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74–465 PDF 2002

S. HRG. 107–100

INDIAN TRIBAL GOOD GOVERNANCE PRACTICES

AS THEY RELATE TO ECONOMIC DEVELOPMENT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

ON

TO PROVIDE INFORMATION ON INDIAN TRIBAL GOOD GOVERNANCE

PRACTICES AS THEY RELATE TO ECONOMIC DEVELOPMENT

JULY 18, 2001

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

DANIEL K. INOUYE, Hawaii, Chairman

BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

FRANK MURKOWSKI, Alaska

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

PAUL WELLSTONE, Minnesota

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

PATRICIA M. ZELL, Majority Staff Director/Chief Counsel

PAUL MOOREHEAD, Minority Staff Director/Chief Counsel

(II)
(III)

C O N T E N T S

Page

Statements:

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, vice chairman, Committee on Indian Affairs .............................................................. 1

Cantwell, Hon. Maria, U.S. Senator from Washington ................................. 9

Chambers, Ardith Dodie, councilwoman, Grand Traverse Band of Ottawa

and Chippewa Indians of Michigan, Suttons Bay, MI ............................... 23

Cladoosby, Brian, chairman, Swinomish Tribe, Washington ........................ 19

Lee, Andrew, executive director, the Harvard Project on American Indian

Economic Development, John F. Kennedy School of Government, Harvard University, Cambridge MA .................................................................. 28

Masten, Susan, president, National Congress of American Indians, Washington, DC ..................................................................................................... 15

McCaleb, Neal, Assistant Secretary for Indian Affairs, Department of

the Interior, Washington, DC ...................................................................... 2

Reynolds, Jerry, associate director, Informational Services, First Nations

Development Institute, Fredericksburg, VA ............................................... 30

APPENDIX

Prepared statements:

Chambers, Ardith Dodie (with attachments) ................................................. 55

Cladoosby, Brian ............................................................................................... 50

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman, Committee

on Indian Affairs ........................................................................................... 37

Lee, Andrew (with attachments) ..................................................................... 96

Masten, Susan .................................................................................................. 40

McCaleb, Neal ................................................................................................... 38

Tomhave, Jeff, executive director, Tribal Association on Solid Waste and

Emergency Response (with attachment) ..................................................... 123

Additional material submitted for the record:

Adamson, Rebecca L., Foundation News and Commentary (articles) .......... 125

Cornell, Stephen, Sovereignty and Nation-Building: The Development

Challenge in Indian Country Today (with attachment) ............................ 137

Kalt, Joseph P., Sovereignty and Nation-Building: The Development

Challenge in Indian Country Today (with attachment) ............................ 137

(1)

INDIAN TRIBAL GOOD GOVERNANCE

PRACTICES AS THEY RELATE TO ECONOMIC

DEVELOPMENT

WEDNESDAY, JULY 18, 2001

U.S. SENATE,

COMMITTEE ON INDIAN AFFAIRS,

Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m. in room 485,

Senate Russell Building, Hon. Ben Nighthorse Campbell (vice

chairman of the committee) presiding.

Present: Senators Inouye, Cantwell, and Campbell.

STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM COLORADO, VICE CHAIRMAN, COMMITTEE ON

INDIAN AFFAIRS

Senator CAMPBELL. The hearing will come to order. We are meeting today to discuss Indian tribal good governance practices as they

relate to economic development.

The economic and social statistics on the Indian communities are

well known. Unemployment is around 50 percent; social problems

like alcohol and drug abuse, poor educational opportunities, ill

health and many other things.

To reverse these trends, I believe there is no more pressing matter than assisting the tribes in building Indian economies that are

strong and sustainable into the future. Achieving this involves

many different factors like physical infrastructure, human capital

and skill development, financial resources and a host of other

things.

In addition to these building blocks, it is increasingly apparent

that the kind of governing environment that a tribe has in place

will determine whether or not businesses will prosper and jobs and

income will flow.

The problems with undeveloped tribal economies do not all originate in Washington, DC. I believe that tribal leadership has a difficult, but critical role in making sure their tribe is doing all it can

do to create business friendly environments. Some tribal leaders

have done so and we will hear from several of them today on what

good governance means. By ‘‘good governance’’ I mean stable institutions with administrative capacity, fair and effective dispute resolutions with an appeals process, a separation of politics from business management and transparency in government, to name a few.
2

Today we will hear from tribal leaders, researchers and others

about what good governance means and how it affects the ability

of tribes to attract and retain economic activity and the benefits

that 9come from that activity.

We will go ahead and proceed since we have a little bit of limited

time this morning. We will proceed with Neal McCaleb, Assistant

Secretary for Indian Affairs. Neal, I believe this is the first time

you testified before the committee since being confirmed by the

Senate. We are very happy to have you with us.

By the way, to all the people who are testifying, your complete

written testimony will be included in the record. If you would like

to abbreviate or change your oral testimony, that is fine.

STATEMENT OF NEAL A. MCCALEB, ASSISTANT SECRETARY

FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR,

WASHINGTON, DC

Mr. MCCALEB. Thank you very much, Mr. Chairman. It is a delight to be here this morning, especially on this subject.

I want to thank you for the opportunity to appear today to speak

about tribal government practices and how those influence economic development in Indian country. The development of a stable

and responsive tribal government with a sound strategy for and a

deep commitment to economic growth is a prerequisite for prosperity and economic opportunity in Indian country.

There are many contributing elements to economic success, including access to markets, access to capital, natural resources,

human resources, governing institutions, and tribal culture.

But there has been tribal success where there was a lack of natural resources, minimally skilled human resources and even poor access to markets. These successes have been in spite of these economic liabilities and have been accomplished by determined tribal

leadership committed to building stable and effective sovereign governmental institutions.

The policies contained in the Self-Determination and the SelfGovernance Acts have been the seedbed of growth for de facto sovereignty and the development of strong and effective tribal governments are essential for sustainable economies.

Even now, tribes are asserting their self-governance influence

through the Economic Development Subcommittee of the Joint BIA

Tribal Budget Advisory Committee by developing strategies on how

the BIA and other Federal agencies can be more effective in encouraging prosperity and economic parity for American Indian

tribes within these United States.

Conversely, it requires a viable and vigorous economy to provide

sovereign governments with a tax base from which to fund essential infrastructure and services required by their constituents and

businesses.

With that in mind, I would like to briefly talk about some of the

successful enterprises that exist in Indian country and their vision

in making things happen. I am not going to go into great detail

about each one of these, but I will just mention them.

One of the more notable is the Mississippi band of Choctaw Indians. The Mississippi Choctaws were federally recognized in 1945.

By 1960, the tribal leaders were still unimpressed with the im-
3

provement, despite over 15 years of effort by the BIA and other

Federal agencies to assist them.

The Mississippi Choctaws remained the poorest tribe in the poorest county in the poorest State. The tribal leaders took responsibility and initiated projects designed to create jobs for the Mississippi

Choctaw members.

The first enterprise was a tribal undertaking called the Choctaw

Development Company, a construction company to build houses

under Low-Income Housing Programs for a small profit, while also

training and employing tribal members.

From this modest beginning, the tribe began tackling other ventures and in some cases seeking and obtaining Federal assistance

through the Indian Finance Act. The Mississippi Choctaws are now

a major economic engine in northeastern rural Mississippi, providing a total direct and indirect impact of over 12,112 jobs and $173

million in wages, $16.7 million a year in taxes and $9.1 million a

year in rent payments.

Currently, the tribe is engaged in the development of its own

natural gas-fired electrical generating plant. Williams Energy is

conducting a feasibility study. Based on the result, they anticipate

construction to begin shortly after the first of the year.

Another success story is told by the Confederated Tribes of the

Umatilla Indian Reservation located in rural northeast Oregon.

Their original economy was based upon agricultural and natural

resources, primarily fishing, grain, and timber.

Today the tribe has diversified into commercial developments

such as a trailer court, a grain elevator, the Wildhorse Casino, a

hotel, a RV park, a golf course, and a solid waste transfer station.

The tribe is now the second largest employer in Umatilla County,

following only the State of Oregon. Their operating budget has increased from $7.6 million to $94.2 million in the last 9 years.

The Southern Ute Tribe, which you are very familiar with, Mr.

Chairman, which is located, for those who don’t know, in rural

southwestern Colorado and northern New Mexico, provides another

model of economic success. The tribe has taken control of its own

oil and gas extraction activity.

In 1992, the tribe established a tribal production company called

Red Willow Cooperative. In 1994, it acquired a majority interest in

the gathering pipeline system called Red Cedar. In addition, the

tribe has expanded by investing in other oil and gas properties in

the West and investing its energy fuels revenues into other commercial enterprises.

Using the knowledge gained from managing and operating its

own reservation companies, the tribe has acquired additional production properties in Texas that produce 20 million cubic feet of

gas a day.

It has invested in an offshore well in the Gulf of Mexico and has

entered into a partnership with northern Ute and the Dominion Oil

Company to explore and develop their oil and gas reserves.

The tribe is evaluating the purchase of shopping malls and a

drug store chain in Texas and Arizona. The tribe has not released

its financial information, but it is reported that the income of the

tribe is in excess of one-quarter of a billion dollars, that is with a

‘‘b,’’ billion dollars a year.
4

The Wall Street rating houses that rate debt, Standard & Poor

and Fitch, have given the Southern Ute Tribe a triple A rating for

their proposed development bonds.

I submit that is an historic first for Indian enterprises. I also

submit that the successes that I have just gone over as well as

many others are not primarily the result of initiatives of the Federal Government, or the BIA.

They are the result of initiatives and leadership by the tribal

governments themselves and the determination that they have

had.

The role of the Federal Government should be to remove obstacles to economic development, especially those that we have created

ourselves through our own rules and actions. We need to create incentives and provide technical and financial, and other assistance

to tribes and tribal members and public and private investment

businesses that are willing to promote economic activities in Indian

country.

The initial priority for the Federal Government is to come together with the tribes to develop a straightforward approach on

how we can all work together on the integration of program services and coordinate activities in the pursuit of economic parity for

Indian country.

Congress has provided us the mandate and the authority under

the Indian Employment, Training and Related Services Demonstration Act of 1992, the Native American Business Development,

Trade Promotion, and Tourism Act of 2000, and the Indian Tribal

Regulatory Reform and Business Development Act of 2000, from

the 106th Congress.

The goal of the subcommittee that I mentioned earlier, which is

working in conjunction with the BIA and the Tribal Budget Advisory Committee is to develop a strategy to coordinate and integrate

all available resources from the tribal, Federal, private and public

sectors into one comprehensive approach that will provide a business resource for enterprises and tribal government services and

ultimately provide a living wage and employment in Indian country.

The subcommittee has identified 10 major tasks to be accomplished. Each of these tasks is to be examined by the subcommittee

from past studies and recommendations. They are currently working models, available resources, legislative and regulatory authorities, budget and resource coordination and integration.

These subcommittees are named for the general subject matter

and are as follows: Tribal Business Development Corporations and

Tribal Venture Capital Funds; Taxation and Incentives; Tribal Economic Development Models; the Indian Finance Act; Tribal Courts;

Federal Set-Aside Procurement; Technical Assistance Centers; Natural Resources and Energy Development; and Tribal Infrastructure

and Employment Development.

The first of these working meetings of the subgroup was held

this week. The first action was to contact representatives from all

Federal programs, including HUD, SBA, ANA, Census, EPA, Energy, and others that provide economic development assistance to

tribes and invite them to participate in this effort. The meeting

was extremely well attended by all the Federal agencies.
5

The subcommittee is planning on providing its initial findings

and recommendations to the full committee and the participating

tribes in October.

