S. HRG. 109–194

INDIAN TRUST REFORM ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

S. 1439

TO PROVIDE FOR INDIAN TRUST ASSET MANAGEMENT REFORM AND

RESOLUTION OF HISTORICAL ACCOUNTING CLAIMS

JULY 26, 2005

WASHINGTON, DC

(
INDIAN TRUST REFORM ACT
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22–831 PDF 2005

S. HRG. 109–194

INDIAN TRUST REFORM ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

S. 1439

TO PROVIDE FOR INDIAN TRUST ASSET MANAGEMENT REFORM AND

RESOLUTION OF HISTORICAL ACCOUNTING CLAIMS

JULY 26, 2005

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

JOHN McCAIN, Arizona, Chairman

BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

MICHAEL D. CRAPO, Idaho

RICHARD BURR, North Carolina

TOM COBURN, M.D., Oklahoma

DANIEL K. INOUYE, Hawaii

KENT CONRAD, North Dakota

DANIEL K. AKAKA, Hawaii

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

JEANNE BUMPUS, Majority Staff Director

SARA G. GARLAND, Minority Staff Director

(II)
(III)

C O N T E N T S

Page

S. 1439, text of ......................................................................................................... 4

Statements:

Akaka, Hon. Daniel K., U.S. Senator from Hawaii ....................................... 77

Cason, Jim, associate deputy secretary, Department of the Interior ........... 78

Cobell, Elouise P., Blackfeet Reservation Development Fund ...................... 93

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

Committee on Indian Affairs ....................................................................... 76

Gray, Jim, chairman, Board of Directors, Inter-Tribal Monitoring Association ................................................................................................................. 86

Hall, Tex, president, National Congress of American Indians ..................... 89

Johnson, Hon. Tim, U.S. Senator from South Dakota .................................. 77

Martin, James T., executive director, United South and Eastern Tribes,

Inc. ................................................................................................................. 99

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

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

Stensgar, Ernest L., president, Affiliated Tribes of Northwest Indians ...... 96

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

the Interior .................................................................................................... 78

APPENDIX

Prepared statements:

Akaka, Hon. Daniel K., U.S. Senator from Hawaii ....................................... 111

Cason, Jim ......................................................................................................... 111

Cobell, Elouise P. (with attachment) .............................................................. 218

Frazier, Harold, chairman, Cheyenne River Sioux Tribe .............................. 122

Gray, Jim .......................................................................................................... 125

Hall, Tex (with attachment) ............................................................................ 134

Hillaire, Darrell, chairman, Lummi Indian Nation (with attachment) ....... 238

Marshall, Sr., Clifford Lyle, chairman, Hoopa Valley Tribe ......................... 117

Martin, James T. (with attachment) ............................................................... 163

Moses, Jr., Harvey, chairman, Confederated Tribes of the Colville Reservation ..........................................................................................................

Stensgar, Ernest L. .......................................................................................... 155

Swimmer, Ross ................................................................................................. 111

(1)

INDIAN TRUST REFORM ACT

TUESDAY, JULY 26, 2005

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

The committee met, pursuant to notice, at 10:03 a.m. in room

216, Senate Hart Building, Hon. John McCain (chairman of the

committee) presiding.

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

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

ARIZONA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. Good morning. I want to ask the indulgence of

my colleagues and the witnesses and those who have joined us

today to observe this hearing. All of you know that I do not ordinarily take a lot of time for an opening statement at our hearings

and that I encourage our witnesses to be brief in their testimony.

I want to take a few extra minutes to share some of my perspectives on the bill before us. For the past several years, I have heard

broad-based concerns from tribal leaders and members of Congress

that the Cobell litigation, which has been pending for nine years,

is draining resources from Indian country and creating a poisonous

atmosphere for the administration of the Federal Government’s

trust responsibilities to Native Americans.

In the 107th and 108th Congresses, I introduced legislation that

was intended to try to correct some of the problems in the administration of the trust funds and assets. In those bills, the Cobell

plaintiffs asked that I include a provision that would allow the litigation to continue to its conclusion. With the support of tribal leaders, I agreed to do so.

In the 108th Congress, the House Committee on Resources and

this committee worked with the Cobell plaintiffs and the Departments of the Interior and Justice to identify and enlist the support

of two highly qualified mediators to determine if it would be possible to reach an agreement on a settlement of the litigation. I supported that effort. Unfortunately, it did not succeed and neither did

any of the bills I introduced.

Earlier this year, with the support of the plaintiffs and defendants in the Cobell litigation, but more importantly with the support

of many in Indian country, I said I would make one good attempt

at resolving the matter legislatively. If it did not succeed, there are

many, many other issues that the committee can attend to.
2

Last week, Senator Dorgan, my friend and cochairman, joined me

in introducing S. 1439, a bill to resolve the historical accounting

claims in Cobell v. Norton, and begin to reform the Department of

the Interior’s trust responsibility. We made it very clear to all parties that the bill was intended to provide a basis for discussion and

review of the issues, and we welcome comment and the opportunity

to improve it.

However, before anyone had time to read and fully understand

the bill, the lead plaintiff in the Cobell case was quoted in the

press saying that the bill ‘‘reminded me of the Baker massacre at

Black Feet when they gave Heavy Runner this piece of paper. They

said, ‘Hold it up, it will keep you safe.’ ’’

I can certainly understand that no one would be entirely satisfied

with the bill. I can even understand that many would be disappointed. That is the nature of a settlement proposal. No one gets

everything they want. There are no clear winners.

This bill embodies a series of proposals. It reflects extensive listening and reflecting on the views of the parties to the litigation,

tribal leaders and many other stakeholders from around the country. It cannot credibly be compared to a massacre, even in a figure

of speech.

I hope that those who are affected most directly by the settlement of this longstanding dispute will engage constructively in the

process. I am disturbed, however, by what I see as a serious misapprehension of some that settlement legislation can be enacted by

being forced down the throat of either party. This simply cannot

and will not happen. The idea that it might betrays a fundamental

lack of understanding of the legislative process in general and the

battle ahead for any legislation that would settle the Cobell litigation in particular.

If all of the people testifying here today were to join hands and

reach agreement on every word in the bill, the work before all of

us would be just beginning. There are many members of Congress,

of the public at large, and in the claimant class who will ask very

hard questions about the amount of money we propose to pay in

lieu of providing an historical accounting. I think the sizable sum

we envision and the manner of its distribution can be defended, but

it will have to be defended and unity among those here today is

necessary, but by no means sufficient to do that.

While they do not like to talk about it in public, the fact remains

that both parties to the case face very serious legal risks if the litigation continues. Some aspects of the strong opinions of the District Court, often cited by plaintiffs, have been rejected by the

Court of Appeals, which is much more selectively cited. The burden

of proof that the Court of Appeals has established for the claims

appears to comport with the precedent, but imposes a very real and

substantial challenge to each and every claimant in the class.

While the parties may not agree on how much risk each faces,

they should agree that they risk facing years and years and years

of litigation during which time the individual plaintiffs stand to receive nothing, save the further draining of resources away from

programs such as education and public safety and towards the Office of Special Trustee.
3

The defendants face year after year of painstaking efforts to reconstruct the past, while simultaneously trying to cope with seemingly inexhaustible demands to do more and better with limited resources appropriated by Congress. I am well aware of the hardships experienced every day by the individuals who have not been

and are not being treated fairly in the administration of their trust

funds and assets. I have visited them in their homes and on the

lands in the Southwest, the Northwest and the Great Plains. I, too,

would like to see them achieve some justice in their lifetimes, and

I would like to believe that at the end of the day, the individuals

who struggle through the drama of the litigation on both sides, I

would like to see them made as whole as is possible in the circumstances we all confront.

I understand that the plaintiffs have reacted negatively to the

proposal that the settlement funds to be made available by Congress would be distributed by a special master, as opposed to having the court distribute the funds and determine attorneys fees.

While the legislation does not specify a dollar amount, it does make

clear that the resolution will be for billions of dollars at a minimum

for the class of hundreds of thousands described in the bill. The bill

proposed that each receive thousands of dollars in per capita payments alone. This is at a minimum.

In addition to per capita payments, the legislation envisions that

many claimants will receive much more than this in formula payments, depending on what they were likely to have lost as a result

of the Department of the Interior’s mishandling of their individual

Indian money accounts.

If the Federal Government is going to make this money available

to attempt to right a wrong perpetrated over many years of mismanaging accounts, it does not strike me as unreasonable that the

legislation resolve the class action for historical accountings and remove it from the court for a prompt and fair distribution to claimants. Congress did this for the families of the victims of the 9–11

attacks. It is not a flawless way to proceed, but it has been demonstrated to be fair and prompt.

I look forward to hearing the witnesses’ statements today. We

are considering very complex issues, and S. 1439 can be significantly improved, but it must be with the agreement of both parties

to the Cobell litigation and with the support of tribes from around

the Nation. Although no tribe is a direct party to the litigation, it

is evident to even the most casual observer that all tribes have

been and are being affected by it.

Let’s start to put our efforts into finding a way to move forward

together. We have an opportunity to try to make some genuine

progress on the issues that are addressed in S. 1439. Let’s all approach it with the seriousness it deserves and leave the rhetoric to

others. We will not have this opportunity again anytime soon.

[Text of S. 1439 follows:]
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II

109TH CONGRESS

1ST SESSION S. 1439

To provide for Indian trust asset management reform and resolution of

historical accounting claims, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 20, 2005

Mr. MCCAIN (for himself and Mr. DORGAN) introduced the following bill;

which was read twice and referred to the Committee on Indian Affairs

A BILL

To provide for Indian trust asset management reform and

resolution of historical accounting claims, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Indian Trust Reform Act of 2005’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—SETTLEMENT OF LITIGATION CLAIMS

Sec. 101. Findings.

Sec. 102. Definitions.
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Sec. 103. Individual Indian Accounting Claim Settlement Fund.

Sec. 104. General distribution.

Sec. 105. Claims relating to share determination.

Sec. 106. Claims relating to method of valuation.

Sec. 107. Claims relating to constitutionality.

Sec. 108. Attorneys’ fees.

Sec. 109. Waiver and release of claims.

Sec. 110. Effect of title.

TITLE II—INDIAN TRUST ASSET MANAGEMENT POLICY REVIEW

COMMISSION

Sec. 201. Establishment.

Sec. 202. Membership.

Sec. 203. Meetings and procedures.

Sec. 204. Duties.

Sec. 205. Powers.

Sec. 206. Commission personnel matters.

Sec. 207. Exemption from FACA.

Sec. 208. Authorization of appropriations.

Sec. 209. Termination of Commission.

TITLE III—INDIAN TRUST ASSET MANAGEMENT

DEMONSTRATION PROJECT ACT

Sec. 301. Short title.

Sec. 302. Definitions.

Sec. 303. Establishment of demonstration project; selection of participating Indian tribes.

Sec. 304. Indian trust asset management plan.

Sec. 305. Effect of title.

TITLE IV—FRACTIONAL INTEREST PURCHASE AND

CONSOLIDATION PROGRAM

Sec. 401. Fractional interest program.

TITLE V—RESTRUCTURING BUREAU OF INDIAN AFFAIRS AND

OFFICE OF SPECIAL TRUSTEE

Sec. 501. Purpose.

Sec. 502. Definitions.

Sec. 503. Under Secretary for Indian Affairs.

Sec. 504. Transfer of functions of Assistant Secretary for Indian Affairs.

Sec. 505. Office of Special Trustee for American Indians.

Sec. 506. Hiring preference.

Sec. 507. Authorization of appropriations.

TITLE VI—AUDIT OF INDIAN TRUST FUNDS

Sec. 601. Audits and reports.

Sec. 602. Authorization of appropriations.
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1 TITLE I—SETTLEMENT OF

2 LITIGATION CLAIMS

3 SEC. 101. FINDINGS.

4 Congress finds that—

5 (1) Congress has appropriated tens of millions

6 of dollars for purposes of providing an historical ac7 counting of funds held in Individual Indian Money

8 accounts;

9 (2) as of the date of enactment of this Act, the

10 efforts of the Federal Government in conducting his11 torical accounting activities have provided informa12 tion regarding the feasibility and cost of providing a

13 complete historical accounting of IIM account funds;

14 (3) in the case of many IIM accounts, a com15 plete historical accounting—

16 (A) may be impossible because necessary

17 records and accounting data are missing or de18 stroyed;

19 (B) may take several years to perform even

20 if necessary records are available;

21 (C) may cost the United States hundreds

22 of millions and possibly several billion dollars;

23 and
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•S 1439 IS

1 (D) may be impossible to complete before

2 the deaths of many elderly IIM account bene3 ficiaries;

4 (4) without a complete historical accounting, it

5 may be difficult or impossible to ascertain the extent

6 of losses in an IIM account as a result of accounting

7 errors or mismanagement of funds, or the correct

8 amount of interest accrued or owned on the IIM ac9 count;

10 (5) the total cost to the United States of pro11 viding a complete historical accounting of an IIM ac12 count may exceed—

13 (A) the current balance of the IIM ac14 count;

15 (B) the total sums of money that have

16 passed through the IIM account; and

17 (C) the enforceable liability of the United

18 States for losses from, and interest in, the IIM

19 account;

20 (6)(A) the delays in obtaining an accounting

21 and in pursuing accounting claims in the case styled

22 Cobell v. Norton, Civil Action No. 96–1285 (RCL)

23 in the United States District Court for the District

24 of Columbia, have created a great hardship on IIM

25 account beneficiaries; and
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1 (B) many beneficiaries and their representatives

2 have indicated that they would rather receive mone3 tary compensation than experience the continued

4 frustration and delay associated with an accounting

5 of transactions and funds in their IIM accounts;

6 (7) it is appropriate for Congress, taking into

7 consideration the findings under paragraphs (1)

8 through (6), to provide benefits that are reasonably

9 calculated to be fair and appropriate in lieu of per10 forming an accounting of an IIM account, or assum11 ing liability for errors in such an accounting, mis12 management of IIM account funds (including unde13 termined amounts of interest in IIM accounts, losses

14 in which may never be discovered or quantified if a

15 complete historical accounting cannot be performed),

16 or breach of fiduciary duties with respect to the ad17 ministration of IIM accounts, in order to transmute

18 claims by the beneficiaries of IIM accounts for unde19 termined or unquantified accounting losses and in20 terest to a fixed amount to be distributed to the

21 beneficiaries of IIM accounts;

22 (8) in determining the amount of the payments

23 to be distributed as described in paragraph (7), Con24 gress should take into consideration, in addition to
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1 the factors described in paragraphs (1) through

2 (6)—

3 (A) the risks and costs to IIM account

4 beneficiaries, as well as any delay, associated

5 with the litigation of claims that will be resolved

6 by this title; and

7 (B) the benefits to IIM account bene8 ficiaries available under this title;

9 (9) the situation of the Osage Nation is unique

10 because, among other things, income from the min11 eral estate of the Osage Nation is distributed to in12 dividuals through headright interests that belong not

13 only to members of the Osage Nation, but also to

14 members of other Indian tribes, and to non-Indians;

15 and

16 (10) due to the unique situation of the Osage

17 Nation, the Osage Nation, on its own behalf, has

18 filed various actions in Federal district court and the

19 United States Court of Federal Claims seeking ac20 countings, money damages, and other legal and equi21 table relief

22 SEC. 102. DEFINITIONS.

23 In this title:

24 (1) ACCOUNTING CLAIM.—The term ‘‘account25 ing claim’’ means any claim for an historical ac-
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1 counting of a claimant against the United States

2 under the Litigation.

3 (2) CLAIMANT.—The term ‘‘claimant’’ means

4 any beneficiary of an IIM account (including an heir

5 of such a beneficiary) that was living on the date of

6 enactment of the American Indian Trust Fund Man7 agement Reform Act of 1994 (25 U.S.C. 4001 et

8 seq.).

9 (3) IIM ACCOUNT.—The term ‘‘IIM account’’

10 means an Individual Indian Money account adminis11 tered by the Bureau of Indian Affairs.

12 (4) LITIGATION.—The term ‘‘Litigation’’ means

13 the case styled Cobell v. Norton, Civil Action No.

14 96–1285 (RCL) in the United States District Court

15 for the District of Columbia.

16 (5) SECRETARY.—The term ‘‘Secretary’’ means

17 the Secretary of the Treasury.

18 (6) SETTLEMENT FUND.—The term ‘‘Settle19 ment Fund’’ means the fund established by section

20 103(a).

21 (7) SPECIAL MASTER.—The term ‘‘Special Mas22 ter’’ means the special master appointed by the Sec23 retary under section 103(b) to administer the Settle24 ment Fund.
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1 SEC. 103. INDIVIDUAL INDIAN ACCOUNTING CLAIM SETTLE2 MENT FUND.

3 (a) ESTABLISHMENT.—

4 (1) IN GENERAL.—There is established in the

5 general fund of the Treasury a fund, to be known

6 as the ‘‘Individual Indian Accounting Claim Settle7 ment Fund’’.

8 (2) INITIAL DEPOSIT.—The Secretary shall de9 posit into the Settlement Fund to carry out this title

10 not less than $ø¿,000,000,000 from funds ap11 propriated under section 1304 of title 31, United

12 States Code.

13 (b) SPECIAL MASTER.—As soon as practicable after

14 the date of enactment of this Act, the Secretary shall ap15 point a Special Master to administer the Settlement Fund

16 in accordance with this title.

17 (c) DISTRIBUTION.—

18 (1) IN GENERAL.—The Special Master shall use

19 not less than 80 percent of amounts in the Settle20 ment Fund to make payments to claimants in ac21 cordance with section 104.

22 (2) METHOD OF VALUATION AND CONSTITU23 TIONAL CLAIMS.—The Special Master may use not

24 to exceed 12 percent of amounts in the Settlement

25 Fund to make payments to claimants described in—

26 (A) section 106; or
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•S 1439 IS

1 (B) section 107.

2 (3) ATTORNEYS’ FEES.—The Special Master

3 may use not to exceed ø¿ percent of amounts

4 in the Settlement Fund to make payments to claim5 ants for attorneys’ fees in accordance with section

6 108.

7 (d) COSTS OF ADMINISTRATION.—The Secretary may

8 use not more than ø¿ percent of amounts in the Set9 tlement Fund to pay the costs of—

10 (1) administering the Settlement Fund; and

11 (2) otherwise carrying out this title.

12 SEC. 104. GENERAL DISTRIBUTION.

13 (a) PAYMENTS TO CLAIMANTS.—

14 (1) IN GENERAL.—Not later than 1 year after

15 the date on which the Secretary publishes in the

16 Federal Register the regulations described in sub17 section (d), the Special Master shall distribute to

18 each claimant from the Settlement Fund an amount

19 equal to the sum of—

20 (A) the per capita share of the claimant of

21 $ø¿,000,000,000 of the amounts described

22 in section 103(c)(1); and

23 (B) of $ø¿,000,000,000 of the

24 amounts described in section 103(c)(1), the ad25 ditional share of the claimant, to be determined
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1 in accordance with a formula established by the

2 Secretary under subsection (d)(1).

3 (2) HEIRS OF CLAIMANTS.—

4 (A) IN GENERAL.—An heir of a claimant

5 shall receive the entire amount distributed to

6 the claimant under paragraphs (1) and (3).

7 (B) MULTIPLE HEIRS.—If a claimant has

8 more than 1 heir, the amount distributed to the

9 claimant under paragraphs (1) and (3) shall be

10 divided equally among the heirs of the claimant.

11 (3) RESIDUAL AMOUNTS.—After making each

12 distribution required under sections 106, 107, and

13 108, the Special Master shall distribute to claimants

14 the remainder of the amounts described in para15 graphs (2) and (3) of section 103(c), in accordance

16 with paragraph (1)(B).

17 (b) REQUIREMENT FOR DISTRIBUTION.—The Special

18 Master shall not make a distribution to a claimant under

19 subsection (a) until the claimant executes a waiver and

20 release of accounting claims against the United States in

21 accordance with section 109.

22 (c) LOCATION OF CLAIMANTS.—

23 (1) RESPONSIBILITY OF SECRETARY OF THE

24 INTERIOR.—The Secretary of the Interior shall pro25 vide to the Special Master any information, includ-
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1 ing IIM account information, that the Special Mas2 ter determines to be necessary to—

3 (A) identify any claimant under this title;

4 or

5 (B) apply a formula established by the

6 Secretary under subsection (d).

7 (2) CLAIMANTS OF UNKNOWN LOCATION.—

8 (A) IN GENERAL.—The Special Master

9 shall deposit in an account, for future distribu10 tion, amounts under this title for each claimant

11 who—

12 (i) is entitled to receive a distribution

13 under this title, as determined by the Spe14 cial Master; and

15 (ii) has not been located by the Spe16 cial Master as of the date on which a dis17 tribution is required under subsection

18 (a)(1).

19 (B) LOCATION OF CLAIMANTS.—

20 (i) RESPONSIBILITY OF SECRETARY

21 OF THE INTERIOR.—The Secretary of the

22 Interior shall provide to the Special Master

23 any information and assistance necessary

24 to locate a claimant described in subpara25 graph (A)(ii).
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1 (ii) CONTRACTS.—The Special Master

2 may enter into contracts with an Indian

3 tribe or an organization representing indi4 vidual Indians in order to locate a claimant

5 described in subparagraph (A)(ii).

6 (d) REGULATIONS.—

7 (1) IN GENERAL.—The Secretary shall promul8 gate any regulations that the Secretary determines

9 to be necessary to carry out this title, including reg10 ulations establishing a formula to determine the

11 share of each claimant of payments under subsection

12 (a)(1).

13 (2) FACTORS FOR CONSIDERATION.—In devel14 oping the formula described in paragraph (1), the

15 Secretary shall take into consideration the amount

16 of funds that have passed through the IIM account

17 of each claimant during the period beginning on

18 January 1, 1980, and ending on December 31,

19 2005, or another period, as the Secretary determines

20 to be appropriate.

21 SEC. 105. CLAIMS RELATING TO SHARE DETERMINATION.

22 (a) IN GENERAL.—Subject to subsection (b), any

23 claimant may seek judicial review of the determination of

24 the Special Master with respect to the amount of a share

25 payment of a claimant under section 104(a)(1).
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1 (b) REQUIREMENTS.—A claimant shall file a claim

2 under subsection (a)—

3 (1) not later than 180 days after the date of re4 ceipt of a notice by the claimant under subsection

5 (c); and

6 (2) in the United States district court for the

7 district in which the claimant resides.

8 (c) NOTICE.—The Secretary shall provide to each

9 claimant a notice of the right of any claimant to seek judi10 cial review of a determination of the Special Master with

11 respect to the amount of the share payment of the claim12 ant under section 105.

13 (d) SUBSEQUENT APPEALS.—A claim relating to a

14 determination of a United States district court relating

15 to an appeal under subsection (a) shall be filed only in

16 the United States Court of Appeals for the District of Co17 lumbia.

18 SEC. 106. CLAIMS RELATING TO METHOD OF VALUATION.

19 (a) IN GENERAL.—Not later than 1 year after the

20 date of enactment of this Act, a claimant may seek judicial

21 review of the method of distribution of a payment to the

22 claimant under section 104(a).

23 (b) REQUIREMENTS.—A claim under subsection

24 (a)—
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1 (1) shall not be filed as part of a class action

2 claim against any party; and

3 (2) shall be filed only in the United States

4 Court of Federal Claims.

5 (c) AVAILABLE AMOUNTS.—

6 (1) IN GENERAL.—The Special Master shall use

7 only amounts described in section 103(c)(2)(A) to

8 satisfy an award under a claim under this section.

9 (2) PAYMENTS TO CLAIMANTS.—A claimant

10 that files a claim under this subsection shall not be

11 eligible to receive a distribution under section

12 104(a).

13 (d) EFFECT OF CLAIM.—The filing of a claim under

14 this section shall be considered to be a waiver by the claim15 ant of any right to an award under section 104.

16 SEC. 107. CLAIMS RELATING TO CONSTITUTIONALITY.

17 (a) IN GENERAL.—Any claimant may seek judicial

18 review in the United States District Court for the District

19 of Columbia of the constitutionality of the application of

20 this title to an individual claimant.

21 (b) PROCEDURE.—

22 (1) JUDICIAL PANEL.—A claim under this sec23 tion shall be determined by a panel of 3 judges, to

24 be appointed by the chief judge of the United States

25 District Court for the District of Columbia.
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1 (2) CONSOLIDATION OF CLAIMS.—

2 (A) IN GENERAL.—The judicial panel may

3 consolidate claims under this section, as the ju4 dicial panel determines to be appropriate.

5 (B) PROHIBITION OF CLASS ACTION

6 CASES.—A claim under this section shall not be

7 filed as part of a class action claim against any

8 party.

9 (3) DETERMINATION.—The judicial panel may

10 award a claimant such relief as the judicial panel de11 termines to be appropriate, including monetary com12 pensation.

13 (c) AVAILABLE AMOUNTS.—

14 (1) IN GENERAL.—The Special Master shall use

15 only amounts described in section 103(c)(2)(B) to

16 satisfy an award under a claim under this section.

17 (2) PAYMENTS TO CLAIMANTS.—A claimant

18 that files a claim under this subsection shall not be

19 eligible to receive a distribution under section

20 104(a).

21 (d) EFFECT OF CLAIM.—The filing of a claim under

22 this section shall be considered to be a waiver by the claim23 ant of any right to an award under section 104.
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1 SEC. 108. ATTORNEYS’ FEES.

2 (a) IN GENERAL.—The Special Master may use

3 amounts described in section 103(c)(3) to make payments

4 to claimants for costs and attorneys’ fees incurred under

5 the Litigation before the date of enactment of this Act,

6 or in connection with a claim under section 104, at a rate

7 not to exceed $ø¿ per hour.

8 (b) REQUIREMENTS.—

9 (1) IN GENERAL.—The Special Master may

10 make a payment under subsection (a) only if, as of

11 the date on which the Special Master makes the pay12 ment, the applicable costs and attorneys’ fees have

13 not been paid by the United States pursuant to a

14 court order.

15 (2) ACTION BY ATTORNEYS.—To receive a pay16 ment under subsection (a), an attorney of the claim17 ant shall submit to the Special Master a written

18 claim for costs or fees under the Litigation.

19 SEC. 109. WAIVER AND RELEASE OF CLAIMS.

20 (a) IN GENERAL.—In order to receive an award

21 under this title, a claimant shall execute and submit to

22 the Special Master a waiver and release of claims under

23 this section.

24 (b) CONTENTS.—A waiver and release under sub25 section (a) shall contain a statement that the claimant

26 waives and releases the United States (including any offi-
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1 cer, official, employee, or contractor of the United States)

2 from any legal or equitable claim under Federal, State,

3 or other law (including common law) relating to any ac4 counting of funds in the IIM account of the claimant on

5 or before the date of enactment of this Act.

6 SEC. 110. EFFECT OF TITLE.

7 (a) SUBSTITUTION OF BENEFITS.—

8 (1) IN GENERAL.—The benefits provided under

9 this title shall be considered to be provided in lieu

10 of any claims under Federal, State, or other law

11 originating before the date of enactment of this Act

12 for—

13 (A) losses as a result of accounting errors

14 relating to funds in an IIM account;

15 (B) mismanagement of funds in an IIM

16 account; or

17 (C) interest accrued or owed in connection

18 with funds in an IIM account.

19 (2) LIMITATION OF CLAIMS.—Except as pro20 vided in this title, and notwithstanding any other

21 provision of law, a claimant shall not maintain an

22 action in any Federal, State, or other court for an

23 accounting claim originating before the date of en24 actment of this Act.

25 (3) JURISDICTION OF COURTS.—
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18

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1 (A) IN GENERAL.—Except as otherwise

2 provided in this title, no court shall have juris3 diction over a claim filed by an individual or

4 group for the historical accounting of funds in

5 an IIM account on or before the date of enact6 ment of this Act, including any such claim that

7 is pending on the date of enactment of this Act.

8 (B) LIMITATION.—This paragraph does

9 not prevent a court from ordering an account10 ing in connection with an action relating to the

11 mismanagement of trust resources that are not

12 funds in an IIM account on or before the date

13 of enactment of this Act.

14 (b) ACCEPTANCE AS WAIVER.—The acceptance by a

15 claimant of a benefit under this title shall be considered

16 to be a waiver by the claimant of any accounting claim

17 that the claimant has or may have relating to the IIM

18 account of the claimant.

19 (c) RECEIPT OF PAYMENTS HAVE NO IMPACT ON

20 BENEFITS UNDER OTHER FEDERAL PROGRAMS.—The

21 receipt of a payment by a claimant under this title shall

22 not be—

23 (1) subject to Federal or State income tax; or

24 (2) treated as benefits or otherwise taken into

25 account in determining the eligibility of the claimant
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1 for, or the amount of benefits under, any other Fed2 eral program, including the social security program,

3 the medicare program, the medicaid program, the

4 State children’s health insurance program, the food

5 stamp program, or the Temporary Assistance for

6 Needy Families program.

7 (d) CERTAIN CLAIMS.—Nothing in this title pre8 cludes any court from granting any legal or equitable relief

9 in an action by an Indian tribe or Indian nation against

10 the United States, or an officer of the United States, filed

11 or pending on or before the date of enactment of this Act,

12 seeking an accounting, money damages, or any other relief

13 relating to a tribal trust account or trust asset or resource.

14 TITLE II—INDIAN TRUST ASSET

15 MANAGEMENT POLICY RE16 VIEW COMMISSION

17 SEC. 201. ESTABLISHMENT.

18 There is established a commission, to be known as

19 the ‘‘Indian Trust Asset Management Policy Review Com20 mission,’’ (referred to in this title as the ‘‘Commission’’),

21 for the purposes of—

22 (1) reviewing trust asset management laws (in23 cluding regulations) in existence on the date of en24 actment of this Act governing the management and
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1 administration of individual Indian and Indian tribal

2 trust assets;

3 (2) reviewing the management and administra4 tion practices of the Department of the Interior with

5 respect to individual Indian and Indian tribal trust

6 assets; and

7 (3) making recommendations to the Secretary

8 of the Interior and Congress for improving those

9 laws and practices.

10 SEC. 202. MEMBERSHIP.

11 (a) IN GENERAL.—The Commission shall be com12 posed of 12 members, of whom—

13 (1) 4 shall be appointed by the President;

14 (2) 2 shall be appointed by the Majority Leader

15 of the Senate;

16 (3) 2 shall be appointed by the Minority Leader

17 of the Senate;

18 (4) 2 shall be appointed by the Speaker of the

19 House of Representatives; and

20 (5) 2 shall be appointed by the Minority Leader

21 of the House of Representatives.

22 (b) QUALIFICATIONS.—The membership of the Com23 mission shall include—
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1 (1) at least 6 members who are representatives

2 of federally recognized Indian tribes with reservation

3 land or other trust land that is managed for—

4 (A) grazing;

5 (B) fishing; or

6 (C) crop, timber, mineral, or other re7 source production purposes;

8 (2) at least 1 member (including any member

9 described in paragraph (1)) who is or has been the

10 beneficial owner of an individual Indian monies ac11 count; and

12 (3) at least 4 members who have experience

13 in—

14 (A) Indian trust resource (excluding a fi15 nancial resource) management;

16 (B) fiduciary investment management;

17 (C) financial asset management; and

18 (D) Federal law and policy relating to In19 dians.

20 (c) DATE OF APPOINTMENTS.—

21 (1) IN GENERAL.—The appointment of a mem22 ber of the Commission shall be made not later than

23 90 days after the date of enactment of this Act.

24 (2) FAILURES TO APPOINT.—A failure to make

25 an appointment in accordance with paragraph (1)
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1 shall not affect the powers or duties of the Commis2 sion if sufficient members are appointed to establish

3 a quorum.

4 (d) TERM; VACANCIES.—

5 (1) TERM.—A member shall be appointed for

6 the life of the Commission.

7 (2) VACANCIES.—A vacancy on the

8 Commission—

9 (A) shall not affect the powers or duties of

10 the Commission; and

11 (B) shall be filled in the same manner as

12 the original appointment was made.

13 SEC. 203. MEETINGS AND PROCEDURES.

14 (a) INITIAL MEETING.—Not later than 150 days

15 after the date of enactment of this Act, the Commission

16 shall hold the initial meeting of the Commission to—

17 (1) elect a Chairperson; and

18 (2) establish procedures for the conduct of busi19 ness of the Commission, including public hearings.

20 (b) SUBSEQUENT MEETINGS.—The Commission shall

21 meet at the call of the Chairperson.

22 (c) QUORUM.—7 members of the Commission shall

23 constitute a quorum, but a lesser number of members may

24 hold hearings.
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1 (d) CHAIRPERSON.—The Commission shall elect a

2 Chairperson from among the members of the Commission.

3 SEC. 204. DUTIES.

4 (a) REVIEWS AND ASSESSMENTS.—The Commission

5 shall review and assess—

6 (1) Federal laws (including regulations) appli7 cable or relating to the management and administra8 tion of Indian trust assets; and

9 (2) the practices of the Department of the Inte10 rior relating to the management and administration

11 of Indian trust assets.

12 (b) CONSULTATION.—In conducting the reviews and

13 assessments under subsection (a), the Commission shall

14 consult with—

15 (1) the Secretary of the Interior;

16 (2) federally recognized Indian tribes; and

17 (3) organizations that represent the interests of

18 individual owners of Indian trust assets.

19 (c) RECOMMENDATIONS.—After conducting the re20 views and assessments under subsection (a), the Commis21 sion shall develop recommendations with respect to—

22 (1) changes to Federal law that would improve

23 the management and administration of Indian trust

24 assets by the Secretary of the Interior;
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1 (2) changes to Indian trust asset management

2 and administration practices that would—

3 (A) better protect and conserve Indian

4 trust assets;

5 (B) improve the return on those assets to

6 individual Indian and Indian tribal bene7 ficiaries; or

8 (C) improve the level of security of individ9 ual Indian and Indian tribal money account

10 data and assets; and

11 (3) proposed Indian trust asset management

12 standards that are consistent with any Federal law

13 that is otherwise applicable to the management and

14 administration of the assets.

15 (d) REPORT.—Not later than 2 years after the date

16 on which the Commission holds the initial meeting, the

17 Commission shall submit to the Committee on Indian Af18 fairs of the Senate, the Committee on Resources of the

19 House of Representatives, and the Secretary of the Inte20 rior a report that includes—

21 (1) an overview and the results of the reviews

22 and assessments under subsection (a); and

23 (2) any recommendations of the Commission

24 under subsection (c).
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1 SEC. 205. POWERS.

2 (a) HEARINGS.—The Commission may hold such

3 hearings, meet and act at such times and places, take such

4 testimony, and receive such evidence as the Chairperson

5 determines to be appropriate to carry out this title.

6 (b) INFORMATION FROM FEDERAL AGENCIES.—

7 (1) IN GENERAL.—The Commission may secure

8 directly from a Federal agency such information as

9 the Chairperson determines to be necessary to carry

10 out this title.

11 (2) PROVISION OF INFORMATION.—On request

12 of the Chairperson, the head of a Federal agency

13 shall provide information to the Commission.

14 (c) ACCESS TO PERSONNEL.—For purposes of carry15 ing out this title, the Commission shall have reasonable

16 access to staff responsible for Indian trust asset manage17 ment and administration of—

18 (1) the Department of the Interior;

19 (2) the Department of the Treasury; and

20 (3) the Department of Justice.

21 (d) POSTAL SERVICES.—The Commission may use

22 the United States mail in the same manner and under the

23 same conditions as other Federal agencies.

24 (e) GIFTS.—The Commission may accept, use, and

25 dispose of gifts or donations of services or property to the
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1 same extent and under the same conditions as other Fed2 eral agencies.

3 SEC. 206. COMMISSION PERSONNEL MATTERS.

4 (a) COMPENSATION OF MEMBERS.—

5 (1) NON-FEDERAL EMPLOYEES.—A member of

6 the Commission who is not an officer or employee of

7 the Federal Government shall be compensated at a

8 rate equal to the daily equivalent of the annual rate

9 of basic pay prescribed for level IV of the Executive

10 Schedule under section 5315 of title 5, United

11 States Code, for each day (including travel time)

12 during which the member is engaged in the perform13 ance of the duties of the Commission.

14 (2) FEDERAL EMPLOYEES.—A member of the

15 Commission who is an officer or employee of the

16 Federal Government shall serve without compensa17 tion in addition to the compensation received for the

18 services of the member as an officer or employee of

19 the Federal Government.

20 (b) TRAVEL EXPENSES.—A member of the Commis21 sion shall be allowed travel expenses, including per diem

22 in lieu of subsistence, at rates authorized for an employee

23 of an agency under subchapter I of chapter 57 of title

24 5, United States Code, while away from home or regular
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27

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1 place of business of the member in the performance of the

2 duties of the Commission.

3 (c) STAFF.—

4 (1) IN GENERAL.—The Chairperson may, with5 out regard to the civil services laws (including regu6 lations), appoint and terminate an executive director

7 and such other additional personnel as are necessary

8 to enable the Commission to perform the duties of

9 the Commission.

10 (2) CONFIRMATION OF EXECUTIVE DIREC11 TOR.—The employment of an executive director shall

12 be subject to confirmation by the Commission.

13 (3) COMPENSATION.—

14 (A) IN GENERAL.—Except as provided in

15 subparagraph (B), the Chairperson may fix the

16 compensation of the executive director and

17 other personnel without regard to the provisions

18 of chapter 51 and subchapter III of title 5,

19 United States Code, relating to classification of

20 positions and General Schedule pay rates.

21 (B) MAXIMUM RATE OF PAY.—The rate of

22 pay for the executive director and other person23 nel shall not exceed the rate payable for level V

24 of the Executive Schedule under section 5316

25 of title 5, United States Code.
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1 SEC. 207. EXEMPTION FROM FACA.

2 The Federal Advisory Committee Act (5 U.S.C. App.)

3 shall not apply to the Commission if all hearings of the

4 Commission are held open to the public.

5 SEC. 208. AUTHORIZATION OF APPROPRIATIONS.

6 There are authorized to be appropriated such sums

7 as are necessary to carry out this title.

8 SEC. 209. TERMINATION OF COMMISSION.

9 The Commission and the authority of the Commis10 sion under this title shall terminate on the date that is

11 3 years after the date on which the Commission holds the

12 initial meeting of the Commission.

13 TITLE III—INDIAN TRUST ASSET

14 MANAGEMENT DEMONSTRA15 TION PROJECT ACT

16 SEC. 301. SHORT TITLE.

17 This title may be cited as the ‘‘Indian Trust Asset

18 Management Demonstration Project Act of 2005’’.

19 SEC. 302. DEFINITIONS.

20 In this title:

21 (1) PROJECT.—The term ‘‘Project’’ means the

22 Indian trust asset management demonstration

23 project established under section 303(a).

24 (2) OTHER INDIAN TRIBE.—The term ‘‘other

25 Indian tribe’’ means an Indian tribe that—

26 (A) is federally recognized;
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29

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1 (B) is not a section 131 Indian tribe; and

2 (C) submits an application under section

3 303(c).

4 (3) SECRETARY.—The term ‘‘Secretary’’ means

5 the Secretary of the Interior.

6 (4) SECTION 131 INDIAN TRIBE.—The term

7 ‘‘section 131 Indian tribe’’ means any Indian tribe

8 that is participating in the demonstration project

9 under section 131 of title III, division E of the Con10 solidated Appropriations Act, 2005 (Public Law

11 108–447; 118 Stat. 2809).

12 SEC. 303. ESTABLISHMENT OF DEMONSTRATION PROJECT;

13 SELECTION OF PARTICIPATING INDIAN

14 TRIBES.

15 (a) IN GENERAL.—The Secretary shall establish and

16 carry out an Indian trust asset management demonstra17 tion project, in accordance with this title.

18 (b) SELECTION OF PARTICIPATING INDIAN

19 TRIBES.—

20 (1) SECTION 131 INDIAN TRIBES.—A section

21 131 Indian tribe shall be eligible to participate in

22 the Project if the section 131 Indian tribe submits

23 to the Secretary an application under subsection (c).

24 (2) OTHER TRIBES.—
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30

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1 (A) IN GENERAL.—Any other Indian tribe

2 shall be eligible to participate in the Project

3 if—

4 (i) the other Indian tribe submits to

5 the Secretary an application under sub6 section (c); and

7 (ii) the Secretary approves the appli8 cation of the other Indian tribe.

9 (B) LIMITATION.—

10 (i) 30 OR FEWER APPLICANTS.—If 30

11 or fewer other Indian tribes submit appli12 cations under subsection (c), each of the

13 other Indian tribes shall be eligible to par14 ticipate in the Project.

15 (ii) MORE THAN 30 APPLICANTS.—

16 (I) IN GENERAL.—If more than

17 30 other Indian tribes submit applica18 tions under subsection (c), the Sec19 retary shall select 30 other Indian

20 tribes to participate in the Project.

21 (II) PREFERENCE.—In selecting

22 other Indian tribes under subclause

23 (I), the Secretary shall give preference

24 to other Indian tribes the applications
34

31

•S 1439 IS

1 of which were first received by the

2 Secretary.

3 (3) NOTICE.—

4 (A) IN GENERAL.—The Secretary shall

5 provide a written notice to each Indian tribe se6 lected to participate in the Project.

7 (B) CONTENTS.—A notice under subpara8 graph (A) shall include—

9 (i) a statement that the application of

10 the Indian tribe has been approved by the

11 Secretary; and

12 (ii) a requirement that the Indian

13 tribe shall submit to the Secretary a pro14 posed Indian trust asset management plan

15 in accordance with section 304.

16 (c) APPLICATION.—

17 (1) IN GENERAL.—To be eligible to participate

18 in the Project, an Indian tribe shall submit to the

19 Secretary a written application in accordance with

20 paragraph (2).

21 (2) REQUIREMENTS.—The Secretary shall take

22 into consideration an application under this sub23 section only if the application—

24 (A) includes a copy of a resolution or other

25 appropriate action by the governing body of the
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32

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1 Indian tribe, as determined by the Secretary, in

2 support of or authorizing the application;

3 (B) is received by the Secretary by the

4 date that is 180 days after the date of enact5 ment of this Act; and

6 (C) states that the Indian tribe is request7 ing to participate in the Project.

8 (d) DURATION.—The Project shall remain in effect

9 for a period of 8 years after the date of enactment of this

10 Act.

11 SEC. 304. INDIAN TRUST ASSET MANAGEMENT PLAN.

12 (a) PROPOSED PLAN.—

13 (1) SUBMISSION.—

14 (A) IN GENERAL.—Not later than 120

15 days after the date on which an Indian tribe re16 ceives a notice from the Secretary under section

17 303(b)(3), the Indian tribe shall submit to the

18 Secretary a proposed Indian trust asset man19 agement plan in accordance with paragraph (2).

20 (B) TIME LIMITATIONS.—

21 (i) IN GENERAL.—Except as provided

22 in clause (ii), any Indian tribe that fails to

23 submit the Indian trust asset management

24 plan of the Indian tribe by the date speci-
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33

•S 1439 IS

1 fied in subparagraph (A) shall no longer be

2 eligible to participate in the Project.

3 (ii) EXTENSION.—The Secretary shall

4 grant an extension of not more than 60

5 days to an Indian tribe if the Indian tribe

6 submits a written request for such an ex7 tension before the date described in sub8 paragraph (A).

9 (2) CONTENTS.—A proposed Indian trust asset

10 management plan shall include provisions that—

11 (A) identify the trust assets that will be

12 subject to the plan, including financial and non13 financial trust assets;

14 (B) establish trust asset management ob15 jectives and priorities for Indian trust assets

16 that are located within the reservation, or oth17 erwise subject to the jurisdiction, of the Indian

18 tribe;

19 (C) allocate trust asset management fund20 ing that is available for the Indian trust assets

21 subject to the plan in order to meet the trust

22 asset management objectives and priorities;

23 (D) if the Indian tribe has contracted or

24 compacted functions or activities under the In25 dian Self-Determination and Education Assist-
37

34

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1 ance Act (25 U.S.C. 450 et seq.) relating to the

2 management of trust assets—

3 (i) identify the functions or activities

4 that are being performed by the Indian

5 tribe under the contracts or compacts; and

6 (ii) describe the proposed manage7 ment systems, practices, and procedures

8 that the Indian tribe will follow; and

9 (E) establish procedures for nonbinding

10 mediation or resolution of any dispute between

11 the Indian tribe and the United States relating

12 to the trust asset management plan.

13 (3) AUTHORITY OF INDIAN TRIBES TO DE14 VELOP SYSTEMS, PRACTICES, AND PROCEDURES.—

15 For purposes of preparing and carrying out a man16 agement plan under this section, an Indian tribe

17 that has compacted or contracted activities or func18 tions under the Indian Self-Determination and Edu19 cation Assistance Act (25 U.S.C. 450 et seq.), for

20 purposes of carrying out the activities or functions,

21 may develop and carry out trust asset management

22 systems, practices, and procedures that differ from

23 any such systems, practices, and procedures used by

24 the Secretary in managing the trust assets if the

25 systems, practices, and procedures of the Indian
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35

•S 1439 IS

1 tribe meet the requirements of the laws, standards,

2 and responsibilities described in subsection (c).

3 (4) TECHNICAL ASSISTANCE AND INFORMA4 TION.—The Secretary shall provide to an Indian

5 tribe any technical assistance and information, in6 cluding budgetary information, that the Indian tribe

7 determines to be necessary for preparation of a pro8 posed plan on receipt of a written request from the

9 Indian tribe.

10 (b) APPROVAL AND DISAPPROVAL OF PROPOSED

11 PLANS.—

12 (1) APPROVAL.—

13 (A) IN GENERAL.—Not later than 120

14 days after the date on which an Indian tribe

15 submits a proposed Indian trust asset manage16 ment plan under subsection (a), Secretary shall

17 approve or disapprove the proposed plan.

18 (B) REQUIREMENTS FOR DISAPPROVAL.—

19 The Secretary shall approve a proposed plan

20 unless the Secretary determines that—

21 (i) the proposed plan fails to address

22 a requirement under subsection (a)(2);

23 (ii) the proposed plan includes 1 or

24 more provisions that are inconsistent with

25 subsection (c); or
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36

•S 1439 IS

1 (iii) the cost of implementing the pro2 posed plan exceeds the amount of funding

3 available for the management of trust as4 sets that would be subject to the proposed

5 plan.

6 (2) ACTION ON DISAPPROVAL.—

7 (A) NOTICE.—If the Secretary disapproves

8 a proposed plan under paragraph (1)(B), the

9 Secretary shall provide to the Indian tribe a

10 written notice of the disapproval, including any

11 reason why the proposed plan was disapproved.

12 (B) ACTION BY TRIBES.—An Indian tribe

13 the proposed plan of which is disapproved

14 under paragraph (1)(B) may resubmit an

15 amended proposed plan not later than 90 days

16 after the date on which the Indian tribe receives

17 the notice under subparagraph (A).

18 (3) FAILURE TO APPROVE OR DISAPPROVE.—If

19 the Secretary fails to approve or disapprove a pro20 posed plan in accordance with paragraph (1), the

21 plan shall be considered to be disapproved under

22 clauses (i) and (ii) of paragraph (1)(B).

23 (4) JUDICIAL REVIEW.—An Indian tribe may

24 seek judicial review of the determination of the Sec25 retary in accordance with subchapter II of chapter
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37

•S 1439 IS

1 5, and chapter 7, of title 5, United States Code

2 (commonly known as the ‘‘Administrative Procedure

3 Act’’) if—

4 (A) the Secretary disapproves the proposed

5 plan of the Indian tribe under paragraph (1) or

6 (3); and

7 (B) the Indian tribe has exhausted any

8 other administrative remedy available to the In9 dian tribe.

10 (c) APPLICABLE LAWS; STANDARDS; TRUST RE11 SPONSIBILITY.—

12 (1) APPLICABLE LAWS.—An Indian trust asset

13 management plan, and any activity carried out

14 under the plan, shall not be approved unless the pro15 posed plan is consistent with—

16 (A) all Federal treaties, statutes, regula17 tions, Executive orders, and court decisions that

18 are applicable to the trust assets, or the man19 agement of the trust assets, identified in the

20 plan; and

21 (B) all tribal laws that are applicable to

22 the trust assets, or the management of trust as23 sets, identified in the plan, except to the extent

24 that the laws are inconsistent with the treaties,
41

38

•S 1439 IS

1 statutes, regulations, Executive orders, and

2 court decisions referred to in subparagraph (A).

3 (2) STANDARDS.—Subject to the laws referred

4 to in paragraph (1)(A), an Indian trust asset man5 agement plan shall not be approved unless the Sec6 retary determines that the plan will—

7 (A) protect trust assets from loss, waste,

8 and unlawful alienation;

9 (B) promote the interests of the beneficial

10 owner of the trust asset;

11 (C) conform, to the maximum extent prac12 ticable, to the preferred use of the trust asset

13 by the beneficial owner, unless the use is incon14 sistent with a treaty, statute, regulation, Execu15 tive order, or court decision referred to in para16 graph (1)(A);

17 (D) protect any applicable treaty-based

18 fishing, hunting and gathering, and similar

19 rights relating to the use, access, or enjoyment

20 of a trust asset; and

21 (E) require that any activity carried out

22 under the plan be carried out in good faith and

23 with loyalty to the beneficial owner of the trust

24 asset.
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•S 1439 IS

1 (3) TRUST RESPONSIBILITY.—An Indian trust

2 asset management plan shall not be approved unless

3 the Secretary determines that the plan is consistent

4 with the trust responsibility of the United States to

5 the Indian tribe and individual Indians.

6 (d) TERMINATION OF PLAN.—

7 (1) IN GENERAL.—An Indian tribe may termi8 nate an Indian trust asset management plan on any

9 date after the date on which a proposed Indian trust

10 asset management plan is approved by providing to

11 the Secretary—

12 (A) a notice of the intent of the Indian

13 tribe to terminate the plan; and

14 (B) a resolution of the governing body of

15 the Indian tribe authorizing the termination of

16 the plan.

17 (2) EFFECTIVE DATE.—A termination of an In18 dian trust asset management plan under paragraph

19 (1) takes effect on October 1 of the first fiscal year

20 following the date on which a notice is provided to

21 the Secretary under paragraph (1)(A).

22 SEC. 305. EFFECT OF TITLE.

23 (a) LIABILITY.—Nothing in this title, or a trust asset

24 management plan approved under section 304, shall inde25 pendently diminish, increase, create, or otherwise affect
43

40

•S 1439 IS

1 the liability of the United States or an Indian tribe partici2 pating in the Project for any loss resulting from the man3 agement of an Indian trust asset under an Indian trust

4 asset management plan.

5 (b) EFFECT ON OTHER LAWS.—Nothing in this title

6 amends or otherwise affects the application of any treaty,

7 statute, regulation, Executive order, or court decision that

8 is applicable to Indian trust assets or the management or

9 administration of Indian trust assets, including the Indian

10 Self-Determination and Education Assistance Act (25

11 U.S.C. 450 et seq.).

12 (c) TRUST RESPONSIBILITY.—Nothing in this title

13 diminishes or otherwise affects the trust responsibility of

14 the United States to Indian tribes and individual Indians.

15 TITLE IV—FRACTIONAL INTER16 EST PURCHASE AND CON17 SOLIDATION PROGRAM

18 SEC. 401. FRACTIONAL INTEREST PROGRAM.

19 Section 213 of the Indian Land Consolidation Act

20 (25 U.S.C. 2212) is amended—

21 (1) by redesignating subsection (d) as sub22 section (h); and

23 (2) by inserting after subsection (c) the follow24 ing:
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•S 1439 IS

1 ‘‘(d) PURCHASE OF INTERESTS IN FRACTIONATED

2 INDIAN LAND.—

3 ‘‘(1) INCENTIVES.—In acquiring an interest

4 under this section in any parcel of land that includes

5 undivided trust or restricted interests owned by not

6 less than 20 separate individuals, as determined by

7 the Secretary, the Secretary may include in the of8 fered purchase price for the interest, in addition to

9 fair market value, an amount not less than $100

10 and not to exceed $350, as an incentive for the

11 owner to sell the interest to the Secretary.

