[House Hearing, 107 Congress]
[From the U.S. Government Printing Office]



 
                      INDIAN TRUST FUND ACCOUNTS
=======================================================================

                           OVERSIGHT HEARING

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION
                               __________

                            February 6, 2002
                               __________

                           Serial No. 107-81
                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
J.D. Hayworth, Arizona               Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                      Tim Stewart, Chief of Staff
           Lisa Pittman, Chief Counsel/Deputy Chief of Staff
                Steven T. Petersen, Deputy Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                









                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on February 6, 2002.................................     1

Statement of Members:
    Christensen, Hon. Donna M., a Delegate in Congress from the 
      Virgin Islands, Prepared statement of......................   179
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming, Prepared statement of....................   179
    Faleomavaega, Hon. Eni F.H., a Delegate in Congress from 
      American Samoa, Prepared statement of......................   107
    Hansen, Hon. James V., a Representative in Congress from the 
      State of Utah..............................................     1
        Prepared statement of....................................     2
    Kildee, Hon. Dale E., a Representative in Congress from the 
      State of Michigan, Prepared statement of...................   179
    Pallone, Hon. Frank, Jr., a Representative in Congress from 
      the State of New Jersey, Prepared statement of.............   181
    Rahall, Hon. Nick J. II, a Representative in Congress from 
      the State of West Virginia.................................     3
        Prepared statement of....................................     4
    Rehberg, Hon. Dennis R., a Representative in Congress from 
      the State of Montana, Prepared statement of................   182
    Udall, Hon. Tom, a Representative in Congress from the State 
      of New Mexico, Prepared statement of.......................    45
    Young, Hon. Don, a Representative in Congress from the State 
      of Alaska, Prepared statement of...........................   182

Statement of Witnesses:
    Cobell, Elouise, IIM Trust Beneficiary.......................    70
        Prepared statement of....................................    73
        Response to questions submitted for the record...........    78
    Gray, Donald T., Esq., Nixon Peabody LLP.....................   150
        Prepared statement of....................................   151
    Hall, Tex G., President, National Congress of American 
      Indians....................................................   124
        Prepared statement of....................................   126
    Jandreau, Michael, Chairman, Lower Brule Sioux Tribe.........    68
        Prepared statement of....................................    69
    Makil, Ivan, President, Salt River Pima-Maricopa Indian 
      Community..................................................    57
        Prepared statement of....................................    59
    Matt, D. Fred, Chairman, The Confederated Salish and Kootenai 
      Tribes of the Flathead Nation..............................    62
        Prepared statement of....................................    64
    Norton, Hon. Gale, Secretary, U.S. Department of the Interior     5
        Prepared statement of....................................    11
        Response to questions submitted for the record...........    22
    Tillman, Charles O., Jr., Chairman, InterTribal Monitoring 
      Association................................................   110
        Prepared statement of....................................   111
        ITMA Position Statement submitted for the record.........   120
    Windy Boy, Jonathan, President, Council of Large Land Base 
      Tribes.....................................................   137
        Prepared statement of....................................   138

Additional materials supplied:
    Addison, Anthony A., Chairman, Northern Arapaho Business 
      Council, Statement submitted for the record................   183
    Addison, Anthony A., Chairman, Northern Arapaho Business 
      Council, Letter to the Department of the Interior submitted 
      for the record.............................................   185
    Anoatubby, The Honorable Bill, Governor, The Chickasaw 
      Nation, Statement submitted for the record.................   186
    Assiniboine & Sioux Tribes, Counterproposal to Bureau of 
      Indian Trust Assets Management submitted for the record....   187
    Berrey, John Lane, Osage Nation/Quapaw Tribe of Oklahoma, 
      Statement and memorandum submitted for the record..........   101
    Blackfeet Tribal Business Council, Letters submitted for the 
      record.....................................................    82
    Bradley, Carman, Chairman, Council of Energy Resource Tribes, 
      Statement submitted for the record.........................   199
    Bourland, Gregg J., Tribal Chairman, Cheyenne River Sioux 
      Tribe, Statement of the Great Plains Tribal Chairmen's 
      Association submitted for the record.......................   203
    Hoopa Valley Tribe, Tribal Self-Governance Trust Reform 
      Proposal submitted for the record..........................   208
    Mille Lacs Band of Ojibwe, Letter submitted for the record...   218
    Montana Wyoming Tribal Leaders Council, Resolution submitted 
      for the record.............................................   220
    Nez Perce Tribe, Statement submitted for the record..........   222
    Slonaker, Thomas N., The Special Trustee for American 
      Indians, Statement submitted for the record................    20
    Tribal Chairmen's Position Statement submitted for the record   224
    Tribal Council of the Northern Cheyenne Tribe, Resolution 
      submitted for the record...................................   177
    Windy Boy, Alvin, Sr., Chairman, The Chippewa Cree Tribe of 
      the Rocky Boy's Reservation, Statement submitted for the 
      record.....................................................   228









     INDIAN TRUST FUND ACCOUNTS: THE DEPARTMENT OF THE INTERIOR'S 
   RESTRUCTURING PROPOSAL AND THE IMPACTS OF THE COURT ORDER CLOSING 
               ACCESS TO THE DEPARTMENT'S COMPUTER SYSTEM

                              ----------                              


                      Wednesday, February 6, 2002

                     U.S. House of Representatives

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Committee met, pursuant to notice, at 10 a.m., in room 
1334, Longworth House Office Building, Hon. James V. Hansen 
(Chairman of the Committee) presiding.

  STATEMENT OF THE HON. JAMES V. HANSEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    The Chairman. We appreciate you all being here today, and 
we know there is great interest in what we are doing here. A 
lot of folks are in the overflow room, and we apologize that we 
do not have adequate room for everybody, but we just do not. We 
would appreciate it if those in the hall would stand against 
the sides so they do not clog the passageway. We are a little 
concerned about fire problems. We thank everyone for being 
here.
    We are going to limit the opening statements to myself and 
the ranking member, and then we will go directly to the 
witnesses.
    I would like to begin by welcoming our distinguished 
witnesses and thank you all for coming. The Federal 
Government's trust obligation to Native Americans and the 
Department of the Interior's management of tribal and 
individual Indian trust funds and assets are both complex and 
important issues. I look forward to an informative and frank 
discussion with all of our witnesses.
    The scope of this hearing is broad and is intended to 
provide an overview of current developments in trust reform and 
challenges facing the Federal Government and Native Americans 
in our trust relationship. I expect our witnesses to discuss 
several issues, including the Department's proposal to 
restructure the Bureau of Indian Affairs, ideas to improve 
trust asset management, and the impacts of the recent shut-down 
of the Department's computer system and restriction to Internet 
access.
    The Chairman. The Committee views the Government's trust 
relationship with Native Americans to be a nonpartisan issue 
that demands our sincere attention. There is no room for 
political posturing. I expect our witnesses to respond honestly 
to pointed and direct questions, and I expect members to 
respect the good intentions and good faith of all of our 
witnesses.
    We appreciate having Secretary Norton with us today. You 
have inherited a complex and emotional situation. Although the 
current administration is on the receiving end of the brunt of 
the blame for inadequate trust management, previous 
administrations, dating back decades, have largely ignored this 
problem.
    I appreciate Secretary Norton's direct involvement in 
efforts to find a solution. The Committee recognizes, however, 
that all three branches of the Federal Government are equally 
responsible for ensuring the integrity of the trust 
relationship. Congress has a critical role in providing funding 
and a meaningful direction. We look to the Department and its 
Secretary to carry out and manage the trust.
    As recently noted by the court monitor in the Cobell v. 
Norton litigation, the three branches of the Government are now 
united to consider the creation of a long overdue trust 
organization to remedy past trust management, and the statement 
from the Court goes accordingly:
    ``One of the three branches of the Federal Government must 
manage the creation of a new fiduciary trust organization whose 
experienced trust officials must select, organize and train a 
nationwide trust staff and move forward as rapidly as possible 
at building a new trust management system--not tinkering with a 
resurrected crew and vessel--to properly house, maintain, and 
protect the Indian Trust beneficiaries' land, resources, and 
assets.''
    The Committee understands, however, that a resolution to 
the trust management problem will not come exclusively from 
within the government. We respect the need for tribal 
consultation and input from other outside experts. We are here 
today to explore ideas and possible solutions that will once 
and for all establish the necessary business practices, 
procedures, policies, and resources necessary for meaningful 
trust reform.
    A notable American philosopher once said, ``Those who do 
not remember the past are bound to repeat it.'' I recognize 
there are no easy answers to trust reform, but the Government 
must do everything possible to break the cycle of mismanagement 
that has existed for many years. Unless we identify a system to 
properly execute the Government's trust responsibility to 
Native Americans, the Department will remain at risk of 
investing in projects that do not satisfy basic trust 
management requirements.
    I appreciate you all being here, and I will now turn the 
time over to the ranking member from West Virginia, the 
Honorable Nick Rahall.
    [The prepared statement of Chairman Hansen follows:]

  Statement of The Honorable James V. Hansen, Chairman, Committee on 
                               Resources

    Good morning. I'd like to begin by welcoming our distinguished 
witnesses and thank you all for coming. The federal government's trust 
obligation to Native Americans and the Department of the Interior's 
management of tribal and individual Indian trust funds and assets are 
both complex and important issues. I look forward to an informative and 
frank discussion with all of our witnesses.
    The scope of this hearing is broad and is intended to provide an 
overview of current developments in trust reform and challenges facing 
the federal government and Native Americans in our trust relationship. 
I expect our witnesses to discuss several issues, including the 
Department's proposal to restructure the Bureau of Indian Affairs, 
ideas to improve trust asset management, and the impacts of the recent 
shut-down of the Department's computer system and restriction to 
internet access.
    This Committee views the government's trust relationship with 
Native Americans to be a nonpartisan issue that demands our sincere 
attention. There is no room for political posturing. I expect our 
witnesses to respond honestly to pointed and direct questions and I 
expect Members to respect the good intentions and good faith of all our 
witnesses.
    We appreciate having Secretary Norton with us today. You have 
inherited a complex and emotional situation. Although the current 
Administration is on the receiving end of the brunt of the blame for 
inadequate trust management, previous Administrations dating back 
decades have largely ignored the problem.
    I appreciate Secretary Norton's direct involvement in efforts to 
find a solution. The Committee recognizes, however, that all three 
branches of the federal government are equally responsible for ensuring 
the integrity of the trust relationship. Congress has a critical role 
in providing funding and meaningful direction. We look to the 
Department and its Secretary to carry out and manage the trust. As 
recently noted by the Court Monitor in the Cobell v. Norton litigation, 
the three branches of the government are now united to consider the 
creation of a long overdue trust organization to remedy past trust 
mismanagement.
        ``One of the three branches of the federal government must 
        manage the creation of a new fiduciary trust organization whose 
        experienced trust officials must select, organize and train a 
        nationwide trust staff and move forward as rapidly as possible 
        at building a new trust management system--not tinkering with a 
        resurrected crew and vessel--to properly house, maintain, and 
        protect the Indian Trust beneficiaries' land, resources, and 
        assets.''
    The Committee understands, however, that a resolution to the trust 
management problem will not come exclusively from within the 
government. We respect the need for tribal consultation and input from 
other outside experts. We are here today to explore ideas and possible 
solutions that will once and for all establish the necessary business 
practices, procedures, policies, and resources necessary for meaningful 
trust reform.
    A notable American philosopher once said, ``Those who do not 
remember the past are bound to repeat it.'' I recognize that there are 
no easy answers to trust reform, but the government must do everything 
possible to break the cycle of mismanagement that has existed for 
years. Unless we identify a system to properly execute the government's 
trust responsibility to Native Americans, the Department will remain at 
risk of investing in projects that do not satisfy basic trust 
management requirements.
    We will now hear from our first panel. Secretary Norton, please 
proceed.
                                 ______
                                 

STATEMENT OF THE HON. NICK RAHALL, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF WEST VIRGINIA

    Mr. Rahall. Thank you, Mr. Chairman.
    I want to, first, thank you, Chairman Hansen, for honoring 
my request to have today's hearing. It is unfortunate, but 
true, that through both Democratic and Republican 
administrations, as you have said, Mr. Chairman, for decades, 
the Interior Department has acted like the Enron of Federal 
agencies when it comes to managing Indian trust funds and 
Indian trust assets.
    Over the years, countless investigative reports by the 
Congress, the GAO, the Inspector General, and others have been 
issued on the failure of the BIA to properly account for and 
manage Indian trust funds. Congressional hearings have been 
held and millions of dollars have been spent in ill-fated 
attempts to fix the system. However, each administration has 
fumbled, with the succeeding administration recovering the 
ball, only to hand it off to the next with that seemingly 
elusive goal of restoring faith and integrity into a system yet 
to be achieved.
    It is true that Secretary Norton is in contempt 
proceedings, but I would observe that every Interior Secretary 
in modern times is culpable to one extent or another to this 
situation. One of the reasons that I requested this hearing was 
to examine the Secretary's rather sudden and unexpected 
proposal at the time to form a new agency within the Interior 
Department that would be vested with all of the Indian trust 
fund responsibilities that are currently managed by the BIA and 
the Office of Special Trustee.
    This plan was developed with no input from Indian tribes or 
account holders. It was a huge mistake, causing process to 
become the issue instead of what really is the matter at hand, 
which is whether each individual Indian and tribal account 
accurately reflects the amount of money that it should contain. 
But make no mistake about it, there is pain and misery in 
Indian Country because of the failure in Federal trust 
responsibility.
    Today's hearing, hopefully, will shed additional light on 
how all of the stakeholders, members of this Committee 
included, can reach for a fair resolution of this matter in the 
near future.
    As I told Deputy Secretary Steven Griles in my office last 
week, we want to be a part of the solution, not the problem. At 
the same time, in speaking for members on this side of the 
aisle, at least, we will not stand idle if we see the rights 
and privileges of those we are charged with a trust 
responsibility for are being trammeled.
    I look forward to hearing the testimony today and, again, I 
thank you, Chairman Hansen, for honoring my request for this 
hearing.
    [The prepared statement of Mr. Rahall follows:]

   Statement of The Honorable Nick J. Rahall II, a Representative in 
                Congress from the State of West Virginia

    I would like to first thank Chairman Hansen for honoring my request 
for this hearing.
    It is unfortunate, but true, that through both Democrat and 
Republican Administrations the Interior Department has acted like the 
Enron of federal agencies when it comes to managing Indian trust 
assets.
    Over the years, countless investigative reports by the Congress, 
GAO, the Inspector General and others have been issued on the failure 
of the BIA to properly account for and manage the Indian trust funds. 
Congressional hearings have been held. And millions of dollars have 
been spent in ill-fated attempts to fix the system.
    However, each Administration has fumbled, with the succeeding 
Administration recovering the ball only to hand it off to the next with 
that seemingly elusive goal of restoring faith and integrity into the 
system yet to be achieved.
    It is true that Secretary Norton is in contempt proceedings. But I 
would observe that every Interior Secretary in modern times is culpable 
to one extent or another for this situation.
    One of the reasons I requested this hearing was to examine the 
Secretary's rather sudden and unexpected proposal at the time to form a 
new agency within the Interior Department that would be vested with all 
of the Indian trust fund responsibilities currently managed by the BIA 
and Office of Special Trustee.
    This plan was developed with no input from Indian tribes or account 
holders. It was a huge mistake, causing process to become the issue 
instead of what really is the matter at hand, which is, whether each 
individual Indian and tribal account accurately reflects the amount of 
money it should contain.
    For make no mistake about it, there is pain and misery in Indian 
Country because of the failure in federal trust responsibility.
    Today's hearing hopefully will shed additional light on how all of 
the stakeholders, the Members of this Committee included, can reach a 
fair resolution of this matter in the near future.
    As I told Deputy Secretary Steve Griles in my office last week, we 
want to be part of the solution, not the problem. At the same time, and 
speaking for Members on this side of the aisle at least, we will not 
stand idle if we see the rights and privileges, of those we are charged 
with a trust responsibility, for being trammeled.
    I look forward to hearing the testimony of the witnesses.
                                 ______
                                 
    The Chairman. Thank you, Mr. Rahall. Let met thank the 
Secretary for being with us, and, again, let me apologize. This 
isn't the room we normally use for a hearing of this size, but 
the other one is going through a little restructuring right 
now, so we are just going to have to get along.
    Madam Secretary, we would appreciate it if you would come 
up and take your place. And, Nancy, don't run the clock on the 
Secretary, OK?
    Maybe you would like to introduce who is accompanying you, 
and we turn the time to you.

  STATEMENT OF THE HONORABLE GALE A. NORTON, SECRETARY OF THE 
 INTERIOR, ACCOMPANIED BY NEAL McCALEB, ASSISTANT SECRETARY OF 
 INDIAN AFFAIRS AND TOM SLONAKER, SPECIAL TRUSTEE, WASHINGTON, 
                              D.C.

    Secretary Norton. Thank you very much, Mr. Chairman and 
members of the Committee. I am very pleased to join you today 
to testify about our Indian trust programs.
    I have submitted a written statement that I ask be 
incorporated into the record.
    The Chairman. Without objection.
    Secretary Norton. Thank you.
    Before I begin my statement, I would like to introduce 
other officials of the Department of Interior who are here 
today. With me is Neal McCaleb, who is the Assistant Secretary 
for Indian Affairs, and Tom Slonaker, who is the Special 
Trustee for Native American Trust.
    Also, here in the room today, and I would also like to 
identify them, is Jim Cason, who is the Associate Deputy 
Secretary, and he is the one who has been working night and day 
to address our Internet shutdown issues.
    Ross Swimmer is here. He is the Director of the Office of 
Indian Trust Transition.
    Deputy Secretary Griles was planning to be here today, but 
he is testifying in the Cobell litigation this morning.
    I have asked Mr. McCaleb, Mr. Slonaker, Mr. Swimmer, and 
Mr. Cason to remain for the balance of the testimony today 
because I think it is important for us to hear the perspectives 
that are being offered to the Committee and to continue our 
listening and understanding of this issue.
    Last year, in my first hearing in front of Congress, I 
spoke briefly about the matter of Indian trust reform. At that 
time, I said, ``As the Trustee, I clearly recognize the 
important obligations of the Department to put in place those 
systems, procedures, and people to fulfill our obligation to 
the trust beneficiaries, both individual Indians and tribes.''
    However, I also emphasized that I have grave concerns about 
our existing management systems. My experience of the past year 
has certainly reinforced my feelings from last February.
    The problems that we are trying to solve have been over 100 
years in the making, and I would like to share something with 
you today that well illustrates that. This is a newspaper front 
page from the Philadelphia newspaper called The Press. One of 
the articles is headlined, ``Indian Trust Fund Losses: Funds 
Alleged to have been Abstracted from the Department of the 
Interior.''
    The other headline on this page says, ``General Custer 
Killed.'' This is from July 6th, 1876. Obviously, the issues 
have gone on for a long time.
    Congress has reviewed the issues of Indian trust asset 
management many times. As Representative Rahall pointed out, 
true reform has never been achieved. Many, many times we have 
come to the point where Congress has examined the issues, where 
the Department of Interior has proposed reforms, where the 
tribes have discussed the need for reform, and yet time after 
time after time, decade after decade, we have failed to 
actually achieve reform.
    I am perhaps unrealistically optimistic, but still somewhat 
optimistic that the time has arrived, that we have a strong 
interest, from many different quarters, in seeing reform 
actually take place, and that is what we are working to 
achieve.
    Let me describe for you some of the issues that we face and 
why this is such a complex issue. Trust asset management 
involves approximately 11 million acres held in trust or 
restricted status for individual Native Americans. Forty-five 
million acres are held in trust for the tribes. This is a total 
of 56 million acres managed by the Department of Interior, and 
that amounts to the combined size of the States of Maine, 
Massachusetts, Vermont, New Hampshire, Connecticut, Rhode 
Island, Delaware, Maryland and the District of Columbia.
    This land produces income for about 350,000 individual 
Indian owners and 315 tribal owners. Leasing and sales revenues 
of approximately $300 million per year are distributed to more 
than 225,000 open individual Indian money accounts and revenue 
of approximately $800 million per year is distributed to the 
1,400 tribal accounts.
    Our management of lands for individual Indians dates back 
to 1887. At that time, Congress passed the General Allotment 
Act, which allocated tribal lands to individual members of 
tribes in parcels of 80 or 160 acres. The expectation of 
Congress was that this would continue for no more than 25 
years, with that land being held in trust for the individual 
Indians. However, Congress kept extending that time period and 
ultimately made that into a permanent status.
    By the 1930's, it was widely accepted that the General 
Allotment Act had failed. Congress stopped the further 
allotment of lands, but the interest in the allotted lands 
began to fractionate, as lands were passed from generation to 
generation. There are now an estimated 1.4 million fractional 
interests of 2 percent or less involving 58,000 tracts of 
individually allotted lands.
    The challenges related to fractional interest in allotted 
lands continue. These interests expand exponentially with each 
new generation to the point where we now have incredibly tiny 
ownership interests. There is a chart that is attached to your 
testimony, and that chart reflects the tiny ownership amounts 
that we have.
    Here is the one I can actually read. As you will see, for 
example, in the first column beyond the blackened area, this is 
the fraction of lands that people hold. This is just in one 
little parcel of land. We have someone who owns 1/592nd-
interest in that. Some other people own 29/77,750ths interest. 
These interests, obviously, are not the entire interest in the 
land. This is just one page reciting a few people's interests 
in this land.
    When you get over to the last column, you see the decimal 
places carrying out the description of how much interest these 
individuals own in this tract of land, and you get into .0003 
as an interest in this piece of land. In order to actually 
convert all of this to a fraction where we had a common 
denominator, we had to get into 228,614,400 as the least-common 
denominator for this.
    As you can imagine, this is a complete bookkeeping 
nightmare, and it is very difficult when you are talking about 
a tract of land that might, perhaps, have had a $250-a-year 
annual income for a grazing lease. Once this is divided down to 
the individuals receiving their tiny share, we have many 
interests where the annual income is less than a penny. These 
are representative of the kinds of interests we manage, and 
these are not even reflective of the smallest interests that we 
see.
    The Department is bound by its trust obligations to account 
for each owner's interest regardless of size, even though these 
accounts might generate such small revenues. Each is managed 
without the assessment of any management fees and with the same 
diligence that applies to all accounts. In contrast, in a 
commercial setting, these accounts would be eliminated because 
of the assessment of routine management fees.
    The income that comes in from these tiny interests in land 
is what flows into our individual Indian money accounts, and so 
small interests in land lead to small accounts with small 
balances.
    I recognize that in the last Congress you passed the Indian 
Land Consolidation Act Amendments of 2000, and we appreciate 
you grappling with the issue in that way. We are examining that 
now as we are implementing it, and we may find that additional 
incentives are needed to expedite the consolidation of these 
interests.
    I would like to now lay out some of the other pressing 
interests that we see in addition to fractionation.
    First, the Department is not well structured to focus on 
its trust duties. Trust responsibilities are spread throughout 
the Department. Thus, trust leadership is diffuse. The Bureau 
of Indian Affairs itself has a long history of decentralized 
management and, as a result, it does not have clear and unified 
policies and procedures relating to trust management. Each of 
the 12 BIA regional offices and 85 BIA agency offices has 
developed policies and procedures that are unique to that 
region and to each of the tribes that are within that region.
    A second issue that we face is that planning systems 
relating to trust have been inadequate. A new strategic plan 
needs to be developed.
    Third, the Department's approach to trust management has 
been to manage the program as a Government trustee, not a 
private trustee. The Department agrees that our trust duty 
requires a better way of managing than we have had in the past. 
However, the current structure of the Department is not 
suitable for carrying out the expectations of the tribes, the 
Congress or the courts. To meet this level of expectation will 
require more funding and resources than have historically been 
provided to the Department, and this has led to the President's 
fiscal year 2003 budget request of an additional $84 million in 
trust asset management funding.
    Fourth, the computer software system known as the Trust 
Asset and Accounting Management System, which we refer to as 
TAAMS, has been inadequate. The Department had hoped to go a 
long way to solving its problems, and yet this system has 
failed to achieve many of its objectives. Also, our information 
technology security measures associated with Indian trust data 
lack integrity and have not been adequate to protect trust data 
or to comply with Office of Management and Budget standards.
    A current challenge that has been in the headlines is the 
Cobell litigation. In 1996, five plaintiffs filed suit against 
the Departments of Treasury and Interior, alleging breach of 
trust with respect to the United States' handling of individual 
Indian money accounts.
    In the first trial, in December 1999, the Court ruled that 
the Department was in breach of four trust duties. The Court 
declared, among other things, that the 1994 Trust Reform Act 
requires Interior and Treasury to provide plaintiffs an 
accurate accounting of all money in their accounts without 
regard to when the funds were deposited and requires retrieval 
and retention of all information concerning the trust necessary 
to render an accurate accounting. This decision was affirmed by 
the D.C. Court of Appeals in February of last year.
    The second trial dealing with historical accounting has not 
yet been scheduled. The trial about whether Neal McCaleb and 
myself should be held in contempt in our official capacities is 
ongoing as we speak.
    To address the problems I have mentioned, a number of 
actions have been initiated in my first year as Secretary. We 
are developing a new strategic plan that will reflect a 
beneficiary approach to trust management and service delivery. 
Objectives will include maintaining comprehensive, up-to-date, 
and accurate land and actual resource ownership records, 
developing a robust accounting system to manage financial acts 
and developing a plan to attract and maintain a qualified, 
effective workforce.
    Last July, I created the Office of Historical Trust 
Accounting. Its mission is to develop a detailed plan for a 
comprehensive historical accounting of trust accounts. We 
expect this plan will provide a foundation for Congress to 
evaluate our future funding requests.
    The budget unveiled this week asked for a $9-million 
increase for this historical accounting. A full reconciliation 
of all accounts will ultimately require considerably more 
money. Conducting a full audit transaction-by-transaction will 
be difficult and very expensive, probably hundreds of millions 
of dollars. Without such an accounting, however, the plaintiffs 
in the ongoing litigation may continue to assert, as they have 
in the press, that they are owed tens of billions of dollars.
    Turning to the reorganization of the Department. We heard 
from many sources, including the Special Trustee, our 
management consultant, EDS, the court monitor in the Cobell 
litigation and through various budget reviews that one of the 
fundamental barriers to trust reform was the disorganized 
scattering of trust functions throughout the Department.
    Our management consultant's review, for example, called for 
a single accountable trust reform executive sponsor. Last 
November, we proposed the formation of a Bureau of Indian Trust 
Asset Management or BITAM. This option envisions consolidating 
most of the trust reform and trust asset management functions 
throughout the Department into a new bureau that would report 
to a new Assistant Secretary. Essentially, we would separate 
out the service functions of BIA, like education, law 
enforcement and so forth. Those would remain within the Bureau 
of Indian Affairs.
    The trust asset management functions, the financial 
accounting functions, would go into the new organization. It 
was hoped that that would consolidate things in a way that we 
could have consistent and coherent planning and the ability to 
have an organization dedicated to the high standards of 
accounting.
    On November 20th, 2001, I issued an order to establish the 
Office of Indian Trust Transition within the Office of the 
Secretary,a need shortly thereafter I appointed Ross Swimmer to 
be its Director. It is currently charged with developing the 
new strategic plan and organizing the Department's efforts to 
implement that plan.
    We are currently in the process of consulting with tribes 
to involve them in reorganizing the Department's trust asset 
management responsibilities. We have held a series of 
consultation meetings. To date, the tribes have expressed their 
dissatisfaction with both our consultation process and with our 
reorganization proposal.
    A task force of tribal leaders has been formed as a way of 
facilitating the consultation process. I have committed 
financial resources to support the task force and other 
consultation efforts. Working with these tribal leaders, we are 
earnestly endeavoring to achieve progress on trust reform.
    This past weekend, we held our first meeting in 
Shepherdstown, West Virginia. The tribal leaders who were 
present listened to us and also presented various alternatives 
to our BITAM proposal. We listened to their proposals, as well.
    We are currently working through our management consultant 
and the task force to evaluate all of the various proposals. 
Overall, I was very encouraged by the meeting. I felt that we 
had begun developing a good working relationship and the 
interpersonal trust necessary to tackle a tough problem 
together.
    Now, on Sunday, as the meeting was drawing to a close, I 
asked the task force members what I should say as I talked with 
you all about their perspectives and about our meeting 
together. Well, it was an hour-long discussion, so I can't 
begin to capture everything that was said, but I wanted to 
share with you some of the perspectives.
    They wanted me to convey that while the tribes had rejected 
the BITAM proposal, they understood that I had inherited a 
disturbing problem for which no past administration had come up 
with a solution. They wanted you to know that there is more to 
understanding this problem than ordinary trust law. There is 
Indian trust law. Due to the willingness of the tribes to work 
together, we can address many of the longstanding problems in 
Indian Country. We all agreed that we were excited about 
working together and that this was true because of some of the 
breakthroughs at least in understanding that came from that 
meeting.
    Congress must understand that the trust responsibility 
comes from treaties under which tribes gave up massive amounts 
of their resources. I have also learned, through the 
consultation process and the task force, that, frankly, to my 
great surprise, the tribes are very strong attached to the 
Bureau of Indian Affairs. They may view it as dysfunctional and 
as a mismanaged organization, but it is the entity to which 
they have invested considerable time and attention, and it is 
their consistent point of contact with the Federal bureaucracy.
    Because a number of the tribal leaders who participated in 
the task force meeting this last weekend are actually 
testifying here today, I am sure that they will also share 
their views of the meeting.
    Let me quickly turn to our computer system, and the 
shutdown of our access to the Internet. Many of you have 
inquired about that and received inquiries from your 
constituents about that.
    On December 5th, 2001, as part of the Cobell proceedings, 
the Court ordered the Department to disconnect from the 
Internet all of the computer systems that house or provide 
access to Indian trust data. The temporary restraining order 
came at the request of plaintiffs and was based on a report by 
the special master for the Court prepared on the security 
weaknesses of information technology security.
    On December 17th, the Court ordered a consent order 
proposed by the Department over the objection of the 
plaintiffs. It establishes a process that allows the Department 
to resume operations of some computer systems after providing 
the special master assurances that the problems he identified 
have been resolved and the security meets a certain standard.
    The December 17th consent order is the only mechanism under 
which the Department may use some systems or reconnect them to 
the Internet. Under that order, we first sought to operate the 
IT systems required to make payments to individual Indians. Our 
initial request was to operate a key Indian system, and it was 
made on December 17th, 2001. The special master concurred with 
our intent to operate this system recently.
    On December 21st, we requested to operate another key 
system that would govern mineral receipts, and that application 
is still pending. It is our intent to make lease payments to 
individual Indians as rapidly as we are permitted to do so.
    As a rough estimate, about 90 percent of the Department of 
Interior is currently off-line. Several other requests have 
been forwarded to the special master recently. We will continue 
to work with the Court to expedite the resumption of the many 
public service programs that depend on reconnecting to the 
Internet.
    We have taken initial steps to prepare a long-term 
strategic plan that would deal with the security of this data. 
We expect that the core of this dedicated network can be 
installed during fiscal year 2002. There would be a phase-in of 
additional hardware and a shift of data from other systems 
expected to take approximately 3 years. The overall cost of the 
estimate for that is $65- to $70 million.
    The actions that I have taken are only the beginning of a 
long, intensive effort that will be required. We will turn to 
Congress for help in our endeavors.
    In conclusion, let me underscore a few points. Indian trust 
asset management is a very high priority for the Department. We 
need to establish an organizational structure that facilitates 
trust reform and trust asset management. We need to establish 
an ongoing effective consultation mechanism with the tribes. 
The Department must improve computer support and security to 
ensure the integrity of Indian trust data.
    We are being challenged by litigation which might require 
significant changes in how the trust is managed. It appears 
that substantial resources will be required to meet the growing 
expectations of tribes, the courts, and Congress. The tribes, 
Interior, and Congress have to reconcile the competing 
principles associated with trust responsibility and self-
determination. It is important that at the end of this process, 
the tribes have greater ability to govern themselves and 
determine their own future.
    Thank you for inviting me to testify here today, and I look 
forward to answering your questions.
    [The prepared statements of Secretary Norton and Mr. 
Slonaker follow:]

 Statement of The Honorable Gale A. Norton, Secretary of the Interior, 
                    U.S. Department of the Interior

Introduction
    Thank you, Mr. Chairman and Members of the Committee, for inviting 
me to testify at this hearing on the Native American Trust program 
being administered by the Department of the Interior, including the key 
elements of trust reform and trust asset management.
    Comments on the trust program were included in my first 
Congressional testimony as Secretary of the Interior. On February 28, 
2001, I told Congress the following:
        ``I would like to comment on a matter of very high priority for 
        myself and for the Department, and that is the matter of Indian 
        trust reform. As the Trustee, I clearly recognize the important 
        obligations of the Department to put in place those systems, 
        procedures, and people to fulfill our obligation to the trust 
        beneficiaries, both individual Indians and tribes. This is an 
        enormous undertaking in correcting the errors and omissions of 
        many decades. Coming into this position, and so early in my 
        tenure seeing a decision from the Court of Appeals in the 
        Cobell litigation, I have to say that I have grave concerns 
        about our existing management systems. It is a very high 
        priority for me that the person who comes in as Assistant 
        Secretary of Indian Affairs and the other people who fulfill 
        leadership positions as to our Indian responsibilities are 
        people with strong management backgrounds and abilities.'' 
        (Emphasis added)
    My experience of the past year has reinforced the concerns I 
expressed last February. The problems we are working to solve have been 
over a century in the making. Allow me to explain the Department's role 
in managing Indian trust assets, the amount of land and accounts we 
hold in trust, the work entailed in managing these accounts, the 
challenges we face in trust management, the work underway to address 
these challenges, and areas where legislative and executive action is 
needed.
Background
    Current Holdings--An understanding of the work that lies ahead 
requires a recognition of the complex issues we have inherited. Trust 
asset management involves approximately 11 million acres held in trust 
or in restricted status for individual Indians and nearly 45 million 
acres held in trust for the Tribes, a combined area the size of Maine, 
Massachusetts, Vermont, New Hampshire, Connecticut, Rhode Island, 
Delaware, Maryland, and the District of Columbia. This land produces 
income from more than 100,000 active leases for 350,000 individual 
Indian owners and 315 Tribal owners. Leasing and sales revenues of 
approximately $300 million per year are distributed to more than 
225,000 open Individual Indian Money (IIM) accounts and revenue of 
approximately $800 million per year is distributed to the 1,400 Tribal 
accounts.
    Trust Functions in Interior--Indian trust asset management involves 
many agencies and offices within the Department, including the Bureau 
of Indian Affairs, the Office of the Special Trustee for American 
Indians, the Minerals Management Service, the Bureau of Land 
Management, the Bureau of Reclamation, the U.S. Fish and Wildlife 
Service, the National Park Service, and the Office of Surface Mining.
    For example, the Bureau of Indian Affairs is responsible for the 
leasing of trust lands, keeping tract of land ownership, lease 
obligations, and appeals. The Office of the Special Trustee focuses on 
the management of the actual trust accounts. The Minerals Management 
Service handles royalty collection and the verification of those 
payments. The Bureau of Land Management does the official surveys of 
Indian trust land and tracks the status of actual lease operations on 
the land.
    In short, these agencies must hire, train and retain personnel 
that:
    1. LLease trust lands;
    2. LConduct surveys across millions of acres to ensure leases are 
properly administered;
    3. LKeep records of leases held by hundreds of thousands of owners;
    4. LRecord differing types of income from differing leases;
    5. LReview transactions within individual accounts;
    6. LIdentify Indian heirs through complex probate proceedings;
    7. LPreserve trust records dating back a hundred years; and
    8. LEnsure the security of complex computer software housing much 
of this information.
    This is not a simple responsibility, and there have been years of 
debate and litigation over how it should be carried out.
    History of the General Allotment Act--One of the most difficult 
aspects of trust management is the management of the individual Indian 
money accounts. In 1887, Congress passed the General Allotment Act, 
which basically allocated tribal lands to individual members of tribes 
in 80 and 160-acre parcels. The expectation was that these allotments 
would be held in trust for their Indian owners for no more than 25 
years. The intention was to turn Native Americans into private 
landowners and accelerate their assimilation into an agricultural 
society. Most Indians, however, retained their traditional ways and 
chose not to become assimilated into the non-Indian society. Congress 
extended the 25-year trust period, but finally, by the 1930s, it was 
widely accepted that the General Allotment Act had failed. In 1934, 
Congress, through the first Indian Reorganization Act, stopped the 
further allotment of tribal lands.
    Interests in these allotted lands started to ``fractionate'' as 
interests divided among the heirs of the original allottees, expanding 
exponentially with each new generation. There are now an estimated 1.4 
million fractional interests of 2% or less involving 58,000 tracts of 
individually owned trust and restricted lands. The Department is bound 
by its trust obligations to account for each owner's interest, 
regardless of size. Even though these accounts today might generate 
less than one cent in revenue each year, each must be managed, without 
the assessment of any management fees, with the same diligence that 
applies to all accounts. In contrast, in a commercial setting, these 
small accounts would be eliminated because of the assessment of routine 
management fees.
    Prior Review By Congress--Over the past 100 years, Congress has 
reviewed the issue of Indian trust asset management many times. In 
1934, the Commissioner of Indian Affairs warned Congress that 
fractionated interests in individual Indian trust lands cost large sums 
of money to administer, and left Indian heirs unable to control their 
own land. ``Such has been the record, and such it will be unless the 
government, in impatience or despair, shall summarily retreat from a 
hopeless situation, abandoning the victims of its allotment system. The 
alternative will be to apply a constructive remedy as proposed by the 
present Bill.'' The bill ultimately led to the Act of June 18, 1934 
which attempted to resolve the problems related to fractionation, but 
as we now know did not.
    In 1992, the House Committee on Government Operations filed a 
report entitled ``Misplaced Trust: the Bureau of Indian Affairs' 
Management of the Indian Trust Fund.'' That report listed the many 
failures of the Bureau of Indian Affairs to manage properly Indian 
trust funds. It pointed out that GAO audits of 1928, 1952, and 1955, as 
well as 30 Inspector General reports since 1982 had found fault with 
management of the system. The report notes that Arthur Andersen & Co. 
1988 and 1989 financial audits stated that ``some of these weaknesses 
are so pervasive and fundamental as to render the accounting systems 
unreliable.''
    The House Report cites an exchange between Chairman Mike Synar and 
then Interior Inspector General James Richards in which Mr. Richards 
states:
        ``I think the Bureau of Indian Affairs will not change until 
        there is some political consensus in that it must change. It is 
        the favorite * * * target of everyone who is shocked by 
        ineptitude and its insensitivity. Yet when we try to 
        restructure it either from a Congressional sense or from an 
        Executive sense, there are always naysayers and there never 
        develops a political sense for positive change.''
    In 1984, a Price Waterhouse report laid out a list of procedures 
needed to make management of these funds consistent with commercial 
trust practices. One of these recommendations was considering a shift 
of BIA disbursement activities to a commercial bank. This set in motion 
a political debate on whether to take such an action. Congress stepped 
in and required that BIA reconcile and audit all Indian trust accounts 
prior to any transfer to a third party. BIA contracted with Arthur 
Andersen to prepare a report on what would be entailed in an audit of 
all trust funds managed by BIA in 1988. Arthur Andersen prepared a 
report stating it could audit the trust funds in general, but it could 
not provide verification of each individual transaction.
    Arthur Andersen stated that it might cost as much as $281 million 
to $390 million in 1992 dollars to audit the IIM accounts at the then 
93 BIA agency offices. The Committee report states in reaction to that:
        ``Obviously, it makes little sense to spend so much when there 
        was only $440 million deposited in the IIM trust fund for 
        account holders as of September 30, 1991. Given that cost and 
        time have become formidable obstacles to completing a full and 
        accurate accounting of the Indian trust fund, it may be 
        necessary to review a range of sampling techniques and other 
        alternatives before proceeding with a full accounting of all 
        300,000 accounts in the Indian trust fund. However, it remains 
        imperative that as complete an audit and reconciliation as 
        practicable must be undertaken.''
    The Committee report then moves on to the issue of fractionated 
heirships which I know Congress has made several attempts to correct. 
The report notes that in 1955 a GAO audit recommended a number of 
solutions including eliminating BIA involvement in income distribution 
by requiring lessees to make payments directly to Indian lessors, 
allowing BIA to transfer maintenance of IIM accounts to commercial 
banks, or imposing a fee for BIA services to IIM accountholders. The 
report then states the Committee's concern that BIA is spending a great 
deal of taxpayers' money administering and maintaining tens of 
thousands of minuscule ownership interests and maintaining thousands of 
IIM trust fund accounts with little or no activity, and with balances 
of less than $50.
    In many ways, the problems and potential solutions remain the same 
as they did when this report was published.
Current Challenges in Trust Management
    As you can see, the problems we are currently facing are not new 
ones. I would like to lay out some of the most pressing issues that are 
now before us.
    Lack of Integration and Centralization of Trust Management--First, 
the Department is not well structured to focus on its trust duties. 
Trust responsibilities are spread throughout the Department. Thus, 
trust leadership is diffuse. The Bureau of Indian Affairs (BIA) itself 
has a long history of decentralized management and as a result, does 
not have clear and unified policies and procedures relating to trust 
management. Each of the 12 BIA Regional offices and 85 BIA agency 
offices has developed policies and procedures that are unique to its 
region and to the Tribes and individuals it serves. While BIA has 
developed some national policies over the past few years, its overall 
approach to trust management is still decentralized. The need for such 
clear and unified policies remains large, but very little has been 
done.
    Lack of a Good Strategic Plan--Second, the planning systems related 
to trust are inadequate. The American Indian Trust Fund Management 
Reform Act of 1994 (the 1994 Trust Reform Act) required the development 
of a comprehensive strategic plan for all phases of the trust 
management business cycle that would ensure proper and efficient 
discharge of the Secretary's trust responsibilities to Indian tribes 
and individual Indians in compliance with that Act. The court in Eloise 
Pepion Cobell, et al. v. Gale A. Norton, et al. (the Cobell 
litigation), which I will discuss later in my testimony, also requested 
information on the Department's plan for remedying problems identified 
by the court. These two responsibilities evolved into the development 
of the original High-Level Implementation Plan (HLIP) dated July 1, 
1998. The HLIP was revised and updated on February 29, 2000. The Eighth 
Quarterly Report that the Department submitted to the Court on January 
16, 2002 states:
        ``As described in prior submissions to the Court, the 
        Department now views the High Level Implementation Plan (HLIP), 
        by which trust management reform progress was measured and 
        reported to the Court, to be obsolete. As reflected in the 
        introduction, HLIP milestones have become increasingly 
        disconnected from the overall objectives of trust reform. The 
        HLIP is now outdated. Many of its identified activities have 
        been designated as being completed; however, little material 
        progress is evident. More fundamentally, the HLIP does not 
        reflect an adequately coordinated and comprehensive view of the 
        trust reform process. A continuing re-examination of ongoing 
        trust reform is needed along with clarification of trust asset 
        management objectives.''
    Changing Standard of Trust Management--Third, the Department's 
longstanding approach to trust management has been to manage the 
program as a government trustee, not a private trustee. Today, judicial 
interpretation of our trust responsibilities is moving us toward a 
private trust model. The Department agrees that our trust duty requires 
a better way of managing than has been done in the past. The current 
structure of the Department is not suitable for carrying out the 
expectations of the tribes, the Congress, or the courts. To meet this 
level of expectation will require more funding and resources than have 
been historically provided to the Department.
    Computer Problems--Fourth, the Trust Asset and Accounting 
Management System software known as TAAMS, which the Department had 
hoped would go a long way to solving trust problems, has yet to achieve 
many of its objectives. Interior began developing TAAMS in 1998 from an 
off-the-shelf program, intending for it to be a comprehensive, 
integrated, automated national system for title and trust resource 
activities. Using this software, Interior employees would record key 
information about land ownership, leases, accounts receivable income, 
and so forth. In November 2001, the Department's contractor, Electronic 
Data Systems (EDS), found that the current land title portion of TAAMS 
provides useful capabilities, but recommended deferring any further 
effort on the realty and accounting portions.
    In addition, Departmental information technology security measures 
associated with Indian trust data lack integrity and are not adequate 
to protect trust data or to comply with Office of Management and Budget 
requirements. In fact, on December 5, the court ordered the Department 
to disconnect all computers from the Internet that housed or provided 
access to Indian trust data. The Department then disconnected nearly 
all of its computer systems from the Internet because they are 
interconnected.
    Fractionated Heirships--Fifth, the challenges related to 
fractionated interests in allotted land continue. These interests 
expand exponentially with each new generation to the point where now we 
have single pieces of property with ownership interests that are less 
than .000002 of the whole interest. A stark example of the size of some 
of these interests is attached to my testimony. It is a page from a 
redacted 1983 Title Status Report for an allotment on the Sisseton 
Reservation in South Dakota. Please note the ownership percentages for 
each individual listed on the far right side of the sheet. The numbers 
speak for themselves. (See Appendix A)
Litigation
    Court Decisions Related to Trust--The Supreme Court has defined the 
government's trust obligations towards Indian tribes in two seminal 
cases--United States v. Mitchell, 445 U.S. 535 (1980)(Mitchell I) and 
United States v. Mitchell, 463 U.S. 206 (1983)(Mitchell II). A guiding 
principle of the Mitchell decisions is that a fiduciary obligation of 
the kind that would support a cause of action for money damages against 
the United States must be clearly established in the governing statutes 
and regulations. In some recent lower court decisions, however, courts 
have upheld money damage claims against the United States even where 
federal officials had not violated any statutory or regulatory 
requirements. The Department has been working with the Department of 
Justice to determine how to respond to these decisions.
    The Cobell Litigation--On June 10, 1996, five plaintiffs filed suit 
against the Departments of Treasury and Interior, alleging breach of 
trust with respect to the United States' handling of individual Indian 
money (IIM) accounts. The Court in this action bifurcated the issues 
for trial. In the first trial, in December 1999, the Court ruled that 
the Department was in breach of four trust duties. The Court declared, 
among other things, that the 1994 Trust Reform Act requires: (1) 
Interior and Treasury to provide plaintiffs an accurate accounting of 
all money in their individual Indian money trust without regard to when 
the funds were deposited; and (2) retrieval and retention of all 
information concerning the trust necessary to render an accurate 
accounting. The Court also ordered Interior to file a revised High-
Level Implementation Plan (HLIP) to remedy these breaches. This 
decision was affirmed by the D.C. Circuit Court of Appeals on February 
23, 2001. The second trial, dealing with historical accounting has not 
yet been scheduled.
    Most recently, on November 28, 2001, the Court issued an order to 
show cause why civil contempt should not lie against Assistant 
Secretary McCaleb and me, in our official capacity, on four counts:
     Failure to comply with the Court's Order of December 21, 
1999, to initiate a Historical Accounting Project.
     Committing a fraud on the Court by concealing the 
Department's true actions regarding the Historical Accounting Project 
during the period from March 2000 until January 2001.
     Committing a fraud on the Court by failing to disclose 
the true status of the TAAMS project between September 1999 and 
December 21, 1999.
     Committing a fraud on the Court by filing false and 
misleading quarterly status reports starting in March 2000, regarding 
TAAMS and BIA Data Cleanup.
    On December 5, 2001, the Court ordered the Department to disconnect 
from the Internet all of the Department's computer systems that house 
or provide access to Indian trust data. This was followed on December 
6, 2001, by a supplemental order to show cause why Assistant Secretary 
McCaleb and I should not be held in civil contempt, in our official 
capacity, for issues related to computer security of IIM trust data. 
The contempt trial has been underway since December 10, 2001.
Tackling the Problems
    To address the difficult challenges of trust reform, a number of 
actions have been initiated in my first year. These include formulating 
a proposal to reorganize trust management; creating a new office of 
Historical Trust Accounting (OHTA); and initiating development of a new 
strategic plan for improved trust management.
    Strengthening Departmental Management--A high priority for me has 
been to identify and recruit seasoned managers who can objectively 
assess the facts and problems and propose practical solutions so that 
we fulfill our fiduciary duties to account for the trust assets of 
Native Americans. The first member of my Indian trust management team 
was sworn in on July 4, 2001, and the most recent member came on board 
November 26, 2001. The team is engaged in a day-to-day decision process 
related to trust reform and trust asset management. Those who have 
worked with my new team can attest to their extraordinary work ethic, 
management experience, seasoned leadership and creativity in 
undertaking complicated tasks. (See Appendix A)
    Developing a New Trust Management Strategic Plan--As I discussed 
above, the ``High-Level Implementation Plan'' (HLIP), developed by the 
Department in 1998, has received considerable criticism. It is a non-
integrated, task-oriented set of activities related to trust reform 
that has failed to accomplish significant progress in improving 
delivery of trust management to the tribes and to individual Indian 
money (IIM) account holders. We are now working to create a plan to 
guide future Departmental activities that will provide an integrated, 
goal-focused approach to managing trust assets.
    This new plan will reflect a beneficiary approach to trust 
management and service delivery. Objectives will include maintaining 
comprehensive, up-to-date and accurate land and natural resource 
ownership records, and developing a robust accounting system to manage 
financial accounts and transactions. An integral aspect of the plan 
will be the development of a workforce plan, and associated activities, 
to attract and maintain a qualified, effective workforce.
    Creating a New Office of Historical Accounting--To better 
coordinate all activities relating to historical accounting--an 
obligation imposed by the 1994 Trust Reform Act and confirmed by the 
court opinions in Cobell--on July 10, 2001, I created the Office of 
Historical Trust Accounting (OHTA) within the Bureau of Indian Affairs. 
OHTA's assignment was further guided by Congressional instructions 
given in the Conference Report on the Department's fiscal year 2001 
appropriations bill which stated the following:
        ''...the managers direct the Department to develop a detailed 
        plan for the sampling methodology it adopts, its costs and 
        benefits, and the degree of confidence that can be placed on 
        the likely results. This plan must be provided to the House and 
        Senate Committees on Appropriations prior to commencing a full 
        sampling project. Finally, the determination of the use of 
        funds for sampling or any other approach for reconciling a 
        historical IIM accounting must be done within the limits of 
        funds made available by the Congress for such purposes.''
    The Department will deliver a Comprehensive Plan to Congress to 
outline the full range of historical accounting activities and to 
provide a foundation for Congress to evaluate the Department's funding 
requests. OHTA has already released its ``Blueprint for Developing the 
Comprehensive Historical Accounting Plan for Individual Indian Money 
Accounts'' and ``Report Identifying Preliminary Work for the Historical 
Accounting.''
    We have requested a $9 million increase in our fiscal year 2003 
Budget for this historical accounting, but as I discussed earlier, when 
a full reconciliation of all accounts is undertaken considerably more 
money would be required. In responding to the court's requirement that 
we do a complete historical accounting of each account by conducting a 
full audit, transaction by transaction, we will face challenges that 
will pose great difficulty and will be very expensive. Without such an 
accounting, the plaintiffs in the ongoing litigation will continue to 
assert, as they have in the press, that they are owed $60 billion to 
$100 billion. A comprehensive historical accounting is likely to cost 
hundreds of millions of dollars, and still may not be viewed as 
entirely satisfactory because of gaps in existing records.
    Proposing a Departmental Reorganization of Trust Management--
Reformation of the Department's trust responsibilities was, of course, 
mandated by Congress in the 1994 Trust Reform Act. In its 1999 opinion, 
the District Court in Cobell declared that the Department had breached 
certain duties found in the Act. I have heard from many sources--e.g., 
the Special Trustee, EDS, the Court Monitor, and through budget 
reviews--that one of the fundamental barriers to trust reform is the 
disorganized scattering of trust functions throughout the Department. 
In August 2001, during our formulation of the fiscal year 2003 budget, 
various proposals and issues were identified concerning the trust asset 
management roles of the BIA, the Office of Special Trustee for American 
Indians (OST), and other Departmental entities carrying out trust 
functions. During the month of September, an additional issue was 
identified by the Special Trustee regarding OST simultaneously 
performing both operational responsibilities and providing oversight. 
The Special Trustee indicated that such dual responsibilities 
represented an inherent conflict. Based on these and other areas of 
concern, an internal working group was created.
    The internal working group developed a number of organizational 
options ranging from maintaining the status quo to privatizing 
functions to realigning all trust and associated personnel into a 
separate organization under a new Assistant Secretary within the 
Department. These options were evaluated based on the best method for 
delivering trust services and other functions to American Indians and 
Tribal governments.
    While this internal review was underway, Electronic Data Systems 
(EDS) was undertaking an independent, expert evaluation. On November 
12, 2001, EDS presented its report ``DOI Trust Reform Interim Report 
and Roadmap for TAAMS and BIA Data Cleanup: Highlights and Concerns'' 
in which it called for a ``single, accountable, trust reform executive 
sponsor.''
    I decided to propose the formation of an organizational unit called 
the Bureau of Indian Trust Asset Management (BITAM). This option 
envisioned the consolidation of most trust reform and trust asset 
management functions located throughout the Department into a new 
bureau that would report to a new Assistant Secretary. The new 
Assistant Secretary would have authority and responsibility for trust 
reform efforts and for continuing Indian trust asset management. The 
proposal was reviewed by EDS and received a supportive endorsement. I 
chose this option because it consolidates trust asset management, 
establishes a clearly focused organization, provides additional senior 
management attention to this high priority program and retains the 
program within the Department to facilitate coordination with the 
Native American community. Under this proposal, BIA would focus on its 
other core functions and programs such as providing tribal services, 
helping tribes with economic development, and education.
    On November 20, 2001, I issued an order to establish the Office of 
Indian Trust Transition (OITT) within the Office of the Secretary and 
shortly thereafter I appointed Ross Swimmer to be the Director of the 
OITT. The OITT is currently charged with developing the strategic plan 
to replace the HLIP, and organizing the Department's efforts to 
implement that strategic plan.
    Mr. Swimmer will be working with all entities within the Department 
involved in trust asset management to develop the strategic plan. The 
immediate objective has been for the Department to identify its 
resources currently being applied to trust management and to try and 
focus those more carefully on the tasks with the highest priority, as 
will be set out in the strategic plan.
    Fulfilling our Obligations to Consult with Tribes--We are currently 
consulting with Tribes to involve them in the process of attempting to 
reorganize the Department's trust asset management responsibilities. To 
date, Tribes have expressed their dissatisfaction with the consultation 
process and with Interior's reorganization proposal.
    The Department has held a series of consultation meetings. The 
first was in Albuquerque, New Mexico on December 13, 2001. Six 
additional consultation meetings in different locations have been held 
and a seventh is scheduled. The meetings have been very well attended.
    A task force of tribal leaders has been formed as a way of 
facilitating the consultation process. The task force consists of two 
elected tribal leaders from each region, with a third tribal leader 
acting as an alternate. I have committed financial resources to support 
the task force and other consultation efforts. Working with these 
tribal leaders, we are earnestly endeavoring to achieve progress on 
trust reform.
    This past weekend I held my first meeting with the tribal task 
force in Shepherdstown, West Virginia. The tribal leaders present 
listened to us, and also presented various alternative proposals to 
BITAM. During the course of consultation sessions and the task force 
meeting, various tribal organizations presented alternatives to 
Interior's BITAM proposal. We are currently working through EDS and the 
task force to evaluate these proposals. My initial reaction is that: 
(1) the various proposals all recognize a need for significant 
improvement in trust management, and (2) the proposals contain many 
insightful suggestions that can potentially be merged with portions of 
Interior's reorganization proposal to achieve broader consensus.
    A number of the tribal leaders who participated in the task force 
meeting this past weekend are actually testifying here today. I am sure 
they will share their views of the meeting with you. On Sunday, while I 
was meeting with the task force, I asked them what they would like me 
to convey to you about the weekend's task force meeting. They wanted me 
to convey to you several items, including:
     we are confident that together we can solve problems,
     while tribes have rejected the BITAM proposal, I have 
inherited a problem that is very disturbing, and for which no past 
administration has come up with a solution,
     there is more to understanding this problem than trust 
law; there is Indian trust law,
     due to the willingness of tribes to work together, we can 
address many of the long-standing problems in Indian country,
     we are optimistic that reorganization will set the 
direction to address many of the issues facing us all,
     Congress must understand that the trust responsibility we 
all bear comes from treaties under which tribes gave up massive amounts 
of their resources.
    Reconnecting Departmental Computers to the Internet--As I 
mentioned, on December 5, 2001, as part of the ongoing Cobell v. Norton 
proceedings, the Court ordered the Department to disconnect from the 
Internet all of the computer systems that house or provide access to 
Indian trust data. The interruption in service occurred when the Court 
issued a temporary restraining order directing the Department to 
disconnect computers from the Internet. The temporary restraining order 
came at the request of plaintiffs and was based on a report the Special 
Master for the Court had prepared on the security weaknesses of 
information technology security involving individual Indian trust data. 
The Department is committed to complying strictly with the orders of 
the Court. Computer systems have been completely shut down where the 
Department has not yet been able to verify complete, immediate 
termination of access to individual Indian trust data.
    On December 17, 2001, the Court entered a consent order proposed by 
the Department, over the objections of the plaintiffs. It establishes a 
process that allows the Department to resume operations of some 
computer systems after providing the Special Master assurances that 
problems he identified have been addressed and that security meets a 
certain standard. The December 17 consent order is the only mechanism 
under which the Department may utilize some systems or reconnect them 
to the Internet.
    The Department prioritized its requests under the Consent Order to 
seek first the Special Master's concurrence to operate the information 
technology systems required to make payments to individual Indians. For 
example, our initial request to operate a key Indian system was made on 
December 17, 2001. The Special Master concurred with our intent to 
operate this system recently. Our December 21, 2001 request to operate 
another key system (governing mineral receipts) is still pending. It is 
our intent to make lease payments to individual Indians as rapidly as 
we are permitted to do so.
    To date, we have received concurrence to permit Internet service to 
the United States Geological Survey and the Office of Surface Mining, 
Reclamation and Enforcement, along with a few isolated computers 
located at the National Interagency Fire Center and the Department of 
the Interior Law Enforcement Watch Office. As a rough estimate, 
approximately 90% of the Department is still prohibited to use the 
Internet. Several other requests have been forwarded to the Special 
Master recently. We will continue to work with the Special Master to 
expedite the resumption of the many public service programs which 
depend upon reconnection to the Internet.
    The Department has taken initial steps to prepare a long-term 
strategic plan to improve the security of individual Indian trust data. 
The Department intends to bring relevant individual Indian trust 
information technology systems into compliance with the applicable 
standards outlined in OMB Circular A-130.
    We expect that the core of the dedicated network can be installed 
during fiscal year 2002, with the anticipated phase-in and shift of 
data from other systems expected to take approximately three years. The 
overall cost estimate could be $65-70 million. The final estimate will 
be determined as we develop a capital asset plan.
Areas Where Interior Needs Help From Congress
    These actions are only the beginning of a long, intensive effort 
that will be required of the Administration, Congress, and the Courts. 
Significant work needs to be done.
    FY 2003 Budget--The President released his fiscal year 2003 budget 
this week and it includes my recommendations for $83.6 million in 
spending increases for trust management and accounting. Increased 
spending for improved trust management is one of the major initiatives 
of the Department's proposed fiscal year 2003 budget.
    Trust Management Expectations--As I mentioned above, the courts 
expect the Department to deliver trust services based on a very high 
standard. Congress must recognize that meeting these expectations will 
require significantly more funding and resources. The courts first look 
to Congress for its expression of intent as to how the trust program 
should be managed. Congress must make clear what it envisions the 
responsibility of the Secretary to be, and provide the resources 
necessary to carry out those responsibilities, while recognizing the 
other financial responsibilities and mandates of the Bureau of Indian 
Affairs and the Department as a whole.
    Land Fractionation--The last Congress enacted the Indian Land 
Consolidation Act Amendments of 2000 in order to prevent further 
fractionation of trust allotments made to Indians and to consolidate 
fractional interests and ownership of those interests into usable 
parcels. As we begin to implement ILCA, we may find that additional 
incentives are needed to expedite the consolidation of these interests.
Conclusion
    I began this testimony by quoting from last year's testimony. As I 
stated earlier, my concerns are reinforced now that I have completed 
one year in office.
    In conclusion:
     Indian trust asset management responsibility is a very 
high priority for the Department.
     The Department needs to establish an organizational 
structure that facilitates trust reform and trust asset management.
     The Department needs to establish an ongoing effective 
consultation mechanism with tribes.
     The Department must improve the computer support and 
security to ensure the integrity of Indian trust data.
     The Department is being challenged by litigation which 
requires significant changes in how the trust is managed.
     It appears that substantial resources will be required to 
meet the growing expectations of the tribes, the courts, and Congress.
     The tribes, Interior, and the Congress have to reconcile 
the competing principles associated with trust responsibility and self-
determination.
    This concludes my testimony, Mr. Chairman. Thank you again for 
inviting me to testify today.
[GRAPHIC] [TIFF OMITTED] T7526.001

                               Appendix B
                       the senior management team
    J. Steven Griles, Deputy Secretary and Chief Operating Officer of 
the Department of Interior, who was confirmed on July 17, 2001. Prior 
to his appointment as Deputy Secretary, Mr. Griles had eighteen years 
of senior management experience at the Department of Interior and with 
the Commonwealth of Virginia. This service included directing national 
programs for the management of public lands, mineral resources and 
collection of royalties from federal mineral leases.
    Neal McCaleb took office as the Assistant Secretary for Indian 
Affairs on July 4, 2001. Mr. McCaleb is a member of the Chickasaw tribe 
of Oklahoma and the former chairman of the Chickasaw National Bank. He 
is also a civil engineer by profession who served as the Secretary of 
Transportation for the State of Oklahoma. Mr. McCaleb was also a member 
of the President's Commission on Indian Reservation Economies and has 
served eight years in the Oklahoma State Legislature.
    William Myers, the Solicitor of the Department of the Interior, 
took office on July 23, 2001. Mr. Myers is a former Assistant to the 
United States Attorney General, Deputy General Counsel at the 
Department of Energy, and has been in private practice with the law 
firm of Holland & Hart.
    James Cason, Associate Deputy Secretary, began his service with the 
Department on August 13, 2001 and serves as the principal manager of 
the Office of the Deputy Secretary. Mr. Cason has 11 years of federal 
experience managing complex public lands, agriculture, and mineral 
programs, including service as the Acting Assistant Secretary for Lands 
and Minerals Management. He also has seven years experience as the Vice 
President for Risk Management of an international technology company. 
He is currently overseeing a range of trust management projects, 
including analysis and development of the Department's security systems 
for our computer and data networks.
    Ross Swimmer, appointed as Director of the Office of Indian Trust 
Transition on November 26, 2001, is a former Assistant Secretary for 
Indian Affairs. Mr. Swimmer is also the former General Counsel and 
Principal Chief of the Cherokee Nation of Oklahoma. In addition, he has 
served as president of the First National Bank of Tahlequah, Oklahoma 
and Chairman of the First State Bank in Hulbert, Oklahoma. He was most 
recently the President and CEO of Cherokee Nation Industries, and of 
counsel to the law firm of Hall, Estill, Hartwick, Gable, Golden and 
Nelson, PC.
    Wayne Smith, appointed Deputy Assistant Secretary for Indian 
Affairs on October 23, 2001. Mr. Smith is the former Chief Counsel to 
the California Assembly Republican Caucus and served as Chief of Staff 
for the California Attorney General.
    Phil Hogen, the new Associate Solicitor for the Division of Indian 
Affairs at the Department, took office on October 25, 2001. Mr. Hogen 
is an enrolled member of the Oglala Sioux tribe of South Dakota and 
served as the former United States Attorney for South Dakota. He has 
also been the Director of the Office of American Indian Trust, and Vice 
Chairman of the National Indian Gaming Commission.
    Bert Edwards, the director of the Office of Historical Trust 
Accounting (OHTA), took office on July 10, 2001, when OHTA was created 
by Secretarial order. The OHTA is charged with planning, organizing and 
executing the historical accounting of Individual Indian Money (IIM) 
accounts. Mr. Edwards served three years as the Chief Financial Officer 
for the Department of State, where he oversaw financial, accounting and 
budgeting operations for a $4 billion budget, 25,000 worldwide 
employees and 260 embassies and consulates in 130 countries. Prior to 
that, Mr. Edwards had 24 years experience as an audit partner for 
Arthur Andersen LLP.
    Bill Roselius, who became IT Systems Consultant for Indian Affairs 
on September 11, 2001. Mr. Roselius has a 42-year career in information 
technology, working for the Oklahoma Department of Transportation, a 
number of hardware and software computer firms and major corporations 
including IBM and Chromalloy.
                                 ______
                                 
    [The prepared statement of Mr. Slonaker follows:]

   Statement of Thomas N. Slonaker, The Special Trustee for American 
                                Indians

    Mr. Chairman, as the Special Trustee for American Indians, I am 
pleased to have this opportunity to discuss with the Committee issues 
pertaining to the reform of the trust responsibility within the 
Department of the Interior. It has now been 20 months since I was 
confirmed by the Senate as the Special Trustee. During that time I have 
reached several conclusions that I would like to share with you 
regarding the capability of the Government to manage appropriately the 
Indian trust assets it holds as trustee for specific Indian 
beneficiaries, comprised of some 300 tribes and nearly 300,000 
individuals.
    Trust reform, as well as the ongoing delivery of trust services to 
these individual and tribal beneficiaries, has reached a point where 
radical measures need to be undertaken now.
    Specifically, the Department's discharge of its trust 
responsibilities, as it is now organized, is inadequate to the demands 
placed upon it.
    The primary problems are as follows. First, there is the need for a 
clear understanding of the Government's trust obligation to the 
beneficiaries. Second, there is a great need for experienced trust 
management. Finally, there is the need to ensure accountability by 
those responsible for delivering trust services.
    It is self evident that the nature and scope of the Federal 
Government's trust obligations in the area of Indian affairs is complex 
and reflects a history dating to the establishment of the Federal 
Government. The American Indian Trust Fund Management Reform Act of 
1994 addresses itself to a discreet part of those Federal obligations: 
the physical assets the Government holds or controls as trustee for 
some 300 tribes and approximately 300,000 individual Native Americans. 
Like a private trustee or commercial bank's trust department, the 
Department is responsible for identifiable assets, in this instance 
primarily land and investable cash, and is required to manage those 
assets, make fiducially responsible investment decisions, account for 
the income produced and report fully to the beneficiaries about its 
stewardship of these Indian trust assets. Like every other trustee, the 
Government trustee is required to know at every moment what assets are 
held in trust, how those assets are invested and managed and to whom 
the proceeds of that management belong and are to be paid. The Reform 
Act has erased any doubt that those traditional trust duties are 
Federal trust duties.
    The problems that trouble the Department are management problems. 
The lack of management capability is signaled by the evident need for 
senior managers with experience in delivering trust services and 
operating trust systems. Additionally, there is a critical need for 
senior level, project management skills applicable to large trust 
reform projects.
    The lack of accountability refers to the need to have all staff 
that are charged with trust responsibilities perform as directed by 
informed and responsible senior managers.
    Until a better understanding of the trust obligation, better 
management, and more accountability are in place, regardless of what 
the trust organization looks like--it will be difficult for the 
Government to come into compliance with the 1994 Reform Act.
    I concur with the Secretary's concept of a single organizational 
unit responsible for the management of the Indian trust assets. That 
organization has the potential of addressing the accountability 
concerns by placing one executive, responsible to the Secretary, in 
charge of the delivery of the appropriate, required trust services to 
tribes and individual Indians. I believe a single organization with its 
own chain of command, that is, not diluted by intersecting other 
Departmental chains of command, can work better than the present 
arrangement. The devil, however, is in the details, and the new 
organization must have the right executive direction and actually hold 
people accountable.
    I also believe that the trust organization needs to be detached 
from the Bureau of Indian Affairs and placed on its own footing.
    It has been proposed by the Special Trustee's Advisory Board on 
December 7, 2001, a group created by the 1994 Reform Act, that the 
entire Indian trust function be removed from Interior and lodged in a 
self contained organization to be created by Congress. This thought was 
an initiative of that Board. It is based in large part on the 
Department's inability over the many years to identify and cure its 
management problems, and is a suggestion that has merit.
    On the other hand, I disagree with those who suggest that once the 
trust organization is ``fixed'' that it be returned to the Bureau of 
Indian Affairs. I believe that organizations are not well motivated to 
make necessary changes if they know that one day they will return to 
their previous owner.
    I also want to comment on the role of the Special Trustee. I 
believe that the Special Trustee is required to provide candid and 
informed guidance to the Secretary as she seeks the more effective 
management of the trust responsibilities under her control. The Office 
of the Special Trustee (OST) will continue to focus on its oversight 
responsibilities. Therefore, OST must be provided appropriate resources 
and pursue every opportunity to ensure that trust reform is carried out 
effectively and efficiently.
    For instance, the Office of the Special Trustee receives 
appropriations for trust reform activities, no matter where in Interior 
the reform project is managed. OST then initiates the funding of 
projects when and if adequate plans and management appear to be 
satisfactory. In some instances, we have found it necessary to 
interrupt funding when expected project success is not being achieved. 
This process has proven helpful to the reform process and has given the 
Special Trustee a useful and independent voice in that effort. I 
believe this budget control over the reform of the trust function 
should continue to be a part of OST's responsibility. The independence 
and informed objectivity of the OST, I believe, is essential to 
achieving lasting trust reform.
    Reform can be done with the right leadership, the necessary 
accountability, and consequences for non-performance.
    Thank you.
                                 ______
                                 
