The Interior Department's failure to correct serious problems in the management of the Indian trust funds : hearing before the Environment, Energy, and Natural Resources Subcommittee on of the Committee on Government Operations, House of Representatives,

250 Pages·1997·8 MB·English

by  United States. Congress. House. Committee on Government Operations. Environment, Energy, and Natural Resources Subcommittee

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THE INTERIOR DEPARTMENT'S FAILURE TO COR-
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HEARING
BEFORE THE
ENVIRONMENT, ENERGY, AND
NATURAL RESOURCES SUBCOMMITTEE
OF THE
COMMITTEE ON
GOVERNMENT OPERATIONS
HQUSE-OEJBEPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
SECOND SESSION
SEPTEMBER 26, 1994
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v
THE INTERIOR DEPARTMENT'S FAILURE TO COR-
\
RECT SERIOUS PROBLEMS IN THE MANAGE-
MENT OF THE INDIAN TRUST FUNDS
Y4.G74/7:F
14/2
The Interior Department's Failure t...
HEARING
BEFORE THE
ENVIRONMENT, ENERGY, AND
NATURAL RESOURCES SUBCOMMITTEE
OF THE
COMMITTEE ON
GOVERNMENT OPERATIONS
HQIJSB-OEJSEPRE^ENTATIVES
ONE HUNDRED THIRD CONGRESS
SECOND SESSION
SEPTEMBER 26, 1994
Printed for the use of the Committee on Governme^^Sja^rations
JANl1 m
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U.S. GOVERNMENT PRINTING OFFICE ^^*^**i^Opp>
8&-S93 WASHINGTON 1997
:
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-055529-9
COMMITTEE ON GOVERNMENT OPERATIONS
JOHN CONYERS, Jr., Michigan, Chairman
CARDISS COLLINS, Illinois WILLIAM F. CLINGER, Jr., Pennsylvania
HENRY A. WAXMAN, California AL McCANDLESS, California
MIKE SYNAR, Oklahoma J. DENNIS HASTERT, Illinois
STEPHEN L. NEAL, North Carolina JON L. KYL, Arizona
TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut
MAJOR R. OWENS, New York STEVEN SCHIFF, New Mexico
EDOLPHUS TOWNS, New York CHRISTOPHER COX, California
JOHN M. SPRATT, Jr., South Carolina CRAIG THOMAS, Wyoming
GARY A. CONDIT, California ILEANA ROS-LEHTINEN, Florida
COLLIN C. PETERSON, Minnesota DICK ZIMMER, New Jersey
KAREN L. THURMAN, Florida WILLIAM H. ZELIFF, Jr., New Hampshire
BOBBY L. RUSH, Illinois JOHN M. McHUGH, New York
CAROLYN B. MALONEY, New York STEPHEN HORN, California
THOMAS M. BARRETT, Wisconsin DEBORAH PRYCE, Ohio
DONALD M. PAYNE, New Jersey JOHN L. MICA, Florida
FLOYD H. FLAKE, New York ROB PORTMAN, Ohio
JAMES A. HAYES, Louisiana FRANK D. LUCAS, Oklahoma
CRAIG A. WASHINGTON, Texas
BARBARA-ROSE COLLINS, Michigan BERNARD SANDERS, Vermont
CORRINE BROWN, Florida (Independent)
MARJORIE MARGOLIES-MEZVINSKY,
Pennsylvania
LYNN C. WOOLSEY, California
GENE GREEN, Texas
BART STUPAK, Michigan
Julian Epstein, StaffDirector
Matthew R. Fletcher, Minority StaffDirector
Environment, Energy, and Natural Resources Subcommittee
MIKE SYNAR, Oklahoma, Chairman
KAREN L. THURMAN, Florida J. DENNIS HASTERT, Illinois
CAROLYN B. MALONEY, New York JOHN M. McHUGH, New York
JAMES A. HAYES, Louisiana DEBORAH PRYCE, Ohio
CRAIG A. WASHINGTON, Texas JOHN L. MICA, Florida
EDOLPHUS TOWNS, New York
BERNARD SANDERS, Vermont
(Independent)
Ex Officio
JOHN CONYERS, Jr., Michigan WILLIAM F. CLINGER, Jr., Pennsylvania
Sandra Z. Harris, StaffDirector
Steve Richardson, Professional StaffMember
Elisabeth R. Campbell, Clerk
Charli Coon, Minority Professional StaffMember
(ID
CONTENTS
Page
Hearingheld on September 26, 1994 1
Statementof:
Adamson, Rebecca, president, First Nations Development Institute, Fred-
ericksburg, VA, accompanied by Jerry Reynolds, coordinator, Informa-
tion Services 57
Bourland, Gregg L., chairman, Cheyenne River SiouxTribe, forthe Inter-
tribal Monitoring Association on Indian Trust Funds [ITMA], Brown-
ing, MT, accompanied byDaniel Press, Counsel for ITMA 32
Deer, Ada, Assistant Secretary for Indian Affairs, U.S. Department of
the Interior, accompanied byJim Parris, Director, Office ofTrustFund
Management, Bureau ofIndian Affairs; Donna Erwin, Deputy Director,
Office ofTrust Funds Management; Steven Richardson, Deputy Direc-
tor for External Affairs, Bureau ofLand Management; and Jim Shaw,
Associate Director of the Royalty Management Program, Denver, CO;
Bonnie Cohen, Assistant Secretary forPolicy, Managementand Budget,
U.S. Department of the Interior; and John Duffy, counselor to the
Secretary, US. Departmentofthe Interior 85
Stalcup, George H., Associate Director, Financial Integrity Issues, Ac-
counting and Information Management Division, U.S. General Account-
ing Office, accompanied by Gayle Condon, Assistant Director, AIMD,
andWilliam F. Laurie, auditmanager, DenverRegional Office 8
Letters, statements, etc., submitted forthe record by:
Adamson, Rebecca, president, First Nations Development Institute, Fred-
ericksburg,VA, prepared statementof 60
Bourland, Gregg L., chairman, Cheyenne RiverSiouxTribe, for the Inter-
tribal Monitoring Association on Indian Trust Funds [ITMA], Brown-
ing, MT, prepared statementof 35
Deer, Ada, Assistant Secretary for Indian Affairs, U.S. Department of
the Interior, prepared statementof 88
Richardson, Hon. Bill, a Representative in Congress from the State of
New Mexico, prepared statementof 3
Stalcup, George H., Associate Director, Financial Integrity Issues, Ac-
counting and Information Management Division, U.S. General Account-
ingOffice, prepared statementof 11
Thomas, Hon. Craig, a Representative in Congress from the State of
Wyoming 5
(III)

THE INTERIOR DEPARTMENT'S FAILURE TO
CORRECT SERIOUS PROBLEMS IN THE
MANAGEMENT OF THE INDIAN TRUST
FUNDS
MONDAY, SEPTEMBER 26, 1994
House of Representatives,
Subcommittee on Environment, Energy,
and Natural Resources,
Committee on Government Operations,
Washington, DC.
The subcommittee met, pursuant to notice, at 11 a.m., in room
2247, Rayburn House Office Building, Hon. Mike Synar (chairman
ofthe subcommittee) presiding.
Present: Representatives Synar and dinger.
Staff present: Sandra Z. Harris, staff director; Elisabeth Camp-
bell, clerk; and Charli Coon, minority professional staffmember.
Mr. Synar. The subcommittee will come to order.
The subcommittee meets today for the fifth time since 1989 to re-
view the Interior Department's management of $2.1 billion held in
trust accounts for native American tribes and individuals. More
specifically, we are going to explore in detail what steps the De-
partment has, or has not, taken to correct the serious management
and accounting problems that have plagued this program for dec-
ades.
We are going to discuss the Department's unwillingness to in-
clude tribal and other account-holder representatives in their plan-
ning and deliberations on trust fund activities, despite repeated
congressional directives to do so. We are going to discuss the Sec-
retary's failure to meet his basic fiduciary obligations to the tribal
and individual Indian account holders.
Over the years, the GAO, the inspector general, and outside ac-
counting firms have issued scores of critical audit reports on the
deficiencies in this program. We will be releasing yet another GAO
audit report today. These problems, and the Department's refusal
to correct them, were the subject of a scathing report unanimously
adopted by the full House Government Operations Committee in
1992. The Department's inability to properly account for the trust
fund accounts has landed this program on the Office of Manage-
ment and Budget's high-risk list for almost a decade.
Indeed, the more than 300,000 trust fund accounts have never
been reconciled or audited, leading one Treasury Department offi-
cial to remark to GAO that with respect to this program, "The Bu-
(1)
reau of Indian Affairs is like a company that's gone bankrupt, and
then had a fire."
GAO, the inspector general, OMB, and many of us in Congress
have tried for years to get the leadership ofthe Department to take
the unglamorous but crucial steps necessary to correct the many
trust fund problems that cut across three separate Bureaus within
Interior.
Thankfully, progress has been made by the Office of Trust Fund
Management. However, that office is responsible for only one part
of the trust fund cycle, and the Director of the OTFM has no au-
thority to correct numerous other problems, such as those at the
Bureau of Indian Affairs field office level or within other Bureaus
ofthe Department.
Time and again we have emphasized that only a comprehensive
strategic action plan addressing all trust fund functions within the
Department and sustained high-level Department leadership will
fix these problems. Time and again, we have been ignored or have
been presented instead with limited or ill-conceived initiatives. I
am sorry to say that even the new administration has proposed
what amounts to putting a band-aid on a patient that is bleeding
to death.
I have the honor ofrepresenting a district which is rich in Indian
history. It has been my privilege over the years to work with tribes
and individual Indians on a variety of programs and problems, in-
cluding this one, that affect their daily lives. Consequently, I know
firsthand that there are real human beings at the other end of this
bureaucratic nightmare, many of whom depend upon their trust
funds to meet their daily needs, a fact that the Department all too
often forgets or simply ignores.
