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S. HRG. 107–647

INDIAN TRUST ASSET AND TRUST FUND

MANAGEMENT AND REFORM ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

ON

S. 2212

TO ESTABLISH A DIRECT LINE OF AUTHORITY FOR THE OFFICE OF

TRUST REFORM IMPLEMENTATION AND OVERSIGHT TO OVERSEE THE

MANAGEMENT AND REFORM OF INDIAN TRUST FUNDS AND ASSETS

UNDER THE JURISDICTION OF THE DEPARTMENT OF THE INTERIOR,

AND TO ADVANCE TRIBAL MANAGEMENT OF SUCH FUNDS AND ASSETS, PURSUANT TO THE INDIAN SELF-DETERMINATION ACT

JULY 30, 2002

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

DANIEL K. INOUYE, Hawaii, Chairman

BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

PAUL WELLSTONE, Minnesota

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

FRANK MURKOWSKI, Alaska

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

PATRICIA M. ZELL, Majority Staff Director/Chief Counsel

PAUL MOOREHEAD, Minority Staff Director/Chief Counsel

(II)
(III)

C O N T E N T S

Page

S. 2212, text of ......................................................................................................... 2

Statements:

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, vice chairman, Committee on Indian Affairs .............................................................. 20

Conrad, Hon. Kent, U.S. Senator from North Dakota .................................. 21

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

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

Jandreau, Michael, chairman, Lower Brule Sioux Tribe .............................. 26

Johnson, Hon. Tim, U.S. Senator from South Dakota .................................. 19

Manuel, Edward, chairman, Tohono O’odham Nation, Sells, AZ ................. 28

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

Nashville, TN ................................................................................................ 31

McCain, Hon. John, U.S. Senator from Arizona ............................................ 19

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

Interior, Washington, DC ............................................................................. 21

Small, Geraldine, president, Northern Cheyenne Tribe and chairperson,

Montana-Wyoming Tribal Leaders Council, Lame Deer, MT ................... 23

APPENDIX

Prepared statements:

Daschle, Hon. Tom, U.S. Senator from South Dakota .................................. 39

Intertribal Monitoring Association on Indian Trust Funds .......................... 47

Jandreau, Michael ............................................................................................ 55

Johnson, Hon. Tim, U.S. Senator from South Dakota .................................. 41

Manuel, Edward, .............................................................................................. 61

Marshall, Clifford, chairman, Hoopa Valley Tribe of California .................. 42

Martin, James T. .............................................................................................. 70

McCain, Hon. John, U.S. Senator from Arizona ............................................ 41

McCaleb, Neal ................................................................................................... 45

Note: Other material submitted for the record retained in committee

files.

(1)

INDIAN TRUST ASSET AND TRUST FUND

MANAGEMENT AND REFORM ACT

TUESDAY, JULY 30, 2002

U.S. SENATE,

COMMITTEE ON INDIAN AFFAIRS,

Washington, DC.

The committee met, pursuant to other business, at 11:35 a.m., in

room 106, Dirksen Senate Building, Hon. Daniel K. Inouye (chairman of the committee) presiding.

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

and Thomas.

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

HAWAII, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. The Committee on Indian Affairs meets again

this morning to receive testimony on S. 2212, the Indian Trust

Asset and Trust Fund Management and Reform Act of 2002.

This measure was introduced on April 18, 2002 by Senator John

McCain for himself and Senators Daschle and Johnson as a discussion draft bill.

The stated purpose of this bill is to establish a direct line of authority for the Office of Trust Reform Implementation and Oversight to oversee the management and reform on Indian trust funds

and assets, and to advance tribal management of those trust funds

and assets.

[Text of S. 2212 follows:]
2

1

II

107TH CONGRESS

2D SESSION S. 2212

To establish a direct line of authority for the Office of Trust Reform Implementation and Oversight to oversee the management and reform of

Indian trust funds and assets under the jurisdiction of the Department

of the Interior, and to advance tribal management of such funds and

assets, pursuant to the Indian Self-Determination Act and for other

purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 18, 2002

Mr. MCCAIN (for himself, Mr. DASCHLE, and Mr. JOHNSON) introduced the

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

A BILL

To establish a direct line of authority for the Office of

Trust Reform Implementation and Oversight to oversee

the management and reform of Indian trust funds and

assets under the jurisdiction of the Department of the

Interior, and to advance tribal management of such

funds and assets, pursuant to the Indian Self-Determination Act and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
3

2

•S 2212 IS

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Indian Trust Asset

3 and Trust Fund Management and Reform Act of 2002’’.

4 SEC. 2. DEPUTY SECRETARY FOR TRUST MANAGEMENT

5 AND REFORM.

6 (a) DEFINITIONS.—Section 2 of the American Indian

7 Trust Fund Management Reform Act of 1994 (25 U.S.C.

8 4001) is amended—

9 (1) in paragraph (1), by striking ‘‘(1) The

10 term’’ and inserting the following:

11 ‘‘(8) SPECIAL TRUSTEE.—The term’’;

12 (2) in paragraph (2), by striking ‘‘(2) The

13 term’’ and inserting the following:

14 ‘‘(4) INDIAN TRIBE.—The term’’;

15 (3) in paragraph (3), by striking ‘‘(3) The

16 term’’ and inserting the following:

17 ‘‘(7) SECRETARY.—The term’’;

18 (4) in paragraph (4), by striking ‘‘(4) The

19 term’’ and inserting the following:

20 ‘‘(5) OFFICE.—The term’’;

21 (5) in paragraph (5), by striking ‘‘(5) The

22 term’’ and inserting the following:

23 ‘‘(1) BUREAU.—The term’’;

24 (6) in paragraph (6), by striking ‘‘(6) The

25 term’’ and inserting the following:

26 ‘‘(2) DEPARTMENT.—The term’’;
4

3

•S 2212 IS

1 (7) by adding at the end the following:

2 ‘‘(3) DEPUTY SECRETARY.—The term ‘Deputy

3 Secretary’ means the Deputy Secretary for Trust

4 Management and Reform appointed under section

5 307(a)(2).

6 ‘‘(6) REFORM OFFICE.—The term ‘Reform Of7 fice’ means the Office of Trust Reform Implementa8 tion and Oversight established by section 307(e).’’;

9 (8) by moving paragraphs (1) through (8) (as

10 redesignated by this subsection) so as to appear in

11 numerical order; and

12 (9) by adding at the end the following:

13 ‘‘(9) TRUST ASSETS.—The term ‘trust assets’

14 means all tangible property including land, minerals,

15 coal, oil and gas, forest resources, agricultural re16 sources, water and water sources, and fish and wild17 life held by the Secretary for the benefit of an In18 dian tribe or an individual member of an Indian

19 tribe pursuant to Federal law.

20 ‘‘(10) TRUST FUNDS.—The term ‘trust funds’

21 means all funds held by the Secretary for the benefit

22 of an Indian tribe or and individual member of an

23 Indian tribe pursuant to Federal law.’’.

24 (b) DEPUTY SECRETARY FOR TRUST MANAGEMENT

25 AND REFORM.—Title III of the American Indian Trust
5

4

•S 2212 IS

1 Fund Management Reform Act of 1994 (25 U.S.C. 4041

2 et seq.) is amended by adding at the end the following:

3 ‘‘SEC. 307. DEPUTY SECRETARY FOR TRUST MANAGEMENT

4 AND REFORM.

5 ‘‘(a) ESTABLISHMENT.—

6 ‘‘(1) IN GENERAL.—There is established within

7 the Department the position of Deputy Secretary for

8 Trust Management and Reform.

9 ‘‘(2) APPOINTMENT AND REMOVAL.—

10 ‘‘(A) APPOINTMENT.—The Deputy Sec11 retary shall be appointed by the President, by

12 and with the advice and consent of the Senate.

13 ‘‘(B) TERM.—The Deputy Secretary shall

14 be appointed for a term of 6 years.

15 ‘‘(C) REMOVAL.—The Deputy Secretary

16 may be removed only for good cause.

17 ‘‘(3) ADMINISTRATIVE AUTHORITY.—The Dep18 uty Secretary shall report directly to the Secretary.

19 ‘‘(4) COMPENSATION.—The Deputy Secretary

20 shall be paid at a rate determined by the Secretary

21 to be appropriate for the position, but not less than

22 the rate of basic pay prescribed for Level II of the

23 Executive Schedule under section 5313 of title 5,

24 United States Code.

25 ‘‘(b) DUTIES.—The Deputy Secretary shall—
6

5

•S 2212 IS

1 ‘‘(1) oversee all trust fund and trust asset mat2 ters of the Department, including—

3 ‘‘(A) administration and management of

4 the Reform Office; and

5 ‘‘(B) financial and human resource matters

6 of the Reform Office; and

7 ‘‘(2) engage in appropriate government-to-gov8 ernment relations and consultations with Indian

9 tribes and individual trust asset and trust fund ac10 count holders on matters involving trust asset and

11 trust fund management and reform within the De12 partment.

13 ‘‘(c) STAFF.—In carrying out this section, the Dep14 uty Secretary may hire such staff having expertise in trust

15 asset and trust fund management, financial organization

16 and management, and tribal policy as the Deputy Sec17 retary determines is necessary to carry out this section.

18 ‘‘(d) EFFECT ON DUTIES OF OTHER OFFICIALS.—

19 ‘‘(1) IN GENERAL.—Except as provided in para20 graph (2), nothing in this section shall be construed

21 to diminish any responsibility or duty of the Assist22 ant Secretary of the Interior for Indian Affairs or

23 the Special Trustee relating to any duty of the As24 sistant Secretary or Special Trustee established

25 under this Act or any other provision of law.
7

6

•S 2212 IS

1 ‘‘(2) TRUST ASSET AND TRUST FUND MANAGE2 MENT AND REFORM.—Notwithstanding any other

3 provision of law, the Deputy Secretary shall have

4 overall management and oversight authority on mat5 ters of the Department relating to trust asset and

6 trust fund management and reform.

7 ‘‘(e) OFFICE OF TRUST REFORM IMPLEMENTATION

8 AND OVERSIGHT.—

9 ‘‘(1) ESTABLISHMENT.—There is established

10 within the Office of the Secretary the Office of

11 Trust Reform Implementation and Oversight.

12 ‘‘(2) REFORM OFFICE HEAD.—The Reform Of13 fice shall be headed by the Deputy Secretary.

14 ‘‘(3) DUTIES.—The Reform Office shall—

15 ‘‘(A) supervise and direct the day-to-day

16 activities of the Assistant Secretary of the Inte17 rior for Indian Affairs, the Special Trustee, the

18 Director of the Bureau of Land Management,

19 and the Director of the Minerals Management

20 Service, to the extent they administer or man21 age any Indian trust assets or funds;

22 ‘‘(B) administer, in accordance with title

23 II, all trust properties, funds, and other assets

24 held by the United States for the benefit of In-
8

7

•S 2212 IS

1 dian tribes and individual members of Indian

2 tribes;

3 ‘‘(C) require the development and mainte4 nance of an accurate inventory of all trust

5 funds and trust assets;

6 ‘‘(D) ensure the prompt posting of revenue

7 derived from a trust fund or trust asset for the

8 benefit of each Indian tribe (or individual mem9 ber of each Indian tribe) that owns a beneficial

10 interest in the trust fund or trust asset;

11 ‘‘(E) ensure that monthly statements of

12 accounts are provided to all trust fund account

13 holders;

14 ‘‘(F) ensure that all trust fund accounts

15 are audited at least annually, and more fre16 quently as determined to be necessary by the

17 Deputy Secretary;

18 ‘‘(G) ensure that the Assistant Secretary

19 of the Interior for Indian Affairs, the Special

20 Trustee, the Director of the Bureau of Land

21 Management, and the Director of the Minerals

22 Management Service provide to the Secretary

23 current and accurate information relating to the

24 administration and management of trust funds

25 and trust assets;
9

8

•S 2212 IS

1 ‘‘(H) provide for regular consultation with

2 trust fund account holders on the administra3 tion of trust funds and trust assets to ensure,

4 to the maximum extent practicable in accord5 ance with applicable law, the greatest return on

6 those funds and assets for the trust fund ac7 count holders; and

8 ‘‘(I) enter into contracts and compacts

9 under section 102 of the Indian Self-Deter10 mination Act (25 U.S.C. 450f) or section 403

11 of the Indian Self Determination and Education

12 Assistance Act (25 U.S.C. 458cc) to provide for

13 the management of trust assets and trust funds

14 by Indian tribes pursuant to a Trust Fund and

15 Trust Asset Management and Monitoring Plan

16 developed under section 202 of this Act.