    [The Department of the Interior's response to questions 
submitted for the record follow:]
  responses to supplemental questions from democratic members of the 
                       house resources committee
    Question (1): Are you committed to full disclosure of all the 
problems with Bureau of Indian Affairs management of the trust assets 
regardless of any settlement that may or may not be negotiated? Please 
explain.
    Answer: Interior is committed to the full disclosure of all 
problems related to the management of Indian trust assets. The 
Department is equally committed to seeking out, addressing, and 
resolving trust asset management problems in all our relevant bureaus 
and organizations.
    Question (2): Without a full disclosure and acknowledgement of the 
scope of the problem, do you expect any proposed solution to work? 
Without a full disclosure, how can you expect Indian tribes to trust 
the federal government?
    Answer: Interior is committed to full disclosure. We will continue 
to search for and disclose problems. Our disclosure and acknowledgment 
of the scope of the problem to date explains why we are pursuing a 
reorganization of trust functions within the Department.
    Question (3): Are you committed to cleaning up the backlog of 
incorrect and missing data about trust assets, and doing so in 
cooperation with tribes? Please explain?
    Answer: Yes we are committed to the cleanup of the backlog and a 
major effort is already underway. Government subject matter experts are 
working with Electronic Data Systems (EDS) on determining the data 
validation universe and priorities for corrective action. The Tribal 
Task Force work group will be incorporated into this effort. It is 
important to recognize however, that no one expects that all data since 
1887 can be found and validated by records. Interior realizes it will 
need to address how to manage the problem of missing information.
    Question (4): As a possible solution to conducting a historical 
accounting of trust accounts, would you be willing to grant money to 
tribes, rather than the BIA, so tribes can go through the backlog?
    Answer: Considerations regarding the Privacy Act and fiduciary 
requirements may limit the role tribes can play in accounting or with 
the data validation effort, but all options will certainly be 
considered in determining how to effectively and efficiently fulfill 
the requirements of the accounting. If tribes have access to individual 
account information or have proposals for supporting such an 
accounting, they are encouraged to contact the Office of Historical 
Trust Accounting.
    Question (5): What immediate improvements do you think are needed 
in the Department to properly manage tribal trust assets?
    Answer: A single responsible and accountable agency or division 
within the Department of the Interior with a high level manager 
dedicated to the task of managing Indian assets is needed. This 
conclusion is supported by an EDS recommendation that the Secretary 
have a single, executive sponsor in charge of trust reform and 
management. If this work continues to be one of many responsibilities 
within the Bureau of Indian Affairs, we believe it will be difficult to 
get the attention needed for trust asset management and accountability. 
We are also working with IT experts and the Court to improve security 
of trust data. Other necessary improvements are explicated in the 
Status Report to the Court number Eight dated January 16, 2002.
    Question (6): As you may know, the Navajo Nation Council voted on 
January 26 to disburse $537,000 to hundreds of financially distressed 
Navajo families who have not been paid their gas and oil royalty checks 
by the Department of the Interior since November. Do you believe that 
the Navajo Nation as well as other tribes are entitled to be reimbursed 
for the grants they have distributed and will you work to see that 
these tribes are properly reimbursed?
    Answer: Our responsibility is to make payments to the individual 
Indian beneficiaries. We assume that the Navajo Nation has an agreement 
with its members with regard to reimbursement once the Department is 
able to make payments to individuals.
    Question (7): Did the Department of Interior approach Judge 
Lamberth and indicate that a shut down of the computer system would 
create an economic hardship on those who are dependent on their royalty 
checks to survive? A simple yes or no answer will suffice.
    Answer: A simple yes or no answer, in this case, does not suffice. 
The plaintiffs filed a motion requesting that Interior disconnect 
systems from the Internet on the night of December 4, 2001. At the 
December 5, 2001 hearing before the Court, Interior, through the 
Department of Justice, advised that it had not had adequate time to 
assess fully the impact of disconnection. Counsel requested two days in 
which to complete the assessment and report to the Court. 
Notwithstanding the Department's request for additional time, the Court 
ordered that all computers housing Indian data or having access to 
Indian data be disconnected from the Internet. Because of the 
interconnectedness of Interior's systems, this resulted in an immediate 
shutdown.
    Under the Indian Self-Determination and Education Assistance Act 
tribes have assumed responsibilities for trust management through 
agreements with the BIA and are managing those assets and accounts 
effectively.
    Question (8a): How does your proposal preserve the viability and 
validity of contracts and compacts negotiated to date?
    Answer (a): Many Indian tribes are doing an effective job of 
managing trust assets and administering federal program money. The goal 
of the Department is to continue extending self-determination and self-
governance contracts to tribes with the expectation that some tribes 
become their own resource managers to the greatest extent possible.
    The proposal for a trust asset management bureau is not intended to 
interfere with any tribal contracts or compacts. Oversight and 
monitoring of tribal contractors will continue through any new agency. 
This level of oversight is necessary because the Secretary remains 
ultimately responsible under the law for trust management and can not 
contract that responsibility away.
    Question (8b): Given the success of tribal management of trust 
functions, why does your proposal not specifically call for further 
technical support and funding in order to expand tribal management of 
trust functions? Isn't this one clear example where trust management is 
already working effectively?
    Answer: The BIA currently provides technical support and funding to 
tribes for tribal management of trust functions. The Department 
oversees tribal management of trust assets and functions under self-
determination and self-governance agreements. Our proposal continues 
that support and oversight. We will consider the need for additional 
technical support as tribes expand their management of trust assets and 
functions.
    Question (8c): What will the role of the tribes be in managing 
trust assets in the future?
    Answer: Management of trust assets by tribes should continue in the 
same manner as is currently done. Before contracting with the tribe, 
the Department reviews and determines that the tribe has the ability to 
account for funds and assets and has expertise in the management of 
trust assets. Tribal management of individual Indian trust assets needs 
different consideration. Trust services for individual Indians may be 
provided by a tribe, when appropriate, as long as the contracting tribe 
is able to exercise the same level of fiduciary duty and maintain the 
same level of service that the Secretary provides. These issues will 
continue to be addressed regardless of the reorganization initiatives.
    The BITAM proposal suggests that ``trust'' and ``non-trust'' 
functions be separated.
    Question (9a): Can such functions really be separated as a matter 
of law or policy?
    Answer: ``Trust'' functions refer generally to assets of land, 
natural resources and money. ``Non-trust'' functions refer generally to 
service areas such as law enforcement, health, housing, education, 
economic development and general welfare. Separating the two functions 
is not intended to diminish the importance of either. However, 
separation does recognize that certain assets are held by the United 
States for the benefit of individuals or tribes while other items are 
more in the nature of services or federally funded programs. While the 
Federal government has a trust obligation for both functions, we 
believe these ``trust'' and ``non-trust'' functions can be separated 
for management purposes.
    Question (9b): Do not all Indian programs within the BIA reflect 
the government's approach to fulfilling its responsibilities under its 
trust relationship to the Indian tribes?
    Answer: Yes
    Question (9c): As a practical matter, is it not true that BIA 
personnel at the local level perform a range of duties, which cut 
across your BITAM proposal's dividing line between ``trust'' and ``non-
trust'' functions?
    Answer: In many instances, employees at all levels of the BIA and 
in particular at the local levels do perform duties that cross over 
many functions. This can create problems of accountability, 
confidentiality and conflict of interest. For the same reasons that a 
commercial bank and its trust department must be independent from one 
another, there is value to having trust officers at the agency level 
who are separate from other staff.
    Question (9d): By creating a new bureau, are you not duplicating 
the federal bureaucracy assigned to these intertwined matters?
    Answer: It is believed that there will be little duplication of 
effort. In fact, many of the trust employees can be co-located at BIA 
Agency offices as well as some of the Regional offices. The work 
performed by trust employees should complement other activities of the 
BIA. Administrative overhead (such as personnel, procurement, etc.) 
could be shared.
    The Department recently began a consultation process with tribes 
regarding the restructuring of the Department's trust account and trust 
asset management. Despite unanimous, unequivocal, nationwide 
condemnation by tribal leaders of the BITAM proposal to restructure the 
Department by creating a new agency within the Department, that 
proposal is still on the table.
    Question (10a): Why has it not been withdrawn?
    Answer: The concept of an independent bureau within the Department 
was developed for discussion with tribes after considerable thought and 
analysis. The Secretary, the Special Trustee for American Indians and 
the Assistant Secretary for Indian Affairs support the concept. The 
concept was further endorsed by the consulting firm of EDS, which was 
hired to perform an analysis of the progress of trust reform.
    The Department's proposal has not been withdrawn because it 
addresses the problems identified with the way the trust functions are 
currently managed in the Department. In addition, most of the criticism 
we have received to date has been directed at the process of 
consultation rather than the proposal itself.
    The Secretary appreciates tribal input and alternatives and is open 
to the different plans currently being submitted. At the same time, the 
BITAM proposal will remain on the table as what we expect will be one 
of many options for the Secretary to consider. The Department is 
committed to trust reform and looks forward to working with the tribes 
and in particular the joint task force on BIA Trust Management Reform, 
on developing a reorganization that will accomplish the goal of better 
trust asset management and accountability.
    Question (10b): What role will the new tribal task force have in 
developing a plan?
    Answer: The tribal task force will review all proposals and will 
help develop the criteria against which all proposals will be 
evaluated. We have asked EDS to perform the actual evaluation according 
to those criteria and those results will be presented to the task 
force.
    Question (10c): To what extent have you and your staff considered 
alternatives prepared by the tribes and what process will be used by 
the Department to consider the alternatives?
    Answer: A two-day review of tribal concerns and proposals was held 
at the Department's training center in Shepherdstown, West Virginia, 
with the tribal leaders task force. The Secretary was in attendance 
during a review of tribal proposals. The Department continues to 
receive input from tribes and from the tribal leaders task force. As 
stated above, criteria for evaluating the various proposals will be 
developed with the tribal task force, and EDS will present an 
evaluation of all proposals using those criteria.
    Question (10d): Will you accept an alternative to your proposal 
developed by tribes if it addresses all of the underlying concerns that 
BITAM seeks to address?
    Answer: The Secretary has told the tribes that she would accept an 
alternative proposal if it accomplishes the objective of improving 
accountability of trust management and satisfies the concerns that led 
to the development of the BITAM proposal.
    Your consultant, Electronic Data Service (EDS), determined that no 
matter what structure is implemented to handle trust management, 
significant resources are needed to hire additional staff and to train 
existing and new staff.
    Question 11: How do you propose to fund such needs?
    Answer: Trust asset management is a unique function within the 
federal government. The Secretary has requested additional funding for 
the trust reform and management functions and will continue to be 
supportive of efforts to obtain funding from Congress as appropriate.
    Judge Lamberth in the Cobell case will be deciding sometime over 
the upcoming weeks whether to appoint a receiver as the plaintiffs in 
that case have requested.
    Question 12: How will the Department's BITAM proposal be affected 
by the appointment of a receiver?
    Answer: A receivership of this kind is unprecedented. We would need 
to review the type and duration of any receivership that may be created 
by before we can answer this question.
    The President's fiscal year 2003 budget proposal contains language 
that states ``the statute of limitations shall not commence to run on 
any claim, including any claim in litigation pending on the date of 
enactment of this Act, concerning losses to or mismanagement of trust 
funds, until the affected tribe or individual Indian has been furnished 
with an accounting of such funds which the beneficiary can determine 
whether there has been a loss.''
    Question (13a): Do you believe this language is adequate enough to 
revive claims of tribes that might otherwise be time-barred from filing 
claims against the United States for mismanagement of tribal trust 
funds?
    Answer: No, it is the Department's position that the language in 
the President's fiscal year 2003 budget proposal does not revive claims 
of tribes that were or are time-barred. The appropriations language has 
been read very broadly by at least one court, which interpreted the 
appropriations language to revive claims that had already become time-
barred before the appropriations language was adopted, and to apply to 
claims beyond trust fund claims. In other words, the appropriations 
language has been misconstrued to make the United States liable for 
claims far beyond the claims at which it was directed.
    Now that Congress has passed S. 1857, a pending enrolled bill 
encouraging the negotiated settlement of tribal claims by establishing 
December 31, 1999, as the date on which tribes are deemed to have 
received the Andersen reconciliation reports, and assuming the bill is 
signed into law, the appropriations language quoted above no longer 
appears to be necessary. The Department believes that S. 1857 fully 
addresses the tribes' legitimate statute of limitations concerns and 
therefore obviates the need for the 2003 budget language. S. 1857 would 
allow tribes to postpone filing claims and facilitate voluntary 
dismissal of those already filed, enabling the United States to engage 
in negotiations concerning tribal trust accounts with interested tribes 
to resolve their claims.
    Question (13b): Do the ``Reconciliation Reports'' conducted by 
Arthur Andersen and provided to tribes in 1996 constitute a full 
accounting of tribal trust funds?
    Answer: The reconciliation was undertaken in response to 
Congressional directives in 1988, 1989 and 1990, that BIA take steps to 
reconcile Indian trust fund accounts as accurately as possible back to 
the earliest practicable date. Pursuant to these directives, BIA 
commenced planning and preparation for the reconciliation project in 
1990. As part of the planning process, reconciliation procedures were 
agreed upon by the Department, OMB, and tribal representatives as the 
best approach, and incorporated into the contract with Arthur Andersen. 
The Department spent over $20 million on the Andersen reconciliation of 
tribal accounts; however, the Department was not able to obtain an 
independent certification of the work as directed by Congress. Further 
accounting for the tribal accounts will be very costly and will require 
that Congress provide supplemental appropriations for that purpose.
    Your testimony highlights the problem of fractionation of trust 
allotments and suggests the need for incentives to expedite the 
consolidation of these interests. The President's budget states that 
consolidation is ``expected to reduce the Government's costs of 
managing Indian lands.'' The President's plan, however, proposes a 
decrease of $3 million for the Indian land consolidation account.
    Question 14: Can you identify for the Committee the increases and 
decreases in the President's budget proposal for trust management 
programs throughout the Department of Interior and include a 
description of those programs?
    Answer: The 2003 OST budget includes program increases of $50.3 
million for trust reform initiative projects, including $30.3 million 
for special work projects, $2.0 million for breaches projects, and $9.0 
million for historical accounting activities, and a one-time decrease 
of $3.0 million for Indian Land Consolidation activities.
    Program increases for special work projects include $2.5 million 
for OST Data cleanup, $5.0 million for BIA Data Cleanup, $6.0 million 
for TAAMS, $4.0 million for Records Management, $4.0 million for 
Policies and Procedures, $6.0 million for Risk Management, $5.1 million 
for Trust Improvement Coordination. Increases for breaches projects 
include $300,000 for Workforce Planning and $1.7 million for Systems 
Architecture. The increase for historical accounting includes $9.0 
million for records collection and reconciliation of IIM accounts. A 
$2.2 million budget reduction is requested for training due to 
completion of some phases of training. The Indian Land Consolidation 
program is funded at $8.0 million, a one-time reduction of $3.0 
million. In addition to appropriated funds, it is expected that 
carryover funds will be available in 2003 to maintain on-going program 
activities.
    To ensure that trust management improvements are sustained, the BIA 
budget for 2003 includes a program increase of $34.8 million. Trust 
activities within BIA focus on sound management of natural resources, 
accurate and timely real estate transactions, and sound leasing 
decisions to preserve and enhance the value of trust lands. Program 
increases include $15.8 million for trust services to provide real 
estate appraisals, surveys, and other services, probates, and land 
titles and records processing; $4.5 million for natural resources 
programs to manage lands that generate revenues; $6.0 million for 
tribal courts and social workers; and $8.5 million for trust reform 
oversight ($3.0 million) and information technology improvements ($5.5 
million).
    These activities are discussed in greater detail in the OST and BIA 
Budget Justifications that are provided to the Committee under separate 
cover.
    Question 15: why characterize BITAM proposal as a consolidation of 
trust functions when the plan really only consolidate trust function of 
the BIA?
    Answer: All trust functions within the Department are being 
considered for consolidation in the new organization. This would 
include trust services from other bureaus such as the Bureau of Land 
Management, Bureau of Reclamation, Fish and Wildlife Service, Office of 
the Special Trustee for American Indians, Minerals Management Services 
as well as BIA. The Department is seeking advice from tribal leaders 
regarding the best organizational approach on how to do this. Until 
advice and recommendations are received, the Department is remaining 
open to alternative organizational approaches that will accomplish the 
goal of satisfactory trust management and accountability.
    Question 16: With respect to the Department's reprogramming request 
to tap into fiscal year 1902 funds, will the Department notify the 
House and Senate Appropriations committees of its ongoing dialogue with 
the tribal task force?
    Answer: Yes. We will make every effort to keep the Committees 
informed of the status of the reorganization effort.
    Question 17: Will the Department refrain from submitting future 
reprogramming requests regarding trust management reform until an 
agreement is reached with the tribal task force?
    Answer: It is not known whether an agreement/consensus will be 
arrived at with the task force. We are hopeful that can occur. If we 
cannot arrive at an agreement the differences will be well documented. 
However, trust reform is also under the jurisdiction of the District 
Court and Court orders must be complied with as well as acts of 
Congress and regulations. Reprogramming requests will be made only when 
necessary to carry out the responsibilities of the Department and the 
tribes will be made aware if any reprogramming requests are made.
    Question 18: Can you explain how the management of an Indian trust 
differs from a trust in the private sector, particularly with regard to 
the rights of a beneficiary?
    Answer: Trusts in the private sector are managed according to the 
instrument establishing the trust and by state law. However, Indian 
trusts do not have a single instrument that establishes the trust and 
provides guidance for managing it. Instead, the trust is governed by 
statues, treaties, and executive orders that have been enacted over a 
period of time. The rights of the beneficiaries are similar in some 
respects but vary in others. The rights are the same in that the 
trustee should manage the trust corpus with a high degree of care, 
skill, and loyalty. However, the rights of the beneficiary are 
different when it comes to integrating the other roles of the 
Secretary. For example, courts have recognized that the Department, as 
trustee, can represent conflicting tribes on the same issue because of 
her overall duties as Secretary. Whereas, the private trustee does not 
have these other duties and would not be called upon to represent two 
conflicting beneficiaries. Also, Congress has enacted statues, such as 
the Indian Self-Determination and Education Assistance Act which 
provide specific instructions to the Secretary to allow tribes to 
manage the trust corpus while retaining the Secretary as the trustee to 
approve of commercial uses such as leasing. Finally, in determining 
whether the beneficiary is entitled to damages for breach of trust, 
courts must look to statutes to determine whether Congress intended to 
subject the United States to money damages for breach of trust. Some 
actions which may be breach of trust in a commercial setting may not 
entitle the beneficiaries to money damages against the United States.
    Question 19: It is true that the Interior Department will be 
requesting that a new trust asset management business model be 
conducted of the Department's trust reform efforts?
    Answer: Yes, EDS has been engaged to examine and document the 
current, or ``AS-IS'' business practices. The Department will then 
examine the documented AS-IS processes and determine what future 
changes need to be made, or the reengineered TO-BE processes. The 
Department will incorporate applicable laws, regulations, and policies 
into the analysis. An independent validation of these reengineered 
processes will take place.
    Question 20: Currently, how many outstanding prime contracts does 
the Department have on trust reform efforts? Of these, how many are 
with businesses that are Native American Indian owned Small 
Disadvantaged Business Owned, 8(a), or women and Service Disabled 
Veteran Owned?
    The Office of the Special Trustee and the Office of Historical 
Trust Accounting have contracts with:
     Arthur Andersen, LLP
     Bankers Trust
     Bloomberg, Inc.
     Booz Allen Hamilton
     Chavarria, Dunne & Lamey, LLC
     DataCom Sciences, Inc.- Native American owned, 8(a)
     Deloitte & Touch LLP
     Electronic Data Systems, Inc.
     Ernst & Young LLP
     Grant Thornton, LLP
     Gustavson Associates
     Hughes and Bentzen PLLC
     Iron Mountain
     KPMG
     L R Compton--Native American owned, 8(a)
     Los Alamos Technical Associates
     Millican & Associates
     NAID, Inc.--Native American owned, 8(a), Disabled Veteran
     National Opinion Research Center at the University of 
Chicago
     Science Application International Corporation
     SEI Investments. Inc.
     Upper Mohawk Inc.
    The Bureau of Indian Affairs currently has six trust reform 
contracts:
     ATS--small business.
     NATEC--Native American, woman owned
     Data Com--3 contracts which consist of data cleanup, 
probate file processing, and posting and recording. These contracts are 
with Native American and small business owned companies.
     NAID--Native American, Disabled Veteran, 8(a) owned.
    The Minerals Management Service currently has 11 Prime Contracts:
     Accenture--One currently active contract for development, 
operations and maintenance of automated systems that manage and store 
trust asset data.
     Peregrine Systems, Inc,--One currently active contract 
for the management of minerals revenue and production data submitted by 
revenue and production reporters. The data is associated with mineral 
leases on Indian Tribal and Allotted lands and Federal land.
     Cooperative Agreements with Indian Tribes--Eight 
currently active contracts with Indian Tribes to conduct audit and 
compliance work related to mineral revenues associated with leases 
located on Tribal lands. These agreements are authorized under Section 
202 of the Federal Oil and Gas Royalty Management Act.

        Navajo Tribe                 Southern Ute Tribe
        Shoshone/Arapaho Tribes      Ute Mountain Tribe
        Jicarilla Tribe              Blackfeet Tribe
        Ute Tribe                    Crow Tribe

     Wyandotte Net Tel----One currently active contract was 
awarded under the Franchise Authority of MMS to Wyandotte Net Tel on 
August 18, 2001. Wyandotte Net Tel is tribally owned by the Wyandotte 
Indian Tribe. The five year Indefinite Delivery, Indefinite Quantity 
type contract has a not to exceed ceiling of $100,000,000 and was 
awarded under the Small Business Administrations 8a program. The 
contract is for telecommunications and information technology supplies 
and services for various government agencies. White Sands Missile Range 
and the Army at Ft. Monmouth New Jersey are the major users of the 
contract.
     Other Agreements--One currently active Intergovernmental 
Personnel Act Agreement with the Shoshone/Arapaho Tribes for a tribal 
auditor to work in the Farmington Indian Mineral Office.
        *LMemoranda of agreement with the National Archives and Records 
Administration regarding the storage and inventory of records.
        *LMemorandum agreement between MMS and the Office of the 
Special Trustee (OST) under which the MMS Minerals Revenue Management 
provides cost-reimbursable services to the OST.
    Question 21: For the future, how does the Department plan to ensure 
that it remains in compliance with the ``Buy Indian Act'', Small and 
Disadvantaged Business Owned Act, 8(a), and the Women and Service 
Disabled Veteran Owned Act?
    Answer: All contracting officers within the Department are 
knowledgeable of the procurement laws including those listed in the 
question. Every effort is made to ensure that laws and regulations are 
followed and this will continue to be the practice of the Department in 
the future.
    Question 22: Pursuant to a question from Mrs. Christensen, you 
agreed to provide the Committee with information regarding the amount 
of money being spent this fiscal year on the Office of Trust 
Transition.
    Answer: The Office of Indian Trust Transition anticipates 
expenditures for its planned activities will approach $200,000 by the 
end of the current fiscal year.
                                 ______
                                 
    The Chairman. Thank you, Madam Secretary. We appreciate you 
being here and appreciate your testimony.
    This is the first time we have ever had a full hearing in 
this room, so we are just asking people, as they come in, to 
sit down. We are going to take the rules of the Committee, and 
we will recognize people as they came in, except for Mr. 
Rahall.
    Let me caution the members to stay within your 5 minutes. 
This is going to be a long hearing. I am not going to call on 
everyone, but what I will do, if you want to speak, will you 
just raise your hand, and then we will give you that 
opportunity.
    Mr. Rahall, we will turn to you.
    Mr. Rahall. Thank you, Mr. Chairman. I will be very quick. 
I want to thank Secretary Norton for taking the time to be here 
today, along with the gentlemen on either side of her.
    You mentioned that you will be leaving after your 
testimony, so you will not be hearing the tribal leaders' 
testimony or panels that are coming next; is that correct?
    Secretary Norton. That is correct. Unfortunately, I need to 
leave today.
    Mr. Rahall. I understand. But you will have somebody here 
during the whole rest of the panel?
    Secretary Norton. My top people who are involved in this 
will be here to listen to the remainder of the panels.
    Mr. Rahall. Thank you. I must say it was very good 
testimony, a good presentation of the problem here, and a good 
history of the problem, and there is not much of your testimony 
with which I could disagree, of course.
    But the central issue, I think, is rather each individual 
Indian and tribal account accurately reflects, of course, the 
amount of money that it should contain. As you have said, and 
as we all know, you are under a court order to conduct an 
historical accounting of the individual Indian money accounts. 
So my question is can the Department accomplish that task? And, 
if not, what is the alternative to conducting such an 
historical accounting?
    Secretary Norton. Our Office of Historical Trust Accounting 
is currently formulating a complete plan for how that might be 
accomplished, and it is a fairly complex task. There are some 
aspects of accounting that can be done fairly quickly and in a 
fairly straightforward way.
    For example, some of the tribes received large payments as 
a result of lawsuits, and that money came in in a large amount. 
It has gone out to people in specific amounts. We can trace 
those and verify those in a fairly straightforward way.
    There are other records that have been lost through time, 
that have been destroyed, fires or other decay of records is 
unavoidable when you look back over many years. Unfortunately, 
there are some things we may never be able to piece together, 
and so we are laying out exactly how the task would look to go 
back and try to identify as much as we can. We think it's going 
to be important to present that to Congress and to seek the 
funding that will be necessary to do an accounting. We are 
moving forward with undertaking a complete accounting.
    Mr. Rahall. So you cannot categorically state here today 
that you are capable of doing the historical accounting that is 
necessary.
    Secretary Norton. I am not sure what I have not answered 
here.
    Mr. Rahall. You cannot do a full historical accounting. You 
have mentioned the documents that may have been burned or 
destroyed for one reason or another. So the answer would be, 
no, you cannot do a full historical accounting.
    Secretary Norton. We have the initial--we have, 
essentially, our bank records. The Historical Accounting is 
essentially trying to find external sources to verify what is 
in our records. So we have essentially the bank's records. Now 
we are trying to find canceled checks or invoices that would be 
the second check on what is in our records, and it is the 
canceled checks or the external invoices, those are the things 
that are the challenge in trying to piece together.
    And so we have a great deal, well, we can certainly say 
with assurance that not every piece of paper is out there--
    Mr. Rahall. And a lot is not--
    Secretary Norton. So it would be possible to find every 
piece of paper because there are pieces of paper that just 
simply do not exist today.
    Mr. Rahall. Some of that could be rather substantial and of 
major consequence.
    Secretary Norton. At this point, I don't know what the 
universe of that is. Part of what our office is doing is just 
checking to see how much of that information still exists. 
There are fairly extensive records, for example, that cover a 
number of time periods. There have been audits done in the past 
that are fairly complete. There are other time periods where it 
is not as complete.
    One of the things that we need to assess is just how much 
information is out there and available.
    Mr. Rahall. Thank you, Mr. Chairman.
    The Chairman. Madam Secretary, Mr. Rahall talked about this 
accounting thing. What period of time, to the best guess you 
can give us, will this cover?
    Secretary Norton. That, Mr. Chairman, is still an 
unresolved question. The Court has asked for an accounting that 
would cover the funds regardless of when they were put into the 
system. There is still a question as to whether there is a 
statute of limitations and how that might affect the 
accounting, but we are proceeding to gather documents at this 
point that would cover the entire range.
    The Chairman. The Committee has been under the impression 
that we can go back all of the way to 1887.
    Secretary Norton. That is certainly, you know, we are 
trying to acquire all of the historical documentation.
    The Chairman. What kind of money are you looking at to do 
an accounting reconciliation all of the way back to 1887? Have 
you projected the cost of this?
    Secretary Norton. We, as part of our planning process, are 
trying to do some cost estimates. It is certainly in the 
hundreds of millions of dollars range.
    The Chairman. The tribes feel that consultation was an 
afterthought, that you conducted it subsequent to a decision 
rather than concurrent with it. Why did you send up a 
reprogramming request before you even started consultation?
    Secretary Norton. Under the consultation requirements, we 
are essentially to begin consultation once we have a plan that 
is capable of having an intelligent discussion, and we felt 
that we began consultation at that point. We also sent a 
reprogramming request that was fairly open-ended, that was 
something that would give us the opportunity to begin the 
reorganization and the transition process and would allow those 
things to be fleshed out as time went on.
    It has been a process of learning about the consultation 
approach. We wanted to move forward on our proposal. We felt 
that we had received fairly consistent feedback on the 
weaknesses within our organization. It is very important that 
we move forward quickly with fairly dramatic change in order to 
have significant reform. We want to work with the tribes to be 
sure that what we are doing is appropriate.
    Although we have asked for the reprogramming, although I 
continue to push forward with our proposal, that is because I 
want to see something actually materially achieved from this. 
We believe that there is a lot we can learn. There are ways of 
improving our proposal, and we are open to doing that. What we 
don't want to do is miss the opportunity to move forward 
quickly.
    The Chairman. How will you ensure that trust management is 
undertaken constructively with tribes and IIM accountholders in 
a manner that is directed toward developing a true relationship 
based on transparency and honesty?
    Secretary Norton. I think our task force has provided a 
good building block for that, and it gives us the opportunity 
to reach out further to tribes because of the leaders that are 
involved in that. We are building our relationship with the 
tribes and want to obtain input from them.
    The Chairman. Thank you very much.
    As this Committee knows, I normally hold my questions to 
the last, but I am going to be turning this over to J.D. 
Hayworth in a short time, so I wanted to ask my questions.
    Now, on the minority side, those who want to speak, would 
you raise your hands.
    All right, we are going by who came first then. Why did I 
even ask?
    [Laughter.]
    The Chairman. Mrs. Christensen, you were the first one 
here, and then Mr. Kildee.
    Mrs. Christensen, you are recognized for 5 minutes.
    Mrs. Christensen. Thank you, and I will try to be brief.
    Thank you, Mr. Chairman, for this hearing. It is not the 
first hearing on this issue that I have been to, and I hope 
that as we leave here we are going to see more of the change 
that the Secretary talked about.
    I want to welcome the Secretary to the hearing. We 
appreciated your testimony. Like our Ranking Member Rahall, it 
is very complete. I have really no quarrel with it and will 
begin by taking you at your word.
    I have a question because there is an issue that whenever 
we have hearings that involve the Native American tribes, one 
of the issues that is always in question, that always seems to 
be at the crux of the problem is the respect for the 
sovereignty of the tribes.
    So I wanted to ask you, as the current Secretary, can we 
proceed on the principle that your office fully respects the 
sovereignty of the tribes as a principle that will guide the 
future deliberations on this subject? Especially in light of 
the fact that consultation did not take place as the plan was 
being developed?
    Secretary Norton. We certainly do respect that sovereignty, 
and one of the things that led to concern on the side of the 
tribes was a misperception that we wanted to take back the 
management of assets that many of the tribes had already 
assumed. Quite the contrary. I think that it is best for the 
tribes to be actively involved in managing their own assets, 
and I want to encourage that and see that whatever we do is not 
an obstacle to the tribes' ability and initiative to do that.
    Mrs. Christensen. Thanks. Just two more, I think, brief 
questions.
    How much is being spent in this fiscal year on BITAM. And 
related to that, there as a question that your proposal 
weakened the BIA. If you would comment on that or there was 
some concern about that.
    Secretary Norton. At this point, BITAM itself does not 
exist. We have an Office of Trust Transition that is focusing 
on our strategic planning and figuring out how we move to the 
future, whatever that future is, and there is a lot of common 
work that needs to be done, whichever course of action we take. 
So there is nothing specifically on BITAM in the President's 
fiscal year 2003 budget request. We continue the budgeting 
under the Office of Special Trustee and the BIA, so we do not 
assume the existence of BITAM in the President's budget 
request.
    Nevertheless, we are moving forward on the trust reform 
issues, and I can provide you with the dollar figures.
    Mrs. Christensen. But how much is being spent in this 
fiscal year?
    Secretary Norton. Let me get that information--on BITAM 
itself?
    Mrs. Christensen. Yes.
    Secretary Norton. Technically, zero.
    Mrs. Christensen. On the Office of Transition? If you don't 
have those figures, if you could--
    Secretary Norton. I would be happy to provide that for you.
    Mrs. Christensen. It is my understanding that some tribes 
receive services directly from BIA, and others manage some of 
the programs through 638 contracts, and others manage them 
through self-governance compacts. How does the plan for the new 
trust agency affect the different styles or deliberately reduce 
services to the tribes or does it not?
    Secretary Norton. One of the difficult issues we need to 
grapple with, whatever the organizational structure looks like, 
is the sometimes conflicting issue of the standard to which the 
Department is held in its trust responsibilities and our 
ability to have the tribes do their own contracting through 
638.
    If we are held to a financial accounting standard that is 
the same type of accounting standard that applies for any major 
financial institution, then we may perhaps also have to hold 
the tribes to that standard in their own administration of 
their contracts. Now I don't know that that is what the tribes 
want to see, I don't know that that is what Congress wants to 
see, but that is one of the issues that I think we need to 
grapple with is how we allow the tribes to go forward with 
their own handling of their own affairs, have a high standard 
for that, without making it so high that nobody but a huge 
financial institution could meet it.
    The Chairman. The time of the gentlelady has expired.
    Mrs. Christensen. Yes, my time is up. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman from Arizona, Mr. Hayworth?
    Mr. Hayworth. Thank you, Mr. Chairman.
    Madam Secretary, welcome. Thank you for complete testimony 
in a problem, if we call it vexing, that is probably the 
understatement of two centuries. I recall a task force that the 
gentleman from Michigan and I co-chaired back in the 104th 
Congress dealing with this particular challenge. As has been 
pointed out by both the Chairman and ranking member, this is 
something that has involved so many prior administrations. We 
appreciate the efforts being made to deal with it.
    I think it is important to amplify portions of your 
testimony. So, for the record, let me ask you, Madam Secretary, 
what is the current standard of accountability for dealing with 
Indian trusts?
    Secretary Norton. It is a much more complex issue than one 
might think. We have a fiduciary responsibility. The courts 
have expressed it in that way. At some point, we have been held 
to something that is like a profit-maximizing-type of standard. 
In other ways, I think we have a standard that is too--it 
allows the tribes, for example, to have self-governance to take 
over contracting, where it appears that what Congress wants is 
something a little less than the rigorous financial management 
structure. It is an evolving standard, and we have the 
statutory standards that are set out. The courts have, at 
times, looked to common law to amplify those statutory 
standards. It is also dependent upon the treaties that we may 
have with particular tribes, so it is not an easy, clear 
answer.
    Mr. Hayworth. Well, following up on that, I am interested 
in your perception and opinion. As we have noted, this has 
carried into the third branch of Government, with the judiciary 
being involved, court cases continuing, you under a court 
order, testimony going on today. Based on that, your training 
in the law and upon your assumption of this role, as Secretary 
of the Interior, in your opinion, what standard does the court 
believe should be applied to managing Indian trusts?
    Secretary Norton. Well, I don't want to reflect on the 
particular litigation in which we are involved, but in general 
I think the courts are moving closer to a financial accounting 
standard, something that would be similar to the standard for a 
major bank or trust company, and that is what has come out as 
particular types of issues have been litigated. That, again, 
depends on the individual statutes, and treaties and so forth.
    Mr. Hayworth. Thank you, Madam Secretary.
    If I could, I realize I have about a minute and a half 
left, just to address a couple of questions to our special 
trustee, Mr. Slonaker. I thank you for being here today with 
the Secretary.
    Just to make it part of the record, in your role as Special 
Trustee, do you report directly to the Secretary?
    Mr. Slonaker. I do.
    Mr. Hayworth. And what are your performance criteria for 
progress for trust management?
    Mr. Slonaker. Basically, the 1994 Reform Act, and the 
accounting, and the accountabilities that are embodied within 
that plan.
    Mr. Hayworth. Have you submitted a plan in this regard?
    Mr. Slonaker. Well, the first Special Trustee submitted a 
strategic plan, which was partially rejected by the then-
current Secretary. That evolved into what I recall more of a 
tactical plan known as the High-Level Implementation Plan. That 
evolved into an HLIP-2, if you will. At this point, in my 
personal view, we see ourselves as a Department evolving yet 
another plan which will be what I recall more strategic. It 
will be based, in large part, not only on the analysis of the 
Department itself, but also on the assistance we have gotten 
from some outside consultants who have looked at this 
independently.
    Mr. Hayworth. With this evolution in plans, do you feel 
safe in saying you are making progress? Are you able to gauge 
any type of progress in this regard?
    Mr. Slonaker. I think there is progress around the edges. 
My concern is that the progress that has not been made by the 
Department, in terms of the major systems and the major 
projects which are the heart of trust reform, if you will, and 
the heart of our obligation as a Government to the 
beneficiaries, and that would encompass such things as the 
accounting system which the Secretary referred to earlier, it 
would also include the probate process, and it would include, 
very importantly, what is commonly known as the data clean-up 
aspects of this reform.
    I don't believe that there has been sufficient progress on 
those areas which, as I say, are really the heart of trust 
reform.
    Mr. Hayworth. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman from Michigan, Mr. Kildee? Mr. 
Kildee has been a champion on Native American issues for many, 
many years. We appreciate it.
    Mr. Kildee. Thank you, Mr. Chairman. Thank you, Mr. Hansen.
    I look out, I have been here in Congress now this is my 
26th year, and I recognize the majority out there. I have 
worked with some of you. Some of you have worked for me, and 
hopefully I am working for all of you. But it is good to see 
all of you. We have known each other for many, many years.
    I cannot say, you know, who is on which side of this issue 
because I think we are all on the side of justice, and I think 
that was we work closely together to achieve the maximum, the 
optimum justice, the better we will serve the Indians who 
deserve this justice so much.
    I read the Constitution regularly, and it says the Congress 
shall have the power to regulate commerce among foreign 
nations, several States and with the Indian tribes. So, 
ultimately, Congress has to be involved in this, and we want to 
be deeply involved.
    You have received an order to come up with a plan, and in 
that order, you were told to consult with the affected Indian 
Nations and individuals. To what degree was that consultation 
concurrent, as you developed the plan, and to what degree was 
that consultation subsequent to your development of the plan, 
Secretary Norton?
    Secretary Norton. In terms of our reorganization proposal, 
there was nothing that specifically required us to do a 
reorganization. It was in response to the need for unified 
management and to answer a persistent question of who is in 
charge of trust reform.
    We anticipated proposing an idea that was a general idea 
and a general reorganization proposal, and then moving forward 
to flesh out the details of that through a consultation 
process.
    Mr. Kildee. It seems to me, from my own unscientific 
methods, that the majority of the Indian Nations and the 
individual Indians do not agree with separating those fiscal 
trust responsibilities out into a separate agency from BIA. 
That would seem to indicate that the consultation with the 
Indian tribes and individuals was only subsequent to your work, 
rather than concurrent with your work.
    Could you comment on that?
    Secretary Norton. Our work is still in progress, and we are 
learning things all the time about how we can improve our 
proposal. We have, essentially, two conflicting major pieces of 
information. One of those says that the BIA system is broken, 
that BIA has not successfully managed these assets, and after 
years and years of trying to improve the BIA management, we 
still haven't seen results.
    The other aspect of it is largely coming before the tribes 
saying continue to have BIA do the same thing. And so we get 
some very strong indication that BIA ought to be out of the 
picture of doing the management, other very strong feedback 
that BIA needs to continue to be at the center of this process. 
And, frankly, we are still trying to figure out how we get the 
best of both worlds.
    Mr. Kildee. Since it is a work still in progress, how wed 
are you then to the idea that you must separate out these 
fiscal trust responsibilities into a separate agency from BIA?
    Secretary Norton. I think that at some level we need to 
have leadership separate from BIA. We need to have a system 
that is going to be able to look at this in a fresh way and 
really move forward with reform. It needs to be outside of the 
old structure. Now, whether that is a different part of BIA or 
whether that is a parallel agency with BIA, there are other 
proposals to have it entirely outside of the Department of 
Interior, and those are things that you all should consider. 
But, at some point, we need to have enough departure from the 
current organization to have real reform.
    Mr. Kildee. But it could be, as you indicated, maybe still 
within the BIA as a separate entity within BIA?
    Secretary Norton. That is what a number of the tribes have 
proposed. I still believe that our separate organization is 
superior and is more likely to bring needed change, but I have 
not entirely closed my mind to the opinions I am hearing from 
other people. Perhaps they can offer some way that we can get 
that reform. At this point, I do still remain convinced that a 
separate organization would be stronger in bringing the kind of 
reform that we would like to see.
    The Chairman. The time of the gentleman has expired.
    Mr. Kildee. Just one final. There is a very obscure agency 
in this city, which is very important. It is called FASB, the 
Federal Accounting Standards Board, which has come into 
prominence now because of Enron. When you went through all of 
your work on these accounts, did you follow all of the 
standards of the FASB, the Federal Accounting Standards Board?
    Secretary Norton. Let me defer to Mr. Slonaker on that.
    Mr. Slonaker. I was tangentially involved with some of the 
thinking on what the organization should be. I don't believe 
that FASB's standards would apply to the creation of an 
organization, unless I misunderstood your question, sir.
    Mr. Kildee. No, that was my question. So you did not 
necessarily apply FASB to this accounting system.
    Mr. Slonaker. Well, let us be clear on what we are talking 
about here. We are really talking about two things. You are 
talking about, I believe, sir, FASB accounting standards, on 
the one hand. I think the Secretary and I are addressing issues 
having to do with the accounting system per se. Obviously, 
there are certain accounting standards that will apply to 
accounting that is done for the beneficiaries, but I think the 
thrust of the Secretary's comment here has to do with the 
organization to create and run that system, if I am making 
myself clear.
    Mr. Kildee. Not entirely, but I will pursue that later.
    Thank you.
    The Chairman. Thank you.
    The gentleman from Montana, Mr. Rehberg?
    Mr. Rehberg. Thank you, Mr. Chairman.
    I am struck by the opportunity to follow Mr. Kildee. 
Between us, your 26-year tenure and my 1-year, we have 27 years 
between us to solve this problem.
    [Laughter.]
    Mr. Rehberg. And what I have come to the conclusion, Mr. 
Kildee, in serving here for a year, that a lot of people 
support reform as long as it doesn't change anything, and I 
find that unique and ironic that we would be talking about a 
problem that has existed for so long and perhaps been on the 
back burner. And I thank some of my constituents for bringing 
the case forward. Perhaps it takes the Court to--
    Mr. Kildee. I might say to the gentleman that, in fairness 
to you, there is 26 years' experience and that is 1 year 
repeated 26 times. I am not sure what I have.
    [Laughter.]
    Mr. Rehberg. Let me begin by asking the question of you, 
Madam Secretary, you made the point that a lot of these trust 
responsibilities were created by treaty. Were those done by 
tribe, by reservation or as a whole? And where I am leading 
with this is, trying to think outside the box, is there any 
reason why all tribes, it is all or nothing? Is there an 
opportunity within the Congress to make a determination that if 
there are tribes that don't like the way the BIA has handled 
it, that they would have the opportunity to separate themselves 
and go out to the private sector and have a private sector 
trustee responsibility?
    Secretary Norton. I would certainly like to see the 
opportunity for tribes to be able to do that. I think that that 
might be very beneficial for tribes, and I certainly personally 
would like to preserve that option.
    Our problem is essentially our needs to have a unified 
computer system, for example; to have one data base where we 
can look to find the information on who owns which pieces of 
property, what the leases are on those property, what the 
accounts receivable are, and so on and so forth, to have a 
basic financial accounting system that meets 21st century 
accounting standards. It is almost impossible to do that, 
unless you have some standardization.
    And so our needs, from a management standpoint, to have 
standardization complicate the policy goal of letting the 
tribes to have their independence to chart their own way. So 
that is just one of the tough issues that we have to grapple 
with.
    Mr. Rehberg. Mr. Slonaker, you have been there for how 
long?
    Mr. Slonaker. I was confirmed about 20 months ago.
    Mr. Rehberg. And you took Mr. Holman's place?
    Mr. Slonaker. Yes, sir.
    Mr. Rehberg. It seemed, in his prior statements, that he 
was willing to consider and, in fact, recommended to the 
Secretary that it be taken as one of the alternatives taken 
outside of the Department of Interior. Is that a position that 
you have tried to promote within your responsibility as the 
trustee?
    Mr. Slonaker. The idea of taking it outside of the 
Department is very appealing. I, clearly, concur with the 
Secretary that this ought to be this trust function, which I 
would refer to as a fiduciary function, as opposed to what I 
also would call the large trust obligation of the Government. 
In other words, I am distinguishing between the financial 
management of the land, on the one hand, for income for 
beneficiaries, on the one hand, and the larger trust 
obligation, which has to do with social services, and highways, 
and so on and so forth.
    So I, clearly, believe and concur with the Secretary that 
the financial trust or the fiduciary trust, if you will, should 
be put on its own footing in a separate organization. I also 
think the idea of moving it entirely out of the Interior 
Department is a very appealing one. As you know, under the 1994 
act, the act created an advisory board to the Special Trustee, 
and that advisory board, as a matter of fact, has recommended 
just that.
    But there are many alternative plans on the table here, to 
which the Secretary has alluded. The central premise, I 
believe, is that there has to be a single organization in 
Interior or outside Interior that is responsible for the 
fiduciary trust obligations of the Government.
    Mr. Rehberg. Let me ask you, then, between the two of you, 
do you have any indication from any tribe that they would be 
willing to try and be a pilot project for moving--I know you 
have a big bite to chew here, but it would seem like if we took 
smaller bites and maybe separated some and showed, perhaps, 
that there was an alternative or an opportunity for some of 
these tribes to move out on their own, giving you the time to 
go ahead and create your own system, but not having the 
responsibility for that individual entity, that that might be a 
way of solving some of the problems. Again, it is all for one 
or one for all. It seems a little burdensome to you because it 
is so big.
    Secretary Norton. There are some tribes that are already 
doing their own management, and some tribes are doing a very 
sophisticated job of managing their assets. Perhaps Mr. 
Slonaker would like to provide some details on that.
    Mr. Slonaker. Under the 1994 act, tribes do have that 
option. Very little that has happened so far, and I can't tell 
you for sure why, more hasn't happened, but most tribes have 
opted to stay within the Government's obligation.
    The Chairman. The time of the gentleman has expired.
    Does the gentleman from New Jersey have questions? The 
gentleman is recognized for 5 minutes.
    Mr. Pallone. Thank you, Mr. Chairman.
    I have to start, Madam Secretary, by being very blunt. I 
really don't believe that creating a new agency for these trust 
accounts is the answer, and I think it is pretty clear that 
most, if not all, of Indian Country has pretty much said the 
same thing.
    I listened to what you said today, and I know this is, as 
you say, just the beginning, but I don't really see that you 
have made the case that we need a new agency. You talked about 
how we need more funds, we maybe need a change in the 
workforce, we need new computers, new accounting methods, but I 
don't see how that problem is solved or necessitates creating a 
new agency. It seems to me that you need to reform the existing 
agency and making those changes within the existing agency, not 
just transfer everything from Hall A to Hall B.
    The other problem I have is that you talked about how the, 
when you had the meetings this weekend, that the tribes felt, 
not that they agree with everything at the BIA, but they felt 
some sort of affinity to the BIA, and I think that kind of goes 
to the heart of the matter.
    I think that your approach, and as Mr. Kildee said, of 
basically coming up with the separate agency idea and then 
going later for consultation, is a kind of a patronistic 
approach. That is the basic problem here. In other words, this 
is money that belongs to the Indians. This is their trust. This 
is their accounts.
    I think that essentially what they are saying is that it 
should have been left to them, at least initially, to come up 
with the idea about how to go about handling this, rather than 
coming up with your own idea and saying we need a new agency 
and then saying, OK, we will consult with you and see if you 
can somehow merge your ideas into what we are already doing.
    My questions really go to the consultation process. If this 
task force that has been set up now that you mentioned is 
really going to be effective, it seems to me that you should 
just start from scratch. You should not assume that your 
proposal is the way to go and that you are just taking some 
ideas from them. You should just say, look, we are starting 
from scratch, you know. I have this proposal out there, but you 
come up with the idea, and you tell me what you think, and then 
we will give our input.
    I would ask you to comment on that, but two or three other 
things to comment.
    Second, I would say give them enough time. I mean, it is 
not clear at all to me that this isn't something you are trying 
to wrap up in a few weeks or a few months. I think that this is 
something that needs some time for this task force to be 
successful and to be able to come up with a recommendation that 
is, essentially, a consensus approach.
    And then the third thing I would ask you to comment on, a 
larger issue, is what is consultation all about? In other 
words, I know there were executive orders in place under the 
Clinton administration that said that you had to consult. Is 
this administration taking the position that those executive 
orders are still in effect and that there is a requirement of 
consultation from the beginning on this or even other issues?
    First, why not just start from scratch, scrap everything; 
second, what kind of time period are you going to give them; 
and, third, comment to me about the consultation process and 
how this administration sees the existing executive orders or 
whether they need to be repromulgated or they are still in 
effect on the consultation issue.
    Secretary Norton. Those are some very good questions.
    First of all, as to the idea of just sort of taking 
everything off the table, and just starting from scratch and 
just, you know, letting this all bubble up slowly through the 
process as we get consensus, the problem is that my trust 
responsibility doesn't get put on hold for several years until 
we reach an end result. I have a trust responsibility that 
exists right now, and I need to do what I think is best to 
improve our provision of services.
    And the proposal we put on the table was done from my 
perspective as a manager. As a manager, I am convinced that the 
best way and the most straightforward way of achieving an 
improvement in our management would be the create a new 
organization, to give clear direction, to start moving things 
into a process that is organized, makes sense, very directed 
and really oriented toward financial management.
    I, also, recognize that that has been a fairly consistent 
theme over decades of looking at reform proposals. Every time 
something that has been put on the table that would really be a 
dramatic reform proposal has been offered, it has always failed 
to materialize because it is not often what the tribes want to 
see. It is a change that has been difficult to get.
    I want to push forward to make some changes and to make 
changes in a short timeframe. For those changes to be 
successful, though, it is going to have to reflect the needs of 
the beneficiaries, and to best get that reflection of those 
needs incorporated into the process, we need to be doing very 
intense discussions with the tribes. That is what we have begun 
to do through this task force.
    Neal McCaleb has been in days and days of consultation 
meetings with the tribes. I have attended consultation, a 
couple of the consultation sessions and spent some hours with 
tribal leaders discussing these issues. Clearly, we have a lot 
more to do, but I would rather do that in a concentrated 
timeframe, to get that input, to get those decisions made, than 
let this just go on, and on, and on and not reach closure.
    Mr. Pallone. About the executive orders, do you consider 
those in effect--
    Secretary Norton. Oh, I am sorry. We are abiding by those 
executive orders. We have been working to get our process to 
meet those executive orders and to work with the tribes on 
that.
    Mr. Hayworth. [Presiding] The gentleman's time has expired.
    Mr. Pallone. Thank you.
    Mr. Hayworth. I thank the gentleman from New Jersey.
    My friend from Utah, 5 minutes.
    Mr. Cannon. Thank you, Mr. Chairman.
    Madam Secretary, I couldn't help but think, as you spoke, 
of the first time you appeared here before us, where I think I 
expressed my approval at your appointment, and perhaps even 
gushing approval. I was hopeful, at that time, that you would 
have the ability to come into the Department and solve some of 
the problems, a culture which resulted in lying to the 
representatives, the elected representatives of my State, 
before the announcement of a huge monument, the kind of culture 
that resulted in the planting of lynx hair and hundreds of 
other problems that you have seen in that Department, but you 
have had some difficulties in doing that.
    Our good friend, your Under Secretary, Steve Griles, was 
not appointed for some time. When was he actually confirmed by 
the Senate?
    Secretary Norton. He took office in late July, and so his 
appointment or his confirmation was about that time.
    Mr. Cannon. And Cathleen Clark, who is your Director for 
the BLM, finally got her confirmation when?
    Secretary Norton. Oh, just right as the Senate was leaving 
town in December.
    Mr. Cannon. We really do appreciate the other bodies acting 
on that expeditiously before leaving town, I might point out. 
These are great people, and I appreciate the quality of people 
that you have chosen to surround yourself.
    May I ask how much of your time are you spending on this 
issue now?
    Secretary Norton. I am spending, well, certainly, more on 
this issue than any other single issue. For the last few 
months, perhaps more than all other issues put together.
    Mr. Cannon. Like, say, 60 percent of your time; is that 
where you are going?
    Secretary Norton. That would be a rough estimate, yes. I 
haven't obviously kept track of the hours, but--
    Mr. Cannon. This is just ballpark.
    Secretary Norton. It is a predominant issue for us.
    Mr. Cannon. It is a lot. And how much of the time of Under 
Secretary Griles is he spending on this issue, do you think?
    Secretary Norton. He is probably spending about 12 hours a 
day on this issue, and then the rest of the Department is in 
addition to that.
    Mr. Cannon. So we have a something that advertises 110-
percent effort, he is doing something more than 110 percent.
    Secretary Norton. About 150 percent, I think.
    Mr. Cannon. And you have an Assistant Under Secretary, Jim 
Cason, who is, essentially, spending full time on this issue, 
as I understand it.
    Secretary Norton. Full time for Jim Cason is 18-hour days. 
He has been putting those in consistently. It is amazing, you 
know, no matter how early you come in, no matter how late you 
are there, whether it is a Saturday or a Sunday, we have those 
people and some others working on our trust reform issues.
    Mr. Cannon. And if I seem approving, Mr. Chairman, of the 
team at Interior, it is because I worked with them when I was 
at Interior, and I can attest that what the Secretary is saying 
probably understates the magnificence of what they are capable 
of doing.
    On the other hand, if I can get back to one of the issues 
at hand here, a number of checks have not been mailed out to 
people who depend on those checks. Do you have a sense of the 
number of those checks that haven't been mailed out or the 
amount of money?
    Secretary Norton. Let me see if I can get that information. 
We do have some information on what has been mailed out. Neal, 
let me defer to you on that.
    Mr. Cannon. What I am really shooting at here, and Mr. 
McCaleb, if you could help us, it seems to me that a whole lot 
of people are suffering a huge amount of pain because checks 
are not going out from the Department, which they have depended 
upon to make their house payments, and their car payments, and 
to buy groceries; is that the case or not?
    Mr. McCaleb. Indeed, that is true. And in response to your 
specific question, it is hard for me to quantify how many 
checks have not been mailed out because they are not uniform 
each month. I can't tell you how many checks have been mailed 
out since early January, when we began to bring some of the 
systems up.
    Mr. Cannon. But it is fair to say that we have got a lot of 
people who are suffering because they don't have a check they 
depend on.
    Mr. McCaleb. Absolutely. We are not sending out any oil and 
gas mineral lease checks that are the preponderance of the--
    Mr. Cannon. Madam Secretary, I want to just touch on 
another issue before my time runs out.
    You are a lawyer, and I suspect you talked with the 
solicitor after you received the order that affected what 
information you could have on the Internet, did you consider 
that and did you consider alternatives to shutting down your 
Internet systems?
    Secretary Norton. Our systems are interconnected. The court 
order says that anything that is connected to the trust data, 
where someone, an outside hacker, could gain access to trust 
data, has to be shut down. As a consequence, we saw no 
alternative but to shut down every aspect of our system. We are 
now working to bring those things back up.
    Mr. Cannon. It is hard for me to imagine how a Federal 
judge could have a greater effect on slowing down the processes 
which the American people elected a President, who nominated 
you and who confirmed you and your fellows at the Interior 
Department more than has happened here and caused such a 
retardation of what I think are important issues for Americans 
and which are painfully important to those individuals who 
haven't gotten their check. I hope we can get this problem 
resolved in a way that the Department, and the American people 
and the recipients of those checks can move forward, and we can 
get back--my office has a problem and I know the Committee has 
a problem getting information from your Department because of 
your being off-line. I hope we can get that resolved soon.
    Thank you.
    Mr. Hayworth. The gentleman's time has expired. We thank 
the gentleman from Utah.
    Our friend from American Samoa, Mr. Faleomavaega.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    I do, also, want to welcome Madam Secretary for appearing 
at our Committee this morning.
    Madam Secretary, I know this position may not be considered 
very important probably among your peers. It doesn't even 
require Senate confirmation or not even a top security or 
crypto clearance, but, Madam Secretary, when are we going to 
get a Director for Territorial Affairs? It is almost one-third 
of this administration's term, and for half a million people's 
needs and welfare, and we don't even have a point person for 
this within the Department.
    Can you take this to President Bush? What can we do to 
assist in this effort? I really think it is very disappointing 
that we still do not have a Director that should oversee the 
needs of the territories.
    Secretary Norton. We are frustrated by that as well. We 
have been in the process of trying to identify the right 
individual for that position, and even just within the past 
week I have heard some additional efforts in that regard, but 
we do not yet have that final decision made.
    Mr. Faleomavaega. I was told 3 months ago that the 
appointment was going to be made in 2 weeks. Now it is the year 
2002, and we are about ready to go to the month of March. Maybe 
we might as well not even have a Director for Territorial 
Affairs.
    I do want to second the concerns that have been expressed 
by the previous members of the Committee, especially of our 
Chairman and also our ranking Democrat, Mr. Rahall. This issue 
is not a new issue, as you well are aware of. I believe the 
late Congressman Mike Synar, from Oklahoma, for 5 years he 
conducted extensive hearings, and research and study of this 
issue of trust funds. And now, at this point, perhaps the only 
reason why we are moving on this is because the Federal courts 
are on our backs now in trying to find a solution to this.
    In the 1990's, we enacted or authorized some $20 million 
even to conduct an auditing, and I guess we were not even 
successful in doing that, expended $20 million just to audit 
the accounts. In 1994, we passed the American Indian Trust Fund 
Management Reform Act, hopefully, to resolve the issue. I would 
like to ask you, Madam Secretary, is this law that was passed 
in 1994, there is no teeth whatsoever in helping reconcile the 
records or whatever the responsibilities that Mr. Slonaker is 
to take up?
    Are we short of any enactment on the part of the Congress 
to give you more authority to address the issue so we don't 
have to go to the Federal court?
    Secretary Norton. The 1994 act sets out some specific 
standards that we are to meet in our trust responsibilities, 
and that is what we are implementing as we go through this 
process, and that is what has formed a large part of the 
court's decisionmaking process as well.
    The issues have largely been ones of implementation, and 
clearing out the--
    Mr. Faleomavaega. I would like to ask Mr. Slonaker, since 
he is the Special Trustee, are there any deficiencies in the 
law that we passed in 1994, Mr. Slonaker, so that we can give 
you the necessary authority to do what you need to do to 
reconcile the accounts. It seems to me that is the most 
fundamental problem that we have here. I hate to make it sound 
simple, but if we have got problems since we passed this last 6 
years or 7 years ago, tell us how to improve the law so we can 
give you more teeth in the process.
    Mr. Slonaker. Very interesting question. I don't think the 
1994 act, the way it was set up, has been terribly successful, 
and I guess the problem that I perceive is that as I have 
looked at the whole process of trust reform, what is really 
needed--which the Secretary has alluded to--is stronger 
organization, and I would add one very important thing to that, 
and that is stronger management.
    Mr. Faleomavaega. Even from the previous administration, 
they kept telling us, We are going to reorganized the BIA, we 
are going to reorganize the BIA, and we never got any 
reorganization plans for the BIA. So my question is: Rather 
than going through this executive procedure and reorganizing 
the BIA, perhaps we need to make improvements in the law that 
we passed in 1994.
    What do you think of that, Madam Secretary?
    Secretary Norton. The court found that the Department was 
in breach of the responsibilities created under that act, and 
so our efforts have been to cure those breaches and to move 
forward with complying fully with our responsibilities.
    Mr. Faleomavaega. I have several other questions, Mr. 
Chairman. I know my time is up. I will wait for the second 
round.
    Mr. Hayworth. I thank the gentleman from Samoa.
    The gentleman from California, Mr. Gallegly.
    Mr. Gallegly. Thank you, Mr. Chairman. And I want to thank 
the Chairman for calling these hearings today, and I welcome 
you, Secretary Norton. I know you have some very great 
challenges ahead, as has every Secretary of the Interior in my 
15-plus years here.
    The mismanagement of the Indian trust funds I believe has 
got to stop, and if the executive branch can't stop it, I 
really believe it is incumbent on this body to enact 
legislation which will do the job once and for all.
    During the 104th Congress, I had the distinct honor of 
chairing a Subcommittee of this Committee which had 
jurisdiction over Native American legislation. At that time it 
came to my attention that hundreds of thousands of individual 
Indian money accounts had been mismanaged by the Interior 
Department.
    The Resources Committee created a Task Force of Indian 
Trust Fund Management. That task force held hearings in 
Washington, D.C., Anchorage, Alaska, and in Phoenix. The task 
force heard from all sorts of Native Americans, Government, and 
private witnesses.
    The General Accounting Office informed us that 32,901 trust 
account transactions involving over $2.4 billion could not be 
traced in an audit, which couldn't even be called an audit 
because there weren't enough documents to audit. Things were so 
bad that the auditors dropped the word ``audit'' and adopted 
the word ``reconciliation.''
    The GAO has also informed us that only 10 percent of the 
Indian mineral leases selected to be reconciled could even be 
verified as having been acted upon. We were told of discoveries 
that trust management systems did not exist, that an accounts 
receivable system did not exist, and that an adequate records 
retention or archive systems didn't even exist.
    Of course, the Bureau of Indian Affairs assured us that 
these problems were being solved and that a new fancy 
accounting system was being put into operation and more funding 
was needed, and that mismanagement of Indian trust funds would 
end. In May 1996, the Cobell suit was filed in the Federal 
district court. Next we heard that Secretary Babbitt and his 
colleague at the Treasury Department were being held in 
contempt of court and fined $600,000.
    Meanwhile, Congress continued to appropriate millions and 
millions and millions of dollars in what appears to have been a 
futile effort to straighten out this mess. And now President 
Bush has sent us a proposed budget for fiscal year 2003se 004, 
which includes continued funding of these activities.
    I applaud the Chairman for holding the hearings. I applaud 
you for being here, Madam Secretary. It is very, very hard for 
me to be optimistic, even with all the words we have heard this 
morning.
    I look forward to us moving ahead. I believe that the 
Native Americans have put up with this charade long enough, and 
I hope that we can do something once and for all, and I hope 
that if the administration can't do it, that the Congress will 
act on it.
    On your plan, Madam Secretary, before implementation, is it 
your intent to look for a comment from the Native American 
community before any form of implementation takes place?
    Secretary Norton. Yes, Congressman, we are very actively 
involved in getting comments and consultation and input from 
the Native American community, both formally and informally. So 
we are very actively engaged now in that dialogue.
    Mr. Gallegly. How optimistic are you, Madam Secretary?
    Secretary Norton. I am fairly optimistic that we have good 
discussions taking place and we are getting a lot more 
understanding in the last few weeks than we began with. So we 
have made tremendous progress, I think, in a couple of months 
in getting better understanding from both sides.
    On the other hand, there is a tremendous resistance to 
change. As we have become more and more familiar with the 
management challenges, every time we unpeel a new layer of the 
onion we find more challenges. We just put out an eighth report 
to the court that is a very detailed analysis of where we are, 
to the best of our understanding, on each of the various 
management issues in front of us. And we would be happy to 
provide you with a copy of that. It is a very pervasive 
management problem, and almost everything that we are doing can 
be improved. We are just, you know, in the process of learning 
how to do those improvements.
    Mr. Gallegly. I thank you, Madam Chairman. I thank you, Mr. 
Chairman. When I was first named to chair the Subcommittee on 
Native American issues, I had someone come to me and say, Mr. 
Chairman, a few years ago when General Custer left for Little 
Big Horn, he gave the order: Don't do anything--gave the order 
to BIA: Do not do anything until I return.
    There are a lot of folks that believe that that order was 
complied with.
    [Laughter.]
    Mr. Hayworth. I thank the gentleman from California.
    We have heard the bells ring, and we have a vote, 15 
minutes for the first vote, followed by a 5-minute vote. But I 
believe we do have time to turn to my friend from New Mexico 
for his 5 minutes of questions before we adjourn to walk over 
for the vote.
    Mr. Udall?
    Mr. Udall of New Mexico. Thank you, Mr. Chairman. And 
welcome, Madam Secretary. Good to have you here today.
    Mr. Chairman, I would ask that my statement be put in the 
record.
    Mr. Hayworth. Without objection.
    [The prepared statement of Mr. Udall of New Mexico 
follows:]

Statement of The Honorable Tom Udall, a Representative in Congress from 
                        the State of New Mexico

    Mr. Chairman and Ranking Member Rahall:
    In the 1800s the United States Government entered into a trustee 
relationship with the Indian Nations. Over the last century, the trust 
relationship has developed and has been defined, by our Constitution, 
statutes, federal agency rules and practices, executive orders, and 
through numerous court rulings. In addition, this unique trust 
relationship and responsibility has helped to preserve the cultures, 
traditions, values, and inherent sovereign rights which has led to 
support Indian tribal self-determination and self-governance and paved 
the road for the federal government to work with Indian tribes on a 
government-to-government basis.
    So why are we here today? We are here because for more than a 
century-----as the federal government has been the trustee of funds for 
Indian tribes and individual Indians---Congress, as well as previous 
Administrations, continue to work on addressing the issues of the 
mismanagement of Indian trust fund accounts. However, the last several 
Administrations have put proposals on the table for discussion, but 
little success has come from those discussions and the efforts to 
address the problems.
    Today's oversight hearing, which I am glad to see Secretary Norton 
attending, will focus on the status of individual and tribal trust fund 
accounts and how the Department of Interior is responding to issues 
raised in the class action lawsuit Corbell v. Norton. These responses 
range from the Department's restructuring proposal and the Tribal 
opposition it faces to the lack of effort, on the part of the Secretary 
of Interior, to work with the court and special master to stress the 
potential ``economic'' hardships the Internet shutdown, which holds the 
Indian trust data, could create for the more than 40,000 Native 
Americans who receive royalty fund checks. These funds are generated 
from rights and leases, including grazing, quarrying, timber, 
agriculture, oil, natural gas, and minerals, on lands held in trust for 
tribes and individual Indians.
    At issue for me and the members of the Navajo Nation, Jicarilla 
Apache, and Pueblos---from the congressional district I represent---is 
that over 40,000 Native Americans have not received any royalty checks 
from the federal government since December 6, 2002, when U.S. District 
Judge Royce Lamberth ordered the Department of Interior to shut down 
its Internet links. Judge Lamberth issued the order after he concluded 
that inadequate computer security left the trust accounts vulnerable to 
outside hackers.
    Mr. Chairman, as a result of this order Native Americans from 
throughout our country, who depend on and have regularly received check 
payments prior to December 6th, have been left out in the cold. Many 
Native Americans depend on these checks to pay their rent, purchase 
food and clothing, as well as purchase other basic necessities. 
Everyone seems to be doing something to assist Native Indians and 
tribes who are waiting for their checks from the federal government. In 
the Navajo Nation for example, the Navajo Nation Council voted on 
January 26th to disperse over $500,000 in grants to hundreds of 
financially strapped Navajo families on the east side of the 
reservation who have not been paid their gas and oil royalty checks by 
the Department. I'd like to remind Secretary Norton that the issuance 
of royalty payments to Tribes and individual Indians are done monthly, 
some quarterly, and some annually. With that said, I believe that the 
federal government should pay back the Navajo Nation for their efforts 
to help their constituents and the federal government should also pay 
those who are awaiting their checks with interest.
    What is an insult to the tribes across the country is the 
``rhetorical spin'' that the Department of Interior is putting out, and 
I quote, ``Royalty payments will be made eventually as soon as we can 
work out with the [court's] special master to bring some of our systems 
back up that relate to this lease information.'' This quote appeared in 
a January 8th article in the Washington Post and almost a month later 
we are still waiting. I believe neither the Department nor you, Madam 
Secretary, realize the gravity of the situation which weighs heavily 
upon our tribes and individual Indians day-by-day as the Department 
continues to work at a snail's pace to get these checks out.
    Mr. Chairman, I find it hard to believe that the Department did 
not---nor currently has---safe guards in place to administer the 
distribution of checks should the Department's computer system crash or 
go off line in the future. What I find particularly disturbing is that 
the Department---realizing that without their computer system they 
could not issue checks---didn't make a strong or convincing argument to 
Judge Lamberth or the Special Master that a shutdown would create 
economic hardships on those who are dependent on the checks to survive.
    I believe that the Department needs to reassess the steps they are 
taking to respond to the issues raised in Corbell v. Norton. When the 
193 tribes of the National Congress of American Indians unanimously 
adopted a resolution opposing the Secretary's Plan, similar to actions 
taken by other tribes and pueblos throughout the country, they sent a 
clear message that they oppose the Department's restructuring plan.
    I don't think coming up with a plan, taking that plan across the 
country to so- called consultation meetings, asking the Congress to 
allow for the reprogramming of funds to create a new Agency to handle 
trust assets management, and doing all of this in haste is the right 
path to take. The path that the Department has taken and which we 
continue to travel I have not doubt will result in a future Congress 
and Administration having to address this very same issue with little 
to no success.
    Thank you Mr. Chairman. I look forward to hearing today's testimony 
from Secretary Norton and our two other panels.
                                 ______
                                 
    Mr. Udall of New Mexico. Madam Secretary, I think you have 
done a very good job at telling us that this is a very 
difficult problem, but I would like to emphasize what my 
colleague Chris Cannon from Utah said and put a human face on 
this issue.
    Many of my constituents are impacted enormously by these 
IIM accounts. I mean, we have had chapter meetings wherein, as 
you know, the Navajo reservation is very rural, and so if 
somebody has to leave their piece of grazing plot and coming 
into a chapter meeting, it is a big deal. And when you have 400 
people show up to a chapter meeting and all of them very upset 
that they are not getting royalty payments, it is a huge deal. 
And when you look at the human consequences, which what we are 
talking about is many of these elderly people that have 
survived on these checks for many, many years, and now the 
checks aren't going out, as you and Mr. McCaleb have just 
acknowledged.
    And so I can't quite understand how this all happened if 
somebody knew that this was going to be the impact, and I guess 
my first question to you is--I know you are a former State 
Attorney General. I know you know about representing big 
agencies in front of the courts. I can't believe that a Federal 
judge would enter an order like this if he was told of the 
impact that this was going to have. And what I want to know is: 
Did your attorneys tell the judge in a very concrete way that 
constituents of mine, constituents, I think, of other members 
here on the panel--Mr. Cannon obviously has people in that 
situation--that these people weren't going to get check, that 
they were going to have some of their homes foreclosed, that 
they were going to probably have cars repossessed?
    This is something that is having a devastating impact on 
the reservation, and I don't understand how a judge would do 
this. So can you tell me that your lawyers laid this all out 
for him?
    Secretary Norton. The plaintiffs moved for the restraining 
order and the injunction to protect the Indian trust data from 
hackers who might come in and harm that data. The primary focus 
has been in trying to protect that information. Obviously, the 
impact is one that we are realizing more and more as time goes 
on.
    It was my hope that we would be able to get those systems 
back up online more quickly than we have been able to do so. 
And we put our initial emphasis on getting exactly those 
systems up and running. The first requests that we put forward 
were for those systems that would provide payments to Indians 
before any of the other aspects of the Department's Internet 
system, except for a few that were critically important for 
public health and safety.
    Other than those very small parts of our Department's 
network, the first ones we have dealt with have been the most 
difficult ones, and those are the Indian financial processing 
aspects of the system. So we are put that as our highest 
priority, and we are moving forward.
    We have been compiling the impacts and presenting--you 
know, putting all of that information into a report. We have 
been submitting that information to the special master and 
working with the special master to keep him apprised of the 
impacts of each of those systems.
    Mr. Udall of New Mexico. Madam Secretary, with all due 
respect, I don't think you--either you didn't understand my 
question or you didn't focus on it, and my question was not 
what you have done subsequently. I know that a court order has 
been entered, and I know that you and your people are very 
upset about it, and you know the consequences and you have 
tried to take actions to remediate it.
    But did your lawyers tell the judge at the time there was 
discussion of the plaintiffs' order, did they say this is going 
to be the result and argue that vociferously? Your counsel's 
job is to represent the trust responsibility, to represent the 
Department, to do everything that they can to let the court 
know the consequences of entering an order like this. And I am 
mystified as to how this happened.
    Mr. Hayworth. The gentleman's time has expired.
    Mr. Udall of New Mexico. No, I understand, and we have a 
vote on.
    Mr. Hayworth. And I thank you. I am trying to be indulgent 
with the time. If the Secretary wants to respond briefly?
    Mr. Udall of New Mexico. And I will stick around, like my 
colleague here, for a second round, also.
    Mr. Hayworth. Great. If you want to respond, we can. I am 
trying to be accommodating to members. The gentleman from Idaho 
has to be three places at once, too, and he asked to go ahead 
with his questions. So I recognize him for 5 minutes.
    Mr. Simpson. Thank you, Mr. Chairman. Thank you, Secretary. 
I appreciate you being here today to testify on this, and I 
appreciate the fact that during your confirmation hearing in 
the Senate, this is one of the issues that you brought up at 
that time that needed your attention. It is a difficult issue.
    I have before me a press release, I guess, that is found on 
the Cobell website on ``Judge suggests game playing by Interior 
may hurt''--``may be behind Internet shutdown.'' And as Mr. 
Udall mentioned, did the plaintiffs' attorney object to--I 
mean, as I understand it, you have tried to put back online 
those things necessary to get the payments out to the Native 
Americans as quickly as possible. Has the plaintiff's attorney 
objected to that?
    Secretary Norton. Yes.
    Mr. Simpson. OK.
    Secretary Norton. It's my--let me verify.
    Yes.
    Mr. Simpson. Thank you. On another issue, underlying your 
reorganizational proposal, is it driven more by the Cobell 
litigation or is it driven by the trust fund responsibility 
that is entrusted to you?
    Secretary Norton. It is twofold. The court has in many 
respects provided the impetus for moving quickly. The 
responsibility is one that is--as everyone has said, almost 
every Secretary of the Interior coming in has recognized the 
need for reform and has tried to move forward with some sort of 
reform. But at this point, I think having the three branches of 
government all focused on reform may be a unique time period.
    Mr. Simpson. I appreciate that. On the board that you had 
up here, we were looking at the administrative costs, $800,000 
for those accounts that had 20 transactions or more, $9.76 
million for those that had 20 transactions or less. Does that 
money come out of the trust fund, the Native Americans trust 
fund?
    Secretary Norton. No. The administrative costs are entirely 
appropriated money.
    Mr. Simpson. Should they come out of the trust funds?
    Secretary Norton. That is a question that Congress can look 
at.
    Mr. Simpson. In the historical account proceedings, trying 
to re-create that, you have mentioned that it is going to cost 
in the hundreds of millions of dollars to do that and do it as 
accurately as possible. And we all know it probably won't be 
totally accurate because of the loss of records as they get 
older and older.
    The plaintiffs have indicated $60 to $100 billion in 
settlement costs. Is that reasonable, or are they out of left 
field?
    Secretary Norton. I at this point don't want to speculate 
on that number for obvious reasons. It, I think, is worthwhile 
for us to move forward on trying to more accurately look at the 
information that is available to us, to look at data to assess 
what the real discrepancies might be.
    Mr. Simpson. One final question. Under this, for lack of a 
better term, mess that is created there, that is there in these 
trust fund accounts, they are going to get worse over time, 
aren't they, with fractionalization?
    Secretary Norton. Absolutely.
    Mr. Simpson. So, I mean, it is not only something that 
needs to be dealt with from the historical perspective of 
making sure that we have it right, but dealt with so that it 
doesn't get worse into the future in one way or another. And 
somehow we have to deal--
    Secretary Norton. That is correct.
    Mr. Simpson. --with this fractionalization and other 
things.
    Secretary Norton. Yes, that is correct.
    Mr. Simpson. I thank you for your work on behalf of the 
Department of Interior, the people of the country, and the 
Native Americans. I know you are trying to do a good job, and 
it is a difficult task you have got there. We look forward to 
working with you on it.
    Secretary Norton. Thank you.
    Mr. Hayworth. I thank the gentleman for is questions.
    The Committee will stand in recess until the votes are 
completed. Then we will return.
    [Recess.]
    Mr. Hayworth. The Committee will come to order, now that 
the power switch has been turned on for amplification.
    Madam Secretary, and those who join you, we thank you for 
your indulgence and spending time on this. It lends credence to 
your point that you have been concentrating on this, and we 
thank you very much for your patience as we continue.
    A couple of notes. Some people have expressed an indication 
they would like to do some follow-up questions, and we will try 
to get there. But what I would stress to the Committee members, 
if we can get to some new and substantive information rather 
than covering old ground--we understand the challenges of time 
and being in so many different places because we have any 
number of folks who have a variety of perspectives. But the 
Secretary and the Assistant Secretary and the Special Trustee 
have graciously said they would remain for part of the day, and 
we are very appreciative of that.
    That is right. I would also point out that we can submit 
questions in writing as well.
    With that in mind, we resume the questioning, and we turn 
first to the gentleman from Oklahoma, Mr. Carson.
    Mr. Carson. Thank you so much, Mr. Hayworth. Thank you for 
staying around for the continuation of this hearing, Madam 
Secretary. Thank you for bringing along Neal McCaleb, a great 
Oklahoman as well. I know we have Chief Swimmer in the back who 
has a vested interest in the hearings process today as well.
    Let me ask you a couple of questions. We have talked a lot 
about the asset side of Indian lands and what amounts to more 
or less an unalloyed fiasco over the last 100 years and 
accounting and for them.
    There is also in many places across the country significant 
liabilities associated with the exploitation of the natural 
resources on Indian land. In my district alone, we have the 
former center of lead and zinc mining in Ottawa County, now a 
massive Superfund site.
    Under your proposal, with BITAM taking over responsibility 
for some of the trust assets, what would happen to the BIA, for 
example, in that Superfund site as a PRP, a potentially 
responsible party, what would happen to environmental 
liabilities associated with some of the Indian land?
    Secretary Norton. Congressman, that is a level of detail 
that we have not contemplated in our proposal yet.
    Mr. Carson. OK. Very good. Do you have a sense of at what 
point in time whether discussion will be had on establishing 
those kind of details and what kind of timeframe we can expect 
kind of those details to be unveiled?
    Secretary Norton. That is an ongoing process, and we will 
be working with the tribes and consulting as we go along on 
those things. That is something that is obviously not at the 
forefront of our financial management concerns, and so I would 
anticipate that that would be something that would remain in 
its current posture for quite a while. And I just am not sure 
that we would ever contemplate a change for that.
    Mr. Carson. One of the concerns of people who will testify 
subsequent to you is that asset management is an 
extraordinarily complicated matter, something outside the 
expertise of any one of those people who are spending their 
lives devoted to the subject, and that the Department of 
Interior and the BIA do not have adequate personnel to deal 
with this issue, with all the latest developments with this, 
that we have some very fine managers and extremely dedicated 
public servants, but not the level of specialized expertise it 
takes to follow the funds and get to the bottom of all of this.
    Can you tell us if you would agree with that statement? 
And, second, is the BIA, is the Department of Interior under 
your proposals, you know, planning on hiring folks, you know, 
perhaps from the private sector with the kind of expertise in 
these complicated transactions that are routinely being done in 
the commercial world but don't yet seem to have infiltrated the 
Government?
    Secretary Norton. Having a workforce plan is part of our 
strategic plan to make sure that we do have the kinds of 
expertise that are necessary. That is something that is still 
to go into our strategic plans. We don't have the specific 
answers.
    I have seen some of the tribes handle very sophisticated 
oil and gas operations, for example, and they have done that 
either through the tribes themselves or through outside 
contracting beyond the BIA responsibilities. And I think that 
has functioned very well, and we certainly would not want to 
interfere with the tribe's ability to draw on that kind of 
expertise.
    Mr. Carson. Let me ask--because my time is limited, as is 
yours, I know. There are two other areas I would like to 
inquire about rather quickly.
    First of all is the entire scandal involved in taking down 
the Internet and the failures and no checks as a result of 
that. There has been--it is my understanding the Department of 
Interior was informed about potential security problems with 
the accounts years ago and that this is something that has been 
long in brewing, but is only recently coming to public 
attention. Could you tell us when you were personally informed 
of any potential security problems there? And also with this, 
there seemed to be basic problems that do not require computer 
expertise to appreciate for all of us, and that is, you had 
multiple vendors, there are no performance reviews being done, 
no routine security checks, I understand, to make sure--see how 
difficult it would be to hack into the site, things that are 
just standard fare for people who are operating secure systems.
    Can you tell us when you were informed about this and, you 
know, kind of what is being done to address--you know, what 
seem to be some obvious management failures in the 
administration of these accounts?
    Secretary Norton. Government computers nationwide across 
all departments have received poor marks for IT security, and 
that is something that has been reported on by many different 
audits that have been done for many different systems.
    I don't recall when I first heard about these issues. It is 
something that has really been brought to a focused attention 
for us much more recently. We have now recognized that we need 
to make changes and need to make improvements, that our systems 
were not adequate, and we are now working hard to get those up 
to being adequate.
    Mr. Hayworth. The gentleman's time has expired. I thank the 
gentleman from Oklahoma.
    The gentleman from Montana has indicated that he had a 
couple of other questions. The Chair would ask for a show of 
hands of those who have additional questions. Fine. We will 
take that into account.
    We will turn first to the gentleman from Montana.
    Mr. Rehberg. Thank you, Mr. Chairman. In preparing for the 
hearing today, I was reading over the briefing material and 
looked with some anticipation at the report by Ernst & Young. I 
don't see it anywhere in here. Is there a problem with 
presenting that to Congress? It seems like we paid for it and 
it has some information that may be conducive to solving this 
problem. And I was hoping that it would be made available. Can 
you explain where it is, how we get it, and why it is not here 
today?
    Secretary Norton. The Department received requests for the 
Ernst & Young report informally, and a formal request from 
Chairman Skeen and Ranking Minority Member Dicks of the 
appropriations side on November 20th.
    We submitted a request through the Justice Department to 
have the court release that report from a protective order. The 
courts yesterday denied our request. We felt it was 
appropriate, given that, to read from the letter from the 
Appropriations Committee: ``Access to the Ernst & Young study 
of the five named plaintiffs is critical to allow the Committee 
to evaluate how a transaction-by-transaction review was 
accomplished and whether it produced the information needed to 
reconcile plaintiffs' accounts and was it a cost-effective 
method.''
    Skipping a few things, ``It is imperative that the 
Committee be provided with the Ernst & Young report in order to 
prepare for a hearing in consideration of the fiscal year 2003 
budget request.''
    We need to work with appropriators to obtain the hundreds 
of millions of dollars necessary for a financial accounting, 
for a historical accounting, and our request to have the Ernst 
& Young report made public was submitted to the court in that 
spirit.
    At this point we are prevented by the court from providing 
that information tot he Committee.
    Mr. Rehberg. One of the best decisions I made as a youth 
was not to become an attorney, so forgive me if I ask you some 
basic questions. I thought I had a future, so I stayed out of 
the law.
    Is there an appeals process? Can we get that report? You 
know, as Chairman of appropriations of the Montana Legislature, 
the Supreme Court one time didn't agree with something we did, 
and we just cut their funding for two of their justices. We did 
catch their attention. How are we going to catch the attention 
of this judge? He seems to be doing everything in his power to 
make life miserable, as Congressman Cannon said, for people 
within the tribes. He seems to make life miserable for Congress 
in our sincere attempt to try and solve a problem that has been 
sitting around for a long time. How do we send the message that 
we want this information? We paid for it. With all due respect 
to his legal expertise, he is flat out wrong.
    Secretary Norton. Let me respond to that by quoting from 
the court's order. ``Either Committee of Congress is free to 
seek to have this court modify its protective order to allow 
disclosure of this report. Should such a motion be filed, the 
court will be obliged to consider the relevant legal questions 
surrounding possible release of the report, including whether 
release is in the public interest.''
    So the court has invited Congress to contact it directly to 
seek release of the report.
    Mr. Rehberg. Mr. Chairman, through the Committee authority, 
I hope we do everything we can to get the information that is 
relevant to solving this problem.
    Mr. Rahall. Would the gentleman yield?
    Mr. Hayworth. The gentleman controls the time, if he will 
yield.
    Mr. Rehberg. Certainly.
    Mr. Rahall. I appreciate it, and just to put on the record, 
I did write a letter to Secretary Norton disagreeing with the 
request that was made by Chairman Hansen. To me, to have this 
information released to the public is like asking one to reveal 
their entire checking account. And I don't think many Americans 
would sit still for a request by any bank to have their full 
checking account details made public. So for that reason, I 
view the attempt to release this Ernst & Young report in that 
same vein, and I have opposed its release, as did the court 
yesterday, I see.
    Mr. Rehberg. Mr. Chairman, reclaiming my time, I look at 
prior testimony from Madam Secretary that has quite a bit 
blacked out. I would assume that same opportunity exists--is 
that not correct?--for receiving information that would block 
out the appropriate personal areas but still give us the 
opportunity to make a logical decision on how to solve the 
problem.
    Secretary Norton. That is a possibility that might be 
pursued.
    Mr. Rahall. Would the gentleman yield?
    Mr. Hayworth. The gentleman's time has expired. If the 
ranking member seeks time--
    Mr. Rahall. Just real quick to say it is my understanding 
that the information blocked out to which you referred was not 
a part of the request that was made by Chairman Hansen.
    Mr. Rehberg. If I may take part of your time, I am just 
suggesting that perhaps it could be done similar to the 
information that we received so we could still use that 
information to make decisions.
    Mr. Hayworth. The Chair would point out there is always 
time to modify and amend. That seems to be a part of the 
process we have here.
    The gentleman from Michigan?
    Mr. Kildee. Just briefly, Mr. Chairman.
    Madam Secretary, I commend you for recommending an increase 
of $84 million to remedy deficiencies in the trust management. 
But I notice that the President proposes a decrease of $3 
million for the Indian land consolidation account. Can you tell 
us why? And can you identify, perhaps not now but send to the 
Committee, identify for the Committee the increases and 
decreases in the President's budget proposal for trust 
management programs throughout the Department, and include a 
description of those programs? Could you specifically tell why 
he has a $3 million decrease and then if you could supply for 
us other increases or decreases within that?
    Secretary Norton. Yes, we would be happy to provide you 
with the additional detail on that in written form.
    The decrease in the amount of land consolidation money is 
because there is a carryover amount from the previous fiscal 
year, and so it is anticipated that we will be carrying some 
money for this year into that future year.
    Frankly, however, we are looking at our approach to that 
land consolidation to see if there are some things we can do to 
move that along. I just had a meeting earlier this week to 
discuss with my staff whether there are some things that we can 
do to make that process operate more efficiently and make sure 
that we are acquiring as much land as possible with the funds 
that are available to us.
    Mr. Kildee. Do you feel that the carryover will be 
sufficient to allow you to do your job properly in that land 
consolidation? The carryover amount of money from previous 
years will be enough, despite the $3 million decrease?
    Secretary Norton. Frankly, we are still looking at that. 
The initial analysis is yes, that should be sufficient. I am 
looking at whether there is more that needs to be done over the 
longer term to really get ahead of the curve on that problem. 
And so I want to continue working with you all to see whether 
what we need are some statutory changes or just more funds 
going into that process.
    Mr. Kildee. If you could do that, I hope that you would ask 
for a supplemental, if need be, because that is very important, 
that consolidation. And if you could give us a breakdown as I 
asked of the various parts of the President's budget in this 
area.
    Thank you.
    Secretary Norton. I would be happy to do that.
    Mr. Kildee. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Hayworth. Thank you, Mr. Kildee.
    From the Chair's purview of round two, I believe the 
gentleman from New Jersey had some questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    Madam Secretary, you mentioned that in your executive 
order, I think, on November 21st with reference to this new 
agency, you also mentioned that Mr. Swimmer would be the head 
of it. Now, I listened before when you talked about how you 
needed all these reforms and changes and you needed a separate 
agency. But my understanding is that he was the BIA Director 
under President Reagan for, I guess, 8 years and I guess--you 
know, I have two questions. Why would you take somebody or 
suggest somebody who, you know, was there before and the 
Director of the agency if you are actually trying to do 
something very different? And, second, to what extent--going 
back to the consultation issue again, to what extent were the 
tribes consulted with regard to his appointment?
    Secretary Norton. Ross Swimmer proposed some changes when 
he was Assistant Secretary that, had they been adopted, we 
would not be in the mess we are today.
    There is some disagreement with that.
    Mr. Hayworth. The Chair would ask for the gallery and those 
guests who join us to please contain themselves. We are not 
here at a television show. Thank you.
    Mr. Pallone. What about the second part, though? Again, you 
know, the concern was that they weren't consulted when the idea 
came out in the executive order on the 21st. Were they 
consulted at all about him?
    Secretary Norton. No one has been consulted about the 
appointments process. That is just not ordinarily something 
that we do--the consultation process is not well suited to 
having public meetings to discuss the merits of individual 
people who are job applicants.
    Mr. Pallone. Well, again, you know, I am not suggesting 
that, you know, you would nominate him and he would be 
confirmed in some way by tribal leaders. But I just think in 
the same way that there wasn't any consultation, or at least it 
hasn't been mentioned, when the proposal was made on November 
21st, there should have been some consultation as well about 
who would be the head of it, or even now at this stage. I don't 
understand--you know, I mean, there is not an official agency 
yet, so I guess there probably hasn't been an official 
appointment yet. And that could still--you know, I would ask 
that you take some input from some of the tribal members at the 
time when he is--you know, if at some point there is some 
action here.
    Secretary Norton. Ross Swimmer is tremendously well 
qualified. He is a lawyer. He is a banker. He is a former 
tribal leader. He is a former Assistant Secretary. He brings to 
this an incredible understanding of these issues and a 
background that is uniquely well suited to solving these 
problems. And I have been very impressed with the work that I 
have seen him do on these issues. He has been part of our 
consultation process to listen to the tribes and to understand 
their concerns.
    Mr. Pallone. Well, thank you. I don't want to continue, Mr. 
Chairman. Thank you.
    Mr. Hayworth. Thank you, Mr. Pallone.
    The gentleman from New Mexico?
    Mr. Udall of New Mexico. Thank you, Mr. Chairman. And thank 
you, Madam Secretary, for staying around for an additional 
round here.
    Before you became Secretary, the Navajo Nation filed two 
lawsuits against--one against the United States and one against 
Peabody Coal, Salt River Project, and Southern California 
Edison. And the basis of those lawsuits was that the Department 
breached its trust to the Navajo Nation, and the operative set 
of facts involved in those cases revolves around former 
employees, Ross Swimmer, Mr. Griles. They were involved in this 
set of facts.
    My understanding, at least I am informed that one of these 
cases is already in the Court of Claims and a breach of trust 
has been found. So I am asking you, have you looked into these 
conflict of interest issues, the fact of having employees that 
are in--or future employees that are in a lawsuit situation, 
have you looked into that? Or do you intend to look into that?
    Secretary Norton. Without going into the specifics of this 
particular case, what you are saying is that someone who has 
been a Government official in the past and has been sued should 
not be a Government official in the future. And I don't think 
that is really the position that you want to be advocating.
    Mr. Udall of New Mexico. I don't think that is what I am 
saying. I am saying that there are facts here that give rise to 
conflict of interest questions, and I am asking, have you 
looked into them?
    Secretary Norton. I am not aware of anything that raises a 
conflict of interest, and so I would be--
    Mr. Udall of New Mexico. Well, I think--
    Secretary Norton. --happy to hear some further detail from 
you and to discuss a potential conflict of interest. But I am 
not aware of anything other than their previous actions as 
Government officials having been the subject of litigation.
    Mr. Udall of New Mexico. Subject of litigation, and one of 
those suits has, in fact, found a breach of trust, hasn't it? 
And they were both a part of the facts and employees at the 
time.
    Secretary Norton. I would like to defer to the Solicitor's 
office to provide you with the information about that.
    Mr. Udall of New Mexico. That would be great.
    As you know, for 2 months now, checks have gone out to 
trust beneficiaries, individual--they have not gone out to 
individuals or tribal. But we are informed that as of 12/17 the 
court entered an order that allowed you to temporarily turn on 
computers to get these checks out. In fact, the language of the 
order says on page 6, ``Interior may reconnect to the Internet 
for specified periods any information technology system that 
houses or provides access to individual Indian trust data for 
the limited purpose of performing those functions necessary to 
receive, account for, and distribute trust funds or 
appropriated funds or to provide other necessary services.''
    Can you tell me when was the first time the Department 
attempted to use that temporary protocol to get checks out?
    Secretary Norton. If I can just go back through some of the 
issues--
    Mr. Udall of New Mexico. It entered on the 17th. When was 
the first time that you attempted to utilize the power under 
that order to get checks out?
    Secretary Norton. We have felt it necessary in the context 
of the special master's interpretation of that consent order to 
obtain the permission of the special master before going 
forward.
    Mr. Udall of New Mexico. And my understanding is it was 
mid-January. So you waited an entire a month before you 
utilized the procedure. Is that--
    Secretary Norton. That was--the action we took in mid-
January was that we obtained the special master's permission, 
and so we have not proceeded to open up any part of the 
Department's computer system without the permission of the 
special master.
    Mr. Udall of New Mexico. What part of that order was 
ambiguous that I just read? I mean, it seems to me that is for 
a broad, sweeping authority to the Department to hook back up 
and get checks out. What was ambiguous about that order?
    Secretary Norton. It is my understanding that the special 
master and the plaintiffs would likely object were we to reopen 
parts of our computer system without getting advance 
affirmative permission.
    Mr. Udall of New Mexico. But the--you know, you have heard 
today from a number of members the urgency of getting checks 
out. It would seem to me the prudent thing to do would be to 
move forward as quickly as possible to try to get the checks 
out and let the court tell you otherwise rather than go off and 
negotiate with the other side.
    Mr. Hayworth. The gentleman's time has expired.
    Mr. Udall of New Mexico. Could she follow up on--
    Mr. Hayworth. If she wishes to respond, she certainly can 
do so.
    Secretary Norton. I was going to suggest perhaps having Jim 
Cason, who has been the point person on this, to respond to 
your questions. I can provide his opportunity to work with you 
and answer your questions either privately or in front of the 
Committee, whatever is your pleasure.
    Mr. Hayworth. Well, Madam Secretary, you have been 
indulgent with your time. We do have other panels here, and we 
need to get to those questions. I would ask my friend from New 
Mexico, as is the right of all members, to put the questions in 
writing to the Secretary, and those who join her, and anyone 
whom she might identify and have them respond. We will hold 
open the hearing record for 2 weeks to have this information 
included, and it will be available in the public domain.
    Mr. Udall of New Mexico. Thank you, Mr. Chairman. Thank 
you, Madam Secretary, for your appearance here today.
    Mr. Hayworth. Once again, I thank you, Madam Secretary, 
Assistant Secretary McCaleb, and the Special Trustee, for 
coming in and serving on this first panel. We appreciate you 
being very generous with your time today. We understand there 
are many other things, but, again, as I said earlier, I think 
it provides evidence as to your intent to try and work through 
the challenges we face. And though we may not have unanimity on 
every jot and tiddle of public policy, I think all of us 
concerned appreciate your time and attention.
    Thank you.
    Secretary Norton. Thank you.
    Mr. Hayworth. The first panel is excused--or P's and Q's or 
commas and question marks.
    Mr. Hayworth. As we say good-bye to the first panel and 
invite up the second panel, a bit of housekeeping from the 
Chair. In the past, our former Chairman, Don Young, has worked 
with the Inter-Tribal Monitoring Association and has made a 
verbal commitment to continue a dialogue to develop, if 
necessary, further reform legislation to finalize the 
accounting problems with the IIM and tribal accounts. It is my 
privilege in the chair to take the opportunity to welcome Don 
Young's Alaskan on the Board of ITMA, Bill Martin, and to offer 
Mr. Young's continued commitment to work to resolving the trust 
fund issue.
    I turn now to my friend, the ranking member.
    Mr. Rahall. Mr. Chairman, just a housekeeping request, that 
all members--a unanimous consent request--that all members be 
allowed to insert their opening statements, whether they were 
given here today or not.
    Mr. Hayworth. Oh, indeed. Without objection, we will 
continue in that regard. As we welcome up panel No. 2, the 
Chair would first turn to my friend from Montana, who has the 
distinction of welcoming a couple of his constituents from Big 
Sky Country.
    Mr. Rehberg. Thank you, Mr. Chairman. At this time I would 
like to introduce two distinguished guests from the State of 
Montana. The second person, I believe, testifying today is Fred 
Matt, a friend of mine, a tribal Chairman from the Confederated 
Salish and Kootenai Tribe, which is in the beautiful Mission 
Valley of western Montana. It is a 1.3 million acre 
reservation, and Fred has got quite a reputation of being a 
tremendous leader, especially in the area of forestry, and 
something that I want to try and present to this Committee of 
having him help us perhaps in a pilot project with timber 
salvage issues. If you look at what they have been able to 
accomplish on their own reservation, I think you will be duly 
impressed. And thank you, Mr. Matt, for being here today.
    The other is another friend of mine, Elouise Cobell. 
Elouise is a banker, a rancher, and a member of the Blackfeet 
Tribe. She is also the lead plaintiff in Cobell v. Norton. Her 
activity in the trust reform issue is not her first foray into 
activism. She served as the treasurer of the Blackfeet Nation 
and is involved in agricultural and environmental issues in her 
home town of Browning, Montana, up on the eastern border of 
wonderful Glacier National Park. And thank you for being here 
today, Elouise, as well.
    Thank you, Mr. Chairman.
    Mr. Hayworth. I thank the gentleman from Montana. I thank 
the illustrious Montanans who join us. The Chair would also 
welcome as part of the panel Michael Jandreau, the Chairman of 
the Lower Brule Sioux Tribe. We thank you for coming, Mr. 
Chairman. And last in terms of introductions, but not least 
because the Chair is constrained to lavish special attention on 
our first witness, since he has the great and good sense to 
reside in the 6th Congressional District of Arizona, that is my 
long-time friend Ivan Makil, who is the President of the Salt 
River Pima-Maricopa Indian Community and tireless advocate on 
behalf of Native Americans and Indian Country. Mr. President, 
we will let you begin with your testimony.

 STATEMENT OF IVAN MAKIL, PRESIDENT, SALT RIVER PIMA-MARICOPA 
                        INDIAN COMMUNITY

    Mr. Makil. Thank you, Mr. Hayworth. I really appreciate the 
opportunity to be here today, and also Ranking Member Rahall 
and other members of the Committee, distinguished guests.
    I am Ivan Makil, the President of Salt River Pima-Maricopa 
Indian Community. We are located right in the Phoenix 
metropolitan area, approximately 7,000 members, traditionally a 
farming and resource-based community.
    I am particularly pleased that Congressman Hayworth, whose 
district, as he mentioned, does include our community, is 
tasked with the responsibility of chairing this Committee, 
particularly because I know that he is very familiar, and I am 
impressed with the fact that many of the Committee members are 
well versed with this issue. So I won't take a lot of time to 
go back and discuss some of the history that I think we all are 
familiar with. But certainly the complexity of managing Indian 
trusts is extremely complex and certainly is something that you 
can't just turn over to anybody, not anybody, at least, like 
Arthur Andersen.
    Before I propose my recommendation about this issue, I 
really would like to re-emphasize the complexity of this topic, 
because managing of these trust issues is an issue that, as has 
been discussed already, is not just as simple as managing a 
portfolio of stocks and bonds. It is necessary to understand 
the importance of managing trust lands and that the land itself 
must be managed as an asset.
    It is also important to understand that this requires 
recordkeeping of land ownership as well as managing all the 
uses that generate revenue. Activities that take place on these 
lands can rum the gamut from resource management, agriculture, 
to real estate. From the tribal perspective, there is another 
equally important consideration. Tribes are tied to the land 
spiritually and culturally. We are inextricably connected to 
it.
    There is a long history to consider and fiduciary disputes 
that must be resolved. Trusts to be managed not only include 
tribal lands that are under the authority of the Tribal 
Government but also in terms of allotted lands, which has been 
discussed as well. And I could give you a lot of examples of 
that, but I think there has been plenty already given.
    As President for the past 12 years of my tribe, I have 
dealt intimately with these issues, and as to my experience not 
only as Chairman but on the advisory board, I am here to 
recommend a proposed solution based on that experience. I also 
have to say to you that I cannot recommend the bank trust model 
that has been proposed by Secretary Norton.
    I think in addition it is important to say that I have yet 
to hear anything substantive as to the benefits of the proposed 
model. In fact, if asked, I think tribes would tell you that 
there is more that potentially could be lost with that type of 
model.
    You all know the issues and the relationships with the 
Federal Government that we have, whether it is through 
treaties, executive orders, or Federal statutes or other 
regulations. The recommendation that I am proposing maintains 
the role of the Bureau of Indian Affairs and improves its 
effectiveness by focusing on the core issues of trust reform.
    My proposal is an independent Indian trust commission. This 
independent Indian trust commission follows the lines of 
actually what I believe the intent of the 1994 legislation was, 
in which the commission, although it was set up under the 
Office of Special Trustee and an advisory board was set up, the 
advisory board was set up without any authority, only in an 
advisory capacity.
    But this commission would develop a plan for trust reform 
and could recommend legislation to Congress. This commission 
would also include on the make-up of the commission tribal 
leaders with experience in these areas as well as non-members 
with banking, finance, and other relative experience that would 
be necessary.
    This would have to be established by legislation, and 
members could be appointed in several different ways. I think 
the most familiar way is by the President and with the approval 
of Congress. It has got to be independent or at least quasi-
independent of the Department of Interior, and it has to be 
able to provide transparent regulatory oversight.
    This commission would also maintain control over the budget 
that would be earmarked for trust reform and would include, if 
necessary, an exit strategy for the commission.
    I realize that my time has run out, and I will just make 
those comments briefly, and just say that there are examples of 
this type of commission. The FCC is one model, and also the 
RTC, or Resolution Trust Commission, offered a second model.
    I thank you for the time. I realize, again, that my time is 
over, and I would be happy to answer any questions.
    [The prepared statement of Mr. Makil follows:]

  Statement of Ivan Makil, President, Salt River Pima-Maricopa Indian 
                               Community

INTRODUCTION
    Chairman Hansen, Ranking Member Rahall, members of the committee, 
Secretary Norton and members of the Interior department, and 
distinguished guests, I am Ivan Makil, President of the Salt River 
Pima-Maricopa Indian Community. Salt River has over 7,000 members in 
what has traditionally been a farming and resource-based community. 
While I commend the Department for undertaking this monumental task and 
putting its proposal forward, I believe I have some concrete proposals 
that may better serve Indian country and the federal government.
    We applaud the Committee for holding this important hearing and are 
particularly gratified that Congressman Hayworth--whose district 
includes our community--has been tasked with chairing part of this 
hearing because of his intimate knowledge about the Indian trust reform 
issue. My testimony today will focus on five main areas: (1) the 
proposed restructuring plan; (2) the consultation process; (3) the 
impact of the current state of affairs; (4) previous failed efforts to 
reform trust; and most importantly, (5) alternative proposals.
    As President of the SRPMIC for twelve consecutive years, I possess 
extensive personal history, knowledge, and involvement with the lost 
and mismanaged Indian trust funds. At the end of my testimony, I 
respectfully offer my own recommendations to a solution that should, 
once and for all, help to facilitate a successful completion of Indian 
trust reform that is consistent with the federal government's trust 
duties and maintains the dignity and respect that America's first 
people so richly deserve.
PROPOSED RESTRUCTURING PLAN
    As you know, Mr. Chairman, the proposed restructuring of the BIA is 
one of the biggest issues facing Indian country, and it has sparked a 
wide range of emotion throughout Indian country. Many tribal leaders 
have argued vehemently against the newly proposed Bureau of Indian 
Trust Assets Management (BITAM). As a positive and productive response, 
many tribes have drafted a wide variety of options that would 
successfully address trust reform without creating a larger federal 
bureaucracy. The number of alternative options offered by tribes 
demonstrates their own ability and depth in recognizing the core 
problems associated with Indian trust management.
    For many years, tribal leaders have specifically requested that the 
Department focus on the core problems of trust asset management and to 
stop making politically motivated cosmetics changes that only 
exacerbate the issue. Moving organizational boxes around will not solve 
the problem. Unfortunately, many lives in our tribal communities hang 
in the balance. We all know that solving the fundamental problems in 
the BIA trust management system is what must happen programmatically 
regardless of changes in organizational structure.
    Nevertheless, continuing the consultation process and congressional 
hearings are an important step toward solving this terrible dilemma 
that affects the very core of Indian country. I want to make it clear 
that the problem of Indian trust reform has lingered on for too many 
years and for too many years the sound recommendations of Tribal 
leaders have fell on deaf ears. I come here today to lend a helping 
hand to the members of the Committee and to the Department in solving 
this growing problem.
THE CONSULTATION PROCESS
    As far as the consultation process is concerned, I commend the 
Department for extending the original deadline for the consultation 
period. Only with continued consultation with the tribes will a 
workable solution be proposed that will truly reform the trust fund 
process. It is my desire to see it extended yet again to ensure that 
all of Indian country has the opportunity to participate in this 
important process and propose solutions. By continuing consultation, 
the Department will be working in good faith and demonstrate its desire 
to truly work together with Indian country.
    Given the fact that Indian trust reform directly impacts almost 
every Indian tribe in the country, it would make sense that any 
proposal would include the input of the actual benefactors of the trust 
relationship. In this regard, it is my desire to see the department 
provide some much-needed guidance regarding BITAM's affect on the local 
level before finalizing its proposal. I am also concerned that the 
BITAM proposal doesn't address the four breaches identified in the 
Cobell Court Orders. 1
---------------------------------------------------------------------------
    \1\ The Secretary has no written plans for either the gather of 
missing data; no written plan for the retention of IIM trust documents; 
no written architectural plan; no written plan for addressing the 
staffing of trust functions.
---------------------------------------------------------------------------
IMPACT OF THE CURRENT STATE OF AFFAIRS
    Fortunately, as a self-governance tribe 2, we were not 
adversely affected by the recent shutdown of the Department's computer 
system. Through this status, we have taken over many of the services 
from the federal government including our own trust accounting system. 
While our system isn't perfect, we can account for trust assets and we 
continue to issue landowner lease payments in an efficient and 
effective manner.
---------------------------------------------------------------------------
    \2\ The Tribal Self-Governance Act, P.L. 103-413
---------------------------------------------------------------------------
    Our self-governance status also presents an interesting dilemma in 
terms of the proposed creation of the BITAM office. With the BITAM, we 
are concerned about what the impact will be on ``638 contract'' and 
``self-governance'' tribes. I am concerned that the current BITAM 
proposal violates both the spirit and the letter of numerous treaties, 
executive orders, secretarial orders, and federal statutes and 
regulations that promulgate the long standing federal policy of tribal 
self-governance and self-determination. 3 I urge Congress to 
impress upon the Secretary the importance of protecting our treaty and 
trust obligations in developing any proposal regarding trust assets.
---------------------------------------------------------------------------
    \3\ The Indian Self-determination and Education Assistance Act 
(P.L. 93-638), The Indian Trust Fund Management Improvement Act of 
1994, the Federal Oil and Gas Royalty Management Act of 1982, National 
Indian Forest Resources Management Act of 1995, the American Indian 
Agricultural Resource Management Act of 1995
---------------------------------------------------------------------------
PREVIOUS EFFORTS
    As you know, Mr. Chairman, there have been many failed previous 
trust reform efforts. Congress most recently enacted the Trust Reform 
Act of 1994 to address the many trust management shortcomings and to 
provide for effective administration going forward. The ``94 Act 
created the Special Trustee for American Indians, operating within the 
Department, to oversee reform efforts. It also created the Office of 
Special Trustee Advisory Board. As a member of the Advisory Board to 
the Special Trustee, I have a unique perspective on Indian trust fund 
management because I have been working on this issue for many years.
    Over the last five years, we have advised the Special Trustee and 
monitored the Department's trust reform efforts. Although the advisory 
committee has made some pro-active recommendations, the Special Trustee 
hasn't followed through on our proposals. The creation of a new 
approach may be the impetus for real reform and solutions to the lost 
Indian trust funds debacle once and for all.
AN ALTERNATIVE TO TRUST REFORM
    There are many sound options to the proposed BITAM office that may 
be incorporated into the Department's proposal. In conjunction with the 
Department, the National Congress of American Indians (NCAI), has 
convened a tribal leaders task force on trust fund reform. They have 
been meeting for several months now and have put together various 
proposals to solve the trust reform issue. I would encourage Congress 
and the Department to carefully review and debate these and other 
proposals to craft the best possible solution.
    I am particularly interested in a proposal that would establish an 
Independent American Indian Trust Oversight Commission. In reviewing 
the various proposals circulating, it has become evident that this 
proposal, combined with two proposals, could create a viable regulatory 
commission that would avoid the creation of additional bureaucracy. 
Recommendations brought forth by the Advisory Board to the Special 
Trustee, the Van Ness Feldman proposal, and the Inter Tribal Timber 
proposal each have compatible components that are based on sound trust 
fund reform principles.
    The Independent American Indian Trust Oversight Commission would 
have the following structure and purpose:
     It would be established by Congressional legislation
     The Commission members would be appointed by the 
President and approved by Congress
     It would be Independent or Quasi-Independent of the 
Department of Interior
     The Commission would develop a comprehensive plan for 
trust reform
     The Commission would recommend to Congress legislation to 
place responsibility for the reformed trust system and for implementing 
a reinvention of the current archaic process
     The Commission would provide transparent regulatory 
oversight
     It would provide annual progress reports to the President 
approved by the House Committee on Resources and the Senate Committee 
on Indian Affairs
     The Commission would have control over the $67 million 
proposed by the 2003 President's budget request earmarked specifically 
for Indian Trust Reform
     The legislation would have a built-in sunset clause that 
will dismantle the Commission once it achieves it intended purpose
    The Independent American Indian Trust Oversight Commission would 
act in a similar manner to the Federal Communication Commission or the 
Resolution Trust Corporation and would have the authority to effectuate 
real change. The Van Ness Feldman proposal provides an interesting 
comparison between the success of the District of Columbia Financial 
Responsibility and Management Assistance Authority and the Indian Trust 
Fund Management Reform Act. Both were enacted between 1994 and 1995. 
Seven years later, one was a spectacular success and the other a 
miserable failure. The Van Ness Feldman proposal states that, 
``...Congress and the President acted on the well established 
management principle that a system that is in bad-a-shape as the D.C. 
Government or the Indian trust system cannot reform itself from within. 
Reform must be directed from outside and that outside entity must have 
plenary authority to impose the reform.'' With input and critical 
participation from tribes--the benefactors of Indian trust--such a 
proposal could meet with similar success. Many of the other proposals 
have merit. All of them should be examined to help craft the proposal 
that will work and resolve this lingering headache for the federal 
government and Indian country.
SUMMARY
    Mr. Chairman, the solution of the mismanaged Indian trust funds 
problem should be seen as a unique opportunity to right the wrongs of 
the past and not as an attempt to dismantle the BIA. As you know, a 
1998 Department of Interior report showed that there were more than 
340,000 individual Indian trust fund accounts and that more than $300 
million passes through the accounts each year. Tribal leaders and 
members alike have lost faith in a government that was entrusted to 
protect their assets. To restore this trust, we must find a solution to 
this escalating and disturbing problem. The time is now, and I stand 
committed to working with the Committee, the Department, and all of 
Indian country to find a sound and just solution.
    I believe the Department and Indian country are united in the 
effort to reform the trust fund system, but we must act together to 
achieve our goals. Only with a united front between Indian country and 
the federal government will we be able to bring meaningful, achievable, 
and necessary reform to the system. Indian country can and will work 
with Congress and the Department to find the solution, but the 
Department must work with us too.
    In conclusion, Mr. Chairman, I commend you for holding this 
important hearing on one of the most pressing issues facing Indian 
country. I also thank Secretary Norton and Assistant Secretary McCaleb 
for putting tribal consultation on the forefront of their agenda. For 
too long, Congress and the Administration have let this issue drag on. 
With this bold initiative, Indian country is committed now, more than 
ever, to finding a solution to this pressing problem. Again, I 
encourage the Department to extend the consultation period to ensure 
that all tribes are able to participate in this important process and 
propose viable solutions in conjunction with the Department's efforts. 
I also hope that the Department will carefully review and scrutinize 
some of the alternative proposals to BITAM in the hopes of crafting the 
best possible solution for Indian country. I remain committed to 
helping Congress and the Department in this regard.
    Thank you again, Mr. Chairman for allowing me to testify before the 
committee today. I would be happy to remain here to answer any 
questions you or the other committee members may have.
                                 ______
                                 
    Mr. Hayworth. Thank you very much, President Makil. And the 
Chair would remind the witnesses, we do appreciate the effort 
to include these remarks within the 5-minute window, and even 
taking into account that sometimes we go a little bit over, the 
Chair will not try to cut things off too promptly.
    Just one another note. Of course, your full testimony has 
been submitted and will be made part of the record, so it gives 
us a chance to have the synopsis of the bulk of your testimony. 
And we are very appreciate for that.
    And, with that, we turn now to Chairman Matt. Welcome.

 STATEMENT OF D. FRED MATT, CHAIRMAN, THE CONFEDERATED SALISH 
           AND KOOTENAI TRIBES OF THE FLATHEAD NATION

    Mr. Matt. Thank you, and I also will try to be brief, 
because, as you pointed out, we have a more detailed copy of 
our testimony for you to read at your leisure.
    First of all, I would like to recognize the Committee for 
taking the time to have us here, and you as Chairman, Mr. 
Hayworth, and Congressman Rahall and the other members, we 
really appreciate the time, as well as our Congressman from 
Montana, Denny. We really appreciate the honor and the 
opportunity to provide such important information for you to 
help you decipher what is going on in Indian Country. And I 
will try to be brief.
    Congressman Rehberg described our reservation a little bit. 
We have 1.3 million acres. We are in the northwestern part of 
the State, and it is literally God's country. When you pray at 
night, it is a local call. And we have 7,000 members, and I 
really don't even know where to start. Like I said, I am glad 
that we have a written statement, and I am glad most of us do, 
because it is such an important issue to Indian Country that I 
don't even know where to start.
    But I do feel this: You know, I have spent a week here, and 
I have spent some time running the Mall. I try to do exercise 
because that extra 20 pounds is still hanging on. And I pray 
during the time that I do my exercise, and I am thinking, What 
can I say that will help all of Indian Country, because we are 
so different. We are so different in the ways we do business.
    What we want to do at Flathead is try to convey just a 
little part of what we do there, and we are very proud of it 
because we have taken upon ourselves some of those 
responsibilities and some of those things that the BIA has 
traditionally done, and I think we will point out through my 
presentation that it is working. The accounting and all those 
other things is working.
    But I also feel like that the train has left the station 
and we are trying to get on it somewhere. I feel that from the 
rest of our tribal leaders. You know, we rally--there are 
probably more tribal leaders in town than there was at the 
Battle of Little Big Horn. And also, you know, I just can't--I 
feel like that I am looking at you there, you as who is going 
to bail us out of this, who is going to save us. And I feel 
like it is the fourth quarter, and I feel like that we are 
sitting back here--you might even call us the Washington 
Redskins. And we are going to throw this Hail Mary pass to you, 
and I hope you catch that ball, and I hope you do something for 
us as Indian Country.
    I am really impressed with what knowledge is up there. You 
go from folks who have got 27 years of experience that has 
represented this Nation. I really appreciate that experience 
because, believe me, if I spend 1 week in Washington, D.C., 
that is 6 days too long.
    But, with that, now I want to acknowledge one person that 
is in the room that means a lot to us in Montana, and he is 
here for a very specific reason. I would like to acknowledge 
Earl Old Chief. He is the chief of the Blackfeet Nation, and he 
is--Earl, would you please stand?
    Didn't I say Earl Old Person? OK.
    Earl has been around for 30 years, and he has represented 
his people for 30 years, and he has been here many times. And 
not only is Earl a respected leader, but he is also named as a 
plaintiff in the class action lawsuit by the Department of 
Interior.
    It is important that all parties involved realize why Earl 
is here today. He is very concerned, as I am, that the 
litigation that he is a part of may well undermine the very 
principles of tribal sovereignty, and that he has fought so 
hard for to protect for so many years.
    I appreciate again the Committee holding this hearing and 
asking the views of Indian people on the proposed 
reorganization of BIA. For many years, Salish and Kootenai 
Tribe knew that the BIA management of trust resources and other 
trust programs were broken. And we ourselves stated the process 
and made some decisions to do it ourselves. My feeling is we 
can do it and we can do a good job of it. And I think we have 
proven that.
    We have compacted or contracted virtually every function of 
the BIA. We have a superintendent that we keep at the agency as 
a signature authority. We call him the Maytag man. But it is 
just to make a point, that we have--we have repaired dams on--
we have one of the largest irrigation projects in the State of 
Montana--is my time already up? And we have a court system, we 
have law enforcement. And we manage our IIM accounts. We have a 
utility there that services 2,200 Indian and non-Indian 
recipients. And we want a health care system.
    It goes on and on, and we are very proud of that, but 
knowing very well that each tribe that sits behind me and that 
is out there has their own way of doing business. I am not up 
here to say that that is the only way. But I just think bigger 
is not better. I think we, if you ask, if you give us the 
opportunity to offer suggestions, offer comments, offer our 
solutions that we have on the ground dealt with day in and day 
out, we have answers for you. We have professional staff.
    There have been reports that have been referred to, and it 
is made available to all of you to go through. They have spent 
20-some-odd meetings, and there is some good stuff here. Why 
reinvent the wheel? Why don't you just borrow some of the good 
suggestions that are in these reports and go forward? Why 
create a whole new agency that might know something about 
balancing a checkbook, but doesn't necessarily know anything 
about trust responsibility when it comes to timber, as you 
mentioned, and other natural resources.
    So, with that, again, I apologize. My staff that comes with 
me, Anna Sorel and Randall McDonald, they are probably thinking 
that I once again have gone long-winded. But I think the real 
fruit of what I have to say today is in our prepared statement 
for the record.
    [The prepared statement of Mr. Matt follows:]

 Statement of D. Fred Matt, Chairman, Confederated Salish and Kootenai 
                  Tribes (CSKT) of the Flathead Nation

    Chairman Hanson, Ranking Member Rahall and honored Members of the 
House Resources Committee, my name is Fred Matt, and I am Chairman of 
the Confederated Salish and Kootenai Tribes (CSKT) of the Flathead 
Nation. On behalf of my Tribal Council, I am pleased to provide these 
comments regarding the Department of the Interior's proposed 
reorganization of the Bureau of Indian Affairs for the purposes of 
Trust Reform. My comments will focus on the potential impact the 
proposed reorganization may have on tribes like CSKT that have 
exercised the opportunities afforded them by P.L. 93-638 the Indian 
Self-Determination and Education Assistance Act. I will conclude my 
testimony with an alternate proposal for reorganization, which 
addresses the concerns I have identified.
    CSKT joins with other Tribes in recognizing that Individual Indian 
Money (IIM) trust fund accounts have been historically mismanaged. For 
many years, we have called for a complete reconciliation of trust fund 
accounts and continue to make that request so that there may finally be 
justice for the over 300,000 IIM accountholders. We look to the Cobell 
v. Norton court case to ensure that accountholders' rights are 
protected, to the fullest extent of the law. However, the future 
management of Indian (including tribal and individual Indian) financial 
trust accounts and trust asset management must be determined through 
the thoughtful development of applicable business standards and 
consultation with Tribes, not as a response to an on-going court case. 
Many tribes, mine included, have for many years operated BIA programs 
and through this experience can provide meaningful input toward 
effective and long-standing trust management reform. The Department of 
the Interior's proposal to create the Bureau of Indian Trust Asset 
Management (BITAM) does not achieve this result. It is reform for the 
sake of reform and will create far more problems than it will solve.
    Over a decade ago, my Tribal Council recognized that one of the 
primary responsibilities of tribal government was to ensure tribal 
self-sufficiency. Our Tribal Council has held a steadfast commitment 
that it is the responsibility of our government to understand the needs 
of our people, and further, to ensure the needs of our Tribes and 
people are met. This approach is the realization of the principles of 
self-determination and self-governance, and results in programs that 
match my people's needs in a way that programs designed in Washington 
D.C. could never do. The CSKT commitment to Tribal self-sufficiency is 
also fulfilled through our efforts in self-governance. We have 
fulfilled this responsibility by exercising the opportunities provided 
in Public Law 93-638, the Indian Self-Determination and Education 
Assistance Act of 1975, as amended. CSKT is one of the original ten 
tribes selected to participate in the Self-Governance Demonstration 
Project of the DOI. Since that time, we assumed the management and 
operation of all of the services, programs and functions previously 
provided by the Bureau of Indian Affairs at the Flathead Agency except 
for the irrigation division of the Flathead Indian Irrigation Project 
(FIIP). We are extremely proud of our P.L. 93-638 contract for 
operation of Mission Valley Power, the power division of FIIP that 
provides electricity to over 22,000 Indian and non-Indian consumers 
throughout the reservation area. Under our administration, MVP has kept 
power rates low and has won numerous management awards.
    CSKT has also assumed the management of the BIA Real Estate 
Services including appraisals. Although this is clearly a trust 
function, we have developed a streamlined approach for the Tribes to 
provide this function. Our Tribal appraiser produces appraisals for 
review and approval by the federal official for the Region. The 
Regional official reviews the appraisal to ensure that all federal 
standards and requirements are met. Once the official is confident the 
appraisal is correct, he then signs off on it.
    There are many other examples of our quality management of federal 
programs. We operate the Land Titles and Records Office (and are one of 
the few tribes in the country to do so), the entire Indian Health 
Service health delivery system for nearly 10,000 beneficiaries and 
provide law enforcement within the exterior boundaries of our 1.3 
million acre reservation that includes portions of four Montana 
counties.
    Unlike DOI accounts managed by the Federal Government, each year 
our Tribes' accounting management undergoes an intensive external 
financial audit according to standards developed by the Federal 
government. I am proud to report our Tribes' audits over the past years 
are clean with no material weaknesses identified. Furthermore, each 
year the Department of the Interior's Office of American Indian Trust 
conducts a trust evaluation on all BIA programs our Tribes have 
assumed. Again, I am proud to report our Tribes' operation meets or 
exceeds the standards set forth in their evaluation.
    The proposed DOI BITAM reorganization of the trust functions, 
including the transfer of all trust programs such as natural resource 
and realty programs, is alarming because it poses a threat to our 
Tribes' ability to manage and operate programs. Our experience is that 
it is extremely difficult, if not impossible to access programs not 
located in the BIA (which will include programs in BITAM if 
transferred). It is critical to recognize that P.L. 93-638 applies to 
BIA programs differently than it applies to DOI programs located 
outside the BIA, which are referred to as ``non-BIA programs.'' We have 
experienced that non-BIA programs are zealously guarded by the agencies 
operating them. The effect is that Tribes have been stymied in their 
endeavors to manage federal functions not located in the BIA. This is 
demonstrated by the few number of non-BIA Self-Governance agreements 
successfully negotiated by Tribes and DOI.
    For example, CSKT has attempted to manage two programs located 
outside the BIA. The first is the National Bison Range. It is a refuge 
managed by DOI U.S. Fish and Wildlife Service. Under federal 
regulation, for a Tribe to assume operation of a non-BIA program, the 
tribe must demonstrate a geographic, historic and cultural connection. 
In our case, CSKT clearly exceeds the burden required by the federal 
regulation. First, the refuge is completely located in the heart of the 
Reservation, on land taken from the Tribes after the reservation was 
established. Second, history credits our late Chairman Michael T. 
Pablo's family with saving the buffalo from extinction as they raised 
the herd of buffalo eventually bought by the United States government 
as the foundation stock on the National Bison Range. And finally, there 
is clear cultural connection between bison and tribes. Yet our effort 
to manage the National Bison Range under a Self-Governance agreement, 
which began immediately after the Tribal Self-Governance Act of 1994 
(Title IV of 93-638) was enacted, has been continually thwarted by DOI.
    Another CSKT experience in assuming operation of a non-BIA program 
was the Financial Trust Services (FTS) including the Individual Indian 
Monies Program (IIM) from the Office of Trust Fund Management (OTFM). 
Although the FTS program is clearly for the benefit of Indian people 
and formerly administered in the BIA, it is now considered a non-BIA 
program and guided by the federal regulations for non-BIA programs. 
Unlike Title IV regulations for the BIA, the Title IV non-BIA 
regulations allow the bureaucracy to determine if and how a program 
will transfer to a Tribe. Unfortunately when the decision arises to 
transfer a federal program to the Tribes, it is the federal government 
that retains final authority, not the Tribes. Faced with the non-BIA 
regulations in negotiating, CSKT decided to set aside important 
principles of Self-Governance in order to reach an agreement to operate 
the FTS program locally when it became clear that OTFM would not 
otherwise agree.
    Since the first agreement was signed between CSKT and OTFM to 
operate the IIM program, there has been a continual erosion of tribal 
opportunity to manage the program. During the first years of operation, 
our IIM program was able to make changes, such as address changes to 
the accounts. Now, all changes, including simple address changes, must 
be forwarded to Albuquerque, NM for processing at a central location. 
Changes to accounts that require the signature of a federal official 
that formerly were signed off by the Agency superintendent must now be 
sent to Portland, OR and then to Albuquerque, NM. CSKT has become a 
paper-processing program and any meaningful work has been transferred 
to the OTFM Central Office. CSKT has every reason to believe the same 
thing or worse will occur should BITAM be implemented. In the name of 
trust reform, programs will be centralized instead of being delegated 
to the local level where we have expertise in implementation. This 
would be devastating to our Tribes and the effective tribal operation 
we have put in place.
    Nowhere in Secretary Norton's proposal to create BITAM are these 
concerns addressed. Representatives from my Tribal Council have 
attended four of the consultation meetings the DOI has conducted on 
this proposal. Each time the tribes in attendance have asked DOI to 
explain the impact this proposal will have on tribal contracting or 
compacting of BIA programs, but to no avail. There is no answer because 
when the proposal was made this critically important question, among so 
many important issues, was not considered. This is not acceptable. 
Assurance must be made that federal regulations governing BIA programs 
for contracting and compacting purposes will remain the same. Tribes 
have not created this problem and should not be punished for DOI's 
mismanagement. The Cobell case should not be used by either the 
plaintiffs or the Department to gut the great legacy left by President 
Richard Nixon to the Indian people: the Indian Self-Determination Act.
    There are going to be major problems between the BITAM and the BIA 
and Indian tribes if this reorganization is allowed to proceed. There 
will be finger pointing between the BITAM and the BIA unless the BITAM 
is given almost all jurisdiction now retained by the BIA. If that is 
the plan, why not simply clean up the BIA? Merely transferring programs 
from one box to another will not lead to substantive change.
    I have explained our Tribes' self-governance experience to 
demonstrate the capability of tribes to manage trust programs to a high 
standard and this must be allowed to continue.
    As the Committee has requested, the Tribes have developed an 
alternate proposal to BITAM even if it might be somewhat premature 
since BITAM has generated more questions than answers. CSKT submits the 
following as one option available to meet the objectives set forth in 
the EDS Report commissioned by the DOI including the primary objective 
to consolidate trust functions under a single individual for 
accountability purposes. Our proposal uses the final Report of the 
Joint Tribal / DOI / BIA Advisory Task Force on Bureau of Indian 
Affairs (BIA) Reorganization, which was chartered by Mr. Manual Lujan, 
Jr., Secretary of the Interior on December 20, 1990. The final Report 
of the Advisory Council was submitted in August 1994. The Task Force 
included three tribal representatives from the 12 BIA areas, two 
representatives from the Department of the Interior and five BIA 
employees. The Task Force met 22 times over a four-year period and 
throughout the United States. At each meeting, they made an effort to 
incorporate the views of the tribes of the local area into their final 
recommendations. All meetings were open to any tribal representative, 
regardless of whether they were officially on the Task Force.
    We propose, as the Task Force's final Report recommended, the 
creation of three separate tiers in the BIA. The first tier is the 
Office of the Assistant Secretary including a number of administrative 
support offices. It is in this tier that uniform standards would be 
developed for all trust functions. The second tier would combine the 
current Central Office functions and the regional offices that would be 
restructured to provide integrated operational and technical services. 
To meet the objectives of trust reform, CSKT recommends this tier have 
three Branches, each headed by a Commissioner who would be nominated by 
the President and approved by the United States Senate to ensure 
continued Congressional involvement in this issue. The Branches would 
have the following responsibilities: The first Branch would be 
responsible for the Financial Trust Accounting. The second Branch would 
be responsible for the management of tangible trust assets that 
generate revenue for the Tribes and individual allottees, such as 
natural resources. The third Branch would manage all remaining programs 
within the BIA. Most importantly, this approach consolidates the 
financial accountability under a single high-level individual, the 
Assistant Secretary of Indian Affairs. It is in this tier that the 
monitoring and evaluation of implementation of uniform standards would 
occur. The third tier would be the agency / field office level where 
the operations according to the uniform standards would be delivered, 
with proper delegations of authority to fulfill the trust 
responsibilities of United States government.
    The foundation of our proposed organization is the development of 
uniform standards for the delivery of trust standards. The tribes and 
DOI would mutually develop these standards but in accordance with trust 
law principles while taking into account the uniqueness of tribal trust 
law and cultural concerns. All BIA services would be provided according 
to these standards regardless of whether they were provided by the BIA 
or contracted or compacted by tribes. Monitoring and financial auditing 
will be essential components of the new delivery system. I have 
attached an organizational proposal for your consideration.
    Thank you for allowing me to testify and for understanding the 
perspective of the Confederated Salish and Kootenai Tribes of the 
Flathead Nation.
                                 ______
                                 
                                 [GRAPHIC] [TIFF OMITTED] T7526.002
                                 
    Mr. Hayworth. Thank you, Mr. Chairman. I wouldn't worry too 
much about that. That seems to be kind of a common affliction 
in Washington, D.C., to have a bit of verbosity. I know whereof 
you speak, so I appreciate the spirit in which you offer those 
remarks.
    Chairman Jandreau, welcome. We look forward to hearing your 
thoughts.

  STATEMENT OF MICHAEL JANDREAU, CHAIRMAN, LOWER BRULE SIOUX 
                             TRIBE

    Mr. Jandreau. I thought he wasn't going to share this mike 
with me.
    Mr. Hayworth, Ranking Member Rahall, it is a pleasure that 
I come here before you today. My name is Michael Jandreau. I am 
the Chairman of the Lower Brule Sioux Tribe, and I am Chairman 
of the United Sioux Tribes. I am also a member of the task 
force that has been recently created. I also was a part of the 
original task force for the reorganization of the Bureau back 
in 1990, in that era.
    I have a statement that has been submitted to the 
Committee, so I will speak of some things that affect me and 
affect our region of the country.
    I spent a weekend with a group of people who were very 
intensely concerned about the problem that we have before us. I 
had spent the previous week with our delegation, our entire 
delegation, attempting to get a seat here to speak to you 
today. On Monday morning, I was called and told my only living 
blood uncle had passed away, and my family wanted me back home 
because I am one of the older ones in the family.
    Because of the difficulty, I wasn't able to go right away, 
and so, you know, preparations were made for me to be able to 
leave today and to return home.
    My uncle also served as a chairman of our tribe and as a 
council member. He dealt with many of the things that I find 
myself dealing with today.
    My statement will talk to you about our concerns, about the 
many attempts to do things with the Bureau of Indian Affairs, 
to make services more appropriate and more accessible to our 
people.
    My statement will also tell you that we don't need 
Committees making decisions with the Office of the Special 
Trustee or anyone else about the future of Indian Country.
    My statement will also tell you about the hardships that 
our people are enduring, in the Aberdeen area, the highest 
death rate, where diabetes and alcoholism is prevalent.
    My statement will tell you that we want to be a part of the 
process to deliver services, that we want to be a part of the 
process to correct the wrongs, to correct the inadequacies.
    My statement will tell you that we want the Bureau of 
Indian Affairs left intact, that we feel under the treaties 
that were made with most of the tribes of my area, that those 
treaties created this trust obligation.
    We know that the treaties have not been honored to the 
extent that they have been passed. But we know that we still 
believe in the content.
    My statement will tell you that our tribes are trying to 
survive. Our tribes are dealing with those resources. On an 
individual level, my particular tribe has the largest 
irrigation project. We have a full-blown hunting and fishing 
project. We are doing things with the computer industry to 
create jobs. We are trying to take care of ourselves. We 
believe in what we are doing, but we also believe not only in 
the real but the moral responsibility that this country owes to 
us, not from the point of being just a victim, but being a 
victim whose real desire is to make life better for those 
people on our reservation and reservations.
    Again, thank you very much for giving me this opportunity.
    [The prepared statement of Mr. Jandreau follows:]

    Statement of Michael Jandreau, Chairman, Lower Brule Sioux Tribe

    I would like to thank you, Chairman Hansen, and Ranking Member 
Rahall for providing me with the opportunity to testify before this 
committee on this extremely important issue. My name is Michael 
Jandreau and I am the chairman of the Lower Brule Sioux Tribe in South 
Dakota. I am here today representing the Great Plains Region, which 
include the 16 tribes in North Dakota, South Dakota, and Nebraska.
    Indian Country is facing many pressing issues that would be 
excellent topics for a Congressional hearing. Indian health care is one 
example. The Great Plains Region leads the country in almost every 
negative health statistic available. We have the lowest life expectancy 
of any group in the country, and alcoholism and diabetes are ravaging 
our communities. There are also pressing economic development needs. 
According to 2000 Census figures, South Dakota Indian Reservations are 
home to five of the poorest counties per capita in the entire United 
States. We have an average unemployment rate of 75% on reservations 
throughout the Great Plains.
    While these are issues that we look forward to working with this 
committee to address, we are here today discussing BIA reorganization, 
trust reform, and our concern about losing the already scarce resources 
we have available to us at the local government level.
    The issues of trust reform and reorganization within the BIA are 
nothing new to us in Indian Country. We have endured many efforts--some 
well intentioned and some clearly not--to fix, reform, adjust, improve, 
streamline, downsize, and even terminate the BIA and its trust 
activities. We have endured these efforts through both Republican and 
Democratic administrations. Unfortunately, they have rarely sought 
meaningful involvement from tribal leadership, nor recognized the 
federal government's treaty obligations to tribes. These are both 
critical if we hope to find a workable solution to this very real 
problem.
    The Bush Administration recently announced the latest effort to 
reorganize these structures and shuffle responsibilities--this one 
mandated by a federal court. The Administration responded to the 
demands of the court by quickly drafting a plan to fix the trust mess. 
However, it did so without consulting the very people who would be 
affected by such a massive restructuring--Indians. Not surprisingly, 
this proposal has been met with concern, suspicion, fear, and even 
outrage from Indian people across the country. BIA reorganization has 
become the most important issue on our reservations.
    As in the past, this proposal did not seek early input from elected 
Indian leaders. In fact, we were not consulted until the Administration 
had devised and released a plan. It was only in response to our 
unanimous rejection that a consultation process was devised and 
instituted.
    Open listening sessions have been held across the country, and now 
a Tribal Task Force has been formed to meet with Interior Department 
officials to discuss trust reform and the reorganization of the BIA. I 
sit on that task force. This should have been the first step in the 
process, not the last.
    I am very concerned because the Court Monitor, Joseph S. Keiffer, 
III, in his most recent report to the U.S. District Court for the 
District of Columbia, stated that the Office of Indian Trust Transition 
(OITT) will continue to pursue trust reform activities while the 
consultation process continues. How can the Department of Interior be 
meeting with tribal leaders to discuss the reform of the BIA, while the 
OITT is simultaneously working implement trust reform measures that 
have not been (and will not be) discussed with tribal leaders? Mr. 
Chairman, if this is consultation then we are doomed even before we 
start.
    Another group, the Special Trustees Advisory Board has recommended 
and supported the creation of an entirely new agency to be solely 
responsible to manage the federal government's ``trust 
responsibilities.'' It recommends that the new agency provide a 
historical accounting of assets of individual Indians and tribes, data 
cleanup and future management of these activities out side the BIA.
    While these are not unimportant steps, they miss the bigger 
picture. Tribal leaders have stressed that trust responsibility goes 
much deeper than finding and implementing certain management tools. The 
federal government must act in light of the moral obligation to tribes 
that it has voluntarily assumed. This obligation is reinforced by the 
fact that the federal government signed treaties with sovereign Indian 
tribal governments, not individual Indians or members of any advisory 
board. During the listening sessions and other dialog, this strong 
belief has resonated throughout each conversation that tribal leaders 
have with the administration and Congress.
    If we want a solution that works, I feel all of the OITT's ongoing 
activity must be stopped. Furthermore, it is not enough that a plan 
simply be agreed to or endorsed by the Special Trustee's Advisory 
Board. Elected representatives of tribal nations must be consulted 
throughout the entire process, and their ideas must be incorporated 
into any solution. Without this, we will end up with another reform 
attempt that costs taxpayers millions of dollars, undermines local 
tribal self-determination, and does nothing to solve the problem. Let's 
not forget that we are here today because similar reform attempts have 
failed in the past.
    It is no secret that the federal government has failed in its 
mission to correctly manage the assets of our Indian people. We need an 
accountable entity that will find a solution and resolve the past 
mismanagement problems. But any effort to find a solution should not be 
at the expense of Indian people across this country. The lives of our 
people are difficult on a good day. Our people must deal with poverty, 
alcoholism, shortened life expectancy, inadequate housing, lack of 
transportation, and other challenges. They look to tribal governments 
for assistance, and we look to all levels of the federal government for 
the resources we need to deal effectively with these problems. We will 
only be successful if the lives of these people are bettered by the 
outcome of this process. We are very concerned that taking 
responsibilities, manpower, authority, prestige and massive resources 
away from the BIA, while creating an entirely new, expensive, out of 
reach bureaucracy, does nothing to better the lives of our Indian 
people back home on our reservations.
    For these reasons, we cannot support the idea of stripping the 
``trust responsibilities'' from the BIA to create a new agency. For 
Indian people, the BIA is synonymous with trust responsibility. We know 
that trust reform management must be reorganized and consolidated under 
one entity, but that entity should remain under one assistant secretary 
within the BIA. This will drive a solution to the problem, but will not 
pillage the resources that tribal governments need to govern 
effectively and provide efficient services to their people.
    You cannot take the heart out of a man and expect him to live. If 
you take away the ``trust'' then we, as Indian people, will eventually 
die. That is how we are viewing the reorganization plan by this 
Administration. It takes our elders back to that dark time prior to the 
Reorganization Act of 1934, when their land and assets were 
disappearing because the government was not upholding its treaty 
obligations. It is our hope that this administration does not seek to 
destroy the reservation system as we know it and terminate of their 
treaty responsibilities to tribal governments. I stand ready to work 
with this committee and with all parties who are interested in finding 
a solution to this problem that will help those who need it most--
Indian people.
    Thank you and I am ready to answer any questions that the committee 
may have.
                                 ______
                                 
    Mr. Hayworth. Chairman Jandreau, we thank you very much for 
your testimony here today.
    Now we turn to our friend, Congressman Rehberg's 
constituent, Ms. Cobell. Welcome once again.

       STATEMENT OF ELOUISE COBELL, IIM TRUST BENEFICIARY

    Ms. Cobell. Thank you for this opportunity to address the 
Committee on the issue of reform of the Individual Indian 
Monies, and I would like to state at the outset this is 
different from the tribal trust monies.
    I would also like to thank Congressman Rehberg for that 
wonderful introduction, and I would also like to recognize 
members of my tribe that are here with me today: Chairman Old 
Person, Councilman James Sankador, and Councilman Irvin 
Carlson.
    The history of mismanagement of the IIM trust is long and 
tortured, but it boils down to three must-do's: The IIM trust 
system must be fixed; the IIM beneficiaries must be provided an 
accounting; restitution must be made. The true trust reform 
will require a restatement of individual Indian trusts. More 
than $100 billion in trust deposits, interest, and accruals 
remain unaccounted for. A senior trust official testified last 
month in a court, stating that not yet have the Department of 
Interior been at the starting gate as far as it goes for an 
accounting.
    Trust funds are not a handout or an entitlement program. It 
is very important to keep in mind that this is our money--
revenue from leases for oil, gas, drilling, grazing, logging, 
mineral extractions on Indian lands. This individual Indian 
trust was devised by the U.S. Government and imposed on Indian 
peoples more than a century ago. As trustee, the United States 
and each branch of the Federal Government has the highest 
legal, fiduciary responsibility to manage the individual Indian 
trust in a professional manner, exclusively for the benefit of 
individual Indian trust beneficiaries.
    Unfortunately, this has been and remains a severely broken 
trust. Hundreds of thousands of American citizens, the 
individual Indian trust beneficiaries, have won decisively at 
every stage of our litigation. Now we are in the middle of a 
contempt trial for Secretary Norton and Assistant Secretary of 
Indian Affairs Neal McCaleb for violating court orders and for 
perpetuating a fraud on the court. I have no doubt that they 
will be held in contempt. Meanwhile, tens of billions of 
dollars have been appropriated by this Congress to defend the 
fraud, deceit, and malfeasance of the Interior Secretary and 
the Treasury Secretary.
    Only yesterday the judge chastised Secretary Norton for her 
totally improper request to circumvent a court order in order 
to try to provide confidential financial information to this 
Committee. The judge said, ``Secretary Norton has demonstrated 
once again her total inability to understand the role of a 
trustee in relationship to a beneficiary by seeking release to 
Congress, knowing that it would be made public, the 
confidential financial information of these beneficiaries.'' I 
certainly agree with Congressman Rahall that nobody of this 
Committee would like to have all their financial transactions 
provided to the general public.
    Despite being ordered by Congress and the courts to reform 
the trust and provide a historical accounting, testimony in the 
contempt trial going on now shows that the Secretary of 
Interior has done nothing--nothing--to comply.
    The administration's mindless battle to prolong this case 
in the face of certain defeat is an indefensible waste of 
judicial resources and an assault to the Native Americans, 
taxpayers, and anybody with integrity.
    Mr. Chairman, the individual Indian trust beneficiaries 
have asked Judge Lamberth to strip control of the trust away 
from the Secretary of Interior and place it in the temporary 
hands of a receiver. The bottom line is that the Bush 
administration is under a court order to account for more than 
$100 billion in individual Indian trust monies and as utterly 
refused to do so.
    Judge Lamberth has appointed both a special master, Alan 
Balaran, and a court monitor, Joseph S. Kieffer III, to help 
force compliance with the court orders and to assess Interior's 
true progress on trust reform and the validity of its quarterly 
reports to the court. Four scathing reports by the court 
monitor formed the basis of four contempt charges against 
Norton and McCaleb. A separate report by the special master on 
the utter lack of computer security for IIM accounting data let 
the fifth court of contempt. Altogether, Mr. Kieffer has issued 
six reports that amount to a searing indictment of Secretary 
Norton, Secretary O'Neill, and Attorney General Ashcroft in 
this matter.
    Secretary Norton and her inner circle of senior officials 
have now proposed a drastic reorganization of trust 
responsibility into a new Bureau of Indian Trust Asset 
Management. Because she has done this so late in the day and 
suddenly and without proper consultation with tribes, as 
required by law, her actions appear to be a desperate attempt 
to stave off contempt. The proposal has met with very strong 
opposition throughout Indian Country. Among its flaws, it would 
merge the tribal trust with the IIM trust under one entity, 
ignoring the trusts' two distinctly different functions, 
constituencies, and histories. This plan will undermine not 
protect tribal sovereignty. It will violate IIM account 
holders' own direct relationship with the Federal Government, 
established by law.
    The most critical defect in the Secretary's proposal is 
that it would leave the trust in the Interior control at the 
mercy of the same inept managers. Mr. Chairman, it is our hope 
that this Committee and Congress will terminate all 
appropriations needed by Interior Secretary, the Treasury 
Secretary, and Attorney General to continue their bad-faith 
legal defense. Instead, we ask you to support the individual 
Indian trust beneficiaries' request for appointment of a 
receiver under the supervision of the judiciary as the only 
rational solution for the Government to fix individual Indian 
Trusts. Congress has appropriated more than $614 million for 
trust reform since 1996, and it has gotten virtually nothing--
no accounting of individual Indian trust monies, no 
rehabilitation of a woeful system, no improvements in 
information technology.
    As the court monitor stated, ``Who within the Department of 
Interior will hold these officials accountable for past and 
present harm caused to the IIM account holders for their 
unprofessional conduct and misleading reports that covered up 
and hid the most serious of their failures?'' Apparently no 
one, because they remain in leadership positions, involved with 
trust operations, and related management and legal activities, 
or have moved on to equivalent senior positions within the 
Department of Interior.
    I believe strongly that further appropriations for trust 
reform should be fenced in to be used by a receiver and not the 
failed programs of the past defense of the indefensible 
litigation. The individual Indian trust should be put in the 
intensive care of a receiver supervised by Judge Lamberth until 
it has been rehabilitated fully and restored to health.
    In summary, instead of underwriting non-existent trust 
reform, a skilled trustee for individual Indian trust--
protected from politics and funded with permanent and 
indefinite appropriations--could hire proficient managers 
desperately needed to ensure prudent management of the multi-
billion dollar trust. The goal here is simple: Stop playing 
politics with our money and our people.
    Our litigation has exposed an ugly story about arrogance 
and ineptness. But with the help of this Committee, we can 
begin to write a new chapter. I appreciate this chance to 
testify before you.
    [The prepared statement of Ms. Cobell follows:]

           Statement of Elouise Cobell, IIM Trust Beneficiary

    Thank you, Mr. Chairman, for this opportunity to address the 
Committee on the issue of reform of the Individual Indian Monies (IIM) 
trust.
    The history of mismanagement of the IIM trust is long and tortured, 
but it boils down to three ``must-do's'':
     The IIM trust system must be fixed. The Secretary of the 
Interior has ignored the will of Congress and misled Congress for 
decades. Since December 1996, the Interior Secretary has ignored orders 
entered by Judge Royce C. Lamberth of the U.S. District Court for the 
District of Columbia. Nothing has changed. Since the Interior Secretary 
continues to breach the trust duties owed by the United States 
government to individual Indian trust beneficiaries and Congress 
clearly is unable to compel an obdurate member of the President's 
Cabinet to obey the law and discharge the trust duties conferred on her 
by Congress, it is time for Judge Lamberth, with the support of 
Congress, to place the IIM trust in receivership.
     The IIM beneficiaries must be provided an accounting. 
Reportedly, at least $500 million a year in trust revenues is generated 
from individual Indian-owned lands. Where is the money? The Interior 
Secretary has demonstrated through the fraud she has perpetrated on the 
United States District Court and the United States Court of Appeals 
that she no longer should be trusted to manage or account for 
Individual Indian Trust funds.
     Restitution must be made. True trust reform will require 
a re-statement of the Individual Indian Trust. More than $100 billion 
in trust deposits, interest and accruals remains unaccounted for. We 
hope that this year, Judge Lamberth will set a trial date to determine 
the full amount due to the individual Indian trust beneficiaries.
    Mr. Chairman, the IIM trust is supposed to be the mechanism by 
which revenues from Indian-owned lands throughout the Western states 
are collected and distributed to approximately 500,000 current 
individual Indian trust beneficiaries. This trust is a vital lifeline 
for Native Americans, many of whom are among the poorest people in this 
country. Where I live, in Glacier County, Montana, the home of the 
Blackfeet Nation and one of the 25 poorest counties in the United 
States, I can tell you that many people depend on these payments for 
the bare necessities of life. These trust checks are not a luxury. 
Trust funds are not a handout or an entitlement program. It is very 
important to keep in mind that this is our money--revenue from leases 
for oil and gas drilling, grazing, logging and mineral extraction on 
Indian lands. This Individual Indian Trust was devised by the United 
States government and imposed on Indian peoples more than a century 
ago. As trustee, the United States and each branch of the federal 
government has the highest legal and fiduciary responsibility to manage 
the Individual Indian Trust in a scrupulously professional manner, 
exclusively for the benefit of Individual Indian Trust beneficiaries.
    Unfortunately--as you and many of the members of this Committee are 
well aware, Mr. Chairman--this has been, and remains, a severely broken 
trust. The mismanagement of the Individual Indian Trust by the United 
States government for more than 120 years is a national disgrace. The 
refusal of the Executive Branch to fix it is appalling. The failure of 
Congress to act decisively to hold the Interior Secretary accountable 
for her malfeasance is disturbing and indefensible. Since we initiated 
class action litigation in 1996 to enforce the trust obligations owed 
by the United States to individual Indian trust beneficiaries, I have 
said many times to our legal team that the government's bad faith and 
misconduct simply cannot get any worse. And each time I've been wrong. 
It gets worse and worse and worse--in spite of humiliating courtroom 
defeats, in spite of scathing reports by court-appointed watchdogs and 
the government's own consultants and experts, in spite of shameful news 
coverage and editorials in the media, and in spite of repeated warnings 
and admonitions from the Congress. The Interior and Treasury 
Secretaries' malfeasance strains the limits of our language. The courts 
and Congress have used some of the strongest rhetoric I have ever seen 
to describe the injustice being done to the individual Indian trust 
beneficiaries, and still the Secretary of the Interior, the Secretary 
of the Treasury and the Attorney General fight on against us and defend 
the legally and morally indefensible. Why? Where has Congress been 
while this mugging has gone on for nearly six years a few blocks away 
from this hearing room? Where is the outrage from this body? Why has 
Congress turned its back on Indian people again?
    Mr. Chairman, I would like to make this clear at the outset to the 
members of the Committee: Hundreds of thousands of American citizens--
the individual Indian trust beneficiaries--have won decisively at every 
stage of this litigation. More than two years ago--in December 1999--we 
won a landmark decision at the U.S. District Court. The Justice 
Department appealed that decision, and we won unanimously at the 
appellate level a year ago--in February 2001. Two members of President 
Clinton's Cabinet--Messrs. Rubin and Babbitt--were held in contempt of 
court in February 1999 for violating court orders and covering up their 
violations, and the taxpayers paid their $630,000 fine. Now we are in 
the middle of a contempt trial for Secretary Norton and Assistant 
Secretary for Indian Affairs Neal McCaleb for violating court orders 
and for perpetrating a fraud on the court, and I have no doubt that 
they, too, will be held in contempt. Tens of millions of dollars have 
been appropriated by this Congress to defend the fraud, deceit and 
malfeasance of the Interior Secretary and the Treasury Secretary.
    Judge Lamberth already has ruled that the Secretary's abject 
failure to provide even minimal computer security protection for 
individual Indian trust data and trust funds is contemptible on its 
face. She also faces charges of failing to begin to provide an 
historical accounting to the individual Indian trust beneficiaries 
(more than seven years after Congress ordered them to do so and more 
than two years after Judge Lamberth ordered them to do so), and 
submitting false report after false report to the court. Despite being 
ordered by Congress and the courts to reform the trust and provide the 
historical accounting, testimony in the contempt trial going on now 
shows that the Secretary of the Interior has done nothing--nothing--to 
comply. The Administration's mindless battle to prolong this case--in 
the face of certain defeat--is an indefensible waste of judicial 
resources and an insult to both Native Americans, taxpayers and anyone 
with integrity.
    Mr. Chairman, the individual Indian trust beneficiaries have asked 
Judge Lamberth to strip control of the trust away from the Secretary of 
the Interior and place it temporarily in the hands of a receiver. If 
Judge Lamberth finds Secretary Norton in contempt, as we hope he will, 
it will clear the way for the judge to do just that. The judge has said 
in court recently that he is proceeding carefully in this contempt 
trial--giving the government all the rope it wants--because no court 
has put an agency of the Executive Branch into receivership the history 
of this nation. But that is exactly where we are headed. And it will be 
a fine day when it happens, too. I would like to return to this subject 
in a moment to explain why we have asked for receivership, why a 
receiver is immensely preferable to Secretary Norton's ill-advised, 
last-minute reorganization plan for the BIA, and why the support of 
Congress for receivership is important.
    If the Secretary is found in contempt and the Individual Indian 
Trust is placed, at last, in the competent hands of a receiver, I hope 
we can move to trial on the final issue--a restatement or correction of 
the Individual Indian Trust balances--before the end of the year 
(subject, of course, to the court's discretion and schedule). In 1999, 
Judge Lamberth and the U.S. Court of Appeals ordered the Secretaries of 
Interior and Treasury to provide individual Indian trust beneficiaries 
with an historical accounting of ``all'' trust revenues, withdrawals 
and accruals. However, Mr. Chairman, Interior has done nothing. A 
senior trust official testified last month that Interior ``is not yet 
at the starting gate'' on an accounting. In fact, he testified that 
Interior officials are still debating internally what the term 
``historical accounting'' means. Secretary Norton's most recent 
Quarterly Report to the court acknowledges that her department's trust 
reform master plan has been shelved. A $3 million consultant's report 
to Interior advises starting over. Even if Interior and Treasury were 
acting in good faith, they are unable to provide an accounting because 
they have destroyed, and continue to destroy, the individual Indian 
trust records (making the Enron debacle seem to be trivial in 
comparison). They also have spent $36 million ``so far'' on a new trust 
accounting computer system that does not work and will have to be 
scrapped.
    The bottom line is that the Bush Administration is under court 
order to account for more than $100 billion in Individual Indian Trust 
monies and has utterly refused to do so. Judge Lamberth will decide in 
the upcoming trial how much of those funds must be restored to correct 
the stated IIM trust balances. That figure is yet to be determined 
finally, but if we go to trial it likely will be much more than $100 
billion. Despite this impending financial train wreck and continuing 
legal humiliation--despite the oaths that the government's lawyers take 
as officers of the court--the Interior Secretary, the Treasury 
Secretary and the Attorney General march on, too arrogant to enter into 
good-faith settlement discussions that could cut this fiasco short, 
spare the court's time and energy and somewhat soften the Executive 
Branch's dishonor.
    Mr. Chairman, I believe it would be helpful at this point to 
summarize very briefly the history of the Individual Indian Trust and 
how the Executive Branch has arrived at this state of disgrace while 
Congress has turned its back on Indian people.
    The IIM trust derives from the 1887 General Allotment Act (the 
``Dawes Act''), which, as Judge Lamberth has noted, was ``driven by a 
greed for the land holdings of the tribes.'' [Judge Lamberth's Dec. 21, 
1999 decision in the Cobell case contains a concise history of the 
trust. It is posted on the Cobell plaintiffs' web site at 
www.indiantrust.com, under Court Rulings.] Under Dawes, tribes were 
paid for their land and each head of household was allotted property, 
usually 40-, 80- or 160-acre parcels. The land left over was opened to 
``non-Indian'' settlement. The allotted lands were held in trust by the 
United States for the individual Indians. For more than 120 years, the 
Interior Department, and specifically the Bureau of Indian Affairs, has 
overseen the leasing of these allotted lands on behalf of the original 
allottees and their heirs. Revenues from these leases have been 
collected by Interior and supposedly held, invested and disbursed to 
the trust beneficiaries by the Treasury Department.
    From the beginning, this system has fallen prey to abuse, 
corruption, neglect and incompetence. As the U.S. Court of Appeals for 
the District of Columbia Circuit said in its Feb. 23, 2001 decision 
upholding Judge Lamberth, ``The trusts at issue here were created over 
one hundred years ago--and have been mismanaged nearly as long.'' 
Incredibly, since 1887 the management of the IIM trust has not grown 
steadily better, but steadily worse. It is worse today than it was in 
1996, when we filed our lawsuit. Just to quote one brief passage from 
Judge Lamberth's 136-page opinion:
        ``It would be difficult to find a more historically mismanaged 
        federal program than the [IIM] trust. ... The court knows of no 
        other program in the American government in which federal 
        officials are allowed to write checks--some of which are known 
        to be written in erroneous amounts--from unreconciled 
        accounts--some of which are known to have incorrect balances. 
        Such behavior certainly would not be tolerated from private 
        sector trustees. It is fiscal and governmental irresponsibility 
        in its purest form.''
    The glaring mismanagement of the IIM trust was exposed (not for the 
first time, or the last) by the House Committee on Government 
Operations, in its landmark 1992 report entitled ``Misplaced Trust: The 
Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund,'' 
which was spearheaded by the late Rep. Mike Synar (D-OK). Citing the 
trust's ``appalling mismanagement,'' Mr. Synar likened the IIM trust to 
``a bank that doesn't know how much money it has.''
    The Synar Report led to passage by the Congress in 1994 of the 
Indian Trust Reform Act. In an attempt to end Interior's chronic 
incompetence in running the IIM trust, the act established a Special 
Trustee for American Indians to oversee reform. A Level 2 position 
filled by a presidential appointee who is subject to Senate 
confirmation, the Office of Special Trustee was expected to provide the 
leadership and accountability that trust reform had been lacking. 
Sadly, that has not been the case.
    On June 10, 1996--after years of run-arounds from Interior and the 
BIA, and convinced that they would have to be forced to clean up the 
IIM trust--we filed our class action lawsuit against the Secretaries of 
the Interior and Treasury. Judge Lamberth split our complaint into two 
issues--reform of the trust, and a re-statement of the accounts. On 
Nov. 27, 1996, the judge also ordered Interior and Treasury to preserve 
all existing IIM trust documents and to produce relevant documents and 
records to the plaintiffs. In fact, destruction of records and 
documents, including e-mails written by government lawyers in this 
case, has continued throughout the life of the litigation. Secretaries 
Babbitt and Rubin were held in contempt by Judge Lamberth in February 
1999 for ignoring the document order, and the judge subsequently 
appointed a Special Master, Alan Balaran, to oversee the government's 
compliance. Unknown to all of us at the time, Treasury had destroyed an 
additional 162 boxes of trust records during the contempt trial. 
Treasury and Justice Department attorneys waited 13 weeks to inform the 
court.
    After a nine-week trial on the first issue--how to fix the system--
Judge Lamberth ruled on Dec. 21, 1999 that the United States must 
provide an historical accounting for ``all'' IIM funds. He ordered 
Interior and Treasury to reform the trust, and required quarterly 
reports from Interior on its progress.
    Testimony in the Norton-McCaleb contempt trial has shown that for 
more than a year after Lamberth's decision, officials and lawyers at 
Interior and Justice did nothing about an accounting and little about 
trust reform. They believed that Lamberth had exceeded his authority 
and hoped he would be overturned by the appeals court. What actions 
Interior and Justice did take were driven by their litigation strategy 
and in support of their appeal, with no regard for the IIM trust 
beneficiaries. A senior trust official, Principal Deputy Special 
Trustee Thomas Thompson, testified that today--more than two years 
after Lamberth's decision--not a single IIM account has been certified 
as accurate. (``It really makes you wonder why I'm sitting here, 
doesn't it?'' said Judge Lamberth.)
    On February 23, 2001, a three-judge panel of the U.S. Court of 
Appeals for the D.C. Circuit unanimously upheld Judge Lamberth. The 
same day, a senior Interior Department official sent a memo to the 
Special Trustee exposing the department's trust reform efforts as a 
sham. The department's trust reform plan, he wrote, was based on ``rosy 
projections'' and ``wishful thinking.'' ``Posturing for the 
court''.seemed to be the primary influence on objectives and 
guidelines.'' Eventual disclosure of the memo by the Justice Department 
led Judge Lamberth to appoint a Court Monitor to assess Interior's true 
progress on trust reform and the veracity of its quarterly reports to 
the court.
    Four scathing reports by the Court Monitor, Joseph S. Kieffer III, 
since his appointment in May 2001 form the basis of four contempt 
charges against Norton and McCaleb. (Court-ordered trust reform, said 
Kieffer, ``is a chimera. The trust reform ship has been scuttled'' A 
cynical observer would go so far as to say it never left dry-dock; 
rotting there.'') A separate report by Special Master Balaran on the 
utter lack of computer security for IIM accounting data led to a fifth 
count of contempt. (It is Balaran's report that Judge Lamberth found to 
be a prima facie case for contempt.) This past Friday, Mr. Kieffer 
issued two more reports. They only add to the searing indictment of 
Secretary Norton, Secretary O'Neill and Attorney General Ashcroft in 
this matter. The Kieffer reports document a shocking pattern of 
misleading statements and outright lies to the court in the quarterly 
reports submitted by the Interior Secretary. Starting with the 3rd 
Quarterly Report in late summer of 2000, the Special Trustee, Thomas N. 
Slonaker, began to include his own independent comments, suspecting 
that project managers in the field were painting a false picture of 
their trust reform progress. By the 7th Quarterly Report last fall, 
Slonaker refused to verify the accuracy of the contents. Pressured by 
Interior lawyers to verify the report, other senior trust officials 
also refused because, they said, ``certifying the 7th Quarterly Report 
would border on the foolhardy.''
    No senior DOI official would touch that report with a 10-foot 
pole,'' said Kieffer, who found that Norton had submitted to the judge 
``an untruthful, inaccurate and incomplete'' report. Judge Lamberth has 
since ordered Secretary Norton to sign all future quarterly reports 
personally. (In her 8th Quarterly Report, submitted last month, Norton 
says her signature ``reflects my belief that my personal observations 
in the Report are true...'')
    Balaran's report on the lack of computer security is equally 
disturbing. With court permission, he hired experts who easily hacked 
into the IIM trust accounting system and created a phony account 
without being detected. Balaran has recommended to Judge Lamberth that 
the system be placed in receivership.
    With her credibility in tatters and faced with the virtual 
certainty of contempt, Secretary Norton and her inner circle of senior 
officials have now proposed a drastic reorganization of trust 
responsibilities into a new Bureau of Indian Trust Asset Management. 
Because she has done this so late in the day and so suddenly--and 
without proper consultation with tribes, as required by law--her 
actions appear to be a desperate attempt to stave off contempt. The 
proposal has met with very strong opposition throughout Indian Country. 
Among its flaws, it would merge the tribal trust with the IIM trust 
under one entity, ignoring the trusts' two distinctly different 
functions, constituencies and histories. This plan will undermine--not 
protect--tribal sovereignty. It will violate the IIM account holders' 
own direct relationship with the federal government, established by 
law.
    Ironically, Norton already has hired former Assistant Secretary for 
Indian Affairs Ross Swimmer to head this effort. She ignores the fact 
that Swimmer was sharply criticized in the Synar Report for management 
failures involving the IIM trust. She ignores the fact that Swimmer--at 
best--has a ``checkered'' personal financial history. His BIA 
management included leading a misguided attempt to privatize the IIM 
trust, spending $1 million on the project and getting nothing in 
return. ``BIA eventually paid Security Pacific [the bank intended to 
take over the trust] $934,512, but according to the Assistant Secretary 
for Indian Affairs [Swimmer], did not obtain any benefits for the 
government''.Far from ``excusing'' the waste of almost $1 million in 
tax dollars, the Bureau's inept handling of the Security Pacific 
contract simply underscores the reasons why it should not have been 
awarded in the first place,'' the report concluded.
    Swimmer's hiring points up the most critical defect in the 
Secretary's proposal: It would leave the trust in Interior's control, 
at the mercy of the same inept managers. It is crystal clear from the 
long record of IIM trust mismanagement that it is time--past time--to 
remove the trust from Interior's grasp and place it temporarily in the 
hands of a receiver. The IIM beneficiaries deeply deserve a trust run 
by competent and experienced professionals, with commercial standards 
of accountability. Fixing the system is a crucial component of trust 
reform, and becomes even more so as we draw closer to Trial Two and the 
issue of re-stating the accounts. The two must go hand-in-hand.
    Mr. Chairman, it is our hope that this Committee and the Congress 
will terminate all appropriations needed by the Interior Secretary, the 
Treasury Secretary and the Attorney General to continue their bad faith 
legal defense. Instead, we ask that you support the individual Indian 
trust beneficiaries' request for appointment of a receiver under the 
supervision of the judiciary as the only rational solution for the 
government to fix the Individual Indian Trust. Congress has 
appropriated more than $614 million for trust reform since 1996, and it 
has gotten virtually nothing in return--no accounting of Individual 
Indian Trust monies, no rehabilitation of the woeful system, no 
improvement in information technology. The court and the Congress have 
not even gotten the truth from the Interior Secretary, in part because 
she and her advisors do not know the truth and lack the qualifications 
and skill to learn the truth before they inflict more irreparable harm 
on individual Indian trust beneficiaries.
    The Court Monitor's 6th Report to Judge Lamberth, which was made 
public last week, captures the lack of accountability and the arrogance 
that the individual Indian trust beneficiaries have experienced for 
decades from their government. Kieffer said:
        The Secretary's candor in the Eighth Quarterly Report is 
        refreshing. But the exacerbation of the ``ordinary human 
        inclination'' to report only good news and ignore the bad was 
        in the context of carrying out the highest fiduciary trust 
        duties imaginable owed to the American Indians by the United 
        States government. Compare this comment on the human 
        fallibility of DOI and BIA officials with the realization that 
        their reports were at the direction of and for the 
        consideration of a United States District Court. A District 
        Court that had previously held two Cabinet-level Secretaries 
        and one Assistant Secretary in civil contempt for their and 
        their subordinates' failure to overcome this ordinary human 
        inclination to lie or dissemble when bad news as well as good 
        was required by Court order to be reported by Defendants and 
        their attorneys.

        The Secretary's admission that activities had been designated 
        completed when ``little material progress is evident'' is the 
        most telling comment in the entire Eighth Quarterly Report. The 
        Secretary, in attempting to prepare an accurate and complete 
        quarterly report, has now found what the Court Monitor has 
        reported in every single Report to this Court--the reports have 
        been untruthful. The only problem is that nowhere can be found 
        any indication that those who have committed or permitted these 
        actions constituting contempt on the Court have been or will be 
        held accountable. No indication whatsoever that they will be 
        forbidden to continue in supervisory or project manager roles 
        in the proposed BITAM and their conduct reviewed for 
        disciplinary action and possible dismissal from their present 
        positions. Who within DOI will hold these officials accountable 
        for the past and present harm caused to the IIM account holders 
        by their unprofessional conduct and misleading reports that 
        covered up and hid the most serious of their failures? 
        Apparently no one, because they remain in leadership positions 
        involved with trust operations and related management and legal 
        activities or have moved on to equivalent senior positions 
        within DOI.

        Where also can be found the expressions of apology and remorse 
        by these same executives, managers and attorneys that should 
        now be substituted in the Eighth Quarterly Report for the 
        repeated arrogant stances taken by the Defendants in the past 
        seven false, inaccurate, and incomplete quarterly reports and 
        their legal defenses of them before this Court?

        These Indian Trust duties were no ordinary responsibilities or 
        obligations of the United States; no APA administrative 
        functions; not a ``no harm, no foul'' badminton game or walk in 
        the park. The Secretary's understanding of these human failings 
        of her subordinates may fall on deaf hears in Indian Country 
        where the effect of these unreported failures has been and is 
        so severely felt.

        Reference need only be made to the present IT Security failure 
        and Court-ordered shutdown. The resultant loss of the income 
        stream to the most needy IIM account holders and Indian Tribes 
        is a perfect example of the result of these ordinary human 
        inclinations. Who will be held accountable for the TAAMS'' 
        failures or the failure to even address the IT Security lapses? 
        Failures made aware to the Defendants months if not years ago 
        by their own paid consultants, the GAO, and the Special Master.

        What also will be the human inclination of Senators and 
        Representatives on oversight committees regarding the 
        appropriation of more monies for the Defendants to try to 
        correct this morass? And who will end up being harmed if the 
        Congress might--understandably--be reluctant to trust the 
        Defendants to perform any better in the future, further 
        delaying trust reform until a new agency can be created and 
        staffed? None other than those same IIM account holders who 
        have suffered so much for so many years at the hands and tender 
        mercies of the Defendants.

        Candor about your subordinates' human failings is one thing, 
        demonstrating how you will hold people accountable for their 
        past and future nonfeasance, misfeasance or malfeasance is 
        quite another. This Court and Congress should require no less.
    Now is the time for the Congress to send a clear signal that waste, 
fraud and malfeasance are unacceptable and that it wants honorable, 
fit, experienced managers in charge of fixing this badly broken 
mechanism. This is a chance for all of us to stand up for financial and 
professional accountability. I believe strongly that further 
appropriations for trust reform should be fenced in, to be used by a 
receiver and not the failed programs of the past or defense of the 
indefensible litigation. The Individual Indian Trust should be put in 
the intensive care of a receiver supervised by Judge Lamberth until it 
has been rehabilitated fully and restored to health.
    After the Court-appointed receiver rehabilitates the Individual 
Indian Trust, it is crucial that the Individual Indian Trust remain 
well-managed in conformity with the duties of a true fiduciary and, 
therefore, is, above all, free of politics and bureaucratic fumbling. 
The Individual Indian Trust already is one of the very few permanently 
and indefinitely appropriated funds of the United States, similar to 
the FDIC, the Federal Reserve Board and the Comptroller of the 
Currency. Therefore, like the Office of the Comptroller of the Currency 
vis-a-vis the Treasury Department, the Individual Indian Trust--after 
rehabilitation by crisis managers appointed by the Court--could be 
recast as an independent bureau within the Interior Department. 
Independence within Treasury is reinforced because the Comptroller is 
appointed by the President for a fixed five-year term, and the 
Comptroller reports to the President, not the Treasury Secretary. And 
there is little doubt that the Comptroller of the Currency model has 
worked well under difficult circumstances since 1863. Instead of 
underwriting nonexistent trust reform, a skilled Trustee for the 
Individual Indian Trust--protected from politics and funded with 
permanent and indefinite appropriations--could hire the proficient 
managers desperately needed to ensure prudent management of this multi-
billion dollar trust. The goal here is simple: stop playing politics 
with our money and our people.
    Our litigation has exposed an ugly story about arrogance and 
ineptness. But, with the help of this Committee, we can begin to write 
a new chapter. I appreciate this chance to testify and I would be happy 
to answer any questions.
                                 ______
                                 
    [Ms. Cobell's response to questions submitted for the 
record follows:]

SUPPLEMENTAL ANSWERS FROM ELOUISE COBELL PROVIDED TO THE U.S. HOUSE OF 
         REPRESENTATIVES COMMITTEE ON RESOURCES, WASHINGTON, DC

    Q. You contend that Judge Lamberth should place the IIM trust in 
receivership. Please explain the structure of the receivership you 
envision and how it would function.
    A. Plaintiffs' Consolidated Motion for a Receiver, filed with the 
Court on Oct. 19, 2001, spells out how the receivership would function. 
I have attached Appendix V of the motion for your review.
    Q. What effect would placing IIM trust reform in receivership have 
on the trust responsibility the federal government has to IIM account 
holders?
    A. We would have an IIM trust that would be under court 
supervision, which would give account holders honest and competent 
service. This type of service would reinforce the trust relationship 
with the trustee and the beneficiaries. Accountability will be a must 
and the court will enforce consequences if accountability is not 
adhered to.
    Q. Would a court-appointed receiver have any responsibility to 
carry out consultation with account holders?
    A. Not only would a receiver carry out consultation in a proper 
fashion with accountholders but for the first time ever a proper 
relationship with the trustee and beneficiaries would begin.
    Q. If the trust functions were transferred to the court, how would 
the court carry out the statutory trust duties that have been 
established by Congress?
    A. Trust functions would be carried out in the manner that Congress 
had intended. The management of trust functions can only improve under 
the court's supervision. Statutory trust duties rest with all three 
branches of Government. The Court Monitor's and the Special Master's 
reports provide a clear and honest analysis of the problems that exist 
and what is needed to fix this horrible mess.
    Q. Where would the court obtain the funding to carry out trust 
functions and what standard would be applied to the relationship?
    A. The IIM Trust has been set up as a permanent and indefinite 
appropriation. Funds that have been appropriated and will be 
appropriated should be utilized by the receiver to begin the task of 
hiring crisis managers. Congress needs to provide the receiver with the 
funding to fix this mismanaged trust.
    Q. Please provide the Committee with a list of specific facts on 
which you base your charge that Secretary Norton has perpetrated a 
fraud on the United States District Court.
    A. The six reports issued by the Court Monitor and the Special 
Master's IT Security Report, along with 4,658 pages of contempt trial 
transcripts.
                                 ______
                                 
                               APPENDIX V
                              the receiver
A. Background
    The Individual Indian Trust has been managed with malfeasance for 
114 years. For the past five years, to the detriment of individual 
Indian trust beneficiaries, this Court has relied on material 
misrepresentations of the Interior defendants and their counsel to 
allow them without direct Court supervision to develop and implement 
trust reform remedies that they claimed would ensure prudent 
administration of the Individual Indian Trust. To encourage compliance 
with Court orders and to verify the accuracy of representations made by 
the Interior Defendants, this Court has employed such extraordinary 
measures as contempt and the appointment of both a Special Master and a 
Monitor.
    These actions have enabled this Court to understand the true nature 
and scope of defendants' deception and malfeasance; however, Interior 
defendants' contemptuous conduct continues unabated and meaningful 
trust reform is no closer today than when this action was brought to 
enforce defendants trust duties. As demonstrated conclusively by the 
Court Monitor and the Special Master, Secretary Norton and her counsel 
continue to breach the trust duties owed by the United States to 
individual Indian trust beneficiaries. Accordingly, to protect the 
Cobell plaintiffs from further irreparable harm, to ensure that the 
trust duties owed by the United States to individual Indian trust 
beneficiaries are discharged prudently, and to ensure meaningful trust 
reform is designed and implemented, this Court should appoint a 
receiver for the Individual Indian Trust as follows:.
B. Qualifications
    Receivers commonly are appointed by courts to oversee trusts, 
bankruptcies, reorganizations and other matters where senior management 
is incompetent, untrustworthy, or guilty of malfeasance as is the case 
here. Unfortunately, the appointment of a receiver does not necessarily 
ensure compliance with court orders. After appointment of some 
receivers, the situation is not rectified--it actually becomes worse. 
The temptation for some courts is to appoint an attorney or a former 
government official with some general experience in subject matter of 
the case. However, appointments of this nature are generally not as 
effective. Successful receivers, or their Court appointed deputies, 
tend to be turnaround and crisis management experts who specialize in 
assuming positions of control on short notice, take immediate action to 
install management and financial controls, and commence and implement 
long term solutions for the collection and creation of reliable asset 
and beneficiary data from which a trustee can prudently administer the 
trust.
C. Duties and Responsibilities
    The duties and responsibilities of a receiver are straightforward: 
identify, account for, protect, and maximize the trust income and 
allocate and distribute the correct amount of trust monies to the 
proper beneficiaries. The mission of the receiver is to gain control of 
the processes, marshal the assets and take whatever corrective action 
is necessary to ensure that the collection, allocation, and 
distribution of funds is accurate, complete, and accounted for 
fully.\1\
---------------------------------------------------------------------------
    \1\ A judgment regarding Phase II issues will resolve the 
historical restatement or ``correction of accounts;'' therefore, the 
appointed receiver should avoid involvement in this regard. Issues 
relating to prospective management of the trust and future 
distributions to the proper beneficiaries will be the most problematic, 
and deserve the undivided attention of the receiver.
---------------------------------------------------------------------------
D. Authority
    This Court may wish to retain the title and authority of receiver 
or confer this title and authority on a court officer (e.g., the Court 
Monitor or Special Master). Therefore, the appointed expert may take 
the title of deputy receiver. In either case, the receiver should be 
vested with the authority of a chief executive officer. As a chief 
executive, he should immediately employ other qualified managers, 
attorneys, and other professionals. One of the most critical aspects of 
the receiver's authority is his ability to have the authority to hire 
and fire personnel administering the trust. Therefore, the receiver, as 
trustee-delegate, should be assigned Department of Interior personnel 
engaged in IIM-related trust operations on a temporary duty basis. 
However, as he identifies the dishonest, weak, or unproductive senior 
managers, counselors, and other employees involved in the 
administration of the Individual Indian Trust, he must have the 
authority to relieve them of their temporary duty assignment and return 
them to the department. The receiver must then have authority to retain 
qualified professionals from the private sector who report to him 
directly.
    The court should hold status conferences with the receiver and 
plaintiffs monthly to review most decisions post facto and justify 
major decisions in advance. A written report by the receiver should 
follow each such meeting.
E. Contract of the Receiver
    The Court should accept proposals from leading turnaround 
management firms. Obviously, the lowest bidder may not be the most 
effective manager. Conversely, the highest bidder may only be that--the 
highest bidder. Large multi-disciplinary firms, such as the Big Five 
accounting firms seem to have no inhibition on amounts they charge. 
Therefore, proposals should be prepared on a time and materials basis, 
including the hourly rates of the various levels of professionals who 
are anticipated to be required for the assignment. However, with a case 
of this magnitude, the court may wish to consider only accepting bids 
on a fixed fee per month or year. A reasonable proposal is expected to 
be in the range of tens of millions of dollars annually.\2\ The 
contract term should be at the pleasure of the court with a modest 
termination fee. The court should also consider a success fee, which is 
common, to encourage the most timely and effective rehabilitation. The 
goal of receivership is to protect the trust assets, rehabilitate the 
trust, and, ultimately, restore management of the trust to the 
executive branch. Such action should occur only after the Court 
determines that honest and competent trust management is in place 
permanently and that all trust systems are operating properly.
---------------------------------------------------------------------------
    \2\ While such sums are not insignificant, they must be viewed in 
light of the comprehensive, specialized expertise that is not now 
available in the government. Moreover, the complexity of this problem 
and the obscene, on-going waste of taxpayer monies to date ($614 
million appropriated for trust reform while the Individual Indian Trust 
continues to deteriorate and trust assets continue to waste away) 
requires competence or this matter will never be resolved..
---------------------------------------------------------------------------
F. Short Term Actions Necessary
    While the appointed receiver should have great latitude in 
establishing his own rehabilitation plan, several actions need to be 
taken expeditiously:
     Gain control of the cash inflows. Trust income is 
currently being received at over 100 locations. These cash flows must 
be identified and redirected to lock boxes under the control of the 
receiver. The number of administrative cash collection centers should 
be greatly limited and electronic systems must be secured or taken off-
line.
     Identify all sources of the cash flows (including a 
revenue generating lands), locate and validate current contracts under 
which rents, royalties, and other funds are paid, determine if other 
payments are due from the same vendor, and, if so, take action to 
enforce such contracts.
     Identify and contract an adequate interim trust asset and 
accounting management system (e.g., an established operating trust 
service bureau.)
     Control and verify the accuracy of all allocations and 
disbursements.
G. Long Term Actions Necessary
    Longer-term actions are also required. Identifying and locating the 
proper beneficiaries and their interests is the major task:
     The genealogies of original allottees must be identified 
and accurately traced to the current generation. The assistance of 
experienced professionals from the private sector here is also 
essential. This process may be the most time consuming and tedious of 
all tasks. As accurate information is obtained, the system should be 
revised to ensure accurate payments are made to each and every 
beneficiary.
     All income flows from the land must be identified, 
tracked, collected and properly recorded to the trust, land records 
must be updated and corrected, and related contracts reviewed and 
updated. This will improve the data on the nexus between the sources of 
revenues and the proper allocations and distributions to beneficiaries.
     Identify and contract an adequate integrated permanent 
trust asset and accounting management system.
    Long term actions may take several years.
H. Funding
     Contempt Sanctions: Inasmuch as appointment of a receiver 
here--similar to the appointment of a Special Master and Court 
Monitor--is a sanction for, or in lieu of, contempt, all costs 
associated with the operation of a receiver should be included within 
the scope of financial sanctions imposed by this Court, allocated 
appropriately, and paid by Interior, Justice, and the contemnors, 
individually and collectively.
                                 ______
                                 
    Mr. Hayworth. And we thank you for your testimony. The 
Chair would note that a 15-minute vote is on on the floor. I 
will just briefly yield to the ranking member for a unanimous 
consent request, and then we will recess and return.
    Mr. Rahall?
    Mr. Rahall. Thank you, Mr. Chairman. I have no questions of 
this panel. I just want to thank Elouise Cobell for taking the 
initiative that she has in seeking redress before the court. 
Being a plaintiff in a high-profile case of this nature is 
certainly not easy, and I am sure it has taken a toll on your 
personal life and on your family life. But rest assured you are 
involved in a noble cause. You are from Montana, but you have a 
friend here from West Virginia, and I certainly commend you for 
what you are doing.
    Ms. Cobell. Thank you.
    Mr. Rahall. Mr. Chairman, just real quickly to note the 
presence of an individual that has been sitting motionless and 
quiet all day during these proceedings in the very midst of us, 
dressed in his travel attire, Mr. James Goddard, and I ask for 
unanimous consent that his statement on behalf of the Blackfeet 
Tribe be placed in the record at this point.
    Mr. Hayworth. Without objection, and we welcome him as 
well. Thank you for coming.
    [The prepared statement of Mr. Goddard follows:]
    [GRAPHIC] [TIFF OMITTED] T7526.028
    
    [GRAPHIC] [TIFF OMITTED] T7526.029
    
    [GRAPHIC] [TIFF OMITTED] T7526.030
    
    [GRAPHIC] [TIFF OMITTED] T7526.031
    
    Mr. Hayworth. Thank you, Mr. Rahall, for that statement.
    There are lots of questions, and we will get to them, and 
we thank the panel for its indulgence.
    The Committee is in recess subject to the call of the Chair 
after we conclude the vote.
    [Recess.]
    Mr. Hayworth. We thank our guests on panel two for their 
indulgence, as well as others who join us today and the members 
of the Committee, with the business afoot on the House floor. 
When the bells ring, it's kind of like school. You have got to 
go over there and take care of that, and then return to our 
duties here in Committee.
    I know a number of members have questions. Let me open with 
Ms. Cobell, especially in the wake of the testimony where you 
advocate a court-appointed receiver and the removal of all 
trust functions from the Department of the Interior. Let's 
amplify that a little bit. Could you tell us in a little more 
detail how you envision that would work?
    Ms. Cobell. Actually, it is not advocating everything out 
of Interior. What we are asking for is somebody to be put in 
charge. And we feel it is very important to put a person in 
charge under the judiciary that would report to Judge Lamberth, 
the receiver; a person that would have the ability to make sure 
accountability is done, and make sure consequences are put in 
place.
    That has been the issue that we have been dealing with. 
People get away with not having any consequences. They are 
mismanaging funds. They are lying to the court and the Congress 
about a big huge accounting system, TAMS. And so we are saying, 
put a receiver in place that would be reportable to the 
judiciary, but leave everything else in place.
    Mr. Hayworth. So I want to really get in this concept of 
the receiver. It sounds to me at first blush, Ms. Cobell, that 
the receiver would kind of be an extension of the role of a 
special trustee, because if it is accountable to the judiciary, 
to Judge Lamberth, how does the receiver really differ from the 
special trustee?
    Ms. Cobell. Well, I wish I could have answered Mr. 
Slonaker's question for him when it was asked, you know: What 
was wrong with the 1994 Trust Fund Reform Act, and why did it 
not work, and what do we need to do as a Congress to make it 
more powerful?
    The problem is the 1994 Trust Fund Reform Act gave special 
powers to the special trustee, but absolutely had no teeth. So 
as a consequence, the special trustee had to report to the 
Secretary. And as you know, Secretary Babbitt just completely 
ignored the plans that the special trustee put in place to fix 
this system.
    And so what happened is the 1994 trust fund did not really 
go all the way. It should have gone all the way, and if it did 
at that point in time we could have ended up with a person 
powerful enough to fix the system. But we do not have that now. 
And so that is why we are asking for a receive.
    Mr. Hayworth. So the receiver would take this job and 
really--And I am not trying to be cheeky about this, but the 
phrase almost ``imperial potentate'' comes to mind. I mean, the 
receiver has the authority to get things done and be 
accountable to the judiciary.
    Ms. Cobell. He would bring in crisis managers. That is what 
has to happen: Bring in crisis managers. Do not continue--And I 
think the discussion went really well from the Congressman. It 
is the fact that: Do not bring in the same old people that have 
been part of the problem. Work with crisis managers. This 
happens every day in the private world. It is no rocket science 
to fix this.
    And I really want to make it clear, the receivership is for 
individual Indian account holders. Because I think what the 
Secretary has done is try to merge these two together. It just 
does not fit. Because we heard from council member Matt where 
they are contracting, and Ivan Makil, they are contracting, you 
know, and everything is working fine. But this is for 
individual Indian accounts.
    Mr. Hayworth. There are some questions I would like to 
pursue with President Makil. But I am just trying to nail down 
the notion of the receivership, and now in terms of crisis 
managers.
    One of the things we have to do is to come up with a plan 
that outlines all of this, whether it is done legislatively or 
whatever remedy that comes up. Do you envision how many crisis 
managers, as you put it, would be required to make this work in 
conjunction with a receiver?
    Ms. Cobell. Well, I bet you could do it under $614 million. 
That is for sure.
    Mr. Hayworth. Well, I understand. I am just wondering how 
many people would have to staff this, in your mind?
    Ms. Cobell. Well, you know, I do not think that there would 
be probably more than ten people, crisis managers, that you 
would have to bring in.
    Mr. Hayworth. So a receiver, ten crisis managers--
    Ms. Cobell. Well, and then you have the entire Department 
of Interior. Because, you know, you keep alluding to the BIA. 
There is more than the BIA involved in this. There is the 
Minerals Management Service and there is the Bureau of Land 
Management, that all have their hands in this trust reform. 
That is why it is not working.
    Mr. Hayworth. So all of these different lines of 
jurisdiction. *** start here
    Ms. Cobell. Yes. And I think that Mr. Kieffer's reports 
that he has, and actually the EDS that has been hired by the 
Department, all point to the same thing: Nobody is in charge. 
And so that is the big issue here, is we have to put somebody 
in charge. And if we do it under a judicial mechanism, then we 
can force it.
    Mr. Hayworth. OK. You would like the receiver to be 
required to consult with Indian tribes, right, in this 
restructuring?
    Ms. Cobell. Well, this is individual Indians.
    Mr. Hayworth. OK.
    Ms. Cobell. Let me tell you, what I am talking about is the 
court case for individual Indians. There are two separate 
trusts we are talking about: the trusts that are held in common 
by the tribes; and there are the individual Indian trusts. And 
there are two separate entities, because the individual Indians 
have a direct relationship with the Federal Government; the 
tribes have a direct relationship with the Federal Government.
    Mr. Hayworth. Just a couple of brief things, because you 
touched on it a second ago. In terms of the cost of how to do 
this and where the funds would come from, in your mind, how 
should it be funded? And what type of cost would the 
receivership and the crisis manager scenario--Any idea how much 
that would be, or anything you would try to budget for it?
    Ms. Cobell. Well, I certainly think it is going to be a lot 
less money than what has been spent so far since 1996, but I 
really do not have those totals. But I know that I think one 
area that we discussed in our written testimony is what happens 
to the temporary receiver? After the receivership, what 
happens?
    There is actually a mechanism that is already in place by 
law. Individual Indian trusts have been permanently funded, 
like FDIC, the Office of Comptroller of Currency. That is 
already on the record.
    Mr. Hayworth. OK.
    Ms. Cobell. So I really think that in order to fix this, 
Congress really has to face reality, the fact that the IIM 
Trust should be permanently appropriated like the OCC is 
permanently appropriated.
    Mr. Hayworth. Ms. Cobell, I thank you for going into more 
detail and amplifying. I also thank the indulgence of my fellow 
Committee members, as I went a bit over time. My good friend 
from Michigan has some questions.
    Mr. Kildee. I appreciate your questioning. I think it was 
very, very important. It would seem to me that there is an 
inherent conflict in having the Secretary representing the U.S. 
Government, and at the same time being the fiduciary for either 
tribes or individuals. There is some type of conflict, and we 
have to somehow resolve that conflict.
    President Makil, you mentioned some type of commission, was 
it you called it? Could you elaborate on that? And also--any of 
you can answer this, too--elaborate on what you think of the 
separation of the Bureau of Indian Trusts assets and 
managements within the Department of Interior. Could you start 
with that Ivan, or Mr. President?
    Mr. Makil. Sure. I think it is important because of the 
fiduciary responsibility to be able to have objectivity on a 
commission. But also, you need the expertise. Because on the 
financial end, as I said earlier in my comments, it is not just 
managing the revenue or the money. It is not managing stocks 
and bonds. It is also the land. So that expertise has to exist.
    A separate commission that would have some authority: As 
also was mentioned about the '94 legislation, it did not have 
the teeth, did not give the authority so that it could oversee 
and actually implement a financial accounting system or other 
things. All it could do was make recommendations and if the 
recommendations were not followed through, nothing happened.
    So what you would do--Or at least a suggestion, one idea to 
think about would be to have a commission that the Secretary 
was responsible to, as well, but keeping all of those trust 
responsibilities together, because they do work hand in hand.
    If I could, in how a receiver relates to this, my 
understanding is that a receiver would be temporary, also. You 
still need a process or a system to be maintained. And if you 
have a commission that oversees all of this that everyone would 
report to and that has a specific task, which is the management 
of those funds and all of the responsibilities along with it, 
that is the way to do it. And the Secretary could be 
responsible to that commission, as well.
    Mr. Kildee. During the consultation which was ordered by 
the Executive Order, were you consulted on anything like that? 
Or was the consultation basically subsequent to their 
decisionmaking?
    Mr. Makil. It was subsequent to their decision.
    Mr. Kildee. It was not at all concurrent with their 
decisionmaking?
    Mr. Makil. No, it was not. And furthermore, I am on the 
advisory panel for the special trustee, and the advisory panel 
consists of tribal leaders with experience--and not just 
because I am there--but tribal leaders with experience, 
extensive experience, on these issues, as well as people from 
different financial institutions. So you have a good mix of 
experience across the board.
    Virtually, our recommendations--We have been told from time 
to time, or reminded from time to time, that we are just an 
advisory panel.
    Mr. Kildee. Just knowing your own particular sovereign 
tribe, you demonstrated your ability to handle finances very 
well out there. And that expertise could very well be tapped, 
could it not, by the Department of Interior?
    Mr. Makil. There are examples across Indian country. And 
Salt River, we have had a model for several years. We contract 
through a self-governance compact for all of the services that 
the Bureau used to provide. We do them ourselves through the 
compact. And we have done it successfully.
    We have offered to Interior to come look at our system, 
because on our system we have been asked to demonstrate it 
several times to other tribes. We maintain all of the records. 
We can get a payment on a lease and turn it around in two to 3 
days, and make the pay-out, and do it accurately.
    We can even through our system produce maps and documents 
which show where lands are located and show the fractionated 
interests as severely as they have been fractionated. We have 
that system, and we have built it internally.
    Mr. Kildee. Let me ask one final question, and any of you 
can answer. Should we let the Department do its own reform? Or 
do we need additional legislation now to do some directing?
    Mr. Makil. My opinion is that you need additional 
legislation, because whether it is a commission or whatever 
other instrument that might be appropriate, it needs to have 
the ability to take the kind of action in an objective, 
fiduciary way that is intended. That is how you are able to 
eliminate those conflicts of interest.
    Mr. Kildee. I thank you.
    Mr. Hayworth. Thank you, Mr. Kildee. Would either of the 
other two panelists care to respond?
    Ms. Cobell. Oh, I agree that Congress has to enact 
legislation to force some of these changes that we are 
suggesting.
    Mr. Hayworth. How about you, Chairman Jandreau?
    Mr. Jandreau. I do not necessarily agree that the idea of 
forcing anything is appropriate. I do believe that there is a 
commission necessary that is empowered to do some things that 
are beneficial to assuring that the Bureau is put back together 
in a way that is responsive to all of the problems that have 
been created. Forcing people brings tension and rejection. I 
think if it is a cooperative effort, I believe it can work.
    Mr. Hayworth. Thank you, Chairman Jandreau.
    The gentleman from Tennessee joins us, and we thank him for 
his time.
    Mr. Duncan. Well, thank you, Chairman Hayworth. And I 
appreciate Governor Rehberg letting me go out of order here. I 
have an appointment coming over here to see me in just a 
minute.
    Miss--Is it ``Co-BELL,'' or ``CO-bell''?
    Ms. Cobell. ``Co-BELL.''
    Mr. Duncan. ``Co-BELL''? I have a first cousin who is a 
radiologist, Dr. Steve Becker, in Libby, which is right next to 
you. But let me ask you this. In your testimony--I apologize 
that I was in other hearings and was not able to hear your 
testimony, but you say here, ``The Interior Secretary has 
demonstrated through the fraud she has perpetrated on the 
United States District Court and the United States Court of 
Appeals that she should no longer be trusted.''
    I was a lawyer and a judge before I came to Congress, and I 
can tell you, that is an extremely serious charge. In fact, I 
have sat through hundreds of congressional hearings in the 
years since I have been here, and I do not recall ever hearing 
a charge quite that serious. Would you tell me specifically 
what you mean by that? Because you are accusing the Secretary 
of illegality, when you say she is perpetrating a fraud on 
Federal courts.
    Ms. Cobell. Right. There have been several reports that 
validate exactly what I said.
    Mr. Duncan. Well, like what? I want to know the specifics.
    Ms. Cobell. Well, there were several court reports that 
were not right that were submitted to the court but were not 
full of the correct information that should have been.
    Mr. Duncan. And you know that she is the one that 
specifically--When you say ``perpetrated a fraud,'' you are 
saying that she intentionally either put false information in 
there or something to that effect. Is that what you are saying?
    Ms. Cobell. Yes, that is what--We are in a contempt of 
court trial right now, as we speak, on these issues. And one of 
the issues, as you probably have read in the testimony, is the 
fact that the seventh quarterly report was not accurate. And 
the special trustee refused to sign it and said, ``This is not 
accurate.'' But it went ahead anyway. And the Secretary, it is 
my understanding, was thoroughly aware of the fact that it was 
full of inaccuracies.
    The issue that is before the court right now is the fact 
that--It is not only my opinion; it is the opinion of several 
reports that were inaccurate, it's the opinion of the court 
monitor's report, it is the opinion of the special master's 
report that is out there. This is serious, Congressman.
    Mr. Duncan. Well, you know, I will say this. You cannot 
base a criminal case on somebody's opinion. You have to have 
facts. You have to have specifics. And what I wish you would do 
is provide to this Committee a list of the specific facts that 
you base that charge on. I cannot say that you do not have 
those facts. I do not know.
    Ms. Cobell. Yes.
    Mr. Duncan. But I think it is such a serious charge that I 
think you should have that, and not just be basing it on some 
third-party, hearsay type statement. You need to have that kind 
of knowledge yourself, because I am not sure that you 
understand how serious the charge is that you are making there. 
You are charging criminal illegality.
    Let me ask all of the witnesses this. In one of the 
briefing papers we are told that you feel the Secretary's 
proposal would weaken the Bureau of Indian Affairs. Will you 
explain to me how you feel that would occur? This is 
something--In fact, Ms. Cobell, you say ``Where is the money?'' 
And I notice that there was a GAO report concerning this 
problem as long ago as 1955. This is a mess that has been going 
on for many, many years. In fact, the Secretary of the Interior 
had a quote from Arthur Andersen, a report in 1988 and '89, 
that said that some of these weaknesses are so pervasive and 
fundamental as to render the accounting systems unreliable, and 
said it would cost $440 million, or as much as $440 million, to 
straighten out. What do you say about that?
    Ms. Cobell. Well, I think that what the Secretary herself 
talked about this morning is the fact that they do not have 
records. They do not even know where the records are. And so it 
seems to me that the logical--
    Mr. Duncan. But those records were lost long before she 
ever came in.
    Ms. Cobell. Yes, well, I know, but she went in as the 
Secretary of Interior, and she is our trustee. And so I think 
the logical thing to do is settle the case; sit down with both 
sides and settle. If you cannot provide a historical 
accounting, do not pretend that you can. Settle the case.
    And Congressman, I really want--With all due respect, I 
want to tell you, this is serious. This is serious. And I would 
not put anything in my testimony that I did not feel was 
accurate and correct. You know, three of the four counts of the 
current contempt proceedings that are going on right now are 
the fraud on the court. And so we do have all the documentation 
to back up what I said.
    So I really want to let you know that we have all talked 
about how long we have been involved with trying to reform and 
getting accounting for the beneficiaries, to really have the 
government understand what it is that you are supposed to be 
providing as the highest fiduciary standard to our 
beneficiaries. And this is very serious.
    Mr. Duncan. And you do not believe the Secretary of the 
Interior is trying to straighten out this mess that she 
inherited?
    Ms. Cobell. No.
    Mr. Duncan. OK. Thank you very much.
    Mr. Hayworth. Thank you, Mr. Duncan.
    Let us turn to the lady from the Virgin Islands.
    Mrs. Christensen. Thank you, Mr. Chairman. And I thank the 
panelists for their testimony. I guess I would ask two 
questions, the first one to President Makil. I think it is 
pretty clear that everyone on the panel agrees that the BITAM 
proposal would undermine the BIA, and that that is a bad 
proposal. I had asked the Secretary about BITAM's impact on the 
638 contracts and the self-governing tribes. And if I recall 
her answer, she said that she thought both were compatible. But 
I think, President, you seem to disagree.
    Mr. Makil. There obviously would be a concern as to how 
they would do that; you know, the process they would go 
through. Two things: One is the funding of it and the funding 
that they would use to support BITAM, and what that means to 
the self-governance process. Because the way that it looks is 
it would mean that it would take away not only the financial 
arrangement we have under the compact, but it would also take 
away the responsibility that we handle already ourselves quite 
adequately. And so now we are being asked, and that is what is 
even more important to us--Well, I should not say more 
important, but as important. It is when you take away the 
responsibility that we have already demonstrated we can handle 
and put it in another system, just for the sake of creating a 
new system to solve a problem.
    Mrs. Christensen. And I agree with my colleague, 
Congressman Kildee, that the model that you have provided, as 
well as some others, should be able to serve as a model for us 
to use as we move ahead from here.
    I wanted to ask Chairman Jandreau and Ms. Cobell your 
opinions on the proposal that was supported by President Makil 
for an independent American Indian Trust oversight commission, 
and to ask how does that compare to the receivership. Ms. 
Cobell?
    Ms. Cobell. I think that it would complement the 
receivership. I think that what Chairman Makil has outlined is 
something that has been discussed for quite some time with the 
advisory board, that we really need to have independence. And 
that would bring the independence of a commission outside of 
the Department, and there would be somebody put in place, a 
body put in place, that the Secretary would have to answer to.
    Right now, the advisory board is ignored by the Secretary 
and the Department. And I think that if we put the receivership 
in for the individual Indian accounts, this will really 
complement what the tribes are trying to do as an outside 
commission. It certainly seems like one good idea to me, too.
    I am still very hung up on the fact that we have to have a 
receiver put in place for the individual Indian accounts, 
because it is a separate situation than the tribal accounts.
    Mrs. Christensen. OK. So it is complementary. I understand 
now. Did Chairman Jandreau want to comment on that?
    Mr. Jandreau. That has been a request that has been in 
existence for at least the last 40 years that I am aware of, 
that there be a commission or a Committee or something driving 
this whole process, going back to even when the commissioner 
position was there. And I believe it is necessary. I believe 
that if that is in place and there is an allowance to recreate 
the Bureau in its entirety with that body in place, I believe 
that there would be no need for a receiver. But whatever 
happens will happen.
    Mrs. Christensen. Those are my questions. Thank you, Mr. 
Chairman.
    Mr. Hayworth. Thank you, ma'am.
    We now recognize the gentleman from Montana.
    Mr. Rehberg. Thank you, Mr. Chairman. I have been asked to 
pass along the apologies of Chairman Matt. He had to catch a 
plane back to Montana. And those of us from Montana know that 
if you miss that one plane, you wait until tomorrow.
    [Laughter.]
    Mr. Rehberg. Yes, it is like the Virgin Islands. So he has 
moved along.
    But I would have asked him a question about his expertise 
in being able to manage the real estate services within his 
reservation. So I guess, perhaps, my question would be to Ms. 
Cobell. And that is, are there contracts for the individual 
Indian trust accounts separate from the BIA at this time, 
similar to what Chairman Makil does with his contract and what 
Mr. Matt does with his contract?
    Ms. Cobell. No, not at Blackfeet. We do not have the IIMs 
contracted. And I think Mr. Makil's tribe and Mr. Matt's are 
unique. I think there are very few out there that have 
contracted the management of the individual Indian accounts.
    Mr. Rehberg. So you are not aware of any other individual 
Indian account--
    Ms. Cobell. I am not aware of it.
    Mr. Rehberg. --separate contracts? It is all being done 
within the BIA?
    Ms. Cobell. Right.
    Mr. Rehberg. I had wanted to ask the Secretary the 
question, and did not, and perhaps you can answer the question 
from your knowledge of the individual Indian accounts. Are 
there situations that you know of, in looking at their numbers, 
where the fractionalization of the ownership was so large that 
the benefit was not anywhere close to the cost of administering 
that trust? How do you propose under the receivership concept 
of trying to bring that to a conclusion? Does it get to the 
point where you finally say, ``Look, if you are 1/64th and 
beyond, we cannot write you a three-cent check''?
    Ms. Cobell. Well, no, I think it has to start even further 
back than that. I think the EDS reports and all of the other 
reports from GAO indicate the fact that we have to go back to 
the land ownership originally. Because in the testimony through 
the court, we had learned that probates were destroyed; that 
nobody had actually verified the land ownership records. And I 
think that if you talk to Ivan and to Fred, they actually had 
to go back and do a lot of in-depth work before they could 
verify the ownerships.
    And the real issue that we are dealing with now is 
ownership. Land ownership records are wrong. And so they really 
cannot tell you what should be in your account. And that is a 
real issue, but it is fixable.
    When we talk about crisis management, I think that is where 
we are going, is finding out what should people--what do they 
really own?
    Mr. Rehberg. Perhaps it is not a fair question, but can you 
estimate the time that the receivership would be necessary? Are 
we talking 5 years?
    Ms. Cobell. Yes, I would think that it would probably at 
least be 5 years. Five years would be my estimation. I think 
that there is a lot of clean-up that has to be done. I think 
Mr. Kieffer, the court monitor, identified on the data clean-up 
they had not even started. But I think that if you get it under 
a receivership where you have accountability and have 
consequences if you do not do your job, that it could be done 
in a shorter period of time.
    Mr. Rehberg. President Makil, you might have said this and 
I missed it. On your trust accounting system, did you design 
the system, did your tribe? Or do you contract with a private 
entity for that system?
    Mr. Makil. We designed it in-house, our own people.
    Mr. Rehberg. And did you share that design with the 
Secretary or the Department of Interior and the BIA?
    Mr. Makil. Many times we have offered.
    Mr. Rehberg. You have offered it?
    Mr. Makil. Many times we have offered. And the last time 
that I recall, I do not remember if it was ITMA or the finance 
directors group of people, but we were asked to make a 
presentation. And representatives of the Bureau were in 
attendance. They gave a presentation on TAMS. And then when we 
came up to give our presentation, they left. So they have 
missed it.
    Mr. Rehberg. One final question, Ms. Cobell. And that is, 
you know, I do not disagree with your comments and Mr. 
Rayhill's comments about privacy and checking accounts and 
such. But I do have a problem with not getting enough 
information to make the right decisions. Is there not anything 
within that Ernst and Young report that could protect the 
privacy but provide us the information of the problems, and I 
guess more specifically with what Mr. Duncan asked, some of the 
fraudulent examples? Is there not a way that we can get some of 
that information?
    Ms. Cobell. Yes, well, the Ernst and Young is not really an 
accounting. And I think everybody has said that through this 
Committee, or at least I heard; that you cannot do an 
accounting. There are lost records. You know, it ends up being 
just a ticking and tacking of the debits and credits. So I 
really do not think that it really shows what you want.
    And I really think it is a violation, Congressman, of our 
privacy rights as beneficiaries, you know. This is a trust 
relationship, and I think that the information is just to go--I 
really feel it is not fair. I think that we all know what is 
missing here is the accounting. And this is not an accounting, 
Ernst and Young. And I would love to spend more time with you 
to talk about that.
    Mr. Rehberg. Thank you, Mr. Chairman.
    Mr. Hayworth. Thank you.
    The gentleman from New Jersey.
    Mr. Pallone. Thank you, Mr. Chairman. Let me just start out 
by thanking the panel. You know, you have really been 
substantive in, I think, giving us a better idea of what the 
problems are and what needs to be done. And I know you have 
been at it for a long time, but it was very helpful. I just 
wanted to stress that.
    The other thing, I wanted to address a few questions to 
President Makil. First of all, I wanted to say I appreciate the 
fact that in your written testimony you talk about how this was 
an opportunity to right the wrongs of the past, because that is 
kind of how I see it. I guess I am a little bothered with 
Secretary Norton, because she seems to sort of suggest that, 
``We are just going to try something here, and we hope it works 
out,'' and I do not think really understands that this is 
really an opportunity to show that by working with the tribes 
that we can really accomplish something and build sort of trust 
with each other.
    But I wanted to ask, you talked about extending the 
original deadline for consultation, and you thought it should 
be extended again. And that is kind of what I said before. I am 
fearful that she is trying to wrap this up very quickly, which 
she kind of said. And I was just wondering if you would 
initially tell us how long a period of time do you think you 
need, and whether you think that the Secretary is spending 
enough time. And she says she is meeting with the taskforce, 
but my fear is that we are not getting enough time here and 
that this is going to be wrapped up very quickly. How long do 
you think we need?
    Mr. Makil. It would be a guess on my part, but I think it 
could be anywhere from six to 18 months. That would be a guess. 
But obviously, if there was some form of legislation enacted to 
create an independent commission, then that would define a 
process for consultation that would be necessary to accomplish 
the task.
    Mr. Pallone. Now, did you comment, have the tribes and the 
taskforce looked at your proposal, and have they commented on 
your proposal at this point?
    Mr. Makil. We have not had the opportunity because, 
obviously, time has been short--
    Mr. Pallone. Right.
    Mr. Makil. --to present this idea to the taskforce. I did 
personally present it to the western region representative, 
which is representing the region that we are located in. I did 
present this idea to that representative. I don't know the 
results of that discussion over the past weekend, if it was 
presented and to what extent there was comment.
    Mr. Pallone. You still need time, obviously.
    Mr. Makil. Right.
    Mr. Pallone. Now, you said in your testimony, also, you 
talked about how the Secretary's current proposal violates a 
lot of things: treaties, executive orders. But then you said 
even the Federal policy of tribal self-governance and self-
determination. You mean what she has proposed, or just the way 
she is going about it? Why is the proposal a violation of 
sovereignty or self-governance?
    Mr. Makil. First of all, it takes the right to decide.
    Mr. Pallone. Right.
    Mr. Makil. For one thing. But the issue is that at least 
one of the issues for us has been there are examples of models 
out there that one ought to consider. If they are working, is 
there not something that can be developed similar to those 
models that will work on a larger scale?
    Now, granted, you know, our model is specific to our tribe. 
But all of the components necessary to develop an adequate 
model that works I believe consist or exist in that model. And 
so there has not been that consideration of these models that 
are out there.
    There also has not been--You know, it was obvious that 
there was a decision made about how things should work, and 
then consultation following to support that. To me, that is a 
severe violation, when it has been the policy of the Federal 
Government to consult with tribes, especially when you are 
talking about something as significant as individual Indian 
money accounts or trust responsibilities that the Bureau has.
    Mr. Pallone. OK. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Hayworth. Thank you, Mr. Pallone.
    The gentleman from American Samoa.
    Mr. Faleomavaega. Thank you, Mr. Chairman. I certainly 
would be remiss if I did not express my sense of appreciation 
to you and the gentleman from Michigan, Mr. Kildee, as co-chair 
of our Indian Caucus. And I sincerely hope, Mr. Chairman, that 
not only the advent of the seriousness of this trust issue that 
has now come before us, but it is my sincere hope that our 
caucus will also address seriously the issues affecting Indian 
health, education, the problem with education, all other areas, 
the BIA also, in any way.
    I am sorry that the Administration did not in any way at 
least consult with this member and members of our caucus; and 
hopefully, that we could have worked together on this issue.
    I do not know if it was the humorist Will Rogers, who I 
understand was part Cherokee, who said that the Federal 
Government did a fantastic job by stealing land from Indians: 
They did it fair and square. That is supposed to be a joke, Mr. 
Chairman.
    [Laughter.]
    Mr. Faleomavaega. I do want to offer my personal and 
highest commendation to Ms. Cobell for her leadership, for the 
initiative and the tenacity to go against an 800-pound gorilla. 
To think that this issue has been in place now for some 100 
years, and now we come to a situation--And in all fairness to 
the current Administration, this is not something that 
Secretary Norton is responsible for. The fact is that both 
Democratic and Republican administrations have failed miserably 
in addressing the issue very seriously. And now it has taken 
the Federal court to finally force the issue.
    And for this reason, I have to offer my personal 
commendation to Ms. Cobell and her team in making this effort. 
Now we are in the square. And I wanted to ask the members of 
the panel, and I had raised this issue earlier with Secretary 
Norton, about the 1994 Act. I think Mr. Slonaker even admitted 
that it does not have very much teeth in it--really, to address 
the issue that has been on the books.
    The OMB, the GAO, and I thought the fantastic work that 
even the late Congressman Sinar from Oklahoma--It was at his 
urging that we pass the 1994 Act. I wanted to ask the members 
of the panel, do you think that maybe this could be a route 
that Congress could make improvements in the current law and 
literally put more teeth in, as opposed to the Secretary's 
proposed executive order, and changing the landscape as far as 
BIA is concerned? I open it to any members of the panel.
    Ms. Cobell. I certainly think that the Trust Fund Reform 
Act of 1994 could use some amendments to it to make it 
stronger. I feel that you could encompass what Mr. Makil has 
outlined in making a more powerful commission, but not to be 
reportable to the Secretary; that it has to be outside. Because 
that is what has failed.
    If you remember, Paul Holman tried to implement change, and 
was met by total--just a real not good attitude from the 
Secretary; and basically took a lot of powers away from him and 
ended up having the special trustee quit. So I think it is a 
real opportunity to enforce the law to what it was intended to 
be.
    Mr. Faleomavaega. Please.
    Mr. Makil. I would agree that it possibly could set up or 
continue to advance that legislation to create an independent 
commission. The intent, as we had discussed it, because many of 
us have been doing this for a number of years and are working 
on this issue for a number of years--The intent was to be able 
to create the advisory board that was set up for the special 
trustee, having that kind of expertise, the financial and the 
tribal expertise, so that it could offer the solutions to 
dealing with many of these issues.
    Unfortunately, it is only an advisory Committee, and does 
not have any authority. That is why it is important, if it was 
going to be changed, that legislatively it needs to be done to 
create the independent commission.
    Mr. Faleomavaega. Well, I think one of the problems that we 
were faced with when the court decision came out, there may be 
an estimate on individual Indian accounts, monies of some $100 
billion. I think this is where everything started shaking here, 
as far as the Congress was concerned, as far as the 
Administration was concerned. Then it became a political 
problem.
    It did not become a problem of justice and fairness. I do 
not think there is any question in anybody here, Mr. Chairman, 
that the money is there. All we have to do is account for it. 
And I think this is where the problem lies. The money is there, 
despite all the burnings and whatever, the misplaced records, 
all of that. But collection continues to come into the pot in 
the Federal Treasury, but we just cannot seem to make an 
accounting.
    The estimates, Ms. Cobell, if I may ask the question, it 
has been estimated that the individual Indian account monies, 
that there is about $100 billion there. Has there been any 
estimate on the amount of monies that were used for the leases 
and extraction of minerals from tribal lands? Any estimates 
along those lines?
    Ms. Cobell. No, I cannot answer on the tribal side. I have 
just been working with the individual Indians.
    Mr. Faleomavaega. How much has this litigation cost your 
tribe and people that are involved in your lawsuit?
    Ms. Cobell. Well, actually, I went out and fund-raised for 
this litigation, and was not able to get any tribal funds 
committed for it because they have their own initiative. They 
have to fight for their tribal funds, tribal trust funds. That 
has not even come before this Committee yet.
    But I know that it has cost a lot of money. And I stated 
that I hope that Congress stops this frivolous litigation on 
the part of the Departments of Interior and Treasury, because 
it has got to stop. You know, we have won every single way, but 
they are refusing to implement the court orders. And we should 
not have to fight this. And if you think about it, you know, 
why should we have to fight for an accounting?
    But it has cost a lot of money, and I have had to fund-
raise to fund this litigation.
    Mr. Faleomavaega. I think there have been seven 
consultations conducted throughout the country by Secretary 
Norton or her staff. Do you consider this to be adequate, in 
terms of consultations with Indian country?
    Mr. Jandreau. No, it is not. But going back to your first 
question about changing the legislation, adding to that, I 
think it is very important that those areas that are not able 
to speak but through one representative, who control 40 percent 
of the account holders, who contain 60 percent of the trust 
assets, that at least field hearings in those areas--and I am 
talking about the Great Plains--be held to really allow those 
people to speak to what kinds of changes and what kinds of 
things that they would like to see happen with the legislation 
to make it stronger.
    And as far as the commission, I think that that is so 
important. And, no, it has not been dealt with, a lot of the 
ideas about tribal trust assets.
    Mr. Faleomavaega. Thank you, Mr. Chairman, my time is up.
    Mr. Hayworth. Thank you.
    The gentleman from Oklahoma.
    Mr. Carson. Thank you, Mr. Hayworth.
    I would associate myself with my friend from American Samoa 
in his comments about the tenacity and persistence of everyone 
in this room in pursuing this litigation and making this issue 
one that is aware for the public, as well.
    Just a couple of questions, because we have touched on a 
number of issues and you have explained your thoughts and the 
positions at length to a number of the other members. Ms. 
Cobell, let me ask you a question. I mean, much of the debate 
and cause of concern on this issue has been about the temporal 
scope of accounting, and how far back you are going to do an 
accounting, and what is possible to reconstruct records.
    In your earlier comments, you alluded to the fact that no 
accounting was possible. I wonder whether you would expound on 
that a bit more for all of us, and tell us to what extent you 
think an accounting can be done, and kind of the scope of that 
accounting if it can be done.
    Ms. Cobell. Well, I think we all understand as individual 
Indians that we are not going to get every penny that was owed 
to us from our ancestors. And from 1887 forward, there has 
never been an audit, or a reconciliation, or whatever you want 
to call it, to individual Indians. But I believe that the 
individual Indian account holders, we have come up with actual 
figures that we think that we could offer in a settlement talk. 
But the Department and Justice, I guess through the Justice 
Department, refused to sit down and have settlement talks.
    And I think that that could be very constructive. And we 
would not have to continue, our Congress would not have to 
continue to appropriate money to fight this case. And so I 
think that that is where the resources should be spent, is 
sitting down and talking about a fair settlement with 
individual Indian account holders.
    And we have had accountants working on this from day one, 
since we started this litigation, to come up with an idea of 
how much is owed individual Indians.
    Mr. Carson. And what is that number that your accountants 
have come up with?
    Ms. Cobell. Well, it is above $10 billion, let me tell you 
that. And we do not know exactly where we would be as far as 
the--I guess I forgot about that, is that we had actually 
shared a model with the Department of Interior, telling them, 
``This is where we can start and where we can go, as far as 
what is owed individual Indians.''
    The $100 billion comes from 1887 forward, because there has 
not been an accounting. And of course, there will probably have 
to be some negotiations as far as allowance for disbursements 
and whatever. But the figure is in the billions of dollars, and 
I would say that $10 billion is a low-ball figure.
    Mr. Carson. Very good. I do not have any further questions. 
Let me just ask if the other panelists would agree with that 
basic notion, that a settlement should be pursued in this 
manner, rather than endless litigation about the proper scope 
of accounting?
    And perhaps, let me ask our first panelist, as well, who 
brought up the idea of some alternative models for accounting 
that you had thrown out there, in some of the discussions on 
this you have talked about a Resolution Trust Corporation style 
model. Tell me how that would be reconciled with much of the 
concern in Indian country about the various rights and 
obligations of self-governing tribes, and the fact that we do 
not want to undercut the Bureau of Indian Affairs. And in many 
ways, the Secretary's proposal is seen perhaps as the first 
step in dismantling the historic trust relationship that the 
BIA is the most obvious symbol of.
    Mr. Makil. Sure. Because of the historic relationship, in 
terms of the trust relationship, that must not be disturbed. 
And the reason that this makes sense is that a commission that 
is made up of members that would also have some tribal 
representation is important, the knowledge of that is 
important; and also, hopefully, that recommendations for 
appointment to a commission would be done through a process 
that would include recommendations from tribes or tribal 
governments.
    One of the things that is important in this process, and I 
think is possible--and it goes to even part of the discussion 
that occurs when you talk about consultation--is that it is 
difficult to have consultation with tribes as a trustee for 
tribes and only speak about the trust responsibilities, and not 
be able to discuss the fact that it is not just individual 
Indian money accounts where there are disputes that need 
resolution. There are, or there will be, disputes on tribal 
monies, as well.
    And the Federal liability, in terms of the Federal 
Government and its liability that exists out there in those 
types of disputes--And it is not just one, you know. There are 
557 different tribes in the country. And maybe not all of them 
will have disputes, but a lot of them will.
    And so the resolution of those disputes through a 
commission that, hopefully, would be objective, would be 
independent, a commission that would be--and I would like to 
believe that it is possible--not politically motivated, could 
deal with just the facts of the tasks that are at hand, and try 
to find resolution. Because then, on the one hand, to resolve 
some of these disputes you would have the tribes on one side, 
and then you would have the Secretary on the other side of the 
table. And so, you know, you cannot do that when the Secretary 
has that responsibility to do it. You have to do it with 
someone that is independent.
    Our concern about the self-governance of tribes is that if 
there is something that we believe can work, and works 
consistent with our ability, it does not mean that you take 
away what we are doing. It may mean that you create a model 
that is consistent with what we are doing. You know, because 
after all, the real issue here is making sure there is a proper 
accounting system in place so that it accounts not only for the 
financial side, but also for maintaining land interests and 
activities of the land that bring in that revenue.
    And the more that tribes can take on those responsibilities 
themselves--Not all tribes are in a position, or have the 
resources to do that. But as they develop the resources to do 
it and there is a model out there, whether it is a commission--
And that was one of the reasons I mentioned the possibility 
even of an exit strategy in the future. Because over time, 
tribes will handle those responsibilities more and more 
themselves, I believe.
    Mr. Carson. Mr. Chairman, I see my time is up. If I could, 
I would just offer, with unanimous consent, to introduce into 
the record the testimony of Mr. John Berrey, an Osage and 
Quapaw with significant expertise in these issues, that I would 
like to offer for the record.
    Mr. Hayworth. Without objection, so ordered.
    [The prepared statement of Mr. Berrey follows:]
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    Mr. Hayworth. Does anyone else have any questions for the 
panelists?
    [No Response.]
    Mr. Hayworth. The bells have rung. We have another vote.
    Just a brief question--the Chairman's prerogative--for my 
constituent. President Makil, just briefly, as we listened to 
the receivership plan, Elouise outlined and talked some about 
that. And you have another thing. This is kind of an all-
purpose exam question, just based on what you have: Compare and 
contrast. Are there any commonalities of views? Because Ms. 
Cobell makes it very clear that she is concerned about the 
individual accounts. You have done work with your tribe on the 
tribal accounts, and done some things. Just at first blush, is 
there any meeting of the minds on this, or just two alternative 
notions here?
    Mr. Makil. Actually, if you look at it from the larger 
perspective, we are really asking for the same thing. And let 
me explain why. In a receivership situation mandated by a 
court, it would be something that has to be done. OK? I mean, 
that is essentially what the court would mandate. So a receiver 
has a responsibility to make it happen. It is not left open to 
maybe coming up with a plan that works. They have to come up 
with something that resolves the issue.
    When I ask for legislation of an independent commission, it 
is because we need something that is going to work. We need 
something in place that is going to truly, truly represent a 
fiduciary, or act as a fiduciary, or those responsibilities 
that fall under the broad title of ``trust,'' on behalf of 
tribes.
    And it is not something that we can continue to do in an 
advisory capacity. Because as has been demonstrated, for the 
past eight, 10 years, it is that an advisory capacity does not 
work. It is something that has to be mandated.
    So in effect, we are asking for the same thing. Now, they 
are two different situations, and they do respond to two 
distinct areas. But I think that they can work in tandem.
    Mr. Hayworth. I thank you, President Makil. Thanks to all 
of the panelists. A vote is on. We will recess.
    Mr. Faleomavaega. Mr. Chairman?
    Mr. Hayworth. Yes, sir?
    Mr. Faleomavaega. May I ask unanimous consent that my 
statement be made part of the record?
    Mr. Hayworth. Why, absolutely. Without objection, it will 
be made a part of the record.
    [The prepared statement of Mr. Faleomavaega follows:]

    Statement of The Honorable Eni F.H. Faleomavaega, a Delegate to 
                      Congress from American Samoa

    The Chairman.
    I want to thank you for scheduling this hearing today on the 
Department of the Interior's proposal to re-structure its management of 
Indian Trust Fund Accounts. I very much appreciate the willingness of 
the Committee to look at this subject again in light of recent 
circumstances, including a federal court order directing the Department 
of the Interior to disconnect from the Internet all computer systems 
through which individual Indian trust data could be obtained.
    As we know, the Department of the Interior's management of Indian 
trust assets is a complex problem with a long history. The Department 
of the Interior has had the trust responsibility of managing both 
individual Indian accounts and tribal accounts since the 1800s. This is 
no small task. The trust is composed of 45 million acres of tribal 
lands, 11 million acres of individually allotted lands, and $3 billion 
in cash assets. Over $1 billion is received and disbursed by the 
Department each year through various trust accounts.
    There is general acknowledgment that these accounts are not now and 
have never been satisfactorily managed in accordance with the fiduciary 
responsibility owed by the government to the trustees. By saying this, 
I do not mean to be any more critical of the current administration 
than prior administrations, and I wish to acknowledge the efforts being 
undertaken to reconcile the accounts by this administration and the 
previous administration.
    Mismanagement of Indian trust funds is not a new problem. Over the 
years, numerous audits and reports on Indian trust funds have been 
published by the Interior's Inspector General, the GAO, OMB, and 
Congressional Committees. Former Representative Mike Synar conducted 
five years of investigations into the problems and published a report 
in 1992 entitled, ``Misplaced Trust: The Bureau of Indian Affairs' 
Mismanagement of the Indian Trust Fund.'' The report detailed problems 
associated with trust fund accounts that had never been reconciled, 
tribes and individual Indians who did not receive regular statements 
detailing the activity in their accounts, checks not being credited to 
appropriate accounts in a timely manner, and irregular bookkeeping 
practices. Today, ten years later, the same problems continue to 
confront us.
    I do not believe the executive branch of our government is solely 
responsible for the mismanagement of Indian trust funds. Congress has 
known about this problem for decades and could have provided additional 
funding and recourse to address this problem. To its credit, however, 
Congress has made efforts to get this mess straightened out.
    In the 1990s, Congress appropriated $20 million and instructed the 
BIA to reconcile the accounts. In 1994, the American Indian Trust Fund 
Management Reform Act was enacted into law. This act set up new 
financial criteria for the accounts, created the Office of Special 
Trustee within DOI, and instructed the Department of the Interior to 
report to Congress with recommendations to resolve the accounts which 
were not reconciled. Despite these Congressional efforts, the 
Department of the Interior failed to get the accounts under control.
    Now the Department has more immediate concerns. I have been 
following the considerable media reports on both the on-going 
litigation concerning mismanagement of individual trust accounts and 
the Secretary's proposed plan to improve the management of the trust 
assets. The reports are that many Indian tribes have spoken out in 
opposition to the proposal and want to be consulted on how trust reform 
might best be accomplished. Although I can understand that the 
Department wants to move expeditiously toward reform, I want to clearly 
state for the record that I believe the tribes must be given full input 
on how best to proceed.
    I also hope to have the following questions answered today:
     What action is the Department taking today to reconcile 
Indian trust accounts?
     Are there any actions the Department would like to take 
to reconcile trust accounts but feels it cannot take without action 
from Congress?
     How many of the trust accounts have been reconciled over 
the past ten years?
     For the accounts which are not reconciled, when is 
reconciliation expected?
     Are there any accounts which the Department believes 
cannot be reconciled?
     If so, how does the Department propose to address this 
issue?
     And finally, what is the status of the on-going 
litigation?
    Mr. Chairman, I again want to thank you for holding this hearing. I 
hope that the Committee will continue to do all it can to resolve this 
long-standing problem and provide the oversight necessary to ensure 
that the Department of the Interior lives up to its responsibility in 
managing Indian trust funds.
                                 ______
                                 
    Mr. Faleomavaega. Also, unanimous consent that the Montana-
Wyoming Tribal Leaders Council resolution and objection to 
Secretary Norton's proposal, dated--Well, anyway, it is in 
there.
    Mr. Hayworth. Right, sir.
    Mr. Faleomavaega. Unanimous consent, also, for the position 
statement of the InterTribal Monitoring Association to the 
Department of the Interior, dated December 11th, 2001.
    Mr. Hayworth. Without objection.
    Mr. Faleomavaega. Unanimous consent, that the tribal 
chairmen's position statement of proposed reorganization that 
was presented to Secretary Norton--This is a tribal 
consultation of Indian Trust assessment management, dated 
December 20, 2001.
    Mr. Hayworth. Without objection, it is so ordered.
    Mr. Faleomavaega. Unanimous consent, that the letter from 
the Northern Arapaho Business Council to Assistant Secretary 
Neal McCaleb, of December 18, 2001, also objecting to Secretary 
Norton's proposal.
    Mr. Hayworth. Without objection.
    Mr. Faleomavaega. Unanimous consent, this statement dated 
February 1, 2002, by the Assiniboine and Sioux Tribes, 
counterproposal to the BIA's proposal for reorganization.
    Mr. Hayworth. Likewise, it is so ordered.
    Mr. Faleomavaega. And unanimous consent, that the trust 
reform recommendations by the Chippewa-Cree Tribe presented by 
Alvin Windy Boy, Senior, chairman, a consultation that was 
conducted dated February 1, 2002.
    Mr. Hayworth. Without objection.
    Mr. Faleomavaega. And thank you very much, Mr. Chairman.
    [The information submitted for the record can be found at 
the end of the hearing]
    Mr. Hayworth. And thank you. And we could tell toward the 
end, I do not know if you grew misty-eyed, Mr. Faleomavaega, 
but you certainly choked up there. And we are glad we got that 
all worked in.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    Mr. Hayworth. We are happy to accommodate a variety of 
views, as we will with panel three when we return from the 
vote. So we thank you for your patience. Thanks to the second 
panel. And again, if anyone has anything in writing, we have 2 
weeks to get that in.
    The Committee stands in recess, subject to the call of the 
chair.
    [Recess, 2:30 p.m.-2:50 p.m.]
    Mr. Hayworth. The Committee will come to order. We have 
asked for any documents in writing and asked for responses. And 
the hearing record will be held open for those responses for 2 
weeks from this date.
    And so, with that, we thank panel three for hanging in. We 
nickname you the ``Job panel,'' because of your patience, as we 
approach ten till 3 Eastern Standard Time.
    And again, we turn to our friend from Montana, who has the 
privilege of introducing yet another constituent.
    Mr. Rehberg. I thank you, Mr. Chairman. One of my 
colleagues was ribbing me a bit, suggesting that perhaps nobody 
was left in the State of Montana. I might point out that I do, 
in fact, represent a district that spans the distance of 
Washington, D.C., to Chicago, and has 902,000 residents. So the 
six or ten that have been here did not even make a dent in our 
district.
    [Laughter.]
    Mr. Rehberg. But I do have the pleasure of introducing 
another good friend, a long acquaintance of mine. Jonathan 
Windy Boy is a member of the Chippewa-Cree if the Rocky Boy's 
Reservation in north central Montana, which is where my family 
originally homesteaded in 1873.
    In addition to serving as president of the Council of Large 
Land Based Tribes, he is a very active member of both his local 
community and, on a larger scale, across Indian country. I am 
pleased to welcome Mr. Windy Boy here today, and appreciate all 
of his efforts on behalf of his people and his community. And 
he is entering into the political arena, running for the state 
legislature for the first time this year. So we wish you well, 
Mr. Windy Boy, in that, as well.
    Mr. Hayworth. And we do thank President Windy Boy for 
joining us, along with Charles O. Tillman, Junior, the Chairman 
of the InterTribal Monitoring Association; and Tex G. Hall, the 
president of the National Congress of American Indians; and 
Donald T. Gray, Esquire, affiliated with Nixon Peabody.
    And with that, we will hear first the testimony of Chairman 
Tillman. Welcome.

