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S. HRG. 107–332

MANAGEMENT OF INDIAN TRIBAL TRUST FUNDS

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

ON

UNITED STATES’TRUST RELATIONSHIP WITH THE SOVEREIGN

GOVERNMENTS OF INDIAN COUNTRY

FEBRUARY 26, 2002

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

DANIEL K. INOUYE, Hawaii, Chairman

BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

FRANK MURKOWSKI, Alaska

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

PAUL WELLSTONE, Minnesota

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

PATRICIA M. ZELL, Majority Staff Director/Chief Counsel

PAUL MOOREHEAD, Minority Staff Director/Chief Counsel

(II)
(III)

C O N T E N T S

Page

Statements:

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, vice chairman, Committee on Indian Affairs .............................................................. 6

Cantwell, Hon. Maria, U.S. Senator from Washington ................................. 8

Cason, James, associate deputy secretary, Department of the Interior ...... 28

Chambers, Reid, esquire, Sonosky, Chambers, Sachse, and Endreson ........ 3

Endreson, Douglas, esquire, Sonosky, Chambers, Sachse, and Endreson ... 9

Gray, Don, esquire, Nixon, Peabody, LLP ...................................................... 13

Hall, Tex, chairman, Three Affiliated Tribes of the Fort Berthold Reservation, and cochairman, Tribal Leaders Task Force on Trust Reform ......... 42

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

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

Marshall, Clifford Lyle, chairman, Hoopa Valley Tribal Council ................. 51

Martin, James T., executive director, United South and Eastern Tribes .... 59

Martin, William, first vice president, Central Council, Tlingit and Haida

Indian Tribes of Alaska; and treasurer, Intertribal Monitoring Association on Indian Trust Funds .......................................................................... 66

McCaleb, Neal A., assistant secretary for Indian affairs, Department

of the Interior ................................................................................................ 31

Morishima, Gary, executive board member, Intertribal Timber Council .... 56

Murkowski, Hon. Frank H., U.S. Senator from Alaska ................................ 26

Slonaker, Thomas, special trustee for American Indian trust funds, Office

of the Special Trustee, Department of the Interior .................................... 33

Thomas, Edward K., president, Central Council of Tlingit and Haida

Indian Tribes of Alaska ................................................................................ 62

APPENDIX

Prepared statements:

Armenta, Vincent, chairman, Santa Ynez Band of Chumash Indians ........ 80

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, vice chairman, Committee on Indian Affairs (with attachments) ............................. 69

Cantwell, Hon. Maria, U.S. Senator from Washington ................................. 285

Cason, James (with attachments) ................................................................... 139

Chambers, Reid ................................................................................................ 86

Devers, Chris, chairman, Pauma-Yuima Band of Mission Indians .............. 83

Dorgan, Hon. Byron L., U.S. Senator from North Dakota ............................ 73

Endreson, Douglas ............................................................................................ 86

Gray, Don (with attachments) ......................................................................... 112

Hall, Tex ............................................................................................................ 164

Marshall, Clifford Lyle (with attachments) .................................................... 174

Martin, James T. (with attachments) ............................................................. 222

Martin, William ................................................................................................ 254

McCaleb, Neal A. (with attachments) ............................................................. 139

Morishima, Gary (with attachments) .............................................................. 195

Navajo Nation (with attachments) .................................................................. 261

Press, Daniel, counsel, Mandan Hidatsa and Arikara Nation (with attachments) ............................................................................................................ 269

Slonaker, Thomas ............................................................................................. 78
Page

IV

Prepared statements—Continued

Thomas, Hon. Craig, U.S. Senator from Wyoming ........................................ 74

Thomas, Edward K. .......................................................................................... 249

Williams, Susan M., attorney, Albuquerque, NM .......................................... 74

Additional material submitted for the record:

American Indian Trust Reform: The Challenge to Consenus, article by

Gale Norton, Secretary of the Interior ........................................................ 283

Blackfeet Nation, letters .................................................................................. 279
(1)

MANAGEMENT OF INDIAN TRIBAL TRUST

FUNDS

TUESDAY, FEBRUARY 26, 2002

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

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

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

the committee) presiding.

Present: Senators Campbell, Cantwell, and Murkowski.

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

HAWAII, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. The committee will come to order. I want to welcome everyone to this hearing on the Federal Indian trust relationship and the management of Indian trust funds.

The term ‘‘trust’’ is used in a variety of contexts. The U.S. Supreme Court has found that the treaties with Indian nations and

the course of dealings between the United States and Indian tribal

governments gives rise to the Federal Indian trust relationship. It

is also commonly understood and accepted that the United States

has assumed a trust responsibility for Indian lands and resources.

There are trust functions performed by various agencies of the U.S.

Government, and there are trust assets and trust resources and

trust funds. These terms are sometimes used interchangeably, yet

they each have distinct meanings and legal implications.

So the committee has called upon two highly regarded professors

of Federal Indian law to begin our hearing today, and to address

the nature of the United States’ trust relationship with the sovereign governments of Indian country. We are seeking an understanding of how this trust relationship and the United States trust

responsibilities relate to the standards that apply to the Government management of individual and tribal trust funds.

We have also asked an attorney who has expertise in the matter

in which private trusts are administered by financial institutions

to help us understand what other standards may be brought to

bear on the management of the Indian trust funds. Beginning in

1978, this committee has called upon the General Accounting Office

[GAO] to identify the challenges and systemic problems associated

with the Government’s management of individual Indian and tribal

trust funds. The GAO reports issued over that time have repeatedly recommended that before any action is taken to reform the

trust fund management system, there should be a comprehensive
2

assessment of the needs the system must be designed to serve, the

kinds of information that the system must maintain and update, as

well as the services that are to be provided to trust fund beneficiaries.

The committee assumes that this kind of comprehensive assessment was undertaken in the formulation of the Secretary’s proposal

to establish a new organizational structure for the management of

Indian trust funds, trust assets, and resources. Although a process

of consultation with tribal governments was initiated by the Department of the Interior to discuss the Secretary’s proposal, there

are members of this committee and likely many other members of

the Congress who have not had the benefit of briefings on the proposal and who thus need to know more about what operating assumptions, fundamental principles, and what objectives went into

the development of this Secretary’s proposal.

While the committee appreciates the sensitivity on the part of

the Deoartment of the Interior’s officials to the fact that other proposals are now the subject of joint review by the Task Force and

the Department, and the Department’s desire not to appear to be

advocating for the Congress’ approval of the Secretary’s plan, the

Department has agreed to respond to questions that members of

the committee have on Secretary Norton’s proposal, and for that

the committee is most grateful.

As a member of this committee for the past 22 years, I would be

remiss, however, if I were to fail to address the past efforts of the

Congress to respond to the problems identified in the landmark report entitled ‘‘Misplaced Trust: The Bureau of Indian Affairs’ Mismanagement of the Indian Trust Fund.’’ This report led to the enactment of the American Indian Trust Fund Management Reform

Act of 1994, and I must observe that at that time, our objectives

were very similar to those which we think the Secretary’s proposal

seeks to achieve. In the act, we sought to segregate those activities

associated with the management of the trust funds from other responsibilities of the Department, and to establish an Office of Special Trustee in the Office of the Secretary to assure that attention

would be given to those matters at the highest level of the Government.

So it is natural, I think, that members of this committee will

want to ask the Department’s representative what is it about the

act’s provisions that have not worked, and what is different about

the Secretary’s proposal that you think will make things work better.

The committee will also receive testimony today on a few of the

tribal proposals that have been developed. Perhaps the most important fact is that the Department and the tribal governments have

agreed to work together. We call upon the Task Force to provide

the committee with a report on that work.

Finally, I would say that the committee knows that there is considerable dissatisfaction with the consultation process and widespread opposition in Indian country to the Secretary’s proposal. But

this hearing is not intended to focus on those dynamics. They are

behind us. What would be helpful to the committee, should tribal

governments wish to submit such to us in writing, are the reasons

why the Secretary’s proposal is unacceptable, not from a process
3

point of view, but in regard to the substance of the proposal. For

that reason, the record of this hearing will remain open for 30

days, and we hope the tribal governments will respond.

And with that, I would like to call upon the members of the first

panel: Reid Chambers of Sonosky, Chambers, Sachse, Endreson,

and Perry of Washington; Douglas Endreson of the same law firm;

and Don Gray of Nixon, Peabody of San Francisco.

So may I first call upon Mr. Chambers.

STATEMENT OF REID CHAMBERS, ESQUIRE, SONOSKY,

CHAMBERS, SACHSE, AND ENDRESON

Mr. CHAMBERS. Thank you very much, Mr. Chairman, and thank

you for the invitation and the opportunity for my partner, Doug

Endreson, and I to appear before the committee today.

We will talk about three subjects—the origins of the vital trust

responsibility of the United States to American Indians; the case

law on how that trust responsibility has been interpreted over the

last 200 years; and finally the scope and extent of the trust responsibility, both as defined by the case law and by enactments of the

Congress, such as the statute that you spoke about, the 1994 Trust

Management Reform Act.

I will talk about the first two items, and Doug will talk about

the third item. As you know, we have a common written testimony

that will be much lengthier than my summary here this morning.

Mr. Chairman, the trust responsibility originated in two decisions by the early Supreme Court—the Marshall Court—in the

1830’s, the two Cherokee cases. The cases involved specifically the

issue of whether Georgia had any authority over people and activities on Cherokee-reserved lands—lands reserved by treaty within

the State of Georgia. The statutes that the State was trying to enforce would have destroyed the Cherokee Government. They would

have required permits by all people entering Cherokee lands. They

would have extended State criminal law over all the Cherokees and

over all their lands. So it is hard to imagine more intrusive statutes than the ones that Georgia was trying to enforce in the late

1820’s, early 1830’s.

The Cherokee Nation itself brought the first suit, Cherokee Nation v. Georgia, in the Supreme Court of the United States, and

sought to bring suit originally before the court without going to any

trial courts, any lower Federal courts. And to do that, the Cherokee

Nation under the Constitution would have to show that it was a

foreign state or a foreign nation, because only particular kinds of

governments can bring suits in the original jurisdiction of the Supreme Court.

In the first case, the Cherokee Nation was unsuccessful. Chief

Justice Marshall, speaking for a majority of the court, held that the

Cherokee Nation was indeed a state or a nation. So it was a government. He held it was a distinct political society. The Cherokee’s

right to be a distinct political society was protected by treaties between the nation and the United States, and by statutes of the

United States. But the court held that the Cherokees were not a

foreign nation; that rather, they were a domestic sovereign and

that their relationship with the United States was similar to a

guardian-ward relationship.
4

The second Cherokee case involved a prosecution by the State of

Georgia of people entering the Cherokee lands without complying

with the State permit statutes. When that case reached the Supreme Court, the Supreme Court did have a case that it had jurisdiction over. It held that the Georgia laws were unlawful; that the

Federal Government had exclusive authority under the Constitution over Indian matters and over Indian-reserved lands. The

States had no authority. The opinion at great length discussed how

the treaties with the Cherokees and statutes of Congress, the Indian Non-Intercourse acts prohibited dealing in Indian land by

anyone other than the Federal Government. It completely preempted any State authority in the area, and also protected the

rights of the Cherokee Nation both to its lands and to its right to

function as a distinct political society.

So the lesson to draw, I think, for present purposes from the two

Cherokee cases is that there is no possible conflict between the

trust responsibility of the United States, and the right of the tribe

to be self-governing as one of the principal, if not the chief purposes, of the guardianship. The trust responsibility in the Cherokee

cases was intended to protect the right of the Cherokees to function

as a distinct political society.

Now, I should add, and I know the committee knows this—yourself and Vice Chairman Campbell know this well—that the Cherokee Nation in the 1820’s and 1830’s was in fact, as well as law, a

distinct political society. It had a written constitution. It had a bicameral legislature. It had courts. It actually had a military. It had

developed a culture where it had reduced the Cherokee language

to written symbols, and had a higher adult literacy rate among the

Cherokees than any State of the Union at that time. So it was a

flourishing and prominent political and civil society. There is no

sense that the trust relationship that was formulated by Chief Justice Marshall was premised in any way on the theory that the

Cherokees were incompetent to manage their own affairs—quite

the opposite.

I want to turn now briefly to a survey of the case law dealing

with the trust relationship in the next century and a half after the

Cherokee cases. Around the turn of the century, there were cases

of the Supreme Court that actually used the trust relationship actually as a basis for the power of Congress to enact statutes in Indian affairs, on the theory that the commerce power in the Constitution was not as extensive as we think of it today.

Some of those cases even suggested, particularly the Lone Wolf

v. Hitchcock case at the turn of the century, that the power of Congress to enact a statute might not be reviewable by the courts of

the United States. But that suggestion has been rejected by modern cases. The standard clearly in the Mancari case and the Delaware v. Weeks in the 1970’s is that the courts do have the power

to review even statutes of Congress to determine whether the act

Congress is tied rationally to the unique trust obligations of the

United States to the Indians.

So even Congress’ power is not unlimited. It is constrained by the

trust responsibility, but it is extensive and it is still seen as exclusive vis-a-vis States. So that means that Congress does end up ultimately being the manager of the trust responsibility, and Congress
5

can, if it acts clearly and plainly, alter the terms of the trust because of the Lone Wolf v. Hitchcock case, which is unfortunately

still good law today, does hold that Congress can even change the

terms of a treaty, if it does it clearly and plainly.

But the cases also hold that where Congress has not acted in a

clear and plain fashion, then the trust responsibly continues in full

force as a limitation on Federal power; that indeed statutes of the

United States dealing with Indian matters where there is doubt

about how they should be construed, where there is ambiguity,

should be construed consistent with the trust responsibility, favorably to the Indians; that general acts of Congress do not operate

to abrogate or alter Indian rights unless Congress has clearly and

plainly stated that they do.

And most importantly for the trust management issue that you

have precisely before you today, the cases are very clear that where

Congress has not clearly and plainly changed the rules, then executive officials who are dealing with the management of Indian property or Indian rights, must adhere to the trust responsibility and

must adhere to the commonlaw trust standards of a private trustee.

I know there has been some claim that the Cobell litigation, and

we do testify in the shadow of that case as it proceeds in the Federal courts here in town, established some new or tougher standard

dealing with executive management of Indian affairs. I want to

refer in a little bit of detail to the controlling Supreme Court and

other lower Federal court cases that show this is not so, and of

course it is elaborated more fully than I can do here orally in the

testimony Doug and I have submitted to the committee.

The two Supreme Court cases I do want to talk about are the

Seminole Nation case in 1942 and the Mitchell case—it is known

as the Mitchell II case, because there were two Mitchell cases like

the two Cherokee cases—in 1985. Seminole Nation is 6 decades old,

60 years old, those cases held clearly that in administer Indian

trust money or trust property—and the Seminole dealt with money;

Mitchell dealt with timber property—the United States is a trustee

subject to the fiduciary duties attendant on the trust relationship.

I want to quote from Mitchell II, because it reads:

Where the Federal Government takes on or has control or supervision over tribal

moneys or properties, the fiduciary relationship normally exists with respect to such

moneys or properties unless Congress has provided otherwise, even though nothing

is said expressly in the authorizing or underlying statute or the fundamental document—I would suppose sections of treaties—about a trust fund or a trust or fiduciary connection.

Now, that is vintage Cherokee Nation. Cherokee Nation did not

talk about a trust in treaties. It didn’t say ‘‘trust.’’ It was a principle that Chief Justice Marshall articulated that has governed the

relationship between the United States and the tribes ever since

that was implicit in the treaties and implicit in the statutes of the

United States at the time.

And similarly in Seminole Nation, the court held that the conduct of the United States as trustee for the Indians should—and

I am going to quote this— ‘‘be judged by the most exacting fiduciary standards, not honesty alone, but the punctilio of an honor

the most sensitive.’’ That is language quoting directly from Justice
6

Cardozo when he was a judge on the New York Court of Appeals

deciding a case dealing with a common law private trust.

The same standards apply to private trustees that apply to government trustees. That was clear in Seminole Nation. That is clear

in Mitchell. In Mitchell, the court looked to the Restatement Second of Trusts to find that all commonlaw elements of a trust relationship are present with regard to the Government’s obligation to

Indians, and following those principles, held in that case that the

Government was liable if it violated them.

These are the two major Supreme Cases on the subject, Mr.

Chairman and members of the committee. The Court of Claims

held shortly after the Seminole case, in the Menominee case in the

1940’s, during the Second World War, that the ordinary standards

of a private trustee govern the Government’s dealing with Menominee property and Menominee trust funds.

The Court of Claims held that again in the Cheyenne-Arapahoe

case dealing with trust funds in the 1970’s; the Eighth Circuit held

the same thing in the Red Lake Band v. Barlow case dealing with

management of tribal funds by the BIA in the 1980’s; the Federal

District Court Judge Renfrew, former Deputy Attorney General

Renfrew in the Carter administration, held that in the Manchester

Band of Pomo case in the 1970’s. Other cases dealing with trust

property hold the same—the 10th Circuit in the Hickory-Ashton

Tribe v. Supron case; the Ninth Circuit in the Covelo case, also in

the Assiniboine and Sioux Tribes v. Board of Oil and Gas Conservation; the Eighth Circuit in the Loudner case and the Blue Legs

cases—all of those cases say that the United States is subject to

the same standards as a private trustee in its dealing with Indian

property.

So there is nothing new in the Cobell case. We are not obviously

the attorneys in the Cobell case. We have no dealings with the

Cobell case professionally, but we have read the opinions by the

Court of Appeals and by the District Court. Those opinions simply

apply the common private fiduciary standards that are in Menominee, that are in Seminole Nation, that are in Mitchell II. They are

in all these other cases from the past 6 decades.

So there is no basis for claiming that there is some new or tough

standard being applied, and there is no basis for changing the law

as that case moves forward.

Now, I take it you probably want to defer questions, Mr. Chairman. I yield to my colleague, Mr. Endreson, if that is agreeable to

you, to talk about the scope of the trust responsibility.

The CHAIRMAN. I thank you very much, Mr. Chambers. Your testimony is most enlightening, but before we proceed to Mr.

Endreson’s testimony, may I call upon the vice chairman for any

remarks he may have.

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

INDIAN AFFAIRS

Senator CAMPBELL. Thank you, Mr. Chairman.

I apologize for being a little bit late. I was over voting. And I am

sorry that I missed Mr. Chambers’ complete testimony. I think I

got most of it. I am always delighted when he is here. He is cer-
7

tainly one of the leading authorities on the history of America and

its relationship to Indian tribes, and it has always been a wealth

of information to me when you appear here. So I am glad you are

here this morning, Mr. Chambers, at this hearing.

Mr. CHAMBERS. Thank you very much, Senator.

Senator CAMPBELL. Unfortunately all of us who have chaired

these kinds of hearings in the past at some point have dedicated

enormous time and effort in trying to reform the Indian trust management systems. You have done it in the past, Mr. Chairman. I

did it for 5 years. It is once again your turn. Very simply, I have

to tell you it is beyond frustrating for me, and I am sure it is for

the Indian beneficiaries as well, that this thing never seems to

reach a conclusion.

Let me start off by saying the issue is clearly a problem of historic proportions. I know Secretary Norton has been on the spot

lately, but very clearly she inherited this mess, as did her predecessor. It has been going on for years. I am somewhat disturbed

that very often when we do hearings when we hear from the Administration they tell us that if they only had more time or if they

had more money or if they had new computer systems or if there

was a different trust management staff, or on and on and on, we

could get it fixed. And we don’t get it fixed. We just seem to go

around and around and don’t get it fixed.

In my own opinion and despite the 1994 act and the vigorous involvement and encouragement of this committee, the trust reform

strategy of the last Administration was to litigate, lurch from hearing to hearing by putting on sort of a dog-and-pony show for us

everytime they came over, and to make sure that the Federal funding spigot did not get turned off. The strategy, as we note and must

recognize today, not only didn’t work, but has led us to today’s

hearing, with no end in sight.

Mr. Chairman, this thing reads like a bad soap opera. We have

had several bills signed into law, documents lost, contaminated and

shredded, Federal lawsuits filed, senior Department officials resign

and being held in contempt by a Federal judge, and countless hours

of legislative and oversight hearings. Just 2 weeks ago, we passed

out of this committee legislation designed to discourage more litigation and encourage the tribes and the department to negotiate settlements, and I believe that bill was the best option for all parties

at this juncture.

Having said that, we are still at a crossroads at this historic moment. We recognize and admit that the litigation has served its

purpose, but ultimately these issues have got to be resolved. I was

interested in your statement, Mr. Chambers, that Congress can

change the terms of a treaty. Let me tell you, the history of this

Nation is that the United States has changed the terms of a treaty

too much without tribal involvement, and just pulled the rug out

from under tribes, which is basically what is being done right now

by the Federal Government, in my opinion.

But I, for one, are ready to write that bill and get involved in

it and get this mess behind us. This committee, the chairman and

I, have done and are doing and will continue to do everything we

can to bring fair and equitable solutions to the issues, but it requires some healthy, honest and open debate. And I don’t think it
8

has really been held yet. Unlike many who have criticized the current Secretary’s proposal, I believe she should be lauded, not criticized, for offering a proposal that may get this thing behind us.

The only disagreement I have with her is that I think there was

not enough tribal involvement. When the current Secretary came

in to tell me about the proposal that she had, I don’t think there

was enough time for the tribes to be involved, and I think that

there have been a number of hearings now around the country. She

has been involved in at least one personally. There have been

about eight or ten. There probably should be a lot more, and they

should have been done a long time ago.

But nevertheless, right to the present day, the Department of

Justice and the BIA have proven themselves pretty much incapable

of reforming the system. That is why I proposed in February 2000

the Indian Trust Resolution Corporation. I am not sure the Federal

Government is ever going to be able to resolve this on its own,

frankly, and under that draft legislation it would have turned the

whole trust fund problem over to an independent commission with

a sunset clause after people who are trained in straightening out

trust responsibilities could have done it as well as anybody in the

country, even with the missing documents, it could have then come

back under the jurisdiction of the Bureau.

But I firmly believe that we should analyze all options, whether

it is legislation to take it completely away from the Federal Government and put it in the private sector for a while, or whatever

the answer is.

Let me also say that in the past, many times tribes have come

in here to tell us that the Federal Government does not consult

enough with them. But I hope that with this hearing, the committee can spark some kind of healthy and constructive dialog to make

something happen to bring final justice for this whole problem that

Indians have been waiting for so many years.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much.

Senator Cantwell.

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

WASHINGTON

Senator CANTWELL. Thank you, Mr. Chairman

Thank you for the opportunity for the committee to examine the

problem of trust fund mismanagement and the recent efforts toward reform. Obviously, the trust fund mismanagement marks a

significant failure of the U.S. Government in its trust responsibility

toward tribes and individual account members.

As the chairperson of the Colville Tribes from Washington State

framed it, one of the saddest chapters in American history is the

long-term mismanagement of the trust resources, which were intended to benefit Native American tribes. Most recently, the class

action suit of Cobell v. Norton has brought renewed urgency to the

need to reform trust management. I share the dissatisfaction of the

court on the failure of the U.S. Government’s trust responsibilities,

and I echo its call to reform trust management.

However, it is critical that this reform be done with careful calculation and in ways that affirm, not diminish, trust responsibil-
9

ities, tribal self-determination and self-governance. Numerous

tribes are here from Washington State and have expressed serious

concerns about the Department of the Interior’s proposal to create

a Bureau of Indian Trust Assets Management, and I share these

concerns. In fact, several tribal leaders from Washington State are

in attendance and I would like to thank them for their leadership

in coming to Washington today to speak on this very important

issue.

The tribes agree that there is significant room for improvement

in the management of trust functions. However, they are concerned

both about the merits of Interior’s plans to create a new Bureau,

and the fact that the tribes were not consulted prior to the development of this proposal. Indeed, tribes and individual Indians are the

beneficiaries of trust assets, and the United States has a responsibility to honor the government-to-government relationship that it

has with tribes. Therefore, it is absolutely critical that tribes play

a central role in any successful trust management reform.

Representatives from Interior have advised the committee that

the trust management would be improved by removing all trust

management duties from BIA, therefore keeping the services BIA

provides to Native Americans and trust management completely

separate. Washington State tribes have expressed their serious

concern that by removing trust functions from BIA, it would effectively dismantle the agency, which has been the foothold for tribes

in the Federal Government.

For example, many tribes have partnerships with BIA in the execution of several trust responsibilities, such as natural resource

management, and tribes do not want to see their role in the management of their resources diminished if these trust fund actions

are taken out of BIA. I intend to ask some of the witnesses today

about their concerns.

We will have the opportunity today to hear about a few of the

proposals for trust reform designed by the tribal organizations. In

addition, the Tribal Task Force is reviewing these proposals and

several others that have been generated by various tribes. It is my

hope that Interior will seriously consider the concerns, suggestions

and the proposals from tribal communities, and also take advantage of the wisdom and insight the leaders who have been working

hard to create a viable plan are putting forth. Again, any success

at reforming this and the century-long problems must include input

from the tribes.

Again, thank you, Mr. Chairman, and I would also like to thank

the witnesses that are here today and representatives from Washington State. I look forward to hearing their testimony and hearing

more about what our committee can do to make sure that meaningful trust management reform takes place.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much, Senator.

And now may I call upon Mr. Endreson.

STATEMENT OF DOUGLAS ENDRESON, ESQUIRE, SONOSKY,

CHAMBERS, SACHSE, AND ENDRESON

Mr. ENDRESON. Thank you, Mr. Chairman, Mr. Vice Chairman,

committee members.
10

I, too, am honored to have the opportunity to speak with you

about the trust responsibility. I would like to begin by summarizing

very briefly what I want to talk to you about.

Mr. Chambers has set out for you the law which demonstrates

today that the trust responsibility applies to all actions of the Federal Government. This could not be clearer from the decisions that

recognize that the constitutionality of Federal actions affecting Indians is to be measured by the trust responsibility itself. It is underscored by the cases that Mr. Chambers referred to that recognize that if Congress is to affect Indian rights, it must express its

intention to do so clearly and plainly, leaving no doubt. The same

point is underscored by the rules of construction that recognize

that ambiguities, uncertainty as the Congress’ intention won’t result in Indians losing rights. Ambiguities, instead, are to be construed to the benefit of Indian tribes and Indian people.

It is also clear that the trust responsibility applies to lands, natural resources, trust funds, other property. There is no dispute over

that.

What I want to talk with you about this morning is the trust responsibility in three other areas. First, I want to briefly pick up on

and expand Mr. Chambers’ discussion of the congruence between

tribal self-determination and the trust responsibility. I then want

to discuss the trust relationship in two related areas. First, the

duty to provide services, which has been recognized by the courts

and repeatedly recognized by Congress in health, education, housing, cultural rights, economic development—among other areas.

I also want to discuss with you very briefly how the cases in

services came to support and reinforce the duty to consult with Indian tribes when Federal actions that would affect their rights are

under consideration.

Let me begin by talking about the congruence of self-determination and the trust responsibility. It has been suggested that these

two may be in conflict. Well, the self-determination policy, as Mr.

Chambers indicated, has as its basic purpose furthering and protecting rights of self-government. That is the same purpose that

Congress has acted on repeatedly since the self-determination policy was announced in 1970 by President Nixon, and Congress has

made its intention abundantly clear. In enacting the landmark Indian Self-Determination Act, Congress stated:

The Congress declares its commitment to the maintenance of the Federal Government’s unique and continuing relationship with and responsibility to individual Indian tribes and to the Indian people as a whole through the establishment of a

meaningful Indian self-determination policy.

The same point underlies the 2000 amendments concerning the

self-governance program, where Congress declared as its purpose to

ensure the continuation of the trust responsibility of the United

States to Indian tribes and Indian individuals.

In addition, Congress has repeatedly recognized the trust responsibility as the foundation of Federal efforts to strengthen tribal governments. Most recently, in enacting the Indian Tribal Justice Support Act, Congress stated in its findings:

The United States has a trust responsibility to each tribal government that includes the protection of the sovereignty of each tribal government.
11

The same point was made by Congress just last year in enacting

the Indian Tribal Justice Technical and Legal Assistance Act of

2000.

These enactments, the Wooster and Cherokee Nation decisions,

show a history of over 200 years of recognition that the trust responsibility’s basic mission is to protect tribal rights of self-government. That mission continues and Congress has repeatedly recognized it.

Let me now talk about a different area—services. The provision

of services to Indian tribes and Indian people through the BIA and

through other Federal agencies is part of the trust responsibility.

The courts have recognized this. Congress has repeatedly confirmed it. Perhaps the best judicial statement of the origin of the

trust responsibility and its role in providing services in particular

comes from a decision by Diana Murphy, who was a District Court

judge in Minnesota and subsequently joined the Eighth Circuit

Court of Appeals, and as District Court judge wrote the Mille Lacs

decision which was affirmed by the U.S. Supreme Court in 1999.

In a case concerning the trust responsibility in the housing area,

Judge Murphy wrote:

The Federal trust responsibility emanates from the unique relationship between

the United States and the Indians, in which the Federal Government undertook the

obligations to ensure the survival of Indian tribes. It has its genesis in international

law, colonial and U.S. treaty agreements, and Federal statutes, and Federal judicial

decisions. It is a duty of protection which arose because of the weakness and helplessness of Indian tribes, so largely due to the course of dealings of the Federal Government with them and the treaties in which it has been promised. Its broad purposes, as revealed by a thoughtful reading of the various legal sources, is to protect

and enhance the people, the property and the self-government of Indian tribes.

Continuing, Judge Murphy wrote:

The trust relationship between the United Stats and the Indians is broad and farreaching, ranging from protection of treaty rights to the provision of social welfare

benefits, including housing. The history of the treatment of the Indians by the

United States justifies this interpretation of the trust relationship and the case law

and the legislative background support it.

Other Federal courts have confirmed the trust responsibility’s

application in the area of services. A leading Eighth Circuit case,

White v. Califano, affirmed that the United States has a trust responsibility to ensure that Indians have access to health care in

cases where other sources such as the States are unwilling or unable to provide it. Similarly, the Ninth Circuit, MacNab v. Bowen,

held that the Indian Health Service was obligated to provide necessary health care to an indigent Indian child, and further held

that if the IHS believed that the State or county had a duty to provide such care, IHS itself had to advance that claim on behalf of

the Indian.

We recognize that the application of the trust responsibility in

the services area is in many ways less well-defined than it is in the

property cases. In Lincoln v. Vigil, the Supreme Court articulated

a limiting factor, holding that the trust responsibility does not prevent a Federal agency from reallocating unrestricted funds from

providing services to a sub-group of beneficiaries to the broader

class of all Indians nationwide.

But at the same time, the Supreme Court and other Federal

courts have repeatedly held that the trust responsibility mandates

a high degree of procedural fairness and protects against the fail-
12

ure of Government agencies to provide Indians with services authorized by Congress. This was the holding of the court in Morton

v. Ruiz, a 1974 Supreme Court decision. The principal of Morton

v. Ruiz, together with the force of the self-determination policy and

its protection and promotion of self-government, have established

the foundation for the Federal courts’ recognition that the trust responsibility includes a special duty to consult with tribes or Indians

to ensure their understanding of Federal actions that may affect

their rights, and to ensure Federal consideration of their concerns

and objections with regard to such action.

That is the holding of Morton v. Ruiz involving the BIA. The

10th Circuit recognized the same point in HRI v. EPA; the Eighth

Circuit in the Loudner case, to which Mr. Chambers referred; the

District Court in Washington in Midwater Trawlers Cooperative v.

U.S. Department of Commerce. These cases recognized that when

Federal actions that would affect Indian rights are under consideration, the trust responsibility requires consultation with the tribes.

Now, in addition, in the services area, while the courts have recognized that the duty to provide services is a part of the trust responsibility, Congress has gone even further. In health, education,

housing, protection of Indian children and families, cultural resources—in all of these areas, Congress has enacted statutes that

expressly and specifically recognize the trust responsibility as the

basis for the enactment. Even those aspects, those services administered outside the BIA such as the IHS, are subject to the trust

obligation. Congress through these enactments has demonstrated

not only that the trust responsibility is the source of the duty to

provide services, it is also specifically directed—not that there

merely be some Federal presence, but that results or outcomes be

achieved.

In education, the trust responsibility was recently expressed by

Congress in amending the Indian Education Act, where the Congress stated:

It is the policy of the United States to fulfill the Federal Government’s unique

and continuing trust relationship with and responsibility to the Indian people for

the education of Indian children.

And it identified the goal of ensuring that programs that serve Indian children

are of the highest quality and provide for not only the basic elementary and secondary educational needs, but also the unique educational and culturally-related academic needs of these children.

The same point was confirmed in the Tribally-Controlled School

Grant Act and the Higher Education Tribal Grant Authorization

Act. The provision of educational services and the goals set out in

these acts are in fulfillment of the trust responsibility.

The same is true in health care. Indeed, in the most comprehensive measure addressing the unmet health care needs of Indian

people, the Indian Health Care Improvement Act, Congress expressly stated:

Federal health services to maintain and improve the health of Indians are consonant with and required by the Federal Government’s historical and unique legal

relationship with and resulting responsibility to the American Indian people.

In the same act, Congress set out specific goals by which the fulfillment of the trust responsibility is to be measured, listing 61 specific health objectives, including coronary heart disease, cirrhosis,
13

drug-related deaths, suicides, deaths from intentional injuries, infant mortality, fetal alcohol syndrome, diabetes, and others.

More recently, in enacting the Indian Alcohol and Substance

Abuse Prevention and Treatment Act, Congress made the same

point. The Federal Government has a historical relationship and

unique legal and moral responsibility to Indian tribes and their

members. Included in this responsibility is the treaty, statutory

and historical obligation to assist Indian tribes in meeting health

and social needs of their members.

So, too, in the housing area. Congress’ enactment of the Native

American Housing Assistance and Self-Determination Act expressly

recognized that the Congress, through treaties and statutes and

the general course of dealings with Indian tribes, has assumed a

trust responsibility for the protection and preservation of Indian

tribes, including improving their housing conditions.

As I mentioned, the same responsibility has been recognized with

regard to the care and protection of Indian children. In the Indian

Child Welfare Act, Congress said:

There is no resource that is more vital to the continued existence and integrity

of Indian tribes than their children. The United States has a direct interest as trustee in protecting Indian children who are members of or eligible for membership in

the Indian tribes.

More recently, the same point was underscored in the Indian

Child Protection and Family Violence Prevention Act.

Congress’ recognition of the trust responsibility in all of these

areas leaves no doubt that the trust obligation includes the duty

to provide service. It is equally clear that when Congress addresses

the trust responsibility in these areas, it looks not simply to color

the legislation with the flavor of the trust, but instead looks to define goals that will make a difference in the lives of Indian people.

This trust responsibility, then, extends across the relationship between Indian tribes and the United States.

Chief Justice Marshall’s original intention that the relationship

between Indian tribes and the United States, while not that of foreign nations and the United States, would be an enduring one in

which the United States would act as the tribes’ trustee. And as

the range of tribal interests and concerns has expanded, as the

threats to tribal interests have grown, the courts have continued to

recognize that the trust responsibility defines this relationship—

the trust funds, the property area, the treaty rights area, yes—but

also, that the trust responsibility includes the duty to consult and

the duty to provide services.

And finally, it is made clear that as Indian tribes join hands with

the United States in the pursuit of self-government, they do so in

furtherance of that same trust responsibility.

Thank you.

[Prepared statement of Mr. Chambers and Mr. Endreson appear

in appendix.]

The CHAIRMAN. Thank you very much, Mr. Endreson.

Mr. Gray.

STATEMENT OF DON GRAY, ESQUIRE, NIXON, PEABODY, LLP

Mr. GRAY. Mr. Chairman, Mr. Vice Chairman, members of the

committee, it is a very great pleasure to appear before you again.
14

This is the second time in about 31⁄2 years that I have had the

honor of appearing before this committee.

You know that this problem is going on too long when you see

quotes that you have made 3 years before that you can hardly read

on charts, which means I am getting old and the problem is getting

old.

It really is a pleasure to be before this committee, and it was 3

weeks ago when I had the pleasure to speak before the House Resources Committee on a similar subject. I think it is fortuitous and

positive that I am able to speak after Mr. Chambers and Mr.

Endreson who are acknowledged experts in the history of Indian

law, and through the prism of legal precedent come to a very similar conclusion that I come to as a private trust fix practitioner, and

that is that the overall basic trust standard that will ultimately be

placed upon whoever or whomever solves this problem is going to

be that of a commonlaw trustee, which is an extremely high standard indeed. Put as simply as it possibly can be put, it is a person

acting prudently as they would with their own affairs, and that is

a pretty high standard.

There have been a lot of allegations of obstruction and defalcations in this problem in the last 5 or 6 years. My own personal feeling is that most of those were deserved by the prior Administration

running the Department of the Interior [DOI]. It is also my personal opinion that they are not deserved with respect to the people

who are running the DOI now. That does not mean that I approve

of the Secretary’s BITAM plan, but it does mean that the current

DOI, the flavor of the current DOI and the atmospherics and the

extent of potential cooperation is so totally different than it was 3

years ago that—including the willingness of both houses of Congress—and I also believe the court and the various tribal units

offer us a very unique point in time to solve this problem, which

is what led me to, in my written testimony, state that I think for

the first time in eight years there is a light in the forest with respect to the resolution of this problem.

For 3 years, I have testified as an outside trust expert who has

been very involved in fixing historic, complex trusts with all the

same problems—lost records, some stolen, some just lost, bad systems, the foolish alchemy of believing you can buy an off-the-shelf

system and then put your practical problems around that system.

I can remember very well about 31⁄2 years ago sitting in a subcommittee room informally talking to the Appropriations staff, literally begging them not to appropriate the $40 million that was

then a supplemental appropriation for Interior to purchase the last

part of TAAMS. I do a lot of international financing and I know

a lot about oil and gas law, and I know what that program is. That

program could no sooner deal with fish in the Klamath or grazing

lands or potato lands in Idaho or timberlands in the west than any

of us could, knowing nothing about that system. That system was

a total, complete failure before it was put on line, and it has never

been fully put on line. That is how bad the prior Administration

was.

But again, I think things have changed. But in that 3 years of

testimony, I have been somewhat resolute in three issues that I

want to reiterate again. And that is, there has been a total lack of
15

expertise. There have been complete and crippling conflict of interest. And there has been a lack of independence in the DOI.

I think that the approach and the mental atmospherics of that

Department have changed dramatically. But, I do not believe that

any of these problems have changed at all. If you listen to Secretary Norton’s testimony on the last day of the testimony in the

current contempt trial in the Cobell litigation, she was very clear

that she was not a statistician. She was not a forensic accountant.

She was not an Indian legal expert. And she certainly had not, in

the time that she had been in office, been well advised by anyone

internally at DOI with respect to those matters and how they bear

on Indian trust reform. They don’t have the expertise. They never

have and they never will. And that is a critically important thing

for this committee to understand.

Further, the conflicts problems, and I have to quote from my pad

because I literally have trouble reading the chart up there, I said

I guess 3 years ago, you cannot and should not try to operate on

yourself, and that is exactly what we are asking well-intentioned

BIA officials to do—to work on a problem and to solve a problem

where they or their friends or their parents may have made mistakes. That is neither fair nor reasonable, and in the commercial

context would never have been countenanced.

I have officiated over, I don’t know, 10 to 15 very large trust fixes

that have involved more money, frankly, than this, and that have

gone back as long as 20 years. The first thing you do is you separate day-to-day trust functions from the fix of the trust system

where it has gone wrong. That has to happen here—that separation has to happen.

As I said, I think we are in a new day, though. With all the problems that we have gone through, we have 1 moment in time to do

something that is very constructive. This is a time of real crisis,

real crisis, and real opportunity, and I want to try to describe what

both of those are. I will start out being an optimist with the opportunity.

In my written testimony, you will see a fairly detailed description

of a government-sponsored enterprise [GSE]. GSE have had a pretty good history in Washington, DC. The Washington, DC GSE that

looked over the administration of a number of departments of, especially the law enforcement departments of the District of Columbia some years ago, was a special purpose government entity that

was time-limited. Nobody wants to create a new government agency. But one that is time-limited and specific for a purpose, and has

just exactly the right expertise can be an enormous help to a problem like this, that has been left alone too long in an incompetent

agency. And I don’t mean the agency itself is incompetent with respect to what they do generally, I mean with respect to a highly

bolloxed-up trust they simply don’t have the expertise.

There is nothing magic—I want to reiterate this—there is absolutely nothing magic about the government-sponsored enterprise

form. The vice chairman did propose a couple of years ago this idea

of the RTC, which I championed. I actually saw parts of draft legislation which I thought were very good ideas. It does not matter

what you call this entity. What does matter a lot is what you try

to do with this entity and who the constituent parties are. I would
16

invite you and ask you to look hard at the constituency of the GSE

and the mandate that I have tried to give it to solve the trust problem.

The other thing that I will mention about this, without going into

consummate detail which I did in the testimony, is that this is only

a prototype. It requires and needs tribal and IIM account representative input. They have their own reasons for wanting things,

and they are valid. They are the beneficiaries and they need to go

over every aspect of this with a fine-tooth comb. If there is something in there they don’t like, and they can validate it as not being

positive for trust reform, you change it. There is nothing magic

about this.

What is magic, and the only thing that is magic, is that the trust

fix, not day-to-day trust administration, the trust fix comes out of

the DOI and into the hands of a blue ribbon panel of commissioners and their hired professionals who have absolutely no mandate and absolutely no conflicting interest with respect to doing

anything but fixing the problem, fixing the trust. I believe that fixing the trust is possible, not to perfection—there is no such thing— but fixing it 90 percent better than it is running now I think is well

within the ambit of possibility in a relatively short time, given how

long this problem has been outstanding.

The parameters for what I have suggested in this GSE have the

following underlying philosophies. One is it is lean. What we don’t

need is the proliferation of bureaucracy. The problem with any government agency, and I have dealt with most of the major government agencies in my 30-year career, is that bureaucracy, like any

company, is inevitable. What you don’t want is a bureaucratized

system. What you want are commissioners who have other jobs,

but who have highly dedicated trust responsibilities to make sure

this one is done correctly—who act as a board of directors—a very

thin staff, maybe even just one director or executive director, and

what I would say is a relatively small handful of trust professionals, which consist of lawyers, accountants, systems analysts

who know how to look at a set of data and a trust cycle, in this

case from revenue leasing of natural resources all the way to payment to the IIM beneficiaries, and conceptually understand how to

get from one end to the other. And then and only then create systems that can get you from one end to the other, while training

BIA officials and others to get you from A to B.

Anyone that thinks that this is a quick fix by a machine has

really been taken in by the computer culture. This is man, woman

and machine. It is a combination of training and very carefully employed technology. What the last Administration did, and I think

they did it to play for time, was that they bought a system that

could not work.

The other thing that I liked, obviously, about the proposal was

that it included—well, it was lean in terms of money, in terms of

the use of government money to get to its goal. It was fat in terms

of expertise. I think you have to lever on outside professionals who

have done this kind of thing before. You can’t put them all on staff

because you can’t afford it, but you can hire them on an as-needed

basis to go out and do specific tasks that are integrated with other

people’s tasks, and that would be the job of the executive director
17

or chief professional. I have seen this happen in the private sector

where the pressure is just as great as it is here, because you may

have as much at stake 2 years ago, with a major, major money center bank, there was a problem where they were sued by 100,000

municipal entities because of problems like this. They didn’t have

a lot of time to fix that problem. Within a relatively short time,

they did fix it, to the satisfaction of all, and there was a global settlement.

The other aspect of this is that it involves neutral government

financial experts. I am not just talking about outside forensic experts. I am talking about neutral government financial experts—a

Governor of the Fed, a high-ranking official of the FDIC or the

Controller of the Currency. If you don’t think these people understand what trust responsibility is, they do. Because what they do

for a living is monitor the entire private banking sector with respect to non-trust accounts and trust accounts, and they know the

difference.

The real problem is going to be getting those people to take on

this job, knowing what kind of very, very high level standard of

care is going to be imposed on them. That is another issue that if

we have time maybe I can refer to later.

Private sector experts are needed. I mentioned that. I believe

that the commissioner board that I have suggested not only would

include public officials who are highly regarded and untouchable in

terms of their trustworthiness and their independence and neutrality, but also representatives of the IIM beneficiaries and the tribal

units. I also think that there should be a representative of DOI.

I think there is a problem here. I think there is a problem of

focus. The Senator from Washington, Senator Cantwell, made a

very good point, and that is this process means nothing unless the

tribal entities feel as though it has integrity, which is why I am

just saying my proposal is a starting point for people to tear apart

and to make additions to or anything else. You have to have representatives of Indian country not only comment on it, but in this

case they would actually be—there would be a commissioner or

maybe two commissioners who were representatives of that group.

And finally, I would make probably the Assistant Secretary for

Indian Affairs at DOI a member of this commission. Certainly, that

person is not going to run the commission. It is going to be predominated by other interests, but it does allow the by-play between

the special purpose entity and the continuing trust efforts that

would be going on within the BIA to be well-coordinated—it is as

simple as this. Get your contesting bodies under one tent. Make

them commissioners. Charge them with a fiduciary sense of duty.

And make them come back to this committee and to the House Resources Committee or a select joint subcommittee on an every other

month basis and account for themselves. Things would change if

that accountability were set up.

The next aspect of it that I want to explain is the separation of

the trust fix from ongoing administration. A number of members

of tribes have expressed to me personally their fear that if you take

the trust function out of BIA, you have essentially gutted BIA. I

think that my colleagues today have somewhat underscored that

because there is a trust aspect to the social services and other as-
18

pects of what BIA does. I have no intention of doing that. I think

that is a very bad idea. First of all, right, wrong or indifferent,

checks have got to go out. Those checks may be wrong. They may

have to be audited in the future. They may have to be adjusted in

some fair way in the future. But you can’t just stop this process

until you have a complete, beautiful, elegant, rococo fix. You have

got to have the BIA do what they are doing on a daily basis, but

not try to fix a program that they may have made mistakes on and

they are going to try to perpetuate in an historic, rather than in

a new way. That is where you run into trouble.

And the other thing, I mentioned before, is continual congressional oversight. When I said before I think that the paradigm here

is off-kilter, asking the DOI to be more sensitive to tribal and IIM

interests is a mistake, not because they are incapable of being sensitive to it, but in all due respect, it is passing the buck. It is not

DOI’s problem anymore. This is a governmental problem and every

branch of government has got to cooperate in its solution. The DOI

and BIA have shown time and time again that they are incapable

of solving the trust fix. They cannot do it. There can’t be any other

compelling evidence that anyone needs to know that they can’t fix

this problem. You have got to have somebody else on the outside

with expertise to do it. Ladies and gentlemen, the buck there stops

with you and the House. This has got to be a legislative solution.

To underscore that, I want to tell you about what I think is acute

timing. Sometime in March, although I am not a party to this litigation either—I read the press clippings and I read the testimony,

just as all of you I am sure to do—and there is one thing that

comes out loud and clear to me. That is that in the month of

March, there will not only be a decision on whether Secretary Norton and Assistant Secretary McCaleb will be held in contempt,

there may very well be a decision to appoint a receiver for this program. That is not the right solution. And that is not because the

court has done a bad job. It is because the court is running out of

options. They don’t know what to do.

If you look at the testimony in the last week that has gone on,

and you do nothing but highlight what the judge has said—just forget everything everybody else has said and take a look at what the

judge has said—the TAAMS failure showed that this case will go

on forever. The court has no idea how to handle the scope of this

problem. The DOI and what it has tried to do to date shows a total

breakdown.

I believe that either inadvertently or knowingly, this very smart

court is asking Congress to do something. In the absence of Congress doing something, you may have a receiver appointed who

does not have the power to be paid—at least in my mind, simply,

I don’t know how they do it—and he may not have the access to

outside professionals to actually fix the problem. Whether the court

has jurisdiction over continuing future modifications to the trust,

as opposed to the historic trust defalcations, I don’t have any idea.

But that is a 6-month trial, and that is six months more we have

to wait.

I would implore Congress—not BIA, not DOI, not anyone else—

I would implore Congress and the native consulting bodies to come

up with at least a rudimentary independent structure, whether it
19

is modeled after what I have put in the record or what the vice

chairman has put in the record as chairman in the past. Get that

out as an exposure draft, get that judicially noticed before the court

is forced into a course of action which sets up a balance of power

fight that is not necessary. There has got to be a way for the

branches of the government to cooperate to get a solution. I think

the court is inviting this body and the House to do just that. I may

be wrong, but I don’t think so.

I think that is really the important part of what I have to say.

Whatever you do in the next legislation, which I hope will include

a neutral body to try to really fix this problem, because I think this

is susceptible of a fix—and that is coming from somebody who has

spent most of his life doing this kind of stuff—it needs to be flexible

and it needs to have continuing oversight, so that this commission,

board, whatever you want to call it—RTC-type unit—is back before

Congress on a consistent basis, and if there is a change that needs

to be made because it is not working, have the legislation flexible

enough so that by changing regulations or whatever, you can stop

the part that doesn’t work.

One of the problems with the 1994 Act is that it was supposed

to be self-actuating. It was very well-meant, very well written, and

destroyed by the DOI. And I think that more flexibility in that, in

having regulatory power and things that you can do in terms of

continuing oversight will keep it much more tightly linked to Congress.

I have spent too much time, and I apologize for that, but I thank

you very much for the opportunity to talk to you today.

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

The CHAIRMAN. Thank you very much, Mr. Gray.

Because of the reality of time, I will be submitting most of my

questions. However, I would like to ask certain general questions

at this time.

This panel has suggested that the trust responsibility is not only

an exacting one, but an all-encompassing one. For example, Mr.

Endreson identified some of the laws enacted by the Congress that

protect the right of self-governance, protect the right of sovereignty,

treaty rights, the rights to health care, education, housing, and the

protection of tribal lands and resources.

The Congress has gone to great lengths in legislating and authorizing and directing. For example, we have the Indian Health Care

Improvement Act. We have the Indian Self-Determination and

Education Assistance Act. And yet we find that Indian health is

worse than many of the third world countries of this globe. In the

area of Indian education, we find that there are greater numbers

of drop-outs in the Indian education system than in any school system of this Nation. My question is, if it is the trust obligation of

the United States to provide education, provide health services, et

cetera, and where the Congress provides legislative authority, but

there are no funds forthcoming, is there a cause of action on the

part of the individual Indian or a tribal government to sue the

United States?

Mr. ENDRESON. I think there is, Mr. Chairman. It is difficult to

describe in any detail what judicial remedy would be available

without a set of facts. But I think when one looks to the availabil-
20

ity of relief to address educational deficiencies in the general law

that it is clear that courts have seen a role in providing and ensuring educational opportunities for people in this country. And when

one adds to that general body of law the trust obligations and the

specific statutory commitments that the Congress has made to Indian tribes in the legislation that has been enacted, I think it is

clear that some form of relief would be available in circumstances

in which a failure of that obligation were clear.

As a judicial matter, the cases that the courts have addressed

have been cases in which extreme circumstances were present.

Some years ago, in 1983, the Government proposed to close down

Indian boarding schools without any notice or having plans in place

that would provide for the education of the children that attended

those schools. The courts stopped the BIA from closing those

schools and Congress then put in place a plan for dealing with proposed closures, addressing the Bureau’s failure. The same has been

true in the health care area in instances where in effect the government has thrown up its hands and said ‘‘not us,’’ the courts has

said, ‘‘yes, you,’’ the Federal Government and the trust responsibility compels it. So I think the courts have been responsive when relief has been sought in the kind of circumstances that I have described.

Now, one of the concerns that has been expressed about the existence of the trust responsibility generally, and that has been

brought to bear on the services discussion, trust responsibility discussion, is the fear that the trust responsibility would set a standard that is too high, too expensive, too burdensome, would cost too

much and take too much time. And I think your statement, Mr.

Chairman, shows the irony, the inappropriateness, the kind of awkwardness that discussion has when in reality there is no threat of

the trust responsibility standards controlling or consuming large

amount of resources or setting standards that won’t be attainable.

The problem is at the ground level, with the failure to meet what

most, perhaps all, would conceded are very minimal standards.

So it is not that the trust responsibility is too demanding. It is

that the level of services has been too limited and the relief that

has been available has been too limited.

The CHAIRMAN. Mr. Chambers, at the February 6 hearing before

the House Resources Committee, a member of the committee asked

the Secretary if tribal trust funds could be used to help defray the

costs associated with the management of Indian trust funds. The

Secretary replied that she found that to be an interesting idea and

would give it consideration. My question is, in applying the principles of trusts as you have described it, do you believe that this

would be an appropriate use of funds that are held in trust by the

Government for individual Indians and tribes?

Mr. CHAMBERS. No; it certainly would not be, Chairman Inouye,

and I would expect that the Secretary, as she thinks about it and

reflects about it, would conclude the same thing. I suppose somebody might say that, SunTrust Bank could charge to administer a

trust for my mother’s estate or something like that, because the relationship between SunTrust and me or the beneficiaries of the estate would be commercial, would be arms length, would be private

commercial relationships. The Federal Indian trust is nothing like
21

that. The Cherokee Nation cases make that clear and all the cases

dealing with the history of the trust responsibility make that clear.

The statutes, for example, that Chief Justice Marshall analyzed

in Cherokee Nation bar red transactions in Indian land, except between the United States and the Indian tribe. The reason for that

is that the Supreme Court had recognized in another case in the

Marshall Court, the Johnson v. Macintosh case, that Indian tribes

hold title to lands. And so the treaties between the tribes and the

United States were a necessary transaction for the United States

to take lawful title to large parts of Indian lands and then Indians

retained other lands that became their reservations. The Indians

paid for the trust relationship by making those land cessions to the

United States. The United States is not entitled to be paid twice,

then, for administering a relationship where it protects lands reserved by the Indians, where it protects Indian property protected

by those treaties, and where it protects the right of tribes to have

a culture and to have a functioning, distinct political society.

So no, it is not at all like a private commercial trustee administering someone’s estate, and it would be totally inappropriate,

really outrageous for the United States to make a charge on Indians, a second charge after all Indians have done for the country in

those and transactions in the treaties that I am speaking of.

The CHAIRMAN. Thank you.

Mr. Gray, you have indicated that expertise is nonexistent and

has never been available in the Department of the Interior, or for

that matter any other place in the Government. Would the nonexistence of expertise be a violation of the trust obligation of the

Government of the United States?

Mr. GRAY. Yes; I think it would. I will amend my statement to

a certain extent because for a while, you actually did have one individual in DOI who did have a great deal of this expertise, Mr.

Homan, who simply ran out of patience with being stonewalled at

everything that he did. But he was a highly qualified RTC official

and he had a stellar resume in terms of private sector, both financial—we call financial money flow, as well as trust expertise. He

had the expertise, and in fact if you look at his report that was discarded or attempted to be obscured by the high-level implementation plan of the prior Administration, it was in terms of, it was as

though a forensic accountant were actually thinking this problem

through. What he said very simply, and it makes a lot of sense to

anybody who has done this before, is there is no conceptual architecture here.

This is not brain science. This is taking the functions of your

trust cycle from grazing land leases to paying out Indian accounts,

and there are a lot of phases in between—document custody, preservation of all kinds of things—and you just put it up on a big

schematic. You know, here at the different functions. Here is how

they are functioning now. Here is how they are not functioning

now. And that is the way you come up with the next stage, which

is the conceptual architecture of a system, and a system is both

computers and people, not just a computer. It is computers and

people, and how you get from one end to the other.

And he was talking like a forensic accountant. He knew exactly

what he was saying, and nobody in Department of the Interior
22

wanted to hear anything about it. And if you look at the high-end

implementation plan, it talks about those different functions as if

they were little projects to be done with allocation of money to be

done totally independently of each other, without any kind of connect. And if I remember correctly, out of I don’t know how many

hundreds of millions of dollars allocated to the overall problem, you

got to the end and there was personnel training, and it was $2 million, out of hundreds of millions of dollars.

Now, I have been in banks where banks have bought computer

systems that are supposed to do things a lot more difficult than

this. They are supposed to unwind derivative securities, or put together derivative securities. And I have gone into trust departments where very smart trust officials have been sitting there, and

I am looking at them, and they are doing the calculations on a

Lotus program. And I said, why aren’t you using the system? Because it doesn’t work. It was an off-the-shelf. It does 80 percent of

the work, but the other 20 percent—and believe me, my investors,

they don’t want 80 percent. My investors are Merrill Lynch and

Northwest Mutual Life Insurance Company—and 80 percent ain’t

even close to good enough.

So I was wrong. There has been. But in order for the Government to discharge its trust function, you simply have got to get this

expertise.

The CHAIRMAN. My one final question, Mr. Endreson, you said

that trust includes the protection of treaty rights.

Mr. ENDRESON. Yes, Mr. Chairman.

The CHAIRMAN. A long time ago, there was a treaty between the

Sioux Nation and the United States Government involving the

Black Hills. The treaty was violated, and Black Hills no longer belonged to the Sioux Nation. Is that a cause of action?

Mr. ENDRESON. I believe it is, Mr. Chairman, and I think the

question there that is enduring is after the Sioux Nation decision

in the Supreme Court is what now can and should be done to bring

the promise of the treaty, the meaning of the promise of that treaty

to future generations of Sioux people.

The CHAIRMAN. What would you do as a lawyer?

Senator MURKOWSKI. Never ask a lawyer. The clock is going to

start running. [Laughter]

Mr. ENDRESON. I think the first thing, Mr. Chairman, would be

to assess where the law has put the parties today. By that I mean,

examining the benefit of the courts that is reflected in the Sioux

Nation decision, and then considering what further avenues may be

available, I would suggest, by working with the Congress as one of

the key avenues, and considering as well whether there are other

means of bringing the promises of the treaty to bear on the question of what Congress ought to do. And I think the trust responsibility would be among the means that a lawyer would look to in

those circumstances.

The CHAIRMAN. Mr. Vice Chairman.

Senator CAMPBELL. Thank you, Mr. Chairman.

As you have, I am also going to submit some of my questions for

the record and would ask that the witnesses answer them for the

committee.
23

I am going to ask two or three questions related to today, but

you did mention the Black Hills, Mr. Chairman. I would remind

the committee that courts have said the Lakota have every right

to get the Black Hills back. It was not taken by treaty, by sale, by

anything. It was just taken to use as a bombing range in World

War II, as you remember.

When Senator Bradley was here, he introduced a bill to do just

that. I was really interested in that bill. Unfortunately, we could

not get the votes to move it. The South Dakota delegation to a man

was opposed to that bill. And so sometimes what is righteous and

fair can’t get done here because of political constraints or partisan

constraints or something else. But I just mention that in passing,

that there has been some people here who recognize that land was

not taken in any fair system at all and that the Lakota do have

the right to get it back.

Mr. Gray, you really said a mouthful, a lot of things, and you

have testified before this committee before. You just reaffirmed my

suspicions with your testimony today that the Department of the

Interior simply does not have the expertise—never had, never will.

And really it has nothing to do with personalities, because I think

there are many very goodhearted, good people there. I see Neal

McCaleb sitting over here in the front row who will be testifying

soon. I know him well—a man of integrity and honesty and I think

a very, very fine person, as others have been in that place—Ross

Swimmer, Kevin Gover, and a number of others.

I just think it has to do with the bureaucracy and government

in itself—that we are not qualified to do certain things. We have

a constant turnover, new people coming and going all the time. We

don’t have the continuity to do it, and clearly we have made some

big mistakes—that $40 million we spent for the TAAMS system. In

my view, we could have taken that money out and set it on fire

in the middle of the street for all the good it did. Maybe it would

have drawn more attention to the problem, rather than finally just

discarding the whole darned system.