The BIA’s Office of Economic Development is committed to economic enterprise that enhances the lives of Indians and stabilizes

the future of Indian tribes. In the more successful tribes in Indian

business enterprises around the country, the BIA has observed

some common elements.

The BIA has also noticed some themes where Indian economic

development is lacking or has failed, and with study and consolidation with tribal leaders, we believe that a few initiatives would significantly improve the current disparity between the few American

Indian tribes that have had success and the many that have not.

Ultimately, the relative economic success and vitality of any nation is the public-private effort that combines the resolve of government policymakers and the imagination and appetite for risk of

independent entrepreneurs to create a healthy environment for enterprise and respect for each other’s unique point of view.

The Government will always be focused on the ‘‘common good,’’ while the entrepreneur has to be driven by an anticipation of profits as a reward for his risk.

Thank you again for the privilege and the opportunity to speak

on this subject that is near and dear to my heart. I will be happy

to answer any questions that you may have.

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

Senator CAMPBELL. Thank you, Neal.

I have a couple of questions. Before I go to them, I would like

to yield to the chairman if he has some comments.

The CHAIRMAN. Mr. Chairman, I have a statement. If I may, I

would like to submit it for the record.

Senator CAMPBELL. Without objection.

[Prepared statement of Chairman Inouye appears in appendix.]

Senator CAMPBELL. Neal, you mentioned the Southern Utes.

Since I live there, I saw you on the plane the other day, in fact,

coming from the Southern Utes to your new job in Washington,

that Standard & Poor rating, the three-star rating, I understand

the Southern Ute Tribe is the only tribe in the Nation that has

that rating. Is that correct?

Mr. MCCALEB. That is my understanding, both Standard & Poor

and Fitch.

Senator CAMPBELL. They have also become, through their success

in energy and a number of other things, the largest employer in the

Four Corners area of Colorado, larger than the school districts, the

hospitals, literally any business.

But the interesting thing to me is that probably half, of the employees of their enterprises since they have grown and developed,

are non-Indian. So, the success of that tribe, like many other tribes,

is a shared success.

When they are successful, it is amazing how it helps the whole

area. So there is more than one facet of why we need to help Indian tribes become successful, because they have this terrific history of sharing that success in terms of jobs.

Let me ask you just two or three things. In tribal self-determination contracting, Indian tribes who provide services to their mem-
6

bers by way of the 638 contracting and self-governance compacting

have been found to be more effective. We know that. Yet, some

tribes are somewhat reluctant to do it.

I have heard some of them in private saying they worry about

whether it will erode the Federal trust responsibility.

Do you have any ideas how we can make incentives for the tribes

to try that? I would like to know your views about that and realize

that you are just getting settled in your job.

Mr. MCCALEB. Well, I am familiar with the fact that there are

a number of tribes that we call direct services tribes that still want

to rely on the BIA to provide direct services to them rather than

contracting or compacting for those who take over those services

themselves.

Clearly the Self-determination Act and the Self-governance Acts

provide for them to make that decision. That doesn’t answer your

question about what we can do to incentivize them to take a more

assertive role in that area.

In fact, there are a number of incentives under the Self-governance Act. I think, in my mind, there are still a certain residual

anxiety that these two acts and these two provisions are an attempt to step back from the trust responsibility, the Federal responsibility and a lot of the direct services tribes hold tenaciously

to that.

That is their judgment and that is the decision that they make.

Under the provisions of Self-determination, I guess we should allow

them to do that, notwithstanding the fact that might not seem the

best in our judgment.

Senator CAMPBELL. Well, my interest in it is how we actually encourage them to do it.

Mr. MCCALEB. I understand. I probably danced around that answer because I don’t know the answer, Mr. Chairman.

Senator CAMPBELL. I don’t either. If you find it, share it with us.

Because we know it is a much better use of Federal money, obviously, if we can send that money through compacts or contracts directly to them rather than through the bureaucracy in Washington,

they are going to get more bottom line dollars to use toward the

problems they are trying to address.

Mr. MCCALEB. Absolutely. More importantly, it is a more effective use of the money when it gets there. They place it, as all local

governments do, where they perceive the need to be the most urgent and they are the best judges of that.

Senator CAMPBELL. That is right.

Maybe one other question. I am sure you, like all Americans, are

aware of the energy crunch, whether it is electricity in California

or hydrocarbon fuels in the rest of the country. It kind of goes up

and down. Right now gasoline is going down a little bit, but it is

only a matter of time before it goes back up. It is kind of a roller

coaster, but the roller coaster, little by little over a period of years,

the valleys are higher and the peaks are higher, too. So, it is little

by little going up.

I happen to think that puts Indian tribes that have resources,

coal, oil, oil shale, natural gas, coalbed methane, and so on, really

in an opportune situation in this country because they have the re-
7

sources that can help us get away from foreign dependency on energy.

We need to find a better way of helping them help develop their

resources. In any of the discussions you have had so far, and I

know it has been a very short period of time, have you found any

ways to perhaps streamline or eliminate some of the Federal regulations that impede tribes in energy development?

Mr. MCCALEB. I can’t cite any particulars in that area. I can cite

a bright spot in this area of energy development. That has to do

with the Three Affiliated Tribes that are looking very seriously

right now, to moving toward the development of a refinery near

Fort Berthold.

Senator CAMPBELL. The Three Affiliated?

Mr. MCCALEB. Yes; in North Dakota. Historically, tribes at best

have been like Third World Countries exporting a commodity, that

being the raw crude. The refinery is a value-added activity in

which they would increase the employment, as well as the capital

investment on the reservation and who has a big multiplier in

terms of the economy, as well as the experience in managing this

kind of facility.

They are developing a management contract to give them experience. I think that is the route, where tribes become value-added enterprises instead of just exporting a commodity.

Senator CAMPBELL. Well, last week in a committee hearing, just

by chance, we heard that the Three Affiliated Tribes have also entered into an agreement with the manufacturers of wind-collecting

systems, and with these great big fans, to build some on the reservation. The estimate is that they may make as much as $1 million a year from wind that is always in the Dakotas.

So, there are a lot of opportunities if we can figure out a way to

make it a little easier for them to get through the permitting process.

Let me yield to the chairman.

The CHAIRMAN. Mr. Secretary, I am sorry I wasn’t here to receive

your testimony, however, I have a few questions from reading your

prepared statement.

You speak of the BIA noting that among Indian nations are lacking in economic development there are common themes. I think

that is the phrase you used. You said that the disparity between

the ‘‘have’’ and the ‘‘have-not’’ nations can be addressed by ‘‘a few

initiatives.’’

What are these common themes you speak of?

Mr. MCCALEB. Well, I think one of the common themes is that

the tribes that are doing well economically have strong, well-developed, de facto sovereign governments. They have taken possession

and built the government institutions and mechanisms that create

an environment that is attractive to industry so that entrepreneurial people or investors are able to make an investment in that area

with the expectation of a reasonable, if not handsome return on

their investment.

It has to do with the court systems, judicial systems, the overall

nation building. I think the tribes that have done well economically

have been successful in nation building. That is one of the first

ones.
8

The CHAIRMAN. You have touched upon a theme that many business people are quite concerned about, the constant turnover in

tribal governments. Do you have any suggestions about how to

bring about greater stability in tribal government administration?

Mr. MCCALEB. Well, I think my answer is probably kind of a circuitous answer in that when you have economic stability and economic growth, we also observe that people are ready to re-elect

their tribal leaders in anticipation of the projection and extension

of that tribal expansion and tribal growth.

There is the greatest turnover in tribal governments, I think,

where the poverty and the economic deprivation is the greatest.

You know, it is the chicken and the egg conundrum; how do you

get started? Well, you get started, I think, by building strong, sovereign tribal governments.

That is clearly a local initiative. That is not something that is

done from Washington.

The CHAIRMAN. What are the initiatives that you suggest to

bring about less disparity?

Mr. MCCALEB. Well, I think we can assist in the area of making

capital investment more attractive by expanding the Indian Finance Act, for one thing. We have a loan limitation of $60 million

a year, which is fully subscribed now and has been every year for

some time.

There is an appetite for Indian businesses to fully utilize that

and more. So, I think probably that it is time to expand the cap

on the Indian Finance Act, the Loan Guarantee Program.

Another is to secure the tax incentive for rapid write- down on

capital investment that is due to expire here in two years because

industry is just now becoming acquainted with that and beginning

to make use of it. It is one of the things that attracted this refinery

that I was talking about, that they are able to write-down their

capital investment rather rapidly.

That is due to sunset here in the next couple of years. I think

that we should look at other tax incentives to attract capital to Indian country. So, there is money, strong local governments and

education, I think. Those are the three things. Education is largely

in reservation country Indian education. We need to strengthen

that. One way we can do that is by expediting the construction program for Indian schools.

The CHAIRMAN. Would you also consider, Mr. Secretary, the necessity for a land base for these nations?

Mr. MCCALEB. Yes; I think that you state the obvious that I did

not state, that most of the tribes that have done very well economically have a well-established land base.

The CHAIRMAN. Well, I ask this because, as you know, there are

many Indian nations that have been denied and deprived of land

bases, especially in California, for example, because of the number

of treaties that we in the U.S. Senate have either refused to ratify

or have just bypassed the ratification of treaties.

Therefore, these nations are now coming forth seeking your assistance in having these lands taken in trust. How can we expedite

this process?

Mr. MCCALEB. Well, first of all, I would like to point out that just

having a large land base is not a formula for success. I think it is
9

important to point out that we have a number of tribes with large

land bases. Some of them are direct service tribes that we were

talking about earlier, that have some of the poorest economies.

So, although I think it is important, I don’t think it is the essence or absolutely essential ingredient for the economic dollar.

The question is: How do we expedite the land under trust.

I think the new regulations that have been imposed that are

under review currently provide for expediting land under trust for

lands that are immediately adjacent to or within the reservation

boundaries. I think it clearly expedites that. Those regulations are

a little more deliberate about taking land into trust that is removed from the reservations.

That is directly tied to the whole gaming issue. I think the regulations, proposed regulations, do in fact expedite taking land into

trust that is within or immediately adjacent to the reservations.

The CHAIRMAN. Do you have sufficient staff to process these

claims and applications?

Mr. MCCALEB. Mr. Chairman, I really can’t answer that question, give you an enlightened answer on that. I have just been on

the job 2 weeks now. It is kind of like taking a drink out of a fire

hydrant. I hope I can give you a more enlightened answer on those

kind of staffing questions later on.

The CHAIRMAN. Then, if I may, Mr. Secretary, I would like to

submit for your consideration questions that you can answer for

the committee.

Mr. MCCALEB. Thank you very much, sir. I will do that promptly.

The CHAIRMAN. I appreciate that. Thank you very much.

Senator CAMPBELL. Well, the Senator touched on some of the

things that have stymied us for an awful long time. We know that

in order to increase economic opportunities we have to have stable

tribal governments. Yet, in order to have stable governments, we

have to have better economic opportunities.

Our troubles are obviously how to get them both improved. But

you are going to have a plateful. Do you still want the job?

Mr. MCCALEB. Yes, sir.

Senator CAMPBELL. Now I will yield to Senator Cantwell. Senator

Cantwell is new to our committee from the State of Washington.

She has a very large Indian constituency; I believe maybe 27 or 28

tribes.

Senator CANTWELL. We have 28 tribes.

Senator CAMPBELL. Twenty-eight tribes. We are delighted to

have her with our committee.

STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM

WASHINGTON

Senator Cantwell. Thank you. Thank you, Mr. Chairman, I

guess. I have an understanding that the committee works in a very

cooperative manner here. I appreciate that.

