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81–564 PDF 2002

S. HRG. 107–639

TRUST FUND REFORM TASK FORCE

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

ON

LEGISLATIVE PROPOSAL OF THE DEPARTMENT OF THE INTERIOR/

TRIBAL TRUST FUND REFORM TASK FORCE

JULY 30, 2002

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

DANIEL K. INOUYE, Hawaii, Chairman

BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

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

FRANK MURKOWSKI, Alaska

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

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 .............................................................. 2

Griles, J. Steven, deputy secretary, Department of the Interior, Washington, DC ........................................................................................................... 3

Hall, Tex, chairman, Three Affiliated Tribes, Fort Peck Reservation, New

Town, ND ....................................................................................................... 10

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

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

Masten, Sue, chairwoman, Yurok Tribe of Indians of California, Eureka,

CA ................................................................................................................... 6

McCaleb, Neal, assistant secretary for Indian affairs, Department of the

Interior, Washington, DC ............................................................................. 5

APPENDIX

Prepared statements:

Griles, J. Steven ............................................................................................... 27

Hall, Tex (with attachments) ........................................................................... 30

Intertribal Monitoring Association on Indian Trust Funds .......................... 45

Masten, Sue (with attachments) ..................................................................... 30

McCaleb, Neal ................................................................................................... 27

Additional material submitted for the record:

Commission on Indian Trust Funds Concept Paper ...................................... 52

(1)

LEGISLATIVE PROPOSAL OF THE DEPARTMENT OF INTERIOR/TRIBAL TRUST FUND

REFORM TASK FORCE

TUESDAY, JULY 30, 2002

U.S. SENATE,

COMMITTEE ON INDIAN AFFAIRS,

Washington, DC.

The committee met, pursuant to notice, at 10 a.m., in Room 106,

Dirksen Senate Building, Hon. Daniel K. Inouye (chairman of the

committee) presiding.

Present: Senators Inouye, Campbell, Conrad, Johnson, McCain,

and Thomas.

STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM

HAWAII, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. The committee meets this morning to receive testimony on the recommendations of the Department of the Interior/

Tribal Trust Fund Reform Task Force as they relate to the reorganization of the Department to improve the management of funds

held in trust by the United States for the benefit of individual Indians and Indian tribes.

Last week the committee held a hearing on the Department of

the Interior’s July 2, 2002 Report to the Congress on the Historical

Accounting of Individual Indian Money Accounts.

The Department’s Report projects that the conduct of a historical

accounting of the accounts held in trust for individual Indians will

take at least ten years and will cost at least $2.4 billion.

Since the time the Department submitted its report, the House

of Representatives overwhelmingly rejected a proposal contained in

the Interior appropriations bill for fiscal year 2003 that would have

limited the accounting of individual and tribal accounts to a 15-

year period.

In addition, the U.S. District Court for the District of Columbia

has agreed to consolidate with the class action lawsuit brought on

behalf of individual Indian money account holders, the Cobell v.

Norton litigation—the seven actions that have been brought by

tribal governments seeking an accounting from the government of

their accounts.

The Department’s Report and these recent developments serve to

provide further context for the recommendations that the committee anticipates receiving this morning.
2

While we understand that a full consensus has yet to be reached

on a number of matters, including the powers and authorities of an

independent Commission, and the establishment of statutory

standards for the administration of the United States trust responsibility, the committee is encouraged by the progress that has been

realized thus far and looks forward to working with the Task Force

and the citizens of Indian country as we endeavor to bring long

awaited resolutions to these matters.

I will now call on the vice chairman of the committee, Senator

Campbell.

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

INDIAN AFFAIRS

Senator CAMPBELL. Thank you, Mr. Chairman.

The Department and Tribal Trust Fund Reform Task Force has

been meeting for quite a long time. It has reached agreement on

a number of issues. There still look to be many areas of disagreement.

Probably more than anything, the parties seem to be quite apart

on the powers and authorities of what will be called the Independent Commission or how independent it should be.

Here we are, 1 month later, and much has happened. On July

2, the Department issues its report on Historical Accounting. On

July 17 this year, the House defeated a provision to limit the

United States accounting responsibility to post-1985, as you mentioned, Mr. Chairman.

On July 21, as you also mentioned, Judge Lamberth assumed responsibility for several of the Tribal Trust Fund claims that have

been filed against the United States. On July 25, this committee

held a hearing on the Report on Historical Accounting.

So, we are making some progress. At the last hearing, I did remind the parties that we have only about 4 or 5 weeks of actual

work. We will be getting out this Friday as most people know, or

I assume we may get out this Friday. It is still a little bit up in

the air. We won’t be back in session for 1 month and I think we

only have 4 weeks or a little over of actual work time.

The task force still has three meetings scheduled for this fall. So,

as I view it, they will not have finished their work before we get

out.

Nonetheless, I believe they are resolving many of the outstanding

issues and that people of good faith from both the administration

and the tribal groups can work to deliver this committee a proposal

that not only has the support of all concerned, but there will be

real reform and trust management for Indian people who have

waited so long and something we can get signed into law.

Thank you Mr. Chairman.

The CHAIRMAN. The panel consists of the Deputy Secretary, U.S.

Department of the Interior, J. Steven Griles; the Assistant Secretary for Indian Affairs, U.S. Department of the Interior, Neal

McCaleb; the chairman of the Three Affiliated Tribes of the Fort

Berthold Reservation of North Dakota, Tex Hall; and the chairperson of the Yurok Tribe of Indians of California, Sue Masten.

Secretary Griles.
3

STATEMENT OF J. STEVEN GRILES, DEPUTY SECRETARY,

DEPARTMENT OF THE INTERIOR, WASHINGTON DC

Mr. GRILES. Good morning, Mr. Chairman, and Senator Campbell, it is a honor to be with you again today to review where we

have been since we last met and to report to you the, I think, significant accomplishments that we have made since that meeting.

Last week the Task Force held its 7th meeting in Portland, OR.

There were a number of earlier meetings that we discussed with

you. As you know, the Task Force has been charged with reviewing

options and proposals to provide, hopefully, a consensus approach

to how we best deliver trust services to the American Indian and

to tribes and individuals.

On June 6, we had met before that, we, the department, had

worked with recommendations of the Task Force. Those recommendations were submitted to Indian country for review. We

held 11 or 12 consultation meetings throughout Indian country to

go and look and listen to what people’s concerns were.

Mr. Chairman, if I could summarize what we heard, I would

summarize those by saying the Federal Government’s commitment

to self governance and self-determination must not suffer as a result of Federal trust reform. This is what people were saying to us,

tribal leaders.

The trust reform must not result in the diminishment of the Government’s trust obligations to Indian people. There is a need for

creation of a high level position within the Department of the Interior who will be the primary individual responsible for ensuring

that trust asset management responsibilities are carried out in an

appropriate manner throughout Interior.

The trust asset management issues must be addressed at the regional and at the agency level of the Bureau of Indian Affairs

[BIA]. But that cannot be one-size-fits-all solutions. Trust reform

must recognize that there are three models for receiving services,

through self governance, compacts, self- determination, contracts,

and direct services from the BIA.

But there is no bright line between fiduciary trust asset responsibilities and other trust responsibilities. We must assure more accountability within the current BIA structure. Management of trust

services and trust resources must be kept at the local level.

We need a clear definition of the trust duties and responsibilities

for management of trust assets. There must be an oversight of BIA

by an entity that has authority to compel and enforce corrective action.

As the above illustrates, Senator, reform of that current system

is not an easy task.

At the Task Force meeting last week, we did, however, reach

agreement as a group to recommend that Congress establish a new

position, an Under Secretary for Indian Affairs, who would be appointed by the President, subject to confirmation by the Senate,

and would report directly to the Secretary.

The Under Secretary would have direct line responsibility over

all aspects of Indian affairs within the Department. This authority

would include the coordination of trust reform efforts across relevant agencies and programs within the Department to assure

those functions are performed in a manner that is consistent with
4

trust responsibility, as well as a number of other duties carefully

hammered out between the Department and the tribal leaders at

the Task Force meeting last week.

It was a very, very important meeting and a very, very successful

meeting. We had some very, lengthy discussions, at times we had

disagreements. But with disagreement, we put that aside and we

reached out to each other, Senator, and I think have been able to

reach agreement on the restructuring of the BIA as a work group.

We had a work group that brought to the full Task Force a proposal which the full Task Force reviewed and asked a number of

questions on. Some of the tribal leaders asked to have some more

time to go back to Indian country and look at that and get some

more tribal leadership input. We, of course, want that to happen.

