The American Indian Trust Fund Management Reform Act of 1994

DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Part 144

RIN 1076-AD 28

The American Indian Trust Fund Management Reform Act of 1994

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Bureau of Indian Affairs proposes to establish a

regulation to implement Title II of Pub. L. 103-412, the American

Indian Trust Fund Management Reform Act of 1994 (the Act), which for

the first time, permits American Indian Tribes to take restricted

tribal funds out of trust status with the Department of the Interior

(DOI). The purpose of the Act is to enable Tribes to manage the funds

by themselves, or with the help of capable commercial fund managers.

The regulation affects tribal funds only, not Individual Indian Money

(IIM) funds.

DATES: Comments on this Proposed Rule must be received on or before

July 15, 1996.

ADDRESSES: Mail comments to Donna Erwin, Director, Office of Trust

Funds Management (OTFM), Department of the Interior, 505 Marquette Ave.

NW, Suite 1000, Albuquerque, NM, 87102, OR hand deliver them to Suite

1000 at the above address. Comments will be available for inspection at

this address from 9:00 a.m. to 4:00 p.m. (MDT), Monday through Friday

beginning approximately 30 days after publication of this document in

the Federal Register.

FOR FURTHER INFORMATION CONTACT: Joe Weller, Office of Trust Funds

Management, at the above address. Telephone (505) 248-5723, fax 248-

5782.

REQUEST FOR COMMENTS: It is the policy of the Department of the

Interior, whenever practical, to afford the public an opportunity to

participate in the rulemaking process. Accordingly, interested persons

may submit written comments regarding this rule to the location

identified in the Address section of this document. To ensure that

public comments have maximum effect in developing the final

regulations, the Department urges that each comment clearly identify

the specific section or sections of the regulations that the comment

addresses and that comments be in the same order as the regulations.

Comments that concern information collection requirements must be sent

to the Office of Management and Budget at the address listed in the

Paperwork Reduction Act section of this preamble. A copy of these

comments may also be sent to the Department representative named in the

preceding paragraph.

SUPPLEMENTARY INFORMATION: 25 CFR Part 144 contains provisions which

affect 240 tribes with trust funds. These tribes currently have

approximately $1.5 billion dollars in judgments, settlements, awards

and associated earnings held in trust status by the Department of the

Interior. Key concepts of the regulation are as follows: (1) Tribes

wishing to withdraw some or all of their restricted tribal funds under

the Act (not IIM funds) must present a tribal resolution acknowledging

that when funds leave the U.S. Treasury, the federal government has no

further liability relating to those funds; (2) tribes must also present

a management plan for Secretarial approval, detailing how the funds

will be managed once they are out of trust, including a protection

against a significant loss of principal; (3) if the funds are not

managed by the tribes, they are to be managed by capable investment

managers or investment firms with proof of liability insurance; (4)

tribes must provide notification to tribal members regarding their

intent to withdraw funds from trust; (5) tribes may return any or all

of their funds withdrawn under this act, including any earnings, to

trust status; (6) tribes may request technical assistance and/or grants

from the Department in order to develop the management plan. The

ability to take funds from trust creates new tribal opportunities for

investment of funds and for economic development; therefore,

establishment of the regulation has a high priority in Indian Country.

Development of the Regulation

In accordance with the Act, this regulation was developed with the

active participation of tribal representatives. A Regulatory Workgroup

was established by OTFM, which had tribal representation, as well

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as representation from the InterTribal Monitoring Association (ITMA),

Departmental Office of the Solicitor (SOL), and Bureau of Indian

Affairs (BIA). Also in furtherance of tribal participation, draft

regulations were sent to all tribes with trust funds in August, 1995; a

formal presentation was made by OTFM at a National Tribal Consultation

in September, 1995. Comments which were incorporated from this

consultation are as follows: (a) A specific provision for notifying the

tribal membership of an intent to remove funds was included based on

comments by the Delaware Tribe of Oklahoma; (b) the ``certification''