  STATEMENT OF CHARLES O. TILLMAN, JR., CHAIRMAN, INTERTRIBAL 
                     MONITORING ASSOCIATION

    Mr. Tillman. Thank you very much, Congressman Hayworth. It 
is a privilege to be here. I did not know I was going to be 
first, but I am now, so I might as well get started.
    A couple of days ago, I was invited out to be one of the 24 
or 36 that participated in the taskforce, and in that, Dr. 
Williamson, University of Colorado, speaker of the 
Sheperdstown, West Virginia: on the origin of trust. And, sir, 
I think that that is where this all begins. We have to start at 
the beginning. And I was told by an old, old-time lawyer years 
ago that you start at the first, and not in the middle, or not 
at the last; but at the first of the thing.
    And the Indians started off with treaties, trust, case law. 
Policies and procedures were developed from that; and then the 
most important part, the accountability. Trust law appeared in 
1831, under Chief Justice Marshall, in the Cherokee Nation 
case. Marshall understood the treaty negotiations, and knew 
what the tribes were asking for, and that was disease 
protection against the white race; protection against trespass 
on their land; protection for their land. That was 171 years 
ago, and here we are today asking for protection, and living up 
to what Congress said 171 years ago.
    But Congress realized that tribal trust law is the most 
direct, most private, and should be held at the highest 
standard of all trust law.
    The moral issue has been felt since the Nixon 
Administration about its great importance, and hopefully to 
every administration thereafter. We have not forgotten what 
Justice Marshall said; that Congress was the ultimate trust 
holder. And I am here today to ask Congress to flex its 
authority, to abide by what our forefathers felt toward the 
native people of this country.
    Congress needs to make sure that the trust functions are 
being carried out by the trustee, which is the Bureau of Indian 
Affairs. And Congress should have its own oversight Committee 
for this purpose.
    Congressmen, I belong to a group called the ITMA, which is 
the InterTribal Monitoring Association, which was started in 
1990. Right now we have 53 tribes, and those 53 tribes consist 
of the largest stakeholders. They are the ones like the Osage 
Tribe of Indians. We have a 1.5 million acre reservation which 
has, I think it is, 14,000 oil wells. And it is badly 
mismanaged.
    The ITMA represents those folks, and we oppose the 
Secretary's plan for the new Bureau of Trust Management, called 
BITAM. We totally, 100 percent, oppose that.
    The second thing we do, we oppose the reprogramming of $300 
million for that purpose, and respectfully request Congress to 
reject the reprogramming of that request.
    ITMA suggests the following issues, and they must be 
addressed and considered in improving trust reform:
    No. 1. Determine the trust duties to be discharged. And 
that means to me, what are the duties to be performed on 
accountability of our assets? That is the main and most 
important thing of all.
    The second thing that the ITMA would request in 
highlighting some of the things is to disclose the known losses 
and theft that have happened on these reservations.
    The third thing is the reconciliation of settlement.
    So what I am here today to do to you is to express the 
proposal of the InterTribal Monitoring Association and who we 
represent. We are the big stakeholders. We are the ones that we 
look at tribal stakeholding, as well as IIM. So today that is 
the reason why I am here.
    I thank you very much for letting me testify here. I 
appreciate your hearing me. But I would like to make one more 
comment. It is that when we take a look at our history, and we 
take a look at Enron, and we take a look at the S&Ls, what 
happened back in the '80's, that it cost this country $88 
billion to fix, then we are in serious trouble. And what I 
call, this is our ugly baby. And if it is our ugly baby, then 
we need to fix it. Because these infractions go on and on and 
on. They are a day to day thing, Congressmen, and we have to 
stop it. Thank you very much.
    [The prepared statement of Mr. Tillman follows:]

Statement of Charles O. Tillman, Jr., Chairman, Intertribal Monitoring 
                   Association on Indian Trust Funds

    The Intertribal Monitoring Association on Indian Trust Funds (ITMA) 
is a representative organization of the following federally recognized 
tribes: Central Council of Tlingit & Haida Indian Tribes, Kenaitze 
Indian Tribe, Metlakatla Indian Tribe, Hopi Nation, Tohono O'odham 
Nation, Salt River Pima-Maricopa Indian Tribe, Hoopa Valley Tribe, 
Yurok Tribe, Soboba Band of Luiseno Indians, Southern Ute Tribe, Nez 
Perce Tribe, Passamaquoddy-Pleasant Point Tribe, Penobscot Nation, 
Sault Ste. Marie Tribe of Chippewa Indians, Grand Portage Tribe, Leech 
Lake Band of Ojibwe, Red Lake Band of Chippewa Indians, Blackfeet 
Tribe, Chippewa Cree Tribe of Rocky Boy, Confederated Salish & Kootenai 
Tribe, Crow Tribe, Fort Belknap Tribes, Fort Peck Tribes, Northern 
Cheyenne Tribe, Winnebago Tribe, Walker River Paiute Tribal Council, 
Jicarilla Apache Tribe, Mescalero Apache Tribe, Pueblo of Cochiti, 
Pueblo of Laguna, Pueblo of Sandia, Three Affiliated Tribes of Fort 
Berthold, Turtle Mountain Band of Chippewa, Absentee Shawnee Tribe, 
Alabama Quassarte, Cherokee Nation, Kaw Nation, Kiowa Tribe of 
Oklahoma, Muscogee Creek Nation, Osage Tribe, Quapaw Tribe, 
Thlopthlocco Tribal Town, Confederated Tribes of Umatilla, Confederated 
Tribes of Warm Springs, Cheyenne River Sioux Tribe, Sisseton-Wahpeton 
Sioux Tribe, Chehalis Tribe, Confederated Tribes of Colville, Forest 
County Potawatomi Tribe, Oneida Tribe of Wisconsin, Eastern Shoshone 
Tribe, and the Northern Arapaho Tribe.
    ITMA is very grateful for this Committee's invitation to share our 
thoughts today on the status of Indian trust reform within the 
Department of the Interior. We believe we have addressed those issues 
on which the Committee specifically requested our views. ITMA 
emphatically:
     Opposes the Secretary's plan for a new bureau of trust 
management
     Opposes the reprogramming of $300 million for that 
purpose
     Respectfully requests the Congress to reject that 
reprogramming request
    ITMA suggests that the following issues must be addressed and 
considered in improving Indian trust reform:
     Determination of the trust duties to be discharged
     Consultation with tribal governments and Indian 
individuals
     Continuous, diligent oversight by Congress
     Develop policies and procedures to execute acknowledged 
trust duties
     Develop internal controls to detect failures to follow 
policies and procedures
     Develop an enforcement system to preserve integrity
     Develop an appropriate system of rewards and sanctions
     Disclose known losses and thefts
     Role of lawyers and budget officials identified
     Deal in good faith
     Avoid self-dealing or double standard
     Reconciliation or Settlement
Consultation is not a gratuitous nicety
    This Committee has heard much about the Secretary's lack of 
consultation in developing her restructuring plan. ITMA wants to 
emphasize that consultation is essential to the Department's own stated 
goals of wanting to improve the delivery of trust services. This 
Committee asks our views. The Senate oversight committee asks our 
views, the appropriations committees in both houses have consulted with 
us over the years, the General Accounting Office has consulted with us 
over the years in the preparation of reports for the Congress, and the 
press has requested our views in reporting trust fund matters to the 
public. The Department of Interior alone, charged with the principal 
duties of Indian trust administration, has almost never consulted us, 
except to solicit our endorsement of a decision already taken behind 
closed doors within the Department.
    Had Secretary Norton consulted us, she would have been told that 
her plan for an additional Bureau of Indian Trust Asset Management 
would face enormous opposition if she unveiled it as a surprise. Such 
an announcement would violate a written agreement entered into by Mr. 
McCaleb's predecessor on the issue of consultation. The Secretary 
recently attended one, and dispatched a team of Departmental level 
officials to attend other tribal ``consultations'' throughout Indian 
Country to convey the reorganization proposal. All these officials 
heard first hand that Indian Country totally opposed the plan and lack 
of consultation.
    Her first personally signed report to the Cobell court, delivered 
on January 16 of this year, gives us our first indication that the 
present Administration just might, after all, bring that breath of 
fresh air to Indian trust reform we have so long hoped for and awaited. 
We are pleased with the report previously given us by her Director of 
the Office of Historical Accounting that he has agreed to adopt the 
approach we suggested six years ago by beginning with the judgment 
accounts. ITMA can be helpful to that office in suggesting ways in 
which the remainder of the IIM accounts can be similarly stratified for 
examination in manageable portions. In her report the court, the 
Secretary announced, among other things, her intention to adopt a few 
of our other long-standing recommendations to her Department.
    None of this suggests that she is in a position to implement such 
sweeping changes as outlined sketchily in her November 14, 2001 memo 
introducing the reorganization and creation of a new agency to carry 
out trust reform successfully. We should not forget that the Department 
was just as confident in its ill-fated, if short-lived announcement 
that she intended to proceed with a ``statistical sampling'' of the IIM 
accounts. We believe the Secretary could have avoided one of the 
present contempt charges, had she simply chosen to confer with us, 
rather than taking the ``statistical sampling'' decision behind closed 
doors, which is the same way her reorganization plan appears to have 
been conceived.
    Successive Administrations going back to 1986 have announced bold, 
sweeping proposals to reform Indian trust administration. None of these 
proposals rose to the level that could meaningfully be called a plan. 
Whether the proposal was to contract trust fund administration to 
Security Pacific Bank, or with Mellon Bank, or to the Bureau of 
Reclamation, or to transfer it to a whole new agency as Secretary 
Norton now proposes, the result was the same and was totally 
predictable. Indian country rose up in outrage not merely because they 
were not ``consulted,'' but because they had no idea what would happen 
to our money or service delivery, and no one could tell us. Career 
employees whose principal contribution in retrospect turns out to have 
been to buy time reaped scores of thousands of dollars in meritorious 
bonuses. The failures and the losses and the national embarrassment 
continued. After a decade and a half, this pattern should be clear.
Progress of ``Consultation'' on the Department's plan for a new Indian 
        Trust Agency
    It is too early in the ``consultation'' process on the Secretary's 
proposal to make any informed observations about the results. It is not 
too early, however, to make some comments on the process itself, or to 
offer some observations about improving the process. In very 
significant measure, this particular consultation process has been 
badly undermined from the beginning by both the Administration and the 
Congress. Tribes and their organizations both have been admonished by 
congressional staff either to come up with persuasive alternative 
proposals or to persuade the Secretary to abandon hers. Otherwise, the 
Department's current plan will almost certainly be approved when she 
presents it again, this advice has continued. If that advice reflects 
the true situation, then the present consultation process is very 
probably not much more than a charade.
    ITMA believes the consultation process should focus on the 
objectives to be achieved in the various areas of trust administration 
such as leasing, rights-of-way, extractive operations, investment, etc. 
These collaborative deliberations should begin with the legal duties 
required of the government as trustee, and the capabilities and 
resources needed to perform those duties. Only when there has been some 
consensus achieved on the nature and scope of those duties does it make 
sense to focus on the systems and structures best suited to accomplish 
their performance. Unless the Department is genuinely willing to put 
its opening assumptions on the table, consultation in this matter will, 
indeed, be simply a gratuitous nicety, to be endured by the Department 
as part of the cost of proceeding with a predetermined course of 
action.
    In the Eighth Quarterly report to the court, the Secretary and her 
contractor indicate what we hope is a commitment to return to first 
principles and analyze the objectives to be achieved before turning 
again to the systems best suited to achieving them. We note, for 
instance, that in revising trust regulations, the previous 
Administration acknowledged the need for an accounts receivable system, 
but would not acknowledge any responsibility for collecting receivables 
until the much vaunted TAAMS system was operational. Now that system 
has been put on hold. Whether or not that disclaimer is effective is 
another matter, but the example is instructive here.
    We have heartily applauded the Secretary's apparent repudiation of 
that systems-driven approach to performance of trust duties, but we 
point out that the very same mistake can be made with respect to 
organizational structure as with respect to systems. Her predecessor's 
systems-driven approach has now left Indian trust beneficiaries stuck 
with a regulatory regime that explicitly disclaims any responsibility 
on the Department of the Interior to collect their receivables. This 
Secretary appears to have repudiated that systems-driven approach. 
Instead, she has apparently elected to proceed with an organizational 
structure-driven approach, instead. If that is the case, we predict a 
similar result. In both instances, the choice made represents a 
decision to proceed publicly amid much fanfare with activities that 
require a lot of motion, transfer and expenditure of funds, and 
generally mesmerizing movement. This flurry of activity in the name of 
reform is well known to the Department as a tried and proven formula to 
forestall embarrassing questions from oversight Committees and eat up 
the calendar allotted to any Administration in large chunks.
    Finally, we have to note that since this hearing was called, the 
Secretary and her top officials have not only agreed to meet, but have 
spent a week-end in intensive talks with a task force put together by 
tribal leadership from across the nation, and have committed themselves 
to seek a mutually acceptable approach to further trust reform efforts. 
ITMA believes that this approach offers greater promise than any 
approach previously taken, but this promise remains unrealized in these 
early days.
Interior Secretary Norton's Plans for Restructuring Trust 
        Administration
    ITMA strongly opposes Secretary Norton's plan to create a Bureau of 
Indian Trust Asset Management or otherwise dividing the Bureau of 
Indian Affairs into two separate agencies. ITMA's opposition does not 
stem from pique over not having been consulted. Rather, our opposition 
stems from the fact that this announcement fits the very pattern 
described above. This is the current Secretary's first sweeping 
proposal for reform, and it, too, was conceived behind closed doors, 
and no one in the Department has been able to tell us just what it 
means for either our money or our other trust assets. It has not been 
lost on us that the apparent architects of this proposal were deeply 
involved in some of the Department's brilliant inventions of the 
1980's, when large meritorious cash bonuses were paid to career 
employees but no improvement resulted.
    This proposal contains within it the same seeds of likely failure 
that attended the software acquisition called TAAMS. So far as anyone 
in the Department has been able to tell us, little thought has been 
given to the ability to state the objectives to be achieved, beyond the 
catchall term of improvement. The Secretary's team has not been able to 
tell us just what functions, positions, resources, facilities, or other 
capabilities she proposes to transfer. Her team has not shared with us 
any of the planning, if any, that went into this proposal, or what it 
portends for the remaining agency and its capabilities. She has not 
been able to tell us why she thinks current employees could perform 
their duties better if they were located in a new agency. We 
respectfully suggest that she and her team have not given sufficient 
attention to the necessary first step of determining just what those 
duties are.
    Further, we note that the BITAM proposal contains within it the 
explicit assumption that determining the nature and scope of those 
duties is solely within her purview. ITMA categorically rejects that 
assumption. We are aware that the Congress is reluctant to ``tie the 
hands'' of the Executive Branch officials who are charged with 
discharging those duties, and that deference to agency ``expertise'' is 
a long-standing tradition. In the present situation, our reluctant duty 
is to advise this Committee that the weight of recent history counsels 
against honoring either of those traditions without carefully examining 
the underlying assumptions.
    While we take some comfort in Secretary Norton's candid concession 
that this proposal was driven in large measure by a desire to avoid 
interference in her administration of the trust by the federal court in 
Cobell, we simply find that explanation totally inadequate for the 
purpose claimed, fraught with far too many uncertainties, and more 
likely than not to be counterproductive even for her stated purposes. 
As we have noted, this proposal offers no explanation why a realty 
clerk having difficulties performing his duties would be better 
disposed or equipped to perform those duties under a new agency than 
under the present one. If the person is the problem, it is a personnel 
problem and not an organizational one. If the person is not receiving 
adequate supervision, it is a management problem and not an 
organizational one. If, as we suspect, the problem is that insufficient 
attention has been given to determining the nature and scope of the 
duties themselves, placing the person's position in a different box or 
the person in a different agency will contribute absolutely nothing to 
improving the situation. If that person is left in the same location, 
but transferred administratively to a new agency the Department will 
have created an entirely new administrative and budgetary regime that 
contributes absolutely nothing to achieving the original objective, 
which remains the delivery of realty services. The Cobell court's 
Special Monitor's reports abound with such examples of bureaucratic 
shuffling that have exacerbated, rather than alleviated, problems in 
Indian trust administration. A wholesale restructuring of the 
Department without a responsibly developed plan for what is to be 
achieved would be somewhat like catching air in a net. Prodigious 
amounts of energy can be expended. The movement can be mesmerizing. But 
in the end, nothing will have been changed.
    ITMA respectfully urges this Committee not to ignore the lessons of 
recent history in carrying out is own oversight responsibilities to 
evaluate Secretary Norton's restructuring proposal.
Impacts of Court Order to Shut Down Internet Access for Trust 
        Activities
    More than 40,000 individual Indians went through the winter month 
of December and the holidays without access to their own money as a 
result of the court-ordered shut down of automated systems connected to 
the internet. Some 43,000 individuals did not receive checks that would 
otherwise have been written during that period. ITMA hopes that the 
lesson in unintended consequences from this episode is not lost on 
either the court or the Department, or the Congress for that matter, in 
considering the Secretary's reorganization plan. We have been told by 
tribal leaders throughout the country that Indians throughout the 
country are facing repossession of family vehicles, telephone and other 
utility disruptions, harassment from creditors and collection agencies, 
and other indignities they are powerless to avoid simply because their 
own money is not available to them. Elderly Indian people have been 
evicted from nursing homes. One tribe has performed a service to the 
government by issuing general assistance checks for eligible families 
throughout the Pacific Northwest because the Bureau of Indian Affairs 
has been unable to do so. Another tribe has drawn down hundreds of 
thousands of dollars of tribal money in an effort to help families 
weather the shut-down period. The impacts of this shut down cannot be 
overstated, and they have been cataclysmic for those most directly 
affected. Not one employee of the Department or the court has missed a 
paycheck during this period, however.
    In addition, other unforeseen consequences of this shut down period 
should not be overlooked when full service resumes. We presume, for 
instance, that the government will pay interest to those individuals 
whose money it held rather than paid out during the period of the 
shutdown. How will the interest be calculated, or from where will it be 
paid? Was the money that was held rather than paid out invested as part 
of the entire IIM investment pool? If it was invested as part of the 
pool, will others in the pool, such as minors and judgment account 
holders, be credited with a portion of the interest so earned? The 
effect on individual Indians who went without their only source of 
income during the winter months and the holiday seasons should not be 
lost on anyone.
    This issue raises other questions that the Secretary's proposal to 
separate ``trust'' and ``non-trust'' functions seems to ignore, 
including the connection between the BIA's trust services and its other 
service delivery responsibilities. Tribes never considered the extent 
to which trust service delivery has come to depend on the internet. The 
recent shutdown has caused us to wonder how many initial lease payments 
were received, along with the administrative fees the BIA now charges. 
That situation would raise the question of whether the government was 
paying into its own account, but not into Indians' accounts, monies 
charged for the use of Indian land. We do not know whose responsibility 
it is in the current situation to ensure that all the payments that 
were withheld are paid, and paid in full, including interest. All the 
monies withheld, together with accrued interest, should be paid 
immediately, and should not take months to work through the backlog.
IIM Security
    ITMA shares the concern of the Cobell plaintiffs, the court, and 
the Department for security of information relating to IIM accounts. We 
point out in passing that during the period of the Cobell litigation, 
the Pentagon, the FBI, and the Central Intelligence Agency have been 
hacked into, and none of them was shut down as a result. Nevertheless, 
there is probably no area of Indian trust administration that has 
generated more consensus among all the interested parties than that, 
``The security of individual Indian trust data is inadequate,'' in the 
words of the current Associate Deputy Secretary.
    This issue has received detailed attention from the Special Master 
appointed by the court in the Cobell litigation and his contractors, as 
well as from the Department and its contractors. No doubt, the court-
ordered shut down did much to focus the Department's attention on this 
matter, and this focus does appear to have resulted in a candid self-
appraisal of its shortcomings in this arena.
    The Department has now acknowledged, for instance, that it simply 
does not have in place either the comprehensive plan for establishing 
and continuously improving data integrity systems, or the staff 
required to develop one, as required by the Government Information 
Security Reform Act, and OMB Circular A-130. Both supervisory and 
technical support positions such as those for a Chief Information 
Officer and Information Technology Specialists for security assistance 
and oversight remain vacant. In the absence of an overall plan, the 
Department's efforts in this area continue to be driven by its 
immediate needs, court orders, and contractor-identified priorities.
    ITMA does note in the area of IIM data security where the 
Department itself is in trouble and the Secretary on trial for contempt 
of court, the Department has adopted an approach long recommended by 
ITMA for the overall trust reform effort. Because the Department is in 
trouble for noncompliance in performing its duties, it has not charged 
ahead with either a huge systems procurement or a wholesale 
reorganization of the boxes on organizational charts. Rather, the 
Department has undertaken an inventory of its duties as they are found 
in statutes, regulations, OMB-Circulars, court orders, treaties, and 
directives from Congressional appropriations Committees. In the absence 
of qualified staff dedicated to this effort, the Department will charge 
one of its contractors to develop guidance in designing business models 
and systems specifications to perform those duties. This is precisely 
the approach ITMA has long insisted the Department adopt to achieve 
trust reform, and not just data integrity in systems designed to 
perform historic functions more efficiently. If the Department would 
exercise similar care in designing trust service delivery that is given 
to keeping its top officials out of jail, prospects for meaningful 
trust reform would be significantly improved.
ITMA Recommendations
    Continuous, Diligent Oversight by Congress. ITMA believes that true 
reform of the administration of the Indian trust must begin with the 
proposition that not this Secretary nor any Secretary alone can be 
permitted to determine the scope of her own duties. Recent history 
demonstrates conclusively that those tasks that appear easy to perform 
will be given prominent attention, and those that will eat up large 
portions of any Secretary's term in office will be held forth as 
progress to shield against continued oversight by the Congress. We 
recognize the natural inclination of the Congress not to appear to be 
interfering with pending court proceedings, or to ``tie her hands'' in 
carrying out her responsibilities.
    For the reasons that follow, however, ITMA respectfully suggests 
that this traditional deference has been misplaced in this context and 
that continued oversight by the Congress is necessary for effective 
reform of Indian trust administration. Even Judge Lamberth appears to 
have overlooked so far the Department's continued intention to violate 
the express command of Congress in the Royalty Simplification and 
Fairness Act of 1996 by implementing that Act on Indian lands, despite 
the plain language of the statute that it shall not apply to Indian 
lands.
    As we have noted, in the absence of effective oversight, the 
Department will determine the scope of its own duties and this alone 
violates the first principle of the law of agency. Secondly, without 
the kind of oversight represented by this hearing, the Secretary would 
already have committed some $300 million to the expensive, highly 
visible, and time-consuming task of reorganizing the trust functions of 
the Department without having shown any evidence that it would result 
in improvement.
    Determination of the Duties to be Discharged. Although the 
Secretary cannot be permitted to determine unilaterally the scope of 
her legal and fiduciary duties, no one disputes that existing duties as 
set forth in treaties, statutes, and case law have not been adequately 
carried out in the past. Neither is it disputed that the Secretary's 
trust duties extend well beyond simply the management of physical 
assets. To date, however, no significant effort been made even to 
identify those duties, except in the area of automated data security 
where the exercise appears to be motivated by the threat of a contempt 
citation. Notwithstanding that this underlying failure to perform legal 
duties is itself the basis for the entire trust reform effort, no one 
to date outside the Office of Trust Funds Management has attempted to 
set forth with clarity just what those duties are. ITMA believes that 
any improvements resulting from reorganization or successful automation 
of current practices would be a result of sheer happenstance if those 
initiatives are not driven by a comprehensive understanding of the 
duties to be performed. Every one of the hundreds of millions of 
dollars paid in settlements and judgments over the past fifteen years 
has been paid because of a failure to perform existing duties required 
by law. In presently pending litigation, the Executive Branch continues 
to deny the existence of those duties. Almost every conceivable avenue 
has been explored, except to identify them, acknowledge them, and then 
to design policies, procedures, and systems to discharge them 
honorably. No one is more familiar with the treaties and statutes 
affecting each tribe than the tribes themselves, and ITMA believes 
their participation in this effort is essential for success.
    Any serious attempt to determine the duties to be performed in 
carrying out the nation's trust duties to Indian tribes and individuals 
will encounter early the Self-Governance Act of 1994 (P.L. 103-413). 
Under that law, some tribes have chosen to undertake many of those 
duties themselves. ITMA is hopeful this Secretary will find those 
tribes' experiences to be useful and instructive, and will not view the 
self-governance policy embedded in our nation's laws as simply a 
frustrating obstacle to her ``global'' approach to trust reform.
    Develop Policies and Procedures to Execute Acknowledged Trust 
Duties. Once the duties to be discharged are determined and 
articulated, then the Department should develop policies and procedures 
designed to facilitate and promote the discharge of those duties. Such 
matters as segregation of duties, development of written policies and 
desk operating procedures, and defining job qualifications, etc., can 
meaningfully be addressed only when the underlying duties to be 
performed have been identified and articulated. BIA data cleanup 
provides a good example of a massive undertaking that preceded, rather 
than followed, a clear definition of the duties to be performed and 
development of policies and procedures developed to improve the 
performance of those duties. ITMA applauds Secretary Norton's decision 
to put this initiative on hold until this kind of analysis can be 
conducted. This is precisely the approach the government seems to have 
chosen when the matter at issue is the liberty of its executives. As a 
trustee, those same executives should be held to no less stringent a 
standard when the matter in issue is our property for which they hold a 
solemn and legal trust obligation.
    Develop Internal Controls to Detect Failures to Follow Policies and 
Procedures. No human enterprise is immune from failures and attempts to 
defraud it. Indian trust administration is no exception. It is not the 
duty of the Secretary to achieve perfection. It is her duty to 
recognize this reality and to design internal controls to detect these 
occasional mistakes or failures and to correct them. There will be 
human mistakes; there will be errors in the best of systems; and there 
will be the occasional criminal attempt. Once appropriate policies and 
procedures are in place, a system of internal controls should be 
designed to permit managers to exercise quality control, maintain 
system integrity, and correct those deficiencies noted. This concept is 
not foreign to the Department. For many years, voucher examiners 
reviewed travel and other reimbursement claims submitted by the highest 
level officials of the Bureau of Indian Affairs to protect the 
government from overpaying for mileage or per diem rates. On the other 
hand, throughout this period, oil and timber companies were permitted 
to take billions of dollars of resources from Indian lands, and no 
employee was assigned to review the self-generated reports of their 
operations. Similarly, no one was assigned the duty of monitoring 
transactions in trust accounts, as the Special Master in the Cobell 
case has so dramatically demonstrated in recent months.
    Develop an Enforcement System to Preserve Integrity. The present 
system of enforcing policies, procedures, and internal controls focuses 
on easily accomplished ``successes.'' The backgrounds and character of 
lower level employees are thoroughly screened. Some with bad credit 
records are relieve of their duties. In the meantime, thefts from trust 
funds are concealed. New hires are brought in at the highest levels and 
given operational authority over trust reform activities with neither 
the civil service review given to voucher examiners or the advice and 
consent of the Senate. When defalcations or thefts are discovered, no 
publication invites other account holders similarly situated to review 
their accounts. No auditor is asked to pay particular attention to 
transactions from that location. Confirmation letters are not directed 
to others who were equally vulnerable to the same pilferage. The 
current system of enforcement, insofar as there can be said to be one, 
is not designed to enforce compliance, but to avoid liability.
    Develop an Appropriate System of Rewards and Sanctions. As noted 
earlier, during much of the last fifteen years, scores of thousands of 
dollars have been paid to career employees of the Department for 
assisting one Administration after another to create the illusion of 
active reform efforts, while underlying problems were not addressed at 
all. Justice Department lawyers have received publicized rewards for 
the meritorious representation of the government in trust funds 
litigation, only to be removed ignominiously from the case months 
later. The government itself has been sanctioned or rebuked in trust 
litigation arising from California to New Mexico to South Dakota to 
Washington, D.C., and the attorneys responsible continue the same 
pattern of practice. In the Cobell case alone, the government has paid 
more than $600,000 in sanctions, three Presidentially appointed 
officials have been held in contempt of court, and another is presently 
on trial. In none of these instances has there been an effective 
incentive to alter the behavior of career employees of the Interior or 
Justice Departments. On the other hand, the government faces serious 
accusations of retiring, firing, or retaliating against employees who 
have disclosed failures, challenged unauthorized access, and told the 
truth when questioned under oath.
    A system of rewards and sanctions should be designed that will 
effectively discourage cover-ups, falsifying records, giving false 
testimony, dissembling, and otherwise providing materially misleading 
writings or utterances. Such a system should reward those who discover 
problems and bring them to light. It should reward those who discover 
and disclose losses, waste, or thefts from the trust corpus. It should 
reward those who come forward with solutions. It should reward those 
who tell the truth. It should reward those who place problems squarely 
on the table for deliberation and resolution.
    Under the current system, losses from nearly a generation are 
tallied neatly with accrued interest owed, but not made whole. ITMA 
respectfully suggests Congress has a responsibility here as well. The 
Department requested $12,668,000 for fiscal year 1996 to make good some 
known losses to IIM accounts, and ITMA believes the Congress declined 
to provide it. No Committee of Congress has so much as made an inquiry 
about it in the intervening years. After the Cobell case was filed, the 
Department has never again even intimated that there may have been 
losses to the IIM portfolio. Institutional memory is entrusted to 
career employees at management and attorney levels who reap rewards for 
covering up and dissembling. The entire nation and its financial press 
in recent weeks have raised a huge public outcry about the lack of 
transparency, the apparent dissimulation, the rewards to management 
while account holders suffered losses, and the failure of analysts to 
discern underlying problems associated with the collapse of Enron. All 
those very same issues attend the current system of Indian trust 
administration.
    Disclose Known Losses and Thefts. Other than possibly the 
appearance of self-dealing, no issue arising from the travesty of the 
Enron collapse has received more attention than the lack of 
transparency in its financial statements. ITMA firmly believes that 
disclosure of known losses, waste, fraud, and theft is an essential 
underpinning of any trust operation. When such events are discovered in 
a commercial trust operation, the legitimate expectation of 
beneficiaries is that some honorable individual will step forward, 
disclose the event, and offer to make restitution. This attitude is 
conspicuously and defiantly absent in the government's administration 
of the Indian trust estate. ITMA has discovered evidence of the theft 
of more than $7.75 million in a single episode in 1984. No Secretary of 
the Interior and no Assistant Secretary of Indian Affairs has ever 
disclosed that theft to account holders. When ITMA brought its 
awareness of the matter to the Department in the mid-1990's, the 
Department calculated the amount required to make good the unrecovered 
money plus accrued interest and requested appropriations to do so. 
Congress declined to provide the money, and the matter has not been 
heard of again. ITMA believes the Department does maintain a running 
tally of the amount presently due, but only against the day when the 
matter may be brought to light again. It is virtually impossible to 
repose trust in a system that knows, but fails to disclose and make 
whole, losses it has allowed to occur. ITMA believes in the adage that 
sunlight remains the best disinfectant known to the operation of 
government in a free society.
    Role of Lawyers and Budget Officials. ITMA believes the failure to 
disclose known losses is often the result of the role of government 
lawyers and budget who see their role not as officers of the court, or 
as protectors of the integrity of government, but as defenders of the 
public fisc. Even those officers appointed by the President to run the 
Executive Branch of government are often hamstrung in their efforts by 
the advice of career employees who effectively direct trust operations 
from their unseen positions in the service of successive 
Administrations. ITMA believes this cloak must be removed, and the role 
of these officers subjected to the same scrutiny we give to those in 
front offices. Even a cursory review of the government's record in 
trust litigation over the past twenty years will convince any reviewer 
of the importance of this issue. But no one in a position of authority 
in Interior, Justice, or Congress is even aware of this record.
    Deal in Good Faith. ITMA believes that neither trust reform nor 
consultation will be successful unless both sides consent to deal with 
the other openly and in good faith. ITMA notes the wildly varying 
explanations provided by the Interior Department to explain the genesis 
of Secretary Norton's reorganization proposal as an example of our 
concern that we are not being dealt with in good faith. Department 
officials have explained to us that her reorganization proposal was 
developed largely out of a concerted desire to avoid court intervention 
in her administration of the trust, and to avoid receivership. We 
understand from conferences with Congressional staff that she has made 
much the same explanation privately to Congress. ITMA notes that her 
explanation to the court suggests an entirely different rationale and 
history of the development of this proposal. Consultation on this or 
any other matter will be utterly meaningless unless the real reasons 
for her positions are put forth straightforwardly for discussion. In 
this matter, ITMA notes that the Secretary's recent report to the court 
explains tribal opposition to her reorganization proposal as centered 
on the consultation process itself. If she really believes that, and 
that there are not substantive issues that need to be addressed, and 
that her assumptions as well as ours are not on the table for 
discussion, then the consultation process is merely a procedural 
hurdle, and not a meaningful forum.
    Avoid Self-Dealing or Double Standard. ITMA believes that 
meaningful collaboration in trust reform will require the Department to 
give as much attention to honorable trust administration as to 
protecting the government from liability for past mistakes or keeping 
the Secretary out of jail. No one expects the government to operate 
flawlessly. We accept that everyone wants to improve the future 
performance of the government in trust administration. But failures of 
the past that are known or discoverable should be faced squarely and 
dealt with honorably. Of course, those that are known should be 
disclosed. None of this is happening, however. The government to date, 
including Secretary Norton's team, has admonished us to let bygones be 
bygones, and to focus on the future. ITMA notes that this government 
has operated vigorously at the highest level and exerted pressure on 
dozens of governments around the world in recent years to face 
honorably obligations owed as a result of the Holocaust. ITMA notes 
that our government has paid some one billion dollars in recent years 
in settlement of past failures in Indian trust administration. ITMA 
further notes that a recent $20+ million effort to ``reconcile'' tribal 
trust accounts resulted in a major accounting firm's disclaimer of 
either opening or closing balances in its reports. ITMA remains 
convinced that the government must agree to deal honorably with past 
failures, even as it focuses its efforts on future reforms, if real 
reform is to have any meaning. Any other approach means that even 
future obligations may be ignored with impunity.
    ITMA also notes that when Secretary Norton created the Office of 
Historical Accounting in her office, she provided the officer in charge 
with 60 days merely to develop a timetable for developing a plan of 
operations. She further afforded him 120 days merely to determine what 
he thought he could do ``immediately.'' In light of that schedule--60 
days merely to develop a timetable for developing a plan--her recent 
abbreviated schedule for nation-wide tribal ``consultation'' on a 
vastly more ambitious undertaking is both an outrage and an insult. 
ITMA fears that this careful and deliberative approach where she is 
faced with contempt proceedings, compared to her cavalier treatment of 
tribes' opportunity to proceed deliberately, reflects a mentality of 
self-dealing and a double standard that is totally unacceptable.
    Likewise, where she is also facing contempt proceedings in the 
matter of IIM data security, she is proceeding by carefully 
inventorying and articulating her duties, tracing them to treaties, 
statutes, case law, regulations, OMB directives, and Congressional 
reports. In the much larger matter of overall trust reform, however, 
she proposed to make a $300 million overhaul. By at least one of her 
accounts, her proposal to uproot all trust functions was made within 
two days of receiving a list of options, a list that did not even 
contain the prospect of beginning with an analysis of the duties to be 
performed.
    ITMA believes that the Secretary must agree to approach trust 
reform by giving Indian beneficiaries the same level of consideration 
she is giving to her far more personal concerns.
    Reconciliation or Settlement. The Department will never be in 
compliance with the 1994 Indian Trust Funds Management Reform Act until 
it can report accurate account balances. In addition, it will never be 
able to report accurate account balances until it deals with the issue 
of historic balances. If the Arthur Andersen reports of the mid-1990's 
demonstrate the impossibility of a global, transaction-by-transaction 
reconciliation of tribal accounts, then other methods must be found to 
achieve ``accurate balances.'' This is neither the impossibility nor 
the meaningless one-quarter billion-dollar exercise it has been 
presented to be. It is an exercise that will require cooperation. It 
will require a willingness to accept responsibility for past failures, 
a determination to deal in good faith, and to avoid self-dealing. ITMA 
has suggested approaches to this matter that have been successful in 
litigation and negotiation for years. The Executive Branch has so far 
been unwilling to participate in any substantive discussions that would 
require it to admit the very systemic failures that it presently 
acknowledges in open court. Career attorneys in the Department of 
Justice have been able to give effective ``direction'' to Presidential 
appointees in Interior to avoid even discussions on settlement 
proposals. ITMA continues to recommend discussions designed to achieve 
negotiated or stated balances where actual reconciliation is not 
possible. In those instances where a full reconciliation is possible, 
there is no excuse for not proceeding.
    Legislative Recommendations. Last month, at least three lawsuits 
were filed against the government, in large part to protect the tribes 
against possible claims that the Arthur Andersen reports provided 
nearly six years ago sufficed to end the Congress' tolling of the 
statute of limitations. Even though those reports explicitly disclaimed 
the accuracy of either opening or closing balances, Justice Department 
lawyers have indicated they will interpose those reports in any claim 
against the government as evidence of both any accounting that might be 
ordered, and as evidence of account balances. The Congress should act 
to eliminate the possibility of either of those uses over the objection 
of any tribe. A tribe that knowingly chooses to accept the report for 
its own accounts, of course, should be free to do so. Congress should 
also affirmatively address the statute of limitations issue by making 
it clear that no tribe is barred from bringing suit until Congress has 
expressed its agreement that an adequate accounting has been provided. 
Such a provision would likely forestall, rather than prompt, lawsuits 
such as those filed last month as protective measures.
    No matter what organizational structure is ultimately adopted, or 
what systems acquired or developed, there are a number of areas where 
substantive legislation is needed. The present method of investing IIM 
monies in a pool has returned hundreds of millions of dollars in 
increased earnings over the past generation, and saved tens of millions 
in administrative costs. This method does not have affirmative 
authorization in law. The method of computing interest for individuals 
is unnecessarily complex and, in fact, has to be contracted out even by 
the trust accounting systems contractor. Both these matter should be 
addressed in legislation. ITMA respectfully suggests that Congress 
consider authorizing a par value fund structure for this pool.
    The Congress should act to repeal the blanket authority presently 
available to the Secretary unilaterally to impose administrative fees 
on Indian trust assets to recover the costs of administering the trust. 
This provision has never until January of last year been incorporated 
into regulations, making it a duty of BIA officials now to make two 
collections for every lease of Indian lands, one for the government and 
one for the Indian landowner. When the Indian payment system was shut 
down in December, presumably the government was paying itself, but not 
Indians for any leases issued during that period. There is neither 
rhyme nor reason disclosed for the ``formula'' now contained in 
regulations for computing the government's fee for processing leases, 
assignments, extensions, modifications, renewals, etc. ITMA believes 
the Congress provides resources for the discharge of trust duties and 
is largely not even aware that the Department is supplementing its 
appropriations with these fees. ITMA also thinks it is an outrage that 
a Department that is in so much trouble for its inability to collect 
for Indians should take it upon itself to double the number of 
transactions to be processed solely for the purpose of augmenting its 
Congressional appropriations. Put more bluntly, ITMA fears that the 
Department has dusted off this antiquated statute and wielded it in 
retaliation for the embarrassments and slights it feels it has suffered 
in trust reform.
    Restore Honor and Decency. There is a moral element in trust 
administration. ``Not honor alone, but the punctilio of an honor the 
most sensitive, is the standard of behavior for a trustee,'' Justice 
Cardozo wrote. President Bush campaigned the length and breadth of the 
nation on a platform to restore honor and decency to the highest levels 
of government. ITMA continues to hope the moral tone he has set for the 
country will filter into the administration of the Indian trust estate. 
We believe that control of this effort must be wrested from the career 
employees who have directed it, and taken firmly in hand by those 
officers appointed by the President under the watchful oversight of 
Congress and the beneficiaries themselves. Those officers must set the 
tone for honor and decency in administering the trust.
    ITMA takes no pleasure whatsoever in our government's 
embarrassment. In numbers out of all proportion to our own, our men and 
women continue to fight for this country whenever it sends our forces 
upon foreign shores. We do no particular honor to their service when we 
rebuke the government they serve in the face of foreign shot and shell. 
It is our government, too. It does not belong to those who occupy its 
seats of power. We desperately want to be able to believe our 
government as much as we believe in it. We stand ready to provide 
whatever assistance we can offer the Department or this Committee in 
this important enterprise.
    On behalf of all the 53 tribal members of the Intertribal 
Monitoring Association on Indian Trust Funds who hold individual 
accounts, we express our profound gratitude to this Committee for its 
dedication to providing oversight to Indian trust reform. Thank you for 
affording us this voice in the operation of our government.
                                 ______
                                 
    [ITMA Position Statement submitted for the record follows:]

  Position Paper of the InterTribal Monitoring Association on Indian 
                              Trust Funds

                           december 12, 2001
                           POSITION STATEMENT
                                 OF THE
                   INTERTRIBAL MONITORING ASSOCIATION
                                 ON THE
          DOI's PROPOSED REORGANIZATION OF BIA TRUST FUNCTIONS
  this document does not constitute official tribal consultation with 
                                  doi)
    The Intertribal Monitoring Association on Indian Trust Funds (ITMA) 
is a representative organization of the following federally recognized 
tribes: Central Council of Tlingit & Haida Indian Tribes, Kenaitze 
Indian Tribe, Metlakatla Indian Tribe, Hopi Nation, Tohono O'odham 
Nation, Salt River Pima-Maricopa Indian Tribe, Hoopa Valley Tribe, 
Yurok Tribe, Soboba Band of Luiseno Indians, Southern Ute Tribe, Nez 
Perce Tribe, Passamaquoddy-Pleasant Point Tribe, Penobscot Nation, 
Sault Ste. Marie Tribe of Chippewa Indians, Grand Portage Tribe, Leech 
Lake Band of Ojibwe, Red Lake Band of Chippewa Indians, Blackfeet 
Tribe, Chippewa Cree Tribe of Rocky Boy, Confederated Salish & Kootenai 
Tribe, Crow Tribe, Fort Belknap Tribes, Fort Peck Tribes, Northern 
Cheyenne Tribe, Winnebago Tribe, Walker River Paiute Tribal Council, 
Jicarilla Apache Tribe, Mescalero Apache Tribe, Pueblo of Cochiti, 
Pueblo of Laguna, Pueblo of Sandia, Three Affiliated Tribes of Fort 
Berthold, Turtle Mountain Band of Chippewa, Absentee Shawnee Tribe, 
Alabama Quassarte, Cherokee Nation, Kaw Nation, Kiowa Tribe of 
Oklahoma, Muscogee Creek Nation, Osage Tribe, Quapaw Tribe, 
Thlopthlocco Tribal Town, Confederated Tribes of Umatilla, Confederate 
Tribes of Warm Springs, Cheyenne River Sioux Tribe, Sisseton-Wahpeton 
Sioux Tribe, Chehalis Tribe, Confederated Tribes of Colville, Forest 
County Potawatomi Tribe, Oneida Tribe of Wisconsin, Eastern Shoshone 
Tribe, and the Northern Arapaho Tribe.
    The Intertribal Monitoring Association on Indian Trust Funds (ITMA) 
unequivocally:
     opposes Interior Secretary Norton's present proposals to 
reorganize Indian trust functions within the Department,
     opposes the establishment of a new Bureau of Indian Trust 
Asset Management within Interior,
     opposes the reprogramming of $300 million from 
appropriated funds available in Fiscal Year 2002, for the purpose of 
establishing the new Bureau.
    ITMA requests the appropriations Committees of Congress to reject 
the Secretary's request of November 20, 2001 to reprogram $300 million 
for these purposes.
    ITMA recommends that the Secretary agree, instead, to a meeting 
early in 2002 to discuss reasonable timelines to engage tribes in a 
meaningful consultation process for Indian trust reform. With her 
acknowledgment that her reform efforts will benefit greatly from tribal 
participation and that the past several years of unilateral trust 
reform efforts have failed, ITMA hopes that tribes and the Department 
might reach some agreement on a collaborative process for trust reform 
to report at that hearing. In the interim, ITMA insists that the 
Secretary designate an official with authority to ensure that essential 
trust functions are not interrupted, and Indian beneficiaries do not 
suffer unnecessarily in the name of improving services to them, by 
disrupting cash flow, per capita payments, timely access to funds, and 
payments for the use or disposition of Indian trust assets.
    On November 14, 2001, Secretary of the Interior Gale Norton 
proposed establishing a separate agency, a Bureau of Indian Trust 
Assets Management, to address the debacle of federal mismanagement of 
Indian trust assets. For the reasons that follow, ITMA believes that 
such a move at this time is fraught with far more danger and 
uncertainty than likely benefits.
    This decision presumably followed the same-day joint recommendation 
of the Special Trustee for American Indians and the Assistant 
Secretary--Indian Affairs that such an organization be created and 
headed by an additional Assistant Secretary for Indian Trust Assets, 
and based in part on a report and recommendation of the Department's 
contractor, Electronic Data Systems (EDS). Unfortunately, the EDS 
report cited for support of these plans is not available to tribes, and 
access to it is barred by the federal court's order to shut down the 
Department's internet connections.
    In the first place, ITMA believes that carving a separate agency 
out of the single Interior agency now totally dedicated to Indian 
services would create great uncertainty because Indian tribes and 
individuals cannot know what either agency will look like, or what 
capabilities either will have. In fact, ITMA suggests that the 
Department cannot at this time even identify the programs, functions, 
responsibilities, or resources that would come under the new Assistant 
Secretary or the new agency. ITMA insists that any such effort to 
identify ``trust functions'' is emphatically not the province of the 
Secretary or the Department alone. There was enormous dysfunctionality 
caused by separating trust funds management from the Bureau, and those 
problems have not been resolved yet, notwithstanding the Department's 
promises for more than two years of an inter-agency MOU, or a BIA/OST 
Handbook to resolve them.
    ITMA notes that the General Accounting Office, the Department's own 
consulting contractor (EDS), the plaintiffs in the Cobell litigation, 
and ITMA have roundly criticized the Department's previous, fitful 
starts at trust reform because boxes have been drawn and systems 
acquired before giving adequate thought to the duties to be fulfilled 
or the objectives to be achieved. ITMA suggests the Secretary makes the 
same mistake by proposing a new organization before giving adequate 
thought to the duties to be fulfilled, or the objectives to be achieved 
by the new organization, much less giving any apparent thought 
whatsoever to what such a move portends for the overall delivery of 
Indian services from the Department of the Interior.
    ITMA suggests that before any major functions are moved, budgets 
disrupted, reporting regimes confused, infrastructure (building, 
vehicles, utility systems, hard drives, equipment and furnishings) 
further divided, and responsibilities shifted that the Congressional 
oversight and appropriations committees should demand that all 
interested parties be afforded an opportunity to provide the counsel 
that the Secretary indicated will ``greatly benefit'' the Department. 
Her view was that the Department's ``refinement'' of the new 
organization would benefit from such counsel. ITMA suggests that 
history, especially the Department's recent history, coupled with the 
Department's acknowledged timing of this announcement in an effort to 
forestall court intervention, compels the conclusion that a move as 
startling as this not be made precipitously or without careful 
scrutiny.
    ITMA suggests that the Department be required to identify to the 
Congressional committees precisely those functions, duties, 
responsibilities, programs, and resources that the Secretary proposes 
to transfer. ITMA further suggests that her effort to do so will result 
in surprisingly vigorous debate. If the Secretary wishes to bring in a 
political appointee to oversee the present reform activities that are 
at issue in litigation or otherwise under the supervision of the 
courts, ITMA does not object to that effort. On the other hand, ITMA 
suggests that such a move demonstrates that the Secretary and the 
Department are continuing to miss the real point of trust reform. ITMA 
suggests that the Department must begin with an analysis of the duties 
that are required to be performed in the management of those assets. 
Such an analysis has not been undertaken, and has, in fact, been 
strenuously resisted by the Department. ITMA insists that failures of 
the past, including known instances of mismanagement, loss, trespass, 
and theft, for instance, must be acknowledged and disclosed. It is 
impossible for trust beneficiaries to accept that the Department has 
learned from any mistakes that it refuses to acknowledge.
    Once those duties are acknowledged, and known mistakes of the past 
disclosed, then the Department will be in a position to devise policies 
and procedures that are designed to correct those mistakes and to 
effectively and efficiently discharge those duties. Only when policies 
and procedures are designed to carry out acknowledged duties can the 
Department and its appropriating and oversight Committees of Congress 
make decisions regarding the organization of the agency charged with 
the performance of those duties. To agree beforehand to a new agency 
that will under any conceivable scenario result in enormous turmoil, 
without a common understanding of what either the new agency (or the 
old one) will have responsibility for, is simply to repeat the mistakes 
of the past dozen years. The DOI with the acquiescence of Congress has 
proposed one plan after another to buy time throughout the last decade. 
ITMA urges in the strongest possible terms that the new Century not 
begin with a similar, temporizing ruse. That is to say, ITMA urges 
tribes and the Congress not to accept one more bureaucratic shuffle as 
a substitute for intellectual honesty and full disclosure.
    ITMA suggests the trust duties to be carried out be identified, and 
policies and procedures designed to achieve the performance of those 
duties. Then a discussion of the organization, budget, and resources 
required by those policies and procedures will be in order. ITMA 
further suggests that this organization will require carefully 
instituted internal controls to ensure that those policies and 
procedures are followed, and that the underlying duties are faithfully 
executed. Finally, ITMA suggests that a revised trust management 
regime, designed from the bottom up, beginning with the duties to be 
performed rather than with names in bureaucratic boxes, must include an 
enforcement mechanism to ensure that violation, failures, and mistakes 
are timely identified and corrected. ITMA further suggests a rigorous 
analysis of the Department's trust program from the perspective here 
recommended will implicate broader reaches of the government and the 
Department than are suggested by the Secretary's current proposal. 
Decisions will be required regarding rewards and punishments for 
concealing or acknowledging mistakes which reverse the historical 
pattern which has too often rewarded those who cover up and punish 
those who disclose the truth.
    Decisions regarding the ultimate lodging of authority for trust 
decisions must be made that examine the current practice of allowing 
mid-level attorneys in the Office of the Solicitor or the Department of 
Justice to give orders to those senior individuals who have been 
appointed by the President and his officers to run the Executive Branch 
of our government. The duties of those other Interior agencies outside 
the BIA presently charged with monumental Indian trust asset management 
responsibilities must also be critically examined. In particular, the 
present role of the Assistant Secretariat for Policy, Management, and 
Budget must be critically examined. In addition, the Department must 
carefully examine the different scopes of its duties regarding direct 
service tribes, contract tribes, and compact tribes.
    ITMA suggests that any examination of ``trust assets'' will 
necessarily be incomplete if conducted by even the most senior officers 
of government who have less than five years of collective experience in 
the arena. ITMA further suggests that this examination will be even 
more seriously compromised if guided by career employees of Interior 
and Justice who have been rewarded in the past for concealment, cover 
up, dissimulation, and denial of even the existence of duties that have 
been repeatedly declared by the courts of our land. In short, ITMA 
suggests that this examination is doomed to failure without 
participation of the beneficiaries themselves, who may well have the 
most to offer and certainly have the most to lose as a result of these 
deliberations. The Congress has recognized this for more than 20 years 
when it placed such requirements into the black letter of the federal 
Indian laws of the United States, beginning with the Federal Oil and 
Gas Royalty Management Act of 1982.
    ITMA urges tribes and the Congress to impress upon the Secretary 
the extent to which her current proposal violates the spirit if not the 
letter of such laws of the United States as the Royalty Simplification 
and Fairness Act; the Indian Trust Fund Management Improvement Act of 
1994; the Federal Oil and Gas Royalty Management Act of 1982, and the 
Indian Self-determination and Education Assistance Act (P.L. 93-638), 
as well as numerous federal regulations, Executive Orders, and 
Secretarial orders. ITMA stands ready to be welcomed to the ensuing 
deliberations and to a constructive engagement with the Department and 
the Congress in the important, and too often in the past nationally 
embarrassing issue of Indian trust reform.
    There will be time enough in the deliberative process ITMA 
recommends to determine whether or not a new Bureau of Indian Trust 
Asset Management is appropriate, or even whether such an agency can 
ever succeed in the Department of the Interior. The Secretary herself 
has recognized that the Department will benefit from tribes' 
participation. It is clear from discussions to date that the Department 
has given no thought whatsoever to just what it means by trust assets, 
that it has not considered duties attendant upon inchoate or 
unquantified assets such as water rights; treaty rights to hunt, fish, 
gather, pass over others' lands, rights to chose in action against 
trespassers, underpaying tenants, or thieves; duties to assert or 
protect rights; or any number of other trust ``assets,'' which the 
government has paid billions of dollars for its failures to protect in 
the past. ITMA insists that any successful trust reform must begin with 
a collaborative effort to establish a process along the lines suggested 
here.
    Finally, ITMA points out that the Secretary's current proposal, far 
from being the breath of fresh air we had hoped for from the present 
Administration in its first year, is simply a continuation of a long 
string of Secretary-level organizational proposals to buy time by 
rearranging boxes while leaving past wrongs uncorrected and failing to 
deal with fundamental issues. In this vein, ITMA points out that the 
Secretary's proposals and the current process by which she further 
proposes national ``consultation'' meetings within the space of two 
months violates the express policy of tribal consultation negotiated 
and executed in writing between the Bureau of Indian Affairs and Indian 
tribes less than one year ago. ITMA is obliged by its responsibilities 
to put these views on record in light of the Secretary's undisclosed 
plan to proceed with her plan by redirecting $300 million of 
appropriated funds, but vigorously asserts that this exercise does not 
constitute tribal consultation in any meaningful sense of the term.
    ITMA respectfully urges the appropriate Committees of Congress to 
withhold automatic consent to this far-reaching and likely permanent 
proposal of Secretary Norton until it has been thoroughly examined. 
ITMA urges the Congress to exercise its oversight role and not to 
subject the nation's American Indian and Alaska Nation trust 
beneficiaries to a unilateral determination of the Secretary as to what 
her trust duties are and are not. ITMA particularly urges the U.S. 
House of Representatives, with an oversight hearing scheduled on trust 
reform on February 6, 2002, not to agree before it begins its inquiry 
to a $300 million, far-reaching and permanent plan hatched behind 
closed doors by the Department alone. More than 30 years of 
Congressional policy dictate that these are national decisions 
involving the beneficiaries themselves, and not merely Secretarial 
ones. There are far too many of our men and women presently on duty 
beyond the seas in the name of this nation for us to take lightly our 
responsibilities to them and their families while they are defending 
us.
                                 ______
                                 
    Mr. Hayworth. Thank you very much, Chairman Tillman.
    One housekeeping note: Since we have the lower dais clear, 
and I see some folks who are back here standing up, and maybe 
some have been standing up most of the time, you are certainly 
welcome. You can join us here on the lower dais. Please do not 
try to ask questions or count votes.
    [Laughter.]
    Mr. Hayworth. But if you would like to come up and sit and 
be a pseudo-Congress observer for the day, I cannot give you 
the Committee status, but we certainly are happy to have you 
come up. Or if you want to be shy, and your legs are good and 
strong, then you can certainly stand in the corner.
    And sure enough, just like the dance floor after some 
initial reticence, some folks are kind enough to come up and 
take chairs, and you can continue to do that.
    So with that housekeeping note, and the voice of bipartisan 
agreement from my friend from Michigan, we turn now to 
President Hall, from the National Congress of American Indians.
    Mr. President, welcome, and we look forward to your 
testimony.

   STATEMENT OF TEX G. HALL, PRESIDENT, NATIONAL CONGRESS OF 
                        AMERICAN INDIANS

    Mr. Hall. Chairman Hayworth and Congressman Kildee, being 
the co-chair of the Native American Caucus. We appreciate also 
all of the members that are here remaining to hear this most 
important issue in Indian country.
    My name is Tex Hall. My Indian name is Red Tip Arrow. I am 
the president of the National Congress of American Indians, and 
also the tribal chairman of the Fort Berthold Indian 
Reservation of North Dakota, the Mandan, Hidatsa, and Arikara 
Nation. I am also co-chair of the newly developed tribal 
taskforce. So I will try to spend part of my time talking about 
the taskforce and some of the work that it has done.
    But I want to concur with Chairman Tillman's points about 
Professor Wilkenson's concept about starting from the 
beginning, and that is trust.
    And NCAI, of course, opposes the BITAM. We call it ``Bite-
Em.'' And the tribes want to come up with their own plan. We 
want to call it ``Fight-Em.''
    So I went to all of the scoping meetings. And we feel the 
Secretary is not following Executive Order 13175, which 
mandates consultation government-to-government. And we feel 
that it was disheartening. I just want to say this, Mr. 
Chairman, in all due respect. It was disheartening to hear the 
Secretary's comments again trying to allude to BITAM as a 
preferred plan.
    The tribes took the time--We have had 6 days, by the way, 
to work on a tribal plan. And EDS took 60 days--or 6 months. 
EDS took 6 months. And I want to reference the Committee to 
page 14. This is a January 24 EDS report that talks about there 
must be government-to-government, a new plan, or BITAM must be 
beneficiary-approached. It must be beneficiary-based. And who 
the beneficiaries are are the tribal governments and the 
individual Indian beneficiaries.
    So again, this is their own contractor that they have 
contracted and spent millions of dollars working with. And it 
is very disheartening, again, to not allow the tribes to come 
up with another plan.
    The tribes have received nine proposals, and we developed a 
matrix. And I will forward this on to the Committee. We do have 
a written testimony. But we put all of the nine tribal 
proposals, and we put standards and principles, like 
maintaining trust, responsibility, separation of trust--which 
none of the tribes want to do. And it is all here, and it is 
all checked off.
    So this is a great start. We also want to put BITAM, and we 
want to put the Cobell receivership motion on here, so we have 
all of the tribes' plans, BITAM, and then the individual Indian 
money account plaintiffs, their motion for receivership; so we 
have a matrix that evaluates every single plan.
    I think that is a must, and it is critical. And it is in 
not only the EDS report, but it is also in the January 16th 
eighth monitoring report that the Secretary has to provide to 
the judge. So all of that is in place.
    I just want to emphasize, again, my disheartening of the 
Secretary's testimony about her preferred plan. That was the 
whole intent of the taskforce, made up of 36 representatives, 
36 tribal leaders who took the whole weekend, from Friday to 
Sunday. We missed the Super Bowl, not that the Super Bowl is--
It was a good game and all that. But this issue is so critical 
to all of us that we sacrificed a whole weekend to work with 
the Secretary. She spent about 4 hours working with us, and 
talked about her commitment to working with us. And of course, 
the beneficiary has to trust the trustee. And to not have them 
to come back and say BITAM is a better plan and all that, we 
think is totally wrong.
    Let me just summarize some of the matrix and some of the 
tribal plans. First of all, the taskforce is not going to be a 
rubber stamp for BITAM. We will simply not be a rubber stamp, 
because these are our assets, these are our monies. And if we 
have to come back to Congress--Because we agree that Congress 
is the ultimate trustee and you have just entrusted the 
Secretary to carry that function out.
    But we said that, first of all, all tribes are opposed to 
BITAM, but all tribes want trust reform. There is no tribe that 
says, ``We do not want reform.'' I do not know where that came 
from, but the Secretary's comments said that. We all want trust 
reform.
    We have nine proposals. The heart of the tribes' concerns 
is that they do not want land management separate from the 
local level, when they have no control and daily 
decisionmakings are taken away. This is critical. We want 
direct authority from the Secretary on down to the local agency 
superintendent.
    We would like to have our own accounting system. It is like 
a corporation not having your CPA being right across the hall 
from you. We have to have our own accounting system, our access 
to accountants that have CPA level in the field. We feel that 
most of this money should be done on the field level.
    There are some key differences in the proposals that the 
tribes have submitted. And tribes, again, do not want to 
separate the land, but would separate the accounting, banking, 
into an independent office at the local level.
    And the tribes have a focus on accountability and external 
monitoring. That is really one of our critical points.
    And we want reform, but a different kind of reform. We want 
land management at the local tribal level, top-quality 
accounting, and accountability. And that is the difference, Mr. 
Chairman. So I think you can draw the line.
    We feel we want to work with the Secretary, if she gives us 
the time to work with her, in true and meaningful consultation 
according to 13175. But if we are not, Mr. Chairman and members 
of the Committee, we may have to come back to you with our 
preferred tribal plan, because you are the ultimate trustee.
    So I realize my time has run out, Mr. Chairman, but I would 
refer to my written statements. And I will be happy to answer 
any questions later on.
    Mr. Hayworth. And we thank you very much, President Hall. 
And it again goes without saying, your complete testimony will 
be entered into the record, as you offer your synopsis in the 5 
minutes we provide.
    [The prepared statement of Mr. Hall follows:]

  Statement of Tex G. Hall, President, National Congress of American 
                                Indians

    Mr. Chairman, members of the Committee, Tribal leaders and members 
of the public: thank you for the opportunity to provide testimony to 
you today on issues that Indian Tribes and Nations believe are of 
critical importance throughout Indian country. My name is Tex Hall, and 
I am providing testimony on behalf of the National Congress of American 
Indians, the oldest and largest organization representing Indian Tribes 
and individual Indians, founded in 1944 and representing more than 200 
Tribes. I am also the Chairman of the Mandan, Hidatsa and Arikara 
Nation (the Three Affiliated Tribes), a Nation with an area of 
approximately 1500 square miles located along the Missouri River in 
northwest North Dakota.
Summary
    1. LTribes throughout the United States are unanimously opposed to 
the creation of a separate Bureau of Indian Trust Assets Management 
(BITAM) within the Department of Interior and have strongly urged the 
Department to withdraw the proposal for creation of BITAM made to the 
court in the case of Cobell v. Norton now pending in U.S. District 
Court for the District of Columbia. Tribes believe that the proposal of 
DOI as filed with the Court goes far beyond what was necessary to 
comply with previous Court orders and that it contradicts the Indian 
Self Determination Act, including the provisions of that Act for self-
governance, and that it violates Congressional intent in passing the 
American Indian Trust Fund Management Reform Act of 1994. Tribes 
further have requested that Congress take such steps as are necessary 
to prevent the BITAM from being created.
    2. LTribes are in the process, through a 36 member Task Force 
selected by the Tribes, of developing alternative mechanisms for 
ensuring effective reform of trust asset management that will carry out 
the mandates of the American Indian Trust Fund Management Reform Act of 
1994 without the need for a separate Bureau within the Department.
    3. LTribes welcome the support DOI has expressed for the Task Force 
process, provided that any alternative mechanism for trust asset 
management that is developed by the Task Force and implemented by the 
Department must receive the full support of all affected Tribes.
    4. LTribes recognize that in order to ensure that necessary trust 
asset management reforms are carried out by the Department, legislation 
may need to be enacted by Congress that among other things, may provide 
for the establishment of trust standards and provide for a permanent 
oversight mechanism to ensure compliance by the Department with those 
standards.
    5. LTribes urge the Congress to appropriate adequate funds to 
address the issues of trust management and accounting in Indian 
Country. We believe that funding for tribal land repurchase programs 
should be seriously considered by Congress as a cost effective solution 
that will decrease the problems and costs related to fractionation of 
land title.
    6. LTribes remain highly concerned about the slow progress by the 
Department in installing necessary security systems on the networked 
computers the DOI uses for accounting for the assets of Tribal members 
contained in Individual Indian Money (IIM) accounts. We understand that 
some checks have begun to be processed, but a great deal of work 
remains to be done while individual tribal members are suffering 
because income from their assets upon which they depend for everyday 
needs has not been paid to them since early December.
    7. LTribes request that Congress pass a modest one-year extension 
of the statute of limitations that arguably can be used to defeat 
Tribal claims against the United States stemming from trust asset 
mismanagement that arise because of the issuance in early 1996 to 
Tribes of the admittedly inadequate Arthur Andersen reconciliation 
reports required by the American Indian Trust Fund Management Reform 
Act of 1994.
Background
    This Nation's Indian Tribes have a special and unique relationship 
with the United States. The relationship is one rooted in the history 
and rooted in the sovereign nature of the federally recognized Indian 
Tribes, which all possess inherent sovereignty over their own affairs 
and are recognized as separate, sovereign governments by the United 
States through treaties and various other forms of Federal recognition. 
How this relationship is to be recognized and handled has been formally 
recognized by the President of the United States in Executive Order 
13175, outlining how the executive departments of the United States 
government should interact with the Tribes on the basis of a 
``government-to-government'' relationship.
    Because of the great sacrifice that the Indian tribes have made to 
the United States of much of their homelands, by conquest, taking, or 
by ceding those lands through treaties and otherwise to the United 
States, the United States has become a trustee of much of the lands and 
assets that have been set aside for the tribes. See, e.g., Memorandum 
Opinion, Cobell v. Babbitt, Civil No. 96-1285, District Court for the 
District of Columbia, December 21, 1999 and the affirmance of that 
opinion by the Court of Appeals for the District of Columbia, February 
23, 2000 for a more complete outline of the origin of the trust 
responsibility of the United States.
    The trust responsibility of the United States to the Indian tribes 
within its borders is carried out on the basis of the statutory 
mandates of Congress, often guided by opinions of the courts of the 
United States. In 1994, Congress explicitly recognized these 
fundamental trust obligations, and also recognized the government's 
failure to adequately carry out its trust responsibility to Indian 
tribes by passage of the ``American Indian Trust Fund Management Reform 
Act of 1994'', P.L. 103-412 (the ``Act''). That Act stated in Title I, 
Section 101 that the Department of Interior needed to act to carry out 
its responsibilities for discharging its trust responsibilities in an 
affirmative fashion, and described the functions the Secretary must 
carry out as follows:
        ``(d) The Secretary's proper discharge of the trust 
        responsibilities of the United States shall include (but are 
        not limited to) the following:
            (1) Providing adequate systems for accounting for and 
            reporting trust fund balances.
            (2) Providing adequate controls over receipts and 
            disbursements.
            (3) Providing periodic, timely reconciliations to assure 
            the accuracy of accounts.
            (4) Determining accurate cash balances.
            (5) Preparing and supplying account holders with periodic 
            statements of their account performance and with balances 
            of their account which shall be available on a daily basis.
            (6) Establishing consistent, written policies and 
            procedures for trust fund management and accounting.
            (7) Providing adequate staffing, supervision, and training 
            for trust fund management and accounting.
            (8) Appropriately managing the natural resources located 
            within the boundaries of Indian reservations and trust 
            lands.''
    The Act further created an Office of Special Trustee (OST) whose 
job it was to develop a plan for the establishment or reform of all 
necessary systems for Indian trust fund management, and to ensure that 
these reforms were in fact carried out by the Secretary of the 
Department of Interior (DOI, or the ``Department'') who in general has 
been given by Congress the responsibility to manage assets held in 
trust by the United States for the benefit of Indian tribes and 
individuals. The Congress, since 1994, has held many hearings regarding 
the progress made by the OST and by DOI, and has appropriated 
considerable sums to ensure that the necessary reforms have been 
carried out.
    Nevertheless, at least in the case of individual Indians, efforts 
were seen to be inadequate and against the backdrop of the American 
Indian Trust Fund Management Reform Act of 1994, litigation was filed 
in 1996 in the U.S. District Court for the District of Columbia by a 
group of individuals representing the class of all those persons who 
have rights to Individual Indian Money (IIM) accounts. Their complaint 
against the Department of Interior sought, among other things, an 
accounting of their assets and affirmative relief against the 
Department to ensure the Department's compliance with the Act. This 
case is known now as Cobell v. Norton, Civil No. 96-1285, still pending 
in the U.S. District Court for the District of Columbia.
    The Court in Cobell has issued a series of rulings and orders, and 
has appointed a special Court Monitor who is required to report back to 
the court the progress the Department has made in carrying out its 
trust reform responsibilities, particularly in relation to the IIM 
accounts which is the focus of the Cobell plaintiffs' complaint. In 
recent months, the Court Monitor has issued several reports highly 
critical of the failure of the Department to complete the required 
reform efforts and has cited the Department for issuing to the Court 
false and misleading reports about its progress in making necessary 
reforms to the trust management systems.
    Because of these reports, the plaintiffs in Cobell have argued to 
the court that the performance of the Department in carrying out the 
orders of the Court, which incorporate the requirements of the American 
Indian Trust Fund Reform Act, and which have identified specific 
breaches of the trust responsibility, is grossly inadequate and that a 
receiver should be appointed to oversee trust reform efforts concerning 
the IIM accounts that are the subject of the litigation. The plaintiffs 
have also sought to have the Secretary of Interior and several other 
officials, and their attorneys, to be held in contempt of court for 
making false statements to the court about the progress of trust 
management reform, among other things.
    On November 14, 2001, attorneys from the Department of Justice 
(DOJ) filed on behalf of DOI a response to the Order of the District 
Court for the District of Columbia in the Cobell case to show cause why 
the Secretary of Interior and others should not be held in contempt of 
court for failing to comply with the Court's previous Orders. The Court 
had particularly wanted to know why the Secretary had failed to comply 
with the Court's order of December 21, 1999 which required, among other 
things, that the Department carry out its High Level Implementation 
Plan (HLIP) as the Department had previously promised to the Court it 
would do in its filings with the Court, and which also identified four 
specific breaches of the trust responsibility that should be corrected 
by DOI with the assistance of the Office of Special Trustee and the 
Department of the Treasury, which handles distribution of earnings from 
trust assets to the individual Tribal member beneficiaries.
    The response outlined a planned division of the functions of the 
Bureau of Indian Affairs (BIA), with a new Bureau to be created called 
``Bureau of Indian Trust Assets Management'' (BITAM) to be headed by a 
new, as yet unnamed, Assistant Secretary of the Interior. The new 
Bureau would be in charge of the all trust asset management functions 
of DOI now handled by the BIA and would eventually handle those trust 
functions of the Office of Trust Funds Management (OTFM), as well, 
including management of Tribal trust assets, despite the fact that 
Federally recognized Indian tribes are not parties to the Cobell 
litigation and the fact that the Court does not have the subject of 
Tribal trust assets before it. Exactly what constitutes ``trust 
management functions'' was not defined in the response presented to the 
Court and to the Tribes.
    The DOI response as filed on November 14, 2001 with the Cobell 
court has vast implications for the provision of all trust services to 
Tribes and their members. Yet, this response was filed without any 
notice to the affected Indian tribes, as required by EO 13175. Instead, 
DOI indicated shortly after filing its response with the Cobell court 
that it was beginning to conduct ``consultations'' with the affected 
Indian tribes to get their reaction to the reorganization.
    In the DOJ filing, the reorganization was not presented as a 
proposal. It was presented as something that the Department would be 
implementing as soon as possible. DOI indicated that it already had 
appointed someone to head a ``Trust Transition Office'', namely Ross 
Swimmer, a former Assistant Secretary for Indian Affairs who served in 
the Reagan Administration. In other materials filed with Congress, DOI 
indicated that it would have to reprogram as much as $200 million for 
fiscal year 2002 in order to effectuate the transfer of the trust asset 
management functions to the new BITAM. It did not indicate that it 
needed any additional funds in order to carry out the reorganization.
    As the reason for its reorganization effort and the creation of the 
BITAM, the noticed filed by with the court by DOI cited a recent report 
from a consultant firm, EDS, that DOI had hired to analyze its progress 
on implementing the HLIP. However, nothing in the EDS report had 
indicated that forming a new BITAM was necessary, and nothing in the 
Court's previous orders had indicated that forming a new agency was 
necessary.
Position of NCAI Concerning the Reorganization
    At its Annual Meeting on November 25-30, 2001, in Spokane, 
Washington, NCAI passed unanimously the attached Resolution, No. SPO-
01-006, which opposed the reorganization plan proposed by the Secretary 
on several fundamental grounds: 1) That the Secretary of Interior has 
made the reorganization plan without adequate consultation with the 
affected Indian tribes, in violation of EO 13175; and 2) That the 
reorganization raised many questions that troubled Tribal leaders, 
including whether it was authorized by law; whether it was in 
compliance with Court orders, whether the proposal would do anything to 
help manage trust assets better, the effect it would have on tribes who 
contract or compact for trust functions, and whether it would end up 
reducing the services provided by the BIA to Tribes.
    Beginning on December 13, 2001, in Albuquerque, New Mexico, the 
Secretary of Interior began a series of meetings with Tribal leaders 
from throughout the United States. Her meetings, called 
``consultations'' in the Notice published in the Federal Register were 
to be conducted according to a published schedule and were to allow 
Tribal leaders to comment on the reorganization plan, but these 
meetings were only to be held in selected regions of the United States, 
and did not include meetings in all of the BIA Regions affected by the 
reorganization. To date, there have been meetings, which the Assistant 
Secretary for Indian Affairs, Neal McCaleb, has publicly called 
``scoping'' meetings, a term Tribal leaders believe is more consistent 
with EO 13175, in Albuquerque, NM(12-13-01); Oklahoma City, OK (1-3-
02);Rapid City, SD (1-10-02); San Diego, CA (1-17-02); Anchorage, AK, 
(1-23-02), and Washington, D.C. (2-1-02).
    At every meeting to date, Tribal leaders have been unanimous in 
their opposition to the BITAM and the Department's plan as presented to 
the Court. Tribal leaders protested the lack of consultation, the 
effect the proposal would have on provision of trust services of the 
BIA, the illegality of the proposal, the failure of the plan to request 
more funds for its implementation, the failure of the Department to 
provide for security in its computer programs and its slow response in 
fixing the problem, the possible affect the changes would have on 
tribes that compacted or contracted for trust services, the failure of 
the plan to provide for historical accounting of trust assets as 
required by the American Indian Trust Fund Management Reform Act, the 
weakening of the BIA as a result of taking trust asset management from 
it, the waste of time represented by such a far-reaching reorganization 
without establishing substantive mechanisms for reform of trust asset 
management, the failure of the plan to address real conflicts of 
interest among agencies providing some of the trust asset management 
and accounting functions, and the fact that the plan went far beyond 
what is required of the Department by the Cobell litigation, among 
other things.
    In Albuquerque, the Tribal leaders developed a position paper 
outlining the basic principles that should govern any trust asset 
management reform effort. These principles have guided tribes as they 
have testified at the various ``scoping'' meetings that have been held 
so far. The principles include: 1) opposition to BITAM for the reasons 
stated above; 2) requiring the Department to engage in true 
consultation on a government-to-government basis pursuant to EO 13175; 
3) ensuring that there are adequate resources to carry out trust 
reform; 4) establishing a mechanism for determining historical account 
balances; 5) doing no harm to established self-determination and self-
governance programs for management of trust assets; 6) providing Tribes 
the flexibility to assist the Department to manage trust resources 
consistent and develop different systems consistent with each Tribe's 
unique resources and circumstances in such areas as grazing, timber, 
oil and gas, commercial real estate, agriculture, fisheries and hunting 
and fishing; 7) recognition of the need for trust assets to be managed 
in a way that protects and allows the continuance of each tribe's 
unique culture on a long term basis, consistent with Tribal control of 
the use and development of their lands, including recognizing a strong 
role for enforcement or leases by the Department.
Development of a Tribal Task Force on Trust Reform
    During the initial ``scoping'' meeting in Albuquerque on December 
13, 2001, and continuing at each of the scoping meetings thereafter, 
Tribal leaders have developed a Tribal Leader's Trust Asset Management 
Reform Task Force, composed of 2 representatives and one alternate from 
each of the 12 BIA Regions in the United States. Each of the Regions 
have now submitted names to the Task Force, and at the invitation of 
the Department of Interior, the Task Force has held its first formal 
meeting over the weekend of February 1-4, 2002 at DOI's National 
Conservation Training Center in Shepherdstown, West Virginia. The Task 
Force is committed to developing in a deliberative manner an 
alternative approach to the BITAM developed by DOI and has requested 
that the Department accept the plan developed by the Task Force instead 
of the BITAM. The Secretary of Interior has stated that the Department 
is interested in considering the proposal developed by the Task Force. 
The Task Force has elected from its members two co-chairs, including 
myself, Tex G. Hall, and Susan Masten, Chairperson of the Yurok Tribe 
in California. The Task Force also has developed a draft protocol of 
its operations
    Already the Task Force has under consideration nine separate 
proposals for trust asset management reform as outlined by various 
Indian Tribes and organizations. As more proposals are received, 
further refinements will be made. Among the common themes of these 
proposals are: 1) keeping all trust management functions within the 
Bureau of Affairs; 2) creating an independent commission to develop 
trust asset management standards and ensure compliance with those 
standards; 3) providing for all necessary trust asset management 
functions within the BIA; 4) ensuring complete and full consultation on 
a government-to-government basis on issues affecting Tribes and their 
members; and 5) recognition and protection of Tribal sovereignty and 
the ability of Tribes to manage their affairs and their resources. The 
Task Force has now appointed a subcommittee to review the various 
proposals and I am confident that the Task Force will develop a final 
proposal that meets the trust management needs of all Tribes, while at 
the same time satisfying the requirements of the Cobell court and other 
court decisions regarding the responsibility of the United States for 
trust asset management for Indian tribes and their members; the 
American Indian Trust Fund Management Reform Act of 1994, and the 
various trust asset management obligations imposed on the United States 
by Treaties and statutes as illuminated by the common law principles of 
trust management.
    Task Force members are aware of the need to communicate effectively 
their work product to all Federally recognized Indian Tribes, and to 
have their meetings open to all Tribes and their advisors so that the 
maximum input and ideas from Tribes may be received. They also 
certainly expect that Task Force meetings will be held in the various 
Regions of the United States to make their deliberations as accessible 
as possible. They expect that their work will be long and difficult, 
and that all Tribes will have to work hard to build consensus among 
them for a final proposal to be acceptable to the Department of 
Interior, to the Courts, to Congress, and finally, and most 
importantly, to all of their members.
    The Task Force members are well aware of the great responsibility 
thrust upon them. They have spoken candidly to Secretary Norton at the 
meeting in Shepherdstown, West Virginia this past weekend about their 
desire to see a Department of Interior that consults on a government-
to-government basis, that takes their concerns seriously, that fully 
funds trust asset management reform, that will implement meaningful 
trust reform, withdraw the BITAM plan, that will honor the Treaties and 
that will respect their sovereignty.
Congressional Assistance
    There are a number of steps Congress can take to assist the 
Department of Interior and the various Indian Tribes in this Nation 
achieve real trust asset management reform.
    1. Congress should ensure that no funds are reprogrammed during 
fiscal year 2002 for the BITAM proposal and that for fiscal year 2003, 
all funds aimed at trust asset management reform remain within the 
Bureau of Indian Affairs and the Office of the Special Trustee.
    This is critical because DOI has already notified Congress of it 
intent to reprogram funds to implement the BITAM plan. Tribes are 
unanimously opposed to the BITAM proposal and know it will not work 
because it so radically changes the way services are provided to 
Tribes. There is no reason to spend money on a planned reorganization 
that does not serve the interests of the affected Indian Tribes.
    Congress should also make it clear to the DOI that it would prefer 
that their BITAM proposal be withdrawn and that a new alternative 
acceptable to Tribes be developed. DOI has committed to making the Task 
Force process work, but that must include an adequate commitment to 
ensure the opportunity for participation in the process by all Tribes, 
through regular communication, a sufficient number of meetings and 
sufficient resources devoted to this effort for it to meet all of the 
Task Force objectives.
    2. Congress should be prepared to assist Tribes to develop 
meaningful legislation that will likely, among other things, establish 
enforceable trust asset management standards that allow the needs of 
all Tribes to be met consistent with each Tribe's unique resources; 
that will establish a mechanism for oversight of compliance with the 
standards; and that will provide a structure for trust asset management 
that balances the needs of Tribes to be involved with trust asset 
management with the overall trust asset management responsibilities of 
the United States.
    Tribes, including the Tribes represented on the Tribal Leaders 
Trust Reform Task Force, are working hard to develop a proposal, or 
perhaps proposals, that will provide a superior alternative to the 
BITAM plan already advanced by the Department. Exactly what is to be 
contained in that proposal is not yet clear, but almost certainly the 
proposal will have a legislative component to it to ensure that the 
Department will enact meaningful trust asset management reform. The 
elements of such legislation may include the establishment of trust 
asset management standards and an independent commission or other 
mechanism to ensure compliance with those standards. This legislation 
must also respect the individual and unique needs of each Tribe, 
consistent with the ability of Tribes and their members to manage their 
own assets and affairs through such things as self-governance compacts 
and self-determination contracts. Finally, the legislation must 
recognize the need for meaningful government-to-government consultation 
as the legislation is implemented by the Department.
    3. Congress should be willing to pass legislation extending any 
potential statute of limitations that would affect the filing of 
lawsuits against the United States by the Tribes for trust asset 
mismanagement.
    The issue of a statute of limitations defense that could be raised 
by the United States in any lawsuit brought by Tribes against the U.S. 
for trust asset mismanagement arises because of the requirements of the 
American Indian Trust Fund Management Reform Act of 1994 that 
reconciliation reports be completed by the Department of the Interior. 
The Department contracted with Arthur Andersen, one the big five 
accounting firms, to prepare the overall report and the reports for 
each tribe with trust funds under management of the Office of Trust 
Funds Management (OTFM), for the years 1972-1992. Arthur Andersen 
concluded that the Department lacked the necessary records and systems 
for a complete review and accounting of Tribal trust accounts, a fact 
generally acknowledged by the Department.
    However, the reports were issued to Tribes beginning early in 1996, 
and the Department made offers of reconciliation to Tribes based on 
those reports. Tribes universally rejected the vast majority of these 
offers as being inadequate because of the inadequacy of the accounting 
by Arthur Anderson. To the extent the reconciliation reports provide a 
basis for a lawsuit being commenced by any particular tribe against the 
United States, the receipt of such reports by any particular tribe may 
start the statute of limitations on tort related lawsuits against the 
United States to run for that tribe. The statute of limitations can, 
and should be extended for at least one year for several reasons:
        1) The Arthur Andersen reconciliation reports are woefully 
        inadequate, cover a limited period of time, and do not form a 
        good basis for indicating the extent of mismanagement of Tribal 
        trust assets by the Department;
        2) Extending the statute of limitations may well induce 
        settlement discussions between Tribes and the United States for 
        past mismanagement of Tribal trust assets, and may well spur 
        discussion in Congress for settlement options;
        3) The number of possible lawsuits that may be filed by Tribes 
        is quite large and the burden on the courts and the Department 
        of Justice will become larger than necessary.
    The proposed legislation for which we would request consideration 
is similar to S. 1857, now pending in the United States Senate.
The Computer Shut-Down Problem
    Just after DOI announced its BITAM plan by filing it with the 
Cobell court on November 14, 2001, the Court Monitor in the Cobell case 
issued a scathing report concerning computer systems security issues. 
The report indicated that DOI's computer systems could be breached, or 
``hacked'', and that records of trust asset management, including the 
financial records of IIM account holders, could be altered by 
``hackers'' relatively easily.
    The Court issued an order that required the Department to fix the 
security problem on its computers before using the system again. The 
Court subsequently allowed the Department, on application to the Court 
Monitor, to use its computer systems for the purpose of issuing checks 
to IIM account holders representing the proceeds of their trust assets 
as managed by the BIA, but that process has not yet occurred and there 
is still no firm date when IIM account holders will receive their 
checks.
    This situation is totally unacceptable to the Tribes and their 
members. While we are aware and appreciate that DOI officials are 
working very hard to fix this problem which was many years in the 
making, we also know that prior to the special effort of the Court 
Monitor to ``hack'' the system, checks had been sent out using the 
computer accounting system for IIM accounts for a number of years 
without significant incident. We are still hopeful of getting the 
checks issued very soon. We urge Congress to devote such resources as 
are necessary to make sure the problem is completely fixed and to 
ensure that the IIM account holders receive the funds they are owed, 
including interest, as soon as humanly possible. The Department and the 
Court Monitor must work together to find an acceptable and immediate 
solution to this problem.
Summary
    NCAI fully supports the implementation of meaningful trust asset 
management reform. In rejecting the BITAM approach NCAI and its members 
Tribes, and indeed, Tribes nationally, are not rejecting the effort 
needed to make trust reform to happen. NCAI's leaders look forward to 
working with the Department of Interior to develop a true alternative 
to the BITAM proposal that meets the needs of all Tribes, is acceptable 
to all Tribes, and which will truly bring about the many needed changes 
to the Department of Interior for trust asset management reform.
    We also pledge to Congress to ensure that in every way possible for 
us, Tribes and their leaders will be made aware of the trust asset 
management reform process as it goes forward. The only way a proposal 
for trust reform can be implemented is for it to receive broad support 
from Indian country.
    We also urge the Congress to assist us as we develop our 
alternative proposal the BITAM approach, especially as we more fully 
develop any legislation that will be needed to fully implement the 
proposal. We believe that this year very well could be the year that 
true trust reform is put into place and this issue can begin to be 
brought to closure. Finally, we would ask Congress to pass legislation 
that will extend the statue of limitations for Tribal lawsuits that 
allege mismanagement of trust assets by the United States. Masehgedataz 
(Thank you).
                                 ______
                                 
    [A resolution attached to Mr. Hall's statement follows:]
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    Mr. Hayworth. President Windy Boy, welcome, and we 
appreciate hearing your testimony.

 STATEMENT OF JONATHAN WINDY BOY, PRESIDENT, COUNCIL OF LARGE 
                       LAND BASED TRIBES

    Mr. Windy Boy. Thank you very much, Chairman Hansen.
    [Speaks in Indian language.]
    Thank you very much, members of the Committee. Thank you 
for giving me this opportunity to come before you. I thank all 
of the members and the people that have traveled many distances 
and all of the people who have traveled throughout Indian 
country and the seven areas to follow this dog-and-pony show.
    First of all, I would like to point out something, and keep 
this in mind. The first thing I want you to keep in mind is in 
the last week we have been watching the Enron hearings on TV. 
The Enron hearings have been mismanaged. Billions of dollars. 
We have the IIM account holders over here with the tribes. 
Billions of dollars over hundreds of years, monies in exchange 
for resources that we have that we have given up as Indian 
people. There are billions of dollars that are owed to our 
people because of this.
    On the other hand, you take the Enron case. It is a big 
scandal. People are going to prison for it. More likely, they 
probably will not. On the other hand here, what is the 
difference? Billions of dollars on the left hand; billions of 
dollars on the right hand unaccounted for. The only difference 
here that I see between Enron and the IIM account is the 
Indians did not gamble their money. It is still owed to us. And 
as soon as that time comes when my people will receive their 
checks in the mail, then we can talk about fairness.
    And one of the many things that we have been talking about, 
two things that I see come across the country in these 
hearings. No. 1, all of the tribes are opposing BITAM. BITAM is 
a proposal that has been devised that has been pushed on us. 
The specifics have not been brought out, have not been 
explained.
    We are talking about different areas of the laws that are 
being impacted here. We are talking about the laws that are 
already in place. And those laws that we talk about are the 
Indian Self Determination Act. We talk about the Act of '94. We 
are talking about the Indian Self Determination Act. These are 
already acts and laws that you have already put in place to 
assure the tribes that we have this opportunity to come to the 
table to present our case to you.
    There are many things that are in question here, as far as 
the tribes and our abilities on a local level. The tribal 
nations throughout this country, all 578 tribes across the 
United States are subject to the Single Audit Act. So you 
cannot tell me that each of these tribes does not have that 
ability to take care of our own back yard, because that is a 
farce, if that has ever been brought to our attention.
    Another thing about the thing is we are talking about IIM 
receivership. And the gentleman behind me, Mr. McCaleb, I asked 
this question specifically to him when he met with us in 
December in Billings, Montana. On IIM, these individual 
accounts, what percent of the total trust accounts for that?
    And you can correct me if I am wrong, Mr. McCaleb, but it 
amounted to 11 to 12 percent of the total trust. So if you take 
11 to 12 percent of the total trust of the whole issue that we 
are talking about, what is going to happen to the other 88 
percent?
    There are a lot of things when I say these two issues, why 
I impress upon you the importance of keeping the IIM 
individuals and the IIM accounts and the trust accounts of the 
tribes separate.
    And another thing, too, in the same sentence there, since 
December a lot of my people in my area have been being held--
All of their checks have been held from them. Why do we have to 
make them suffer, when they are the receivers, they are the 
ones who have had this coming for 2 months? And there is no 
telling how much longer that the court case is going to be 
moving forward. Why can't they just get something that is due 
them?
    And I know that my time is up here, but I am more than 
willing to be here. And I also have a lot of my other tribes 
who were not present for the comment on the record, and there 
are others.
    Two things, also, I would like to make as recommendations. 
I recommend that all the proposals from the tribes be 
considered on this reform, be recommended from the 
consultations, to be submitted for congressional record as a 
matter of congressional record.
    And furthermore, to field hearings on all tribal policy; 
not just this trust issue. Because our issues are broad. Our 
issues are broad because the administrations change every 4 
years--every 8 years, sometimes. But the policies change. And 
we are always the ones that are always holding the bag here.
    So with that, I, too, will be available for questions. 
Thank you.
    [The prepared statement of Mr. Windy Boy follows:]

Statement of Jonathan Windy Boy, President, Council of Large Land Base 
                                 Tribes

    Good morning, Chairman Hansen and honorable members of the House 
Committee on Resources. My name is Jonathan Windy Boy, Business 
Committee Member, Chippewa Cree Tribal Council and I am testifying 
today in my capacity as President of the Council of Large Land Base 
Tribes. The Council of Large Land Base Tribes was formed in 2001 to 
advocate on behalf of a number of Indian tribes that have trust, 
allotted lands and other lands in the states of Montana, Wyoming, 
Arizona, New Mexico and Utah. The Council member tribes govern 
approximately 60% of the roughly 54 million acres in Indian Country. 
The members of the Council of Large Land Base Tribes express their 
appreciation to the honorable Chairman and members of the House 
Committee on Resources for this opportunity to address the Committee.
    I am here today to address the following matters, trust management 
reform, the Cobell litigation, the plan of the Department of the 
Interior to establish a new Bureau of Indian Trust Assets Management 
(BITAM) and the associated hardships which Indian tribes are now 
experiencing because of the current shutdown of the systems within the 
Department of the Interior for payment of oil and gas allotment 
revenues and interest to the members of Indian tribes. These matters 
are causing extreme distress and hardship for members of all Indian 
tribes, including those Indian tribes that are members of the Council 
of Large Land Base Tribes. See Appendix A, Statistics on Trust 
Resources for the Rocky Mountain Region.
    The Council of Large Land Base Tribes agrees wholeheartedly with 
Judge Royce Lamberth in the Cobell litigation that the Department of 
the Interior has failed dismally in its fiduciary responsibilities to 
Indian tribes and individual Indian allottees. Trust management by the 
Department of the Interior has largely been a sorry history of 
negligent, and in some cases, intentional trust mismanagement that has 
resulted in the loss of billions of dollars to Indian tribes and 
individual Indian allottees. However, the Council is extremely 
concerned with the current actions of the Department of the Interior to 
perform a radical reorganization of the Bureau of Indian Affairs 
through the establishment of the BITAM. See Appendix B, affected full 
time equivalent positions (FTEs) in the Rocky Mountain Region. The 
Council is concerned that the proposed BITAM does not address the five 
breaches of trust already found by Judge Lamberth and is not designed 
in a manner which will lead to the effective reformation of the trust 
management system. Further, the Council is not convinced that the harm 
now confronted by individual Indian allottees are being effectively 
addressed by the Department of the Interior.
    The Council of Large Land Base Tribes by its Resolution CLLBT-08-
01, attached as Appendix C, has supported the concept of trust reform. 
However, the Council does not support the BITAM. Sometime in November 
2001, the Department of the Interior developed BITAM entirely without 
consultation with the Indian tribes and individuals who are the 
beneficiaries of the trust obligations. The Department of the Interior 
has never provided a detailed description or plan for the BITAM, other 
than a single sheet organizational chart. The Indian tribes have 
traveled from Spokane, to Albuquerque, Minneapolis, Oklahoma City, 
Rapid City, San Diego, Anchorage, and finally, Washington D.C. in 
pursuit of information which has never been provided.
    Without consultation with Indian tribes, on November 20, 2001, the 
Department of the Interior submitted a request for reprogramming of 
$300 million to Congress in order to establish BITAM. The Council, in 
Resolution CLLBT-08-01, rejected the BITAM and requested that Secretary 
Norton withdraw her request for the reprogramming of $300 million that 
was intended for the immediate establishment of BITAM.
    The Senate Committee on Appropriations responded to Secretary 
Norton's request for reprogramming of $300 million by its letter of 
December 20, 2001 signed by Chairman Robert C. Byrd and the Honorable 
Conrad Burns. The Committee declined approval of the reprogramming, in 
spite of its recognition of the need for trust management reform. The 
Committee ``wholeheartedly approved the Department of the Interior's 
announced plans for full consultation'' with Indian tribes. In doing 
so, the Committee acknowledged that ``an open and positive dialogue 
with those most directly affected by this reorganization is 
fundamental'' to the success of the consultation process. The Committee 
recognized that ``[q]uestions concerning the exact structure of the new 
Bureau, the ramifications of a reorganization on the remaining 
functions of the Bureau of Indian Affairs, and potential outyear costs 
of the reorganization are of special interest to many Senators.'' The 
Committee expected that the Department of the Interior would 
incorporate ``additional information, conclusions and recommendations'' 
of both the Department of the Interior and the Indian tribes in any 
further reprogramming request.
    In Resolution CLLBT-08-01, the Council also requests that a number 
of principles be embraced by the Department of the Interior in 
proceeding with trust management reform. The Council requests that any 
trust reform effort preserve, enhance, and in no way diminish the trust 
responsibility that the United States owes to Indian tribes and 
individuals. Any trust reform effort shall affirm and support tribal 
sovereignty, self-governance, and self-determination as recognized in 
treaties, statutes, executive orders and regulations. Trust reform 
shall encompass all aspects and functions that the United States 
performs on behalf of the Indian tribes.
    The Council requests that any reform implement the goals of 
decentralization, flexibility for each reservation or service area to 
tailor programs to the needs of individual Indian tribes, and the 
creation of well-defined duties of each federal official and employee 
relative to trust management. Centralized record-keeping systems should 
track information needed on a nationwide basis. But these records must 
be maintained in a manner consistent with trust responsibilities and 
managed in a manner which will avoid their destruction or loss, and 
ensure that they are available to the federal government, the tribal 
government, and the affected individual Indian allottees. The Council 
requests that Indian hiring preference be applied in all trust reform 
activities.
    The Council requests that any cost savings generated by any 
proposed reorganization go directly to increase direct services at the 
local level, including those provided by direct federal services, self-
determination contracts and grants, and self-governance compacts. 
Rather than being driven by perceptions of administrative convenience 
at the central level, increased funding for trust reform should be 
designed to address the need to improve services at the reservation 
level. No funds should be expended for trust reform or payment of 
damages in a manner that would detract from the quality or quantity of 
services currently provided to Indian tribes and individuals.
    With regards to the need to compensate Indian individuals or tribes 
for trust mismanagement, the Council requests that assessment of 
damages determined in the Cobell or any other litigation for past 
mismanagement of trust resources be separately funded and proceed on a 
parallel track to funding for trust reform. The Council supports the 
extension of any statute of limitation which might be argued to apply 
to any and all past mismanagement of trust assets, to allow all efforts 
to be exhausted to identify all past mismanagement of trust resources, 
including but not limited to physical trust assets and financial 
resources derived from such sources.
    It is notable that in each of the scoping meetings held by the 
Department of the Interior in Spokane, to Albuquerque, Minneapolis, 
Oklahoma City, Rapid City, San Diego, Anchorage, and Washington D.C. 
the Indian tribes attending the meetings unanimously rejected the 
proposal for establishment of the new BITAM. The rejection by the 
Indian tribes of the Department's proposal for the establishment of the 
BITAM were based on unanswered questions by the Indian tribes relative 
to the proposed structure of the BITAM, the impacts of the creation of 
the BITAM on the remainder of the BIA, the affect of the proposed 
reorganization on the delivery of direct services to members of Indian 
tribes, including services provided by federal agencies, and by the 
Indian tribes through self-determination contracts and grants, as well 
as self-governance compacts. As well, the Indian tribes questioned the 
decision of the Department of the Interior to place its BITAM 
transition activities in the control of Ross Swimmer and Steven Griles, 
Deputy Secretary of the Interior, both long-time Department of the 
Interior officials whose lack of leadership and effectiveness in trust 
management have been instrumental in the continued mismanagement of 
individual and tribal Indian trust assets.
    However, the Indian tribes remain dedicated to effective trust 
management reform. In this effort, member tribes of the Council of 
Large Land Base Tribes, including The Chippewa Cree Tribe of the Rocky 
Boy's Reservation, The Confederated Salish and Kootenai Tribes of the 
Flathead Nation, and The Navajo Nation participated last weekend, 
February 1--3, 2002, in a meeting of tribal leaders at the National 
Conservation Training Center in Sheperdstown, West Virginia. This 
meeting was scheduled and hosted by Secretary Norton, who visited 
briefly with the group of tribal leaders late on Friday and late on 
Sunday afternoon.
    The group of tribal leaders who met at Sheperdstown last weekend 
was not an inclusive meeting. The National Conservation Training Center 
was managed as a secured federal facility, accessible only to certain 
named individuals through a security gate. Only two representatives, 
and one alternate, from each of the twelve BIA Regions were included in 
the group of tribal leaders. While the group was initially planned to 
have included technical representatives from ten organizations in which 
Indian tribes are members, including the Council of Large Land Base 
Tribes, these technical representatives were later excluded from the 
group. There were tribal leaders from over one hundred Indian tribes 
who were not provided the opportunity to participate in that retreat at 
Sheperdstown. They were left behind at the Hyatt Regency Crystal City 
to wonder what the Department of the Interior and the small group of 
tribal leaders might decide, on behalf of the entirety of all 575 
Indian tribes, during that one weekend of closed meetings. The tribal 
leaders who were closed out of the meeting did not have that crucial 
opportunity to be included in an open and positive dialogue with the 
Department of the Interior. This failure must not be repeated in future 
meetings of the tribal leaders group.
    The tribal leaders from the Council of Large Land Base Tribes who 
were admitted to the Sheperdstown retreat as representatives from the 
twelve BIA Regions reported back about the discussions held there. 
There were nine alternative proposals to BITAM that were received and 
subjected to preliminary review, including proposals from The Chippewa 
Cree Tribe of the Rocky Boy's Reservation, The Confederated Salish and 
Kootenai Tribes of the Flathead Nation, The Cheyenne River Sioux Tribe, 
The Oglala Sioux Tribe, and The Hoopa Tribe. There were also proposals 
submitted by the Intertribal Timber Council, the United Southern and 
Eastern Tribes, and the Van Ness Feldman Law Firm. All of these 
alternative proposals address matters that would be significant 
improvements over the BITAM proposal. Although the tribal leaders 
discussed the proposals and internal organizational issues, they were 
unable to reach a consensus by the end of the weekend. The tribal 
leaders have agreed to three committees who have set a meeting next 
week in Portland, Oregon to perform an in-depth analysis of these 
proposals, along with others that may be submitted by tribes and other 
organizations, and to discuss the internal organizational issues.
    There are a number of general guiding principles that were common 
to the alternative proposals. There was strong support within the group 
to keep BIA as a viable agency, to provide a mechanism for 
establishment of trust standards that can be tailored by Indian tribes 
to their individual needs and values, for the establishment of a trust 
management system that is consistent with principles of self-
determination and self-governance, and for the provision of resources 
and expertise at the local tribal, BIA Regional and Agency levels. 
While these general guiding principles must be incorporated into any 
trust reform plan, there obviously must be much more work performed 
with open and full consultation with all Indian tribes prior to the 
determination of a plan for real, sustained, and effective trust asset 
management reform.
    This is not a process that can or should be conducted in haste or 
in secret. The Congress passed the Indian Self-Determination and 
Educational Assistance Act, the Self-Governance Act of 1988, and the 
American Indian Trust Fund Management Reform Act of 1994 following 
extensive hearings and consideration of the concerns and interest of 
the Indian trust beneficiaries. The proposal of the Department of 
Interior to establish the BITAM, as understood by the Council, would 
administratively amend these laws without action by the United States 
Congress. The Council is concerned about such a process and believes 
that laws passed by the United States Congress should not be undermined 
by administrative actions. The gains made by Indian tribes in the areas 
of self-determination and self-governance compacts should not be 
reversed or jeopardized by an administrative reorganization which is 
contrary to the spirit, if not the letter, of the law.
    I would like to emphasize that the crucial matter of trust asset 
management reform must not be driven by the current exposure of the 
Department of the Interior or the Secretary of the Interior to 
sanctions in the Cobell litigation. These matters must be separated, to 
the maximum extent, from the much larger matter of trust asset 
management reform in order for the interests of both the Individual 
Indian Money (IIM) account holders and Indian tribes to be effectively 
and adequately addressed. The IIM account holders who have had their 
primary or sole income halted by the Department of the Interior 
computer shutdown are being harmed, physically, emotionally, and 
spiritually, as well as financially. They are unable to buy food, 
shelter, clothing, and other household items. They are unable to make 
payments on vehicles, houses, and business equipment. All of these 
harms are a direct result of the failure of the Department of the 
Interior to make payments to these IIM account holders from funds 
earned from their own allotted lands. The Department of the Interior 
must be required to make estimated payments to these IIM account 
holders, based on historical payments, in order to decrease the 
unnecessary suffering and harm that they are sustaining.
    In its 2002 Winter Session, the Navajo Nation Council had to 
appropriate over $527,000 to assist Navajo IIM account holders whose 
lives have been disastrously affected by the failure of the Department 
of the Interior to issue checks for income due to them. This is only 
the latest instance wherein the trust beneficiary Indian tribes have 
been forced to undertake significant financial detriments because of 
the failure of the Department of the Interior to adequately address its 
trust responsibilities. The Council of Large Land Base Tribes requests 
that this Committee assist its members, and all Indian tribes and 
peoples to correct this deplorable situation. Thank you, Mr. Chairman.
                                 ______
                                 
    [Appendices A, B, & C attached to Mr. Windy Boy's statement 
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    Mr. Hayworth. And we thank you very much, President Windy 
Boy.
    Mr. Gray.

      STATEMENT OF DONALD T. GRAY, ESQ., NIXON PEABODY LLP

    Mr. Gray. Thank you, Mr. Chairman and members of the 
Committee.
    My name is Donald Gray. I am a forensic trust expert. And 
what that means in simple language is, I fix broken trusts. And 
I have done so for about 26 years with some of the nation's and 
world's largest financial institutions.
    I think I am the token private-sector person on these 
panels.
    [Laughter.]
    Mr. Gray. I also have followed this problem intensely for 
about 10 years, and have testified before Senate Committees, 
and have helped draft legislation--without a client. Which 
makes me the closest thing you will ever see to an altruistic 
lawyer.
    I do care about this issue, and I do have some very 
definite ideas that I bring from the private sector, and I hope 
they are helpful.
    The first is expertise. Secretary Norton talked a lot. 
Actually, I think it was Mr. Carson who asked a very direct 
question about, ``Do you have the expertise to do it?'' And 
there was an answer about, ``There will be training programs 
that will go on.'' In all fairness, having followed this and 
read everything about it for 10 years, that is the blind 
leading the blind.
    There is no expertise of the caliber that is required for 
trust processing, forensic fixes, land asset management, 
conceptual architecture, systems architecture, trust 
consolidation, modeling, and all of the things that have to go 
in--and I am now speaking about the IAM accounts--that will 
have to go into any kind of historic fix, much less a fix of 
the systems to go forward.
    They do not have the expertise. And that is one of the 
reasons that prior administrations have never been able to 
grapple with this problem, even though they spent over $500 
million in the process of doing it. And just a change of 
management inside the DOI does not do a thing. You have to have 
the expertise. And I will speak in a moment about how you get 
that expertise.
    The second thing is conflict of interest. You have--and I 
think any lawyer will see this--you have an incredible conflict 
of interest, in having the BIA fix this problem. I want to give 
you an example from the private sector.
    When we are asked to go into a bank and fix a 30-year-old 
trust problem that may involve 20 or 30 billion dollars, we 
take the trust staff that has administered that for the last 
five or 6 years, and we separate them. And we immunize them, 
unless they have done something criminal. And we say, ``You are 
going to sit on the sidelines. We are going to fix this. And we 
are going to come to you and we are going to ask you a lot of 
questions. And you are going to help us. And at the end of the 
day, you are going to look like heroes, we are going to look 
like heroes, and the bank is not going to get sued.''
    But the first thing you do is to separate the people who 
have been working on these accounts from trying to fix the 
accounts, because they are going to run across mistakes they 
made, their father made, their brother made, or someone else. 
And that is a terribly unfair thing to do to anybody in the 
BIA. And it is not done in the private sector.
    The other thing that is admitted by Ms. Norton is that 
leaving accounting outcome to a defaulting agency does not make 
any sense at all. I mean, what the court has done is say, 
``Give us an accounting.'' They are the ones who are on the 
defensive. They are the ones that cannot come up with the 
accounting. How in the world are they going to come up with an 
accounting that is fair and reasonable and that takes into 
account the interests of the Indian beneficiaries?
    The people who have worked on this--Ernst and Young; and 
Pricewaterhouse (which was an expert for the plaintiffs.) I 
have worked with both of those on numerous bank fixes. They 
know how to model. And what I mean by ``model'' is, when you 
have a 30-year gap in records, you go back in and you see what 
somebody else did; you stitch it together; and you come up with 
the best guess you can. And that was the basis of beginnings of 
settlement talks that the government wanted no part of.
    The third thing is independence, which is related to 
conflicts of interest. If you do not have independence from a 
DOI who is heavily conflicted, then you will never get this 
problem fixed.
    Whether it is a receivership or a GSE, this problem has got 
to come out of the DOI. Or you will put another few hundred 
million dollars into absolutely nothing. It has got to come 
out.
    I would suggest to you that there is a sub rosa agenda here 
by Judge Lamberth. The judge is begging the Congress to offer a 
solution. He does not want to appoint a receiver. He has had 
enough trouble with trying to correct the problems of the past 
in accounting, much less a receiver with respect to how to go 
forward. And they are intimately linked, if you are a trust 
fixer. He is absolutely begging the Congress to come in there 
and do something; which is why I believe that some kind of GSE/
receivership is the answer.
    In fact, if you combine Ms. Cobell's testimony with 
President Makil's testimony, you will see that there is an 
answer here that Congress can implement to solve this problem.
    But it will never be solved by the DOI. The judge is 
begging Congress to get into it. You need expertise. It does 
not have to last forever. It can be three to 5 years. But you 
have got to create an agency that has the money to hire the 
expertise and get the problem done.
    And at the same time, train BIA people whom you have set 
aside as trust experts. At the end of the day, they will be 
able to be trust experts in Indian land banks or in commercial 
banks. So it is not leaving the BIA behind. And after that 
time, give it back to the BIA, because it is fixed.
    I have gone over my time, and I apologize.
    [The prepared statement of Mr. Gray follows:]

    Statement of Donald T. Gray, Nixon Peabody LLP, San Francisco, 
                               California

    My name is Donald Gray. I am a partner with the law firm of Nixon 
Peabody LLP in San Francisco. For 26 years, I have specialized in 
matters concerning commercial trust and institutional fiduciaries. I 
appreciate the opportunity to testify before you, and to bring what I 
hope is a helpful and fresh perspective to the Indian Trust Fund reform 
effort.
    For many years, my practice--and the practice of Nixon Peabody's 
Trust and Financial Rehabilitation Group (the ``Group'')--has centered 
on working with institutional trustees and other professionals in 
establishing, administering, reconciling and rehabilitating long-term 
complex trusts. My work has given me extensive exposure to active asset 
management, trust administration and operations, investment, complex 
cash flow and risk control problems of trusts involving billions of 
dollars of managed assets of every variety. Our Group, which I lead, 
has represented some of the nation's largest financial institutions in 
these matters. One example of our work is our recent representation of 
a major money-center bank concerning trust funds of over one thousand 
governmental agencies, and hundreds of millions of dollars of claims 
relating to unclaimed trust monies, recordkeeping, investment and fees 
dating back many years. Simply put, our business is largely devoted to 
``fixing'' broken trusts.
    Although my experience is predominately in the commercial sphere, I 
have also been involved in trusts that touch both the public and 
private sectors. For example, in the mid-1980's, I authored the series 
of master and subsidiary trust agreements implementing the settlement 
between the United States Department of Commerce and the Native 
American corporations representing the Pribilof Islands of Alaska. 
Those trusts helped form the basis of the Islands' new economy, as it 
emerged from more than a century of U.S. Government oversight.
    I was pleased to accept Chairman Hansen's invitation to testify on 
trust funds management by the Department of the Interior (DOI). I 
believe I bring a perspective which, except for the significant efforts 
of Mr. Homan during his tenure as Special Trustee, seems to be 
completely lacking in the current process. That is, the perspective of 
an independent person or group with significant private sector trust 
and financial institutions expertise. The key concepts here, and 
throughout my comments are ``independence'' and ``expertise.''
INTRODUCTION
    The problems facing Indian Trust Fund reform are admittedly multi-
faceted. Understandably, there are micro-economic, institutional, 
political, cultural and emotional concerns involving the DOI and the 
American Indian people, which have and will continue to manifest 
themselves throughout the process. I am not an expert on Indian 
affairs, nor on the intricate workings of the governmental agencies 
with responsibilities in these areas. I am a trust lawyer. But after 
significant research, I have reached the inescapable conclusion that 
the Indian Trust Fund reform effort cries out for the kind of detached, 
independent expertise that exists among professional trust 
administrators, accountants, lawyers and other professionals in the 
private sector. These are persons who have spent most of their careers 
dealing with trust problems comparable to those addressed in the GAO 
Report No. B-280950.
    I reach this conclusion because the Indian Trust Fund problems are, 
first and foremost, financial trust problems based on issues frequently 
encountered by private sector trust institutions, such as inadequate 
policies and procedures and poorly planned systems conversions 
resulting in ineffective recordkeeping. It appears to me that, if the 
Indian Trust Fund problems are to be effectively dealt with, the 
resolution process needs to be removed from the vestiges of 150 years 
of U.S. Government/American Indian relations, with solutions fashioned 
primarily through the prism of historic structures and viewpoints. In 
my view, effective reforms will never be accomplished until the 
fiduciary and financial reporting aspects of Indian Trust Fund 
management is separated from the DOI's other role in overseeing the 
social and economic development and political concerns inherent in the 
U.S. Government/American Indian relationship. These latter concerns, 
which are an important aspect of DOI's mission, and the persons 
responsible for such matters, must, in my opinion, be separated 
completely from the management of the Indian Trust Funds with the 
latter function placed in the hands of persons with commercial and 
financial trust expertise who can identify and implement the systems 
and resources essential to real trust reform. I am convinced that 
without such independence and expertise, the affected American Indian 
people will be deprived of the same high level of money and asset-
management services, as well as legal protections, that are available 
to every citizen of the United States, who puts his or her financial 
affairs in the hands of another.
THE GAO REPORT
    The GAO extensively studied one aspect of the DOI's High Level 
Implementation Plan (HLP)--the planning and acquisition of a new trust 
asset and accounting management system (TAAMS). The GAO concluded that 
the DOI had not developed an overall information systems architecture 
for the entire business cycle of the trust funds functions--including 
land ownership and appraisal, utilization and income management, trust 
fund accounting, investment, custody and records control, and 
disbursements. Without this architecture, there can be no assurances 
that isolated systems purportedly providing one function will interact 
and interconnect properly with systems developed for all other 
important trust functions. The GAO also found that the DOI, by 
purchasing the TAAMS off-the-shelf software, had not done enough to 
assure that all aspects of asset management data (involving complex oil 
and gas, timber, crop, fishing and other asset pricing, leasing and 
money flow information) would be accommodated.
    The DOI acquired TAAMS, at a reported cost of $60 million, without 
regard to the GAO's warnings of the need for overall information 
systems architecture in correspondence with the DOI in 1997 concerning 
the Special Trustee's Strategic Plan issued in compliance with the 
American Indian Trust Fund Management Trust Reform Act of 1994 (``1994 
Act''), and in its general guidelines on systems architecture 
development issued in 1992. The DOI also seemed to ignore the highly 
integrated approach for trust fund clean-up, rehabilitation and 
implementation recommended by the Special Trustee in his April 1997 
Strategic Plan issued in compliance with the 1994 Act. Similarly, the 
DOI appears to have overlooked the specific directives of that statute 
(the governing document for all trust reform) to accomplish all aspects 
of reform in an integrated, coordinated and properly interactive 
process. The DOI also seems not to have heeded the advice of Macro 
International Inc., consultants to the Office of Special Trustee (OST), 
which found in 1997, after significant research into the personnel and 
training deficiencies of DOI's reform effort, that any implementation 
of a technologies infrastructure to solve the manifold trust problems 
first required the foundation of well thought-out practices and 
procedures relating to overall integrated reforms that would assure a 
comprehensive output consistent with commercial standards. In other 
words, without accurate data collection and input, no software system, 
even the most sophisticated, can achieve the required objective of 
providing accurate financial reporting.
    As an outside trust expert, I must question why the DOI staff would 
apparently ignore the GAO, a highly qualified finance expert, former 
Special Trustee Homan, outside consultants, and finally, the governing 
statute, by purchasing an off-the-shelf system, at enormous expense, 
without any clear assurance that it will be integratable with other key 
aspects of trust reform, or even that it will be able to process all 
data variables inherent in the vast array of Indian Trust Fund assets. 
One theory is that such an extraordinary action is a symptom of a 
larger problem. The symptom, which I have seen in the commercial 
context, is the almost frantic attempt, when existing procedures fail, 
to grasp for a quick fix, even if the fix merely creates the appearance 
of a solution.
    As explained below, any asset management system must be extremely 
agile and have the ability for constant modification to accommodate all 
the data variables inherent in the IIM assets. I believe it has been 
convincingly demonstrated that the TAAMS system is a failure in this 
regard and there are serious questions as to the compatibility of the 
system with other systems, or its consistency with an overall 
architecture, which does not yet exist.
    The larger, and much more fundamental problem, is that the DOI and 
its internal Bureaus are encumbered by serious conflicts-of-interest, 
although not of their own making. It is highly probable that such 
extreme conflicts-of-interest will inevitably drive the DOI, its 
captive OST, and the Bureau of Indian Affairs (BIA) to actions that are 
not directed solely at rehabilitating and correcting accounting for all 
trust assets properly creditable to the Individual Indian Monies (IIM) 
accounts, the only true goal of the 1994 Act. The very essence of 
trustee status and integrity, and of fiduciary responsibility, is the 
absence of conflict-of-interest.
WHAT IS SYSTEMS ARCHITECTURE?
    If I may be permitted a small digression, I suspect that some of 
the Committee members may be a bit confused with the overly technical 
jargon used by the DOI, the GAO and, admittedly, trust professionals 
like me. It may be helpful to decipher what ``systems architecture'' 
means, at least to me.
    When professional trust experts approach the original set-up or 
historic reconciliation of a complex income asset/money flow/investment 
trust, they first start with a comprehensive listing of all possible 
data input, incorporated into a conceptual diagram of how that data 
must flow through each and every phase of the trust accounting system 
(appraisal, leasing, accounts receivable, accounts payable, any special 
cash flow allocations like reserves, posting to proper accounts, 
investment accounting, account ownership records and disbursements). In 
addition, assessments are made of the personnel expertise needed to 
keep track of, analyze and control all such information. Finally, there 
is a narrative conceptualization of how information/technology (i.e., 
computer) systems can facilitate the above processes as well as an 
identification of so-called ``inflection points,'' where one technical 
system's data is downloaded to people for analysis and re-uploaded to 
other systems, or where two technical systems can and should interface 
to transmit critical data. This process must be substantially complete 
before any one automated system is specified or purchased.
    Put another way, seasoned trust professionals in the commercial 
context first apply simple common sense to the problem. This sounds 
obvious and easy, but it is far from it. In a trust rehabilitation 
context, this foundational process involves what we call in the 
industry ``scrubbing.'' That is, the architects of a workable system 
must roll up their sleeves, review thousands of potential data input 
variations (past and future), conceptually design how trust data flows 
through a multi-phase system, perform calculations on trust data and 
explain what people should do, and what computer hardware and software 
should do, to implement the system.
    This is some of the hardest work in professional trust management 
and requires expertise in all facets of commercial trust accounting 
and, typically, legal interpretation of trust instruments and governing 
laws. First and foremost, administrators must resist the sometimes 
inexorable urge to look at computer systems as panaceas for any complex 
problem. Computer systems do not think. Hopefully, they are designed by 
people who do think, and who are intimately familiar with processes and 
calculations which are being automated. They gain this knowledge by 
working intimately with such a multi-disciplinary trust team for 
countless hours. After flowcharting the desired processes or 
calculations, they write or procure a software program (or package of 
programs) embodying them. If the software is designed and programmed 
well, a computer system can then perform such processes and 
calculations in bulk and at great speed.
    Also, computer systems do not self-correct and expand themselves to 
create new capabilities for handling information/data with which they 
were not designed to cope. I have seen highly sophisticated trust and 
asset management commercial systems that do a splendid job with 90% of 
complex data or analysis, but utterly fail to accommodate, or be 
modified to accommodate, 10% of the required data or analysis. 
Unfortunately, 90% correctness for millions or billions of dollars of 
managed assets does not sit well with investors and other 
beneficiaries.
    Although seemingly reasonable to the lay person, the former DOI 
Secretary's comments concerning the selection of a ``near enough'' off-
the-shelf asset management system, by selecting a system developed not 
for the IIM trust reform, but for an ``analog'' problem, is a bit 
frightening to a trust professional.
    As the GAO report indicates, instead of the ``intricate and complex 
coordination process'' of all facets of the reform effort called for by 
the former Special Trustee in his Strategic Plan, the DOI's HLP leaves 
the IIM effort with a disjointed, potentially non-integratable mish 
mash of project initiatives, and the occasional ``big splash'' computer 
system for one element of the task that may work only for highly 
selective data. But the current trust reform effort, as evidenced by 
the DOI's HLP, contains features far more troublesome than a potential 
functionally deficient, or non-integratable TAAMS product.
INDEPENDENCE, EXPERTISE AND AN INTEGRATED APPROACH
    Although both the HLP and the Special Trustee's Strategic Plan 
admittedly contain similar, and undeniably necessary, tasks essential 
to account clean-up, reform and new systems building (including data 
clean-up, records retention and proper custody, workable trust 
accounting and asset management procedures, investment, accounts and 
land title, appraisal and probate clean-up), these are no more than 
static descriptions of jobs to be performed on a coordinated basis. 
What is of ultimate importance is the philosophy, mission goal and the 
resulting and overriding ``how'' to attack all these deficient areas. 
Respectfully, while the former Secretary plucked out independent 
projects that are undeniably important to trust reform, he specifically 
and dramatically gutted the Special Trustee's Strategic Plan of its two 
essential cornerstones for such an overriding mission and goal--
independence and expertise. Without these elements, which create both a 
reform environment and give it its essential tools, meaningful trust 
reform will not occur.
    The Special Trustee's Strategic Plan, in its first two pages, could 
not have been clearer on this all-important ``how.'' First, with some 
courage, Mr. Homan called for a completely independent and neutral 
body, a Government Sponsored Enterprise (GSE), to take over the trust 
rehabilitation process, under the supervision of government agencies 
expert in commercial finance and modern trust procedures. He 
continually cites the ongoing conflict within the DOI in failing to 
separate its special trust reform fiduciary goals from its general 
responsibilities in education, housing, law enforcement and a multitude 
of other welfare programs and other American Indian services provided 
by the DOI and its Bureaus. In short, Mr. Homan concluded that, in the 
competition for the limited funds appropriated to DOI, when a choice 
must be made between a department's general responsibilities and trust 
fund reform, the latter program would inevitably suffer.
    What is also obvious from the HLP's allocation of responsibility 
for its 13-category, piecemeal approach to reform, is that there is at 
least an unconscious attempt to employ the other internal Bureaus of 
the DOI, especially the BIA, in these processes, regardless of a proven 
lack of expertise, since only two of the projects are reserved to the 
OST. This foreshadows two very negative results. First, it displays a 
lack of appreciation for the expertise, and long-term training required 
for trust rehabilitation and administration, and suggests that 
involving these internal DOI Bureaus is of greater importance than 
solving the trust fund problems. The DOI's loyalty to one of its 
Bureaus, the BIA, is laudable, but completely inappropriate in the IIM 
trust reform process. Second, the misguided piecemeal methodology of 
the HLP permits agency employees, no matter how much they may wish to 
act in good faith, to attempt to solve the trust fund problems by 
purchasing an expensive new software system, creating the impression 
that by do doing they are attempting to obscure past mistakes with an 
easy, but ineffective fix. This is not intended to be an indictment of 
such personnel, it is simply a recognition that human beings, no matter 
how fair-minded and well-intentioned, should never be asked single-
handedly, in isolation and without expert advice to rehabilitate a 
process which has gone seriously awry during their historic involvement 
in the process.
    For a commercial trust practitioner, deeply involved in the 
activities of bank trust departments, and a veteran of dealing with the 
Office of the Comptroller of the Currency (OCC), and other federal 
agencies, state banking authorities, accountants and rating agencies in 
connection with audits of trust and fiscal agency procedures, the 
equally apparent inability of the DOI staff to appreciate the level of 
expertise required for the rehabilitation and modernization of a trust 
problem as vast as the IIM accounts issues is surprising to me. I 
cannot put this any more clearly than former Special Trustee Homan did 
in his Strategic Plan, and I fully concur with his conclusions. 
Regarding the lack of trust managerial resources within the DOI, and 
the BIA specifically, Mr. Homan states:
        Managers and staff of the BIA have virtually no effective 
        knowledge or practical experience with the type of trust 
        management policies, procedures, systems and best practices 
        which are so effective, efficient and prevalent in private 
        sector trust departments and companies. The BIA area and field 
        office managers do not have the background, the training, the 
        experience, the financial and trust qualifications and skills, 
        necessary to manage the Federal Government's trust management 
        activities according to the exacting fiduciary standards 
        required in today's modern trust environment. Thus, and through 
        no fault of their own, and even assuming financial resources 
        were made available, they are not capable of managing 
        effectively the Federal Government's trust management 
        activities on a par with that provided by private sector 
        institutions to their customers. . .--[emphasis added]
    If your or my bank or trust company were to handle our assets with 
completely unqualified personnel, in a manner that can be described 
metaphorically as a ``shoe box'' approach to accounting, we would be in 
court, or at the steps of the OCC or other appropriate regulator the 
next morning. That was one of the great lessons of the financial 
institution crises of the 1980's.
    The independent contractors, Macro International Inc., Larson Slade 
Associates, LLC and Arrowhead Technologies, in cooperation with project 
resource firms (such as Riggs Bank, NationsBank and State Street Bank 
and Trust) echoed Mr. Homan's conclusions after hundreds of DOI 
personnel interviews. Their goal was, in part, to identify any gaps 
between the current Indian trust systems and trust departments in the 
commercial sector. These consultants concluded in 1997 that the 
accepted legal and procedural standards of fiduciary responsibility to 
manage trust assets and accurately report on their status to 
beneficiaries were not being met. Without properly trained personnel, 
and without a ``single-point management responsibility'' like a GSE, 
the current system falls far short of commercial trust standards. What 
is needed, these consultants found, is a single trust organization, 
with complete control over both resource and financial assets utilizing 
tried and true commercial applications. Finally, they concluded that 
all of these tasks will fail to improve the Indian Trust Fund reform 
process unless an effective and efficient staff is able to carry out 
the tasks.
    A quick look at previous DOI budgets demonstrates with clarity the 
Agency's historic opinion of these expert findings. Although these 
numbers have since been inflated, the previous Administration's HLP, 
for combined fiscal years 1999 and 2000, called for a budget for 
computer software ``systems'' of $51.1 million. For the same years, 
this budget for ``training'' is a meager $7 million, and even that 
relates solely to on-the-job training for BIA officials (which the 
consultants found generally ineffective) rather than for the hiring of 
experienced commercial trust administrative staff. So much for 
expertise.
    With the growing complexity of investment vehicles, asset-backed 
securitizations and their correspondingly complex cash flows (not 
unlike the IIM accounts), modern trust administration requires a level 
of financial and technical expertise that was unheard of twenty years 
ago. What once required a few accounting courses and on-the-job bond 
payment training, now frequently requires advanced degrees in money 
management, fiduciary standards and laws, complex cash flow analysis 
techniques (called ``analytics'' or ``modeling''), dexterity on PC-
based spreadsheet and database systems, a complete understanding of 
permitted investments, overnight ``float'' investments, special cash 
accounting systems and the use of complex computer programs. Even with 
this training, and with the constant support of expert supervisors, tax 
specialists, accountants and attorneys, it takes years to develop the 
intuitive expertise to perform proper trust accounting. To my 
knowledge, not one person from the commercial sector with such a 
background is presently on the staff of the DOI.
    Again, I must ask why the DOI has completely ignored the critical 
need for such independence (i.e., lack of conflicts-of-interest) and 
expertise. One might guess that this answer would be the very 
``special'' nature of U.S. Government/American Indian relations, and 
the ultra-sensitivity the BIA and the other DOI Bureaus bring to this 
special problem. But from the outside this rather looks more than 
suspiciously like institutional self-perpetuation, obfuscation of past 
mistakes, and at worst, the kind of paternalism that should have gone 
with the wind many years ago.
A PROFESSIONAL TRUST APPROACH
    How would a team of commercial trust experts approach a problem 
like IIM reform, and how does the DOI's course of action compare to 
such a commercial approach?
    Although admittedly a long time in the making, commercial trust 
entities have tackled efforts just as daunting as the IIM problem, 
especially when they have inherited active asset trusts which have been 
mismanaged.
    An overview of a typical step-by-step approach to a major 
``fiduciary fix'' of a private sector trust organization follows:
Step 1. Assemble a Team.
    The first step is to assemble a team consisting of highly 
experienced trust professionals, accountants who specialize in detail 
analysis of trust accounts, cash flows, investments and control 
procedures, legal experts knowledgeable about the governing law, 
documents and the practical general industry practices, and computer 
systems analysts, specifically trained to translate conceptual 
architecture developed by the other team members into software systems 
requirements. We are not talking about hundreds or even dozens of 
people. Although they may all require expert staff assistance, at the 
core, we are talking about four to six trained professionals. I and my 
colleagues in the industry have worked successfully with many such 
teams.
Step 2. Assure the Project Team's Independence.
    The next step is to establish the absolute independence of the 
project team. As I have mentioned to many interested people on the Hill 
during the past three years, establishing independence for the team 
responsible for either fixing a broken trust, or creating an entirely 
new trust system for a complex array of assets, money flows and 
beneficiary variables, is essential. That team would initially meet 
with personnel historically involved in the trust, or trust asset 
process. Those people will be separated and protected in the trust fix 
process. By this I mean that there will be the immediate recognition 
that those involved in a historic process where mistakes have been 
made, whether or not they personally have made them, are exactly the 
wrong people, at least at the initial phases, to be actively engaged in 
rehabilitation or designing replacement systems. The natural urge of 
all of us is to mitigate, gloss over and in extreme cases, hide past 
mistakes, and that urge can frequently take precedence over sound 
reform efforts. And yet these people, in this case DOI personnel, must 
be protected. Their institutional historic knowledge of problems, where 
data is to be found, what external pressures have been brought to bear 
at the expense of proper functioning, and a multitude of other 
essential information, resides in the memories of these people. If they 
are told that they will not be fired or otherwise punished for human 
errors and mistakes (short of criminal self-dealing, which I doubt is a 
serious concern here), they can be of tremendous help. But if they are 
left alone to fashion all reforms, they are being required to do the 
impossible--protect themselves and their families while being asked to 
single-mindedly protect the interest of IIM beneficiaries. Again, all 
efforts, at all levels, must be employed to eliminate such fatal 
conflicts-of-interest.
Step 3. Establish Document Custody and Control.
    The next step of the team is to establish the strictest document 
custody and security measures possible. Every piece of historic data 
that is contaminated or disappears diminishes the integrity of any 
reconstruction effort, and eliminates data variables, and potential 
problems that may likely recur, and therefore should be collected, 
solved and input into a system that can accommodate all data variables 
and similar problems in the future. Past reports by the Department of 
Justice and the Special Master in the class action litigation regarding 
BIA document destruction and general substandard condition of trust 
record maintenance make this step an obvious priority.
Step 4. Identify Data Elements.
    Next, the data elements relevant to all phases of the trust 
business cycle must be identified, whether relating to land records/
ownership, asset management or trust accounting functions of proper 
crediting, investment and disbursement. Further, an analysis of how 
that data has, and may change over time is critical. Systems, 
especially automated systems, do not usually adapt well to data 
changes. Significant experience, knowledge and creativity in the ever-
changing nature of land resource exploitation, investment parameters 
and ownership variables are required at this stage.
Step 5. Develop a Schematic Diagram.
    Then comes the hardest part, the development of a narrative, 
logical but highly complex non-automated schematic diagram (which could 
cover the walls of this hearing room), demonstrating how all collected 
data must move, interface, inter-relate and be re-analyzed, 
recalculated and otherwise re-assessed to assure that all functions of 
a highly integrated lease-to-beneficiary disbursement system will, at 
least conceptually, work. For lack of a better term, this is the 
conceptual model, or overall architecture of any complex trust problem. 
In the end, if an experienced commercial trust administrator, with the 
aid of only an HP or a simple PC-based spreadsheet system, cannot track 
financial data from lease billing to beneficiary disbursement, 
throughout all the intervening trust business functions, then all the 
elaborate personnel task forces and isolated pieces of systems 
software, no matter how sophisticated, will be worthless. All the 
functional elements of the business cycle must be analyzed 
simultaneously and interactively at this conceptual architecture phase, 
or hundreds of millions of dollars in ``magical fix'' systems will be 
purchased, and ultimately wasted.
Step 6. Design Architecture.
    Next, experienced trust systems analysts, capable of fully 
comprehending the conceptual architecture, and fully knowledgeable 
about the universe of commercial off-the-shelf (COTS) trust accounting 
systems and custom applications providers, can begin to design an 
interactive systems architecture to accommodate all functions. This 
does not mean such an expert independently develops separate, or fully 
integrated software components. What is does emphatically mean is that 
one person, or a group of extraordinary trained people, is fully 
cognizant of both the overall goals and the intricate conceptual plan 
based on actual data and the universe of automated solutions that might 
be brought to bear to facilitate the conceptual design. Then, and only 
then, are requirements developed, and systems pre-tested and finally 
purchased, and then only with extensive warranties, retrofitting and 
modification undertakings and extensive service, support and back-up 
packages.
Step 7. Recruit Permanent Trust Administration Staff.
    Automated systems are only as good as data input performed by 
skilled trust administrators. Further, if multiple automated systems 
are used, such administrators must constantly monitor whether the 
systems are correctly interfacing and exchanging information, since 
this is an area of frequent difficulty given the ever-expanding 
universe of data variables and money calculations which flow through 
those systems. This requires knowledge of the basic functions these 
systems perform. Data variables, and sometimes simple automated systems 
breakdowns (or ``crashes''), or failures due to viruses, require trust 
administrators to constantly test the validity of systems calculations, 
usually by ``shadow'' calculations mimicking the essential tasks of any 
automated systems, performed on single stand-alone spreadsheet PC 
systems. This is painstaking work, and requires significant experience.
    I have read the Special Trustee's Strategic Plan, the HLP, the GAO 
report referred to above and countless preceding GAO reports, hundreds 
of pages of court transcripts and Congressional testimony, outside 
consultants reports, and press releases and studies of the DOI and its 
internal Bureaus. And yet, I am far from an expert on all IIM reforms 
to date. However, I respectfully ask the DOI, the former Special 
Trustee, the Advisory Board established by the 1994 Act, the members of 
this Committee--what kind of a report card would you give to the DOI 
during the past few years based upon the above model of a well thought-
out, rehabilitation approach?
    The following hypothetical, admittedly from a different but similar 
context, may help to put the current state of affairs in perspective. 
After growing up through the New York City public school system in the 
1950's and 1960's, this hypothetical has meaning to me, and hopefully 
to others present.
    Suppose a blue-ribbon group of local merchants, professionals and 
workers in an inner-city environment decided to establish a multi-
faceted urban redevelopment project, aimed at dramatically improving 
the lives of the low income majority living in the area. The group 
engages the help of health professionals to set up clinics, educational 
professionals to establish remedial programs and vocational education 
to augment a perpetually underfunded public school system, artists and 
musicians to establish creative centers as counters to drugs and crime 
and off-duty police to assure an atmosphere of security rather than 
fear. Assume the group also sets out to develop an investment and asset 
management program to help the populace invest their hard-earned 
savings, budget their household funds to maximize the best life style, 
and to manage income-producing property that belongs to individuals or 
civic associations. Suppose this group over time, through successes, 
attracted local, state, federal and private non-profit funding to 
facilitate its programs.
    Now, assume five solid years of demonstrable success. The streets 
are safer, drug use among the young is down, educational achievement 
and job retention is higher, and health benefits have reached homes 
never reached before. But also assume that the organizing group, simply 
due to lack of time and resources, neglected the asset management and 
investment functions with respect to potentially millions of dollars of 
poor people's money. Records were literally kept in shoe boxes, or 
lost, pending the engagement of financial professionals, or deposits in 
regulated financial institutions, that the group always intended to do, 
or to make, but simply failed to do given the enormity of the task it 
had undertaken. The result is millions of dollars of unrecoverable 
losses for citizens, and no adequate program in-place to manage the 
assets or invest the money, assuming the group even knows or can locate 
current balances.
    As a citizen, or a state regulator, what would you do? Would you, 
out of anger and frustration, seek to punish the individuals who had 
formed the redevelopment project, or end the project itself? I doubt 
it. But would any sane person, in their wildest dreams, allow the 
control persons, who are now heavily conflicted and who lack any 
financial expertise, to continue to manage the assets and money out of 
the shoe boxes, and to spend fabulous amounts of other people's money 
to buy computer systems, with grand but empty promises to solve all 
problems? I do not believe so. Any responsible person would take what 
money they could find and deposit it in a bank, and transfer what 
assets they could find to a bank trust department. Then, under proper 
regulatory guidance, true experts would be employed to reconstruct 
proper balances, probably on a modeled test case basis given the 
paucity of records, and true reform would begin.
    Why should the American Indian beneficiaries of the IIM accounts be 
treated with any less reasonableness and fairness?
CONCLUSIONS AND RECOMMENDATIONS
    The leaders of the DOI and the BIA, and the rank and file of those 
entities in Washington and in the field, no matter how well-
intentioned, are seriously conflicted in the process of Indian Trust 
Fund Reform. If fiduciary integrity means anything, it means the 
absence of such conflicts-of-interest posed by concerns of job 
security, political survival, institutional longevity and self-
protection against blame for historic errors. People of good faith can 
argue about the meaning of the prudent investor rule, or other high 
fiduciary standards of care. But after a professional lifetime of 
attempting to reconcile textbook standards of care for trustees with 
real work capabilities of human beings like you and me, I (along with 
many courts, bank regulators and the Federal Securities Acts) have 
concluded that professional fiduciaries must, at the very minimum, be 
trained in state-of-the-art money management, completely free from 
conflicts-of-interest, and must treat the assets of others in their 
care as though they were the personal assets of the trustee, his or her 
spouse, and children. When the former Secretary of the Interior chose 
to backburner Mr. Homan's concerns about trust standards of care, along 
with the Special Trustee's concerns about independence and expert 
staffing, in the HLP, it became clear that the only governing standard 
would simply be the best the DOI/BIA could do, hampered as they are by 
a void of necessary expertise and in the face of serious conflicts. 
This is not a fiduciary standard. This is capitulation to the status 
quo, with a correct accounting for the IIM accounts at best only a 
secondary or tertiary concern.
    I strongly believe that the only viable answer to the present trust 
reform problems is the creation of a neutral body, independent of the 
DOI, with both public and private support and input. The GSE suggested 
by the former Special Trustee Homan in his Strategic Plan is one such 
vehicle. The Indian Trust Management Reform Authority recommended by 
the Chairman of the Intertribal Monitoring Association on Indian Trust 
Funds could also serve such a purpose.
    Ideally, such an independent body would be sponsored by, or have 
some connection with a banking or other financially sophisticated 
federal regulatory or quasi-governmental body. Obvious candidates would 
include the OCC or, perhaps, one of the federally sponsored entities, 
such as Ginnie Mae or Freddie Mac (or its related entity, the Federal 
Housing Finance Board), which are intimately familiar with complex 
active asset/cash flow trusts. It is also essential, in my mind, that 
oversight be retained by this Committee as well as the Senate 
Committees on Indian Affairs and the Energy and National Resources 
Committee.
    The structure of the neutral body need not be complex. In its 
simplest form, it would be administered by a financially sophisticated 
person with experience dealing with inter-governmental agency issues. 
In addition to government financial input, such an entity must have the 
ability to engage trust experts from the private sector, representing 
the disciplines referred to above in connection with a proper 
commercial approach to solving the IIM trust problems. It is my belief 
that such an entity would be able to obtain the services of highly 
qualified trust administrators, accountants, lawyers and systems 
experts who would be willing to work on this problem. Believe it or 
not, there are many people in the private sector who understand how 
important this problem is, and would be willing to devote extraordinary 
effort to help forge a real solution.
    The budget for such an enterprise could be a fraction of the DOI's 
expected Indian Trust Fund reform requests. Its mission would be to 
develop the critical conceptual and systems architecture described 
above, and called for by the GAO, in order to assure that future 
spending is actually aimed at viable solutions. No input would be 
ignored. The cognizant Congressional Committees, the GAO and the DOI/
BIA would be consulted on an ongoing basis. The entity should be task 
specific, and should have a sunset timeline coordinated with trust 
reform progress, although some viable means of continuing trust 
supervision, or progressive privatization, would be required. Such a 
small, well-controlled, highly dedicated and expert group, if given the 
cooperation of the DOI, could not only accelerate implementation of a 
properly integrated trust function for the entire IIM business cycle, 
but would also go a long way to relieve the unhealthy pressure that has 
built up around the historic approach to this problem.
    A few years ago, the head of the BIA cited a concern about 
potential independence for the IIM trust function that is very telling. 
He voiced a serious concern that wresting this problem from the BIA 
might spell the end of that Bureau as a viable governmental body. 
Although his concern has nothing to do with the Trust Reform Act's 
primary purpose of assuring IIM trust reform for the Indian 
beneficiaries, one can certainly be sympathetic with a concern that 
hundreds of people, many of whom are American Indians, may not have 
viable work in the future. But I would respectfully suggest that the 
kind of neutral body I and others are recommending might present an 
opportunity of a lifetime for many American Indians, within and outside 
the BIA. With the tremendous growth of retirement assets and the use of 
complex trust structures as investment vehicles, this country needs 
more qualified trust administrators. Given the increasingly high 
qualifications required for such professionals in the private sector, 
many move on quickly to other financial positions, such as investment 
banking. The staff of any neutral body would constantly be interfacing 
with many of the BIA staff who are currently working on the problem, 
and who would continue to do so in cooperation with the neutral body. 
The opportunities for real, commercial level trust administration 
training is obvious. Whether an affected BIA staff person chose to use 
such training in government service, or in working with Indian-owned 
independent banks or any independent bank or trust company, his or her 
prospects for the future could be far brighter than continuing to work 
on any single-purpose project.
    The most important observation I can make, as a dispassionate 
outside professional, is for all major players in this process--
including the DOI, the American Indian groups, the U.S. Congress and 
the Federal courts, to take advantage of the opportunities inherent in 
the present state of affairs.
    This problem has been a long time in the making. The present staff 
of the DOI did not make the problem, and, in fact, have made some 
valiant efforts to solve it. But the DOI has already lost control of 
the process. This is because the historical accounting, reconstruction 
and rehabilitation of the IIM accounts is currently in the hands of the 
Federal courts, and will be played out in some kind of court-mandated 
accounting, a receivership or a consensual settlement process, in each 
case requiring outside trust professionals to determine how history is 
to be reasonably reconstructed. I can state with some assurance that in 
a trust problem of this magnitude, the validity of the systems designed 
to take care of future trust and asset accounting will depend in large 
part on what is learned in that historic accounting and reconstruction 
process, even if that process is accomplished largely on a sample 
modeling basis. Simply put, most if not all of the variables involved 
in complex asset leasing and accounting, in beneficiary succession and 
in custody problems have already presented themselves in the protracted 
history of the IIM accounts. Those data variables are the building 
blocks for any future systems or procedural architecture. The 
intricacies of leasing potato land in Idaho, as opposed to oil and gas 
deposits in Oklahoma, and what has gone wrong in the respective 
accounts payable/accounts receivable histories of such leasing, is 
vital information for any new asset management system.
    What I am suggesting is that the two processes--historic 
accounting/reconstruction and future systems development are 
irrevocably linked. The experts of any independent body charged with 
future asset and trust accounting design, unless they are to duplicate 
effort, must talk with the experts involved in the reconstruction 
process. Ideally, at some point those processes should be combined. But 
the point is that one portion of the ``fix'' process, historical 
accounting, is already in the hands of a neutral body, the court. It 
makes little sense, then, since both aspects of the fix must be 
irrevocably linked, to leave the largely derivative portion, new 
systems, to a governmental agency, steeped in the knowledge of Indian 
welfare, but devoid of any trust expertise and heavily conflicted. This 
makes even less sense since the entity currently working on the future 
systems fix, the DOI, is in a legally adversarial posture in the 
current Federal court proceedings where the historical fix is being 
played out.
    When the recommended independent body is formed, serious 
consideration should be given to combining any court-mandated 
accounting or receivership reconstruction effort with new systems 
development tasks of that neutral body.
    Politics and institutional self-preservation aside, it is time for 
the DOI to let go, to the extent it has not already been forced to do 
so by the pending class action litigation.
    I would also hope that all those involved, given the nature of the 
interests of the American Indian beneficiaries at stake, would take a 
strictly non-partisan approach to the trust reform process.
    Finally, and briefly, I would like to remark on past published 
statements reportedly made by DOI officials in defense of their various 
reform efforts. Purported statements branding constructive critics of 
the DOI's efforts as ``anti-Indian'' are very regrettable. So are 
suggestions that anyone opposing the DOI/BIA reform effort, and the 
proposed additional funding for that process, are simply motivated by a 
desire to keep money from the Indians.
    As a seasoned business lawyer, I am unfortunately inured to even to 
this kind of name calling. People say unfortunate things when they are 
on the defensive. If these labels are put on me because of my 
testimony, so be it.
                                 ______
                                 
                               EXHIBIT A
   testimony of donald t. gray before the senate committee on indian 
             affairs regarding indian trust fund management
                           february 26, 2002
    My name is Donald Gray. I have testified as an expert previously 
before this Committee, and I appreciate the opportunity to do so again. 
I have also recently testified before the House Resources Committee on 
the same topic. I bring what I hope is a helpful and fresh independent 
perspective to the Indian Trust reform effort at a time when I believe 
real change is possible.
    I am a partner in the law firm of Nixon Peabody LLP. For 26 years I 
have specialized in working with institutional trustees and other 
financial institutions in establishing, administering, reconciling and 
rehabilitating long-term complex trusts and other money flow 
arrangements involving billions of dollars of managed assets. Simply 
put, my business is largely devoted to ``fixing'' broken trusts in the 
private sector. The clients of Nixon Peabody's Trust and Financial 
Rehabilitation Group, which I helped found, include some of the largest 
money-center banks in the world. I am also an international logistics 
and shipping expert, and in this area am well-known to the Alaska and 
Hawaii Congressional delegations as well as all government agencies 
with jurisdiction in the area.
    When I testified previously in July of 1999, the atmosphere for 
potential change was very different, and not nearly as positive as I 
believe it is today. Yet, because there has been so little progress in 
the intervening time on trust reform, much of my prior testimony, 
especially concerning the precise methods and architecture for true 
trust rehabilitation in the IIM accounts, remains relevant. Therefore I 
re-submit that testimony, with minor updating revisions, as Exhibit A 
hereto.
    In short, after following this process for many years and reading 
all relevant DOI, GAO, outside expert reports and court transcripts, 
and while I do not claim any panacea for one of this nation's most 
vexing problems, I believe for the first time there is a light in the 
forest. There is hope for a truly viable IIM trust fix.
    I summarize the reasons for that belief, and the organizational 
methodology I believe to be essential to the trust fix below:
    1. The Need for an Independent Body. What has been missing since 
the passage of the American Indian Trust Fund Management Reform Act of 
1994 is the essential trust fix expertise within the DOI, with the 
exception of Mr. Homan, whose efforts were consistently thwarted by DOI 
officials. The other irreconcilable obstacles to trust reform have been 
the flagrant conflicts-of- interest within the BIA in attempting to fix 
a broken system it has helped to perpetuate. My conclusion, and the 
only conclusion I believe a private sector expert can come to, is that 
the fix must be under the auspicious of a body independent of the DOI 
and the BIA. The issues of lack of expertise, crippling conflicts-of- 
interest and the need for an independent body for the required trust 
fix are discussed in detail in Exhibit A. My suggestions for the form 
such an independent body should take--a time- limited, government-
sponsored entity (``GSE'')--and its Congressional mandate, are set 
forth below.
    2. The Continuing Role of the DOI and the BIA. Before continuing to 
outline an alternative structure, I want to be clear about the positive 
role the DOI and the BIA can play in this process. With the exception 
of the highest-ranking DOI officials of the previous Administration, I 
do not believe any DOI or BIA employee has deliberately bogged down the 
process, obfuscated with respect to critical records, or intentionally 
wasted vast sums on computer systems that were ill-conceived and did 
not work. There is still a very important job for these BIA officials 
and employees to do.
    The key here is to separate the trust ``fix'' problem from the day-
to-day administration of trust funds. The BIA still needs to perform 
the basic collection and trust allocation and payment functions as best 
they can, while trust fixes are developed by the independent body and 
made a part of the existing trust function over time. However, the BIA 
employees can no longer be put in the impossible position of attempting 
to fix a system they and their parents have helped to create and 
perpetuate, especially since they lack the specific expertise to effect 
the fix.
    In addition to day-to-day administration, such BIA employees would 
be available to the independent body suggested below, since they 
possess valuable information about past and present asset management 
and trust payment procedures. Their input is critical, especially in a 
case like this where some records have been lost or destroyed. As fixes 
are developed by the independent body, these employees would be 
essential in putting them into effect. The law changes required to 
establish the independent body must permit the full and open 
participation of these employees in the fix process, as mandated by the 
independent body, and must protect these employees from internal 
retribution and/or legal actions for good faith mistakes made in the 
past.
    The interaction of the independent body and its professionals with 
the BIA trust employees in the fix process also offers a unique 
training opportunity for the BIA personnel involved. The BIA would 
learn the new system and proper trust functions from the best experts 
in the field. Such training can be used by the BIA employees in the 
years to come within the BIA, in connection with the IIM accounts or 
other similar trust functions in which the BIA is involved, or in the 
private sector, as they choose.
    3. Inter-Branch Governmental Cooperation. The reason I believe 
there is hope for a true trust fix now has to do with what I perceive 
to be the posture of the major participants at this point. Most 
importantly, both houses of Congress appear willing to take dramatic 
action on a non-partisan basis. That did not appear to be the case 
three years ago. Also, despite the characterization of the current DOI 
officials in the Cobell litigation and the press, it does not appear to 
me that they (unlike Mr. Babbitt and his top aides) are bent on 
obstruction, nor dead-set against external, independent assistance in 
reaching a trust fix. Respectfully, Secretary Norton's internal 
reorganization plan, although well- intentioned, will not work, and 
pouring another $200 million into that reorganization rather than a fix 
by real experts is a very great mistake. This is the only sound 
conclusion that I can reach after watching the waste of hundreds of 
millions of dollars over the past eight years on internal 
reorganization and inept systems, and assessing the lack of proper DOI 
expertise that Secretary Norton apparently admitted recently in her 
testimony in the Cobell litigation. Again, without the proper 
expertise, lack of conflicts-of-interest, and independence, an internal 
reorganization will do nothing. But the DOI's participation in an 
independent body structure, like the one outlined below, through Mr. 
McCaleb or another reform- minded DOI official, is essential.
    Finally, there is the court. I cannot imagine that anyone would 
take the position that the heroic efforts of Ms. Cobell, and the 
tenacity of Judge Lamberth and his assistants, have not been an 
essential ingredient in shining light on, and narrowing the issues 
concerning the historic trust defalcations. But, as a purely practical 
matter, a court-appointed receiver does not appear to be the best 
answer as to future trust reform. For instance, how will that receiver 
be paid? How will proper trust fix experts be made available to the 
receiver? Will that receiver obtain the proper, timely and essential 
input and cooperation of the BIA officials and employees currently 
engaged in the trust administration function? As to these matters, I 
would hope the court and Congress would both seek to find a way to 
cooperate on the establishment of an independent body charged with that 
fix.
    4. The Independent Body. I believe the best vehicle for effecting a 
viable trust fix is the creation of a GSE, with a mandate and structure 
as outlined below. However, except for the independence of this entity, 
which is essential, there is nothing magic about any part of the 
following structure. I would invite the Committee, and all interested 
parties, to suggest structural alternatives if they can be shown to 
better reach a trust fix in a timely fashion.
    a. The GSE would have three levels of participants. This structure 
would be very lean, and would leverage on outside professionals on an 
``as- needed'' basis.
    At the top, all trust fix policies and procedures would be the 
ultimate responsibility of a ``blue ribbon'' board of Commissioners 
drawn from specific public and private sector sources. At least two 
Commissioners would ideally be acting officials in federal financial 
institution agencies or bodies, specifically a Governor of the Federal 
Reserve, a senior official of the Office of Comptroller of the Currency 
or the Federal Deposit Insurance Corporation. These agencies have a 
great deal of trust and related financial expertise, as well as 
regulatory oversight responsibility for the private banking sector. 
There should also be a representative of the IIM beneficiaries who is 
viewed in Indian County as financially sophisticated and completely 
trustworthy. In addition, given the extent of cooperation required 
between the GSE and the DOI (including the Special Trustee and the 
BIA), the board should include a high-ranking DOI official acceptable 
to the other Commissioners and Indian County. The Assistant Secretary 
for Indian Affairs would, in my judgment, be a likely candidate for 
this position. Finally, if the mandate of the GSE were broad enough to 
include Tribal trust issues, a representative approved by the various 
Tribal organizations should be a Commissioner.
    The Commissioners would meet regularly, and should be paid for 
their time and expenses, but with recognition that they are serving as 
a very active board of directors, who have primary jobs and 
responsibility elsewhere. The Commissioners would have the direct and 
continuing oversight of the Senate Committee on Indian Affairs and the 
House Resources Committee.
    The next level of the GSE would be an Executive Director (``ED''), 
with as lean a support staff as possible. This person should have 
``hands on'' trust or other financial fix expertise, such as a former 
RTC official. The ED would manage professionals, be the liaison between 
such professionals and the Commissioners on all aspects of reform 
(e.g., document and records custody and control, identifying and 
maintaining critical data elements, developing a schematic diagram and 
design architecture for all aspects of the assets/trust systems, 
developing and implementing a systems design), be responsible for 
liaison with BIA trust administrators, and be a ``plain language'' 
interpreter for the oversight committees on what will be at times 
complex procedures employed by the professionals.
    The last element would be trust professionals who work constantly 
in detailed trust accounting and reconciliation, cash flows, 
investments, control procedures, computer system analysts and 
implementators. This would include legal trust fix experts, trust 
administrators, forensic accountants and computer specialists, all of 
whom have worked on trust reformation and fixes in the past. It would 
be impossible, and economically prohibitive, to have all such 
specialists on staff. They may, for periods, be used intensively, but 
only on an ``as-needed'' basis. Ideally, there would be a lead 
professional who would help the ED choose and coordinate the efforts of 
all other professionals to avoid overlap and promote efficiency.
    b. The mandate of the GSE would be to design and implement a viable 
trust accounting and reporting system inclusive of the entire cycle, 
from resource leasing to IMM account-holder payments. The GSE would 
have authority to implement new systems and procedures, if possible on 
a progressive, partial basis. The GSE would have authority over BIA 
trust administrators for implementing the fixes and training BIA 
employees and officials as to proper implementation and maintenance.
    c. The GSE would be time-limited. It is suggested that a initial 
life of five years would be adequate, with authority in Congress to 
extend this sunset provision, if necessary.
    d. Ideally, the GSE would be able to coordinate its efforts with 
any trust professionals used by the Cobell court, or by the parties 
litigant therein, in accomplishing an accounting or reaching a 
settlement on past trust practices. As explained in Exhibit A, 
reconciliations, modeling and findings regarding past practice and 
mistakes are usually part and parcel of any future trust fix because 
the latter gleans so much information on proper (and improper) trust 
accounting from the former. Also, having worked with the plaintiffs' 
accounting professional on other significant large, historic trust and 
similar financial fixes, their input, if possible, into designing a 
suitable program for the future is almost indispensable.
    In conclusion, it is ironic and telling that just such an GSE was 
recommended by Special Trustee Homan in his report (contested by then 
DOI officials) after several years of frustration in attempting to 
accomplish an IIM trust fix within the DOI.
                                 ______
                                 
    Mr. Hayworth. Mr. Gray, we thank you for that testimony. 
And as is the case with all of the testimony, it leads to some 
questions. Amplify a bit what you were saying, Mr. Gray. You 
believe there should be created a governmental agency. This 
could not be, for example, farmed out to a private entity, in 
your mind? This needs to be a new type of agency, but it has to 
be outside of the Department of the Interior?
    Mr. Gray. No, I think total privatization has its own 
problems, in terms of oversight. I think that Congress has the 
responsibility, and the ability, to oversee some kind of 
limited commission or GSE. And I think Elouise was the one who 
actually told you who the members of that ought to be.
    The members ought to be representative of the Indian 
community, definitely; forensic trust experts; land management 
experts; systems analysts; architectural analysts. I have 
watched this thing for 10 years, and I have watched them pour 
in over $500 million into mainly computer software. No one has 
ever come up with the conceptual--not computer--conceptual 
architecture of what are all of the tasks, from land leasing, 
to the check to the beneficiary. What are they? Just write them 
on the wall. No one has ever done it.
    They do not even know what conceptual architecture is. And 
until they know that, it is not a panacea for this problem. 
This problem has at least 80 different parts to it. It could 
not work. And what I got back from a very sympathetic 
Appropriations Committee about 3 years ago was, we have no 
choice. If we do not appropriate the money, we will be called 
anti-Indian.
    Mr. Hayworth. If it were up to you, Mr. Gray, in your mind, 
the numbers of people needed, the cost, any ballpark figures?
    Mr. Gray. Yes, I do. I do. I mean, Arthur Andersen, when 
they first tackled this problem in the late 1980's, they came 
up with, and this is fairly typical of Arthur Andersen. I am 
not just picking on them because they are down, but it is 
somewhat typical in my experience. They were paid 20-something 
million dollars to say that we really need another $500 million 
to solve the problem, and I do not think that is true.
    I do think that it would take--it would take the $150 
million that will be, and I promise you it will be, 
appropriated this year simply to set up this, what do they call 
it, ``bite em.'' That is a great acronym.
    [Laughter.]
    Mr. Gray. To set that up, to defend the lawsuit that they 
have already lost 20 times and to do whatever else they are 
going to do, they will get, through direct and supplementals 
this year, at least $150 to $175 additional million. If you 
took that money and you had a commission that had six to seven 
people who were national experts on the issue, including tribal 
and IMM members who really, at the land level, really know what 
they are talking about, what would happen is that those people 
would not do all the work. At various stages in the process, 
they would go out and they would hire maybe 30 or 40 
professionals to say, all right, here is the stuff. Now, here 
are the important things we need from it. Go through it and get 
it out, and they would do that.
    So it is not a case that you have got ten people working 24 
hours a day. You would have ten people who had the access and 
the knowledge, and there are two accounting firms already in 
this process who are absolute, dead-on experts at doing this 
thing. I have worked with both of them and gotten some very 
large banks out of some very bad situations.
    Mr. Hayworth. One final question, just going back for the 
record, under a commercial trust, what is the normal input that 
beneficiaries have?
    Mr. Gray. Well, they have a lot of input, and it is usually 
in the sense of an accounting, an action for an accounting. I 
mean, it would take--everybody here has already admitted, 
including, I think, the Department of Interior, that a trustee 
has a higher standard of care than just a bank does with a 
depository account, which is true under U.S. law, commercial 
law. If you add to that the increased standard of care under 
U.S. Indian aspects of history, you have one of the highest 
standards of care in the world.
    When there is a breach of trust or somebody thinks there is 
a breach of trust, they file a breach of trust action. I do not 
know of any State anywhere where that breach of trust action 
would not be heard on an expedited basis within six to 8 months 
because it is a trustee action, and it would be resolved one 
way or the other. This has been going on forever and nothing is 
resolved.
    Mr. Hayworth. Just one final note here, to follow up on it. 
How would the Department, and again, taking into account what 
you are saying, but just take a look at the record, if the 
Department still had involvement, how would it even have to 
change its current trust relationship to make it operate more 
like a commercial trust, or is that even desirable?
    Mr. Gray. At this point, it is not desirable. What is very 
desirable is that the BIA stick to their knitting and what they 
really know, and what they really do know is social services 
and welfare and other things. What they do not know is anything 
about fixing a trust that is this bolloxed up, and not because 
they bolloxed it up but because it has been messed up for years 
and years. First, they stick to the things that they really 
know well.
    Second, they are delegated by whatever law you hopefully 
can put together on this thing, they are delegated the 
responsibility to cooperate with the Commission so that --A) 
they are immunized in a fair way; B) they can get information 
so people can really get at things, because if you go out to 
Billings, Montana, and get stonewalled, nothing is going to 
happen; and C) they are trained, they are trained in forensic 
trust.
    This used to be a small industry. Twenty years ago, when 
the financial industry was nothing but stocks and bonds, a high 
school graduate could go out and be a trust officer. Now, what 
you have are the most complex securities that you have ever 
imagined, derivatives on top of derivatives, I mean, just 
things that would boggle most people's minds that flow through 
trust offices. They are MBAs; the first jobs that most MBAs 
have are trust officers for these large banks because these 
things are so complicated, and the training opportunity for 
people in the BIA who have a financial proclivity, I think is 
one of the missed opportunities of all time.
    Now, all they are doing is running around trying to hide 
mistakes and worried that if they are a whistleblower, they are 
going to get punitive action. If they try to do the right thing 
or they are told what they are to do, they do not know whether 
they are doing something that is right or whether it is wrong. 
I mean, they are working in a total vacuum of knowledge. It is 
not their fault. It is not what they were trained to do.
    Mr. Hayworth. Thank you, Mr. Gray.
    Let me turn to the gentleman from Michigan.
    Mr. Kildee. Thank you, Mr. Chairman, and thank all the 
witnesses. Today, I was called upon to attend two different 
hearings. I serve on two Committees, Education and Labor, and 
we take care of pensions over there and they are having 
hearings on Enron, and then I had this responsibility over here 
on Indians and I figured there was a lot of attention being 
paid to Enron right now and not enough to Indians, so I spent 
the day over here.
    I really appreciate your testimony. You would think that 
the public relations of the Department of the Interior would 
have thought through that new acronym, BITAM, before they 
changed that.
    [Laughter.]
    Mr. Kildee. They did not run it by public relations, but 
maybe it was a Freudian slip over there.
    Mr. Tillman, you mentioned that this trust responsibility 
is the oldest trust responsibility in the U.S. Government. As a 
matter of fact, it antedates even the Constitution. The 
Northwest Ordinance clearly specifies our responsibility, and 
it is not a trust as I think some people through the years have 
thought, a trust for minors. It is a trust for people, for 
tribes who have a civilization and a language and a land. Very 
often, they were treated as if these were minors they were 
taking care of, and they should take care of them, too, but 
very often, it has been a certain patronizing role, which is 
unfair. That is one of the reasons I established the Native 
American Caucus, because of some of the unfairness I hear.
    It is rooted in, as I say, our responsibility to you. It is 
in the Constitution. Your sovereignty is not given to you in 
the Constitution, it is only recognized in the Constitution, 
right. It is a retained sovereignty, but Article I, Section 8, 
talks about it.
    Mr. Tillman. Right.
    Mr. Kildee. It is a retained sovereignty, and it is rooted 
in the fact that the loss of so many of your assets taken by 
the Federal Government and promises made.
    When I first got elected to the State legislature back in 
1964, I read the Treaty of Detroit and read what was promised 
to the Ottawa and the Chippewa and the Potawatomi in Michigan 
and was not delivered. So it is well rooted. It is very well 
established and we have an obligation, and that trust 
responsibility, and I preach this all over, resides with the 
entire U.S. Government. It is not just with the Interior 
Department. It is with the Congress. It is with the courts, the 
entire U.S. Government, and we have a responsibility. That is 
why we are having these hearings today. We passed a bill in 
1994 which is not working well enough.
    I have 12 tribes in Michigan. We used to have about five. 
We got some of their sovereignty recognized. They have been 
dropped from the rolls, even their sovereignty. You could not 
even keep the trust responsibility of who is a sovereign tribe. 
They were dropped from the rolls and we have had legislation. 
So we have an injustice out there and we have to respond to 
that injustice.
    Let me ask you this question, and I will ask it of all of 
you, the courts are involved now, and very often the courts and 
the Congress will act when the executive branch is not acting 
properly. If we amend or scrap and start over again the 1994 
law and really try to address this well, will we in any way be 
interfering in a negative way with what the court progress may 
be now? Maybe I will ask Mr. Gray that question.
    Mr. Gray. I think you are at a real historic moment. Up to 
this point, I would have said yes, because what the court's 
mandate was was past foul-ups, and what always bothered me 
about a forensic fixer was how in heaven's name do you put 
together a future fix if you do not know what has gone wrong in 
the past, and that future fix was left with TAAMS and with the 
Interior.
    Now, they have come together. Judge Lamberth is a very 
intelligent man and he looks at this down the road, not just 
one motion to the next. He had the historic problem and now he 
has ordered an accounting. Second, he had an opportunity to 
take jurisdiction, which can be challenged, but he took 
jurisdiction over the current fix because of the security 
problem. So now he has brought those two ends together, but I 
believe in my heart and with my legal reasoning that he 
believes he has done what he can do and he really needs the 
help of Congress.
    Before this point, it would have been inter-meddling. I 
think it would have been seen as inter-meddling because there 
was not enough information out. Now he has seen all the 
information he can stand. But at this point in time, I really 
believe that the judiciary which is involved in this would 
really welcome Congress's participation and maybe cooperation. 
Maybe you have a receiver who is cooperating with a special 
purpose entity.
    I do not have the magic bullet. I would love to write it 
for you, because it is coming together in my mind. But the fact 
of the matter is, I think it is a historic moment to do that, 
and I also believe--I went through 8 years with a Secretary of 
Interior, and I am an Independent, but I have to tell you, the 
former Secretary of Interior deserves the reputation for 
arrogance and stonewalling, period. I do not believe that 
Secretary Norton has been in the job long enough to deserve 
those epithets and I think she is trying to grapple with this 
problem the best way she can.
    And frankly, I think if it were taken out with her advise 
and consent, I mean, she would be part of the process of 
saying, I want the BIA involved, I want my people trained, I 
want you to get the accurate information--you do not have many 
situations come together like this right now, but somebody has 
got to act and I think it is the Congress.
    Mr. Kildee. Maybe we can find some way we can mesh the two, 
because the executive branch of government for over 100 years 
has not done a good job. We are where we are because of the 
executive branch of government of both parties. So maybe we can 
mesh well our gears between the judicial branch and the 
legislative branch.
    The 1994 law, which I voted for, probably passed virtually 
by a landslide, maybe unanimously--the 1994 law was written not 
on Mount Sinai but on Capitol Hill, right, so it is not 
perfect. We know it is not perfect. We see the imperfections. I 
am willing to work with particularly this group right here, 
because the three of you, along with your counsel here, 
represent groups of sovereign nations, so you can speak with 
great authority when you talk to this Committee. I would like 
to work with you to see what we can do to really resolve this, 
because justice delayed we know is justice denied, and this has 
been delayed and delayed and delayed and delayed. People have 
died who could have lived much better had this government kept 
its trust responsibility.
    I am talking too much, but Chippewa Cree, are they related 
to the Chippewas in the Midwest?
    Mr. Windy Boy. Actually, they got lost.
    [Laughter.]
    Mr. Windy Boy. That is where I come from. I would like to 
respond to that, if I may.
    Mr. Kildee. OK.
    Mr. Windy Boy. You know, you are talking about reforming or 
amending the 1994 law. There are a couple of things I would 
like to keep in mind here. No. 1, you are the trustee as the 
U.S. Government. No. 2, when we are having these government-to-
government consultations as far as governments, my 
interpretation of a government is a tribal leader as chairman 
and tribal leaders sit up here as you sit up there and are 
considered as heads of state, and we are the ones that have 
been elected by our people to move forward and make decisions 
that are going to affect them positively to make their lives 
better. That is why we are here.
    And if anything is going to come forward as far as any 
amendments toward that law, there should be a consultation. 
That is why I recommend this to you. Have these hearings, not 
just on trust, on all policy, because our policy that is going 
to be considered in the White House right now is going to have 
great impact on the Indian country right now as we see it.
    Mr. Kildee. Thank you.
    Mr. Hayworth. I see one more comment here, and then we need 
to let the other members go.
    Mr. Tillman. I would like to say one thing about what 
Congressman Kildee had to say about the three groups that 
represent the total assets of Indian country, and we do. The 
InterTribal Monitoring Association has 53 tribes in it that are 
large stakeholders. The National Congress of American Indians 
has a certain amount of tribes that are stakeholders. And the 
Council of Large Land Based Tribes have also a great asset of 
millions and millions of acres.
    So not only this diversification of assets, which include 
oil, gas, timber, millions and billions of board feet of 
timber, but fisheries and land-based tribes and leases and 
grazing, this goes on and on to when you line up all these 
assets, you are going to have a tremendous amount of assets to 
look after.
    Now, how do you do that? The Osage Tribe at one time in 
1992 hired Cooper Lybrand to come to the Osage Agency, which is 
a single-tribe agency, to assess that agency because they 
thought that they were the Cadillac of all of oil and gas 
operations. We hired Cooper Lybrand at a large amount of money 
to come to that agency to do that work for us, and they did.
    And after their report was given to the tribal council that 
they were operating back in the 1950's and 1960's, in 1996, we 
spent $50,000 more and brought the same company back in to 
check it and to make sure that we knew what we were talking 
about. They came back and told us the same thing, that, yes, 
they have new equipment, yes, they have this, yes, they have 
that, but they are still operating back in the 1960's.
    So here we are in 2002 and we are sitting here at this 
plateau today and we are sitting down here in the Bureau of 
Indian Affairs. Now, how do you bring that back up to standard? 
I am not talking about above standard, but just standard.
    The Osage Tribe has 1,600 tank batteries that exist on its 
reservation. Those tank batteries consist of 5,000 tanks. Those 
tanks are being purchased every day as they fill up with oil. 
Do you know how many gaugers that the Osage Tribe has? Four. We 
have four to see over that asset.
    Now, that is why I say that this is very critical to us 
today. It was an honor to be here today to tell you the horror 
stories that are going on out there. Yes, the trust 
responsibility that Congress has, is the ultimate trust holder, 
is true and that is why I came here. I came 1,400 miles to tell 
you that, that you can oversee the Bureau of Indian Affairs. 
You have the authority to oversee, to create a commission or a 
Committee made up of us people to overlook the BIA and become 
part of that, to make sure that our asset is being well taken 
care of. Thank you very much.
    Mr. Kildee. Thank you. Let me say to Chief Windy Boy, with 
my Michigan accent and Chippewa, I'll say, ``Migwich'' [ph.].
    [Laughter.]
    Mr. Hayworth. Thank you, Mr. Kildee.
    The gentleman from New Jersey.
    Mr. Pallone. Thank you, Mr. Chairman. I have to apologize. 
I missed most of this panel's testimony because I was at the 
Enron hearing and then I had to go to the floor on a bill that 
I had sponsored, but I wanted to say this.
    My concern throughout today has been that the Secretary is 
just going to move forward with this proposal that she has, and 
even though she is saying, and there has been some consultation 
now at the late stage, that she wants to wrap this up fairly 
quickly and move on, I am not really asking this question, but 
at least there seems to be in her mind that she has the 
authority to set up a separate agency and not have to wait for 
Congressional action to do so. There might be some legal 
question there about whether she can do that and maybe you 
might want to comment on that. But she seems to think that she 
can do it on her own.
    So I keep trying to push, and I guess my question is what 
you think maybe we need to do as Congressmen or as a Committee 
to try to make sure that that does not happen. In other words, 
we need to press for more time, we need to raise the issue of 
whether it can be legally done.
    I understand that President Hall said in his testimony 
today that you were somewhat concerned about this meeting that 
was held over the weekend with the task force. She obviously 
told us that there was a split of opinion. Some were in favor 
of her proposal, others were not. That is, at least, the way I 
think she said it, and yet you seem to think that really nobody 
is in favor of it.
    So I just wondered what you think we should be doing short 
of legislation, because that takes time, to press to make sure 
that this does not just pass by without proper input.
    Mr. Hall. Thank you, Congressman. Just a couple of points. 
I appreciate your coming back.
    In all of the plans, and I am sure Mr. Gray has the 
expertise as being a forensic trust expert, but no matter who 
it is, it has to be tribally driven. The tribes on our task 
force put together a matrix. Here are all the proposals, nine 
tribal proposals in lieu of BITAM, and here are the standards 
that we want to adhere to. We want to include BITAM and the 
individual plaintiff Cobell on this. But the task force had 6 
days. Secretary Norton had 6 months with EDS and spent millions 
of dollars. And so that way, the computer system matches up 
with the records of the land, just like Mr. Gray was 
indicating, so we do not have another TAAMS fiasco.
    So that is what we are saying, is that there is an 
executive order. If tribes are sophisticated, as we heard many 
of the speakers today, they have got great models that they are 
utilizing already, if given the time, the tribes will come up 
with--if the Secretary is not going to listen to the tribes, we 
will come up with our own plan and we welcome and we want to 
work toward legislation. Our task force does not want to be a 
rubber stamp.
    It is really disheartening to spend a whole weekend, 30 
hours from Friday to Sunday, trying to gain a trust with the 
Secretary and the 36 tribal leaders represent Indian country, 
and then we have to go back and sell that to Indian country, 
and we are committed to do that, but we have to have the trust 
of the Secretary that she is going to abide with consultation 
and with her word.
    We told the Secretary before we went in, because a lot of 
tribes did not want to go in there because they did not trust 
the Secretary and her word, but we said, no, let us begin this 
relationship. Let us go in with an open mind and an open heart. 
Let us go in and work with our trustee and establish a 
relationship. She wants to be involved with the task force. She 
supports the task force. Let us sit down and see if she will 
consult with us throughout and let us come up with an 
alternative plan, because she knew we opposed BITAM.
    It was in every seven consultation meetings. We opposed 
BITAM. She knew that. So we went in and we said, let us come up 
with an alternative tribal plan to BITAM. And then to hear that 
the Secretary may want to continue with BITAM and to say that 
some supported her plan, no tribe supported her plan in 
Shepherdstown, West Virginia, over the last week.
    And so I am very disheartened by it, but I do see light at 
the end of the tunnel. I think there can be some merger here. 
If tribes will--if we are given the time to come up with our 
own preferred alternative, because we feel BITAM separates 
trust and is a potential breach of trust and we would not want 
to support a concept or a model that potentially breaches trust 
all over again.
    We do not want to go back into litigation. We want to come 
back and find a solution. But in the report, again, it must be 
beneficiary-based approach plan, and to leave out the 
beneficiary, either tribal or individual, and just, no offense 
to Mr. Gray, but let a commercial expert do it, it could again 
breach a trust responsibility that Congress has to Indian 
tribes.
    So I think I am confident that the tribes can get there 
because we want reform, and whoever says we do not want reform 
and want the same old BIA as it is is completely wrong. That is 
false, Congressman. We do want reform. We just, because it is 
our assets and money, we want to be at the table to help be a 
solution to it and to have the resources to come up with it, 
and I really like the examples that were made.
    President Makil talked about the independent review 
commission. I think that is an excellent example. As a matter 
of fact, the task force is starting to consider that. We want 
external auditing. We want to consider that. And we want to 
look at, again, a tribal-driven plan that can put the focus at 
the local level, not in Washington but at the local level so 
that the tribal government and its IM account holders has the 
resources right in the field as they are looking to leasing for 
grazing, looking for appraisals, oil and gas, all of that. We 
need to have those accounting experts. We need to have those 
people and those resources right there, and I think it can 
happen, but we are going to need the assistance of Congress, 
clearly. I think there is no question about it.
    Mr. Pallone. Thank you. Thank you, Mr. Chairman.
    Mr. Windy Boy. Can I respond? My response to that is 
simple. The point that you brought up, all of the above should 
be adhered to, should be pursued. Make sure that it is legal. 
No. 2, in order to put a stop to this, make a reprogramming 
request. How can the Department make any moves without any 
money? How can you operate a Department without any money? It 
is simple.
    Mr. Gray. That is simple.
    [Laughter.]
    Mr. Gray. Do that, and I have a slightly more moderate 
suggestion, and that is if this Committee, in connection with 
and in tandem with the Senate Energy and Senate Indian Affairs 
Committee, were to send a letter to the Secretary and say that 
these hearings have brought to light issues that call into 
question her plan and that before she implement that plan, it 
is important for you to hear more from her as to the--or to 
answer the questions that have been here today about the 
viability of that plan as a trust fixer and also the legality 
of creating a new bureau within an agency.
    I do not know the answer to that, but it would give the 
Committees time to look to their counsel to get a handle on 
that. It would put some pressure on them to come up with their 
legal reason for it. And it would also have a substantive 
basis, which is we have heard enough to really question whether 
or not that makes a whole lot of sense.
    I was here for 8 years, but I never considered myself a 
Washington lawyer, so you know how things work and I do not, 
but I have worked with those Committees and one of the things 
that is, having come 3,000 miles for this little adventure, I 
can tell you that I am amazed at the bipartisan approach of 
these Committees toward this issue. I mean, I really am and it 
is a credit to everybody in this room and it is a credit to the 
Senate side, because I know those Committees very well.
    I think it is time to take some action. Ms. Cobell may do 
it anyway, but having done that under the umbrella of a 
perfectly reasonable request from Congress, that would be a 
bold act, indeed.
    Mr. Pallone. Mr. Chairman, maybe the Chairman and the 
ranking member and we could look into that more and see if 
maybe they would be willing to do something like that.
    Mr. Hayworth. I think there are a variety of things, and 
the chair would just point out something here today. There have 
been some differences of opinion, honestly expressed, but I 
think I would be remiss if I did not point out that the 
Assistant Secretary and the Associate Deputy Secretary have 
stayed here the entire time. This was not a cameo appearance. 
This was not, oh, gee, we have got to run off somewhere else.
    I can speak from personal experience with the 
bipartisanship or the nonpartisanship. When I first came to the 
Congress, there was inherent distrust of one of the new guys 
coming in, and when we finally get past this, and yes, the 
philosophers who say, is it not a shame that youth is wasted on 
the young, and to a certain degree we can say, is it not a 
shame that policy is not always related to politics.
    But in fairness, I think we ought to be compelled to say 
that stepping into a difficult situation, the Secretary of the 
Interior deserves the benefit of the doubt and honest and open 
and unbridled and unvarnished criticism, and that is going on 
today, but let us try to deal with this in a positive manner, 
and whether it is written communication or whether it is 
transmitted face-to-face or taken back by her representatives, 
I think there is a chance to build trust based on this type of 
hearing and the constructive things we can do.
    So we can take a look at letters, but I just want to point 
out for the record, I appreciate very much the fact that Mr. 
McCaleb and others have stayed here for the entire hearing to 
take into account what is being said. I think we can move 
forward in a positive, constructive way. It will not mean there 
will not be differences of opinion down the road. Consensus 
differs from unanimity. But I think we can hammer this out, and 
so I appreciate the suggestion you offered, Mr. Pallone, and we 
will see where we can go.
    Of course, the gentleman from Michigan and I, as co-chairs 
of the Native American Caucus, have done a number of things, 
and I want to work proactively with everyone in here. So I 
appreciate the spirit of that remark.
    I see my good friend from American Samoa who has been here 
who has worked with us on so many of these issues and I know he 
may have some questions or thoughts.
    Mr. Faleomavaega. Thank you, Mr. Chairman. I think some of 
the people have raised the question, why am I interested in the 
issues dealing with Native Americans? I consider myself as a 
member of the Samoan tribe. I do not know if some of our Native 
American friends here have ever heard of Samoans. We are very 
small numbers, although we do have 16 that play in the NFL 
right now.
    [Laughter.]
    Mr. Faleomavaega. I keep asking my good friend, Windy Boy, 
when are we going to get one of Sonny Six Killers and the 
famous Jim Thorpes. I do have a very strong feeling for Native 
American people because I think there is a cultural 
relationship with those of us who come from the islands.
    I do want to offer my personal welcome to my good friend, 
Jonathan Windy Boy, President of the Council of Large Land 
Based Tribes, and certainly Mr. Hall, this is the first 
opportunity I have had in meeting you, President of the NCAI, 
and Mr. Tillman and Mr. Gray.
    I think there has been no question, Mr. Chairman, and I do 
thank you in all sincerity, in our efforts in trying to work 
this on a bipartisan basis. Over the years, you and I have 
known that it has been very difficult even to have a 
Subcommittee on Indian Affairs established. I wish we could 
have taken the tack and the initiative that the Senate has 
taken and now the Senate Committee on Indian Affairs is a full 
standing Committee. It is a very difficult situation, and not 
taking anything away, the sincerity of all the members that 
want to do for their constituents, but this has always been the 
problem.
    And whether we like it or not, what Ms. Cobell has done 
really has now forced the issue before the Congress and before 
the administration to resolve the issue. As you said, Mr. 
Chairman, and I could not agree with you more, Secretary Norton 
and members of her staff have taken on the responsibility. It 
has only been a year. I would be the last person to pass 
judgment in terms of what she has tried in her attempts to 
resolve this very difficult problem.
    It is always easy for us to look at hindsight and to say 
what we have done to the S&L and the $87 billion that we were 
able to focus and how sad it is that here we have the issue 
with Enron and just about every major media company, television 
and all the networks are focusing on this issue, which is 
before three or four Committees. I do not even see C-SPAN 
taking an interest in this $10 billion debacle on issues 
involving the needs of some four million Native Americans. I 
think there is no question where our hearts are and how we feel 
about the needs of our Native American brothers and sisters.
    Mr. Gray, you made a very provocative statement about the 
situation. You say BITAM. I would say ``chew it and spit it 
out.''
    [Laughter.]
    Mr. Faleomavaega. But with all respect to what Secretary 
Norton is trying to do, I certainly do not want to second-guess 
her efforts in wanting to do this, but I sincerely hope that 
before implementation, and I doubt very much that she can 
implement it anyway because she cannot get the authorization or 
even any funding allocated for doing this. I think she was 
wanting $300 million and I think the Appropriations Committee 
from the Senate side did not approve this request.
    So there is a question of structure and how we are going to 
fund this $300 million effort to address the issue. Mr. Gray, I 
want to ask you, you made it very clear that this issue should 
not even be involved--BIA should not even be in it. You 
suggested a third party or whatever organization that we put 
up, a trusteeship, a receivership, whatever it is. In your 
honest opinion, this is probably the best procedure that we can 
go about in resolving this 100-year-old issue once and for all?
    Mr. Gray. Yes, I think it is, but with a qualification on 
that. I think that when people think about GSEs, they think 
about a bunch of government officials, some of them very good. 
I mean, if you look at the D.C. Commission and the enormous job 
that they did, I mean, that was really a wonderful job, but 
that is not really what I am talking about.
    I am talking about a commission, whatever you call the 
name, I am talking about a group that is made up of Native 
American experts on this, because one of the things that you 
never hear when the Department of Interior talks about this 
thing is where it all starts, and that is what is happening 
with the land and whatever the natural resource is that is 
being leased. Historically, I know it has been mismanaged 
horribly, but I just wonder, now, other than when it is in the 
hands of the actual beneficiaries themselves and they know what 
they are doing, I just wonder about that.
    I think that Indian participation on that commission, 
direct participation, is absolutely essential. I think that 
well-respected government officials who have--I am sorry, I 
have forgotten her name now, but the person from the Fed who 
ran the D.C. program for a long time, but there are people in 
government who are highly respected who could be on this, with 
financial backgrounds, people from finance-type agencies who 
understand, I think, not only the business aspect of it but who 
are sympathetic to the fact that you have got a major cultural 
sovereignty issue here. So it would be an unusual body, but if 
you do not get agreement among those people about what you want 
to do, then it is not going to go anywhere.
    The second thing I would say is I do not think the BIA 
should be left totally out of this. I think the BIA is an 
enormous resource for this, but to ask them to fix a problem 
where they are inherently conflicted and have no expertise is 
absolutely insane. I mean, if you did that in the commercial 
sector, they would blow you right out of court. You would be in 
jail. I mean, you cannot do that. It does not make any common 
sense, much less legal sense.
    But if they are there and they are protected, they are a 
wealth of information. You cannot do it without them. You could 
even consider having them on the commission. I mean, I have not 
come up with a perfect fix on this thing, but have somebody--I 
think the Special Trustee has done a remarkable--the new 
Special Trustee has done a remarkable job at keeping his 
independence within an agency that can slap him down at any 
time. I think Mr. Holman showed disarming restraint in not 
walking out of the door the second year he had the job. He held 
onto it for a long time in the face of much more demonic 
opposition than Secretary Norton is capable of.
    So I would not take them out of the process. I am just 
saying you need an independent group that is ultimately 
responsible to the Congress of the United States and the courts 
that brings these people together. I am not for division here. 
The idea is to bring them together and say, you have got to fix 
this, and we are going to give you the resources to hire the 
professionals who can. It is not that hard.
    Eloise Cobell told you the truth. She is a banker and a 
good one. It is not that hard to fix. I am not sure I would 
agree with her that it is not brain surgery, because I like to 
kind of think of it that way, but she is right. If you get the 
right professionals, you can fix it.
    Mr. Faleomavaega. Mr. Windy Boy--I am sorry, I think the 
time is--
    Mr. Windy Boy. I would like to have a slight difference of 
opinion of that as far as receiverships. I think when you are 
talking receiverships, you have got to keep in mind, though, 
that there has got to be the difference of the individual and 
tribal, because the individual accounts are separate, and that 
is what this whole litigation is based upon. And then we are 
talking about the trust assets on the tribal side, that is 
where the tribal leaders have control, with the tribes within 
themselves of the land within the boundaries of their nations. 
That is why I say this issue has got to be separate.
    Mr. Gray. By the way, I agree with that. Most of my 
comments--all of my comments are directed to the IIM accounts. 
It is not the tribal accounts. I am not an expert on that.
    Mr. Hall. Congressman, can I just add one point on what has 
been made here? There is a unique situation, though, oil and 
gas, for example. Chief Tillman comes from oil and gas. Many 
times, a tribe will own the mineral but an individual will own 
the surface. So there is an interweaving here. There is an 
interweaving because the tribes and individuals still have to 
go back to the same agency, the same department, when it comes 
to leasing, appraisal, grazing, and oil and gas extraction. So 
to totally separate, now, that is going to take some work here 
to do that. And there are some tribes, also, that have some IMM 
accounts.
    So just to say there is total separation is not quite true. 
So there is going to have to be some strategy and to get with 
some experts to look at those unique situations where a tribe 
owns the oil and gas, an individual owns the surface, and the 
tribes own some--some, not a whole lot, but some IMM accounts. 
I just wanted to clarify that.
    Mr. Gray. I think you need representatives of both on a 
commission like this.
    Mr. Windy Boy. Then you get into more issues there, when 
some tribes have a lot of water rights issues. So there are a 
lot of things here, I think, whole complexities.
    Mr. Hayworth. President Windy Boy, I think we are finding 
just how, again, just how interrelated and how challenging this 
may be.
    My good friend from Michigan had a final note.
    Mr. Faleomavaega. Mr. Chairman, I just want to say again to 
thank Mr. McCaleb for his patience in being here with us all 
day and thank you for your patience and the gentleman from 
Michigan. I sincerely hope that this is not the end of this 
whole process and I sincerely hope that our Indian Caucus could 
perhaps collaborate with our friends from the Department of the 
Interior and with as many of our Indian tribal organizations. 
Let us see if we can consult and see if we can do anything by 
way of legislation or help Secretary Norton beef up or improve 
whatever she started in her proposal at this point in time.
    But I sincerely want to thank you and thank the gentleman 
from Michigan for your diligence in pursuing this on behalf of 
our caucus. Thank you.
    Mr. Hayworth. The gentleman from Michigan?
    Mr. Kildee. Just one comment. President Hall, your point 
was very good that we have to recognize that in solving these 
things, we have to deal with sovereign-to-sovereign, and that 
is very, very important. That is fundamental to this. Whether 
it be Congress, whether it be the Secretary, they have to 
recognize that you are chief executives of sovereign nations 
and that status is very important.
    Let me tell you just one quick story on that. Several years 
ago, I helped three tribes in Michigan get their sovereignty 
recognized and reaffirmed, not given, it is retained 
sovereignty. So I asked President Clinton to have a bill 
signing ceremony in the Oval Office for that. So we went over 
there to the Oval Office and we had the three chairmen of the 
tribes whose sovereignty has just been reaffirmed. And 
President Clinton after the signing likes to wander around the 
Oval Office, talking. The office was filled.
    And I turned to the three chairmen of the sovereign tribes 
that had just had their sovereignty reaffirmed. I said, ``Sit 
down in the President's chair.'' And there was a U.S. Senator 
there and he said, ``Dale, I do not think we can do that.'' I 
said, ``That is right, we cannot do that, because we are not 
chief executives of sovereign nations, but these guys are.''
    [Laughter.]
    Mr. Kildee. So they all three sat down in the President's 
chair, because they were co-equal with the sovereign.
    Mr. Hayworth. That is a good story.
    Mr. Kildee. As a matter of fact, on the way out, I turned 
to Frank Ettawageshik, who was the Chairman of the Little 
Traverse Bay Band of Odawa, and I said, ``Frank, you know, all 
I have ever had in that chair was my eye.''
    [Laughter.]
    Mr. Hayworth. Thank you, Mr. Kildee.
    Ladies and gentlemen, we thank all of you, those who came 
to testify today, those who have joined us to pay close 
attention to what is transpiring here, the aforementioned 
friends from the Department of Interior. Many things have been 
said and I just thank everyone for making what I hope will be, 
I do not know if this is so Churchillian, the beginning of the 
end so we can bring this to a conclusion and working closely 
with everyone concerned.
    Mr. Kildee. One more unanimous consent, to put something 
from the Tribal Council of the Northern Cheyenne Tribe in the 
record.
    Mr. Hayworth. Without objection, it is so ordered. 

    [The resolution of the Tribal Council of the Northern 
Cheyenne Tribe follows:]
[GRAPHIC] [TIFF OMITTED] T7526.032

[GRAPHIC] [TIFF OMITTED] T7526.033

    Mr. Hayworth. This hearing is adjourned.
    [Whereupon, at 4:05 p.m., the Committee was adjourned.]
    [The opening statements of Members submitted for the record 
follow:]
    [The prepared statement of Mrs. Christensen follows:]

Statement of The Honorable Donna M. Christensen, a Delegate in Congress 
                        from the Virgin Islands

    Thank you, Mr Chairman.
    I appreciate your holding this hearing, but we have all been at 
hearings on this issue before and are not any closer to a resolution of 
the problem of the trust. As a matter of fact, at one of the last 
hearings which was a joint one for the Senate and the House, for the 
better part of the hearing, I was the only member present.
    So I am here today and I may or may not have a lot of questions 
because this is an over 120 year problem. Looking at how long it has 
gone unaddressed, despite investigations, reports and acknowledgments 
of the travesty that it has been, I have already concluded that we, as 
a country, do not have the requisite will to fix it.
    Is it that we do not in our hearts do not believe that Native 
Americans should get this kind of money ( and trust me as a member from 
a territory we have been there, so we know it happens and we know how 
it feels)?
    The other possible conclusion is that no matter what the law says, 
many states, and even our federal government still does not fully 
respect the sovereignty of the recognized tribes.
    This country owes the first Americans a debt we can never repay. 
Even in health care, which is my field, we see glaring disparities in 
the health of all of the indigenous peoples of this country. Just as in 
African Americans they are an outcome of long term neglect, so the 
issues that have yet to be rectified are many--not just this trust 
fund.
    My maternal grandmother was part Chocktaw, and even though I don't 
know my Native American family or if her tribe or my ancestors have 
lands or money in this trust, I come to this hearing on her and their 
behalf.
    Today we need to go beyond the hearing stage to action. It is long 
overdue and only right that we pay up.
                                 ______
                                 
    [The prepared statement of Mrs. Cubin follows:]

  Statement of The Honorable Barbara Cubin, Chairman, Subcommittee on 
                      Energy and Mineral Resources

    For more than a century the federal government has been the trustee 
of funds for Indian tribes as well as individual Indians. These trust 
funds, generated from rights and leases, have become a significant 
source of funding for many Indian tribes all across the nation.
    This is especially the case on the Wind River Reservation, which 
lies within the borders of my state of Wyoming. Wyoming has two 
resident tribes, the Eastern Shoshone and the Northern Arapaho. As is 
the case in most of Wyoming, these large land based tribes have been 
blessed with a substantial amount of natural resource interests, 
particularly oil and gas production. Because of their substantial 
financial interests in how the federal government resolves this issue, 
and because of concerns regarding Internet accessability, I too have a 
great interest.
    I would like to emphasize in my previous statement the phrase, 
``how the federal government resolves this issue,'' because the 
responsibility to find a workable solution is borne not only by the 
Department of Interior, but by the Administration, Judiciary and 
Congress. It is essential that each branch work together to find the 
fair and equitable solution that has eluded Indians for well over 100 
years. I pledge my energy to this effort and highly encourage my 
colleagues to do the same.
                                 ______
                                 
    [The prepared statement of Mr. Kildee follows:]

Statement of The Honorable Dale E. Kildee, a Representative in Congress 
                       from the State of Michigan

    Good morning. Mr. Chairman, as a senior member of the Resources 
Committee and as Co-Chair of the Congressional Native American Caucus, 
I am pleased to have the opportunity to speak to the issue of Indian 
trust funds. I remain deeply concerned that the government is not 
living up to the high standards the law demands of the Federal 
trusteeship over Indian and tribal trust funds. The Interior Department 
is legally bound to manage and prudently invest individual Indian and 
tribal income from judgments, grazing and farming leases, timber sales, 
oil and gas royalties, mineral leases and investments from Indian 
lands.
    For more than a century, Interior has done a poor job maintaining 
trust fund records. This issue dates back to more than 180 years when 
the Federal Government first began its policy of holding tribal funds. 
It has managed funds for individual Indians since the passage of the 
1887 General Allotment Act. Allotment laws were designed to break up 
tribal lands by providing 40, 80, and 160 acre tracts to individual 
Indians. Congress stopped the allotment process in 1934, after a loss 
of millions of acres of tribal lands and hundreds of thousands of acres 
that were lost to taxes that Indians did not know they owed. 
Unfortunately, these injustices of the past still remain as the 
problems of today.
    Because of the allotment policy, Indian allotees face the complex 
problem of owning fractionated interests in allotted land. Today, it is 
common for hundreds of owners to hold an interest in one tract of land. 
These owners are heirs of the original allotment holder whose land can 
become more fractionated as the number of beneficiaries increases. This 
means that hundreds of beneficiaries could own shares in income derived 
from one tract of land. This situation has added to the complexity of 
this problem and has served to undermine reform efforts.
    In 1994, Congress passed a law to reform the management of trust 
funds for individual Indians and tribes. The law was intended to 
rectify many bureaucratic practices that had stalled the proper 
administration of these accounts and to restore what rightfully 
belonged to Indian people. Sadly, the Interior Department has yet to 
restore old land records and the income derived from the land.
    in 1996, Congressman J.D. Hayworth and I led the Resources 
Committee's Task Force on Indian Trust Fund Management. The result was 
that the Committee held four hearings on the issue in 1996. That same 
year, Elouise Cobell, a beneficiary of an Individual Indian Money (IIM) 
account and a witness at today's hearing, filed a class-action lawsuit 
against the Secretary of Interior on behalf of approximately 300,000 
IIM account holders seeking an accounting of the money owed to the 
account holders and to bring permanent reform to the trust fund system.
    During the previous administration, a U.S. District Court judge 
found Interior and Treasury officials in contempt of court for their 
failure to produce trust documents for IIM account holders. In the 
current administration, Interior and other officials face contempt 
charges in the Cobell v. Norton case. With respect to tribal trust 
funds, Interior cannot reconcile $1.9 billion in tribal trust funds 
because of missing documents.
    On November 14, 2002, in response to the Cobell v. Norton case, the 
Department of Interior developed a reorganization plan. Interior's plan 
would strip the BIA of all its trust functions and consolidate those 
functions into a new Bureau of Indian Trust Assets Management (BITAM). 
Overseeing this new agency would be a new Assistant Secretary who would 
report directly to the Secretary of Interior.
    Interior began its tribal consultation sessions subsequent to the 
reorganization proposal rather than create a plan concurrently with the 
tribes. In addition, Interior submitted a $300 million reprogramming 
request to the House and Senate Appropriations Committee to fund the 
reorganization proposal. Both the House and Senate appropriators 
agreed, however, to put the request on hold until Congressional 
hearings and tribal consultation sessions were conducted.
    Another issue stemming from the litigation includes a computer 
shutdown at the Department of Interior that has prevented tribal and 
thousands of individual trust beneficiaries from receiving payments. 
This situation is simply unacceptable. The notion that the Federal 
Government cannot do its job sends the clear message that Native 
Americans are considered to be second-class citizens.
    Decade after decade, this problem has plagued both Democratic and 
Republican administrations, but none more than the Indian people and 
tribes. Indian people and tribes have the right to know about all 
transactions and ownership interests in their land. These trust 
beneficiaries also have the right to create a plan concurrent with the 
administration to address the issues raised in the Cobell litigation 
and to develop an alternative plan to the Department's reorganization 
plan. I strongly urge the Department of Interior to continue its 
dialogue with the tribal task force on trust reform.
    In the end, we would all do well to remember that those in Indian 
country who are caught in this web of mismanagement are not asking for 
any privileges or handouts. This money belongs to them. The Federal 
Government's involvement was meant to give legal and technical support 
only. There is no doubt that, up to this point, the government has 
failed. The only question is whether or not we will now rectify these 
accounts for the future and in the process restore some dignity to the 
past.
    I look forward to hearing the testimony today. Thank you.
                                 ______
                                 
    [The prepared statement of Mr. Pallone follows:]

  Statement of The Honorable Frank Pallone, Jr., a Representative in 
                 Congress from the State of New Jersey

    The United States Government committed to a trustee relationship 
with the Indian Nations. Defined by treaties, statutes and interpreted 
by the courts, the trust relationship requires the federal government 
to exercise the highest degree of care with tribal and Indian lands and 
resources. At first, the federal trust responsibility served to protect 
tribal lands and tribal communities from intrusion.
    However, in a push to acquire tribal land and turn Indians into 
farmers, the federal government imposed reservation allotment programs 
pursuant to the General Allotment Act of 1887. Under these policies, 
the selling and leasing of allotted lands and inherited interests 
became primary functions of the Bureau of Indian Affairs. Tribes lost 
90 million acres and much of the remaining 54 million acres was opened 
to non-Indian use by lease. In sum, the federal government took the 
trust responsibility for Indian land upon itself in order to gain the 
benefit of vast tribal lands and resources that were guaranteed by 
treaty, Executive Order, and agreements for exclusive use by the 
tribes.
    It is widely known that the BIA has grossly mismanaged the 
remaining tribal lands and has squandered billions of dollars worth of 
resources that should have gone to the benefit of often impoverished 
American Indians. Today, the Secretary of the Interior is faced by a 
mandate from Congress to clean up the accounting and management of 
Indian trust funds, and by a lawsuit alleging a great failure of the 
Secretary's trust responsibility for Indian lands. In response, the 
Secretary has proposed a plan to create a new Bureau of Indian Trust 
Asset Management and remove the trust functions from the Bureau of 
Indian Affairs.
    This proposal will profoundly effect the BIA's management of 54 
million acres of Indian lands, the administration of trust funds 
derived from those lands, and nearly every aspect of economic 
development, agriculture, and land management within Indian Country.
    I am greatly concerned that this plan is repeating the failures of 
the many past trust reform efforts. Recently, 193 Indian tribes 
unanimously adopted a resolution opposing this reorganization and 
transfer of the responsibilities of the Bureau of Indian Affairs. I 
strongly believe that this reorganization effort cannot go forward 
until the Department consults with Indian tribes in the development of 
a business processes plan for trust reform--a clear plan for performing 
the basic trust functions of accounting, collections, record keeping, 
inspections, enforcement and resource management. The plan must include 
policies, procedures and controls. The fundamental and consistent 
criticism of the Department's trust reform efforts over the last decade 
has been the failure to develop a plan for these business operations of 
trust management. Instead, the DOI has a well-documented record of 
making short-term cosmetic changes in response to court imposed 
deadlines or Congressional inquiries.
    It is notable that this criticism, a lack of structural foundation, 
is exactly the same as has been leveled against the Department's 
development of the Trust Asset and Accounting Management System. All 
tribal leaders strongly support trust reform and want to work 
constructively with the Department and with Congress to ensure sound 
management of tribal assets. In fact, it is the tribes that have the 
greatest interest in ensuring that tribal assets and resources are 
properly managed.
    To complete my statement, I just want to raise concerns regarding 
today's hearing. Similar to Mr. Rahall, I do not concur in the request 
made by Chairman Hansen to Secretary Norton of the Department of the 
Interior, by letter dated January 15, 2002, to submit to the Committee 
a report compiled by the auditing firm Ernst & Young that is under seal 
by the Court as part of the Cobell v. Norton lawsuit.
    Striving to maintain the integrity of the federal government's 
trust responsibility of Indian tribes, and thereby tribal assets, is a 
commitment that the United States first made as part of the Cherokee 
Nation v. Georgia lawsuit in 1831. Making the individual trust accounts 
a matter of public record is not adhering to the spirit of the federal 
trust responsibility. Ironically, if such account records were opened, 
the public would have more information about the monetary balances of 
Indian accounts than the actual Indian account holders themselves. 
Trust responsibility to the individuals in question requires that this 
report not be placed into the public domain unless they concur.
    The Tribal Leaders Task Force on Trust Reform, comprised of 24 
appointed tribal leaders from throughout the United States and Alaska, 
convened here in Washington this past weekend to discuss the trust 
reform issues. Indian tribes and their representatives are continuing 
to interface between their separate governments in order to put forth 
their recommendations for Indian trust reform. Proper consultation 
between Indian tribes and the federal government must occur to ensure 
that decades of Indian trust mismanagement ends.
    In conclusion, I do not believe--and I think much of Indian country 
would agree with me--that creating a new agency to manage existing 
Indian trust accounts is the solution for government reform. Especially 
given that proper consultation between the federal government and 
Indian tribes did not occur. I am disappointed with the Department of 
Interior concerning this government reform issue and believe that DOI 
needs to do a better job in exercising the trust responsibility to 
Indian tribes and Alaska Natives.
                                 ______
                                 
    [The prepared statement of Mr. Rehberg follows:]

   Statement of The Honorable Dennis R. Rehberg, a Representative in 
                   Congress from the State of Montana

    Thank you Mr. Chairman. I would like to join my colleagues in 
thanking the Committee for holding this very important hearing. Indian 
Trust Reform has been on the back burner long enough.
    The more I learn about this issue, the greater appreciation I have 
for the complexity of the situation. Montana is proudly the home to 
seven tribes. I know that in my experience the needs of different 
tribes can be very specific and diverse in nature. Several 
representatives from Montana's tribes have traveled far to be in 
attendance. I am privileged to have three Montanans here to testify--
each in different capacities. Their respective roles here today are 
representative of the various needs of tribes across our nation. I 
would like to take this opportunity to let the tribes in my state know 
that I admire their commitment to work together on proposals for trust 
reform, and I look forward to assisting them in their efforts.
    I appreciate the efforts of the Secretary on this issue. Many have 
come before her and despite their efforts they failed to produce 
meaningful reform. I know there are a lot of concerns relating to the 
BITAM. Regardless of what you think of the plan, Secretary Norton 
should be applauded for her commitment and willingness to tackle this 
issue. I know she is committed to working with stakeholders to come up 
with the best final product possible.
    I know this will not be easy. Trust management reform is severely 
overdue. The circumstances that brought us to this crisis situation are 
nothing we can be proud of, but I hope that the final product--of what 
promises to be the result of a lot of hard work--is something we will 
be proud of.
    Thank you all for being here and I look forward to a productive 
hearing.
                                 ______
                                 
    [The prepared statement of Mr. Young follows:]

Statement of The Honorable Don Young, a Representative in Congress from 
                          the State of Alaska

    I would like to thank Chairman Jim Hansen for scheduling this 
oversight hearing on the Trust Fund accounts of American Indians and 
Alaska Natives. Since the l980's, I have been an active member on this 
Committee with Trust Fund reform and am pleased to see that Chairman 
Hansen has set a high priority to try and resolve this issue in this 
Congress.
    For more than ten years, Congress has given the Department of the 
Interior (DOI) the funding and the flexibility to try to resolve the 
problem with the DOI's accounting of IIM and tribal accounts. Obviously 
this has not worked. While I believe that this current Administration 
should be given the opportunity to try to resolve the problem, it has 
always been my belief that tribes need to be consulted to help find a 
resolution to the problem with the accounting of their IIM and Tribal 
account funds. I am hopeful that the consulting process will continue 
with Tribes and that the DOI will take their recommendations seriously 
and implement some of these recommendations in the effort to finally 
resolve the Trust Fund issue.
    In the past, I have worked with the InterTribal Monitoring 
Association (ITMA) and have made a verbal commitment to continue a 
dialogue to develop, if necessary, further reform legislation to 
finalize the accounting problems with the IIM and Tribal accounts. I 
would like to take this opportunity to welcome my Alaskan on the board 
of ITMA, Bill Martin, and to offer my continued commitment to work to 
resolving the Trust Fund issue.
                                 ______
                                 
    The following information was submitted for the record:
     Addison, Anthony A., Chairman, Northern Arapaho 
Business Council, Statement submitted for the record
     Addison, Anthony A., Chairman, Northern Arapaho 
Business Council, Letter to the Department of the Interior 
submitted for the record
     Anoatubby, The Honorable Bill, Governor, The 
Chickasaw Nation, Statement submitted for the record
     Assiniboine & Sioux Tribes, Counterproposal to 
Bureau of Indian Trust Assets Management submitted for the 
record
     Bradley, Carman, Chairman, Council of Energy 
Resource Tribes, Statement submitted for the record
     Bourland, Gregg J., Tribal Chairman, Cheyenne 
River Sioux Tribe, Statement of the Great Plains Tribal 
Chairmen's Association submitted for the record
     Hoopa Valley Tribe, Tribal Self-Governance Trust 
Reform Proposal submitted for the record
     Mille Lacs Band of Ojibwe, Letter submitted for 
the record
     Montana Wyoming Tribal Leaders Council, 
Resolution submitted for the record
     Nez Perce Tribe, Statement submitted for the 
record
     Tribal Chairmen's Position Statement submitted 
for the record
     Windy Boy, Alvin, Sr., Chairman, The Chippewa 
Cree Tribe of the Rocky Boy's Reservation, Statement submitted 
for the record

    [A statement submitted for the record by Mr. Addison 
follows:]

 Statement of Anthony A. Addison, Chairman, Northern Arapaho Business 
                                Council

    The Northern Arapaho Tribe wishes to express its concerns with 
respect to the proposed reorganization of the Department of the 
Interior, removing trust-related responsibilities from the Bureau of 
Indian Affairs and placing them in a proposed Bureau of Indian Trust 
Assets Management. Let there be no doubt: the Northern Arapaho Tribe 
fully supports trust reform. As a land-based Tribe with substantial 
natural resource interests ``'' most notably oil and gas production 
``'' the Northern Arapaho Tribe would undoubtedly benefit from a 
reformed and fully functioning trust system.
    However, the Northern Arapaho Tribe is deeply concerned about the 
manner in which the current attempt at reform has been put forth. 
Foremost among the Northern Arapaho Tribe's concerns is the lack of 
meaningful consultation between the United States and any sovereign 
Tribe ``'' particularly the Northern Arapaho Tribe. Although both you 
and the Secretary were present for the consultation meeting in 
Albuquerque on December 13, 2001, this meeting can hardly be considered 
meaningful consultation. First, the failure of the Department of the 
Interior to be more forthcoming with information about the proposed 
Bureau made it impossible for any Tribal leader to make meaningful and 
insightful suggestions or comments. Second, the after-the-fact nature 
of the event itself created considerable resentment among many of the 
attendees, effectively eliminating the possibility of meaningful 
dialogue. At a breakfast meeting with the Council of Large Land Based 
Tribes, Deputy Assistant Secretary Wayne Smith represented that the 
Albuquerque meeting would be nothing more than a ``listening session.'' 
The Northern Arapaho Tribe respectfully suggests that meaningful 
government-to-government consultation requires actual dialogue between 
governments, not one government listening in silence to the grievances 
of another.
    That stated, the Northern Arapaho Tribe believes Secretary Norton 
can and should undertake reform of the current trust system. However, 
such reform can only work if undertaken in a deliberate and 
comprehensive manner. Second, Secretary Norton must agree that not only 
will any trust reform in no way diminish the current trust obligations 
owed by the United States to Tribes and individuals, but will also 
preserve and enhance that trust relationship. Third, trust reform 
should affirm and support Tribal sovereignty, self-government and self-
determination, and should not undermine any treaties or executive 
orders between Tribes and the United States. Fourth, in any trust 
reform, the concerns of the present and the future need to take 
precedence over the failures of the past. The Northern Arapaho Tribe is 
confident that Secretary Norton is mindful of these basic principles, 
and will diligently observe them in any trust reform she undertakes.
    As stated above, trust reform is impossible without consultation. 
So far, the Secretary's attempts at consultation have been 
unsatisfactory. However, this is not to say that meaningful 
consultation cannot be accomplished. The first step in a meaningful 
consultation process is to give all concerned parties a common base of 
information. This means that the Secretary needs to tell Tribes ``'' 
specifically the Northern Arapaho Tribe ``'' exactly what she intends 
to do with respect to trust reform, including how this proposed reform 
will result in measurable improvements over the services currently in 
place on the Wind River Reservation Without specific information, the 
meaningful dialogue between sovereigns embodied in government-to-
government consultation simply cannot be accomplished.
    Additionally, as the Committee and Secretary Norton are both 
undoubtedly aware, Congress tasked the Department of the Interior with 
trust reform in 1994. Although the Northern Arapaho Tribe understands 
that many of the problems facing the Secretary now with respect to 
trust reform were inherited from past administrations, we would like to 
know why the requirements and recommendations made pursuant to the 1994 
Act have not been implemented, or if implemented, have not been 
successful. The Northern Arapaho Tribe requests that the Secretary 
publish an account of why each of the reforms proposed in 1994 has 
failed, either in implementation or effect. We are confident that the 
Secretary agrees that without a frank and thorough examination of the 
failures of the recent past, no progress can be made in trust reform.
    With respect to the actual effect of trust reform, the Northern 
Arapaho Tribe strongly recommends the Secretary consider the following: 
any reform of the Bureau of Indian Affairs should increase the ability 
of each reservation or service area to tailor programs and services to 
the specific needs of that reservation or service area; any cost 
savings realized from trust reform in any way should go directly to 
increased services to the trust beneficiaries themselves; any system 
implemented to track trust activity needs to be flexible enough to both 
provide necessary trust accountability and meet the unique needs of 
specific geographical areas; trust reform should not come at the 
expense of any services or programs currently provided to Tribes or 
individuals; and Indian hiring preference of qualified personnel must 
be continued in any trust reform. Finally, while the mistakes of the 
past should not prevent trust reform, neither can they be ignored. 
Trust reform should not preclude any recovery of damages by Tribes or 
individuals for past trust mismanagement, nor should it create a 
statute of limitations or other bar to recovery for such mismanagement.
    In closing, the Northern Arapaho Tribe is committed to meaningful 
trust reform, and as a large, land-based Tribe with extensive natural 
resources would benefit from such reform. Secretary Norton is certainly 
correct in recognizing the problem with the current trust system; 
however, without further details of her current plan for reforming this 
system, she cannot engage in meaningful, government-to-government 
consultation and dialogue with Tribes. Any group or committee called 
upon by the Department of Interior for consultation must be comprised 
of elected Tribal leaders.
    Additionally, it is extremely important that any reorganization-- 
whether it be within the BIA, or through the development of a new 
agency--it is important that it be clearly established that all aspects 
of the Federal Government's responsibilities to Indian Tribes are trust 
responsibilities. It is just as important that members of the Northern 
Arapaho Tribe receive adequate health care, for example, as it is that 
their land and minerals be properly administered. However the 
reorganization occurs, it cannot be emphasized to greatly that all 
aspects of the Federal Government's duties be properly classified as 
trust responsibilities.
    It is also important that the Indian preference be continued within 
any agency that has trust responsibilities to Indian Tribes. Just as it 
is critical that there be government-to-government communications 
between Tribes and the Federal Government, it is also critical that 
qualified Indian people fill the jobs that have the most interaction 
with Indian Tribes. Additionally, no monies can be taken from existing 
programs to fund any new or reorganized agencies. Almost all programs 
on the Wind River Reservation are presently under funded, and any 
further reductions would be devastating.
    The Northern Arapaho Tribe would like to engage in discussion with 
the Secretary and provide whatever assistance possible in furthering 
meaningful trust reform, but first the Secretary must let us know what 
we would discuss.
                                 ______
                                 
    [A letter submitted for the record by Mr. Addison follows:]

December 18, 2001

The Honorable Neal McCaleb
Assistant Secretary for Indian Affairs
U.S. Department of the Interior
1849 C Street NW
Washington, D.C. 20240

Dear Assistant Secretary McCaleb,

    This letter is to express the strong concerns of the Northern 
Arapaho Tribe with respect to the proposed reorganization of the 
Department of the Interior, removing trust-related responsibilities 
from the Bureau of Indian Affairs and placing them in a proposed Bureau 
of Indian Trust Assets Management. Let there be no doubt: the Northern 
Arapaho Tribe fully supports trust reform. As a land-based Tribe with 
substantial natural resource interests--most notably oil and gas 
production--the Northern Arapaho Tribe would undoubtedly benefit from a 
reformed and fully functioning trust system.
    However, the Northern Arapaho Tribe is deeply concerned about the 
manner in which the current attempt at reform has been put forth. 
Foremost among the Northern Arapaho Tribe's concerns is the lack of 
meaningful consultation between the United States and any sovereign 
Tribe--particularly the Northern Arapaho Tribe. Although both you and 
the Secretary were present for a purported consultation meeting in 
Albuquerque on December 13, 2001, this meeting can hardly be considered 
meaningful consultation. In the first place, the failure of the 
Department of the Interior to be more forthcoming with information 
about the proposed Bureau made it impossible for any Tribal leader to 
make meaningful and insightful suggestions or comments. In the second 
place, the after-the-fact nature of the event itself created 
considerable resentment among many of the attendees, effectively 
eliminating the possibility of meaningful dialogue. At a breakfast 
meeting with the Council of Large Land Based Tribes, Deputy Assistant 
Secretary Wayne Smith represented that the Albuquerque meeting would be 
nothing more than a ``listening session.'' The Northern Arapaho Tribe 
respectfully suggests that meaningful government-to-government 
consultation requires actual dialogue between governments, not one 
government listening in silence to the grievances of another.
    That stated, the Northern Arapaho Tribe believes Secretary Norton 
can and should undertake reform of the trust current trust system. 
However, such reform can only work if undertaken in a deliberate and 
comprehensive manner. This means first and foremost that Secretary 
Norton must withdraw--if not already withdrawn--the request before 
Congress to reprogram funds for the proposed Bureau. Second, Secretary 
Norton must agree that not only will any trust reform in no way 
diminish the current trust obligations owed by the United States to 
Tribes and individuals, but will also preserve and enhance that trust 
relationship. Third, trust reform should affirm and support Tribal 
sovereignty, self-government and self-determination, and should not 
undermine any treaties or executive orders between Tribes and the 
United States. Fourth, in any trust reform, the concerns of the present 
and the future need to take precedence over the failures of the past. 
The Northern Arapaho Tribe is confident that Secretary Norton is 
mindful of these basic principles, and will diligently observe them in 
any trust reform she undertakes.
    As stated above, trust reform is impossible without consultation. 
So far, the Secretary's attempts at consultation have been 
unsatisfactory. However, this is not to say that meaningful 
consultation cannot be accomplished. The first step in a meaningful 
consultation process is to give all concerned parties a common base of 
information. This means that the Secretary needs to tell Tribes--
specifically the Northern Arapaho Tribe--exactly what she intends to do 
with respect to trust reform, including how this proposed reform will 
result in measurable improvements over the services currently in place 
on the Wind River Reservation. The Northern Arapaho respectfully 
request this information, in writing, no later than January 15, 2002. 
Without specific information, the meaningful dialogue between 
sovereigns embodied in government-to-government consultation simply 
cannot be accomplished.
    Additionally, as you and Secretary Norton are both undoubtedly 
aware, Congress tasked the Department of the Interior with trust reform 
in 1994. Although the Northern Arapaho Tribe understands that many of 
the problems facing the Secretary now with respect to trust reform were 
inherited from past administrations, we would like to know why the 
requirements and recommendations made pursuant to the 1994 Act have not 
been implemented, or if implemented, have not been successful. The 
Northern Arapaho Tribe requests that the Secretary publish, by February 
1, 2002, an account of why each of the reforms proposed in 1994 has 
failed, either in implementation or effect. We are confident that the 
Secretary agrees that without a frank and thorough examination of the 
failures of the recent past, no progress can be made in trust reform.
    With respect to the actual effect of trust reform, the Northern 
Arapaho Tribe strongly recommends the Secretary consider the following: 
any reform of the Bureau of Indian Affairs should increase the ability 
of each reservation or service area to tailor programs and services to 
the specific needs of that reservation or service area; any cost 
savings realized from trust reform in any way should go directly to 
increased services to the trust beneficiaries themselves; any system 
implemented to track trust activity needs to be flexible enough to both 
provide necessary trust accountability and meet the unique needs of 
specific geographical areas; trust reform should not come at the 
expense of any services or programs currently provided to Tribes or 
individuals; and Indian hiring preference of qualified personnel must 
be continued in any trust reform. Finally, while the mistakes of the 
past should not prevent trust reform, neither can they be ignored. 
Trust reform should not preclude any recovery of damages by Tribes or 
individuals for past trust mismanagement, nor should it create a 
statute of limitations or other bar to recovery for such mismanagement.
    In closing, the Northern Arapaho Tribe is committed to meaningful 
trust reform, and as a large, land-based Tribe with extensive natural 
resources would benefit from such reform. Secretary Norton is certainly 
correct in recognizing the problem with the current trust system; 
however, without further details of her current plan for reforming this 
system, she cannot engage in meaningful, government-to-government 
consultation and dialogue with Tribes. The Northern Arapaho Tribe would 
like to engage in discussion with the Secretary and provide whatever 
assistance possible in furthering meaningful trust reform, but first 
the Secretary must let us know what we would discuss.

Sincerely,

Anthony A. Addison,
Chairman,
Northern Arapaho Business Council
                                 ______
                                 
    [A statement submitted for the record by Governor Anoatubby 
follows:]

Statement of Chickasaw Nation Governor Bill Anoatubby submitted for the 
                                 record

    It is a pleasure, on behalf of the Chickasaw Nation, to provide 
this written testimony to the U.S. House of Representatives Resources 
Committee on the topic of trust funds management reform. This is a 
topic of much concern throughout Indian Country, and it is one which 
has the potential to affect every single Native American in this 
country.
    The Chickasaw Nation is strongly in support of trust funds 
management reform. For far too long, assets of tribes and private 
citizens have been relegated to a ``back room'' of accounting. The 
tribes have entrusted the federal government with those funds for 
safekeeping. That trust has been violated over and over again, 
compounded by the federal government's inability to account for those 
dollars--dollars which rightfully belong to the tribes and to their 
citizens. Reforming the system of management of those funds is not only 
a necessity, it is a moral obligation which should be addressed 
thoroughly and as efficiently as possible.
    We ask the Committee's understanding in stating that we oppose any 
court-appointed receiver in the matter of accounting for and/or 
managing individual trust funds accounts. It has always been the 
obligation of the U.S. Department of the Interior, through the Bureau 
of Indian Affairs, to manage and account for these funds. It should 
remain that way, in order that a clear and extant line of 
responsibility remain in place for the monumental task which lies 
ahead.
    The process for correcting the current situation while satisfying 
the concerns of the federal court, should be independent of the 
Department of the Interior, conducted by independent advisors with 
private-sector expertise in financial trust rehabilitation. We most 
impressed with the testimony before the Committee of Donald Gray, Esq., 
who has over 25 years experience in reconciling and rehabilitating 
long-term complex trusts and other money flow arrangements involving 
billions of dollars of managed assets with some of the most prestigious 
financial institutions in this country. The Department of the Interior 
simply lacks this kind of expertise. We recommend and advocate a 
legislative solution.
    Further, we wish to affirm our support for tribal consultation in 
this process. As one of two representatives to the task force for 
Oklahoma, I am keenly aware of how vital tribal consultation is to the 
success of this process. Tribes must have a role in the administration 
of the new sovereignty and the study of restructuring trust asset 
management.
    We urge the Congress to take expeditious and decisive initiative to 
propose a plan for revamping federal accountability for individual 
Indian trust monies. The process for management of tribal trust funds 
should not be disturbed.
    We appreciate being given the opportunity to provide these 
comments, and wish the committee every success in its deliberations.
                                 ______
                                 
    [A counterproposal submitted for the record by the 
Assiniboine & Sioux Tribes follows:]

 Assiniboine & Sioux Tribes Counterproposal to Bureau of Indian Trust 
Assets Management (BITAM); BIA Reorganization Advisory Group, Draft 12/
                                 12/01

    In response to the reform proposals submitted by the Department of 
the Interior and Bureau of Indian Affairs Advisory Group, the 
Assiniboine and Sioux Tribes submits the following counterproposal 
which is designed to achieve a lasting and comprehensive trust reform 
in the management of Indian trust assets.
    The counterproposal includes infusion of additional resources where 
they are needed to provide true lasting trust reform--at the 
reservation level. It is the level and location where protection and 
management of trust assets occur. It is also where the Bureau of Indian 
Affair's legal responsibilities on behalf of the Federal government for 
accountability and responsibility originates.
    This counterproposal does not create additional levels of 
bureaucracy that do nothing to enhance or improve the quality of 
fiduciary performance but rather provides the professional staff, 
facilities, and equipment where all documents and transactions 
originate which enhances the quality of fiduciary performance. It also 
returns those functions which have been fractured from the Bureau of 
Indian Affairs--OST, OTFM, MMS--to one entity control.
    It maintains the basic structure of the Bureau of Indian Affairs by 
retaining a Central Office operation in oversight, legislative, and 
management assurance facets but requires meaningful consultation with 
the local levels prior to any legislative proposals. In this 
reorganization image, regional offices are virtually expendable with 
professional staffing and funding resource reassigned to the field 
offices at the agency level. Central Office operations remain with 
policy and regulation functions, however direct contact with the field 
offices are envisioned for clear working principles and impacts prior 
to any formal proposals being adopted.
    In support example, currently 62 positions at the Fort Peck Agency 
consists of 50 full time and 12 career seasonal positions. The funding 
support for these positions totals $2,202,958 with $122,019 agency 
operational costs for over 15 baseline program functions handling 
approximately 2,112,000 trust acres with an estimated $11,100,000 
annual trust fund disbursement. Of the 50 full time positions at Fort 
Peck, only 12 are professional level with a surprising gap in 
professional accounting, information and records management and 
technology, let alone not considering the various specialized fields 
required at the agency level management of trust assets. Professional 
services were to be provided by regional/central office staff for any 
problem areas in field operations, a cumbersome unworkable procedure 
that has resulted in enormous delays in all services, including long 
term management dysfunctions.
    The following proposal envisions the Assiniboine and Sioux Tribes' 
full service Agency operations only. As such, it is intended to be a 
blueprint for further development in other levels of operations as well 
as use by other Tribes to develop as their unique operations require.
                    FORT PECK AGENCY REFORM PROPOSAL
                  FUNCTIONAL REORGANIZATION STATEMENT
    The Fort Peck Agency is located at Poplar, Montana. The Agency 
jurisdiction lies in the northeast corner of the State of Montana. It 
is responsible for the delivery of all Bureau of Indian Affairs 
programs, administration and management services (1) to the tribal 
government, individual tribal members, and trust resources of the 
Assiniboine and Sioux Tribes of the Fort Peck Reservation; (2) to the 
trust resources owned by individual tribal members of the Turtle 
Mountain Tribe of Chippewa Indians in North Dakota which are located in 
northeastern Montana outside of the external boundaries of the Fort 
Peck Reservation; and (3) individual Indians who are members of other 
tribes but reside in the Fort Peck Agency jurisdiction.
    Two separate tribal groups, the Assiniboine and the Sioux, have 
maintained a single tribal government entity on the Fort Peck 
Reservation since its establishment in 1888. The two tribes rejected 
the Indian Reorganization Act of 1934 but operate under a constitution 
approved by the Commissioner of Indian Affairs in 1960. Tribal business 
is conducted through an Executive Board comprised of a Chairman, Vice-
Chairman, Sergeant-at Arms, and twelve Members. All are elected at 
large in elections held in odd numbered years. Although a single joint 
tribal membership roll is maintained, each tribe exercises control and 
supervision over its own enrollment.
    Members of the Turtle Mountain Tribe of Chippewa Indians in North 
Dakota own trust land allotments situated outside of the boundaries of 
the Fort Peck Reservation in northeastern Montana which are 
administered and managed by the Fort Peck Agency. These Indian 
landowners are not affiliated with or represented by the Assiniboine 
and Sioux Tribes. Their business is transacted individually directly 
with the Fort Peck Agency staff.
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    [A statement submitted for the record by Mr. Bradley 
follows:]

   Statement of Carman Bradley, Chairman, Council of Energy Resource 
                                 Tribes

    On behalf the Council of Energy Resource Tribes (``CERT'') I extend 
my appreciation to the Resources Committee and Chairman Hansen and 
Ranking Member Rahall for providing CERT the opportunity to submit 
testimony on Indian trust management reform. My name is Carman Bradley 
and I am Chairman of CERT and also Chairperson for the Kaibab Paiute 
Tribe.
    CERT was formed in 1975 by twenty-five energy resource-owning 
Tribes who shared the philosophy that collectively Tribes could manage 
and responsibly develop their natural resources in a manner that 
reflects Tribal priorities and values. Tribes owning energy resources 
collaborated to rewrite the federal law and policy with respect to 
Indian minerals and royalty accounting with the Indian Mineral 
Development Act of 1982 and the Federal Oil and Gas Royalty Management 
Act. Tribes themselves have developed sophisticated capabilities in 
resource management and development as well as in revenue accounting 
and auditing that in many cases exceed those of private industry and 
government agencies charged with similar responsibilities for public 
resources. Each CERT member Tribe's chief elected official sits on the 
CERT Board of Directors. Because of vast resource ownership and sizable 
income generated from energy minerals, each Tribe individually, and 
Tribes collectively in CERT, has a great stake in trust management 
reform.
    The Bureau of Indian Affairs, Office of Trust Fund Management, 
states that 77 percent of the Fund assets are held by 8 percent of the 
Tribes 1. CERT member Tribes own vast quantities of oil, 
coal, natural gas mineral resources and vast quantities of land and 
other natural resources that contribute the greatest part of the income 
flow through the tribal trust fund accounts. Energy mineral production 
from Indian lands in 2000 was 9.3 million barrels of oil, 299 billion 
cubic feet of gas and 21.4 million short tons of coal. Energy minerals 
from Indian lands remain significant at greater than 10% of total 
federal on shore production 2. Any trust reform measures 
taken by the Department of the Interior (DOI) will significantly impact 
CERT member Tribes. The trust income goes to support the discharge of 
Tribal governmental responsibilities from education to law enforcement 
and from resource management to economic development. For many of the 
energy resource Tribes, this income represents the majority of their 
non-federal income for investing in their own social and economic 
development.
---------------------------------------------------------------------------
    \1\ Misplaced Trust: The Bureau of Indian Affairs Mismanagement of 
the Indian Trust Fund, Committee Reports 102d Congress, House Report. 
102-499.
    \2\ Minerals Management Service 2000 Year End Report.
---------------------------------------------------------------------------
    CERT applauds Secretary Norton's desire to address trust management 
reform within the DOI. However, CERT has grave concerns about the 
procedure that Secretary Norton has followed in development of a reform 
plan and the Department's proposal to transfer fiduciary trust services 
to a new Bureau in an attempt to separate fiduciary trust 
responsibilities from other trust services provided by the Bureau of 
Indian Affairs (``BIA''). CERT strongly opposes the DOI's Bureau of 
Indian Trust Assets Management (``BITAM'') reorganization proposal and 
the reprogramming of BIA Fiscal Year 2003 appropriations to support the 
development of the Department's proposal.
    The DOI's proposal is incomplete and does not address critical 
elements that prevent the Department from enacting effective trust 
management reform. CERT contends that the Department must work with all 
stakeholders including Tribes, Tribal organizations, Indian 
individuals, and Congress, to develop a comprehensive, transparent 
trust management reform plan. Participatory methodologies in roundtable 
style, open dialogue, collaboration and problem solving on a regional 
level will ensure full Tribal participation. CERT suggests that the 
Bureau define the regional areas according to Tribal regions and not 
confined to BIA administrative regions. The role of Tribal organization 
should be recognized by the Bureau as a valuable information source 
providing important subject matter expertise to supplement, but not 
replace the important Tribal work at the regional level.
    The atmosphere between the DOI and Tribes is poisoned with distrust 
and suspicion. The Secretary of the Interior will fail in her attempts 
to bring positive change until she and the Department as a federal 
institution addresses the lack of faith and confidence with their 
Tribal constituencies. ``No government policy toward Indians can be 
fully effective unless there is a relationship of trust between the 
Federal government and the Indian people.'' 3 Recent actions 
taken by Secretary Norton and her senior officials at the DOI reduce 
the little confidence Tribes hold in the DOI. Secretary Norton must 
answer how she intends to establish the conditions necessary for the 
Department and the Tribes to work together to solve the crisis that 
their mismanagement of their responsibilities to the Indian Trust 
created.
---------------------------------------------------------------------------
    \3\ Nixon, Special Message to Congress on Indian Affairs, July 8, 
1970.
---------------------------------------------------------------------------
    CERT challenges the Secretary's testimony presented to the 
Resources Committee on February 6, 2002 in which she states that Tribes 
are opposed to change and would like to see the BIA continue with the 
current trust management practices. Tribes support trust management 
reform to ensure Tribes are getting paid on time, at fair market value, 
royalty payments; and the Department develop an accurate accounting 
system that will interface with Tribal computer systems. Tribes have 
unified in a single voice to oppose the Secretary's BITAM proposal for 
reform. Tribal opposition to the Department's reorganization plan 
should not be, and cannot be, misconstrued for opposition to trust 
management reform.
Inadequacies of BITAM Proposal
    The BITAM proposal is fatally flawed as it fails to address several 
barriers that have prevented the Department from successful trust 
management reform. CERT does not support any proposal that does not 
address the issues outlined below.
     DOI Secretary's Conflict of Interest as Trustee

        The Federal Government's trust responsibility includes the 
        protection of Indian lands and natural resources, provision of 
        social, medical, and education and other essential services 
        necessary for survival of Tribal members, and protection of 
        Tribal political and territorial integrity. The DOI is to act 
        on behalf of Tribal interests in conflicts and disputes that 
        arise from the protection and the development of Tribal lands 
        and natural resources. Former President Nixon recognized this 
        conflict of interest on behalf of the United States. He said, 
        ``[T] he Federal government is faced with an inherent conflict 
        of interest. The Secretary of the Interior and the Attorney 
        General must at the same time advance both the national 
        interest in the use of land and water rights and the private 
        interests of Indians in land which the government holds as 
        trustee.'' 4
---------------------------------------------------------------------------
    \4\ Nixon, Special Message to Congress on Indian Affairs, July 8, 
1970.

        The conflict of interest described by President Nixon cannot be 
        more evident than in the Department's handling of the Cobell 
        litigation and its response to the demand that it reform its 
        management of the Indian trust. The Department of Justice 
        represents the Department of the Interior and the Department of 
        Treasury on behalf of the federal government against the 
        Indians with whom it has a trust obligation. Litigation in the 
        trust mismanagement debacle seems to be driven by DOJ's desire 
        to minimize the government's liability to its trust 
        beneficiary. Management reform has been frustrated even after 
---------------------------------------------------------------------------
        an act of Congress mandated its reform.

        Another example of DOI and DOJ's conflict of interest is 
        evident in their use of the Arthur Andersen report. The BIA 
        contracted Arthur Andersen to reconcile both the Tribal 
        accounts and a random sampling of some 17,000 IIM accounts. 
        Arthur Andersen was only able to reconcile the 2,000 Tribal 
        accounts for a short time period from 1973 to 1992. For this 
        20-year period alone, the auditor noted that at least $2.4 
        billion in Tribal trust accounts was unaccounted for and 
        billions of dollars more were virtually untraceable because of 
        the questionable nature of the government records. Arthur 
        Andersen was unable to reconcile any of the IIM accounts and 
        further estimated that to begin such a process would cost 
        upwards of $281 million. ``The accounting firm claimed that the 
        government had destroyed, never created or otherwise did not 
        maintain, the records necessary to conduct a reconciliation. 
        Even if the full IIM audit were performed, the firm said the 
        costly information would be of little or no value when it came 
        to providing IIM account holders with any real assurance that 
        their balances are correct.'' 5 Although the Arthur 
        Andersen report plainly illustrates difficulties to full trust 
        fund reconciliation, the Department of Justice has indicated 
        their intention to enter a motion for the Arthur Andersen 
        report marking the starting point for statute of limitations 
        for Tribes and individuals to file claims for damages against 
        the Department of the Interior. And yet, it is the Department 
        of Justice that should litigate against the Department of the 
        Interior on behalf of the Tribes and Indian individuals for 
        damages against the DOI.
---------------------------------------------------------------------------
    \5\ Joel Dyer, ``Billions Missing From U.S. Indian Trust Fund.''

