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S. HRG. 109–504

ECONOMIC DEVELOPMENT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON

OVERSIGHT HEARING ON ECONOMIC DEVELOPMENT IN INDIAN

COUNTRY

MAY 10, 2006

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

JOHN McCAIN, Arizona, Chairman

BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

MICHAEL D. CRAPO, Idaho

RICHARD BURR, North Carolina

TOM COBURN, M.D., Oklahoma

DANIEL K. INOUYE, Hawaii

KENT CONRAD, North Dakota

DANIEL K. AKAKA, Hawaii

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

JEANNE BUMPUS, Majority Staff Director

SARA G. GARLAND, Minority Staff Director

(II)
(III)

C O N T E N T S

Page

Statements:

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

Committee on Indian Affairs ....................................................................... 4

Garcia, Joe A., president, National Congress of American Indians ............. 11

Hall, Tex, chairman of the board of directors, Inter-Tribal Economic Alliance ................................................................................................................ 13

Johnson, Hon. Tim, U.S. Senator from South Dakota .................................. 4

Jorgenson, Miriam, research director, the Harvard Project on American

Indian Economic Development .................................................................... 19

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

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

Meeks, Elsie, executive director, First Nations Oweesta Corporation ......... 17

Middleton, Robert, director, Office of Indian Energy and Economic Development, Office of the Assistant Secretary for Indian Affairs, Department of the Interior ...................................................................................... 1

Morgan, Lance, chief executive officer, Ho-Chunk, Inc. ................................ 15

APPENDIX

Prepared statements:

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

Committee on Indian Affairs ....................................................................... 29

Garcia, Joe A. (with attachment) .................................................................... 31

Hall, Tex (with attachment) ............................................................................ 67

Johnson, Hon. Tim, U.S. Senator from South Dakota .................................. 74

Jorgenson, Miriam ............................................................................................ 75

Meeks, Elsie ...................................................................................................... 96

Middleton, Robert ............................................................................................. 105

Morgan, Lance .................................................................................................. 115

National Center for American Indian Enterprise Development ................... 117

Native American Contractors Association ...................................................... 123

Additional material submitted for the record:

American Indian Population and Labor Force Report 2003, U.S. Department of the Interior, Bureau of Indian Affairs, Office of Tribal Affairs ... 124

(1)

ECONOMIC DEVELOPMENT

WEDNESDAY, MAY 10, 2006

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 Office Building, Hon. John McCain (chairman of the

committee) presiding.

Present: Senators McCain, Dorgan, Johnson, and Thomas.

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

ARIZONA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. We will get started.

As several of today’s witnesses point out in their written testimony, Indian gaming has the reputation of having made Indians

rich. Members of this committee know that is not the case.

For many Indian people, poverty continues to be an intransigent

problem, despite Government programs and tribal gaming facilities. Unemployment, for example, is a persistent presence on reservations and tribal economies are often unstable.

We also know that poverty has many components and there is

no single or simple solution. If there were, we might have found

it by now. Today, however, we turn to people who are working to

identify and implement solutions. The witnesses each have experience in identifying what works to create healthy and diversified

tribal economies. I look forward to their insights.

Senator Dorgan is on his way over and will be here shortly. In

the meantime, Dr. Middleton, we will begin with you. Our first witness is Dr. Robert Middleton. He is the director of the Office of Indian Energy and Economic Development, Office of the Assistant

Secretary for Indian Affairs at the Department of the Interior.

Welcome, Dr. Middleton.

STATEMENT OF ROBERT MIDDLETON, DIRECTOR OFFICE OF

INDIAN ENERGY AND ECONOMIC DEVELOPMENT, OFFICE OF

THE ASSISTANT SECRETARY FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR

Mr. MIDDLETON. Good morning, Mr. Chairman and members of

the committee. You have my written testimony, but I would like to

open with a brief 5-minute statement and point out some of the

highlights of my written testimony.

My name, as you mentioned, is Bob Middleton. I am director of

the Office of Indian Energy and Economic Development. It is a new
2

office that was formed by the Secretary of the Interior to address

some of the issues that you raised in your opening statement.

We also would like to talk a little bit about our workforce labor

report. The Department of the Interior believes that the Indian

workforce information is a critical indicator of an Indian community’s well being or distress. Information on Indian employment is

also a critical social and economic factor in the department’s program, planning and execution and can be used as a proxy measure

of socio-economic conditions in a given Indian community.

This really allows us to use it as a long-term social and economic

services demand indicator on our programs. The biennial Indian

labor force report is the only known comprehensive and certified

accumulation of data on tribal enrollments, service population,

workforce and employment, and it is used for a wide range of purposes by the equally wide range of users.

The labor force report is also used by tribes in showing governing

stability, efficient governing institutions, effective community support systems and mechanisms, and solid community support, which

demonstrates the community is a good place to locate businesses,

put venture capital, and/or capitalize on untapped labor pools.

However, really no matter how one analyzes the data in the

labor report, there is no dispute that reservation unemployment

has been too high for too long. The 2000 census tells us that real

per capita income of Indians is less than one-half the United States

level and that Indian unemployment is more than twice the United

States rate.

Chronic joblessness seems endemic to many parts of Indian country, resisting all antidotes, and it plagues one generation to the

next. In many cases, the sheer remoteness or isolation of some reservation is an enormous hurdle that tribes must overcome to get

capital flowing into their reservations, rather than out of their reservations.

Although the remoteness of many reservations from markets and

services might provide a partial explanation, it does not explain

why Indian joblessness lingers on despite good economic times in

adjoining non-Indian communities. For example, according to census data, Buffalo County, SD is America’s poorest county. About

2,000 people live there, yet just to the east of Buffalo County is

Jerauld County, which is similar in size and population, but has

a much higher income and much lower unemployment rate.

A recent article by John Miller in The Wall Street Journal noted

the disparities between these neighboring counties and found the

main difference between the is that the Crow Creek Indian Reservation occupies much of Buffalo County. As Miller notes, ‘‘the

place is a pocket of poverty in a land of plenty.’’

I think like virtually all Americans, the Department of the Interior is saddened that any communities within the boundaries of the

United States should not be able to share in this country’s success

and persist as pockets of poverty, and we are not willing to accept

that they should remain so.

While success in improving the economy of Indian communities

has been uneven, we believe we do have a clear understanding of

how they became pockets of poverty and why reservation unemployment is different than unemployment elsewhere. One thing we
3

know for certain is that one size fits all does not work to address

the unemployment and underemployment issues on reservations.

That is why the department is taking a focused approach to work

with individual tribes to identify and nurture economic development opportunities that fit best with the tribe’s resources, workforce, markets and culture. For the most part, tribal members have

a hard time creating sustaining jobs because of a number of roadblocks.

In addition to the obstacle of remoteness, these include the ability to obtain collateral to obtain capital; access to financial services;

technical know-how to access what capital is available; and the

legal, corporate and judicial infrastructure necessary to assure participation by outside investors.

Historically, it has been tougher for Native Americans to obtain

financing than perhaps any other group in the United States because they own no land in fee to offer as collateral for loans. Lenders are also reluctant to enter financing agreements because tribes

are sovereign and lenders see limited venues to resolve disputes

with tribes in court.

Because trust land cannot be used as collateral for a mortgage

or loan, the lender has no ability to foreclose on them and then sell

the land, which severely decreases the amount of capital that can

flow into Indian country. Ready access to investment capital has

enabled many generations of other Americans, including recent immigrants, to launch small businesses. As we know, small business

employs one-half of all private sector employees.

But this has not been the case for Native Americans. According

to the 2003 report by the Kauffman Center for Entrepreneurial

Leadership, Native Americans owned and started the fewest small

businesses of all minority groups in the United States. Without

capital, there is limited enterprise, and without enterprise, there

are few jobs.

Native Americans want to honor tribal traditions and culture,

while achieving better lives for their families. They are willing to

work hard to accomplish that goal, given the opportunity. The department recognizes these issues and has committed both budget

dollars and personnel to address each of these roadblocks to economic progress in Indian country.

As I mentioned, I am director of the Office of Indian Energy and

Economic Development. It was an office that was initiated about 1

year ago by the Secretary of the Interior by a secretarial order. We

have pulled together four components that we believe are important to the economic development in Indian country. Under my office, we currently have the Office of Workforce Development, which

you know as the 477 program. We have pulled in the Division of

Economic Development, which we are using to identify business opportunities in Indian country. I currently have under me the Indian Guaranteed Loan Program, which allows us to provide capital

to Indian businesses. I have the Energy and Minerals Division,

which is located out in Denver, which provides technical assistance

to Indian communities in developing their energy and mineral resources.

In summary, I would like to say the Department of the Interior

does not consider the status quo to be acceptable. I am sure that
4

the distinguished panel that will follow me will talk about the

needs in Indian country. We stand ready to work with other Federal agencies and the Indian community to address economic development for tribes. We believe we now have a team in place that

will work with tribes and individual Indian entrepreneurs to aggressively pursue solutions.

I thank you again for the opportunity to testify today, and I

would be happy to answer any questions the committee may have.

[Prepared statement of Dr. Middleton appears in appendix.]

The CHAIRMAN. Senator Dorgan, would you like to make an

opening comment?

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

NORTH DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN

AFFAIRS

Senator DORGAN. Mr. Chairman, I will just put my statement in

the record, and only say that this issue of economic development

is critical because we have Americans among us who are living in

third-world conditions with little opportunities for jobs and the

progress that comes from having those jobs, with a stable income.

I really appreciate the fact that we are holding this hearing. I will

ask that my statement be part of the record.

The CHAIRMAN. Without objection.

Senator Johnson.

STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM

SOUTH DAKOTA

Senator JOHNSON. Thank you, Mr. Chairman, for holding this

hearing. I, too, will submit my opening statement for the record.

I have some questions for the panel. But I would share Senator

Dorgan’s observations that I think one of the most critical issues

we face in Indian country is the development of a much more robust private economic sector.

As was pointed out to me by one of the tribal chairmen in South

Dakota, Chairman Bordeaux at Rosebud, he indicated to me that

about 85 percent of the money that goes in wages on the Rosebud,

about $130 million, leaves the reservation. There simply is no, or

very little, private sector economic activity going on.