So, it was a really good consensus meeting on a number of

issues. I think that though many of us have a different view of

what changes were needed, the tribes’ express concern that trust

officers would become involved in the day-to-day activities at the

agency level without being answerable to the Superintendent or

Regional Directors.

At times the differences between us seemed so great that we

could never resolve it in the few days we had, but once we stopped

talking concepts and we really rolled up our sleeves and took the

time to put on the table the tribal real concerns and the Government’s real concerns we were able to develop an organizational

model that I think is to assure that the Federal Government can

exercise its fiduciary trust duty and at the same time ensure that

the tribal governments can be active managers to the degree desired of their own trust assets.

A copy of the consensus reorganization proposal of the working

group is attached to my testimony. The work of the Task Force is

not complete, as you mentioned, Senator Campbell. We are exploring possibilities as a creation of a commission with oversight responsibilities of a trust fund and management and asset development.

We have reached agreement on the agreement to have an independent commission, but we have not reached an agreement on

how that will be and how and what the authorities and duties of

that commission should be. We are working very diligently on that,

on the qualifications for membership, on those duties.

We plan on participating on the work group which the Task

Force has set up to resolve these questions, hopefully to resolve

these questions and continue to reach a consensus on how we move

forward. It is our hope to reach that kind of consensus in our August meeting in Anchorage.

We were also asked by the Task Force Members to work with the

tribes on drafting statutory trust standards and they gave a draft

to us at the meeting last week. These standards that were presented to us will be carefully reviewed within the administration

in preparation for our next Task Force meeting. We haven’t

reached agreement on those trust standards, but we have looked at

them and there is a lot of agreement with a lot of the ones that

they have prepared. We are going to go forward and have those reviewed by our attorneys and by the Justice Department. That was

an agreement we reached with the Task Force members.
5

In closing, I would just want to say, Mr. Chairman, and Senator

Campbell, that from my perspective the leadership that the cochairmen have shown from Indian country and Sue and Tex have

been remarkable. There are a number of Task Force members here

today who spent long hours and a lot of time discussing and analyzing and understanding. It is not something that has come without that kind of effort. But we all are committed to that effort and

I am just very, proud to say that I am part of that effort.

I have Mr. McCaleb with me, Mr. Chairman, if you would like

for him to say anything.

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

The CHAIRMAN. Secretary Griles, I am certain the committee is

most grateful to all of you for your participation. We commend you

for your patience.

STATEMENT OF NEAL A. MCCALEB, ASSISTANT SECRETARY

FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR,

WASHINGTON, DC

Secretary MCCALEB. Mr. Chairman, Senator Campbell, I am not

going to add a lot to the very good report that Secretary Griles provided you, except to make it clear that we did reach a consensus

on option 5 that was contained in the June 4 submittal.

We had five organizational models. Pursuant to the review of

those organizational models and the consultation process around

the country between June 4 and this August meeting, we did reach

a firm consensus on option 5 and defined the position to lead Indian affairs as the under secretary position.

I would just say that I am continually impressed at the good

work that can be done when the members of the Joint Task Force

focus on a particular issue, which we did at this meeting. We were

focused on the somewhat contentious issue of how the organization

worked below the assistant secretary level at both the regional and

the agency level in the delivery of the trust functions.

As Secretary Griles indicated, there was a pretty substantial gap

between the tribal Task Force members and the Department of the

Interior members. But we work all day and into the evening and

about 9 o’clock on Tuesday evening we began to come together. We

had to get some traction on the issue and come together on it. The

work group did, in fact, agree, both the Interior members and the

tribal Task Force members.

It was submitted to the tribal Task Force at home the following

morning. Generally, consensus was deferred until there was an opportunity to vet this proposal before a much wider cross-section of

tribal membership across the country. I think that is representative of how this deliberative process works, not only with the 24

members of the tribal Task Force, but the way they view their responsibility to gain broad consensus and support of agreements before they are actually reached.

We are making substantial progress at each meeting, and although the differences sometimes seem large, at every instance we

have focused on a particular issue, we have been able to reach

some kind of an accommodation with each other, which I think

speaks to the level of sincerity and commitment of all the members

of the tribal Task Force as well as the members of the Department
6

of Interior to reach—not only just find a solution, but find a solution which we can all embrace and which we so sincerely and prayerfully hope will find its fruition in the better management and the

better keeping of the trust.

Thank you.

[Prepared statement of Mr. McCaleb appears in appendix]

The CHAIRMAN. Thank you, Mr. Secretary.

Chairwoman Masten.

STATEMENT OF SUE MASTEN, CHAIRWOMAN, YUROK TRIBE

OF INDIANS OF CALIFORNIA, EUREKA, CA

Ms. MASTEN. [Remarks in native tongue]. Good morning, Chairman Inouye and Vice Chairman Campbell. I am honored to appear

before you again today to discuss the progress of the Tribal Leader/

Department of Interior Trust Reform Task Force.

I would like to take the time to introduce the members of the

Task Force. The tribal leader cochair, chairman and president Tex

Hall; Alvin Windy Boy, chairman Ed Manuel, president, Jerry

Small, Governor, Bill Anoatubby and Tim Martin, chairman Mike

Jandreau, chairman Ron Allen.

From the Department of the Interior, cochair, Assistant Secretary Neal McCaleb, cochair, Deputy Secretary Steven Griles,

Deputy Assistant Secretary, Aurine Martin, Phil Hogan, Tom

Slonaker, Ross Swimmer, and David Bernhardt. These are the

members that are with us today as we address you.

I also would like to take the opportunity to introduce to you the

Yurok counsel members and staff that are with me this morning,

if they could please stand.

I want to begin by thanking Deputy Assistant Secretary Aurine

Martin and especially Deputy Secretary Steven Griles and Assistant Secretary Neal McCaleb for the extraordinary effort and commitment that they have made in working with the Task Force on

trust reform. We feel that we are beginning to develop a cooperative partnership with the Department of the Interior and without

the joint commitment and the dedication of the tribal leaders and

the department we would not have made the progress that we have

made.

To begin, we would like to point out several significant events

that have occurred since the last time we spoke to you. Last week,

Congress reached resolution on the Corporate Accounting Reform

Bill, H.R. 3763. The President is signing the bill into law today.

Among other things, this legislation creates an independent commission that will establish standards and have the power to enforce

those standards to force corporations to report honestly their financial affairs to their shareholders.

The rapid passage of this new law shows that Congress can move

quickly to address problems. We believe that Congress should

make a similar effort on trust reform. We believe it is just as important to hold the Department of the Interior accountable for the

funds and resources that the Department holds in trust for Indian

tribes, American Indians and Alaska Natives as it is for corporations to be held accountable to their shareholders.

If an independent commission can be created by Congress to create corporate accountability for the benefit of shareholders, then
7

Congress can just as well create an independent commission that

will hold the Department of the Interior and the Department of

Treasury accountable for the trust assets they control.

Tribes have the right to expect no less of our trustee than shareholders expect from corporate executives.

Second, just 2 weeks ago, the House of Representatives voted

overwhelmingly against a proposal that would have, among other

things, limited the time period for accounting of trust accounts for

individuals and tribes to 15 years.

We believe this vote sends a strong signal that Congress supports trust reform and a full accounting for Indian trust funds and

trust assets.

The time for moving trust reform legislation is now and we believe that it can be done before Congress adjourns.

Third, and still another important development, just last week

the Court, in the Cobell litigation, agreed to treat cases filed recently by tribes as related to the trust fund accounting class action

that is being pursued on behalf of the individual Indian account

holders.

In essence, this means that tribes that filed these cases can rely

on the rules made in the Cobell case and can expect the Departments of the Interior and Treasury to be held to the same standards of trust funds management for their tribal funds as have been

applied to those departments in the Cobell case.

This event should also a signal the Department of the Interior

that it is in everyone’s interest to work with us toward the development of both internal and external mechanisms that will provide

for full oversight of the management of trust funds and trust resources.

The Task Force has discussed at length what needs to be done

to create true trust reform. Although many details remain to be

worked out, candid dialog, perseverance and mutual accommodation have enabled us to develop a comprehensive proposal that

holds the promise of vastly improving accountability for management of funds and resources held in trust by the United States.

We are developing a system of internal and independent checks

and balances, capacity building, technical support and standards to

create a management structure that greatly advances accountability in trust administration, protects the rights and interests of

tribes, whether they receive direct services from BIA or contract or

compact, and provides the flexibility necessary to respond to the

varied tribal needs throughout Indian country.

While much remains to be done, we are optimistic that the thousands of hours of hard work and dedication, which have been invested in the Task Force, will ultimately produce positive results.

At this stage we recommend that legislative efforts focus on the

creation of an independent Oversight Commission, establish the position of an Under Secretary for Indian Affairs, and codification of

principles to guide the department in its administration of trust

funds and resources.

In addition, we would like to discuss the agreement we are working on with the Department regarding the organization of the Bureau of Indian Affairs [BIA].
8

I will discuss the first two matters and Chairman Hall will discuss the remainder.

No. 1, the creation of an independent commission with oversight

of all aspects of trust funds management. As we testified at the

last hearing, we have proposed that an independent commission be

created. The commission, which in the tribal proposal exists outside

the Department of the Interior, would be composed of five members, three of whom would be members of federally-recognized Indian tribes.

All of the commissioners would be full-time and would have experience in administration, regulation, accounting or legal aspects of

trust management or have comparable experience in tribal government.

The commission should have the power to, among other things,

ensure that regulations are enacted that set minimum requirements which the Department must meet in carrying out its responsibility for all aspects of trust funds, management including the

sale and lease of trust assets;

Investigate acts or omissions to act by the Department that are

in violation of the minimum trust standards.

Order the Department to take specific actions to correct any acts

or omissions to act regarding trust funds management;

Audit any and all trust accounts as managed by the Departments

of the Interior and Treasury; and

Review the adequacy of the Department’s budgets to carryout its

trust funds responsibility.

The Department of the Interior agrees that we need an independent commission, but has questions and concerns about the regulatory and enforcement authorities. Also, at this point, they do not

want the commission to be created outside of the Department of

the Interior.

The Department does agree that the commission should be able

to perform audits and report to Congress about the adequacy of the

Department of the Interior budgets. Last week the Department

made a new proposal to the Task Force that the tribal members

of the Task Force are still reviewing.

The Department has proposed that the office of Comptroller of

Currency within the Department of Treasury be given the authority to investigate whether the Department is managing trust funds

according to the standards that the OCC generally sets for commercial banks.

The Task Force is considering the proposal made by the Department but we need more information about their ideas. The key to

the discussion about an independent commission is adequate authority to enforce trust standards that set forth what must be done

by the Department to carryout its responsibilities to trust beneficiaries.

We have also agreed that we do not want the independent commission to interfere with the right of a tribe to manage and govern

its own resources, and we want the commission to protect tribal

self-determination.

Our discussions lead us to believe that the primary failure of the

1994 Trust Reform Act was that it did not provide the Office of
9

Special Trustee with sufficient powers to fully carryout trust reform.

This perhaps is the main reason we are still here discussing this

issue today. This problem must be corrected once and for all if Congress really wants trust reform to occur.

We have attached a discussion draft of the tribes’ legislation for

the commission. As we continue our negotiations with the Department, we are requesting your input, as well as the input of tribes

on this critically important issue.

No. 2, the creation of the position of Under Secretary for Indian

Affairs.

General consensus was reached with the Department about the

need to create a new position within the Department of the Interior

above the level of the Assistant Secretary for Indian Affairs who

would answer to the Secretary on Indian matters.

This represents a part of option 5 proposed by the Joint Task

Force in the report provided to the Secretary on June 4, 2002. The

Department and tribal leaders have reached consensus that the

new position should be created as an under secretary rather than

a deputy secretary.

The position of under secretary fulfills the management need of

the Department to have a full-time official who is responsible for

coordinating trust efforts across all Interior agencies, including the

Bureau of Indian Affairs, Minerals Management Service, the Bureau of Land Management, the Office of Special Trustee, the Bureau of Reclamation and the Office of Hearings and Appeals.

We are close to a consensus on a full specification of the duties

of the under secretary and they are listed in our testimony. The essence of this position is that it will have the direct line authority

over all aspects of Indian affairs within the department, including

the responsibility for trust reform across all the relevant agencies

and programs to ensure that functions are performed in a manner

that is consistent with trust responsibility.

This includes accounting, records management, establishing policies and systems, budgets and strategic planning.

In conclusion, as we turn now to Chairman Hall for his testimony, I would like once again to thank Secretary Norton, Deputy

Secretary Griles, and Assistant Secretary McCaleb for all the hard

work that they and their staff have put into the trust reform effort

of the Task Force.

In addition, I would like to thank the tribal leadership on the

Task Force and their tribes for the money, time and energy they

have put forth.

If we maintain this serious level of effort, we firmly believe that

we can reach some policy decisions that will put the reform effort

on track to a successful conclusion. I would like to also thank the

committee as always for your continued interest in the concerns of

Indian Country.

Thank you.

The CHAIRMAN. Your statement gives us much hope.

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

The CHAIRMAN. Chairman Hall.
10

STATEMENT OF TEX HALL, CHAIRMAN, THREE AFFILIATED

TRIBES OF THE FORT BERTHOLD RESERVATION, NEW

TOWN, ND

Mr. HALL. Senator Dan Inouye, Senator Ben Nighthorse Campbell, and Senator Craig Thomas, thank you for this opportunity to

present testimony on behalf of the Tribal Task Force. I am now cochair of the Task Force. I would also like to begin by reiterating

the testimony in support for our cochair, Sue Masten, for the creation of an independent commission to oversee trust reform.

I would also like to thank the Department, Deputy Secretary

Griles and Assistant Secretary McCaleb, for the work they are

doing. It is because of that work that we are making progress and

we have them to thank for that as well as Secretary Norton. We

are also heartened that this administration understands that there

needs to be an independent oversight mechanism for the Indian

trust.

The Indian trust within the Department of the Interior is the

only trust in the United States that is not subject to any type of

independent regulation or oversight. We believe that an independent commission must have the authority to set specific standards

when the Department’s standards are deficient and to enforce the

trust standards when needed.

Mr. Chairman, we cannot have a trust system where the duties

of the trustee are self-defined by the Department that most often

is concerned only about defending against liability. We need an

independent commission to perform this task because it is very

clear that the Department will not do it on its own.

In regards to trust standards, we, the Task Force also firmly believe that Congress should provide direct guidance to the Department and to the commission about the fundamental trust responsibility to Indian tribes and the specific responsibility for trust

funds and trust resource management.

The right way to solve this problem is to first clearly delineate

the duties and responsibilities and then to create the systems, the

policies, staffing and training that will be necessary to carryout

those duties and functions.

Moreover, we are very concerned about the tendency of the Department to constantly await the outcome of some pending litigation before they will begin to address those responsibilities.

In the previous administration, it was the Cobell and the Department’s response was, We will work with you when Cobell is resolved in court. In this administration, it is the White Mountain

and the Navajo cases. We will know what our responsibilities are

after the Supreme Court decides.

Time and time again in our discussions we have bumped up

against this wall where the department waits the outcome of some

future litigation that will relieve them of their trust responsibilities.

Mr. Chairman and committee members, there will always be litigation. It is part of the American system. So, we can not wait for

the end to all litigation before Congress takes action to fix the Indian trust system. Moreover, we do not want to wait around to find

out if the lawyers at the Department of Justice can convince some

court to undermine that trust responsibility.
11

Congress should act now to define the trust responsibilities and

legal principles that the Department must follow in carrying out its

management of Indian trust funds and Indian trust assets that

generate those funds.

Attached to our testimony you will find a discussion draft for legislation that contains general findings on the broad trust responsibility to Indian tribes and also specific language on the duties for

trust asset management. The general findings are taken from the

case law and are important to show the origin of the trust responsibility.

The specific duties are taken from the trust principles in Secretarial Order 3215, called Principles for the Discharge of the Secretary’s trust responsibilities which has been incorporated into the

Department’s manual. In fairness to the Department, we should

note that we have only recently begun given this proposed language and giving it to them.

In addition, the language is still under discussion by the Task

Force members and tribal leaders in general. The language comes

from an existing source within the department and has already

been through the review process at least one time in the past.

Moreover, these principles are not new, but have been applied in

the private sector for many years. We expect that this proposal will

have to be discussed and refined as part of the ongoing process, but

felt it was important to begin discussing this issue today with the

committee.

In regards to the oversight of the trust responsibility at the regional local level, another essential component of trust reform is internal oversight of the Department of the Interior as it carries out

its trust responsibilities.

We do have charts that are listed there that show that proposed

reorganization. This reorganization is at the heart of the discussion

about the Department’s proposal to create BITAP, the Bureau of

Indian Trust Assets Management in November that resulted in the

formation of the Joint DOI-Tribal Trust Reform Task Force.

The principal goal of the Task Force is to have a single point of

decisionmaking at the level at which the tribe interacts with the

BIA. Whether that is at the local level or at the regional level coupled with an adequate internal oversight mechanism which will

seek to ensure that trust funds management functions are being

carried out appropriately.

To accomplish this, we propose that the organizational realignment will involve all levels of the Department of the Interior. At

the highest level, the Task Force proposes to establish a new under

secretary for Indian affairs to coordinate and unify policy direction

for the BIA and to all other agencies operating programs or providing services to Indians within the Department of the Interior as

discussed above.

An Office of Self-Governance and Self-Determination report to

the Under Secretary to advance long-standing policies that support

greater involvement of Indian tribes and managing programs for

the benefit of tribal communities.

A new Office of Trust Accountability would report to the Under

Secretary to provide internal control and quality assurance in trust
12

administration throughout the department as well as ensuring

timely resolution of problems.

Within the BIA, a trust services section will provide technical

support for field operations, trained services for BIA and tribal

staff and controls to ensure that programs are administered in accordance with the defined standards for trust administration, and

to help avoid problems before they reach serious proportions.

The trust services section would also be responsible for operating

trust fund accounting, cash management, appraisal and accountability functions. The structure will retain a single line of authority

for delivering programs and services to tribal communities in accordance with overwhelmingly tribal preferences.

However, substantial changes to current operations will have to

occur. Adequate staffing and funding levels will have to be sought.

Personnel will be well qualified to perform these responsibilities

and technical assistance will need to be readily available and performance standards reflecting modern practices of trust administration will need to be established and enforced.

This is the proposal that has been developed by a small working

group that was mentioned involving tribal representatives and Department of the Interior representatives. The proposal needs to be

fully considered by all the tribal members of the Task Force before

a full consensus can be obtained.

However, our differences are now relatively narrow on these

issues. As we pointed out at the last hearing, the key to this issue

has been the tensions created by a lack of resources in both trust

management and in tribal services. While we cannot fix all the resources issues, we do believe the proposal under consideration by

the Task Force provides the most economical way to resolve the

problem while still providing adequate oversight authority to ensure that trust reform in this area is carried out.

Future efforts: We fully recommend that we cannot resolve all

the issues in trust reform in what is left of this legislative year.

A future effort, with the assistance of this committee and Congress,

will be needed to stem the tide of including fractionalization of

ownership that exponentially increases the complexity and cost of

Federal administration and deprives Indian beneficiaries of the full

potential benefit of those resources and undermines the ability of

tribes to protect communal resources like water, fish, wildlife and

jeopardizes the security of our reservation homelands by eroding

tribal sovereignty.

The Task Force needs to continue its efforts to resolve our differences in the proposed legislation. We will next be meeting in Anchorage in late August, just before the end of the Congressional recess and will seek to exchange or refine our proposals on the independent commission, on our statement of trust responsibilities and

legal obligations and make the final adjustments to the duties and

responsibilities of the Under Secretary.

In the meantime, we are placing our trust in the expertise and

the political acumen of the Senate Committee on Indian Affairs to

assist us to move legislation forward this year. We believe it is certainly possible to get this legislation passed by Congress yet this

Session. If Congress can pass, in a few short days, a bill creating

an independent board providing for financial accountability of cor-
13

porations, it can certainly help us pass legislation or provide for accountability by the Department of the Interior and the Department

of Treasury to American Indians and Alaska Natives.

We look forward to working with you and your staff to move this

effort forward as quickly as possible.

Mr. Chairman, the tribal leadership is encouraged by the

progress of the Task Force and recognizes that this process is far

from complete. As the department and tribes face the challenge of

implementation of trust reform, we urge your support to ensure the

necessary resources are available to support and complete the work

of the Task Force and to continue this throughout the trust reform

transition period.

So, in conclusion, we believe we made significant progress toward

a legislative package since the last hearing held on this issue and

the tribes believe they have most of the legislation ready to go and

trust that the committee will use its best judgment to assist us in

moving this forward.

We also believe that we have reached consensus or at least close

to consensus with the Department on a number of issues. We most

respectfully ask that you consider how we can yet resolve these

issues in this session of Congress and again we thank you for the

opportunity to present this.

Mr. Chairman, in closing, I am just concerned about a lot of the

older folks, a lot of the tribal members that are 70, 75, 80 years

of age and those that are passing on every months throughout Indian country. This has been over 125 years since this trust has

been resolved.

We urge Congress to move with this session to help us create

this legislative proposal so that many more elders do not pass on

without this trust being fixed for them. And we have the capacity

within ourselves.

Thank you.

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

The CHAIRMAN. As we go on to statutorily establish trust standards, would you recommend that we embrace the standard applicable to private fiduciary. If not, what sort of standard would you

suggest?

Mr. GRILES. Mr. Chairman, I think that we would like to work

with you and the tribal leaders in taking the draft of trust principles as well as some of the findings that they have prepared and

use that to try and articulate what would be those appropriate

standards within the context of how you move forward.

We believe, I think the four of us sitting here, believe that we

have an opportunity to come back to you with a consensus approach on how to best do that. There are many issues that are

raised as we discuss these. We need other parties who are not at

this table here, but other tribal leaders as well as others in government to assist us to assist you in defining that.

That is my request. I think we can do that. I really believe we

have bridged a lot of water. We bridged a lot of gaps and there is

a lot of trust among all of us that we can do that.

The CHAIRMAN. Chairwoman Masten, do you think we could resolve this in Anchorage?
14

Ms. MASTEN. I think that as we presented this for the first time

for consideration at our last session that there was general agreement in the principles, in the general principles that was the specifics in having the opportunity to fully look at them from the tribal

perspective as well as the department. That was the only issue at

hand.

It was the first time we had a place at the table before us. I believe that we will make substantial progress the next session, or

at least I am optimistic that we will.

The CHAIRMAN. Mr. Secretary, Secretary Griles, your prepared

statement speaks of restructuring the Bureau of Indian Affairs.

What is the nature of the restructuring that you speak of?

Mr. GRILES. I am looking to see if that is the right chart that is

up there.

The CHAIRMAN. I cannot see it from here. We have been told

there is something in here.

Mr. HALL. It should be in the attached testimony as well, Mr.

Chairman.

Mr. GRILES. Mr. Chairman, this is an overview chart, if you will.

It doesn’t have all the complete details, but I think fundamentally

what this chart reflects is on the left side, under the Under Secretary, we have the Director of Trust Accountability. This is an office with something that the tribal work group, individual members

of the work group came up with and this is their idea.

We have endorsed this kind of approach. Attached to this, I

think, are some duties and responsibilities that talk about what

each of these members are to represent.

The fundamental thing, I think, below there, if you will, is the

Office of Trust Services and the trust evaluation that we put on

here. What we are attempting to do is assure that in the IMM account holders and the tribal trust responsibilities that we have

qualified individuals as a trustee who, you know, with a high degree of care and skill and loyalty; that they are administering our

trust obligations to Indian country.

We think that with this approach and with the consensus we

have reached that we can make that responsibility defined in such

a manner that the future will be fundamentally different than the

past. That is what we set out to accomplish here with the tribal

Task Force.

The CHAIRMAN. Am I correct to assume that the Under Secretary

is the Under Secretary of Indian Affairs?

Mr. GRILES. That’s correct, sir.

The CHAIRMAN. Chairwoman Masten, do you go along with this?

Ms. MASTEN. We have agreed in consensus between the Department of the Interior and the tribal leadership for everything above

the Assistant Secretary of Indian Affairs. We have agreed in concept for everything below, but we are still fleshing out the duties

and responsibilities, so we are still working on that. It is an ongoing process.

The CHAIRMAN. In your best calculation, how much would this

cost?

Mr. GRILES. That is a very good question, Senator. We are evaluating that. If I could answer the question this way: We have two

things ongoing that are part of the Task Force effort. We have
15

maintained and kept the consulting group, EDS on board to help

us look at what is the business that we are currently conducting

in Indian country today, that is, as is business.

We have set up a task group of tribal leaders and experts within

Interior. I call them experts because they are becoming extraordinarily knowledgeable about all of those aspects. Out of that group

will come a report to us, the Task Force, and we will hopefully

have process changes. Out of those process changes will also come

a resource need identified as to what our total resource needs are,

but specifically to these offices of trust services and trust evaluation.

I don’t have a number, but I don’t see it being a huge number

in the sense of government. I see it being a number of trust evaluators that could be in the range we have 85 agency offices; I don’t

think we need a trust evaluator in every office. We have to evaluate each of those and determine if we need one there or can we

work with the regional structures and set up some trust centers,

maybe three or four trust centers that would be around the country

that would provide the resources and activities.

So, we are formulating that as we speak. We are working and

we are going to present some plans to the Task Force about how

we see this working, duties, responsibilities, and resource needs. I

don’t see it being a very large number in the traditional sense. I

think it is a number that hopefully you and the rest of Congress

will believe it is very important to do.

One of the things we have been able to do, Senator, is that Office

of Management and Budget has been at each of our Task Force

meetings. They have sat there. They listened. They comprehend it.

They have made great input. So, we hope that we are making those

kinds of steps also as we go forward so the administration in totality is working with the tribal Task Force in identifying these resources and functions and duties.

Ms. MASTEN. And Senator, it is one of the priorities for the Anchorage meeting, to review the budget.

The CHAIRMAN. In your statements this morning, for example,

Ms. Masten, you spoke of the importance of the independent commission and felt that the Congress should immediately focus ourselves upon the enactment of such a measure to establish this.

Are you suggesting that we move as you progress or do we wait

until the whole package is ready?

Ms. MASTEN. I would ask that you work closely with us because

we are adamant that an independent commission is necessary. I

don’t know that we will make any further progress with Interior

on whether that position should be advisory or inside or outside of

Interior.

But the tribal leadership believes strongly that this commission

needs to be outside of the Department and that it needs to have

sanction and enforcement capabilities.

The CHAIRMAN. I realize that position, but do you want the Congress to establish this separately and proceed with other facets of

the measure or do you want the whole package?

Ms. MASTEN. We would want you to move as quickly as you can

on the issue. If it is before we complete the other items, then we

would request that you do that.
16

The CHAIRMAN. Do you have any thoughts on that, Secretary

Griles?

Mr. GRILES. Well, Senator, I think that there are some fundamental questions of both legal, constitutional as well as pragmatically about how sanctions could be issued against a government agency from another government agency. We just have to

work our way through this.

We need your help. We need the staff’s help in thinking through

other ways. We have been trying to be very creative. We haven’t

even talked to the Department of Treasury about the idea we presented last week to the Task Force and the Task Force has agreed

to consider that.

So, one of the things we are going to do between now and Anchorage is come back and say, okay, we spent a little bit of time

talking with Treasury about this. Does this have merit? Because

that is where the banking industry and all gets its monitoring and

standards that are adopted. So, we are trying to be creative. We

understand the essence of what the Indian country wants, and that

is assurance that the past is not repeated in the future.

Mr. McCaleb and I and the Secretary would not be dedicating

this time to this if we thought that was going to happen. So, we,

too, are looking for the best means to assure that the future is

much different than the past.

The CHAIRMAN. Secretary Griles, two cases were mentioned, the

Navajo case and the White Mountain case, both pending in the Supreme Court. Would the Department of the Interior be willing to

stay the case until we resolve this trust matter?

Mr. GRILES. Senator, I don’t represent the U.S. Government in

its totality. That is a decision that the Justice Department makes

on our behalf. I think one of the briefs has been filed already. The

other one is scheduled for briefing, I believe, in the next few weeks

or maybe the end of the month or early September. I am not sure

what the correct answer from the government is on that, Senator,

I would be happy to explore it and get back and talk with you

about it.

This is not something that I am in a position to respond to today,

sir.

The CHAIRMAN. I am certain the committee would like to know.

At this point, may I yield to the Vice Chairman?

Senator CAMPBELL. Thank you, Mr. Chairman.

You said right from the beginning of this that we shouldn’t move

any faster than the Task Force moves. Those things that the Task

Force agreed on we have been trying to frame up in some bill. But

I have to say that we are going to be out and we are coming back

around September 2 and we are out about 4 weeks after that.

You have one more meeting while we are in session and two

more after we are out. If you think we can move forward and get

a bill signed in that amount of time, you have more confidence in

this place than I have. I have been here for a while. But I am looking forward to the results of the Alaska meeting.

I was looking at the organizational proposal. Since we have been

talking so much about the commission, if we were going to diagram

the commission and put it on there, where would it be, right up

here above the secretary?
17

Mr. HALL. Senator Campbell, she will flip the other chart and it

will show.

Senator CAMPBELL. Oh, I see, okay, top right. As I understand

the tribal position, this commission would have oversight, so I assume some enforcement authority, subpoena authority, I believe I

read that in the notes, be able to promulgate rules and regs and

other powers.

I would like to ask Mr. Griles, what specifically is the disagreement with this? Does this detract from the authority of the Secretary?

Mr. GRILES. I think it has that potential to distract from the authority of the Secretary in the sense of within normal course of

business, who and what are those standards that one has to respond to? We are talking about sanctions against individual government employees who have multifaceted duties and responsibilities today.

Unlike, say, a banker or an accountant who has a defined duty,

it is defined as being what it is, a single duty, when a government

agency holds the responsibility, it is accountable to the Congress,

we are accountable the courts in some instances.

Senator CAMPBELL. Tell me the difference, in your view, of what

other commissions have, like the Federal Home Loan Bank Board

or the Comptroller of the Currency. I believe there was something

in your testimony that dealt with that, that might be a model.

Mr. GRILES. I think the fundamental difference is they are regulating a private entity whereas here we are trying to regulate a

government entity which has responsibilities. But, I think, Senator,

we, too, are looking for how to accomplish the objectives that Indian country has told us they would like to see us accomplish and

as the Task Force has.

Senator CAMPBELL. The June 4, 2002 report for the Secretary

prepared by the Task Force contains some of what were called

cross-cutting principles. One of the principles seeks a definition of

exactly what the Department’s fiduciary responsibility would be.

Is it your view that the tribes and the Congress should await the

decisions of the Supreme Court this fall? Senator Inouye, I think,

alluded to that, before we take any action?

Mr. GRILES. I think that Congress always has the power to act,

to define what our trust obligations and responsibilities are. We are

guided by the previous statutes. We are guided by the treaties, the

laws, the rules and regulations. We are guided by the departmental

handbook that has been put in place that defines trust principles.

So, Congress obviously has that authority if it wishes to define that

trust relationship differently.

Senator CAMPBELL. Maybe to Chairman Hall and Chairwoman

Masten, since November 2001, how would you compare the amount

of consultation that has occurred since then? More sparks in the

beginning and more cooperation now, I would hope?

Mr. HALL. Sparks in the beginning, cooperation now and a little

bit of sparks now.

Senator CAMPBELL. A little bit of sparks now.

Mr. HALL. Yes, Senator Campbell; it is ongoing. It is a relationship. We are not going to agree on everything.
18

Senator CAMPBELL. Yes; and I guess that is one of my concerns

about trying to push a bill too fast before we have most things in

agreement because you are going to have to go back and speak to

somebody else. I mean let us face it, all tribes are not in agreement

with all points the Task Force agrees to.

It is going to be difficult, I think, if we try to move this too fast,

and then you go back to the people you have to consult with or be

accountable to, individual tribes, are you confident that they are

going to support the decisions that you have agreed to as a member

of the Task Force.

Mr. HALL. One hundred percent confident, Senator Campbell,

that the tribes have agreed because we had consultations and they

all wanted an independent oversight commission. The Task Force

agreed in consensus, as was mentioned, from the Assistant Secretary forward.

The tribes want legislation and they want to move it in this Session.

Senator CAMPBELL. There is the law of possibility and the law of

probability. Anything is possible, but I have to tell you, I think it

is improbable that we will be able to get it done.

Ms. MASTEN. Senator, I just wanted to add that there has been

more consultation with the tribes since November on trust reform

than has occurred in the past. But you are correct, although we

heard loud and clear from Indian country on several of the points

that we reported to you today, there is still a lot of work that we

accomplished in the last session and that we will accomplish in the

next session that we also need to go out to Indian country for consultation on.

Senator CAMPBELL. What if you can’t reach a resolution on the

commission and we put something like that in a bill and we get

a veto threat of something? Have we accomplished anything?

Mr. HALL. Senator, the Task Force is committed to working on

this. This has got consensus in Indian country. It is a tribal caucus

proposal. It has the independent commission. It has been debated

with the tribal folks throughout all these months, so we are 100

percent.

Senator CAMPBELL. I understand that, but the Task Force doesn’t

sign the bill into law. That is why I think if we don’t reach some

consensus, we are going to run into a brick wall even if we could

get it passed through the Senate and the House and get it downtown.

Mr. HALL. The Task Force is committed to working and helping

with the political process.

Senator CAMPBELL. I see. Thank you, Mr. Chairman.

Ms. MASTEN. But Senator, I would also hope the President, as he

considered the commission for the corporations and being responsible to the shareholders, would also have the same commitment to

the tribal leaders and to the individuals on trust assets in accountability.

Senator CAMPBELL. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you. Although it might be convenient to

equate the commission that we are discussing now with the commission that Congress enacted, in the case of the Congressional enactment of the recent commission, it was in response to an unsta-
19

ble and volatile market, that if something had not been done immediately, we would have had some real problems on Wall Street.

Second, with the almost never-ending parade of misdeeds, something had to be done immediately. I, for one, on a measure of this

magnitude, join my vice chairman in trying to suggest that we be

a bit more careful here.

I know that you want legislation before we adjourn, but the time

is not on our side. One of the worst things we can do is to have

a lame duck session coming back after the elections. Then you will

have members who may not be responsible to their constituents

participating in policy making and the passage of measures.

So, it might take a little while longer, thus my question: Mr. Secretary, you spoke of the Anchorage meeting. Do you have any

timeline as to when this committee or this Congress may be able

to study a finished product that the Task Force has come forth

with?

Mr. GRILES. Mr. Chairman, I think the Anchorage meeting will

give us a real indication of how many daylight there continues to

be between us and the tribal representatives. I think on the legislation, if one wanted to enact the under secretary, we would be in

a position to provide the drafting services to the committee this

week and some of the other things.

As far as the remainder of the organizational change, besides the

commission, I don’t think you would want to put in legislation

below the Assistant Secretary. I would think you would want to

keep that out of statute and let that be part of the administration

of how it organizes it with the concurrence of Congress that we

submit organizational proposals up here and the committees review

them, but you don’t enact those into statute.

So, we think that the only issue that is probably keeping us from

reaching a consensus is the commission, its duties, roles and responsibilities and maybe some of the findings and trust principle

issues that we have got to review and look at.

So, it really is dependent upon the committee’s desire, as to how

much you want to enact. If there are other things we need, the

Task Force at the last meeting identified other legislative issues,

the fractionalization issue that Chairman Hall spoke to. We really

need your assistance and help to get that very complicated issue

addressed in the future, because no matter what we do on trust reform, no matter how hard we try to work, if we don’t deal with that

issue, Senator, this program will never be in a position where it

can truly be administered in a manner that is efficient and effective and we have really good accountability.

The CHAIRMAN. I gather from this discussion that a major problem may be the commission. Does the Department of the Interior

have an alternative proposal?

Mr. GRILES. Senator, we have suggested to the tribal members

some duties and responsibilities that we have agreed on, auditing,

reporting to Congress, those kinds of things. So, there are things,

we believe, that can pass the necessary standards that we believe

within the executive branch——

The CHAIRMAN. Can we study your proposal in writing, say what

would constitute the membership, the duties and responsibilities
20

and powers? We would like to compare that with the one the tribal

leaders have come forth with.

Mr. GRILES. I think within a few days we could give you that.

It is not quite as clean a presentation as it needs to be. But we

will endeavor to do that before you go home, sir.

The CHAIRMAN. Who knows, the cochairman of this committee

may look it over and come up with a solution.

Mr. GRILES. We hope you can, sir.

The CHAIRMAN. You can never tell.

Senator CAMPBELL. Mr. Chairman, may I interject one question?

The CHAIRMAN. Please do.

Senator CAMPBELL. Perhaps Mr. Griles does not know, and I certainly don’t, perhaps you do. But is there in any other Federal

agency in the Federal Government, of all the departments, is there

any commission in place now that has this similar authority or latitude?

Mr. GRILES. Senator, I am not aware of one that has that kind

of latitude and authority over another Federal agency as this is envisioned. We have searched, along with the tribal reps and the tribal reps have attorneys who have been looking.

So, we have looked for models throughout the Government to see.

Some of the things we have fashioned come from some that we

have found. So, the things we will be presenting to you will be

based on some of the previous successes that have been adopted.

Senator CAMPBELL. So, the committee, I guess, can assume that

your opposition really isn’t to a commission; it is the authority of

the commission. You seem to be of the mind that a commission that

has an advisory capacity is not bad, but one that has the authority

to oversee, direct and so on is much worse. Is that correct?

Mr. GRILES. That’s correct, Senator. I think an advisory commission, that is not an issue. We could do that and concur in that easily. It is the expanded role of sanctions and the ability to take enforcement actions against employees that concerns us. How do you

do that as an independent body within an executive branch?

We are trying to figure that out.

The CHAIRMAN. Mr. Secretary, do we need legislative authority

to establish the office of under secretary and the office of self-governance and self-determination or can the Secretary, Ms. Norton,

do that right now?

Mr. GRILES. We need the authority for the under secretary, Senator. We have, and I am going to use a number, six or seven assistant secretaries that are established by statute and one or two

which are named specifically to that title, but we do not have the

authority, as we have been told by a legal review of this, to establish the under secretary position without statutory inclusion.

The CHAIRMAN. Should the life of this Task Force be extended?

Mr. GRILES. Mr. McCaleb and I have found this to be a useful

dialog and I think I can speak for him on this and it has been a

very, very worthwhile effort. There is so much more work to be

done. I mean we have only scheduled three more consultation

meetings, but there are about three or five, maybe more than that,

subcommittees that are working as we speak today throughout Indian country.
21

So, this new Task Force can and should probably have a longer

life than this review of the organization. Once we get an organization agreed to, it is the whole level of how you manage it, what are

the principles, what is the staffing? We have the fractionation.

We have a new group. A new subcommittee of the Task Force

that has been set up on fractionalization. They are going to meet

next week, I believe it is, or the week after next. There is just a

lot of work that the tribal leaders have dedicated. I mean they are

not leaving home and spending a huge amount of time to do this

for us and with us. We have a lot of employees who are away from

home also.

The long answer to your short question is, yes, I think we do.

The CHAIRMAN. Chairwoman Masten, do you agree or disagree?

Ms. MASTEN. We agree. It was a principle that the Department

and the Task Force agreed to a couple of months ago that it is important as we move forward with the implementation of trust reform that tribal leadership be actively engaged and we insure that

consultation occurs in Indian country.

The CHAIRMAN. Senator Conrad, do you have any questions?

Senator CONRAD. I do, Mr. Chairman. First of all, I thank you

and our cochairman for holding this hearing. I thank the witnesses,

and a special welcome to Chairman Tex Hall of my home State,

somebody that we have high regard for and we are very pleased

is actively involved in the search for a solution.

I would like to turn the attention of the witnesses’ to the question of the individual Indian money accounts. Perhaps, you could

give us, Mr. McCaleb, if that is appropriate, an update on where

we are.

I would like to preface your response by talking about the events

that occurred at Standing Rock where they had been doing the

inputting of the documentation for those accounts with respect to

that tribe and then were told that was all going to be centralized

and taken away from them, leading to a loss of jobs and a very

strong negative reaction from the tribal leadership there as well as,

I think, the tribal membership.

I think it was not well received. My understanding is all of that

has been put on hold by the lawsuit. But perhaps there is more to

know than that. Could you give us an update on where things are

with the individual accounts?

Mr. MCCALEB. Yes, Senator; one of the things that the Task

Force has done is create a special subcommittee on as-is business

processes. It is done in cooperation with Electronic Data Services

to determine exactly how we are doing business at the agency level

right now and the regional level in the delivery of these services.

We are translating that into areas that we see that need to be

improved or enhanced. The report of this committee will be very influential of any changes that are done at the agency level.

We have agreed in the tribal Task Force on two guiding principles. One is that our organization within the BIA needs to be

such that trust review and trust services are delivered at the level

where they originate. That is largely at the agency, as you have indicated about Standing Rock.

Second, that there must be full and timely accountability. Those

are two broad principles. We are trying to incorporate that. There
22

is a management organization chart over there that represents

some tentative agreements that have been reached by the tribal

Task Force and the department participants in this joint committee.

We came to that agreement in a work group last week, very late

in the evening. It has been submitted to the tribal Task Force at

large for approval. They wanted to vet that before a wider crosssection of leadership.

I guess the shorter answer is, I think that is what this Task

Force is about, trying to determine the most effective way to deliver these services at the agency level where the work originates.

Senator CONRAD. Has there been any further update of the funds

that could not be identified? That is, with the individual money accounts there were funds that could not be accounted for. Is there

an update with respect to those funds that could not be specifically

accounted for?

Mr. MCCALEB. The special trustee has been working with the

BIA and the Office of Trust Funds Management to define the extent of that. I am not aware of the outcome of that at this point,

but that is an ongoing effort on the part of the special trustee.

Senator CONRAD. Mr. Chairman, if I could ask one other question

on a subject that is related, I held a hearing on what happened to

the J Tech funds of the Standing Rock Tribe. During the course of

that hearing, we were advised that money had been drawn down

for the purpose of building schools, $12 million for the stated purpose of building schools. We found out in fact that none of the

money had been used for building schools, but instead was being

used to backstop accounts that were individual loans that were

made, unsecured loans in that amount.

In fact, we are now being told it may be much more than that.

It went out by the way of individual loans, unsecured.

In that circumstance, we learned that Cora Jones, who was the

representative of the BIA that had the authority to release those

funds, had released them without any evidence that they were

going to be used for the purposes indicated. That is, there was absolutely nothing that demonstrated the money was going to be used

for the purposes intended by the legislation that passed here.

Mr. McCaleb, can you assure us today that Ms. Jones is not in

a position of authority over any of those funds going forward?

Mr. MCCALEB. The answer to your question is yes.

Senator CONRAD. There is an ongoing investigation by the Department, is that correct?

Mr. MCCALEB. Yes; by the Office of Inspector General of the Department of the Interior.

Senator CONRAD. By the Office of Inspector General? Can you

give us any update with respect to that investigation?

Mr. MCCALEB. No; not really while the investigation is still in

progress. I received a preliminary report at the launching of the investigation which basically supports everything that you determined in your hearings; that these funds which were dedicated for

other purposes were utilized to collateralize or secure individual

loans, which was completely beyond the investment plan on which

the funds were released.
23

Senator CONRAD. Well, I would just say that was a hearing by

this committee in which we discovered this. I would hope that follow-up would be provided to this committee. This committee played

a central role in securing those funds. Those funds were secured for

very clear purposes.

I think it is essential to the working of the committee that they

be advised upon the outcome of that investigation.

Can you assure us today that will be done?

Mr. MCCALEB. Yes, sir; as soon as I have a substantive report

from the Office of Inspector General, I will share that with this

committee.

Senator CONRAD. Well, I thank you. I would just say to the chairman, Mr. Chairman, this is a matter of significant concern to me,

to, I think, to this committee. It is of grave concern to the members

of the Standing Rock Sioux Tribe, because we provided, you will recall, $90 million in compensation for land that was taken and never

appropriately compensated for. But we provided the compensation

pursuant to the recommendation of a commission during the

Reagan Administration.

Now we find out that some of that money has been used for purposes other than those intended, and perhaps a very substantial

part of the money. This is something that we simply must pursue.

I want to thank the chairman and I want to thank Mr. McCaleb

for those answers. We will be looking forward to your additional report.

The CHAIRMAN. Thank you very much.

Chairman MCCAIN. Senator MCCAIN. Thank you very much, Mr. Chairman. Thank

you for holding this hearing.

Mr. McCaleb, Mr. Griles, are you aware that Judge Lambeth has

said that he will take on the various suits by the individual tribes?

Are you aware of that?

Mr. GRILES. Yes, Senator McCain.

Senator MCCAIN. Does that lend any urgency to you and the

tribes coming to some kind of agreement?

Mr. MCCALEB. Senator, in addition to the Task Force meeting

that we held in Portland last week, we also held a meeting with

the Inter–Tribal Monitoring Association, which is a group of 50

tribes, most of whom are litigants in these lawsuits.

We are trying to educate both ourselves and the tribes relative

to this.

Senator MCCAIN. What education is necessary?

Mr. MCCALEB. Well, it has to do with most of the suits, of the

20 suits that have been filed, all but 3 are asking for an accounting, which they are absolutely due.

We are going to involve the Office of Historical Accounting in a

seminar with these tribes so that we can go forward on the same

fact basis. They had agreed to do that in early October.

Senator MCCAIN. You have been having discussions for 6 months

with the tribal leaders?

Mr. MCCALEB. With the tribal Task Force. We had our first

meeting with the ITMA in May.

Senator MCCAIN. Well, I have to tell you that a lot of us have

sat here with various witnesses over many years and we have gone
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around and around on this issue, previous administrations, previous witnesses, previous Task Forces, previous BIA officials, and

as far as I can tell, we are no different than what we were 10 years

ago.

That is incredibly frustrating. I have often said that if this were

being done to any other Group of Americans outrage would prevail

throughout this country.

Yet, we now seem to be unable, again, to come to an agreement.

We are hung up on a chart of who is responsible for what. I think

that some of us may feel unless there is some agreement that

Judge Lambeth and other judges throughout the Nation will be

making decisions which will probably, in the end, cost the taxpayers one heck of a lot more, just in legal fees, than it would be

if there was some kind of orderly way of adjudicating these claims.

It seems to me that would lend some urgency to you all coming

to some agreement. I am not against reorganizing the BIA. I think

the first hearing I ever appeared in was the reorganization of the

BIA in 1987. That is fine. I mean after a while it gets a little boring, but it is fun to move different boxes around and call people

deputy secretary or under secretary and have little lines going out

in different directions.

But tell me what in the world that has to do with settling these

pressing claims that have been around for 100 years.

So, my admonition to you is that I hope that you could agree

with the tribal Task Force, you could agree with any other tribal

organization there is, come to some agreement, come to the Congress and say, We need this statutory authority, or don’t waste

time away from home for some of your employees, and just say, Let

us let the courts decide it.

I think I have a reasonable legislative proposal. I would like you

to examine it. I would like for the tribes to examine it. If you want

to change it, change it. If you want to reject it out of hand, reject

it out of hand.

But let’s not fool around with reorganizing the BIA. And by the

way, the previous administration is more culpable than you are.

You have only been in office for 1 year or perhaps less in your appointed positions. The other administration had 8 years.

But the way I see the progress going, 8 years from now we will

be having another hearing, perhaps not with the same Senators,

but certainly the same subject.

So, all I can say is please don’t come to us with another reorganization of the BIA. Come to us whenever you want with a reorganization of the BIA. As I say, it is a fun academic exercise. But

please come to us with a proposal to settle the issue where Native

Americans are deprived of billion of dollars that is rightfully theirs.

If we can’t do that, if we can’t get action through the Congress,

then I wish Judge Lambeth and all of the other Federal judges

across America a great deal of success because maybe they will be

able to do something that we in the administration have been unable to do over 100 years, roughly.

I would be glad to hear any response that Mr. McCaleb and Mr.

Griles have or Ms. Masten or Mr. Hall.

Thank you, Mr. Chairman.

Would you like to make any comments? Please go ahead.
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Mr. MCCALEB. Mr. Chairman, if I may, I would like to point out

that our meeting with the ITMA has been for the purpose of seeing

if we can develop a model for alternative dispute resolution as an

alternative to mass litigation on the issue of historical accounting

on the tribal accounts.

The individual Indian money accounts are already at issue in a

class action suit, as you indicated, before Judge Lambeth in his

court.

That is the historic aspect of this equation, looking back. Another

equally important aspect is looking forward and asking what do we

do in the future, so that the mistakes and the mismanagement of

115 years is not repeated.

The cooperation between the tribal Task Force and the Department of the Interior, which we have been discussing, is substantial.

This organizational chart is one aspect of that. But there are fundamental concepts upon which we have agreed that will profoundly

affect the administration of the trust in the future.

There are aspects we have not yet agreed upon that we have discussed here today. But that is precisely, Senator, what our goal

and ambitious objective is, that is, to prevent the reoccurrence or

the continuation of the mismanagement and the concerns of the Indian people that you have expressed.

Senator MCCAIN. Mr. Griles.

Mr. GRILES. I think Secretary McCaleb has responded. I want

you to know as Deputy Secretary, he and I have spent thousands

of hours and many, many days working to find solutions to the

very problems you speak to.

We are not reorganizing for the sake of reorganizing. We are

meeting with the tribal leaders hopefully to define the future so

that the future is fundamentally different than the past. The past

is unacceptable. The future has to be different.

So, within the context of that, as Mr. McCaleb says, the Indian

tribal leaders, on the tribal lawsuits, have agreed to a process and

we are making progress to try to find a better solution than having

a number of suits around the country. We owe them an accounting.

We are not arguing that. That has been argued by the previous administration. We are not arguing that.

We came to this committee and to this Congress and suggested

legislation in the spring that was enacted by Congress to extend

the opportunity for us to enter into these discussions and negotiations in order to try to resolve an historical problem that we inherited. I appreciate your recognition of that.

So, we are going to continue to work with the tribal leaders, the

tribes, and this committee to look for other solutions to these problems. We need your help. We are going to need your advice and

your help in how to resolve some of these questions as we develop

what the real problems are with the individual tribal accounting.

We are going to, hopefully, Senator, come forward with a process

that will allow the tribal governments to understand what has

been done, why it was done, what is wrong with it and give them

an accurate accounting of those accounts.

Senator MCCAIN. I think we know all of everything but the last.

We know how it was done. We know why it was done. We know

what happened.
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Please go ahead, Mr. Hall.

Mr. HALL. Thank you for the question and for the comments,

Senator McCain. We are fundamentally working together on a

number of issues, the tribes and the Task Force, but we fundamentally have a difference on the legislation.

The tribes do want to put forward legislation. I am concerned

that with the remaining time, that we are short on time, but you

know, Senator, on trust standards and trust responsibilities there

are two cases pending before the Supreme Court, the White Mountain Apache case and the Navajo Nation case.

The tribe Task Force doesn’t want the Supreme Court to make

those determinations on that trust responsibility. We would like to

include that in this legislation, as well as an independent oversight

commission and the authorization of those new positions that you

see from the Assistant Secretary up, which includes the Under Secretary and the Director of Trust Accountability, which really is the

internal mechanism to oversight on trust. The independent commission is the external.

So, the tribes are looking to the Senate Committee on Indian Affairs to proceed with this type of legislation in the remaining days

of the 107th Congress.

Senator MCCAIN. Don’t bite off more than you can chew, Mr.

Hall.

Go ahead, Ms. Masten.

Ms. MASTEN. Senator, I personally have been involved in trust

reform for the past 12 years and have seen no progress to date. At

least today we are sitting down at the same table with the Department of the Interior and we are consulting with tribal governments

across Indian country.

I do expect, though, if Congress and the administration can act

quickly to address the corporate shareholders needs, then they

ought to be able to act quickly to be accountable to Indian country.

Senator MCCAIN. Thank you very much, Mr. Chairman.

The CHAIRMAN. I thank you very much. With that, I would like

to thank the panel for helping us. We look forward to your report

of the Anchorage meeting.

[The July 24, 2002 Commission on Indian Trust Funds Concept

Paper appears in appendix.]

[Whereupon, at 11:34 a.m., the committee proceeded to other

business.]
(27)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED JOINT STATEMENT OF J. STEVEN GRILES, DEPUTY SECRETARY OF THE DEPARTMENT OF THE INTERIOR, WASHINGTON, DC AND NEAL MCCALEB, ASSISTANT

SECRETARY FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

Mr. Chairman and members of the committee, it is a pleasure for the two of us

to appear before you again on a panel with the two cochairs of the Joint Department

of the Interior/Tribal Leaders Task Force on Trust Reform, Sue Masten, chairwoman of the Yurok Tribe of Northern California, and Tex Hall, chairman of the

Three Affiliated Tribes of North Dakota. We are here today to brief the committee

on the status of the work of the Task Force.

Last week, the Task Force held its seventh meeting in Portland, OR. Earlier

meetings were held around the country in Shepherdstown, WV, Phoenix, AZ, San

Diego, CA, Minneapolis, MN, and Bismarck, ND. The Task Force was formed last

December in response to the Department’s proposal to create a new organizational

unit called the Bureau of Indian Trust Asset Management, which envisioned the

consolidation of most trust reform and trust asset management functions located

throughout the Department into a new bureau. This proposal was subsequently

strongly opposed by the tribes.

The Task Force is charged with providing proposals to the Secretary on organizational alternatives for the management of trust services within the Department. The

Task Force’s purpose is to evaluate organizational options and to submit to the Department one or more alternatives to reorganize the trust asset management system. The composition of the tribal membership of the Task Force was determined

by all the tribes and represents a broad cross-section of tribal interests on a regional

basis. The Task Force consists of two tribal leaders from each region, with a third

tribal leader, from each region, acting as an alternate. Members of the Federal team

consist of senior Department officials, including myself and Assistant Secretary

McCaleb.

The members of the Task Force have all come a long way personally and professionally as participants in this group. The two of us have attended every one of

these meetings, as have our cochairs here with us today. As we talk about the future of the Bureau of Indian Affairs and work together to resolve issues related to

how the Federal Government carries out its trust responsibility to Indian people,

we are building another kind of trust among ourselves.

While we have reached agreements on many key issues related to the organization of the Department of the Interior and management of our trust functions, our

work is not done. We will be meeting in August in Anchorage, AK, and have other

meetings scheduled.

On June 6, at a meeting of the National Congress of American Indians, the Department at the recommendation of the Task Force solicited comments on various

options proposed by the Task Force for restructuring of the Department with respect

to trust. We received back from the Tribes detailed and thoughtful comments. We

heard the following themes:
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The Federal Government’s commitment to self-governance and self-determination

must not suffer as a result of Federal trust reform.

Trust reform must not result in diminishment of the government’s trust obligation

to Indian people.

There is a need for creation of a high level position within the Department who

will be the primary individual within the Department responsible for ensuring that

the trust asset management responsibility is carried out appropriately throughout

the Department.

Trust asset management issues must be addressed at the regional and agency

level of the Bureau of Indian Affairs [BIA].

There can be no one-size-fits-all solution. Trust reform must recognize that there

are three models for receiving services: Through self-governance compacts, self-determination contracts, and direct services from the BIA.

There is no bright line between fiduciary trust asset responsibilities and other

trust responsibilities.

We must ensure more accountability within the current BIA structure.

Management of trust services and trust resources must be kept at the local level.

We need a clear definition of the trust duty and responsibility for management of

trust assets.

There must be oversight of the BIA by an entity that has the authority to compel

and enforce corrective action.

As the above illustrates, reform of our current system is not an easy task. At the

Task Force meeting last week, we reached agreement as a group to recommend that

Congress establish a new position, an Under Secretary for Indian Affairs, who

would be appointed by the President, subject to confirmation by the Senate, and

would report directly to the Secretary. The Under Secretary would have direct line

authority over all aspects of Indian affairs within the Department. This authority

would include the coordination of trust reform efforts across the relevant agencies

and programs within the Department to ensure these functions are performed in a

manner that is consistent with our trust responsibility, as well as a number of other

duties carefully hammered out between the Department and the Tribal Leaders on

the Task Force. We believe reaching consensus on the creation of this position and

the duties of this new senior official was a major accomplishment of the Task Force.

We have also reached agreement on creation of an Office of Self-Governance and

Self-Determination within the Office of the Secretary, reporting directly to the new

Under Secretary for Indian Affairs. This will enhance the abilities of the tribes that

are interested in moving toward more compacting and contracting to carry out the

services due to Indian tribes. Similarly, we have agreed that any legislation should

also include the creation of a Director of Trust Accountability reporting directly to

the Under Secretary who will have the day-to-day responsibility for overseeing the

trust programs of the Department.

Perhaps most importantly, last week in the working group we reached agreement

on a restructuring of the Bureau of Indian Affairs. The Department and the Tribes

agree that our trust duty requires a better way of managing than has been done

in the past. The Department’s longstanding approach to trust management needed

to change, and this change must be reflected in a system that is accountable at

every level with people trained in the principles of trust management. When the we

arrived in Portland last week, the Department brought a proposal to create Trust

Centers at the regional level within the Bureau and trust officers at the agency

level. It was the best way we could see to ensure that decisions made at the regional

and local level were reviewed to ensure that we were meeting our fiduciary trust

responsibility to both tribes and individual allottees.

4 Our tribal counterparts on the Task Force had a very different view of what

changes needed to be made within the Bureau. The tribes expressed concern that

these trust officers would involve themselves in most of the day-to-day activities at

the agency level without being answerable to the Superintendent or the Regional

Directors. The differences between us seemed too great to resolve in just a few days.

However, once we stopped talking in concepts, rolled up our sleeves, and took the

time to put on the table our real concerns, we were able to develop an organizational model that does its best to ensure that the Federal Government can exercise

its fiduciary trust duty, and, at the same time, ensure that tribal governments can

be active managers, to the degree desired, of their own trust assets. A copy of the

working group consensus reorganization proposal is attached to this testimony for

your information. This reorganization can be done administratively and does not require additional legislative authority. We believe that it is likely to have the greatest positive impact on the future management of trust assets.

As we mentioned above, the work of the Task Force is not complete. We are exploring the possibility of creating a commission with oversight responsibilities for
29

trust funds management. We have reached agreement within the Task Force to recommend creation of an independent commission on Indian trust funds within the

executive branch. While we have mutual agreement on many of the functions this

commission should have, we have mutual disagreements as well. We are not in

agreement on the Commission’s duties and we have not discussed the Commission

member qualifications or term of service. We have presented a number of commission ideas that we plan to discuss with the Task Force at the upcoming meeting

in August. We plan to participate with a working group set up by the Task Force

whose charge it is to try to resolve these differences and reach consensus on the

details of this commission’s duties and responsibilities. Our goal is to have an agreement on this issue at our August meeting in Anchorage.

5 Finally, we were also asked by the tribal members of the Task Force to work

with the tribes on draft statutory trust standards presented at our meeting last

week. These standards will be carefully reviewed within the Administration in preparation for our next Task Force meeting. We have not reached any agreement on

the trust standards. However, we will be having both our attorneys and attorneys

at the Department of Justice look at them.

This concludes our statement. We would be happy to answer any questions the

committee might have at this time.
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