12 ‘‘(2) SALE OF ALL TRUST OR RESTRICTED IN13 TERESTS.—If an individual agrees to sell to the Sec14 retary all trust or restricted interests owned by the

15 individual, the Secretary may include in the offered

16 purchase price, in addition to fair market value and

17 the incentive described in paragraph (1), an amount

18 not to exceed $2,000, as the Secretary determines to

19 be appropriate, taking into consideration the avoided

20 costs to the United States of probating the estate of

21 the individual or an heir of the individual.

22 ‘‘(e) CERTAIN PARCELS OF HIGHLY FRACTIONATED

23 INDIAN LAND.—

24 ‘‘(1) DEFINITION OF OFFEREE.—In this sub25 section, the term ‘offeree’ does not include the In-
45

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1 dian tribe that has jurisdiction over a parcel of land

2 for which an offer is made.

3 ‘‘(2) OFFER TO PURCHASE.—

4 ‘‘(A) IN GENERAL.—If the Secretary deter5 mines that a tract of land consists of not less

6 than 200 separate undivided trust or restricted

7 interests, the Secretary may offer to purchase

8 the interests in the tract, in accordance with

9 this subsection, for an amount equal to the sum

10 of—

11 ‘‘(i) the fair market value of the inter12 ests; and

13 ‘‘(ii) an additional amount, to be de14 termined by the Secretary, not less than

15 triple the fair market value of the interest.

16 ‘‘(B) REQUIREMENT.—The Secretary shall

17 make an offer under subparagraph (A) not

18 later than 3 days before the date on which the

19 Secretary mails a notice of the offer to the

20 offeree under paragraph (3).

21 ‘‘(3) NOTICE OF OFFER.—

22 ‘‘(A) IN GENERAL.—The Secretary shall

23 provide to an offeree, by certified mail to the

24 last known address of the offeree, a notice of
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•S 1439 IS

1 any offer to purchase land under this sub2 section.

3 ‘‘(B) INCLUSIONS.—A notice under sub4 paragraph (A) shall include in plain language,

5 as determined by the Secretary—

6 ‘‘(i) the date on which the offer was

7 made;

8 ‘‘(ii) the name of the offeree;

9 ‘‘(iii) the location of the tract of land

10 containing the interest that is the subject

11 of the offer;

12 ‘‘(iv) the size of the interest of the

13 offeree, expressed in terms of a fraction or

14 a percentage of the tract of land described

15 in clause (iii);

16 ‘‘(v) the fair market value of the tract

17 of land described in clause (iii);

18 ‘‘(vi) the fair market value of the in19 terest of the offeree;

20 ‘‘(vii) the amount offered for the in21 terest in addition to fair market value

22 under paragraph (2)(A)(ii);

23 ‘‘(viii) a statement that the offeree

24 shall be considered to have accepted the

25 offer for the amount stated in the notice
47

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•S 1439 IS

1 unless a notice of rejection form is depos2 ited in the United States mail not later

3 than 90 days after the date on which the

4 offer is received; and

5 ‘‘(ix) a self-addressed, postage pre6 paid notice of rejection form.

7 ‘‘(4) TREATMENT OF OFFER.—

8 ‘‘(A) IN GENERAL.—An offer made under

9 this subsection shall be considered to be accept10 ed by the offeree if—

11 ‘‘(i) the certified mail receipt for the

12 offer is signed by the offeree; and

13 ‘‘(ii) the notice of rejection form de14 scribed in paragraph (3)(B)(ix) is not de15 posited in the United States mail by the

16 date that is 90 days after the date on

17 which the offer is received.

18 ‘‘(B) REJECTION.—An offer made under

19 this subsection shall be considered to be re20 jected by the offeree if—

21 ‘‘(i) the notice of rejection form de22 scribed in paragraph (3)(B)(ix) is depos23 ited in the United States mail by the date

24 that is 90 days after the date on which the

25 offer is received; or
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•S 1439 IS

1 ‘‘(ii) the certified mail receipt for the

2 offer is returned to the Secretary unsigned

3 by the offeree.

4 ‘‘(5) WITHDRAWAL OF ACCEPTANCE; NOTICE.—

5 ‘‘(A) WITHDRAWAL OF ACCEPTANCE.—A

6 person that is considered to have accepted an

7 offer under paragraph (4)(A) may withdraw the

8 acceptance by depositing in the United States

9 mail a notice of withdrawal of acceptance form

10 by the date that is 30 days after the date of re11 ceipt of the notice under subparagraph (B).

12 ‘‘(B) NOTICE.—The Secretary shall pro13 vide to any person that is considered to have

14 accepted an offer under paragraph (4)(A), by

15 certified mail, restricted delivery, to the last

16 known address of the person, a preaddressed,

17 postage prepaid withdrawal of acceptance form

18 and a notice stating that—

19 ‘‘(i) the offer made to the person is

20 considered to be accepted; and

21 ‘‘(ii) the person has the right to with22 draw the acceptance by depositing in the

23 United States mail the notice of with24 drawal of acceptance form by the date that
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•S 1439 IS

1 is 30 days after the date on which the no2 tice was delivered to the person.

3 ‘‘(6) NOTICE OF ACCEPTANCE AND RIGHT TO

4 APPEAL.—The Secretary shall provide to any person

5 that has been served with a notice under paragraph

6 (5)(B) and fails to withdraw the acceptance of the

7 offer in accordance with paragraph (5)(A), by first

8 class mail to the last known address of the person,

9 a notice stating that—

10 ‘‘(A) the offer made to the person is con11 sidered to be accepted and not timely with12 drawn; and

13 ‘‘(B) after exhausting all administrative

14 remedies, the person may appeal any deter15 mination of the Secretary in accordance with

16 paragraph (7).

17 ‘‘(7) JUDICIAL REVIEW.—A person described in

18 paragraph (6) may appeal any determination of the

19 Secretary with respect to—

20 ‘‘(A) the number of owners of undivided

21 interests in a tract of land required under para22 graph (2);

23 ‘‘(B) the fair market value of a tract of

24 land or interest in land;
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•S 1439 IS

1 ‘‘(C) the date on which a notice of rejec2 tion form was deposited in the United States

3 mail under paragraph (4)(B)(i); or

4 ‘‘(D) the date on which a notice of with5 drawal of acceptance form was deposited in the

6 United States mail under paragraph (5)(A).

7 ‘‘(f) OFFER TO SETTLE CLAIMS AGAINST THE

8 UNITED STATES.—

9 ‘‘(1) IN GENERAL.—The Secretary may make

10 an offer to any individual owner (not including an

11 Indian tribe) of a trust or restricted interest in a

12 tract of land to settle any claim that the owner may

13 have against the United States relating to the spe14 cific tract of land of which the interest is a part (not

15 including a claim for an accounting described in title

16 I of the Indian Trust Reform Act of 2005).

17 ‘‘(2) REQUIREMENTS.—An offer to settle claims

18 under this subsection shall—

19 ‘‘(A) be in writing;

20 ‘‘(B) be delivered to an individual owner by

21 the Secretary in person or through first class

22 mail; and

23 ‘‘(C) include—

24 ‘‘(i) the name of the individual owner;
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•S 1439 IS

1 ‘‘(ii) a description of the tract of land

2 to which the offer relates;

3 ‘‘(iii) the amount offered to settle a

4 claim of the individual owner;

5 ‘‘(iv) the manner and date by which

6 the individual owner shall accept the offer;

7 ‘‘(v) a statement that the individual

8 owner is under no obligation to accept the

9 offer;

10 ‘‘(vi) a statement that the individual

11 owner has the right to consult an attorney

12 or other advisor before accepting the offer;

13 ‘‘(vii) a statement that acceptance of

14 the offer by the individual owner will result

15 in a full and final settlement of all claims,

16 known and unknown, of the individual

17 owner (including the heirs and assigns of

18 the individual owner) against the United

19 States relating to the tract of land identi20 fied in the offer; and

21 ‘‘(viii) a statement that the settlement

22 proposed by the offer does not cover any

23 claim for an accounting described in title I

24 of the Indian Trust Reform Act of 2005.
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1 ‘‘(3) ACCEPTANCE.—No acceptance of an offer

2 under this subsection shall be valid or binding on the

3 individual owner unless the acceptance—

4 ‘‘(A) is in writing;

5 ‘‘(B) is signed by the individual owner;

6 ‘‘(C) is notarized; and

7 ‘‘(D) is attached to a copy of, or contains

8 all material terms of, the offer to which the ac9 ceptance corresponds.

10 ‘‘(4) LIMITATION.—No offer to purchase an in11 terest under this section or any other provision of

12 law shall be conditioned on the acceptance of an

13 offer to settle a claim under this subsection.

14 ‘‘(5) OTHER LAWS.—The authority of the Sec15 retary to settle claims under this subsection shall be

16 in addition to, and not in lieu of, the authority of

17 the Secretary to settle claims under any other provi18 sion of Federal law.

19 ‘‘(g) BORROWING FROM TREASURY.—

20 ‘‘(1) ISSUANCE OF OBLIGATIONS.—

21 ‘‘(A) IN GENERAL.—To the extent ap22 proved in annual appropriations Acts, the Sec23 retary may issue to the Secretary of the Treas24 ury obligations in such amounts as the Sec25 retary determines to be necessary to acquire in-
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•S 1439 IS

1 terests under this Act, subject to approval of

2 the Secretary of the Treasury, and bearing in3 terest at a rate to be determined by the Sec4 retary of the Treasury, taking into consider5 ation current market yields on outstanding

6 marketable obligations of the United States of

7 comparable maturities to the obligations.

8 ‘‘(B) LIMITATION.—The aggregate amount

9 of obligations under subparagraph (A) out10 standing at any time shall not exceed

11 $ø¿.

12 ‘‘(2) FORMS AND DENOMINATIONS.—The obli13 gations issued under paragraph (1) shall be in such

14 forms and denominations, and subject to such other

15 terms and conditions, as the Secretary of the Treas16 ury may prescribe.

17 ‘‘(3) REPAYMENT.—

18 ‘‘(A) IN GENERAL.—Revenues derived

19 from land restored to the Tribe under this Act

20 shall be used by the Secretary to pay the prin21 cipal and interest on the obligations issued

22 under paragraph (1).

23 ‘‘(B) ASSURANCE OF REPAYMENT.—The

24 Secretary shall ensure, to the maximum extent

25 possible, that the revenues described in sub-
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•S 1439 IS

1 paragraph (A) provide reasonable assurance of

2 repayment of the obligations issued under para3 graph (1).

4 ‘‘(4) AUTHORIZATION OF APPROPRIATIONS.—

5 There are authorized to be appropriated to the Sec6 retary for each fiscal year beginning after the date

7 of enactment of this subsection such sums as are

8 necessary to cover any difference between—

9 ‘‘(A) the total amount of repayments of

10 principal and interest on obligations issued to

11 the Secretary of the Treasury under paragraph

12 (1) during the previous fiscal year; and

13 ‘‘(B) the total amount of repayments de14 scribed in subparagraph (A) that were contrac15 tually required to be made to the Secretary of

16 the Treasury during that fiscal year.

17 ‘‘(h) RECEIPT OF PAYMENTS HAVE NO IMPACT ON

18 BENEFITS UNDER OTHER FEDERAL PROGRAMS.—The

19 receipt of a payment by an offeree under this title shall

20 not be—

21 ‘‘(1) subject to Federal or State income tax; or

22 ‘‘(2) treated as benefits or otherwise taken into

23 account in determining the eligibility of the offeree

24 for, or the amount of benefits under, any other Fed25 eral program, including the social security program,
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•S 1439 IS

1 the medicare program, the medicaid program, the

2 State children’s health insurance program, the food

3 stamp program, or the Temporary Assistance for

4 Needy Families program.’’.

5 TITLE V—RESTRUCTURING BU6 REAU OF INDIAN AFFAIRS

7 AND OFFICE OF SPECIAL

8 TRUSTEE

9 SEC. 501. PURPOSE.

10 The purpose of this title is to ensure a more effective

11 and accountable administration of duties of the Secretary

12 of the Interior with respect to providing services and pro13 grams to Indians and Indian tribes, including the manage14 ment of Indian trust resources.

15 SEC. 502. DEFINITIONS.

16 In this title:

17 (1) BUREAU.—The term ‘‘Bureau’’ means the

18 Bureau of Indian Affairs.

19 (2) OFFICE.—The term ‘‘Office’’ means the Of20 fice of Trust Reform Implementation and Oversight

21 referred to in section 503(c).

22 (3) SECRETARY.—The term ‘‘Secretary’’ means

23 the Secretary of the Interior.

24 (4) UNDER SECRETARY.—The term ‘‘Under

25 Secretary’’ means the individual appointed to the po-
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1 sition of Under Secretary for Indian Affairs, estab2 lished by section 503(a).

3 SEC. 503. UNDER SECRETARY FOR INDIAN AFFAIRS.

4 (a) ESTABLISHMENT OF POSITION.—There is estab5 lished in the Department of the Interior the position of

6 Under Secretary for Indian Affairs, who shall report di7 rectly to the Secretary.

8 (b) APPOINTMENT.—

9 (1) IN GENERAL.—Except as provided in para10 graph (2), the Under Secretary shall be appointed

11 by the President, by and with the advice and consent

12 of the Senate.

13 (2) EXCEPTION.—The officer serving as the As14 sistant Secretary for Indian Affairs on the date of

15 enactment of this Act may assume the position of

16 Under Secretary without appointment under para17 graph (1) if—

18 (A) the officer was appointed as Assistant

19 Secretary for Indian Affairs by the President by

20 and with the advice and consent of the Senate;

21 and

22 (B) not later than 180 days after the date

23 of enactment of this Act, the Secretary ap24 proves the assumption.
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1 (c) DUTIES.—In addition to the duties transferred to

2 the Under Secretary under sections 504 and 505, the

3 Under Secretary, acting through an Office of Trust Re4 form Implementation and Oversight, shall—

5 (1) carry out any activity relating to trust fund

6 accounts and trust resource management of the Bu7 reau (except any activity carried out under the Of8 fice of the Special Trustee for American Indians be9 fore the date on which the Office of the Special

10 Trustee is abolished), in accordance with the Amer11 ican Indian Trust Fund Management Reform Act of

12 1994 (25 U.S.C. 4001 et seq.);

13 (2) develop and maintain an inventory of Indian

14 trust assets and resources;

15 (3) coordinate with the Special Trustee for

16 American Indians to ensure an orderly transition of

17 the functions of the Special Trustee under section

18 505;

19 (4) supervise any activity carried out by the De20 partment of the Interior, including—

21 (A) to the extent that the activities relate

22 to Indian affairs, activities carried out by—

23 (i) the Commissioner of Reclamation;

24 (ii) the Director of the Bureau of

25 Land Management; and
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•S 1439 IS

1 (iii) the Director of the Minerals Man2 agement Service; and

3 (B) intergovernmental relations between

4 the Bureau and Indian tribal governments;

5 (5) to the maximum extent practicable, coordi6 nate activities and policies of the Bureau with activi7 ties and policies of—

8 (A) the Bureau of Reclamation;

9 (B) the Bureau of Land Management; and

10 (C) the Minerals Management Service;

11 (6) provide for regular consultation with Indi12 ans and Indian tribes that own interests in trust re13 sources and trust fund accounts;

14 (7) manage and administer Indian trust re15 sources in accordance with any applicable Federal

16 law;

17 (8) take steps to protect the security of data re18 lating to individual Indian and Indian tribal trust

19 accounts; and

20 (9) take any other measure the Under Sec21 retary determines to be necessary with respect to In22 dian affairs.
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1 SEC. 504. TRANSFER OF FUNCTIONS OF ASSISTANT SEC2 RETARY FOR INDIAN AFFAIRS.

3 (a) TRANSFER OF FUNCTIONS.—There is transferred

4 to the Under Secretary any function of the Assistant Sec5 retary for Indian Affairs that has not been carried out

6 by the Assistant Secretary as of the date of enactment

7 of this Act.

8 (b) DETERMINATIONS OF CERTAIN FUNCTIONS BY

9 THE OFFICE OF MANAGEMENT AND BUDGET.—If nec10 essary, the Office of Management and Budget shall make

11 any determination relating to the functions transferred

12 under subsection (a).

13 (c) PERSONNEL PROVISIONS.—

14 (1) APPOINTMENTS.—The Under Secretary

15 may appoint and fix the compensation of such offi16 cers and employees as the Under Secretary deter17 mines to be necessary to carry out any function

18 transferred under this section.

19 (2) REQUIREMENTS.—Except as otherwise pro20 vided by law—

21 (A) an officer or employee described in

22 paragraph (1) shall be appointed in accordance

23 with the civil service laws; and

24 (B) the compensation of the officer or em25 ployee shall be fixed in accordance with title 5,

26 United States Code.
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1 (d) DELEGATION AND ASSIGNMENT.—

2 (1) IN GENERAL.—Except as otherwise ex3 pressly prohibited by law or otherwise provided by

4 this section, the Under Secretary may—

5 (A) delegate any of the functions trans6 ferred to the Under Secretary by this section

7 and any function transferred or granted to the

8 Under Secretary after the date of enactment of

9 this Act to such officers and employees of the

10 Office as the Under Secretary may designate;

11 and

12 (B) authorize successive redelegations of

13 such functions as the Under Secretary deter14 mines to be necessary or appropriate.

15 (2) DELEGATION.—No delegation of functions

16 by the Under Secretary under this section shall re17 lieve the Under Secretary of responsibility for the

18 administration of the functions.

19 (e) REORGANIZATION.—The Under Secretary may al20 locate or reallocate any function transferred under this

21 section among the officers of the Office, and establish,

22 consolidate, alter, or discontinue such organizational enti23 ties in the Office, as the Under Secretary determines to

24 be necessary or appropriate.
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1 (f) RULES.—The Under Secretary may prescribe, in

2 accordance with the provisions of chapters 5 and 6 of title

3 5, United States Code, such rules and regulations as the

4 Under Secretary determines to be necessary or appro5 priate to administer and manage the functions of the Of6 fice.

7 (g) TRANSFER AND ALLOCATIONS OF APPROPRIA8 TIONS AND PERSONNEL.—

9 (1) IN GENERAL.—Except as otherwise pro10 vided in this section, the personnel employed in con11 nection with, and the assets, liabilities, contracts,

12 property, records, and unexpended balances of ap13 propriations, authorizations, allocations, and other

14 funds employed, used, held, arising from, available

15 to, or to be made available in connection with, the

16 functions transferred by this section, subject to sec17 tion 1531 of title 31, United States Code, shall be

18 transferred to the Office.

19 (2) UNEXPENDED FUNDS.—Unexpended funds

20 transferred pursuant to this subsection shall be used

21 only for the purposes for which the funds were origi22 nally authorized and appropriated.

23 (h) INCIDENTAL TRANSFERS.—

24 (1) IN GENERAL.—The Director of the Office of

25 Management and Budget, at any time the Director
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1 may provide, may make such determinations as are

2 necessary with regard to the functions transferred

3 by this section, and make such additional incidental

4 dispositions of personnel, assets, liabilities, grants,

5 contracts, property, records, and unexpended bal6 ances of appropriations, authorizations, allocations,

7 and other funds held, used, arising from, available

8 to, or to be made available in connection with such

9 functions, as are necessary, to carry out this section.

10 (2) TERMINATION OF AFFAIRS.—The Director

11 of the Office of Management and Budget shall pro12 vide for the termination of the affairs of all entities

13 terminated by this section and for any further meas14 ures and dispositions as are necessary to effectuate

15 the purposes of this section.

16 (i) EFFECT ON PERSONNEL.—

17 (1) IN GENERAL.—Except as otherwise pro18 vided by this section, the transfer pursuant to this

19 section of full-time personnel (except special Govern20 ment employees) and part-time personnel holding

21 permanent positions shall not cause any such em22 ployee to be separated or reduced in grade or com23 pensation for a period of at least 1 year after the

24 date of transfer of the employee under this section.
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1 (2) EXECUTIVE SCHEDULE POSITIONS.—Except

2 as otherwise provided in this section, any person

3 who, on the day preceding the date of enactment of

4 this Act, held a position compensated in accordance

5 with the Executive Schedule prescribed in chapter

6 53 of title 5, United States Code, and who, without

7 a break in service, is appointed to a position in the

8 Office having duties comparable to the duties per9 formed immediately preceding such appointment

10 shall continue to be compensated in the new position

11 at not less than the rate provided for the previous

12 position, for the duration of the service of the person

13 in the new position.

14 (3) TERMINATION OF CERTAIN POSITIONS.—

15 Positions whose incumbents are appointed by the

16 President, by and with the advice and consent of the

17 Senate, the functions of which are transferred by

18 this title, shall terminate on the date of enactment

19 of this Act.

20 (j) SEPARABILITY.—If a provision of this section or

21 the application of this section to any person or cir22 cumstance is held invalid, neither the remainder of this

23 section nor the application of the provision to other per24 sons or circumstances shall be affected.

25 (k) TRANSITION.—The Under Secretary may use—
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1 (1) the services of the officers, employees, and

2 other personnel of the Assistant Secretary for Indian

3 Affairs relating to functions transferred to the Office

4 by this section; and

5 (2) funds appropriated to the functions for such

6 period of time as may reasonably be needed to facili7 tate the orderly implementation of this section.

8 (l) REFERENCES.—Any reference in a Federal law,

9 Executive order, rule, regulation, delegation of authority,

10 or document relating to the Assistant Secretary for Indian

11 Affairs, with respect to functions transferred under this

12 section, shall be deemed to be a reference to the Under

13 Secretary.

14 (m) RECOMMENDED LEGISLATION.—Not later than

15 180 days after the effective date of this title, the Under

16 Secretary, in consultation with the appropriate committees

17 of Congress and the Director of the Office of Management

18 and Budget, shall submit to Congress any recommenda19 tions relating to additional technical and conforming

20 amendments to Federal law to reflect the changes made

21 by this section.

22 (n) EFFECT OF SECTION.—

23 (1) CONTINUING EFFECT OF LEGAL DOCU24 MENTS.—Any legal document relating to a function

25 transferred by this section that is in effect on the
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62

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1 date of enactment of this Act shall continue in effect

2 in accordance with the terms of the document until

3 the document is modified or terminated by—

4 (A) the President;

5 (B) the Under Secretary;

6 (C) a court of competent jurisdiction; or

7 (D) operation of Federal or State law.

8 (2) PROCEEDINGS NOT AFFECTED.—This sec9 tion shall not affect any proceeding (including a no10 tice of proposed rulemaking, an administrative pro11 ceeding, and an application for a license, permit,

12 certificate, or financial assistance) relating to a

13 function transferred under this section that is pend14 ing before the Assistant Secretary on the date of en15 actment of this Act.

16 SEC. 505. OFFICE OF SPECIAL TRUSTEE FOR AMERICAN IN17 DIANS.

18 (a) TERMINATION.—Notwithstanding sections 302

19 and 303 of the American Indian Trust Fund Management

20 Reform Act of 1994 (25 U.S.C. 4042; 4043), the Office

21 of Special Trustee for American Indians shall terminate

22 on the effective date of this section.

23 (b) TRANSFER OF FUNCTIONS.—There is transferred

24 to the Under Secretary any function of the Special Trustee
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1 for American Indians that has not been carried out by

2 the Special Trustee as of the effective date of this section.

3 (c) DETERMINATIONS OF CERTAIN FUNCTIONS BY

4 THE OFFICE OF MANAGEMENT AND BUDGET.—If nec5 essary, the Office of Management and Budget shall make

6 any determination relating to the functions transferred

7 under subsection (b).

8 (d) PERSONNEL PROVISIONS.—

9 (1) APPOINTMENTS.—The Under Secretary

10 may appoint and fix the compensation of such offi11 cers and employees as the Under Secretary deter12 mines to be necessary to carry out any function

13 transferred under this section.

14 (2) REQUIREMENTS.—Except as otherwise pro15 vided by law—

16 (A) any officer or employee described in

17 paragraph (1) shall be appointed in accordance

18 with the civil service laws; and

19 (B) the compensation of such an officer or

20 employee shall be fixed in accordance with title

21 5, United States Code.

22 (e) DELEGATION AND ASSIGNMENT.—

23 (1) IN GENERAL.—Except as otherwise ex24 pressly prohibited by law or otherwise provided by

25 this section, the Under Secretary may—
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64

•S 1439 IS

1 (A) delegate any of the functions trans2 ferred to the Under Secretary under this sec3 tion and any function transferred or granted to

4 the Under Secretary after the effective date of

5 this section to such officers and employees of

6 the Office as the Under Secretary may des7 ignate; and

8 (B) authorize successive redelegations of

9 the functions as are necessary or appropriate.

10 (2) DELEGATION.—No delegation of functions

11 by the Under Secretary under this section shall re12 lieve the Under Secretary of responsibility for the

13 administration of the functions.

14 (f) REORGANIZATION.—The Under Secretary may al15 locate or reallocate any function transferred under sub16 section (b) among the officers of the Office, and establish,

17 consolidate, alter, or discontinue such organizational enti18 ties in the Office as the Under Secretary determines to

19 be necessary or appropriate.

20 (g) RULES.—The Under Secretary may prescribe, in

21 accordance with the provisions of chapters 5 and 6 of title

22 5, United States Code, such rules and regulations as the

23 Under Secretary determines to be necessary or appro24 priate to administer and manage the functions of the Of25 fice.
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1 (h) TRANSFER AND ALLOCATIONS OF APPROPRIA2 TIONS AND PERSONNEL.—

3 (1) IN GENERAL.—Except as otherwise pro4 vided in this section, the personnel employed in con5 nection with, and the assets, liabilities, contracts,

6 property, records, and unexpended balances of ap7 propriations, authorizations, allocations, and other

8 funds employed, used, held, arising from, available

9 to, or to be made available in connection with the

10 functions transferred by this section, subject to sec11 tion 1531 of title 31, United States Code, shall be

12 transferred to the Office.

13 (2) UNEXPENDED FUNDS.—Unexpended funds

14 transferred pursuant to this subsection shall be used

15 only for the purposes for which the funds were origi16 nally authorized and appropriated.