Until more people have jobs and until there is a greater private

sector presence, I think we will be forever behind the curve in

terms of government programs. So I appreciate your holding this

hearing.

I also want to welcome Elsie Meeks and J.C. Crawford from

South Dakota.

Thank you.

The CHAIRMAN. Thank you very much.

Thank you, Dr. Middleton. I read your written statement, and I

think it is an excellent statement.

The average unemployment rate for self-governance tribes is 35

percent, which is still terribly high, but it is much lower than the

average of other tribes. How do you explain this significant differential between self-governance tribes’ unemployment and nonself-governance tribes?
5

Mr. MIDDLETON. We think that a self-governance program is

really of great value to the Indian tribes. It does help them take

advantage of the opportunity to manage their resources, to manage

the money that flows into the reservation, to identify job opportunities and economic opportunities on reservation.

We think that as more tribes start moving toward self-governance and start identifying what the shortfalls may be for developing job opportunities on reservation, or in fact develop a workforce

that can work off-reservation, the better off the Indian community

will be. We are standing willing to help any tribe willing to work

toward the self-governance philosophy to do that.

The CHAIRMAN. It is my impression that movement toward selfgovernance has slowed down recently. Is that true?

Mr. MIDDLETON. That is also what I have heard, yes.

The CHAIRMAN. You might look into that because it seems pretty

clear, like most of us who were strong supporters of self-governance, that there would be a variety of improvement associated with

self-governance, including more job creation and lower unemployment. It is just the nature of the kind of government that allows

people to basically govern themselves and make their own decisions, rather than have them made in Washington.

The report reflects that the Coushatta Tribe of Louisiana has an

unemployment rate of 97 percent, yet this tribe has a casino that

must create many jobs. Can you explain that?

Mr. MIDDLETON. I am sorry, Senator. I am not familiar with that

particular case.

The CHAIRMAN. Do me a favor and get us a written response, will

you?

Mr. MIDDLETON. We will do that.

The CHAIRMAN. Here is a casino tribe that obviously made a lot

of money because they gave a lot to Mr. Abramoff. I would be curious why a tribe like that, with a functioning casino, a money-making casino, would have such high unemployment.

How do unemployment rates for tribes with casinos generally

compare with those for tribes without casinos?

Mr. MIDDLETON. In the experience that I have had, typically the

tribes with casinos do provide additional employment to the tribal

members. I know this is particularly true with the Oneida Tribe in

New York. As far as a broad-based statistical analysis, we would

be glad to provide that to you after the hearing.

The CHAIRMAN. We would be interested in that, too.

I understand from your written statement that there is a different way to calculate unemployment on Indian reservations in Indian country, as opposed to non-Indian country. But some tribes

have reported 100 percent unemployment. How is that possible?

Some people are employed by the tribe.

Mr. MIDDLETON. The information and the data that is reported

is certified by the tribes and then verified by our agency superintendents, as well as the regional offices of BIA. This is the only

labor report that actually is certified by the tribes as being accurate.

Based on checks that we have been able to make, we believe that

the numbers are accurate, but I will have to look at the 100 per-
6

cent number and see. It may be 99.8 percent and rounded up, but

we will have to check on that.

The CHAIRMAN. You mentioned that one of the traditional ways

that people or groups get financing is through putting up land for

collateral. Obviously, you are not suggesting that Indian tribes do

that.

Mr. MIDDLETON. No; we are not. We are just indicating that it

is a reason why capital investment and collateral and lending is

not available to the tribes readily.

The CHAIRMAN. So then they have to find other means of collateral. What would that be?

Mr. MIDDLETON. Well, that is one of the difficult roadblocks that

we are trying to face. Absent gaming, though, we feel that in many

cases energy and mineral development for tribes are probably the

largest opportunity for tribes to be able to develop economically

and economic opportunities on reservation. That is why we are taking and providing a focused effort on looking at what energy and

mineral resources may be available to the tribes to develop, and we

are helping to provide technical assistance to them to do that.

We also believe that the energy bill that was recently passed,

title V, which allows tribal energy resource agreements to be developed, would be a very valuable and useful tool to help tribes develop economically and help develop their energy and mineral resources.

The CHAIRMAN. I always thought one of the most underutilized

aspects of Indian reservations was tourism. Do you have any

thoughts on that?

Mr. MIDDLETON. Yes; as a matter of fact, we are looking at a

number of opportunities to help provide tribes some support to develop business plans for a tourism industry. We think that it could

be a very valuable part of what tribes can do to in fact promote

economic development on reservation. It obviously could not be a

total panacea, but we think it could be a very valuable key portion

of what tribes can do to foster business development.

The CHAIRMAN. Senator Dorgan.

Senator DORGAN. Dr. Middleton, tell me about your agency. You

are the Director of the Office of Indian Energy and Economic Development. What are the resources that you have? How many people and how many dollars?

Mr. MIDDLETON. Actually, the office, we are just finalizing the

changes in the departmental manual that will establish the boxes,

if you will, that make up this office. We currently have approximately 35 people on board with an FTE limit of about 45 folks

total.

I have 15 people, plus some contractors, working on energy and

mineral development. I have plans to have seven or eight people

in our Economic Development Division. We have four people working on our Guaranteed Loan Program, but in addition we have 10

regional loan officers, that although they do not report to me, we

work closely with them in the regions. We have five people that are

managing our 477 program, our Workforce Development Program. Our resources that we currently have total approximately $18

million cross all of the divisions. We have been fortunate that the

administration is very supportive of the energy bill that was re-
7

cently passed and the budget that came up from the President contained an additional $2 million to help us implement title V of the

energy bill, with $1.4 million available for grants that be given to

tribes to help develop tribal energy resource agreements, and

$600,000 that will allow me to add three or four additional staff to

help implement the program.

Senator DORGAN. So there are about 40 people and $18 million?

Mr. MIDDLETON. Yes; roughly.

Senator DORGAN. Roughly. You also mentioned contractors. Are

you spending money on contracts?

Mr. MIDDLETON. We do, but the contract support is mostly for

our IT support out in our Mineral Development Office.

Senator DORGAN. Tell me, if you would, what are the high points

or the achievements that you could point to? You told us in your

statement what you are aspiring to do and so on. Are there some

things that you can describe to us that result from this expenditure

and from this attention?

Mr. MIDDLETON. I believe so. We actually have had the opportunity of establishing a number of new and what I think are innovative programs, trying to focus our efforts working with tribes, as

well as other institutions. We, of course, are major sponsors of the

Reservation 2006 Economic Development Conference that was held

in February of this year. We think that it was a valuable opportunity for tribes to not only be able to provide information to each

other on economic development opportunities, but also opportunities for non-tribal, non-Indian members to know what opportunities

are available in Indian country.

We have also sponsored in White Earth a loan conference where

we are trying to educate lenders on the opportunities for lending

capital in Indian country. That was a great success, attended by

about 150 people. We plan on expanding that effort and holding it

in each of the region’s that are available so that we can marry up

the capital investment community with the needs that are identified in Indian country.

This week, we are holding a conference in Minnesota to talk

about procurement, because we think there are great opportunities

for tribes to participate in the Federal procurement process. We are

working across government lines to be able to provide that access

to tribal governments. We are partnering with SBA, as well as with

DOD, to look at the opportunities for procurement.

In addition, as a result of an effort by the White House to identify economic development opportunities in Indian country, we have

an executive leadership group made up of representatives from

across the Federal Government working in Indian programs. I

chair an effort, working with the Department of Labor, Department

of Commerce, Department of Energy, USDA, Small Business Administration, as well as EPA and a number of other agencies, to

see if there are ways that we can in fact use the various programs

we currently have working in Indian country, and leverage those

resources and work cooperatively to have a better effect that we

are having individually.

Senator DORGAN. Mr. Middleton, I think that the conferences you

suggest make a lot of sense. It seems to me you have to provide

information. I am going to ask the next panel as well what impact
8

does your organization have on their lives; what kinds of assistance

are you providing. It is a fair amount of money, $18 million and

30 or 40 employees. I obviously want you to succeed and I appreciate your being here today, giving us a status report.

The CHAIRMAN. Senator Thomas.

Senator THOMAS. Thank you, Mr. Chairman.

Sorry I missed the first part. I am very much interested, however, in this issue, and particularly the energy and minerals aspect

of it. You mentioned in your statement that the potential there is

to produce over 5 billion barrels of oil. What progress has been

made? What is the main obstacle to moving forward?

Mr. MIDDLETON. I think we have actually made some very significant progress with our energy and minerals program. Part of

the $18 million that we have available actually goes out as technical assistance grants to tribes to help identify and evaluate the

resources that they have available.

Just this year, we made approximately $4.1 million available to

over 40 tribes to help develop their opportunities in energy and

mineral development. I will be honest with you, though. I think

that we do have some hurdles to overcome. Even though we are

looking at hydrocarbon and renewable energy development, sometimes the remoteness of the communities does make it difficult.

We believe that it is important that we move a number of the

tribes, or allow a number of tribes to have the opportunity to move

from simply being landlords over their energy and mineral resources, to partnerships, helping to develop their energy and mineral resources so that there is value added, because that added

value also brings additional income into the tribe itself.

We also think, as I mentioned, that the tribal energy resource

agreements that are authorized under title V of the energy bill are

going to be a significant opportunity for tribes to move to one of

being a partner or being actually a developer of their energy and

mineral resources.

Part of the issue really is that many tribes have come to us and

they would like to do things like set up ethanol plants using biomass they have available. They would like to put in place refineries. They would like to have an opportunity of developing their

wind. All of this is very highly capital-intensive. What we are trying to do is find ways to marry together the capital investment

market with the needs that are demonstrated out in Indian country.

Senator THOMAS. How about those potentials for energy production that someone else is willing to do? It doesn’t take capital. It

provides jobs. It provides revenue. All you have to do is make the

leases and go.

Mr. MIDDLETON. Exactly. My folks, the division out in Denver

works extensively with tribes to provide them technical support.

Typically right now it is under the Indian Minerals Development

Act and the Indian Minerals Development Act agreements. We are

working with tribes, those tribes that choose to develop their resources, to find adequate partners so that we can work closely on

developing those agreements.

Senator THOMAS. You say ‘‘who choose to.’’ Is that the problem?

Mr. MIDDLETON. I am sorry. I missed that.
9

Senator THOMAS. You said ‘‘who choose to.’’

Mr. MIDDLETON. Yes.

Senator THOMAS. So some of the tribes are not wanting to develop it? Is that it?

Mr. MIDDLETON. We found that many of the tribes are wanting

to develop, but some tribes actually feel that development of their

mineral resources may be happening a little too fast and they want

to make sure that it fits well within their culture and their beliefs.

We respect that.

As Senator Dorgan pointed out, we do have some limited resources and we are trying to use those resources toward those

areas where we feel we have a better idea of success. So we are

trying to target those resources in helping the tribes that have

come to us and asked for help.

Senator THOMAS. Thank you.

The CHAIRMAN. Senator Johnson.

Senator JOHNSON. Thank you.

I took with interest your reference to Buffalo County, SD as the

poorest county in America, home to the Crow Creek Indian Reservation in South Dakota. Several of the other most impoverished

counties in America are also South Dakota Indian counties.

I would note that the school dormitory at Crow Creek burned

town earlier this year, last year. And the rest of their school is a

temporary replacement as well. It is a school where they have been

maintaining annual yearly progress. It has been a successful

school, but at the rate we are going with school replacement, it is

going to be literally years and years before these children in America’s poorest county have an actual school building to go to school

at. I know this is outside your bailiwick directly, but I have to note

that as you bring up the question of Crow Creek.

Also in my meetings with Native business leaders, and there are

more of them, and we do now have a Chamber of Commerce and

some other infrastructure in place, which I am grateful for, but one

of their observations is one of the greatest hurdles, and there are

many, but one of the greatest hurdles to Indian entrepreneurship

in Indian country is the BIA itself and its leasing mechanisms,

which have been a huge obstruction for Native leaders who would

like to begin a business. It takes years to negotiate a lease with

the BIA which is set up to deal with grazing leases, but is uncooperative and unhelpful in terms of small business development in

Indian country.

They wind up with short-term leases and once they get one, then

they have to come up with the capital to build a building, and then

they run into the collateralization issues that you raised, which

cause still further problems. So I think in too many cases, the BIA

has been part of the problem instead of part of the solution when

it comes to the development of entrepreneurship and Indian owned

businesses in Indian country.

That also, of course, affects home ownership. Home ownership

has been one of the great mechanisms for the development of the

middle class, of all Americans, and yet because we have not come

up with an entirely adequate collateralization process, we wind up

with people who simply are mired in a low income status and are
10

not in a position to generate the wealth that ordinarily could come

with the ownership of a business or housing.

Two questions I want to raise with you. The SBA, CDFI, and

USDA rural development funds have all been under tremendous financial pressure in recent years. I wonder if you would share any

thoughts with us about the importance of those programs as funds

that generate not only capitalization, but business training skills

and business planning skills. Are they important programs in the

overall scheme of things, as far as you are concerned?

Mr. MIDDLETON. I believe they are. Actually, we have been working closely with all of those programs to find ways that we can take

advantage of the resources that we are currently using out in Indian country. I think their success really speaks for itself. I think

they have been valuable programs.

Senator JOHNSON. Well, they are very small programs, but they

are ones that have been under tremendous financial stress. So I

would hope that we could work together with the White House in

bipartisan fashion, that while we are under a lot of financial downward pressure these days, that we do hold onto programs that do

truly involve investment.

The last question for you, is on the energy side of what you do.

You made a brief mention of this, but my tribes in South Dakota

tend not to have a lot of natural resources, other than agricultural

land that they have. But they do have in many instances the potential for significant wind energy development. There has been some

modest progress in that area, but very modest.

Can you share with us any thoughts about what your office could

do to enhance the wind energy capabilities of some of these tribes?

They are very remote, as you say. Their infrastructure is not adequate, but there is some income generating opportunity from the

full development of those resources.

Mr. MIDDLETON. Yes; it has been an issue. We have been working very closely with the Intertribal Council on Utility Policy,

which of course is a strong wind advocate. We also did provide

funding for the single turbine that was put up in Rosebud. We are

working diligently to try and develop our renewable energy resources. In this last year, we put forward about $1.5 million in

grants, a significant number of which were wind development

grants to try and address the feasibility of wind development in Indian country.

As I am certain you are aware, many of the tribes have access

to much wind, but they do not have access to the grid. It has been

an issue getting the interconnect so that the economics of putting

up an wind plant or a wind farm to kick in has been difficult because you really don’t get the economics to come in and be able to

get the lenders to put capital into this until you are able to sell off

your excess and use the green credits and use other activities that

allow you to do different things when you have access to put the

electricity on the grid.

I know that there are some provisions in the energy bill that are

taking a look at this, but we are also looking at it, and we have

been working with the Department of Energy to see if we can find

some solutions to this. Having access to the grid is what really is

going to be important for some of the Northern Plains tribes.
11

Senator JOHNSON. Thank you. We do have some of the tribes

that are located actually quite close to the existing Pick Sloan

hydro dam system in South Dakota. It is my hope that at the very

least that we could somehow find some interconnections there, because I do agree with you that transmission issues are difficult

issues, but there are some instances where it would seem to me

that we could make better use of existing transmission capabilities

than we do.

Thank you.

Mr. MIDDLETON. Thank you.

The CHAIRMAN. Thank you very much, Dr. Middleton. You will

get us some written answers to some of the question we have?

Mr. MIDDLETON. We will. Thank you so much.

The CHAIRMAN. Thank you very much, Dr. Middleton.

Our next panel is Joe Garcia. He is the president of the National

Congress of American Indians; Tex Hall is the chairman of the

Board of Directors of the Inter-Tribal Economic Alliance; Lance

Morgan is chief executive officer of Ho-Chunk, Winnebago, NE;

Elsie Meeks is executive director of First Nations Oweesta Corporation; and Miriam Jorgensen is research director of the Harvard

Project on American Indian Economic Development of Cambridge,

MA.

Welcome. Joe Garcia, we will begin with you. Welcome back before the committee.

STATEMENT OF JOE A. GARCIA, PRESIDENT, NATIONAL

CONGRESS OF AMERICAN INDIANS

Mr. GARCIA. Good morning, everyone. Good morning, Chairman

McCain, Vice Chairman Dorgan, and Senators, members of the

committee. My name is Joe Garcia. I am Governor of Ohkay

Owingeh and president of the National Congress of American Indians.

I am happy to be here today to discuss how the Federal Government and the tribes can best support our efforts to achieve self-reliance and support of our communities through economic development.

It bears repeating that real per capita income of Indians living

on reservations is still less than one-half of the national average.

The poorest counties in the United States are on tribal lands. Frequently identified barriers to economic development include a lack

of access to capital; insufficient infrastructure; remote locations;

complicated legal and regulatory status; and insufficient access to

training and technical assistance, among others.

Compounding the problem, tribal governments have a severely

restricted tax base that makes it difficult to build infrastructure

and fund basic governmental services. In addition, tribes are hamstrung in their ability to access other traditional governmental revenue streams such as tax-exempt bond financing. As a result, we

rely upon Federal funding and what we can develop from tribal

businesses to run our governments and to provide necessary services.

Meaningful economic development is sorely needed. Recent studies indicate that the tribes are making progress, and that tribal

self-determination is working. Tribal enterprises across a variety of
12

industries are growing and thriving. Tribes, despite the barriers,

are becoming more sophisticated in assessing the assets available

to them for economic development and making the most of those

assets.

Tribes have also made strides in attracting outside investors into

tribal communities and encouraging business development among

tribal members. Native entrepreneurship is on the rise and, as respected researchers at Harvard University have found, this

progress is due to increased respect for self-determination.

I would like to spend a few more minutes this morning focusing

on a few opportunities for action that are currently before this Congress. First is streamlined sales tax. I mentioned earlier that tribes

have a limited tax base. However, some tribes have begun to turn

to sales taxes as a key source of revenue to build infrastructure,

and infrastructure, simply defined, is not just the physical infrastructure or fiscal, but the human resources is consider as infrastructure.

For example, the Navajo Nation imposes a reservation-wide sales

tax and collects over $14 million annually to provide government

services. Other tribes like the Reno-Sparks Indian Colony are able

to use their sales tax revenue to back tax exempt bonds. RenoSparks recently built a hospital with tax exempt bonds backed by

its sales tax revenue.

Senator Dorgan, you are one of the primary sponsors of the

streamline sales tax legislation, which will give Federal authority

to the States to collect taxes on remote sales. We would very much

like you to consider including tribal governments in the legislation.

Just like North Dakota or Puerto Rico, a tribal government collects

sales tax and they need the ability to participate so that they can

collect taxes on remove sites and be a part of the new sales tax collection system.

With a more stable tax base, we can provide the infrastructure

that will make economic development happen and more successful

in Indian country.

Tax exempt bond financing. Another obstacle preventing tribes

from accessing capital is the limitations on tribal tax exempt bond

financing. Under current law, tribes may issue tax exempt government bonds only for facilities used in the exercise of a ‘‘essential

governmental function,’’ a restriction that does not apply to State

or local governments.

The Audit Division fo the IRS has adopted an extremely restrictive view of an essential government function. In their view, if it

earns revenue, it can’t be an essential government function. But of

course, it is hard to repay a bond if there is no revenue. The IRS

Audit Division has put a chill on most tribal participation in the

tax exempt bond market and prevented the use of what could be

a valuable economic tool for tribes.

This past fall, your colleagues in the House urged the IRS to

move forward with a regulation to clarify this issue. Moreover, the

IRS’s own Advisory Committee on Tax Exempt and Government

Entities acknowledged problems with enforcement in tribal tax exempt bonds. The tribes cannot even challenge the IRS in court because as the bond issuers, we are not the taxpayer.
13

Legislation is needed that would allow tribes to issue tax exempt

bonds or other financing obligations in a manner similar to States

and municipalities. At the very least, we would like Congress to

give us the standing to challenge the IRS mistakes. We urge you

to join with the Senate Finance Committee in reviewing this matter.

8(a) Contracting. Several recent studies have identified the 8(a)

minority contracting program as one of the most valuable programs

for tribal economic development. The tribes participating in the

program confirm this. The Federal Government buys over $200 billion in goods and services annually and the 8(a) and HUBZone programs provide incentives for Federal agencies to contract with tribally-owned businesses for the procurement of these goods and services.

