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[Senate Hearing 107-332]
[From the U.S. Government Publishing Office]

                                                        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

                    U.S. GOVERNMENT PRINTING OFFICE
78-201                       WASHINGTON : 2002
____________________________________________________________________________
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                      COMMITTEE ON INDIAN AFFAIRS

                   DANIEL K. INOUYE, Hawaii, Chairman

            BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

FRANK MURKOWSKI, Alaska              KENT CONRAD, North Dakota
JOHN McCAIN, Arizona,                HARRY REID, Nevada
PETE V. DOMENICI, New Mexico         DANIEL K. AKAKA, Hawaii
CRAIG THOMAS, Wyoming                PAUL WELLSTONE, Minnesota
ORRIN G. HATCH, Utah                 BYRON L. DORGAN, North Dakota
JAMES M. INHOFE, Oklahoma            TIM JOHNSON, South Dakota
                                     MARIA CANTWELL, Washington

        Patricia M. Zell, Majority Staff Director/Chief Counsel

         Paul Moorehead, Minority Staff Director/Chief Counsel

                                  (ii)

  
                            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
    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

                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 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 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.
    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 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 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 certainly 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 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 responsibilities, 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.
    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.

    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 far-reaching, 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 failure 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, 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. This is the second time in about 3\1/2\ 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 
3\1/2\ 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 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 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 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 aspects 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 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 availability 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 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 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.
    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 
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--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 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?
    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.
    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 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 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- by-transaction 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 interests 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.
    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 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 
sub-groups 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.
    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 1\1/2\ 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 experience 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 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 
Department 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 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 reorganization 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 single 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.]
    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.
    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 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 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 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.
    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 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 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?
    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 business 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 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 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 approval. 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 agency. 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 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.
    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 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 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 single-minded 
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 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 segregate 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 non-trust 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 
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.
    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 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. 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 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.
    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 
Department'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.
    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.]
=======================================================================

                            A P P E N D I X

                              ----------                              

              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.
    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) February 1992, and 
``Problems Affecting BIA Financial Management,'' (GAO/T-AFMD-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.
    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 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--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-to-
day 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 Yavapai-Apache Nation of the 
Camp Verde Reservation.
    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 would provide a clear 
line of authority and accountability for reform efforts and ongoing 
operations.
---------------------------------------------------------------------------
    \1\ This trust duty is discussed later in this statement.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \2\ See, 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).
    \3\ See 31 U.S.C. sec. 703.
---------------------------------------------------------------------------
    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, active 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\
---------------------------------------------------------------------------
    \4\ See also Secretarial Order 3225, ``Principles for the Discharge 
of the Secretary's Trust Responsibility,'' issued by former Interior 
Secretary Babbitt on April 28, 2000.
---------------------------------------------------------------------------
    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 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.
    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 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 agriculture 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.
    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 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 Pauma-Yuima 
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 
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, 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.

                               
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