On November 15, 2001, the Secretary of the Interior announced a plan to reorganize Indian trust asset management into a new unit called the Bureau of Indian Trust Assets Management (BITAM). Details of the reorganization plan have not been worked out, and there are many unanswered questions. According to the Department, reorganization will take place in one form or the other. It is critical, of course, that tribal rights under the Indian Self-Determination and Education Assistance Act (ISDA) not be compromised or overlooked, and tribal participation is what will prevent a useful exercise from becoming a disaster. The more tribes understand and make their solutions known, the more likely it is that trust reform will be successful. Do not rely on NCAI, NIGA, or any other association to carry the full burden of speaking for you. Everyone knows the system has failed, but reorganization will fail, too, if bureaucrats continue to make decisions without tribal input. Indian tribal leaders must weigh in, offering specific solutions, not just generalized complaints about the system. We urge thoughtful participation by every tribe, every tribal leader. Tribes can be part of the success, or they can continue to live with the failure.

BACKGROUND INFORMATION

What is BITAM?

According to the Department's plan, BITAM will be a separate entity from the Bureau of Indian Affairs (BIA) and will have its own Assistant Secretary. This proposed new unit will concentrate on four main activities: trust reform, performance and program management, beneficiary services, and trust asset and investment strategy development. The BIA will retain education, economic development, tribal construction projects and other services it currently provides to tribes.

It is unclear whether trust resource management (as opposed to management of the money derived from trust resources) will remain with BIA or be transferred to BITAM. For example, forest management may or may not remain with the BIA. Similarly, it is unclear whether BITAM will administer individual trust assets, or whether it will administer tribal trust assets as well.

The Draft Organizational Chart issued by the Department shows that there is a proposed division called "Contract and Compact administration," supervised by the Bureau Director of BITAM who reports to the Assistant Secretary of BITAM. It is anticipated that this division will be in charge of matters relating to the ISDA.

The Department has just begun tribal consultation on the BITAM reorganization plan. However, the Department has made it very clear that the status quo is not an option. Department officials have stated that keeping trust asset management in the BIA as it exists today will not continue though the Department has not begun to address how contracting will occur, either conceptually, programmatically, legally or technically.

There are many uncertainties. Therefore, it is essential that each tribae voice its concerns, opinions, and recommendations at this critical stage. It is also critical that the Department be informed about how reorganization may impact contracting and compacting under the ISDA.

Can Programs within BITAM be contracted under the ISDA?

The contracting of trust asset functions should, and must, be available, even if BITAM is formed. The creation of a new organizational unit in no way affects the Secretary of Interior's legal obligations under the ISDA. The ISDA provides that the Secretary of Interior (it is not limited to the BIA) must enter into a contract with a tribe for it to assume the operation of programs, functions, services, and activities (PFSA's) that are operated for the benefit of Indians because of their status as Indians without regard to the agency or office within which it is performed 25 U.S.C. § 450f(a)(1)(E)¹. This is commonly called "mandatory" contracting because the Secretary must enter into a contract unless she can provide a "specific finding that clearly demonstrates" that the programs cannot be contracted for five specific reasons². Id. § 450f(a)(2). These five reasons are commonly called "declination criteria."

Indian Trust Asset Management clearly falls within the ISDA's requirement to contract. BITAM would not be operating programs for the general public. See Hoopa Valley Tribe v. Northern Area Manager, Bureau of Reclamation, IBIA 00-41-A (Feb. 2, 2001). Instead, it would exist due to the unique trust relationship the United States has with Native Americans and Alaska Natives.

There is some concern that, because BITAM programs will be separate from the BIA, contracting will not be "mandatory." Instead, it may be up to the agency's discretion. "Discretionary" contracting exists under the Self-Governance Act, which states that the Secretary can decide what programs operated by Interior-other than those operated by the BIA- can be contracted. See 25 U.S.C. § 458aa et seq. However, nothing in the law allows the Department to avoid mandatory contracting under the ISDA simply by moving programs out of the BIA. It would be contrary to the law and contrary to Congressional intent.

The Self-Determination Act does not restrict contracting to BIA programs only. It is the Self-Governance Act -- enacted after the Self-Determination Act -- that allows discretionary contracting of non-BIA programs. This is because the statute was intended to extend contracting to all Interior programs, not just those operated for their benefit because of their status. The Self-Governance Act does not overrule the mandatory contracting of PFSAs; it expands the contractibility of programs, as opposed to restricting them.

When the Self-Governance Act was passed, Congress understood that trust asset management was performed by BIA. Therefore, Congress made trust asset management subject to mandatory contracting when it enacted the law. The Department cannot ignore the statute's mandates simply by moving programs from one agency to another. The Draft Organizational Plan supports this conclusion. The plan calls for a division called "Contract and Compact administration." Obviously, the Department acknowledges that there will be contracts and compacts to administer under BITAM.

The Secretary would be obligated to contract BITAM programs with a Tribe unless she can clearly demonstrate a declination criteria³. It is imperative that this position be expressed to the Department so that it can start working on the details of contracting. There may be changes in negotiating new or expanded contracts, administering current trust management contracts, using and accounting for appropriations, budgeting, reporting requirements, and receiving technical assistance.