The positive impact of this program, particularly for tribes who

have been unable to jump-start their economies through gaming,

cannot be overstated. Revenue generated by tribally owned 8(a)

companies allow the tribe to provide benefits and services to the

community as a whole.

Committees on both the House and Senate sides have indicated

that they will be holding hearings to examine Native participation

in the 8(a) program in the upcoming months. I think there is a

great deal of confusion about the differences between tribal participation in the program and participation of other individual minority business owners.

The CHAIRMAN. Mr. Garcia, I am going to have to ask you to

summarize, since we are over time.

Mr. GARCIA. Okay. The other thing that I would simply like to

reflect on a little bit, and it is provided in my testimony, is that

there are opportunities for government-to-government relations in

such items as telecom. It is a major effort. On trust reform, we

need to be sure that that gets done because as we are tied up in

trying to provide some solution to that, efforts in the economic development, education and other areas, that the Federal Government is to help with Indian country, is stalemated. So I would appreciate it if we could move forward those kinds of agenda.

I appreciate the opportunity. Thank you.

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

The CHAIRMAN. Thank you very much, President Garcia. Yours

and all the witnesses’ complete statements will be made part of the

record.

Tex Hall, welcome back.

STATEMENT OF TEX HALL, CHAIRMAN OF THE BOARD OF

DIRECTORS, INTER-TRIBAL ECONOMIC ALLIANCE

Mr. HALL. Thank you, Mr. Chairman, and members of the committee, Senator Dorgan, Senator Johnson.

I have a different hat on today. It is the hat of the Inter-Tribal

Economic Alliance. I am very excited to report about this wonderful

organization which we established in 2001, whose sole mission is

to develop economic development on reservations.

So entrepreneurship, creating businesses and job on or near reservations, Alaska Native land, and Native Hawaiian communities,

is critical to us. I was really appreciative of Bob Middleton’s report
14

on the BIA labor force, the current labor force in my neck of the

woods and the Great Plains still with 70 percent unemployment. So

I want to talk a little bit about how we are going about doing and

putting a dent in some of that.

I first want to talk about one of the initiatives that ITEA has

done. It is focused on the SBA 8(a) program, so that is very critical

to us. We formed a multi-tribal IT consortium so its gets the contract as an IT consortium and it subcontracts. We now have 12 Native businesses that include the Turtle Mountain Reservation,

Cheyenne River Reservation, Three Affiliated Tribes. I see the

chairman for the Shoshone Tribe, Ivan Posey is here from Wyoming, Wind River. They are in there. The Tlingit-Haida from Alaska, and Hawaii and so on and so forth. So those are 12, and we

really appreciate the initial efforts of Senator Inouye and Senator

Stevens. This is on digitization of defense contracts.

So in working with the defense and the Defense Committee, we are initially get $34 million to digitize. One of the key things is we

have a teaming relationship with these tribes with DCL, Data Conversion Laboratories out of New York City. So with that expertise

that they have, combined with the 8(a) program that ITEA has

done with its IT consortium, we were able to solicit that initial $34

million and now $80 million in contracts that are critical to creating 350 jobs on our reservations.

So that is key in how that actually works, and how to use that

8(a) program, and use a teaming agreement with experts like DCL

to create the expertise and job opportunities on our reservation.

So that is very critical to us. We want to continue in other businesses because we showed success in the IT. We want to go to energy, the Multi-Tribal Energy Consortium, that ITEA is going to

build another for-profit leg that will sit next to the ITEA and we

want to focus on oil and gas, wind, solar. And so we want to move

to natural beef, buffalo, natural food products.

And we want to also move into a construction consortium, and

finally a MTEF, a multi-tribal enterprise fund, where we would

like to work with the gaming tribes, those that have success in the

gaming tribes that are near large markets, to contribute to this

venture capital fund that we can fund these many projects that we

currently have problems in collateralization, as Mr. Chairman you

mentioned, and members of the committee had mentioned earlier.

We want to be able to create this fund with gaming tribes’ help,

and those tribes that don’t have successful gaming.

So we really want to show that it works. I think, Chairman

McCain, you were actually at one of our companies up in Barrow,

UIC, and visited one of our ITEA companies, so you have probably

seen Native people up in Barrow actually working and doing this

digitization for the Department of Defense.

And so our whole initiative at ITEA is to create 200,000 jobs. We

have a ways to go, but we created 350. As we look to develop these

economies, if you drop back to energy, for example, there are some

obstacles. In my tribe, we are trying to build a refinery, and again

I was appreciate. Bob Middleton has been very supportive of our

refinery project, but we had some additional work in our EIS that

EPA was willing to give moneys, but they don’t have 93-638 contracting capabilities.
15

They can’t provide money directly, so it has to get transferred to

BIA. But BIA said, well, we can’t do that because the work has already been done in terms of the contract with our water quality

studies, so the moneys we want to get, $112,000, was to be put

back to the EPA. So there are obviously some problems in 93-638

that EPA doesn’t have and they are trying to give money, but it

is going to get put back because the work has been already done.

So there are some problems within the 93-638 in terms of other

agencies being able to use this.

So in closing, what we are really trying to say as ITEA is we

would like to ask the committee to be our partner. We need the

Senate Committee on Indian Affairs to be a partner with this national effort that we at the Inter-Tribal Economic Alliance are trying to do with creation of our for-profit businesses.

We have developed or are developing a multi-tribal air ambulance company. This will be the first of its kind. We rolled it out

in Sioux Falls 2 weeks ago. Rosebud and Pine Ridge were the first

two tribes to sign on. Again the success of ours is a teaming agreement, and so we have a company out of Minneapolis that has eight

airplanes to provide air rescue within that golden hour, but they

would have to renovate our airports on the reservations in order

to have the air ambulance come in and go to a trauma, at least a

level II trauma center, which in my case would be Bismarck, ND,

and would be 39 minutes by air. By car, it would be just under 3

hours. We would lose that golden hour.

So that is another for-profit company we are working on. And of

course the third party billing to pay for that would be Medicaid and

Medicare.

So we are very appreciative of this time to testify. But again, we

are looking to have the Senate Committee on Indian Affairs partner as we look to create this 200,000 jobs initiative.

Thank you, Mr. Chairman.

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

The CHAIRMAN. Thank you very much, and welcome back.

Mr. Morgan, welcome.

STATEMENT OF LANCE MORGAN, CHIEF EXECUTIVE OFFICER,

HO-CHUNK, INC.

Mr. MORGAN. Thank you. I appreciate the opportunity to testify.

I am the CEO of a company called Ho-Chunk, Inc., which is

owned by the Winnebago Tribe of Nebraska. In 1994, the tribe had

a modest casino operation, and they decided that they would want

to diversify their economy, and that is the company that I have run

for the last 11 years. I was the first employee. We now have 525

employees. The first year we started, we had revenues of $400,000.

This year, we will have revenues close to $150 million, all completely non-gaming.

We are a tribe with basically 4,000 members and primarily centered on a town with 1,500 people. So we have been able to have

a broad impact. We now have more jobs than working age tribal

members in our community, so it is something that we are very

proud of.

When I think about this, though, we really are an exception in

a lot of ways because of the difficult environment that we have to
16

function in. I am not going to belabor it because several panelists

have talked about the trust land system, but it doesn’t allow us to

have property taxes, so no taxes and bonds, no home ownership, no

inter-generational wealth transfer, no collateralizing on loans,

those kinds of things.

So it pretty much is the most difficult environment possible to do

development in the United States. The Federal Government has

been pretty aggressive in developing programs that are designed to

implement or designed to emulate the American economic system

off the reservation, but they are usually limited in scope and don’t

have enough impact.

So tribes are told to go into business. If you don’t have a tax

base, you can’t develop your own economy. The Federal Government encourages us to go into business and use those profits in lieu

of the taxes to develop the economy. The tribes with no collateral,

no experience, no wealth, no capital, and going into business usually don’t mix.

What we have done over the years is exploit tribal jurisdiction.

If you think about it, there is a bit of a stereotype of the types of

business tribes function in: Gas, tobacco, and now gaming. Those

are not tribal businesses per se. Those are businesses that we can

get into that allow us to exploit our jurisdiction and create an advantage. The problem with those types of businesses is that they

are controversial. They tend to interfere with State rights or they

tend to upset the playing field for non-Indian economic interests

that are already entrenched.

So we do not believe that those are the future. Now, Ho-Chunk,

Inc., is a company that has been in those businesses, since we have

exploited them, and we have made the decision that we want to

focus on other things. In the last 5 years, we have purchased a

home manufacturing company. We started a construction company.

We started an office supply company, a marketing company. But

all of those are nice companies, but the thing that had the most

potential for us to grow beyond attracting gamblers and smokers

to our reservation, was Government contracting.

We started a government contracting company, and for 4 years

we lost money on it trying to figure out how to do it. I think there

are some shortcuts probably we could have thought of, but we like

to do it the hard way. We have built up a company that now has

operations in three different countries doing vital things for the

Federal Government, things that we can take pride in.

What is interesting about this is that we have just figured out

how to do this. It is a key way for us to develop our economy and

diversify it away from these kinds of controversial businesses. Now,

we are suffering some kind of attacks on it. I think it is completely

unreasonable that that is happening.

The Federal Government set up this system. They told us to go

into business. They set up some incentive programs. We invested

hundreds of thousands of dollars to get into it. And now we are just

starting to be successful in those areas, and it is really elevating

our level of sophistication across the board. And now we have to

look over our shoulder, and I think it is completely unfair.

I would ask you as our leaders to figure out a way to help us

in this regard. This system, this trust land economic system is not
17

a system that we created or designed. We are desperately trying

to figure out ways to function within it. And things like the 8(a)

program are very important.

I thank you for your time.

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

The CHAIRMAN. Thank you very much.

Ms. Meeks, welcome.

STATEMENT OF ELSIE MEEKS, EXECUTIVE DIRECTOR, FIRST

NATIONS OWEESTA CORPORATION

Ms. MEEKS. Thank you, Chairman McCain and Vice Chairman

Dorgan. Although I can’t see Senator Johnson, I know he is there.

[Laughter.]