Senator Inouye, thank you for the opportunity to ask questions

of Mr. McCaleb. I guess I would say I am very fortunate to be on

this committee. I appreciate the assignment. There are 28 tribes in

the State of Washington. As the only member from the Pacific

Northwest on the committee, I hope that I can bring some insights
10

to the challenges that we are facing throughout the entire Northwest in that population.

There are very important issues we need to work on, obviously,

with health care, job training and economic development, some of

the subjects that you were talking about this morning. I look forward to working with the committee on those issues.

Mr. McCaleb, I apologize, too, for not being here to hear your testimony, but I have reviewed it. Congratulations on your recent

swearing in, as well.

I had a couple of questions about economic development as it relates to some of the subjects that you brought up. First of all the

area of human resources and job training. You mentioned the Indian Employment Training and Related Service Demonstration Act

that was passed in 1982.

Can you update us on how you think the workforce preparedness

issues are being addressed by the agency and whether we need to

significantly enhance that at a time when our economy is changing

drastically and even the most prepared people are finding that they

need to upgrade their job skills. So, how are we doing on the issue

of job training and access to resources?

Mr. MCCALEB. Our whole economy is in a transition, as you stated, from an industrialized economy to a knowledge based economy.

To be frank, I don’t think our BIA-operated school systems, known

to be consistent with most rural described systems, have been able

to keep pace with the velocity of change and the acceleration and

training needs for a knowledge-based economy.

We could start with computer skills. I think there needs to be a

focused effort in math, science, and communication skills. In fact,

that is the goal of the BIA, to bring our students and our educational system up to a minimum of a 70-percent proficiency in

math and science and also communication skills.

We are not there. We are probably at 50 percent efficiency at this

time.

The other programs that are for adult education need to be rifleshot focused on computer literacy and on the ability to operate in

an economy that is going to be driven by computers, is driven by

computers, whether you are buying an airline ticket or checking

out at the grocery store; it is computers that handle the transaction.

Those are the kinds of skills and understandings that I think

will be essential in the future.

Senator CANTWELL. So, you were say that we have adequate programs or in adequate programs?

Mr. MCCALEB. I would say our programs need to be improved.

We are focusing on the need for math, science, and communication

skills. But I am also saying that our results are well below our

goal. So, they need to be improved. Our results need to be improved. We have set the goal well above the mark where we are

right now.

Senator CANTWELL. Given the number of the locations of the reservations throughout the country, and sometimes they are adjacent

to urban areas, sometimes they are more remote, does the BIA

have any kind of policy on the delivery of high speed access to Indian reservations?
11

Mr. MCCALEB. Definitely we do. We are trying to optimize the

high-speed access, first to our schools and then to the reservation

in general. It is going to require some work with the Federal Communications Commission [FCC] and private investment, to attract

private investment to wire the reservations, if you please, for highspeed access.

One of the problems that has held reservations back in economic

development is the lack of access to markets. With few exceptions,

they are largely rural and remote. That makes them remote to the

large markets.

In a knowledge-based economy, the distance doesn’t really matter, as long as you are hard-wired to your customers. Computers,

fiber optics, wireless communications, I think, present literally a

world of opportunity for economic development, in rural America in

general and on reservations in particular.

Senator CANTWELL. So, you would say that, again, the percentages of reservations having that kind of access——

Mr. MCCALEB. It is low. I think that is not uncharacteristic with

rural America in general. In my own experience in my home State

of Oklahoma, most of our rural towns do not have good access to

the high-speed broadband communications system, fiber optics, if

you please. I think that is characteristic of rural America. The

tribes fall in that communication area.

Take basic communications, like the telephone, there are fewer

Native Americans who have telephones in their homes percentagewise than the rest of the larger economy.

Senator CANTWELL. Mr. Chairman, if I could, one more question.

Perhaps we can follow up with some additional questions about

those programs, both for job training and for high-speed access.

I am curious, given our experience in the State of Washington

where the Tallalah Tribe had a joint effort on economic development with their adjacent city, the city of Marysville. They both had

a desire to develop land in an industrial way, requiring huge investments of sewer and water that were not currently there in the

community.

So, they worked jointly on that from an economic development

perspective and then later created the Tallalah-Marysville Chamber of Commerce. So, they joined together in an economic development effort.

Are there other instances of that around the country where the

formal economic development mission has been, you know, joined

with other organizations?

Mr. MCCALEB. Well, I am personally aware of a few in Oklahoma

that are, the Chickasaw Nation in the city of Ada and the Industrial Development Authority of Ada cooperated in industrial development activities.

This business of making a joint effort where you actually finance

major capital improvements for infrastructure, that is the first time

I have heard of that. That is remarkable and it is very important.

When tribes and local governments can cooperate like that, a lot

of the other barriers will melt away.

Senator CANTWELL. Thank you.

Senator CAMPBELL. Thank you, Neal. You know, I might mention

before you leave that the people on this committee all serve be-
12

cause every one of us is trying to make things a little bit better

for Indian people.

But, as a Government, we are doing a poor job of networking our

different agencies. Too many times, in my view, the left hand

doesn’t know what the right hand is doing. Maybe you are following this huge question. In the last couple of days there is a hearing

going on, in fact, right now here on the Hill dealing with the access

for Mexican trucks and drivers to the United States under the

NAFTA agreement.

We are going to face a big, billion dollar fine if we do not allow

them access in the United States. Well, when we signed that

NAFTA agreement, we knew, according to the American Trucking

Association and a number of other groups that we are short of drivers, between 250,000 and 300,000 drivers.

We have unemployment on reservations between 60 and 70 percent and we can’t seem to put it together that we have people that

need the jobs in this country, and yet we are going to open access

to foreign drivers. I am not against foreign drivers.

What I am saying is that we are doing a better job for them than

we are doing for our own people. It just seems to me that we have

a long way to go in trying to make sure that our agencies recognize

and in our international trade agreements and things of that nature that we have people that need the jobs. These are good jobs, $50,000 a year jobs. A lot of Indian people

would love to have those jobs, and yet we are just bypassing them.

That is an example of some of the dumb things we do here in

Washington when we are trying to make things better.

I do appreciate your being here this morning. If any other committee members have questions, they may send them in writing.

Mr. Chairman.

The CHAIRMAN. Mr. Secretary, if I may ask one question before

we proceed, the prepared statement of the president of the NCAI

is a very interesting one. I hope you will read and study that statement. She speaks of devolution or the decentralizing of policy on

the part of the United States.

Devolution is the philosophy that by providing assistance to

States you might bring the activities closer to the people. Well, it

happens that history has shown us that whenever we call upon the

States to provide services to Indian country the services are not

forthcoming. They are rather lacking at times.

For example, just a few days ago a court issued a judgment in

which it is stated that the tobacco payments will be made to States

and tribal governments will not receive any payments, on the

premise that the States will be responsible for all the people living

within the borders of that State.

Would the BIA make certain to monitor this so that Indian nations and the Native Americans will get their fair share? Otherwise, I think that just the non-Indians will get the tobacco benefits.

Mr. MCCALEB. Mr. Chairman, that is a large task that you just

carved out there for the BIA. You know, I come from a State that

has maybe the second or third largest Native American population

in the United States. I was privileged to serve in the legislature

there for a number of years. They had a large number of Native

American members in the legislature.
13

Fundamentally, States historically have not been responsive to

Indian interests. I agree with the principle of your statement. I am

not sure how the BIA can regulate or incentivize the States to better perform their role with people who are already their constituents.

The fundamental problem here is that the larger portion of the

population does not understand nor respect the sovereignty of the

several American Indian nations of this country.

When I served in the legislature, I remember our Organic Act

clearly provides that the treaty rights will be protected when we

became a State. Of course, part of the treaty rights were basically

unrestricted hunting and fishing.

I brought the modest bill to exempt Native Americans with a

Certificate of Blood card, from having to buy hunting and fishing

licenses, which I thought, was already provided for in the Organic

Act. I worked for four years trying to get that bill passed and I

never did. I don’t think it was because of racism. I think it was because of insensitivity to the fundamental rights of Native American

people that are provided in the Constitution of the United States.

That is a huge education job. I would certainly see the BIA assisting in whatever effective way we can in seeing that Indian people and Indian tribes get their appropriate share of Federal moneys

that are dispersed directly to the States.

But that, in my judgment, is a huge job and one; again, that I

think most effectively will be done in partnership with the local

tribal sovereign leaders because they are the ones that understand

those issues the best. They are the voters of the legislators. They

are becoming more influential in every State.

I have been observing this now for over 30 years; 30 years ago

Indian interests were totally disregarded in most State legislatures. If they were regarded at all, it was one of hostility.

That has changed. It has changed for the good. It has changed

largely because of the policies of the Congress through the Indian

Self-Determination Act and in many ways the subsequent amendment titles in the Self-Governance Act. We are developing strong

tribal governments with articulate and thoughtful leaders who are

able to present their cases most eloquently and most forcefully with

their State legislators.

So, notwithstanding, you know, we kind of drown in the negative

statistics that we have, and they are dismal and they are disheartening, but we have made great progress in the last 30 years. It has

not been a straight line.

Starting 30 years ago, our progress plotted against time was flat

and almost nothing was happening. It began to pick up and it is

going up almost vertically. Our challenge is that it doesn’t become

an S-curve and level off at a plateau and doesn’t go further.

One of the reasons that I am very pleased to have the position

that you all have confirmed me in is the opportunities that I think

are present in America today.

The CHAIRMAN. Just one final question, if I may, Mr. Secretary.

Whenever I enter into discussions with tribal leaders, certain

words come up most frequently. One is sovereignty. Another is

trust reform. Another is consultation and also economic develop-
14

ment. These are the four words and phrases that the come up more

often than anything else.

According to the testimony of the president of the NCAI, tribal

leaders have been advised by BIA that whenever they ask for consultation on trust reform the response has been ‘‘These are internal

matters, therefore we need not consult with you.’’ Do you have any response to that?

Mr. MCCALEB. Well, I reject that premise, Mr. Chairman. Trust

is about communication. You can only have trust when people can

openly address or discuss issues that are of mutual concern to

them. The trust issue is not just whether some money has been

misplaced or not distributed appropriately.

The trust issue, to me, is much deeper. It is about the whole

issue of the competence of the Indian community in the larger

sense with the BIA. I am not trying to say anything negative about

the BIA, I am just saying that I trust the count at the bank is dangerously low and we have overdrawn it, if you please.

Trust, like respect, can only be given. It can’t be demanded. We

have to rebuild that trust. It is going to be a long and arduous

climb. We will take it one step at a time. But the first step is open,

unrestricted communication. I am trying to say in many words that

I agree wholeheartedly.

The CHAIRMAN. I am certain that Indian leaders would be most

pleased to hear that, sir.

Thank you very much.

Senator CAMPBELL. I am also delighted to hear that because in

my view, agreements between the Federal Government and tribes

are like Federal government and States or the Federal Government

and other nations. You can’t have a good agreement if only one

party sits at the table.

You have to have trust built on the fact that both of them are

there to provide input. I might mention just for your own information, on the tobacco settlement, we have a bill that collapsed of its

own weight around here.

The question Senator Inouye posed might be better posed to the

Department of Justice. But there were very, very good Indian sections in that bill when it was here in the Senate and primarily because of your boss, Secretary Norton, who was the Attorney General of Colorado in those days. She came in and testified several

times to make sure that Indians had language in that bill that

would enable them to receive some of the settlement money that

would have gone to health care, to education to different kinds of

ceremonial use and things of that nature. It obviously fell apart,

but you might dig that old bill up and look it up.

Mr. MCCALEB. I will go to school at my boss’s side on that.

Senator CAMPBELL. Thank you.