The following are a few issues that need to be addressed as the BITAM consultation process unfolds:

• Although it probably makes sense to have one person ultimately accountable for trust asset management, does it make sense that this one person be in charge of both historical accounting and trust reform? Should there be separate organizational units within the Department for historical reconciliation, current management, and reform efforts?
• Should BITAM manage individual trust assets only, or should it manage tribal trust resources as well?
• Does it make sense to separate the accounting of trust assets from the management of trust resources? Does it make sense to perform Indian trust asset management in the same manner as private trusts?
• How will BITAM be funded? Will BIA funds be transferred? If so, will enough funds remain in BIA so that services will not be compromised?
• Who will staff BITAM? Will employees from the already skeletal BIA staff be transferred? Will BITAM hiring be subject to Indian preference laws?
• Will the creation of BITAM lead to the diminishment of the role of the BIA as the institutional advocate for Indian tribal issues and concerns within the federal government?

In addition to the broad question of whether or how BITAM should be formed, there will be many practical and legal issues concerning the contracting of BITAM programs. Simple questions such as to whom should you submit a contract proposal must be clarified. of concern, as well as its sources in the environment.

Historically, a contract proposal could be submitted to the BIA contracting officer at the local field office. However, with BITAM, it is quite conceivable that contract proposals will be submitted to Headquarters in Washington, DC. It may not be the BIA contracting officer anymore, unless the BITAM Assistant Secretary delegates his/her contract authority to the BIA. Similarly, it is unclear whether the BIA or whether BITAM will provide technical assistance--which is required under the ISDA--to tribes that want to assume the operation of programs.

Another looming question concerns the regulations. Both the Self-Determination and Self-Governance regulations are issued under the authority of the Assistant Secretary for Indian Affairs. The Assistant Secretary for BITAM probably will not be bound by the regulations, unless the Secretary issues an order or regulation that binds the new Assistant Secretary. If BITAM is created before the regulation issue is clarified, it will be unclear how to submit a contract proposal, how to appeal a declination, and how to do many other things.

Tribes that currently operate trust asset management programs will need to clarify how their funds will be disbursed so they will not have an interruption in services once BITAM is created. Will they continue to get funds through the BIA or the Office of Self-Governance, or will they be transferred to BITAM, and then to the tribe? These issues need to be answered before BITAM is created.

Additional issues to be resolved:

• Tribes will probably have to get two signatures on the annual funding agreements: the Assistant Secretary for Indian Affairs and the Assistant Secretary for BITAM. They may have to negotiate with two contracting officers: one in BIA and the other in BITAM.
• Tribes may have to watch their expenditures more closely. Because BITAM likely will be appropriated funds as a separate entity, appropriation acts and appropriation law may restrict their ability to reallocate funds or place funds in the general operating fund.
• The Assistant Secretary for BITAM may be reluctant to contract, and thus may broadly interpret what is an "inherently federal functions". When the BIA and IHS began contracting, they were overly cautious and conservative in contracting out functions. It has taken years for the government to reach a certain comfort level. It is not an easy task, administratively, financially, or legally, to divvy up government operations. Agencies tend to be possessive of their employees and funds. If history is any indicator, BITAM may be reluctant to contract functions, and tribes consciously work to ease the new unit's fears.
• Moreover, because the programs are trust related, it may be easier for BITAM to claim it is "inherently federal" as a legal matter. The law is very unclear as to what constitutes "inherently federal function." Tribes may have to be prepared to challenge declination issues and contracting policies before the Interior Board of Indian Appeals and federal courts.
• The Assistant Secretary for BITAM may try to impose additional reporting requirements. The IDSA is very clear on the limited amount of reporting that must be done. Because of the political and sensitive nature of trust asset management, tribes should keep alert to the potential imposition of illegal reporting requirements.
• The Department may centralize functions thus limiting "tribal shares." Currently, BIA employees in the field perform many functions. In order keep the new line of authority clean, the Department may take away trust management functions from the field offices. Under the ISDA, tribes are entitled to their portion of administrative funds at the local and regional BIA offices associated with the contracted programs. These local and regional funds are commonly called "tribal shares." If BITAM is centralized, tribes will not get tribal shares.
• Contract support costs will continue to be a problem. As you know, Congress has not appropriated enough funds to pay tribes 100% of the administrative costs for operating ISDA programs. Often, dollars that are supposed to go for the service itself have to be used to pay contract support costs. Therefore, if you assume trust management functions from BITAM, it may create financial burdens. Congress probably will not appropriate contract support costs to BITAM, absent great pressure from you. But because Congress is assessing the Department's reorganization plan, this is a great opportunity to bring the contract support costs issue to the table. Congress should appropriate contract support costs as a separate line item--in addition to the dollars appropriated for the operation of BITAM programs-- so that tribes will not be shorted.

CONCLUSION

We encourage you to participate in the process to ensure that tribal rights under the ISDA are not compromised by whatever form reorganization takes. Also, we must keep on top of the budgeting process with the Department and the Office of Management and Budget and actively participate in the formulation and justification process. When, where, how, and how much BITAM funds are appropriated will be of utmost importance. We would be happy to help if needed; just call.

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¹Other contractible programs that are not relevant to this discussion are those: