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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 378,000 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. (As of the end of fiscal year 2008, nearly 19,500 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 fiduciary trust does not charge for services to manage the natural
resources of the trust or investment of trust funds. Virtually 100 percent of
the income is returned to tribes and individuals. In fiscal year 2008, the trust
produced over $900 million in combined tribal and individual revenues. Most of
the revenue was produced by a very small percentage of accounts. Over 185,000
of the nearly 425,000 accounts in the system earn $10 or less per year. Interior’s
annual expense to manage this trust is approximately $500 million from appropriated
funds.
- 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.
On trust lands, the Department manages over 100,000 leases. It also manages
approximately $3.4 billion in trust funds. For fiscal year 2008, funds from
leases, use permits, land sales, and income from financial assets, totaling
approximately $460 million, were collected for about 378,000 open IIM accounts.
Approximately $506 million was collected in fiscal year 2008 for about 2,700
tribal accounts (for over 250 tribes).
There are currently 128,000 individual Indian allotments and 4.2 million
fractionated interests.
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