        The inherent conflict of interest creates an ethical impediment 
        for the Secretary of the Interior to unilaterally develop and 
        implement a plan for reforming the management of Indian trust 
        resources in ``good faith''. The Secretary must demonstrate 
        that her plan resolves this inherent conflict of interest.
     Basic Standards for Trust Management Reform

        First Principles of the Federal Indian Trust
         Trustee deals in good faith.
         Trustee cannot engage in self-dealing. The Trustee 
        cannot have a conflict of interest with the beneficiary of the 
        trust nor can it place its administrative convenience before 
        the trust.
         The Trustee makes FULL DISCLOSURE of all known 
        losses, thefts, and errors past and present.
         Tribal resource information is proprietary, not 
        public information, and is not subject to freedom of 
        information disclosure.
         To assure that the Trustee is adhering to the reform 
        systems principles and that the systems continue to have 
        integrity over time and that there is oversight by an 
        Independent Regulatory Body.
         That the Trust management and accounting system is 
        based on the terms of the organic documents that give rise to 
        the fiduciary trust responsibility.

        Requirements that a new management system must exhibit:
         Legal documents from which the trust arises--
        treaties, statutes, executive orders, purchases and documents 
        that created the trust lands--from the foundation for the 
        information systems;
         Agreed upon land/resource management responsibilities 
        are accounted for;
         Tribal and individual land description records are 
        integrated;
         Surface and subsurface resources are integrated in 
        the data base;
         Contracts, leases, rights-of-way agreement terms and 
        conditions are used in the system;
         Monitoring of activities such as mineral production 
        to assure compliance to terms of the agreements, applicable 
        regulations and environmental standards are integrated;
         Accounting based on legal requirements created by 
        court decisions, statutes, regulations and contract terms are 
        adopted;
         All Tribal resources management ordinances, zoning, 
        and land use that affect Tribal resources management, 
        protection and development are integrated into the system; and,
         Management and information systems design are 
        compatible with local Tribal administration.
Violation of Executive Order 13175--Consultation and Coordination with 
        Indian Tribal Governments
    Secretary Norton did not follow guidance for consultation with 
Indian Tribal Governments on Departmental actions that affect Indian 
Tribes. By not consulting with Tribes, the DOI was unable to completely 
develop their plan and therefore announced BITAM with only a skeleton 
sketch of the new Bureau and its functions. The DOI cannot completely 
answer or fill in the blank spaces of the plan without seeking advice 
from Tribes. Again, this dilemma was anticipated by President Nixon 
when he said, ``The Federal government needs Indian leadership if its 
assistance is to be effective in improving the conditions of Indian 
life.'' Secretary Norton forgot this important advice from past 
leadership of her Party who knew in 1970 that only with Tribal support 
and advice could effective policy be developed. It seems that she also 
forgot that the basis of democracy is that government can only govern 
with the consent of the governed. CERT advocates that DOI consult with 
all Tribes on a government-to-government basis. CERT does not recognize 
the series of meetings DOI is currently convening around the country as 
``government-to-government'' consultation.
Implementation of Cost Analysis for BITAM
    The BITAM proposal cannot be seriously analyzed. One undisputable 
factor that can be substantiated is that implementation of BITAM will 
be very expensive, confusing and will cripple BIA and Tribal operations 
beyond current inconveniences. The major objective of the Norton plan 
is to establish, through consolidation of management responsibilities 
of Indian trust assets, a single Office responsible for trust 
management. The BITAM plan does not explain how adequate funding and 
staff resources will be made available to the Special Trustee and the 
new management; how another, separate and distinct Bureau will be 
adequately funded to complete all of its assigned duties; how duties 
between the field BIA employees will be separated and reassigned with 
minimum confusion and loss of services to Tribal members. The very real 
risks to not only the Trust beneficiaries but to entire Tribal 
communities associated with the new Bureau far outweigh any potential 
benefit BITAM might provide.
Full Review of DOI's Implementation of The American Indian Trust Fund 
        Management Reform Act of 1994
    CERT calls on Congress to conduct a thorough review of DOI's 
implementation of The American Indian Trust Fund Management Reform Act 
of 1994 (PL 103-412) and the failure of the Office of Special Trustee 
to bring about the necessary measures within the Department for trust 
management reform. CERT asserts that Secretary Norton has not closely 
analyzed the problems of implementing the Reform Act of 1994. In some 
respects, the idea behind the OST and BITAM are similar in theory, 
however the OST has been largely unsuccessful in any reform measures 
for the accounting systems or implementing policy change within the 
involved Bureaus for accurate accounting or reconciliation of the IIM 
or Tribal accounts. The Secretary has not been responsive to the 
Special Trustee and OST has never been adequately funded or staffed to 
perform the required duties under law. Neither the Secretary nor her 
predecessor ever vested any authority to the Special Trustee preventing 
the Special Trustee from implementing policy change in a timely manner. 
This failure must be explained.
Perceived Threat of Termination of the Bureau of Indian Affairs
    Tribes across the Nation have expressed concern about a hidden 
agenda of the Secretary to terminate the BIA after BITAM has been 
completely established. The DOI perceives BIA programs and funding that 
are not directly related to the fiduciary trust obligations as 
``services'' to Indian people based upon the concept that Tribes cannot 
function without federal government help, or in short, welfare for the 
Indians. All functions of the BIA are trust obligations and are 
integral to the Federal Indian Trust as services to Indians because of 
Indian status. Since the 1970s with the advent of Indian Policy based 
on Tribal Self-determination, the Executive and Legislative Branches of 
government have acknowledged that the trust obligations are based upon 
agreements and solemn obligations between the United States and Tribes. 
Tribes surrendered claims to vast tracts of land and submitted to 
forced lifestyle changes in exchange for essential services such as 
health, education and public safety to ensure a quality of life enjoyed 
by other Americans. BIA services such as education, construction, 
environmental permitting, and recent congressional laws such as Indian 
gaming, Indian Child Welfare Act, and environmental regulatory 
authority and others are based upon the U.S. constitution, treaties and 
court decisions affirming that the federal trust obligation includes a 
social contract, protection of political autonomy as well as a 
fiduciary responsibility.
    While the responsibility for land, resources and revenues derived 
from them make the fiduciary the more tangible of the three trust 
obligations and, in theory the easier to fulfill and to fix, the 
fiduciary trust obligation is inseparably linked to the social contract 
and political protection aspects of the trust obligation. Any proposal 
for trust reform that does not recognize the full federal obligation to 
Tribes will fail and perpetrate the specter of termination of federal 
trust obligation to Indian people.
    Separating the fiduciary trust obligation from the other trust 
responsibilities will not bring about trust management reform. The 
Secretary has not addressed how the Minerals Management Services and 
the Bureau of Land Management fiduciary trust management services will 
be integrated into the BITAM proposal. Tribes are validated in their 
concerns of DOI dispelling their all trust responsibilities not related 
to the fiduciary trust obligation. CERT asks Congressional support to 
ensure that all trust obligations are preserved and honored.
Alliance with the Intertribal Monitoring Association on Indian Trust 
        Funds
    CERT has a long history and close working relationship with the 
Intertribal Monitoring Association on Indian Trust Funds (``ITMA''). 
Many of CERT member tribes are also members of ITMA. CERT has worked 
with ITMA on trust management reform efforts and will continue to 
support their recommendations and position on trust management reform.
Conclusion
    The Council of Energy Resource views Secretary Norton's decisive 
action to fix the trust management problems as an opportunity to reform 
the Trust to fulfill the federal government's fiduciary obligation and 
bring the concept of Trust Protection Responsibility into the twenty-
first century based upon modern American ideals of a government-
government relationship with Tribal control over Tribal trust resources 
and funds and away from the eighteenth century concepts of Federal 
control over Indian. CERT looks forward to working with the Resources 
Committee to develop legislation that will meet this goal.
                                 ______
                                 
    [A statement submitted for the record by the Great Plains 
Tribal Chairmen's Association follows:]

  Statement of the Great Plains Tribal Chairmen's Association to the 
Senate Committee on Indian Affairs on Management of Indian Trust Funds, 
                           February 26, 2002

    Mr. Chairman, Honorable Committee Members, and others present. 
Thank you very much for allowing us this opportunity to testify today 
on the very important matter of Trust Fund Management Reform. The Great 
Plains Tribal Chairman's Association consists of sixteen tribes in 
three states that include: The Cheyenne River Sioux Tribe, The Crow 
Creek Sioux Tribe, Three Affiliated Tribes, Spirit Lake Tribe, Lower 
Brule Sioux Tribe, Oglala Sioux Tribe, Rosebud Sioux Tribe, Sisseton-
Wahpeton Sioux Tribe, Standing Rock Sioux Tribe, Turtle Mountain Band 
of Chippewa, Omaha Tribe, Santee Sioux Tribe, Winnebago Tribe, Yankton 
Sioux Tribe, Ponca Tribe of Nebraska, and the Flandreau Santee Sioux 
Tribe.
    According to federal statistics, the Great Plains Region accounts 
for almost half of the total Native American land-base and over half of 
the total trust accounts. Additionally, the Great Plains Region 
accounts for the majority of the tribal trust funds, with the largest 
being the Sioux Nation Trust Fund of over six hundred million dollars, 
and several tribal settlement funds or JTAC funds, with hundreds of 
millions of dollars.
    As the majority of these trust funds are managed by the Bureau of 
Indian Affairs (BIA) and the Office of the Special Trustee (OST), we in 
the Great Plains Region have a very large interest in the outcome of 
federal trust management reform.
HISTORY
    The majority of the tribes in the Great Plains Region are treaty 
tribes. These tribes have been promised by the United States Government 
that their interests and assets would be protected. We were promised 
that our money and assets would be safeguarded and that the federal 
government would provide us with full fiduciary and trust services.But 
history has shown that the exact opposite has been true. Native 
American money has been squandered, misspent, stolen, and mismanaged 
while Native American assets have been lost, swindled, and mismanaged 
by the federal government. Trust is the predominant job of the Bureau 
of Indian affairs since it was conceived over 150 years ago. But, 
unfortunately, they have a long and sordid history of mismanaging that 
trust for Native Americans and their resources and assets.
    For many years tribes, tribal members, and organizations have been 
reporting these facts to the Department of Interior, the Bureau of 
Indian Affairs, and Congress. We have heard many promises. As a result, 
organizations like the Inter-tribal Monitoring Association on Tribal 
Trust Funds (ITMA) have made it their mission to bring to the attention 
of Congress, the Administration, and the world, this federal 
mismanagement of tribal assets and funds.Congress took charge and began 
to investigate the allegations against the federal government of this 
mismanaged trust. In 1992, Congress mandated that a reconciliation and 
audit of select trust fund accounts be done. A CPA firm, Arthur 
Anderson & Company, was hired for this very daunting task. The outcome 
was as ITMA had expected. The BIA could not account for over two 
billion dollars of Native American tribal trust money.
    This was not even counting all of the trust fund accounts in the 
BIA, nor the IIM (Individual Indian Money) accounts. And the 
reconciliation only went back a few years. Estimates are that the total 
unaccounted for in Indian Trust Money's could be in the billions of 
dollars. And that is not even including the trust lands and assets that 
have been taken from us.In late 1993 ITMA put together the Indian Trust 
Fund Reform Act in hopes of the Federal government truly reforming the 
federal trust program. Instead, after much opposition by the Department 
of Interior, Native America was given half- hearted legislation in the 
Indian Trust Fund Reform Act of 1994. And since then, Native America 
has faced opposition from the Department of Interior at any meaningful 
attempt at true trust management reform.
    Congress thankfully did attempt to make the Department of Interior 
improve Indian trust asset management and provide basic fiduciary 
services to trust beneficiaries in the 1994 Indian Trust Fund Reform 
Act.
    A new department within Interior was created, as a result of this 
act; the Office of Special Trustee. A Special Trustee for American 
Indians was hired. An investment banker by the name of Paul Homan took 
this job. Under Mr. Homan, the Office of Trust Fund Management was 
transferred over to OST. The BIA kept all other trust functions.
    Mr. Homan also instituted a new plan for trust, called the High 
Level Implementation Plan (HLIP). This HLIP included several major 
components, two of which are the most controversial; TAAMS (Trust Asset 
Accounting Management System) and TFAS (Trust Fund Accounting System). 
TAAMS is under the BIA and TFAS under the OST.
    But, then Secretary of Interior Babbitt continually interfered and 
undermined his efforts. Mr. Homan resigned as a result of the negative 
politics and constant interference from the Department of Interior.
    Additionally, as a result of the consistent failure on the part of 
the Department of Interior, Eloise Cobell of the Blackfeet Nation filed 
a class action lawsuit on behalf tribal allottees in United States 
Federal Court. This has resulted in a huge amount of media attention to 
the issue. And the previous Secretary of Interior, Secretary of 
Treasury, and Assistant Secretary of Indian Affairs were all held in 
contempt of court for failing to protect native trust and records.The 
current Special Trustee for American Indians, Mr. Tom Slonaker, has 
tried unsuccessfully to get the HLIP in working order. There have been 
many problems in TAAMS. This led Secretary Norton, to do an independent 
study of the HLIP and trust reform efforts in June 2001. The Department 
of Interior contracted with EDS (Electronic Data Systems Corporation) 
to conduct this study. EDS was to do an assessment of TAAMS and the BIA 
Data Cleanup Project. (A project that would ensure that only good clean 
data was inputted into the system).
    EDS published a ``confidential'' report titled: DOI Trust Reform, 
TAAMS/BIA Data Cleanup Recommendations: ``For Comments'' Report dated 
October 31, 2001. 1 Concurrently in Federal Court DOI 
Secretary Gayle Norton was on the verge of being declared in contempt 
of court.
---------------------------------------------------------------------------
    \1\ This information is available on the Internet on the DOI 
website.
---------------------------------------------------------------------------
    As a result, the Department of Interior put pressure on EDS to 
publish their interim report on TAAMS and BIA Data Cleanup. As stated 
on page seven of that report: ``Subsequent to the release of the 
``Recommendations: For Comments Report'', the DOI asked EDS to 
accelerate the development and publication of a roadmap.'' What this 
means is DOI was worried about the Court and hurried EDS to get their 
report out so they could use it as a means for filing in court.
    In collaboration with the DOI, EDS shortened the comment period 
that was to be provided to tribes on the October 31st report and 
prematurely published the report entitled ``Interim Report and Roadmap 
for TAAMS and BIA Data Cleanup,'' dated November 12, 2001. 2 
This report said, and I quote:
---------------------------------------------------------------------------
    \2\ This information is also available on the Internet at the DOI 
website.
---------------------------------------------------------------------------
    ``The EDS Report contains the following key Recommendations for 
improving Indian trust asset management:
     Immediately appoint a single, accountable Trust Reform 
Executive Sponsor
     Develop an overarching trust operations business model
     Adopt an overall business and computer systems 
architecture
     Adopt a consistent information systems acquisition 
strategy
     Implement consistent technology frameworks, methods, and 
tools
     Establish a trust program management center
     Execute comprehensive staffing plans for all 
participating organizations.''
    This report led the Special Trustee, Tom Slonaker, and the 
Assistant Secretary of Indian Affairs, Neal McCaleb, to immediately 
issue a joint memo to Secretary Norton recommending, ``a dramatic 
change in organization and management structure for Indian trust reform 
and trust operations.'' 3 (See Tab A) Secretary Norton 
concurred with their recommendations and directed Interior staff to 
begin the process of reorganizing DOI's Indian trust asset management 
systems. 4 (See Tab A)
---------------------------------------------------------------------------
    \3\ Tab A..Nov. 14, 2001 Memo from McCaleb and Slonaker to Norton, 
included Tab B
    \4\ Tab A..Nov. 14, 2001 Memo from Norton to McCaleb and Slonaker
---------------------------------------------------------------------------
    This prompted Steven Griles, Deputy Secretary of DOI, to 
immediately file in Federal Court a document outlining the 
reorganization on November 14, 2001. 5 This reorganization 
would, in Griles own language:
---------------------------------------------------------------------------
    \5\ Federal Court filing: Declaration of Steven Griles
---------------------------------------------------------------------------
        ``consolidate/s Indian trust asset management functions in a 
        single agency separate from the OST and BIA: the Bureau of 
        Indian Trust Assets Management. Segregating these trust 
        functions is intended, as in the private sector, to facilitate 
        the development of performance measures, processes, controls, 
        and systems that are designed to meet Interior's fiduciary 
        obligations.

        The Bureau of Indian Trust Assets Management will report to an 
        Assistant Secretary for Indian Trust Assets Management. This 
        new Assistant Secretary will have authority and responsibility 
        for Indian trust asset management, The Special Trustee will 
        continue to perform oversight for Interior's trust reform 
        efforts. BIA, under the supervision of the Assistant Secretary 
        - Indian Affairs, will continue to provide those services to 
        Indian tribes and individuals that are not related to trust 
        assets.'' (Griles court filing-DOI-11/14/01)
    The Department of Interior goes on to say:

        ``The proposed reorganization impacts many interested parties. 
        Interior has begun consultation with Indian tribes and with 
        Congress. Appropriate notification to departmental employees 
        and union representatives will occur on November 15, 2001. 
        Also, candidates for the Assistant Secretary and the Bureau 
        Director must be found. The Assistant Secretary must be 
        nominated and confirmed.

        Trust reform activities will continue during this transition 
        process. The final organization structure will depend upon the 
        results of the consultation process. Implementation will 
        progress as soon as it becomes final. In the meantime, three 
        key subprojects (TAAMS, BIA Data Cleanup, and Probate) will be 
        supervised by Ms. Donna Erwin, previously Deputy Special 
        Trustee for Trust Systems and Projects, under a newly created 
        Office of Trust Transition in the Office of the Secretary. 
        Planning for the transfer of the remaining subprojects is 
        underway. Project resources needed in the short term are being 
        identified and work with EDS to develop a business model is 
        underway.

        Meanwhile, OHTA (Office of Historical Trust), created by 
        Secretarial Directive on July 10, 2001, has proceeded on its 
        announced schedule with its task of planning, organizing, 
        directing and executing the historical accounting of EM 
        accounts. On September 10, 2001, OHTA issued a `Blueprint for 
        Developing the Comprehensive Historical Accounting Plan for 
        Individual Indian Money Accounts,' which sets forth a 
        description and timetable for completion of all steps necessary 
        to staff and develop the plan for the historical accounting.

        On November 7, 2001, OHTA issued its `Report Identifying 
        Preliminary Work for the Historical Accounting.' It identifies 
        work that is underway and work that can begin immediately to 
        constitute an historical accounting and pilot test possible 
        methods and assumptions about how to conduct the historical 
        accounting, among other tasks. In the, proposed reorganization, 
        OHTA will be a line organization under the new Assistant 
        Secretary.''
    On November 15th, 2001 the Department of Interior released a 
document entitled ``Reorganization to Improve Indian Trust Asset 
Management''. 6 This was the closest thing to a plan that 
they had at that point. In December 2001, the National Congress of 
American Indians passed a resolution in Spokane, Washington asking for 
consultation with Native America and also asking for the creation of a 
task force to study the proposed reorganization by an overwhelming 
unanimous vote.
---------------------------------------------------------------------------
    \6\ Reorganization to Improve Indian Trust Asset Management
---------------------------------------------------------------------------
    On January 8th, 2002, Keith Beartusk, BIA Rocky Mountain Regional 
Director, sent an email that had a draft alternative proposal from the 
BIA Regional Director Reorganization Advisory Group. This document 
makes clear that the BIA will not be able to survive if all trust 
functions are taken away from it. 7
---------------------------------------------------------------------------
    \7\ 1-8-02 Keith Beartusk..includes: Draft memo 12-12-01 Version 
6.1
---------------------------------------------------------------------------
    Since mid-December, Secretary Norton and Assistant Secretary 
McCaleb have convened ``consultation'' meetings around the country and 
have heard overwhelming opposition from Tribal Nations and Tribal 
people to the creation of BITAM.
21OPPOSITION TO BITAM
    First it is important to understand that we support trust 
management reform. But, not under these circumstances! Trust reform 
should be for the sake of Native America, not for the sake of 
Department of Interior Secretary Gayle Norton! On November 14th, 2001, 
Secretary Norton introduced to the Federal Court the concept of 
creating the Bureau of Indian Trust Asset Management. This was in 
response to a threat from the court to be held in contempt. The 
Department of Interior used as its excuse the Electronic Data Systems 
Corporation report of November 12th, 2001.
    It is very clear as to the intent of Secretary Norton. Take all 
trust functions away from OST and BIA and create BITAM. Do it with 
little consultation from the tribes, BIA, OST, Congress or anyone else. 
And keep in mind that this is not for the sake of Indian Country. No, 
it is purely being done for her sake. And why is this being done? Has 
the Interior Department suddenly decided it was time to ``fix'' 150 
years of mishandled Native American trust? No, it is in response to the 
Cobell court case. If Secretary Norton did not respond as she had, the 
Court may have taken this trust authority and placed it under a 
receivership. And of course there was still the contempt of court 
charge hanging over her head.
    And by doing this, Secretary Norton is able to shift attention from 
the fact that TAAMS has been a scandalous nightmare for the BIA, having 
spent tens of millions of federal dollars on a system that does not 
work. They have misled the Court, Tribes, and Congress about the 
``success'' of TAAMS knowing full well it does not do the job it was 
intended to do. 8
---------------------------------------------------------------------------
    \8\ See Nov. 14, 2001 EDS Interim Report and Roadmap for TAAMS and 
BIA Data Cleanup Page 31-33
---------------------------------------------------------------------------
    And finally, by creating a new agency, there is also the 
possibility that the BIA could be completely gutted and have to compete 
with the new agency for valuable resources. It has also been proposed 
that all contracting and compacting functions be placed under BITAM. 
This may make the ``638'' contracting of Roads, Social Services, 
Education, Police, Courts, etc. very difficult as they would stay under 
the BIA.
    Additionally Assistant Secretary Neal McCaleb said at the Spokane 
NCAI meeting that the DOI was going to transfer all trust functions 
from the BIA over to BITAM. He said that all ``empowerment'' programs 
like roads, welfare, law enforcement, etc. would stay with the BIA. 
This potentially could have a critical impact in years to come as these 
programs may be declassified as ``trust'' programs by the Federal 
government.But, in fact, all trust functions do not transfer over to 
BITAM. The Minerals Management Service, BLM, and other federal agencies 
within the Department of Interior remain intact and free to continue 
their mismanagement of Native American Trust while not being placed 
under BITAM.
    And Secretary Norton has yet to provide Native America with a 
sufficient plan or ``Trust operations business model''. In contrast she 
has declared that the HLIP was obsolete, when in fact it has never been 
implemented to any sufficient degree.DOI has yet to prove that their 
computer nightmare, TAAMS and TFAS, can ever interface with a myriad of 
other DOI ``Trust computer systems''. The DOI has failed to adopt a 
``consistent information systems acquisition strategy'', implement 
consistent technology frameworks, methods and tools, and ``establish a 
trust program management center''.
    As a blunt matter of fact, all the DOI has done is to shuffle 
existing federal employees around, while bringing in ex-federal 
officials who were part of the problem to begin with. A far cry from 
executing a ``comprehensive staffing pattern'' as suggested by EDS.
SOLUTION
    The Solution is simple and to the point. Keep in mind that the DOI 
is basing this reorganization and creation of BITAM on the EDS report, 
and the EDS report says:
     Immediately appoint a single, accountable Trust Reform 
Executive Sponsor;
     Develop an overarching trust operations business model;
     Adopt an overall business and computer systems 
architecture;
     Adopt a consistent information systems acquisition 
strategy;
     Implement consistent technology frameworks, methods, and 
tools;
     Establish a trust program management center; and
     Execute comprehensive staffing plans for all 
participating organizations.
    BITAM cannot do this because it does not consolidate all trust 
activities under a ``single trust reform executive sponsor''. The 
intent of DOI Secretary Norton is to take all trust functions away from 
OST and BIA and create BITAM, thereby giving this new agency those 
functions, but the Secretary's plan does not transfer any authority 
from MMS, BLM nor any other agency of the DOI. This in itself falls far 
short of the EDS report.
    The Great Plains Tribal Chairman's Association respectfully 
requests the United States Senate, through the Senate Committee on 
Indian Affairs, to consider the following recommendations for trust 
management reform:
     Consolidate all trust activities from within DOI such as 
OTFM, MMS, and others under the Bureau of Indian Affairs;
     Place all above activities under the existing Director of 
Trust or a like agency within the BIA;
     Allow tribes input into the architecture of the High 
Level Implementation Plan. (Trust Operations Business Model);
     Implement the High Level Implementation Plan under the 
newly consolidated trust management program under the Director of Trust 
in the BIA;
     Implement all other EDS recommendations as per the 
report;
     Amend the Indian Trust Reform Act to authorize the Office 
of the Special Trustee to act as a separate agency apart from the 
Department of Interior, with the responsibility of oversight over all 
trust activities within the BIA.
     Authorize the Office of Special Trustee the power to 
impose sanctions on any government agency or department that fails in 
it's responsibility for proper administration of Native American trust 
programs; and
     The Office of Special Trustee should report to Congress 
and Native America of all trust activities.
    While the solution is simple and to the point, it allows the full 
EDS recommendations to be carried out. We see this as the simple, cost 
effective solution to trust fund reform. It keeps the BIA totally 
intact while strengthening the BIA's trust management capability. It 
allows for the creation of one centralized system under the BIA for 
Trust Fund Management. And it ensures that the BIA will be held 
accountable.
CONCLUSION
    We also feel that the ultimate solution would be to create a 
Department of Indian Affairs. The above structure could be placed under 
this department. It is long overdue for Native American to have it's 
own cabinet level position. It is our hopes and prayers that your 
honorable Committee and honorable Senators will find the power and the 
will to convince the President to implement a plan to establish a 
Department of Indian Affairs.Until then, prompt passage of our 
recommendations would be appreciated.
    We thank you for your time and consideration of this testimony.

Written by:
Gregg J. Bourland
Tribal Chairman, Cheyenne River Sioux Tribe
                                 ______
                                 
    [A statement submitted for the record by the Hoopa Valley 
Tribe follows:]
[GRAPHIC] [TIFF OMITTED] T7526.015

      Statement of the Hoopa Valley Tribe submitted for the record

                               SGProp-03
              TRIBAL SELF-GOVERNANCE TRUST REFORM PROPOSAL
BACKGROUND.
    The origin of federal trust responsibilities to Indian tribes began 
when the United States began negotiating and entering into treaties and 
agreements with sovereign Indian nations. Those treaties and agreements 
accomplished a number of key goals, including: 1) allowing for the 
transfer of billions of dollars worth of assets, rights and territories 
to the United States, 2) providing provided for a number of guaranteed 
programs and services available to tribes in exchange for lands and 
rights ceded, and 3) providing for the preservation of inherent tribal 
self-governing powers. The Federal trust responsibilities to individual 
Indians began with the enactment of the General Allotment Act in 1887. 
Since then, many laws and court cases have further defined those 
responsibilities, including clarifying management standards and 
agreeing to pay liabilities when those standards are breached. It is 
this legal and political framework that mandates that tribes and the 
Federal Government will conduct their affairs in a government-to-
government like fashion. Many federal officials do not seem to 
understand or possibly appreciate the fact that treaties and agreements 
are two party contracts, between tribes and the Federal Government. And 
today, now more than 2 centuries later, the Federal Government still 
struggles to define what these responsibilities really consist of.
    When the U.S. Congress passed laws that authorized the sale, use or 
disposition of resources being held by the U.S. for the benefit of a 
tribe or individual Indians, they also imposed management 
responsibilities on the agency that carries out that function. For 
example, when the BIA forestry branch sells tribal or allotment timber, 
they must incorporate land management practices that will ensure that 
the tribe's or Indian's lands will remain productive. This requirement 
is what creates the federal forest management standards that apply to 
tribal and Indian lands. Similar standards have been developed for land 
leasing, grazing permits, water uses, roads, etc. Likewise, when a 
Federal agency is charged by law with the responsibility to ``manage'' 
tribal and Indian money accounts that were generated from the sale or 
use of resources, or from breach of trust lawsuits and the like, then 
the Federal Government is responsible for carrying out the prudent 
management requirements of those accounts. When applying standards to 
``trust responsibility'', the courts have defined the United States' 
responsibilities as being similar to ``how a prudent person would 
manage their own resources''. Basically, this means that if the BIA or 
another agency, or their employees would not in their course of doing 
business destroy, diminish the value of or otherwise improperly use 
their own assets, then neither should they do so with tribal or 
individual Indian resources and funds that they are charged with 
overseeing.
    Interior Secretary Norton recently announced a proposal to reform 
the manner in which the Department of the Interior manages trust assets 
that are being held for the benefit of individual Indians and Indian 
tribes. The Secretary's proposal includes the establishment of a new 
Assistant Secretary for Trust Assets Management and the transfer of all 
activities presently being managed by the BIA to this new bureau. 
Obviously, undertaking the process of developing a new bureau within 
any Federal agency will be expensive, time consuming, difficult to 
staff and ``carving out'trust related functions from the existing BIA 
offices may prove to be a quite complex undertaking. Furthermore, the 
Self-Governance tribes believe that other options should also be 
considered that will accomplish the same level, if not more, of the 
intended objectives outlined for the trust reorganization proposal. 
Therefore, the Self-Governance Tribes offer the following approaches to 
addressing the Department's trust reform concerns:
BITAM--WHAT IS IT?--SCENARIOS A & B--APPENDIX 1.
    In November, 2001, Secretary Norton proposed a plan to create a new 
Bureau of Indian Trust Asset Management (BITAM). The proposal is 
reported to be an effort to transfer all trust related functions 
presently being carried out by the BIA to the new BITAM agency. Since 
the announcement of the BITAM proposal, Tribal leaders have also been 
asked to comment of the plan, which is yet to be defined or explained 
with any level of detail. Without anything to analyze, input on the 
BITAM proposal seems fruitless. Therefore, in an effort to provide 
constructive analysis of the concept, Appendix 1 attached hereto 
contains Scenarios A and B of what BITAM could be. Each scenario also 
contains an impact analysis of the concepts outlined therein. These 
scenarios also provide a baseline proposal from which alternatives can 
be analyzed.
INDIAN TRUST VS. COMMON TRUST.
    Since development of the Trust Management Improvement Project, an 
issue at the heart of the trust reform effort has been how to establish 
a process that integrates both the common law principles of financial 
management with the unique and fundamental principles of Indian trust 
law. Within the arena of management of Indian affairs today, both 
common law and Indian trust law principles are critical and necessary 
parts of successful implementation of any trust reform plan. Under 
common law standards, courts have ruled that the U.S. must manage trust 
assets and financial accounts in a prudent manner as if an official 
were to be managing their own assets and accounts. This is an essential 
and fundamental part of the U.S.'' management of tribal and individual 
financial accounts. Obviously, the courts would hold the U.S. liable if 
they were to manage tribal and individual Indian accounts in a manner 
that is not consistent with banking industry standards. However, when 
dealing with the management of tribal and individual Indian trust asset 
management, the emphasis naturally must shift to employing the 
fundamental principles of Indian trust law.
    Under Indian trust law principles, tribal and individual Indians 
must be an integral part of both setting standards and carrying out the 
management activities related to their trust assets. In fact, without 
such direct involvement, the legal and political framework of tribal 
self-government and the U.S/Tribal government-to-government 
relationship is rendered meaningless. It has been consistently upheld 
in case law and Congressional and Administration policy that one of the 
most fundamentally important inherent principles of tribal self-
government is for tribes to be able to exercise authority to plan and 
administer activities related to their territorial jurisdiction, 
including being directly involved with the management of their trust 
assets. A similar inherent authority is retained by individual Indians 
that are the owners of trust assets that were acquired under the 
authority of the General Allotment Act.
    Therefore, any trust reform effort of the U.S. must necessarily 
integrate the principles of both common law and Indian trust law if it 
is to be successful. Anything less will result in reversing more than 
200 years of laws, policies and principles upon which the U.S./Tribal 
government-to-government relationship is based.
                                 PART I
              TRIBAL SELF-GOVERNANCE TRUST REFORM PROPOSAL
IMPROVEMENTS IN TRIBAL/FEDERAL RELATIONS AND TRUST ASSET MANAGEMENT 
        UNDER SELF-GOVERNANCE AND SELF-DETERMINATION.
    The Indian Self-Determination Act was inspired from tribal 
dissatisfaction of the Federal Government's management of Indian 
affairs. Following decades of Federal agencies disregarding tribal 
concerns and priorities regarding the management of their treaty-
protected properties, resources, and other Indian programs, in 1974, 
Congress enacted the first Indian Self-Determination and Education 
Assistance Act. The Act was designed to establish legal contracting 
obligations on Federal agencies charged with carrying out Indian 
functions to contract with interested tribal governments and transfer 
those functions to tribes to carry out. The Act also allowed the Tribal 
Governments to plan, prioritize and administer many of the programs to 
which their members were the intended beneficiaries. Throughout the 
years, the provisions contained in the Act has been expanded and to 
where today, most Indian programs of the BIA and IHS are being carried 
out by tribes under Self-Governance compacts and 638 contracts. In 
effect, the Indian Self-Determination Act have been always been in the 
forefront of federal trust reform efforts and have been demonstrated to 
be possibly the most cost effective and efficient means for the Federal 
Government to carry out functions that benefit Indians.
    Self-Governance and Self-Determination Acts has resulted in broad 
Tribal assumption of trust-related programs from the BIA under the 
Tribal for more than the last decade. One of the most fundamental basis 
for these efforts is to design an evolving process whereby the Tribes 
could continue to assume and carry out trust related activities with 
the greatest degree of flexibility at the reservation level while, at 
the same time, the Federal Government could effectively carry out its 
fiduciary trust obligations to tribes and individual Indians that are 
required under treaties, agreements, statutes and regulations.
    Under Self-Governance and Self-Determination agreements, tribes 
have become integral parts of the federal system to fulfil the U.S.'' 
fiduciary and legal obligations to Indian Tribes. It is most unlikely 
that any federal trust reform efforts will ever be successful unless 
they fully incorporate the philosophies and ideals of the Tribes and 
individual Indians, the true intended beneficiaries of the Federal/
Indian relationship. Anything less that full integration of Self-
Governance and Self-Determination objectives in trust reform will 
simply not be consistent with the government-to-government relationship 
between Indian tribes and the U.S., upon which the trust 
responsibilities are based.
SELF-GOVERNANCE/FEDERAL AGENCY STRUCTURE.
    An important part of the Self-Governance Act is the ability of 
tribes to negotiate with Federal agencies for the transfer of all non-
Inherent Federal Functions to tribal agreements. This provision has 
served as a very useful means for tribes and Federal agencies to 
establish positive working relationships at both the reservation and 
agency levels. Under Self-Governance, many tribes have assumed broad 
trust and not-trust functions, which in turn has transferred most of 
the program administrative functions to tribal governments. In other 
cases, tribes have agreed to leave functions to be carried out by the 
agency. In all cases, Self-Governance has created a method for tribes 
and federal agencies to establish meaningful working relationships, 
including for activities involving trust resources and other programs, 
including the ability for tribes to negotiate to determine the 
administrative level that the agency will use to carry out various 
federally-retained functions.
    A part of the Federal/Tribal working relationships include 
developing agreements on how trust transactions are processed, the 
types of supporting records that will be required to complete a trust 
transaction, how a trust activity will be monitored, and how annual 
trust evaluations will be carried out. Since Self-Governance was 
implemented in 1990, not a single unresolved trust problems within any 
trust programs assumed by a Self-Governance tribe has been identified. 
Further, the number of breach of trust complaints against the U.S. by 
Self-Governance tribes and those of individual Indians that associated 
with Self-Governance tribes has been significantly reduced since Self-
Governance was initiated in 1990.
    Therefore, the ability of Federal agencies and tribes to resolve 
longstanding trust management concerns has been significantly 
strengthened under the Tribal Self-Governance Act. In addition, even 
though tribes have assumed responsibilities for trust programs as a 
lower funding level that was even utilized by the BIA when they 
administered the trust program, Self-Governance has demonstrated the 
dedicated commitment of tribes to address difficult and complex trust 
issues by the Act's authority to consolidate, redesign and prioritize 
programs activities to address the needs and concerns of the true 
beneficiaries of the trust functions at the reservation level.
TRUST MANAGEMENT STANDARDS.
    There can be no ``one size fits all'' approach to management of 
trust assets around the Country because each tribe may have a number of 
individual issues, concerns or trust obligations that must be address 
in carrying out trust transactions. For example, Douglas Fir timber may 
have one monetary value on one reservation because a tribe has a 
sawmill and will recover a higher return on sales after processing, 
while another tribe may not and seeks only the highest monetary return 
on the logs being sold. Another example may be that a tribe may allow 
the use of tribal lands for land leases to members for virtually no 
monetary return while still requiring nonmembers to pay fair market 
commercial value for a lease. Each of these trust transactions can 
create a federally-managed trust account which has a specific monetary 
return based on a tribally-defined ``beneficial use'' for each trust 
asset.
    Under Self-Governance, the Tribe and BIA can develop agreements 
whereby the management standards for trust assets can accommodate both 
the requirements of 25 C.F.R. or other appropriate Federal statutes and 
regulations. As a result, each tribe, as beneficiary of the trust 
relationship can work with the BIA to develop trust management 
standards on a resource-by-resource basis that will also be used in 
approving trust transactions. In cases where tribal management 
standards have not been developed, a tribe and BIA utilize applicable 
federal standards for trust transactions. In the event of a potential 
conflict between tribal and federal trust management standards, the 
tribe and BIA meet to develop mutually-acceptable methods for resolving 
the conflict. In areas where ongoing statutory and regulatory concerns 
may be required, such as compliance with the Endangered Species Act and 
Clean Water Act, both Self-Governance tribes and the BIA work with 
other tribes to develop mutually-acceptable management standards that 
are applicable to each effected trust transaction.
TRUST RECORD KEEPING.
    Under Self-Governance, tribes carry out many governmental functions 
in addition to those that are required for BIA trust transactions. 
Therefore, all records developed by a tribe that are not needed for BIA 
approval of a trust transaction are the property of the Tribe. However, 
all documents developed and submitted by the Tribe for BIA approval of 
a trust transaction become the property of the BIA and recorded on the 
title, as appropriate. Under Self-Governance, it is the responsibility 
of the BIA to ensure that all records necessary to approve and monitor 
a trust transaction are secured and maintained by the BIA. Under this 
arrangement, the Tribe is free to developed internal centralized files 
for BIA and non-BIA activities, while also providing the BIA with the 
necessary records to ensure its trust obligations to the tribe and 
individual Indians are carried out. Under Self-Governance, the 
responsibility to approve all trust transactions is maintained with the 
BIA, as required by the Self-Governance Act.
TRUST FINANCIAL ACCOUNTING.
    Self-Governance tribes and the BIA continue to work cooperatively 
with the Office of Trust Funds Management (OTFM) in the financial 
accounting of all trust transactions, however, it is necessary for OTFM 
expand its activities to include program experts who will provide 
oversight in the programmatic accounting of all trust accounts. It will 
be the responsibility of OTFM to work with the BIA and appropriate 
Self-Governance tribes to ensure that all necessary documents are 
provided to assure the proper accountability of trust transactions.
    There is a need for OTFM, the BIA and tribes to work out procedures 
to ensure that proper and efficient management or trust transactions 
and their resultant trust financial accounts are reconcilable. Self-
Governance tribes believe this is best worked out during the typical 
negotiations between the Tribe and BIA. For example, if a tribe 
compacts an OTFM activity, then that tribe would be required to develop 
and maintain the required internal procedures and checks and balances 
that are required in its Self-Governance agreement. Monitoring of this 
requirement can be incorporated into the annual trust evaluation 
process that is required by the Self-Governance Act.
SUMMARY.
    There are many reasons that led to the situation that the Federal 
Government finds itself in today in the Cobell litigation, many of 
which stem from the inherent problems that exist solely within the 
confines of its own infrastructure. Attempts to simply move the same or 
similar functions from one office to another, or from one agency to 
another, quite often do not achieve the intended results. Furthermore, 
no agency shuffling efforts result in creating one of the greatest 
tools necessary to guarantee success, which is establishing a vested 
interests in the activity to be performed. However, it is ``tribal 
vested interest'' that has been the fuel that has made Self-Governance 
both successful and effective in addressing longstanding problems that 
the Federal Government has experienced in managing Indian programs for 
over 200 years. Likewise, Tribal Self-Governance is the fuel that is 
necessary to make trust reform both successful and effective in the 
future.
                                PART II
   SELF-GOVERNANCE TRUST REFORM IMPLEMENTATION AND ORGANIZATION PLAN
    The following contains detailed proposals and organizational 
structures, as well as their supporting justifications, for 
implementing trust reform activities within the Department of the 
Interior.
FOUR COBELL BREACHES.
    The Cobell Court has identified the following four breaches of the 
Courts Orders, as described by the BIA Regional Director: 
Reorganization Advisory Group (Memorandum of 12-12-01)
    A. The Secretary has no written plan to gather missing data;
    B. The Secretary has no written plan for the retention of IIM trust 
documents;
    C. The secretary has no written architecture plan; and
    D. The Secretary has no written plan addressing the staffing of 
trust functions.
INTERIOR AGENCIES INVOLVED IN TRUST REFORM AND THEIR PURPOSE.
    The following are brief descriptions of Interior agencies that are 
involved in trust reform and their purposes:
    1. Office of Special Trustee. The Office of Special Trustee (OST) 
was established under Title III of P.L. 103-412, the American Indian 
Trust Fund Management Reform Act of 1984. Under Section 302 (c) of the 
Act, OST is designed as a temporary agency that is to be phased out 
after the components of trust reform are developed and implemented. 
Under the Act, OST is to provide oversight and coordination of trust 
reform activities which are being carried out by the Bureau of Indian 
Affairs, Bureau of Land Management and Mineral Management Services.
    2. Bureau of Indian Affairs. The BIA is one of the primary agencies 
of the Federal Government that is empowered to specifically carry out 
the U.S.'' trust obligations to Indian tribes and individual Indians, 
which includes those associated with both trust resources and other 
legal obligations. The BIA, through Regional, Agency and Sub-Agency 
offices work with Indian tribes and individual Indians to implement the 
U.S. obligations that are protected by treaties, Executive orders and 
federal statutes.
    3. Office of Self-Governance. The Office of Self-Governance is 
charged with implementation of the Tribal Self-Governance Act, P.L.103-
413, the Tribal Self-Governance Act, as amended. The OSG typically 
functions in an oversight role ov er Tribal/Federal Self-Governance 
negotiations and is responsible for implemented Self-Governance 
agreements once the are completed.
AUTHORITY OF P.L. 103-412 TO RESTRUCTURE THE BIA.
    Questions have arisen about whether implementation of federal trust 
reform measures require the creation of a new trust agency within the 
Federal Government. This Implementation and Organization Plan is based 
in part on provisions contained in P.L. 103-412 that specifically 
provides that improvements are to be made in the systems of the Bureau 
of Indian Affairs and other Interior agencies. Relevant parts of the 
Act relating to improvements in the BIA trust-related systems are as 
follows:
    Sec. 202(a)--...held in trust by the United States and managed by 
the Secretary through the Bureau [of Indian Affairs].
    Sec. 202(b)--...the Director of Office of Trust Funds Management 
within the Bureau [of Indian Affairs].
    Sec.301(2)--...and that reforms of policies, practices, procedures 
and systems of the Bureau [of Indian Affairs]...
    Sec.303(a)(2)(A)--Identification of all reform to the policies, 
procedures, practices, and systems of the Department, the Bureau [of 
Indian Affairs]...
    Sec. 303(b)(1)--The Special Trustee shall oversee all reform 
efforts within the Bureau [of Indian Affairs]...
    Sec. 303(b)(2)(A)--...trust accounts to ensure that the Bureau [of 
Indian Affairs]...
    Sec. 303(b)(2)(B)--The Special Trustee shall ensure that the Bureau 
[of Indian Affairs]...
    Sec. 303(b)(2)(C)--The Special Trustee shall ensure that the Bureau 
[of Indian Affairs]...
    Sec. 303 (c)(1)(A)--...the policies, procedures, practices, and 
systems of the Bureau [of Indian Affairs]...
    Sec. 303 (c)(2)--The Special Trustee shall ensure that the Bureau 
[of Indian Affairs]...
    Sec. 303 (c)(3)--...and that they are adequate to support the trust 
funds investment needs of the Bureau [of Indian Affairs].
    Sec. 303 (c)(4)(A)--...the land records system of the Bureau [of 
Indian Affairs]...
    Sec. 303 (c)(4)(B)--...interface with the appropriate asset 
management and accounting systems of the Bureau [of Indian Affairs]...
    Sec. 303 (c)(4)(B)(i)--...and disburse to the Bureau [of Indian 
Affairs]...
    Sec. 303 (c)(4)(B)(ii)--...the Bureau of Land Management and the 
Bureau [of Indian Affairs]...
    Sec. 303 (c)(5)(A)--...with the advice of program managers of each 
office within the Bureau of Indian Affairs...
    Sec. 303 (d)--...and in implementing reforms to Department, Bureau 
[of Indian Affairs]...
    Sec. 303 (f)--...each year on the progress of the Department, 
Bureau [of Indian Affairs]...
ORGANIZATIONAL STRUCTURE.
    Attached is a proposed organizational structure to implement trust 
reform within the BIA and other Interior Agencies that is based on the 
legal framework outlined in P.L. 103-412. The trust reform functional 
components of the organization are briefly outlined as follows:
    Chart--Bureau of Indian Affairs--Office Organization.
    Office of Special Trustee. The Office of Special Trustee is 
provided oversight capability, which is to be phased out once trust 
reform is successfully completed. In addition, responsibility for 
oversight of implementation of the the Cobell Court's four breaches has 
been assigned to OST.
    Assistant Secretary-Indian Affairs/Central Office. The Assistant 
Secretary-Indian Affairs is also assigned responsibility of 
implementing the Cobell Court's four breaches. A Division of Trust 
Accounting (see separate chart) is incorporated as a subordinate office 
of the Assistant Secretary-Indian Affairs so that direct oversight and 
control can be assured over this new Division.
    Regional/Agency Offices. Within each Regional Office, a new Deputy 
Director of Trust management is established whose responsibilities 
include implementation of trust reform at the Regional, Agency and Sub-
Agency levels, as well as responsibility to implement the four Cobell 
Court breaches. As has been carried out by the Pacific Regional Office 
for decades, the Regional Office Appraisal functions are under the 
direct control and oversight of the Deputy Director of Trust 
Management. This structure will ensure that the integrity of the 
Appraisal Office is maintained by segregating their functions from 
those of Real Estate Services. Also as contemplated in P.L. 103-412, 
the Division of Trust Accounting (possibly a Regional Office 
counterpart to OTFM) is made part of the responsibilities of the Deputy 
Director of Trust Management. This structure will ensure that proper 
and timely accounting and reconciliation of trust functions and trust 
accounts takes is maintained.
    Another important part of the proposed organizational structure if 
the ability to coordinate, through the Regional Director, the functions 
of both the Deputy Director of Indian Programs with those of the Deputy 
Director of Trust Management. The objective of this structure is to 
streamline the administrative functions of both offices so that 
important BIA services, such as economic development and road 
maintenance and construction, each of which must necessarily be 
coordinated to be successful, has the greatest opportunity of providing 
the intended benefits to Indian Country.
SINGLE ADMINISTRATIVE OFFICIAL RESPONSIBLE FOR TRUST REFORM.
    In their critique of trust reform, EDS stated that significant 
problems have been encountered in both developing the trust reform 
measures and implementing them because there has not been a single 
authority charged with trust reform improvements. While this has been a 
problem within the BIA for years, it has been compounded with the 
creation of the Office of Special Trustee under P.L. 103-412 in 1994. 
Since then, trust management has in effect been divided between two 
separate agencies. This Self-Governance proposal addresses this 
problems, consistent with the provisions of P.L. 103-412 by 
establishing a clear line of authority from the Secretary of the 
Interior, through the Assistant Secretary of Indian Affairs, the BIA 
Regional Directors and to the Deputy Regional Director for Trust 
Management. The Deputy Regional Director for Trust management is 
directly responsible for the actions of all Regional, Agency and 
Subagency personnel. Under this streamlined structure, an 
understandable process is established whereby each progressive line of 
authority can monitor and evaluate the actions of their subordinate 
official (See attached organizational charts).
MECHANISM TO ESTABLISH TRUST VALUATION STANDARDS.
    Important events always lead up to the filing of breach of trust 
cases against the U.S. by Indian tribes and individual Indians. Also, 
systems such as TAAMS and federal trust record keeping systems are less 
useful if they do not also contain information that helps all parties 
concerned to understand the reasons why various components were 
included, or not included in a specific trust transaction. Again, many 
of these ``unknowns'' can result in a breach of trust claim against the 
U.S.
    To address this situation, the Department of the Interior, through 
the BIA Regional Office structure, should develop a plan to work with 
tribes and individuals to establish formal management standards for 
each trust asset and money account. This process would entail 
conducting an inventory of all trust assets and accounts that would 
need to be managed under these standards. Each BIA Regional office 
would be charged with the responsibility to work with each tribe and 
individual Indian owner to establish formal management standards for 
those resources and assets.
    For areas where the BIA and Tribe/individual Indian do not develop 
formal management standards, the BIA shall only process a trust 
transaction under the control of an ``Informed Decision Process'' (IDP. 
The IDP would consist of a checklist of required questions that must be 
affirmatively answered before the BIA can proceed with completing a 
trust transaction. The questions would include such things as, was the 
owner informed of the resource value, does the owner agree with the 
values included in the trust transaction and were any difference 
explained, were they provided copies of support documentation 
(appraisals, timber cruises, gas and oil estimates, market values, 
etc). The IDP documentation will be made part of the BIA decision 
making process for the trust transaction.
    Timefames and funding will be provided to the BIA and tribes/
individual Indians to complete this process.
RECONCILIATION OF TRUST ACCOUNTS.
    Questions continue to be raised regarding how the U.S. will 
reconcile the trust accounts held by the Federal Government with the 
trust transaction that crated the account, then ultimately reach 
agreement with the tribe or individual owner(s) of the account.
    To address this, the Department of the Interior should sponsor 
legislation that would allow an individual tribe or Indian account 
holder to select an option for conducting an accounting. These options 
could include:
    a. LA transaction-by-transaction accounting;
    b. LA random accounting of selected accounts; or
    c. LA process for selecting existing accounting information.
    Each option have specific timeframes and costs assigned. Under the 
accounting process, the BIA and tribe/individual Indian could negotiate 
how the accounting process would be completed, including the option for 
tribes to contract/compact that function.
    Once the accounting is completed, either the Federal Government or 
tribe/individual Indian could contest the accounting results in a forum 
established for that purpose.
PROS AND CONS OF PROPOSAL.
Pros:
     More timely and less expensive to implement
     Has broad support among Tribal and the BIA
     Doesn't require federal employee union or GSA involvement 
to implement
     Is consistent with both the Trust Reform Act and Tribal 
Self-Governance/Self-Determination
     Facilitates resolution of potential conflicts between 
Tribal and Federal trust asset management standards which led to Cobell 
and other breach of trust cases
     Responds to the Cobell Court issues in a timely manner
     Does not require a second restructuring plan for BIA 
retained function that would follow BITAM implementation
     Integrates Tribal and BIA directly into Federal trust 
reform efforts
Cons:
     Does not address perceptions that BIA cannot do the job
     Requires legislation to implement Cobell related 
reconciliation issues
     Will require re-integration of OST functions back into 
BIA structure
     Reconciliation process would require added work to 
resolve Federal/Tribal/individual Indian reconciliation related issues
                             APPENDIX NO. 1
BITAM--WHAT IS IT?--SCENARIOS A & B..
    In November, 2001, Secretary Norton proposed a plan to create a new 
Bureau of Indian Trust Asset Management (BITAM). The proposal is 
reported to be an effort to transfer all trust related functions 
presently being carried out by the BIA to the new BITAM agency. Since 
the announcement of the BITAM proposal, Tribal leaders have also been 
asked to comment of the plan, which is yet to be defined or explained 
with any level of detail. Without anything to analyze, input on the 
BITAM proposal seems fruitless. Therefore, in an effort to provide 
constructive analysis of the concept, Appendix 1 attached hereto 
contains Scenarios A and B of what BITAM could be. Each scenario also 
contains an impact analysis of the concepts outlined therein. These 
scenarios also provide a baseline proposal from which alternatives can 
be analyzed
                     BITAM ORGANIZATION--SCENARIO A
Assumption.
    A. LThat the BIA consists of approximately 50% trust asset related 
activities and 50% other programs.
    B. LThat all trust-related staff of the BIA personnel of the 
Central, Regional, Agency, and Field Offices will be physically 
relocated and reassigned to BITAM.
    C. LThat there will be established a comparable (mirror) structure 
under BITAM as existed under the BIA.
Implementation Impacts.
    1. LEmployee related impacts- Existing BIA trust related employees 
would need to be offered a job at the BITAM office at a different 
location. For employees who choose not be relocate, there would have to 
be severance pay provided. For each BIA employee who did not relocate, 
a new employee would have to be hired and trained. This scenario would 
entail working with the federal employee union and effected employees 
to implement. All administrative manuals of the BIA would need to be 
revised.
    2. LFacilities and equipment impacts: Before the BITAM could be 
implemented, the General Services Administration would need to 
negotiate and enter into a facilities agreement for the Agency. At 
least 2 options could be involved, including:
        a. LEstablishing BITAM offices in each pervious BIA location. 
        This concept would entail ``duplicating'' the BIA offices and 
        staff in each of the separate Central, Regional, Agency and 
        Subagency locations. In addition to office space negotiations 
        and agreement, this concept would require that office equipment 
        and other support functions also be relocated and/or 
        purchased.. Also, there would be a need to remove all trust 
        related files, records and manuals from the BIA to be relocated 
        to the new BITAM offices; or
        b. LConsolidate BITAM offices in locations different from the 
        BIA offices. This concept would probably require all of the 
        activities identified in ``a'' above, but would also require 
        significant additional consultation with tribes and BIA 
        employees regarding where and how to select the locations for 
        the new BITAM consolidated offices.
Implementation Timeframes Impacts.
    Scenario A will likely take the longest amount of time and will be 
the most costly to implement. This scenario will likely take more that 
a year, even under the best of circumstances, to implement (assuming 
that tribes and the Congress give up their objections to BITAM). Given 
the pressures of the Cobell Court for Secretary Norton and Assistant 
Secretary McCaleb to get something done, this scenario will not meet 
the needs of DOI.
                     BITAM ORGANIZATION--SCENARIO B
Assumption.
    1. LThat the BIA consists of approximately 50% trust asset related 
activities and 50% other Indian programs.
    2. LThat all trust-related staff of the BIA personnel of the 
Central, Regional, Agency, and Field Offices will be retained in the 
existing BIA offices but reassigned to BITAM.
    3. LThat there will be established a comparable (mirror) structure 
under BITAM as existed under the BIA.
Implementation Impacts.
    A. LEmployee related impacts- Existing BIA trust related employees 
would need to be offered a job in the BITAM offices. For employees who 
choose not be reassigned, there would have to be severance pay 
provided. For each BIA employee who did not agree to be reassigned, a 
new employee would have to be hired and trained. This scenario would 
entail working with the federal employee union and effected employees 
to implement. Additionally, it is conceivable that each of the Central, 
Regional, Agency and Subagency offices will need to hire separate BITAM 
department heads, regional directors, agency superintendents and 
subagency directors in order to effect a ``separation'' of BIA 
functions from those of BITAM. One must assume that this action must be 
undertaken in each of the 12 Regional, 58 Agency, 1 Subagency, 28 Field 
Station and 3 Irrigation Project Offices, which would probably require 
around 125 new federal positions.
    b. LFacilities and equipment impacts: Under Scenario B, it is 
assumed that the same BIA offices will be utilized for BITAM, however, 
it is probable that some equipment that is presently being shared 
within BIA offices will have to be replaced in order to physically 
separate the different agency functions. All existing administrative 
manuals of the BIA would need to be revised to separate the trust-
related functions from the BIA. Supervision of BIA vs. BITAM personnel 
would be interesting because ``co-mingled staff'' would be working for 
completely different agencies. At least conceptually, there may have to 
be ``green'' doors and lines on the floor for BITAM personnel and 
``red'' door and lines on the floor for other Indian program staff. 
Also, there would be a need to move all trust related files, records 
and manuals from the BIA to the new BITAM offices.
Implementation Timeframes Impacts.
    Scenario B will be easier to implement that Scenario A, but is 
still required hiring a significant number of new BITAM and other 
support needs. Because of the increased implementation costs, it is 
unlikely that this concept can be implemented in less than a year. In 
both Scenarios A and B, the most limiting factor that will negatively 
impact the implementation schedule will be finding personnel who are 
familiar with Indian trust and related requirements. The difficulties 
in implementing Scenario B is also likely to strain the patience of the 
Cobell Court.
                                 ______
                                 
    [A letter submitted for the record by the Mille Lacs Band 
of Ojibwe follows:]
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    [A resolution submitted for the record by the Montana 
Wyoming Tribal Council Leaders follows:]
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[GRAPHIC] [TIFF OMITTED] T7526.027

    [A statement submitted for the record by the Nez Perce 
Tribe follows:]

   Position of the Nez Perce Tribe Opposing Transfer of Trust Asset 
   Management Responsibilities to the ``Bureau of Indian Trust Asset 
Management'' in the Absence of Tribal Consultation and a Comprehensive 
                          Reorganization Plan

    The Nez Perce Tribe has serious concerns with the decision of the 
Department of the Interior to create a new federal agency, the Bureau 
of Indian Trust Assets Management (BITAM), and remove certain trust 
responsibilities from the Bureau of Indian Affairs (BIA). To strip the 
BIA of its core trust responsibilities and transfer them to an entirely 
new agency casts into doubt over 100 years of well-established Tribal-
federal policy.
    Beginning with the passage of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. Sec. 450 et seq.) and subsequent 
legislation, the United States government has repeatedly recognized the 
need to work closely with Tribes on a government-to-government basis 
and to support tribal self-determination and self-governance. In 1968, 
President Lyndon B. Johnson stated that ``Indian must have a voice in 
making the plans and decisions in programs important to their daily 
lives,'' so that the relationship between Tribes and the federal 
government would be one of the ``full partnership--not dependency.'' 
Two years later, President Richard Nixon reaffirmed this policy stating 
that ``the time has come . . . for a new era in which the Indian future 
is determined by Indian acts and Indian decisions. After similar 
statements from Presidents Regan and Bush, this process culminated with 
Executive Order 13175 which required all federal agencies to consult 
with Tribes prior to formulating and implementing policies or other 
actions which may have a substantial affect on a Tribe or tribal 
resources. In a letter sent to the Nez Perce Tribe in August 2000, 
then-Governor George W. Bush recognized and reaffirmed the unique 
government-to-government relationship that exists between our two 
sovereign nations and promised to work with Tribes to strengthen the 
federal trust relationship.
    Despite these mandates and promises, and in violation of the 
consultation Executive Order, Secretary Norton released a decision to 
reorganize the BIA without prior consultation between the Department of 
the Interior and Indian Tribes. The failure of the Department to 
consult with Tribes prior to announcing this decision represents a 
complete abdication of the federal trust responsibility and a refusal 
to abide by the unique government-to-government relationship that 
exists between Tribes and the federal government. As the primary agency 
dealing with Tribes on a daily basis, any BIA reorganization plan will 
immediately impact Tribes. Considering that the proposed reorganization 
will remove a core group of BIA's trust responsibilities, the need for 
early, meaningful consultation could not be greater. For Tribes to find 
out about this reorganization through the Washington Post is simply 
unacceptable. Moreover, the decision to reorganize was made without 
input from BIA regional management, further undermining the 
reorganization proposal. Consultation is not a process you endure 
before moving forward with predetermined plans.
    The proposed reorganization will not, in itself, solve the numerous 
problems of trust reform. The proposal, as outlined to date, is vague 
and incomplete, and raises more questions than answers as to the future 
of trust reform and the tribal-federal relationship. These are complex 
problems which require well-reasoned thoughtful plans. Absent 
consultation with affected parties, the proposed action by the 
Department will fail to resolve the problems with Individual Indian 
Money (IIM) accounts.
    The Nez Perce Tribe, nearly two months after the decision to 
reorganize the BIA was announced without regard to the dramatic impact 
the reorganization would have on trust asset management and the entire 
trust relationship itself, has neither received any detailed 
substantive information about the proposed reorganization, nor any 
guarantees that, like the BIA, the BITAM will honor the government-to-
government relationship, Indian preference, or other fundamental 
principles of Indian self-determination. In order to obtain additional 
information, the Nez Perce Tribe recently filed a Freedom of 
Information Act request with the Office of the Secretary and the BIA to 
obtain any documents describing the process and procedure for trust 
reform and BIA reorganization. The Nez Perce Tribe strongly believes 
that the reorganization effort cannot go forward until all Tribes have 
participated in meaningful consultation to develop a comprehensive plan 
for trust reform, including clear policies, procedures, and controls.
    It is widely known that the BIA has grossly mismanaged tribal trust 
assets since the inception of the Bureau. It is clear that the 
Secretary of the Interior is faced with a mandate from Congress, dating 
back to the 1994 Indian Trust Reform Act, to clean up the accounting 
and management systems of Indian trust accounts. It is also clear from 
the Cobell v. Norton litigation that the Secretary has failed to meet 
the mandates that Congress established for her. In fact, the report 
contracted for by DOI from EDS which serves as the basis for the trust 
reform proposal freely admits these failures. Without a doubt, a 
comprehensive, sweeping response is needed; however, the proposed 
reorganization of the BIA is not the answer.
    The proposed reorganization of the BIA will profoundly effect the 
BIA's management of 54 million acres of Indian lands, the 
administration of trust funds derived from those lands, and nearly 
every aspect of economic development and land management within Indian 
Country. The Nez Perce Tribe is greatly concerned this proposal is 
simply repeating the failures of many past trust reform efforts by 
providing a short-term cosmetic fix to a much more serious problem. 
Trust reform must not come as a response to court imposed deadlines or 
Congressional inquiries. Trust reform must be based on a long-term, 
well-reasoned plan, complete with comprehensive policies, procedures, 
and guidelines which will truly reform the trust management system. 
Without this type of proposal, the scheduled consultation meetings are 
no more than initial scoping meeting which does not and cannot qualify 
as meaningful consultation. A good faith effort must be made to include 
Tribes and IIM account holders in the reform effort.
    Creating a new agency does not create trust reform. The proposal to 
create the BITAM would strip a majority of the BIA's trust 
responsibilities, leaving the Bureau to function as a social service 
agency. The responsibility for billions of dollars of trust assets 
would be handed over to a new office, with no congressional 
authorization, no appropriations, and at present, no support from 
Tribes. The same understaffed and undertrained employees will not be 
able do for BITAM what they could not do for the BIA. Moreover, a 
proposal to artificially divide ``trust'' from ``services'' is simply 
unworkable. While it is often criticized, the BIA is only voice for 
Indian issues in the Executive Branch, and is critical to the 
functioning of our government-to-government relationship. Stripping the 
BIA of trust responsibilities would de-emphasize the importance of 
these relationships.
    The proposal is also too broad and unmanageable. The reorganization 
plan goes far beyond the situation in Cobell where solely Individual 
Indian Money accounts are involved. The proposed formation of BITAM 
goes decidedly beyond the management of funds at issue in the trust 
fund litigation to reach all trust assets, including those belonging 
solely to tribal governments. If the BIA cannot properly manage the 
accounts that were under their control, what makes the Secretary 
believe that the BITAM can take on an even greater responsibility--one 
that should rest with the Tribes that control those resources. Trust 
reform must focus solely on the four trust breaches identified by the 
Cobell court.
    Over the past twelve years, the Department of the Interior has paid 
more than a billion dollars on judgments and settlements for its 
repeated failures to protect and properly manage trust assets. The 
costs of continued failure will far outweigh the costs of finally 
fixing the system. Trust reform must cease to be reactive. Therefore, 
the Nez Perce Tribe also opposes any reprogramming of monies within the 
fiscal year 2002 BIA budget to fund the proposed BITAM until Congress 
and Tribes have had an opportunity to review the final trust reform 
proposal. Funneling monies will not provide accountability and will 
only threaten those programs which remain under BIA oversight.
    The future of trust management must include increased protection 
and tribal control over Indian lands and resources, and a federal 
system that provides technical assistance and trust oversight--not 
additional federal bureaucracy. This system, driven by self-
determination rather than a paternalistic regime, must meet the unique 
needs of individual Tribes in each part of the country. The role of the 
federal government as trustee is to protect the long tern viability of 
tribal lands and resources and to ensure that any action is consistent 
with tribal control and tribal needs. The current BIA reorganization 
plan encompasses none of these goals.
    The Nez Perce Tribe is not opposed to trust reform. In fact, the 
Tribe strongly supports the need to make major changes to the trust 
asset management system. However, Secretary Norton's plan is not the 
answer. Therefore, the Nez Perce Tribe urges the Department of the 
Interior to withdraw the proposed reorganization plan until full 
meaningful consultation has occurred with Tribes and urges Secretary 
Norton to redefine the goals of trust reform to better meet the needs 
of Tribes and Indian people without sacrificing the federal trust 
relationship.
                                 ______
                                 
    [A position statement submitted for the record by the 
Tribal Chairmen follows:]
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[GRAPHIC] [TIFF OMITTED] T7526.043

[GRAPHIC] [TIFF OMITTED] T7526.044

[GRAPHIC] [TIFF OMITTED] T7526.045

  TRUST REFORM COMMENTS AND RECOMMENDATIONS BY THE CHIPPEWA CREE TRIBE
                              presented by
                     alvin windy boy, sr., chairman
  on behalf of the chippewa cree tribe of the rocky boy's reservation
          tribal consultation on indian trust asset management
                            february 1, 2002
                            washington, d.c.
I. INTRODUCTION
    Trust reform is nothing new for Indian Country. This is 
particularly true for Self-Governance tribes since our efforts began 
with our frustration of the BIA's mismanagement with carrying out 
Bureau programs on our respective reservations. The Chippewa Cree Tribe 
supports trust reform, however tribes need to play a substantial part 
in defining, developing and delivering any meaningful attempt at trust 
reform within the Bureau of Indian Affairs (BIA).
    We believe the first thing we need to do is not buy into this 
``divide and conquer'' mentality of the current administration. We need 
to strategize with our friends in Congress to slow this ``court-
driven'' trust reform effort by the current administration and 
strategize with our legal people so that the Cobell litigation cannot 
be used by the Department as this driving force for their trust reform 
efforts. In order to do this we need to operate on parallel tracks and 
continue with the trust reform efforts which are currently incomplete:
    1. CONGRESSIONAL INTERVENTION
        1. House Resource Hearing (2/6/02)
        2. Senate Indian Affairs Committee Hearing (2/26/02)
        3. Legislative initiative:
            a. trust reform legislation
            b. Lappropriations rider to prohibit DOI fiscal year 2002 
            or 2003 funds to be used for the BITAM proposal
    2. LEGAL INTERVENTION
        1. LTribal Leaders Task Force file a statement or notice to 
        Judge Lamberth regarding the Task Force's support of the 
        litigation and concerns with the DOI's proposed reorganization 
        plan and its potential impacts on tribal trust reform
        2. Amicus brief in Cobell litigation; and
        3. Tribal trust mismanagement lawsuits
    3. LDEVELOPMENT OF A TRIBALLY-DRIVEN TRUST RESOURCE AND ASSET 
MANAGEMENT REFORM PLAN
II. KEY ISSUES IN TRUST REFORM
    The Chippewa Cree Tribe supports trust reform, however tribes need 
to play a substantial part in defining, developing and delivering any 
meaningful attempt at trust reform within the Federal Government, in 
particular within the Department of the Interior (DOI), Bureau of 
Indian Affairs (BIA). As such, we need to ask ourselves two (2) very 
important basic questions:
    a. WHAT IS TRUST REFORM?
         i. LTrust reform concerns both TRIBAL TRUST RESOURCES AND 
        TRIBAL TRUST ASSETS and the reform is the management of the 
        trust resources and trust assets by the FEDERAL GOVERNMENT 
        (DOI) and the TRIBES.
        ii. LAnd within TRIBAL TRUST RESOURCES AND TRUST ASSETS are 
        INDIVIDUAL TRUST RESOURCES AND TRUST ASSETS and the reform is 
        the management of the individual trust resources and trust 
        assets by the DOI and the Tribes.
        iii. LTrust reform will concern many aspects in the management 
        of both tribal trust and individual trust resources and assets. 
        The key will be to reconcile the roles of DOI and the TRIBES in 
        the management of the trust resources and assets while taking 
        into consideration the INDIVIDUAL'S interest in context of the 
        larger tribal interests.
        iv. LA key issue will be reconciling the roles of the FEDERAL 
        GOVERNMENT (DOI), The TRIBAL GOVERNMENT (TRIBES) and the 
        INDIVIDUALS in the management of the trust resources and 
        assets. Our tribe is not an allotted reservation so we do not 
        have many of the issues other allotted reservations have, 
        however we do have IIM accounts for our people as well as the 
        Tribe.
         v. LWe believe that key to successful trust reform will be 
        between the FEDERAL GOVERNMENT and the TRIBES. This is because 
        the TRIBES govern over the INDIVIDUAL trust resources and to a 
        limited extent over the management of the trust assets as well.
        vi. LIn summary, tribal trust resources and assets are the 
        larger of the pie, if you will, containing approximately 89% of 
        the pie while individual trust resources and assets contain 11% 
        of the pie. We have a classic case of the tail wagging the dog, 
        so to speak, when INDIVIDUAL TRUST RESOURCE AND ASSET 
        MANAGEMENT is leading the charge as in the COBELL litigation. 
        This is fine and trust reform still needs to occur, however we 
        need to understand that trust reform must first occur at the 
        TRIBAL TRUST RESOURCE AND ASSET level.
             1. LTribal trust resource and asset management (89%)
             2. LIndividual trust resource and asset management (11%)
    b. HOW DO WE ACHIEVE TRUST REFORM?
        1. LOnce everybody is on the same page on what is trust reform, 
        then need to agree on a process to achieve trust reform. We 
        have seen many tribes and organizations propose organizational 
        structures and reform measures. This is great and we need to 
        incorporate all recommendations and other relevant information 
        into our process for trust reform.
             i. LThe process as we understand is to work with the 
            Tribal Leader's Task Force and develop a trust reform plan 
            that is conducive to Indian Country's needs. And in order 
            to do this we need set the agenda and gather the necessary 
            information and technical resources.
            ii. LRight now, the process is being driven by the 
            litigation. This is okay because sometimes litigation is 
            necessary to stimulate the parties to do something. In 
            fact, the litigation has brought all the interested parties 
            to the table to achieve trust reform because prior to this 
            DOI hired EDS to tell them how to achieve trust reform. Now 
            we have the necessary parties at the table and now we can 
            go forward and take EDS recommendations into consideration 
            with all the other relevant information and recommendations 
            as well.
            iii. LNext, we need to gather and distribute all the 
            necessary information and recommendations from everyone 
            including:

a. LTreaties, statutes, agreements, and anything else which delineates a 
trust responsibility or trust duty upon the federal government to the 
tribes;

b. LTribal recommendations; and

c. LAll other DOI information such as HLIP (old and new), EDS reports and 
any other relevant reform plans and initiatives.

III. COBELL V. NORTON--IIM TRUST MANAGEMENT REFORM
    We agree with the Dear Tribal Leaders Letter, dated January 5, 2002 
from the Native American Rights Fund (NARF) which expresses concerns 
with the DOI proposed reorganization plan. Basically, the NARF letter 
states that
        ``DOI's proposal to reorganize is not a good faith effort to 
        improve trust management, but rather a last minute and poorly 
        thought out attempt to convince the Court (Judge Royce C. 
        Lamberth) that appointment of a receiver to reform the IIM 
        trust in unnecessary.''
    Unfortunately, the DOI's legal strategy is to conquer and divide 
tribes over the IIM litigation. We agree that Tribes definitely have a 
concern with the impact of the appointment of a receiver for the IIM 
accounts and the trust reform efforts by the DOI in relation to IIM 
trust resources and trust assets. However, we must keep in mind that 
the Cobell litigation concerns issues related to IIM funds.
IV. DOI TRUST REFORM REPORTS
    The Tribal Leaders Task Force should take the EDS reports under 
advisement and consider how reliable they are and the separately 
analyze issues reviewed by EDS. This will require EDS to present their 
findings and recommendations to the Task Force and allow Task Force 
members to ask questions in regards to the reports and outcomes by EDS. 
In addition, the Task Force should consider other trust reform efforts 
in the past such as the report generated by the 1990 BIA Reorganization 
Task Force.
        a. TAAMS & BIA DATA CLEANUP ASSESSMENT
        b. TRUST REFORM ASSESSMENT
V. RECOMMENDATIONS TO INCLUDE IN TRIBAL TRUST REFORM EFFORTS
    The Chippewa Cree Tribe recommends the following outline as a start 
to true, meaningful trust reform of the BIA. We firmly believe that no 
reorganization of the BIA can take place until we have reviewed all 
previous trust reform efforts which have occurred in at least the last 
ten (10) years and thoroughly evaluated the impacts of these efforts on 
our trust resources and trust assets.
    Here are our recommendations to include in the process of achieving 
an alternative trust reform plan to present to the Secretary rather 
than the overhaul of the BIA which is currently be proposed by the 
Department.
        A. LTRIBAL SOVEREIGNTY, SELF-GOVERNMENT AND TRUST 
        RESPONSIBILITY
            1. LSECRETARY OF INDIAN AFFAIRS TO HAVE CABINET STATUS
            2. LDELEGATION OF AUTHORITIES TO TRIBAL/AGENCY LEVEL
            3. LNO REDUCTION OF CURRENT FUNDING LEVELS AND EXEMPTION OF 
            ANY BUDGET REDUCTIONS BY OMB
            4. LANY SAVINGS DUE TO TRUST REFORM WHICH RESULT IN 
            REDUCTIONS TO EITHER CENTRAL OR REGIONAL OFFICES MUST BE 
            TRANSFERRED TO TRIBAL/AGENCY LEVEL
        B. LORGANIZATIONAL REFORM
            1. LRE-EVALUATE THE OFFICE OF SPECIAL TRUSTEE SINCE THE 
            OFFICE HAS BEEN INEFFECTIVE SINCE ITS INCEPTION
            2. LRE-EVALUATE THE OFFICE OF TRUST FUNDS MANAGEMENT
            3. LBRING AS MUCH RESOURCES AND RESPONSIBILITIES TO THE 
            TRIBE/REGION/AGENCY LEVEL
            4. LCONSIDER MOU'S BETWEEN TRIBES AND BIA IN THE MANAGEMENT 
            OF TRIBAL TRUST RESOURCES AND TRUST ASSETS
        C. LREGULATORY REFORM
            1. LDEVELOP TRIBAL TRUST RESOURCE AND TRUST ASSET 
            MANAGEMENT STANDARDS
            2. LFORMULATE TRIBAL TASK FORCE TO IDENTIFY TRUST FUNCTIONS 
            (INHERENT AND NON-INHERENT) AND FUNDING ASSOCIATED WITH 
            SPECIFIC TRUST FUNCTIONS
            3. LIDENTIFY COMPACTABLE TRUST FUNCTIONS ASSOCIATED WITH 
            TRUST RESOURCE AND TRUST ASSET MANAGEMENT
            4. LAPPROVE TITLE IV AMENDMENTS
        D. LBUDGET REFORM
            1. LCOMPLETE TRIBAL SHARES PROCESS INCLUDING CENTRAL OFFICE 
            SHARES
            2. LTRIBAL MEANINGFUL PARTICIPATION IN BUDGET FORMULATION
            3. LBUDGET REQUESTS BASED ON UNMET NEEDS
            4. LEXEMPTION FROM MANDATORY BUDGET REDUCTIONS
                                 ______
                                 

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