[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4485 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4485

To provide for the restitution and compensation of federally held trust 
        fund accounts for Indian Tribes, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 6, 1998

 Mr. Miller of California (by request) introduced the following bill; 
            which was referred to the Committee on Resources

_______________________________________________________________________

                                 A BILL


 
To provide for the restitution and compensation of federally held trust 
        fund accounts for Indian Tribes, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Indian Trust Fund Judicial Procedure 
Act''.

SEC. 2. FINDINGS.

    The Congress makes the following findings:
            (1) The United States unilaterally assumed the role of 
        trustee for lands and the income earned from such lands, owned 
        by Indian tribes and individual Indians, beginning in 1820 for 
        lands owned by Indian tribes and beginning in 1887 with the 
        enactment of the General Allotment Act, for lands owned by 
        individual Indians.
            (2) The Federal courts have held that the United States, in 
        assuming the role of trustee, is subject to the same high 
        fiduciary standards that are applied to other trustees and that 
        the United States is liable in monetary damages for breach of 
        those trust responsibilities in the same manner as are other 
        trustees.
            (3) Since the United States, acting through the Department 
        of the Interior, assumed this trust responsibility it has 
        collected and disbursed billions of dollars belonging to Indian 
        tribes and individual Indians that was earned from the leasing 
        of their trust lands and the assets on and under those lands. 
        This is not money the United States has given to the tribes and 
        individual Indians; it is their money that the United States 
        unilaterally agreed to manage for them as their trustee.
            (4) However, based on numerous reports by congressional 
        committees, the General Accounting Office and private 
        accounting firms retained by the United States Government, it 
        is possible that many additional dollars were never collected 
        or were collected and improperly managed because the United 
        States failed in significant ways to carry out its trust 
        responsibilities to Indian tribes and individual Indians. In 
        particular, these reports have found the following:
                    (A) The United States failed to install the basic 
                trust management systems that are necessary for 
                fulfillment of its trust responsibility. For example, 
                it never installed an accounts receivable system, so 
                that it is unable to verify whether income due a tribe 
                or individual Indian from a lease of its trust land was 
                in fact paid by the lessee, paid in the correct amount, 
                paid in a timely manner or paid and deposited.
                    (B) The United States is unable to meet a trustee's 
                most basic responsibility, that of providing the 
                trust's beneficiary with a full accounting of all 
                transactions involving the trust assets and income.
            (5) The United States one effort to reconstruct the records 
        in order to provide such an accounting, the so-called ``Arthur 
        Andersen Reconciliation'', cost over $20,000,000 just for 
        reconstructing the general ledger, which is one small portion 
        of the trust management system for one 20-year period. Yet even 
        at that cost, the work product has generally been considered to 
        be inadequate because too many of the records needed to perform 
        a complete reconciliation had been destroyed or were missing. 
        As a result, it would not be a prudent use of Federal monies to 
        carry out further efforts of this kind since the costs will be 
        prohibitive while such efforts would fail to provide an 
        accurate accounting.
            (6) Under trust law principles, when a trustee has lost or 
        destroyed records so that it is unable to provide the 
        beneficiary with a full trust accounting, the beneficiary's 
        remedy is to provide the court with an estimate of the amount 
        that the trustee lost. The trustee is liable for that amount, 
        unless it can disprove the estimate, with the burden of proof 
        on the trustee for all matters. Further, a trustee who is 
        unable to provide a trust accounting is liable for the 
        beneficiary's attorney's fees and costs.
            (7) The individual Indians whose lands are held in trust by 
        the United States filed a class action lawsuit against the 
        Secretary of the Interior on June 9, 1996, in Federal District 
        Court for the District of Columbia, seeking restitution for all 
        losses they have suffered as a result of the United States 
breach of its trust responsibility in regard to management of their 
trust funds. Defending that suit will require the United States to 
produce millions of pages of records, such that the Department of 
Justice has estimated that the cost of gathering the records, preparing 
for and litigating that one lawsuit could be extremely costly and the 
litigation could be extremely lengthy.
            (8) If each of the 200 Indian tribes who have had funds 
        managed in trust by the United States filed a similar lawsuit, 
        it would impose undue burdens on the courts and significant 
        costs on the United States and the Tribes.
            (9) The United States has both a legal and moral obligation 
        to provide these trust beneficiaries with the same rights and 
        compensation they would be entitled to if their trustee were a 
        private party and had engaged in similar breaches of trust. 
        Since the United States is demanding that the Swiss Government 
        provide a full accounting of the funds its banks managed for 
        victims of the Holocaust, the United States must do the same 
        when it is in the capacity of trustee for money belonging to 
        others.
            (10) Because so many of the systems were never installed 
        and because so many of the records are missing, it is 
        impossible for Congress or the executive branch to produce any 
        rational estimate of the United States liability as a result of 
        its long-standing breach of trust, such that this problem 
        cannot be resolved through legislation that provides a certain 
        fixed amount of compensation.
            (11) For these reasons, while the United States has already 
        been sued for breach of trust by the individual Indian trust 
        account holders, it is in the best interest of the United 
        States for Congress to avoid massive litigation by the tribal 
        trust beneficiaries by legislating a procedure that is 
        comprehensive in its scope so that when completed, all trust 
        fund claims have been resolved and extinguished, and that will 
        provide the tribal trust beneficiaries with their full 
        procedural and substantive rights, while placing limits on the 
        amount of time and cost required to resolve this problem.

