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Sen. John McCain Statement on S.1439

The following is the text of a Senate floor statement by Sen. John McCain on S.1439, the Indian Trust Reform Act of 2005. July 20, 2005.

Mr. McCAIN. Mr. President, I am pleased to introduce the Indian Trust Reform Act of 2005.

The following is an overview of the bill, title by title, which is followed by a discussion of the reasons for the measure.

Title I of the bill would provide for a lump sum settlement of the claims for an historical accounting that have been asserted in the case of Cobell v. Norton. The section would establish a Settlement Fund which would be administered by the Secretary of the Treasury and a Special Master. The total amount of the fund is left blank in this introduced version of the bill. The Committee on Indian Affairs will hold a hearing on this soon and have further discussions with the parties, hopefully to reach a consensus number for the settlement. The settlement fund would be distributed to individual Indians using two formulas: part of the fund would be distributed among all claimants equally, and part would be distributed under a formula that allocates funds in accordance with a through-put analysis--account holders with high volume accounts would receive more than those with low volume accounts. A portion of the fund would be held in reserve for payment of attorneys fees at an hourly rate, for administration of the fund and for claimants who successfully challenge their distribution in court. If any of the reserved funds remain unused, they are to be distributed to the claimants under the formula.

Title II of the bill establishes and sets forth the duties, responsibilities, and authority of a 12-member Indian Trust Asset Management Review Commission. The Commission would have two principal areas of responsibility: 1. Reviewing all current trust resource management laws, (including regulations), and the Secretary of Interior's trust resource management practices, and 2. Following that review, preparing a report to the Senate Committee on Indian Affairs, the House Committee on Resources and the Secretary of Interior containing the Commission's recommendations for improving the management of those assets.

Title III of the bill establishes an eight-year Indian Trust Resource Management Demonstration Project. The demonstration project would initially be open to all Indian tribes participating in section 131 of the Fiscal Year 2005 Interior Appropriations Act and an additional 30 Indian tribes that submit applications to the Secretary. Participating tribes would negotiate a ``trust resource management plan'' with the Secretary, which would remain in effect for the full duration of the demonstration project but would be subject to modification or termination annually. A participating tribe would be allowed to negotiate with the Department of Interior as to how the trust asset management budget for the reservation would be prioritized. Self-governance tribes participating in the demonstration project would also be permitted to develop their own ``customized'' trust asset management systems and practices. Trust assets subject to the plan would have to be managed in accordance with 1. The Federal trust responsibility and 2. Certain basic standards set forth in the section. The trust asset management plan itself would not create, diminish or increase the liability of either the United States or the Indian tribe. The Indian tribe would have the right to terminate the plan by giving the Secretary notice, but termination would not be effective until the beginning of the next fiscal year.

Title IV of the bill would be an amendment to Section 213 of the Indian Land Consolidation Act (25 USC 2212). As currently written, Section 213 of ILCA authorizes the Secretary to purchase fractional interests in land in accordance with certain requirements. One problem with this program is that the fractional interests are so small that an offer of fair market value is such a small amount of money that there is little incentive to sell. Accordingly, the amendment would be a new subsection to ILCA Section 213 that would authorize the Secretary to offer more than fair market value for fractional interests in tracts of land that have 20 or more trust or restricted fractional interests--the offer would be fair market value PLUS an additional amount of at least $100 but not more than $350.

Also, this title would add another new subsection to ILCA section 213 that would authorize the Secretary to offer, along with an offer to purchase any interest or interests under section 213, an additional amount of money to settle any and all mismanagement claims against the United States that the interest owner may have in connection with the tract of land of which the fractional interest is a part. The interest owner would have the option of selling his or her interest to the Secretary with or without a settlement of mismanagement claims, i.e., the settlement of mismanagement claims could not be made a mandatory condition of the sale of the interest.

Also included as part of this title is a provision dealing with tracts of extremely fractionated land--specifically, tracts of land that consist of 200 or more fractional trust interests. If the Secretary determines that a tract is owned by 200 or more individuals, she is authorized to make the offer (not less than four times fair market value) via certified mail to each and every trust interest owner in the tract. The offer would include a notice that says they have 90 days to reject the offer or it will be deemed to have been accepted. It would include a pre-addressed (back to the Secretary) postage-paid ``notice of rejection'' form that the offeree may use to reject the offer. If they fail to mail the form back in time, they will be given another notice stating that they may withdraw the offer by mailing a postage pre-paid ``notice of withdrawal'' form back to the Secretary within 30 days. If They fail to do that in time, the offer is deemed to be accepted.

This title of the bill would reorganize the Bureau of Indian Affairs and Office of the Special Trustee for American Indians under a new office within the Department of Interior, an Under Secretary for Indian Affairs. The title provides that the Under Secretary has responsibility for the administration of all Indian trust and non-trust matters, including, after a transition period ending on December 31, 2008, matters currently within the scope of authority of the Special Trustee for American Indians under the American Indian Trust Fund Management Reform Act of 1994 (25 USC 4041 et seq.). The Under Secretary would oversee a new Office of Trust Reform Implementation and Oversight, but the Special Trustee would continue performing his duties under the 1994 Act until December 31, 2008, at which time the OST would be abolished.

Title VI of the bill requires the Government Accountability Office to contract for an annual audit of all funds held in trust by the United States for the benefit of an Indian Tribe or an individual Indian. The audit would be conducted in accordance with generally accepted auditing principles and the Single Audit Act. Copies of each audit report must be submitted to the Secretary of Interior, the Senate Committee on Indian Affairs, and the House Committee on Resources.

Reasons for the bill: the performance of the United States over the past 125 years in its capacity as trustee and manager of Indian trust and restricted lands is not something to be proud of. The policy of allotting Indian tribal lands, which was made the general Federal Indian policy in the 1880s, was one of several federal ``experiments'' in Indian matters that have had regrettable results both for Native Americans and for the Government. This policy of the 19th Century has come back to haunt us now in the form of fractionated ownership of allotted lands--where some parcels of land are owned by hundreds and in some cases over a thousand different Indian owners. This fractionation of ownership has led to a proliferation of individual Indian money accounts ``IIM accounts,'' now numbering in the hundreds of thousands, all of which the Federal Government has a trust obligation to track and manage.

The staggering number of IIM accounts--along with decades of mismanagement on the part of Government officials--contributed to the conditions that led to the filing of the Federal class action here in the District of Columbia known as Cobell v. Norton. A lot has happened in that litigation since it was filed 9 years ago, much of it reported in newspapers across the country, but I think it is fair to say that one thing the case has shown is that the United States has not lived up to its duty as a fiduciary to the thousands of Indian beneficiaries of IIM accounts.

The principal objectives of the Cobell case are to obtain a complete historical accounting of IIM accounts and to reform the trust itself. The Government has been ordered to perform a complete, detailed accounting of transactions relating to IIM accounts and to submit and implement a plan to reform the trust. In hearings before the Committee on Indian Affairs, officials from the Department of Interior have stated that the cost of doing the accounting may run in to multiple billions of dollars, and representatives of the plaintiffs in the case as well as the GAO, have stated that much of this accounting cannot be done due to missing or destroyed records, information, or data relating to the IIM accounts.

The bill I introduce today would provide a resolution of the class action relating to an historical accounting and would also bring a number of important changes to the Indian trust asset management system. In lieu of an accounting, the bill would create a settlement fund and direct the Secretary of the Treasury to develop a formula for distributing the fund to the beneficial owners of IIM accounts in full settlement for losses, errors, and unpaid interest in their IIM accounts. Several other aspects of the bill are included for the purpose of reforming the Indian trust management system. For example, the bill would create a special commission charged with the responsibility of examining current Indian trust management laws, regulations and practices and reporting back to the authorizing committees of jurisdiction in the Senate and House with recommended revisions of these laws, regulations and practices. It would also restructure the Bureau of Indian Affairs under an Under Secretary For Indian Affairs, phasing out the Office of the Special Trustee whose responsibilities would be transferred to the Under Secretary after December 31, 2008.

I would like to thank the National Congress of American Indians, the Inter-Tribal Monitoring Association, the Affiliated Tribes of Northwest Indians, representatives of the plaintiffs as well as many other stakeholders for their considerable and helpful input in developing this legislation. The bill does not include everything that they requested, and they may have issues with certain aspects of the bill as it is now written. That said, the bill is offered as a starting point for discussion. I do not think that there is any provision in the bill that is immutable, closed to debate or negotiation. Hopefully the stakeholders will remain engaged and continue to provide me with information and suggestions to make it a better bill, a bill that brings substantial improvements to the administration and management of Indian trust assets.

I look forward to working with my colleagues on both sides of the aisle to enact this timely legislation. I ask unanimous consent that the full text of the bill be printed in the RECORD.

There being no objection, the bill was ordered to be printed in the RECORD, as follows: