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H.C.R. 11 Enrolled

             1     

CONCURRENT RESOLUTION SUPPORTING THE TRANSFER

             2     
OF ADMINISTRATION OF THE UTAH NAVAJO OIL AND GAS

             3     
ROYALTIES TO THE UTAH DINÉH CORPORATION

             4     
2013 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Chief Sponsor: Michael E. Noel

             7     
Senate Sponsor: David P. Hinkins

             8     
             9      LONG TITLE
             10      General Description:
             11          This concurrent resolution of the Legislature and the Governor expresses the
             12      Legislature's and the Governor's support for the transfer of all oil and gas royalties
             13      administrative and fiduciary obligations to the Utah Dinéh Corporation under specified
             14      conditions.
             15      Highlighted Provisions:
             16          This resolution:
             17          .    expresses the Legislature's and the Governor's support for the transfer of all oil and
             18      gas royalties administrative and fiduciary obligations to the Utah Dinéh Corporation
             19      subject to federal action;
             20          .    declares that any transfer pursuant to federal action of oil and gas royalties
             21      administrative and fiduciary obligations to the Utah Dinéh Corporation must also
             22      indemnify and hold harmless the state of Utah from any and all legal and equitable
             23      claims arising from future oil and gas royalties administration by the Utah Dinéh
             24      Corporation and for litigation costs related to any claims;
             25          .    declares that transfer of oil and gas royalties administrative and fiduciary
             26      obligations to the Utah Dinéh Corporation should require that the value of fixed and
             27      monetary oil and gas royalties assets remain at least at current levels so that funds
             28      will be available to promote future generations of oil and gas royalties beneficiaries'
             29      health, education, and general welfare; and


             30          .    declares that, if the foregoing objectives are ensured, the transfer of oil and gas
             31      royalties administrative and fiduciary obligations to the Utah Dinéh Corporation
             32      should occur by federal action.
             33      Special Clauses:
             34          None
             35     
             36      Be it resolved by the Legislature of the state of Utah, the Governor concurring therein:
             37          WHEREAS, in 1933, Congress enacted 47 Stat. 1418, which expanded the boundaries
             38      of the Navajo Reservation north of the San Juan River, in San Juan County, Utah, referred to as
             39      the "Aneth Extension," and directed that 37.5% of all royalties from oil and gas extracted from
             40      certain portions of the Aneth Extension "shall be expended by the State of Utah in the Tuition
             41      of Indian children in white schools and/or in the building or maintenance of roads across the
             42      [Aneth Extension], or for the benefit of the Indians residing therein";
             43          WHEREAS, in 1968, Congress enacted Public Law 90-306, 82 Stat. 121, which
             44      expanded the beneficiary class to include all Navajo residing in San Juan County, Utah, (Utah
             45      Dinéh), and which redefined the purposes of the Utah Navajo Trust Fund (UNTF) to include
             46      the beneficiaries' "health, education and general welfare";
             47          WHEREAS, the 1933 act and the 1968 expansion of the beneficiary (Federal Acts)
             48      class effectively created a common law discretionary trust whereby the United States is the
             49      settlor, Utah is the trustee, and all Utah Dinéh residing in San Juan County, Utah, are
             50      beneficiaries;
             51          WHEREAS, pursuant to the Federal Acts, Utah is directed to administer the oil and gas
             52      royalties for the health, education, and general welfare of the Navajo Indians residing in San
             53      Juan County;
             54          WHEREAS, oil and gas were first extracted in paying quantities from the Aneth
             55      Extension during or about the late 1950s;
             56          WHEREAS, in 2008, the Legislature of the state of Utah enacted H.B. 352,
             57      Amendments Related to Monies Derived from Navajo Nation Reservation Lands in Utah,


             58      which in part declared, "It is the purpose of this chapter to provide for a transitional process
             59      until congressional action designates a new recipient of the Utah Navajo royalties";
             60          WHEREAS, H.C.R. 4, Concurrent Resolution Encouraging Congressional Action to
             61      Designate a New Recipient of Royalties from Navajo Reservation Lands in Utah, also passed
             62      by the Utah Legislature in 2008, noted that "the state first received monies from the 37.5% of
             63      the oil and gas royalties in 1959 and litigation related to those royalties began almost
             64      immediately" and that "the litigious environment surrounding the state's administration of the
             65      oil and gas royalties harms the relationship between the state and the San Juan Navajos and
             66      complicates all parties' ability to meet the needs of the San Juan Navajos";
             67          WHEREAS, H.B. 352 incrementally reduced expenditures under the trust duties;
             68          WHEREAS, H.B. 352 resulted in the establishment of what became known as the
             69      Navajo Royalty Holding Fund (NRHF) no later than July 1, 2008, into which all oil and gas
             70      royalties monetary assets and future royalty payments would be placed;
             71          WHEREAS, Utah law, established by H.B. 352, was amended in 2012 by S.B. 155,
             72      Transition for Repealed Navajo Trust Fund Act, to allow expenditures from the NRHF for the
             73      education of certain beneficiaries up to January 1, 2014;
             74          WHEREAS, on June 30, 2010, net assets then being held by the state of Utah in the
             75      NRHF totaled $51,352,590;
             76          WHEREAS, this includes a $33,000,000 court settlement, the final installment of
             77      which is to be paid by the state of Utah in 2013;
             78          WHEREAS, litigation is now pending in United States District Court seeking to force
             79      the state of Utah to resume active administration of the oil and gas royalties for the health,
             80      education, and general welfare of the beneficiaries;
             81          WHEREAS, the health, education, and general welfare of the beneficiaries would be
             82      improved by continuing projects previously funded, wholly or partially, with oil and gas
             83      royalties funds, including housing, water development, range improvement, delivery of
             84      education, healthcare, and other social services;
             85          WHEREAS, beneficiaries seeking secondary education are currently unsure whether


             86      college financial aid will continue to be available through the NRHF;
             87          WHEREAS, in certain carefully selected instances, and in partnership with other
             88      governmental and private financial institutions, the beneficiaries would benefit from the
             89      expenditure of oil and gas royalty money for economic development in San Juan County;
             90          WHEREAS, the oil and gas royalties should be actively administered in these areas of
             91      need for the health, education, and general welfare of the beneficiaries;
             92          WHEREAS, the Federal Acts provide no mechanism for the state of Utah to resign as
             93      trustee of the oil and gas royalties;
             94          WHEREAS, legislation to amend the Federal Acts to name a successor trustee was
             95      introduced in the 111th and 112th Congress, but did not become law;
             96          WHEREAS, no legislation to amend the Federal Acts to name a successor trustee has
             97      been introduced in the 113th Congress;
             98          WHEREAS, the Legislature of the state of Utah and the Governor stated in H.C.R. 4
             99      that the "removal of the state as a go-between provides an opportunity for Navajos";
             100          WHEREAS, the Utah Dinéh Corporation (UDC) is a nonprofit organization formed
             101      under the Utah Revised Nonprofit Corporation Act;
             102          WHEREAS, the UDC is organized exclusively for charitable, religious, educational,
             103      and scientific purposes, including the making of distributions to organizations that qualify as
             104      exempt organizations under IRC Section 501(c) of the Internal Revenue Code;
             105          WHEREAS, UDC's proposed amended bylaws ensure transparency and accountability
             106      at every level of corporate administration and prohibits real and apparent conflicts of interest,
             107      including nepotism, at every level of corporate administration;
             108          WHEREAS, the UDC's proposed amended bylaws position the Utah Dinéh to play
             109      important roles in oil and gas royalties administration and oversight, require that the overall
             110      value of the oil and gas royalties' assets, currently estimated at approximately $55,000,000, be
             111      maintained and, if consistent with applicable law and oil and gas royalties' purposes, grown;
             112          WHEREAS, the UDC's proposed amended bylaws require that any oil and gas royalties'
             113      assets made available for economic development be limited in amount, comprise only a minor


             114      portion of any single funding package, be partnered with loans from other chartered financial
             115      institutions, be offered only as loans at current market rates for any amount over $300, and
             116      occur only after it is expressly determined that the expenditure will actually promote the
             117      beneficiaries' health, education, or general welfare;
             118          WHEREAS, the UDC's proposed amended bylaws provide that if all oil and gas
             119      royalties administrative and fiduciary obligations are transferred to the Utah Dinéh
             120      Corporation, a Request For Proposals addressed to large, chartered financial institutions will be
             121      issued immediately, and every three years thereafter, for performing fund management,
             122      investing, and auditing services;
             123          WHEREAS, the members of each Utah chapter of the Navajo Nation have previously
             124      resolved to support the UDC's effort to become the trustee of the oil and gas royalties;
             125          WHEREAS, this support will again be ensured by means deemed reasonable and
             126      reliable prior to any transfer of oil and gas royalties administration to the UDC;
             127          WHEREAS, the San Juan County Board of Commissioners unanimously supports
             128      transfer of administrative and fiduciary obligations for the oil and gas royalties to the UDC;
             129          WHEREAS, the UDC Board of Directors will include representatives elected from each
             130      Utah chapter of the Navajo Nation and from one chapter organized to represent Utah Dinéh
             131      that currently do not reside within Navajo Reservation boundaries;
             132          WHEREAS, the UDC intends to administer the oil and gas royalties pursuant to all
             133      applicable laws and regulations, including the common law of Indian trusts that imposes strict
             134      and exacting fiduciary obligations upon any trustee administering the property of Native
             135      Americans; and
             136          WHEREAS, any transfer of oil and gas royalties administrative and fiduciary
             137      obligations to the UDC must ensure that the state of Utah is indemnified and held harmless for
             138      any liability, damages, or litigation costs resulting from oil and gas royalties administration:
             139          NOW, THEREFORE, BE IT RESOLVED that the Legislature of the state of Utah, the
             140      Governor concurring therein, expresses its support for the transfer of all oil and gas royalties
             141      administrative and fiduciary obligations to the Utah Dinéh Corporation conditioned on removal


             142      of the state as trustee, by an act of Congress or a federal court order that can then be used to
             143      encourage congressional action and that indemnifies and holds harmless the state of Utah from
             144      any and all legal and equitable claims.
             145          BE IT FURTHER RESOLVED that the Legislature and the Governor declare that any
             146      transfer of the oil and gas royalties administrative and fiduciary obligations to the Utah Dinéh
             147      Corporation by Congressional act or federal court order must also indemnify and hold harmless
             148      the state of Utah from any and all legal and equitable claims arising from future oil and gas
             149      royalties administration by the Utah Dinéh Corporation and for litigation costs related to any
             150      claims.
             151          BE IT FURTHER RESOLVED that the Legislature and the Governor declare that any
             152      transfer of oil and gas royalties administrative and fiduciary obligations to the Utah Dinéh
             153      Corporation should require that the value of fixed and monetary oil and gas royalties assets
             154      remain at least at current levels so that funds will be available to promote future generations of
             155      oil and gas royalties beneficiaries' health, education, and general welfare and that the Utah
             156      Dinéh Corporation should operate under bylaws that have the protections described in this
             157      resolution.
             158          BE IT FURTHER RESOLVED that the Legislature and the Governor declare that, if
             159      the foregoing objectives are ensured, the Legislature and the Governor support action by
             160      Congress or federal court order to transfer the oil and gas royalties administrative and fiduciary
             161      obligations to the Utah Dinéh Corporation.
             162          BE IT FURTHER RESOLVED that a copy of this resolution be sent to the Navajo Utah
             163      Commission, the President of the Navajo Nation, the Speaker of the Navajo Nation Council,
             164      the elected secretary of each Utah Dinéh chapter, the San Juan County Board of
             165      Commissioners, the current administrator of the Navajo Royalty Holding Fund, the secretary of
             166      the United States Department of the Interior, the United States Attorney General, and the
             167      members of Utah's congressional delegation.


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