by tribe's legal counsel of authority of tribal government to withdraw

funds was changed to a requirement for a ``legal opinion'' to be

included in the application package based on comments from both the

Hopi and Cheyenne River Tribes; (c) a requirement to provide a copy of

audit or investment report when requesting to withdraw additional funds

was included based on comments from the First Nations Development

Institute; (d) a requirement for liability insurance of tribal

officials was added based on a suggestion from the Skokomish Tribe of

Washington State. Other changes were made, such as changing the

approving official to the Secretary, Department of the Interior, from

the Commissioner of Indian Affairs, Bureau of Indian Affairs, removing

duplicative language from the policy statement; adding clarifying

language regarding applicability of these regulations to ``proceeds of

labor'' funds; and requiring tribes to submit copies of applicable

distribution plans or settlement acts when making application to

withdraw funds. The regulation has also been rewritten into a ``user-

friendly'' format.

Statutory Authority

Title II of Pub. L. 103-412, the American Indian Trust Fund

Management Reform Act of 1994, governs the withdrawal of tribal funds

from trust status within the Department of the Interior. Specifically,

the Secretary is authorized to approve withdrawals of funds based on a

Tribal Management Plan. The law states that regulations do not need to

be in place for funds to be withdrawn.

Procedural Determinations

The Regulatory Flexibility Act

The Department has determined that this rulemaking will not have a

significant economic effect on a substantial number of small entities

under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

Executive Order 12630

The Department certifies that the rule does not represent a

governmental action capable of interference with constitutionally

protected property rights. Thus, a Takings Implication Assessment need

not be prepared under Executive Order 12630, ``Government Action and

Interference with Constitutionally Protected Property Rights.''

Executive Order 12778

The Department has certified to the Office of Management and Budget

that this rule meets the applicable standards provided in Sections 2

(a) and 2 (b) (2) of Executive Order 12778.

Executive Order 12866

This document has been reviewed under Executive Order 12866 and is

not a significant regulatory action.

Paperwork Reduction Act of 1995

Section 144.7 contains information collection requirements. As

required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507 (d) ),

the Department of Interior has submitted a copy of this section to the

Office of Management and Budget (OMB) for its review. These regulations

affect any tribe for whom the Office of Special Trustee manages funds

in tribal trust.

Information in Subpart B (Application to Withdraw Tribal Funds from

Trust Status) is being collected to determine the eligibility of

applicants, and the capability of tribes or their contractors to manage

and invest large blocks of funds. This is in accordance with statutory

authority which requires that a tribal Management Plan be approved by

the Secretary prior to release of funds from trust. This information

will be collected once only from each applicant. Annual reporting and

recordkeeping burden for this collection of information is estimated to

average 342 hours for each response for 12 tribal respondents,

including the time for reviewing instructions, searching existing data

sources, gathering and maintaining the data needed, and completing and

reviewing the collection of information. Thus, the total annual

reporting and recordkeeping burden for this collection is estimated to

be 4,104 hours.

Information in Subpart D (Application for Federal Assistance and

Budget Information--Non-Construction Programs) is being collected to

determine the eligibility of applicants, as well as the level of need

for technical assistance in order for tribes to develop the Management

Plans and to complete the application for withdrawal process. This is

in accordance with statutory authority which requires the Secretary to

provide technical assistance for tribes to complete the required

Management Plan. This information will be collected once only from each

applicant. Annual reporting and recordkeeping burden for this

collection of information is estimated to average 52 hours for each

response for 12 tribal respondents, including the time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information. Thus, the total annual reporting and

recordkeeping burden for this collection is estimated to be 624 hours.

Organizations and individuals desiring to submit comments on the

information collection requirements should direct them to the Office of

Information and Regulatory Affairs, OMB, Room 10235, New Executive

Office Building, Washington, D.C. 20503; Attention: Desk Officer for

U.S. Department of the Interior.

The Department considers comments by the public on these proposed

collections of information in:

Evaluating whether the proposed collections of information are

necessary for the proper performance of the functions of the

Department, including whether the information will have practical

utility;

Evaluating the accuracy of the Department's estimate of the burden

of the proposed collections of information, including the validity of

the methodology and assumptions used; and

Enhancing the quality, usefulness, and clarity of the information

to be collected.

OMB is required to make a decision concerning the collections of

information contained in these proposed regulations between 30 and 60

days after publication of this document in the Federal Register.

Therefore, a comment to OMB is best assured of having its full effect

if OMB receives it within 30 days of publication. This does not affect

the deadline for the public to comment to the Department on the

proposed regulations.

National Environmental Policy Act of 1969

We have determined that this rulemaking is not a major Federal

action significantly affecting the quality of the human environment,

and a detailed statement under section 102(2)(C) of the National

Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) is not

required.

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List of Subjects in 25 CFR Part 144

Indians, Indian tribal trust funds, Indian trust responsibility.

For the reasons set out in the preamble, Part 144 of Title 25,

Chapter 1, of the Code of Federal Regulations is proposed to be added

as set forth below.

PART 144--AMERICAN INDIAN TRUST FUND REFORM ACT

Subpart A--General Provisions

Sec.

144.1 Purpose of this regulation.

144.2 Definitions.

144.3 What is the Department's policy on tribal management of trust

funds?

144.4 May tribes exercise increased direction over their trust

funds and retain the protections of Federal trust status?

144.5 What are the advantages and disadvantages of managing trust

funds?

144.6 Do these regulations tell tribes how to receive future income

directly rather than having the government continue to collect it?

144.7 Information collection.

Subpart B--Withdrawing Tribal Funds From Trust

144.10 Who is eligible to withdraw their tribal funds from trust?

144.11 What funds may be withdrawn?

144.12 What limitations and restrictions apply to withdrawn funds?

144.13 How does a tribe apply to withdraw funds?

144.14 What must the Tribal Management Plan contain?

144.15 What is the approval process for management plans?

144.16 What criteria will be used in evaluating the management

plan?

144.17 What special criteria will be used to evaluate management

plans for judgment or settlement funds?

144.18 When does the Department's trust responsibility end?

144.19 How can the plan be revised?

144.20 How can a tribe withdraw additional funds?

144.21 How may a tribe appeal denials under this part?

Subpart C--Returning Tribal Funds to Trust

144.30 How does a tribe notify the Department if it wishes to

return withdrawn funds to Federal trust status?

144.31 What part of withdrawn funds can be returned to trust?

144.32 How often can funds be returned?

144.33 How can funds be returned?

144.34 Can a tribe withdraw redeposited funds?

Subpart D--Technical Assistance

144.40 How will the Department provide technical assistance for

tribes?

144.41 What types of technical assistance are available?

144.42 Who can provide technical assistance?

144.43 How can a tribe apply for technical assistance?

144.44 What action will the Department take on requests for

technical assistance?

Authority: 25 U.S.C. 4001.

Subpart A--General Provisions

Sec. 144.1 Purpose of this regulation.

This part describes the processes by which Indian tribes can manage

tribal funds currently held in trust by the United States. It defines

how tribes may withdraw their funds from trust status; how they may

return funds to trust; and how they may request technical assistance or

grants to help prepare plans to manage funds or to ensure the

capability to manage those funds.

Sec. 144.2 Definitions.

As used in this part:

Act means the American Indian Trust Fund Management Reform Act of

1994 (Pub. L. 103-412, 108 Stat. 4239, 25 U.S.C. 4001).

Agency Superintendent means the official in charge of a Bureau of

Indian Affairs Agency.

Area Director means the official in charge of a Bureau of Indian

Affairs area office.

Bureau or BIA means the Bureau of Indian Affairs within the

Department of the Interior.

Department or DOI means the Department of the Interior.

General Counsel means the attorney for the tribe.

OTFM means the Office of Trust Funds Management, Department of the

Interior.

Resolution means the formal manner in which a tribal government

expresses its legislative will.

Secretary means the Secretary of the Interior or his designee.

Solicitor means the Office of the Solicitor, Department of the

Interior.

Special Trustee means the Special Trustee for American Indians

appointed under Title III of the Act.

Tribal Council means the elected or appointed governing officials

of any Tribe which is recognized by the Secretary.

Tribe means any Indian Tribe, Band, Nation, Rancheria, Pueblo,

Colony or Community, including any Alaska Native village or regional or

village corporation as defined or established pursuant to the Alaska

Native Claims Settlement Act which is federally recognized by the U.S.

Government for special programs and services provided by the Secretary

to Indians because of their status as Indians. For this purpose, it

also means two or more tribes joined for any purpose, the joint assets

of which include funds held in trust by the Secretary. An example of

this would be the KCA (consisting of the Kiowa, Comanche and Apache

Tribes).

Us means the Department of the Interior, i.e., the Secretary of the

Interior or his/her designee.

We means the Department of the Interior, i.e., the Secretary of the

Interior or his/her designee.

Sec. 144.3 What is the Department's policy on tribal management of

trust funds?

(a) We will give tribes as much responsibility as they desire for

the management of their tribal funds that we currently hold in trust.

(b) Title II of the American Indian Trust Fund Management Reform

Act, implemented by these regulations, offers tribes one approach for

assuming increased management of their funds that we now hold in trust

and administer. Under Title II, a tribe may completely remove its funds

from Federal trust status and manage them as it wishes, subject to the

requirements and conditions in this part. When a tribe withdraws its

funds under this part, it may invest those funds in equities or other

investment vehicles that are statutorily unavailable to us.

Sec. 144.4 May tribes exercise increased direction over their trust

funds and retain the protections of Federal trust status?

Yes. The Tribal Self-Governance Act (25 U.S.C. 458) and the Indian

Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.)

provide other options for trust funds management. A tribe may choose to

manage its trust funds under the provisions of these Acts if it wishes.

These options are covered in these regulations: ``Indian Self-

Determination and Education Assistance Act Program'' ( 25 CFR Part 271,

et seq.) and the ``Self- Governance Program'' (25 CFR Part 1001).

Sec. 144.5 What are the advantages and disadvantages of managing trust

funds?

Under these other options, the funds remain in Federal trust status

and the tribe can exercise a range of control over their management.

However, the tribe has fewer investment options than it has when it

withdraws its funds completely from Trust status. If a tribe chooses to

keep its funds in trust status, the tribe is subject to the same

statutory investment restrictions that bind us. That means that the

tribe's investments are limited to bank deposits and securities

guaranteed by the United States. (See 25 U.S.C. 162a for specific

statutory investment restrictions).

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Sec. 144.6 Do these regulations tell tribes how to receive future

income directly rather than having the government continue to collect

it?

No. These regulations apply only to the withdrawal of funds which

are in trust. Some of these funds come from the sale or lease of trust

resources. Even if a tribe withdraws its funds, we will collect and

manage future income. If a tribe wishes to receive future income

directly, it should contact its agency or area office to find out how

to do this.

Sec. 144.7 Information collection.

Information collection requirements contained in Subpart B of this

part, Withdrawal of Tribal Funds from Trust, and Subpart D of this

part, Technical Assistance, have been submitted to the Office of

Management and Budget for approval as required by 44 U.S.C. 3501 et

seq. Information collected in Sec. 144.13, (How does a tribe apply to

withdraw funds?) will be used to determine the eligibility of

applicants, and the capability of tribes or their contractors to manage

and invest large blocks of funds. Information collected in Sec. 144.43,

(How can a tribe apply for technical assistance?) will be used to

determine the eligibility of applicants, as well as the level of need

for technical assistance, in order for tribes to develop Management

Plans and to complete the application for withdrawal process. The

collections of information for Subpart B and Subpart D of this part

will not be required until approved by the Office of Management and

Budget.

Subpart B--Withdrawing Tribal Funds From Trust

Sec. 144.10 Who is eligible to withdraw their tribal funds from trust?

Any tribe for whom we manage funds in trust.

Sec. 144.11 What funds may be withdrawn?

A tribe may withdraw some or all funds that we hold in trust if we

approve a plan that it submits under this part.

Sec. 144.12 What limitations and restrictions apply to withdrawn

funds?

(a) A tribe may withdraw funds appropriated to satisfy judgments of

the Indian Claims Commission (ICC) and the Court of Federal Claims and

that we hold under the Indian Judgment Funds Use and Distributions Act

(25 U.S.C. 1401) or another act of Congress if:

(1) The tribe uses the funds as specified in the previously

approved judgment fund plan, and;

(2) The tribe withdraws only funds held for Indian tribes and does

not include any funds held for individual tribal members.

(b) A tribe may withdraw funds appropriated to satisfy settlement

agreements relating to certain tribal claims and that we hold and

manage for the tribe pursuant to an act of Congress if:

(1) The tribe uses the funds as specified in the previously

approved settlement act plan;

(2) The tribe withdraws only funds held for Indian tribes and does

not include any funds held for individual tribal members; and

(3) It is determined that there is no provision in the act or

settlement agreement requiring that the funds remain in trust to

implement the act or agreement that cannot be waived.

(c) Tribal funds commonly known as ``Proceeds of Labor'' funds,

usually income to trust resources, are generally withdrawn under normal

tribal budgeting procedures, but may also be withdrawn from trust under

this part. These funds may be returned to trust under the provisions of

Subpart C of this part.

Sec. 144.13 How does a tribe apply to withdraw funds?

The tribe must submit four copies of its application and the

attachments listed below to: Director, Office of Trust Funds

Management, Department of the Interior, 505 Marquette NW, Suite 1000,

Albuquerque, NM 87102. We will notify the tribe if the application is

incomplete and will help the tribe complete the application if

requested. When we determine that the application is complete, we will

send copies to the appropriate agency superintendent and area director,

the Special Trustee and the Solicitor. Each application package must

contain the items listed below.

(a) Proof that the tribe has notified its members of its intent to

remove funds from trust and that, when the request is approved, the

tribe and not the United States Government will be liable for funds

management. Notification must be by the method(s) that the tribe

customarily uses to notify its members of significant tribal actions.

The notification must identify the specific funds to be withdrawn.

(b) A tribal resolution that:

(1) Expressly authorizes the withdrawal of the funds and indicates

the (approximate) dollar amount of the funds to be withdrawn;

(2) Expressly acknowledges that the funds, once withdrawn in

accordance with the Act, will no longer be held in trust status by the

United States, and that we have no further liability or responsibility

for the funds; and

(3) Acknowledges that:

(i) Neither we nor the tribe necessarily accept the account

balances at the time of withdrawal as accurate; and

(ii) Neither we nor the tribe have waived any rights regarding the

balances, including the right to seek compensation for incorrect

balances.

(c) A copy of a formal agreement between the tribe and the manager

of the funds to be withdrawn, in which the manager agrees to:

(1) Comply with the terms of the plan we approve under Sec. 144.15

and make only those changes that conform to revision procedures in the

approved plan and the requirements of Sec. 144.19; and

(2) Transfer funds to the tribe or another manager only after

receiving a valid tribal resolution calling for this transfer and proof

that the tribe has notified its members of intent to transfer the

funds. The resolution must clearly state that:

(i) The funds are being withdrawn to be reinvested by the tribe in

a manner consistent with the goals and strategies of the approved plan;

and

(ii) The fund managers will continue to follow any previously

approved distribution plan conditions.

(d) A legal opinion by the tribe's attorney or its general counsel

that:

(1) The resolution referred to in paragraph (b) of this section was

enacted under procedures established by the tribe's organic documents

or oral tradition;

(2) The tribal governing body has the legal authority to withdraw

funds from trust status and that the withdrawal does not require a

referendum vote or other procedure beyond a tribal council resolution;

and

(3) If the funds to be withdrawn are judgment or settlement funds,

that the tribe's plan for managing the funds meets the requirements of

any applicable judgment fund use and distribution plan or settlement

act.

(e) The results of a tribal referendum, if one was held.

(f) If the funds to be withdrawn are judgment or settlement funds,

a copy of the act and/or plan that sets out the conditions for the uses

of the funds or income from them.

(g) A management plan as provided for in Sec. 144.14.

Sec. 144.14 What must the Tribal Management Plan contain?

The Tribal Management Plan required by Sec. 144.13 must include

each of the following.

(a) Tribal investment goals and the strategy for achieving them.

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(b) A description of the protection against the substantial loss of

principal, as set forth in Sec. 144.16.

