OPA

The Interior Department is requesting budget increases for fiscal 1983 to continue construction of essential water projects in the West, upgrade deteriorated facilities at national parks, and improve access to energy and other minerals on multiple-use Federal lands, Secretary of the Interior James Watt said today.

Another significant budget initiative is increased grants to States for surface mining regulation and abandoned mine land restoration, the Secretary said.

· At the same time, Interior is asking Congress for less spending on other ongoing programs in keeping with the overall austerity of President Reagan's FY 1983 budget. Thus, the sums requested for a majority of Interior agencies register a decrease from the funding voted them by Congress for the current fiscal year.

Interior's 1983 budget requests total $6,024,618,000 (excluding activities expected to be transferred from the Departments of Energy and Education under reorganization plans soon to be proposed). This is a net increase of about $293 million over the comparable FY 1982 budget level of $5,731,974,000.

"Some otherwise desirable programs will have to make do with less money until the national economy is on firmer footing," Secretary Watt said. "We have instituted tighter management controls across the board to make the best use of the limited funding available. Of the activities recommended for increases, several promise to increase jobs and prosperity, reduce our energy and mineral dependence on foreign sources, and return more money to the Treasury; others represent better stewardship of federally-owned lands and resources, notably in our national parks; and still others demonstrate our commitment to Interior's responsibilities toward Indian tribes.

"The fact that we are able to request relatively modest increases for FY' 83 reflects the success of our deep budget cutting during FY'81 and '82," the Secretary said. "Still, that certainly does not mean that the cost squeeze is ended. We will keep our commitments to essential activities by exerting constant heavy downward pressure on nonessential costs, continually making reductions wherever possible."

Interior estimates that it will receive about $20.5 billion in receipts in FY 1983. This is almost double the level expected in FY 1982. The increased FY 1983 receipts include $18 billion projected to come from revenues from oil and gas leases on the Outer Continental Shelf.

One potential source of additional revenues is the new Minerals Management Service (MMS), which will seek greatly improved collection of royalties from mineral leases on Federal and Indian lands. The Minerals Management Service has assumed responsibility for supervision of mineral leases from the former Conservation Division of the U.S. Geological Survey, from which it was formed by order of the Secretary on January 19. It is budgeted initially for $128.5 million--including an increase of $6.4 million targeted for improved royalty management systems. (Details may be found under the Geological Survey heading in the Department's detailed budget documents.) MMS will receive priority consideration for necessary added funding in the months ahead.

Highlights of the new budget requests include:

---$191 million to continue Secretary Watt's national park restoration and improvement program (PRIP) to correct major deficiencies in park facilities and address serious resource preservation problems. Watt initially asked for a $105 million increase in FY 82 over the $87.3 million requested by the previous Administration. If Congress votes the full $191 million for PRIP for FY 83, it will augment the NPS efforts to restore and improve the parks during fiscal 1983.

The fiscal 1983 total proposed for restoration and improvement, including base funding, provides $67 million for small scale maintenance, rehabilitation, and historic preservation projects; $124 million is earmarked for major capital improvements involving 46 projects in 40 parks. These projects include the rehabilitation of water and sewer systems, the reconstruction of unsafe roads and bridges, fire and safety improvements in public facilities, and the preservation of important historic structures.

---$24.6 million in operating increases for park areas to restore programs curtailed over the years due to inflationary pressures on park budgets--programs ranging from routine and special maintenance to law enforcement and including scientific research to improve park resource protection, better evaluation of concessions management, and interpretive activities to enhance park visitors' understanding of park values. New parkland acquisition would be severely limited, however, in line with the Watt policy of emphasizing better stewardship of lands already owned.

---$118 million more than in FY 82 for the construction program of the Bureau of Reclamation in the 17 contiguous Western States for work on 70 projects, including new rehabilitation and betterment work on four projects, and 7 to conduct pre-construction work on two projects. The largest of the works under way include the Central Arizona Project; Bonneville Unit of the Central Utah Project; Central Valley Project, California; Colorado River Basin Salinity Control Projects; Columbia Basin Project, Washington; and McGee Creek Project, Oklahoma. A $17 million increase is proposed for continuation of 10 loan projects; and 13 new investigations would be undertaken emphasizing energy production, municipal and industrial water supplies, and Indian water development; plus 11 new advance planning studies, proposed in a manner intended to shorten considerably the time needed to prepare a project for construction.

---Watt said the President's 1983 budget includes a contingency allowance for initial work on new Bureau of Reclamation construction starts--as yet undesignated--which will meet the Administration's criteria for cost sharing and non-Federal financing, The new starts will be selected from among projects authorized but never funded, after the Administration adopts new guidelines defining cost sharing and related criteria.

---Funds requested for the Office of Surface Mining would change only slightly from FY 82 levels overall, but significant changes would take place in how the money is allocated. Grants to States would rise to $111.9 million, one-third more than in FY 82, as the States achieve primacy for their regulatory and mined land reclamation programs, as provided in the 1977 Surface Mining Act, These increases would be offset by reductions in the funding for direct Federal programs. OSM's total budget for FY 83 is $159.8 million, down slightly from the $160.6 million appropriated for FY 82.

---A $4.2 million increase for the Bureau of Land Management (BLM) to accelerate its Outer Continental Shelf leasing program; plus a $4.1 million increase to help BLM prepare for more onshore oil and gas leasing; and a nearly $1 million increase for oil shale leasing and steps toward a 1984 tar sand leasing program.

---U.S. Geological Survey is earmarked for a $21.1 million total increase above FY 82, largely for such programs as mineral resource surveys, applied and basic geological research, oil and gas and coal resource information, water resource investigations (principally for acid rain and toxic wastes), and the operation and maintenance of the Barrow, Alaska gas fields. The $21.1 million includes the $6.4 million increase mentioned previously for improved royalty management in the new Minerals Management Service; formerly USGS' Conservation Division.

---National wildlife refuges, national fish hatcheries, and wildlife research facilities would receive a $10.2 million increase for minor rehabilitation and increased cyclical maintenance, Major rehabilitation would be increased by $6 million.

---The appropriation request for Indian Affairs exceeds 1982 funding by $88.6 million, after excluding programs to be transferred from the Department of Education. The request reflects a net increase of $47 million for operations over the FY 1982 level of $802 million. This net increase includes $2.2 million for education; $15.2 million for services such as welfare payments, law enforcement, housing and similar programs and also including $5 million for a new initiative intended to improve the management capability of small tribes; $13.7 million for economic development and employment including $10 million for a new economic development initiative; $9.5 million for natural resources development; $1.3 million for the Federal Government's trust responsibilities; $10 million for facilities maintenance; $11.1 million for general · administration; and a decrease of $16 million for overhead. Another increase is in facility construction (+$12.4 million). Road construction decreases by $3.6 million. Indian trust funds are increased by $32.8 million to a total of $601 million.

---Operating budgets for the U.S. territories and the Trust Territory of the Pacific Islands will be slightly higher than in FY 82, although the total amount requested for Territorial and International Affairs will show a $30 million decline; most of the reductions actually represent non-recurring expenditures for capital improvements such as completion of a hospital in the Virgin Islands, which is receiving $21.5 million in FY 1982, and a number of projects in Guam, American Samoa and the Trust Territory. However, sums are included for FY 83 for territorial development projects including the first phases of a hospital for the Northern Marianas ($4 million) and capitals for the emerging governments of Micronesia ($7.8 million).

---Bureau of Mines Minerals Resources Technology research on strategic and critical materials is increased in FY 1983 by $2.6 million even though the Bureau's overall research program is significantly reduced. Reductions requested from FY 1982 appropriations include:

---National Park Service: Land acquisition, a new request of $59.8 million, providing funds for deficiency awards, emergency acquisitions and overhead costs; Urban Park and Recreation Rehabilitation grants, zero-budgeted for 1983 compared with a $7.7 million appropriation in FY 82; historic preservation grants to States and to National Trust for Historic Preservation, zero-budgeted compared with $25.4 million current level.

---U.S. Geological Survey: Program reductions include earthquake and volcano hazards investigation down by $4.6 million; uranium and thorium energy investigations down by $4.7 million; geothermal investigations down by $1.9 million; oil shale investigations down $1.5 million; and Federal coal drilling down by $3.0 million. ---Office of Water Research and Technology: Down $10.6 million. The programs are proposed for termination.

---Payments in Lieu of Taxes by BLM to local governments: Down $56.3 million to a new total of $45 million, with legislative changes proposed for later transmittal to Congress. The reduction includes $5.8 million for National Wildlife Refuge lands.

---U.S. Fish and Wildlife Service: $14.9 million less for land acquisition; $4.4 million cut by discontinuing cooperative research units; a reduction of $2.8 million for other research, and animal damage control reduced $1.7 million. Thirty-one fish hatcheries would be transferred to States or closed down for a $3.7 million saving--but none of the 31 would be hatcheries that primarily produce for anadromous or Great Lakes fisheries, or for Federal mitigation or endangered species restoration.

---BLM range management: Down $4.4 million, partly by transferring some maintenance costs to range users. Forest management also would be trimmed by $2.1 million by curtailing activities in marginal timber-growing areas outside the highly productive western Oregon timber lands. Rangeland improvements financed from 50% of grazing fee receipts will drop $2.2 million because grazing fees for 1982 have been reduced pursuant to the statutory formula, largely reflecting recent declines in livestock prices paid to ranchers.

---The FY 1983 budget for the Bureau of Mines is reduced by $25.9 million. Approximately $4.0 million of this decrease is attributable to one-time funding that was in the Bureau's FY 1982 budget for construction of facilities. Another $9.2 million results from the Department's decision to discontinue funding of Mineral Institutes in FY 1983. Funding for the Bureau's mineral information program is reduced by $2.5 million. The remaining budget reductions are achieved through curtailment of Bureau research and development projects. In general, federally funded research and development by the Bureau would be limited to high-risk projects with long-term payoff. The President's Budget for Interior includes some programs proposed to be transferred from the Departments of Energy and Education. The Energy programs are the Strategic Petroleum Reserve, the Naval Petroleum and Oil Shale Reserves, and the five power marketing administrations, with total FY 1983 budget requests of approximately $1.2 billion, an increase of $258 million over the FY 1982 estimated level of $930 million. The Education programs, which are included with the Department's Bureau of Indian Affairs budget request, are the Indian Education Assistance Program and Impact Aid for Indian school construction, with a combined FY 1983 budget request of $52 million, a decrease of $29 million from the estimated FY 1982 President's budget request.

DEPARTMENT OF INTERIOR Budget Authority and Outlays (in thousands of dollars)

DEPARTMENT OF INTERIOR Budget Authority and Outlays (in thousands of dollars)

FY 1982 Budget Authority excludes $71 million for proposed FY 1982 fire suppression supplementals and $30 ·million in Contract Authority - Land and Water Conservation Fund. Outlays have been adjusted accordingly.

PRESS CONTACTS FOR FURTHER INFORMATION REGARDING INTERIOR'S FY 1983 BUDGET (Area codes need not be used from Washington, D.C., unless indicated below)

Interior's Deputy Assistant Secretary for Indian Affairs, Roy H. Sampsel, will begin negotiations February 10 with Alaskan state officials in Juneau for the transfer of 37 Bureau of Indian Affairs schools to the state education system.

In addition to the 37 elementary schools located in Alaska Native villages, the Bureau now operates one boarding high school, Mt. Edgecumbe, at Sitka, Alaska it is expected that Mt. Edgecumbe would continue operation at least through the 1982-83 school year to allow the state to develop suitable alternative plans for the high school students.

"The Bureau of Indian Affairs' schools for the Alaska Natives were established to meet needs until the state was ab le to assume the responsibility," Sampsel said. He noted that the Alaska Constitution requires the state to "maintain a system of pub lie schools open to all children of the state."

Sampsel said that the BIA and the state formalized an agreement in 1963 for the transfer of Bureau schools to state administration. There were at one time as many as 120 BIA schools in Alaska. Transfers have occurred intermittently since 1963.

Topics for discussion with state school officials and representatives of the Governor's office, Sampsel said, would include the transfer of BIA school buildings to the state, personnel issues, scheduling, and the possible need for special legislative authority.

Sampsel and BIA education officials initiated discussions with state officials on the transfer of BIA schools this past fall. At that time BIA representatives visited 36 of the 37 villages to talk with Native leaders about the proposed transfers. The one village was missed because of bad weather.

Sampsel acknowledged that reduction in the BIA's education budget made further delays in the transfer of the schools undesirable. ''We have to make substantial reductions, so it seems reasonable -- and beneficial to the state school system and the Native children -- to simply complete the transfer."

Secretary Watt announced today that William "Perry" Pendley will be the Acting Director of the new Minerals Management Service in the Department of the Interior. Pendley will retain his current position as Deputy Assistant Secretary for Energy and Minerals, but in the days to come while the search for a permanent Director is underway, his prime responsibility will be the administration of the Minerals Management Service

"I have full confidence that Perry will provide the strong leadership needed to .transfer the functions of the Conservation Division into the Minerals Management Service and to ensure that the goals of the Linowes Commission are not only achieved, but exceeded," Watt said.

As Acting Director of the Mineral Management Service, Pendley will report directly to a four-man Minerals Management Board made up of the Under Secretary, the Assistant Secretary for Policy, Budget and Administration, the Assistant Secretary for Indian Affairs and the Assistant Secretary for Energy and Minerals. This reorganization and restructuring will ensure that the royalty collection functions within the Department receive high priority and Secretarial level attention, Watt said.

Pendley came to Interior after nearly five years on Capitol Hill, first as Legislative Assistant to former U.S. Senator Clifford P. Hansen of Wyoming, and then as Minority Counsel to the Mines and Mining Subcommittee of the House Interior and Insular Affairs Committee.

Last year, President Reagan appointed Pendley as a member of his Strategic Minerals Task Force responsible for submitting to the President recommendations for achieving a national strategic minerals policy.

A native and legal resident of Wyoming, Pendley was born in Cheyenne April 3, 1945. He holds a Juris Doctor degree from the University of Wyoming's College of Law, and Bachelor and Master of Arts degrees in public affairs from George Washington University, Washington, D.C.

Earl J. Barlow, Director of the Bureau of Indian Affairs' Office of Indian Education Programs since 1978, has been appointed Director of the BIA's Minneapolis Area Office, Interior Assistant Secretary for Indian Affairs Ken Smith announced today. His appointment is effective March 7, 1982.

Barlow, a Blackfeet Indian, is a member of the Federal government's Senior Executive Service.

Smith said that Barlow had led the Indian education office through an important transition period following the enactment of the Education Amendments Act of 1978. The Act mandated major changes in the Bureau's education organization and the transfer of basic responsibility for the schools to local Indian communities. "The flexibility of the Senior Executive Service," Smith said, "allows us to transfer out top officials as we think necessary to best achieve our goals. I think a new appointee brings new vitality to a job. I believe that good executives welcome new challenges."

John Fritz, a Minneapolis resident until his appointment this past December as Deputy Assistant Secretary in charge of BIA operations, will be Barlow's immediate supervisor.

The Minneapolis Area Director is responsible for BIA activities in Minnesota, Wisconsin, Michigan and Iowa. The position has been vacant since last May. Barlow, 54, was Superintendent of Schools in Browning, Montana, from 1973 to 1978. He had also served as the Montana State Supervisor of Indian Education and had worked for 30 years as a teacher, principal and education program administrator. Barlow graduated from the University of Montana, with a degree in social studies and then earned a Master's in education from that University.

The Minerals Management Service, created today by Interior Secretary James Watt to ensure the proper and full collection of royalties from Federal and Indian leases, will place renewed emphasis upon efforts to stem royalty fraud and theft in a system producing $5 billion in annual collections.

The basis of the new Service is the Conservation Division of the U.S. Geological Survey, which is being reassigned to report directly to the Under Secretary and an executive group within the Office of the Secretary.

"This elevated status," Watt said, "indicates the high level of involvement" intended for the Service as it further tightens inspections, site security and auditing and accounting procedures governing more than 44,000 oil and gas wells on nearly 17,000 leases spread across 27 States.

Enforcement of the 60 recommendations of the Commission on Fiscal Accountability of the Nation's Energy Resources and approved by Watt will be a major responsibility of the new agency. The Commission, appointed by Watt in July 1981 and headed by David F. Linowes, suggested major changes in royalty accounting to cope with increasing demands for oil and an expanded domestic drilling program.

Current Interior Department projections indicate that royalty collections could rise from their present $5 billion a year level to $14 billion a year by 1990. A significant portion of that money is returned to the States of origin and to the Indian tribes where leases are located.

"Moving the Conservation Division out of the USGS will preserve and enhance the Survey's international reputation and scientific excellence as well as its role as the Federal Government's prime earth science agency,” Secretary Watt said. "With the reassignment of the Survey's regulatory activities, it can focus on broad objectives including scientific research on geology, topography, land, water and power studies, and dissemination of scientific data," Watt said. Cooperative agreements with jurisdictions which benefit from the royalty money are high on the list of changes called for by Secretary Watt as he adopted the Linowes Commission recommendations. States now receive half of the royalties from Federal leases within their borders (except for the State of Alaska which receives nine-tenths of the Federal royalties), and Indian tribes receive all of the royalties on tribal leases.

Watt's creation of a legislative Task Force to develop an omnibus royalty management bill indicates his intention of expanding the sanctions available to the Minerals Management Service for cracking down on royalty offenders, as well as other legislative improvements': Watt will seek as well authority to create a self-sustaining fund from royalties for royalty management. Watt has asked that the legislative proposal includes a bounty system, or reward incentive plan, by which individuals could be paid for furnishing information about fraudulent or wasteful practices in the royalty collection system.

Watt's creation of a legislative Task Force to develop an omnibus royalty management bill indicates his intention of expanding the sanctions available to the Minerals Management Service for cracking down on royalty offenders, as well as other legislative improvements. Watt will seek as well authority to create a self-sustaining fund from royalties for royalty management. Watt has asked that the legislative proposal include a bounty system, or reward incentive plan, by which individuals could be paid for furnishing information about fraudulent or wasteful practices in the royalty collection system.

Creation of the new agency culminated a series of actions which Watt began shortly after taking office a year ago. Last February the Secretary met with the governors of western oil-producing States and asked for their help in curbing potential losses of royalty. He noted that investigations by the General Accounting Office, the Congress, the States and Indian tribes back to 1959 had little effect on the problem, which has worsened during recent years as the prices for oil shot up.

When Watt appointed the Commission on Fiscal Accountability last July, he offered it all the resources of his own office, as well as opening the way for coordination with President Reagan's Council on Integrity and Efficiency and the Office of Management and Budget, to seek solutions for fraud and theft in the royalty system. He said the commission report would have first priority in seeking to avert a financial scandal among the onshore Federal and Indian leases.

"The American people deserve full payment for the sale of the public resources, and I intend to see that they get it," Watt said in appointing the Commission.

Reconstituting the Conservation Division into the Minerals Management Service will permit the remainder of the USGS to concentrate on other problems of national magnitude, Watt said. These include finding new resources of strategic minerals and energy, understanding acid rain, dealing with radioactive waste, and better preparing for geologic hazards, from mudslides to earthquakes.

"We also expect the Survey to accelerate the Department's National Mapping Program and to build the new National Digital Cartographic Data Base that will support the activities of nearly every governmental agency in the country," he said, adding:

"The Survey will be able to place more emphasis on developing better assessments of the mineral and energy resources potential on the public lands, both onshore and offshore. A good leasing program is still dependent on good earth science, and we will continue to expect the Survey to provide that base."

Secretary Watt noted that during the past century the Geological Survey has been known as the mother of bureaus spinning off numerous functions to form new bureaus within the Department of the Interior including the Bureau of Reclamation, the Bureau of Mines, and elements of the Bureau of Land Management.

"I am excited by today's action to create the Minerals Management Service because it will allow the Geological Survey to concentrate more fully on its scientific mission, and I and the Department will be able to rely more upon the organization and its director, Dr. Dallas Peck, as our principal advisor on scientific matters," Watt added.

Interior Secretary James Watt today announced a major overhaul of the Interior Department's decades-old system for collecting mineral royalties, to assure recovery of an estimated $200 to $500 million a year in oil and gas royalties believed unreported on Federal and Indian leases.

Watt's decisions, requiring realigned management, tighter internal controls, more site inspectors, improved auditing, additional penalties, and greater cooperation with States and Indian tribes, were adopted to implement 60 recommendations of the Commission on Fiscal Accountability of the Nation's Energy Resources. Watt appointed the Commission last July to look into waste and fraud in the royalty program, which now provides approximately $5 billion a year for the Federal Treasury, mineral producing States and Indian tribes. Projections indicate that royalty collections will top $14 billion a year by 1990.

"I have directed the Department to move aggressively to achieve or exceed the goals of the Commission's recommendations," the Secretary said. "Orders were issued earlier this week and implementation is now under way."

The Secretary noted that studies conducted by the General Accounting Office, the Congress, State governments and the Indian communities dating back to 1959 revealed serious allegations of waste, fraud and mismanagement in the royalty collection program.

“Nevertheless,” he said, “I discovered on coming to the Department that very little had been done to resolve these problems. Today, to accomplish President Reagan's- goals of eliminating government waste while stimulating domestic energy production, we must and will assure that we receive full value from the sale of the public's oil, gas and other mineral resources.

"I have focused major attention of this Department upon the royalty management program involving the States and Indian tribes. Our efforts have renewed interest in the importance of the collection process but a comprehensive review such as that conducted by the Commission was vital, “said Watt. To provide improved management of the royalty system by increased Secretarial responsibility, Watt announced creation of a Minerals Management Service.

The U.S. Geological Survey's Conservation Division, will be reporting to a three-man Minerals Management Board directly responsible to the Secretary. The executive group chaired by Under Secretary Donald Paul Hodel will include Assistant Secretaries J. Robinson West {Policy, Budget and Administration) and Daniel Miller (Energy and Minerals).

"The new agency will have ready access to the Secretary and will require a high level of involvement and direction," Watt said. "The transfer of functions governing the administration of mineral leases away from the Geological Survey should strengthen that agency. Relieved of its regulatory duties, the Survey will be better able to carry out its prime responsibilities for scientific research and for gathering, analyzing and disseminating scientific information about the Nation's resources." '

Watt credited the Commission's six-month investigation, headed by David F. Linowes and including a panel of four nationally recognized fiscal, legal and scientific authorities, with having pinpointed major long-standing deficiencies in the royalty management process.

The Minerals Management Service, through new regulations, will require improved security on about 46,500 wells on 17,600 Federal leases. Operators will be required to develop site security plans and will face stiff penalties for violations. Federal monitoring will be intensified. States and tribes will be urged to cooperate in augmenting the work of an expanded inspection team.

"I am implementing a policy whereby we will enter into cooperative agreements with the States and tribes to augment much of the enforcement work now performed by the Geological Survey,” Watt said.

Watt agreed with a Commission proposal to create a Legislative Task Force which will develop an omnibus royalty management bill to be forwarded to Congress. The task force, to be headed by Theodore J. Garrish, Legislative Counsel to the Secretary, will consider legislative changes required to make States and Indian tribe’s equal partners in the collection program. Proposed also are penalties up to $10,000 a day for security and reporting violations, creation of a self-sustaining royalty management fund, adoption of a reward incentive plan for encouraging reports on fraud or mismanagement, and other improvements.

The Secretary also announced his intention to name an Advisory Commission composed of Federal, State and Indian representatives, to assist in implementing the Commission's recommendations and in improving the levels of cooperation among the various governments. The Linowes Commission had strongly urged creation of such a group.

The Secretary said a proposal by the Linowes Commission to raise the onshore minimum royalty rate from its present 12 1/2 percent to 16 2/3 percent (the current rate on most offshore and recent Indian leases) merits further study, which he ordered be conducted and completed by April 1.

The Department's Office of Inspector General was requested by Watt to report on a Commission recommendation to determine whether minerals sales could and should be traced beyond the first purchaser. The Commission had made that recommendation as a means by which the Department could independently verify information from producers, royalty payers and first purchasers.

The commission recommended that Interior conduct intensive "lookback audits" regarding the sufficiency of past royalty payments of the top 25 royalty payers. The Secretary reaffirmed his commitment to such audits and agreed that an analysis of ' 1 lookbacks 11 into the payments of two major producers, now under way, will guide the Department in deciding which additional lookbacks will be worthwhile and to speed their completion.

The USGS, meanwhile, has instituted major changes in auditing procedures as a result of its own investigations of irregularities, as well as a review by the Secretary early in 1981. The agency recently awarded contracts totaling $12.4 million for work over a multi-year period to support a more automated accounting system.

Growing problems in the system, spotlighted by earlier investigations and brought into focus by oil price increases, led Watt last February to advise governors of oil-producing States that he planned to modernize the royalty collection system.

In appointing the Commission in July, he urged it to use its independent authority to probe waste and fraud, asking that it report its findings directly to him within six months. The Commission conducted five hearings in Washington, New York and Denver, listening to scores of witnesses, while visiting a number of oil and gas lease sites in the Western States.

The Commission maintained coordination with the President's Council on Integrity and Efficiency, and the Office of Management and Budget. Besides Linowes, an international authority in management, the Commission members are Elmer B. Staats, former comptroller general of the United States; Michel T. Halbouty, renowned earth scientist and engineer; Charles J. Mankin, State Geologist of Oklahoma; and Mary Gardiner Jones, attorney and consumer affairs specialist.

The United States' top Indian official, Interior Assistant Secretary Ken Smith, told 350 Indian businessmen January 13 that Indian reservations need businesses that are "competent and competitive and are going to endure to provide jobs and services for the community… because they earn the money they make and they also earn respect".

Smith, addressing the Minority Business Contractors Association of North Dakota, stressed the importance to reservation communities of "well managed, soundly established Indian enterprises." He said the reservations do not need more government-funded make-work jobs.

A Wasco Indian who ran the very successful tribal enterprises of the Warm Springs Reservation in Oregon before coming to Washington, D.C., last year, Smith has consistently told Indian groups they must be less dependent on the Federal government. "We should use and develop our own resources, break our addiction to easy-come, easy-go Federal money and achieve real economic independence," Smith told the Indian contractors.

Smith said that he was seeking to establish a $10 million fund to be used to help tribes plan and carry out development ventures with private capital and in joint ventures with private industry. He said his plan would “provide Indians with up-front expert examination of ventures before capital is put at risk.” He said the Indians need to build a record of successes to bring back to 11 0MB and Congress if we hope to get additional funding of this kind.

"The Department of the Interior, Smith said, would continue to support and implement the provisions of the Indian preference policy and the Buy Indian Act, which permit the non-competitive awarding of government contracts to Indian firms. He added, however, that these laws "can never be an excuse for inferior or non-competitive performance."

Smith said the Indian businessmen had a special value and importance in the Indian community. "Though you are bearing the risks and the burdens as individuals, your success brings benefits to the whole Indian community." Members of the North Dakota Minority Contractors Association, he said, did more than $70 million in business in the past year.

Smith's itinerary included a visit to the Devils Lake Sioux Manufacturing Company on the Fort Totten Reservation in North Dakota and meetings at Aberdeen, South Dakota and Minneapolis, Minnesota, with Bureau of Indian Affairs area officials and with tribal leaders.

The proposed budget for the Bureau of Indian Affairs for fiscal year 1983 requests appropriations of $1.05 billion for the operation of Indian programs and construction projects.

The appropriation request for the operation of Indian programs exceeds 1982 funding by $40 million.

Programs receiving increases include school operations, plus $3.7 million; social services, plus $8.3 million; self-determination services, $7.6 million; business enterprise development, $7.9 million, and natural resources development, $9. 5 million.

There is an increase of $12.7 million for the construction of buildings and utilities and a decrease of $3.6 million for road construction.

The budget also calls for a general overhead cost reduction of $16 million. Interior Assistant Secretary Ken Smith said that consolidating area offices would be one of the administrative actions taken to cut overhead costs. Smith said that the development of communications and the widespread use of computers "greatly reduced the need for regional offices geographically close to the groups they serve."

The 1983 budget plan also calls for the closing of elementary boarding schools at Concho, Oklahoma and Wahpeton, North Dakota and the post-secondary vocational training school, Southwest Indian Polytechnic Institute at Albuquerque, New Mexico. The Bureau will also be transferring village day schools in Alaska to the state system.

Funds requested for new initiatives include $5 million to help small tribes acquire and maintain basic management capabilities and $10 million for tribes starting economic development ventures. The funds would assist the tribes with "seed money" aimed at encouraging private sector investment and sound business principles in the tribal programs. Indian Education: $256,7 million is requested for BIA Indian education programs.

This consists of $179.8 million for school operations; $26 million for Johnson-O'Malley programs; $30.i _million for college student assistance grants; $4 million for adult education; $10.4 million for tribally controlled community colleges and $6.4 million for the operation of the Haskell Indian Junior College at Lawrence, Kansas and the institute of American Indian Arts at Santa Fe, New Mexico.

The budget request also includes $51.1 million for the proposed transfer of the Title IV program from the Department of Education. Funds in the amount of $838,000 were also requested to supervise the spend out of prior year obligated balances for a Department of Education Indian school construction program.

Indian Services: The $98.7 million requested for social services includes $7.7 million for carrying out provisions of the Indian Child Welfare Act. The $56.9 million for self-determination services provides $30.3 million to cover tribal overhead costs associated with P: L. 93-638 contracts and $19.4 million for grants to tribal governments. Construction: The $60.1 million requested for construction of buildings and utilities include $15 million for first phase construction of Hopi High School in Arizona and $45.1 million for facilities improvements and repairs. The $45.9 million for irrigation construction includes $29.8 million for the legislatively mandated Ak Chin, Arizona project (to be made available upon enactment of authorizing legislation.) There is also $1 million for a Fallon, Nevada project and $2.6 million for the Grass Rope Project in South Dakota. A line item breakdown of the budget request, with the 1982 funding figures follows:

*1982 figures include actual appropriations and pending supplemental request.

**Programs included in the Department of Education in FY 1982, including rescission proposed in FY 1982.

***Includes Ak Chin Irrigation Project proposed for later transmittal.

Secretary of the Interior Manuel Lujan today appointed 36 Indian tribal representatives and seven departmental employees to an Advisory Task Force to develop goals and plans for the reorganization of the Bureau of Indian Affairs (BIA).

"I look forward to working with this important group to define ways that we can strengthen the organization of the BIA to better serve the Indian people," Lujan said. "These are the people that know the Bureau and know how it can best be of benefit to Indian tribes. I value their judgment."

Lujan followed the recommendations of Indian tribes in selecting three representatives for each of the 12 BIA areas. He added two representatives from his office and five from BIA.

The first meeting of the Joint Tribal/BIA/DOI Advisory Task Force has been scheduled for Tuesday, January 22, in Washington, D.C. Time, date, place, purpose and proposed agenda will be published in the Federal Register. Discussion of goals and/or plans for the reorganization of the BIA will take into consideration tribal government, departmental and federal government, and BIA concerns and ideas about strengthening the administration of Indian programs.

Established for a two-year period, the Task Force will make preliminary recommendations to Secretary Lujan on BIA reorganization by April 30, 1991. Lujan will designate one co-chairperson from the federal representatives and the tribal members will select by majority vote the other co-chairperson from tribal representatives.

Proposals for reorganization of the BIA were first presented to Indian tribes at a National Indian Tribal Leaders Conference sept. 28, 1990, in Albuquerque, N.M., by Lujan. He recommended that a Bureau of Indian Education be created separately from the BIA that would report directly to the Assistant Secretary for Indian Affairs and that the remaining functions form a separate bureau. A federal trust office would be created as part of the assistant secretary's office.

In the 1991 appropriations act, Congress directed the BIA to delay reorganization until a task force is convened and reports to the House and Senate Committees on Appropriations.

Representing Lujan's office on the Task Force will be Eddie Brown, assistant secretary - Indian Affairs, as designated co-chairperson, and Bill Bettenberg, deputy assistant secretary - Indian Affairs. The five BIA representatives will be Stan Speaks, acting deputy commissioner of Indian affairs; Edward Parisian, director, Office of Indian Education Programs; Bill Collier, area director, Anadarko Area Office; Betty Walker, area education programs administrator, Minneapolis; and Wyman Babby, superintendent, Fort Peck (Montana) agency.

Tribal representatives appointed by Lujan are listed by area.

Aberdeen: Charles Murphy, chairman, Standing Rock Sioux; Harold D. Salway, president, Oglala Sioux; and Michael Jandreau, chairman, Lower Brule Sioux.

Albuquerque: Wendell Chino, president, Mescalero Apache; Chester Fernando, councilman, Pueblo of Laguna; and Bernie Teba, executive director, Eight Northern Indian Pueblos Council.

Anadarko: Joseph T. Goombi, chairman, Kiowa Business Committee; Larry Nuckolls, governor, Absentee-Shawnee; and Juanita Learned, chairperson, Cheyenne-Arapaho.

Billings: Donovan Archambault, president, Fort Belknap Community Council; Harold Monteau, tribal attorney, Chippewa Cree; and John Washakie, chairman, Shoshone Business Council.

Eastern: James Sappier, governor, Penobscot Indian Nation; James Billie, chairman, Seminole Tribe; and Phillip Martin, chief, Mississippi Choctaw.

Juneau: Will Mayo, president, Tanana Chiefs Conference, Inc.; Willie Kasayulie, president, Native Village of Akiachak; and Joe Hotch, president, Klukwan, Inc.

Minneapolis: Gordon Dickie, chairman, Menominee Indian Tribe of Wisconsin; Darrell Wadena, chairman, Minnesota Chippewa; and Michael Parish, attorney, Hannahville Indian Community of Michigan.

Muskogee: Gary Breshears, executive director, Creek Nation of Oklahoma; Bill Follis, chief, Modoc Tribe of Oklahoma; and Mark Downing, executive director, planning, research and development, Cherokee Nation of Oklahoma.

Navajo: Daniel Tso, delegate, Navajo Nation Council and chairman, Education Committee of the Navajo Nation Council; Virgil Pablo, executive director, division of Social Services, Navajo Nation; and Karen Dixon Bates, executive director, Shiprock Alternative School Inc.

Phoenix: Nora Garcia, chairperson, Fort Mojave Tribal Council; Brian Wallace, chairman, Washoe Tribal Council; and Luke Duncan, chairman, Uintah and Ouray Tribal Business Council.

Portland: Georgia George, chairman, Suquamish Tribe; Mickey Pablo, chairman, Salish/Kootenai Tribe; and Ken Smith, chief executive officer, the Confederated Tribes of the Warm Springs Reservation.

Sacramento: Donald Ray, chairperson, Hopland Rancheria; Virgil Moorehead, chairperson, Big Lagoon Rancheria; and Frances Shaw, chairperson, Manzanita Band of Mission Indians.

Washington, D.C. - OMB Director Richard Darman and Secretary of the Interior Manuel Lujan announced today that, effective immediately, all adjustments associated with the Interior Department's Bureau of Indian Affairs (BIA) accounting and financial management system must be reviewed by a special management team established by the Department of the Interior (DOI). Further, Darman and Lujan announced the establishment of a plan to improve management at the BIA.

Responding to reports of $95 million in accounting discrepancies as a result of the preliminary resolution of FY 1990 accounts, DOI and 0MB teams conducted preliminary inquiries at the BIA accounting facility in Albuquerque, New Mexico. The preliminary 0MB report found severe and wide-ranging problems with the accountability of funds and the management of financial systems in a number of BIA programs, including numerous uncontrolled adjustments in accounting entries.

DOI and OMB investigators in Albuquerque discovered that the financial management system was potentially accessible to over 12,000 individuals. In FY 1990 alone, over 500,000 adjustments were made to the BIA financial management system.

As a result of these discoveries, Secretary Lujan has directed that, effective immediately, all future adjustments in the BIA financial system must be approved by a special team established by DOI. At the same time, a team of accounting and management experts will assist in the complete overhaul and revamping of BIA's financial tracking system. Darman and Lujan have stated that a new system is expected to be in place by the beginning of October.

In the meantime, OOI's Inspector General is conducting inquiries regarding the possibility of overspending of appropriations, in violation of the Anti-Deficiency Act. The joint DOI/OMB review, although preliminary, confirmed longstanding, fundamental problems in the BIA accounting and financial system, including:

Uncontrolled access by BIA employees to the accounting system.

The ability of individuals with access to the system to make after-the-fact changes, and in some cases to shift funds in order to make the books balance.

Poor controls over accounting for procurement and grant contracts totaling over $500 million per year.

Failure to use standard double entry accounting methods that provide for needed checks and balances. one-sided entries were commonplace, leading to ledger accounts that cannot be balanced.

As a result of the initial report of the OMB team, Dannan and Lujan announced that OMB and Department management experts will undertake the following steps with DOI by September 30, 1991:

Assist in the implementation of new accounting and financial controls to exercise effective, permanent control and accountability over BIA's finances;

Establish a special review and technical assistance team under the Deputy Assistant Secretary for Indian Affairs, which must approve all spending adjustment transactions. This team will report to Lujan and to a newly established BIA Management Review Board that will include OMB and other expert Federal agencies:

Implement the steps necessary for the conversion of BIA's accounting system to a department-wide Federal Financial system;

Determine and address the training needs of BIA's accounting personnel;

(5) Develop and introduce specialized controls to provide adequate accountability over procurement and grant transactions;

(6) Immediately provide a team of professional accountants to review and correct existing accounting records: and

(7) Provide a mechanism for on-going independent reviews of accounting results to ensure that new operational problems are promptly addressed.