Thank you for the opportunity to appear here on behalf of First

Nations Oweesta Corporation and the Native Financial Education

Coalition. My name is Elsie Meeks. In addition to my role as the

executive director of Oweesta and chair of the Native Financial

Education Coalition, I am appearing before you as someone who

has, although I didn’t know I was going to dedicate my life to, I

have, to the importance of private enterprise development on reservation communities.

I have come to believe that unless tribal members are given the

tools and opportunities to build assets we will never become selfsufficient and independent. Home ownership and small business

development can stand on their own as important initiatives, but

at the end of the day unless we start to build assets individually,

we are never going to become independent.

So my journey began more than 20 years ago, as I said, when

we launched the Lakota Fund on the Pine Ridge Indian Reservation, with the mission of creating a private sector economy through

financing and capacity building for entrepreneur development.

Now, a couple of years after we started lending, we did a little

study that showed that 85 percent of our borrowers have never had

a checking or a savings account and 75 percent have never had a

loan, or it was the other way around, and only 5 percent of them

had ever been in business before.

So we were tackling a really big job. My testimony is also informed by my role as the chair of the Native Financial Education

Coalition that Oweesta has worked to spearhead. This coalition is

a testament to our conviction that financial education is at the very

foundation of effective economic development in all communities,

and especially Native communities.

And also, you know, it is a truism of economic development theory that credible institutions are essential to successful development, yet most Native communities lack nonprofit institutions that

are taken for granted in most other communities, and many lack

a developed private sector economy. Dr. Middleton also referred to

the Treasury study that showed the lack of financial institutions on

Indian reservations.

So to address this need, Oweesta’s main goal is to help Native

communities create Native community development financial institutions. These are community based organizations that really work

on the ground and they bring the need for accessible and affordable
18

loans and other financial products, and they are always tied to intensive training and technical assistance for its borrowers.

CDFI has been around for years, but when Congress created the

CDFI Fund under the Department of Treasury, there were very

few established Native CDFIs. Today as a direct result of the CDFI

Fund, there are over 80 Native financial institutions in various

stages of development and certification, including 36 of them, Native CDFIs, are now certified under the CDFI Fund.

In my written testimony, what we see as integrated asset building strategies, which start with, there is a graphic in your written,

starts with the need for building these institutions, Native community development financial institutions, organizations like HoChunk, Inc. and other non-governmental organizations, that then

provide tools such as financial education, entrepreneurial development, homebuyer education, and then the outcomes of that are

home ownership, entrepreneur development and human capital,

which in the end then results in healthy economies and strong

communities.

And so it is really this holistic approach. Just to give you some

really fast, and I am probably running out of time, but in South

Dakota we have done a pretty good job of the tribes there developing CDFIs. This is all foundational work, so it is going to take some

time to get to where we need to be. Even at Pine Ridge, which is

probably one of the most difficult places to work, we have already

seen an increase in per capita income, a decrease in unemployment. This has all come about from these small businesses.

The mention of this high unemployment rate, you know, it has

been historical at Pine Ridge. We have had high unemployment for

many, many years, so people a lot of times don’t even, you know,

the workforce isn’t developed. And bringing in these big companies

that employ a lot of people, sometimes it has been very difficult.

But through each small business, they have hired 5, then 10, then

15 and 20 employees, and have really started to build this workforce in a very slow, but I think quality way.

Arizona has 11 Native financial institutions. The Navajo Partnership for Housing, for one, has just initiated a Navajo nationwide

financial literacy campaign, and offered homebuyer education to

over 2,000 community members. There is a lot of activity with the

tribes in Arizona. In North Dakota, Three Affiliated Tribes is just

now developing one. Turtle Mountain has been in the process.

In Wyoming, the Wind River Reservation has developed the

Wind River Development Fund which has been a very strong CDFI,

and I think has really helped the tribe in helping to create a UCC

code. So they are all very foundational and they are about system

building.

One of the quick recommendations I would like to see is I would

like to see CDFIs, a lot of them are already lending, of course, and

as they develop and become a more important institution in their

communities, be able to utilize the BIA guaranteed loans. That is

not possible at this point, and also the SBA guaranteed loans.

I would also like to echo Senator Johnson’s remarks about improving the title status reports and the ability to use land as collateral. It is an incredible mess at this point. I don’t understand why

it is something we can’t fix.
19

So I will conclude my remarks, but again, thank you so much

and I have longer written testimony. So thank you.

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

The CHAIRMAN. Thank you very much.

Ms. Jorgenson.

STATEMENT OF MIRIAM JORGENSEN, RESEARCH DIRECTOR,

THE HARVARD PROJECT ON AMERICAN INDIAN ECONOMIC

DEVELOPMENT

Ms. JORGENSEN. Chairman McCain, Vice Chairman Dorgan and

distinguished members of the committee, which I guess at this

point is Senator Johnson. I also want to give a special greeting to

you, because while you would not know it from my institutional affiliations, I was also born and raised in Vermillion, SD, which affects a lot of the perspectives and viewpoints that you will hear

today.

My name is Miriam Jorgensen. I am research director of the

Harvard Project on American Indian Economic Development. I also

hold a parallel position at the University of Arizona at the Native

Nations Institute for Leadership, Management and Policy, which is

part of the Udall Center for Studies in Public Policy. It is really

a joint research enterprise that we undertake.

For nearly 20 years, the Harvard Project and the Native Nations

Institute have been focused on a central research question: How,

amidst the widespread poverty and social distress that characterize

Indian country, are an increasing number of Native nations breaking old patterns and building societies that work? What explains

the stark differences that we see in Indian country?

I really do mean ‘‘stark differences.’’ For a long time, before we

had very good data about what was going on in Indian country

with regard to gaming, we used to present information of the pregaming era, and say, look, there are a number of Native nations

that are really pulling away from the pack and demonstrating economic and social success.

Now, when we have a lot of data about the 1990’s and the rise

of gaming in Indian country, we still see remarkable diversity.

There are gaming and non-gaming tribes at the top of the distribution, where per capita incomes for Native reservation residents in

2000 were double their inflation adjusted per capita levels in 1990,

and we have gaming and non-gaming tribes at the bottom of the

revenue distribution or growth distribution, where per capita incomes in 2000 for Native reservation residents were barely holding

pace with inflation adjusted 1990 levels.

I think these data reinforce the fundamental question that our

research has been addressing: Where it is occurring, how and why

did economic development occur?

In answer, our research points to the important roles of institutions, culture and sovereignty. Now, I think many of you are familiar with a lot of that research, and I don’t want to rehash it. It is

presented in my written comments. Today, I want to focus just on

one element of that. And indeed, I think you have heard a lot of

policy recommendations that underscore this idea, and it came up

in your opening remarks as well, Senator McCain.
20

I want to talk about this notion of sovereignty and self-determination as a broad policy and make a pitch for its creative and

expanded implementation, because I think it has made a lot of difference in Indian country.

What I want to explore right now in my oral remarks are what

I see as four important linkages between practical sovereignty and

self-determination and economic and community development in

Indian country. I want to explore those links, reinforce them, and

hopefully provide you with some ideas for policy action.

The first link is one of institutional design. Governing institutions provide the foundation on which economies are built. They

provide a rule of law, help resolve disputes, and smooth the processes of business interactions. But to be effective in these roles, institutions must also be legitimate. They must reflect the society’s

beliefs about how power and authority ought to be distributed and

exercised.

This is a consonance that in our research we call ‘‘cultural

match.’’ It is the leading reason why self-rule, practical sovereignty

and self-determination matter. Sovereignty and self-determination

make it possible for a Native nation to design its institutions with

traction in a society. People will follow those rules, and the institutions are able to work in support of economic development and

community change.

The second idea that ties sovereignty and self-determination to

positive economic outcomes is ownership. Self- determination and

self-governance place resources squarely in the hands of Native nation officials and citizens. This leads to an increased sense of ownership over those resources, which in turn backs up the effectiveness of community development strategies. Ownership is about people coming to say, ‘‘these are my resources; don’t mess with them.’’

The third link, accountability, is really the mirror image of ownership. In the direct service model, where Federal administrators

manage programs, program managers are accountable to Washington and not to tribal citizens. But under a contract or a compact

and other manifestations of self-determination and sovereignty,

tribal government program managers become accountable to tribal

citizens for how resources, both Federal resources and a tribal governments’ own resources, are used.

I want to point out here that the hard statistical evidence on this

shift in accountability is unequivocal. From programs such as forestry management to health care, changed accountability through

tribal takeover of program management improves program outcomes.

And now there is also an additional, largely unsung, payoff to

self-determination, and that is leadership development. Indigenous

control attracts and provides a fertile training ground for talented

leadership. These leadership skills result in more effective bureaucracy, creative programming, new economic opportunities, and even

the expanded use of self-governance, so you get a virtuous cycle of

economic growth and community change going in these communities.

I just want to end my remarks with this pitch, that self-determination, and here I mean self-determination broadly conceived,

not just the idea of Public Law 93-638 and its amendments, is the
21

only Federal policy that has worked to alleviate poverty and social

distress in Indian country. Without self-determination, the Federal

Government invites increased and prolonged dependence on the

Federal budget, and that is a lose-lose policy for everyone.

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

The CHAIRMAN. Ms. Jorgenson, when you say self-determination,

do you believe an integral part of that is self-governance?

Ms. JORGENSEN. I do. I want to be clear here that in a lot of

ways, and I am subject to this myself, the terms ‘‘self-determination’’ and ‘‘self-governance’’ are captive to the policies that the Federal Government has put in place, while I want to talk about the

ideas very broadly.

The CHAIRMAN. Yes; but I was referring to the specific self-governance law that tribes are free to implement or not implement.

Ms. JORGENSEN. Yes; and in fact I make a point in my written

testimony that says I really like self-determination policy in Public

Law 93-638, but I like self-governance better, because I think there

is a tendency under self-determination for tribes to simply self-administer programs. Their operations become an extension of the

Federal Government, and that is not really taking advantage of the

four points I have made here about how you really get creative programming and true self-rule, which is through good institutional

design. That is only possible under self-governance where there is

more freedom to design programs that work. So I really do like

that policy better. I like them both, but if I were to rank them, the

self-governance policy gets higher marks in my book.

The CHAIRMAN. President Garcia, why do you think there has

been such a slowdown in tribes choosing to exercise self-governance?

Mr. GARCIA. Sir, it might just be the policies that are set forth

and may demonstration that policies are implemented or laws are

made and Indian country proceeds with some of those, being active

in those environments, and they become successful, and then new

laws are made to sort of curtail their effectiveness and their success.

The CHAIRMAN. What laws have been passed which would curtail

their ability to exercise self-governance?

Mr. GARCIA. Well, the self-governance is different, though. I

think we need to make a separation between self-governance. ‘‘Governance’’ means governmental services that are provided for Indian

country and the tribal membership, whereas self-sufficiency and

self-determination is about how do you succeed using not government, but the business side of it, and how you interface the two

is an important piece.

The CHAIRMAN. President Garcia, we passed a law concerning

self-governance in, somebody knows what year it was. It was

former Senator Dan Evans that was prime. It was in the 1980’s.

There were a large number of tribes that decided to exercise selfgovernance, according to that law. My specific question is, why is

it that a number of tribes have not? At first, we had a large number of tribes who chose it, and by all reports it was a great success,

but now there has been a slowdown. Maybe Tex Hall can give me

his view of that, given your previous position.
22

Mr. HALL. Mr. Chairman, I would say the number one issue is

budget, funding, or lack of funding. You are correct. It is very successful, but tribes are hesitant because if they manage the contracts and the funding doesn’t follow, then it goes cycle from year

to year, then it falls flat on its face. So there was a great success.

Really, a lot of tribes were involved with the self-governance, and

those that are doing it, I think Bob Middleton talked about the statistics are very good, and probably Ms. Jorgensen, but it has slowed

down because of funding. There is uncertainty among tribes of

what is going to be in the Federal budget.

The CHAIRMAN. What I don’t quite get is the choice is not what

the money is going to be in the Federal budget. The choice is

whether it is administered by the BIA or by the tribe themselves.

So I don’t quite understand. I think there is a legitimate concern

about funding of programs, but my understanding of self-governance is the decisions are made by the tribe or they are made by

the Federal Government.

Mr. HALL. Mr. Chairman, could I just comment?

The CHAIRMAN. Yes; could I just say at the time of passage, we

were worried, and we made it voluntarily for a number of reasons,

but one of them was that some tribes did not have the infrastructure to administer their own programs. It seems to me that they

have had a number of years now to set up that infrastructure so

that they could then make the decisions at the tribal level that are

otherwise made at the Federal level here in Washington.

I think testimony that we have received over the years, including

today, where unemployment is lower on self-governing tribes rather than not, I can understand the real concern about funding levels. But I am not sure how that would affect decisions as to whether to take whatever funding there is and make the decision on how

to spend it at the tribal government level, as opposed to Washington bureaucracy level.

Please respond. Both of you. Go ahead.

Mr. HALL. Mr. Chairman, I just wanted to mention on Indian

Health Service, the reason that tribes are reluctant to self-govern

that program is because, let’s use contract health. There is a report

that says don’t get sick after June because those funds run out

around June 30, so they don’t have enough money to go to the end

of the fiscal year.

The CHAIRMAN. Don’t they run out no matter whether you are a

self-governance tribe or not? That is my point.

Mr. HALL. So it is a liability issue.

Mr. GARCIA. Let me respond, Senator. If you use the word ‘‘success’’ or ‘‘non-success,’’ I guess it would reflect that. If the appropriations don’t follow the mandates and the services are to be provided by tribal government, then if the funds run out, that says

that you have been unsuccessful in implementing programs that

are for the benefit of the people. And so if the funds dry out and

you don’t provide as effective services, that sends the wrong message. I think there is a fear for those tribes that want to do that.

They still hold the Federal government responsible for its fiduciary

trust responsibility. So getting away from that would say, well, we

de-obligate the United States for its trust responsibility, and that

would hinder the progress.
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The CHAIRMAN. I think we are talking past each other. We appropriate a certain amount of money for Indian health care. It

doesn’t say ‘‘this amount for self-governing tribes and that amount

for non-self-governing tribes.’’ We appropriate certain amounts of

money for certain purposes.

Now, I will freely agree, and all of us, or at least certainly a majority of us on this committee feel strongly opposed to any cuts in

funding, particularly for Indian health care. I have never seen in

any legislation saying ‘‘this is for tribes that are self-governing

tribes, and those are not.’’

So we are talking past each other. I guess there is no point in

continuing this conversation because I believe that the most efficient use of these Federal dollars, as they become scarcer, is the

decisions made by the tribal governments themselves. Whether

they are unsure of funding or not unsure of funding, they are still

either going to receive or not receive the money. I think that every

tribal government that I have talked to that exercises self-governance is more satisfied with being able to make the decisions themselves.

Senator Dorgan.

Senator DORGAN. Mr. Chairman, if I might just follow on that

point. I think with respect to something Chairman Hall said, this

issue of contract health running out of money in May or June, for

example, and someone being very, very ill, in chronic pain, and it

is not judged life or limb, in those cases the health care is not going

to be available to them. My guess is that under self-governance, all

of a sudden the tribe says, no, the reason it is not available is we

are in charge and the money is not there. I think that gets to the

liability question and who is responsible for the money not being

there.

I understand the point you are making as well.

The CHAIRMAN. I understand that. And it is disgraceful that we

should be in this situation. I think we are certainly in agreement

on that.

Senator DORGAN. Running out of money for contract health is in

fact a disgrace. It is doing two things. Number one, it is preventing

people who have serious health problems from getting the kind of

health care they need. And number two, in certain circumstances,

those who got the health care they needed and who fall into this

gray area, and it is not being paid for, it ruins their credit because

the hospital goes back after them because contract health doesn’t

pay for it.

But let me ask a question. I guess first for Mr. Middleton. I have

the 2003 report of Indian population and labor force report. Is

there a new report? This is the last report issued?

Mr. MIDDLETON. It is the last report issued, but we are preparing

the information right now and it will be out at the end of this year.

Senator DORGAN. I think you are required to do that every two

years, so I would expect that it would be out soon. I was looking

at this because of the testimony today. I am trying to understand

whether we are taking baby steps or making big strides in dealing

with this issue of unemployment and trying to address some of the

economic issues. Ms. Jorgensen’s report suggests that we are making some progress. You have all suggested we are making progress.
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I am looking at this report. This is 2003. Let me just mention

a couple of statistics: Fort Berthold, 71 percent unemployment in

Fort Berthold. I want to ask about your anecdotal notions about

are we making progress to whittle that down: the Pine Ridge Agency, Ms. Meeks, 87 percent unemployment; the Sisseton-Wahpeton

Tribe, which is partially in North Dakota, 82 percent unemployment; the Standing Rock Sioux Tribe, 56 percent on the North Dakota side, 91 percent unemployment on the South Dakota side;

Turtle Mountain Tribe in North Dakota, 71 percent unemployment.

So we are talking about very high rates of unemployment in

2003. All of us understand the consequences of that. The consequences are devastating. The inability to get a job that pays well

with benefits to allow you to take care of your family and do the

things that give you an opportunity for a good life, those are gone

if you don’t have that opportunity.

So let me ask whether you see now these numbers that we have.

They are the latest numbers that exist. When the new report comes

out, and I don’t have any idea what these numbers will show, but

the question I have is: Are we making strides? Ms. Jorgensen says

we are. Are they baby steps or are they big strides? Ms. Meeks?

Ms. MEEKS. Well, I can speak for several reservations in South

Dakota, primarily Pine Ridge. I think we are taking baby steps,

but I think we are headed in the right direction. To tell you the

truth, I don’t think there is any way to do it but to take baby steps.

That is why I am such a proponent of small business development

because as I said, I have a grocery store. I have a business at Pine

Ridge and we hire about 20 people. Let me tell you, we had to work

very hard to get those 20 people, kind of get a core group, because

people haven’t worked for years.

And so I know, and other business, Crazy Horse Construction,

one I mention in my testimony, is hiring 20 or 30 people. And this

has all come about in the last 10 years. So I am surprised that that

report in 2003 says 87 percent because the South Dakota Business

Review actually showed a decrease, and actually the fastest growing employment in any county in South Dakota, which is still not

good.

Senator DORGAN. Baby steps toward a goal can take decades,

given how far the population is below the rest of the American population. So I am not diminishing what you said.

The CHAIRMAN. When you said fastest growing employment, from

what to what?

Ms. MEEKS. I actually can’t even remember the percentages now,

but compared to any other county in South Dakota, Shannon County, which is Pine Ridge Reservation, it had the fastest growing employment than any other county in South Dakota. So it is headed

in the right direction. I mean, we are still at the bottom virtually.

Senator DORGAN. It says, for example, just to use Pine Ridge, the

latest report that we have as a panel says 87 percent unemployment. There were 3,400 jobs essentially and 2,800 of them were

public sector jobs; only 576 private sector jobs. My guess is that all

of us would agree that what we need to do in order to provide opportunity is to build the private sector. I know that is what Chairman Hall is talking about on the Fort Berthold Reservation.
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So as much as we can, we really need to get new numbers to find

out what has happened; where are we moving and how quickly are

we moving in that direction.

Chairman Hall, this suggests that on the Fort Berthold Reservation we have 71 percent unemployment. In your notion, is that improving at this point?

Mr. HALL. I think it definitely is improving. I think if we looked

at the data today, 2006, it would be much less because we just had,

it was 300 plus on the new Four Bears Bridge construction of tribal

members and other tribes working, but now that the bridge is complete, that is our challenge. How do we provide, and I think that

report shows available workforce in one of the categories, Senator

Dorgan.

That is the best thing that I got in that report is that unemployment is one thing, but available workforce is another. So it shows

there is an available workforce if we can just create the opportunities. I think we are taking small steps. I would like to take larger

steps, and I know Elsie, my good friend, is more on the entrepreneurship. I am more on creating large business contracts that are

probably leaving our State and going somewhere else. We would

like to keep those jobs within Indian country and our States.

So we are losing opportunities. In natural beef, we don’t have the

capital to put feedlots of processing plants, but by doing a teaming

agreement with somebody else, we could do it right now. So those

are the kind of opportunities, like the IT that we are looking at.

How do we create teaming agreements with corporate America,

with people who have the expertise, to get those contracts and get

those jobs created right now.

