I

103D CONGRESS

1ST SESSION H. R. 1846

To require the Secretary of the Interior to pay interest on Indian funds

invested, to authorize demonstrations of new approaches for the management of Indian trust funds, to clarify the trust responsibility of the

United States with respect to Indians, to establish a program for the

training and recruitment of Indians in the management of trust funds,

to account for daily and annual balances on and to require periodic

statements for Indian trust funds, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 22, 1993

Mr. SYNAR introduced the following bill; which was referred to the Committee

on Natural Resources

A BILL

To require the Secretary of the Interior to pay interest

on Indian funds invested, to authorize demonstrations

of new approaches for the management of Indian trust

funds, to clarify the trust responsibility of the United

States with respect to Indians, to establish a program

for the training and recruitment of Indians in the management of trust funds, to account for daily and annual

balances on and to require periodic statements for Indian

trust funds, 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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Native American Trust

3 Fund Accounting and Management Reform Act of 1993’’.

4 SEC. 2. DEFINITIONS.

5 For purposes of this Act—

6 (1) the term ‘‘Secretary’’ means the Secretary

7 of the Interior; and

8 (2) the term ‘‘Bureau’’ means the Bureau of

9 Indian Affairs of the Department of the Interior.

10 TITLE I—TRUST FUND INTEREST

11 PAYMENTS

12 SEC. 101. PAYMENT OF INTEREST ON FUNDS INVESTED.

13 (a) PAYMENT OF INTEREST.—(1) The fourth proviso

14 of subsection (a) of the first section of the Act of June

15 24, 1938 (25 U.S.C. 162a), is amended by striking ‘‘may

16 invest’’ and inserting ‘‘shall invest’’.

17 (2) The first section of the Act of June 24, 1938 (25

18 U.S.C. 162a), is amended by adding at the end the follow19 ing new subsection:

20 ‘‘(d) Amounts deposited or invested under subsection

21 (a) shall earn interest at the appropriate rates, taking into

22 consideration the type of deposit or investment. The Sec23 retary shall periodically pay such interest to the appro24 priate Indian tribe or individual Indian or, at the election

25 of the Indian tribe or individual Indian, add such interest

26 to the principal so deposited or invested.’’.
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1 (b) TECHNICAL CORRECTION.—The second sub2 section (b) of the first section of the Act of June 24, 1938

3 (25 U.S.C. 162a), as added by section 302 of Public Law

4 101–644 (104 Stat. 4667), is hereby redesignated as sub5 section (c).

6 (c) REPEAL OF LIMITATION ON UNITED STATES LI7 ABILITY.—Paragraph (2) of subsection (c) of the first sec8 tion of the Act of June 24, 1938, as amended by sub9 section (b), is amended to read as follows:

10 ‘‘(2) Amounts deposited or invested under this sub11 section shall generate earnings at the appropriate rates,

12 taking into consideration the type of investment con13 cerned. The Secretary shall periodically pay such earnings

14 to the appropriate Indian tribe or individual Indian or,

15 at the election of the Indian tribe or individual Indian,

16 add such earnings to the principal of such funds so

17 invested.’’.

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to interest earned on amounts de20 posited or invested on or after the date of the enactment

21 of this Act.

22 SEC. 102. AUTHORITY FOR PAYMENT OF CLAIMS FOR IN23 TEREST OWED.

24 The Secretary is authorized to make payments to an

25 Indian tribe or an individual Indian—
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1 (1) in full satisfaction of any claim of such In2 dian tribe or individual Indian for interest on

3 amounts deposited or invested on behalf of such In4 dian tribe or individual Indian before the date of en5 actment of this Act under the Act of June 24, 1938

6 (25 U.S.C. 162a), and who was not paid the appro7 priate amount of interest on such funds; and

8 (2) in an amount equal to the interest which

9 would have been earned if funds of such Indian tribe

10 or individual Indians which were subject to the Act

11 of June 24, 1938 (25 U.S.C. 162a), had been depos12 ited or invested in accordance with such Act.

13 TITLE II—INDIAN TRUST FUND

14 MANAGEMENT DEMONSTRA15 TION PROGRAM

16 SEC. 201. PURPOSE.

17 The purpose of this title is to demonstrate new ap18 proaches for the management of tribal and individual In19 dian funds held in trust by the United States and man20 aged by the Secretary through the Bureau, that, consist21 ent with the trust responsibility of the United States and

22 the principles of self-determination, will—

23 (1) give Indian tribal governments and individ24 ual Indian account holders greater control over the

25 management of such trust funds;
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1 (2) pursuant to tribal instructions, involve in2 vestment of such trust funds by the Secretary in a

3 manner that will also help to promote economic

4 development in Indian communities; or

5 (3) otherwise demonstrate how the principles of

6 self-determination can work with respect to the man7 agement of such trust funds, in a manner consistent

8 with the trust responsibility of the United States.

9 SEC. 202. DEFINITION.

10 For the purposes of this title, except for the purposes

11 of section 208, the terms ‘‘Indian tribe’’ and ‘‘tribe’’

12 mean—

13 (1) an Indian tribe;

14 (2) a consortia of Indian tribes; or

15 (3) an association of Indians holding individual

16 Indian trust fund accounts managed by the Sec17 retary through the Bureau.

18 SEC. 203. DEMONSTRATION PLANS.

19 An Indian tribe may submit to the Secretary a plan

20 to demonstrate a new approach for the management of

21 tribal or individual Indian funds held in trust by the Unit22 ed States for such tribe or the members of such tribe, and

23 as of the date of the enactment of this Act, managed by

24 the Secretary through the Bureau. Such plan may provide

25 for the following:
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1 (1) Management of such funds directly by the

2 Indian tribe in financial institutions selected by the

3 tribe, subject to supervision and oversight by the

4 Secretary. For the purposes of this section, the term

5 ‘‘management’’ may include one or more of the func6 tions carried out, as of the date of the enactment of

7 this Act, by the Secretary through the Bureau in

8 managing such funds, such as collection, disburse9 ment, and investment functions.

10 (2) Management of such funds by the Secretary

11 in a manner that—

12 (A) involves investment of such funds in fi13 nancial institutions on or near the reservation;

14 (B) increases tribal access to such institu15 tions;

16 (C) promotes economic development activi17 ties on the reservation; or

18 (D) otherwise promotes tribal priorities.

19 (3) Management of such funds at the local level

20 through contracts with local financial institutions

21 that meet the purposes of this title.

22 (4) Such other approaches, as determined by

23 the Secretary, that meet the purpose of this title.
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1 SEC. 204. APPROVAL OF PLANS BY THE SECRETARY.

2 (a) IN GENERAL.—The Secretary shall approve and

3 implement, or provide for the implementation by an Indian

4 tribe of, a plan that meets the following conditions:

5 (1) Such plan has been approved by the appro6 priate Indian tribe, as follows:

7 (A) For a plan involving tribal trust funds,

8 such plan is accompanied by a resolution from

9 the tribal governing body approving the plan.

10 (B) For a plan submitted by an Indian

11 tribe (as defined in paragraphs (1) and (2) of

12 section 202) involving individual Indian money

13 accounts, where most or all of the account hold14 ers are members of the submitting tribe, it is

15 accompanied by a resolution from the tribal

16 governing body approving the plan, along with

17 a certification that the tribe held no fewer than

18 2 public meetings to provide an opportunity for

19 account holders to comment on the plan.

20 (C) For a plan submitted by an Indian

21 tribe (as defined in paragraph (3) of section

22 202), it is accompanied by a written approval

23 signed by each participating account holder,

24 along with a certification that the tribe on

25 whose reservation the trust asset that is the
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1 source of the funds is located, has been con2 sulted regarding the plan.

3 (2) The Secretary determines such plan to be

4 consistent with standards of reasonable prudence,

5 after considering all appropriate factors, including

6 but not limited to the following:

7 (A) The capability and experience of the

8 individuals or institutions that will be managing

9 the trust funds.

10 (B) The protection against substantial loss

11 of principal.

12 (C) The rate of return, provided that the

13 plan need not produce the highest rate of re14 turn possible if the Indian tribe chooses to ac15 cept a lower rate in return for other benefits

16 such as the benefits from investing in local fi17 nancial institutions.

18 (D) The ability of the Secretary to effec19 tively monitor the demonstration, pursuant to

20 the trust responsibility of the United States as

21 specified in section 205.

22 (3) The duration of the plan does not exceed 5

23 years.