Our next panel will be three witnesses: Sue Masten of the National Congress of American Indians; Brian Cladoosby, chairman of

the Swinomish Tribe of Washington; and Ardith ‘‘Dodie’’ Chambers,

councilwoman of the Grand Traverse Band of Ottawa and Chippewa from Michigan.

We give a great deal of latitude to the administration witnesses.

We ask other witnesses, though, to keep their comments a little

more brief. So, if you would like to proceed.
15

STATEMENT OF SUE MASTEN, PRESIDENT, NATIONAL

CONGRESS OF AMERICAN INDIANS, WASHINGTON, DC

Ms. MASTEN. Good morning, Chairman Inouye and Vice Chairman Campbell.

I want to thank you for the opportunity to address you this

morning on this critical issue.

For the record, I am Susan Masten, president of the National

Congress of American Indians, the oldest and largest organization

representing tribal government. I also serve as the chairperson for

the Yurok Tribe, located in Northern California.

I am here today to present testimony on the relationship between

tribal governments and economic development on Indian reservations. As you know, economic development is perhaps the leading

concern in Indian country today.

It is heartbreaking, as a tribal leader, not to be able to address

the social problems that plague our communities. Our people are

still dying of preventable diseases. We still have substandard housing, high dropout rates, substance abuse, suicide, teen pregnancies,

and there is a high rate of crime against our people, all of which

is relative to the overwhelming poverty on reservations.

Reducing unemployment rates as high as 80 percent, eliminating

homelessness, decreasing dependence on welfare and increasing

education opportunities are all linked to building economic activity

within our communities.

Tribes face many obstacles to economic development, including

lack of infrastructure, poor access to training and technical assistance, the shortage of equitable financing mechanisms, remote locations, and dual taxation, to name a few.

Although many tribes have found ways to remedy these problems

through creative means to overcome the barriers to economic development, the incomparable structural and legal obstacles that tribes

face are simply too large.

NCAI is poised to make the issue of economic development in Indian communities paramount in our work to promote and defend

the concerns of our people. As such, my testimony today will focus

on policy changes that we believe Congress should consider in

order to reduce the barriers we face.

Successful economic development in Indian country is directly

tied to strong, independent, culturally appropriate tribal government structures. Congress has the authority to support tribal authority or to impede it. All too often our authority is limited in

ways that impede our ability to effectively contribute to economic

development.

By passing sound Federal Indian policy, Congress will provide us

with the key to create change in our communities. There have been

many examples of positive and progressive Federal Indian policy,

most notably Public Law 93–638. It is through self-determination

and self-governance that tribes have been able to prioritize funding

to meet our community’s needs.

It is through these policies that tribal leaders and tribal staff

have gained valuable management experience in decisionmaking

while becoming accountable to our people through sound governmental procedures.
16

While self-determination has been a successful form of decentralization in matter involving the BIA and the Indian Health

Service, there is still much to be done. For example, we are concerned about the recent actions taken by the Department of the Interior regarding reform efforts which may result in a departure

from the policy of self-determination. By moving trust records away

from tribal governments, this limits our ability to access information regarding our land and our resources.

Tribes own four-fifths of the trust property. We have the greatest

interest in ensuring that there is proper accounting and management. If there is ever going to be trust reform, we must be actively

involved by consulting with those who are making the decisions

that impact us, as it is at the heart of our sovereignty.

NCAI would welcome the opportunity to assist and facilitate the

government-to-government relationship between the Department of

the Interior and the tribes on this critical issue. We also seek the

committee’s continued guidance to ensure that BIA and the Office

of Special Trustee proceed with full respect for tribal self-determination in every area of trust reform.

NCAI is also greatly concerned about the Federal policies that

are outside the scope of the BIA and Indian Health Service, including commerce, agriculture, taxation, human services, education, energy transportation, and environmental protection.

In general, there is a trend for the Federal Government to decentralize and to devolve many Federal authorities to State and local

governments. Unfortunately, this trend has often negatively affected tribal governments. Most often, we are not recognized as

units of government with authority to directly receive programs

and funds.

Even when tribes are authorized to administer programs directly

similar to States, often we are afforded proportionately fewer resources and are subject to greater oversight than the States are.

Devolutionary policies also raise questions about diminishment of

Federal treaty and trust responsibility to tribes and a reduction of

Federal responsiveness to tribal needs. State governments do not

have the same legal obligations and it is of great concern that

States will simply overlook the tribe’s interest in their administration of Federal programs.

We also note that when State governments receive dollars they

often do not regard tribal governments on a government-to-government basis, but view tribes merely as a part of the service population or as local interest groups.

If Congress is to fulfill its responsibility to Indian tribes by supporting tribal self-government, it must create Federal policies that

support tribal government’s authority and protects tribal self-determination.

There must also be clear definition of the roles of the Federal

Government, the State government and the tribal government.

Tribes are supportive of devolution that provides for increased authority and flexibility to tribes in the context of a respectful government-to-government relationship.

As devolution of programs to tribe is one of the surest ways to

engage tribes in capacity building and economic development,
17

NCAI believes that the following principles may serve as a starting

point for the development of sound Federal policies.

No. 1, as a basic exercise of tribal sovereignty, tribal governments should have the option to control any programs, functions,

services or activities that are intended to benefit tribes and tribal

service populations at the same level of authority and control as

State governments.

No. 2, Federal policy should preempt the application of any State

law that imposes a dual burden to comply with both tribal law and

State law within the boundaries of Indian country.

No. 3, duplicative State regulation or taxation will drive economic development away from Indian lands.

Where tribal governments opt not to administer particular programs and functions, service and activities, State or county governments or private contractors who administer the programs must

consult with tribes over the delivery of services to tribal members.

States must be encouraged through Federal policy to relate the

tribal governments on a government-to-government basis, as do

contractors. Federal policy should encourage the use of negotiated

agreements between States and the Federal Government or State

governments so that each tribe can address its unique needs.

Federal standards must give tribes enough leverage to reach a

successful and enforceable agreement. Tribal governments should

have a right to all documentation or studies held by the State governments or other institutions that are relevant to the sustainability, fairness and safety, et cetera.

Tribal governments should have their own independent experts

present at the table as needed during negotiations and assessment

processes. Tribal governments must be provided with adequate

technical and financial support for administration of programs.

Policies should protect Federal treaty and trust responsibilities.

Unfortunately, Indian country still lives in Third World conditions, lacking basic infrastructure in this time of prosperity. We

have little hope of economic development unless funding for

projects for future development becomes a priority.

The creation and maintenance of a viable infrastructure is the

first step tribes must take to foster a positive business environment

that will attract outside sources of investment as well as local business partners.

As such, Congress needs to work with us to develop policies that

include infrastructure development. We need projects that construct or upgrade our roads, water and sewer systems, utility systems and electrical grids, commercial codes, licensing programs,

phone systems and technology improvements.

All too often Indian nations are prohibited from receiving training and technical assistance to conform with new Federal statutes,

while some appropriations have provisions for such measures, most

are under funded.

If a tribe is not provided with the knowledge and expertise to administer a program, it is usually doomed to be unsuccessful. There

is a funding shortfall in the administration’s budget that impacts

technical assistance, feasibility studies, business infrastructure and

research for legal code issues that creates a gap that Indian country is often unable to fulfill.
18

Technical assistance can also address other important issues, for

example empowerment zone technical assistance is a great example

of a successful process. During the course of the program, implementation that technical assistance provided for grass roots structure to communities to talk about governance. Community members involved provided much needed input to ensure stability within their own government, furthering the idea that good governance

is a result of good policy.

The premise of providing equity in opportunity to financial resource is also imperative for self-determination. Tribes often are

left out of opportunities for obtaining bond financing and loan guarantee components.

State and local governments have long enjoyed the authority

under Federal tax law to use tax-exempt bonds to fund a variety

of governmental projects. We need to remove restrictions imposed

on tribal governments to provide the same opportunities that other

governments enjoy.

Loan guarantee components are vital for the success of tribal

businesses, as many of our tribal members do not have the collateral for fully funded, fully secured loans during the start-up period

of a business.

Economic development in Indian country requires not only successful tribal government businesses in economic development initiatives, but efforts to foster successful small businesses for tribal

members also.

The problem that most banking institutions face when dealing

with tribal members who reside on the reservation is the uncertainty of enforcement jurisdiction if the borrower defaults on the

loan. To address this recurring issue, NCAI encourages hearings

and briefings to be arranged between Indian nations and off-reservation commercial banks, as banks are reluctant to lend in this

high-risk environment.

Good governance is not dependent upon quick fixes. Rather, good

governance is dependent upon good policy that promotes long-term

solutions. The application of these tenets, among others that will

be uncovered in the policy consultation sessions that will occur before the drafting of legislation create a secure environment for tribal governments and investment.

By enacting these policies, the government is not only fulfilling

their trust and treaty obligations, but is also giving the tribes some

of the tools they need to build their own capacity to govern.

It has been the experience of NCAI that tribes who are best able

to address the issues of economic development in their own communities are the ones who have comprehensive strategies that incorporate all the resources that the tribe has at its disposal.

Tribal plans that engage all the key players in their communities, capitalize upon the interests and strengths of community

members is a key way to jumpstart economic development on Indian lands and ensure that economic development is spread

throughout all public and private sectors of the tribal economy.

By creating policies that will enable tribes to use all of their resources together, the committee also creates an environment that

is good for development in general. While it is good that the governmental agencies have programs that offer incentives for busi-
19

ness or companies who subcontract with tribes, these programs

need to be evaluated for effectiveness.

Tribes have voiced concern that programs such as the Department of Defense 5 percent tribal incentive programs lack clear

goals to ensure that the Department markets and promotes the

program in the same manner as other incentive programs. We recommend that the committee commission evaluations of programs

such as this to make sure they are proficient in serving the needs

of Indian country.

Public Law 106–447, the Indian Tribal Regulatory Reform and

Business Development and Public Law 106–64, the Native American Business Development Trade Promotion and Tourism Act of

2000, need to be implemented as soon as possible to help reduce

the barriers that Indian country faces for economic development.

In closing, capacity building is the first step toward good governance. Only when Indian tribes have the ability to administer our

programs and manage our affairs for our people will we be able to

move to the path of self-determination by allowing tribes to engage

in economic development initiatives, by enabling the expansion of

tribes’ capacities to govern is directly linked to tribal sovereignty

and self-determination.

The establishment of clear policies that define the roles of Federal, State, and tribal governments that give tribes authority to

self-regulate, that develop infrastructure and human resources,

eliminate disincentives to investment such as dual taxation, create

programs that are designed for the long- term direct resources to

set a high standard of action and that preserve the Federal trust

and treaty responsibilities is the most effective means by which the

Federal Government can support good governance with tribal nations.

There is a need to work with Indian communities to develop comprehensive policies and analyze existing programs. NCAI is always

available to cultivate the government-to-government relationship

between tribes and Federal Governments. We are ready to help you

facilitate any discussions that will need to take place in order to

create effective Indian policies.

Thank you for this opportunity.

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

Senator CAMPBELL. Chairman Cladoosby.

STATEMENT OF BRIAN CLADOOSBY, CHAIRMAN, SWINOMISH

TRIBE, WASHINGTON

Mr. CLADOOSBY. Chairman Inouye, Senator Campbell, members

of the Committee on Indian Affairs, guests and staff: I am honored

to have the opportunity to appear before you and share my

thoughts on good governance and economic development in Indian

country.

I would also like to take this opportunity to welcome Senator

Maria Cantwell to the Senate Committee on Indian Affairs. We in

Indian country, especially those of us from the great State of Washington, look forward to working with her in her new capacity and

thank her for her support that she has shown us thus far.
20

For the record, my name is Brian Cladoosby. I am the chairman

of the Swinomish Indian tribal community. I am also the president

of the association of Washington tribes.