I don’t think we are going to get it fixed within the bureaucracy,

very frankly. Senator Murkowski is here with us today. As you

know, I believe you testified once and in your testimony a few

years ago gave us the opportunity to frame up an independent bill,

an independent structure in the private sector. We didn’t actually

introduce that bill but simply circulated it in Indian country.

Maybe the time is now, right now to do it, after we have had a

couple of more years where tribes have seen how little can actually

be done within the bureaucratic system. I, for one, am just fed up

with it and ready to introduce a bill to take it away from the bureaucracy and to try and reach some kind of settlement with the

people who are waiting for their money.

I saw a movie not long ago, and I remember the byline—the

byline in that movie was ‘‘show me the money.’’ Judgments don’t

mean a hill of beans if you don’t get the dough. Isn’t that right?

I mean, what good is a judgment if you don’t get the money in a

judgment.

Mr. GRAY. Absolutely nothing.

Senator CAMPBELL. Absolutely nothing. Well, I think you are

right. But there are two, to my mind there are two times in our
24

recent history in which we have taken legislative action to try to

fix some injustice that we did to a people. One of them was the

Japanese-Americans of World War II. And if you remember, it has

been about 10, 12 years ago now, we did pass a bill in which we

tried to give them a monetary settlement—every Japanese-American. It wasn’t nearly what they lost when many of them were

taken and put into American camps, if you remember. But at least

it was an attempt to do something right for people that had suffered an injustice on the part of the Federal Government.

There is another time, too, called the ‘‘Volcker Commission’’ some

years back. I am sure you are familiar with that. The U.S. Government created that commission to deal with the issue of bank accounts owned by Holocaust victims and held by Swiss banks. That

situation was cleaned up pretty quickly, but I think there was

some similarity, and that was missing documents, and clearly a bureaucracy that could not do it.

Do either of those times in history, would they offer a model of

something that we can do legislatively by introducing some legislation to rectify this with Indian people?

Mr. GRAY. I think one, yes; and one, no. I think the Japanese

reparation issue was not one that was based upon or even tried to

be based upon individual either pain and suffering or economic

loss. It was done in a much more generic way. The Volcke Commission did attempt, to the extent they had records, to trace to individuals or families what they had lost or what had been stolen during

World War II through these Swiss bank accounts.

Now, the problem with Swiss bank accounts is—this is the same

problem that Congress is grappling with and that I am working on

also on the New Patriot Act. It is in a sense good money in, bad

money out. I mean, money came in. It got commingled, and then

it accrued enormous amounts of interest, and then how do you unwind it in a way that is allocable to the known accounts that you

have, and then what do you do for unknown accounts. And the one

piece of learning that I would take from that, and this is very important—you will find this, I think, in the Volcke Commission

records—is that there is no way, and actually there was a question

submitted to me—do you believe that it is possible to reconcile the

trust accounts? The answer is in total, no, because there are too

many lost records. There are too many disjoinders between individual Indian claimants and the lands that they really have claims to.

Even if you know what the lands are, and they are now fully producing, who does it really go to? And then you have the dissent and

devise issue, which is a real big issue.

So perfection is not something that I think you are after here.

I think what you are after here is when you do have the records,

use them scrupulously. When you don’t—and I know there has

been a lot of talk about modeling and statistical analysis—and people’s eyes start to glaze over when they hear those things, and figure, well, that is just some accountant or lawyer talking about

some process we don’t understand.

It is not that mystical. Actually, the best example I can give you,

if you want to hear it, is the private sector. For many, many years

when you or I or someone else, someone old enough to remember

this, bought a corporate bond, they had coupons attached to them—
25

little tabs attached to them. And the way you got your interest— they were bearer bonds—and the way you got your interest payments every 6 months or every year was you took that thing into

a bank, into a trust department, and said, ‘‘here’s my coupon, now

give me my money.’’ And the only record of ownership was holding

onto that bond and having that coupon in your hand.

Now, over the years that became an enormously cumbersome

problem with the peripatetic nature of the world and the computerization of the world, so they changed about 20 years ago to a registry system, so that you would have a registered owner of a bond.

You would have Ben Campbell, who resides at—and they would

just send you out your check for interest and record it.

Well, in between those two things, many banks found that they

didn’t have records of the coupons before they were transmitted

into registered accounts. When they had the registered accounts,

they could show that checks were cut. But before that, they had

lost the coupons. This goes back 20, 30, 40, 50 years. You know,

big banks, big government, little coupons—zillions of them—they

lost them.

Now, what do you do in a case like that? What you do is you look

at either other phases of time for the same transaction and you

look at how many people really didn’t come in with their coupons

and how many did, and you analogize that to that situation, or you

look at another bond deal—some completely separate bond deal at

the same contemporaneous time, and see how many people just forgot to bring in their coupons. Because these claims are brought on

the basis that nobody brought in their coupons, and therefore the

banks owe $200 billion worth of interest for that time, which the

bank knows it doesn’t owe, which plaintiffs know they don’t owe,

because trust departments when they got the coupons usually gave

the money away. They didn’t just run away with it, but they don’t

have records of it.

So that is when you get into this kind of statistical sampling. It

is not anywhere near as—I don’t know, it seems kind of mystical

and haphazard, but it is not. These are the kind of things that

have been going on for years. In fact, I am not privy to this because

I am not privy to the litigation, but I have worked with Price

Waterhouse on a number of very large fixes in the commercial sector. And Price, as you may or may not know, is the consultant, the

forensic consultant to the Cobell plaintiffs. And I pretty much know

what they have done to come up with the basis of the historic

claim. They have used procedures that are tried and true in the

private sector.

I am not a part of that litigation. I am not saying the claim is

correct to the dollar. I am saying I know what kind of rigorous procedures they use. So anybody who expects perfection out of this

doesn’t grasp the reality of the fact that you have got rat infestation and lost records and you have to do something about that. But

the something isn’t just magic that you create out of your hands.

It is modeling on the basis of contemporaneous other deals or other

time periods in the same deal.

And that is very important in this for another reason. It is not

just payment. The real problem in the historic Indian money accounts—not so much now, but historically—is that, let’s face it, you
26

can guess that there were times when Indian lands simply were

not leased at all for their resources. Of if they were, somebody

pocketed the money. And this is a long time ago. I mean, we are

talking about the 1920’s or 1910’s or something like that. I am not

saying anybody in current Administrations have done that. But

when you have those kind of gaps, when you have 10 years of a

grazing pastures, large grazing pastures—you are talking about a

huge acreage here—that have no money coming in, you have got

to do some modeling of similarly situated privately owned grazing

land and say, hey, if somebody were even half on the ball, they

would have brought in—— Senator CAMPBELL. Well, let me tell you that anybody looking for

perfection is not going to find it around here. That just happens to

be the system in Washington. But the more I think about it, the

more I think the longer this goes and the more attorneys we involve, the more complicated it is going to get. Sometimes I think

if you get two attorneys together, you can have three fights. It gets

worse, the more they get involved. And I am not trying to denigrate

the legal profession.

Mr. GRAY. Senator, you have already said something about the

Congress that is true. You are never going to find perfection, and

you are not going to find in me a proponent of the legal profession.

I think they deserve the reputation they have, to a large part. But

you do have three attorneys up here——

Senator CAMPBELL. Whatever that means. [Laughter.]

Mr. GRAY. But you do have three attorneys up here with no clients, and it may be the last time you ever see anything like that.

So there are some who will actually help you.

Senator CAMPBELL. I think so. But I think that you agree that

what we need to do is get some checks in the hands of Indian people, and for the life of me I don’t know how we are going to do that

unless we reach an agreement with the people we owe the money

to and do some kind of legislative relief, because I just don’t think

it is going to get ever cleared up within the bureaucracy.

And thank you, Mr. Chairman.

The CHAIRMAN. Thank you.

Senator Murkowski.

STATEMENT OF HON. FRANK H. MURKOWSKI, U.S. SENATOR

FROM ALASKA

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

Mr. Gray, I want to thank you for your comments. Unfortunately, I did not hear the other gentlemen. I was at a hearing before the Judiciary Committee, where we have a new judge for Alaska, Judge Beistline, and his nomination hearing was taking place.

But as the chairman and ranking member know, I have for a

long time preached my belief as a former banker and one who has

had the responsibility of a trust department, that we have a situation here where we have been kidding ourselves for a long time.

We have had two Secretaries of the Interior in a row who have

been held in contempt on this matter. So it is a bipartisan failing,

and the question is, are the tribal units and those that are fearful

that we are winding down the BIA ready to come aboard and admit

that this is not working?
27

I mean, Mr. Thomas, president of the Central Council of Tlingit

and Haida, is with us today. He is going to be testifying. In reading

over his testimony, I totally agree with a portion that states, the

fatal flaw in the approach—and this is the approach back in 1994

when Congress set up the special trustees to take the steps to put

forth solutions to the trust management problems—and the fatal

flaw in the approach was that it left the Office of Special Trustee

under the administrative authority of the Department of the Interior Secretary—Secretary Babbitt—who made it very clear, and he

testified before this committee from the beginning that he did not

feel that the Office of Special Trustee was necessary, nor did he

support the work being performed under the authority. We had

several discussions. He claimed that it would amount to basically

the unraveling of the BIA’s responsibility.

Now, Secretary Norton has inherited this special trustee put in

place by Secretary Babbitt. The point is, the process of BIA doing

it has failed for the reasons that we have identified here today.

They are not set up to do it. They are good people, but this is a

very complex problem that is dealt with in the private sector all

the time in a proficient manner. What we have here is a problem

with, again, the tribal acceptance—that we are taking something

away from the BIA that they are incapable of doing and putting

it in the hands of the private sector who can do it right.

For heaven sakes, a firm that takes on this responsibility, and

I think the point was made by you, Mr. Gray, there might be some

reluctance of the private sector to take this on because it is such

a mess. On the other hand, I have a belief that the private sector

will back up their efforts if they do take it up, with their reputation. They’ve got something to lose. So they are not going to take

this lightly.

So I would hope, Mr. Chairman, that once and for all, after 21

years on this committee dealing with this problem, which didn’t

occur overnight. We have seen pictures or the recordkeeping. It is

disastrous. It is unacceptable. It is inappropriate. To face reality,

and get on with the idea of giving it to some organization or groups

of organizations collectively who are experts in the area. They have

proven their expertise with satisfaction to their customers, and

save the Federal Government a lot of money. As the Senator from

Colorado said, get the checks out where they belong and quit fooling around.

We are not trying to diminish the BIA’s authority. We are just

trying to get a job done that the BIA has shown that they are incapable of. If there is any question of evidence, let’s look at the

mess before us.

I have no questions. I am just preaching. [Laughter.]

The CHAIRMAN. Thank you very much.

I would like to thank the panel for your patience and your wisdom. We will be submitting questions. I think all members of the

committee will have questions to submit. Do you believe that 30

days will be sufficient?

Mr. CHAMBERS. Certainly for us it would be, Mr. Chairman.

The CHAIRMAN. With that, I thank you very much, sir.

Mr. CHAMBERS. Yes, sir.
28

The CHAIRMAN. May I now call upon the next panel—the assistant secretary for Indian Affairs, Neal McCaleb; the associate deputy secretary, Department of the Interior, James Cason; the special

trustee for American Indian Trust Funds, Department of the Interior, Thomas Slonaker.

Mr. Secretary, it is always good to have you before us, sir.

Mr. MCCALEB. Thank you, Mr. Chairman.

Mr. CASON. Mr. Chairman, we discussed briefly beforehand and

thought I would start our testimony today, and then each of us will

have comments later on when we do the testimony.

STATEMENT OF JAMES CASON, ASSOCIATE DEPUTY

SECRETARY, DEPARTMENT OF THE INTERIOR

Mr. CASON. It was very interesting to listen to the first panel,

and I guess somewhat depressing when you hear that the problem

is insolvable and it has been here forever and there is nothing you

can do about it.

I would not say that the folks in the Department are quite that

pessimistic. We think there are things that can be done. What we

want to do is come up today and visit with the committee regarding

the major problems that we see at the moment, and some of our

views on those problems, and begin a dialogue with the committee

about how to address those.

I do have testimony that I would like to enter into the record.

Other than that, I would just like to make a few brief comments,

and then the other two gentlemen here would like to make brief

comments and then we will take questions.

The CHAIRMAN. All of the prepared statements are made part of

the record.

Mr. CASON. Thank you, Mr. Chairman.

In taking a look at the issues that we have before us, I think the

committee in the last dialog that we just had recognized that there

has been a long history of problems in trying to administer the

trust on behalf of Native Americans, both tribes and individual Indians. We do have two classes of organizations that we have to deal

with, that we need to keep on the table. One is tribes, and there

are more formal relationships with tribes through treaty with the

United States. And the other is with individual Indians.

We have some responsibilities for both. As the committee heard,

there is wide-ranging responsibilities that involve many parts of

the Federal Government, both the judicial branch, the congressional branch and the executive. There are several organizations in

the executive that manage tribal responsibilities, and the Department of the Interior has particular responsibilities in managing

tribal responsibilities. Most of those are centered with the Bureau

of Indian Affairs [BIA], but there are also responsibilities located

throughout the Department, with the Office of Special Trustee, the

Bureau of Land Management, the Minerals Management Service

and others.

One of the issues that has prompted the dialog that we are having here is the proposal made by the Department of the Interior

to create a new organization to manage some of those responsibilities. It has been termed the BITAM, or the Bureau of Indian Trust

Assets Management. When we were looking at the issues before
29

the Department about how to manage some of these responsibilities, and particularly the trust assets, and the trust assets involve

basically 56 million acres of property and about $3 billion that are

in accounts. We were looking at the reports that have suggested

that over time, these assets had not been managed properly. In

looking at all of those reports, we were trying to come up with

ways to address those problems and that discussion over the period

of a couple of months involving the three of us and a number of

other senior management people within the Department, led to the

formation of a whole set of options that we considered within the

Department of the Interior.

The BITAM option, as it is called, was the option that we

thought was best out of the ones that we had within the Department, to try and improve the management, integrity and security

of managing Indian trust assets. The objective of that was to add

profile to the issue by having another assistant secretary within

the Department be responsible for those assets. It was not to undermine BIA in particular. It was to get a clear focus on the job

that was there to be done, to make sure that there was an organization that had one sole purpose, and that was to ensure that the

management of Indian trust assets was being done as well as possible. It was to permit us an opportunity to clarify the policies and

procedures that were necessary to get that job done. And it was

there to try to remedy some of the weaknesses that we have in the

system within the Department.

Would it be a panacea? No. It would not have been a panacea,

but it was a step and we considered it merely a step in the right

direction.

We stopped our deliberations within the Department at a conceptual framework. We basically said, here is the problem, here is an

organizational way to try and address it, and at that point in time

started consultation with the tribes. We have had a number of tribal consultation sessions, and Mr. McCaleb is going to talk about

the dialog that we have had with the tribes. We are very appreciative of the effort being made by tribal leaders to assist us in

evaluating that proposal and a number of other proposals as to how

best we can try to address this problem.

As far as the Department is concerned, any and all options are

possible except for just the status quo, because we feel like the status quo is not appropriate. But other options to address this problem, including a number of Indian-sponsored alternatives, the alternatives talked about by Mr. Gray, the alternative talked about

by Senator Campbell—you know, we will take a look at any option

and in the evaluation process what we are after is what is the best

way to try and address the problem.

So the Secretary and the Department are not in a position at this

point to say the only option is the BITAM option. When we offered

it as a conceptual framework, it appeared to be a good option, but

it is not the only option.

Another problem that we are dealing with right now that is important to note is the Cobell litigation that the Department is involved in. It is a difficult challenge for the Department. It is consuming a tremendous amount of resources to manage our part of
30

this litigation. It is consuming a lot of resources with the Department of Justice.

In the Cobell litigation, there has been several pieces that are

noteworthy. One of those is trial one. Trial one is basically prospective trust reform. That trial ended with a decision by the U.S. District Court judge circa December 1999, and was later appealed to

the Court of Appeals and in most parts affirmed by the Court of

Appeals. The trial involves individuals as opposed to tribes, and we

all have to recognize that as we go through our processes. There

is a possibility for a trial two, and the trial two would be involved

principally with historic accounting.

And then we are currently involved in a contempt trial, as Senator Murkowski noted. The prior Administration was tried in contempt of court and Secretary Babbitt and Secretary Rubin were

found to be in contempt of court on this issue, and our current Secretary Norton is being tried in contempt also related to issues here.

The contempt trial I believe is nearing its end. I believe all the witnesses have given testimony, and it is basically up to the judge to

decide what is appropriate in this case.

Also, one of the issues involved with the Cobell litigation is the

possibility of a receiver. That is something else that is being look

at, has been looked at as an option. It is a tangential option to

some of the things that we have talked about this morning already.

In this case, the judge has sent signals or made comments that a

receiver may be possible if we don’t find the right kind of an environment is being pursued within the Department.

One of the issues that is also an outcropping that we want to discuss with the committee is the possibility of historic accounting— let me re-phrase that—the task that we have to conduct a historic

accounting. The judge in this case has made a determination that

the Department is responsible to conduct a historical accounting.

And historical accounting is generally defined as a transaction- bytransaction accounting without regard to when funds were deposited.

So one could determine that this means since 1877, we are to account for all the funds that have been deposited on behalf of Indians since that point, on a transaction-by-transaction basis. The Department is preparing, planning to do that. We have told the committee and we have told Congress in general and the court that we

would supply a plan as to how we would go about doing that accounting by June 30. There is an issue related to the complexities

of doing that type of accounting, the relative costs that would be

involved in doing the accounting, the methodologies that would be

used and the relative satisfaction that one would get from doing it,

because there is a problem with missing records over time, and

that the further back in time one goes, the more you are going to

find that there are missing records and that other assumptions or

other methods would have to be used to fill in the missing data.

Finally, there are two other small issues I would like to raise.

One is fractionated interest. We do have an issue with fractionated

interest on the part of the individual Indians. As generations pass,

the relative level of undivided interest in properties continue to

fragment to the point that they are becoming unmanageable. I

have been told at this point that the BIA is now tracking these in-
31

terests to 26 decimal places, and that they are preparing to rewrite

their computer systems to be able to track to 42 decimal places.

These are very, very small interests in property and it does complicate the management job within the Department to have to

track these interests because you have to be able to identify them

all in probate, record them all in title work, and you have to be

able to manage the accounts that are associated with these fragmented interests and that there are some difficulties with this.

They are so widespread and expanding exponentially now that we

will have to come up with a broader solution than we have available.

The last item, just to put it on the table, we have also experienced here in the last three months the shut-down of most of the

computer systems within the Department under a temporary restraining order issued by the judge in the Cobell litigation. The Department has had to disconnect from the Internet virtually all of

its computers. There have been a number of impacts associated

with that. The reason for shutting down the computers was because the security of the data that was in our systems was inadequate, and the judge made a determination that we should shut

down the computers and do the job to go back and take a look at

where individual Indian data was located within the Department,

and ensure the security integrity of that data.

We are currently going through that process. At this point, we

have about one-half of the computers of the Department hooked

back up to the Internet and we are working on the remainder.

That is a brief overview of what we have included in our testimony, and we would be happy to answer questions once these two

gentleman have had an opportunity to comment.

Thank you, Mr. Chairman.

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

The CHAIRMAN. I thank you very much, Mr. Cason.

Secretary McCaleb.

STATEMENT OF NEAL A. MCCALEB, ASSISTANT SECRETARY

FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR

Mr. MCCALEB. Thank you very much, Mr. Chairman, Mr. Vice

Chairman, Senator Campbell.

I am privileged to be here this morning. I thank you for the opportunity to discuss these very far-reaching problems affecting Indian country and Indian individuals.

As Mr. Cason indicated, we had a fairly extensive and spirited

debate within the Department about how to try to get our hands

around this seemingly intractable problem of the effective management of the Indian trust asset in Indian country. The proposal that

was agreed upon after considerable discussion and analyzation, and

reaching a consensus, was the BITAM proposal. It is a conceptual

proposal. It was not a detailed proposal. It embodied certain principles of central single-executive sponsor management under a new

Assistant Secretary for Indian Trust Asset Management, and involved the removal from a variety of Departments, not just the

BIA, but all Departments that involve trust asset management, including the BIA, BLM, MMS, and others to this new bureau.
32

We took the concept on the road, if you please. It was clear from

the outset that we absolutely needed an extensive consultation

process. And in the spirit of the Indian policy of self-determination

and self-governance, we began the consultation process after due

public notice on the December 13 in Albuquerque. Secretary Norton

chaired that first meeting herself and spent the entire day listening

to all the comments that were made. And there were probably 500

people in attendance at that particular meeting in Albuquerque.

We have since that time held seven other consultation sessions.

There is some reluctance on the part of Indian country to refer to

this as consultation. The term that is preferable to many of the Indian tribal leaders is ‘‘scoping’’ sessions. But we have held seven

more of these throughout the country—in Minneapolis, Oklahoma

City, Rapid City, San Diego, Anchorage, Washington, DC, and most

recently in Portland, OR. These have been attended by various officials within the Department of the Interior. I personally have attended every one of them, and chaired them all except the initial

one which was chaired by Secretary Norton.

We conducted these eight meetings so far. We have listened to— there has been about 2,000 people in the aggregate attending these

meetings. We have heard over 50 hours of testimony and received

some 10 different defined alternative proposals from tribal leaders

and tribal advisory organizations. Now, there were a number of repetitive themes that emerged from the consultation process. Some

of them were, there was basically unanimous opposition to the

BITAM proposal as it had been presented.

Second, there was most notably concern that they had not been

included, on the part of the tribal leaders, that they had not been

included in the formulation of the BITAM proposal, which in my

judgment was one of the underlying reasons of the out-of-hand rejection from the very start of the BITAM proposal.

Clearly, the tribes wanted to be involved and have input into

these very, very important discussions affecting their lives and

their futures, to which they are absolutely entitled. In that respect,

they recommended, since they perceived these as scoping sessions,

another alternative method of having some input into the formulation of alternative proposals by the creation of a task force. This

task force was developed in the next few subsequent meetings. The

composition was determined to have two members from each of the

12 regions and one alternate member, or a total of the alternates

and membership of 36. They were to be selected by the tribal leaders from each one of their respective regions from which they came.

That has happened. That has been completed. And we in fact

held our first complete task force meeting on February, beginning

on the first, second, and third, at the National Conservation Training Center at Shepherdstown, attended by Secretary Norton, Deputy Secretary Griles, Mr. Cason, myself, Mr. Slonaker, and a variety of other of the top management in the Department of the Interior, to listen to and interact with the members of this task force,

many of which by the way I have noticed are here in attendance

in this room today, and most of the members of your panels three

and four are members of that tribal task force.

At the meeting at Shepherdstown in the first weekend in February, the task force presented to the Secretary four of what they
33

thought were the most probable alternative proposals for her consideration, and also for their careful evaluation. They had developed a matrix for evaluating these different proposals, based upon

criteria which they have also developed to determine which proposal or proposals are most likely to further consideration.

In my judgment, the consultation process or scoping process,

whatever you want to call it, in any event it was a communications

process, and it was largely a listening process for me because, as

chair, I largely listened to the recommendations, the concerns of

the participants from all over Indian country who came to speak

and responded to questions as they were directed to me.

I believe this process and the creation of the tribally driven task

force is very useful because whatever the solution is to this seemingly intractable problem, it needs to be done with the enthusiastic

endorsement of Indian country, in my judgment. As indicated earlier, Mr. Chairman, in your opening remarks, the days have long

since passed of the BIA and the United States Congress dictating

unilaterally to the sovereign tribes of the United States what is

best for them. They have demonstrated quite dramatically in the

last 26 years, going on 27 years now, since the passage of the Indian Self-Determination and Self-Education Act and the subsequent titles, their ability to run their own businesses and to administer their own programs and to, in many instances, be very competitive in a market-driven economy.

So there has to be the careful listening and response to the tribal

initiatives in this. And that is the process that is ongoing right

now. I am very pleased that many members of the task force are

in attendance here. Will this joint effort between the Department

of the Interior, the tribal task force, be frictionless and without debate? Absolutely not. Will we reach some kind of a unanimous

opinion on what is best? Highly unlikely. But it is a mechanism

that has to be tried and used and implemented. And I am maybe

the last unreconstructed optimist in this process, but I believe in

the efficacy of the tribal leadership to sort out these problems with

us and to help define appropriate solutions.

I would also say that the next meeting of the task force is set

for March 8 and 9 in Phoenix. They have organized three subgroups to assist in the segmentation and development, including a

group to work on the protocols of how the mechanisms of how this

organization is going to work and interact with the Department of

Interior; also to help us define future scope of services for our consultant EDS and how to utilize their service most effectively; and

thirdly to evaluate very carefully all the different proposals that

have been put on the table so far.

I think I will conclude my remarks at this point, and answer any

questions that you may have at the appropriate time.

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

The CHAIRMAN. Thank you very much, Mr. Secretary.

Mr. Slonaker.

STATEMENT OF THOMAS SLONAKER, SPECIAL TRUSTEE FOR

AMERICAN INDIAN TRUST FUNDS, OFFICE OF THE SPECIAL

TRUSTEE, DEPARTMENT OF THE INTERIOR

Mr. SLONAKER. Thank you, Mr. Chairman.
34

The last time I appeared before you was at my confirmation

hearing and you offered your condolences for my taking this job,

and I must tell you at this point that I appreciated that, but it has

been very interesting and challenging.

The Special Trustee’s role in the Department is truly unique, and

I suspect is unique throughout the Administration in the sense

that it is an independent role. It is supposed to be an independent

role. Some of my staff who were here when Paul Homan, the first

Special Trustee was here, often joke about the Special Trustee’s

Containment Committee within the Department, but I think that

in my time it has been apparent that the Department is willing to

listen and think with me through a lot of these problems.

But it is a role going forward that I think will be more and more

critical. I have spent the last 11⁄2 years-plus when I was confirmed

trying to, I suppose you would say un-peel the onion and discover

what the issues really were with the sub-projects under the HLIP

in the first place. And then we got to the point where I felt that

we needed to bring EDS, it turned out to be EDS, but bring in a

firm to really look into the three major sub-projects which are at

the heart of trust reform and also trust management. And then of

course with the support of the Secretary, that EDS assignment was

expanded to an even greater look at the entire trust reform process. So it has been an interesting time.

Let me share with you very briefly some of my observations in

terms of where I think problems are and where I think potential

solutions may lay. First of all, I very much echo Mr. Endreson’s

comment in the first panel, distinguishing between what I call the

fiduciary management and what might be called the broader trust

obligations that the government has. By fiduciary management, I

mean the management of the 56 million acres of land that are subject to being leased to produce income for Indian beneficiaries, both

individual and tribal—the accounting for all of that, the pursuit of

the leasing activity, the payment of checks and everything that

goes with it. All of that activity looks like nothing more or less

than a significantly sized trust department.

But there are broader trust obligations, and he articulated some

of those in terms of services from the Government to the tribes,

and I thought he did a good job of it. But I think it is worth dwelling on that point because in the discussions that go on, I often find

confusion between the two issues. The fiduciary trust clearly is a

part of the trust obligation of the Government, but may require solutions to make it work properly that don’t necessary have to impact in any way the broader trust obligations of the Government.

I think the problems that I have observed are as follows. In the

first place, I think the 1994 Act, with 20/20 hindsight provided the

special trustee first of all with no line management capability. In

the recognition of the fact that there are five separate bureaus and

offices that have parts of the trust operation, you can begin to see

that oversight, which is what the 1994 Act conveys to the Special

Trustee, is oversight, but it is not line management, and what this

takes is line management to get the job done. There is a very high

lack, which has already been mentioned, severe lack of experienced

trust managers within the Department of the Interior. In fact, I

venture to say that those with actual private sector trust experi-
35

ence are relegated strictly to the Office of the Special Trustee at

this point.

There is also a lack of project management capability. It is just

not there in any meaningful amount to get a lot of the projects

done in appropriate manner, and these are large-size projects as

they were sized in the high-level implementation plan.

But regardless of what the organization looks like, regardless of

whether it is outside the Department of the Interior, whether it remains part of the BIA, or whether it takes on some other configuration within the Department, what is really needed here is experienced management, clear line management, and accountability up

and down the line. For example, it would not be necessary, really,

to split this off from BIA at all, but it would be important to get

the people who are responsible for delivering trust services to the

beneficiaries, both individual and tribal beneficiaries, so that they

don’t have conflicting duties up and down the line. We have a lot

of people on the ground, I have come to understand in the time I

have been in this job, that really are doing and want to do a good

job as far as their trust beneficiaries are concerned, but often they

are conflicted with other responsibilities. I think it is very important that the middle management of the trust organization be carefully examined as well, because those people have to understand

the trust obligation and they have to be willing and able to deliver

the services.

I concur with the Secretary’s concept of a single trust organization. But as I have just mentioned, where it is placed, either inside

or outside the Department, I think is a little bit less important

than the fact that it is a single line of authority. There is accountability up and down that line, and there is a meaningful amount

of trust experience, particularly in the management level, to carry

off the job.

In fact, you may remember that the 1994 Act also created an advisory board for the Special Trustee. That advisory board has, within the last couple of months, actually recommended that the trust

function be put in a single organization and taken outside the Department. I am very sympathetic, as I have mentioned already, but

I do think the point should be that it is a single organization with

accountability.

You may wonder what I think about the role for the Special

Trustee going forward. I think in some fashion there needs to be

oversight with teeth that has not been there, because the Special

Trustee has to provide candid and informed guidance for the Secretary. That is the mandate. But in order to get anything done,

there has to be teeth in there. There have to be appropriate resources provided for OST as an oversight, and in my opinion there

continues the need to have the Office of the Special Trustee in

charge of the funding which takes place on trust reform projects,

which is the way it has worked up to this point. I would trust and

expect that it would work that way going into the future.

That is to say that anything to do with trust reform has to pass

the test of good planning, good logical planning in order to get the

funding which Congress has already provided through appropriations. As you probably know, my office has actually halted much
36

of the funding and some of the projects for the lack of good planning.

In conclusion, let me just mention a few things that I think are

important going forward. I think that we get caught up in the Department, even my office gets caught up in trust improvement,

trust reform. One of the things, actually two things that I think we

are going to need to spend a great deal more time on and are making steps in that direction, one is we need to be assured that the

Department, no matter how it is organized, is maximizing the returns on the assets we invest for the beneficiaries. I don’t think I

need to say much more than that because I think we are all aware

that there are situations here and there in Indian country where

the assets, the lease, is not being maximized for the benefit of the

beneficiary.

Also in the area of trust investments, we are relegated to U.S.

Government securities only, and some Federal agencies, related

Federal agency securities. I worry about, for example, the Indian

child who will not receive moneys until they reach a majority, with

those moneys being invested strictly in government securities. We

need to think about how we offset the impact of inflation over

many years. So those are important tasks I think we will need to

work on.

I think there is an important role for the tribes under the 628

contracts and the compacting arrangements. In fact, there is a vital

role, but I think it is also important for somebody to say that there

is also a very high standard of trust here, which was articulated

pretty well I think in the first panel, that will apply to no matter

who is involved with administering the trust.

And with that, I would like to conclude, Mr. Chairman.

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

The CHAIRMAN. Thank you very much, Mr. Trustee.

I just have a few questions, and I would like to, as I did with

the other panel, submit my questions for your consideration.

Mr. Cason, as you have indicated, trust management functions

are performed by other bureaus, not just BIA, but the Bureau of

Land Management, Office of Surface Mining, et cetera, et cetera.

If that is the case, why is the Department’s request for a reprogramming of funds only proposes to ore funds allocated to BIA

and the Office of the Special Trustee, and not to others?

Mr. CASON. Mr. Chairman, the initial reprogramming request

was to establish the core of the new organization. The core was basically the operational portion of the Office of Special Trustee and

the trust asset management portion of BIA. The Department also

had intended to go agency by agency throughout the Department

to evaluate all of the other organizations that contribute to trust

assets management, and evaluate case by case what is the smartest thing to do in moving pieces of those into this new organization.

At the time we submitted the reprogramming proposal to establish the core, we knew we had a ways to go before we would be

prepared to move the other parts effectively, but the intention was

to look at all parts of the Department and consolidate where it

made sense.

The CHAIRMAN. Mr. Cason, in your testimony you mentioned the

Cobell case. In the Cobell case, the court found that the Depart-
37

ment had breached certain fiduciary duties, and in fact they cited

four of them—failure to provide an accurate accounting of all

money in the individual Indian money accounts, failure to retrieve

and retain all information necessary to render an accurate accounting, failure to establish written policies and procedures for retaining necessary documents and information, implementing computer

and business systems architecture, and fourth, failure to ensure

sufficient staffing of trust management functions.

Will the Secretary’s proposal address these breaches?

Mr. CASON. The organizational proposal itself does not. The organizational proposal is just how we do work, who is assigned to do

work. Instead, this is basically what work needs to be done. The

Secretary and the Department is aware of the four breaches, are

working on the four breaches. There are individual efforts going on

under the four breaches. There is some influence between the

breaches and the work that has been done and the organizational

proposals.

For example, Mr. Chairman, on the fourth issue of staffing for

trust management functions, the Department had prepared a workforce staffing plan, but that staffing plan will be influenced as to

what sort of organizational arrangement we have at the end of our

consultation process. So that is basically in abeyance at the moment in large part, while we sort out what the organization is, and

then we revise the staffing plan to meet the organizational expectations that we will have. So there are some influences between

them, but they are not direct.

The CHAIRMAN. Are you saying that there is no expertise available at the present time?

Mr. CASON. No; I am sorry. That would not be an accurate way

of looking at it. There are people throughout the Department who

bring expertise into the job that we have to do. I think that there

are some references here from the initial panel’s experts and Mr.

Slonaker, that there are particular skill types that are relatively

rare within the Department, and that skill type is people that have

a good resume on trust functions or fiduciary responsibilities management. That is a skill type that we would like to have more of.

We don’t have enough of. But there are other people that do other

things like computer experts, management people, et cetera, that

we do have some skill types within the Department that is useful.

We just don’t have enough of all of them.

The CHAIRMAN. Thank you.

And if I may ask Secretary McCaleb, Mr. Secretary, when you

couple the proposal to strip all trust-related functions of your bureau, and the proposal in the President’s budget request to turn all

BIA-operated schools over to tribal governments and the private

sector, it would appear that there is very little left for you to oversee. What do you view as the role of the Assistant Secretary to be

if these proposals are implemented? This is a question that many

of the tribal leaders have been asking.

Mr. MCCALEB. Well, first of all, in the education area, we already

have over two-thirds of the schools that are operated under contract by local tribal school boards. I think that is a legitimate objective, just as I think it is a legitimate objective to have public

schools operated by local school boards. The proposal to privatize
38

some schools, and it is a pilot proposal within the budget, is to try

to deal with some of the very difficult schools that are our lowest

achieving schools, to try to bring them up to something approaching what our education goal which is 70 percent proficiency in

reading and communications and mathematic skills.

Will that work? I don’t know. They are pilot programs. But the

point is that the Office of Indian Education Program still has the

responsibility for Indian education—its trust responsibility—just as

at the State level there is usually a State Board of Education or

an overall education agency responsible for all the local school

boards. That is still the responsibility of the Office of Indian Education Programs reporting directly to the Assistant Secretary of the

Interior.

In addition to that, of course, there are many functions that are

essential for the safety, health and welfare of the community, such

as public safety, law enforcement, the court systems. Economic development is clearly a very, very important role, I think, of the Assistant Secretary and the BIA, because I think we will only solve

some of our social pathology that exists in Indian country is a result of eliminating the despair and hopelessness that comes from

poverty. And that can only be, in my judgment, done by developing

market-driven economics—self-sustaining market-driven economies. We are starting to see that develop in different tribal entities, and with great success.

Roads, which is an element of economic development because all

access to the market—well, not all access—all direct access of products to the market is with roads, but also the development of the

essential telecommunications process that I think is useful—no, essential to economic emergence for tribes because of their remoteness of location—is an appropriate activity. Social services clearly

are still the responsibility of the BIA. Other functions, while not

great, are very important, like land trust activities and tribal recognition.

We still have to build the schools and the Office of Facilities

Management and Construction operates the school construction

program and I think will continue to do so. We have a very ambitious school construction program. This is the third year of it, and

it is a quantum—not a quantum jump, but a tripling of the investment that we have made in the replacement of outdated and in

many cases unsafe school buildings. All those still remain under

the purview of the Assistant Secretary of the Interior.

The CHAIRMAN. The trust relationship exists between the Government of the United States and Indian Nations and Indian individuals. However, many in Indian country look upon the BIA as

the trustee. Of course, that is where they focus their concerns,

their desires and their needs. Do you believe that the Secretary’s

plan will diminish the importance of your bureau?

Mr. MCCALEB. Well, it would clearly diminish some of the functions that are placed under the new Assistant Secretary of the Interior for the Bureau of Indian Trust Asset Management. Whether

it diminishes the importance or not is a matter of debate. I happen

to think that it does not diminish the importance. I happen to

think, my limited experience after seven months on the job is that

it is a very consuming and demanding responsibility. The reorga-
39

nization would let the Assistant Secretary for Indian Affairs focus

on these other areas that are vital to the quality of life and the economic emergence in Indian country. I think that is very useful, and

in my judgment extremely important.

The CHAIRMAN. Thank you very much, Mr. Secretary.

If I may now call upon the Trustee. If your office is provided

teeth, as you indicated, and line management responsibilities and

accountability, and the expertise that you need, would we need a

new proposal or plan? Would you be able to carry out your functions?

Mr. SLONAKER. You mean, as an amendment to or in lieu of the

1994 Act?

The CHAIRMAN. In addition to the 1994 Act.

Mr. SLONAKER. In addition to. I don’t believe so. I think the 1994

Act, to begin with, can permit me to, or as the Special Trustee to

make certain that trust reform and also ongoing trust operations

take place to fulfill the trust obligation. I think the secret here is

to get the line management capability or something very akin to

it. The Secretary, I should tell you, in the summer of last year provided the Special Trustee with the capability to issue directives,

which would be used presumably only in those cases where there

was no other resolution, to correct a trust situation. The terms of

the order provide that the people who are affected, or the organization that is affected, has a capability of appealing that to the Secretary. If she stands behind me, which I am sure she would, after

a 30-day period, it has the effect, that directive of mine has the effect of becoming, in effect, a secretarial order itself.

We have tried that, and we have not concluded whether it really

works yet. It is, I must just tell you bluntly, but there is a bureaucracy that can defeat even such directives, or at least deter them.

And so I am not convinced that that is the real answer. I think

there has to be something stronger than that, and I don’t see what

that would be other than direct line authority.

So I am not sure, Mr. Chairman, that the 1994 Act has to be

touched at all. But there has to be the kind of resolution that I just

mentioned and I think obviously there has to be a considerable

amount of planning that has to go on to do this trust reform correctly, and also to ensure, going on, that the trust obligation is carried out properly.

We have created, for example, in my Albuquerque office, an Office of Trust Risk Management, which is designed to be in effect

the watchdog on making certain the trust operations are operating

correctly; that the obligation is being carried out; that the maximization of income on the leases, that I mentioned before, is being

carried out correctly. So there is a lot we are doing and can do a

lot more of in that respect. I hope that answers your question.

The CHAIRMAN. Do you support the Secretary’s plan?

Mr. SLONAKER. I support the Secretary’s plan in the sense, as I

mentioned before, of addressing one critical question, and that is

to actually separate those who are responsible for trust administration and operations, up and down the line, into a single organization. A single organization can be outside the DOI. It could be inside DOI. It could conceivably be inside BIA. But it has to be a sin-
40

gle line management, undistracted from other responsibilities and

with accountability up and down the line.

The CHAIRMAN. Mr. Cason and Mr. McCaleb, I presume both of

you would support the Secretary’s plan.

Mr. CASON. Mr. Chairman, we do support the Secretary’s plan,

but I would say the Secretary’s plan is an option and that the Secretary and the Department are in a position that we are soliciting

other options for how to better address our trust asset management

responsibilities. We have received a good eight to ten proposals

from the Indian community on how to do that. We are open to

other proposals. We are continuing to work with the tribal leadership organization, the task force, to evaluate the proposals we have

and to develop other proposals.

So while we support the Secretary’s plan and we helped formulate it—this group, we helped formulate it—we did not see that as

a panacea; that it was a way to address the problems that we had

and that we are open to other ways on how to address those problems. What we hope out of this consultation process is that we end

up with even a better proposal than that one on how to manage

it. If we come up with a better one, that would be terrific.

The CHAIRMAN. So you are flexible and open to other suggestions?

Mr. CASON. Absolutely, Mr. Chairman.

The CHAIRMAN. I have two questions submitted by Senator

Daschle, who could not be here. He has asked that I pose this to

the panel here.

What is the status on the shut-down of the Bureau’s land records

information system? When will this important automated trust

land ownership system come back on line for data entry by the

Land Titles and Records Office?

Mr. MCCALEB. The land titles records is of course computer

based, and is connected to the Internet in order to retrieve. So it

has been shut down as a result of the judicially mandated disconnect. It is not one of the systems that has been brought back

up yet, because our first priority is to bring the systems back on

line by which we can convey checks to the IIM accountholders and

other beneficiaries of the trust. But it is a high priority behind

those.

The CHAIRMAN. How long will it take?

Mr. MCCALEB. That can only be determined by the judgment of

the Special Master of the court. We work with him under the consent decree to determine or to satisfy him that the security measures that we have taken protect each system before we bring it

back on line.

The CHAIRMAN. Mr. Secretary, what is the Department’s plan for

the TAAMS title sub-system that is currently in use at the BIA Billings Land Titles and Records Office? Is it your plan to deploy this

automated title system at all the BIA Land Titles and Records Offices? If so, how soon and how long will it take to fully implement

this automated system?

Mr. MCCALEB. I am going to let you respond to that, Jim, since

you have worked a little closer with EDS. [Laughter.]

Mr. CASON. Did you see a short straw coming over here? [Laughter.]
41

The TAAMS system, as we talked about earlier in the testimony,

was developed over time. The Department’s contractor, EDS, evaluated TAAMS along with BIA data cleanup in its initial effort. Our

contractor basically concluded that the TAAMS system had not

been developed to be successful in the long term, and recommended

that we suspend two of the three basic modules of TAAMS. The

module they thought would work was title, and then they suggested we suspend work on the realty and accounting portions of

TAAMS, which we have done.

The TAAMS program on title is being used in four areas of BIA,

and it is being currently evaluated further for the relationship between the Legacy record system and the TAAMS system. And that

over time, the expectation is that the TAAMS title portion can be

used more broadly.

I don’t have a specific timetable, Mr. Chairman, of how long it

is going to take to do that. As I understand it, there are differences

in the way that each BIA region manages its land records and that

that has been part of the problem that led to the, I will say, failure

of TAAMS. What the Department tried to do was take a commercial off-the-shelf system and force it onto the Bureau as a means

of standardizing work. That did not really work in the end, so we

ended up with a 100-percent commercial modified system.

So the issue that we have before us is to recognize that each of

the regions do things slightly differently, take a look at the mechanisms of TAAMS between the current TAAMS system and the Legacy system, and see if we can make those work module by module,

region by region—to do that deliberately. So I don’t have a specific

timeframe, but that is the basic idea about how to approach it.

The CHAIRMAN. Thank you very much.

As I indicated, the committee will be submitting questions for

your consideration, and we will keep the record open for 30 days,

and I hope your responses can come in before then.

Mr. CASON. We would be pleased to do so, Mr. Chairman.

The CHAIRMAN. Mr. Cason, Secretary McCaleb and Trustee

Slonaker, thank you very much.

Mr. CASON. Thank you.

The CHAIRMAN. Senator Dorgan has asked that I extend his regrets that he cannot attend today’s hearing because, as some of you

know, he is chairing the Commerce Committee hearing on Enron’s

collapse. Senator Dorgan wanted to be here to introduce Chairman

Tex Hall of North Dakota and to listen to the testimony of the Department of the Interior and tribal leaders.

So on behalf of Senator Dorgan, his written statement will be included in today’s record.

[Prepared statement of Senator Dorgan appears in appendix.]

The CHAIRMAN. Mr. Chairman Hall, my apologies from Mr. Dorgan.

Our next panel is Tex Hall, chairman of the Three Affiliated

Tribes of the Fort Berthold Reservation, cochairman of the Tribal

Leaders Task Force on Trust Reform. Is Susan Masten here also?

Mr. HALL. No, Mr. Chairman; she had recent surgery and will

not be able to attend today.

The CHAIRMAN. I am sorry to hear that. I hope she is doing better.
42

Mr. HALL. Thank you. I will forward that on to her.

The CHAIRMAN. Chairman Hall, the floor is yours.

STATEMENT OF TEX HALL, CHAIRMAN, THREE AFFILIATED

TRIBES OF THE FORT BERTHOLD RESERVATION, AND CO–

CHAIR, TRIBAL LEADERS TASK FORCE ON TRUST REFORM.

Mr. HALL. Thank you, Mr. Chairman.

Again, my name for the record is Tex Hall, chairman of the

Three Affiliated Tribes of the Fort Berthold Reservation and also

the cochairman, along with Sue Masten, of the National Tribal

Leaders Task Force.

Just a couple of things I wanted to point out, Mr. Chairman, before I begin my formal presentation. I have submitted a written

testimony. But in response to, and you had some very good speakers up here, but in response to Mr. Gray’s testimony, obviously Mr.

Gray has a great amount of expertise, but as tribes represent sovereign nations, we want to make sure that we counter what Mr.

Gray has indicated about the commonlaw standards of a trust versus historical standards of a trust that go back to the 1800’s.

That was reiterated by the comments from Mr. Chambers and

Mr. Endreson. We agree for the most part of that historical relationship, and that trust is all-encompassing based on treaty, statutes, executive orders and so on and so forth. We want to concur

with the two attorneys and want to offer that that is what we

think BITAM does not address that historical trust standard. That

is one of the main points that the Tribal Task Force is really opposed to on that proposal of BITAM. We feel it does not address

that. So I just wanted to say that from the onset, Mr. Chairman.

In terms of the origination of the Task Force, Mr. Chairman, we

really created ourselves by the tribes. The Task Force was created

at a response of BITAM, as we call it. That was in Albuquerque

on December 13. Tribes were very concerned and spent a good deal

of 12 hours on the day before, on December 12, in anticipation for

Secretary Norton coming to Albuquerque. We had just received notice on this mainly in person from Mr. Steven Griles and Assistant

Secretary McCaleb at the annual NCIA convention and meeting in

Spokane on November 29. So this really came as a lightning bolt

to the tribes and we were very alarmed at the complete lack of consultation, the lack of regard to the beneficiaries, to the tribes, and

the IIM accountholders.

As sovereign nations, of course, that is who we have jurisdiction

over, is our land and our people. And we know all too well that this

is important for the past, for today and for the future. And as we

heard today, some people, some government employees will talk

about it has taken a lot of their time. Mr. Chairman, we want to

reiterate as a Task Force of tribal leaders, this is our life. This is

past, this is present, and this is for the future generations. So we

need to be involved and we will take as much time as necessary

to make sure that a plan is drafted that is tribally leader-driven.

And so we, again back to the December 12 and December 13

meeting in anticipation with Secretary Norton, 80 tribes in Albuquerque, Mr. Chairman, by unanimous consent, and it took all of

12 hours the day before the—we call it ‘‘scoping’’ because we do not

feel it was in compliance with Executive Order 13175, and that is
43

that before any kind of a change and any kind of the operational

changes that are being proposed must have full and meaningful

consultation.

So again, this was a lightning bolt and we spent all of the 12

hours and said we need to come up with some principles that we

all agree on so the tribes are in unanimity, that we are unanimous

in our position. And tribes are. And of course, the first principle,

out of the seven that we developed, is that we were opposed to

BITAM.

But also, I want to reiterate, Mr. Chairman, for the record that

tribes do support trust reform. We know all too well our people are

the ones that are going without right now. I would hope that the

Department is looking at some sort of compensation, Mr. Chairman, for those people. It has been 90 days now, that basically their

credit is ruined for many of our IIM accountholders and tribes.

Many tribes have also had to issue their GA checks during that

month of December to get the checks to the poorest of the poor. In

providing those GA checks, many tribes had to do it through their

638 contracts. So my tribe, for example, we had to expend $50,000

out of our 638 contract. We are still waiting for the BIA to refund

our tribe’s $50,000 contribution.

It is promising to hear that some members—some of our tribal

members are getting paid. I know at my tribe at Three Affiliated

there is probably about 150, but of course we have a long ways to

go. There are about 6,000 IIM accountholders. So there are some

members being paid, but again I hope that the committee would

look and work with the Department on some sort of compensation,

Mr. Chairman, for those members who have basically lost their

credit.

The tribes, through its Task Force in working on its principles

want to go back and reiterate some of the comments not only of Mr.

Chambers and Mr. Endreson, but a Professor Charles Wilkinson,

in a determination that all the functions that are all trust. And we

again feel BITAM is very limited, and it actually breaches that

trust because it separates those trust functions.

It also does not address the breaches of the Cobell litigation. You

will hear later on, Mr. Chairman, from—in the next panel, you will

hear from a number of the tribal leaders that have spent a lot of

time and diligence. Tribes are very sophisticated in this matter because they work on these issues every day. You will hear the plans

that they are developing and how it encompasses all of that trust

responsibility.

Mr. Chairman, the Task Force as it was working through Albuquerque, and it worked through all of the eight scoping meetings—

I attended all of the eight scoping meeting—and we feel that a lot

of the time was wasted by the time we got to the February 14 and

the eighth scoping meeting in Portland. It was wasted because

BITAM continued to be placed on the table by the Secretary.

If there is a commitment from the Secretary that she wants to

work with the tribes in the Task Force in specific to come up with

a plan collectively, then those eight scoping meetings would have

been much more productive. In my opinion, Mr. Chairman, they

were not that productive because every meeting in all eight regions

continued to discuss the same proposal, and that was BITAM. And
44

so again, there are four more regions to go, but as long as BITAM

is on the table, that will continue to be a place of and a time of

opposition, and not of constructive work. And meanwhile again, as

we mentioned, the work needs to happen and it is not happening

because the proposal is still on the table.

It leads me to the Shepherdstown meeting, Mr. Chairman, on

February 1–3. It took a great deal of effort to work with the Task

Force. And the Task Force, I should say, is 36 tribal leaders made

up from the 12 regions of the United States. So these are the leadership in Indian country that the tribes have elected to represent

them on this Tribal Task Force. And so it was very hard, and I told

this, quote-unquote, to Secretary Norton in Shepherdstown. I said:

Good afternoon, Madam Secretary. What you have before you is 36 separate sovereign nations that are before you. This is like a tribal United Nations and it is very

hard to get consensus. But the consensus we do have is trust reform, and secondly

a plan must be tribally driven.

And so it was very hard to get all of the 36 tribal leaders there.

For one thing, there was a lot of uncertainty; a lot of lack of confidence in Secretary Norton to really consult with tribes because it

had not happened initially. And so to come to Washington, DC and

to go out to a retreat in Shepherdstown so to speak, to really dialog

was difficult. But we all agreed, unanimously all 36 of us, that we

needed to be at the table because these are our assets, these are

our people, and these are our moneys.

And so with reluctance, all 36 of us went. The other part of the

reluctance was we were not able to take any staff with us. We

could not take, as Mr. Gray indicated, you need systems analysts.

The tribes, all of us, have systems analysts and attorneys and technical people. We were not able to bring those people. However,

some of the tribes that did get a chance to present were able to get

a few of their technicians with them later on, the next day on Saturday, and then finally on Sunday. But for the most part, most of

us had to leave behind our technicians, and we felt that was unfair

because the Department had all of their system analysts and their

experts and their expertise there.

And we thought this was a collective method and a collaborative

way of doing adequate consultation. And we were just disheartened

by that.

So to make a long story short, Mr. Chairman, we went through

the process. We heard from Charles Wilkinson. We heard from a

private banker talking about common law trusts. And then we also

got a chance to present our plans—our nine tribal plans. And we

developed a matrix. And I thought our method of looking at the different plans was much more sophisticated because of the matrix

that we developed.

For example, some of the criteria, Mr. Chairman, in our matrix

we listed the nine plans and we listed criteria. And the first criteria that we listed, we said, does any of these plans protect tribal

self-determination? And again, with BITAM, it does not adhere to

self-determination. And there are some tribes who are doing a wonderful job of managing their own assets. In the House Resources

panel, the Salt River Tribe, for example, from Phoenix, AZ, and the

Salish-Kootenai from Flathead, MT are both managing their own

assets and are doing quite well. BITAM does not do that. So that
45

is the first criteria we wanted to put in our matrix, is does it protect tribal self-determination.

Do any of these plans comply with the treaties and Federal Indian law? Third, these plans should not compromise the broad

trust responsibility. Fourth, would any of these plans set trust

management standards to the highest fiduciary responsibility?

Would they provide for external monitoring? Would they ensure appropriate trust accounting? Would they ensure appropriate management of natural resources? And finally, would they provide for

historical account balance reconciliation?

So in our matrix, we listed those in the left margin and we listed

all nine, and we had a chance to present on Saturday and then on

Sunday.

We were also disappointed, Mr. Chairman, that when we arrived

finally on Friday night, we were told by the Secretary that she

could only spend a short amount of time. We went under the

premise that she was going to spend a whole weekend working

with us collectively to come up with a plan, because there was such

a concern from the Department because of the Cobell litigation that

we had to get moving, we had to be working on a plan ASAP.

And so with all of that, we were very disappointed that she basically had supper with us and talked to us a little bit, made some

comments about what she thought should be developed over the

weekend. And we agreed with that. And part of that whole thing

was to start beginning a trust relationship. The 36 members of the

Tribal Task Force, we thought well, what better way than to begin

a trust relationship with the trustee. And so we all agreed, let’s

stay and let’s work through this.

Finally, she on Sunday, February 3, the Secretary came back in

late afternoon around 3–3:30 p.m. somewhere thereabouts. And the

tribes had an opportunity to present a shortened version of their

plans, just to demonstrate to the Secretary all of the criteria, all

of the standards that the tribes wanted included in that matrix.

And we also indicated as a Task Force that not only will be review

nine of the tribal proposals, but it is open for any other tribal proposal. But we also are including in this matrix an examination of

the IIM account receivership motion that is before the judge, and

also BITAM itself. So we were putting actually all of these 11 plans

in the matrix and we are working toward that.

And we put a contract with the Secretary and Mr. McCaleb as

Assistant Secretary. We put a contract proposal because the tribes

felt that it is important that the tribes get the consent and the consultation with the entire Indian country, with all of the 569 tribes.

We felt that is how important it is, because everybody is separate,

everybody is sovereign, and we needed to get that consent. We

wanted to have this contract, and most of this contract, Mr. Chairman, about 75 percent of it was just for travel alone. And then the

other part of the contract was for dissemination of information and

communication. We wanted to make sure it was tribally driven so

that the tribes had control of, or at least a partnership in the agenda, and that it would not be provided by the Government, and then

of course that falls under the Federal Act, and that means that it

is not tribally driven. We did not want that to happen.
46

Unfortunately, we have not had any resolution to that contract

yet. And so our next meeting on March 8 and 9, again of course

the Department is scheduling that meeting and of course we know

with their computer shut-down, there is a lack of information that

can go out, and it is difficult and it is trying. Of course, through

NCIA, we have the database that can provide exactly that.

So we left Shepherdstown on Sunday evening February 3 with

fairly good thoughts, as the Secretary was starting to I think nod

her head and started to think that—we started to get a feeling as

a Task Force because she spoke to all of us personally and asked

for comments, asked for suggestions. And I thought that we had

started to get the feeling she was starting to understand her role

as a trustee, and starting to understand the magnitude of the issue

and how that in historical trust law that it is all-encompassing and

that tribes and individual IM accountholders needed to be a part

of it. And so we shook hands and left.

Forty-eight hours later in her testimony on February 6 in the

House Resources Committee—I personally testified, as well as

many of the tribal leadership—Jonathan Windy Boy of Council

Large Land-Based Tribes; Ivan Makil, president of the Salt River

Maricopa Tribe; and Fred Matt, Salish-Kootenai and others. So we

thought that this was a great opportunity because we just left a

very good retreat until we heard the Secretary’s testimony.

Two things of the testimony were very disheartening, Mr. Chairman. Of course, one of them was the testimony, quote-unquote,

said that although the tribes are developing their plans and we are

working with them, she felt BITAM, her plan, was far superior.

And it was disheartening after working hard as tribal leadership,

first of all, to go into the meeting and then to spend 30 hours working Friday evening, Saturday and all day Sunday in a collective,

collaborative manner to have the Secretary read that testimony

was very disheartening. I really think it set us back even further.

And then the other part of the testimony that was disheartening,

Mr. Chairman, was the part of, one of the congressmen asked her

about her role, and of how in her role why she just submitted

BITAM without the consultation of Indian tribes. And she said, of

course, because of the Cobell litigation, but mainly because of her

role as a manager that she felt that she needed to do that. And

again, Mr. Chairman, we all know, as Indian country, and you, Mr.

Chairman, I know agree that the role of the Secretary is a trustee

to protect the Indian and individual Indian account lands and natural resources.

And so we think that the Secretary perhaps has confused her

role in her testimony. And I have not seen her—we have not seen

as a Tribal Task Force a retraction from that. And again, it has

kind of put the tribes back a little bit because of the February 6

testimony. I was hoping she would testify here today, so that she

could have said that in front of the committee and on the record,

Mr. Chairman.

The Task Force is still open, and I appreciate the comments from

Mr. Cason and Mr. McCaleb and Mr. Slonaker about they are still

open and want to work with us. But I believe, Mr. Chairman, in

all honesty, there is some reluctance now because of the testimony

on February 6. I believe there has to be a retraction from Secretary
47

Norton. And I think we all make mistakes at times, and I think

if it was just to say that I made a mistake; I know my role. It is

the trustee and I am committed to working with the Task Force

and I am committed to working with a plan collectively with you.

And I think the tribes would come back to the table. It might take

a lot of work to do that again, Mr. Chairman, but I think we can

do that. That is the commitment of the Task Force, the National

Tribal Leaders Task Force, Mr. Chairman, because I want to reiterate again this is not a part-time job for us. This is not something

that we’re dismayed if we work 60 hours or have to work 30 hours

on a Friday and Saturday and Sunday in a retreat. This is our life,

and we are settling historically back to, of course, back into the

1800’s, and we are trying to settle forward once and for all.

And you will see in the next panel again, Mr. Chairman, tribes

are committed. They are sophisticated. They know the historical

trust law better than anybody. To go on without including the Tribal Task Force would be a major mistake.

We want to commend the committee for the stopping of the reprogramming. I know Senator Johnson was very critical in that;

Senator Daschle—I have seen letters from both of them, Mr. Chairman, that had talked about the reprogramming. Before any reprogramming would go on of the $300 million that was proposed

that there be adequate and meaningful consultation. And I would

offer that again to you, Mr. Chairman, that that committee that action for any future.

Again, we were dismayed that the President’s budget of, I think it is around $83 million, again did not include tribal consultation.

In determining that budget, I really think that is a low figure,

though, Mr. Chairman. I think it is much higher, but again there

is really no plan that is fleshed out. We have done a lot of work

and I think we are getting a lot further there, but it has got to be

a collection. The Department must work with us.

We also agree that ultimately Congress is the ultimate trustee.

If the Department does not want to work with us, I think it is a

relationship that we want to go to Congress, and the Task Force

is committed to do whatever it takes to get true and meaningful

trust reform that has a tribally driven plan.

And with that, Mr. Chairman, I would be happy to answer any

questions in any regard on the Task Force or otherwise.