17 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

18 are authorized to be appropriated such sums as are nec19 essary to carry out this section.’’.

20 (c) ADVISORY BOARD.—

21 (1) IN GENERAL.—Section 306 of the American

22 Indian Trust Fund Management Reform Act of

23 1994 (25 U.S.C. 4046) is amended to read as fol24 lows:
10

9

•S 2212 IS

1 ‘‘SEC. 306. ADVISORY BOARD.

2 ‘‘(a) ESTABLISHMENT AND MEMBERSHIP.—Notwith3 standing any other provision of law, the Deputy Secretary

4 described in section 307 shall establish an advisory board

5 to provide advice on all matters within the jurisdiction of

6 the Office of Trust Reform. The advisory board shall con7 sist of 9 members, appointed by the Deputy Secretary

8 after consultation with Indian tribes and appropriate In9 dian organizations, of which—

10 ‘‘(1) 5 members shall represent trust fund ac11 count holders, including both tribal and Individual

12 Indian Money accounts;

13 ‘‘(2) 2 members shall have practical experience

14 in trust fund and financial management;

15 ‘‘(3) 1 member shall have practical experience

16 in fiduciary investment management; and

17 ‘‘(4) 1 member, from academia, shall have

18 knowledge of general management of large organiza19 tions.

20 ‘‘(b) TERM.—Each member shall serve a term of 2

21 years.

22 ‘‘(c) FACA.—The advisory board shall not be subject

23 to the Federal Advisory Committee Act.’’.

24 (2) PREVIOUS ADVISORY BOARD.—The advisory

25 board authorized under section 306 of the American

26 Indian Trust Fund Management Reform Act of
11

10

•S 2212 IS

1 1994 (25 U.S.C. 4046) as in effect on the day be2 fore the date of enactment of this Act shall termi3 nate on the date of enactment of this Act.

4 (d) CONFORMING AMENDMENTS.—

5 (1) Section 302 of the American Indian Trust

6 Fund Management Reform Act of 1994 (25 U.S.C.

7 4042) is amended—

8 (A) in the second sentence of subsection

9 (a), by striking ‘‘who shall’’ and inserting ‘‘who,

10 except as provided in subsection (b)(3), shall’’;

11 and

12 (B) in subsection (b), by adding at the end

13 the following:

14 ‘‘(3) TRUST FUND MANAGEMENT.—The Special

15 Trustee shall report directly to the Deputy Secretary

16 with respect to matters relating to trust fund man17 agement and reform.’’.

18 (2) Section 303 of the American Indian Trust

19 Fund Management Reform Act of 1994 (25 U.S.C.

20 4043) is amended—

21 (A) by striking subsection (a);

22 (B) in subsection (b)(1), by striking ‘‘The

23 Special Trustee’’ and inserting ‘‘Except as pro24 vided in section 307(d), the Special Trustee’’;
12

11

•S 2212 IS

1 (C) in subsection (c)(5)(A), by striking ‘‘or

2 which is charged with any responsibility under

3 the comprehensive strategic plan prepared

4 under subsection (a) of this section,’’;

5 (D) by striking subsection (f); and

6 (E) by redesignating subsections (b)

7 through (e) as subsections (a) through (d), re8 spectively.

9 SEC. 3. INDIAN PARTICIPATION IN TRUST FUND ACTIVI10 TIES.

11 Title II of the American Indian Trust Fund Manage12 ment Reform Act of 1994 (25 U.S.C. 4021 et seq.) is

13 amended—

14 (1) by striking sections 202 and 203; and

15 (2) by inserting after section 201 the following:

16 ‘‘SEC. 202. PARTICIPATION IN TRUST FUND AND TRUST

17 ASSET MANAGEMENT ACTIVITIES BY INDIAN

18 TRIBES.

19 ‘‘(a) PLANNING PROGRAM.—To meet the purposes of

20 this title, a 10-year Indian Trust Fund and Trust Asset

21 Management and Monitoring Plan (in this section referred

22 to as the ‘Plan’) shall be developed and implemented as

23 follows:

24 ‘‘(1) Pursuant to a self-determination contract

25 or compact under section 102 of the Indian Self-De-
13

12

•S 2212 IS

1 termination Act (25 U.S.C. 450f) or section 403 of

2 the Indian Self Determination and Education Assist3 ance Act (25 U.S.C. 458cc), an Indian tribe may de4 velop or implement a Plan. Subject to the provisions

5 of paragraphs (3) and (4), the tribe shall have broad

6 discretion in designing and carrying out the plan7 ning process.

8 ‘‘(2) To include in a Plan particular trust funds

9 or assets held by multiple individuals, an Indian

10 tribe shall obtain the approval of a majority of the

11 individuals who hold an interest in any such trust

12 funds or assets.

13 ‘‘(3) The Plan shall be submitted to the Sec14 retary for approval pursuant to the Indian Self-De15 termination Act (25 U.S.C. 450f et seq.).

16 ‘‘(4) If a tribe chooses not to develop or imple17 ment a Plan, the Secretary shall develop or imple18 ment, as appropriate, a Plan in close consultation

19 with the affected tribe.

20 ‘‘(5) Whether developed directly by the tribe or

21 by the Secretary, the Plan shall—

22 ‘‘(A) determine the amount and source of

23 funds held in trust;

24 ‘‘(B) identify and prepare an inventory of

25 all trust assets;
14

13

•S 2212 IS

1 ‘‘(C) identify specific tribal goals and ob2 jectives;

3 ‘‘(D) establish management objectives for

4 the funds and assets held in trust;

5 ‘‘(E) define critical values of the Indian

6 tribe and its members and provide identified

7 management objectives;

8 ‘‘(F) identify actions to be taken to reach

9 established objectives;

10 ‘‘(G) use existing survey documents, re11 ports and other research from Federal agencies,

12 tribal community colleges, and land grant uni13 versities; and

14 ‘‘(H) be completed within 3 years of the

15 initiation of activity to establish the Plan.

16 ‘‘(b) MANAGEMENT AND ADMINISTRATION.—Plans

17 developed and approved under subsection (a) shall govern

18 the management and administration of funds and assets

19 held in trust by the Bureau and the Indian tribal govern20 ment.

21 ‘‘(c) NO TERMINATION REQUIREMENT.—Indian

22 tribes implementing an approved Plan shall not be re23 quired to terminate the trust relationship in order to im24 plement such Plan.
15

14

•S 2212 IS

1 ‘‘(d) PLAN DOES NOT TERMINATE TRUST.—Devel2 oping or implementing a Plan shall not be construed or

3 deemed to constitute a termination of the trust status of

4 the assets or funds that are included in, or subject to, the

5 Plan.

6 ‘‘(e) LIABILITY.—An Indian tribe managing and ad7 ministering trust funds and trust assets in a manner that

8 is consistent with a Plan shall not be liable for waste or

9 loss of an asset or funds that are included in such Plan.

10 ‘‘(f) INDIAN PARTICIPATION IN MANAGEMENT AC11 TIVITIES.—

12 ‘‘(1) TRIBAL RECOGNITION.—The Secretary

13 shall conduct all management activities of funds and

14 assets held in trust in accordance with goals and ob15 jectives set forth in a Plan approved pursuant to

16 and in accordance with all tribal laws and ordi17 nances, except in specific instances where such com18 pliance would be contrary to the trust responsibility

19 of the United States.

20 ‘‘(2) TRIBAL LAWS.—

21 ‘‘(A) IN GENERAL.—Unless otherwise pro22 hibited by Federal law, the Secretary shall com23 ply with tribal law pertaining to the manage24 ment of funds and assets held in trust.

25 ‘‘(B) DUTIES.—The Secretary shall—
16

15

•S 2212 IS

1 ‘‘(i) provide assistance in the enforce2 ment of tribal laws described in subpara3 graph (A);

4 ‘‘(ii) provide notice of such tribal laws

5 to persons or entities dealing with tribal

6 funds and assets held in trust; and

7 ‘‘(iii) upon the request of an Indian

8 tribe, require appropriate Federal officials

9 to appear in tribal forums.

10 ‘‘(3) WAIVER OF REGULATIONS.—In any case

11 in which a regulation or administrative policy of the

12 Department of the Interior conflicts with the objec13 tives of the Plan, or with a tribal law, the Secretary

14 may waive the application of such regulation or ad15 ministrative policy unless such waiver would con16 stitute a violation of a Federal statute or judicial de17 cision or would conflict with the Secretary’s trust re18 sponsibility under Federal law.

19 ‘‘(4) SOVEREIGN IMMUNITY.—This section does

20 not constitute a waiver of the sovereign immunity of

21 the United States, nor does it authorize tribal justice

22 systems to review actions of the Secretary.

23 ‘‘(5) TRUST RESPONSIBILITY.—Nothing in this

24 section shall be construed to diminish or expand the

25 trust responsibility of the United States toward In-
17

16

•S 2212 IS

1 dian funds and assets held in trust, or any legal ob2 ligation or remedy resulting from such funds and as3 sets.

4 ‘‘(g) REPORT.—

5 ‘‘(1) IN GENERAL.—Not later than 180 days

6 after the enactment of this section, and annually

7 thereafter, the Secretary shall submit a report to the

8 Committee on Indian Affairs of the Senate and the

9 Committee on Resources of the House of Represent10 atives.

11 ‘‘(2) CONTENTS.—The report required under

12 paragraph (1) shall detail the following:

13 ‘‘(A) The efforts of the Department to im14 plement this section.

15 ‘‘(B) The nature and extent of consultation

16 between the Department, Tribes, and individual

17 Indians with respect to implementation of this

18 section.

19 ‘‘(C) Any recommendations of the Depart20 ment for further changes to this Act, accom21 panied by a record of consultation with Tribes

22 and individual Indians regarding such rec23 ommendations.’’.
18

17

•S 2212 IS

1 SEC. 4. REGULATIONS.

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

3 date of enactment of this Act, the Secretary of the Interior

4 shall promulgate regulations to carry out the amendments

5 made by this Act.

6 (b) ACTIVE PARTICIPATION.—All regulations promul7 gated in accordance with subsection (a) shall be developed

8 with the full and active participation of Indian tribes that

9 have trust funds and assets held by the Secretary.

Æ
19

The CHAIRMAN. Now, I am pleased to call upon a distinguished

member of the committee, the former chairman of the committee,

and the principal sponsor of S. 2212, Senator John McCain.

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

ARIZONA

Senator MCCAIN. I thank you, Mr. Chairman, and Mr. Vice

Chairman. I thank you for scheduling today’s hearing on S. 2212

that I sponsored with Senators Daschle and Johnson in response

to continuing problems plaguing the Department of the Interior’s

management of Indian trust funds.

Mr. Chairman, since we have been discussing the same issue, I

would like to have my complete statement be made a part of the

record so that we can move forward with the hearing, except a

comment that Senators Daschle and Johnson and I recognize that

legislation can and should be modified and it was certainly our intention to be open to proposed changes based on the recommendations of the tribal task force and others.