(c) A copy of the tribe's ordinances and procedures for managing or

overseeing the management of the funds to be withdrawn. These must

include adequate protections against fraud, abuse, and violations of

the management plan.

(d) A description of the tribe's previous experience managing or

overseeing the management of invested funds. This should include

factual data of past performance of tribally-managed funds (i.e.,

audited reports) and the identity and qualifications of the tribe's

investment officer.

(e) A description of the capability of all of the individuals or

investment institutions that will be involved in managing and investing

the funds for the tribe. Provide copies of state or federal security

applications for account executive(s).

(1) Investment entities named must submit:

(i) Ownership information (including Central Registry Depository

(CRD) numbers);

(ii) Asset size and capitalization;

(iii) Assets under management;

(iv) Performance statistics on managed accounts for the past 5

years; and

(v) Any adverse actions by licensing and/or regulatory bodies

within the past 5 years.

(2) In addition, we may ask about:

(i) Soft dollar arrangements;

(ii) Affiliation with broker dealers, banks, insurance and/or

investment companies;

(iii) Research done in house;

(iv) Recent changes in active portfolio managers; and

(v) Any other information necessary to make an adequate evaluation

of the proposed plan.

(f) A description of how the plan will ensure that the fund manager

will comply with any conditions established in judgment fund plans or

settlement acts.

(g) Proof of liability insurance of the investment firm.

(h) Proof of liability insurance that protects against fraud for

those Tribal Council members with authority to disburse funds. In many

tribes the chairperson, and the comptroller and/or the tribal

treasurer, for example, would be the positions having this authority.

(i) A plan for custodianship of investment securities that

includes:

(1) Name of persons in the tribe who can direct the custodian;

(2) Name of the custodian;

(3) Copy of intended custodian agreement;

(4) Size of custodian operation;

(5) Disclosure of any security lending provisions; and

(6) Insurance coverage.

(j) A tribal council agreement to provide an annual audit and

report on performance of withdrawn funds to the tribal membership, with

a copy to: Office of the Special Trustee for American Indians,

Department of the Interior, MS-5140, 1849 C Street NW, Washington, DC

20240. This agreement must include:

(1) A statement that the copy to the Special Trustee is for

information only, and infers no liability on our part regarding the

audit results, nor does it infer a requirement for us to take any

action whatsoever; and

(2) A description of the steps (including audit performance and

reporting) the tribe will take to ensure its membership that the tribe

is continuing to comply with the terms of the plan submitted and

approved pursuant to judgment fund limitations (if any) and/or the

terms of the Act.

(k) The proposed date for transfer of funds.

(l) A statement as to whether the tribe chooses to receive the

withdrawal as a cash balance transfer, as a transfer of marketable

investments that we own for the tribe, or as a combination of the two.

(1) A cash balance transfer may require us to sell bonds, notes, or

other investments that we purchased when investing the tribe's monies.

(2) We cannot transfer non-marketable securities to a tribe. We can

only purchase and hold them and must sell them back to the U.S.

Treasury.

(3) If we sell a tribe's security at a loss (i.e., when market

value is less than book value or carrying value) we will first notify

the tribe. The tribe must instruct us to proceed with the sale and must

agree not to hold us responsible for the loss before we will make the

sale.

(4) If the tribe asks us to transfer marketable securities, upon

proper instructions from the new tribal custodian, we will order our

custodian to physically transfer the proper security to the new

custodian on the agreed upon date.

(m) Agreement that judgment award funds will have segregated

accounts.

(n) A description of the procedures for amending or revising the

plan.

Sec. 144.15 What is the approval process for management plans?

The Secretary will approve or disapprove each management plan,

based in part upon our recommendation.

(a) We will determine the completeness of the application, provide

for adequate professional review of the application and the management

plan, and provide technical assistance as necessary to make an

application complete.

(b) We will coordinate with area directors in confirming authority

of tribal governments to make requests, and in providing technical

assistance.

(c) We will approve or disapprove a request within 90 calendar days

of receiving a completed application. This 90-day period does not

include time that we spend awaiting a response from the tribe for

additional information that we have requested. All determinations will

be in writing, and all responses will be by certified mail.

(d) If we find that a plan does not meet the criteria in

Sec. 144.16, we will notify the tribe of shortcomings of the request,

and allow the tribe to respond before recommending formal disapproval.

(e) Before final approval, we will reach agreement with the tribe

on how many days after final approval we will transfer the funds. We

will transfer the funds as soon after final approval as the tribe or

manager is ready to receive them, unless we need additional time to

sell existing instruments.

Sec. 144.16 What criteria will be used in evaluating the management

plan?

Each plan must be approved by the appropriate tribal governing

body, and must be accompanied by a resolution approving the plan. The

plan must be reasonable in light of the trust responsibility and the

principles of Indian self-determination, and other appropriate factors,

including, but not limited to, the factors listed below:

(a) We will evaluate the individuals or entities that will manage

the funds to be withdrawn, or that will advise the tribe on investing

the funds to be withdrawn in order to determine if they have the

capability and experience to manage the funds. Among the elements we

will evaluate are: the number of years in business, the performance

record for funds management, and the ability to compensate the tribe if

the entity is found liable for failing to comply with the tribe's

management plan (i.e., its assets, bonding, and insurance).

(b) We will review the tribe's experience in managing investments.

We will compare this experience to the complexity of the proposed

management plan to determine whether the tribe has the experience to

manage its proposed plan or whether it should begin with a less complex

approach.

(c) We will evaluate the tribe's internal audit and control systems

for

[[Page 24736]]

overseeing or monitoring its investment activity.

(d) We will evaluate the adequacy of protection against substantial

loss of principal. Our determination will include a thorough evaluation

of the tribe's investment plan including:

(1) The goals and objectives;

(2) The proposed uses of the fund in order to meet business

objectives;

(3) The size and diversity of the investment portfolio (for

example, the class of stocks and the mixture of types of investments);

(4) The financial condition of the tribe;

(5) The inherent riskiness of the proposed investments; and

(6) The tribe's projected need and proposed timeframes to draw down

the funds being invested or the income from them.

(e) We will determine the likelihood that the plan will be

followed. We will base this determination on the contents of the

agreement between the tribe and the fund manager and other appropriate

factors.

Sec. 144.17 What special criteria will be used to evaluate management

plans for judgment or settlement funds?

For judgment or settlement funds, in addition to the criteria in

Sec. 144.16, we will determine if the plan adequately provides for

compliance with any conditions, uses of funds, or other requirements

established by the appropriate judgment fund plan or settlement act.

Sec. 144.18 When does the Department's trust responsibility end?

Our trust responsibility for funds withdrawn under this part ends

on the date that the funds are withdrawn. However at the time of

withdrawal neither we nor the tribe may be deemed to have accepted the

account balance at the time of withdrawal as accurate, or waived any

rights regarding the balance and our ability to seek compensation.

Sec. 144.19 How can the plan be revised?

Once a tribe has withdrawn its funds, the tribe may revise its plan

without our approval. All revisions should conform to the procedures

outlined in the approved management plan. The tribe should inform its

members of all revisions to a plan through normal tribal procedures

before the revisions are implemented.

Sec. 144.20 How can a tribe withdraw additional funds?

(a) If a tribe has withdrawn funds under an approved tribal

management plan and wishes to withdraw additional funds that will be

managed under the same plan, it need not submit a complete new

application. The tribe must:

(1) notify us of the additional amount it intends to withdraw and

whether the funds to be withdrawn are in kind or cash. (Written

notification should be provided to our address in Section 144.13);

(2) send us a tribal resolution approving the new withdrawal and

certifying that the funds are being withdrawn subject to the same

conditions and that they will be managed under the plan in the original

approved application;

(3) send us a copy of the most recent compliance audit or

investment report.

(b) After we finish our review we will release the additional

funds, unless the compliance audit or investment report indicates that

the tribe is not complying with its management plan. In this case, we

will not release the additional funds until the tribe demonstrates that

it is complying with the management plan.

Sec. 144.21 How may a tribe appeal denials under this part?