17 (i) INCIDENTAL TRANSFERS.—

18 (1) IN GENERAL.—The Director of the Office of

19 Management and Budget, at any time the Director

20 may provide, may make such determinations as are

21 necessary with regard to the functions transferred

22 by this section, and make such additional incidental

23 dispositions of personnel, assets, liabilities, grants,

24 contracts, property, records, and unexpended bal25 ances of appropriations, authorizations, allocations,
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66

•S 1439 IS

1 and other funds held, used, arising from, available

2 to, or to be made available in connection with such

3 functions, as are necessary, to carry out this section.

4 (2) TERMINATION OF AFFAIRS.—The Director

5 of the Office of Management and Budget shall pro6 vide for the termination of the affairs of all entities

7 terminated by this section and for any further meas8 ures and dispositions as are necessary to effectuate

9 the purposes of this section.

10 (j) EFFECT ON PERSONNEL.—

11 (1) IN GENERAL.—Except as otherwise pro12 vided by this section, the transfer pursuant to this

13 section of full-time personnel (except special Govern14 ment employees) and part-time personnel holding

15 permanent positions shall not cause any such em16 ployee to be separated or reduced in grade or com17 pensation for a period of at least 1 year after the

18 date of transfer of the employee under this section.

19 (2) EXECUTIVE SCHEDULE POSITIONS.—Except

20 as otherwise provided in this section, any person

21 who, on the day preceding the effective date of this

22 section, held a position compensated in accordance

23 with the Executive Schedule prescribed in chapter

24 53 of title 5, United States Code, and who, without

25 a break in service, is appointed to a position in the
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67

•S 1439 IS

1 Office having duties comparable to the duties per2 formed immediately preceding such appointment,

3 shall continue to be compensated in the new position

4 at not less than the rate provided for the previous

5 position, for the duration of the service of the person

6 in the new position.

7 (3) TERMINATION OF CERTAIN POSITIONS.—

8 Positions the incumbents of which are appointed by

9 the President, by and with the advice and consent

10 of the Senate, and the functions of which are trans11 ferred by this title, shall terminate on the effective

12 date of this section.

13 (k) SEPARABILITY.—If a provision of this section or

14 the application of this section to any person or cir15 cumstance is held invalid, neither the remainder of this

16 section nor the application of the provision to other per17 sons or circumstances shall be affected.

18 (l) TRANSITION.—The Under Secretary may use—

19 (1) the services of the officers, employees, and

20 other personnel of the Special Trustee relating to

21 functions transferred to the Office by this section;

22 and

23 (2) funds appropriated to those functions for

24 such period of time as may reasonably be needed to

25 facilitate the orderly implementation of this section.
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•S 1439 IS

1 (m) REFERENCES.—Any reference in a Federal law,

2 Executive order, rule, regulation, delegation of authority,

3 or document relating to the Special Trustee, with respect

4 to functions transferred under this section, shall be

5 deemed to be a reference to the Under Secretary.

6 (n) RECOMMENDED LEGISLATION.—Not later than

7 180 days after the effective date of this title, the Under

8 Secretary, in consultation with the appropriate committees

9 of Congress and the Director of the Office of Management

10 and Budget, shall submit to Congress any recommenda11 tions relating to additional technical and conforming

12 amendments to Federal law to reflect the changes made

13 by this section.

14 (o) EFFECT OF SECTION.—

15 (1) CONTINUING EFFECT OF LEGAL DOCU16 MENTS.—Any legal document relating to a function

17 transferred by this section that is in effect on the ef18 fective date of this section shall continue in effect in

19 accordance with the terms of the document until the

20 document is modified or terminated by—

21 (A) the President;

22 (B) the Under Secretary;

23 (C) a court of competent jurisdiction; or

24 (D) operation of Federal or State law.
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1 (2) PROCEEDINGS NOT AFFECTED.—This sec2 tion shall not affect any proceeding (including a no3 tice of proposed rulemaking, an administrative pro4 ceeding, and an application for a license, permit,

5 certificate, or financial assistance) relating to a

6 function transferred under this section that is pend7 ing before the Special Trustee on the effective date

8 of this section.

9 (p) EFFECTIVE DATE.—This section shall take effect

10 on December 31, 2008.

11 SEC. 506. HIRING PREFERENCE.

12 In appointing or otherwise hiring any employee to the

13 Office, the Under Secretary shall give preference to Indi14 ans in accordance with section 12 of the Act of June 8,

15 1934 (25 U.S.C. 472).

16 SEC. 507. AUTHORIZATION OF APPROPRIATIONS.

17 There are authorized to be appropriated such sums

18 as are necessary to carry out this title.

19 TITLE VI—AUDIT OF INDIAN

20 TRUST FUNDS

21 SEC. 601. AUDITS AND REPORTS.

22 (a) FINANCIAL STATEMENTS AND INTERNAL CON23 TROL REPORT.—

24 (1) FINANCIAL STATEMENTS.—For each fiscal

25 year beginning after the enactment of this Act, the
73

70

•S 1439 IS

1 Secretary of Interior shall prepare financial state2 ments for individual Indian, Indian tribal, and other

3 Indian trust accounts in accordance with generally

4 accepted accounting principles of the Federal Gov5 ernment.

6 (2) INTERNAL CONTROL REPORT.—Concur7 rently with the financial statements under by para8 graph (1), the Secretary shall prepare an internal

9 control report that—

10 (A) establishes the responsibility of the

11 Secretary for establishing and maintaining an

12 adequate internal control structure and proce13 dures for financial reporting under this Act;

14 and

15 (B) assesses the effectiveness of the inter16 nal control structure and procedures for finan17 cial reporting under subparagraph (A) during

18 the preceding fiscal year.

19 (b) INDEPENDENT EXTERNAL AUDITOR.—

20 (1) IN GENERAL.—The Comptroller General of

21 the United States shall enter into a contract with an

22 independent external auditor to conduct an audit

23 and prepare a report in accordance with this sub24 paragraph.
74

71

•S 1439 IS

1 (2) AUDIT REPORT.—An independent external

2 auditor shall submit to the Committee on Indian Af3 fairs of the Senate, and make available to the public,

4 an audit of the financial statements under sub5 section (a)(1) in accordance with—

6 (A) generally accepted auditing standards

7 of the Federal Government; and

8 (B) the financial audit manual jointly

9 issued by the Government Accountability Office

10 and the Council on Integrity and Efficiency of

11 the President.

12 (3) ATTESTATION AND REPORT.—In conducting

13 the audit under paragraph (2), the independent ex14 ternal auditor shall attest to, and report on, the as15 sessment of internal controls made by the Secretary

16 under subsection (a)(2)(B).

17 (4) PAYMENT FOR AUDIT AND REPORT.—

18 (A) TRANSFER OF FUNDS.—On request of

19 the Comptroller General, the Secretary shall

20 transfer to the Government Accountability Of21 fice from funds made available for administra22 tive expenses of the Department of Interior the

23 amount requested by the Comptroller General

24 to pay for an annual audit and report.

25 (B) CREDIT TO ACCOUNT.—
75

72

•S 1439 IS

1 (i) IN GENERAL.—The Controller

2 General shall credit the amount of any

3 funds transferred under subparagraph (A)

4 to the account established for salaries and

5 expenses of the Government Accountability

6 Office.

7 (ii) AVAILABILITY.—Any amount

8 credited under clause (i) shall be made

9 available on receipt, without fiscal year

10 limitation, to cover the full costs of the

11 audit and report.

12 SEC. 602. AUTHORIZATION OF APPROPRIATIONS.

13 There are authorized to be appropriated such sums

14 as are necessary to carry out this title.

Æ
76

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

NORTH DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN

AFFAIRS

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

Let me echo your comments about some of the more intemperate

remarks that have been made about our draft proposal. It is important to point out that this litigation, the Cobell litigation, affects

not just the individuals that are a party to the litigation. It will affect all Indian people all across this country. In the future, we can

spend billions of dollars doing historical accounting, sending the

money to accountants, legions of accountants and lawyers to do the

historical accounting, or we can find some way to resolve this. But

the fact is, this issue is going to affect Indian health care, Indian

housing, Indian education unless we find some way to address it.

Now, we drafted a piece of legislation. We said it was a start, a

draft. We left the money issue blank in the larger numbers. We

drafted this influenced by many of the principles developed by the

work group that was organized by the National Congress of American Indians and Chairman Tex Hall and the Intertribal Monitoring Association. When we put it out there, we clearly indicated,

look, this is just a step we hope in the right direction.

Indian people have been cheated, bilked and defrauded over a

long period of time. I understand that. I agree with that. This country needs to deal with that. It has been the case with respect to

trust accounts. Senator McCain and I and other members of the

committee cannot undo that. We wish we could, but we can’t. So

the question is, what do we do now?

Well, there are two choices. We can be actively involved trying

to reach some kind of legislative solution to this that is acceptable

to everyone, or hopefully acceptable to most. Or we can just say,

we have a lot of other things we ought to work on. You all just handle it. Let the courts handle it. We cannot pass legislation. We

have too many discordant voices out there. It cannot be done, so

that will not be our agenda. We will just not move legislation.

Whatever the courts decide, they decide. Whatever money we have

to pony up for accountants and attorneys, we will do it. But we

cannot provide the leadership on something that is insoluble.

That is one approach. We have chosen not to try to move down

that road because we think that is counterproductive for the country, but most importantly we believe it is counterproductive for Indian people. We think for the tribes and the individuals involved

in the case and for all Indians all across this country, who I think

still suffer from a bona fide emergency in health care, housing and

education, we need to do better. That is why we have decided to

try to advance working with the working group, advance something

that we think constructively could intercept and respond to this. Does anybody in this room think that spending $8 billion, $10 billion, or $12 billion for accountants and lawyers and historical accounting is the right way to address this? That is unbelievable.

So we have two choices. We can either decide to proceed and

work with people in a constructive way, or we can decide, don’t

bother us; we can’t do it. And so you all go figure it out with the

courts and let the lawyers and the accountants get rich and everybody else is going to suffer the consequences. I hope we choose the
77

former, but I must say that I was not very impressed the other day

reading some of the statements. There is so much shrill noise,

crowd noise on some of these issues that it will make it very hard

to proceed.

Let me also as I conclude say that there are also some important

leadership out there in Indian country as well who really feel that

this needs to get resolved in the right way for Indian people. We

want to work with them. This will not be easy, but Chairman

McCain and I and other members of the committee have decided

we have a responsibility to try. We are going to try as hard as we

can to see if we cannot find a way to do this, but we can’t do it

without your help.

Mr. Chairman, thank you very much.

The CHAIRMAN. Thank you very much.

Our first panel is Jim Cason, who is the associate deputy secretary of the Department of the Interior. He is accompanied by

Ross Swimmer, who is the special trustee for American Indians in

the Department of the Interior. Welcome to both of you, and please

proceed. It is good to have you back, Mr. Cason.

Mr. CASON. Thank you, Mr. Chairman.

The CHAIRMAN. Excuse me, before you go. Did Senator Akaka or

Senator Johnson have opening comments?

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

HAWAII

Senator AKAKA. Yes, Mr. Chairman; I do have a statement. In

the interests of time, I will submit my statement for the record.

But before that, I want to commend you and Senator Dorgan for

addressing this huge, historic problem for Indian country and all

Indian people. It is something that is going to be tough, but I hope

that we will all work together to try to find the best solutions to

this problem over many, many centuries, not centuries, but decades

that this has been a problem

Mr. Chairman, I want to commend you and Senator Dorgan for

introducing S. 1439 and commend you for the effort and to let you

know that I will be with you in addressing this huge issue for our

country.

Thank you very much, Mr. Chairman.

[Prepared statement of Senator Akaka appears in appendix.]

The CHAIRMAN. Thank you.

Senator Johnson.

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

SOUTH DAKOTA

Senator JOHNSON. Yes, Mr. Chairman; I will be very brief.

Thank you for holding this hearing and for your efforts with the

Indian Trust Reform Act of 2005. I am still receiving comments

from both tribal leaders and tribal members regarding this bill.

Upon receiving more feedback from the interested parties back

home, I will share their concerns with the committee.

It is my hope that all concerned parties can work toward a just

conclusion with a minimum of harsh rhetoric and a maximum of

good faith, cooperation and consultation. I want to thank the committee staff for consulting with our tribal leaders thus far, as the
78

committee should. My home State of South Dakota is home to a

significant percentage of individual Indian money account holders

and trust asset, with 26 percent of Indian money accounts from

tribes in the Great Plains region, twice the number of individual

accounts of any other region.

I look forward to continuing to work with you as we proceed on

this important issue. Frankly, I have been discouraged over the

years with the Government’s actions pertaining to the management

and mismanagement of the tribes and individual trust assets. The

Government as trustee has failed Indian country. At times, the

Government has acted in bad faith.

I understand that this bill was drafted with compromise in mind.

It is important that efforts continue to go on to reach a reasonable

consensus. While I believe that this legislation is a good start, I

urge the committee, as I know you will, to continue to take a hard

look at some of the pro-tribal provisions that have been omitted.

Most importantly, however, I hope that we can arrive at a point

where legislation will include an articulation of trust standards in

the legislation itself.

Finally, any settlement legislation should balance the obligations

that the United States owes to the tribes and tribal claimants. We

have to be mindful that this legislation does not just address the

settlement of Cobell, but has a significant impact on all tribal concerns.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much

Mr. Cason.

STATEMENT OF JIM CASON, ASSOCIATE DEPUTY SECRETARY,

DEPARTMENT OF THE INTERIOR, ACCOMPANIED BY ROSS

SWIMMER, SPECIAL TRUSTEE FOR AMERICAN INDIANS

Mr. CASON. Good morning, Mr. Chairman.

Thank you for the opportunity to come before the committee

again and discuss the Cobell v. Norton lawsuit. We have discussed

the lawsuit on several prior occasions. The Department of the Interior supports the efforts of Congress as the Indian Trust Settlor to

clarify our Indian trust duties, responsibilities and expectations.

We particularly want to thank the chairman and vice chairman

for their efforts to try to reach a full, fair, and final settlement of

the issues in this case. This Congress has the opportunity to look

at this issue anew, examine the facts, and move forward to a clear

and consistent sense of purpose regarding the Federal Government’s administration of the Indian trust.

Mr. Chairman, as mentioned before, we have had a significant

challenge in trying to separate rhetoric from fact involving this

issue. The case is laced heavily with rhetoric. What we have done

in the last 3 years is attempt to replace rhetoric with fact with our

accounting efforts. I would like to synopsize basically what we have

found.

On the individual accounting area, the Department of the Interior spent approximately $100 million in individual accounting thus

far. We have done an accounting or compiled the ledgers for the

name plaintiffs and predecessors in interest. We have looked at

tens of thousands of judgment and per capita accounts. We have
79

distributed thousands of special deposit accounts. We have done a

statistical evaluation of thousands of transactions involving landbased accounts.

We have done all of these activities under the auspices of the

plan provided by the Department of the Interior to Congress and

the court to conduct the historical accounting. Throughout all of

these efforts, we have found that there are differences between

what is on the accounting ledgers within the Department of the Interior and what is in the supporting documentation. The differences tend to be few. They tend to be small. And they tend to

be on both sides of the ledger. There are instances in which we

have overpaid Indian account holders and there are instances in

which we have underpaid Indian account holders. If you take all

of the transactions and all of the interest that is associated with

the transactions in total for all of the things that we have examined, we have so far overpaid Indian beneficiaries.

That does not mean that the job is done. It is not. We have been

concentrating on our first priority, which is to do the accounting for

the accounts that had current balances as of December 31, 2000.

We selected that as the priority because we have an ongoing relationship with those account holders. These accounts go beyond the

period in which we were planning to do historical accounting,

where they had an ongoing responsibility, and under the 1994 act

we had ongoing requirements for providing periodic statements and

balancing those accounts.

So we set that as the priority accounts that we would do first.

We have found some errors, but they do not amount to anywhere

near the magnitude of error that has been asserted thus far in this

case. For example, Mr. Chairman, as we have looked at the accounts for land-based accounts, which are the most problematic,

the most expensive to do, the most complicated to do, and the most

time-consuming to do, thus far in examining all of the thousands

of transactions that we have looked at, we have a net error of

about $10,000. We have an overall error of underpayments of about

$48,000 and about $35,000 of off-setting overpayments.

So there are some errors, but they tend to be small. They tend

to be few. I would leave this synopsis with the thought that depending on the task that we are given as to how far back we account and for whom we account, there could be much, much more

to be done and in that area there is risk and uncertainty. We do

not know what we will find if we spend hundreds of millions or billions of dollars to go do an accounting. We may find results similar

to what we have found so far, or we may find that there are in fact

problems. We do not know. The plaintiffs do not know.

But what we know so far is, after doing tens of thousands of accounts, we have not found any sign of systemic fraud or systemic

accounting error in our systems. What I have been told by the accounting firms through our Office of Historical Trust Accounting is

that the errors that we have found manifest themselves as normal

human error, as opposed to the result of any systemic problem with

our systems.

If I can move on, Congress created the individual trust. We are

hopeful that S. 1439 will resolve many of the issues that we have

spent the last 9 years in court debating. From the Government’s
80

standpoint, we believe that S. 1439 should provide a full, fair, and

final resolution of the entire case; provide a clear and realistic

statement of the Government’s historic accounting obligations for

the trust funds of individuals; resolve the accounting claims of account holders and any associated funds for funds mismanagement;

eliminate inefficient trust management obligations by consolidating

individual Indians’ lands through a land purchasing program; address any historical land assets mismanagement claims; clarify

trust accounting and management responsibilities such that they

are limited by available appropriations so that future claims and

litigation do not arise as a result of unfunded obligations; and provide a clear statement of the government’s historical accounting obligations for Indian tribes.

We recognize that this is a daunting task, but I can assure you

it is no more daunting than the prospect of facing many more years

in court trying to find the answers to these issues.

Mr. Chairman, I would like to close with a comment in support

of our people at the Department of the Interior. We want to be sure

that the public record reflects the fact of their extraordinary service

to their country. Many of our employees past and present have

faced rough sledding in the Cobell case and have been unfairly maligned.

Department of the Interior employees working on the issues involved in the Cobell case, like other employees of the department,

are here to serve the American public. They work hard and in good

faith to implement the laws that you enact and protect the legal

rights of Native Americans. We ask that our employees be treated

with the dignity and respect they have earned and deserve, as we

all work our way together through the difficult legal issues involved in the Cobell case.

The department is encouraged by the Senate’s leadership on this

issue. We look forward to resolving this case so that the department and beneficiaries can move forward on a positive agenda for

Indian country.

Thank you for the opportunity to appear. We would be happy to

answer any questions at this time.

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

The CHAIRMAN. Mr. Swimmer, do you have any additional comments?

Mr. SWIMMER. Mr. Chairman, I do not have specifically on the

bill, but I would like to bring to the attention of the committee

some of the reform items which have been a sideline to the Cobell

matter in the court, in requesting that the trust be reformed. After

the 2002 consultations that we had with the tribal leaders and the

tribal leader task force, several things came out of that that I felt

were very important. After becoming the Special Trustee, we

moved forward on this agenda of reform. I would like to just let you

know a few of the things that have happened.

One of the most distressing things has been, I guess in the rhetoric both in the case and previous to our tenure there and that is

that there seems to be a wholesale lack of records in Indian country that can establish for fact what happened in individual Indian

accounts. I think at one time this was true, but it was true not because records were not available. It is because they could not be
81

brought together. They were located in literally hundreds of different locations, Federal record centers from Fort Worth to Washington; tribes; BIA offices; and other places.

One of the things that has happened is the creation of a records

repository in Lenexa, KS. It is a state-of-the-art, actually the most

modern records center of any in the Federal Government, as well

as elsewhere. Currently, that record center is housing over 100,000

boxes of records that have been collected and approximately 250-

plus million pages of records. Most of these deal with the financial

accounting or management of Indian lands over the years.

These have also been indexed and stored, and they are there in

perpetuity. As we are able to collect additional records, they go into

this repository. This has been no small effort. Approximately $20

million a year has been dedicated to this effort for the last few

years to bring these records together.

Since the 1994 act, beginning in the late 1990’s, the trust fund

has been audited annually by outside auditors, both the tribal and

the individual trust fund. In addition to that, as provided in the

act, quarterly statements of account have been sent to beneficiaries

who are entitled to receive the statements on any funds that might

be there. I might add, the quarterly statements are sent out for

those who have more than $1 in their account. The 1994 act provides that those with less than $1 in their account receive annual

statements, and those too are sent.

We have just completed the conversion of legacy systems into

what we call pilot agencies at Anadarko and Concho. These legacy

systems change from 30- to 40-year-old computer systems for the

title, work that is done by the Bureau of Indian Affairs to the accounting work that is done by the Special Trustee’s office, and

tracking the leasing and the use of land. The conversion of these

legacy systems and the data in these legacy systems enable us to

fulfill the requirements of the 1994 act, identifying source, type and

status of funds for each individual Indian account holder.

We have recently implemented at those two locations a lockbox

system. This has been particularly troubling in Indian country. It

is to collect the money that is owed. It is not unusual, has not been

in the past, for a lessee to come in and give money to the Bureau

of Indian Affairs and have it sit on someone’s desk for a few days,

maybe weeks. This lockbox system allows us to collect directly from

the lessee, deposit the money immediately, begin generating interest on those funds, and place it in the appropriate account to avoid

the special deposit account problem that we have now.

One innovative thing, I think, that has been very helpful in Indian country just in the last 4 months, is a call center operation

that was set up to receive calls from beneficiaries to help them

identify answers to problems that they might have with their accounts or anything dealing with the trust issue. So far, we have

fielded over 33,000 calls from beneficiaries at this call center with

an 800 number. Over 90 percent, I think about 94 percent of the

calls are able to be resolved at the time of the call, which is also

important to avoid having to continually call back and try to find

someone to provide an answer.

For the first time in the history of the Indian trust, we now have

trained trust administrators and trust officers located in the field.
82

These are people who have come both from the private sector of

trust, fiduciary trust, working in trust companies, building trust

companies, to people in the Bureau of Indian Affairs who have

been trained in the fiduciary trust, and then cross-trained with the

Indian trust and those coming from the private trust and vice

versa.

Seven years ago, there was one person in the Department of the

Interior that had private sector trust experience, and that is my

Deputy Special Trustee Donna Erwin. Since that time, we now

have over 60 people trained similarly in the trust world of fiduciary

trust administering accounts and business on behalf of our trust

beneficiaries. The total focus of the reform effort has been to, for

the beneficiary him- or herself to provide the services that have in

fact been lacking in the past.

So I bring these items to your attention to let you know that

there is another side to Cobell, and that has been in the reform,

and we have not been waiting on things to happen, but moving forward with the support of the Congress and the appropriations, and

the support of the Secretary particularly, and people like Mr.

Cason. So we bring that to the attention of the Congress and thank

you very much also for the efforts on the introduction of the proposed legislation.

The CHAIRMAN. Thank you very much.

Mr. Cason, what percentage of the total land-based accounts

have you examined, roughly?

Mr. CASON. The part that we have been looking at, Mr. Chairman, is the electronic-era accounts, 1985 to 2000. Our estimate is

that they represent about 70 percent of the accounts that we intend

to look at under our plan.

The CHAIRMAN. What is the percentage of the total accounts?

Mr. CASON. Total accounts since 1887? We do not know. No one

knows. As far as I know, there is no list ever compiled of all the

accounts over the last 118 years. No one knows.

The CHAIRMAN. How much money have you spent on examining

land-based accounts?

Mr. CASON. I do not have a specific figure. Overall, we have spent about $100 million looking at individual accounts, broken

into the efforts that I mentioned earlier

The CHAIRMAN. Would you provide that for the record for us?

Mr. CASON. Yes.

The CHAIRMAN. How much money do you think it will cost to

complete the land-based accounts?

Mr. CASON. The estimate that we have in our plan that we submitted to Congress for the accounting that we intended to do was

$335 million. The cost of the accounting looks like it may be a little

bit more than that, but we have not revised it, pending discussions

about how we resolve our accounting duties and obligations.

The CHAIRMAN. Mr. Swimmer, I think it was the 108th Congress,

we called for two mediators to work to try to solve this. Do you remember that? Two highly qualified individuals? What happened?

Mr. SWIMMER. I think what happened is that any mediation

needs to work toward a middle point and you eventually get the

two parties together. The information that has been generated thus

far is that there could be millions of dollars in discrepancies in the
83

Indian trust funds over 100 years. It is not evident that there was,

as Mr. Cason said, wholesale fraud at the bureau level. Money

came in, money went out, and that was the basis of the accounting

that was ordered. Money came in and money went out. It was not

for estimating what should have come in. If I leased my minerals

for x dollars and I think I should have gotten X plus one, the point

is, x went into your account.

The plaintiffs, on the other hand, have set a number based on $13 billion that we generally both agree came into the trust. Their

position is none of it went out. It never got paid. If you add interest

to that over those periods of time, you come up with $170-plus billion. When you start at $170-plus billion and what could be millions that could be assessed, and you are trying to reach a middle

point, I really believe that the mediators were unable to bring that

together, to bring the two parties closer together than that.

The CHAIRMAN. Do you have an idea as to what a lump-sum payment would be, Mr. Cason, under our proposal?

Mr. CASON. No, Mr. Chairman; it would depend on the assumptions that you make. If we use the facts that we have found so far

in the accounting process, the number would be very, very low. If

you looked at the assumptions that Ross just talked about, the

number would be very, very high. We do not think that the facts

that we have thus far would support a very high number, but there

is uncertainty and risk associated with, as you mentioned, Mr.

Chairman, in your opening statement, that as we go further back,

depending on the size of the job and how we frame the job, what

exactly has to get done while we look at it. There is risk and uncertainty in a 100-years worth of activity, if that is what we have to

look at.

The CHAIRMAN. Finally, suppose that Senator Dorgan’s and my

proposal gains no traction and there is just opposition to it from

all sides, so we move on to other issues. As mentioned, we have a

number of other issues. It seems to me there is a great deal of uncertainty in the courts given the record of the District Court judge

making certain decisions and then that being overturned by an appellate court.

Then it seems to me that understandably people who are involved in litigation may want to carry it all the way to the U.S.