Some of the recommendations require additional deliberation,

but I don’t think we should hold back on modifications. It is clear

to even the most casual observers that change in the underlying

laws is needed and it is needed now.

We have been through countless hearings, GAO investigations,

court battles, further delays in the changes we know we can make

now will continue the long and sorry history of mismanagement

and as has already been mentioned, in recent days the Federal

courts are finding it necessary to accept an even larger role in dealing with the consequences of mismanagement by the Department

and Congressional inaction.

The bottomline is status quo is unacceptable and I hope we can

move forward on this very important issue.

I thank the witnesses for being here today. I thank Mr. McCaleb

and the other witnesses and I thank you, Mr. Chairman.

The CHAIRMAN. Your full statement will be made a part of the

record, Senator McCain.

[Prepared statement of Senator McCain appears in appendix.]

The CHAIRMAN. I will now call on Senator Johnson.

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

SOUTH DAKOTA

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

timely hearing. I want to commend my friend and colleague, Senator McCain as well for the extraordinary leadership that he has

exhibited on this chronic and long-standing problem.

I want to acknowledge that on the panel today is Chairman Mike

Jandreau of the Lower Brule Sioux Tribe. Mike has served on the

Department of the Interior’s Trust Fund Reform Task Force. He

provided outstanding leadership in a wide range of Native American issues over the years in my State of South Dakota and has

brought his talent to bear on this particular issue as well, and I

am grateful for that.

Also I notice that in the audience is Phil Hogan. Phil is another

South Dakotan. We are proud of his work. He previously was an
20

U.S. attorney and is now with the Department of the Interior. We

appreciate his presence here as well.

I will submit a statement in full so we can get to the panel. I

apologize for having been late. Earlier today I had to be at the

White House at a bill signing for the Corporate Accountability legislation on which I served on the Conference Committee.

I very shortly need to leave to be on the floor of the Senate, but

I will submit a statement in full and simply confirm some of the

same views that Senator McCain has expressed, that I think it is

important that this legislation be here as a starting point.

It is subject to some modification and we need to continue to

keep in mind that if we are going to make progress on this issue

it is going to be because we arrive at a resolution through very

close consultative process with tribes; that the tribes role in all of

this is as an equal, as part of a government-to-government relationship and that there is no resolution possible unless it comes

through the tribes themselves as a consequence of their discussions

that they have internally.

So, I think this task force is a very important entity. It is my

hope that we can at least break this gridlock through the help of

this legislation and modifications that will be forth coming, that we

can make some things happen.

I think it was very well said that we act very quickly when there

is a crisis on Wall Street, but our actions have not been as expeditious when it has been a long-standing problem that has been of

devastating consequences in Indian country.

We need to change that and change that now. This hearing, I

hope, will move us in that direction.

Thank you, Mr. Chairman.

The CHAIRMAN. Your full statement will be made part of the

record. I thank you.

[Prepared statement of Senator Johnson appears in appendix.]

The CHAIRMAN. Mr. Vice Chairman.

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

INDIAN AFFAIRS

Senator CAMPBELL. Thank you, Mr. Chairman.

Well, we have just heard from the four folks on the task force

that there is a lot of hard work that remains to be done before we

can have a concrete, workable proposal that has the input and the

blessing of both the administration and the tribes.

I think all of us on this committee are interested in making sure

that we get a bill that we can get signed into law and one that has

broad-based support among the tribes, too.

I have said consistently, in fact, that I would oppose any bill that

didn’t have involvement of the tribes in the drafting of the legislation.

But I would like to commend Senator McCain, Senator Johnson,

and Senator Daschle for bringing this bill to us because if nothing

else, it has focused the attention on the problem and I think it

keeps the administration engaged with the problem.

But I would maybe finally say that I am more interested in doing

things right than I am in doing things fast. Whatever time it takes,
21

we ought to bring this thing to a conclusion. If we can do it this

year, fine. I frankly doubt if we are going to be able to do it in just

the last few weeks.

But, hopefully, when we do pass something it will be the kind

of bill we are all going to be proud of.

Just as a side note, Mr. Chairman, I would like to note that with

the single exception of the panel that will be testifying is the Geri

Small, who is the first president of the Northern Cheyenne and

who is a woman. She has done a fine job up there. She is also the

chairman of the Montana-Wyoming tribal leaders association. I am

just delighted to see her here. She is a good personal friend.

The CHAIRMAN. She is your boss.

Senator CAMPBELL. She is my boss. In some respects that is correct. Thank you.

The CHAIRMAN. Senator Conrad.

STATEMENT OF HON. KENT CONRAD, U.S. SENATOR FROM

NORTH DAKOTA

Senator CONRAD. Mr. Chairman, I just wanted to thank Senator

Johnson, Senator McCain, and Senator Daschle for coming forward

with legislation. We know that it is a work in progress, that it is

open to amendment and discussion. But I do want to thank them

for moving the ball forward because it focuses the debate and the

discussion and I think there are many useful ideas in this bill.

As I have reviewed the major elements, I think it touches on all

those things that most of us share the frustration expressed by

Senator McCain and Senator Johnson. You know, this has just

been going on and on and on and it never seems to reach a conclusion. Part of that gets before the courts and we all know what happens there.

But it is really time to reach a conclusion on these issues. It is

only fair to the Indian peoples whose money is at issue. It is their

money. If ever there was a case where we have a circumstances in

which it really is the peoples’ money, this is it.

They deserve an answer and an accounting of what has happened to their money. So, I want to commend our colleagues for

taking the initiative on this is matter.

The CHAIRMAN. Thank you very much.

We have a panel of five witnesses today. First is the assistant

secretary of Indian affairs, Neal McCaleb; president of the Northern Cheyenne Tribe and chairperson of the Montana-Wyoming

Tribal Leaders Council of Montana, Geraldine Small; the chairman

of the Lower Brule Sioux Tribe of South Dakota, Michael Jandreau;

the chairman of the Tohono O’odham Nation, Sells, AZ, Edward

Manuel, and the executive director of the United South and Eastern Tribes of Nashville, Tennessee, Tim Martin.

I call upon Secretary McCaleb.

STATEMENT OF NEAL MCCALEB, ASSISTANT SECRETARY FOR

INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

Mr. MCCALEB. Thank you very much, Mr. Chairman and members of the committee. I am very pleased to have the opportunity

to appear before you this morning along with the tribal leaders
22

arrayed before you at this table who I have been privileged to work

with since the first of the year on our tribal task force.

I think that is significant in consideration of the remarks that I

am going to make right now. First of all, the administration is unable to support S. 2212 in its current form and recommends, instead, that we look to the recommendations of the Joint Tribal

Task Force and the Department of the Interior’s efforts toward recommendations in those areas where there is agreement.

While well-intended, and much appreciated, this bill does not reflect the consensus of the opinions that have been reached by the

task force over the period of the last 7 months.

I want to express my appreciation to Senators McCain, Johnson

and Daschle for the initiative they have shown in filing the bill because at our San Diego meeting in April, we began the discussion

of the bill along with 28 other proposals that had been laid on the

table for the task force members, a different array of tribal leaders,

and Indian organizations.

I pointed out that in Senator McCain’s remarks, when he introduced the bill, he stated that the bill was an initiative to focus attention on this issue and that he fully intended to give careful consideration to the recommendations of the task force which was then

in progress.

We have had four Tribal Task Force multi-day meetings since

April when the bill was first discussed along with the other 28 proposals that were laid on the table. The Tribal Task Force has not

endorsed the bill to this date. In fact, it has come up with other

recommendations that are in ways in tension with the recommendations of the bill.

For example, the bill recommends the creation of a Deputy Secretary position and after careful discussion of this matter by the

Tribal Task Force and the Department of the Interior, we agreed

by consensus last week at our meeting in Portland to support the

concept of utilizing an Under Secretary. It was after a full discussion of what those two offices meant that that consensus was

reached.

As I indicated in my earlier testimony before this committee, we

did reach a consensus on the adoption of the model for trust reform

which was contained in option 5 of the proposal that was presented

on June 4. This had other aspects that were in tension with S.

2212.

We have indicated earlier that we would be happy to provide the

committee with draft legislation that embodies the duties upon

which the department and the tribal leaders and the task force

have agreed upon.

We also object to the creation of the Office of Trust Implementation and Oversight and the proposed 10-year Indian Trust Fund

and Asset Management and Monitoring Plans. There is one specific

recommendation in section 307{e)(3)(H) which specifically says that

the duty of this management reform group is to ‘‘ensure the greatest return on those funds and assets.’’

This is in tension, I think, with the concept of tribal self-determination. I will try to use an example that I have used before.

There is no question that in the management of forest assets,
23

which many of our tribes have, the greatest return on the asset is

clear-cutting.

Not one of the tribes that I am aware of that has timber resources have opted to clear-cut. They have all been supporters of

selective cutting because of their perception that clear cutting does

great damage to the environment and to the wildlife, although it

yields the highest return on the investment.

On the one hand, S. 2212 is encouraging tribes to develop a plan

under the self-determination option and I do support that idea.

That is the reason I am here to try to emphasize and to optimize

the opportunity for self-determination and self-governance.

But on the other hand, when you vest in another separate entity

the responsibility statutorily to ensure the greatest return on investment, that language is clear and unambiguous, but it is in tension with the aspect of self-governance and self-determination.

My point is that the tribes should decide whether they want to

maximize the investment or optimize the investment. There is a

substantial difference in those two.

In short, the administration recommends that the committee put

aside S. 2212 and consider instead the legislation that reflects the

recommendations of the task force. As I have said, these recommendations include the consideration of an Under Secretary position, the creation of a new Office of Self-Governance and Self-Determination that reports directly to that Under Secretary and the

creation of a Director for Trust Accountability.

With the permission of the chair, I will ask that my complete

written testimony be included in the record and answer any questions when the time is appropriate.

The CHAIRMAN. Without objection, Mr. Secretary, your statement

will be made part of the record.

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

The CHAIRMAN. Now, may I recognize President Small?

STATEMENT OF GERALDINE SMALL, PRESIDENT, NORTHERN

CHEYENNE TRIBE AND CHAIRPERSON, MONTANA–WYOMING

TRIBAL LEADERS COUNCIL, LAME DEER, MT

Ms. SMALL. Thank you. Chairman Inouye, Vice Chairman Campbell, and committee members, thank you for inviting me here today

to testify on S. 2212. I am honored to appear before you today to

testify on this very important legislation on trust reform.

I am especially proud to be testifying by the Honorable Ben

Nighthorse Campbell, the tribe’s most esteemed member. Besides

serving as president of the Northern Cheyenne Tribe, I also serve

as the chair of the Montana-Wyoming Tribal Leaders and as a Delegate to the Trust Reform Task Force.

Today I am speaking to you as the president of the Northern

Cheyenne Tribe. I have not had time to consult with the tribes

from my region to get a consensus on my testimony.

As you know, S. 2212 was introduced on April 18, 2002 by Senators McCain, Daschle, and Johnson at the urging of the tribes

from Great Plains region. I was at a meeting with the Great Plains

and Rocky Mountain region tribes on April 17, 2002 when I learned

of the legislation.
24

The Great Plains and Rocky Mountain Tribes discussed the legislation at length that day and worked feverishly to submit a preliminary response generally supporting the legislation. I understand that the introduction of S. 2212 was not popular with the Department of the Interior, some of the Senators sitting on this committee and some tribal leaders.

However, the introduction of legislation was needed to impress

upon Interior that legislation is absolutely necessary to resolve

trust management problems. I believe that S. 2212 has served that

objective effectively and that it has provoked lively discussion concerning trust reform legislation.

According, I thank Senators McCain, Johnson, and Daschle for

sponsoring S. 2212.

There are some issues that ascend above party lines and personal agendas. Trust reform is such an issue. It is time to roll up

our sleeves and develop administrative and legislative solutions to

resolve the long history of mismanagement and Indian trust assets.

