Legislation to create a 'passive' Indian trust
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Legislation under consideration in the Senate will essentially eliminate the federal government's trust responsibility to countless individual Indians who share ownership in 11 million acres of land.

The bill seeks to reduce bureaucratic bungles associated with the Individual Indian Money (IIM) trust, which has been mismanaged for more than a century. But instead of correcting long-standing fiduciary breaches to 500,000 IIM account holders, it changes the Department of Interior's obligations by creating a "passive" trust.

The passive trust will apply only to landowners who are not members of federally recognized tribes, according to the legislative package. The Department of Interior will continue to manage land on behalf of enrolled tribal citizens if the bill is passed.

Nonetheless, the proposal takes the Interior off the hook in areas at the center of a billion-dollar class action filed on behalf of IIM beneficiaries. For example, the department will not be required to approve leases for oil, gas, timber or other activities on passive trust land. Nor will it have to account for any funds generated from those activities.

Passive trust properties will remain free from state taxation, stay under tribal jurisdiction and still be considered Indian Country. At a House hearing in March, Interior official Ross Swimmer said the Bush administration would support a limited IIM trust if those conditions were met.

"I think there obviously is some value," Swimmer said on March 14, "if there were a way to having less than a full trust duty to those properties."

Despite the scaleback, tribal leaders are being encouraged to back the proposal. The National Congress of American Indians, the largest inter-tribal organization, recommended passage by year's end.

But with both chambers of Congress adjourned until after the elections, those prospects have been hindered. The Senate and House plan to take up federal budget bills and other high-profile issues when they reconvene in mid-November.

Still, Senate Majority Leader Tom Daschle (D-S.D.) is interested in getting some sort of trust reform legislation through, an aide said. "Tribal leaders have called on Congress to act," said Jay Carson.

"To continue to force the Native American community to wait is wrong," he said.

The passive trust idea grew out of a debate before the Senate Indian Affairs Committee. At a hearing in May, tribal and Indian leaders sought ways to prevent land from falling out of Indian hands by allowing trust land to be inherited by anyone with Indian ancestry.

The Bush administration opposed the idea and wanted the trust limited to enrolled tribal members, a stance rooted in the increased fractionation of the Indian estate. As land is passed onto future generations, dozens of Indian beneficiaries end up sharing interests in small parcels of property for which the government is responsible.

For example, there at least 1.4 million fractional interests of 2 percent or less involving 58,000 tracts of individual Indian-owned land. Assistant Secretary Neal McCaleb last month told tribal leaders that resolving this issue was a critical reform task.

The passive trust is being offered through amendments to the Indian Land Consolidation Act (ILCA), a law designed to address fractionation. Tribal leaders say the law has not addressed their concerns.

Tribal leaders are not supporting an "unclaimed" trust property proposal the Bush administration has drafted. The department had hoped to tack it onto the ILCA but the controversial idea has been rejected repeatedly.

Relevant Documents:
S.1340 - To amend the Indian Land Consolidation Act | NCAI Analysis of S.1340 | How S.1340 will change ILCA | NCAI Support of S.1340

Relevant Links:
Indian Trust: Cobell v. Norton -
Cobell v. Norton, Department of Justice -
Indian Trust, Department of Interior -
Trust Reform, NCAI -

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