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

The CHAIRMAN. Thank you very much, Chairman Hall.

You were here when the Associate Deputy Secretary, Mr. Cason,

testified. In his testimony, he made a commitment, and I believe

on behalf of the Secretary, that the Department will be open-minded and flexible, and that the BITAM proposal is one proposal on

the table. Would that suffice?

Mr. HALL. That is a very good question, Mr. Chairman. I would

have to honestly say there would be some reluctance on the Task

Force because of the comments from the Secretary, who is Mr.

Cason’s boss. The Secretary’s comments are on the record and she

has not retracted that.

I would say in all honesty there would be some reluctance.

However, the Task Force is optimistic if there was some kind of

a letter or some kind of a communication to say, I am committed
48

to working with the Task Force; I am committed to—and if I said

that my plan is superior, I take it back and I want to work with

all of the plans.

We don’t want—even in our nine tribal plans—we don’t want to

say, this tribe’s plan is better than this tribe, until we have conducted our work with the matrix, Mr. Chairman. And the same

with BITAM. That is part of that matrix.

And so I would say that there is some reluctance, but we are still

open as well.

The CHAIRMAN. Do you believe that you are at this moment in

a negotiating posture with the Department?

Mr. HALL. For the alternative plans?

The CHAIRMAN. Yes.

Mr. HALL. When we left February 3, Shepherdstown, Mr. Chairman, we were very optimistic. When we went in, we were reluctant

to cautiously optimistic. When we left we were a lot more optimistic. After February 6, it went back to I think reluctance. The Tribal

Task Force is still open, but I think until that commitment from

the Secretary comes, there is going to be some reluctance. I think

it is important that the Secretary come back and meet with the

Task Force.

I think if the Secretary was to do that either on or before March

8 and 9, which is our next scheduled Task Force meeting in Phoenix, Arizona, the tribes are ready to roll up their sleeves and work

all weekend again, another 30 hours in just a little over two days,

because we are going to caucus on the 7th again, because we feel

that we need to devote that amount of time and we need a contract

as well in order to get our technicians, to get that expertise, to be

able to negotiate fully government-to-government. And so again, I

think there is reluctance, but I think that in terms of the negotiations, it is kind of stalled since February 6.

But again, if the Secretary would come back—she herself I believe has to do that, Mr. Chairman. She has to come back and do

it herself. I think we can take off again.

The CHAIRMAN. Chairman Hall, obviously I cannot speak for the

Secretary, and I am not authorized to do so. But isn’t it possible

that the Secretary’s presentation on February 6 was part of the negotiation? When one negotiates, you put your best foot forward, and

obviously not admit weakness. Isn’t that correct?

Mr. HALL. You are absolutely correct, Mr. Chairman. One of my

points that I have made in my testimony is I think that her proposal breaches that trust responsibility and it is a legal question.

And I think the Secretary and her staff have to go back to where

it began, and that is the historical Indian trust law. We feel that

if she does, she will see that her plan breaches that and it also does

not address the breaches of Cobell. It only barely gets to where it

is not even encompassing as I think the tribal plans do. And I

think then she would recognize, get it off the table, and let’s get

all the proposals together and develop criteria and standards so we

can come up with a plan collectively, or a couple of plans.

The CHAIRMAN. Mr. Cason, may I ask a question of you? Would

I be correct in stating that your commitment to be open-minded

and flexible is the Secretary’s commitment?
49

Mr. CASON. That is my understanding, Mr. Chairman. We are

open to all proposals, and the spectrum is very wide as to what one

could suggest all the way from one end of the spectrum of we could

patent all the property to the tribes and individuals and disseminate the trust fund to the rightful beneficiaries, all the way to the

other end of having an organization outside the Department of the

Interior where all of these functions are packaged up and sent to

another organization. And proposals that we looked at were principally proposals within the Department of the Interior and how we

would organize to do the job, assuming that it stayed within the

Department.

So we are open to suggestion, and if there is a better proposal

on how to manage these processes, we would like to have that. And

hopefully, we find something that is better than BITAM. And we

would very much like to be in a position where the Department

and the beneficiaries, both tribes and individuals, would agree

upon how we would do this job, frankly because it is a lot easier

to do the job if everybody is on the same page.

So we are open and I am sure the Secretary is open. The phrasing in the hearing that Mr. Hall talks about certainly can be interpreted to be a difficulty, but I don’t think it was meant to be that

way. And Mr. Chairman, I think you made a good point that that

is the proposal we put out. It is a proposal that we felt is an appropriate one, but it is not the only one and we are looking for other

options.

The CHAIRMAN. Mr. McCaleb, can I ask a question of you? Do

you concur with Mr. Cason that the commitment of open-mindedness and flexibility expresses the Secretary’s commitment?

Mr. MCCALEB. Yes, Mr. Chairman; I would like the privilege of

reading an excerpt from an editorial that was published yesterday

in the Indian country Today authored by Secretary Norton. I am

not going to read the whole thing, but I will read one short paragraph:

I am optimistic that together we can agree on a reorganization——

Meaning the Task Force.

That we can agree on a reorganization plan that will enable us to address the

major longstanding issues in trust reform. These issues are not new either to American Indian communities or to Interior officials. As trustee, the Department is responsible.

The important sentence is her commitment and her optimism

about reaching a reorganization plan in concert with the Task

Force.

The CHAIRMAN. Thank you very much, Mr. Secretary.

Chairman Hall, would that suffice?

Mr. HALL. Mr. Chairman, I appreciate the comments. I have a

question, though, and maybe they can answer.

The CHAIRMAN. Fair enough.

Mr. HALL. The EDS proposal—is the EDS proposal contracted

out—further contracted out? And the reason I ask that of the Department, Mr. Chairman, is that in our meeting in Shepherdstown,

the Department was contemplating an additional contract. Of

course, EDS just finished a report on January 24 which was barely

seen at that time. But there was another contract to implement the

business model, and that was to implement a plan into the busi-
50

ness model. My understanding, Mr. Chairman, it was a $7.3-million contemplated contract.

We as a Task Force said now wait 1 minute now. You can’t put BITAM into this business model and spend $7.3 million until we

come up with a plan that we all agree on. Because the tribes, we

just now are presenting our nine plans. So my question to the Department, Mr. Chairman, is have you signed a contract to continue

at a $7.3-million without allowing the tribes to come up with a plan

and the Department collectively?

The CHAIRMAN. Secretary McCaleb can you respond to that? Or

Mr. Cason, can you respond?

Mr. CASON. Mr. Chairman, we did enter into a new contract with

EDS. If I can take you back just a little bit to give context, the Special Trustee mentioned in his testimony that the Department had

hired EDS to come in and take a look at the Department’s status

of trust reform and trust assets management. It started off with a

review of the TAAMS system and the BIA data cleanup sub-project

that we had. Then we expended the scope to look at all of the trust

reform sub-projects that we are operating in. The EDS has given

its report to the Department, and one of the recommendations of

the EDS report was to evaluate the current business processes

being used by BIA to support its trust responsibilities or to fulfill

its trust responsibilities.

The contract that the Department entered to do that is on the

order of $2.5 million, as opposed to $7 million. So I think that is

just a communication problem between the parties here. It is in the

order of $2.5 million, and our intention in having EDS do the business processes is to involve the Tribal Task Force representatives

in that process to provide guidance to EDS as to who they should

talk to in the tribal community. We have asked EDS to discuss

their project with the leaders in the Tribal Task Force, as well as

a number of other leaders in the Indian community.

The timeline in getting it done has not worked perfectly because

we did enter the contract to get EDS working on it prior to getting

a sub-team of the Task Force to take a look at the contract itself.

But our intention is still basically the same—to have EDS look at

the business processes and to involve tribal leaders in helping us

evaluate what those business processes are, so that we know clearly what work is being done and how it is being done, and see if

we can come up with better ways with our beneficiaries, the tribal

leaders, in how to do the work in the future.

The CHAIRMAN. Chairman Hall, does that suffice?

Mr. HALL. Not really, Mr. Chairman, with all due respect. I

think this negotiation is a one-way street. We have not talked to

EDS. We have not been consulted about that, and just only at the

retreat in Shepherdstown we met EDS and they gave a presentation about the January 24 final report document. But again, we

talked about the new contract, the $2.5 million. It was $7.3 million

that was contemplated. They must have scaled it down, Mr. Chairman, to $2.5 million. So they scaled it down only to look at the

business principles. But again, no matter what, if this negotiation

or consultation is a two-way street, we have not been involved and

been a party to that. And we are still waiting for a contract to be

able to fund the Task Force. We still haven’t got an answer on
51

that, and that has been almost a month now. We have lost a

month, and we keep I guess reading newspaper articles or hearing

that we are looking at real consultation, but we are still waiting

for it.

The CHAIRMAN. Would a letter from the Secretary suffice?

Mr. HALL. I think that would be very helpful, Mr. Chairman, if

we had a letter from the Secretary and her commitment to fund

and to work with the Task Force on coming up with a plan that

is in consultation and collaboration acceptable to the tribes. I think

then the tribes would—again, we would have to work hard again

just like we did in Shepherdstown. There is going to be some reluctance, but I think that letter is critical for the success of the Task

Force and the Secretary and her staff to continue.

The CHAIRMAN. Mr. Cason, don’t you think that a letter of what

you just said can be suggested by you to the Secretary?

Mr. CASON. I would be happy to make a suggestion to the Secretary that we prepare a letter back to the Tribal Task Force regarding our intentions to work with the Tribal Task Force, both on

a reorganization proposal and on the EDS contract. We would be

happy to do that, or I would be happy to that with the Secretary.

The CHAIRMAN. Thank you very much, Mr. Cason.

Mr. CASON. Thank you.

The CHAIRMAN. I hope that we can all get back to work again.

Mr. CASON. We would be very interested in that, Mr. Chairman.

The CHAIRMAN. Chairman Hall, I thank you very much. It was

not my intention to be a mediator, but I felt that things have to

move along. [Laughter.]

Mr. HALL. Thank you very much, Mr. Chairman, again for your

commitment to working with Indian tribes in Indian country.

The CHAIRMAN. I will do my best, sir.

And now the final panel, the chairman of the Hoopa Valley Tribal Council, Clifford Lyle Marshall; executive board member of the

Intertribal Timber Council of Portland, OR, Gary Morishima; the

executive director of the United South and Eastern Tribes of Nashville, TN, James T. Martin; the president of the General Council

of Tlingit and Haida Indian Tribes of Alaska, Edward K. Thomas;

and the principal chief of the Osage Nation, Charles O. Tillman, Jr.

Chairman Marshall.

STATEMENT OF CLIFFORD LYLE MARSHALL, CHAIRMAN,

HOOPA VALLEY TRIBAL COUNCIL

Mr. MARSHALL. Thank you, Mr. Chairman, members of the committee.

My name is Clifford Lyle Marshall, and I am the chairman of the

Hoopa Valley Tribe of California. I appreciate this opportunity to

testify in opposition to Secretary Norton’s BITAM proposal, and request the committee persuade Secretary Norton to seriously consider alternatives to BITAM, some of which you will hear today.

Let me backup for 1 minute, because the last testimony is disconcerting to me. I have attended a number of the consultations.

The consultations were called, they were published after a publication in the Federal Register, and we received this press release. My

first question to anybody who is here, is has anybody seen the

BITAM plan other than this 2-page press release and 1-page flow
52

chart? That is what the tribes have been asked to comment on in

the last 3 months.

The substance of BITAM is something that we have not seen and

we do not know. In the consultations that I have attended, starting

in Albuquerque—excuse me, starting in Spokane, which was called

the informal consultation, the National Congress of American Indians in Spokane, of which Chairman Hall is the President of, voted

unanimously, with 193 tribes rejecting the BITAM proposal and

asking that the Secretary withdraw it and work with the tribes to

develop a new proposal. The first formal hearing was in Albuquerque—again, 80 tribes to a tribal leader testified before the Secretary in opposition to the plan and ask that she withdraw it so

that we could work together to develop a trust reform proposal together. Every consultation has been the same and every tribal

leader, to a man, has unanimously stood up and said:

We oppose the BITAM proposal. Will you please withdraw it so that we can start

with a clean slate and begin to develop a trust reform plan.

I am fortunate today that I am being allowed to testify, but this

room is full of tribal leaders. Each one of them has testified at a

consultation within their region across this country, and they have

stood up and said:

Withdraw the BITAM proposal so that we can sit down and work together to develop a new plan.

I cannot, as a representative of my tribe or as a representative

on the Task Force or the Self-Governance Advisory Committee, nor

can any member of that Task Force change the charge, the direction that their region or organization has given them. And every

region has unanimously opposed BITAM. To ask us to come back

and sit down and say that is an option on the table is something

that I cannot do. And I don’t believe that Mr. Hall or any other

member of the Task Force can make that concession without going

back first to the tribal leaders that have already rejected the proposal.

We implore the Senate committee—I implore on behalf of my

tribe to reject the Secretary of Interior’s proposal to create a new

agency within the Department known as BITAM, and to stop the

reprogramming and appropriation of funds for the development of

this new agency.

BITAM, in my opinion, will undermine and undo 27 years of progressive Federal Indian policy that has been developed to create

the opportunity for self-determination and self-governance. It circumvents the laws of Congress. In the first instance, BITAM is a

plan that is not in compliance with the American Indian Trust

Fund Management Reform Act of 1994. That Act was enacted, Congress passed, you are all a part of and well aware of it, that created

the Office of Special Trustee to address the issues of mismanagement of trust funds. It is called the Trust Fund Management Reform Act, not the Trust Asset Management Reform Act, not the

Management of All Natural Resources, All Lands on the Reservation, or All Programs.

That Act required that the Special Trustee—it still calls for it—

that the Special Trustee develop a comprehensive strategic plan to

be brought back to the House Committee on Natural Resources and

the Senate Committee on Indian Affairs for your review and ap-
53

proval. That plan is supposed to be comprehensive and strategic

and set forth the express duties of the Secretary of Interior on behalf of Indians. We are still waiting for that plan.

But in spite of not receiving a plan, we see an implementation

of a plan that is not being presented. And we are fearful of that

because we don’t believe that it is in our best interest. When this

plan was first proposed to us in November, before the press release

came out, it was announced the same day that the press release

came out in a self-governance conference on the Quinault Indian

Nation in Washington State. And it was presented this way, and

I appreciate that the rhetoric has changed, but it was presented

this way: There is an inherent conflict between sovereignty and

trust responsibility, and therefore we must reestablish trust control

over all trust assets.

What did that mean, we asked. Does that mean trust funds, not

trust resources? Natural resources? They said, we think it means

everything.

The audience that it was being presented to were the self-governing tribes in this country that have compacted to manage trust assets. And since 1988, my tribe and the tribes that were present at

that conference have managed not only adequately, but exceptionally, on limited funding and resources, in my opinion.

We can talk about the past and we can talk about the mismanagement of the Bureau. No one knows that better than the Indian Nations. But when the opportunity came in 1975, and that is

25 years of this country’s history—it is a blip in time. And up until

that time, the Bureau managed everything. I was barely graduated

from high school at that time.

The opportunity came for tribes to reclaim their right to determine their own future and manage their own lands and develop

their own economies and teach their children. And they contracted.

They seized the opportunity. Many tribes did not. Many tribes did.

And they have created success—not to their mismanagement. They

have managed the programs. They have run the programs—the

programs that were designed by the Bureau. But in 10 years time,

the tribes who were being successful outgrew that. They realized

that the next step was design their own programs, and that is

where self-governance came from. And the tribes then entered into

a negotiation and the term ‘‘government-to-government relationship’’ emerged. And they began to plan not only the management

of reservations, but the regulation of reservations, resources, land,

property, programs and people.

Those have been success stories of the last 25 years, and I believe that I am preaching to the choir because you have played

such a dramatic role in seeing that progressing take place. You

have helped Indian people move forward educationally, economically, governmentally in developing their lands, their resources, the

governments and their programs.

This is a taking back. This is a taking back. We must manage

our own resources, because the BIA is getting sued by Cobell, but

this plan does not address the breaches in Cobell. There are insidious aspects to this plan that tribes are very fearful of, and that

is the impact on laws that Congress has passed pertaining to the

BIA. Because this won’t be the BIA. It will be a new Federal agen-
54

cy. And so in the Indian Reorganization Act, the requirement of Indian preference of hiring of Indians who work within the Indian

Office, which is the BIA, will be given preference if they are qualified. Moving it out eliminates that requirement.

The whole process of contracting and compacting under the Self– Determination Act and the self-government program is premised on

Section 458—I think it is double–A—that says you can contract

BIA programs under the Snyder Act, the Indian Reorganization

Act, the Indian Health Service Act and other programs outside of

DOI. By moving them into another agency within the Bureau, it is

questionable that the tribes will still be able to contract and compact those trust functions.

And the scariest thing about this proposal is that it was proposed

that it would draw a bright line between trust and non-trust functions. And the question was, what is a non-trust function? And

they said well, trust is trust assets, trust resources, the money in

the resources, and the land. Non-trusts are things like education,

health care, social services, Indian child welfare, housing.

Well, you have heard today from learned scholars who will tell

you that everything that the Bureau does is trust. And the problem

in dividing this department into two—it does not create a clear line

of authority. It creates two lines. And so if I want to build a house

on my reservation and I have a tribal program for credit, and I

have a HUD housing program, and I need to build a road, and so

I need a title search. I need an appraisal. I need easements. I need

right-of-ways. This proposal moves realty and appraisals to another

agency. And so the difficulty is doubled in doing those projects because you have to then go through two separate agencies.

The other problem that we see with this program is the process

of compacting and contracting is moved to the new agency of BIA

programs. I know of no where else where that exists—where one

agency contracts the programs or the functions of another agency.

Those are the things that are scary in the BITAM proposal and

I cannot accept it.

However, under self-determination, those principles, those concepts—self-determination and self-governance—tribes can fix and

address their own problems. You have heard today of 11 proposals.

My tribe, my staff sat down, because it has always been said to the

Indians, well, this is what was said to us in Albuquerque—we don’t

have any other proposal; we’ve got to go with the one we’ve got.

We presented new proposals. There are very many similarities in

the proposals that we have presented. There is much among us

that is of like mind. We see a direct line of authority that can be

established within the BIA for the management of natural resources and the management of income from those resources. We

believe that the management of the income from those resources

can be done within a trust fund management program or OTFM.

I think the key difference that we have in our proposals is where

the standards should be set for management of resources. Our

greatest fear is that the standards are going to be set somewhere

else. A comment was made today about leasing property. When do

you lease it? If a trustee’s sole interest is earning income, you lease

it whenever you can. If an Indian person’s interest is more than

just income, then you don’t always lease it whenever you can. You
55

don’t always log a forest whenever you can for maximized profit.

There are places that we say are sacred. There are places we say

we don’t use. There are places where we say we go to gather food,

medicine. There are places where we say we have to protect for

habitat.

And we set those standards for ourself, our own life, our own

quality of life. We set the standards. We believe that it is our right

as sovereign nations. Creating a Federal agency to set standards

and then manage our resources for our benefit as a common law

trust, rather than a special trust relationship within the parameters of the trust relationship with the United States and tribes

takes away our authority to govern. It circumvents our jurisdiction.

We are very fearful of BITAM. We cannot allow it stay on the

table as it is written. And we implore this committee, the members

of this committee to ask the Secretary to withdraw it in good faith

and sit down at a table in good faith and start from the beginning.

We were told in Albuquerque that the train had already left the

station and our only option was to jump on and go with this proposal. I am asking this committee to ask them to bring the train

back to the station.

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

The CHAIRMAN. Thank you very much, Mr. Chairman.

I have been advised by staff that the panel has been asked to

present your proposals.

Mr. MARSHALL. I have a really good one. I am sorry I did not

have a chance to present it.

The CHAIRMAN. I would like to advise you that I have other responsibilities, and lunch is not one of them. I can forego that. But

I am due at another meeting at this time, but I will just hold on

for a while.

Before I proceed, may I ask a question of Mr. Cason again?

Chairman Marshall has made a charge, a rather serious one,

that all they have received is a 1-page press release on BITAM. Is

that correct?

Mr. MARSHALL. It is 2-pages.

The CHAIRMAN. Two pages. Is that the proposal that was presented to the Indian Nations?

Mr. CASON. Mr. Chairman, as I commented before, BITAM is no

more than a conceptual framework at this point. We recognized

early in the process that we needed to go through consultation and

that we did not take the BITAM proposal down to specifics of what

offices there would be, how we would subdivide that organization,

what individuals would move into BITAM and what individuals

would stay where they were in BIA or in OST. We did not do any

of that. We basically just got to a conceptual framework that said,

this seems like an interesting concept, a way to approach the problem, and we started consultation at the concept stage.

So it is true there isn’t a lot of details on BITAM, and we did

not go through the process of laying out in great specificity exactly

how BITAM would work because we approached it from the standpoint that in the consultation process we would get a lot of advice

on how to go through that. So there are not a lot of details about

BITAM.

The CHAIRMAN. Thank you very much, Mr. Cason.
56

Mr. CASON. You are welcome.

The CHAIRMAN. May I now call upon Mr. Morishima.

STATEMENT OF GARY MORISHIMA, EXECUTIVE BOARD

MEMBER, INTERTRIBAL TIMBER COUNCIL

Mr. MORISHIMA. Thank you, Mr. Chairman.

My name is Gary Morishima. It is my pleasure to appear before

you today. I am here on behalf of the Intertribal Timber Council

at the request of our President Nolan Colegrove to present our suggested approach for accountability in trust reform.

In a nutshell, three concepts lie at the core of our proposal. The

first is an independent, presidentially appointed American Indian

Trust Oversight Commission. The Commission would be comprised

of individuals nominated by tribal governments and experts in fiscal and resource management, with ex officio representation from

the Interior Department.

It would have four primary functions. The first would be to develop a strategic plan and performance standards for trust reform.

The second would be to formally certify the functionality and accountability of trust fund management and reporting systems. The

third function would be to evaluate issues and management performance on both topical and reservation-specific levels. And the

last function would involve reporting.

The topical investigations would be selected from suggestions

provided by tribal governments and individuals. Performance

would be evaluated against a set of fundamental criteria for management of trust resources. Reservation-specific studies would compare management against standards and criteria that are embodied in the values that are reflected in tribally developed and departmentally approved management plans. And lastly, the reporting function provides for periodic information to be provided to the

Secretary, the beneficiaries of the trust and to the Congress on the

progress of trust reform.

There is ample proof that the Department of the Interior is incapable of providing adequate oversight for its own efforts as trustee. The independence of the Commission is critical to both credibility and accountability. We understand full well that legislation will

be required to establish the Commission and provide the necessary

powers and authorities to the Commission, while protecting the

beneficiaries of the trust from public access to private and sensitive

information.

The second concept involved in the Intertribal Timber Council

proposal is the temporary centralization of responsibility for the development of fiscal accounting systems within the Office of the Special Trustee. A single entity must be vested with necessary authority and responsibility for implementing the strategic plan for developing and deploying fiscal management systems to ensure accountability. But once these fiscal management systems are certified by

the Commission, operational responsibility would be transferred

back to the BIA. The Office of the Special Trustee would then sunset as envisioned by the American Indian Trust Fund Management

Reform Act of 1994.

The last concept of the ITC proposal is to retain ultimate responsibility for management of trust fund accounting, trust resource
57

management and the delivery of trust services to tribal communities within the BIA. It is at the BIA regional agency office level

that working relationships are largely maintained between the Department of the Interior and tribal governments. This is where the

unique circumstances of individual tribes, their treaties, applicable

executive orders, statutes and case law are accommodated. By retaining the BIA tribal interface, transaction costs of Federal trust

administration can be minimized and tribal governments will have

the maximum flexibility to meet the needs of their own communities as they elect to exercise self-determination by designing and

operating their own programs.

The Commission would provide continuing evaluation and oversight for both BIA and tribal programs by conducting periodic audits to ensure that performance continues to meet operational

standards.

We fully appreciate that our proposal for trust reform is only one

among many. Over the course of the past few weeks, several worthy ideas have come forward from the tribal community as viable

alternatives to BITAM and undoubtedly more will be forthcoming

in the future. But the process for addressing trust reform must not

be permitted to become trivialized as an exercise to promote divisiveness within the tribal community, or as an exercise of shuffling

boxes around in organization charts.

The goal of trust reform must be accountability. To do that, we

must focus on requirements—the what, the why, the how and the

when of trust reform, not the who.

Tribal approaches to trust reform consistently share a common

characteristic that prominently distinguishes them from BITAM:

The focus on maintaining legal, political relationships between tribal governments and the United States. Over the past few weeks,

I have read with dismay media accounts of the contempt trial in

the Cobell case, where Secretary Norton and Judge Lambert are

seemingly lamenting in unison that the tribes just don’t get it with

regard to the needs of trust reform. It should come as no surprise

that tribes have vehemently and adamantly opposed BITAM. Besides the consultation issue, the conceptual nature of that plan

itself makes it prone to conjecture and speculation, so nobody really

knows what BITAM is or what it is intended to do.

But with all due respect, I contend that it is the judge and the

Secretary who fail to get it, because they seem oblivious to the important distinction that commonlaw trust duties to individuals does

not encompass the full scope of trust obligations of the United

States toward Indian tribes under Indian trust law. By submitting

thoughtful proposals of their own, tribes have clearly demonstrated

that they are not opposed to trust reform per se. They have been

clamoring for it for decades. But rather, they are opposed to any

form of trust reform which threatens to undermine or destroy their

unique government-to-government relationships with the United

States.

It is useful to remind ourselves that the Interior Department’s

current inability to properly administer the trust is of the Federal

Government’s own making. Congress and the Administration have

never provided the funding necessary for the Department to fulfill

its responsibilities for managing the Indian estate. Indeed, the very
58

origins of the accounting mess involving individual Indian money

accounts lie in the passage of the Dawes Act over 100 years ago.

And since the Dawes Act, the trust responsibility has been extended to both individuals and the tribes. But with each passing

generation, the difficulty of managing the resources and income

generated from those allotments has become increasingly worse as

the number of undivided trust, fee, tribal and individual property

interests has escalated. Unless and until an effective solution is

found to the Indian inheritance problem, the magnitude of the

challenge confronting trust reform will continue to expand exponentially.

Having worked with Indian tribes for more than 30 years, I have

learned many lessons. Principal among them to be always cognizant of history and to view major initiatives such as trust reform

with somewhat of a jaundiced view. It is difficult to escape the disturbing parallels between allotment and current efforts related to

trust reform. I cannot help but wonder if the Administration’s paternalistic attempt to impose BITAM upon tribes for their own

good may become transformed into a subtle, insidious reincarnation

of the Dawes Act. Through this legislation, the United States

sought to dismember tribal communities by breaking up reservations and allotting lands to individuals. There is a danger that the

trust responsibility owed the tribal governments may likewise become a casualty of the Interior Department’s seemingly singleminded focus on applying principles of common law trust to provide

proper accounting services for individuals, while ignoring tenets of

Indian trust law.

Will trust reform, with its emphasis on fulfilling fiduciary obligations to individuals, prove to be the means through which the

United States attempts to absolve itself of the duties and obligations owed to Indian tribes? We hope not. This disturbing specter

can be readily vanquished by ensuring that Indian tribes have a

substantial role in trust reform, now and in the future. Long-lasting and effective solutions to the problems confronting the BIA’s

administration of its trust responsibilities must be developed collaboratively with tribal beneficiaries of the trust.

The Task Force, which includes tribal and Interior participants

and which has the capacity to draw upon support and outside expertise as needed, presents a rare and a valuable opportunity for

methodical evaluation and reform of the Federal trust. It is vitally

important that this opportunity not be squandered. The Task Force

must be given the chance to do its job, allowing leadership from the

tribal community and the Interior Department to work together to

craft a mutually acceptable and effective approach to accomplish

true trust reform.

The central message I wish to leave the committee with today is

that trust reform is serious stuff. A great deal of money is involved,

to be sure, but at its heart the issues go to the capacity of the

United States to properly discharge its fiduciary obligations within

an evolving unique government-to-government relationship with

Indian tribes. Trust reform must be a commitment, akin to a covenant, to ensure accountability in the management of trust funds

and in the programs that manage trust resources and provide trust

services. It must be built piece by piece in accordance with a
59

thoughtfully developed strategic plan and measurable performance

standards which are developed in concert by the Trustee and the

beneficiaries of the trust.

Mr. Chairman, that concludes my testimony. Thank you for the

opportunity to appear before your committee. We are pleased to be

involved in the deliberations on trust reform, and we hope that we

can constructively contribute to the deliberations before us.

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

The CHAIRMAN. I thank you very much, Mr. Morishima.

And now may I call upon Mr. James T. Martin.

STATEMENT OF JAMES T. MARTIN, EXECUTIVE DIRECTOR,

UNITED SOUTH AND EASTERN TRIBES

Mr. JAMES T. MARTIN. Thank you, Senator Inouye.

It is a pleasure again to be before this distinguished body to provide testimony on such an important matter to Indian country.

I am an enrolled member of the Poarch Band of Creek Indians.

I also serve as executive director of United South and Eastern

Tribes. As such, I have been afforded the opportunity to represent

my tribes on the Trust Reform Task Force.

A few minutes ago was a perfect example of why I personally

wanted to come before this committee to testify this afternoon. It

is vitally important that this committee, the entire Congress, the

true trustee, to get involved in this situation. Call it mediation?

Call it strong-arm tactics? Whatever we call it, we have got to get

something done.

I have sat patiently listening to all of the speakers beforehand,

and I will attempt to, out of respect for you, sir, to go directly to

our proposal. Our tribes took the Secretary at her word. BITAM,

if you don’t like it, show us something better. I believe USET

brings forward a proposal that does do it better. I believe the USET

proposal addresses the concepts that are the full breaches in the

Cobell case. Our proposal calls for minimal standards to be set to

protect trust assets. I believe in setting minimum standards not

only can you protect the assets, but you can work with tribes on

a government-to-government relationship to maximize the asset.

But you can maximize that asset in a balanced with that tribe’s

concerns for the environment, for sacred sites, for the future generations—not simply a monetary improvement.

One of the things that is unanimous as I have sat through the

collaboration, the consultation, the scoping meetings is that the

tribes, the Congress, the Department of the Interior are all committed to the fact that they know trust reform has to come about. It

is simply how are we going to do it. The Secretary says take all

of the trust functions and move them out of the current BIA and

set up a new bureaucracy—I believe in direct contradiction to the

Indian Self-Determination Act. But even the Administration, the

Republican management plan for downsizing of the Federal Government, it would in a sense create a new bureaucracy. It will fundamentally change the scope as we understand the BIA to be currently today.

I believe that the functions are total trust functions—examples

from the chairman and the previous speakers; that the trust functions are so interrelated at the local level, if we attempt to seg-
60

regate them out and put one somewhere else and one over here,

both will be diminished, irreparable harm will be done to both of

them.

I have submitted written testimony for the record. A lot of my

written testimony reiterates the things that have already been spoken today. I then would turn our attention to what does the USET

proposal provide. The USET proposal would consolidate tribal functions under an executive supervision of a Commissioner for Tribal

Trust Asset Management. The Commissioner would serve in the

Office of the Assistant Secretary and be guided by a tribal advisory

board consisting of tribally designated representatives.

Our proposal is a proposal that would be beneficiary-driven. If

you want to do it right, ask the people who it is going to affect.

Let those people that it is going to affect be a part of the decisionmaking process of the systems, of the controls, the personnel, hardware, software, that you are going to put in place to provide assistance to those beneficiaries. That is vitally important.

The USET proposal, however, separates the duties. Through the

consultation process, we have heard the Department of the Interior

talk about a bright light, a dividing of the trust functions from nontrust functions. We disagree in the fact that it is a dividing of trust

and non-trust functions. We believe all are trust functions. But we

absolutely agree that you have to separate the duties of the individuals to make sure that a system that is in place is transparent

from top to bottom; that it is above reproach; that if you apply industry standards, when any reasonable person who looks at the

transactions that have occurred can say that the Secretary put into

place a system that showed due diligence that the assets were protected, they were not diminished, and could be construed to be

maximized based upon the agreements that would be entered into

between the tribal governments and the Secretary. Those types of

things would be above, though, the minimum standards that would

be brought to bear all across Indian country.

The Secretary points to the EDS report as to give her instruction

and the leeway to fashion the framework that has been considered

to be BITAM. But nothing in the EDS report indicates that the creation of a new bureau has to come about to achieve the functions

necessary they call for in the EDS. What I would pose to this committee and Indian country as a whole, take us back 20 years.

BITAM was in place. But BITAM went through the same

downsizing and less resources on a year-to-year basis that the current Bureau has existed for the last 20 years. Would we not be

here talking about a change of BITAM to something else, and to

say, put to this new structure what the EDS calls for—business

principles 101.

Any organizational structure that is going to succeed has to have

adequate funding. It has to have adequate human resources, and

those human resources have to be experts in their fields. Any type

of organizational structure, whether it be the USET proposal or

any other type of hybrid proposal that is developed has to still have

those fundamental premises to them. We believe in our proposal we

do address those things.

With the separation of the duties—we call for the creation of a

Commissioner for Indian Programs. The example the chairman
61

gave beforehand of the individual who wanted to build a house,

build a road out to his or her house. Those functions that have to

occur at the local level are so intertwined that they cannot exist

independently. And it is beyond comprehension of our tribes to say

that you would go out and create a new structure, a double administration to force our Indian people to go to one set of administration to look at particular items and make sure they get it checked

off on, and go to a separate administration to literally do the same

thing. You are talking about the same people. You are talking

about the same house. You are talking about the same road, but

you would be going to two separate administrations to literally get

a lot of the same information.

We don’t believe that has to occur. I believe that you can draw

distinguished lines between the duties of all of the trust functions

that exist in the current Bureau, with adequate resources given to

the human and monetary aspects, that those functions can be separated; that they could function independently. And the most important thing that we call for in our proposal is the ongoing monitoring of the trust functions, the trust system from top to bottom.

We envision the Commissioner for Trust Management to employ

individuals that would be on an ongoing basis, would look at the

structure that would be developed under the BIA, under the Assistant Secretary. And all of the transactions from top to bottom would

receive periodic review. And then they would be signed off on as

being certified that they were separation of duties and no conflict

of interest did occur in the transactions.

I believe our proposal calls for those types of frameworks to be

able to come about. We heard testimony earlier about the independent commission. Our proposal would be a proposal that could

easily be modified to bring in that independence of experts in the

industry, experts within the BIA, experts from the governmental

sector, from this committee or other committees of jurisdiction, to

be brought to bear to set the policies, the principles that the Secretary would have to adhere to in the performance of her trust responsibility.

Our proposal calls for the extraction and setting aside of the Indian member money accounts and in setting up of an independent

commission to look at those. Our tribes believe to put together the

interest of the individual Indian money accounts and the interests

of tribal assets is too complex; that independent commissions could

be set up to review and consider the interest of those individuals

and make recommendations to the structure that is put in place to

manage both tribal assets as well as the individual Indian assets.

The critical part of our proposal, though, lies in the establishment of minimum standards. Our proposal does not call for the

segregation of the BIA down to only the types of programs that

were alluded to earlier; that it should take all trust things and separate the duties. But it could be done at the regional level.

Our Eastern Region serves almost like a super-agency. The majority of our tribes contract. Over 92 percent of the resources going

to Indian tribes in our region are already contracted either by 638

contracting or self-governance. We simply do it better than the government could do it.
62

The most reluctance we see in the BITAM proposal is that it

would throw the process of 638 and self-governance totally in reverse. There is no need for that to happen. Even the EDS report

when we listened to them, their presentations, they said some of

the best practices they have found thus far in trust management

has been at the tribal level that has already contracted the management of the trust resources. Why then should we contemplate

a proposal that would reverse those types of processes? Certainly,

we should complement the process that envisions the responsibility

of the beneficiaries to be a part of the decisionmaking process.

Our proposal would bring about accountability. It would bring

about with the identification of a single executive, the Commissioner for Trust Management, as the single person in responsibility

for the administration and carrying out the duties to protect and

maximize the assets.

As I said, I have attended the consultation meetings. I have read

the transcripts when I have gotten them from the other meetings.

One thing is unanimous: All tribes are against BITAM. But the

other thing that is unanimous is all tribes, the court, the DOI, the

Congress agree that trust reform needs to come about. Therein lies

the key. We talked about timing earlier, from one of the speakers.

I truly believe the timing is correct right now to bring about true

trust reform. And I implore this committee to get involved in the

deliberation about trust reform, if nothing is monitoring it, mediation—whatever form that necessarily has to come about, so that

we can go forth and develop a new organization for trust management that can be bought in by all of Indian country, by the Department of the Interior, by the Congress, and most of all by the American Indians and Alaska Natives that are out there that need the

services that we are here to render to them.

I submit my testimony. I submitted my proposal in its entirety

for you to review and would be open to questions.

Thank you, Mr. Chairman.

[Prepared statement of Mr. James T. Martin appears in appendix.]

The CHAIRMAN. I thank you very much, Mr. Martin.

May I now call on Mr. Thomas.

STATEMENT OF EDWARD K. THOMAS, PRESIDENT, CENTRAL

COUNCIL OF TLINGIT AND HAIDA INDIAN TRIBES OF ALASKA

Mr. THOMAS. Thank you very much, Mr. Chairman.

My name is Ed Thomas. I am the President of the Central Council of Tlingit-Haida Indian Tribes of Alaska. Our tribe has 24,000

members. I have been the President for a little over 17 years and

have managed BIA programs since 1975. I started when I was 12.

I am honored to be here in speaking to this committee, and I

commend you for your effort in sticking in out with us. I realize

you have a very busy schedule and I will very much summarize my

comments.

But I want to point out that from my point of view and from the

point of view of your first panel, that as long as these systems are

broken, we are jeopardizing and we are undermining the trust relationship that this Federal Government has to the tribes and to the

individual accountholders. And so as I make my comments, I hope
63

that my comments are not offensive to anybody. They probably

could be construed that way, but it is intended to talk about the

issue, and I realize that many of the tribes have put forth some

proposals that they have worked very hard on. I commend them for

that and I want to make it clear that I am not here to lead into

a process of BIA-bashing, as we talked about 1 decade ago.

But let me make it clear that ever since I got involved in this

process, which was way back in the 1990’s when we were still on

the Joint Task Force on BIA Reorganization. We noticed that not

only was their acknowledgement of these problems and that they

need to be fixed, but there was lack of willingness, delegation of authority and delegation of resources to fix the problem.

Now, our board is very fortunate that we have some very respected tribal leaders on our board. We also have three professional

bankers with a lot of history in trust management. We are very

much aware that commercial trust management is a lot different

than the Federal trust management or Federal trust relationship

to tribes.

Way back when we first started talking about this in the early

1990’s, I always felt that the best approach was the approach the

Federal Government used in fixing the savings and loan scandal.

They set up the quasi-governmental agency, the Resolution Trust

Corporation which had unlimited authority to do what was necessary to fix the problem. And when our Nation through our Congress and the President put politics aside and put the interest of

our citizens first, I was very proud to see that our leadership went

forth. They fixed the savings and loan scandal. They restored a lot

of the money to the people who lost their life savings, and moved

on. And now we are back to where we have savings and loans functioning and the banking institute is healthy, and the people have

their life back in order.

We are not seeing that happening in the 1994 Act. A lot of people

celebrated the 1994 Act. I almost did, but I was disappointed because it fell short of what happened in the savings and loan issue

or problem. It fell short and it put us back into the Department of

the Interior under a hostile Secretary. Now, people can say what

they may. I can assure you that Secretary Babbitt was not in favor

not only of the trust reform movement, but he was not in favor of

the Office of the Special Trustee and he did everything in his

power, while I was around anyway, to undermine the efforts of the

Special Trustee and many of the activities that were necessary to

happen within the BIA and the Department of the Interior to fix

many of the problems.

Now, I realize that there are many well thought out proposals

out there, and I don’t want to diminish them in any way. Some of

these proposals call for going as far as pulling the entire BIA out

of the Department of Interior, all the way to just leaving things the

way they are and let’s kind of tweak things and move some boxes

around.

Now, I am going to reiterate that the Special Trustee Board went

on record quite recently that because of the way things were happening, they wanted to go on record again as saying we need to

really take the trust asset management portion out of the Department of Interior and be very forceful about fixing those problems.
64

Now, on the one hand I agree with that concept, on the matter of

principle and let’s get the job done. On the other hand, I am leery

from the point of view that maybe that is not achievable—achievable because of the lack of commitment for resources; achievable

because of the political realities that we must face. And so therefore if we are not going to ever make the step of even getting into

what is called BITAM, we need to talk about what is really going

to happen.

Now, we say in the record or in the newspapers I read where we are talking about a project that will cost $400,000 to $500,000 dollars. Then I see the budget amendments for 2003 and they only

add about $60 million. I meant to say millions, I’m sorry. I wish

it was only thousands. But when we see that once again you are

proposing something up here, and then you put a budget down

here—that is what caused the problem in the first place—not

enough resources to do the job that is being proposed.

And so I think it is important and I respectfully request this

committee, let’s put some reality back into what is achievable

under this political climate. What will the President agree to and

what will the Congress agree to? If we have proposals out there to

set up the BITAM and there is no money being asked for it, then

we are talking about something that is not going to happen no matter what we say. And it is just a big waste of time.

Not only is it a waste of time, but it is distracting from the orders of the day—not only the orders of the day within the Department dealing with this program, but many of us have to set aside

many other important issues so that we can weigh in on this important issue. We should be talking about the indirect costs where

it falls, and enhancement of tribal economies, weaknesses to the

tribal welfare programs, land and trust issues. We really should be

having hearings on those things.

And important to Alaska tribes, there is a very serious threat on

the status and the power of Alaska tribes floating around Washington and in Juneau. We should be spending more time on that, and

we certainly will.

But when it comes to this issue, I really feel it is necessary for

us to talk in terms of what is achievable, and we are not going to

do so by just saying, well, we have a whole bunch of concerns and

we have a whole bunch of problems and it is going to take a lot

of money, and then people request half or a third or a fourth of

what is necessary. I don’t think that is wise. I don’t think that is

fair to anybody. I think it is very much a distraction for me because I look at these proposals and I think some of them are great.

But I don’t think you are going to fund them. I have not seen that

kind of appetite in this Congress or the President to fund a lot of

these proposals. So I think we have to got to talk, really, on what

is achievable.

Now, one of my final points I am going to make here is that people have thought or have stated that we should pull out these trust

asset management functions out of the Bureau. You are stripping

the trust component out of the Bureau, and I commend you for

having the first panel because they most definitely put that issue

to rest, that all of these programs that are available to Indian people and the tribes are there because of the Federal Government’s
65

trust relationship to tribes and their people. And that is why, even

though we do not have a trust asset management component within IHS, our needy people still get IHS services; same way with

HUD.

And so I really appreciate your methodology in bringing these

scholars to the table here and clarifying that issue because I, for

one, feel that it is just the reverse. As long as we have this mismanagement of the absence of management of the assets of our

tribes and individual Indians, as long as that is not done properly

and unaccounted for, that is a breach of trust and it is weakening

the relationship that we as Native Americans have with the Federal Government and our trust relationship is being compromised.

Even after saying that, however, I believe it is imperative that

if you come up with a piece of legislation that endorses any alternative proposals, that there be language very specifically stating

that the trust relationship that this Federal Government is not

compromised by moving a box from over here to over here, one

agency to another, or even formulating a quasi-governmental agency. Because I think it is important for the comfort of the tribes that

when language is in legislative action that the issue of trusts is

preserved and that you understand the value of those trust relationships and have language in the legislation.

In closing, I once again commend you for your time. I commend

you for your interest and the leadership that you bring to this very

important issue. I recommend that if you are going to have either

the Special Trustee like we have it now, or you are going to do the

BITAM or you are going to go along with Tim’s proposal, that you

have member of members of Congress appointed to those oversight

boards. I realize that in your busy schedule you can’t attend meetings, but I think your administrative assistant people, people who

are knowledgeable about it, could represent you very well in these

meetings. But without that, it just becomes, well, we can give good

advice, but if they feel good 1 day, they will listen; if they don’t the

next, they won’t.

That is just the way it has been. That is the way life is, and I

don’t know how to say that nice, but it really is a matter that when

we debate the issues, we talk about alternatives, we talk about the

wishes of the tribal people, nothing happens because they don’t

agree and therefore they don’t have to listen because we are just

advisory. An example is that when President Tex Hall was talking

about the resources, it is very hard to have any of these proposals

compare with even the EDS reports, the series of reports that are

out there, because they don’t have the technical support that either

the Trustee or the BIA has. And I believe that if we are going to

be honest about looking at them and we are going to work together,

then EDS needs to come in and say, well, let’s look at Tim’s report.

Let’s look at the Hoopa report—any of them.

Maybe they don’t want them to look at it, I don’t know, but the

resources need to be there to come up with a joint plan that tribes

may have that lay out the principles that Tim was talking about

in his testimony and others. I really feel it is critical and I think

it could be very easily done, and I think we can amend the EDS

report and get the money out there to help people. Maybe they

want to have their own consultants, I don’t know.
66

But we have got to come up with a strategy to get the resources

to the Task Force so they can be competitive, they can get their

wishes better articulated in writing. Without that, I think they are

always going to be a disadvantage.

And with that, I thank you again, Mr. Chairman, and I will be

happy to answer any questions, and this is the shortest speech any

Tlingit has ever given.

Thank you.

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

The CHAIRMAN. Thank you very much, President Thomas

Chief Tillman.

STATEMENT OF WILLIAM MARTIN, FIRST VICE PRESIDENT,

CENTRAL COUNCIL, TLINGIT AND HAIDA INDIAN TRIBES OF

ALASKA; AND TREASURER, INTERTRIBAL MONITORING ASSOCIATION ON INDIAN TRUST FUNDS

Mr. WILLIAM MARTIN. Thank you, Mr. Chairman.

ITMA is pleased to be given the opportunity to testify today.

However, Chief Tillman was not able to make it, and with your

permission, I will offer the highlights of our testimony.

Mr. Chairman, members of the committee, my name is William

Martin. I am the elected First Vice President of the Central Council, Tlingit and Haida Indian Tribes of Alaska. I am also serving

as the Secretary-Treasurer to the Intertribal Trust Fund Monitoring Association. Accompanying me here today are some of our

board members, Richard Wilnett, chairman of the Turtle Mountain

Chippewa; Charles Jackson of the Confederate Tribes of Warm

Springs; Mark Fox, council member for Three Affiliated Tribes;

Paul Neiman of the Oneida Wisconsin. Also accompanying us is

ITMA Technical Consultant David Harrison.

Mr. Chairman, ITMA is a 12-year-old tribal organization comprised of the 53 federally recognized tribes which are virtually interested in continuing efforts to reform the administration of the

Indian trust estate of the Federal Government. We believe strongly

that the current attention focused on reorganization of functions

within the Department of the Interior is premature and not likely

to result in meaningful reform unless more fundamental underlying values and issues are first addressed.

Arcana has uncovered some things the Department has never acknowledged as an example of vest and failures. We think no reform

will work as long as there is a culture of secrecy around these failures. Hopefully, Secretary Norton’s new reporting of failures as

well as successes will represent a turnaround.

We fear that the Department of Justice, however, will prevent

this kind of full disclosure that we need.

I would like to address two or three important points in the limited time today. First, with respect to the competing reorganization

plans, we think focus on reorganization distracts from the policies

being implemented without being examined. We believe reform

should happen in a way that clarifies and enhances the Federal

Government’s trust responsibility and liabilities, and not diminish

it.

We believe the focus on reorganization is premature without determining duties to be performed, including oversight of the De-
67

partment’s trust duties by Congress or an independent body. The

Department resists this approach. It appears Justice does not want

to acknowledge any specific duties either.

With respect to EDS engagement by the Interior, we think

benchmarking against industry standards is an illusory exercise

designed to report that the Department’s trust standards are impossibly high. We think any benchmarking must include analysis

of corporate culture regarding mistakes and losses.

No system is perfect. There are going to be mistakes and failures. How these are handled will determine the success of any

trust reform. To date, this remains the biggest single failure and

made it impossible for previous Administrations to admit mistakes

with TAAMS. So far, it makes it impossible for this Administration

to acknowledge mistakes in the reorganization plan.

Finally, with respect to charging fees for administering the Indian trusts, this trust was paid for along ago by tribes in treaties,

of land cessations and promises of peace. Any fee by the government that cannot be avoided is really a tax, no matter what you

call it.

We have no say in our choice of provider of trust services. We

cannot take our business elsewhere. To impose a Government fee

is to tax it. The Congress should repeal the existing authority for

the Secretary to impose such a fee. It has been used arbitrarily and

capriciously. The Government should not be collecting for its own

account until it demonstrates it can collect appropriately for our

trust account.

ITMA suggests that this committee exercise its oversight authority to forestall widespread reorganization of trust functions until

the trust duties to be performed by any organization are well understood by those charged with both their performance and their

oversight, as well as those rights and properties of the estate.

ITMA suggests that the Congress should act swiftly to pass legislation tolling the statute of limitations on claims arising from the

administration on Indian trust estate until such time as Congress

has convincing evidence that the beneficiaries of this trust have not

been denied in good faith, a fair hearing and full disclosure demanded by a trustee generally.

ITMA suggests that Congress should act swiftly to repeal the

current statutory authority of the Secretary unilaterally to collect

fees to cover the costs of administering to Indian trusts, at least

until such time as the Congress is satisfied that the trust is being

honestly, prudently and competently administered.

ITMA respectfully requests this committee to urge the strongest

possible terms that any benchmarking of current trust practices by

the Department of the Interior be rejected. The Department should

require the property, identify its legal obligations as the trustee

arising out of existing treaty, executive order, statutes, case law

and contractual documents authorized under the authorities such

as grazing, mining leases, et cetera.

The Department should be required to also include a review of

the Department’s current practices regarding losses, mistakes, errors and omissions, thefts and other defalcations, and disclosure of

material facts.
68

While the private trust industry might provide useful models

after the relevant legal duties are identified, ITMA submits that

the most modern, efficient and competent regime of trust administration known to man will fail by its business culture. It is characterized by the determination to hide losses, cover up theft and bury

mistakes in buzz words and blizzard of promises.

In conclusion, ITMA takes no pride or pleasure in expressing

such dissatisfaction with our government agencies. It is our government, too. We continue to have faith that those in charge of it will

step forward to restore the faith and the honesty of what Thomas

Jefferson once called the last best hope of mankind on Earth. Toward that end, we earnestly seek the diligence of this committee

in continuing to champion the goal. We stand ready to provide

whatever additional information the committee might request of

us.

Thank you for your consideration.

[Prepared statement of William Martin appears in appendix.]

The CHAIRMAN. I thank you very much, Mr. Martin.

As chairman of this committee, it should be noted that I am part

of the Government of the United States. And I hope that all of you

would believe me when I say that I take my responsibilities and

my trust obligations to Indian country very seriously.

As chairman of this committee, let me assure you that this committee will not consider any proposal that is not the product of

open and free negotiation and consultation. I will be conferring

with the Secretary of the Interior. I have met her several times.

She is a good woman and I am certain her heart is in the right

place. I hope that all of you will take this role responsibly, those

of you on the Task Force, because the time is now. If we don’t resolve this now, it will be another 10 years. And I have no idea who

will be sitting here 10 years from now.

So with that, I thank all of you for your patience, for your testimony, and for your suggestions. And we will be do our part, I can

assure you of that.

With that, the record will be open for 30 days if you want to submit addendum or corrections, please feel free to do so, and I invite

all tribal leaders if they have statements they wish to have placed

in the record, it will be done. I have a request from the Secretary,

Mr. McCaleb that the statement of Secretary Norton be made part

of the record, an article entitled ‘‘American Indian Trust Reform:

The Challenge to Consensus.’’ Without objection, that statement is

made part of the record.

[Referenced document appears in appendix.]

The CHAIRMAN. With that, the hearing is adjourned.

[Whereupon at 1:18 p.m., the committee was adjourned, to reconvene at the call of the Chair.]
(69)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM

COLORADO, VICE CHAIRMAN, SENATE COMMITTEE ON INDIAN AFFAIRS

Good morning and thank you Mr. Chairman for convening this important hearing.

Unfortunately, all who have chaired this committee at some point must dedicate

enormous time and effort in trying to reform the Indian Trust Fund Management

systems.

You have done it in the past, Chairman Inouye, I did it for 5 years and now it’s

your turn once again. It’s beyond frustrating for me and for the Indian beneficiaries

as well.

Let me start off by saying that this issue is clearly a problem of historic proportions: It is not Secretary Norton’s creation. When I chaired this committee I acknowledged the same fact to Secretary Babbitt.

Nonetheless, what Congress passed in 1994 to reform this system was enacted

over the objections of the last Secretary of the Interior. My own opinion is that despite the 1994 Act and the vigorous involvement and encouragement of this committee, the trust reform strategy of the last Administration was to litigate, lurch from

hearing to hearing by putting on a brave face and a dog and pony show, and do

everything they could to make sure the Federal funding spigot didn’t get turned off.

That strategy, as we all know and surely must recognize today, not only didn’t

work, Mr. Chairman but has in fact led us directly to where we are today.

Mr. Chairman, this reads like a bad soap opera: We have had several bills signed

into law; documents lost, contaminated and shredded; Federal lawsuits filed; senior

department officials resign and being held in contempt by a Federal judge; and

countless hours of legislative and oversight hearings. Just 2 weeks ago we passed

out of committee legislation designed to discourage more litigation and encourage

the tribes and the Department to negotiate settlements which I believe is the much

better option for all parties.

Having said that, we stand at a cross-roads here—a historic moment where I

think if we recognize and admit that the litigation has served its purpose, but ultimately these issues should be, and I think will be, resolved here in Congress

through a settlement bill.

Frankly, this committee—and the chairman and I—have done, are doing, and will

continue to do everything we can to bring fair and equitable resolution to these

issues but it requires some healthy, honest and open debate and one that may not

have been held before.

Unlike many who have criticized her proposal, I believe the Secretary should be

lauded, not criticized, for making a proposal to reform the way the United States

handles Indian money and Indian assets.

There are tribal proposals as well and we’ll hear a little about them today too.

Some fundamental realities we all need to acknowledge are:

No. 1. The status quo is unacceptable: It’s unacceptable to the Secretary, to the

tribes, to the court and to this committee.
70

No. 2. Right to the present day, the current system is not meeting the standards

of performance that it should be—that’s why I proposed an independent ‘‘Indian

Trust Corporation’’ in February 2000.

No. 3. Whether the answer lies in the Secretary’s idea, in receivership, in the

trust corporation or in any other form, I firmly believe we should analyze them

without passion or prejudice and get in place a system that brings justice to Indians

which, after all, is what this should be all about.

In closing, let me say something about ‘‘Consultation’’. When the Secretary informed me of her proposal to reform the trust, I encouraged her and the Department

to consult early and often with the tribes.

Three months later, close to 10 consultation meetings have taken place. The Secretary herself attended the first meeting in Albuquerque. Nonetheless, Secretary

Norton is being criticized for not conducting more consultations.

In 1 year, this Secretary and high-level Department officials have met and consulted with the tribes more often on Indian Trust Reform issues that the past Administration did in 8 years. That—ladies and gentlemen—is a fact.

I do hope, Mr. Chairman, that with this hearing the committee can spark the kind

of healthy and constructive dialog that is so needed at this point in time.

With that, I ask unanimous consent that my formal statement be included in the

record along with some additional materials.

Thank you Mr. Chairman.

TRUST FUNDS TIME-LINE

Acronyms

AITFMRA—American Indian Trust Fund Management Reform Act, P.L. 103–412

(October 25, 1994)

DoI—Department of Interior

GAO—General Accounting Office

SCIA—Senate Committee on Indian Affairs

Important Events

September 8, 1982, ‘‘Major Improvements Needed in the BIA’’ Accounting System,’’ (GAO/AFMD–82–71).

January 11, 1984, Price Waterhouse, ‘‘In-Depth Review of the Indian Trust Funds

for the Bureau of Indian Affairs, Task V Recommendations.’’ (Discussed in April 22,

1992 report ‘‘Misplaced Trust’’ from House Committee on Government Operations

at the text accompanying footnote #53.)

April 15, 1987, BIA publishes Request for Information for transferring Indian

trust fund management to the private sector. More than 100 responses were received.

December 27, 1987, Supplemental Appropriations Act, P.L. 100–202 and P.L. 100–

446, September 27, 1988, include a directive preventing the BIA from transferring

trust accounts to a private institution until they are reconciled.

October 26, 1989, Secretary Lujan, issues Secretarial Order 3137, Establishment

of the Office of Trust Funds Management, BIA.

May 11, 1990, Arthur Andersen & Co., ‘‘Tribal and Individual Indian Monies

Trust Funds, Report of Independent Auditors,’’ Financial Statements as of September 30, 1989 and 1988.

July 2, 1990, Secretary Lujan, issues an amendment to Sec. Order 3137; material

to be included in the Departmental Manual by January 1, 1991.

November 5, 1990, Interior Appropriations. Act, P.L. 101–512 tolls statute of limitations until reconciliation ordered by Committee is scheduled to be completed. The

Act also requires independent certification that reconciliation results are the most

complete reconciliation possible.

April 11, 1991, ‘‘Bureau of Indian Affairs Efforts to Reconcile and Audit the Indian Trust Funds,’’ (GAO/T–AFMD–91–2).

May 20, 1991, ‘‘Bureau of Indian Affairs Efforts to Reconcile and Audit the Indian

Trust Funds,’’ (GAO/T–AFMD–91–6).

April 2, 1992, ‘‘Financial Management: BIA Has Made Limited Progress in Reconciling Indian Trust Funds and Developing a Strategic Plan,’’ (GAO/AFMD–92–69).

April 22, 1992, House Government Operations Committee approves and adopts a

report from its Subcommittee on Environment, Energy, and Natural Resources:

‘‘Misplaced Trust: The Bureau of Indian Affairs Mismanagement of the Indian Trust

Fund,’’ H.Rep. 102–499.

July 2, 1992, SCIA oversight hearing, S. Hrg. 102–856, on land fractionation and

BIA financial management with the GAO as the principal witness testifying on its

reports: ‘‘Profile of Land Ownership on 12 Reservations,’’ (GAO/RCED–92–96BR)
71

February 1992, and ‘‘Problems Affecting BIA Financial Management,’’ (GAO/TAFMD–92–12) July 2, 1992 (‘‘The bulk of problems are internal to BIA ‘‘things such

as poorly designed accounting systems, weak internal control, and trained staff.’’).

August 12, 1992, SCIA oversight hearing, S. Hrg. 102–939, on Indian Trust Fund

Management, S. Hrg. 102–939. Financial Management; BIA Has Made Little

Progress in Reconciling Trust Accounts and Developing a Strategic Plan, (GAO/

AFMD–92–38) June 1992. (‘‘The unreconciled accounts are only a symptom and not

a cause of BIA’s trust fund financial management problems.’’)

June 22, 1993, SCIA hearing, S. Hrg. 103–225, on S. 925 Native American Trust

Fund Accounting and Management Reform Act of 1993, (companion bill to Representative Synar’s bill, H.R. 1846).

September 22, 1994, ‘‘Financial Management: Focused Leadership and Comprehensive Planning Can Improve Interior’s Management of Indian Trust Funds,’’

(GAO/AMD–94–185). (‘‘Interior continues to develop piecemeal management improvement plans that do not provide the comprehensive approach to correcting fundamental problems in the way Interior agencies carry out their trust fund functions.’’)

October 25, 1994, President signs American Indian Trust Fund Management Reform Act of 1994, (AITFMRA) P.L. 103–412.