If we deny a request or do not approve an application within 90

days of a request, the tribe may address any problems that we identify

and resubmit a revised request, seek technical assistance, or appeal

the denial under 43 CFR Part 4.

Subpart C--Returning Tribal Funds to Trust

Sec. 144.30 How does a tribe notify the department if it wishes to

return withdrawn funds to Federal trust status?

If a tribe elects to return some or all of the funds it has

withdrawn from Federal trust status pursuant to this Act, it must first

notify us in writing at our address in Section 144.13. This

notification must provide a proposed date for the return of the funds,

as well as the amount of funds to be returned, or actual securities to

be delivered to the appropriate custodian.

Sec. 144.31 What part of withdrawn funds can be returned to trust?

A tribe may return all or a portion of the principal which was

removed from trust under this Act along with earnings and profits. We

will verify the amount declared for earnings before we accept a return.

We will accept any amount less than the original principal amount as a

principal amount.

Sec. 144.32 How often can funds be returned?

Tribes may return all or part of withdrawn funds no more than twice

a year, beginning no sooner than 6 months after date of withdrawal,

except with approval of the Secretary.

Sec. 144.33 How can funds be returned?

Funds may be returned either as cash or securities which meet the

requirements for investments in 25 U.S.C. 162(a). Cash can be

transferred to the US Treasury by Electronic Funds Transfers (EFT), or

the Automated Clearing House (ACH) process. Tribes must coordinate

transfer of ownership in securities with us to ensure proper credit to

the tribe. The securities must meet investment restrictions contained

in 25 U.S.C. 162(a).

Sec. 144.34 Can a tribe withdraw redeposited funds?

Yes, if a tribe wishes to withdraw redeposited funds from Federal

trust status, it must submit a written request to do so, accompanied by

a new resolution and any revisions it wishes to make in its original

management plan.

Subpart D--Technical Assistance

Sec. 144.40 How will the Department provide technical assistance for

tribes?

(a) We will provide direct or contract technical assistance, in

accordance with appropriations availability, to tribes for developing,

implementing, and managing Indian trust fund investment plans. We will

ensure that our legal, financial and other expertise is made fully

available to advise tribes in developing, implementing, and managing

investment plans.

(b) We may award grants to tribes for developing and implementing

plans for investing Indian tribal trust funds.

(c) Tribes may also obtain technical assistance on their own.

Sec. 144.41 What types of technical assistance are available?

The types of technical assistance include: investment planning;

accounting; selection of investment managers; monitoring of

investments; asset management; or other assistance appropriate to

support funds withdrawal.

Sec. 144.42 Who can provide technical assistance?

A sample of competent providers includes any of the following

entities with the appropriate skills and capabilities: available DOI or

BIA staff; intertribal organizations; public agencies; and contracted

private investment firms.

Sec. 144.43 How can a tribe apply for technical assistance?

(a) Tribes wishing technical assistance may request it by sending

us a letter along with a tribal resolution outlining

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the technical assistance required, tribal resources which may be

applied to the need, and suggested provider, if known. The resolution

must state clearly that the assistance is needed for developing,

implementing, or managing an investment plan under the provisions of

this authority.

(b) Tribes requesting funds for technical assistance must send a

completed SF-424, APPLICATION FOR FEDERAL ASSISTANCE, and SF-424A,

BUDGET INFORMATION, along with a tribal resolution, detailing the

assistance specifically requested, and the suggested provider to our

address in Section 144.13.

(c) We will make grants subject to funds availability. We will

publish a notice in the Federal Register concerning the availability of

funding, deadlines for grants, the application process, and approval

criteria. If funding is limited, grants will be awarded based on

criteria that we feel will best meet the intent of the Act. We will

consult with tribes in determining annual criteria. Unsolicited grant

requests will not be accepted.

Sec. 144.44 What action will the Department take on requests for

technical assistance?

We will respond in writing to all requests for technical assistance

and grants, advising of decision, availability of appropriate expertise

and funding, and anticipated delivery of the service.

Dated: May 8, 1996.

Ada E. Deer,

Assistant Secretary--Indian Affairs.

[FR Doc. 96-12143 Filed 5-15-96; 8:45 am]

BILLING CODE 4310-02-P