Supreme Court, since there seems to be divisions of opinion at the

lower court levels. Is that a logical sequence of events here?

Mr. CASON. Mr. Chairman, in my opinion, if we are not successful with this effort it will be a great opportunity lost. We have been

in court for 9 years. I do not think we are any closer to a resolution

now after 9 years than we were when we started. I think you are

right that there are several rounds of up and down through the

District Court, Court of Appeals, and eventually the U.S. Supreme

Court if we have to go down that pathway. At this point, the time

and effort spent going down that pathway does not look very productive if there is another alternative, which I am hopeful this bill

will provide us

The CHAIRMAN. Ross.

Mr. SWIMMER. I would agree with Mr. Cason. I would say that

based on the expenditures to date for the litigation, which exceed

$100 million, we are looking at another $400 million to $500 mil-
84

lion just in litigation expenses. So I think there is obviously some

room for some value to be put on this in the legislation.

The CHAIRMAN. Senator Dorgan.

Senator DORGAN. Mr. Cason, to the extent that you know, what

is the size of the class in the Cobell v. Norton case? Some say

200,000; some say 500,000 individuals. What is your sense of that?

Mr. CASON. At this point, it is undefined. What we have from the

court is a generic reference to current and former IIM account

holders, but we have not had any more specific definition of that.

There are some parameters, a time frame. The numbers would

change if you say a statute of limitations would apply which the

District Court does not say applies, or if you say, well, I want to

take accounts from the 1970’s or 1950’s or 1930’s. Some people believe that the operative date would be 1938 when the Court of Appeals referred to that date and it is also in the 1994 act, and the

District Court judge says 1887. At this point, we do not have any

clear definition as to who would be covered and who would not be

covered.

Senator DORGAN. Mr. Cason, you told me once about a particular

parcel of land. You were trying to make a point about fractionated

ownership, a particular parcel of land, I think maybe it was 2,000

acres at the Wahpeton-Sisseton Tribe. Can you recount that for

me?

Mr. CASON. I have had several examples, in particular I have one

tract of land that has been pointed out to me by our staff that the

smallest individual interest is one-ten-billionth of an interest. If

you take a typical allotment, most of them are 40 acres or 80 acres

or 160 acres. It amounts to a very, very tiny, small amount of undivided interest in a property.

The point that I was making with you is that as a result of fractionation, we have huge complications in running this trust. Instead of the 100,000 allotments that we have, we have 2.5 million

to 4 million ownership interests, depending on what you count,

that we have to keep track of.

In doing all the land title work for all of those things and the

implications for leasing and the implications for probate, puts us

in a position that the way the trust is currently framed for individual allotees, we end up wasting a lot of money because we have to

administrative processing on interest of very low value or no value.

Senator DORGAN. Interest payments of 0.1 cent or 0.4 cents.

Mr. CASON. Yes.

Senator DORGAN. I think you described to me a piece of land that

produced, was it $2,000 worth of revenue and cost $42,000 for the

yearly accounting to keep track of the fractionated ownership.

Mr. CASON. Yes.

Senator DORGAN. The only reason I make that point is to describe I assume how difficult historical accounting is and how timeconsuming and how much money it is going to take.

Mr. Swimmer, you said that if this continues through the courts

to its conclusion, you think upward of $500 million of additional

legal fees?

Mr. SWIMMER. Accounting and legal.

Senator DORGAN. Accounting and legal fees.
85

Mr. SWIMMER. Accounting and legal, and most of that, well, that

is what the money is going for now is to do the historical accounting and to perform the various orders of the court, as well as to

pay the attorneys, both sides, for the effort that they are putting

into the case.

Senator DORGAN. But that would not reflect the cost of the larger

historical accounting, if you were to be required, as the court seems

to suggest, and go through the entire historical accounting effort,

I assume that the costs are much, much higher.

Mr. SWIMMER. It could be. We have estimated I believe as high as in excess of $10 billion if you were do a transaction by

tranaction analysis since 1887 of every single account holder. If you

took the 2,000 owners of the 160-acre tract, every time that is

leased you have 2,000 transactions because each owner has to have

an account set up, whatever the money, if it less than one penny,

it is rounded up to one penny and goes into the account, and then

when that person passes on, we have to do a probate for that particular person, even though it is one-ten-billionth.

So there are structural reforms that need to be done with the

trust, and certainly the effort at fractionation interests that you all

have worked on before I think will be helpful in the future. It has

been helpful in the past.

Senator DORGAN. One final point. Mr. Cason, you indicated that

in some of the accounting efforts that you have made that the results show little if any error. And yet, most of us have read of just

devastating anecdotal accounts of not just errors, but fraud, manipulation in various parts of the country over many years. How does

that square with your assessment that you take some accounts and

take a look at it and you find very little error?

Mr. CASON. It doesn’t. In terms of separating the rhetoric from

fact, we have not found that in the accounting that we have done.

I think it is also fair to say that we have not looked at all accounts

everywhere. We started with a priority of doing the accounts that

are relatively new that had balances. Maybe there is something different about those than the ones in the past.

Where we are potentially different in how the two sides refer to

this is I take the position that until I have actually done the accounting and have some indicator one way or the other as to what

the actual facts are, I do not project one way or the other what I

would find. Based on the areas that we have actually looked and

found the facts, what we have found is a few errors, and they are

small and they are both sides of the ledger, where we have overpaid the Indian account holder, underpaid the Indian account holder, and that when you net it out it is very close to zero relatively.

So it suggests that we have not found any systemic fraud. We

have not found any systemic accounting errors in our systems. As

Ross said, we do balance our accounts daily now. So for that period

of 1985 to 2000 that we are looking at principally, we have not

found material problems. It is possible before that that there may

be problems.

Senator DORGAN. Then I think I understand the basis for your

comment. The fact is, this goes back a long, long way with unscrupulous land agents and a whole series of fascinating and in some

ways devastating stories. I think I understand why you say little
86

error if you are just talking about a few accounts in a relatively

short recent timeframe.

Mr. Chairman, as I indicated to you, we have a series of five

votes, the first of which will start in just 1 moment. When that

first vote starts, I will run over and cast my vote and come back

so we can continue the hearing. I think the third, fourth, and fifth

votes will be 10-minute votes, but we will have to see how that

goes. I just wanted to mention that when the buzzer rings for the

first vote, I will leave and then come back so we can retain the

hearing as scheduled.

The CHAIRMAN. Thank you very much.

Senator Johnson.

Senator JOHNSON. Yes, Mr. Cason; I wonder if you and the Department of the Interior would address this specific bill, S. 1439.

Have you taken a position on this legislation? And would you share

any further elaboration or critique of the bill?

Mr. CASON. The Administration has not provided a statement of

Administration position on the bill yet. As you know, Senator, we

just got it last Thursday. We have looked at the bill and given the

nature of the Cobell litigation, there are lots of people in the Administration who are interested in this legislation and the prospect

for resolving the issues.

I would say generally for all the people that I have talked to

within the Administration, people have been positive about the effort, hopeful about the leadership being shown by this committee

to try and address the issue. There are a few issues which we

would like to discuss further with the committee in further deliberations of the bill, but overall we have been positive.

Senator JOHNSON. Thank you

No further questions.

The CHAIRMAN. Thank you very much.

Thank you for appearing today. It is good to see you again.

Mr. CASON. Nice to see you, Mr. Chairman.

The CHAIRMAN. Thank you.

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

Congress of American Indians; Chief James Gray, who is the president of the Inter-Tribal Monitoring Association and cochairman of

the Trust Reform and Cobell Settlement Work Group; Ernest L.

Stensgar, who is the president of the Affiliated Tribes of Northwest

Indians of Portland, OR; James T. Martin, the executive director

of the United South and Eastern Tribes of Nashville, TN; and

Elouise P. Cobell, the Blackfeet Reservation Development Fund of

Browning, MT.

We will begin with you, Chief Gray.

STATEMENT OF JIM GRAY, CHAIRMAN, BOARD OF DIRECTORS,

INTER-TRIBAL MONITORING ASSOCIATION

Mr. GRAY. Mr. Chairman, Mr. Vice Chairman, and members of

the committee, I am here in my capacity as chairman of the InterTribal Monitoring Association, and as cochairman of the Trust Reform and Cobell Settlement Work Group. I also serve as principal

chief of the Osage Nation.

The Nation will provide its own separate written testimony about

S. 1439 in light of our unique hybrid situation.
87

The CHAIRMAN. Without objection, all written statements will be

made part of the record.

Mr. GRAY. Thank you.

Those of you have worked to establish the principles for resolving

Cobell, reforming the broken Federal trust system, have strongly

held convictions about solutions to this decades-old problem. We

may come from different regions of the country, have varying trust

resources and have different stories to tell about the harm we have

suffered, but we all share the same critical and overriding objective: a meaningful settlement of the Cobell litigation that helps to

both undo the damage done and ensure that it does not happen

again.

There is no doubt in my mind, Mr. Chairman and Mr. Vice

Chairman, that we share the objective of justice for the past and

certainty for the future. There can be no question that this bill represents the first and perhaps the only opportunity we will have to

settle this case through discussions with the U.S. Congress, the entity that established the trust and which has preliminary, but not

unlimited authority to establish the terms of the trust.

As tribal leaders, we have the responsibility to make the most of

this extraordinary opportunity. This bill represents the committee’s

commitment to this objective as well. We must be successful in this

effort, for if we are not, the growing rift between Indian tribes and

the United States will become an entrenched gulf.

Consequently, I would like to note at the outset that one of the

most positive aspects of this significant legislation is the simple

fact that it has been introduced and by whom. I, for one, view the

chairman’s and vice chairman’s commitment to this effort as evidenced by the introduction of S. 1439 to be a very positive step and

pledge to work with you in a frank, pragmatic and reasonable manner to make this the best legislation it can be.

You have both demonstrated true political courage and leadership in crafting a bill to address this bitterly controversial issue,

and you deserve thanks and appreciation from all of us for this

bold step.

As to the bill you have introduced, I want to underscore in my

testimony today the key element that we believe is right, and then

close with a few thoughts of where we can go to improve the bill.

Let me begin with the things that we believe are right in S. 1439.

First, in your bill the funds for settlement do not come from programmatic funding of other Federal activities. This is a very important element of the bill that is absolutely correct. Unquestionably,

funds to settle the injustice against individual Indian money account holders cannot come from Indian programs. We believe the

explicit reference in S. 1439 to the judgement fund sends a clear

message that there is no legitimate argument that the cost of this

settlement should be charged or borne by any distinct part of the

Federal Government or Federal beneficiary.

Second, S. 1439 takes clear and affirmative steps toward reducing and eliminating several of the primary causes of the mismanagement mess. In particular, the bill addresses two causes:

The fractionated ownership of allotted lands and the absence of

clear executive responsibility for Federal trust activities.
88

The fractionation component of the bill demonstrates your commitment to a comprehensive effort to put this sad history and allotment policy and its nefarious consequences behind us. The creation

of an Under Secretary position should result in the coordination of

Federal policies throughout the Department of the Interior through

the focus of the Federal Government’s trust obligation. The recognition of this trust responsibility underscores the legitimacy of every

interaction between the Federal Government and Indian tribes and

their members. These and other provisions demonstrate that this

bill is concerned with both settling the past and taking steps to fix

the future.

Third, the bill recognizes that a fair settlement for hundreds of

thousands of individuals who have suffered for years or decades

will need to be resolved with a payment involving billions of dollars. With a class of claimants that includes hundreds of thousands

of individuals, a settlement of even hundreds of millions of dollars

would amount to nothing more than a token payment for each individual. Your bill recognizes that such a token payment will be a

constitutionally questionable act of confiscation, not the legitimate

act of a trustee.

Even if such a patently inadequate payment might be permissible, it would neither be fair or adequate to bring the crisis to an

immediate resolution we must strive to achieve.

There are a number of tribal leaders like myself who look forward to developing a legislative proposal that we can recommend

to Indian country. As you have heard from others today, we are not

yet at that point. But both the sponsor statements upon introduction clearly demonstrated that neither the chairman or vice chairman assume that this bill was intended to be anything more than

a starting point.

I look forward to our dialog. In this dialog, we must face each

tough issue together. There will be likely to be many, and resolve

them pragmatically, but also in a manner mindful of the terrible

injustice we are all committed to rectify. Ultimately, we must succeed. No amount of effort or accomplishment in any other area in

this committee’s jurisdiction will make up for the cost of not

achieving a settlement.

So where do we go from here? First, we must begin with a dialog

with the sponsors and their staff to develop an understanding of

whether certain provision of S. 1439 constitute mere place holders,

necessary components of settlement legislation, or concessions to

the legislative environment. For example, there is a great deal of

mistrust of both the Departments of the Interior and Treasury

within Indian country. Allowing either department to exercise the

scope of discretion that would be permitted under the current version of the bill could allow the very individuals who are the most

antagonistic to the objectives of this process to control most or

nearly all of the elements of the distribution of a settlement fund.

There may come a day when there is enough trust in Indian

country to structure the settlement in this fashion, but we are not

at that point today. In fact, we are far from it. If there are reasons

why a judicially managed distribution is presently perceived as either unworkable or unacceptable, we need an open dialogue to analyze and address those concerns.
89

Similarly, we must develop together a model to determine how

much to compensate the victims of this injustice. We greatly appreciate the sponsors’ recognition that a settlement must be measured

in the billions. We must now work on how to develop a rationale

for a more specific number. In this process, we must bear in mind

that an insurmountable burden of accuracy measuring the precise

amount of compensation is due completely to the Federal Government’s mismanagement of its own records.

In light of this, we believe that it may be worthwhile to work

with committee staff to develop some models for calculating a fair

and equitable settlement figure. One proposed model would calculate a compensation amount using an inputted error rate times

account activity. Adjusted for interest and inflation, this idea has

some genuine merit and together we should explore its viability.

There are a number of other issues that concern ITMA members,

which includes allotees. We will provide you with more detailed

comments as to these in the near future. We have a meeting in

Denver that is scheduled this week to address this area specifically. There is a great deal more to say and discuss. Some of these

discussions will probably be somewhat heated, but we must remember that we are all working in good faith and to a common

end. We represent a lot of people who have a lot of stake in this

issue, but when tribal leaders get home, no one wants to know

whether we won any arguments. They want to know if they will

be compensated in their lifetimes for acknowledged injustices,

whether their parents will get justice before they die.

To the chairman and vice chairman, I thank you for giving them

some hope that this will be the case.

Thank you and I would be happy to answer any questions.

The CHAIRMAN. Thank you.

Tex Hall, welcome back.

STATEMENT OF TEX HALL, PRESIDENT, NATIONAL CONGRESS

OF AMERICAN INDIANS

Mr. HALL. Thank you, Chairman McCain, and good morning Senator Johnson and Vice Chairman Dorgan, and members of the committee.

I want to thank you for holding this hearing, Chairman McCain,

on this most critical issue in all of Indian country today. I want to

thank the vice chairman and members of the committee for their

support and leadership on this issue.

I am honored to appear before the committee today to testify on

the Indian Trust Reform Act of 2005. I want to start by expressing

my appreciation to the committee on behalf of the 250 member

tribes of the National Congress of American Indians, for your commitment to Indian country and to the people of American Indians,

and to bedrock the principles of trust which underlie the entire relationship between our sovereign Indian nations and the Federal

Government.

NCAI strongly shares the view of the committee that it is time

for Congress to establish a fair and equitable process for settling

the Cobell lawsuit. We cannot wait any longer. We also stand with

the Cobell plaintiffs in seeking a full and fair adjustment of the individual Indian money trust accounts. I want to point out that as
90

tribal leaders that are seated in the audience today, we also have

the responsibility to fight for the welfare of our individual tribal

members who are for the most part IIM account holders. We are

accountable to them as elected tribal leaders.

For that reason, as NCAI president and as a tribal chairman, I

have invested months and directly used my authority to help build

a national tribal initiative to resolve the Cobell case and reform the

trust management system. This process resulted in the development of 50 trust principles that represent the views of Indian country and I would like have them submitted in the record, Mr. Chairman.

The CHAIRMAN. Without objection.

Mr. HALL. Thank you very much.

[Referenced document appears in appendix.]

Mr. HALL. I understand this process and response to the challenge of the committee to unite Indian country behind a bill that

is both fair and comprehensive. Let me say without reservation

that I remain committed to that process. I whole heartedly agree

with you, Mr. Chairman and Mr. Vice Chairman, that the bill as

introduced is a starting point and a solid starting point for resolving the trust.

But make no mistake, the bill needs to go further. There are

major changes that need to be made in order to convince all of Indian country to rally behind the bill. I know that the committee is

committed to working with Indian country and I am positive that

together we can agree on the right changes to the bill. As we do

so, I can guarantee you that I will be working day and night to

help unite Indian country behind this bill.

On trust standards, the lack of trust standards, independence

and enforceability are the most conspicuous omissions from the 50

principles we submitted. NCAI believes that standards and accountability are the cornerstone tenets of meaningful trust reform.

There simply must be an independent body with true oversight authority, explicit trust standards, and a cause of action in Federal

courts for a breach of those standards.

The very absence of those provisions is why we have the Cobell

lawsuit and all of the tribal trust lawsuits. Decades of trust reform

efforts have borne little, if any, fruit. Why? Because the Department of the Interior believes its job is to ensure that the United

States is never held liable for its failure to properly administer

trust assets. For this reason, DOI has always opposed the standards in trust reform.

On the settlement in title I in our 50 trust principles, we set forth the rationale we use to justify a sum of $27.5 billion. We understand that you, Mr. Chairman, believe that the settlement

should be in the billions of dollars, as mentioned in the bill, but

the bill before us does not specify a specific dollar amount. In order

for us as tribal leaders to convince Indian country and our members that whatever figure is settled on is fair, we need to be armed

with a dollar amount and a credible rationale that we can explain

to our tribal members.

Without that, we will be hamstrung in our efforts. I believe that

the $14 billion needed for historical accounting is a starting point.

That fact that the lump sum would come from the judgement fund
91

so would no come at the expense of any other Indian programs or

an account is an example we could use to rally Indian country.

Under title II, the Indian Trust Asset Management and Policy

Review Commission, the NCAI believes that this provision has the

power to make a significant contribution to the ways our trust accounts are managed. We suggest that Congress should make all of

the appointments, rather than leave a significant number up to the

executive branch. Indian country is united that a commission must

have teeth and a power to independently investigate the Department of the Interior.

In regards to title III, NCAI strongly applauds the creation of the

Indian Trust Asset Management Project. As the tribal chairman of

my own reservation in the Great Plains, I support the creation of

an area-wide demonstration project. I can assure you there will be

a flood of tribes that will want to participate in this project and

free them from the shackles of the governmental structure of the

Office of Special Trustee.

NCAI recognizes that this provision is an affirmation of tribal

self-determination and sovereignty. Nevertheless, even for the

tribes participating in this project, the bill does not go far enough.

Not only should more tribes be allowed to participate, but tribes

should be given the opportunity to establish clear trust standards.

Furthermore, tribes should be able to immediately resolve disputes through the courts or a third party mediator such as the Federal Mediation and Conciliation Service, rather than have to exhaust departmental appeals.

In regards to title IV, the fractionation, NCAI strongly supports

the new incentives for voluntary sales of fractionated interests by

allowing the secretary to offer more than fair market value. On the

other hand, the bill has a provision for highly fractionated lands of

more than 200 owners where if the secretary follows certain procedures, including notice by certified mail, the offer would be deemed

accepted unless it is affirmatively rejected by the owner. NCAI understands the rationale behind this provision, but it seems grossly

unfair to the landowners.

Mr. Chairman, as you know, there are 50,000 addresses that are

unknown today in the system. One possibility is to work with the

tribes’ enrollment offices in order to establish a direct communication with the IIM holders because the tribal enrollment office has

every account member’s enrollment number and address. NCAI

strongly agrees that any payments Indians received under a land

repurchase program should not be subject to State or Federal income tax, and should not affect their eligibility for Social Security

and welfare.

Under title V, the restructuring of the BIA and Office of Special

Trustee, the new Office of the Under Secretary meets a number of

the goals in our trust principles, including the elimination of the

Office of Special Trustee. The creation of this position addresses a

major issue that has been raised in every significant study of trust

management at Interior: The lack of clear lines of authority within

the department.

NCAI believes the bill should go further. Nearly every agency in

the Department of the Interior, not just MMS or BLM or USGS,

has some significant trust responsibilities. At this time, there is no
92

single executive within the secretary’s office who is permanently responsible for coordinating trust reform efforts across all of the relevant agencies. This absence has particularly hurt the progress of

those issues that cut across agencies such as the development of a

system architecture that integrates trust fund accountings with the

land and asset management systems of the BIA, BLM and MMS,

and as required by the 1994 act.

Furthermore, the BIA has never been provided with an adequate

level of resources, staffing and budgeting to fulfill its trust responsibilities to Indian country. This has been a chronic neglect and

this understaffing and underfunding has contributed to the dysfunctional management and financial systems at all levels of the

BIA.

NCAI also believes that an independent entity, perhaps the

GAO, should have the job of reviewing the Federal budget for trust

management and provide an assessment to Congress of its adequacy. I believe this role may be more important than ever today

as the Administration moves to assess Federal budgets under the

PART, the program assessment rating tool.

Under title V, the audit of Indian trust funds, this section would

require the Secretary of the Interior to prepare financial statements for individual Indians, tribal and other Indian trust accounts

and prepare an internal control report. The section would also direct the Comptroller General of the United States to hire an independent auditor to conduct an audit of the secretary’s financial

statements and report on the secretary’s internal controls. This

title appears to meet the goals of our trust principles and I believe

that the details of the audit procedures can be redefined and improved after more discussion with tribal leadership.

So in conclusion, Mr. Chairman, on behalf of NCAI I would like

to thank the members of the committee for all of their hard work

and their staffs and the time they have put into this bill and the

entire trust reform effort. For the most part, I also want to recognize Chief Jim Gray here as cochairman of the National Indian

Working Group. Together with NCAI and ITMA and all the other

tribal leaders that are here, and our membership of the 250 tribes

of NCAI, and the 50 tribes of ITMA, comprising 300 Indian tribes,

we will continue our Work Group to reach out to all tribes and all

national and regional tribal organizations for as long as it takes.

This bill is a good starting point. It is a solid starting point, but

it needs to go further. We need resolution. We need to come together. We need to stay united, and I will continue as president of

NCAI to call on and to work with Indian country and the committee here to come up with a bill that we can all support to provide

a meaningful settlement for our elders, especially for our elders

who have died in poverty without receiving justice. It is time justice comes to Indian people. They have waited too long.

So thank you, Mr. Chairman, for your continuing support on this.

We appreciate it.

Senator DORGAN [assuming chair]. Chairman Hall, thank you

very much, and Chief Gray, thank you as well. I know the two of

you have worked and spent a lot of time, travel, effort and this

committee appreciates that very much.
93

Next, we will hear from Elouise Cobell. Ms. Cobell, you may proceed.

Let me also just mention the Chairman has gone to cast a vote

on the first vote and will return right after the second vote has

started, and he will have cast a vote on that.

You may proceed.

STATEMENT OF ELOUISE P. COBELL, BLACKFEET

RESERVATION DEVELOPMENT FUND

Ms. COBELL. Good morning, Vice Chairman Dorgan and members

of the committee. Mr. McCain, I will tell him good morning when

he returns.

I would like to thank you for inviting me here today to provide

testimony to the committee on the possible legislative resolution of

our 9 year old lawsuit. Although we have our strong disagreements

with your initial proposal as an appropriate way to resolve the case

in a fair manner, we are all united in our end goal to achieve an

equitable resolution to this century-old stain on this great Nation’s

honor.

I am here today on behalf of myself and the more than 500,000

individual Indian trust beneficiaries represented in the lawsuit we

filed in the Federal court, Cobell v. Norton. I would also like to explain to you that the Blackfeet pray at the Baker massacre on a

yearly basis and we pray that the Federal Government will never

treat us like they treated us then.

I also pray on a daily basis going to work on the Blackfeet Reservation at Ghost Ridge where 500 Blackfeet died of starvation because the Indian agent withheld rations.

So I apologize to you if I hurt the committee’s feelings when I

explained what I felt about S. 1439, but that is the only way that

I could express myself because I have to tell you that has been a

very difficult task in making the U.S. Government accountable for

individual Indian beneficiaries. I did not want to be in a 9-year

lawsuit. I think this could have been over very quickly if the U.S.

Government would admit that they could not give an accounting to

individual Indian beneficiaries.

We are in the 10th year of this litigation and more than 1 century of mismanagement of individual Indian trusts has already

passed. Justice has been delayed for individual trust beneficiaries.

Every individual trust beneficiary I have spoken with has told me

that they want a fair resolution even if it takes longer. They do not

want to be sacrificed at the altar of a political expediency as they

have so many times before.

Since 1887, members of the class have been subjected to injustice

after injustice. Report after report for generations after generations

have cited the rampant mismanagement and the malfeasant administration of the Individual Indian Trust. As you know, a congressional report from 1915 spoke about the scandals in terms of

fraud, corruption and institutional incompetence almost beyond the

possibility of comprehension.

A 1989 investigative report by this committee found similar

fraud and corruption. The misplaced trust report from the House

Committee on Government Oversight made similar findings of malfeasance. The Court of Appeals described the disastrous historic
94

and continuing management of individual Indian property as malfeasance, and in 2001 held the continuing delay was unconscionable.

The Federal District Court Judge Royce Lamberth, who has presided over this case for nearly a decade, appropriately described

the utter failure to reform the Interior Department and continued

abuse of Indian beneficiaries in this way:

The entire record in this case tells the dreary story of Interior’s degenerate tenure

as trustee delegate for the Indian trust, a story shot-through with bureaucratic

blunders, flubs, goofs and foul-ups, and peppered with scandal, deception, dirty

tricks and outright villainy, the end of which is nowhere in sight.

By setting up the trust, the Government promised to abide by

common trust laws. It has failed even the most simple of these

trustee duties. The Government still cannot say how much money

is in each beneficiary’s account. Imagine the outrage if suddenly a

major United States financial institution were to announce that it

had no idea how much money was in each depositor’s account.

Imagine the congressional hearings, the class action lawsuits that

would be filed as a result.

