed. I am interested in hearing from the Administration on what it has done to improve trust

management and what additional steps it intends to take, because

it is no secret that many in Indian country are not satisfied in

whole or in part with the Administration’s approach and have different views about the direction we should be going in reforming

the system.
2

I also look forward to hearing what the tribal leaders and Ms.

Cobell on the second panel have to say about reforming the system.

One more point before proceeding. Several times in recent

months I have promised to make trust reform, including the settlement of the Cobell case and related issues, a high priority during

my tenure as chairman of the Committee on Indian Affairs, but I

will also repeat here that I intend to give it only one good shot. If

it looks like we are not getting anywhere, if the tribes, the Government, or other interested parties cannot come to terms on a settlement of the lawsuit and on what trust reform should be, then I will

leave that task to a future Congress and the courts and concentrate

my efforts on other important issues in Indian country.

I am hoping that the Administration and Indian country will

begin working with committee staff immediately to see whether

something close to a consensus can be reached on the key components of trust reform. This will probably require an efficient, but

representative working group within Indian Country to begin helping us shape a bill that can be introduced for review and comment

by all stakeholders.

Vice Chairman Dorgan, do you have a statement at this time?

STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM

NORTH DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN

AFFAIRS

Senator DORGAN. Mr. Chairman, let me say that I share your

sentiments. It is the case that we cannot solve this issue. Chairman McCain and I and other members of this committee cannot resolve this issue. The parties to this issue must find a way to develop consensus to resolve this issue.

I do not think there is any question but that what is happening

now is having a detrimental impact on Indian country. We see

sharp cuts in some of the tribal programs that are critically important to Indian tribes for the welfare of the Indian people in this

country. We see those sharp cuts in part as a result of the litigation. In my judgment, more and more funds are going to both sides

of the litigation. In some ways, I guess in many ways, the Indian

people are bearing the burden of the costs for both sides of the litigation.

I think that the settlement of these claims, the settlement of this

issue is imperative. My hope is that through the process of this

hearing and through the development of other approaches, that we

can find a way for us to get all the parties together to reach a consensus and put this behind us.

If we do not, it will have an impact on virtually everything this

committee does, all the appropriations that we are involved in with

respect to Indian tribes for years to come. I don’t think any of us

want that. What we want is a fair, thoughtful, equitable settlement

that all parties can agree to, and then we move on.

So Mr. Chairman, thank you very much for your leadership.

The CHAIRMAN. Thank you very much.

Welcome, Mr. Cason. Welcome back, Mr. Swimmer. Please proceed.
3

STATEMENT OF JIM CASON, ACTING ASSISTANT SECRETARY

FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR, ACCOMPANIED BY ROSS SWIMMER, SPECIAL TRUSTEE FOR

AMERICAN INDIANS

Mr. CASON. Thank you, Mr. Chairman.

My name is Jim Cason. I am the associate deputy secretary of

the Department, and currently I have delegated authorities of the

assistant secretary of Indian affairs while we are searching for a

new assistant secretary. I am accompanied by Ross Swimmer, who

is the special trustee for American Indians. We intend to give a

very short opening statement and then go ahead and get on with

questions.

We would like to have our written testimony entered into the

record, if that would be satisfactory.

The CHAIRMAN. Without objection.

Mr. CASON. We would commend the written testimony for reading. We think it gives a pretty detailed explanation of some of the

problems that we think are inherent to the trust.

The Indian trusts had origins with the formation with the formation and expansion of our country. It first began with tribes and

in 1887 the United States began a trust relationship with individual Indians. The trust relationship is complicated. It has many opportunities, problems and challenges. Many of the problems stem

from conflicting statutory objectives that combine a social agenda

with demands of a fiduciary trust, all to be managed in a government program environment.

The challenges and problems have been longstanding and mostly

unresolved. For example, the statutory origin of the trust without

a trust document is an issue; the long-term nature of the trust, it

is in perpetuity, and we are generations away from when the trust

started; the lack of a cost-benefit paradigm that marries the interest of the trustee delegate and the Indian beneficiaries together;

land fractionation; the choice of skilled personnel; the lack of clear

requirements and expectations on all parties that are consistent;

the duties and funding are not well coordinated; and organizational

structure is a problem.

All of these problems basically came to roost with litigation that

we all talk about as Cobell, and some associated 22 or 23 lawsuits

filed by tribes, where these problems manifest themselves in litigation. One of the problems that was the root of this hearing is to

talk about organizational structure, and how we dealt with reorganization of the Department. That effort began about three years

ago, and it began with our initial discussions about the underlying

roots of the Cobell lawsuit.

One of the things that we actually agreed with the plaintiffs on

is that we were not clearly focused on managing the trust that we

had as a trust. The reorganization efforts that began with the advancement of an idea that was lovingly termed BITAM by Indian

country, was to try to separate out the fiduciary trust duties of the

Bureau of Indian Affairs [BIA] into a separate organization and

place a new assistant secretary in charge of that, so we have a very

clear focus on the Department’s trust responsibilities.

Needless to say, there was broad opposition in Indian country to

that idea for many reasons. That began an almost 2-year process
4

of initial discussions with Indians, a whole host of meetings, a task

force endeavor, lots of written examination of different proposals.

At the end of that process, we ended up at impasse. The issues at

impasse were basically a request for the United States to waive

sovereignty; the interest of Indian country in having an external

oversight committee that would oversee the Secretary of Interior

and her implementation of the trust; and a request to have delineated trust standards that were in excess of what we already had

in the Department.

We reached an impasse and at that point the task force for reorganization broke up and the Department went internal at that

point and attempted to implement in good faith the parts of the

discussion that we had had in the task force that we thought we

ended up agreeing on. There is one exception that comes to mind,

and that is we had reached an agreement on pursuing an under

secretary for Indian affairs in the Department. We did not pursue

that because we believed that it would take both Indian country

and the Department supporting that in Congress in order to get

that authorization, so we did not pursue that part.

After the reorganization, we are basically complete with our reorganization efforts. There are still some staff people we need to hire.

That is part of our normal personnel process, but essentially the

reorganization is complete within the Department. We have moved

our focus since then from reorganization efforts to a host of other

efforts designed to improve the trust. Ross is going to talk a couple

of minutes about those efforts.

Mr. SWIMMER. Thank you, Jim.

Thank you, Mr. Chairman and Vice Chairman.

I appreciate the opportunity to present to you today some of the

things that are being done in Indian country in regard to the fiduciary trust. As Mr. Cason explained, the trust as we know it today

as a fiduciary trust was not a part of the 1887 Allotment Act. The

original Allotment Act was for the purpose of holding title to land

to prevent alienation or any other form of leasing, mortgaging or

using of the land other than by the individual him- or herself.

The attempt would be, then, to move Indian individuals into the

economy of the day, which was primarily agrarian, to become farmers and ranchers like their neighbors, and then of course, as we

know, the other result was to open the west for homestead.

The intent was to have that title held for 25 years, and at such

time as that ended, that would be the end of that era and fee title

would be transferred to all of the allotees. In fact, in 1887, the law

specifically prohibited an Indian from leasing their land or getting

income from an outside source of their land because the intent was

to teach them how to use the land, rather than to have money

come into it.

As a result, we have what in law is often referred to as a resulting trust. In this case, I may refer to it as an evolving trust. In

about 1910, there was much greater freedom given by Congress to

Indian individuals to lease their land. Much of this land was not

good for production, for agricultural production. And there were

people that wanted to lease it, and we know about the mineral

leasing that eventually came about as oil and gas became important in Indian country.
5

What we have today is what we call a fiduciary trust, but over

the years was treated more as a programmatic activity of the BIA.

What we created in the Office of the Special Trustee as a result

of the work with the tribes, with the BIA and other bureaus within

Interior, the Bureau of Land Management, Minerals Management

Service, and others, was a trust model that we called the fiduciary

trust model. It grew out of 1 year of looking at how the BIA and

the Department managed this trust. Then we spent 1 year on how

we should manage it. Out of that grew the model that is our basis

for managing this trust today.

Obviously, there are still serious issues when we talk about managing the trust. Mr. Cason alluded to a few of those. We have highly fractionated interests in land that make it very difficult to lease

that land, to collect the money, and to distribute it to thousands

and thousands of people that may own a single parcel. However,

some of the things I will mention do help us do that more effectively. Whether we should or not is not a question. At this point,

we are obligated by some, it is estimated to be 4,000 statutes and

regulations that direct how we should administer this trust.

One of the things that we have done as part of the model is we

created another category of people in Indian country. For the first

time since 1887 we have fiduciary trust officers deployed to the

field located at BIA agencies. These are trained trust officers. They

come many from the private sector, several are attorneys, several

have been with banks and trust companies. They have been trained

in the concepts of fiduciary trusts. They have also been trained in

how we transfer the concepts of private sector fiduciary trusts to

the Indian trusts, because they do not always mesh, but the concept of a fiduciary, someone that is faithful to the process of managing another’s property are basically the same.

