Congress to try again to reform Bureau of Indian Affairs

A little more than a century ago, Congress set up a system of private land ownership for Native Americans, hoping, in the words of then-Rep. Henry Dawes, R-Mass., to "civilize" Indians and encourage them to "cultivate the ground, live in houses, ride in Studebaker wagons, send children to school, and drink whiskey."

But almost from the beginning, problems plagued the federal program. Indian families rarely occupied the property they were assigned, and it became the task of the Interior Department's Bureau of Indian Affairs to lease the land and distribute any wealth it earned from grazing, farming, oil drilling, or mining. The agency had trouble keeping track of the funds and making sure that Indians received the money they deserved.

Ernestine Werelus, a member of the Shoshone Bannock tribe who is in her 70s, tells of a decades-long effort just to get the agency to pay the fair market value for Indian-owned farmland in prime potato-growing country in her native Idaho. "I will fight to the end to see that our people get justice on this reservation," Werelus said in a recent interview. "We're in a fight for our lives."

Now, pressure from Congress and the courts, as well as a drive to apply modern technology to tattered government ledgers, may finally yield some long-needed reforms.

In the troubled 176-year history of the Bureau of Indian Affairs, few matters have been more vexing than the agency's handling of trust funds containing the money owed to Native Americans. The Clinton Administration's headaches over the issue escalated last year, when a federal judge held Interior Secretary Bruce Babbitt and then-Treasury Secretary Robert Rubin in contempt of court for failing to turn over documents in a class action lawsuit related to the trust funds.

The suit, filed in 1996 by Elouise Cobell, a member of the Blackfeet Nation, on behalf of at least 300,000 Native Americans, was intended to force the government to fix the current system of administering the trust funds and to provide a full accounting of past mistakes and omissions that could have shortchanged Indians.

Last December, U.S. District Judge Royce Lamberth appointed a special master to monitor the Bureau of Indian Affairs and required quarterly updates on progress in fixing the trust fund accounting system. He called the BIA's handling of the trust program "fiscal and governmental irresponsibility in its purest form."

The Individual Indian Monies trust fund system dates from the 1887 Dawes Act and other so-called allotment acts enacted in the latter part of the 19th century that divided tribal lands that had been owned communally into individual or family parcels ranging in size from 40 acres to 160 acres. (White settlers managed to grab as much as two-thirds of tribal lands in the process.)

The history of problems is well documented: At a recent congressional hearing, Sen. Ben Nighthorse Campbell, R-Colo., the chairman of the Senate Indian Affairs Committee and a Native American, displayed an 1876 article from The Philadelphia Press-headlined "Indian Trust Fund Losses"-that discussed "gross irregularities" in the trust system.

Today, simply locating Bureau of Indian Affairs records, long scattered across the West in field-station offices, is a difficult task. And even when the documents are found, they can prove hazardous to a bureaucrat's health. Campbell has pictures of trust fund records that are "water-damaged and kept in trash bags, disintegrating boxes, next to paint cans, mop buckets, and road signs." In 1998, the Interior Department said it could not comply with one court order to produce documents, because they were covered in mouse droppings potentially contaminated with the hantavirus, according to Campbell.

A "fractionated" inheritance system exacerbated the record-keeping problems: The Indians' allotted land parcels can be inherited, but not divided. If a father dies, leaving his two children a 40-acre piece of land, each child does not get 20 acres. Instead, each will own 50 percent of 40 acres. After a few generations, as many as 16 heirs could own that parcel, each with a 6.25 percent share. In another generation, 64 heirs could each control 1.56 percent of the same 40-acre plot.

"This problem grows exponentially," explained Assistant Interior Secretary Kevin Gover, the head of the BIA and a Pawnee Indian. "If we had dealt with it 30 years ago, we wouldn't be where we are now. If we don't deal with it now, in 30 years it will be beyond a nightmare. We know, for example, that we have one piece of land that has 3,000 owners. Three thousand people own an interest in this property. Because of the way these things descend, in another 30 years, there will be 3 million owners of that property."

Congress tried to tackle the issue in 1983 with the Indian Land Consolidation Act, which would have blocked the inheritance of any ownership fraction of less than 2 percent. Instead, the land would revert to the tribe. The Supreme Court ruled the law unconstitutional because it took property from the owner without compensation.

Congress tried again in 1984. It amended the act to allow the property to be inherited under some circumstances, but that version was found unconstitutional, too. The court ruled that the amended law "severely restricts the right of an individual to direct the descent of his property by shrinking drastically the universe of possible successors."

Chris Changery, Campbell's press secretary, described the 1984 changes as "rearranging the deck chairs on the Titanic." Campbell hopes to address the problem with legislation establishing what aides call a "right of survivorship." Under the plan, if four heirs inherit a fraction of land when a parent dies, ownership would shift from heir to heir as the heirs themselves die. Only the final surviving heir would pass on the land interest, which would be the same percentage as it was in the previous generation.

The Senate approved the bill, which also provides a framework for substantial reforms in tribal probate codes, by unanimous consent on July 26. No similar House legislation is pending, but Campbell and Administration officials are hopeful that the measure will eventually become law and pass constitutional muster. "We're working hard with the Senate staff to make this as constitutionally bulletproof as possible," said Edward Cohen, Interior's deputy solicitor until recently.