With respect to the administrative solution, I have attended

every task force meeting and I am impressed by the commitment

by the tribal leaders and Interior officials on the task force. I believe the task force is close to creating a new organizational structure that will improve the management of trust assets by the Bureau of Indian Affairs.

Consequently, I believe it is time for this committee to start

working closely with the task force to develop trust reform legislation. Tribal leaders have advanced certain things at the task force

meetings that I believe must be supported by trust reform legislation. These things are the creation of an independent regulatory

commission that will oversee Trust Fund management including

the sale and lease of trust resources.

The creation of a new position, either a Deputy Secretary or an

Under Secretary that reports directly to the Secretary that will,

among other things, coordinate trust reform efforts of all effected

agencies; the development of trust standards to guide the BIA in

managing trust accounts and resources; the concentration of resources at the local agency level; legislation that addresses the

problem of land fractionation; deference to tribal laws regulating

trust resources; the continuation of the task force or a task force

to work out the details of the implementation of the new organizational structure and trust reform legislation; direct oversight of

BLM, BOR and MMS trust management.

Trust reform shall not restrict the tribe’s ability to compact. Most

importantly, adequate funding.

I will address each of these themes and how S. 2212 deals with

them. The creation of an independent regulatory commission that

will oversee trust fund management, including the sale and lease

of trust management.

I believe that trust principles require that an independent regulatory commission be created to oversee the management of trust

funds including the sale and leave of trust resources. Congress

needs to create a check and balance to ensure proper trust management.

Tribes and Indian individuals should not have to run to Federal

court every time they suspect their accounts have been mis-
25

managed. Rather an independent regulatory commission should be

created to establish trust fund management regulations and to investigate allegations of mismanagement and enforce violations and

conduct audits.

S. 2212 creates an Office of Trust Fund Reform Implementation

and Oversight that is not independent of Interior nor regulatory in

nature. An independent regulatory commission that would oversee

and enforce trust management is a better alternative, in my view.

The creation of a new position, either Deputy Secretary or Under

Secretary that reports directly to the Secretary that will, among

other things, coordinate trust reform efforts of all effected agencies.

S. 2212 creates a Deputy Secretary position that will coordinate

trust reform efforts throughout Interior and will report directly to

the Secretary. I believe that tribes would prefer a Deputy Secretary

as opposed to an Under Secretary, however, Tribes may settle for

the Under Secretary as long as the Under Secretary reported directly to the Secretary of the Interior.

S. 2212 is silent on trust standards, however the jurisdiction of

the Independent Commission and Trust Officers are limited to

trust fund management and the sale and lease of trust resources.

The standards for management should be the highest fiduciary

standard realized by normal banking standards.

This standard should be confirmed in trust reform legislation.

The standard for the management of trust resources is a more difficult question. If the standard is not developed in the trust reform

legislation, it should be developed in separate legislation in the

near future.

The concentration of resources at the local agency level: S. 2212

does not address this issue and I am not certain how this issue can

be addressed legislatively. However, I know that trust funds and

resources cannot be managed from afar. Human resources must be

available at the local agency level in order to manage trust funds

and resources.

Legislation that addresses the problem of land fractionation: S.

2212 does not address the enormous problem of the land fractionation. I understand that the separate legislation is pending concerning land fractionation. It is imperative that the fractionation

problems be resolved legislatively in order to make land and resource management more manageable.

Deference to Tribal laws regulating trust resources: S. 2212 does

not address this theme directly. However, Rocky Mountain and

Great Plains Tribes have identified situations where the implementation of the highest trust standards and trust resources could infringe on tribal regulations.

For instance, the Northern Cheyenne Tribe has set grazing rates

on the Northern Cheyenne Reservation. The Great Plains and the

Rocky Mountain Region Tribes are concerned that the highest trust

standards could require the BIA to obtain the highest price for the

resource. This could conflict with the tribe’s decision to subsidize

tribal cattle operators.

Also, from an enforcement standpoint a trust officer operating

under the highest trust standards may remove an operator from a

tribal range unit he believes is being over-grazed. The tribe may
26

not agree with the trust officer’s assessment or believe that the

trust standard is a lesser standard.

In other words, the tribe would like to reserve these decisions for

themselves and avoid interference from the trust officer. Trust reform should not interfere with the tribe’s right to regulate trust resources.

The continuation of a task force to work out the details of the

implementation of the new organizational structure and trust reform legislation: S. 2212 creates an advisory board to provide advice on all matters within the jurisdiction of the Office of Trust Reform. The purpose of the task force after the proposal is adopted

is two-fold. The first reason is to work out the details of the new

trust reform organization and regulations for the trust reform legislation. The second would be to work with the independent regulatory commission on trust fund management regulations.

Direct oversight of BLM, BOR, and MMS: S. 2212 provides that

the Office of Trust Reform would supervise the Director of BLM

and MMS the extent that they administer any Indian trust assets

or funds. This is consistent with what tribes would like, except

oversight responsibility would rest with the Deputy Secretary or

the Under Secretary, whichever position is created, instead of the

Office of Trust Reform. Tribes would also like to have BOR included in the oversight to the extent that it administers Indian

trust assets.

Trust reform should not restrict a tribe’s ability to compact. Selfgovernance tribes are concerns that the trust reform legislation will

negatively impact their compacts with the Federal government. S.

2212 supports a tribe’s ability to directly manage trust funds or assets themselves through self-governance laws. Any legislation

adopted by Congress should provide the same support.

Adequate funding. Trust reform legislation and the efforts of the

task force will prove futile unless Congress commits to adequately

funding the BIA. In each task force session, I hear tribal leaders

state the resolution of this problem really comes down to adequate

funding. I agree with this assessment.

Funding is needed to employ additional quality people, properly

train all employees and to purchase the necessary equipment. S.

2212 does not address this issue, as it isn’t an appropriations matter.

I raise it today to stress this point. Congress must realize that

mismanagement cost Congress money. We would be better off paying what is necessary to manage properly than to pay for the mistakes later.

This concludes my testimony. Thank you for your patience and

for allowing me to testify today.

The CHAIRMAN. Thank you very much, President Small.

May I now call upon Chairman Jandreau.

STATEMENT OF MICHAEL JANDREAU, CHAIRMAN, LOWER

BRULE SIOUX TRIBE, LOWER BRULE, SD

Mr. JANDREAU. Hello. Chairman Inouye, Senator Campbell, Senator McCain, it is my honor to address you today. It is my hope

that my testimony will be made a part of the record.

The CHAIRMAN. Without objection, it is so ordered.
27

Mr. JANDREAU. I would like to informally address those parts of

my testimony that I wish to accent.

I have been involved in tribal government for 30 years now, directly, as either a councilman or the chairman. For 23 of those

years I have been a chairman of my tribe. I was on the first task

force that was developed under President Bush, Senior. I served on

there approximately 11⁄2 years.

I have had the opportunity to be appointed by my peers to serve

on this task force. This time I am the only one from Sioux country.

I am also chairman of the United Sioux Tribes. The Sioux feel that

a Deputy Secretary is essential to elevate the position of Indian Affairs to a level that is commensurate with their standing as citizens of the United States and as individual tribal groups who have

given much for the development of this country.

We also feel that there should be Deputy Secretary of the Interior that would handle the trust assets and the Indian programs.

There are many other issues in relationship to the total development of S. 2212 that we need to occur.

But unless it is enacted into law, unless it becomes something

that we as tribes can build on, we really have nothing but good

faith.

I have attended every task force meeting, however, I missed the

one important one. As you know, I listened to the testimony this

morning and I was amazed because it seems like in Portland when

I wasn’t there everything worked out. So, I got to feeling a little

guilty. Maybe I am a part of the impediment. I don’t really feel

that way.

But there are many issues regarding 2212 that we have dealt

with in conversations in the Indian Caucus task force. One of the

matters was that in Bismarck we agreed to ask for hearings. The

tribal member portion of the task force caucus all agreed to it. But

when we went into joint session, there seemed to be a huge confusion that pervaded the room.

Finally, we did get a letter from the chairman or one of the cochairs sent to Congress saying that we did wish hearings. We were

told by the administration that we were jointly going to have testimony prepared that would adequately reflect both the administration and the tribal consultees’ position.

You know, the ironic part is this last week or so there was language attached to an appropriation bill in the House that talked

about some very interesting things in which none of the administration knew anything about.

I find it very difficult, after all the years that I have been involved, to say that we can really consistently develop something

that has a true tribal complexion, that has a true tribal ideal that

is not meant for and somehow ameliorating what the administration wants.

I believe in self-determination. I work very hard on my own reservation to make self-determination a reality. I find it doesn’t matter whether you are a Democratic or a Republican. But if you are

an Indian, your rights just seem to mean a little less.

Thank you.

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

The CHAIRMAN. I thank you very much, Mr. Chairman.
28

Now I will call on Chairman Manuel

STATEMENT OF EDWARD MANUEL, CHAIRMAN, TOHONO

O’ODHAM NATION, SELLS, AZ

Mr. MANUEL. Chairman Inouye, Vice Chairman Campbell, my

name is Edward D. Manuel. I am chairman of the Tohono O’odham

Nation which is located in south central Arizona. It consists of

25,000 members and a land base of 2.8 million acres.

I am also a Western Region Tribal Representative serving on the

Tribal Leader/Department of the Interior Trust Reform Task Force.

I am honored to be here and I thank you for the invitation and

I appreciate the opportunity to testify before the committee on S.

2212. I will summarize my testimony, if I may, and submit it for

the record.

The CHAIRMAN. Without objection, your full statement will be

made part of the record.

Mr. MANUEL. The first point I want to make on S. 2212 is that

it provides the incentive for the administration and the tribes to

stay engaged to bring about a much needed trust reform. Reform

of the Federal Government to meet its duty of trust responsibility

to American Indian tribes is a complicated and difficult task. Previous efforts of reform have fallen victim to one or a combination

of political, financial, legal or intellectual factors.

Everyone including Congress, the Executive, the Judiciary, the

tribes and individual beneficiaries recognize the need for change.

However, what that change should entail at times creates disagreement among the parties involved.

One point is certain. S. 2212, along with other Congressional interest shown in trust reform, has provided the incentive to keep

the Bush administration engaged with the tribes on reform discussions. To this end, the active participation of this committee and

the Congress, whether during this legislative session or the next,

is crucial.

Continued Congressional participation is critical not only with

development of the trust reform plan, but in the successful implementation of a plan as well. This committee is encouraged to keep

trust reform at the top of its agenda during the next Congressional

session.

S. 2212 serves as a basis to start the discussion of trust reform

and provides a foundation to keep the discourse continuing.

The second point I want to make is that S. 2212 encompasses

many worthwhile ideas needed for legislation. As written, the

American Indian Trust Fund Management Act of 1994 may have

been successful in the implementation of trust reform. The act contains many wonderful phrases and requirements.

Those requirements, amongst other things, are all elements

which the tribe wants to see implemented in the current reform effort. The question is: What went wrong with the 1994 reform act?

The tribes maintain that the lack of success of the 1994 Reform

Act was that the inability of the Special Trustee to act independently of the actions of the Department of the Interior. Thus, difficult changes, crucial for reform, were never identified, or if identified, never implemented.
29

While tribal leaders had input in the drafting of the 1994 reform

act, the original intent was to place the Office of Special Trustee

outside of the control of the Secretary of the Interior. The tribe

wanted an independent external office with authority to address

the trust issue. This particular element of the 1994 Reform Act was

compromised politically and trust reform was not successful as a

result.

S. 2212 needs a provision that would create an independent, external enforcement and oversight body to ensure the Department

of the Interior’s proper performance of the Federal Government’s fiduciary or trust responsibility to the American Indian tribes are

carried out.