But one doesn't have to be from Indian country to find totally un-
acceptable the Department's neglect of these long standing trust
fund problems. Purely from a government management and ac-
countability standpoint, this situation is intolerable. Moreover, the
Department's continued failure to take necessary corrective action
subjects the Secretary to potentially significant liability for breach
ofhis fiduciary responsibilities.
After years of battling the Department's inertia, Congressman
Richardson and I, along with Senator Inouye, have proposed legis-
lative solutions to these problems. Our bills would statutorily es-
tablish a special trustee to oversee all trust fund functions through-
out the Department, facilitate greater tribal management of those
funds, and require the Secretary to invest and pay interest on indi-
vidual Indian money trust funds.
These proposals enjoy the strong bipartisan support of many
other Members, and I intend to do everything in my power to help
ensure enactment of this legislation before Congress adjourns this
year.
At this point, I ask unanimous consent that the record be open
for other statements by Mr. Richardson, Mr. Thomas, as well as
any ofthe members ofthe subcommittee.
[The prepared statements of Hon. Bill Richardson and Hon.
Craig Thomas follow:]
STATEMENTOF REPRESENTATIVE BILL RICHARDSON
COMMITTEE ON GOVERNMENTOPERATIONS
SUBCOMMITTEE ON ENVIRONMENT, ENERGY,AND NATURAL RESOURCES
OVERSIGHTHEARING ON
AMERICAN INDIAN TRUSTFUND MISMANAGEMENT
September26, 1994
I want to thank my good friend, Chairman Mike Synar for allowing me to submit
testimony on the continuing problems with the Department of Interior's management of
American Indian trust funds.
I serve as Chairman of the Natural Resources Subcommittee on Native American
Affairsandhave muchtothankMike Synarfor. Inyesterday'sWashington Post, columnist
David Broder, referring to Mike's too short congressional career said, "... Synar quickly
earned a reputation as a workhorse who was ready to take on the toughest issues a
congressmanfromaconservative,ruraldistrictcouldtackle." Indiantrustfundmanagement
is a perfect example. Mike has been a pit bull on this issue. He has spent years
investigating and exploring all the aspects ofthe Department ofInterior's management of
Indian allotted lands and the revenues derived from them. The report his Subcommittee
issued in 1992, Misplaced Trust: The Bureau of Indian Affairs' Mismanagement of the
IndianTrustFunddetailsasadlaundrylistofproblemsincludingtheincrediblefactthatthe
SecretaryofInterior,whoisthefiduciaryresponsibleforthesetrustfundscannotevengive
anaccurate accountingtotheaccountholders. The 1992reportdid notstopthere, itcame
up with several workable solutions to the problems. Several General Accounting Office
(GAO) reports have also recommended solutions. Unfortunately, we sit here 2yearslater
andlittlehaschanged. MySubcommittee hasdependedontheworkofthisSubcommittee,
and H.R. 1846 authored by Mike Synar, during consideration ofpending legislation.
Today,theGeneralAccountingOfficereleasesyetanotherreportontheIndiantrust
fundproblems. Thisreport,likesomanyotherreportsabouttrustfundmanagementclaims
that the problems can be fixed if only the Department of Interior would make the
management commitment todo so. You and Iknow itwill not be easyto clean upall the
problemswhich exist. Butthe piecemeal approach the Department consistently takeswill
NEVERsolvetheproblem. Theremustbeanoverallstrategicplan. Itmustaddressallthe
problems and the Secretary must commit the needed resources to implement it.
In August I introduced H.R. 4833 as a complementarybill to H.R. 1846. This was
done after numerous meetings with tribes, GAO, the Department, this Subcommittee, the
Interior Appropriations Subcommittee and even the Senate were held. H.R. 4833
establishes a SpecialTrusteewithin the Department ofInteriorwhowouldanswerdirectly
to the Secretary. The Special Trustee would develop the needed strategic plan to address
all trustfund issues. This personwould have the authorityandabilityto coordinateamong
the major agencies of the Bureau of Indian Affairs, Bureau of Land Management, and
MineralManagementServicetoensurethatIndianallottedlandswerehandledproperlyand
in compliance with fiduciary standards.
The GAO report, Focused Leadership and Comprehensive Planning Can Improve
Interior's Management ofIndian Trust Funds,whichwillbe presented here todaysupports
the Special Trustee concept. The report also supports much ofwhat is in the legislation
currently pending before the Subcommittee of Native American Affairs. I realize the
Department is hesitant to support this concept. Unfortunately, the Department does not
have an alternative to suggest.
We are now in the waning days of the 103rd Congress, but I plan to push the
American Indian trust fund reform legislation as far as I can. I believe, once correctly
implemented the Departmentwill agree with its purpose.
Thankyou againforthe opportunity toworkwithyou on this importantmatterand
for allowing me to be a part ofthis morning's hearing.