The statute has pretty much set out what that responsibility is.

We have fiduciary trust administrators that we have selected six

of those who manage the fiduciary trust officers at the reservation

level. We have created in addition support for the beneficiaries. We

have a beneficiary call center that has now been in place for nearly

2 months. In the 2 months, they have received over 10,000 calls

from beneficiaries asking for information, everything from when is

my lease due, am I going to lease my land, how much do I have

in my account, when was my last check given, and this sort of

thing; 94 percent of the calls have been resolved at that time when

the call center was called. The other calls get referred to the trust

officer or to a superintendent or a realty person at the agency for

support.

We have also noted in the past that we have had trouble in ensuring that collections were made timely. It was not unusual for a

lessee to come into the agency and leave a check, and that check

may lay on somebody’s desk for a few days. We do not want that

to happen. We have moved into a lockbox system so that all moneys that are owed will be collected through a lockbox. We will have

a receivable system that will indicate to the lessee how much that

money is supposed to be, and we will be able to track it.

In the year 2000, we completed the conversion from about a 30-

year-old legacy accounting system to a modern trust accounting

system used currently by the largest private trust companies in the
6

United States. That trust system now allows us to account for collections and to balance to the penny with Treasury on a daily basis.

In addition to the lockbox system, we have advised and continue

to stress to individual Indian people that we will disburse their

funds faster through the use of direct deposits. We have worked

out with Treasury a system where as soon as the money comes in

on a person’s account, we can send it right out again if it is a nonrestricted account. In those cases where we can do it as a direct

deposit, it will go there even quicker. Last year, we sent 435,000

checks out to individual Indian account holders. We would rather

do that in a direct deposit, saving both money on checks, as well

as getting the money to them faster.

We have and are in the process of replacing legacy IT systems.

We have just converted fully from a, again, 30-year-old title system

that was very cumbersome to use, to a new title system that should

allow us to be able to issue title status reports much quicker than

before.

We have provided through professional trust training centers,

trust training not only for employees of the Special Trustee, but for

the employees of the BIA that may be involved in providing trust

services, as well as other employees of the Department of the Interior, BLM, Minerals Management Service and others, in the concepts of fiduciary trusts, and again explaining how those concepts

relate to the private sector fiduciary trustee and the Indian trust.

The model calls for a streamlining of the probate process through

combining the probate adjudication. It calls for placing of surveyors

from the Bureau of Land Management in each of the regional BIA

offices to provide faster services on surveying. We have instituted

a records center at Lenexa, Kansas that is now a state-of-the-art

record center, better than anything in the Federal Government. It

is a repository currently for the records of the BIA and for the

trustee for the beneficiaries and the tribes. There are millions of

records currently being stored there and millions of records that

will go there in the future.

These are just a few of the things that we have accomplished as

a result of the fiduciary trust model. We are making progress every

single day on implementing the model that was adopted this past

year.

Mr. CASON. Mr. Chairman, can I just add one other thing? We

really appreciate the intent of the committee to take on the Cobell

issue and trust reform during this session. It is a really complex

and difficult issue and we would really appreciate some help with

it.

Thank you.

[Prepared statement of Mr. Cason appears in appendix.]

The CHAIRMAN. Mr. Swimmer, what are the major remaining obstacles to resolving this issue, in your view?

Mr. SWIMMER. In terms of the reform, the real remaining work

that needs to be done is in the IT sector. We have two other programs coming along that will replace legacy information technology

systems. One of those is in what we call the realty, which affects

the leasing and managing the land, basically. That is a system that

we are currently, in fact it is scheduled for the end of March, to

do a user acceptance test. Once that is done and it passes the test,
7

we will begin the implementation of that. That should replace what

you may have heard the acronym before, the IRMS, integrated

records management system, as well as about eight other legacy

sort of home-grown system RIMS, DADS, GLADS, and various others.

That is going to be a major change. What it does, it allows us

then to fully comply with the Reform Act. It allows us to give beneficiary statements with source, type, status of funds. Even though

a beneficiary may have a 1/1000’s of an interest in a parcel of land

or an allotment, we will list that on their statement. We will show

whether there is any income received from that. We will show the

balance of their account and any other assets that they may own.

On average, a beneficiary today has about 10 interests, usually

fractionated interests in land scattered in multiple States. The new

title system I mentioned gives us access to that information for the

individual on a national scale without having to go region by region.

The other basic tracking systems for the appraisal program for

the probate program and others that we are replacing legacy systems. The other major component, obviously, is we are currently

hamstrung by the lack of Internet access. This is of course a courtordered issue. We do not have any choice about it. We are kept off

of the Internet. We cannot communicate with beneficiaries via the

Internet. It does have a serious impact on our ability to perform

a lot of these functions in a productive manner. We are having to

do a lot of work around to get there.

The CHAIRMAN. What about the resolution of claims?

Mr. SWIMMER. In terms of the accounting claims, we are doing

the accounting as we have explained to the committee before. My

office oversees the accounting. It is done through the Office of Historical Trust Accounting which was created by this Secretary shortly after she came into office. That office has pursued the accounting. They have an accounting plan. They have an accounting manual. Currently, I think that they have completed accountings or

reconciliation of about 36,000 accounts, primarily judgment accounts and per capita accounts. They have ventured into the landbased accounts and are doing some of the work there on the larger

transactions.

The plan, as we have described to the committee before, was a

plan to do a transaction-by-transaction analysis of accounts from a

date-certain forward that would give us a full reconciliation of a

person’s account and then on transactions below a certain threshold, essentially $5,000, we would do then a statistical sampling, a

broad sample across the Nation to give us an indication if in fact

there appeared to be any serious issues with the account statements of the individuals.

As you know, that is a process that we started 2 years ago. We

have continued to ask Congress to fund that. It is approximately

a $335-million effort. We continue to work along those lines on the

plan. That was a plan submitted to the court January 6, 2003. Recently, the Federal District Court has reinstated its structural injunction of last year that would require an accounting in the form

of a transaction-by-transaction analysis for every account from the

time it ever had money in it, which would probably be about 1895.
8

The CHAIRMAN. What would be the expense involved with that?

Mr. SWIMMER. It has been estimated by our accounting group

and other professionals that it would be somewhere between $6 billion and $12 billion.

The CHAIRMAN. Senator Dorgan.

Senator DORGAN. Mr. Chairman, thank you.

Mr. Swimmer, that is the course we are now on, correct? The

transaction-by-transaction historical accounting ordered by the

court? If nothing were to interrupt what is now happening, that is

the direction that we are now moving. Is that correct?

Mr. SWIMMER. That is correct.

Senator DORGAN. And the end-point of that is the expenditure of

billions and billions of dollars.

Mr. SWIMMER. Yes.

Senator DORGAN. It appears to me that much of that would come

out of otherwise appropriated funds for critically needed programs

for Indian tribes and Indian citizens across our country. Would you

agree with that?

Mr. SWIMMER. It has to come from someplace. It would come

from appropriations. There have been suggestions that it should

come from the, quote, ‘‘judgment fund’’ of the Justice Department

that is used often to pay off judgments, but that does not protect,

if you will, the Department of the Interior’s budget. It still is appropriated funds. It still has to come from the appropriations.

Senator DORGAN. Well, if you look at the President’s budget this

year, what you find is that in that Interior Department, you have

a certain amount of money that is allocated for these Indian programs, and that same Department bears the burden, then, of the

additional costs here. That looks to me like you have a corresponding decrease in certain Indian programs and a corresponding increase in the trust issues.

Let me just ask, you indicated that you have people in the field

now that will be involved in telephone servicing if someone calls

and wants some information about their account. I do not quite understand how you do that when there is the fractionated ownership

and the absence of the completion of a transactional accounting.

How good is the information that you provide to people who call

and ask for it?

Mr. SWIMMER. What I would distinguish is the historical accounting, and say answering a question regarding someone’s grandfather’s account statement in 1930. We would not do that. That is

a function of the historical accounting that eventually will come up

with that account statement. At that point, we theoretically could

do that. What the call center is doing, it is a centralized 800 number and the idea is to, and frankly it is patterned after the Bank

of America’s trust call center so that when an individual, wherever

they might be located, calls for information on their account balance today or yesterday or back to 2000, we would be able to pull

up the information right out of the system, out of our trust fund

accounting system. Or if they ask for information regarding their

fractional interest, or if they had a relative that was in probate and

they wanted to know the status of things like that, we could answer those questions for them and are able to do that.
9

Senator DORGAN. I understand. Mr. Swimmer, what is the practical alternative to going back over a century and recreating on a

transactional basis this historical accounting? If doing that is going

to cost $6 billion, $8 billion, or $10 billion, what is the practical alternative do doing that in a way that satisfies the interests of all

the stakeholders here, in your judgment?

Mr. CASON. I will take the first crack at it. We have another alternative that the Department is actually implementing, which is

the plan that we have proffered to the court. That plan depends on

the use of statistical accounting to try and resolve the issues and

questions about the accuracy of the systems in the past. So that is

a plan that takes a lot less time to do. It takes a lot less money

to do. If you add the caveat at the end of your question, will everyone be satisfied? Probably not.

If we do the plan proffered by the court, will everybody be satisfied? Probably not. There is not any plan that will satisfy all parties that might be interested in this. But there definitely are alternatives that can be pursued to define the scope of the accounting

and define the level of effort required, the level of accuracy of the

accounting. All of those will dictate the amount of time and resources it takes to do the work.

We have possibilities for a different approach as well, and that

is discussion about settlement. Is there some way that we can cobble together a strategy on settlement that would be acceptable to

a majority of the parties? Is there any settlement approach to satisfy everyone? No, but there are ways that we can address most of

the problems in a way that is reasonable. We would like to work

with the committee to explore the various options that are there

and see if we can work with Indian country to bring it to resolution

so that in the end, whatever benefits come out of this go to Indian

people as opposed to a host of lawyers and accountants.

Senator DORGAN. Mr. Chairman, thank you. I might just observe

that obviously I think working with the Indian people takes priority over working with this committee because I think the only way

this committee is going to play a constructive role here is to have

brought to us the development of a consensus of all the stakeholders. Primary, of course, there are the Native Americans whose accounts we are talking about.

Mr. Chairman, thank you.

The CHAIRMAN. Thank you.

Out of curiosity, Mr. Cason, where would $6 billion to $12 billion

come from? What is the BIA’s budget?

Mr. CASON. The BIA budget right now, including education, is

about $2.2 billion. How much we spend on implementing the trust

for both tribes and individuals is somewhere on the order of $500

million a year. So clearly, the Department does not have a funding

base that could accommodate this.

The CHAIRMAN. I thank you very much. I am sure we will be seeing more of each other.

Mr. CASON. Thank you, Mr. Chairman.

Mr. SWIMMER. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much.

The next panel is Tex Hall, who is the president of the National

Congress of American Indians; Chief Jim Gray who is the chair-
10

man of the Board of Directors, Inter-Tribal Monitoring Association

of Albuquerque, NM; Charles Colombe, who is the president of the

Rosebud Sioux Tribe; Darrell Hillaire, who is the chairman of the

Lummi Nation; and Elouise P. Cobell, Blackfeet Reservation Development Fund, Browning, MT. Welcome.

We will begin with you, President Hall.

STATEMENT OF TEX HALL, PRESIDENT, NATIONAL CONGRESS

OF AMERICAN INDIANS

Mr. HALL. Thank you, Mr. Chairman. Again for the record, my

name is Tex Hall. I am the president of the National Congress of

American Indians and chairman of the Mandan, Hidatsa and

Arikara Nation in Fort Berthold, ND. I appreciate Chairman

McCain and Vice Chairman Dorgan for allowing us to testify on the

oversight hearing on trust reform.

Just a brief statement to the response to what was testified earlier. At the end of the day, we still have 50,000 addresses unknown, IIM account holders not known. We still have spent nearly

$1 billion for trust reform, and we are not at the point where we

need to be. It still takes in some places 3 years to get accurate title

for landownership. In many places, including my reservation, lease

checks for grazing are not distributed yet in a timely manner and

those usually come out much earlier.

So I would like to start my testimony officially by saying I am

pleased to be on this panel here with the distinguished tribal leaders that we have before us and the Cobell plaintiff Attorney Keith

Harper. I am also pleased to be joined by Chief Jim Gray who is

the chairman of the Inter-Tribal Monitoring Association. We at

NCAI and ITMA are going to lead a coalition of Indian tribes and

organizations that will help draft a legislative trust reform and settlement proposal which we would like to submit to the committee

later on this spring.

I cannot emphasize how important in Indian country the formulation of this proposal is. To that end, I want to make it clear that

my staff and all of us are ready to work with the committee 24–

7, whatever it takes to get that task done.

The trust problem, as we know, has dogged the United States for

over 100 years, so on behalf of NCAI we want to say that we want

legislation that will require the United States to exercise its fiduciary responsibility to Native Americans. We expect that there will

be a high standard of accountability and responsibility. There really can be no other way. Fiduciary law is designed to prevent the

trustee from abusing its powers. As a fiduciary, the United States

cannot treat its relationship with Indian tribes as an arms-length

or adversarial relationship. Instead, the United States must safeguard and promote the interests of Indian tribes and individual Indians. It has not, and that is why we need the help of this committee and Congress.

Against this backdrop, the NCAI strongly shares the views of the

leadership of this committee that it is time for Congress to establish a fair and equitable process for settling the Cobell and doing

a trust fix. Tribal leaders have consistently supported the goals of

the Cobell plaintiffs in seeking to correct the trust fund’s accounting and overhaul the system at the Interior.
11

Just a little backdrop, in 2002 in response to the BITAM that

Jim Cason mentioned that was presented by the Secretary in the

fall of 2001, it was agreed upon by the tribes through NCAI and

the Secretary for creation of a task force that met pretty much for

all of 2002. We did not want a bureaucracy that separates the management of our lands from all of the activities that take place on

our lands. What has instead evolved is a two-headed bureaucracy

that would never make any decisions and would take resources

from other important programs of the BIA and really limit services

to Indian recipients.

Despite our rejection of this BITAM, it seems like our worst fears

are coming true as trust functions and resources are being shifted

from the BIA to the Office of the Special Trustee. The President’s

budget for 2006 would cut $139 million from BIA, mostly from

school construction, and add $76 million to OST. On top of this,

OST has created trust officers without tribal consultation, with basically no job description and basically no coordination with tribal

governments.

So after the meeting in Spokane, we reached an agreement to

create this task force in 2002. After 10 months, the Department

walked away from the table. However, some of the key recommendations that were part of this proposed legislation that the

Indian tribes will be drafting in the next few months, are based on

the recommendations and discussions that came out of the 2002

task force.

We had unanimous consent on three key issues. One is the creation of an independent entity with oversight responsibility for

trust reform. The Office of Special Trustee was originally envisioned as an independent office that could provide expert trust

management advice and oversight. Instead, it was placed under the

Secretary of the Interior and now completely lacks independence.

It has evolved into a trust management agency that was never intended by Congress or the tribes. Tribal leadership on the task

force are working on a proposal to phase out the Office of Special

Trustee, and instead replace it with an independent commission capable of oversight on the Indian trust.

In the last Congress, you, Chairman McCain, helped introduce S.

1459, a bill which would create an independent commission that

would review Federal trust laws and policies for the management

of the Indian trust funds and make recommendations. NCAI

strongly supports an independent agency and independence, and

that would be of course a great backbone of our legislative proposal.

The second commonality that tribes reached was a high-level responsibility for Indian affairs. The Department agreed with tribal

leaders on the task force about the creation of an under secretary

for Indian affairs that would have direct line authority over all aspects of Indian affairs within the Department, including the coordination of trust reform efforts across all the relevant agencies within the Department of the Interior outside of BIA. Indian country

supports the creation of an under or deputy secretary in new trust

reform legislation.

And number three, the reorganization of the BIA. The principal

goal of the tribal task force members was to have the resources and
12

decision making at the local level of the BIA, coupled with an internal oversight mechanism. The Department instead has preferred

splitting the authority at the local level, which is what we are seeing today, the development of trust officers. Like BITAM, this is

unacceptable to Indian country and we ask Congress to put an end

to this in proposed legislation.

Tribal leaders also wanted clear trust standards and legal obligation. If DOI violates its trust responsibility to Indian tribes because

DOI is a fiduciary and acts as the bank for Indian tribes, Congress

must make DOI to commonly accept legal standards and accountability as other trustees.

On adequate resources, we must have adequate resources, financial and human resources necessary to perform the trust duties. In

1994, the Trust Reform Act called for the Special Trustee to review

the Federal budget for trust reform and certify that it is adequate

to meet the needs of trust management. In practice, the Special

Trustee has no independence and certifies whatever is submitted

by the President. Tribal leaders strongly believe that an independent entity should review the Federal budget for trust management

and provide its views to Congress.

On core business systems, NCAI believes that Congress should

also focus oversight efforts on title, leases and sales and accounting

to ensure that reform efforts meet the requirements of the fiduciary

trust.

On fractionation, we at the tribal level, at the Administration

level and Congress, have great success in the Indian Land Consolidation Act. However, we need more funding.

Finally, last week at the NCAI meeting, Indian country and

NCAI leaders met and agreed that we must ask Congress to consult with Indian country first on any trust reform legislation. NCAI

strongly believes that any legislative proposal on trust reform

should be developed with Indian tribes prior to being introduced in

Congress. So as president, I directed a special committee to work

on this reform and settlement legislation. I will serve as cochair of

this committee on trust, along with Chief Jim Gray. We will reach

out to all tribes and tribal organizations, and will welcome and encourage participation at these meetings by all.

We look forward to working closely with the members of this

committee, the House Resources Committee, and your staffs on the

development of a lasting solution that will settle the litigation and

create a lasting trust reform.

Thank you, Mr. Chairman.

[Prepared statement of Mr. Hall appears in appendix.]

The CHAIRMAN. Thank you.

Chief Gray.

STATEMENT OF JIM GRAY, CHAIRMAN, BOARD OF DIRECTORS,

INTER-TRIBAL MONITORING ASSOCIATION

Mr. GRAY. Thank you, Senators. My name is Jim Gray. I am the

principal chief of the Osage Nation. I am also chairman of the

Inter-Tribal Monitoring Association, known as ITMA.

This organization of 60 tribes across the country that have vast

trust resources that are managed by the Department of the Interior, BIA through the OST. Over the course of these past 15 years
13

of this organization’s existence, we have worked diligently with

both the House and Senate committees that have jurisdiction on

Indian affairs. We also have worked diligently with the Administration over the years in a variety of ways on how the administration of the trust resources of Indian country is being managed and

how it is being appropriated.

Part of the concerns that ITMA wants to bring before the committee today is primarily detailed in our written testimony which

is being submitted to the committee.

The CHAIRMAN. All written statements will be made part of the

record.

Mr. GRAY. Okay, thank you.

So today what I would just like to do is just make brief observations about where we are today from ITMA’s standpoint, and how

we can be helpful in contributing to an overall effort to achieve real

trust reform in Indian country.

Part of the biggest concerns that our organization has had is following the process of the 2–B model and its fiduciary trust model,

as it is being called today as it is being rolled out across Indian

country. One of the biggest concerns that our organization has had

is the lack of adequate tribal input and discussion as these policies

have been carried out by the Administration.

One of the concerns that I have had just personally is the internal workings of this entity before it was rolled out into Indian

country. What I would like to have been able to have been a part

of, and of course Chairman Hall had mentioned this earlier, that

the task force had worked for almost two years on this effort to try

to find some consensus. But the only thing that I think Indian

country came out of that was finding the areas where there was

disagreement. Unfortunately, that disagreement has not been, I

don’t know, sufficiently communicated to Congress or to the Administration as these proposals have been fully implemented.

Another concern that we have had is that the process of getting

input from the people who are most affected by these policies, the

beneficiaries, the individual account holders, as well as the tribes

themselves, has been something that ITMA has worked very hard

to try to find a resolution to. Last year, at the very beginning of

last year, we started out what I thought was a very ambitious and

hopeful effort by ITMA to reach out to Indian country. We held

seven listening conferences in six States around the country last

year. We have four scheduled to be going on this year. This work,

as important as it is, it is limiting in some respects in that we

would like to be able to do more. The problem is that the purpose

of this is to try to find out from individuals across Indian country

the impacts of the fiduciary trust model is having on Indian country.

We have made some general observations that are in our written

testimony, but I would just like to speak to a couple of them right

now. One of the concerns is obviously the speed at which the rollout is taking place and its impact, and the fact that many of these

people who are beneficiaries are not receiving a full understanding

of the changes that are going on within the Administration from

the OST to the BIA. Most of the individual Indians just do not un-
14

derstand what the implications of moving these policies and administrative positions around.

From the tribal leader’s standpoint, I am somewhat familiar with

the moving of the boxes all over and the reorganization. As Chairman Hall mentioned earlier, we have concerns that we feel like

there has been some consolidation at the central office of very important functions that normally used to be taken care of at the

ground.

Part of what I am most proud of with these listening conferences

that the ITMA has hosted had to do with being able to get top-level

presidential-appointed Administration officials to come before these

hearings. Mr. Swimmer and the Deputy Director Donna Erwin attended many of these meetings. We tried our best to try to get their

counterparts at the Bureau to attend these meetings as well. One

of the problems that we encountered was just scheduling problems,

but for the most part these two individuals from the OST made

themselves available to listen to the concerns from both tribes and

individuals time and time again on their concerns.

Many of the concerns could be explained with just good communication. Some of the concerns were fundamental, and are part of

our written testimony, that we think need to be addressed by this

committee.

So ultimately, and I will just sum up real quick at this point, is

that we have what I think is probably a good system in place right

now from ITMA’s standpoint to continue this effort to get input

into Indian country, and to specifically be able to address and document some of the concerns that are happening in the roll-out of the

Department’s new fiduciary trust model.

I think what I would like to be able to continue to bring before

this committee on behalf of this organization over time is basically

a presence in Indian country that is maintaining what the Administration believes is the best trust model that they can put together, and just to see its impact on Indian country, and be able

to come before this committee as needed to be able to present to

you the views from Indian country as to how that is working.

If Congress does not act on trust reform in the form of any legislation, I would hope that you would see that our role would be a

helpful one. But beyond that, if there is a real interest in doing a

full-blown legislative solution on trust reform, that you will also

see that ITMA can be helpful in that capacity as well. I do pledge

to work with the organizations that we have developed relationships with, like the Council of Energy Resource Tribes, the Inter–

Tribal Timber Council, and many other intertribal organizations

that are devoted to trust resource management as a narrow focus,

as well as working with Chairman Tex Hall here, who has demonstrated great leadership in this area on behalf of NCAI.

So at this point, I would like to make myself available for any

questions you may have.

[Prepared statement of Mr. Gray appears in appendix.]

The CHAIRMAN. Thank you very much.

President Colombe.
15

STATEMENT OF CHARLES COLOMBE, PRESIDENT, ROSEBUD

SIOUX TRIBE

Mr. COLOMBE. Chairman McCain, Vice Chairman Dorgan, members of the committee, my name is Charles Colombe. As tribal

president, I am honored to testify today on behalf of the Rosebud

Sioux Tribe of South Dakota.

I have also submitted written testimony that you have, but I am

going to shorten that up. I want to thank the committee for their

ongoing efforts in holding this hearing and in attempting to deal

with the issue before us.

At Rosebud, we have approximately 900,000 acres of trust land,

about 25,000 tribal members, with 21,000 of them living on the reservation. We have the second-poorest county in the United States

there. We are land-poor in a lot of ways. Only one out of five of

our adults have a job.

However, we consider ourselves rich in our customs, our traditions, and certainly in our land. Land should be the foundation of

our reservation’s economy. Since the reservations were created, the

United States has had management and control of our land. As I

am sure you are aware, the BIA’s land management has been a

dismal failure. Land management is therefore the heart of trust reform in our region, and I know trust land very well.

I ran our tribe’s purchase program during the 1970’s when I was

on the tribal council. From 1979–94, I contracted title work to the

BIA and oil companies. I completed change of title and curative

work and computerized all of the land records on all trust titles in

the Minneapolis area, the Great Lakes area, Great Plains, Rocky

Mountain, and Northwest regions.

I also built the title plant data for the Pacific region and turned

the switch on in Sacramento. I provided the same services for 11

of the 19 Pueblos in New Mexico. In that time, I also did a lot of

work on title relating to legal claims. For example, law firms asked

me to reconstruct ownership files after they had won claims

against the United States for timber mismanagement. This sometimes required me to construct records for land that had been probated 20- or 30-year earlier, some of which had passed out of trust.

Also beginning in 1979, I ran the 28 U.S.C. 2415 claims process

for South Dakota Legal Services. The United States had filed actions against local governments, utility companies and others on

behalf of tribes and allotees for damaging and primarily for using

trust lands without first obtaining perfected rights-of-way. The

2415 claims process was an effort to assist tribal members in filing

land claims before the statute of limitations expired.

On a personal level, as a rancher, I have leased and permitted

thousands of trust acres, bought and used land, and mortgaged it.

I understand the way the Bureau manages land, not only on my

reservation, but on many others where I have provided contract

title services.

Before I get too far into my testimony, I want to acknowledge

that almost every tribe has a dog in the fight over the ongoing reorganization of the BIA, because most tribes are impacted by the

deep funding cuts to TPA and school construction. The Department

of the Interior should collaborate with all tribes to reform the Indian trust. The United States, the Office of Special Trustee, the
16

BIA and Indian tribes can collaborate. One only has to look at the

successful passage of the American Indian Probate Reform Act of

2004 to see how well this can work. I personally believe that this

is the most significant piece of legislation enacted to benefit Indian

tribes and their members since the 1934 Reorganization Act.

The Great Plains and Rocky Mountain region have the majority

of individual Indian money account holders. We want to collaborate

with the United States to come up with meaningful trust reform.

These regions also recognize that other regions like Oklahoma may

very well have higher dollar values in their IIM accounts due to

the development of mineral resources on their land.

An example from my reservation demonstrates the land management problems we face with the BIA. It also demonstrates how unresponsive current reorganization is to tribal trust concerns on the

Great Plains. In 1943, the BIA created tribal land enterprise for

the Rosebud Sioux Tribe under a Federal charter. It is the only one

in existence. The BIA wrote TLE’s bylaws and still retains supervisory authority over all actions by the board of directors. The

board is appointed by the tribal council and the shareholders. As

president, I am also a TLE board member.

The BIA today retains signatory authority over all accounts, land

transactions, leasing and is responsible to ensure that fair market

value is received by the allotee when he sells his property to TLE.

TLE seemed like a good idea at the time it was created in 1943.

TLE has worked well for the BIA and sometimes, but not always,

for tribal government. Here is how it should work.

TLE purchases land from individual tribal members, paying

them with a certificate of ownership in the corporation comparable

to a stock certificate. These certificates allow individual allotees to

retain a financial interest in a corporation that manages the land

that would otherwise be of little or no use to them because it was

rapidly turned into fractionated undivided interests. Thus, TLE

consolidated fractional undivided land interests and returns those

interests to tribal ownership.

TLE manages such lands by leasing most of it for agricultural

uses. TLE assigned other land to individual tribal members. Profits

from leased land have been used to buy even more fractionated

land. Regrettably, the bylaws have not been followed for a variety

of reasons. TLE board of directors and TLE staff are not trained

in land management or other accounting procedures. TLE has simply failed miserably in complying with its own bylaws.

The BIA has stood on the sidelines and allowed shareholders,

that is, former allotees, to be defrauded. On paper, TLE has been

wildly successful, and has apparently acquired over 570,000 acres

of individual land that it now manages for the tribes. It generates

approximately $3 million every year in gross lease income. After

expenses shows a profit of close to $2 million a year. In reality,

however, TLE has become a black hole for the financial interests

of individual certificate holders.

Since 1943, TLE has systematically failed to perform the annual

land valuation mandated by its bylaws. Due to these failings, individuals selling certificates issued in 1943 could receive less.

The CHAIRMAN. Mr. President, you will have to summarize, if you

will please.
17

Mr. COLOMBE. Thank you. Individuals receiving less than $42 an acre for land that is worth about $300 an acre.

Frankly, Mr. Chairman, what I need from the committee, the

BIA, U.S. Government, are a couple of very simple things. We need

to collaborate on how to fix this. This is a case that the accounting

is there, the records are there, everything is before us, and it shows

that our people have basically lost close to $100 million. It is not

one that we have to do a historical accounting on and search for

records that are not there. They are all there.

[Prepared statement of Mr. Colombe appears in appendix.]

The CHAIRMAN. Thank you very much, sir.

Mr. COLOMBE. Thank you.

The CHAIRMAN. Chairman Hillaire.

STATEMENT OF DARRELL HILLAIRE, CHAIRMAN, LUMMI

NATION

Mr. HILLAIRE. Chairman McCain, Vice Chairman Dorgan, it is

an honor to be here. My name is Darrell Hillaire, the chairman for

the Lummi Nation.

We have been working in cooperation with the California Tribal

Trust Reform Consortium, Big Lagoon, Cabazon, Hoopa, Karuk,

Quilliville Rancheria, Redding Rancheria, Yarok. We have also

been working with Rocky Boy Reservation of Chippewa Cree, ATNI

organization, most notably Colville Nation.

Today, we have drafted and are submitting for consideration proposed legislative language that addresses our concerns regarding

the national conflicts associated with trust reform and settlement

of the Cobell litigation.

Riding on both issues is the Office of Special Trustee and its failure to limit its activities and scope of work within the boundaries

set by the 1994 American Indian Trust Fund Management reform.

The terminationist and paternalistic insensitivity that the OST has

displayed toward the impacted tribes and the damages caused by

prior mismanagement of trust funds and assets have polarized Indian tribes and leadership nationwide. The topic of OST consultation with Indian tribes has become a farce that Indian country does

not take kindly to.

Our draft language can be divided up into five synoptic topics.

The first is the Consortium tribes’ concerns that the legislation includes protection of treaty rights and self-determination. The second is the recommendation to create a deputy secretary for Indian

affairs that will replace any counterpart duties and functions assigned to an assistant secretary or the Office of Special Trustee,

and that the funding and resources that were temporarily placed

under the OST will be completely transferred to said deputy secretary.

The third concern is that Indian tribes should be provided every

right and opportunity to fully assume the functions of trust fund

and asset management, along with the financial resources essential

to accomplish the tasks. The fourth concern was the idea of a commission to provide advisory services to the deputy secretary for the

purposes of assessing the fiduciary and management responsibilities of the Federal Government with respect to Indian tribes and
18

individual Indian beneficiaries. Although this recommendation has

surfaced before, our Consortium is concerned that it will simply become a commission to circumvent the concerns of the tribes and its

beneficiaries.

The fifth issue is associated with the call for mandatory mediation of the Cobell litigation. It is sometimes too easy for parties

that are not plaintiffs to the litigation to recommend settlement

when the impacts are not directly felt by their tribes or their individual membership. However, the Consortium at least believes that

the subject could be submitted for consideration during the hearings. It recommends that major plaintiffs and their lawyers are

given agenda time during the hearing process.

The most common theme that unites Consortium tribes together

is the principles of Indian self-determination and self-governance.

The individual Indian money accounts are trust funds that were

created as a result of the enactment of the General Allotment Act.

The Indian lands were divided. The trust patterns were created,

and the BIA assumed control over the estates of all incompetent or

non-competent Indians. This even included control of tribal trust

funds. The Allotment Act nearly completely destroyed Indian tribal

governance. It did destroy tribal reservation economies and impoverished the Indian people.

Since then, the Indian Reorganization Act of 1934 and the Indian

Self-Determination and Education Assistance Act of 1975 have

been enacted. Then, the latter was amended to provide tribes with

the opportunity to become self-governing as a matter of Federal Indian law. Indian tribal leadership was aware that the trust system

has been a failure since it began. The tribes have always suffered

as the wards and the guardian has always failed to protect the interests of Indians.

This failure was why the War Department transferred Indian Affairs to the Department of the Interior in 1848. This continuing

failure is why President Grant in 1872 placed church leadership in

control of Indian reservations. This is why the U.S. Congress has

held hearings in the 1870’s as to the extent of the BIA mismanagement that then resulted in modification of the laws that governed

legal contracts with Indians. The Cobell case is litigation that was

simply forming over 100 years ago.

Throughout this, Indian lands and inheritance have been destroyed beyond recovery due to the fractionated ownership problems instituted by the Federal BIA mismanagement of Indian affairs. The Indian Land Consolidation Act must be fully funded by

Congress in order to reverse the damages done to Indian land titles. Major appropriations should be earmarked specifically for the

use of the tribes to clear land titles. Clear titles are essential to Indian housing development, as well as tribal governance and economic development projects.

This is a concern of self-governance tribes in the Consortium.

The Consortium tribes want every opportunity to develop a tribally

based trust fund and asset management system that will guarantee

the protection of the rights and benefits to both the tribes and individual beneficiaries at the local level. The standard of the DOI BIA

thus far has been mismanagement and failure. Indian tribes should

not have to confront OST or other similar types of officials that
19

work to squash tribal efforts to develop honest, fair and equitable

trust fund and asset management systems.

In addition, there is inadequate attention paid to the difference

between the individual trust and the collective trust owed to Indian

people. The individual trust is associated with BIA management of

trust assets created by the General Allotment Act. Then, there is

the sacred trust of civilization that is tied to the government-togovernment relationship the tribes have with the United States.

Under the latter, the Indian tribes are concerned about assuring

that they are given access to rights, services and benefits provided

to other population segments of the United States by the other

Federal departments and agencies.

The trust concept has been abused. In history, it was always the

BIA and only the BIA that serviced Indian tribes and Indian people. Indian tribes have treaty relationships with the whole United

States, and not just the BIA. Trust reform is more than simply

undoing the damages caused to individual Indian money accounts

beneficiaries. It is more about providing Indian people and Indian

tribes the opportunity to really exercise Indian self-determination

and self-governance. This will take the cooperation of the whole

United States. It will require reestablishment of the governmentto-government relationship between the Indian tribes and the

United States as founded upon the U.S. Constitution.

[Prepared statement of Mr. Hillaire appears in appendix.]

The CHAIRMAN. Thank you very much, sir.

You are obviously not Ms. Cobell.

Mr. HARPER. I am not, Mr. Chairman. [Laughter.]

My name is Keith Harper from the Native Americans Rights

Fund. I am one of Ms. Cobell’s attorneys.

The CHAIRMAN. Thank you. For the recorders, repeat one more

time.

Mr. HARPER. Okay. Keith Harper.

The CHAIRMAN. Thank you very much. Please proceed.

STATEMENT OF KEITH HARPER, NATIVE AMERICAN RIGHTS

FUND

Mr. HARPER. Thank you, Mr. Chairman and good morning to you

as well, Vice Chairman Dorgan. Ms. Cobell could not make it here

today, but she did provide written remarks that we would like to

make part of the record.

[Prepared statement of Ms. Cobell appears in appendix.]

Mr. HARPER. We want to thank you for providing this opportunity to give oral and written testimony. On behalf of Ms. Cobell,

I want to express our gratitude for your continuing leadership in

ameliorating the continuing mismanagement of Indian trust assets

and the commitment to explore a prompt and fair resolution of the

Cobell case.

Our views are detailed in Ms. Cobell’s testimony, but I do want

to touch upon a couple of points. Mr. Chairman, you have called

the mismanagement of Indian trust assets criminal. And it is, in

every sense of the word. It is a national disgrace. If this abuse occurred to any other Americans other than Indians, this situation

would have been addressed with finality years ago.
20

Think of it this way. The Congress is presently considering various ways to address the future of Social Security. What if someone

proposed to abandon present management of Social Security and

instead have it managed by the Department of the Interior in the

manner they manage our assets? Knowing what we know about Interior’s management, how many Americans would support that proposal? Not many, I imagine.

If it is unacceptable for other Americans, why is it okay for the

first Americans? After all, in a very real sense, these assets are our

property and our financial security, and the financial lifeblood of

our communities.

We would like to be absolutely clear on one point. We want to

resolve this case. We brought the case not for any other purpose

but to seek redress for these identifiable abuses that are occurring

to many Indians out there as has been documented time and time

again in hearing after hearing going back generations.

We have put a quote from a report from 1915 for the Congress

of the United States that identified fraud, corruption and institutional incompetence almost beyond the possibility of comprehension, 1915. Those same conditions still exist today.

There has been talk about the advances in trust reform by the

Department officials. We still have fundamental problems. Let me

raise a couple. Collections are largely done on the honor system.

Think about that, for a trust, for a fiduciary, there is inaccurate

ownership information that controls who gets paid what moneys

still today.

There is no fair market value for leasing. To give you an example

developed in our case, the special master did a report. He showed

on the Navajo Reservation for allotees for rights-of-way going

across their land, they get about $9 to $40 a rod, the standard

measurement for a right-of-way. For a non-Indian, living right off

the reservation, you get no less than about $140 a rod and you

probably get more than $590 a rod. Think about that difference, 20-

, 30-, 40-fold difference. Now, that is a pretty serious Indian discount and that kind of stuff is not being addressed. So I am not

sure what they are talking about when they are talking about

these reform efforts, but the fundamental problems are not being

addressed.

There is still no accounts receivable system. Mr. Chairman, we

think that trust reform is an integral part to resolution of the

Cobell case, along with historical accounting. I did not intend to

talk about historical accounting, but I know that there were questions asked and there was some testimony from the government officials, so I will just say a couple of things, because I understand

the concern about spending a lot of money, $6 billion to $14 billion,

any money, to provide something to provide the accounting.

We do not believe that one red cent should be spent on performing this accounting because it simply cannot be done. It is absolutely futile. The government admitted that in 1997, but now because of their litigation positioning, they do not want to admit it

today. Why? Because if they admit that it is impossible, they admit

it is impossible, then we will have to go with an alternative method

that they know will mean high liability for them. But if they cannot do the accounting, then we have to look at alternatives that are
21

consistent with trust law. So we do not want to spend that money.

We say spend that money on building schools and all the other desperate needs out in Indian country, not for futile accounting.

The other point is this, the court did reenter the structural injunction, but based largely on the fact that the government said

they could do the accounting. If they cannot do the accounting required by law, then we should move on and they should admit as

much.

They also have the alternative of getting out of that accounting

by going to the court and asking the court to change its order. They

have not done that. They said they have appealed and we will see

where that goes.

I do want to mention a couple of points that are described in detail in our written testimony. We take a commonsense approach to

trust reform. We ask this question: How is this trust different from

all other trusts? There are simple answers. There are three critical

components that are missing from this trust. I appreciate the leadership of Tex Hall on this issue, and he said what they are.

One, you do not have clear standards and you do not have standards that are applicable and easily discernible that they apply to

this trust. In every other trust in this country, every single one,

you have clear standards.

Second, those clear standards are enforceable in a court of law.

It is clear that they are enforceable. You do not have to argue

about jurisdiction. You do not have to argue that you are in the

Court of Federal Claims or the Federal District Court. They are

simply enforceable.

If you do not have clear standards. If you do not have enforceability, and third, you do not have an independent oversight with

real authority, then you do not have the three components that

make sure that every other trust in this country is run properly.

We think that these three elements form an essential foundation

for proper trust management. These proposals are detailed in our

testimony. All I would like to say is that we appreciate the leadership of Chief Gray, Tex Hall and the other tribal leaders, and we

will work closely with them to get a single proposal to resolving the

Cobell case, addressing these foundational concerns and attempting

to ameliorate trust management, because we do not want that

fraud, corruption and institutional incompetence that existed in

1915 to 2015, and we want to work with this committee to ensure

that it is not so.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much.

If you do not require an accounting, what is the alternative?

Mr. HARPER. We propose one alternative in our January 6, 2003

plan. What that requires is that the Government and us actually

agree on an essential point, that within a certain given time period,

approximately, we differ slightly but approximately $13 billion was

generated from this trust. That is not counting interest, but the

point is this, if you take that $13 billion and you figure out how

much of that money actually reached the correct beneficiary, the

difference is what is owed.

The CHAIRMAN. How do you figure that out?
22

Mr. HARPER. Well, you have to look at certain transactions. They

can, for example, produce any disbursement records that actually

show cancelled checks.

The CHAIRMAN. But they do not have the records.

Mr. HARPER. They do not have the records on a lot of things, and

to the extent that they do not, then you have to use whatever alternative methods are available.

The CHAIRMAN. I go back to my original question. What is the

alternative?

Mr. HARPER. The trust law answer is this. The trust law answer

is that if you cannot show it, you owe it. And if the Government

cannot show that it paid out to a specific beneficiary, then to that

beneficiary it owes the money that it said it paid out but never did.

The CHAIRMAN. And if you went to that alternative, have you got

an estimate of how much that would cost?

Mr. HARPER. That alternative would mean the $13 billion plus

interest, minus any kind of disbursement that they show. We do

not know what the disbursements that they can show are.

The CHAIRMAN. The interest starting to accrue when?

Mr. HARPER. When the moneys were deposited.

The CHAIRMAN. So we would be talking about the late 1800’s,

early 1900’s?

Mr. HARPER. That is correct.

The CHAIRMAN. We must be talking about $100 billion.

Mr. HARPER. Over $100 billion is they cannot show specific transactions. That is what trust law provides. What the Government’s

alternative is, Mr. Chairman, is to say let’s change that. Let’s

change the normal way we figure out these problems and find that

there is a lesser duty.

The CHAIRMAN. I think they are saying that, Mr. Harper, because nobody knows where we are going to come up with $100 billion.

Mr. HARPER. I understand that, and that is why we have been

at the mediation table. We are working with this committee and

others to find a settlement solution. If they cannot do it, then let’s

resolve it by agreeing to a sum certain that is fair. We are not saying that no money reached the beneficiaries, but they cannot make

hardly any demonstration of that. Their present accounting plan is

essentially absurd. We just have to go to something that works,

and that does not.

The CHAIRMAN. Thank you.

Chief Gray, a statement has been made that the, quote, ‘‘Administration’’ has not been communicating or has not been listening.

Is there anyone more highly regarded than Mr. Swimmer? Mr.

Swimmer, have you attended a lot of these meetings? Go ahead.

Mr. GRAY. Well, specifically in my opinion, I believe that what

Mr. Swimmer represented the U.S. Government at these meetings.

To many of these beneficiaries, and specifically in the North Dakota region where he did attend the meeting in the Three Affiliated

Tribes area, that was the first time a presidentially appointed official had ever visited the reservation to listen to the concerns. I

think that was a great starting point for actually having the opportunity to look some of these beneficiaries right in the eye and explain to them why your appraisal did not get done, and why it got
23

moved to OST, and then they have to explain what OST is, and

then they have to explain why it has taken so long.

I think one of the big problems is that that needed to happen,

Senator. I really do believe that. I think those discussions needed

to happen, just for the sheer complexity of the work that has been

done up here on this very issue, you still have to distill it to a point

where it is deliverable in the sense that people can understand it

and have some faith in it.

Part of the problem that I saw was a great disconnect because

many of the discussions that you have heard today are in the abstract, but to the folks back home this could not be more real. So

what ITMA proposed to do was to continue to hold these listening

conferences. We may not get complete satisfaction out of every

meeting, but we know that over time, I know Mr. Swimmer can

probably attest to this to a degree, that the more exposure he got

to Indian country, the more he was able to really address some of

their concerns because he was there. I think that was a great starting point.

You know, as far as I am concerned, no matter if the committee

decides to take on trust reform legislation or not, there is still

going to have to be a very important communication component to

all this to the beneficiaries.

The CHAIRMAN. Chairman Hall, in your testimony you state a position that I have many times before: The need for clear trust management standards for the Department’s trust management functions. At the same time, I have heard that the imposition of standards without sufficient funding for the Department to live up to

those standards is a formula for further litigation and claims

against the Federal Government.

I guess my question is, is NCAI willing to work with the committee and staff and with the Administration to see if in the context

of comprehensive trust reform, there is some way we can find common ground here?

Mr. HALL. I think so, definitely, Mr. Chairman, because as you

are looking at a trust fix, we obviously have to have a standard for

those standards. But there needs to be a time period where there

can be no litigation as the trust fix is being developed with the

standards, and that might be two years down the road. We do not

know. We will not know until this thing shakes out.

So obviously, in Indian country we understand that. In establishing that relationship, we do not just want to go back the next day

if we do a settlement and sue. Instead, we want to work with the

committee on resolving the standards, whatever those standards

might be.

The CHAIRMAN. I would just like to mention to the witnesses, the

main reason why Senator Dorgan and I sought to try to achieve

some resolution on this issue is that if it is left up to the courts,

we could be looking at a minimum of 10 to 15 years before we could

possibly get something done. A lot of Native Americans are not

going to be with us 10 or 15 years from now. That is why we want

to give this a very, very high priority and do the best we can to

reach some kind of legislative fix or facilitate an agreement without

legislation, although I am not sure that that is possible.
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We intend to do everything we can to encourage the Administration to be forthcoming. This may be probably the most difficult

issue that I have encountered, not only as far as Native American

issues are concerned, but in the Congress, and I thank all the witnesses for their involvement.

Senator Dorgan.

Senator DORGAN. Mr. Chairman, thank you very much. You are

correct that this is enormously complicated. It probably over the

many decades involves some criminal activity, substantial incompetence, perhaps corruption. When you hear some of the stories

about the mismanagement, it really I think angers all of us. So the

question for us now is how do we resolve this and how do we create

a structure going forward that has some credibility?

Chairman Hall, the National Congress of American Indians convened a meeting last week, I understand, to discuss strategy for developing a comprehensive resolution of these trust issues. What

was the outcome of that meeting, in your judgment?

Mr. HALL. The outcome was we formed a special committee that

would move quickly and that NCAI would open meetings for all

tribal leaders and national and regional organizations to provide

input, because a lot of the answers, we know it is a complex issue,

but the answers lie within Indian country. I, for one, am also an

IM account holder and the chairman of a tribe, so I have to look

out for the tribe’s interest and I have to look out as an IM account

holder and a rancher.

So a lot of us have those day-to-day activities. We live on those

56 million acres of trust land, but we have to talk to each other.

We have to communicate to know what is best at the local level.

We just do not see that happening. So the tribes at NCAI last week

wanted to make sure that we were at the table, because as we see

the current reorganization, again we are not being communicated

with and we are spending a lot of money at the Federal level, at

the congressional level, for a plan that really does not address local

issues.

Senator DORGAN. You described your leadership, along with

Chief Gray’s leadership on this issue. Can you tell us what that

leadership will entail and what activities will be involved going forward to try to address this from the standpoint of the tribes, as

well as the Indian citizens?

Mr. HALL. NCAI, as you know, Senator Dorgan, comprises about

250 tribes. We have area vice presidents for all of the 12 regions

that the BIA has broken out for the United States. ITMA, as cochair for Chief Gray, has close to 60 tribes, so that is 310 tribes

of the 562 tribes. So those two organizations by joining forces, we

think we will get the necessary input from Indian country. Indian

country has met already with the 2002 task force, so we do not

have to reinvent the wheel, so to speak. We can pick up the white

paper that was adopted in 2002. There were many issues we had

agreement on, standards, oversight commission and accountability

for those standards.

And then the legislation that has been done, as I mentioned to

Senator McCain, who introduced S. 1459. Let’s look at the trust reform legislation. Let’s look at the 2002 task force as starting points
25

to go forward and let’s see what has taken place in reorganization

since then, and let’s put those together.

Senator DORGAN. Chief Gray.

Mr. GRAY. Yes, Senator; from ITMA’s standpoint, we have been

working on trust reform for a number of years now, and it is certainly the number one priority of this organization’s function. Part

of what we have also recognized is that we need to work and have

relationships with other intertribal organizations that have a similar goal in mind, especially those Indian organizations that have

specific natural resource issues that they are gathered around, like

the Council of Energy Resource Tribes or the Inter-Tribal Timber

Council.

Certain tribal organizations that have a very narrow focus are an

instrumental part of formulating any kind of overall policy that

ITMA may present to the committees. Part of what we also believe

is most important, I think, is that, and I think Chairman Hall

spoke to this a second ago, and that is that we understand that

other tribes across the country have specific natural resource issues

that are specific to their tribe. Our tribe, for example, the Osage

for example, we have a very unique situation among all tribes in

Indian country regarding our relationship to the IM account holders and the governing institutions of the Osage Nation, and our

status as a federally recognized tribe. Many of the dollar flow

through both entities’ hands, as a tribal government and as individual allotment distributions. This makes us a hybrid in Indian

country. Whether we like it or not, we have one foot squarely in

the Cobell camp and one foot squarely in the tribal camp.

These individual kind of instances that occur all across Indian

country are reflective of these other organizations’ efforts to try to

gather the broadest consensus that there may possibly be, but respecting the individual interest of every tribe. This is a very difficult line to walk, but this is how we are trying to approach it.

Senator DORGAN. Without substantial leadership from the tribes,

I do not think this gets resolved. I agree with the chairman that

it may require legislation ultimately, but legislation in my judgment will not successfully occur here without substantial leadership at the tribal level on behalf of the Indian people. I think you

have a significant burden, Chairman Hall and Chief Gray. I am

pleased that you are accepting that burden to try to see if we can

find a way to bring people together to reach a consensus.

Chief Colombe, you raised a point in your testimony about TSE,

TLE, I am sorry. I think, Mr. Chairman, I would suggest that we

have our staff take a look at the TLE allegations raised by Mr.

Colombe. If the allegations are as he is representing them this

morning, I believe it would be appropriate to ask the GAO to take

a look at that situation. So with your permission, I would hope perhaps we could have our staff take a look at that specific instance.

The CHAIRMAN. May I mention, maybe we ought to have the

GAO look at the whole situation and see what their view is of it

and what the options are. It is pretty big tasking, but we might

want to do that.

Senator DORGAN. Yes; I think we should. I do think that the specific set of issues with respect to the BIA’s management of this particular issue, it would probably be instructive for us to understand
26

a bit more, but I think we also could use those resources to take

a broader look as well.

This has been I think an interesting set of testimony that has

been offered today. It is a starting point. As I said, in order for this

to bear some fruit, it is going to require substantial leadership on

the part of all of you in order for us to find a way to develop some

consensus.

It is, in my judgment, a failure on everybody’s part if nothing

happens except we just talk and talk and talk until we are all exhausted and we are back in the same position of having a historical

accounting that is required by a transaction-by-transaction analysis, and we spend billions and billions of dollars to do that. That

would be a horrible failure, in my judgment, for everybody, for the

American taxpayer, and most especially, though, for American Indians and the tribes. We really do need to find a way to see if we

can solve this very complicated issue.

Mr. Chairman, I want to thank you, and let me thank those who

have presented testimony today.

The CHAIRMAN. I thank the witnesses.

This hearing is adjourned.

[Whereupon, at 11:15 a.m., the committee was adjourned, to reconvene at the call of the Chair.]
(27)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF JIM GRAY, PRINCIPAL CHIEF, OSAGE NATION AND

PRESIDENT, INTERTRIBAL MONITORING ASSOCIATION

Good morning, my name is Jim Gray, I serve as both the principal chief of the

Osage Nation and the president of the Intertribal Monitoring Association [ITMA].

I appear today to provide testimony in my role as ITMA president, but I would be

pleased to answer any questions the committee may have about the unique trust

systems that apply to Osage Nation trust resources.

The ITMA would like to thank Chairman McCain and Vice Chairman Dorgan for

holding this hearing and for inviting ITMA to participate. It is ITMA’s understanding that Chairman McCain has made settlement of Cobell v. Norton and trust reform one of his highest priorities during his tenure as the chairman of this committee. ITMA applauds and thanks the chairman for his commitment to seek solutions

to this difficult subject. ITMA appreciates the opportunity to play a role in this process and support this worthy effort.

There is a widespread view that Congress and both sides of the Cobell lawsuit

are sufficiently fatigued by this litigation and there is some basis for hoping that

a settlement can be reached and approved by Congress. Based on that belief, there

is also hope that the time may be ripe to enact comprehensive trust reform legislation during the 109th Congress.

If Congress does not enact trust reform legislation, the Department may interpret

this as a tacit endorsement of its ‘‘To-Be’’ trust reform effort and the Department’s

decision to continue to expand the Office of Special Trustee [OST]. ITMA can assist

the committee with its effort to decide whether it wishes to preceed with trust reform legislation or allow the field to be occupied by the Department’s ongoing efforts.

ITMA can provide this assistance to Congress because it can draw from the collective knowledge of at least 60 individual tribal governments that represent the

breadth and width of the trust reform issues and experience. In addition, ITMA has

been a direct participant in both inter-tribal efforts to develop trust reform proposals as well as recent Federal-tribal efforts to reach a consensus on these matters.

Finally, and we believe most importantly, ITMA as an organization has undertaken

an exhaustive effort to go out into Indian country to meet with the beneficiaries of

the Federal trust obligation. We have and continue to gather and analyze this important testimony to guide both ITMA’s consideration of trust reform and to make

this information available to Congress.

Based on this knowledge and experience ITMA would like to make the following

general observations concerning trust reform. Based on these observations this testimony will address the alternatives available to Congress.

First, ITMA believes that Congress should determine the manner and direction

of trust reform. Only in the absence of Congressional action should by the Executive

branch lead the way. It is very likely that Federal courts will only address discrete

issues related to the Federal Government’s trust obligation bit not the direction or

the overall character of trust reform. In fact, the recent Court of Appeals decision
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in Cobell recognizes this. Indian tribes certainly prefer a future where they work

directly with this committee and the House Resources Committee to structure

meaningful trust reform.

Second, in light of its trust responsibility to Indians and its trust relationship and

responsibility to Indian tribes, Congress should make every effort to enact trust reform legislation that seeks to hold the Federal Government to the highest fiduciary

standards applicable to a trustee. Any legislation should also be mindful of the Federal Government’s enlightened policy of tribal self-determination.

Finally, at least until Congress has successfully enacted effective trust reform legislation, Congress should take steps to ensure that IIM account holders and tribal

governments have a strong voice and some affirmative means for monitoring and

participating in the Department’s ongoing reorganization.

The first question this committee must address is whether it wishes to enact trust

reform legislation. The ITMA, strongly encourages the committee to do so. While the

1994 American Indian Trust Reform Act [act] provides some direction, the passage

of time has rendered some of the act’s provisions obsolete. For example, the special

trustee was originally intended to be a temporary position. There is no indication

that either that position or the OST bureaucracy is in any way temporary. Quite

the contrary is true. Tribal leaders fear the BIA’s demise while the OST flourishes

in terms of budget and growth. In our listening conferences, we have heard repeated

concerns that the OST is distant and unresponsive to individual Indian and tribal

concerns. The question of whether, and if so how, the OST should occupy this large

a role should be the subject of an informed Congressional decision rather than simply the absence of action.

The growth of the OST and the permanence of the position of special trustee is

only one of the issues that only Congress can decide.

ITMA notes that this hearing is by no means Chairman McCain’s first effort to

contribute to the dialog on this topic or the effort to achieve meaningful reform of

the trust management system. In recent years, Senator McCain has introduced several legislative proposals to raise issues and to ensure that Congress seriously considered any compromise proposals that emerged from the Trust Reform Task Force

[TRTF] that was formed in 2002. ITMA also notes that each of these legislative proposals was a bipartisan effort to bring about trust reform.

ITMA believes that most or all of the essential elements of an effective trust reform framework can be gleaned from the following sources:

No. 1. The work of the TRTF;

No. 2. The bi-partisan legislation I referred to previously; and

No. 3. By an honest effort, led by this committee and its House counterpart, to

engage with tribal governments and IIM account holders.

I would like to briefly address each of these sources.

The TRTF represented a significant commitment of time and resources by tribal

leaders. While this process did not result in a consensus between the tribal representatives and the Department, it did define a number of elements of comprehensive trust reform. More importantly, it sharply defined the points of disagreement

between Indian country and the Department over the extent and nature of trust reform. Some of these differences Congress can only resolve. For example, while there

was a consensus on the idea of establishing a more consolidated line-of-authority for

Indian trust resources, there was no agreement on what steps should be taken to

ensure that Interior agencies other than BIA and OST would be included in this

structure. It seems only logical that all Department of the Interior employees who

are responsible for Indian trust resources should be at least presumptively included.

As I indicated previously, Chairman McCain’s legislation from the two previous

Congresses includes many fundamental and essential elements for trust reform.

These elements include a strong recognition and commitment to self-governance and

self-determination. These bills also include clear direction to the Department that

define the Government’s obligations as trustee. Many of these directions are the

most commonsense responsibilities imaginable, such as the need for accurate, periodic account balances. If there is any resistance to the enactment of these commonsense requirements, this only shows how great the need is for this committee to act.

ITMA has already begun the work of engaging Indian country in a serious and

important discussion about the direction that trust reform must take. This committee has always been the place where such views would receive a receptive and supportive audience. I would like to provide a summary of some of the emerging issues

that have been raised in ITMA’s seven listening conferences in Oklahoma, North

Dakota, Oregon, Montana, Wisconsin, and Arizona.

This is not intended to be an exhaustive listing and we would appreciate the opportunity to continue to work with the committee as we continue to obtain and analyze this important testimony. These observations include the following:
29

IIM account holders and allottees are becoming more sophisticated and more interested in the management of their trust resources, especially land and mineral resources. Yet the BIA still labors under an organizational structure and policies and

procedures that belong in an era where Indian ownership was much more passive.

While trust beneficiaries do not reject the idea of a trust relationship, they do demand that the BIA, especially the local offices, have the staff, training, and resources to assist them with identifying their interests, providing records, appraisals,

and other support services in a timely fashion.

Trust beneficiaries also have the right to demand immediate action to prevent the

improper, unauthorized use, or exploitation of their trust resources, especially trespass.

There is a widespread belief in Indian country that the BIA needs to recognize

that it must be accountable to the trust beneficiaries and not to the individuals who

lease or develop those resources.

Finally, as trust beneficiaries become more involved in the management of their

on-reservation assets, they recognize that it is wasteful, impractical, and inefficient

to hold some of these assets in trust status and others in fee. In response, they frequently apply to have some assets returned to trust status. But they frequently encounter strong resistance, delay and sometimes even opposition from the Department.

Because ITMA funding is derived from the general trust reform line item, it is

impossible for our organization to make any plans that extend beyond the current

fiscal year. As a result, ITMA must scramble to organize meetings once our funding

level is determined. We believe that Congress should address this issue by providing

a specific line-item to underwrite ITMA activities. This would also remove the temptation to use ITMA’s need for Federal support as a method to retaliate against

ITMA for any constructive criticism it makes about trust reform.

With respect to Indian tribes, ITMA is working directly with its member and also

non-member Indian tribes that are interested in both trust reform and developing

a process for resolving tribal claims for losses to or mismanagement of trust resources. With respect to the resolution of tribal claims, ITMA believes that both

Federal and tribal interests are served by the creation of a voluntary process ?for

settling claims. ITMA is working diligently to develop such an alternative process,

especially for those tribes that do not have the resources to commit to initiate or

sustain a lawsuit against the Federal Government.

ITMA is also committed to act as a facilitator in inter-tribal discussion and

through its work with inter-tribal organizations with general mandates, like NCAI,

as well as those entities that are organized around specific resources, such as the

Council of Energy Resources Tribes and the Intertribal Timber Council. As President Tex Hall indicated, part of this effort includes ITMA’s willingness to serve and

participate in a special committee to work with all interested and engaged Indian

tribes to provide this committee and the House Resources Committee with as much

direction as possible directly from Indian country.

As a starting point for developing a working relationship with Indian tribes and

account holders, ITMA strongly encourages the Department to identify any known

thefts and losses of trust resources, proceeds or royalties. There are still instances

where one part of the Federal Government has prosecuted crimes for such actions,

while other parts of the Federal Government denies that any theft or losses occurred. It is difficult to form a relationship built on trust in such a situation. Similarly, as long as the Department is, by its own admission, not in compliance with

its own trust standards and, obligations it is both inappropriate and unseemly for

the Department to collect administrative fees for its activities. At a minimum a fee

collection moratorium should be either self-imposed or imposed by appropriate Congressional action.

In the absence of trust reform legislation Congress needs to fulfill its trust responsibility to the tribal and individual holders of the beneficial title of trust resources

by ensuring that strong, independent and adequately financed organizations can

monitor and participate in the Department’s trust reform activities. Without such

oversight, Congress risks the repeated cycle of trust mismanagement and reform.

ITMA is pleased to be a part of this important effort and with the support of this

Committee, would like to continue to play this role.

I would like to thank the chairman and vice chairman for their dedication to this

important, but difficult issue. I would be pleased to answer any of the committee’s

questions.
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