Senator DORGAN. I might just point out, I just received information. The Indian Self-Determination Act was passed in 1975. The

Indian Self-Governance Act, which expands self-determination, was

passed in 1989. I share the belief of the chairman that this is a

really important direction. I think the Harvard studies show this.

I think the people best able to make decisions about what is

promising, what works, what doesn’t work, are the people who are

running the tribes, the tribal government. So I agree with the

chairman.

One other point, I note, Chairman Hall, you and I have had

lengthy discussions about this. President Garcia, you mentioned it,

and Mr. Morgan, you did as well, the trust land issue, which is a

real problem. When you talk about how do you develop new enterprises, create new business, startups and so on, you have to talk

financing. When you talk financing, you talk now in present day

circumstances about a huge disadvantage for tribal governments

because they don’t have the land base because of the trust land situation that most others would have to go to lenders and to go to

others to say, here is the asset base we have, upon which you can

lend.

So we also need to begin thinking about how we address some

of that. You have made some recommendations today which I think

are helpful as well. But all of us, I think we are of one mind. All

of us desperately want to find the key that unlocks opportunity

here. It is not right in this country that we have pockets of poverty

that exist similar to third world conditions.
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You can look at this and say 80 percent are out of work. It is

not because they don’t want to work. These are people that would,

in my judgment, they would trade their circumstance in a nanosecond for a good job that pays well with decent benefits, that

would give them a chance to take care of their families.

So, we want what you want, and I think it is very helpful to have

you describe to us what you are observing and what your circumstances are, and the kinds of things you think could be helpful.

Ms. Jorgensen, thank you for the work that you are doing, both in

Arizona and at Harvard, trying to provide some focus and some

spotlight on these issues.

Mr. GARCIA. Mr. Chairman, if I may make one small recommendation? I think it will impact a lot of Indian country, and

that is that something we have demonstrated in Ohkay Owingeh,

New Mexico is that because we have a tribal business, the Thay

Corporation, when we planned out our business diversification, we

basically kind of overcame the hindrances of leasing agreements

with the Bureau and the requirements thereof by setting aside a

commercial development sector, if you will, and defined that property. It is a major commercial development area, and we obtained

a master lease signing the agreement one time with the Bureau,

and agreed to that.

So we then turned that over to the corporation, the tribally

owned corporation, to do with it as it wished in terms of commercial development. So you by-passed a requirement that has been a

hindrance in a lot of Indian country, and that seemed to help us

move forward a lot faster. So something like that could be incorporated in a number of other tribes, and that would be a big help.

Thank you.

Senator DORGAN. President Garcia, thank you.

I have to run, but as we conclude, I didn’t ask you a question,

Mr. Morgan, but I did want to say that your story and your success

is very inspiring. Congratulations to you.

Mr. MORGAN. Thank you.

The CHAIRMAN. Yours and the Choctaws are great, inspiring stories.

Senator Dorgan, I know you have to run. We are about to wrap

up here. I think maybe there has been some lack of attention to

the self-determination, particularly self-governance issues. Maybe

this committee could do a little research, helped by Ms. Jorgensen

and others, and point out the success of the self-governance program and send a letter to the Indian tribes on behalf of this committee saying that we hope you will take another look at self-governance, since it seems to have lost some of its momentum, and yet

it seems to have been rather successful for Native American tribes.

We certainly would not want to mandate it, but at least we could

point out to many of the tribes that at least for the overwhelming

majority of tribes that have adopted self-governance, it has been

very successful. Would you agree with that assessment, Ms.

Jorgensen?

Ms. JORGENSEN. I would. I also think there is more that the committee can do than send a letter.

The CHAIRMAN. All right. What would you like for us to do?
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Ms. JORGENSEN. Congress can actually increase the incentives to

take up self-governance. I think one of the things you have heard

from the Honorable Mr. Hall and the Honorable Mr. Garcia is that

tribes right now don’t feel the incentive. Despite the fact that the

research evidence shows that there are advantages, that is not

translating to an incentive at the Native nation level.

I think there are a variety of things, for instance investments in

the administrative capacity, which you noted was discussed back in

1988 and 1989 when the legislation was passed. To be specific,

maybe competitive funding streams made to develop administrative

capacity could increase the uptake.

I think there’s also an oblique way of getting at it that is quite

important. It relates to administrative capacity. It is echoed in

some of the comments of Dr. Middleton about the labor force report. Tribes don’t have the management information system capacity to generate a lot of their own data, to understand the success

of programs, even know very precisely what their unemployment

and employment situation is. Investments in that kind of capacity

I think could make those points to tribes.

The CHAIRMAN. Then I would like to have from the witnesses

their recommendations. Maybe Senator Dorgan and I would reintroduce tribal self-governance II, mission impossible II or III.

[Laughter.]

Mr. HALL. The ratings aren’t too good. [Laughter.]

The CHAIRMAN. Well, Senator Dorgan will play Tom Cruise.

[Laughter.]

The CHAIRMAN. But maybe we could shape some kind of legislation to increase incentives for self-governance. It works, and it obviously is not being adopted by a significant number of tribes at this

time. Maybe this is something valuable we could have learned from

this hearing.

By the way, President Garcia, Senator Smith is holding a hearing on May 23 in his subcommittee of the Finance Committee to

address tax-exempt bonding in Indian country. Pay close attention

to that, and we will work with Senator Smith because that area

does fall under the Finance Committee, as you know.

I want to thank the witnesses and I appreciate the testimony.

You have re-motivated us.

Thank you.

[Whereupon, at 11 a.m. the committee was adjourned, to reconvene at the call of the chair.]

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APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. BYRON L. DORGAN U.S. SENATOR FROM NORTH

DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

Mr. Chairman, most of us in this room today are aware of the Third World conditions that continue to be commonplace in most Indian communities. While the

United States maintains an unemployment rate around 5 percent, unemployment

within Indian country continues to be near 50 percent, with some reservations in

the Great Plains having an unemployment rate over 75 percent.

Tribal communities continue to face extreme poverty, severe health conditions,

overcrowded and substandard housing, substance abuse problems, and a weak education system. This is unacceptable.

Similar to Third World Countries, many of these social issues faced by tribes are

a result of under-developed and unstable economies and governments.

But tribes are somewhat unique in that Congress and the Federal Government are partly to blame for the condition of tribal economies and governments:

• Many tribes were removed from their traditional homelands. • In some instances the United States took the best lands on Indian reservations

for our public projects. • Our Federal courts continue to limit tribal jurisdiction over their lands, and the

tribes’ ability to tax persons and activities that occur on their lands. The basic

services that any local government can provide its citizens are dependent upon

that government’s ability to raise revenue, which is primarily done through taxation. Yet, Indian tribes lack a clear tax base.

Now, I’m NOT suggesting that the Federal Government supply an endless

amount of money or initiatives to build tribal economies, but we do need to

recognize that many of the obstacles faced by tribes are a creation of the Federal

Government. Nor do I believe that it is the Federal Government’s responsibility to

ensure that each tribe has a thriving economy. But it is our responsibility to

look for ways to remove the hurdles to tribal economic development that

we helped to create.

The Federal Government continues to support the policy of self-determination and self-sufficiency for Indian tribes. However, neither of these objectives

can be reached if tribes are not able to develop strong and sustainable economies.

Each Indian tribe is unique, and thus, the development of each tribal economy

will have unique attributes.

There is no ‘‘one-system-fits-all’’ solution here. But I think that there are

some basic elements that ANY successful economy requires:

• Stable governmental institutions;

• Governmental jurisdiction over its citizens and lands;

• The ability of a government to tax persons and activities on their lands;

• Physical infrastructure;

• A healthy, educated workforce;
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• Jobs that provide a livable wage;

• Assess to financial capital and markets; and

• Incentives for entrepreneurial innovation.

We need to find ways to assist Indian tribes and individuals obtain these characteristics. We need to

• create incentives; and

• provide technical and financial, and other assistance to tribes; and

• promote economic activities in Indian country for tribal members and public

and private investment companies.

I know that there are some examples of successful tribal economies out there, and

I think we are going to hear about some examples of success today. These successes

have been in spite of the economic liabilities faced by tribes and their members, and

I applaud the good work that our witnesses are doing.

And let me finish by saying that as we look at this issue, we should NOT limit

our trust responsibility to tribes. Rather, we need to look at this issue as an

opportunity to fulfill our trust responsibility, and helping tribes reach the goals

of self-determination and self-sufficiency that Congress and the tribes share.

Mr. Chairman, this is an important issue, an overwhelming issue, which makes

it difficult to determine how best to tackle it. But it is one that our Committee

should be addressing, and I thank you for convening this hearing.
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PREPARED STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA

Thank you Chairman McCain and Vice Chairman Dorgan for holding a hearing

on this important issue. I would also like to extend a special welcome to Elsie Meeks

of the Oglala Sioux Tribe in South Dakota, we’re glad you are here and I look forward to your testimony.

The development of reservation economies is of the utmost importance to both the

Indian and non-Indian constitutes in my State. I recently proposed a comprehensive

economic development initiative called ‘‘The Hometown Prosperity Plan,’’ which focuses on the specific needs of both tribal and rural communities.

In conjunction with this initiative I recently conduced a tribal listening session

on tribal economic development and had an opportunity to hear from several tribal

chairmen, presidents, and business leaders. The general consensus among those in

attendance was that the greatest impediments to development in Indian country

were the lack of access to capital and inadequate infrastructure development.

As our witness will probably agree, the Community Development Financial Institutions, Community Development Block Grants, and USDA Rural Development programs have been useful to address these concerns but need continued support from

Congress.

Also, a bill I have introduced, the Native American Small Business Development

Act, would create three grant programs to promote new Native American-owned

businesses and establish a permanent Office of Native American Affairs within the

U.S. Small Business Administration. I appreciate the bipartisan support this bill

has received and will continue in my efforts to pass the legislation.

Several of the tribal leaders who spoke at the listening session also brought up

the fact that many impediments to economic development can only be properly addressed by tribes themselves. The tribal leaders I spoke with emphasized their responsibilities to build stable governments, educate their youth, and maintain responsible government relationships as sovereign entities.