Yet, that is exactly what has happened here. The courts have

held that the Government is in breach of its trust duties. They

have held that interest and imputed yields are owed beneficiaries

as a class. They have held that the duty to account preexisted the

1994 Trust Fund Reform Act and that the Government has a duty

to account for all funds. Time after time on major issue after major

issue, the courts have made it clear that the law and the facts are

on our side.

I should point out that there are some aspects of the proposed

legislation that are positive. First, this hearing itself is a constructive step forward to educate Congress and the American people.

Additionally, the inclusion of a provision that calls for the settlement amount to come from the claims judgment fund to ensure victims are not punished also is an important positive component, as

is recognition that the settlement amount is in billions.

To be honest, I was deeply disappointed when I read S. 1439. It

falls so short of being a good starting point to resolving the Cobell

case in an equitable manner. This bill in present form is drastically

in favor of the Government malfeasors position. It is not faithful

to the two important sources that offer considerable guidance to

any legislative resolution effort, the 50 principles for settlement

that Chief Gray and Tex Hall talked about, and the numerous decisions rendered by the court in Cobell itself.

We need your support to stand up for the many individual Indian

beneficiaries who are relying on all of us to create a fair and equitable resolution. Like Mary Johnson, a Navajo grandmother who

relies almost exclusively on a few dollars in her allotment to receive support for her family. She receives pennies of what a nonIndian is paid for gas from her land. Or Mary Fish, a 70-year-old

Creek woman who cannot replace windows in her small home because she lacks the funds, yet there are five oil wells pumping constantly for decades on her land. There are so many more across

every reservation, grandmothers and grandfathers and parents and

children suffering from the same indignities of their forbears.
95

I am confident that if we work together we can achieve our common objectives. There are many specific parts of S. 1439 that I believe I need to address. One of the most disturbing aspects of S.

1439 is the placing of the Secretary of Treasury, a defendant in the

Cobell lawsuit and one of the parties principally responsible for the

historic and continuing victimization of Indian trust beneficiaries,

as the person to be in charge of the settlement funds. The Treasury

Department has been Interior’s partner in crime for far too long.

They have been found in breach of trust. They have failed to reform. The suggestion that any settlement fund be handled by such

an entity is wholly unacceptable to the beneficiary class.

A second area of concern to all Individual Indian Trust beneficiaries is that under this legislation, the court would be eliminated from the picture entirely. That makes no sense for a number

of reasons. Courts have the greatest institutional competence to

make distributions in a fair manner. They are often called upon to

do just that. Courts are armed with rule 23 and related case law

that provides sound guidance for resolving difficult distribution

issues.

The court in Cobell has 9 years of experience of living with the

facts of this case. The knowledge developed through that process is

invaluable and irreplaceable. We recognize that S. 1439 places the

settlement amount approximately in the billions of dollars. That, of

course, is only sensible since the government’s own internal risk

assessment by their contractors set the liability as between $10 billion and $40 billion.

In the 50 principles, the Work Group put forward a reasonable

and well-founded aggregate settlement amount of $27.487 billion.

This is not reparations. This is not damages, nor is it welfare. It

is quite simply a return of a portion of the money that was and is

being taken from us. The amount was derived by reviewing our

model for each year of total proceeds from the Indian allotted

lands. The Government’s model of these proceeds is not far off from

the plaintiffs in aggregate amount generated from these lands. For

each year, plaintiffs calculate a percentage of the moneys that

were, for settlement purposes, properly collected, invested and disbursed to the appropriate beneficiary. The disbursement percentages we have used are highly favorable to the Government, even

though we have evidence that the Government cannot account for

even 1 percent of the transactions.

For purposes of the calculation we assumed that the Government

could account for 80 percent. Using this percentage, we calculated

how much of the yearly aggregate proceeds defendants failed to distribute properly. In this number, we add interest for a yearly calculation. We added this number together and then subtracted,

again a litigation delay, a percentage-based calculation for the cost

of continuing litigation. The result of this calculation is $27.487 billion. The number is further justified in my written testimony.

Reform requires fundamental changes that must be made immediately in all other trusts. There are, among other things, clarity

of the trust duties, clarity regarding the complete enforceability

and the availability of meaningful remedies, independent oversight

with substantial enforcement of authority to ensure that bene-
96

ficiaries are protected. These core trust elements are not in the legislation and need to be.

Congress must clarify that Indian beneficiaries will receive the

same protection as all other non-Indian trust beneficiaries. The importance of keeping the courts involved cannot be overemphasized.

Only when we turned to the courts was any progress made to fix

the trust and establish the individual Indian beneficiaries right to

an accounting. The decades of experience by the Federal courts in

dealing with class action cases must not be cast aside. It is essential to resolving this case and achieving accountability.

Not only has the executive branch abused us and defied the

courts, it has defied you. It has repeatedly refused to comply with

legislation passed by this body. It must finally be called to account.

I look forward to continuing our work together and to finally and

conclusively put an end to the criminal administration of our trust

property. I thank you very much for this opportunity to testify.

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

Senator DORGAN. Ms. Cobell, thank you very much.

Next, we will hear from President Stensgar.

STATEMENT OF ERNEST L. STENSGAR, PRESIDENT,

AFFILIATED TRIBES OF NORTHWEST INDIANS

Mr. STENSGAR. Thank you.

Good morning, Vice Chairman Dorgan, members of the committee. I appreciate the opportunity to present testimony. I have submitted written testimony and I would like it included in the record.

My name is Ernie Stensgar. I am president of the Affiliated

Tribes of the Northwest. I represent 54 tribes from Montana,

Idaho, Oregon, Western Montana, California, and some of Alaska.

Over the past several years, and after numerous court-issued declarations in the Cobell litigation, Affiliated realized that resolution

of the litigation in the court system would take many years and

that a settlement of the litigation would probably not result in action that would compensate the plaintiffs, along with individual Indian trust account holders to a level that would be fair and equitable.

Therefore, ATNI, Affiliated Tribes of Northwest Indians, decided

to focus on working cooperatively with Congress and other stakeholders in creating a legislative resolution of the Cobell litigation,

while at the same time accomplishing reorganization of the Department of the Interior to fit the needs of Indian country.

On April 5, 2005, Affiliated submitted Indian trust reform legislation to the Hon. Maria Cantwell to be considered on an expedited

basis by the Senate Committee on Indian Affairs. The legislation

essentially asked Congress to provide several provisions for the settlement of the Cobell litigation and to accomplish trust reform. The

first provision sought to elevate the assistant secretary for Indian

Affairs to a deputy secretary. The intent of this provision was to

ensure that the principal officer assigned to fulfill the trust responsibility would have the authority over the constituent agencies that

have an effect or impact on the trust responsibility.

Under S. 1439, Section 503 entitled Under Secretary for Indian

Affairs, there is an under secretary for Indian affairs position created that is directly subordinate to the Secretary of the Interior.
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Affiliated supports the creation of the under secretary for Indian

affairs position within the department, along with the duties requiring management and accountability of the trust responsibility

in consultation with Indian tribes.

ATNI also supports section 505 of the legislation which would

terminate the Office of the Special Trustee for American Indians by

December 31, 2008. ATNI also sought the codification of the standards of the administration of trust duties that were adopted by Secretary Babbitt in 2000. ATNI understands that these standards

have not been codified as a provision of the act, but it does not believe that this will ultimately be fatal to the legislation. Under section 503 of the act, there is the under secretary for Indian affairs

that will be required to implement and account for the fulfillment

of the trust responsibility to Indian tribes.

The legislation also describes the duties that the under secretary

for Indian affairs will be required to fulfill under section 503. ATNI

asserts that if this section is holistically integrated with other provisions of the legislation, the under secretary has some guidance

from Congress defining some actions and responsibilities that will

be required to fulfill the trust responsibility. Specific trust standards can be finalized at a later date and in subsequent legislation.

The third provision that Affiliated sought was a settlement of the

Cobell litigation by the authorization of a mediator that would submit recommendations to the court on settlement issues and allow

the court the ability to implement the recommendations without

having to submit to a drawn-out trial process. Affiliated has reviewed the act and is in agreement with the congressional findings

contained within section 101.

ATNI realizes that in many cases it is impossible for the Federal

Government to provide a total historical accounting of funds held

in IIM accounts due to any number of factors. Affiliated supports

the proposition that the settlement of the Cobell litigation must

provide a fair and appropriate calculation of the IIM accounts in

lieu of actually performing an accounting of the IIM accounts.

ATNI lends its support for the creation of an individual accounting claims settlement fund contemplated in section 103 so that

there can be closure to the plaintiffs in the Cobell litigation and

other aggrieved parties. The settlement amount will obviously need

to be debated and agreed upon after intense consultation with all

the affected parties. The animosity that has guided previous attempts at settlement should not deter actual and honest agreement

over a final settlement amount.

Affiliated supports the proposition that a special master should

be appointed to administer the settlement fund. However, section

103 allows the secretary the unilateral ability to appoint a special

master to administer the fund without allowing any tribal input in

the determination of appointing the special master. Since the settlement fund is the result of litigation between two adversarial parties, there should be the ability of the representatives of both parties to come to agreement on the appointment of a special master

to administer the settlement fund.

ATNI is supportive of the provisions in the legislation which recognizes the right of claimants to seek judicial review. However,

provisions in sections 105, 106, and 107 are confusing and should
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be clarified to protect these important rights. ATNI supports the

right of judicial review for claims relating to share determinations

in the U.S. District Court for the District in which a claimant resides. In this instance, the claim would not be considered a waiver

by the claimant of the right to receive a share under section 104.

However, a claim relating to the method of valuation and a claim

relating to the constitutionality of the application of this title to the

claimant filed in the U.S. Court of Federal Claims would be considered a waiver by the claimant of any right to receive either the per

capita share or the formula-based share under section 104. Affiliated does not support the provisions that require a waiver by the

claimant of any right to an award under section 104 if the claimant

files a claim seeking review.

ATNI asserts its strong support for section 110. In that section,

tribal government claims against the United States would not be

discharged as a part of the settlement of litigation claims identified

in section 102.

The fourth provision sought by the ATNI was the creation of an

independent legal authority that would have some oversight power

over administration of the Federal trust responsibility. Title II of

the act creates a commission known as the Indian Trust Asset

Management Policy Review Commission that would be charged

with the review of trust asset management laws and the review of

the department’s practices with regard to individual Indian trust

assets. The commission would then have the ability to make recommendations to the secretary and to the committee for improvement of the department’s laws, practices and management of the

trust assets.

Affiliated supports the commission as created by title II of the

act since it would allow for an independent review of the department’s practices and would possibly lead to recommendations that

would assist the department in adopting a best practices approach

to fulfillment of the trust responsibility. Indian country has shown

in the past that it is willing and able to participate in crafting recommendations that will lead to an improved department as it continues to administer its trust duties.

The fifth provision sought the establishment of a demonstration

project that would build on the work of those tribes that have been

administering their own trust programs pursuant to authority

granted by the Congress in the appropriations bills.

Senator DORGAN. Mr. Stensgar, I am going to have to ask you

to complete your testimony, if you would. There are 2 minutes remaining on the vote on the floor of the Senate and I have to be

there to vote. So if you will just finish in a sentence or two, we will

then recess for 10 minutes.

Mr. STENSGAR. Okay. I just want to say that the Northwest

tribes stand ready to proceed in the process of adopting legislation

and working with this committee to further that. It is time that the

tribes continue on with their other important work and we are at

a standstill now.

Thank you.

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

Senator DORGAN. Mr. Stensgar, thank you very much for your

testimony.
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Mr. Martin, you will begin testifying when we reconvene. We expect the committee will be in recess for 10 minutes while we vote

on the floor of the Senate.

[Recess.]

The CHAIRMAN. [Presiding] Again, I would like to extend my

apologies to the witnesses because of we have five consecutive votes

in a row. I apologize for any inconvenience this has caused them.

I believe we are now at Mr. Martin, is that correct?

Mr. MARTIN. Yes, sir.

The CHAIRMAN. Please proceed.

STATEMENT OF JAMES T. MARTIN, EXECUTIVE DIRECTOR,

UNITED SOUTH AND EASTERN TRIBES, INC.

Mr. MARTIN. Chairman McCain, Vice Chairman Dorgan and distinguished members of the Senate, my name is James T. Martin.

I am an enrolled member of the Poarch Band of Creek Indians and

executive director of United South and Eastern Tribes.

On behalf of the 24 tribes of USET, we have closely followed the

Cobell case over the last 10 years and the Department of the Interior’s subsequent reorganizations. Along with President George, I

represented the tribes of the Eastern Region Office in the DOI

Tribal Task Force and have testified before this committee several

times on trust reorganization. I thank this committee for the opportunity to testify on this issue again.

For USET tribes, the Cobell litigation and the Department of the

Interior’s redirecting of funds to trust activities carried out by the

Office of the Special Trustee has had an immediate and harmful

impact for fiscal year 2005 and 2006. Funding for the BIA has reduced full-time staff for law enforcement, education and other vital

programs. The Cobell litigation and DOI’s interpretation of the requirements to meet court orders have absorbed resources and limited the ability to implement already under funded programs.

I thank the Senators McCain and Dorgan for introducing S.

1439, which represents a critical step for trust reform and provides

a solid footing for resolving the interrelated and complex problems

of trust reform. Given the complexity of the trust-related issues,

one piece of legislation is unlikely to solve all of the problems. This

bill, however, takes on the challenge of addressing the fundamental

issues of the settlement of the Cobell lawsuit, land consolidation,

and prospective trust reform reorganization.

USET, in response to Senator McCain’s call for legislative solutions to this crisis, developed proposed trust reform legislation in

April and provided that proposal to the chairman and to committee

staff. The USET proposal legislation is intended to introduce measures that would increase the accountability and efficiency of DOI’s

administering of the United States trust responsibility, while enhancing self-determination.

Upon review of S. 1439, it appears that the committee shares

USET’s concerns and provides similar approaches to resolving

them. Additionally, USET requests that the committee further deliberate several critical issues. I am attaching USET’s proposed legislation to my written testimony and request that this proposal be

included in the hearing record, as it may be useful to the committee as it seeks to finalize trust reform legislation.
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But first, I would like to commend the committee for the recognition and incorporation of key components for trust reform and DOI

reorganization. Specifically, let me mention a few of these here.

Elevation of the Assistant Secretary of Indian Affairs to the position of under secretary and eliminating the OST, which the tribes

have advocated for for a long time, would improve coordination of

trust activities within the DOI and establish decisionmaking authority and accountability under one executive authority.

USET views the commission established by title II of S. 1439 as

a logical extension of the DOI Tribal Task Force. This commission

is needed to conduct a thorough analytical review of laws and practices in order to make valuable recommendations for future legislative actions for trust reform.

With regard to land consolidation, S. 1439 responds to Tribal

Trust Reform Work Group recommendations to expand the voluntary buy-back of highly fractionated shares by providing for

sums greater than fair market value shares. USET suggests, however, that the problem of locating whereabouts unknown individuals for purposes of land consolidation is a matter that should be

addressed by this legislation or by the commission created by title

II of S. 1439.

S. 1439, with its Tribal Trust Assets Management Demonstration

Project, title III, embraces a view strongly held by the USET tribes

that self-determination works. USET is confident that management

of trust functions will benefit from this demonstration project.

Moreover, we expect it will foster an array of best practices to be

utilized for the wide range of trust resources managed in Indian

country. While the legislation does not itself codify tribal standards, USET recognizes that S. 1439 provides for a commission to

issue recommendations on proposed Indian trust management

standards, section 204(3)(c), and that the demonstration project

provides for the development of trust asset management plans that

meet trust standards as established by tribal law and consistent

with trust responsibilities of the United States.

USET recognizes the necessity of standards, yet acknowledges

those standards must be developed in a manner that allows for

flexibility, reflecting the diversity that exists among tribes, as well

as the diversity that exists among the resources that both exist in

tribes and resources, but to which the secretary has a trust responsibility.

Title I of S. 1439 would resolve the complex and prolonged and

costly Cobell litigation. The terms of the bill demonstrates the committee’s understanding of many of the issues and considerations involved in this large class action lawsuit. Title I addresses such

matters as the distribution of the settlement funds and offers a

mechanism for judicial review for that distribution, including the

filing of claims to challenge the share distribution, to challenge the

validation of the claim, and to challenge the constitutionality of the

application of the title to an individual claimant.

USET encourages a fair and complete resolution to that litigation

and I understand the committee will hold additional hearings to

consider the views of the Cobell plaintiffs. USET urges the parties

to this dispute to engage the proposed legislation in the spirit of
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compromise and the recognition of the unique opportunity this legislation offers.

USET appreciates that tribal claims are preserved in section

110(d). USET also endorses Indian preference in hiring by the

under secretary in the offices under the under secretary by section

506.

USET highlights these provisions as those which are directly responding to the concerns and approaches the USET tribes and

other tribal organizations have identified as critical to trust reform

legislation. USET urges the committee to give additional consideration to several other considerations.

First among them is for independent accountability. While the

independent external audit provisions contained in title VI of S.

1439 establishes a sound approach for accounting or auditing,

USET believes that DOI’s management of non-monetary trust assets needs similar independent review. Additionally, the beneficiaries need a point of regress to report fraud and abuse and the

day-to-day implementation of the Government’s fiduciary trust responsibility.

USET’s proposal would create an assistant inspector general for

Indian Trust to carry out investigations and audit responsibilities.

We urge the committee to give greater attention to the need for

this mechanism that can police the DOI’s compliance reform contained in S. 1439.

Second is the ineffective duplication that has been created by the

DOI’s stovepiping its lines of accountability and decisionmaking authority between trust and non-trust functions. We believe this is a

critical issue that the trust reform legislation and the commission

created by title II of S. 1439 must address.

Finally, all of the reform in the world cannot get the job done

without adequate funding. The number of vacancies and understaffing in the DOI has contributed to the problem. As the committee has recognized with S. 1439, trust reform requires tribally driven flexible mechanisms that reflect the diversity of tribes and the

distinct types and quantities of resources that exist.

Moreover, in order for trust reform to advance, the Cobell litigation must be resolved. We stand ready to work with this committee

to further this legislation and other legislation that is needed to

bring this issue resolution.

I thank the committee and look forward to answering any of your

questions, sir.

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

The CHAIRMAN. Thank you very much.

All the witnesses have testified in favor of the court being the

one who would be responsible for the distribution of money. In the

50 principles, you say the court would conduct a court fairness

hearing. What will the court be testing the fairness of? I guess I

will begin with you, Chief Gray.

Mr. GRAY. Part of what I think may be helpful in describing

what the rationale behind the 50 principles and that particular

area are certain aspects of what we consider to be the use of the

resources, the land, the amount of money and activity and flew to

these accounts. Obviously, you are looking at situations like, for example on my reservation, the Osage Nation, we have had over 100
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years of oil and gas exploration. Through that hybrid system I referred to earlier, you also have a similar situation that occurs in

the use of those lands and the resources, the surface lands that

have been leased out to the allotment.

To try to understand the through-put, for example, of that kind

of funding that went through there certainly does create different

scenarios throughout Indian country.

The CHAIRMAN. So the court would decide each different tribal

entity throughout Indian country?

Mr. GRAY. I think it is not so much a tribal entity as much as

it is the use of the land, and how the resources derive from that

land or how are they going to be fairly and adequately valued.

The CHAIRMAN. So the court would decide in each entity that is

owned by tribes as to what is fair and what is not fair?

Mr. GRAY. I admit, it is a head-scratcher, Senator. I really do

think that what we are trying to achieve here is just trying to find

the entity, or to find out a formula. Should it be congressionally

driven, for example, that you have in the bill; that a formula be

adequately put together that can address the specific uses of the

lands and the uses of the resources and the funds as a way to determine the value of each one of the settlement accounts that are

being put forward.

We just came up with one proposal, and in light of the specific

information that exists in the bill, there may be ways in which we

might be able to approach the committee on how this could be resolved through a formula of some type.

The CHAIRMAN. Tex.

Mr. HALL. Mr. Chairman, I just think that in our testimony and

most everybody’s testimony, they feel that the court is more fair

and impartial. I believe that the treasury is a named defendant,

Mr. Chairman, so the impartiality is not, you know, that is the

thought and it’s not there.

The CHAIRMAN. I understand there is profound mistrust of the

Department of the Interior and the BIA, and I understand that

there is great trust, at least at the District Court level and the

judge, but I think you are asking a District judge to take on a task

which is incredibly complex and one that I do not know if a District

judge has the kind of assets to make those kinds of judgments.

That is my question. I think we are all interested in fairness.

Mr. HALL. We would be happy to work with you, Mr. Chairman,

on something I think that we could come to agreement on.

The CHAIRMAN. Mr. Stensgar, do you have any thoughts on this

issue?

Mr. STENSGAR. The Northwest supported the special master, Mr.

Chairman. We would have to look at that section about the courts

and do an evaluation before we respond to that. We thought that

the Special Master would address that issue.

The CHAIRMAN. As you know, we have had special masters in the

past.

Mr. STENSGAR. The special master, Mr. Chairman, we want some

Indian input in respecting that. We want to make sure that the

sheep dog is guarding the sheep.

The CHAIRMAN. Well said.

Mr. Martin.
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Mr. MARTIN. USET’s position is that we support also the special

master. I am a father of four boys, and when one boy does something to the other, I make the one who is the perpetrator apologize

and correct the wrong. I think it is just to make sure the perpetrators correct what was wrong and make them do it fairly.

I think still, though, there could be a role of the court as far as

supervision and some sort of injunction-type of mechanism that if

the special master or the people that are made to correct these

wrongs go outside of the parameters, then there should be some

sort of relief to that.

The CHAIRMAN. Ms. Cobell, attorneys fees were not mentioned in

the principles set forth by the working group. What dollar amount

or percentage of the proposed $27.5 billion was to go to attorneys

fees?

Ms. COBELL. Could I answer that first question that you asked

all the other witnesses, too?

The CHAIRMAN. If you would like to, it would be a pleasure.

Ms. COBELL. I would love to.

The courts do this all the time, distributing.

The CHAIRMAN. Not with this amount of money, they don’t.

Ms. COBELL. Yes; on a class action lawsuit, yes they do.

The CHAIRMAN. No; they don’t. They don’t decide what is fair and

unfair. Go ahead.

Ms. COBELL. At least everything I read, Senator. They weigh the

evidence.

The CHAIRMAN. Courts also decide what attorneys fees are.

Ms. COBELL. Yes; and that was my answer that I was going to

tell you.

The CHAIRMAN. Okay.

Ms. COBELL. It is my understanding that the courts will decide

the attorneys fees, and that was done as a result of a congressional

act that took out the States and wanted to make sure that the Federal judge decides on what the attorney fees should be.

The CHAIRMAN. Excuse me. Whenever there is a settlement proposal, they require an accounting of attorneys fees. I think the taxpayers of America would be more than entitled to know what your

view is of the amount of attorneys fees that would be part of this

$27.5 billion settlement.

Ms. COBELL. Well, our attorney fees are submitted to the courts

for reimbursement. But you know, Senator, I really have to tell you

is I have been interested in what the attorney fees have been by

the Federal Government in fighting this case. We cannot find out.

There are hundreds who just come to the courtroom. There are

hundreds of attorneys that are sitting in that courtroom day after

day, and there was a rider approved by the Congress in the appropriation bill that allowed for the Government officials that were accused of this wrongdoing to hire their own attorney private firms.

I see those people every single day.

So vice versa. I really would like to see what the Government is

spending on attorney fees.

The CHAIRMAN. I would like to also, but that does not change the

fact I would like to know how much of the $27.5 billion would be

spent on attorneys fees.
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Ms. COBELL. I am sure that we could get you the figure and we

could share that with you.

The CHAIRMAN. I would very much appreciate that.

Ms. COBELL. My attorneys have not been paid in years, let me

tell you.

The CHAIRMAN. Well, if there is $27.5 billion at play, I am sure

they will be, Ms. Cobell.

Ms. COBELL. There is no huge contingency amount that has been

negotiated with attorneys, let me assure you of that.

The CHAIRMAN. Let me assure you, then, there should be no problem then of telling us how much of the $27.5 billion.

Ms. COBELL. Yes; I would be very happy to do that, sir.

The CHAIRMAN. Thank you very much, because I am familiar

with a case many years ago where Agent Orange was settled and

veterans died before they got any money and lawyers got paid first.

And I am not going to see that happen in whatever settlement we

have of this case. Native Americans will be reimbursed first, and

then attorneys, if I have anything to say about it.

Again, I want to go back to this business, because there is strong

disagreement, and we are trying to come to agreement with the Administration. I will again begin with you, Chief Gray.

If Congress were to place billions of dollars in the court registry,

how would the judge distribute the money? Would it be through,

as you stated earlier, a special master would be appointed and he

would be making those decisions? Is that a methodology that would

be pursued?

Mr. GRAY. I think you said it there, methodology. Obviously, just

to help clarify the previous response to your first question earlier

was that obviously we need more information, I think, on basically

what a formula would look like. It is not so much to say that, and

certainly in our testimony, that we felt like there wasn’t a suitable

method in the court that is far superior to any other method out

there. But the way you described this particular issue to be resolved in the bill leaves open a need for more clarification and more

information, and maybe that might be where I think a starting

point might be in our discussions, for finding out exactly what the

formula might be in terms of how Congress might be able to distribute these funds fairly and adequately, because obviously the

bill in and of itself at this point does not answer all those questions

right now. Even though the question you just raised to me, I do not

have a complete answer myself. So obviously, we still have a lot of

work to do in this area.

The CHAIRMAN. Thank you.

We will have additional questions which we will submit to you

as we continue through this process, as well as questions for the

Administration.

I want to emphasize again that we appreciate many of your long

years of involvement in this issue. We are trying to come up with

some way of preventing another 10, 15, or 20 years of litigation in

the courts which is very uncertain. I have a personal opinion that

I am a bit disturbed at some of the recent Supreme Court decisions

as they affect Native Americans. I think there has been some encroachment on the principle of tribal sovereignty and governmentto-government relationship.
105

So I am not totally confident that even though you have a District Court judge that has ruled your way that if it wended its way

all the way through the courts that you would get a satisfactory

resolution, number one.