24 (b) INVESTMENT IN EQUITIES.—Nothing in this sec25 tion shall prohibit an Indian tribe submitting a plan for
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1 a demonstration under this section from providing in such

2 plan for the investment of its trust funds in equities, if

3 the Secretary determines that such plan meets the stand4 ard of reasonable prudence under subsection (a)(2).

5 SEC. 205. FEDERAL TRUST RESPONSIBILITY.

6 (a) IN GENERAL.—If an Indian tribe assumes man7 agement of trust funds pursuant to a demonstration under

8 this title, the trust responsibility of the United States with

9 respect to such funds shall, for the duration of the dem10 onstration, be limited to the following:

11 (1) The exercise of reasonable prudence by the

12 Secretary in approving the plan for the demonstra13 tion.

14 (2) An annual audit provided by the Secretary,

15 directly or by contract, to determine that the tribe

16 is performing in conformance with the plan for the

17 demonstration.

18 (3) If the Secretary finds, through such audits,

19 that the tribe is not in compliance with the terms of

20 the plan, the Secretary shall—

21 (A) terminate the demonstration; or

22 (B) prescribe remedial action to be taken

23 by the tribe to achieve compliance with the

24 plan.
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1 (b) DECREASE IN INTEREST AND LOSS OF PRIN2 CIPAL.—If a plan for a demonstration submitted under

3 this title and approved by the Secretary provides for the

4 implementation of such demonstration by the Secretary,

5 the United States shall not be liable, during the period

6 of such demonstration, for any decrease in interest rate

7 or any loss of principal that is proximately caused by the

8 Secretary’s prudent implementation of such demonstra9 tion.

10 (c) AGREEMENT.—Prior to the implementation of

11 any demonstration under this title, the Indian tribe in12 volved shall sign a written statement indicating that it un13 derstands and accepts the limitations on the trust respon14 sibility of the United States as provided in this section.

15 SEC. 206. TECHNICAL AND FINANCIAL ASSISTANCE.

16 The Secretary shall, directly or by contract, provide

17 Indian tribes with technical and financial assistance in de18 veloping, implementing, and managing plans for dem19 onstrations under this title.

20 SEC. 207. NO INCOME TAX CONSEQUENCES.

21 Funds managed pursuant to a demonstration pro22 gram under this title, and distributions made from such

23 funds, shall, for purposes of the Internal Revenue Code

24 of 1986, be treated in the same manner as such funds
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1 would be treated if such funds were managed directly by

2 the Secretary, through the Bureau.

3 SEC. 208. VOLUNTARY WITHDRAWAL FROM TRUST FUND

4 PROGRAM.

5 (a) IN GENERAL.—An Indian tribe may, in accord6 ance with this section, submit a plan to withdraw some

7 or all funds held in trust for such tribe by the United

8 States and managed by the Secretary through the Bureau.

9 (b) APPROVAL OF PLAN.—The Secretary shall ap10 prove a plan under this section that meets the require11 ments specified in section 204(a)(1) and subparagraphs

12 (A) and (B) of section 204(a)(2).

13 (c) TERMINATION OF TRUST RESPONSIBILITY.—Be14 ginning on the date funds are withdrawn pursuant to this

15 section, any trust responsibility of the United States with

16 respect to such funds shall terminate.

17 SEC. 209. REPORT TO CONGRESS.

18 The Secretary shall, beginning one year after the date

19 of the enactment of this Act, submit an annual report to

20 the Congress on the implementation of demonstration pro21 grams under this title. Such report shall include rec22 ommendations for changes necessary to effectively imple23 ment the purpose of this title.
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1 TITLE III—RECOGNITION OF

2 TRUST RESPONSIBILITY

3 SEC. 301. AFFIRMATIVE ACTION REQUIRED.

4 The first section of the Act of June 24, 1938 (25

5 U.S.C. 162a), as amended by section 101(a)(2), is

6 amended by adding at the end the following new sub7 section:

8 ‘‘(e) The Secretary shall properly discharge the trust

9 responsibilities of the United States under this section

10 by—

11 ‘‘(1) providing adequate systems for accounting

12 for and reporting trust fund balances;

13 ‘‘(2) providing adequate controls over receipts

14 and disbursements;

15 ‘‘(3) providing periodic, timely reconciliations to

16 assure the accuracy of accounts;

17 ‘‘(4) determining accurate cash balances;

18 ‘‘(5) preparing and supplying account holders

19 with meaningful periodic statements of their account

20 balances;

21 ‘‘(6) establishing consistent, written policies and

22 procedures for trust fund management and account23 ing; and
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1 ‘‘(7) providing adequate staffing, supervision,

2 and training for trust fund management and ac3 counting.’’.

4 SEC. 302. TRUST RESPONSIBILITY WITH RESPECT TO NATU5 RAL RESOURCES.

6 The Congress recognizes that the trust responsibility

7 of the United States extends to tribal and individual In8 dian owners of natural resources located within the bound9 aries of Indian reservations and trust lands. This includes

10 the fiduciary responsibility to manage funds held in trust

11 by the United States for Indian tribes and individual Indi12 ans derived from actions including, but not limited to, the

13 use and sale of leased lands, judgments, mineral leases,

14 oil and gas leases, timber permits and sales, and water

15 resources.

16 TITLE IV—TRAINING AND

17 PERSONNEL

18 SEC. 401. TRAINING.

19 (a) TRAINING PROGRAM.—The Secretary shall estab20 lish a program to assist Indians, including, but not limited

21 to, employees of the Bureau and members and employees

22 of Indian tribes, to obtain expertise in the management

23 of trust funds. Components of such program may include

24 the following:
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1 (1) An outreach program to encourage and as2 sist Indians to obtain employment with private fi3 nancial institutions.

4 (2) Agreements with financial institutions and

5 other entities under which such entities would pro6 vide classroom training, on-the-job training, intern7 ships, and employment opportunities not to exceed 2

8 years, for employees and prospective employees of

9 the Bureau.

10 (b) RECRUITMENT.—

11 (1) EMPLOYMENT DESCRIPTIONS.—The Sec12 retary shall ensure that the employment description

13 for any Federal position related to the management

14 of Indian trust funds contains requirements nec15 essary to ensure that a person filling such position

16 would have the necessary skills, based on industry

17 standards, to fully perform the position’s responsibil18 ities in a manner consistent with the responsibility

19 of the United States to properly manage Indian

20 trust funds.

21 (2) PAY.—The Secretary, in consultation with

22 the Office of Personnel Management, shall establish

23 the rate of pay payable for a position related to the

24 management of Indian trust funds at a level of the

25 General Schedule appropriate for such position.
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1 (c) INDIAN PREFERENCE.—Nothing in this title shall

2 authorize or permit any waiver of Indian preference laws

3 as such term is defined in section 2(f)(2) of Public Law

4 96–135 (25 U.S.C. 472 et seq.).

5 TITLE V—RESPONSIBILITY TO

6 ACCOUNT FOR INDIAN TRUST

7 FUNDS

8 SEC. 501. RESPONSIBILITY OF SECRETARY TO ACCOUNT

9 FOR THE DAILY AND ANNUAL BALANCES OF

10 INDIAN TRUST FUNDS.

11 (a) REQUIREMENT TO ACCOUNT.—The Secretary

12 shall account for the daily and annual balance of all funds

13 held in trust by the United States for the benefit of an

14 Indian tribe or an individual Indian which are deposited

15 or invested pursuant to the Act of June 24, 1938 (25

16 U.S.C. 162a).

17 (b) PERIODIC STATEMENT OF PERFORMANCE.—Not

18 later than 10 business days after the close of a calendar

19 month, the Secretary shall provide a statement of perform20 ance to each Indian tribe and individual with respect to

21 whom funds are deposited or invested pursuant to the Act

22 of June 24, 1938 (25 U.S.C. 162a). The statement, for

23 the period concerned, shall—

24 (1) identify the source, type, and status of the

25 funds;
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1 (2) the beginning balance;

2 (3) the earnings and losses; and

3 (4) the ending balance.

4 (c) ANNUAL AUDIT.—The Secretary shall cause to be

5 conducted an annual audit on a fiscal year basis of all

6 funds held in trust by the United States for the benefit

7 of an Indian tribe or an individual Indian which are depos8 ited or invested pursuant to the Act of June 24, 1938 (25

9 U.S.C. 162a), and shall include a letter relating to the

10 audit in the first statement of performance provided under

11 subsection (b) after the completion of the audit.

12 (d) EFFECTIVE DATE.—This section shall take effect

13 October 1, 1993, but shall only apply with respect to earn14 ings and losses occurring on or after October 1, 1993, on

15 funds held in trust by the United States for the benefit

16 of an Indian tribe or an individual Indian.

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