Economic development is not just a tribal responsibility or Federal responsibility,

but a partnership. The entire country benefits when reservation economies grow and

become self sufficient. In my State, as is common across the country, reservation

communities are often considerably worse off financially than non reservation communities of similar sizes. The history of Federal Indian policy is largely to blame

for these discrepancies.

The obvious difference between comparable reservation and non reservation communities in the Great Plains is that reservation communities lack the private sector

development that exists off the reservation. The money that comes into the community rarely turns over before it leaves the reservation. At my listening session President Bordeaux of the Rosebud Sioux tribe, estimated that 85 percent of the $130

million in wages paid annually leaves the reservation without ever turning over because there are simply not enough places to spend money on the reservation.

I know many of the witnesses here today have worked hard to address these problems and as Congress proceeds I think consultation, such as at this hearing, is essential. III conceived Federal Policies of the past, some of which still exist, are significantly responsible for the lack of opportunity in Indian country. I feel the best

way to avoid the mistakes of the past is through meaningful consultation, and as

today’s witnesses demonstrate there is a strong determination to put these ideas

into action.

These are challenging issues to address and they rarely have easy answers so

again I would like to thank Chairman McCain and Vice Chairman Dorgan for calling this hearing and I look forward to the testimony. Thank you,
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PREPARED STATEMENT OF LANCE MORGAN, CEO OF HO-CHUNK, INC.

Over the last 200 years the United States has developed arguably the world’s best

financial, legal and economic development system. But those battle tested economic

and financial systems don’t work on the reservation. It isn’t that tribes and Native

Americans aren’t capable of economic success. Tribes had a complex economic and

trading system based on mutual self-interest for thousands of years. Like all people

we want to make sure that our families have the best available opportunities. But

participating in the American economic system remains a far-fetched dream for tribal governments and tribal members because our hands have been tied behind our

collective backs.

The Trust Land Economic System

I want to discuss briefly the economic system we are forced to function in. The

consistent and long-term poverty of tribes has its roots in Federal policy. If I had

to pick one reason we are poor, I would chose Federal trust land. When the Government created trust land it basically guaranteed our dependence on it for basic services and put a stranglehold on tribal entrepreneurial and economic development.

Trust Land can’t be taxed by anyone including tribal governments themselves.

This prevents tribes from using local property tax dollars and tax-exempt bonds to

implement basic Government services. Other attempts at developing an alternative

tax base are consistently attacked by overaggressive State governments and encouraged by the U.S. Supreme Court rulings. This lack of a tribal tax base results in

tribes being dependent upon the Federal Government for education, health, roads,

and police protection.

Trust land is also inalienable and therefore, can’t be used as collateral for a loan.

This effectively killed modern farming on my reservation. Tribal members simply

couldn’t go to the bank in the spring and get a loan to plant our crop. This forced

our members to lease their land to non-Indian farmers and condemned our landholders to the bottom of the value added chain. In most years, the farmers receive

more in Federal subsidies than we do in lease income.

Trust land also killed home ownership in Indian country. Owning a home has always been a path to create wealth in the United States. But you cannot get a normal mortgage on trust land. We have become life long renters. As a result, we never

developed any equity in our homes. This lack of home ownership means inheriting

meaningful wealth doesn’t even enter our minds. No capital, no collateral, no

intergenerational wealth transfer and no experience means owning your own business remains only a dream to most Native Americans.

The Federal Government has created this ‘‘Trust Land Economic System’’, which

is an astounding failure. To make up for it the Federal Government creates smallscale band-aid lending and homeownership programs, which in essence are designed

to try and recreate the American economic system on reservations. These programs

are well intentioned but have almost no chance of addressing the underlying issue,

which is that we don’t control our own fate because our largest asset, our land and

resources, is controlled by someone else—the Federal Government.

Stereotype Economic Development

Because meaningful Trust Land reform remains a controversial issue, we have to

function in the Trust Land Economic System for now. Without a tax base and almost no hope of being allowed to develop one, we are told by the Federal Government to develop businesses, and to use the profits in lieu of taxes to provide for ourselves.

So what do tribes do? We exploit what we can. We historically have gone into low

capital businesses that take advantage of all we have—tribal jurisdiction. Tribes

have stereotype businesses that include things like gas, tobacco and now gaming.

These aren’t genetically hard wired into tribal DNA. These are businesses that

allow us to create some type of advantage using our tribal jurisdiction.

The problem is that these businesses are controversial. Their existence is not

viewed as part of a governmental development strategy, but as an unfair advantage

given to a racial group. A cross border tax variance in price on gas or tobacco between States is acceptable and common, but if a tribe tries to create an advantage

for itself it is called an unequal playing field. This type of attack is bitterly ironic

when you consider that the entire economic system on reservations has clearly been

slanted against tribes.

Now we have gaming, which has been the most successful use of tribal jurisdiction yet for economic development. But it too is under attack now. The tribes have

never in our history of dealings with the United States been able to maintain anything of significant value. There is always a logical rationale, but in the end it is

the same result and tribes are left wondering what happened? Because of the obvi-
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ous threats to non-Indian interests, nobody believes that these jurisdiction-based

businesses are the final answer. They are simply the first step. Tribes have to move

up the economic ladder to the second stage of development. By taking the income

from these controversial businesses and investing it into other types of businesses

we will have a chance to create a permanent and self-sustaining economy.

SBA 8(a) Program and Diversification

One of the primary ways that tribes diversity their economy is the SBA 8(a) program, which allows tribes to break out of a cycle of economic dependence and move

up the ladder of economic activity.

The company I run is fairly sophisticated, but it took us 4 years of hard work to

figure out how to best utilize the SBA 8(a) program. We are currently doing projects

for the Federal Government all over the United States and in three countries. In

just a few years, we have been able to transform ourselves from a company dependent upon cheap cigarette and gasoline sales to one that is performing vital tasks

for the Federal Government.

Without the SBA 8(a) program we would be stuck in the Trust Land Economic

System and figuring out ways to get more gamblers and smokers to come to our

reservation. This program has been hyped by the Federal Government for as long

as I have been an Indian professional. It is astounding to me and beyond common

sense that its success is being attacked. The SBA 8(a) program should be trumpeted

as a clear sign that tribes are evolving their governmental, legal and corporate systems to participate at a higher level in the economic system.

In closing, our economic problems are not our own creation. We are doing what

we can in an incredibly difficult development environment and are desperately trying to improve the lives of our members. You, as our leaders and controllers of our

assets, have the ability to help or hurt us. I respectfully request you help us by allowing us to take control of our destiny and leaving in place meaningful incentive

programs that help us help ourselves. Thank-You.
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PREPARED STATEMENT OF THE NATIVE AMERICAN CONTRACTORS ASSOCIATION

The Native American Contractors Association [NACA] appreciates the opportunity

to submit testimony for the record on the U.S. Senate Committee on Indian Affairs

Oversight Hearing on Tribal Economic Development. The Native American Contractors Association was formed to increase the awareness of the benefits of using Indian tribes, Alaska Native Corporations and Native Hawaiian Organizations [NHO]

to provide goods and services to the Federal Government. The mission of NACA is

to enhance self-determination through preservation of government contracting participation based on the government-to-government relationship between Native

Americans and the Federal Government.

The Native American Contractors Association [NACA] is working to enhance the

economic self-sufficiency of America’s indigenous people. We are working to create

a brighter future for Indian tribes and Alaska Natives and Native Hawaiian organizations whose members are among the poorest and most under-employed in America. NACA strives to create opportunities for Native Americans to become economically self-sufficient by enabling them to compete more effectively in the marketplace

for government contracts. Unlike other American small businesses, for whom profits

generally go to one individual or one family, the profits from Native American corporations owned by tribes and Alaska Native Corporations [ANC] are shared by

hundreds—and sometimes even thousands—of tribal members. The profits earned

by Native Americans and Alaska Native Corporations provide dividends, job training programs, scholarships, healthcare clinics, social service programs, and cultural

programs for their communities. Contracting profits are an essential source of revenue to support vibrant, healthy Native communities in some of the poorest regions

where unemployment and poverty rates are disproportionately high—often staggering.

To help overcome barriers and impediments to Native American economic development, Congress forged one of its most successful Federal initiatives for Indian

tribes, Alaska Native Corporations and Native Hawaiian Organizations [Native

Americans] in making them eligible to participate in the Small Business Act’s Section 8(a) program. This business development program is intended to help small

businesses be successful for the future. The Native American contracting provisions

that Congress enacted recognize the unique status of Indian tribes, Alaska Native

Corporations and Native Hawaiian Organizations and promote government to government commerce. The Federal Government has a fiduciary duty to promote Native American economic development and self-sufficiency.

It took almost 20 years, for Native American contractors to show progress in participating in the Federal marketplace and they are just now starting to achieve a

level of success in the 8(a) program. With the Federal Government buying over $300

billion in goods and services annually, and Congress imposing a statutory goal of

awarding 23 percent of all Federal contract dollars to small businesses, Nativeowned businesses are working harder than ever to match their business capabilities

with Federal contracting opportunities.

The recent GAO report, Contract Management: Increased Use of Alaska Native

Corporations’ Special 8(a) Provisions Calls for Tailored Oversight (GAO–06–399)

shows the success of the Federal policy of promoting Native American governmentto-government participation in the Federal marketplace. The 8(a) program has

helped tribal communities diversify their economies and provide jobs, education, and

services to a group of Americans historically far less able to access the American

dream. The 8(a) program has been particularly helpful to those tribes and Alaska

Native Corporations that are located far away from major markets or industrial centers because it provides access to Federal markets nationwide. The ability to participate in Government contracting helps tribes and Alaska Native Corporations develop strong Native economies by generating profits and diversifying native revenue

bases rather than focusing on employment.

Fostering the development of successful small business contractors advances the

Government’s interests by broadening and diversifying its industrial base of service

providers and suppliers. More competition can result by combating the consolidation

of the Government contracting industry into a few dominant large businesses. By

providing different contracting provisions to qualified Native Entities, Congress increased the likelihood of sustaining business opportunities, ownership, and revenues

for Native Americans. These provisions are fulfilling the Federal Government’s special legal obligations. to Native Americans. As discussions regarding the reauthorization of the Small Business Act and implementation of the recommendations in

the above-mentioned GAO report begin, we ask for your support to maintain and

preserve these Native 8(a) provisions.
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