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Statistics and Facts about OST
The Department of the Interior is responsible for managing over 56 million acres of land for over 370,000 Indian beneficiaries and over 250 tribes. There is nothing comparable to this in the commercial trust sector. Beyond size, there are a number of additional factors that make the Indian trust a unique management challenge:
- Unlike most commercial trusts, there was no trust document that created the Indian trust and articulated the fiduciary duties incumbent on the federal government in managing that trust. Instead the Indian trust gradually evolved from a series of Congressional actions – beginning with the General Allotment Act of 1887 (“Dawes Act”) – and subsequent policy changes. This unusual history created uncertainties about how the trust was to be managed, and about the very nature of the Indian trust: was it more like a common law trust or more like a government program? These ambiguities were gradually, if incompletely, resolved by case law, then finally by enactment of the American Indian Trust Fund Management Reform Act of 1994. Even now, and despite legislative clarifications, the courts still wrestle with the issue of whether the Indian trust is governed by the Administrative Procedures Act (like other federal government programs) or by the common law of trusts;
- The Indian trust operates under unique probate and title change requirements, and the sovereignty of the beneficiary community frequently influences management decisions;
- Unlike the commercial trust environment, where accounts and underlying trust assets must remain economically viable and productive or face liquidation under the common law of trusts, a large number of small accounts exist within the Indian trust. (Nearly 25,000 IIM accounts have balances of less than one dollar with no activity for 24 months.) In fact, most Indian trust accounts would fall below the minimal threshold for commercial trust accounts. In many cases the value of an Indian trust account is less than the cost of its administration, and the cultural heritage associated with the land held in trust is sometimes more important to the beneficiary than its monetary worth;
- The Indian trust does not charge for services and there is no mandate to generate a profit – currently the Indian trust, both individual and tribal, produces over $600 million per annum in revenue, but costs about $500 million per annum to administer. Most of the revenue is produced by a very small percentage of accounts: 86% of IIM accounts receive $10 or less per annum.
- Trust agreements or trust documents do not exist for each tribal account or each IIM account, which in a commercial trust would provide specific guidance in management of the trust assets;
- By law, the Indian trust is limited to investments in Government or Government-backed securities, which decreases risk but also limits the potential for growth.
Funds generated from leases, use permits, land sales, and interest earned on deposited funds, totaling approximately $300 million, are collected for some 370,000 open Individual Indian Money accounts.
About $500 million was collected in FY 2005 for 1,450 tribal accounts for over 300 tribes. Additionally, the trust includes approximately $3 billion in tribal funds and $400 million in Individual Indian Money accounts.
There are currently 128,000 individual Indian allotments and 3.6 million fractionated interests.
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