Number two is, it still eludes me why we cannot sit down together, all of us that are involved, and come up with some reasonable resolution to an issue that, as Mr. Swimmer testified, has already been in the courts for nine years. If we are going to reach

an agreement, there is going to have to be some compromise on

both sides. When I talk to the previous special masters, they say

that the reason why it failed, I met with them, and they say the

reason why it has failed is because neither side has been willing

to move in a more compromising direction.

So I think that I speak for both of us when I say, and certainly

Senator Dorgan is more eloquent than I am, we want to give this

as hard an effort as we possibly can, but we cannot just have hearing after hearing year after year on this issue because there are

needs in Indian country for education, health care, housing, et

cetera. As Senator Dorgan pointed out, all of those efforts are impacted by this issue. That is why we are giving it the priority that

we are.

I know that all of the witnesses at this table and behind you are

men and women of good faith and maybe we are going to have to

ask you to exercise that to a significant degree even where it may

alienate some of your constituency. I can assure you that Senator

Dorgan and I have on several occasions on this one alienated part

of our constituency. [Laughter.]

So I want to thank you again and appreciate your involvement

in your cases of many, many years. I thank the witnesses.

Senator DORGAN. [Presiding] Mr. Chairman, thank you very

much.

First of all, let me thank all five of you. I regret that we are moving back and forth, but it is the only way we can conduct 10-minute

votes and still maintain this hearing and complete it.

Ms. Cobell, let me start with you. You said you are sorry if you

hurt the committee’s feelings. You do not hurt feelings of people involved in politics. If one’s feelings are hurt easily, you do not run

for the U.S. Senate. So it is not about hurting our feelings.

I think, however that using a term like ‘‘massacre’’ in your description and also in just disillusionment with legislation, I worry

it hurts our opportunity to find solutions. That was the only point

that I was making in my statement. It is not about hurting feelings.

You are a very passionate and a very articulate advocate. That

is obvious from your testimony today. I understand that. I would

be as well if I were sitting on that side of the table, concerned,

upset, anxious, worried that this has taken far too long. I would

have all those feelings because I think from your testimony, you describe descriptions of 1915 and periods back when I think literally

people were stealing from Indian people.

Unscrupulous people were supposed to be in charge of these assets on behalf of Indian people and there was very substantial

waste and abuse and fraud, especially fraud, I think. And we need

to do a better job of describing that, I think, because others say,
106

well, we have looked at accounts in the last 10 years or something.

It is a different story. This is historical and it is substantial and

it is a big issue.

So I just want to say that I understand your passion, but I do

hope even if we disagree in the end of this process, if we cannot

find agreement and this committee finally says, look, we cannot do

this. You go back to the courts and whatever happens, happens in

the courts and figure it all out, but it is something we cannot do.

I mean, if that is the case, it won’t have been because we didn’t

make an honest, as aggressive as possible effort, because we felt it

was necessary to try to solve it.

But it is not solvable without all the stakeholders. It will not,

cannot ever be solved in the context of the kind of discussion we

are having, without having all the stakeholders being interested in

solving it. If all the stakeholders are not interested, it is very easy,

in my judgement, to up-end any agreement or any negotiation.

And then it just goes back to the courts and perhaps another $500 million in legal expenses and maybe $6 billion, $8 billion, $10

billion in accounting fees to try to figure out who the thousands of

people are that own a fractionated interest in 200 acres of land

someplace so that we can send them a penny or two pennies. None

of this comes together unless we find a thoughtful way for reasonable people to come together and say, let’s figure this out and solve

it and address the abuses.

Let me just finally ask a couple of questions. Tex Hall, your organization, I believe, because you and Chief Gray have traveled a lot,

used a lot of personal time to try to work through this, I assume

you are committed to seeing if you can find a legislative solution.

There are other solutions, but Senator McCain and I are both

talking now about some kind of a negotiated legislative solution. Is

that what you would prefer and is that what you are committed to

trying to find?

Mr. HALL. Mr. Chairman, there is no question about it that

NCAI and I know ITMA, as well as working with the Cobell plaintiffs, are totally committed. When you were raising the question

about in the past, 1915, and the fraud, it made me think of an

elder that passed on, Carol Young Bear. Carol had diabetes. This

was 2 years ago.

She asked me for help to get her IIM account checked. There was

a delay in getting the checks paid out. All she wanted was, she

only gets $200, not too much, in her IIM account. She just wanted

a used van with a hydraulic lift because she had her legs amputated. All she wanted was to expedite her check so she could get

a used van and go play bingo. It was sad to not be able to help

because we could not get the check and she passed on.

So it is elders like her that make me get criticized at home for

traveling too much. My constituents want me to work at my tribe,

but as NCAI President I have to travel to try to bring unity to get

this done. So I am further committed because of the elders like

Carol, to get this legislation, find common ground, find a way to do

that.

I know with the gentlemen sitting next to me and all the people

at this panel, these five people I know we are committed to doing

that. We started this in February and I know that he has probably
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caught heck at home, too, for being gone from his tribe in Osage,

because he is a chief at his tribe. But it is an issue that affects all

of us, Mr. Chairman, so that is why we are further committed and

we are optimistic because, and I want to publicly thank you for

your leadership, for cosponsoring S. 1439, Senator Dorgan. That, to

me, is the key, is that bipartisan leadership and you stepped forward and you signed onto this bill. So that tells me that you are

committed, and if you are committed we have to be committed as

well.

So to me, it is a team effort and we are totally committed, and

further committed after hearing the words that I heard from you

and Chairman McCain and members of the committee today.

Senator DORGAN. Chief Gray.

Mr. GRAY. Yes; like Chairman Hall said, when we set out the effort to respond to this call for input from Indian country, we knew

what we were getting into in terms of the commitment that it was

going to take. I want to specifically say that we would not have

done it if we did not think that you all were genuinely sincere in

trying to do this.

I think that what we have tried to do is try to bring all the parties together and have these meetings both region-wide and tribalwide and significantly address some of the specific resources out

there. When we formulated our principles last June and presented

them to the committee, we felt like that, too, was a good start.

Although there is going to have to be that kind of necessary give

and take with the Administration and the committee regarding

these areas where we have broad enough agreement to go forward,

I just want to let you know that ITMA and the tribes that make

up this organization, as well as the Osages, are going to be committed to the process.

Senator DORGAN. Mr. Martin, I was not here when you testified,

but I have been able to look at your testimony. You testified that

there are a number of vacant positions and understaffing at the

Department of Interior and the BIA. How does that impact your

member tribes?

Mr. MARTIN. This year in the 2006 budget and coming in the

2007 budget, they allude to a crisis in law enforcement where

money is needed for law enforcement elsewhere, so therefore the

staffing, and only six staff people exist in our District Six office. It

is proposed to be cut down to one. Due to the absorption of trustrelated functions, there has been less money to be able to go to

non-trust related functions like law enforcement, education and

other programs like that.

Also, you will find, then, the (2)(B) and the re-engineering, if you

look at the reorganization and the work of the OST, a lot of areas

when they go in there with their trust officers, and they have made

improvement. I have to give credit where credit is due. They have

made improvements in the trust office, but you will find in some

regions they do not have the staff to do the work for the trust officers to review and sign-off on. You find that there are places in the

BIA across Indian country that are understaffed, that you have

good working people, but not enough warm bodies to get the work

done.
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Senator DORGAN. Ms. Cobell, words have meaning and I understand the story you told about the history of your tribe and the suffering of your people, and understand the way you used words in

your description of this. The draft legislation that Senator McCain

and I have issued, we did when we issued it say this is a draft,

a starting point.

For some people in negotiations, ‘‘no’’ means it is an opening position; for other people, ‘‘no’’ means never under any condition. You

never know exactly what it means from certain people until you

begin negotiating. I am wondering what negotiations would mean

to you here in terms of your very strong feelings about this. You

have given us, I think, helpful testimony today. We appreciate that.

Beyond that which you recited orally today, you have described in

some detail certain provisions that you think need to be changed

and how they should be changed.

But it is much easier to oppose than propose. It just is. Mark

Twain was once asked if he would get involved in a debate and he

said, sure, as long as I can take the opposing view. And they said,

we have not told you what the subject is. It doesn’t matter, he said,

the opposing view will not take any time to prepare. It is so much

easier to oppose than propose.

So the question I ask you, you have heard Chairman Hall and

Chief Gray and others talk about the need to be involved in trying

to construct some sort of legislative approach that might address

these issues or solve these issues. Do you feel this is achievable in

a legislative arena? Is this the manner in which it should be addressed? And do you feel you would want to be a continuing part

of negotiations in an attempt to address it?

Ms. COBELL. Of course. I definitely would like to be involved in

the continuing negotiations. I would like to clarify just a couple of

areas after listening to the testimony today, is that when the mediation took place, we put proposals on the table. The department did

not. So we are not the bad guys in this entire game. We are the

ones that are fighting, that have fought and won major victories in

court.

That is what I saw about the legislation is these major victories

were not implemented into the legislation, and I was really concerned about that, especially we won. And I think it is important

to clarify that the Court of Appeals has largely affirmed the District Court.

When I heard Senator McCain talking about just the District

Court, he was not referring to the Court of Appeals. The Court of

Appeals has affirmed the District Court on jurisdiction, on standards, on the application of the trust law, on the scope of the accounting, that the accounting scope is from 1887 forward. The appellate court has upheld the District Court in all of these arenas,

and those are very important areas to cover in this legislation.

So I just want to make sure that, you know, I worked on the

1994 Trust Fund Reform Act. Let me tell you, we gave. We compromised. And look what happened? It didn’t work. And that is

what I feel about. The Office of the Special Trustee is not working.

You heard from the testimony today that that is an area that does

not seem to be working.
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So, you know, I compromise. I am not the bad person in this. I

am just wanting accountability for individual Indian beneficiaries.

If we can do it in the ways that satisfy individual Indian beneficiaries, then I am willing to sit at the table, but I think there are

certain victories that have happened in the court that need to be

part of this legislation.

Senator DORGAN. Well, we will stipulate that our feelings are not

hurt and you are not the bad person. [Laughter.]

You and others have every right to seek redress in the courts.

You have done that. You have been successful at many different

levels. So I understand that you are not coming to this in bad faith

at all. You have used the system of justice in this country to address wrongs.

So the question at the moment is, we find ourselves at kind of

an intersection here. One road, I think, leads us to spend a lot of

money on things that detract from the needs of Indian people in

a way that will probably never get us a good solution. Another road

might be for all of us to understand that we really are forced to

negotiate something that is fair and just and equitable in order to

put the past behind us, address the needs of people who have been

victimized, and then from here forward, trying to straighten all

this out and make certain this does not happen again.

Let me again say on behalf of Chairman McCain and myself, we

and our staffs have worked very hard on this and we will continue

to do that. What we would like to do is use this hearing as an opportunity, and many of you have brought ideas to this hearing as

well. Chairman McCain said, and he is absolutely correct, we cannot just go on and have hearing after hearing after hearing. We are

not going to take this next year and a half in this Congress and

decide that we are going to have 10 more hearings on trust reform

because we cannot do that. But we can, it seems to me, make this

a major priority from now forward as we negotiate to see if we can

find a solution. If by the end of this year, in the next 3 or 4 or 5

months, if we could find our way through this, that would seek a

solution that all of us think is just and fair, I think it would be

the best news in the world for Native Americans, for the First

Americans who have seen their rights violated and who ask not

just the courts, but ask the Congress now to intervene in a way

that redresses those wrongs.

So that would be my hope. The reason I asked Ms. Cobell, your

name is on the litigation, obviously, and others of you. All of us

have interests here. I just wanted to make sure everybody is really

interested in pursuing this approach that Senator McCain and I

have tried to initiate.

I am hopeful, as a result of your response and the response of

all of you, and I think Senator McCain will not be able to return

because we will have another vote I believe that has perhaps just

started on the defense authorization bill, so I will have to go cast

that vote as well.

On behalf of the Chairman and myself and other members of the

committee, I thank all of you for taking the time to come to Washington, DC today and to participate in this hearing and give us I

hope a renewed starting point with the legislation that we have in-
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troduced and the opportunity to continue working with you and

talking with you about this important issue.

This hearing is adjourned.

[Whereupon, at 4:15 p.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 OF HON. DANIEL K. AKAKA, U.S. SENATOR FROM HAWAII

I thank Chairman John McCain and Vice Chairman Byron Dorgan for holding

this hearing today and for introducing S. 1439, the Indian Trust Reform Act of 2005.

In addition, I thank the witnesses who will testify before the committee for their

participation today.

For decades, the United States has been trying to resolve the accounting problems

for both the individual Indian money and Indian tribal accounts. As a result, for

10 years now, litigants for individual Indian money account holders who filed a lawsuit in 1996 against then Secretary of Interior Bruce Babbit and now against Secretary of the Interior Ann Norton, have been waiting for an accurate and complete

accounting of their individual trust accounts. However, to this day, after contempt

of court findings against cabinet officials and expenditures by both the Government

and litigants, a historical accounting of the individual Indian money accounts still

has not been rendered. On February 23, 2005, Judge Royce Lamberth issued another structural injunction requiring the Department of the Interior to admit to Individual Indian Money trust account holders that its accounting may be unreliable.

It also provides specific requirements for the Department as it completes its accounting. Still, I am not certain the Department will be able to fully comply with

Judge Lamberth’s latest Memorandum and Order.

Mr. Chairman, for this reason, I am pleased that you and Senator Dorgan have

introduced S. 1439. While I commend the chairman and vice chairman for their efforts to bring forth this legislation to address the Government’s responsibility to provide an accurate and complete accounting of the individual Indian money accounts,

I wish to ensure that this legislation is a balanced and fair approach that will be

acceptable to the plaintiffs and the Department of the Interior. It is imperative that

Congress ensures that this legislation does not diminish the government’s trust responsibility with Indian country. I agree with the intent of S. 1439, but I have some

concerns and I look forward to working with Senators McCain and Dorgan on addressing them. Mr. Chairman, again, I thank you for holding this important hearing.

PREPARED STATEMENT OF JAMES CASON, ASSOCIATE DEPUTY SECRETARY, AND ROSS

SWIMMER, SPECIAL TRUSTEE FOR AMERICAN INDIANS ON THE COBELL LAWSUIT.

Thank you for the opportunity to come before this committee again and discuss

the Cobell v. Norton lawsuit. As we have discussed on several prior occasions, the

Department of the Interior supports the efforts of Congress, as the Indian trust settlor, to clarify Indian trust duties, responsibilities, and expectations.

Allow me to emphasize that the Administration strongly supports protecting the

rights of Native Americans under the law and that is an important objective of the

Department of the Interior. Everyone involved the Cobell lawsuit—the Government,

the Indian plaintiffs, and the judges in the district court and the appeals court—
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shares, we believe, that objective. But the protracted and painful litigation that has

occurred does not serve that objective as well as would a settlement reached by

agreement of the parties. It may not be easy for the Government and the Indians

to reach a settlement, but it is well worth the effort for all concerned to engage in

a good faith effort to resolve the matter. It is, of course, important that any settlement have the support of the Congress, as a settlement could not be implemented

without appropriation of the necessary funds.

We particularly want to thank the chairman and the ranking minority member

for their efforts in trying to reach a full, fair, and final settlement of the issues in

this case. This Congress has an opportunity to look at this issue anew, examine the

facts, and move forward with a clear and consistent sense of purpose regarding the

Federal Government’s administration of the Indian trust.

The Cobell litigation has been pending for too long. It is clear that after 9 years

of litigation, the courts have not reached a resolution that is broadly supported by

Congress. Interior’s annual appropriations make it clear that Congress has not and

does not support the kind of accounting effort required by the District Court.

While Congress recently took actions to forestall the implementation of the District Court’s structural injunction regarding historical accounting, the introduction

of S. 1439 is the first serious Congressional effort we have seen to comprehensively

resolve the issues involved in the Cobell lawsuit. While many details remain to be

negotiated and clarified, the bill represents an important step toward bringing the

parties together for a meaningful effort to seek closure on this matter.

Congress is the Indian trust settler, that is, the creator of the trust and hence

the party that defines its terms. Congress provides statutory direction to guide the

management of assets held in trust for Indians and Congressional appropriations

are provided to fund trust operations.

Congress began its involvement with the passage of the General Allotment Act.

That act authorized the allotment of tribal lands to individual Indians with the hope

individual Indians would take up farming and assimilate themselves into the nonIndian society and culture. The act provided that the Secretary would hold the lands

as an allotment in trust for 25 years. After 25 years, Indians would be free to sell

or encumber their lands as they saw fit.

In 1934, Congress passed the Indian Reorganization Act and extended the trust

for individual Indian allotments in perpetuity. By then, many of these lands had

already started to fractionate into many undivided interests and have continued to

do so exponentially over the next 71 years. The interests have become so small in

many cases that heirs do not bother to claim their inheritances and interest holders

in many cases fail to inform the BIA of their whereabouts. Keeping track of family

deaths, missing relatives, and moving interest-holders is a full time job for many

employees at BIA.

The 1994 Reform Act was intended to further define the Department of the Interior’s obligations regarding the management of IIM funds. In particular, the 1994 Reform Act defined several prospective accounting duties and a requirement to provide

Indian beneficiaries with periodic account statements. In reading the legislative history of the 1994 Reform Act, one will recognize that Congress had known for years

about the condition of the trust accounts. However, it also seems apparent that Congress did not expect the Act to set the stage for what is now claimed to be a multibillion dollar historical accounting liability on the part of the United States. The

District Court has directed Interior to account for every land and cash transaction

since 1887, even with regards to beneficiaries who had died and whose trust account

was closed before 1994. The Court of Appeals seems to have identified a historical

accounting requirement beginning in 1938.

In 1996, the Cobell plaintiffs filed a lawsuit seeking an accounting of IIM account

funds. Although Congress had not directed Interior to prepare periodic accounting

statements or consistently funded such a requirement in the past, the Court of Appeals has ruled that a historical accounting for IIM accounts is required, ostensibly

to ensure that the current balances of IIM accounts are accurate.

The plaintiffs’ lawyers have said they do not want handouts; they do not want

reparations; they do not want welfare. They just want what is rightfully owed to

them—in other words, they want money that was collected for them, but which they

believe has not been distributed. In Court, the plaintiffs seek a historical accounting

but are now working hard to prevent that accounting from occurring. In Congress,

they argue against providing funding for that accounting; in Court, they argue that

the accounting is impossible. Instead of an accounting, they want a lot of money.

The plaintiffs have been quoted by the press as asserting that the Government has

failed to pay individual Indians $176 billion. Recently, the plaintiffs and tribal leaders have offered to settle the historical accounting claims of individual Indians for

$27.487 billion. In the recently proposed S. 1439, the Senate left blank the amount
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of the proposed settlement, but with an indicator that the figure should be in the

billions.

Before we speak to the provisions of S. 1439, we would briefly like to address the

list of 50 principles the committee has before it from the Trust Reform and Cobell

Settlement Workgroup, which included the Cobell plaintiffs. The principles recommend a lump sum payment to the plaintiffs of $27.487 billion.

This $27.487 billion payment will not necessarily resolve the Cobell litigation. In

addition, it does not settle any other claims individuals might have against the

United States related to funds management or to their lands. The $27.487 billion

is intended to cover only the historical accounting claim. Principles 48–50 State

clearly that the individuals should be allowed to continue to seek redress for Federal

mismanagement claims. Federal mismanagement, the principles say, should be

treated as a matter of national interest and, under principle #48, Congress is urged

to provide a fair offer to individuals to compensate them for mismanagement in addition to the $27.487 billion.

To achieve a full, fair and final settlement to the potential claims being raised

by individual Indians (and separately, by tribes) it is important to consider carefully

four key components:

• Any requirement to conduct historical accounting activities should be eliminated. In exchange for a settlement payment, the account holder must relinquish any claim to an accounting and accept as accurate the balance of the account when closed or at the date of settlement. In addition, permitting a significant number of account holders the option of pursuing an accounting will undermine the cost effectiveness of a settlement program.

• Claims regarding funds mismanagement, including but not limited to accounts

receivable issues, funds handling and deposit, investment decisions, etc. must

be addressed.

• Appropriate mechanisms for the mitigation of fractionated interests must be

provided. For example, the authority to conduct ‘‘consolidation’’ sales of highly

fractionated lands would be helpful.

• Congress must decide whether separate resource mismanagement claims will be

permitted, and if so, what remedies will be made available by Congress. If the

legislation does not resolve those claims, Congress should ensure that these

claims do not provide an opportunity to seek a sweeping historical accounting

similar to that sought in the Cobell litigation.

In determining how much money the Federal Government should provide to settle

individual Indian claims, Congress should consider what work Interior has done so

far and what we have found.

As part of the Cobell litigation, Interior collected over 165,000 documents for the

historical accounting of IIM trust fund activity through December 31, 2000, for the

named plaintiffs and agreed-upon predecessors. Of these documents, about 21,000

documents were used to support the transactional histories, which dated back as far

as 1914, and which included a total of about 13,000 transactions.

Pursuant to the requirement in section 131 of the fiscal year 2003 Appropriations

Act, on March 25, 2003, the Department of the Interior provided Congress with a

summary of the expert opinion of Joseph Rosenbaum, a partner in Ernst & Young,

LLP, regarding the five named plaintiffs in Cobell v. Norton. This report describes

the process the contractor went through and also contains a summary of his opinions. These conclusions included:

• The historical IIM ledgers were sufficient to allow DOI to create virtual ledgers

that were substantially complete for the selected accounts.

• The documents gathered by DOI supported substantially all of the dollar value

of the transactions in the analyzed accounts.

• The documents gathered by the Department of the Interior do not reveal any

collection transactions not included in the selected accounts, with a single exception in the amount of $60.94 that was paid to another account holder, due

to a transposed account number entered in the recording process.

• An analysis of relevant contracted payments, evidenced primarily by lease

agreements, showed that substantially all expected collection amounts were

properly recorded and reflected in the IIM accounts.

• There was no indication that the accounts are not substantially accurate, nor

that the transactions were not substantially supported by contemporaneous documentation.
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This analysis, including the named plaintiffs and the selected predecessors in interest, found both non-interest transaction over payments to class members (37 instances totaling $3,462) and under payments (14 instances totaling $244).

As of June 30, 2005, Interior’s Office of Historical Trust Accounting [OHTA] had

reconciled more than 21,847 Individual Indian Money [IIM] judgment accounts with

balances totaling more than $56.3 million and an approximately 15,000 additional

accounts with no balance as of December 31, 2000. This accounting effort found noninterest overpayments (2 instances totaling $2,205) and under payments (21 instances totaling $52).

As of June 30, 2005, OHTA had also reconciled 3,995 IIM per capita accounts with balances of over $28.1 million and an additional approximately 4,000 accounts with

no balance as of December 31, 2000. In this accounting effort, no overpayment or

underpayment discrepancies were identified.

Interest recalculations identified a particular set of IIM judgment transactions (786 instances totaling $25,000) where principal had been distributed without associated interest amounts (an underpayment) and, more broadly, interest amounts for

judgment and per capita accounts that appeared to have been overpaid (a net

amount approximating $377,000 on about 25,842 accounts).

The National Opinion Research Center [the Center] at the University of Chicago,

a national organization for research, has contracted to assist Interior with interpreting historical accounting data and results. It has recently completed a draft progress

report entitled ‘‘Reconciliation of the High Dollar and National Sample Transactions

from LandBased IIM Accounts,’’ looking at land-based IIM accounts that were open

on or after October 25, 1994. The goal of the project is to assess the accuracy of

the land-based IIM account transactions contained in the two IIM Trust electronic

systems (Integrated Records Management System and Trust Funds Accounting Systems) for the electronic era 1985–2000. Accuracy is being tested by reconciling all

transactions of $100,000 or more and a large statistically representative random

sample of non-interest transactions under $100,000. The historical accounting initiative is scheduled to end in August 2005. To date, the Center has found:

• Over 98 percent of the sampled transactions needed for preliminary estimates

have been reconciled for all 12 BIA regions.

• A completion rate of 98 percent is extremely high in a sample such as this. The

draft report states: ‘‘This very high completion rate for searching and attendant

reconciliations should put to rest most concerns about the impact that the few

remaining reconciled transactions might have on results.’’

• Of land-based IIM account transactions exceeding $100,000, 1,730, of 1,737

were reconciled [99 percent]. The reconciliation identified both over payments

[34 instances totaling $34,053] and under payments [24 instances totaling

$47,168]. For the sampled land-based transactions of less than $100,000, fewer

differences were found among the 4,134 out of 4,162 transactions reconciled,

with over payments to beneficiaries [15 instances totaling $506] and under payments [6 instances totaling $516].

• Reconciliation shows the debit difference rate to be 0.3 percent.

• Reconciliation results show the credit difference rate to be a little over 1 percent.

Based upon the historical accounting results so far, Interior suggests that Congress consider exempting Judgment and Per Capita funds from any proposed legislation. Regarding the findings from the IIM land-based accounting thus far, the net

difference [under payments—over payments] would be about $10,000. Just under

payments, without regard to offsetting over payments, equal less than $48,000. Notwithstanding the facts, all parties need to be mindful of the cost, risks and uncertainties associated with continued accounting efforts involving the remaining as yet

unreconciled accounts.

Through December 31, 2004, OHTA also resolved residual balances in nearly

8,200 special deposit accounts, identifying the proper ownership of more than $38

million belonging to individual Indians, tribes, and private entities. By the end of

2005, OHTA expects to resolve the proper ownership of approximately $51 million

[cumulative] in residual IIM Special Deposit account balances.

Consistent with Interior’s historical accounting plan, the Administration proposed

funding the historic accounting at $130 million in fiscal year 2004, Congress appropriated $45 million. We requested $109 million for fiscal year 2005; only $58 million

was appropriated and this includes funding for tribal trust fund accounting as well.

The fiscal year 2006 budget request for historical accounting is $135 million. This

amount would provide $95 million for IIM accounting and $40 million for tribal accounting, however initial indications from House and Senate passed appropriations
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bills suggest approximately $58 million will be provided. As a result of the lower

appropriations amounts provided, the pace of completing Interior’s planned historical accounting effort is slower, and the anticipated completion date will move further into the future. To date, Interior has spent in excess of $100 million to obtain

the historical accounting results indicated above.