The tribal leaders of the Trust Reform Task Force believe an

independent body is absolutely necessary for successful trust reform to occur. Should S. 2212 prove to be the vehicle for trust reform, the bill should be amended to provide for this independent

body.

Another crucial problem of the 1994 Reform Act was the fact that

tribes, especially those who had the capability of managing their

own trust assets, funds and resources, were forced to comply with

national ‘‘one-size-fits-all’’ standards. No adjustments were allowed

to account for the local variations most tribes encounter when

meeting the needs of local constituents.

Many tribes ended up politically opposing the reforms suggested

by the Special Trustee due to this lack of consideration for local

concerns.

S. 2212 helps face this issue by allowing each tribe the ability

to create an ‘‘Indian Trust Fund and Trust Asset Management and

Monitoring Plan.’’ The plans, once approved, will take local needs

into account by providing for the management and administration

of funds and assets held in trust by the Bureau and the tribes.

Furthermore, S. 2212 requires the Secretary to comply with tribal law in relation to the management of trust funds and assets unless prohibited by Federal law. This is tribal self-determination at

the most fundamental level. Such provisions are critical to the success of any trust reform and must be included in any legislation

passed to address the situation.

My third point is that an independent oversight commission is legally plausible. There was a lot of discussion this morning regarding the independent oversight commission. We had looked at the

separation of powers of the three branches. We looked at the

court’s past decisions. We looked at the unique trust relationship,

and guardianship principles. We looked at the plenary powers doctrine and we believe that it would stand judicial scrutiny in the

creation of this independent body.

My fourth point is that the union and Civil Service protections

must not present obstacles to reform. During our discussions in the

Tribal Leaders/Department of the Interior Joint Task Force, there

were many issues brought out regarding Bureau employees who

hamper local tribal government self-determination initiative.

We request that in the legislation dealing with trust reform, the

issue of Civil Service protection and incompetent employees should

be scrutinized to be sure that tribes and their members are being
30

provided trust services by individuals who will be held accountable

for their actions.

Further, this Civil Service protection should not be the foundation for career oriented but non-dedicated employees to derail trust

reform. Employees need to have access to training and experience

to properly carryout their trust function. But once that training

and instruction is provided and employees make the conscious

choice not to perform properly or simply cannot perform properly,

then these employees should be relieved of their employment and

not be able to hide behind Civil Service law or even union agreements to protect such employment.

Tribes must continue to be involved with the implementation of

reform. Over the years, tribal leaders have participated in many efforts to reorganize or reform the Federal Government’s provision of

services to Indian country. Many of these plans produced positive

and concrete ideas which, if implemented, would have resulted in

greatly improved services. However, none of these plans were totally implemented.

Tribal leaders must continue to have a voice in the trust reform

efforts in order to compel implementation of the plan, thereby ensuring the successful reform of the Bureau of Indian Affairs.

While S. 2212 calls for the creation of an Advisory Board, the

constituency of which will contain tribal people, the Board will simply not have the authority to mandate implementation of any particular aspect of reform should such be necessary. The same now

holds true for the Advisory Board created in the 1994 Reform Act.

Complete change did not occur under the 1994 Trust Reform Act

because the Board did not have the proper authority to make

change happen.

The tribal leaders on the current Trust Reform Task force are

advocating for the creation of an independent oversight commission

having the authority to ensure the Federal government’s trust

functions and fiduciary responsibilities are properly performed.

This oversight mechanism will only become effective if trust reform legislation is fully implemented. Tribes, as a whole, must continue to be engaged, through the Task Force or another body, to

ensure that the entire reform plan, which includes an independent

oversight commission, is completely implemented. Only thereafter

can the independent oversight commission take control and provide

the continuous tribal input needed for the successful provision of

trust services.

In conclusion, the Tribal Leader/DOE Trust Reform Task Force

continues to develop the crucial elements needed to bring about reform of the Federal Government’s trust services to Indian country.

Eventually, legislation will be needed to implement this reform.

The task force envisions that the position of Under Secretary be

created. This position will be the focal point and responsible for the

Federal Government’s trust obligation. This person will have line

authority over all Department of the Interior trust functions. This

is similar to, but not identical with what is contemplated in S.

2212.

The task force believes that all, not some, of the agencies within

the Department of Interior should be subject to the Under Secretary’s control in relation to trust responsibilities for Indians.
31

Furthermore, the tribal leaders on the task force insist upon the

creation of an independent oversight commission. S. 2212 does not

contain this element. If S. 2212 is the vehicle to be used for trust

reform, the task force requests that the concept of an independent

oversight commission as developed by the task force, be placed in

such legislation.

Thank you for the opportunity to provide testimony here today

on this very important topic. I will be happy to answer any questions from the committee.

The CHAIRMAN. I thank you very much, Mr. Chairman.

May I now recognize Mr. Martin.

STATEMENT OF JAMES T. MARTIN, EXECUTIVE DIRECTOR,

UNITED SOUTH AND EASTERN TRIBES, NASHVILLE, TN

Mr. MARTIN. Chairman Inouye, Vice Chairman Campbell, Senate

Committee on Indian Affairs: I have submitted a written testimony

and I would like that to be made part of the record.

The CHAIRMAN. Without objection it is so ordered.

Mr. MARTIN. I would like to further comment on that testimony

and highlight some of the key components of that testimony and

some of the discussion that has already occurred today and reflect

on hopefully some of the discussion that should occur in the future.

I am here today before you, James Martin, enrolled member of

the Poarch Band of Creek Indians. I serve as executive director of

United South and Eastern Tribes. As executive director, I was appointed by the 24 member tribes of our region to represent them

on the tribal task force on trust reform.

Going to the task force meeting and working within that task

force, I was appointed by that task force along with Ross Swimmer,

to cochair a subcommittee of that task force on EDS As-Is Business

Process Modeling.

On behalf of our 24 member tribes, I would like to express our

appreciation to be able to come and to express our views on Indian

trust management reform. I would also like to express my appreciation to the task force, both the tribal and Federal members of

that task force, for the work that has been done to date to bring

about a structure that protects the Government’s fiduciary responsibility to tribes and promotes accountability at all levels of the Department of the Interior and the Bureau of Indian Affairs.

I would like to thank Senators McCain, Daschle, and Johnson for

introducing S. 2212 as a mechanism to assist the task force in this

monumental task. This group, this panel, that is before you today

are here walking a tightrope.

I want to be able to honor my commitment to the task force and

honor the consensus that have been made in those deliberations,

but at the same time, be able to comment from our tribe’s perspective on S. 2212.

There are some differences and there are some similarities. I

would like to be able to highlight some of those. Before I do that,

though, I would like to talk about our region and our perspective

in our region.

The USET tribes vary differently. We have very wide differences

in population, the governmental infrastructures, economic develop-
32

ment. And the endowments of natural resources vary widely. However, we are deeply committed to self-determination.

We are committed to exercise our right to sovereignty through

the self-determination by 638 contract. In our region over 95 percent of the resources that go into our region is contracted out either

by 638 contracting or by compact.

By and large, the only services rendered by the Bureau of Indian

Affairs at the regional level are the inherent Federal functions. So,

all of the functions that we are talking about are being performed

by the tribes. That is a testament to our commitment to self-determination.

Our tribes have engaged frequently in conversations regarding

trust resource management, trust asset management, and this reform effort, ever since the Secretary introduced it last November.

Our tribes first expressed our recommendations to the Secretary

on February 1, when USET proposed an alternative to BITAM. I

also testified before this committee on February 26, where I outlined our proposal.

Earlier this month, July 8, our tribes came together again in consultation to deliberate over the task force’s recommendations at

that time, the different 29 proposals that had been dwindled down

to four different options. Our tribes deliberated over those options.

We looked at our proposal and we made adjustments to our proposal.

But our tribes unanimously and unequivocally asserted that regardless of whatever structure is finally settled upon, that a single

point of decisionmaking authority still has to occur at the local

level for all Indian programs. And I want to reiterate that point

and emphasize that point from the outside because the tribes of our

region believe that it is getting missed, that it should not be overlooked any longer.

Our tribes have the day-to-day experiences showing that trust

management systems are working. When it comes to affective delivery of Indian trust services and the proper execution of the fiduciary trust responsibilities, the current bureau structure that

unites both the trust accounting and trust services personnel at the

region and tribe agency level that assures tribes have direct access

and interaction with decision makers responsible for the programs.

Based upon our experience in our region, this access is essential

whether those Federal responsibilities are administered pursuant

to self-determination contracts or compacts or delivered directly by

the Bureau of Indian Affairs.

This structure provides a bottom-up accountability that is as important to the trust beneficiaries as the structure of the single executive is to the Department of the Interior. This point has been

identified and articulated by our tribes from day one as we learned

about the Secretary’s BITAM proposal.

At the local level we need to improve accountability and eliminate inefficiencies. This can be done by the improvement of trust

standards, trust policies and trust procedures. A key problem is excessive delay in working through the various levels of the bureaucracy.

But to the extent tribes had administered 638 programs through

contracts and provided that the regional office is set up to offer
33

tribes one-stop shopping to contract those programs, the system

works.

Department of the Interior representatives on the task force continue to demand additional layers of bureaucracy that duplicate authority at the local level. Such a structure would impede tribes’ efforts by adding excessive, ineffective and costly administrative procedures to a system that is overly bureaucratized to date.

In order to maintain and expand tribal involvement and to enhance opportunities for tribes and include individuals to exercise

bottom-up accountability, the Federal government needs to streamline the trust asset management, not bureaucratize it.

Now to the key elements to which I believe the task force and

S. 2212 do agree on. The task force has reached consensus on the

senior executive leadership structure, consistent with what was

proposed in S. 2212. Both the task force and S. 2212 elevate the

senior executive within the Department of Interior.

The senior trust executive reports directly to the Secretary and

has direct line authority over the assistant secretary of Indian affairs and over the assistant secretaries of each of the bureaus that

perform functions and/or administered trust assets. This line authority would serve to protect the full range of trust funds and assets managed by the Federal Government and institute the call for

a single executive to ensure that the trust obligations are met.

The task force has selected the concept of an Under Secretary

rather than a Deputy Secretary based on the view that establishing

an Under Secretary would run into political objections that might

arise with proposing what appears to be an unprecedented second

Deputy Secretary within the Executive Department.

Now, to ensure that trust policy is properly implemented at the

regional and agency level, USET has suggested that five commissioner positions be established as Civil Service posts under the Assistant Secretary for Indian Affairs. These five commissioners

would have the responsibility to ensure the proper execution of

trust responsibilities at the regional and tribe agency level.

The Commissioner for Indian Services and the Commissioner for

Trust Management would have quality assurance and oversight authority with respect to the trust functions pertaining to the regional director.

This authority over trust functions at the central office to regional office level would parallel the Under Secretary’s authority

over trust functions pertaining to the Assistant Secretary in the

other Department of Interior bureaus. Meanwhile, the line of authority over the operational responsibilities of the regional director

would run from the Assistant Secretary to the Commissioner of Regional Operations.

All 12 regional directors would answer directly to the Commissioner from Regional Operations. For reasons I have mentioned

above, the Eastern Region Tribes urge that all trust services and

resources remain at the regional level under the direction of a single line of authority.

Below the regional directors is where the performance and authority over trust services and trust resources would divide. For example, through a deputy regional director for trust services and another for trust resource management, the agency supervisory level
34

would replicate the same structure, one single line of authority, the

agency superintendent, with authority over all trust services and

trust resources at the agency level.

You separate the functions. You separate the personnel. But

there is nothing to date to indicate that those separated personnel

cannot still report in to a single line of authority when you have

clearly delineated out the policies, the procedures and the standards that those two sets of personnel have to adhere to.

A key point is to have one individual decision maker at the level

of the bureaucracy to whom the tribes have access to agree on. Another component that both the task force and S. 2212 involves corresponding elevation of the policy of Indian self-determination.