Our tribe is located about 70 miles north of Seattle. We have

about 800 members in our tribe. My tribe is composed of descendants from the Swinomish, Samish, Lower Skagit, and Kikialus

Tribes, which lived in the Skagit Valley region and the islands that

are now Woodby Island and Camano Island.

We are a treaty tribe. I am proud to say that my grandfather’s

grandfather signed the treaty for our tribe in 1855. His Indian

name Washington Kalkultsic and his x appears in the Point Elliot

Treaty.

Our reservation was set aside by Executive order in 1873 and it

has been the homeland of the Swinomish people for many generations. However, today, as a result of the General Allotment Act of

1887, also known as the Dawes Act, our homeland has been reduced to just over one-half the area of the reservation. Our exclusive homeland is now also home to more non-Indians than tribal

members.

You are all familiar with the devastating impacts of this ill-conceived legislation. Other tribal leaders have told you of the multiple

problems created by the checkerboard lands within the reservations across the United States, the fractionated ownership of Indian allotments and the jurisdictional conflicts generated by this

failed strategy of assimilation.

We have heard these accounts of lost lands, unmanageable resources and eroded sovereignty on many occasions. The Swinomish

people have lived it on a daily basis.

Over the years the Swinomish people have been involved in a variety of conflicts and confrontations over fishing and hunting

rights, criminal jurisdiction, taxation and gaming issues and the

regulation of reservation land use.

Our inherent right to exert jurisdiction over the lands we reserved in our treaty is constantly being questioned and threatened.

Recognizing that the your hearing today is about good governance and economic development, I would like to turn my remarks

to my tribe’s efforts to make the best of the challenging context in

which we now live.

In recent years the Swinomish Tribe has viewed inter-governmental cooperation as an important vehicle for increasing tribal

self-determination and expanding our capacity for good governance.

We truly believe that cooperation and communication go a lot further than confrontation and litigation.

We have entered into a number of agreements with neighboring

jurisdictions for the provision of major public services. There are

two major water purveyors in Skagit County, the city of Anacortes

and the Skagit County public utility district. They used to be the

main purveyors of water within the Swinomish Reservation. We

signed an agreement with them and they agreed that the

Swinomish Tribe would be the only purveyor of water within the

reservation’s boundaries.

We signed a wastewater treatment agreement with the town of

LA Conner. We have a police cross-deputization agreement with

the Skagit County Sheriff’s Department. We have a first- of-its-
21

kind in stream flow water agreement with the Skagit County PUD

and the city of Anacortes.

As many of you are aware, there are many disputes involving

water issues with Indians and non-Indians across the United

States. Of course, we have the Swinomish Cooperative Land Use

Program, which I am here to talk about today.

We have a long history of working well with our neighbors and

believe firmly that respectful cooperation and coordination with

other governments are central to our expansion of self-determination.

Like many of you, our tribe spends countless hours in deliberations, negotiations and policy development to devise dynamic forms

of conflict resolution. Perhaps slightly different than many of you,

most of our work is focused on the complex and often contentious

historic divisions existing between jurisdictional interests operating

within or around the boundaries of the Swinomish Indian Reservation.

An important outgrowth of these efforts has been the Swinomish

Cooperative Land Use Program. The program provides a framework based on a memorandum of agreement between the tribes

and Skagit County for conducting activities within the boundaries

of our checkerboard reservation and a forum for resolving conflicts

that might arise during the process.

Land use issues confront virtually every tribe that has been impacted by the Allotment Act. This program provides a potential

model for resolving those issue through a collaborative and cooperative process. Our Cooperative Land Use Program received a high

honors award from the Honoring Nations Program administered by

the Harvard Project on American Indian Economic Development.

We are grateful for the recognition of the Harvard Project. In addition to providing encouragement to other governments with

whom we might negotiate future agreements, participating in the

Honoring Nations Program has given us the opportunity to learn

about the great work being done by Indian communities all across

the country.

We believe this MOA is a first of its kind between tribal and

county governments in the United States. Whether it is the first

of its kind or one of a proud few, we hope that it indicates a growing belief in the benefits of working together rather than against

each other.

Establishing a viable, self-sustaining reservation economy is a

primary goal of our tribe. Unresolved jurisdictional issues arising

from checkerboard land tenure patterns can be a serious obstacle

to economic development by deterring investment and limiting the

tribe’s ability to achieve our development goals.

These conflicts impede our tribe’s ability to use our land and natural resources effectively and in a manner that fully benefits our

tribal members and indeed benefits all members of our reservation,

Indian and non-Indian alike.

Only when our sovereignty is supported by sustainable economic

development can the goals of self-government be fully realized.

The Cooperative Land Use Program is still a work in progress

with a long history, and hopefully, with more effort and continued

cooperation from Skagit County, a bright future.
22

The work actually began in the mid-1980’s when the tribe and

the county found themselves in the midst of a jurisdictional conflict. Both governments were administering zoning, permitting and

regulation enforcement programs that affected non-Indian fee simple owned lands within the reservation’s boundaries.

The resulting confusion over jurisdiction and allowable land use

engendered skepticism, anti-Indian and anti non-Indian sentiments, a litigious atmosphere and serious difficult in attracting investment. Rather than litigating these jurisdictional issues, the

tribe and the county agreed in 1986 to attempt to resolve the conflict by embarking on a joint planning program.

The philosophy guiding the effort was to overcome inconsistencies through mutually agreed land use policy for the reservation.

Assisted with funding from a northwest area foundation and a

facilitator from the Northwest Renewable Resources Center, representatives from the tribe and county began discussions on the

issues of mutual concerns related to land use.

We agreed that it would be mutually advantageous to avoid costly litigation by resolving differences under a formal government-togovernment relationship. While the talks proceeded slowly, they

proved useful. Ultimately, our governments were able to craft a series of agreements, including a 1987 Memorandum of Understanding recording our commitment to work together on a comprehensive

land use plan.

In 1990, we created a draft Comprehensive Use Plan, which was

the first comprehensive planning effort, attempted by a tribe and

a county. In a 1996 Memorandum of Agreement between the

Swinomish Tribe and Skagit County, which delineates a set of procedures for administering the Comprehensive Land Use Plan, in

particular the MOA requires joint reviews of proposals, provides

dispute resolution mechanisms and affirms that cooperative problem solving is the preferred means of decision making. A copy of

the MOA is attached to the text of my comments.

Because of time, I will spare you the reading of the MOA, but

I hope you and your staff have an opportunity to review it.

Where the Cooperative Land Use Program has succeeded, one of

the fundamental reasons for the success of the program is that

it has institutionalized a process of collaboration. We truly believe

that we need to institutionalize these agreements because we know

that elected officials come and go.

So, in closing, I would just like to thank you for allowing me to

share with you a little bit of the work that the Swinomish Tribe

has done in trying to work out cooperative agreements with other

governments in trying to create an economic development base.

In closing I would also like to thank you for bringing up the issue

of how the recent court decisions are affecting Indians in Indian

country. I hope we can work with our representatives to figure out

a way that we can look at those decisions.

Thank you.

Senator CAMPBELL. Thank you.

Ms. Chambers.
23

STATEMENT OF ARDITH ‘‘DODIE’’ CHAMBERS, COUNCILWOMAN, GRAND TRAVERSE BAND OF OTTAWA AND CHIPPEWA INDIANS OF MICHIGAN, SUTTONS BAY, MI

Ms. CHAMBERS. Good morning. I want to thank the chairman

and the vice chairman for inviting the Grand Traverse Band to

speak today.

The issues we are going to talk about are tribal courts and issues

of separation of power.

My name is Ardith ‘‘Dodie’’ Chambers, the treasurer of the

Grand Traverse Band of Ottawa and Chippewa Indians,

Peshabestown, MI. I have served our tribe all of my adult life. I

was one of the original group of people to bring our petition for

Federal recognition to Washington in 1978.

On May 27, 1980, the Grand Traverse Band of Ottawa and Chippewa Indians became the first tribe in the United States to successfully petition for Federal recognition under the new process.

Shortly thereafter, I became our tribe’s first tribal chairperson.

I am a descendent of Chief Peshabe, who founded the village of

Peshabetown in 1852, along with other groups of Ottawas. The

Grand Traverse Band consists of 3,682 members. One-half of our

members live in our six-county area. The others are scattered nationwide and worldwide, because we have some members in Germany, as well.

Today, I will speak on the issue of separation of power in our

tribe’s governing structure. But keep in mind as I testify, that I am

neither a judge nor an attorney. By a vote of 376 to 47, tribal members ratified our constitution on February 24, 1988.

The U.S. Secretary of the Interior, Donald P. Hodel, approved

our constitution on March 29, 1988. In chapter 6 of our tribe’s history book, chapter 6 is entitled ‘‘Tribal Courts and Law Enforcement.’’ Our history book is called the Mem-ka-weh, Dawning of the

Grand Traverse Band of Ottawa and Chippewa Indians by George

Weeks. That chapter 6 defines our judicial system.

Significantly, the Grand Traverse Band is one of the few in the

country that has mandated a separate branch for it’s tribal court

system. It is the only one in Michigan that mandates that the appellate structure be part of the independent judicial system. Our

appellate court consists of three judges.

Article V, section 6 of our tribal constitution states:

The tribal judiciary shall be independent from the legislative and executive function of the tribal government and no person exercising powers of the legislative or

executive function of government shall exercise powers properly belonging to the judicial branch of government.

Two opinions from our tribal court will demonstrate the separation of power and the independence of the judiciary.

Opinion no. 1. Tribal councilor removed from office, conflict of interest. In Re: Referral of John McSauby, Tribal Councilor to Tribal

Judiciary for Removal from Office. A tribal councilor was ordered

removed from the tribal council for misconduct in office.

In the GTB constitution, article VII, section 2(a)(3), which is your

exhibit C, Mr. McSauby sold a piece of his property to the tribe

while he was a member of the tribal council. The judiciary meeting

en banc found that he violated the constitution, article XII, and
24

section 1 in that his personal financial interest in the property sale

amounted to a prohibited conflict of interest.

While the judiciary ordered him removed from office, it did allow

reasonable attorney fees and costs to be awarded to Councilor

McSauby’s attorney.

Opinion no. 2. Due Process Required Before Disenrollment Tribal

Membership Upheld. In this appellate decision, Angus A.

DeVerney, Sr., et al, exhibit E, the court affirmed the lower court’s

decision that a member, once enrolled, is entitled to due process before he can be disenrolled. There is no automatic disenrollment.

Mr. DeVerney enrolled himself and his children as minors in

1982. An adult child attempted to enroll at a later date. The membership office discovered that Mr. DeVerney and his children had

been enrolled with another tribe since 1976. In 1996, the membership office attempted to automatically remove the family from the

membership rolls.

On appeal, the court found that the lower court’s decision was

not a violation of sovereign immunity as a direct grant of right

under the constitution was involved. As persuasive law, the court

looked into the 6th Circuit Court of Appeals, Bartell v. Lohiser.

The court also found that the lower court’s ruling to pay the per

capita funds to the DeVerneys did not violate sovereign immunity

because the money was not damages, but rather it was an entitlement under the Claims Commission docket funds to members.

In reaching its decision, the court cited tribal constitution article

II, section 2, Dual Membership Prohibition, in tribal ordinance 7

GTBC, section 202(b), Incorrectly Enrolled Members.

The Peace Makers Court. In 1999, Harvard University, John F.

Kennedy School of Government, sponsored Honoring Nations: An

awards program that identifies, celebrates and shares outstanding

examples of tribal governance. The program conferred an award on

our tribal court, Exhibit H. The group specifically mentioned our

Peace Makers Program.