We are pleased to have an opportunity to review S. 1439, the ‘‘Indian Trust Reform Act of 2005.’’ This bill was just introduced late last week so our comments

today are preliminary ones. We will provide more detailed comments after an indepth review of the bill.

First, we appreciate the fact that legislation has now been introduced to attempt

to address the issues in Cobell. We are pleased to see the bill focuses on consolidation of fractionated Indian lands and supports a more aggressive land acquisition

program than the one currently under way. We do, however, have some serious concerns with the bill as currently drafted.

Title I. S. 1439 would provide a yet undetermined number of billions of dollars

to resolve the historical accounting claims of the class members of the Cobell litigation. However, it does not provide for settlement of all of the elements of the Cobell

litigation. In addition, in determining what is a reasonable amount, Congress should

be aware that the $27.487 billion requested by the plaintiffs does not include money

to resolve potential mismanagement of trust fund and asset claims. In deciding

upon the amount to provide for a resolution, the Congress should carefully consider

all potential liabilities with respect to the individual Indian trust. The legislation

should resolve or restrict any claims that might permit the reinstatement of historical accounting litigation comparable to the Cobell case. Congress should also realize

that 25 tribal trust cases have been filed involving sums of money far greater than

those involved in the individual Indian trust.

Indian Trust Asset Management Demonstration Project Act. S. 1439 includes provisions allowing for a pilot project for 30 tribes to take over management

of Indian trust assets. However, it is critical to transfer the responsibility for results

along with authority and funding. Thus, we do not believe the United States should

remain liable for any losses resulting from a tribe’s potential mismanagement of an

Indian trust asset. This is particularly true because the bill would allow tribes to

develop and carryout trust asset management systems, practices, and procedures

that are different and potentially incompatible with those used by Interior in managing trust assets. In a normal trust, this action would be considered a merger of

Trustee and beneficiary and thus end the Trust. Of course this would have no impact on the government-to-government relationship.

We look forward to further discussing the following key aspects of this provision.

For example, would Interior need to develop expertise in 30 different trust asset

management systems sufficient enough to ensure that everything a tribe is doing

under that system is in keeping with Interior’s trust responsibility? If program reassumption became necessary, how would Interior take back program responsibilities and integrate information back into our trust asset management environment

when it has been collected and processed in different systems? What kind of constant monitoring of tribal activities will Interior have to do to ensure the tribe is

living up to the standards in the bill? What performance standard would apply: the

imminent jeopardy standard associate with Public Law 93–638 or the ‘‘highest and

most exacting fiduciary’’ standard being required of Interior?

Fractional Interest Purchase and Consolidation Program. As we stated

above, we are pleased to see that the bill places a priority on developing an aggressive program for the purchase of interests in individual Indian land with the intent

of restoring those interests to the tribes, we are not prepared to take a detailed position on the specific provisions in the bill until we have done further analyses.

The President’s fiscal year 2005 budget request included an unprecedented $75

million request for Indian land consolidation. Congress chose to appropriate $34.5

million for the program in fiscal year 2005. In light of this, we requested $34.5 million for fiscal year 2006.

As structured, the program in S. 1439 provides incentives where a parcel of land

is held by 20 or more individuals and where an individual sells all interests in trust

land. In cases where a parcel of land of land is held by over 200 individuals, the

bill provides procedures for noticing interest holders and moving ahead with consolidation of the interests. These provisions will greatly help consolidate interests and

reduce the costs of management of the individual Indian trust.

Care must be given, however, to ensure that this bill does not work as an incentive to fractionate land so that individuals can become eligible for the bill’s incentives. So far, there has been no lack of willing sellers at appraised values. In addition, we would like to work with you further on the thresholds and amounts included in this title. We have some serious concerns as to the cost of the significant
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premiums provided in the bill. In addition, we would like to explore the possibilities

for consolidation sale authority to reduce the associated public financing burden of

addressing the fractionation issue. Further, we need Congressional clarification regarding the seemingly apparent public policy of retaining individual Indian land

within Indian Country ownership versus the trust responsibility to obtain fair market value for each land interest. We need to analyze the costs of the new incentives,

the mechanisms for funding land acquisitions and the impact of the American Indian Probate Reform Act on the rate of fractionation as a part of our implementation plan.

Restructuring the Bureau of Indian Affairs and the Office of the Special

Trustee. S. 1439 includes a number of concepts that were discussed by the Joint

Department of the Interior/Tribal Leaders Task Force on Trust Reform in 2002. This

task force was formed during the period when the department was examining ways

to restructure the trust functions of the department in response to the trust reform

elements of the Cobell court. The task force ended in an impasse with regard to implementing legislation on matters that were not related to organizational alignment.

In the face of no legislation, the Department implemented a reorganization plan

that could be achieved administratively. We will review this new title with respect

to the reorganization just completed and provide you with our comments in our comprehensive report on the bill.

This title of the bill also extends the Indian preference hiring policy to the new

Office of Trust Reform Implementation and Oversight created by the bill and abolishes the Office of the Special Trustee for American Indians. Interior would appreciate the opportunity to discuss these policy choices in some detail.

While Interior is receptive to the concepts of establishing an undersecretary position and merging Indian programs under new leadership, we would like to discuss

the objectives of such a proposal. In Interior’s view, such an initiative is unlikely

to materially alter Indian trust performance due to the presence of other, more

pressing, structural concerns about the trust, such as the lack of a clear trust agreement to guide responsibilities and expectations, appropriations that do not track

with all program trust responsibilities, the lack of an operative cost-benefit paradigm to guide decisionmaking priorities, the challenges of incorporating Public Law

93–638 compacting and contracting and the requirements associated with Indian

preference hiring policies. These issues have frustrated the beneficiaries, the administrators, and a various times Congress throughout the lifespan of this trust. We encourage Congress to speak clearly in whatever legislative direction in chooses to

write, and carefully consider the impacts the language will have in allowing us to

meet the objectives of your constituents.

It is clear that moving from today’s organization into a beneficiary-services-oriented organization of excellence will demand the highest of financial, information

technology and managerial skills. American Indians make up less than 1 percent

of the American public. If we unduly restrict hiring to this small fraction of potential employees, instead of reaching out to whoever may be most qualified, we deprive ourselves of 99 percent of the available talent pool. While the Indian preference hiring policy does permit the hiring of non-Indians, it also may serve as a

significant disincentive for non-Indian applicants. We would like the opportunity to

serve Indian Country to appeal to a broader range of applicants so as to create an

applicant pool large enough to ensure we are hiring well qualified employees.

Let me be clear. Indian people who are the best or equally well-qualified should

be given preference. This allows us to ensure our organization understands the

unique issues of Indian country. However, when better qualified individuals are not

even considered or given reasonable promotion potential, a reality exists that organizational performance suffers.

Audit of Indian Funds. The last title of S. 1439 requires the secretary to prepare financial statements for Indian trust accounts in accordance with generally accepted accounting principles of the Federal Government. The Comptroller General

of the United States is then required to contract with an independent external auditor to audit the financial statements and provide a public report on the audit. The

secretary is required to transfer funding for this audit to the Comptroller General

from ‘‘administrative expenses of the Department of the Interior’’ to be credited to

the account established for salaries and expenses of the GAO.

Congress created the individual Indian trust. We are hopeful that S. 1439 will resolve many of the issues that we have spent over 9 years in court debating.

From the Government’s standpoint, we believe S. 1439 should——

• provide for a full, fair, and final resolution of the entire case;

• provide a clear and realistic statement of the government’s historic accounting

obligations for the trust funds of individuals;
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• resolve the accounting claims of the account holders and any associated funds

mismanagement claims;

• eliminate inefficient trust management obligations by consolidating individual

Indians’ lands through a land purchasing program and address any historic

land assets mismanagement claims;

• clarify trust accounting and management responsibilities such that they are

limited by available appropriations, so that future claims and litigation do not

arise as a result of unfunded obligations; and,

• provide a clear statement of the Government’s historic accounting obligations

for Indian tribes.

We recognize this is a daunting task. But I can assure you, it is no more daunting

than the prospect of facing many more years in the court system trying to find the

answers to these issues.

Mr Chairman, I would like to close with a comment in support of our people at

the Department of the Interior. We want to be sure that the public record reflects

the fact of their extraordinary service to the country. Many of our employees past

and present have faced rough-sledding in the Cobell case and have been unfairly

maligned. Department of the Interior employees working on the issues involved in

the Cobell case, like the other employees of the department, are here to serve the

American public. They work hard, in good faith, to implement the laws you enact

and protect the legal rights of Native Americans. We ask that our employees be

treated with the dignity and respect they have earned and deserve as we all work

our way together through the difficult legal issues involved in the Cobell case. The department is encouraged by the Senate’s leadership on this issue. We look

forward to resolving this case so that the department and beneficiaries can move

forward on a positive agenda for Indian country. Thank you for the opportunity to

appear. We would be happy to answer any questions you might have at this time.

PREPARED STATEMENT OF CLIFFORD LYLE MARSHALL, SR., CHAIRMAN, HOOPA

VALLEY TRIBE

We thank you for the opportunity to submit testimony on S. 1439, the Indian

Trust Reform Act of 2005. The Hoopa Valley Tribe, one of the original self-governance tribes, a section 131 tribe and member of California Trust Reform Consortium

and ATNI, commends Chairman McCain and Vice Chairman Dorgan for their dedication to resolving the issues arising from the Cobell v. Norton case, the Department

of the Interior’s reaction to that case, and the future of tribal and individual Indian

trust assets management. The Hoopa Valley Tribe appreciates the time and energy

spent on the development of S. 1439 and is pleased with the outcome. We support

the effort and look forward to working with the committee on improving the bill as

it moves through the legislative process.

S. 1439 presents a plan for remedying the wrongs of the past while proposing a

structured approach for future trust management. It seeks to ensure that problems

surrounding the Federal management of trust assets and resources, which have, afflicted Indian country, for so long, will not plague us in the future. The bill supports

the government-to-government relationship between tribes and the United States,

adheres to the Federal Government trust Responsibility to tribes, and furthers the

principles of self-governance and self-determination. Unlike past short-sighted trust

management approaches of the United States, that gave rise to the breach of trust

claims, S. 1439 is a balanced approach to addressing the immediate issues of Cobell

and the Federal Government’s management of trust assets. Importantly, S. 1439

also preserves the rights of tribes, as inherent sovereign governments, to participate

in the management and protection of their territories and resources. It recognizes

that the United States must be held accountable for past wrongs and also that true

reform is needed for proper trust management in the future. We believe S. 1439 is

the vehicle for that for that reform.

Below, we discuss three overarching points of the bill and then provide brief comments on certain provisions. Specifically, we believe S. 1439 rightfully refocuses

trust reform to the original objectives and intent of the 1994 Trust Fund Management Reform Act, blunting the United States’ recent policy of micromanaging trust

issues in light of Cobell which has caused duplication and bloated bureaucracy. Further, we believe S. 1439 protects self-governance and the rights and abilities of

tribes to participate in trust management. Finally, it appears S. 1439 frees up substantial funds that could be used on the ground to address the many issues in Indian country.

Refocusing Trust Reform
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We believe S. 1439 correctly refocuses trust reform back to the original mission

of the American Indian Trust Fund Management Reform Act of 1994, 25 U.S.C.

§§4001–4061. The Hoopa Tribe agrees with the goals and principles of the 1994 act.

We also believe in the need for the Office of Trust Fund Management [OTFM] to

operate within the BIA. The 1994 act established the Office of Special Trustee [OST]

to oversee and coordinate reforms in the Department of the Interior’s [DOI] practices relating to the management and discharge of the secretary’s trust responsibility to tribes and individual Indians. Under the act, the OST is to ensure that policies, procedures, practices and systems of the DOI’s bureaus related to the discharge

of the trust responsibility are coordinated, consistent and integrated. It is clear

under the Act that OST is meant to be an oversight and coordinating entity.

In light of Cobell, however, the OST in recent years has used the 1994 act to leverage unnecessary control and micromanage trust issues. It has moved away from

its intended role as a coordinating oversight entity to become an entity engaged in

the delivery of trust services, a role originally reserved for the BIA. This has resulted in a fragmentation of appropriations for Indian programs, a dismantling of

the Indian service delivery system and unnecessary duplication and bloating of bureaucracy. This is in direct contradiction to tribes’ longstanding desire to keep the

BIA system intact while repairing resource management problems that need fixing.

The purpose of the 1994 act was to provide oversight, not create a new agency focused on protecting itself from liability.

We do not need additional bureaucracy, nor can we afford it, particularly in today’s budget environment. OST has been operating under a ‘‘bright line’’ philosophy

under which it attempts to develop an arbitrary separation between Indian assets

and the people themselves. Indian people and their assets, however, cannot be conveniently separated simply by dividing programs and functions and moving trust

program management from a single line of authority to multiple lines of decisionmakers at different agencies. Any bright line plan that has a basic framework to

separate trust assets from Indian communities will necessarily be in conflict with

the goals of economic development, providing adequate services, and reducing poverty in Indian country.

Under the existing BIA structure, each Regional and Agency Office has established internal trust personnel to oversee the management of trust assets at every

point in the delivery of trust services. The OST has also established trust officers

to serve in the Regional and Agency Offices. Under the combined BIA and OST restructured trust programs, there are nearly 1 dozen Federal employees carrying out

what was done by less than One-half in previous years. We do not believe this is

what was intended by the 1994 act.

The Hoopa Tribe supports S. 1439, in part, because title V takes bold steps to restructure the BIA and the OST. Title V seeks to ensure a more accountable administration of the secretary’s duties with respect to providing services and programs to

Indians and tribes, including the management of trust resources. Title V creates the

position of under secretary for Indian Affairs, who reports directly to the Secretary

of the Interior, and provides for the phasing out of the OST by December 31, 2008.

The termination of the OST is specifically intended by the 1994 act. S. 1439’s clear

sunset of the OST protects against the possibility that the OST will become permanent, regardless of its efforts in bureaucracy building and assuming the responsibility for delivering certain trust services.

The Hoopa Tribe supports S. 1439’s creation of the position of Under Secretary

and the transfer of the duties and functions of the OST and the Assistant Secretary

for Indian Affairs to this new position. We think the plan will streamline the process for carrying out trust functions. Moreover, with the emerging trust issues regularly surfacing in other bureaus and agencies of the DOI, we believe the creation

of the under secretary position will help resolve trust problems tribes face due to

the lack of coordination or understanding of the issues by those other agencies/bureaus. Having one direct line of authority will assist in the coordination of the various aspects of trust management. Further, we support the effective merger of OST

functions back into Indian programs of the BIA, under the under secretary. This

would prevent the duplication of services and the overgrowth of bureaucracy, and

foster progress in the delivery of services to Indian people.

S. 1439 Protects self-governance and the ability of tribes to manage their own resources

As a self-governance tribe and participant of section 131, we are grateful that

Congress recognizes the benefits of the section 131 Demonstration Project and has

included the Indian Trust Asset Management Demonstration Project Act in Title III

of S. 1439. The Hoopa Tribe is honored to participate in the section 131 project with

the six other tribes in the California Trust Reform Consortium (Karuk, Yurok,
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Cabazon, Big Lagoon, Redding, and Guidiville) as well as the Salt River Pima Maricopa Indian Community, the Confederated Salish—Kootenai Tribes and the Chippewa Cree of the Rocky Boys Reservation. Section 131, to date, has been successful.

Accordingly, we strongly support the Demonstration Project in S. 1439 and will assist in any manner to address areas of concern that Congress or the Administration

may have.

The motivation behind section 131 [section 139 in its initial year] was multi-fold.

For the California Trust Reform Consortium, we sought protection of our then-existing Operating Agreement for trust resources management that we entered into with

the BIA Pacific Regional Office [PRO] and protection of our relationship with the

PRO in the face of uncertainty in the direction of trust reform efforts. We did not

want the imposition of the restructured OST and DOI to alter our tried and true

successful means of managing our trust resources. It is our position that trust reform should focus on what is broken and preserve what is working. Section 131

tribes have systems and practices for trust management that work. In fact, pursuant to section 131 each participating tribe underwent an evaluation by the OST and

received a determination that it is capable of performing compacted trust functions

under the same fiduciary standards to which the secretary is held. Hoopa was even

cited as ‘‘an excellent example of trust administration, in furtherance of tribal selfdetermination.’’

Section 131, we also believe, is an appropriate way to showcase successful models

of trust management that not only demonstrate to the United States how trust

management can be implemented, but also encourage tribes to participate in the

management of their resources. It stands as an example that local decisionmaking

and combined efforts with the BIA can result in significant trust management improvements. Tribes can properly implement trust management even though they

may use different practices and methods than the DOI. Title III of S. 1439 maintains and encourages this concept by preserving the ability of tribes to continue

their own successful trust resource management.

The S. 1439 Demonstration Project builds upon and encourages self-governance

and self-determination, which are proven successful policies for building growth in

capability and infrastructure in tribal governments. We believe that the Demonstration Project under title III will provide a useful model for how tribal governments

can assist the United States with properly managing trust assets and create an understanding on the part of the Federal Government of the differences between our

respective values and expectations when managing trust assets within our tribal

territories. We also believe that all tribal governments, regardless of whether they

are direct service tribes or operating pursuant to self-governance or self-determination agreements, should be a part of the management of trust assets within their

jurisdictions. Active participation by tribal governments in the management of trust

assets not only creates positive results, but reduces the chance of conflicts or breach

of trust claims. Again, we support the concept of the Demonstration Project and are

committed to working with the committee to find ways for tribal governments of any

fashion of service delivery to engage in the management of their trust assets.

One concern we do have with the Title III Demonstration Project is that the default action under section 304(b)(3) is to deny approval of a tribal applicant’s demonstration project plan if the secretary does not act within a certain timeframe. We

believe this standard should be reversed so that a plan is approved unless specifically denied by the Secretary. This approach would be mindful of the fact that tribes

are always at a disadvantage when the secretary has the ability to obstruct the negotiation process.

Under S. 1439, substantial amounts of money will be available for use on the ground

to address the many issues in Indian country.

It appears that under S. 1439 a substantial amount of funds currently being used

for litigation costs by the DOI in the Cobell case as well as reorganization efforts

of the OST would be available to be used for on-the-ground initiatives in Indian

country to address the many needs of tribes and their members.

We have previously estimated that the costs of implementing the To-Be Model,

Records Policy and Trust Examination Handbook nationwide would be approximately $1 billion. While we support the continuing requests of tribal leaders to provide adequate funding for trust resource programs, we do not support the concept

that creating new multi-million dollar centralized bureaucracies located thousands

of miles away from where the resources need to be managed is the best way to accomplish trust improvements. To the contrary, we strongly believe that meaningful

and cost effective trust improvements occur when there is support and funding provided at the local level. S. 1439 appears to recognize this principle by encouraging

self-governance and the integration of tribal government action with a local deci-
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sionmaking focus in trust management. S. 1439 appears to streamline trust management rather than expand Federal bureaucracy. With this, moneys that would

have been put toward centralized bureaucracies, it appears, would be available for

spending at the local level on trust improvements. This, in turn, will further tribal

economic development and the effort to reduce poverty among tribal members.

Titles I, II, IV, and VI of S. 1439

The Hoopa Tribe is in support of a timely and fair resolution of the Cobell case. The importance of the United States’ obligations to Indian people can never be diminished. Further, Indian people should not suffer from inaction on their claims.

The Hoopa tribe has had experience with claims that take far too long to resolve.

Such delay does not do justice to Indian people. A fair and timely resolution is needed so Indian people can move forward. We look forward to hearing the comments

that will be forthcoming with regard to the proposal outlined in title I.

The Hoopa Tribe previously has not supported the concept of a commission because we do not want it to become another level of overreaching bureaucracy. However, as title II is written, it seems the Trust Asset Management Policy Review

Commission [Commission] might provide some benefit in reviewing the laws and

practices of the DOI with respect to trust asset management, and recommending improvements to those laws and practices to the Secretary and Congress. The manner

in which Indian trust services has been staffed, funded and carried out has left

many of us with a strong sense of frustration and disappointment. The commission

concept may help ensure that the problems which plagued us in the past will not

plague us in the future. It is absolutely necessary, however, to ensure that there

is no risk that the Commission will take on a life of its own, by extending its reach

beyond reviewing and making recommendations. It cannot duplicate efforts of the

agencies nor can it drain critically needed funds from Indian programs or wield any

authority over how tribal governments address individual issues relating to trust

management, The manner in which Title II is drafted appears to protect against

such short-sighted policies and additional bureaucracy that would only complicate

the problems. We recommend, however, that the commissioners selected from Indian

country consist of a balance between direct service and self-governance tribes.

The Hoopa Tribe strongly supports resolving the problem of fractionated interests.

We, however, reserve comments on title IV regarding the Fractional Interest Purchase and Consolidation Program until we have had the opportunity to hear from

the Indian Land Working Group and other appropriate entities that have an interest in this matter.

We believe the concept in Title VI, Audit of Indian Trust Funds, is necessary to

ensure adequate checks and balances of financial trust functions within the Federal

Government. The requirement for an independent audit will lend necessary credibility to the overall management of trust funds by the Federal Governments.

We want to express our appreciation for Chairman McCain’s and Vice Chairman

Dorgan’s leadership demonstrated through the introduction of S. 1439. Trust mismanagement problems have afflicted tribes and Indian people for too long. Allowing

these problems to remain unresolved for much longer will only create more injustices, conflict and delays in the services the United States is obligated to provide

Indian people. It is time to act. We believe that S. 1439 is a solid foundation for

such action, and we look forward to working with the committee, the House Resources Committee and the Administration to move meaningful legislation through

the process as expeditiously as possible.

STATEMENT OF THE HARVEY MOSES, JR., CHAIRMAN CONFEDERATED TRIBES OF THE

COLVILLE RESERVATION

The Confederated Tribes of the Colville Reservation [Colville Tribe] would like to

express its thanks to Chairman McCain and Vice Chairman Dorgan for introducing

S. 1439, the ‘‘Indian Trust Reform Act of 2005,’’ and would like to take this opportunity to provide initial thoughts and comments on the bill. Although such an important legislative initiative will undoubtedly generate a wide range of reactions,

the Colville Tribe generally supports the legislation and believes that it is a crucial

first step in resolving the Cobell v. Norton litigation and implementing meaningful

trust reform in the Department of the Interior.

While the statements contained herein are based only on a preliminary review of

the bill, the Colville Tribe is pleased to see that title V of S. 1439 would help rectify

one of the more unfortunate recent developments in Federal Indian policy—the rise

and gradual domination of trust issues by the Office of Special Trustee [OST]. The

Colville Tribe has long made known its opposition to OST, as have many of our sister tribes in the Pacific Northwest and around the country. Our opposition to OST
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and our desire to see the transfer of OST functions back to the Bureau of Indian

Affairs [BIA] are based on our own experiences with OST and on the detrimental

impact continued funding of the OST bureaucracy has had on the funding levels of

critical Indian programs.

The Colville Reservation comprises over 1.4 million acres of trust and allotted

lands in north central Washington State. With lands that include timber, agricultural and water resources, our tribe and our tribal members necessarily depend on

a smooth working relationship with our local BIA agency office to ensure that land

transactions and other BIA supervised activities are completed in a timely manner.

For decades, the Colville Tribe has generally enjoyed such a relationship. Certain

activities undertaken by the OST, however, have resulted in periods of extended

delays in completing land sales by and between our people. OST has gone so far

as to impound our tribe’s probate records from our agency office in Nespelem, WA

[where they had been secure for decades], and moved them to Albuquerque, NM.

We understand that since the move, OST cannot account for all of the records. To

say the least, these actions have dealt a serious setback to our tribe’s ability to conduct business and are not in keeping with a healthy and constructive Federal-tribal

relationship.

Also, as we noted in statements previously submitted to the committee in connection with its March 9, 2005, oversight hearing on trust reform, continued funding

of OST at the expense of the BIA means that OST diverts critical funding and personnel away from agency offices. Our tribal members are the beneficiaries of these

agency-level services and are the very people who need the assistance most and who

can least afford to suffer bureaucratic folly. Indeed, every new fiscal year brings

with it another increase in OST funding and a corresponding reduction in BIA funding for critical health and safety programs. Returning these functions to a single administrative entity, as proposed by S. 1439, would reverse this trend.

While we believe a need exists for independent oversight of the BIA’s delivery of

trust services, OST has morphed far beyond this oversight function. As proposed,

title 11 of S. 1439 would establish a trust management policy review commission

that would provide policy oversight, while title VI would give the Government Accountability Office a key role in overseeing how the Department safeguards its trust

responsibility. While these titles could use some fine tuning, the Colville Tribe believes that these are steps in the right direction.

The Colville Tribe also agrees with the intent of title III—which would establish

the Indian Trust Asset Management Demonstration Project—that tribes that so

choose should have an opportunity to prioritize funding and management of their

trust resources based on their own needs. Although we have questions on how the

proposed project will be implemented and are interested in seeing the details of how

tribes and the Department would negotiate a ‘‘trust resource management plan,’’

these issues can surely be resolved later.

Title I of the bill proposes a voluntary claims resolution regime to settle the accounting claims of the hundreds of thousands of Individual Indian Money [IIM] account holders currently embroiled in the Cobell v. Norton litigation. While the specific dollar amount is left undetermined in S. 1439, the tribe is very encouraged that

funds to resolve the IIM accounting claims will come from the Judgment Fund and

not from the annual Indian program appropriation. The tribe is also supportive of

the availability of judicial review for claimants to challenge their settlement amount

or, indeed, challenge the methodologies used to arrive at a settlement amount. We

are mindful of the complexities involved in trying to settle the Cobell case, and are

fully aware that many questions need to be answered, but applaud the committee

for taking the initiative to bring this 9-year old litigation to a fair and final conclusion.

The Colville Tribe supports a comprehensive legislative approach such as the one

set forth in S. 1439. The legislation would clarify the Department’s trust obligations

and ensure that services provided by the BIA are not jeopardized because of a competing office within the department.

Again, the Colville Tribe thanks the committee for the opportunity to present its

preliminary views on this critical legislative proposal. The Tribe looks forward to

working with the committee on this important subject.
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