SEC. 3. PURPOSE.

    It is the purpose of this Act to establish a procedure that 
resolves all trust fund liability the United States may have to Indian 
tribes in a manner that is consistent with trust law principles, that 
provides the tribes with full procedural rights, that has reasonable 
time and cost restrictions, that consolidates issues and processes to 
the extent possible in order to avoid multiple litigation to the extent 
that can be accomplished consistent with the right of the parties, that 
provides for the United States, as trustee in breach, to pay all of the 
costs of such a proceeding, and that is comprehensive in that it will 
address, provide compensation for, and then extinguish, the United 
States liability for breach of trust at all stages of the trust fund 
process and for all of the years the United States has managed Indian 
trust funds.

  TITLE I--ESTABLISHMENT OF THE TEMPORARY COURT FOR TRIBAL TRUST FUND 
                              RESTITUTION

SEC. 101. ESTABLISHMENT OF THE COURT.

    There is hereby established the Temporary Court for Tribal Trust 
Fund Restitution. The Court shall, pursuant to the provisions of this 
title, fully and expeditiously resolve all matters involving the 
management by the United States, in its capacity as legal trustee, of 
moneys belonging to Indian tribes.

SEC. 102. COMPOSITION OF THE COURT.

    The Court shall consist of 3 judges designated by the Chief Justice 
of the United States, 2 of whom shall be Federal District Court judges 
and 1 of whom shall be a Court of Federal Claims judge. The Chief 
Justice of the United States shall designate 1 of such judges as the 
chief judge of the court.

SEC. 103. RULES OF PROCEDURE.

    Except as otherwise provided by this Act, proceedings before the 
Court shall be subject to the Federal Rules of Civil Procedure.

SEC. 104. FUNCTIONS OF THE COURT.

    The Court shall be the legal forum within which shall be carried 
out the 2-phased procedure set out in this Act for resolving tribal 
trust fund breach of trust claims against the United States. In phase 
I, the Court shall decide which economic model(s) shall be used to 
estimate the liability of the United States for breach of its trust 
responsibility of the individual Indian tribes in light of the fact 
that the United States is unable to provide an acceptable trust 
accounting to the tribes because it never installed adequate trust 
management systems and has lost or destroyed many of the trust records. 
In phase II, the Court shall apply those economic model(s) to determine 
the United States liability to each tribe that chooses to be a party to 
these proceedings.

SEC. 105. SPECIAL MASTER.

    (a) Appointment.--Within 30 days after the judges are appointed, 
they shall appoint a special master, a person with expertise in trust 
law, Indian law, and the application of alternative methods for 
determining economic loss when relevant documents have been lost or 
destroyed. He or she shall be compensated at the same rate and from the 
same source that is customary for court-appointed special masters, 
subject to such limitations as are established by the chief judge.
    (b) Staff and Consultants.--The special master shall, within 30 
days of appointment, submit to the chief judge, for his review and 
approval, a staffing plan and a budget for his office. The chief judge 
shall act on said submission within 30 days of receipt and shall 
authorize the release of necessary funds.
    (c) Access to Documents.--Without a subpoena or other action by the 
Court, the Special Master shall be provided full and immediate access 
to all documents in the possession of the United States regarding its 
management of the trust funds and assets of those tribes that have 
chosen to participate in the proceedings authorized by this title. The 
Special Master shall initiate contempt of court proceedings against any 
Federal employee or official who fails to provide such access or 
otherwise cooperate with the Special Master.

SEC. 106. THE PHASE I PROCEDURE.

    (a) Plaintiff and Defendant.--During Phase I, the plaintiff shall 
be a class consisting of all Indian tribes that have had funds managed 
in trust by the United States. The defendant shall be the United States 
of America.
    (b) Plaintiffs' Counsel.--The class of tribal plaintiffs shall be 
represented in the Phase I proceeding by 1 attorney named by each tribe 
that the court determines, pursuant to appropriate criteria, is a major 
stakeholder on the trust fund issue plus no more than 5 attorneys 
selected by the chief judge from nominees submitted by tribes that are 
members of the class of plaintiffs in Phase I but are not major 
stakeholders. The selection shall be conducted in a manner that 
provides that plaintiffs with legal expertise in Indian trust law that 
reflects the diverse nature of the different sources of trust income, 
such as oil and gas, timber, agricultural leasing, and investments. 
Plaintiffs' counsel shall be compensated at their usual and accustomed 
hourly rates and for customary expenses, except that the chief judge 
shall impose such limitations on the number of hours and the amount of 
expenses for which the attorneys may receive compensation for their 
work on Phase I. The plaintiffs' attorneys shall be compensated from 
the same source of funds the Department of Justice uses to compensate 
attorneys of parties that are awarded fees and expenses under the Equal 
Access to Justice Act when such fees and expenses are not passed back 
to the particular agency that was the defendant in that case.
    (c) Development of Economic Models for Estimating United States 
Liability.--The Special Master, staff and experts, with full 
participation of plaintiffs' and defendants' counsel and their experts 
shall, within 18 months from the date of the appointment of the Special 
Master, prepare and submit to the court, a set of economic models that 
can be used to estimate how much of the beneficiaries' money the 
trustee lost as a result of breach of its trust responsibilities, 
beginning on the first day that the United States began acting as 
trustee. The economic models shall be based on applicable principles of 
trust law and shall use comparative analysis or such other forensic 
accounting techniques as the Special Master determines are appropriate. 
The models will be used in Phase II to determine the amount of 
compensation each plaintiff tribe is entitled to as a result of the 
United States breach of its trust responsibility in its management of 
that tribe's trust funds, beginning at the point at which the trustee 
was responsible for the management of the trust assets for that tribe, 
but excluding those years for which the United States provided a trust 
accounting to that Tribe that satisfies trust law requirements and 
excluding those losses for which the Tribe has been otherwise 
compensated. The submission to the Court shall consist of 1 or more 
economic models as the Special Master determines are needed, in light 
of the diversity among the tribal situations and the different kinds of 
trust assets (e.g., timber, agricultural land, minerals, investments) 
that are at issue in this proceeding, to determine the losses incurred 
by tribes as a result of the United States failure to meet its legal 
trust responsibility.
    (d) Objections to the Special Master's Submission.--Within 45 days 
after the Special Master submits his or her recommended set of economic 
models to the Court, either party may file objections to those 
recommendations. The Court, after providing the parties an opportunity 
to submit written briefs and to present oral argument, shall issue its 
decision on such objections within 90 days after they were filed with 
the Court. There shall be no appeal from the decision of the Court.
    (e) Applicable Trust Law Principles.--In determining the applicable 
principles of trust law to apply in developing the economic models and 
in deciding objections to those models, the Special Master and the 
Court shall first be guided by principles of trust law established by 
Federal Indian trust law cases. If there are no applicable Federal 
cases on a particular matter, the Court shall apply trust law 
principles established by other Federal court decisions on trust law. 
If there are no applicable Federal trust law cases, the Court shall 
apply general principles of trust law as established by State court 
decisions. If there are inconsistencies among the States on a 
particular issue, the Court, after giving the parties an opportunity to 
be heard, shall select the principle of trust law that it concludes 
best reflects the purposes of this Act.

SEC. 107. PHASE II PROCEEDINGS.

    (a) Initiation of Negotiations.--Within 45 days after the 
completion of Phase I, the Special master and his or her staff shall, 
in the capacity as mediator, begin to initiate negotiations between 
each plaintiff tribe and the United States for the purpose of seeking 
agreement on the application of the economic models to that tribe and 
then to produce an estimate of the trustee's liability to that tribe. 
The tribe and the United States may introduce additional evidence to 
demonstrate why the trustee's liability to that tribe should deviate 
from that estimate produced by application of the economic models 
developed in Phase I: Provided, That the evidence that may be 
introduced by the United States is limited to documents it had 
previously produced in the course of carrying out its trust management 
responsibility.
    (b) Stipulated Settlement Permitted.--If, through the negotiation 
process, the parties are able to reach agreement, they shall submit a 
stipulated settlement to that effect to the Court, which shall issue an 
order approving the settlement, unless the Court determines it is 
arbitrary or unconscionable.
    (c) Effect of Inability to Reach Agreement--If, within 18 months 
from the initiation of such negotiations with a particular tribe, the 
parties are unable to reach agreement on the amount of the trustee's 
liability, the Special Master shall terminate the process and shall, 
within 45 days thereof, submit to the Court his or her recommendation 
for the amount of the liability. The parties shall have an opportunity 
to submit memoranda of law and for oral argument before the Court to 
oppose or support the Special Master's recommendation. The Court shall 
issue a final order establishing the amount of the liability within 6 
months after the Special Master submits his or her recommendation to 
it. There shall be no appeal from that decision.
    (d) Fees and Expenses.--During Phase II, legal counsel for each 
tribe shall be paid at his or her usual and customary fee, plus 
expenses, from the fund used by the Department of Justice to pay 
attorneys for parties pursuant to the Equal Access to Justice Act, 
subject to such limitations on each attorney's hours and expenses as 
are established by the Court. The Court shall also provide each tribe 
and the United States with a budget for the hiring of experts for use 
during this stage of the proceedings.

SEC. 108. STATUTE OF LIMITATIONS.

    The statute of limitations shall not be a defense to any claim 
under this Act for any year in which the United States acted in the 
capacity as trustee for a tribe unless the United States can 
demonstrate that, prior to the date of the enactment of this Act, it 
had provided the tribe with a full and complete trust accounting, as 
that term is defined by applicable trust law principles, for the year 
at issue.

SEC. 109. PAYMENT.

    Within 60 days after entry of the Court's final decision for a 
particular tribe, the United States shall pay to that tribe, from the 
Judgment Fund Account of the United States in the Department of the 
Treasury, the amount determined to be the United States liability to 
that tribe as provided for in the Court's order. At the tribe's option, 
the payment may be deposited in the tribe's account in the Office of 
Trust Fund Management, Department of the Interior, or may be deposited 
in such other account as is requested by the tribe.

SEC. 110. EXTINGUISHMENT OF CLAIMS.

    Upon receipt of payment by a tribe pursuant to the procedures 
established by this Act, all claims that a tribe may have against the 
United States for breach of the United States trust responsibility for 
management of trust funds of such tribe, beginning with that stage in 
the trust management process at which the trustee is required to lease 
the trust asset, shall be completely and permanently extinguished for 
the years that were subject to the procedures set out in this title.

SEC. 111. OPTING OUT.

    A tribe may, on an account-by-account basis, choose to opt out of 
the procedure established by this Act by, within 1 year of the 
effective date of this Act, submitting a motion, accompanied by a 
resolution from the tribe to that effect, to the Court. If a tribe opts 
out of the procedure established by this Act, it may pursue its claims 
through direct settlement negotiations with the Secretary and mediation 
procedures provided in title II of this Act, or through litigation 
under the established legal procedures for bringing claims against the 
United States, except that none of the rights provided tribes by this 
Act shall be available to such a tribe, unless the court hearing that 
tribe's claims finds an independent source for such rights. A tribe 
that is presently in litigation on a matter subject to this Act may, at 
its option, request that the court transfer the case to the Temporary 
Court established by this Act. The court shall grant that motion unless 
it finds that doing so will not serve the interests of justice in that 
case.

SEC. 112. AVAILABILITY OF RECORDS.

    Effective upon the enactment of this Act, the Secretary shall make 
available to a Tribe all records and documents requested by that Tribe 
involving the United States management of trust funds and trust 
resources belonging to that Tribe, regardless of whether or not the 
Tribe has chosen to participate in the procedures set out in sections 
106 and 107. The Secretary shall provide the requested information 
within 45 days of the request: Provided further, That, where a request 
imposes severe workload burdens on the Secretary, he may provide the 
information within 120 days of the request, by providing the Tribe 
within 30 days of the request, a written notice describing the burdens 
that make it impossible to comply within 45 days. If the Secretary 
fails to provide the requested documentation within the time provided 
for in this section, he shall be subject to a civil penalty of $500 per 
day for each day he fails to comply: Provided further, That the 
Secretary may apply to the Court established pursuant to section 101 of 
this Act for a waiver of such penalty upon a showing of good cause. All 
penalties shall be paid out of the funds appropriated to the Office of 
the Secretary of the Interior.

SEC. 113. KNOWN ERRORS.

    The Secretary shall, within 120 days of the effective date of this 
Act, compensate each tribe for all known errors identified in the 
reconciliation report that resulted in losses or underpayments to that 
tribe's trust fund account. Such payments shall be made without 
prejudice to any claims the tribe may elect to bring under other 
sections of this Act.

SEC. 114. INTEREST.

    Any compensation paid to a tribe pursuant to this title shall 
include interest from the date of the loss or error to the date of the 
adjustment or payment of compensation. The rate of interest shall be 
the average Treasury rate. Interest shall be compounded on a daily 
basis.

SEC. 115. SOURCE OF FUNDS FOR PAYMENT.

    All payments made to tribes pursuant to the provisions of this 
title shall be made from the Permanent Judgment Claims Fund (section 
1304 of title 31 of the United States Code). No funds for implementing 
this title or for paying damage claims pursuant to it shall be taken 
from appropriations for the operation of or programs for the benefit of 
Indians.

    TITLE II--EXPEDITED PROCEDURE FOR TRIBAL TRUST FUND RESTITUTION

SEC. ____.

    A Tribe, by resolution, may select the following set of procedures 
for resolving the United States liability for mismanagement of that 
Tribe's trust funds and resources. A Tribe that selects this set of 
procedures is barred from participating in the procedures set out in 
title I of this Act.

SEC. 201. DIRECT NEGOTIATIONS WITH THE SECRETARY.

    (a) In General.--A tribe that has opted out of the proceedings 
established in title I may, within 1 year of the effective date of this 
Act, by letter sent by registered mail, request that the Secretary 
enter into negotiations with the tribe to settle the United States' 
liability to that tribe for mismanagement of that tribe's trust funds 
and assets. In the letter, it shall indicate whether it will submit a 
settlement proposal or if it chooses for the Secretary to submit the 
initial proposal. The parties shall, within 60 days of the date of the 
tribe's request, engage in direct negotiations under such arrangements 
as are agreed to by them: Provided, That, the Secretary in his 
discretion, may delay the commencement of any such negotiations if 
insufficient resources or personnel require. If the parties reach 
agreement, it shall be incorporated into a settlement agreement. If, 
after 1 year the negotiations have failed to produce a settlement, or 
upon mutual agreement by the parties at any time that the negotiations 
will not produce a settlement, the negotiations shall terminate unless 
both parties agree to their continuation. Upon termination of the 
negotiations, the tribe shall, within 180 days, either--
            (1) initiate the mediation procedure provided for in 
        section 202 of this title;
            (2) notify the Court established pursuant to title I of 
        this Act that it is entering those proceedings as a plaintiff; 
        or
            (3) file suit in Federal court under the regular procedures 
        established for monetary claims against the United States.
    (b) Extinguishment of Claim for Lack of Action.--If the tribe fails 
to take any of these actions within the time period provided, its 
claims for monetary damages against the United States for breach of its 
trust responsibility for all years prior to the effective date of this 
Act shall be extinguished.

SEC. 202. MEDIATION.

    A tribe that has opted out of the proceedings established by title 
I, may either within 1 year of the effective date of this Act, or 
within 180 days of the termination of negotiations with the Secretary 
under section 201 of this Act, request mediation or arbitration to 
resolve the United States liability to that tribe for mismanagement of 
that tribe's trust funds and assets, under the following procedures:
            (1) The mediator or arbitrator shall be provided by the 
        American Arbitration Association.
            (2) The mediation or arbitration shall commence within 60 
        days after the date of the tribe's request: Provided, That the 
        Secretary, in his discretion, may delay the commencement of any 
        such mediation or arbitration if insufficient resources or 
        personnel require.
            (3) The parties may agree to conduct, or the mediator or 
        arbitrator may direct that there be conducted, limited 
        additional analysis of the trust management records to 
        facilitate a settlement.
            (4) The parties shall exchange any records each may have 
        with regard to the subject of the arbitration or mediation.
            (5) The arbitration shall continue until a decision is 
        issued by the arbitrator. Such decision shall be binding and 
        there shall be no appeal from it.
            (6) The mediation shall terminate 1 year after the date of 
        the first meeting unless the parties mutually agree to its 
        continuation. Upon termination, a tribe, within 1 year of the 
        date of termination of the mediation, shall either enter the 
        proceedings established pursuant to title I of this Act or file 
        suit in Federal court pursuant to the procedures established 
        for bringing monetary claims against the United States. If the 
        tribe fails to take either action within the time period 
        provided, its claims for monetary damages against the United 
        States for breach of its trust responsibility for all years 
        prior to the effective date of this Act shall be extinguished.
            (7) If an agreement on the United States liability is 
        reached through mediation or through a decision by the 
        arbitrator, it shall be incorporated into a settlement 
        agreement.

SEC. 203. PAYMENT.

    Within 60 days after a settlement agreement is entered into 
resulting from the procedures set out in this title and said settlement 
is approved by the Attorney General of the United States, the United 
States shall pay to that tribe, from the Permanent Judgment Fund 
Account of the United States in the Department of the Treasury, the 
amount determined to be the United States liability to that tribe as 
provided for by the procedures established by this title. At the 
tribe's option, the payment may be deposited in the tribe's account in 
the Office of Trust Fund Management, Department of the Interior, or may 
be deposited in such other account as is requested by the tribe.

SEC. 204. ATTORNEYS FEES AND COSTS.

    If a tribe participates in 1 of the procedures provided for in 
sections 201 and 202 of this title and such procedure has resulted in a 
settlement, the tribe shall be entitled to the award of reasonable 
attorneys fees and costs pursuant to the Equal Access to Justice Act: 
Provided, That the eligibility requirements at section 2412(d)(2)(B) of 
that Act shall not be applicable.

SEC. 205. INTEREST.

    Any compensation paid to a tribe pursuant to this title shall 
include interest from the date of the loss or error to the date of the 
adjustment or payment of compensation. The rate of interest shall be 
the average Treasury rate. Interest shall be compounded on a daily 
basis.

SEC. 206. EXTINGUISHMENT OF CLAIMS.

    Upon receipt of payment by a tribe pursuant to the procedures 
established by this title, all claims that a tribe may have against the 
United States for breach of the United States trust responsibility for 
management of trust funds of said tribe, beginning with that stage in 
the trust management process at which the trustee is required to manage 
the trust asset, shall be completely and permanently extinguished for 
the years that were subject to the procedures set out in this title.

SEC. 207. SOURCE OF FUNDS FOR PAYMENT.

    All payments made to tribes pursuant to the provisions of this 
title shall be made from the Permanent Judgment Claims Fund (section 
1304 of title 31 of the United States Code). No funds for implementing 
this title or for paying damage claims pursuant to it shall be taken 
from appropriations for the operation of or programs for the benefit of 
Indians.
                                 <all>