March 8, 1995, GAO Testimony; ‘‘Indian Trust Funds Cannot Be Reconciled’’

(GAO/AIMD-T–95–94) (Before the House Committee on Appropriations).

September 13, 1995, SCIA hearing, S. Hrg. 104–340, on nomination of Paul

Homan to be Special Trustee.

September 29, 1995, GAO Letter Report, draft legislative proposal on reconciliation and settlement of tribal trust funds (GAO/AIMD/OGC–95–237R).

February 9, 1996, Secretary Babbitt issues Secretarial Order 3197, Establishment

of the Office of Special Trustee and Transfer of Trust Funds Mgt. Functions from

the BIA (Order terminates on October 1, 1997).

June 10, 1996, Cobell v. Babbitt filed in the U.S. District Court for the District

of Colombia, referred to Judge Royce C. Lamberth.

June 11, 1996 SCIA Hearing, 104–514, Indian Trust Funds 1995, the primary witness is the GAO, which presented testimony on its report: ‘‘BIA’s Tribal Trust Fund

Account Reconciliation Results,’’ (May 3, 1996, GAO/AIMD–96–63) (‘‘[B]ecause [the]

BIA’s report package did not explain or describe the numerous changes in the reconciliation scope and methodologies or the procedures that were not performed, the

limitations of the reconciliation were not evident.’’).

January 1997, Senator Campbell assumes chairmanship of SCIA.

February 4, 1997, Judge Lamberth certifies the named plaintiffs in Cobell v. Babbitt as representative of a class consisting of all resent and former IIM account holders.

April 1997, Special Trustee submits his proposed Strategic Plan, as required by

AITFMRA.

May 21, 1997, Sec. Babbitt writes letter stating that the proposed Strategic Plan

‘‘fails to meet the objectives of the AITFMRA.’’

May 23, 1997, GAO, Letter Report, ‘‘Tribal Account Holders’’ Responses to Reconciliation Results’’ (GAO/AIMD–97–102R).

July 28, 1997, SCIA holds hearing S. Hrg., 105–295, on Special Trustee’s Strategic

Plan, Special Trustee Paul Homan testifies.

August 22, 1997, Sec. Babbitt issues memorandum on Trust Improvement Project

Definition: ‘‘Notwithstanding my reservations about certain aspects about certain

aspects of his Plan, selected trust systems improvements and data cleanup efforts

in the Plan can and should proceed as soon as possible within the organizational

structure of the Department.’’ Secretary Babbitt calls for the creation of a ‘‘high

level implementation plan.’’

November 13, 1997, DoI issues press release on a proposal for the settlement of

tribal accounting claims against the United States.

April 16, 1998, DoI submits Settlement Proposal for tribal trust funds to Congress. Introduced at the end of the month by Congressman Miller (by request) as

H.R. 3782.

July 22, 1998, SCIA hearing, S. Hrg. 105–815, on H.R. 3782, To Compensate Certain Indian Tribes for Known Errors in Their Tribal Trust Fund Accounts, to Establish a Process for Settling Other Disputes Regarding Tribal Trust Fund Accounts,

and for Other Purposes. (The proposal was roundly criticized by Indian tribes and

others for ‘‘tilting the playing field’’ in favor of the United States and effectively,

if unintentionally, preventing Indian tribes from asserting certain claims.)

May 5, 1998, Judge Lamberth issues a discovery and scheduling order.

July 31, 1998 High Level Implementation Plan issued.
72

November 5, 1998 Cobell v. Babbitt, 30 F. Supp.2d 24 (D.D.C. 1998) ruling denying Interior’s motion for summary judgment, etc. and refusal to impose a statistical

sampling upon the case as a means of providing an accounting.

December 18, 1998, Cobell v. Babbitt, order to show cause why Sec. Babbitt

should not be held in contempt.

January 5, 1999, Secretary Babbitt issues Secretarial Order No. 3208, Reorganization of the Office of the Special Trustee.

January 7, 1999, Special Trustee Paul Homan resigns.

January 28, 1999 Secretary’s Office provides defense of Order No. 3208 and status

report on High Level Implementation Plan February 1999, GAO provides draft report entitled: ‘‘Interior Lacks Assurance that Trust Improvement Plan will be Effective,’’ issued as a final report in April 1999 (GAO/AIMD–99–53).

February 22, 1999, Cobell v. Babbitt, (1999 WL 101636) Judge Lamberth issues

order finding Secretaries Babbitt and Rubin and Assistant Secretary Gover in contempt.

March 3, 1999 SCIA holds a joint hearing with Senate Energy and Natural Resources Committee on Secretarial Order No. 3208, S. Hrg. 106–12. Secretary Babbitt

is principal witness. With respect to the contempt citation, Secretary Babbitt stated:

‘‘[L]et me just say we apologize to the court for the Government’s failures in this

litigation.’’ March 25, 1999, Senator Murkowski introduces S. 739 (to direct the Secretary of

the Interior to contract with qualified financial institutions for the investment of

certain trust funds) with Senator Campbell as an original cosponsor. (At the request

of the bill’s sponsors, the Inspector General sought to determine whether Departmental communications constituted illegal lobbying after published reports indicating such lobbying may have ocurred.)

April 3, 1999, SCIA holds hearing on BIA Capacity and Mission, S. Hrg. 106–79.

April 1999 ‘‘Interior Lacks Assurance that Trust Improvement Plan Will Be Effective,’’ (GAO/AMD–99–53).

June 7, 1999, Cobell v. Babbitt, 52 F.Supp.2d 211 (D.D.C. 1999) Judge Lamberth

rules on Defendant’s motions for summary judgment.

June 25, 1999, Secretary Babbitt ‘‘unveils’’ TAAMS at Billings, Montana.

June and July 1999, Bench trial in Cobell (Phase I) case. According to the Court

Monitor’s second report, at this trial: ‘‘Without question, the Federal Government

indicated that trust reform was underway and TAAMS was the framework and infrastructure for effecting trust reform.’’ July 14, 1999, Joint Hearing SCIA/Senate Committee on Energy and Natural Resources, Trust Fund Reform, S. Hrg. 106–146. ‘‘Indian Trust Funds: Interior Lacks

Assurance That Trust Plan Will be Effective,’’ (GAO/AIMD–99–53). (GAO report: ‘‘Until Interior develops an information systems architecture addressing all of its

management functions, it can not (sic.) ensure that its information systems will not

be duplicative or incompatible or will optimally support its needs across all business

areas.’’) (Don Gray, Esq. ‘‘You can not and should not try to operate on yourself,

and that is exactly what we’re asking well-intentioned BIA officials to do-to work

on a problem and to solve a problem where they or their friends . . . may have made

mistakes. That is neither fair not reasonable and in the commercial context would

never be countenanced.’’)

September 8, 1999, According to records revealed to the Court Monitor, a high

level meeting was held within the Department concerning TAAMS (‘‘Discuss current

TAAMS status and agree on Departmental Policy Position.’’) Meeting attended by

Secretary Babbitt’s Chief-of-Staff Ann Shields, Kevin Gover, Daryl White, John

Berry, Bob Lamb, and Dom Nessi. (This meeting and the failure to inform either

Judge Lamberth or Congress about TAAMS implementation problems are addressed

extensively in the Court Monitor’s Second Report dated August 9, 2001.)

September 22, 1999, SCIA hearing, Trust Management Reform Act, hearing on S.

1587 (Amending the American Indian Trust Fund Management Reform Act of 1994

to establish within the Department of the Interior an Office of Special Trustee for

Data Cleanup and Internal Control) and S. 1589 (Establishing a Indian Trust Fund

Reform Commission). According to Secretary Babbitt: ‘‘Senator [Murkowski], if you

go to Billings, Montana today you will see the TAAMS system running in parallel

with the old system.’’

November 18, 1999, Interior Appropriations Conference report language limits deployment of TAAMS: until and unless the Secretary, ‘‘advise[s] the Committees on

Appropriations that, based on the Secretary’s review and analysis, such systems

meet TAAMS contract requirements and user requirements.’’

December 21, 1999, Cobell v. Babbitt, 91 F. Supp. 1 (D.D.C. 1999), decision of

Judge Lamberth based on June/July bench trial. The court rules that the Government had a duty to (1) provide an accounting of funds held in IIM trust; (2) create
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written plans for collection and retention of IIM trust documents, computer and

business systems architecture, and staffing of trust management functions; (3) delay

was a breach of trust.

February 8, 2000, Chairman Campbell sends copies of an draft bill entitled Indian

Trust Resolution Corporation Act to all Indian tribes.

February 29, 2000, DoI issues second High Level Implementation Plan March 22,

2000, SCIA hearing on the nomination of Thomas Slonaker to be Special Trustee.

March 30, 2000, DoI issues its draft Secretarial Order concerning ‘‘trust principles’’.

April 3, 2000, BIA publishes notice of request for Comments on the Settlement

of IIM claims.

April 12, 2000, Chairman and Vice Chairman of SCIA and Chairman of Energy

and Natural Resources write to ask the Department to reconsider its draft ‘‘trust

principles.’’ Confirmation of Special Trustee is blocked over draft ‘‘trust principles.’’

April 28, 2000, Secretarial Order on Trust Principles is issued after it is modified

to meet most concerns. Senate confirms Tom Slonaker as Special Trustee.

June 22, 2000, SCIA hearing on draft bill Indian Trust Resolution Corporation

Act.

July 14, 2000, DoI proposes regulations concerning the leasing and grazing of

trust lands and the management of IIM funds and probate (65 FR 43874).

September 22, 2000 Chairman Campbell and Vice Chairman Inouye and 16 other

Senators write to Secretary and ask him not to proceed to finalize most of the July

14, 2000 draft regulations.

September 29, 2000, Interior Appropriations Conference Report, H. Rep. 106–914

on H.R. 4578 (FY ‘‘01 Interior Approps.) ‘‘[W]hile approving the request to begin an

IIM sampling approach, the managers direct the Department to develop a detailed

plan for the sampling methodology it adopts, its costs and benefits, and the degree

of confidence that can be placed on the likely results.’’

December 1, 2000, plaintiffs in Cobell v. Babbitt file motion to re-open trial I.

They assert that the Government presented false and misleading evidence to support its claim that trust reform was underway.

December 29, 2000, Secretary Babbitt issues Memorandum to proceed with statistical sampling.

January 20, 2001, over the September 22, 2000 objections, the DoI finalizes draft

July 14, 2000 regulations. (Regulations are allowed to go into effect by Bush Administration.)

February 23, 2001, U.S. Court of Appeals for the D.C. Circuit issues opinion in

Cobell v. Norton, 2001 WL 17299 (D.C. Cir.). The decision affirms Judge Lamberth’s

ruling that the plaintiffs may proceed with their suit against the United States for

breach of trust arising out of the government’s failure to manage its trust activities.

The panel also rules that the Government’s duty to account does not arise out of

the AITFMRA of 1994.

February 23, 2001, Dom Nessi writes two memorandum raising concerns about

the DoI’s project for both Trust Reform and Data Cleanup.

February 27, 2001, Secretary Norton issues Memorandum on statistical sampling.

February 28, 2001, Secretary Norton appears before SCIA, announces decision on

statistical sampling.

April 16, 2001 Judge Lamberth appoints Joseph S. Kieffer, III as Court Monitor.

July 10, 2001, Secretary Norton issues Secretarial Orders creating Office of Trust

Reform and Historical Accounting (Sec. Order 3231) and augmenting the authority

of the Special Trustee (Sec. Order 3232).

July 11, 2001, Court Monitor issues his first report on Historical Accounting.

August 9, 2001, Court Monitor issues his second report on TAAMS. This report

confirms that the Department misled Congress and the court with respect to trust

reform efforts.

November 12, 2001 EDS submits DoI Trust Reform: Interim Report and Roadmap

for TAAMS and BIA Data Cleanup November 20, 2001 Office of Indian Trust Transition (OITT) through Secretary Order 3235.

January 16, 2002, DoI submits Status Report #8.

January 17, 2002 First Meeting of Tribal Leaders Task Force January 24, 2002,

EDS publishes DoI Trust Reform: Final Report and Roadmap

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

DAKOTA

Mr. Chairman, I want to thank you for convening this hearing on the Department

of the Interior’s management—or perhaps mismanagement would be a better term—
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of Indian trust funds. As my colleagues know, the United States has a fiduciary responsibility to uphold with respect to the 225,000 individual Indian money accounts

and 315 tribal accounts that it holds in trust for Native Americans. Unfortunately,

as has been well documented, the Departments of the Interior and Treasury cannot

properly account for billions of dollars in Indian trust fund accounts.

Clearly, the Federal Government simply must do a better job of upholding its

trust responsibilities to Native Americans. In an attempt to live up to the Federal

Government’s obligations, Interior Secretary Gale Norton proposed to reorganize

some of the trust assets management responsibilities of her Department. I can understand why Secretary Norton might feel a dramatic reorganization is warranted,

but, as I have expressed to her in a letter, I have concerns about such a reorganization.

First and foremost, I am concerned that a proposal with such important ramifications was put forward without consultation with tribes and their members. I appreciate that the Department has subsequently conducted a series of regional consultation meetings with tribes, but more meaningful discussion needs to occur. Tribal

leaders, the Administration and Congress should work together to make substantive

reforms in the trust asset management process. To that end, I am pleased that we

are having this hearing today and will be receiving testimony from Interior Department officials and tribal leaders. I especially want to acknowledge the leadership

and contribution of North Dakota tribal Chairman Tex Hall, who is the president

of the National Congress of American Indians and cochair of the Tribal Leaders

Task Force on Trust Reform.

Mr. Chairman, thank you again for calling this hearing, and I look forward to

reading the testimony of the many witnesses.

PREPARED STATEMENT OF HON CRAIG THOMAS, U.S. SENATOR FROM WYOMING

Thank you, Mr. Chairman. Let me begin thanking the committee for holding this

hearing to discuss Indian Trust Management. Throughout my time in Congress and

as a member of this committee, I have been involved with efforts to remedy the existing problems with the current management system. It continues to be my hope

that we can develop a dependable system.

As we are all aware, the Cobell v. Norton litigation has prompted an intense reevaluation of our Government’s trust responsibility. Consequently, Secretary Norton

has put forth a proposal to restructure the Bureau of Indian Affairs, thereby creating a new agency solely charged with managing Indian trust accounts. This new

agency has been referred to as the Bureau of Indian Trust Asset Management

[BITAM]. I understand this proposal has been met with opposition throughout areas

in Indian country. I also understand the tribes’ frustration with the Department’s consultation process. However, I strongly believe that we must not lose focus in our

efforts to resolve this long-standing problem and move forward to establish an accountable system of trust management.

The Department of the Interior is not the only agency to bear the burden of finding a solution or addressing the problem. Each branch of our Government continues

to shape the future outcome of Indian trust management. The history of mismanagement must be eradicated and replaced with a renewed commitment to providing a fair, accountable system. I look forward to working with my colleagues as

we proceed in this difficult task.

Thank you, Mr. Chairman, I look forward to hearing from our witnesses.

PREPARED STATEMENT OF SUSAN M. WILLIAMS, ATTORNEY, ALBUQUERQUE, NM

Mr. Chairman and members of the committee, my name is Susan M. Williams.

I am an attorney in Albuquerque, NM. I represent Indian tribal governments

throughout the country and have broad experience in matters relating to the U.S.

Government’s trust responsibility to Indian tribes and individual Indian people.

Through many years of experience, I have acquired a wide-ranging understanding

of the Federal Government’s attempts to fulfill its trust duties through the day-today operations of the Department of the Interior [Department] and, particularly, the

Bureau of Indian Affairs [BIA].

I am pleased to present a written statement to this distinguished body regarding

the Department’s management of Indian trust resources and Secretary Norton’s current proposal to transfer management of those resources out of the BIA and into

a new Bureau of Indian Trust Asset Management [BITAM]. I submit this testimony

on behalf of two Arizona Indian tribes, the Hualapai Nation and the YavapaiApache Nation of the Camp Verde Reservation.
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1This trust duty is discussed later in this statement.

Notwithstanding the problems inherent in the Department’s present system of Indian trust asset management, the Secretary’s plan to reorganize the Department in

an effort to eliminate the problems is a bad idea that will not work. Financial account management and natural resource management are linked inextricably. The

Secretary’s plan, however, does not address critical issues related to natural resource management. Rather, the plan focuses exclusively on financial account management issues raised by the Cobell litigation.

Natural resource management, in contrast, includes the actual day-to-day oversight and protection of the land, forests, water, and other resources held in trust

by the United States for Indian tribes and individual Indians. The Federal Government holds approximately 11 million acres in trust or restricted status for individual Indians and 45 million acres for tribes. The BIA and, in certain circumstances,

the Bureau of Land Management [BLM] and the Minerals Management Service

[MMS], have management responsibility for these resources. Those responsibilities

include, among other activities, the leasing and valuation of trust lands, the maintenance of land ownership records, forest management, fire suppression, and the collection and verification of oil, gas, and other mineral royalty payments. The Secretary’s plan does not address the substance of, or propose improvements to, these

critical natural resource management functions.

The Secretary’s proposal also ignores the unique position that the BIA occupies

in the context of the Federal Government’s relations with the Indian tribes. To Indian people, the BIA is synonymous with the trust responsibility, and for good reason: There is little, if anything, in which the Bureau is engaged that is not connected to our government’s fulfillment of its trust duty to Indian people. Indeed, the

Secretary’s reorganization plan is controversial because it proposes to take away

from the BIA natural resource trust asset management responsibilities without articulating a valid set of reasons for doing so.

Trust reform will not be complete until all the agencies within the Department

responsible for either financial account management or natural resource management are in compliance with relevant laws and the Federal trust responsibility to

Indian tribes. At the core of the problem with the proposed reorganization is Secretary Norton’s failure to address (or at least articulate) how both the management

of natural resources performed by BIA (as well as the BLM and the MMS) and the

financial account management operations performed by the Office of the Special

Trustee [OST] and Office of Trust Funds Management [OTFM] will be improved

substantively by merely moving those functions to the new BITAM. In addition,

such a move, which is both drastic and costly, fails to address how tribal trust beneficiaries will continue their participation in trust management as contemplated by

the American Indian Trust Fund Management Reform Act, the Indian Self-Determination and Education Assistance Act, and other Federal laws that authorize

tribes to manage their own trust resources.

Instead of BITAM, we recommend that the Congress and the Secretary undertake

trust reform as follows:

A. Organization—New Deputy Secretary and a Unified Chain of Command.

We urge the Congress to authorize and establish within the Department a new

Deputy Secretary position reporting directly to the Secretary. This new Deputy Secretary would direct a unified chain of command and would possess line authority

over all of the Department’s trust responsibilities for natural resource management

and financial account management regardless of the location of those functions

within the Department’s various bureaus and agencies. Specifically, the new Deputy

Secretary would have authority to direct all trust functions in the BIA, BLM, MMS,

OST, OTFM, and the Office of Hearings and Appeals, including the duty to establish

policies, procedures, systems, and practices that comply with the Secretary’s trust

responsibility to individual Indians and Indian tribes.1 For the non-trust functions

of the BLM and the MMS, the existing Deputy Secretary of the Interior and the

Assistant Secretary for Land and Minerals Management, as well as the respective

agency directors, would retain direct authority. The new Deputy Secretary also

should have the authority to hire a small staff of additional, highly qualified trust,

management, and organization professionals to design and oversee trust reform.

This approach would allow the financial account management reforms in progress

at OTFM to continue, but would add additional oversight, direction, and accountability for that reform process as well as implement necessary reform measures related to the natural resources held in trust for Indian tribes. In other words, the

new Deputy Secretary would direct the implementation of all necessary reforms and
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2See, e.g., 28 U.S.C.A. sec. 532, note (term of office of the Director of the Federal Bureau of

Investigation is 10 years); 31 U.S.C. sec. 703 (the Comptroller General of the United States is

appointed by the President for a term of 15 years); 12 U.S.C. sec. 241 (the President appoints

members of the Board of Governors of the Federal Reserve System for terms of 14 years). 3See 31 U.S.C. sec. 703.

would provide a clear line of authority and accountability for reform efforts and ongoing operations.

To ensure that the new Deputy Secretary has the necessary qualifications of trust

experience and organizational and management leadership, and to ensure that

meaningful reform continues between changes in Administrations, the Congress

should provide that the President appoints the new Deputy Secretary, with the advice and consent of the Senate, for a fixed term of 6 years. There is ample precedent

for statutorily fixed terms of office for officials who occupy high levels of trust and

responsibility in the Federal Government.2 The tribes should have substantial input

into this selection process during Senate confirmation of the appointment, and the

Congress should establish in law standards for removal of an appointee during a

term of office, similar to the standards established for the Comptroller General of

the United States.3

B. Standards of Performance—The Trust Responsibility.

The trust responsibility for Indian trust asset and trust funds management is well

established in the legal decisions. A legally enforceable trust obligation is owed by

the United States to the individual Indian and tribal trust beneficiaries based on

treaties, agreements, and statutes. The Congress has broad authority over Indian

affairs, but its actions must be ‘‘tied rationally to the fulfillment of the Congress’’ unique obligation toward the Indians.’’ Morton v. Mancari, 417 U.S. 535, 555 (1974).

The trust responsibility is more than just following requirements in statutes and

regulations but imposes common law fiduciary standards on executive branch management of Indian trust resources and trust funds similar to duties imposed on private trustees. United States v. Mitchell, 263 U.S. 206, 225 (1983) (‘‘Mitchell II’’) (the ‘‘undisputed existence of a general trust relationship between the United States and

the Indian People’’ is well established). That fiduciary standard has been described

as an obligation to act in the ‘‘best interests’’ of the Indian beneficiary. Jicarilla

Apache Tribe v. Supron Energy Corp., 728 F.2d 1555, 1563 (10th Cir. 1984) (Seymour, J. concurring in part and dissenting in part), adopted as majority opinion as

modified en banc, 782 F.2d 855 (10th Cir. 1986), cert. denied, 479 U.S. 970 (1986)

(holding that the Secretary’s duties in the mineral leasing context are not limited

to compliance with administrative laws and regulations, but are subject to the ‘‘more stringent duties demanded of a fiduciary;’’ when faced with a decision for which

there are several ‘‘reasonable’’ choices, the Secretary must select the one that best

serves the Indians’’ interests). Lower courts have applied these common law trust

principles to the government’s management of Indian trust assets. In other contexts,

it has been stated that the ‘‘most fundamental duty owed by the trustee to the beneficiaries of the trust is the duty of loyalty. . . to administer the trust solely in the

interest of the beneficiaries.’’ Pegram v. Herdrich, 530 U.S. 211, 224 (2000) (quoting

2A A. Scott and W. Fratcher, Trusts at 311 (4th ed. 1987)).

The commonlaw fiduciary standard has been modified in two respects when the

government deals with Indians. First, the United States may represent interests

conflicting with the tribal trust interests, but the United States may be liable for

money damages for failure to protect the ‘‘best interests’’ of the Indian trust beneficiaries in such circumstances. Nevada v. United States, 463 U.S. 110 (1983) (‘‘mere

existence of a formal ‘‘conflict of interest’’ does not deprive the United States of authority to represent Indians. . . . If, however, the United States actually causes

harm through a breach of its trust obligations the Indians should have a remedy

against it.’’) (Brennan, J., concurring). Second, under existing law, tribal trust beneficiaries have a right to manage their own tribal trust resources. The American Indian Trust Fund Management Reform Act of 1994 gives Indian tribes the opportunity to manage tribal trust funds currently held in trust by the United States.

See 25 U.S.C. secs. 4021–4029. In the event a tribe chooses to manage its own

funds, the United States’’ trust responsibility respecting those funds ceases once the

funds are withdrawn from the government’s accounts. Id. sec. 4022(c). Similarly, the

National Indian Forest Resources Management Act and the American Indian Agricultural Resource Management Act provide Indian tribes the opportunity to participate in the management of their forest and agricultural lands and resources, respectively, through the self-determination contracting and self-governance compacting

provisions of the Indian Self-Determination and Education Assistance Act. See 25

U.S.C. secs. 3104 (forest lands and resources); 3711 (agricultural lands and resources). Unlike the situation under the Trust Fund Management Reform Act, ac-
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4See also Secretarial Order 3225, ‘‘Principles for the Discharge of the Secretary’s Trust Responsibility,’’ issued by former Interior Secretary Babbitt on April 28, 2000.

tive tribal participation in trust resources management under both the Forest Resources Management Act and the Agricultural Resource Management Act does not

diminish in any way the United States’’ trust responsibility toward those resources.

Id. secs. 3102 and 3120 (Forest Resources Management Act); 3702 and 3742 (Agricultural Resource Management Act).

C. Process—Full Evaluation of Trust Management Activities.

Before the Secretary is permitted to move ahead with her current proposal to reorganize the Department’s management of natural resource trust assets and trust

funds management, or any such proposal, for that matter, Congress should require

the Department to engage in a detailed, ‘‘ground up’’ examination of the way the

Department currently manages Indian trust assets. The Department should first

commission an outside, independent program compliance audit of all of Interior’s trust management activities. Indeed, the Department’s trust functions should undergo such an audit periodically in order to ensure that all standards and controls

are implemented and operating as effectively as possible and in accordance with relevant requirements and standards. We are unaware if the trust management programs of the BIA, BLM, or MMS have ever been subjected to such an audit. These

agencies’’ management of trust resources must undergo a systematic critique to

gauge the relative strengths and weaknesses of the operations and to suggest means

for improvement. That the agencies’’ operations may never have undergone an independent program compliance audit is nothing short of extraordinary and may go a

long way toward explaining why the inadequacies in the management of Indian

trust resources have never seriously been addressed. In contrast, since passage of

the 1994 Reform Act, the OTFM periodically undergoes such audits.

There are good reasons to think that the outstanding issues related to financial

account management can be responsibly addressed by the existing OTFM. After the

passage of the American Indian Trust Fund Management Reform Act of 1994, the

trust account management duties of the Department were removed from the BIA

and placed under the supervision of the Special Trustee for American Indians (‘‘Special Trustee’’). Since that time, great strides have been made in the management

of both IIM and tribal trust accounts. A key reason for the progress appears to be

the methodology employed by the OST and the OTFM to implement necessary

changes into the trust account management system. A concerted effort has been

made to build from the ground up: first, to understand the duties and responsibilities inherent in the management of Indian trust accounts; second, to identify the

functions and tasks that must be undertaken to satisfy those trust duties and responsibilities; third, to develop uniform standards by which those functions and

tasks are to be undertaken; and finally, to procure commercial, off-the-shelf systems

necessary to successfully perform the requisite duties, at the same time providing

that internal controls are in place to ensure the integrity of operations.

Notwithstanding the great strides that the Special Trustee and OTFM have made

in the management of the IIM and tribal trust accounts, there remains a tremendous amount of work to do. To ensure the successful completion of that work, the

OTFM should be permitted to continue along its current path of reform, subject to

the authority of the proposed new Deputy Secretary and contingent on the results

of the outside audit and a comprehensive evaluation as proposed below.

The ‘‘ground up’’ examination of trust operations mentioned above should build

upon the completed audit of existing operations and follow the steps briefly outlined

earlier concerning the operations of the Special Trustee and OTFM, specifically:

1. Duties and responsibilities. Before any trust reform proceeds, we must have a

clear understanding of the goals of such reform, both in terms of financial account

management and natural resource asset management. This would involve development of a specific mandate of precisely what the Federal trust responsibility requires with regard to the management of financial accounts and natural resources

such as land, water, minerals, and forests. The mandate necessarily would require

a review of the relevant treaties, statutes, regulations, policy and guidance documents, and court decisions. We discussed earlier the general trust duty established

in the applicable court decisions. We note one previous attempt to catalog the Department’s trust responsibilities: Interior Solicitor Leo Krulitz’s letter of November

21, 1978, to Assistant Attorney General James W. Moorman, concerning the case

of United States v. Maine. In that letter, Solicitor Krulitz set out the Department’s view of the United States’’ trust obligation with respect to Indian property interests. 4

2. Functions and tasks. The Department must develop a comprehensive catalog

of the activities in which the Department must be engaged in order to fulfill the
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trust responsibility mandated above. This effort should benefit from the results of

the completed audit critiquing how well current activities are being performed.

3. Develop uniform standards. Any trust reform plan must include an explanation

of how natural resource asset management and trust funds management will be administered in accordance with trust principles. To that end, the Department must

develop, refine, and articulate uniform standards by which both financial account

management and natural resource asset management activities are to be undertaken and measured.

4. Implement necessary systems. The next step would be for the Department to implement operational and accounting policies and procedures, based on the uniform

standards according to which the necessary functions and tasks are to be performed.

Such systems must include internal controls to ensure the quality of operations.

5. Integration of Tribal Self-Determination in Trust Assets Management.

In the context of the existing trust management regime, as detailed above, an emphasis has been placed on ensuring that Indian tribes, consistent with the principles

of self-determination, can manage, if they so choose, their own trust assets. These

self-determination opportunities must be permitted to continue. Accordingly, great

care should be exercised to integrate the program and policy principles of the Trust

Fund Management Reform Act, the Forest Resources Management Act, and the Agricultural Resource Act into the revamped trust management structure, and to expand the concept of trustee/beneficiary comanagement to all appropriate areas of

trust management.

D. Conclusion—Responsible and Cost-Effective Trust Reform.

The trust reform proposal outlined above is efficient as it does not require the

costly expenditures to transfer and realign agencies and agency functions. The proposal is effective because it establishes a clear line of authority over all Interior

trust management activities with a highly qualified person to direct the organizational and operational performance reforms needed to meet the United States’’ trust

responsibility to Indians. And, finally, by maintaining the BIA and the OTFM intact

(albeit under the new Deputy Secretary’s ultimate authority over trust functions),

the proposal continues the strong partnership established by the tribes and the Department consistent with the principles of self-determination and self-governance.

Thank you for this opportunity to express the views of the Hualapai Nation and

the Yavapai-Apache Nation of the Camp Verde Reservation.