Both the task force and S. 2212 proposals place responsibility to

self-determination contracting and compacting within the domain

of the senior trust executive.

While S. 2212 authorizes the deputy secretary to enter into selfdetermination contracts, the task force proposes the establishment

of an Office of Self-Determination Policy in the Office of Under Secretary.

At the strong request of tribal representatives, the task force

agreed that while policy formulation regarding self-determination

shall be elevation to the under secretary level, the implementation

of self-determination agreements must remain at the level most appropriate to ensure the tribe’s greatest access.

Independent oversight: Both S. 2212 and the Trust Reform Task

Force coincide in the view that establishing accountability for the

Department of the Interior trust management requires independent oversight. However, the task force has not reached a consensus

regarding the scope and powers to be delegated to this independent

commission.

Both the tribal and Federal representative agree that the commission should have powers to audit trust accounts, investigate allegations of accounting failures, and agency action inconsistent

with the trust responsibilities, and analyze budget needs.

There also appears to be, however, general agreement that the

oversight commission would perform quality assurance and accountability through the under secretary and on down the chain of

command. Quality assurance is understood to be trust management

oversight functions, not administration and implementation.

One of the failures that our tribes see in the functions to date

is that the people and offices that were put into place to oversee

the dealings of trust management actually got involved in performing them. To me, that is a fundamental flaw of all of the transactions and the reorganizations that have appeared to date.

The main disagreement on the commission is to tribal and Federal representatives disagree to the nature of the commission’s enforcement authority and regarding the delegation of rulemaking

authority.

I have agreed to cochair a task force sub-work group to seek resolution to these differences. To sum up these differences, the Federal representatives have suggested that the commission should exercise its enforcement authority by referring findings of non-compliance to the Treasury Comptroller of the Currency for it to determine what sanctions and/or remedies to apply.
35

The tribes wish to empower the commission with the range of enforcement mechanisms available to the Comptroller, so as to retain

full discretion and authority to independently take actions and

bring about corrective actions on whatever issue is at hand.

As regards to rulemaking, the tribes want the commission to be

able to promulgate rules. The Federal representatives have objected to having a commission take the rulemaking outside of the

Secretary’s own discretion of rulemaking.

Let me also note that S. 2212 retains and rebuilds the Office of

Special Trustee [OST]. The view of the tribes in the eastern region

is that the commission would assume most of the functions now

changed to OST.

We believe legislation will be required to provide for a transition

of functions from the Special Trustee to the independent commission.

Establishing clear trust standards: In testimony before this committee last month, the Deputy Secretary of the Department of the

Interior stated that he was not able to define the standards governing Indian trust responsibility. The tribal members of the task

force and the Eastern Region Tribes urge this committee and Congress that it is time for Congress to establish statutory standards

governing the trust responsibilities.

If the senior officials from the Department of the Interior responsible for overseeing the trust responsibility is not able to articulate

the standard, then the Department of the Interior is not well positioned to execute that responsibility.

Our tribes believe a starting point for legislating this definition

can be found in the Department of the Interior’s own policy manual

which provides under part 303, section 2.7, it delineates out the

secretary’s responsibility.

I will not go into that. That is in my written testimony. It has

already been articulated. It had also captured in the secretarial

order, talking about trust principles. I would refer the committee

to both the manual and the secretarial order.

The tribal representatives on the task force believe that the secretary’s accountability for trust responsibility would markedly improve if legislation modeled on these guidances in the departmental

manual were enacted into law to provide a basic definition for trust

responsibility and the secretary’s corresponding duties to carryout

that responsibility.

Under standards, the tribes and the Secretary have disagreed on

different views about standards and how far that these standards

should go.

The tribes have discussed the possibility of permitting the development of standards governing tribal implementation of trust duties. The idea that tribal standards might be different from the

Secretary’s does not imply that the standards would be lower.

Rather, the separate standards simply knowledge that different

policy considerations are at play. For instance, rather than a standard requiring that the resources be leased for their highest market

value, a tribal standard may be to assure the resource’s protection

and preservation in order to fully reflect the asset’s cultural and

spiritual value.
36

From the perspective of USET tribes, the proper execution of the

trust responsibility is achieving a balance that maximizes the utilization of trust resources and protects those trust resources for future generations.

No structure can work without sufficient resources to drive it.

Lack of funding and personnel, particularly at the regional level,

account for a significant portion of the Secretary’s failure to properly discharge the Federal Government’s trust duties.

We ask this committee, in reviewing the Task Force’s proposal,

to bear in mind that new structures and functions will be replacing

the existing offices within the Department of the Interior. The

President has proposed significant budget increases for trust reform. We believe they should be targeted to the trust reform efforts

currently being proposed by the Task Force.

In closing, I would like to reflect and express our tribe’s sincere

appreciate for the Department of the Interior, Deputy Secretary

Griles, Assistant Secretary McCaleb, and their staffs for engaging

in an unprecedented historic level of consultation on this issue.

Have we had problems? As Senator Inouye said, ‘‘Is it a

lovefest?’’ No, it is not. These last meetings have been hard. They

have been gut wrenching. I believe, though, I can say with sincerity

that both parties are sincere in trying to accomplish something and

we stand on the brink of an opportunity for that to come out.

I would sincerely ask this committee to continue to engage your

staff in coming to the meetings and offering solutions to these problems as we engage them.

I would invite, and I hope you have reserved all the good questions for us.

The CHAIRMAN. I thank you very much, Mr. Martin.

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

The CHAIRMAN. The Task Force was established in January this

year. Since its establishment, seven formal meetings have been

held. The eighth will be in Anchorage, AK in late August.

Between these formal meetings numerous caucuses and conference calls, and subcommittees of the task force have met. Many

hours have been expended. I gather that all of you are members

of the Task Force. Am I not correct?

The general tone of the testimony I have heard among the Indian

witnesses is that you approve of the process and procedure adopted

by the Task Force in carrying out its mission to resolve these long

standing issues; am I correct?

Mr. MARTIN. Chairman Inouye, I think you are correct in those

things. I think I can say to you on behalf of the other people here

that we are in agreement on the recommendations that have been

made thus far from the tribal and Department of the Interior Task

Force.

The outstanding issues, as in any give and take and deliberations of parties coming from different viewpoints, even though they

are few in number, we are still in monumental disagreements on

some of the issues. But I believe that we have the mindset, we

have the people at the table, that we can come back to this committee with some concrete recommendations on the outstanding issues.

Is it going to solve all of the problems? Is everybody going to be

100 percent unanimous for it? No, sir. I don’t believe that was ever
37

envisioned by anybody who sat down at those tables when we

began.

The CHAIRMAN. I gather that this Task Force is an historic one

in the sense that there has been more consultation and joint work

than any other task force in the history of Indian relationship with

the Government of the United States.

This, but this committee has held more meetings than any other

committee in the Congress of the United States. In the 21 weeks

of legislative work, we have already held 48 meetings, including

this one. We have held five on the work of the Task Force. We look

forward to the next one.

I can assure you that we are intent on bringing forth the statute

that will incorporate your recommendations. So, we are serious in

our work.

We have two measures before us, S. 2212 and the work of the

Task Force. But I gather that if the Task Force carries out its mission, all of you will be satisfied.

I thank you all very much.

Mr. MARTIN. You would be welcomed, Senator.

The CHAIRMAN. The hearing is adjourned.

[Whereupon, at 12:47 p.m. the committee was adjourned, to reconvene at the call of the Chair.]

(39)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. TOM DASCHLE, U.S. SENATOR FROM SOUTH DAKOTA

Chairman Inouye, Vice Chairman Campbell and members of the committee, thank

you for holding this hearing on S. 2212, the Indian Trust Asset and Trust Fund

Management Reform Act of 2002. Trust reform is a critical issue for the Native

American community nationwide, and I am pleased to have joined with Senators

John McCain and Tim Johnson in sponsoring this legislation.

Indian country has faced many challenges over the years. Few, however, have

been more important, or more difficult, than ending the mismanagement of the Indian trust fund and restoring integrity to this administrative process. The Indian

Trust Asset and Trust Fund Management Reform Act is intended to focus attention

on solutions to the longstanding problem of inefficient management of the assets

and funds held by the United States in trust for federally recognized Indian tribes

and individual American Indians.

For over 100 years, the Department of the Interior has been charged with the responsibility of managing a trust fund containing the proceeds of leasing of oil, gas,

land and mineral rights for the benefit of Indian people. Today, that trust fund may

owe as much as $10 billion to as many as 500,000 Indians.

To give some perspective, the 16 tribes of the Great Plains in South Dakota,

North Dakota, and Nebraska comprise 10 million acres of trust lands representing

over one-third of the trust accounts. Many enrolled members of the nine South Dakota tribes have trust accounts.

How these trust funds have been, and will be managed is being litigated in Cobell v. Norton, and the resolution of this lawsuit will have far-reaching ramifications

throughout Indian country. It is impossible not to evaluate potential legislative responses in the context of this lawsuit.

There is clear consensus in Indian country that the current administration of the

trust fund is a failure. The vexing question has always been how to reform it.

Last fall, the Secretary of the Interior unveiled plans to reorganize the Bureau

of Indian Affairs [BIA] and segregate the oversight and accounting of trust-related

assets in a new Bureau of Indian Trust Asset Management [BITAM]. In testimony

before the U.S. District Court, she acknowledged that, ‘‘We undoubtedly do have

some missing data—and we are all going to have to find a way to deal with the

fact that some information no longer exists.’’ The Secretary’s controversial reorganization proposal was presented to the court

with minimal consultation with the tribes or individual Indian account holders, not

to mention Congress. In South Dakota, tribal leaders communicated to Tim Johnson

and me their concern that the Secretary’s solution appeared to be a fait accompli,

conceived without meaningful participation of the stakeholders most directly affected by it. They felt strongly that this proposal should not be implemented without

further consultation with the tribes.

Earlier this year, in the face of Administration assurances that its reorganization

plan was not set in stone, the Interior Department requested that $200 million from

the BIA and $100 million from the Office of the Special Trustee, be reprogrammed
40

to ‘‘a single organization that will report to the Secretary through an Assistant Secretary, Indian Trust.’’ This contradiction set off red flags in Congress, and a clear

and direct message was sent to Secretary Norton by Senators Inouye, Campbell,

Byrd, Johnson, and others that no action should be taken to implement her proposed reorganization plan administratively.

Given these developments, Senators McCain, Johnson, and I felt that Congress

should be more assertive in forcing discussion of what role Congress might play in

ensuring that tribes and individual Indian account holders have a voice in shaping

trust reform policy. It is our hope that this bill will stimulate better dialog among

the Congress, the Department of the Interior, and Indian country on this problem.

With that goal in mind, the Indian Trust Asset and Trust Fund Management Reform Act was reviewed by representatives of the Great Plains tribes at a meeting

in Rapid City in April. Mike Jandreau, chairman of the Lower Brule Sioux Tribe,

has been an effective advocate and champion of trust reform, not only for his tribe,

but for all Indian people. Mike and Tom Ranfranz, chairman of the Flandreau-Santee Sioux Tribe and president of the Great Plains Tribal Chairmen’s Association, led

a very productive working session with tribal leaders from South Dakota, North Dakota, Nebraska, Montana, and Wyoming that both raised awareness of the stakes

of this issue and built support for the McCain/Johnson bill.

I commend the willingness of tribal leaders to be a part of a public process that

will hopefully will not stop until Indian country feels comfortable with a final trust

reform product. The McCain-Johnson-Daschle bill is intended to be a starting point

for promoting greater understanding of what needs to occur to achieve meaningful

trust reform and for focusing attention on concrete solutions to the problem.

At this point, I would like to share with my colleagues some initial observations

on this proposal that were raised by participating South Dakota treaty tribes and

tribes of the Great Plains and Rocky Mountain regions. These comments demonstrate how thoughtfully Indian leaders are approaching the trust problem, and I

encourage the committee to consider their suggestions as it addresses the trust reform challenge.

The following issues are of great importance to the Great Plains Tribal Chairman’s Association:

Providing the Deputy Secretary with sufficient authority to ensure that reform of

the administration of trust assets is permanent; They do not believe the bill at

present gives the Deputy Secretary the full and unified authority needed;

Including cultural resources as a trust asset for management purposes;

Incorporating the Office of Surface Mining and Bureau of Reclamation and other

related agencies within the Department of the Interior and the Federal Government

under the purview of the Deputy Secretary;

Assuring that the legislation not infringe on tribal sovereignty by interfering with

tribal involvement in the management of individual trust assets or tribal assets, or

both;

Maintaining the Bureau of Indian Affairs’s role as an advocate for tribe;

Providing in law that Bureau of Indian Affairs funds not be used to fund the Deputy Secretary appointed by the legislation;

Stressing the importance of appropriating adequate funding allow reform to succeed;

Reflecting in the legislative history that much of the funding needed for real trust

reform be allocated at the local agency and regional levels of the Bureau of Indian

Affairs;

Since bill introduction in April, revelations of corporate mismanagement and its

consequences for the pensions of individual American workers have sent shockwaves

through the country. Lawmakers, economists and academics, appalled by the Enron

and MCI/WorldCom experiences, have called for swift and decisive action to

strengthen corporate accounting practices and protect employee pension accounts.

And Congress has responded. Earlier today, in the East Room of the White House,

with great fanfare surrounded by congressional leaders, President Bush signed corporate accountability legislation.

Unknown to many of these lawmakers, economists and academics, a similar injustice is occurring out of the public spotlight to many American Indians. And the responsible party is not corporate management, but rather the Federal Government.

The issues of trust reform and reorganization within the BIA are nothing new to

members of the committee, or to Indian country. Collectively, we have endured

many efforts—some well intentioned and some clearly not—to fix, reform, adjust,

improve, streamline, downsize, and even terminate the Bureau of Indian Affairs and

its trust activities.
41

These efforts have been pursued in both Republican and Democratic administrations. Unfortunately, they have rarely sought meaningful involvement from tribal

leadership, or recognized the Federal Government’s treaty obligation to tribes.

Both meaningful consultation and acceptance of tribal status are essential if we

expect to find a workable solution to the very real problem of trust management.

The bill Senators McCain, Johnson, and I have introduced reflects this conviction.

There is no more important challenge facing the tribes and their representatives

in Congress than that of restoring accountability and efficiency to trust management. And nowhere do the bedrock principles of self-determination and tribal sovereignty come more into play than in the management and distribution of trust

funds and assets.

This measure recognizes that the only effective long-term solution to the trust

problem must be based on government-to-government dialog. I am hopeful the discussion the Indian Trust Asset and Trust Fund Management Reform Act generates

today will not only provide the catalyst for meaningful tribal involvement in the

search for solutions, but also form the basis for true trust reform. I look forward

to participating with tribal leaders in pursuit of this important objective.

Thank you.

PREPARED STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA

Chairman, Inouye, Vice Chairman Campbell, and members of the committee,

thank you for holding this hearing. Also, thank you, Chairman Inouye, for your

leadership on this issue. First, I’d like to welcome all the tribal leaders who have

traveled to Washington, DC to address this committee on these important issues of

trust reform. I’d like to especially thank Chairman Jandreau of the Lower Brule

Sioux Tribe for giving his insights into this critical issue. Chairman Jandreau is

from my home State of South Dakota and has served the Department of the Interior’s Trust Fund Reform Task Force. Mike is the longest serving tribal chairman in

South Dakota. As always, Mike has risen to the occasion and offered outstanding

leadership, this time on the issue of trust reform.

I apologize for missing today’s earlier hearing pertaining to the Tribal/Interior

Trust Fund Task Force’s findings. I was unable to listen to the testimony in person

because as a senior member of the banking committee and chairman of the financial

institutions sub-committee, I was pleased to serve on the accounting reform and corporate responsibility conference committee. The President signed that legislation

into law today and I attended that signing. I find it ironic, that fixing private sector

corporate mismanagement was viewed with such urgency, yet fixing public sector

mismanagement of funds has yet to be done.

As I’ve said again and again, the issue of trust fund mismanagement is one of

the most urgent problems we are faced with in Indian country. It is also one of the

most complex and difficult. But the time to act is now. This has gone on for far too

long. I hope that the Trust Fund Task Force will soon put forth recommendations

that the Congress can take to heart, review, and act on. I look forward to reading

the testimony and the report issued by the Task Force and listening to the testimony of the witnesses here today.

I’ve indicated previously that S. 2212 can be the vehicle for implementing needed

change. 1, along with my distinguished colleagues Senator Daschle and Senator

McCain, want this bill to be the starting point. I look forward to working with other

members of this committee, the Department of the Interior, and the tribal leaders

in reaching an appropriate solution to this critical problem. I feel strongly that we

need to work at getting some resolution by the end of this Congress. I hope today’s hearing on S. 2212 and the testimony of our witnesses will play a role in passing

these important reforms. Thank you again for holding this hearing today.

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

Mr. Chairman and Vice Chairman, I thank you for scheduling today’s hearing on

S. 2212, legislation I sponsored along with Senators Daschle and Johnson, in response to continuing problems plaguing the Interior Department’s management of

Indian trust funds. I would also like to thank the witnesses for appearing today and

for their commitment to work toward a meaningful legislative reform proposal.

As I stated upon introduction of this bill in April, the purpose of this legislation

is to serve as a ‘‘place-holder’’ bill that can be modified or expanded as the dialog

to consider reform alternatives ensued between the Interior Department, the Tribal

Task Force and the Congress. I, as well as Senators Daschle and Johnson, thought

it critically important to voice the concerns of the Congress in this process and to
42

stand ready with a legislative remedy. I don’t think there can be any doubt that

a legislative remedy is required.

S. 2212 focuses on two primary changes to the 1994 American Indian Trust Fund

Management Reform Act, the underlying law governing Indian trust funds management. First, it creates a single line-of-authority in the Interior Department by establishing a Deputy Secretary for Trust Management and Reform; and second, the bill

strengthens provisions for Indian tribes and beneficiaries to directly manage or comanage with the Interior Secretary trust funds and assets, based on successful selfdetermination policies.

Obviously, this legislation does not address every issue or problem inherent in

trust funds or trust assets management, but it deals with two of the primary issues

that are important to true reform—a single, high-level policy official responsible for

oversight of trust funds and assets management and, authorizing the Secretary to

contract with Indian tribes to directly manage trust funds or assets themselves

through self-governance laws—concepts embraced by tribes, the Congress and eight

presidents of both parties for more than three decades.

I, along with Senators Daschle and Johnson, recognize that S. 2212 as currently

drafted, can and should be modified—it was certainly our intention to be open to

proposed changes based on the recommendations of the Tribal Task Force and others. As the discussions between the Task Force and the Department have matured,

it has become clear that this legislation responds in a very appropriate way to the

structural and policy changes needed in the Interior Department’s management of

trust funds. The changes that need to be made in the bill can now be made rather

quickly and should enable us to move the bill prior to adjournment of the 107th

Congress.

Some of the major policy recommendations of the Task Force, including establishment of an independent trust commission and development of fiduciary standards,

obviously require additional deliberation, as stated by the Tribal Task Force cochairs in the hearing earlier this morning. While most generally agree that independent oversight is necessary, including myself, the best way to structure that

oversight is still open to considerable debate. If such a proposal can be readied for

enactment this year, I will do everything in my power to support that action.

However, I do not believe we should hold back on modifications to S. 2212. It is

clear to even the most casual of observers that change in the underlying law is

needed and it is needed now. We have been through countless hearings, GAO investigations, and court battles on this matter. Further delay in the changes we know

we can make now will only continue the long and sorry history of mismanagement.

In recent days the Federal courts have found it necessary to accept an even larger

role in dealing with the consequences of mismanagement by the Department and

Congressional inaction. In the absence of congressional action this year, the Courts

will become increasingly more involved and exercise more authority in areas entrusted to the Congress under the Constitution.

The bottomline is, the status quo is unacceptable. S. 2212 provides significant reform and a framework for the tribes, the Department and the Congress to continue

to work toward a full solution to the problems involved in the management of Indian trust funds and assets. S. 2212 embodies a structural reform proposal that can

be modified and enacted this year. I, along with Senators Daschle and Johnson,

stand ready to work with you to make it happen.

PREPARED STATEMENT OF CLIFFORD MARSHALL, CHAIRMAN, HOOPA VALLEY TRIBE OF

CALIFORNIA

I am Clifford Marshall, chairman of the Hoopa Valley Tribe. I appreciate the opportunity to submit my testimony for the Senate Committee on Indian Affairs hearing record regarding the trust reform and related matters. Because trust reform will

effect the ability of tribes to develop stable governments for the next several decades, I urge the committee to take the necessary time to assess the impacts on Indian country before moving forward with proposals that are based on vague short

term concepts rather than addressing longstanding problems.

There have been two forms of trust reform that have been underway for the past

several years, one initiated by tribes and the other by the Federal Government.

These are two very different approaches. The tribal approach focuses on Indian

country, while the Federal approach has been one focused on inside the Beltway

using consulting firms that have little experience in Federal Indian trust and tribal

government matters.

Regarding tribal efforts, tribes have been involved in various forms of trust reform

activities since the first treaty was entered into and the trust relationship was es-
43

tablished. At least part of the tribal trust reform efforts have been designed to address problems associated with the underfunded BIA Indian programs. For example,

comparisons between the budgets of Indian programs to those for federally owned

lands and resources demonstrate that Indian forest programs receive only 35 percent of the funds appropriated for management of the United States’ own lands and

that Indian roads maintenance programs only receive 30 percent of Indian road

maintenance needs. It was this type of underfunding, coupled with the lack of local

tribal control over management of reservation affairs, that led to the development

of such laws as the Indian Self-Determination and Tribal Self-Governance Acts.

Information that was submitted to the Task Force by the tribe demonstrates that

tribal and individual Indian beneficiaries, as well as the United States, receive a

benefit of $3 of non-BIA funds for every $1 of BIA compacted/contracted funds as

a direct result of the tribal efforts in furthering tribal trust reform activities (SEE

ATTACHMENT). Clearly, this information indicates that the Tribal Self-Determination and Self-Governance initiatives are very beneficial to the goals of reforming Indian trust programs.

Regarding Federal trust reform efforts, it has been both frustrating and costly for

tribal governments over the past few years to chase around Indian country the most

recent recommendations of consulting firms who’ve been awarded multi-million dollar contracts by DOI. It certainly is very revealing of the Federal efforts to have

spent over $760 million thus far, but we have yet to find meaningful solutions and

many of the consultant proposals have been universally rejected by the tribes. Unfortunately, the most recent Federal trust reform efforts have focused almost entirely on restructuring or eliminating the BIA’s trust management functions without

spending any time to analyze whether the new organization will simply fall into the

same old problems that brought us to where we are today.

DOI officials say that status quo of the BIA is unacceptable, and restructuring is

necessary if trust reform is to be successful, including ‘‘realignment’’ of the lower

levels of the BIA. (Task Force Report, p. 27). This proposed realignment initiative

includes the probability of segregating trust asset management functions and budgets from the BIA Regional, Agency and Sub-agency offices for transfer to a trust

service centers. While there has been discussion about the local BIA Regional and

Agency offices ‘‘contracting’’ with the trust service center to maintain local trust

asset management functions, it is more likely that these functions will be permanently removed from the local offices since the budgets will no longer be available

to support them.

The American Indian Trust Funds Management Reform Act of 1994 (Reform Act)

established the Special Trustee for American Indians and gave that position a significant amount of control over trust reform efforts. Despite the fact that Office of

Special Trustee (OST) was supposed to only provide an oversight function—not a

program implementation function, Congress began appropriating substantial

amounts of funds for the OST budget. OST then assumed control over the BIA Office of Trust Funds Management, then assumed control of the historic accounting

functions, most recently appraisals, and probates are expected to follow. Today, OST

has stopped being the oversight function as originally contemplated in the Reform

Act and has now become part of the problem. In effect, OST is now what the BIA

was 12 years ago—and the problems continue to escalate and few are being resolved. For example, it was the failures of the OST’s Office of Trust Funds Management system that resulted in the complete shut-down of the DOI computer systems

that were connected to the OTFM systems. In effect, the DOI computer systems had

to be disconnected because proper safeguards were not incorporated in the OTFM

systems that would prevent outsiders from improperly accessing trust information.

Clearly, OST has now become a major part of the problem that must be fixed if

trust reform is ever to be successfully implemented.

Congress mandated in the Reform Act that a comprehensive plan be developed,

in consultation with tribes, and submitted to the House Resources and Senate Indian Committees for review. To complete the framework for trust reform, the Reform Act also contains a mandate that the Special Trustee certify in writing the

adequacy of the trust reform budgets. of the BIA, BLM, and MMS. Unfortunately,

neither of these, statutory requirements has been complied with. I believe that the

present state of the Federal trust reform is in the state of chaos that we see today

largely because of these critical failures by OST in complying with these legal mandates.

To address trust asset management, DOI has proposed to fragment Indian services into two or more agencies. If one fully implemented these proposals, Indian

country would become the only place in the Nation where a tribe or individual Indian will be required to go to multiple agencies just to get permission to start businesses, create employment, implement welfare reform programs, build roads, have
44

adequate housing fight fires, use resources and lands, and so on., Despite the fact

that Indian people today are more regulated than any other group around the Nation, separating BIA functions into multiple organizations will require a substantial

amount of new funds just to maintain the same level of services that are being provided today. Indian services will be reduced in favor of paying for more Federal bureaucracy. Unfortunately for tribes, none of the proposals analyzes what impacts

will occur to the regional and agency offices where 95 percent of the services in Indian country are provided.

Based on an analysis of BITAM submitted earlier by the tribe, any option that

separates the BIA functions into multiple organizations will cost at least $10 million

of new or reprogrammed funds just to hire additional supervisors, assuming that

the same level of BIA employees will be maintained. Additional funds will likely be

necessary once the new organization determines what service it will provide to

tribes and individual Indians. With respect to contracting and compacting with

tribes, there will likely need to be amendments to various Federal statutes, including the Indian Self-Determination and Self-Governance Act, to provide for mandatory contracting/compacting requirements for any new non-BIA organization.

Restructuring of the any Federal agency must be done in accordance with pre-determined plans, with identified and measurable goals and specific timeframes, none

of which presently exist for restructuring Indian affairs today. Restructuring for the

sake of restructuring is typically not the best use of limited resources, funds or time.

Quite simply, changing employee name tags and agency addresses will not fix trust

problems. Over three-quarters of a billion dollars have been spent by Federal officials and numerous consultants in the name of trust reform and little benefits have

been demonstrated from the results. Yet tribes continue to struggle with underfunded programs, largely because of the unwillingness of Federal officials to provide

funding and resources at the local tribal government levels, where clear progress is

being made as tribes have consistently corrected problems and brought stability to

local trust services under the Self-Determination and Self-Governance Acts. It

seems clear that the Federal Government has simply been investing in the wrong

solutions.

With respect to the DOI consultation process for the Task Force report, we are

concerned that the process is not proceeding in a manner that will provide meaningful input from tribes and individual Indians regarding trust reform activities. Quite

simply, DOI cannot expect that having just over 30 days for review and comment

on such a major effort provides any level of reasonable consultation with tribes

across the Nation, even if the Task Force report were to be expanded to include sufficient information with which to make an independent assessment of the Task

Force’s recommendations. It has also been explained that the EDS contract is supposed to provide additional substantive information regarding how the options will

impact the local levels of the BIA. Further, no explanation has been provided to reconcile the fact that the Task Force’s report to the Secretary will be submitted in

July while the EDS analysis won’t be completed until December.

Trust Reform Budget Requests. The tribe does not believe that DOI has given

fair consideration of budget needs to implement trust reform measures. Past needsbased budgets submitted to tribes during national budget meetings indicate that

there is a need of approximately $7.0 billion to adequately fulfill the trust obligations to tribes and individual Indians, as compared to the existing BIA budget of

approximately $2.2 billion. Instead of dedicating more limited funds and resources

toward reorganization of the BIA, the Hoopa Valley Tribe believes that DOI must

aggressively work toward securing adequate funds and resources to implement the

Federal trust obligations to tribes and individual Indians. Without both adequate

funds and commitment to engage tribes into every phase of the trust reform efforts,

no trust reform plan can be successfully implemented.

With respect to S. 2212, the tribe strongly believes that there must be a legislative solution to trust reform problems if they are ever going to be resolved. Quite

simply, there is presently insufficient legal guidance and authority to address the

trust management issues that we are confronted with today. S. 2212 provides a

sound beginning point for the legislative package.

Our comments on S. 2212 are as follows:

No. 1. We agree with S. 2212 that the BIA structure must be kept in tact. Besides

not having the time or funds to construct a new Indian agency, the exercise of separating trust functions between resource management and other trust services will

undoubtedly become an insurmountable task. The Hoopa Valley Tribe opposes DOI

proposals that fragment the BIA into two or more agencies because we believe that

it will ultimately lead to the destruction of Indian services and diminishment of

trust responsibilities owed to tribes and individual Indians by the United States.
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No. 2. We disagree with section 307 of the bill that there is a need for a new Deputy Secretary for Trust Management and Reform. We believe that the bill correctly

defines the trust duties for trust asset management and that the existing Assistant

Secretary for Indian Affairs can appropriately address trust reform issues provided

that the necessary funding and resources are made available to the BIA.

No. 3. We wholeheartedly agree with the provision contained in the bill that provides for the development of resource management plans. We believe that this is

one of the key cornerstones to ultimately resolving the differences between tribes,

individual Indians and the United States with respect to management of trust lands

and resources. Again, adequate funding must be made available to accomplish this

goal and adequate flexibility must be provided to tribes and individual Indians to

contract for the development of the plans.

No. 4. We recommend that a provision be added to the bill that will facilitate the

development and submission of adequate budgets necessary to properly manage

trust assets and to fulfill the trust responsibilities of the United States to tribes and

individual Indians. We suggest that language be included that mandates that the

annual BIA Unmet Needs budget be reviewed so that annual budgets provide a reasonable method of increasing the funding levels of the BIA on a regular basis to

meet the unmet needs.

No. 5. We recommend that a section be added that would establish a new Division

of Indian Claims within the DOI Office of Hearings and Appeals. Throughout the

years of tribal deliberations regarding trust reform, tribes have expressed frustration from not having access to information that is controlled by the United States

that would help to facilitate the development of claims, in order to resolve these

claims through mediation, negotiation, litigation or legislation.

No. 6. We recommend that provisions be added to the bill that would facilitate

resolution of the breaches of trust that have been identified by the Cobell Court.

PREPARED STATEMENT OF NEAL MCCALEB, ASSISTANT SECRETARY FOR INDIAN

AFFAIRS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

Mr. Chairman and members of the committee, I am here today to provide to the

committee the Administration’s position on S. 2212, the proposed ‘‘ Indian Trust

Asset and Trust Fund Management and Reform Act of 2002’’ sponsored by Senators

McCain, Johnson, and Daschle.

The Administration is strongly opposed to the enactment of S. 2212, and recommends instead that the recommendations of the Joint Department of the Interior/

Tribal Leaders Task Force on Trust Reform be enacted, where there has been agreement. While well intentioned, S. 2212 does not reflect the consensus of the Tribal

Task Force.

In the remarks Senator McCain made when the bill was introduced, he stated

that Congress should give careful consideration to the recommendations of the Task

Force. The Department learned a valuable lesson last year when it proposed the formation of a new Bureau of Indian Trust Asset Management prior to consulting with

the tribes. This proposal was soundly rejected by tribal leaders. They were particularly concerned that the Department and the tribes had not sat down together to

discuss the concept before it was proposed.

Similarly, S. 2212 was introduced in the Congress without any discussions or review by the Department of the Interior or the broader tribal community. The provisions of S. 2212 are at odds with the work of the Task Force. Enactment of these

provisions after the Department and tribal leaders have met at multi-day meetings

in seven different locations over the past 7 months would seriously undermine the

consultation process and the work of the Task Force.

The Administration is strongly opposed to creating another Deputy Secretary position within the Department of the Interior. No other Department within the executive branch has more than one Deputy, or a Deputy with a particular mission other

than the overall responsibility of the Secretary. We have reached agreement within

the Task Force to recommend the creation of an Under Secretary for Indian Affairs

who would be appointed by the President and confirmed by the Senate, the creation

of a new Office of Self-Governance and Self-Determination that reports directly to

the Under Secretary, and the creation of a Director for Trust Accountability.

The Under Secretary would have direct line authority over all aspects of Indian

affairs within the Department. This would include the coordination of trust reform

efforts across the relevant agencies and programs within the Department to ensure

these functions are performed in a manner that is consistent with our trust responsibility. This reorganization will require narrowly tailored legislation. We would be
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happy to provide to the committee draft legislative language that embodies the duties agreed upon by the Department and the Tribal Leaders on the Task Force.

We also object to the creation of an Office of Trust Implementation and Oversight.

This is not the model we have developed in our consultation with the tribes through

the Task Force. Also, we do not believe that the proposed 10-year Indian Trust Fund

and Trust Asset Management and Monitoring Plans authorized by the bill will meet

their goal of assisting tribes in moving toward self-governance and self-determination.

In addition, we have concerns with the list of duties of the Office of Trust Reform

Implementation and Oversight enumerated in section 2(b), which adds a new section

307 to the American Indian Trust Fund Management Reform Act of 1994. Many of

the duties in section 307(e)(3), as currently drafted, are overbroad and imprecise,

and serve only to further confuse the issue of what obligations the trustee has. For

example, section 307(e)(3)(H) imposes the duty to ‘‘ensure. . .the greatest return on

those funds and assets.’’ The proposed language arguably does not permit the Government to analyze the claimed liquidity needs or to consider the compound interest

needs of any particular individual or tribal owner of trust funds before it invests

such funds. Additionally, the proposed language appears intended to extend the

Government’s responsibility regarding trust asset management beyond that established by Supreme Court precedent, with the potential to affect ongoing litigation

over the scope of the government’s fiduciary duties.

We also have concerns regarding the obligation to manage the funds in accordance

with all applicable tribal laws. This requirement carries the possibility of altering

the trust duties of the Secretary in differing ways depending on which tribe’s plan

was involved, which could make the Department’s administration of its ‘‘inconsistent

responsibilities’’ practically very difficult and subject to litigation risk.

For these reasons, we recommend that the committee put S. 2212 aside, and consider instead legislation that reflects the recommendations of the Task Force. Those

recommendations include creation of the Under Secretary position mentioned above,

creation of a new Office of Self-Governance and Self-Determination that reports directly to the Under Secretary, and creation of a Director for Trust Accountability.

The Task Force has also agreed on the concept of creating an independent commission that would provide oversight on the management of trust funds and other

issues. Our work on that proposal is not yet complete. We are hopeful that we will

finalize the commission proposal in August. We look forward to working with the

Committee on these provisions during the next few weeks.

This concludes my statement. I would be happy to answer any questions the committee might have at this time.
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