In the materials I have submitted with this testimony, I have included a description of our Peace Makers Program. That is in your

exhibit I. The Peace Makers work with children and juveniles who

are at risk or who commit criminal offenses. The unit is a division

of our court system.

The Peace Makers utilize alternative conflict resolution strategies to assist young juveniles to accept responsibility for their actions and to restore to society what is due it. Community service

and restitution are important. A recent report from our Chief Peace

Maker, Paul Raphael dated June 1, 2001 indicates that he works

with 42 youths a week. There were seven referrals from the court

of tribal prosecutor.

The Peace Makers have been called to the local public school to

help resolve conflicts between native and non-native students.

Young couples with marital problems utilize the Peace Makers.

Landlord and tenant issues are also resolved.

For the period of January 2000 through January 2001, Peace

Maker handled 14 court referrals involving four retail fraud, five

assaults and two minor in possession. A sample Peace Maker

agreement is attached as exhibit L.
25

I hope this brief summary has informed you of the workings of

our court. We seek, as a people, to serve justice and to promote dispute resolution in a cultural context. Thank you.

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

Senator CAMPBELL. Thank you. I have a couple of questions. Let

me start by telling you that we do hearings for two purposes. We

do them to try to define the problem and the second is to try to

find some solutions. Boy, since Senator Inouye and I have served

together, we have heard the problems. We know there are a lot

more problems than we have solutions. You deal with them in the

sense of sovereign and good governance and self-determination and

jurisdiction and all those things. They are great big pictures.

We can pass, I mean with the help of other people in Congress,

literally any bill that helps Indian people. Getting it through the

whole process, through the Senate and the House, as Sue knows,

is a little tougher.

If we have a friendly administration, we can get it signed. But

that doesn’t mean our job is finished, because the agencies sometimes don’t implement it in the way we meant. We face that all the

time. Or they will say there is no money to implement it and we

come back and we have to go through the whole thing again to provide the money so they can implement the darn thing.

Sometimes they don’t have the will. Sometimes they don’t have

tribal input. Sometimes they don’t notify the tribes of the opportunities there under the bill. But we are trying.

Susan, you spoke of a lot of the problems that we have heard

many, many times. But in your capacity at NCAI, I would really

challenge you to try to find specific language to help us resolve the

problems.

We have a great staff. Senator Inouye does and I do, too. They

work together. We are desperate, literally, to try to find specific

language to resolve some of the things that Indian country faces.

We have had a great few years, the last few years, when I, Senator Inouye, and the other members have passed a lot of legislation

in this committee. You mentioned some of it in your testimony.

There is still a lot more to be done. But come up with specific

language, if you can, about how we can fix things.

I certainly was interested in hearing Chairman Cladoosby’s comments because I think we have to go a long way in looking at the

effective models that some tribes are already doing. Sometimes

they are doing it totally without the help or input of the Federal

Government. They are doing it almost in spite of the Federal government and sometimes they are doing it because we opened an avenue with some legislation where they have taken advantage of it.

We need to have a better way that we can share those things.

We hear about it when you come in here. But we don’t have a real

good way of sharing those opportunities or those success stories, so

to speak, with other tribes.

Two days ago, I had a meeting with the Northern Cheyenne,

where I am enrolled. I told them about the successes of the Southern Utes that our assistant secretary mentioned. They are going to

make a trip this October and spend time with the Southern Utes

to study some of their successes. Some of the experiences might not

be transferable, but I think some of them are.
26

We can’t really do that here in Washington. That has to be done

tribe by tribe and it has to be done with some kind of an intermediary agency like NCAI that will help network where the tribes

who have the needs can benefit from the experiences that have

been successful with the tribes that have already done it. That has

to be played more on your ball field.

Ms. MASTEN. Senator, if I might, we did have some success with

developing a tribal-State relations brochure that showcased best

practices. Maybe that is something that Harvard and us could partner up with for showcasing the best practices in Indian country for

economic development. I would be interested to talk more about

that and possible funding sources to support that initiative.

We would be happy to step forward. I personal am committed

and our new executive director, Jackie Johnson, has a similar commitment to prioritize economic development and identification and

reduction of barriers in working with the agencies to ensure that,

you know, those that we can remove without legislation, we do, and

identification of the barriers so that we can pursue legislation to

remove those that still exist.

Senator CAMPBELL. I would encourage NCAI to do that and share

with us specific information that we can try to put in bill form.

Senator Inouye, may I yield to you?

The CHAIRMAN. I thank you very much, sir.

About 15 years ago, I believe tribal leaders throughout this land

looked upon the U.S. Supreme Court as the court of last resort and

believed that they could depend upon the justices sitting there to

uphold their rights.

Their rights were denied or abridged, tribes believed that they

could always go to the Supreme Court and get some relief.

In recent days, we have noted the development of a trend in

court decisions that would suggest that this has changed. For example, several weeks ago in Nevada v. Hicks, the Supreme Court

held that tribal courts are not courts of general jurisdiction and are

not vested with authority to determine whether State law enforcement officers who come on their reservations to search tribal members homes located on trust land are acting within the scope of

their authority.

This is a dramatic departure from what we have considered to

be the sovereign powers of Indian nations. They also declared that

exhaustion of tribal court remedies is not required before proceeding to Federal court. Now this has been the rule for many years,

that before you can go to Federal court you have to exhaust all

remedies before the tribal court. But now, the Supreme Court says

that, that is no longer the case.

Several weeks ago, in the Atkinson Trading Post case, the Supreme Court held that the Navajo Nation has no authority to impose hotel occupancy taxes even though the Navajo Nation provides

fire and police protection and emergency medical services to the

hotel and its patrons.

You know, that is a real departure from accepted principles of

sovereign rights. I could go on and on because there are other

cases, and these are not cases from 50 years ago. These are just

cases within the last several years.
27

I think the time has come for the Congress to address these rulings of the Supreme Court because we are at a very critical juncture, and therefore I welcome the nine principles that the NCAI

has enunciated in their statement. I think that this could be a

basis of a discussion between tribal leaders and this committee to

come forth with a comprehensive law setting forth basic standards

or principles because, if not, this trend will continue.

If this trend continues, then Indian country will no longer be Indian country.

So, I commend the NCAI for coming forth with the nine principles. I would like to arrange a meeting soon with Indian leaders

to begin discussing this because I think time is of the essence.

Mr. Vice Chairman, I have many questions.

I would like to commend Chairman Cladoosby on receiving the

high honors from Harvard.

I will be submitting a question to you, asking your opinion on

how we can apply your principles on bringing about better relations.

Mr. Vice Chairman, before I relinquish the Chair I would like to

note the presence of the assistant secretary. I do not know if the

witnesses realize that he has been sitting here listening to all of

you.

In all the years that I have been a member of this committee,

I think this is the first time that the Assistant Secretary of the Interior in charge of Indian Affairs has stayed to hear testimony of

Indian leaders without being urged to do so.

I wish to commend you, Mr. Secretary.

[Applause.]

The CHAIRMAN. I believe that you can tell by the applause that

they appreciate your presence here, sir.

So, Mr. Vice Chairman, I would like to submit questions to the

three witnesses and ask them to respond with their thoughts on

my statement here. I think it is very urgent that we get together.

Ms. MASTEN. Senator, I just wanted to add that we are planning

for a forum with tribal leadership the week of September 11 to do

just that. So, we welcome you. We will have further discussions.

We have had initial discussions with your staff with regard to that.

We will continue to keep them informed on our progress toward

that.

Senator CAMPBELL. Did you have something final to say, Chairman Cladoosby?

Mr. CLADOOSBY. Yes; two things. Our program that we have initiated with Skagit County is a model. I cannot thank Harvard

enough. I think these models need to be proven to the Indians and

non-Indians around the United States that it can work. Like you

said, Senator Campbell, it might not work for your tribe exactly

how it works for ours, but it is a start. It is a basis and a foundation.

In response to Senator Inouye’s remarks about the recent Supreme Court decisions, they do seem out of step with the support

that we have received recently from Congress and in recent Executive orders for tribal sovereignty and self-government.

When courts do question tribal regulatory authority on our reservations, they do undermine the economic vitality and social de-
28

velopment that has emerged from tribal self-government. So, those

are very, very serious cases.

We look forward to working with you to ensure that the good

governance that we celebrate today will be strengthened and that

economic development, so long coming in Indian country, will continue. We need to work together somehow to try to look at these

cases.

I agree with Senator Inouye that a meeting with leaders is needed.

So, I thank you for the time that you have given the Swinomish

Tribe today. I appreciate all your comments.

Senator CAMPBELL. We thank you. We will submit some questions in writing, too.

We will now go to the last two people testifying. That will be Andrew Lee of the Harvard Project and Jerry Reynolds, associate director of Informational Services, First Nations Development Institute, Fredericksburg, VA.

Go ahead, Mr. Lee.

STATEMENT OF ANDREW LEE, EXECUTIVE DIRECTOR, THE

HARVARD PROJECT ON AMERICAN INDIAN ECONOMIC DEVELOPMENT, JOHN F. KENNEDY SCHOOL OF GOVERNMENT,

HARVARD UNIVERSITY, CAMBRIDGE, MA

Mr. LEE. Good morning, Mr. Chairman and Mr. Vice Chairman.

Thank you for the opportunity to be here with you today. My name

is Andrew Lee. My Seneca name is Ono-dah-geyh. I have the pleasure of serving as the executive director of the Harvard Project on

American Indian Economic Development, which is housed at the

John F. Kennedy School of Government at Harvard University.

For the past 15 years, the Harvard project has been working to

understand the conditions under which sustained, self-determined

social and economic development is achieved on American Indian

reservations.

Collaborating with the Udall Center for Studies in Public Policy

and the Native Nations Institute, both at the University of Arizona, our activities include research, advisory services, and executive education for tribal leadership.

Additionally, the Harvard Project administers Honoring Nations,

a national awards program that identifies, celebrates, and shares

outstanding examples of good governance.

Mr. Chairman, I believe the most ambitious challenge facing the

Indian country today can be posed in a single question: How can

tribes build and sustain healthy, prosperous Indian nations?

Certainly there are no easy answers, but the Harvard Project’s

research points out very clearly that successful Indian nations assert the right to govern themselves and exercise that right effectively by building capable and culturally appropriate institutions of

self-governance.

Governance goes a long way toward explaining why some tribes

are able to break poverty, dependency and their related social ills

while other languish. Fortunately, a growing number of tribal success stories are emerging from Indian country.

As director of Honoring Nations, I have witnessed the astonishing success that tribes achieve when they put themselves in the
29

driver’s seat for decisionmaking. I have been inspired by those

tribes that stop insisting others are responsible for solving their

problems and instead craft sovereign solutions.

I have seen how program success hinges on such attributes as accountability, performance-based tracking and institutionalization.

In sum, Honoring Nations’ 32 award-winning programs give us

many reasons to be optimistic about the future of Indian country.

Now, in discussing economic development specifically, the importance of tribal governance cannot be overstated. Let me explain. In

our work at the Harvard Project, we often encounter two different

approaches to economic development. The first is a ‘‘planning and

projects’’ approach, grounded in the idea that economic development is about getting the next big Federal grant or picking the one

winning project that will magically solve the reservation’s economic

problems.

This is approach is destructive and shortsighted. It encourages

tribes to become expert grant-seekers. It engenders institutional

dependency whereby tribal governments become mere appendages

of the Federal apparatus.

And history demonstrates that this approach produces economic

development failures.

The second approach is a ‘‘nation building’’ approach. Nation

building tribes recognize that economic development is first and

foremost a political challenge and that the task is to create an environment where businesses and people can flourish. These tribes

displace the role of Federal agencies, focus on the exercise of sovereignty and create capable institutions of self-governance.

Critically, these nation-building tribes are the ones that are

breaking away from the pack economically, socially, politically and

culturally.

So what institutional attributes characterize nation building and

serve as the underpinnings for economic development? Our research points to at least five. First, tribes must have stable institutions and policies. The experience of the developing world demonstrates that unstable institutional environments fail to attract

investment both within and outside the nation. The same holds

true for Indian country.

Second, tribes need to establish fair and effective dispute resolution mechanisms. We find that the unemployment rate among

tribes with independent judicial systems is on average five percentage points lower than those tribes that don’t have independent judiciaries. Why? Investors tend to look for court systems that will

give them a fair shake. They tend to shy away from places where

court decisions are arbitrary or the courts are controlled directly by

politicians.

Third, economically successful tribes tend to have a clear separation of business and politics. Tribal enterprises that are formally

insulated from political interference are four times as likely to be

profitable from those that are not.

Fourth, tribes must have capable bureaucracies. Contracting and

compacting place a premium on efficient bureaucracies that, at the

most basic level, can get things done.

Finally, successful economies in Indian country stand on the

shoulders of culturally appropriate governing institutions. It is no
30

coincidence that tribes functioning under essentially foreign governing systems have a long history of economic failure. The task

for tribes is to equip themselves with the institutional tools that fit

their unique societies.

To conclude, our research, coupled with the lessons taught by our

Honoring Nations winners, suggests that the Federal Government

has a role in fostering economic development on Indian reservation.

Of primary importance, self-determination should remain the cornerstone of Federal Indian policy. It is the only policy in over a

century that has brought improvement to the material health of Indian country.

To withdraw from self-determination would not only reverse the

successes of the past 30 years, but it would ultimately burden the

Federal Government and America at large.

Moving forward, we urge the Government to expand opportunities for tribes to control programs through compacting and contracting, and fully break away from the ‘‘planning and projects’’

mentality by supporting institutional capacity building for tribal

governments.

If there is one thing I would stress, Mr. Chairman, and Mr. Vice

Chairman, it is that governance matters and self-governance

works.

Thank you for the opportunity to be here today.

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

Senator CAMPBELL. Mr. Reynolds, why don’t you go ahead? I

have some questions of Mr. Lee. I will hold them until you are finished.

STATEMENT OF JERRY REYNOLDS, ASSOCIATE DIRECTOR OF

INFORMATIONAL SERVICES, FIRST NATIONS DEVELOPMENT

INSTITUTE, FREDERICKSBURG, VA

Mr. REYNOLDS. Very well. Thank you, Senator. Greetings, Mr.

Chairman and Mr. Vice Chairman. Members of the committee and

staff: My name is Jerry Reynolds. I am with First Nations Development Institute. For the second time before the committee, I think,

I am pinch hitting for our president, Rebecca Adamson and vice

president, Sherry Salway Black, who are engaged in other First

Nations obligations.

We are pleased and privileged to take part. We know how hard

you work and how hard you try. We take note of your successes

and all that you do. Please include us if we can help you in the

important work that you do.

We felt that the contribution that we could make today was to

emphasize the role of philanthropic, nonprofit activity on good governance and economic development in Indian country. I don’t think

I have to tell anyone here that the demands on tribal government

often exceed the demands on other forms of government.

I was a reporter at Indian Country Today from 1988 to 1993. I

would often go over to talk with the late, lamented Alex

Lunderman, Sr., chairman of the Rosebud Sioux Tribe. In the

course of 1 hour, he might have people coming in to help him with

commodities or women, infant, and children benefits. He might give

someone some money. He might be on the phone with a congress-
31

man. He might be making a decision about the tribe’s economic future.

So, that was a first-hand lesson on the enormous demands on

tribal governments and tribal leaders. I think everyone here is well

aware, too, that those demands are increasing between Federal

devolution and the rising in youth population on reservations.

I had the opportunity to be in Seattle at the beginning of April

at the Wisdom of the Give Away Conference that First Nations

held. It was on Native American philanthropy. The Umatillas have

been mentioned.

At that meeting, Les Minthorn, a tribal councilman with the

Confederated Tribes of Umatilla Indians said something I think is

very worth noting. He said that as the demands increase on tribal

governments, whether you can fulfill those demands or not, you

need to deal with them one way or another.

Well, First Nations has teamed up with the National Indian

Gaming Association for the first, we believe, national survey of Indian gaming nation charitable giving. It is in a late draft stage and

I will submit it to the record when it is in final form or if the

record is not open, I will get it to your staff.

Senator CAMPBELL. That will be fine.

Mr. REYNOLDS. Among the findings that I know will not change

are that a majority of Indian gaming nations make charitable contributions without a formalized process or structure and that the

majority of recipients of tribal contributions are non-Indian nonprofit organizations. We believe this reflects the limited number of

native nonprofit organizations operating within some Native American communities

In conclusion, I think that I would simply like to emphasize the

role of nonprofit intermediaries, native nonprofit intermediaries

and their potential role in stabilizing governments and providing

for economic development by taking away some of the demands

that are made on tribal governments. They can meet some of those

demands.

In fact, among the many outstanding case studies that the Harvard Native American Project has put together, and you can read

about them in the book that is back on the mantle, in many, many

cases you will find that it is nonprofits that are working with tribal

governments and other organizations, State and Federal agencies

and helping to facilitate this economic development.

I would mention in particular the Yukana Development Corporation in Alaska where actually the tribe’s willingness to create a corporation enabled the tribal government to concentrate on politics

while others concentrated on business. This is the kind of process

that nonprofits and tribal government created, governmental entities—I won’t get into all the details of tax law at this point in the

day.

We know that these considerations are often not noted. They

seem to have a little bit of a low profile when we discuss economic

development. So, we felt that our role should be to emphasize what

nonprofits can do and their value to good governance, stability of

governance and economic development.

I will be very happy to answer any questions. As I say, I will fill

out the record when this survey becomes final.
32

Senator CAMPBELL. Thank you.

Let me start by telling you, Mr. Lee, that I have briefly read

your testimony. I have to tell you, it is terrific testimony. I have

always been very impressed with the Harvard Project. I guess it is

because you share my philosophy about how to make things better

in Indian country.

I have never believed that the way you help make Indian country

better is to make them more dependent on the Federal Government.

You mentioned in your testimony that some people have become

expert grant seekers. There is no question about it. There is a keen

competition about getting grant money. To me it flies in the face

of sovereignty. How can a nation dependent on another nation and

still declare itself sovereign?

We have the problem, of course, of fitting that into the trust responsibility that we are obliged to provide the tribes. So, we have

to find a balance, you know that. But there is no doubt that just

depending on grants for jobs, we have something backward.

You know, in the free enterprise system, it seems to me what you

do is provide a service. You provide a product and then you compete out there and you get the thing sold or you do whatever you

have to do. That provides jobs.

But in some conditions with some tribes, the way to create the

jobs is to get a grant and that grant provides the jobs for the duration of that grant. I mean you have explained that very carefully.

It is not very far-sighted, as I think your testimony indicates.

It seems to me as a Federal Government, what we need to do is

help provide the conditions for growth. The tribes can flourish in

a democratic market-based system. I know they can do it. The

places where they have had some successes, they have proven over

and over they can do it if they are given the opportunity to do it.

So, it is really a tough question, but one of the things that makes

this tough is that we have an institutionalized bureaucracy that is

afraid of letting tribes be too independent. You know that. I don’t

mean to say it to our new Assistant Secretary, but you know, we

have known that for years that in some cases the agencies that are

authorized and empowered to help Indians become more independent in fact put some roadblocks in there because they worry about

the loss or authority or turf or jobs or whatever the reason is. We

have to get away from that mentality, too, if we are truly going to

let tribes be free.

I just wanted to tell you that I don’t really have any questions.

I want to submit some in writing to both of you. But that testimony

really hits the nail on the head. Unfortunately, in some circles it

probably offends some people because somebody probably could

misconstrue that to mean, ‘‘Do you mean you are going to pull the

rug out from under the tribes?’’

It is not that at all. We have to have a new way of thinking and

get away from this mindset that somehow government has all the

answers. Most tribes don’t want the government to have the answers to their problems. They want to have the answers to their

problems.
33

We have to help create conditions so that tribes cannot only define the problems, but find solutions and give them the opportunities to be able to do it.

Senator Inouye, do you have any questions or comments before

we close down?

The CHAIRMAN. Thank you. I would like to join you in commending Mr. Lee for his testimony. I have always maintained, especially

in the last 15 years or so, after serving on this community for some

time, that the best laws are laws made my Indians in Indian country for Indians, because all to often, well-meaning non-Indians living in Washington, living in air-conditioned homes, not really

knowing the conditions in Indian country, draft laws that do not

serve Indian country well.

So, your statement is right on target. However, as you indicated,

if there are to be successful governments, there must be an environment that would be conducive to success. When one looks at

some of the conditions in Indian country, you see conditions that

are just horrendous, conditions which would be unacceptable, even

in Third World countries.

Having said that, many of those who want to do business with

Indian country have repeatedly suggested that it would help if Indian nations had stable governments. They frequently cite one example. The turnover is too high. Every year there is a change of

government.

Do you have any suggestions at to what can be done? I realize

that Indian governments have to be relevant to their conditions.

For example, there is a tribe in New Mexico where families take

turns in governing.

Other than that, do you have any suggestions?

Mr. LEE. I am very glad you asked that question, Mr. Chairman.

Let me suggest that the problem has less to do with turnover in

tribal government as it does with inconsistent policies or institutions that change rapidly.

The problem is not necessarily the politicians themselves and

their turnover, but the institutions. We work with a number of the

Pueblos in New Mexico. They have rapid turnover. Some of those

Pueblos, like the Cochiti Pueblo, Pueblo of Pojoaque, and many

other Pueblos have elections every year.

What they have there, in the ones that are economically successful, is stability in institutions. The policies don’t change from administration to administration. So, I think the appropriate way to

frame this issue is stable institutions, rather than turnover in government.

That said, I think there are a number of things that tribes

should be thinking about. I think Mr. Reynolds has it exactly right.

The civil society sector should be holding tribal governments accountable.

What the Federal Government can do, I think, is change the incentive structure. If it is true that many tribal governments are experts in the grantsmanship game, then their incentive is to perform according to how the Federal Government wants them to perform rather than how their citizens demand that they perform.

I think shifting around that incentive structure will have a tremendous difference. The implications for policy are that block
34

grants might be the appropriate way to go. I very much see devolution as providing good opportunities if it is done properly.

Another way the Federal Government can help in this regard, is

to have performance-based grants rather than having a checklist of

boxes that a tribe must go through before a grant is made. The

Federal Government might consider doing midstream and post-investment appraisals.

Those kinds of things shift the accountability to the people and

the tribal governments, and I think, with more accountability, we

will eventually see less turnover and greater stability in the vary

institutions that we are talking about today.

The CHAIRMAN. Mr. Reynolds, you submitted a couple of articles

that speak of section 7871 of the Internal Revenue Code.

Mr. REYNOLDS. Correct.

The CHAIRMAN. What are some of the benefits that Indian country can derive from the application of that section?

Mr. REYNOLDS. Yes, thank you, Senator. The section 7871 determination is for tribal government entities. Often people say it is

nonprofits, but that is a little tricky terminology. It is for tribal

governmental entities. It assures grant makers that the grant they

made counts toward their payout. In other words, a simple way to

say it is that it is tax deductible.

Tribes have the benefit of not having to file with the State Secretary of State in their State if they get a section 7871 determination. This is helpful because if the tribe ever wants to change the

charter of that organization, it will not risk running into some

problem within the State where they maybe don’t want to see that

charter changed for various reasons. They will just be able to do

it. They won’t have to answer to that Secretary of State.

In other words, they are not under the oversight of State government. They answer to Federal law. So, we consider it as an extension of sovereignty to do that.

They also have much less of a compliance burden because they

do not have to file Form 1023 initially or Form 990 every year

thereafter, reporting on their activities to the State. Now, we always advise that because compliance and reporting is the comfort

zone for grant makers and philanthropic community as a whole,

shall we say, we always advise that tribes should acknowledge donations and report on them publicly, maybe in an annual report.

However, it is quite an advantage in terms of the compliance

burden not to have to constantly report to the State. So, those are

two of the major advantages that tribes can realize from section

7871 for their government entities.

The CHAIRMAN. If the Navajo Nation decided to use section 7871

and set aside a large parcel of land within their reservation borders

and this section 7871 organization leased this property to a hotel

operation to conduct hotel business, would the terms of the contract

be subject to State scrutiny or approval or disapproval?

Mr. REYNOLDS. That is a fascinating question. I think we are getting into Atkinson here, maybe. It is fascinating. I am not normally

known for holding back when I can plunge over the verge. I am

tempted to do so here. I don’t know the exact answer to that, but

I think the possible answer is that there are real possibilities there.
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I think the tribes should explore those possibilities. I guess part

of what we hope to accomplish today is to urge the committee and

the Congress at large to help them explore those. I think it might

make a good topic for your conversations with NCAI.

We would be very happy at First Nations to provide you references to the tax attorneys that we have used who could give you

truly reliable information. I am a little bit worried about myself

there. I know some, but not enough.

The CHAIRMAN. We will be calling upon you, sir.

Mr. REYNOLDS. I hope so. I just can’t predict this Supreme Court,

Senator.

The CHAIRMAN. If I may, I would like to submit a few questions

to Mr. Lee and Mr. Reynolds.

Senator CAMPBELL. Please do.

The CHAIRMAN. Thank you very much.

Mr. Secretary, you have established a new record and a new

standard, sir.

Mr. MCCALEB. After you gave me that ‘‘atta boy,’’ I had to come

back.

The CHAIRMAN. Thank you very much.

Senator CAMPBELL. With that we will keep the hearing record

open for 2 weeks. If anyone has additional things they would like

to comment on to be included in the record, do so in the next 2

weeks.

We thank all the witnesses.

The hearing is adjourned.

[Whereupon, at 11:38 a.m. the committee adjourned, to reconvene at the call of the Chair.]

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APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII,

CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The committee meets this morning to receive testimony on the governmental practices that foster the potential for economic development in Indian country.

I am pleased to know that the academic research conducted by the Harvard University Project on Economic Development has documented that the fundamental cornerstone of good governance is sovereignty.

Without sovereignty, in all likelihood, Indian people would have long ago been assimilated into the dominant society and would no longer have any lands or communities that you have made your own. Your children would not know their culture,

their traditions, their language or the great contributions their ancestors have made

to America.

All of this would have been wiped out over time, because American law draws a

sharp distinction between those who have a government-to-government relationship

with the United States and those people who are defined by reference to their race

or ethnicity.

Although there are still many Americans who don’t seem to understand this distinction. That which makes the indigenous, native people of this country unique.

The members of this committee do understand this most fundamental of all principles, and we know that it is on this basis that the treaties with Indian nations

were entered into, and that it is on this basis that the Congress has, for over 200

years, enacted legislation to address conditions in Indian country.

But when we speak of good governance, we must be much more careful that we

are not calling upon Indian governments to be a mirror reflection of other governments.

As the Navajo Nation Supreme Court expresses so effectively, your traditional

laws have governed the relations among people in your communities for hundreds

of years before this country was ever founded. You have customs and mores and

ways of resolving disputes that have proven effective over time, and have stood the

test of time. So the dominant society must not rush to judgment if your governmental mechanisms may differ a little or even a lot from those they are accustomed.

Having said that, I believe the Harvard Project has tried to examine those governance practices that are the most effective from the vantage point of what works in

Indian communities because those practices have the greatest degree of acceptance

from the citizens of the tribal government—and thereby, the consent of the governed.

Indian nations that are strong and healthy will be those in the best position to

shape the future of Indian country. Those of us on this committee who are dedicated

to your cause want to do everything we can to assist you in building and maintaining governance structures that will serve your children and your grandchildren well.
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PREPARED STATEMENT OF NEAL MCCALEB, ASSISTANT SECRETARY FOR INDIAN

AFFAIRS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

Good morning, Mr. Chairman and members of the committee. I want to thank you

for the opportunity to appear before you today to speak about tribal government

practices and how that influences economic development in Indian country.

The development of stable and responsive tribal governments, with a sound strategy for and commitment to economic growth, is a prerequisite for prosperity and

economic opportunity in Indian country.

There are many contributing elements to economic success including access to

market opportunities, access to capital, natural resources, human resources, governing institutions and tribal culture. There have been tribal successes where there

was a lack of natural resources, minimally skilled human resources and even poor

access to markets. These successes have been in spite of these economic liabilities

and have been accomplished by determined tribal leadership building stable and effective sovereign governmental institutions.

The policies contained in the Self-Determination and Self-Governance Acts have

been the seed bed of growth for sovereignty and the development of strong and effective tribal governments that are essential for sustainable economies.

Even now, tribes are asserting their self-governance influence through the Economic Development Subcommittee of the Bureau of Indian Affairs’ [BIA] Tribal

Budget Advisory Committee by developing strategies on how the BIA and other Federal agencies can be more effective in encouraging prosperity and economic parity

for American Indian tribes within these United States.

Conversely, it requires a viable and vigorous economy to provide sovereign governments with the tax base to pay for the essential infrastructure and services required

by their constituents and businesses.

With that in mind, I would like to talk briefly about some of the successful enterprises that exist in Indian country and their vision in making things happen. One

of the more notable examples is the Mississippi Band of Choctaw Indians [MBCI].

MBCI was federally recognized in 1945. By the late 1960’s, tribal leaders were

unimpressed with their improvement, despite over 15 years of effort by Federal employees sent to help them. MBCI remained the poorest tribe in the poorest county

in the poorest State. Tribal leaders took responsibility and initiated projects designed to create jobs for MBCI members. The first enterprise for the tribe was

Chahta Development, a construction company that built houses under a low-income

housing program for a small profit while also training and employing tribal members in a building trades skill. From this modest beginning, the tribe began tackling

other ventures, in some cases seeking and obtaining Federal assistance through the

Indian Finance Act. MBCI is now a major economic engine in northeast rural Mississippi, providing a total direct and indirect impact from MBCI and its affiliate

companies of 12,112 jobs, $173M in wages, $16.7M in taxes and $9.1M in rent payments. Currently, the tribe is engaged in the development of its own natural gas

fired electric generating plant. Williams Energy is conducting a feasibility study,

and based on the results, construction could begin in 6–8 months.

Another success story is told by the Confederated Tribes of the Umatilla Indian

Reservation, located in rural northeast Oregon. Their economy was based on natural

resources, primarily fishing, grain and timber. Today, the tribe has diversified into

commercial developments such as a trailer court, a grain elevator, the Wildhorse

Casino, a hotel, an RV park, a golf course, a solid waste transfer station and the

Tamastslikt Cultural Institute. The tribe is now the second largest employer [1,100]

in Umatilla County, following only the State of Oregon. Their operating budget has

increased from $7,559,950 in January 1992 to $94,157,875 in January 2001.

The Southern Ute Tribe, located in rural southwestern Colorado, provides another

model of economic success. That tribe has taken control of its own oil and gas production. In 1992, the tribe established a tribal production corporation [Red Willow

Cooperation], and in 1994 it acquired a majority interest in a gathering pipeline

company [Red Cedar]. In addition, the tribe has expanded by investing in other oil

and gas projects in the west, and is investing its energy fuels revenues into other

commercial enterprises.

Using knowledge gained from managing and operating it’s own reservation companies, the tribe has acquired production properties in Texas that produce 20M

cubic feet of gas per day. It has invested in an offshore well in the Gulf of Mexico,

and has entered into a partnership with the Ute Indian Tribe of the Unitah and

Ouray Indian Reservation and the Dominion Oil Company to explore and develop

conventional oil and gas from the former Naval Oil Shale Reserve No. 2. The tribe

is also evaluating the purchase of shopping malls and a drug store chain in Texas

and Arizona.
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The tribe does not release financial information on their enterprises, but it’s reported that the income to the tribe is in excess of $250M per year. The Wall Street

rating houses of Fitch and Standards & Poor recently gave the tribe a triple A rating on the tribe’s development bonds.

The role of the Federal Government should be to remove obstacles to economic

development [especially those created by Federal rules and actions], create incentives, and provide technical, financial and other assistance to tribes, tribal members

and public and private sector businesses willing to promote economic activities in

Indian country.

The initial priority is for the Federal Government to come together with tribes

to develop a straightforward approach on how we all can work toward the integration of program services and coordinate activities in the pursuit of economic parity

for Indian country. Congress has provided us the mandate and authority under the

Indian Employment, Training and Related Services Demonstration Act of 1992

[Public Law l02–477], as amended; the Native American Business Development

Trade Promotion and Tourism Act of 2000 [Public Law 106–464]; and the Indian

Tribal Regulatory Reform and Business Development Act [Public Law 106–477].

The goal of the subcommittee, I mentioned earlier, is to develop a strategy to coordinate and integrate all available resources from the tribal, Federal, private and

public sectors into one comprehensive approach that will develop businesses, enterprises, and tribal government services and provide meaningful living wage employment in Indian country. The subcommittee has identified 10 major tasks to be accomplished. Each of the tasks is to be examined by a sub-subcommittee for past

studies and recommendations, current working models, available resources, legislative and regulatory authorities, budget and resource coordination, and integration.

These sub-subcommittees are named for the general subject matter of their inquiries, as follows: [1] Tribal Business Development Corporations and Tribal Venture

Capital Funds; [2] Taxation & Incentives; [3] Tribal Economic Development Models;

[4] Indian Finance Act; [5] Tribal Courts; [6] Federal Set Aside Procurement; [7]

Technical Assistance Centers; [8] Natural Resources & Energy Development; [9]

Tribal Infrastructure; and [10] Employment Development.

The first working meeting of the subgroup is being held this week. The? first action was to contact representatives from all Federal programs [HUD, SBA, ANA,

Census, EPA, Energy, et cetera] that provide economic development assistance or

statistical information to tribes and invite them to participate in the effort. The subcommittee is planning on providing its initial findings and recommendations to the

full committee and the participating tribes in October.

BIA’s Office of Economic Development is committed to economic development that

enhances the lives of Indians and stabilizes the future of Indian tribes. In the more

successful tribes and Indian business enterprises around the country, the BIA has

observed some common elements. BIA has noted some common themes where Indian economic development is lacking, and through study and consultation with

tribal leaders, believes that a few initiatives would significantly improve the current

disparity between the few American Indian tribes and businesses that are doing

well, and those that are not.

Ultimately, the relative economic success and vitality of any nation is a public—

private effort that combines the resolve of the government policymakers and the

imagination and appetite for risk of entrepreneurs to create a healthy environment

for enterprise and respect for each others unique point of view. Government will always be focused on the ‘‘common good’’ while the entrepreneur has to be driven by

an anticipation of profits as a reward for it’s risk.

Thank you, again, for the opportunity to speak on a subject that is near and dear

to my heart. I will be happy to answer any questions you may have.
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