PREPARED STATEMENT OF THOMAS N. SLONAKER, SPECIAL TRUSTEE FOR AMERICAN

INDIANS

Mr. Chairman, as the Special Trustee for American Indians, I am pleased to have

this opportunity to discuss with the committee issues pertaining to the reform of

the trust responsibility within the Department of the Interior.

It has been 22 years since the Office of Management and Budget first identified

the financial management of Indian trust assets as a high-risk liability to the

United States. It has been approximately 8 years since the enactment of the American Indian Trust Fund Management Reform Act, which clarified some of the existing trust responsibilities of the Secretary. That act established the Office of the Special Trustee for American Indians and required the Department to bring about the

‘‘more effective management of, and accountability for, the proper discharge of the

Secretary’s trust responsibilities to Indian tribes and individual Indians. . . ’’ In August 1997, in response to the comprehensive strategic plan required by the Act to

be prepared by the Special Trustee ‘‘for all phases of the trust management business

cycle,’’ the Secretary authorized that ‘‘selected, trust systems improvements and

data cleanup efforts. . . should proceed as soon as possible.’’ I was confirmed by the

Senate as the Special Trustee 21 months ago. During that time I have reached several conclusions that I would like to share with you regarding the capability of the

Government to manage appropriately the Indian trust assets it holds as trustee for

specific Indian beneficiaries, comprised of some 300 tribes and nearly 300,000 individuals.

Trust reform, as well as the ongoing delivery of trust services to these individual

and tribal beneficiaries, has reached a point where radical measures need to be undertaken now. Specifically, the Department’s discharge of its trust responsibilities,

as it is now organized, is inadequate to the demands placed upon it.

The primary problems are as follows. First, there is the need for a clear understanding of the Government’s trust obligation to the beneficiaries. Second, there is

a great need for experienced trust management, and, finally, there is the need to

ensure accountability by those responsible for delivering trust services.
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It is self evident that the nature and scope of the Federal Government’s trust obligations in the area of Indian affairs is complex and reflects a history dating to the

establishment of the Federal Government. The American Indian Trust Fund Management Reform Act of 1994 addresses itself to a discreet part of those Federal obligations: The physical assets the Government holds or controls as the trustee for Indian tribes and individual Indians. Similar to a private sector trustee, the Department is responsible for identifiable assets, in this instance primarily land and

investable cash, and is required to manage those assets, make fiducially responsible

investment decisions, account for the income: Produced and report fully to the beneficiaries about its stewardship of these Indian trust assets. Like every other trustee,

the Government trustee is required to know at every moment what assets are held

in trust, how those assets are invested and managed and to whom the proceeds of

that management belong and are to be paid. The Reform Act has erased any doubt

that those basic trust duties are Federal trust duties.

Today the Department cannot perform its trust duties at the level required by the

Reform Act. Trust reform to date has not achieved an acceptable level of success,

and, indeed, to speak of trust reform is misleading. The implementation of selected

trust systems and data cleanup efforts is only the prelude to trust reform. It is the

acquisition of the basic tools to do what needs to be done. It is selecting and buying

the plow. Cutting the furrows lies far ahead. Actual trust reform must be accomplished. By properly serving the best interests of these Indian beneficiaries, the

trustee—the Government—protects itself from the high risk of liability that OMB

spoke to in 1980.

The problems that trouble the Department are management problems. The lack

of management capability is signaled by the evident need for senior managers with

experience in delivering trust services and operating trust systems in the private

sector. Additionally, there is a critical need for senior level, project management

skills applicable to large trust operations projects. The execution of those Federal

fiduciary obligations must be rationalized.

The lack of accountability refers to the need to have all staff that are charged

with trust responsibilities perform as directed by informed and responsible senior

managers.

Until a clearer understanding of the trust obligation, better management, and

more accountability are in place regardless of what the trust organization looks like,

it will be difficult for the Government to come into compliance with the 1994 Reform

Act.

I concur with the Secretary’s concept of a single organizational unit responsible

for the management of the Indian trust assets. That organization has the potential

of addressing the accountability concerns by placing one executive, responsible to

the Secretary, in charge of the delivery of the appropriate, required trust services

to tribes and individual Indians. I believe a single organization with its own chain

of command, that is one not diluted by intersecting other Departmental chains of

command, can work better than the present organization. The devil, however, is in

the details, and the new organization must have the best trust executive direction

and actually hold people accountable. I also believe that the trust organization

needs to be separated from other activities of the Bureau of Indian Affairs and

placed on its own footing.

At its last meeting on December 7, 2002, the Special Trustee’s Advisory Board,

a Board required to be created by the 1994 Reform Act, adopted a formal proposal

that the entire Indian asset trust function be removed from Interior and lodged in

a self contained organization to be created by Congress. This proposal is an initiative of the Board, and it is based in large part on the Department’s inability over

the many years to identify and cure its management problems. It is a suggestion

that has merit.

On the other hand, I disagree with those who suggest that once the trust organization is ‘‘fixed’’ that it be returned to its present organizational locations. I believe

that organizations are not well motivated to make necessary changes if they know

that 1 day they will return to their previous owner.

I also want to comment on the role of the Special Trustee. I believe that the Special Trustee must have the opportunity to provide candid and informed guidance directly to the Secretary as she seeks the more effective management of the trust responsibilities under her control. The Office of the Special Trustee (OST) will continue to focus on its oversight responsibilities. Therefore, OST must be provided appropriate resources and pursue every opportunity to ensure that trust reform is carried out effectively and efficiently.

Last July, the Secretary authorized the Special Trustee to issue written directives

requiring the adoption of appropriate changes in existing policies that hinder trust

reform. Although such directives may be overruled by the Secretary on appeal, the
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authority to issue such directives can prove to be a valuable tool. However, it is not

as effective as active direct line authority over those in the Department who implement trust policies and practices. Also, I am concerned about the inherent conflicts

that can arise between our responsibility to individual Indian beneficiaries and our

need to consult with tribes on matters affecting Indians in general.

Currently, the Office of the Special Trustee receives appropriations for trust reform activities, no matter where in Interior the reform project is managed. OST

then initiates the funding of projects when and if adequate plans and management

appear to be satisfactory. In some instances, we have found it necessary to interrupt

funding when expected project success is not being achieved. This allocation procedure has proven helpful to the trust reform process and has given the Special Trustee a useful and independent voice in the Department’s implementation of trust reform. The procedure is consistent with OST’s oversight responsibilities under the

1994 Reform Act. It is important to achieving lasting trust reform and should continue to be a part of the reform effort We speak about organizing for trust reform

within the Department, but it is important to recognize that today there are ongoing

trust functions that require attention. For example, we need to review with the Congress the restrictions that now apply to the investment of trust cash concern here

is the ability to offset inflation for those beneficiary trust funds that are expected

to remain with the trustee for a matter of years. One example of this is the investment of cash for the benefit of a young Indian until such time that it may be distributed upon reaching their majority age.

I also believe that it is critical to trust reform to confirm that Indian trust land

assets are earning a competitive market rate of royalty or lease income. This is the

Trustee’s obligation on behalf of the beneficiaries, tribal or individuals. We have created in OST a risk management unit which, when fully operational, will help assure

the Secretary that the assets are properly managed.

Finally, let me comment on the notion advanced by some parties these days that

the administration of the Government’s trust can be split into two seemingly separate organizations, one for individual Indians and one for the tribes. I understand

that litigation issues prompted this alternative. It is highly impractical in my opinion, however, to split administratively and operationally those trust responsibilities

that have virtually identical characteristics of accounting, beneficiary reporting,

land management (sometimes overlapping), investment management, and tribal distributions to individuals. Its only result would be to create two similar organizations

that would be at odds with each other.

In conclusion, Mr. Chairman, proper trust reform can be put in place with the

right leadership, the right trust skills, and accountability up and down the chain

of command.

Thank you for this opportunity to be with you.

PREPARED STATEMENT OF VINCENT ARMENTA, CHAIRMAN, SANTA YNEZ BAND OF

CHUMASH INDIANS

Chairman Inouye, Vice Chairman Campbell and members of the committee, thank

you for holding this oversight hearing on the Department of the Interior’s management of Indian trust funds and for the opportunity to provide you with my testimony on behalf of the Santa Ynez Band of Chumash Indians. We appreciate the efforts of Congress, especially the Senate Committee on Indian Affairs, to identify,

analyze, address and evaluate the continuing needs throughout Indian country.

The Santa Ynez Band of Chumash Indians has 161 members, many of whom reside on the Santa Ynez Reservation, located in Santa Barbara County in Southern

California. The Santa Ynez Reservation is a mere 128 acres and consists of a long

and narrow parcel which is mostly in creek bed areas. The composition, terrain and

absence of other natural resources on our reservation have not afforded the Santa

Ynez Band or our individual members with lease, royalty, or other resource income

that is managed by the Department of the Interior in tribal trust accounts and Individual Indian Money [IIM] accounts. However, the proposed reorganization of the

Bureau of Indian Affairs [BIA], creation of the Bureau of Indian Trust Assets Management [BITAM], and transfer of BIA trust management to BITAM causes us great

concern because it appears that the proposed BITAM would manage more than the

tribal trust accounts and IIM accounts and would impact our trust programs and

activities.

As referenced above, the composition and terrain of our reservation have presented us with many challenges, have limited our ability to provide housing and

other governmental services for our members, and have also limited our ability to

take advantage of diverse economic development opportunities. Tourism and agri-
81

culture continue as the primary industries in the surrounding communities and

members of the Santa Ynez Band are actively considering ways to participate more

fully and equitably in the region’s development as well as contribute to its prosperity. Despite the many challenges we face, the Santa Ynez Band has developed tribal

housing through HLJD programs, including NAHASDA, provides health care at the

Santa Ynez Tribal Health Clinic through 638-compacting, established the Santa

Ynez Chumash Environmental Office through the EPA’s General Assistance

Progran, provides higher education scholarships to our members, and developed the

Chumash Casino. This is just the beginning as we have many long-neglected unmet

needs to address.

While we strive to develop our governmental infrastructure and achieve financial

independence, we look to the Federal Government as a partner and resource. Our

future as a self-governing sovereign Indian nation requires our mutual commitments to a strong government-to-government relationship. We look to Congress, the

Administration and the courts to reaffirm the Federal Government’s commitment as

we, the Santa Ynez Band of Chumash Indians, reaffirm our commitment to work

with you.

Concerns with the Department of the Interior’s Proposed Trust Management Reorganization

The proposed trust management reorganization has caused great concern

throughout Indian country. This is due in large part to the vague and inconsistent

language that has been used and the lack of clarity regarding the scope of the Secretary of the Interior’s proposal. We have received reports that Interior officials

have declined to respond to many direct questions and have said that they will wait

until the conclusion of the consultation/scoping meetings before issuing any written

responses or clarifications. While we certainly appreciate and support Interior conducting more meetings throughout Indian country, we believe that we would all derive great benefit from Interior’s clarification which tribes have sought from the

very first meeting. With better information, tribes and Congress would have the information with which to assess exactly what the impacts of the Secretary of the Interior’s proposal would be.

Though we oppose the BITAM proposal, we emphatically support the need for

trust reform as the current systems and programs fail to meet our cumulative and

growing unmet needs. Furthermore, the greater distribution of trust responsibilities

throughout the various departments and agencies demand a clearer and more focused direction and strong leadership that must originate from the one agency seen

as ‘‘the’’ agency that should do this—the Bureau of Indian Affairs.

Secretary of the Interior Gale Norton says that the Bureau of Indian Trust Assets

Management [BITAM] proposal was quickly announced and advanced due to the

proceedings of the Cobell litigation which focuses on the Department’s mismanagement of IIM accounts only. However, we have received reports that the plaintiffs

in the Cobell litigation reject the BITAM proposal as it fails to address the concerns

of the litigation. Tribal leaders from throughout Indian country have emphatically

rejected Secretary Norton’s proposal. Thus, we do not understand Secretary Norton’s

continuing push for the plan. With the limited information that we have at this

point, we can only speculate that the BITAM proposal is intended to erode and potentially eliminate the BIA.

It appears that the Bureau of Indian Trust Assets Management proposal would

affect the existing structures, programs, services, and trust obligations, duties, and

responsibilities of the Federal Government. The Draft Organizational Chart for the

BITAM proposal, dated November 14, 2001, shows that the proposed reorganization

will affect self-governance, 638-compacting, contracting and direct service tribes in

a variety of ways. However, we have received reports that changes to that Draft Organizational Chart have already been considered and that some activities and functions will remain with the BIA.

Secretary Norton has said that the creation of a new Bureau with another Assistant Secretary to oversee trust reform and trust assets management will free up Assistant Secretary McCaleb to concentrate on the other programs within the Bureau

of Indian Affairs to improve the delivery of services. The Santa Ynez Band would

like to know exactly which programs will remain with the Bureau of Indian Affairs,

what will remain of the BIA’s organizational structure, and what the BIA’s plans

are for improving the delivery of their services. We view this as being very critical

because we see this move to ‘‘reorganize’’ as an erosion of the BIA rather than a

reinforcement of the BIA. We would like, to see a clear plan and vision for the future Bureau of Indian Affairs from Secretary Norton and Assistant Secretary

McCaleb.
82

Everyone involved—tribes, individual Indians, Congress, the Department of the

Interior, the courts—would benefit from clarification regarding what Interior intends the scope of ‘‘trust assets’’ and ‘‘trust funds’’ as used in its proposal to mean.

Tribes are especially concerned about what is being excluded and whether the exclusion of any assets, funds, programs or services from the ‘‘trust’’ umbrella is an indication of a change in the administration’s view of its trust obligations, duties and

responsibilities. Funds flowing from the Federal Government and through Federal

programs may be viewed as ‘‘trust’’ funds as they are in furtherance of the trust

responsibilities of the Federal Government and in furtherance of the trust policy of

the Federal government to promote the self-determination and self-governance of

our Indian nations. The Draft Organizational Chart would support this view.

When Interior characterizes or categorizes trust v. non-trust functions, it appears

as though Interior is redefining its trust obligations, duties and responsibilities.

However, if Interior intends to separate its fiscal management of trust moneys only,

and this is the only distinction Interior intends, then it should clarify that. Some

Interior officials have said that BITAM is intended solely as a fiscal management

reorganization. These same officials do not believe that BITAM will, nor should, affect natural resources management, land into trust applications and other BIA functions that are better informed at the regional and field office levels. We are concerned with the characterization of such natural resources as ‘‘non-trust’’ assets by

an Interior official, though we assume that a very narrow definition of ‘‘trust’’ was

intended. We would appreciate a clarification with regard to the above concerns.

We hope that Secretary Norton and Assistant Secretary McCaleb are willing and

able to provide direct responses soon. We are otherwise concerned that the lack of

clarity is intentional and intended to veil purposes that can only be adverse to our

interests.

Concerns With General Distribution of Trust Responsibilities and Lack of Leadership

We have great concern over the distribution of program management outside of

the Bureau of Indian Affairs, whether that is indeed the intent or the unintended,

though foreseeable, result. We are already grappling with the efforts of Departments

outside of Interior who are relatively new to administering Indian programs and are

for the first time responsible for effecting the implementation of Federal trust obligations, duties and responsibilities. While Interior has not been as effective as Indian country deserves, it causes us great concern to have to work with new and

much less knowledgeable, experienced, or committed departments of the Federal

Government.

Secretary Norton, in her testimony before the House Resources Committee on

February 6, 2002, entitled ‘‘Native American Trust Issues and Ongoing Challenges,

stated one of the Department of the Interior’s trust management challenges is that

‘‘Trust responsibilities are spread throughout the Department. Thus, trust leadership is diffuse.’’ We strongly agree with that statement and do not understand why

Secretary Norton proposes to keep Interior’s trust responsibilities spread across two

different bureaus. Further, the proposal would require creating many completely

new positions within the Department that will be staffed by individuals who can

not have any experience fulfilling the duties required by those positions. Beyond the

serious questions raised by this lack of experience, the net increase in the personnel

costs of trust administration, we fear, will run into many millions, if not tens of millions, of dollars. Given the lack of clarity in the Secretary’s proposal, and the already staggering amount of other unmet needs throughout Indian Country, the proposal does not satisfy the Secretary’s fiduciary obligation to ensure that monies set

aside for the benefit of individual Indians and Indian tribes is used wisely. We cannot repair one breach by creating another. The alternative proposals offered by various Indian nations and inter-tribal organizations suggest the focused management

and leadership Secretary Norton seeks.

The Federal Government’s trust responsibilities are spread throughout various departments beyond the Department of the Interior, including the Department of

Health and Human Services, the Department of Housing and Urban Development,

the Department of Agriculture, the Environmental Protection Agency, and the Department of Justice. Some of these departments have looked to the Department of

the Interior and the Bureau of Indian Affairs for their trust leadership and have

found them woefully lacking. We also understand that programs and services remaining under the Bureau of Indian Affairs will remain under close scrutiny and

that any failure of the Bureau of Indian Affairs to meet certain minimum performance standards will result in that program being shifted to another department. It

is critical that we reinforce and dramatically improve the Bureau of Indian Affairs.

Thank you Chairman Inouye, Vice Chairman Campbell and members of the committee for this opportunity to provide testimony on behalf of the Santa Ynez Band
83

of Chumash Indians. If you have any questions or wish to discuss our concerns and

interests and how we might work together to address them please do not hesitate

to contact us. Thank you.

PREPARED STATEMENT OF CHRIS DEVERS, CHAIRMAN, PAUMA-YUIMA BAND OF

MISSION INDIANS

Chairman Inouye, Vice Chairman Campbell and members of the committee, thank

you for keeping the record open for the committee’s oversight hearing on the Department of the Interior’s management of Indian trust funds and for the opportunity to

provide you with written testimony on behalf of the Pauma-Yuima Band of Mission

Indians. We appreciate the efforts of Congress; especially the Senate Committee on

Indian Affairs, to identify, analyze, address and evaluate the continuing needs

throughout Indian country.

The Pauma-Yuima Band of Mission Indians has 200 members, a majority of

whom reside on the Pauma and Yuima Indian Reservations, located in northern San

Diego County in Southern California. The Pauma and Yuima Indian Reservations

consists of approximately 5,800 acres most of which is on Palomar Mountain, an important tribal and cultural resource which we continue to strive to protect and preserve, leaving approximately 275 acres for housing, governmental services, and economic development. All of the reservation lands are held in trust for the PaumaYuima Band. While our members do not have Individual Indian Money [IIM] accounts, the tribe has significant settlement funds held in trust and managed by the

Department of the Interior. The proposed reorganization of the Bureau of Indian Affairs [BIA], creation of the Bureau of Indian Trust Assets Management [BITAM],

and transfer of BIA trust management to BITAM causes us great concern because

it appears that the proposed BITAM would manage our tribal trust accounts as well

as impact our trust programs and activities. We are especially concerned that the

issues and concerns of small tribes with precious limited resources may be once

again overlooked.

We have overcome many challenges, though there are also many that remain. As

mentioned above, the composition, terrain and location of our Reservations have

presented us with many challenges, have limited our ability to provide housing and

other governmental services for our members, and.have also limited our ability to

take advantage of diverse economic development opportunities.

Agriculture continues as the primary industry in the surrounding community. The

tribe has developed and maintained orange and avocado groves. However, during

some years, the cost of picking the fruit and getting them to the market have exceeded the price that we could obtain for the fruit. The tribe and our members continue to actively consider different ways in which we may participate more fully and

equitably in the region’s development as well as contribute to its prosperity.

Despite the many challenges we face, the Pauma-Yuima Band has developed tribal housing through HUD programs, including NAHASDA, provides health care as

a part of the Indian Health Council consortium, established the Pauma Natural Resources Department through grove income and the EPA’s General Assistance Program and other EPA grants, provides after-school care and educational services, and

developed Casino Pauma in 2001—We are hopeful that Casino Pauma will generate

income that will enable us to provide additional services to our members and community as we have many long-neglected unmet needs to address.

While we strive to develop our governmental infrastructure and achieve financial

independence, we look to the Federal Government as a partner and resource. Our

future as a self-governing sovereign Indian nation requires our mutual commitments to a strong government-to-government relationship. We look to Congress, the

Administration and the courts to reaffirm the Federal Government’s commitment as

we, the Pauma-Yuima Band of Mission Indians, reaffirm our commitment to work

with you.

Concerns with the Department of the Interior’s Proposed Trust Management Reorganization

The proposed trust management reorganization has caused great concern

throughout Indian country. This is due in large part to the vague and inconsistent

language that has been used and the lack of clarity regarding the scope of the Secretary of the Interior’s proposal. We have received reports that Interior officials

have declined to respond to many direct questions and have said that they will wait

until the conclusion of the consultation/scoping meetings before issuing any written

responses or clarifications. While we certainly appreciate and support Interior conducting more meetings throughout Indian country, we believe that we would all derive great benefit from Interior’s clarification which tribes have sought from the
84

very first meeting. With better information, tribes and Congress would have the information with which to assess exactly what the impacts of the Secretary of the Interior’s proposal would be.

Though we oppose the BITAM proposal, we emphatically support the need for

trust reform as the current systems and programs fail to meet our cumulative and

growing unmet needs. Furthermore, the greater distribution of trust responsibilities

throughout the various departments and agencies demand a clearer and more focused direction and strong leadership that must originate from the one agency seen

as ‘‘the’’ agency that should do this—the Bureau of Indian Affairs.

Secretary of the Interior Gale Norton says that the Bureau of Indian Trust Assets

Management [BITAM] proposal was quickly announced and advanced due to the

proceedings of the Cobell litigation which focuses on the Department’s mismanagement of IIM accounts only. However, we have received reports that the plaintiffs

in the Cobell litigation reject the BITAM proposal as it fails to address the concerns

of the litigation. Tribal leaders from throughout Indian Country have emphatically

rejected Secretary Norton’s proposal. Thus, we do not understand Secretary Norton’s

continuing push for the plan. With the limited information that we have at this

point, we can only speculate that the BITAM proposal is intended to erode and potentially eliminate the BIA.

It appears that the Bureau of Indian Trust Assets Management proposal would

affect the existing structures, programs, services, and trust obligations, duties, and

responsibilities of the Federal Government. The Draft Organizational Chart for the

BITAM proposal, dated November 14, 2001, shows that the proposed reorganization

will affect self-governance, 638-compacting, contracting and direct service tribes in

a variety of ways. However, we have received reports that changes to that Draft Organizational Chart have already been considered and that some activities and functions will remain with the BIA.

Secretary Norton has said that the creation of a new Bureau with another Assistant Secretary to oversee trust reform and trust assets management will free up Assistant Secretary McCaleb to concentrate on the other programs within the Bureau

of Indian Affairs to improve the delivery of services. The Pauma Band would like

to know exactly which programs will remain with the Bureau of Indian Affairs,

what will remain of the BIA’s organizational, structure, and what the BIA’s plans

are for improving the delivery of their services. We view this as being very critical

because we see this move to ‘‘reorganize’’ as an erosion of the BIA rather than a

reinforcement of the BIA. We would like to see a clear plan and vision for the future

Bureau of Indian Affairs from Secretary Norton and Assistant Secretary McCaleb.

Everyone involved—tribes, individual Indians, Congress, the Department of the

Interior, the courts—would benefit from clarification regarding what Interior intends the scope of ‘‘trust assets’’ and ‘‘trust funds’’ as used in its proposal to mean.

Tribes are especially concerned about what is being excluded and whether the exclusion of any assets, funds, programs or services from the ‘‘trust’’ umbrella is an indication of a change in the administration’s view of its trust obligations, duties and

responsibilities. Funds flowing from the Federal Government and through Federal

programs may be viewed as ‘‘trust’’ funds as they are in furtherance of the trust

responsibilities of the Federal Government and in furtherance of the trust policy of

the Federal Government to promote the self-determination and self-governance of

our Indian nations. The Draft Organizational Chart would support this view.

When Interior characterizes or categorizes trust v. non-trust functions, it appears

as though Interior is redefining its trust obligations, duties and responsibilities.

However, if Interior intends to separate its fiscal management of trust moneys only,

and this is the only distinction Interior intends, then it should clarify that. Some

Interior officials have said that BITAM is intended solely as a fiscal management

reorganization. These same officials do not believe that BITAM will, nor should, affect natural resources management, land into trust applications and other BIA functions that are better informed at the regional and field office levels. We are concerned with the characterization of such natural resources as ‘‘nontrust’’ assets by

an Interior official, though we assume that a very narrow definition of ‘‘trust’’ was

intended. We would appreciate a clarification with regard to the above concerns.

We hope that Secretary Norton and Assistant Secretary McCaleb are willing and

able to provide direct responses soon. We are otherwise concerned that the lack of

clarity is intentional and intended to veil purposes that can only be adverse to our

interests.

Concerns With General Distribution of Trust Responsibilities and Lack of

Leadership

We have great concern over the distribution of program management outside of

the Bureau of Indian Affairs, whether that is indeed the intent or the unintended,
85

though foreseeable, result. We are already grappling with the efforts of Departments

outside of Interior who are relatively new to administering Indian programs and are

for the first time responsible for effecting the implementation of Federal trust obligations, duties and responsibilities. While Interior has not been as effective as Indian country deserves, it causes us great concern to have to work with new and

much less knowledgeable, experienced, or committed departments of the Federal

Government.

Secretary Norton, in her testimony before the House Resources Committee on

February 6, 2002, entitled ‘‘Native American Trust Issues and Ongoing Challenges,

stated one of the Department of the Interior’s trust management challenges is that

‘‘Trust responsibilities are spread throughout the Department. Thus, trust leadership is diffuse.’’ We strongly agree with that statement and do not understand why

Secretary Norton proposes to keep Interior’s trust responsibilities spread across two

different bureaus. Further, the proposal would require creating many completely

new positions within the Department that will be staffed by individuals who can

not have any experience fulfilling the duties required by those positions. Beyond the

serious questions raised by this lack of experience, the net increase in the personnel

costs of trust administration, we fear, will run into many millions, if not tens of millions, of dollars. Given the lack of clarity in the Secretary’s proposal, and the already staggering amount of other unmet needs throughout Indian country, the proposal does not satisfy the Secretary’s fiduciary obligation to ensure that moneys set

aside for the benefit of individual Indians and Indian tribes is used wisely. We cannot repair one breach by creating another. The alternative proposals offered by various Indian nations and inter-tribal organizations suggest the focused management

and leadership Secretary Norton seeks.

The Federal Government’s trust responsibilities are spread throughout various departments beyond the Department of the Interior, including the Department of

Health and Human Services, the Department of Housing and Urban Development,

the Department of Agriculture, the Environmental Protection Agency, and the Department of Justice. Some of these departments have looked to the Department of

the Interior and the Bureau of Indian Affairs for their trust leadership and have

found them woefully lacking. We also understand that programs and services remaining under the Bureau of Indian Affairs will remain under close scrutiny and

that any failure of the Bureau of Indian Affairs to meet certain minimum performance standards will result in that program being shifted to another department. It

is critical that we reinforce and dramatically improve the Bureau of Indian Affairs.

Thank you Chairman Inouye, Vice Chairman Campbell and members of the committee for this opportunity to provide testimony on behalf of the Pauma Band of

Mission. If you have any questions or wish to discuss our concerns and interests and

how we might work together to address them, please do not hesitate to contact us.

Thank you.
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PREPARED STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON

Mr. Chairman, thank this opportunity for the committee to examine the problem

of trust fund management and recent efforts toward its reform. Trust fund mismanagement marks a significant failure of the U.S. Government’s trust responsibility toward tribes and individual account holders. As the chairperson of the Colville

Tribes from Washington State framed it, ‘‘One of the saddest chapters in American

history is the long-term mismanagement of trust resources’’ which were intended for

the benefit of Indians and tribes.

Most recently, the class action lawsuit, Cobell v. Norton, has brought renewed urgency to the need to reform trust fund mismanagement. I share the dissatisfaction

of the court in the failure of the U.S. Government’s trust responsibilities, and I echo

its calls to reform trust management. However, it is critical that this reform be done

with careful calculation and in a way that affirms, not diminishes, trust responsibilities, tribal self-determination, and self-governance.

Numerous tribes from Washington State have expressed serious concerns about

the Department of the Interior’s proposal to create a new Bureau of Indian Trust

Assets Management, and I share these concerns. In fact, several tribal leaders from

Washington State are in attendance today, and I would like to thank them for their

leadership on this issue.

The tribes agree that there is significant room for improvement in the management of trust functions; however, they are concerned about both the merits of Interior’s plans to create a new Bureau and the fact that tribes were not consulted prior

to the development of its proposal. Indeed, tribes and individual Indians are the

beneficiaries of trust assets, and the United States’ has responsibility to honor the

government-to-government relationship it has with tribes. Therefore, it is absolutely

critical that tribes play a central role in any successful trust management reform.

Representatives from Interior have advised the committee that trust fund management would be improved by removing all trust management duties from BIA,

therefore keeping the services BIA provides to Native Americans and trust management completely separate. Washington State tribes have expressed their serious

concern that removing trust functions from the BIA would effectively dismantle the

agency, which has been the foothold for tribes in the Federal Government. for example, many tribes have partnerships with BIA in the execution of several trust responsibilities, such as natural resource management, and tribes do not want to see

their role in the management of their resources diminish if these trust functions are

taken out of the BIA. I will ask the witnesses to speak to these concerns today.

I understand that we will have the opportunity today to learn about a few of the

proposals for trust reform designed by tribal organizations. In addition, the Tribal

Task Force is reviewing these proposals and several others that have been tribally

generated.

It is my hope that Interior will seriously consider the concerns, suggestions, and

proposals from the tribal community and also take advantage of the wisdom and

insight from the leaders who are working hard to create a viable plan for reform.

Again, any successful attempt at rectifying this complex and centuries-long problem

must include the experience of the tribes.

Again, thank you Mr. Chairman, and I would also like to thank the witnesses and

the representatives from Washington State for being here today. I look forward to

hearing the testimony and learning more about what we can do to assist in the effort of meaningful trust management reform.

Æ