The Indian Land Working Group, a Native American organization that works with the Senate Indian Affairs Committee, opposes Campbell's proposed land inheritance changes. In a letter to the Senator, the group wrote that the measure would "cause chaos" because it does not set up a system to track the deaths of heirs. The group suggested that "a new, virtually unadministrable program would have to be created."

Meanwhile, the Bureau of Indian Affairs is also working to consolidate the trust lands by buying individual Native Americans' interests. The agency spent $5 million in 1999 on a pilot program in Wisconsin, and it is preparing to spend the same amount this year. Campbell's bill would extend the pilot program for another three years, and his staff says the Senate has authorized $10 million a year for it, although the House has authorized only half that.

"I think that will, in 20 years or so, deal with the fractionation problem," Gover said, referring to both the buy-back plan and the reversion provisions. "Now we still have the fundamental management issue. We will still have tens of thousands of owners of this land to whom we are accountable."

The "management issue" is a big one. After decades of mismanagement, the Bureau of Indian Affairs is mistrusted by many tribes. Hundreds of thousands of Indian accountholders do not know what their land interests are really worth. Mary Fish, a Muskogee Indian from Oklahoma, tells of receiving checks ranging from as little as 6 cents to as much as $3,000 from her one-eighth interest in a property that includes oil wells.

Gover said such cases are rare, but he cannot discuss specific cases because of Privacy Act restrictions. He said that as many as 200,000 of the 300,000 trust fund accounts hold less than $20, but cost the government $35 to $40 apiece a year in processing costs.

The Arthur Anderson accounting firm has estimated that a complete audit of the accounts could cost hundreds of millions of dollars. The BIA is considering the use of econometric, or statistical, sampling to estimate the amount each account is owed. The plaintiffs in Cobell's suit and other Indian representatives say that is not good enough. In fact, Cobell believes that as many as 500,000 Native Americans are owed trust fund money, not the 300,000 the BIA estimates.

The BIA is launching a new computer system, called the Trust Asset and Accounting Management System, that it says will be able to monitor Indian trust fund records nationwide. Gover said the agency has successfully tested the system in a pilot program in Billings, Mont.

But John Dossett, general counsel for the National Congress of American Indians, says the Billings project had to be tested with dummy data because the actual records were in such poor shape. Marcella Giles, a Muskogee Indian who works with 15 organizations representing individual trust fund beneficiaries, said the new system lacks necessary information. "One lease may turn up on the system, but will the system show that there are six or seven wells on that land? If you put bad data in, you'll get bad data out," she said.

The BIA's plan to move its national record-keeping center from Albuquerque, N.M., to the Washington, D.C., suburbs has also attracted criticism. Angry federal employees have questioned the need for the move, and one has asked for a new contempt citation against Babbitt; she maintains she is being punished for questioning the success of the new computer system.

Even though some tribal leaders credit the BIA for taking steps to address problems that have been largely ignored for decades, distrust of the agency is still strong. Dossett said that because the BIA accounts receivable system is flawed, people who lease Indian lands can draw too much oil, or graze too many cattle, or pay the government royalty fees years late, or not at all. So even if the accounts are ever straightened out, Indians may have lost millions of dollars that they will never recover.

Congress has tried before to fix problems at the BIA. In 1994, it passed an Indian Trust Reform Act that created an Office of the Special Trustee to oversee the trust reform effort. But Paul Homan, the first special trustee, resigned last year after claiming that Babbitt was undercutting his authority and impeding reform efforts. (His successor, Thomas Slonaker, won confirmation only recently because his nomination was stalled in a Senate logjam along with many other Clinton Administration appointees.)

Homan, a former banking regulator, had proposed forming an independent Indian Resolution Trust Corp., similar to the agency that helped sort out the savings and loan failures in the late 1980s and early 1990s. But Gover said such a system would be costly to set up and would have to charge recipients fees that could be higher than the income they receive from their land.

"There are folks out there who think you can turn this over to some private institution of some kind, and, with the genius of the private sector, all this could be resolved in a few years," Gover said. "But part of the genius of the private sector is that they don't do foolish things like take on 200,000 accounts worth less than $20." Dossett agrees with Gover that there is little support in Indian country for a private or quasi-private agency to take over management of the trust funds.

Campbell, however, has begun to circulate a draft of another bill among Native American leaders that is a variation on Homan's proposal and would take certain trust management responsibilities away from the BIA. At a congressional hearing on June 22, a representative of the Intertribal Monitoring Association supported Campbell's draft. The Senator has cited a poll from Indian Country Today showing that 80 percent of those Native Americans surveyed thought that an independent entity was necessary to clean up the trust fund mess.

Campbell's proposal would create a temporary agency to reform the trust system, but eventually the trust duties would return to the Interior Department. Campbell hopes to introduce the legislation and hold a markup session soon, although time is running out in this session of Congress. For now, the BIA is sticking with its schedule for the new computer system. The agency's goal is to get the in-house reform process far enough along so that it is continued by the next Administration, no matter who wins the November election.

"It has been the death of previous reform efforts of any type to go through one of these [presidential] transitions without having critical mass, or reaching the point of no return," Gover said. "Any Administration would come in here and say, `Why do we want this hassle? Why would we make this the centerpiece of our Indian program?' The temptation will be to back away."

Michael Steel is an editorial assistant for National Journal News Service.