    [Senate Hearing 108-389]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 108-389

                  INDIAN MONEY ACCOUNT CLAIMS SATISFACTION ACT

    =======================================================================

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON INDIAN AFFAIRS
                              UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    S. 1770

    TO ESTABLISH A VOLUNTARY ALTERNATIVE CLAIMS RESOLUTION PROCESS TO REACH
              A SETTLEMENT OF PENDING CLASS ACT ACTION LITIGATION

                                   __________

                                OCTOBER 29, 2003
                                 WASHINGTON, DC

    90-266              U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2003
    ____________________________________________________________________________
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                          COMMITTEE ON INDIAN AFFAIRS

                  BEN NIGHTHORSE CAMPBELL, Colorado, Chairman

                    DANIEL K. INOUYE, Hawaii, Vice Chairman

    JOHN McCAIN, Arizona,                KENT CONRAD, North Dakota
    PETE V. DOMENICI, New Mexico         HARRY REID, Nevada
    CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
    ORRIN G. HATCH, Utah                 BYRON L. DORGAN, North Dakota
    JAMES M. INHOFE, Oklahoma            TIM JOHNSON, South Dakota
    GORDON SMITH, Oregon                 MARIA CANTWELL, Washington
    LISA MURKOWSKI, Alaska

             Paul Moorehead, Majority Staff Director/Chief Counsel

            Patricia M. Zell, Minority Staff Director/Chief Counsel

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page
    S. 1770, text of.................................................     3
    Statements:
        Akaka, Hon. Daniel K., U.S. Senator from Hawaii..............    18
        Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
          chairman, Committee on Indian Affairs......................     1
        Cason, James, associate deputy secretary, Department of the
          Interior, Washington, DC...................................    19
        Echohawk, John, executive director, Native American Rights
          Fund, Boulder, CO..........................................    27
        Gray, Jim, principal chief, Osage Tribal Council, Pawhuska,
          OK.........................................................    37
        Hall, Tex, president, National Congress of American Indians,
          Washington, DC.............................................    32
        Inouye, Hon. Daniel K., U.S. Senator from Hawaii, vice
          chairman, Committee on Indian Affairs......................    17
        Matt, Fred, chairman, Confederated Salish and Kootenai
          Tribes, Pablo, MT..........................................    34
        Thomas, Hon. Craig, U.S. Senator from Wyoming................    18
        Upton, Brian, legal department, Confederated Salish and
          Kootenai Tribes, Pablo, MT.................................    34
        Waters, George...............................................    34

                                    Appendix

    Prepared statements:
        Cason, James.................................................    44
        Echohawk, John...............................................    52
        Gray, Jim....................................................    72
        Hall, Tex....................................................    63
        Matt, Fred...................................................    69
        McCain, Hon. John, U.S. Senator from Arizona.................    43
    Additional material submitted for the record:
        Position Statement of the Navajo Nation (with resolution)....    75

                  INDIAN MONEY ACCOUNT CLAIMS SATISFACTION ACT

                                  ----------

                          WEDNESDAY, OCTOBER 29, 2003

                                           U.S. Senate,
                                   Committee on Indian Affairs,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:20 a.m. in
    room 106, Dirksen Senate Building, the Hon. Ben Nighthorse
    Campbell (chairman of the committee) presiding.
        Present: Senators Campbell, Inouye, Thomas, and Akaka.

     STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM
            COLORADO, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

        The Chairman. The Committee on Indian Affairs will be in
    session.
        Good morning. We are told that we will have a vote at 10:40
    a.m. We will go as far as we can, take a 10- or 15-minute
    break, and then come back if we have not heard from all of the
    witnesses.
        Eight long years have passed since the Cobell v. Norton
    case was filed. To date, we have spent hundreds of millions of
    dollars on accountants and lawyers. No accounting has been
    done, and not one penny has been paid to one Indian account
    holder. It is getting worse.
        On September 25, Judge Lamberth issued a 400-page decision
    that guarantees at least 5 more years of litigation, billions
    more dollars spent, and no end in sight to the lawsuit. With
    appeals, Congressional squabbling over the money, and further
    lawsuits aimed at securing money damages, the case is just
    beginning.
        The Department claims that pennies on the dollar are owed
    to the plaintiffs, but without billions more being spent on
    accounting activity, the Department cannot say for sure how
    much is in the accounts, or should be in the accounts.
    Preliminary cost estimates from the Interior Department suggest
    that it will take $10 billion more to comply with Judge
    Lamberth's order on historic accounting. The money will be
    spent year-after-year through at least fiscal year 2008.
        Many of my colleagues and I believe this money is better
    spent on reconstituting the Indian land base and building a
    forward-looking state-of-the-art trust management system and
    providing more dollars to Indian health care, education, and
    many other things in Indian country that are under funded.
        The plaintiffs claim that more than $175 billion should be
    in these accounts, a number that the Department vigorously
    contests. Last night, the Interior Appropriations Conference
    approved a provision that will delay the accounting ordered by
    the judge until Congress clarifies the obligations of the
    Department regarding an accounting, or by December 31, 2004.
    This is a stopgap measure. We were worried, obviously, in this
    Committee, that if that had been done on a long-term basis, it
    might have, in fact, eroded the jurisdiction of this committee
    to deal with it at all.
        In my mind, that means that we have roughly 1 year to reach
    settlement on this matter. With Congress facing a $400-billion
    deficit next year, any settlement is still a long way from
    having the money actually appropriated. As most people know,
    when you get a judgment, it does not necessarily mean that you
    get the money then. It might be years and years. There are a
    lot of Indian people out there that need the money and have a
    right to the money.
        Last week, along with Senators Inouye and Dominici, I
    introduced S. 1770, the Indian Money Account Claim Satisfaction
    Act of 2003, to reach a legislative settlement of the case. I
    look forward to hearing from our witnesses this morning. I
    would hope that they would offer some positive suggestions on
    how we bring this matter to a close, and not simply dig their
    heels in and rehash many of the old issues that we have dealt
    with over and over.
        [Text of S. 1770 follows:]

        The Chairman. I would yield to my colleague, Senator
    Inouye.
        Senator Inouye. Thank you very much, Mr. Chairman.

     STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII,
               VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

        Senator Inouye. A few days ago, as you indicated, Mr.
    Chairman, the members of the Conference on the Interior
    Appropriations agreed to a House proposal that we have been
    advised is of questionable constitutionality. The relevant
    language, as pointed out, will prevent the provisions of the
    American Indian Trust Fund Management Reform Act, the
    provisions of any other statute, or any principle of common law
    from being construed or applied to require the Department of
    the Interior to commence or continue the conduct of an
    historical accounting of individual Indian money accounts until
    the earlier of the following shall have occurred:
        First, the Congress acts to amend the American Indian Trust
    Fund Management Reform Act to, and I quote, ``delineate the
    specific historical accounting obligations of the Department of
    the Interior with respect to the Individual Indian Money
    Trust,'' or, second, December 31, 2004.
        As pointed out, Mr. Chairman, that puts this committee on
    the spot. We do not mind that, but I think this is an
    unconstitutional matter.
        Since that time, our offices have been flooded with
    telephone calls, faxes, and e-mails expressing the concerns of
    Indian country that hundreds of thousands of Indian people have
    been denied their rights to seek an accounting of the funds
    that are held in trust for their benefit by the United States.
        They ask me, and undoubtedly they are also asking other
    Senators who serve on this committee, whether any other group
    of Americans--would be singled out in this manner for such
    treatment. Sadly, I believe we all know the answer to that
    question.
        However, today we embark on a new path that will hopefully
    lead us away from one of the sorriest episodes in my tenure of
    service in the Senate to a day when those who have been denied
    their rights will have their rights vindicated. Those of us who
    have joined the chairman in cosponsoring this measure know that
    it is just a starting point, and that is why we are having this
    hearing today, so that we may call upon the wisdom of those who
    would be affected by this legislation.
        On April 8 of this year, Chairman Campbell and I wrote to
    the parties to the Cobell v. Norton class action lawsuit to
    explore their interest in settlement of the litigation. Both
    parties replied that they were amenable to settlement
    negotiations, and thereafter, there was some discussion of
    mediation. Before we dismiss that idea, I would like to make
    one small suggestion.
        Often, when mediation is discussed, it usually entails an
    effort to bring the parties to agreement over a monetary figure
    that would resolve their differences. My suggestion would be
    that we keep the concept of mediation on the table as we
    consider this bill--only rather than have the parties enter
    into mediation over money--we call upon the parties to enter
    into mediation as to which methodology, or series of
    methodologies, should be applied to the accounts that will
    bridge the gap that has been brought about through the loss of
    critical information commonly considered necessary for a full
    accounting.
        Then, as the parties have agreed they are capable of
    doing--that is, coming to agreement--by the time the IMACS Task
    Force is constituted, there will be one or more methodologies
    that have been blessed by the parties to the litigation, and
    that the Task Force can apply to each individual account, if an
    account holder elects to pursue that course of action.
        Most importantly, I believe it is incumbent upon us to
    act--to act deliberately but with speed--so that this national
    nightmare may be brought to a close, and the first Americans of
    this land may have access to the moneys that are rightfully
    theirs.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Inouye.
        Senator Thomas.

       STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM WYOMING

        Senator Thomas. Very briefly, Mr. Chairman. Certainly we
    have a problem before us. The Court has significantly increased
    the scope of the accounting. The DOI must complete the
    accounting. That would take decades longer and would cost of
    billions of dollars more than was originally planned, I
    believe.
        All of us are interested in a settlement that is fair to
    willing plaintiffs. The Cobell case will continue for several
    years, if not decades, the way it is. I certainly promote the
    notion that we continue to look at the legislation before this
    committee, to provide an alternative. As one of the
    reservations allotted under the 1887 Dawes Act, the Wind River
    Reservation has thousands of individual Indian money account
    holders involved in this suit.
        We are supportive of the concepts proposed in the
    legislation and urge you to move forward.
        Thank you, Mr. Chairman.
        The Chairman. Thank you.
        Senator Akaka, do you have any statement you would like to
    make?

      STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR FROM HAWAII

        Senator Akaka. I want to thank you, Mr. Chairman, for this
    opportunity to make a statement. I want to thank you, Chairman
    Campbell and Vice Chairman Inouye for this hearing today, and
    in introducing S. 1770, the Indian Money Account Claims
    Satisfaction Act of 2003.
        In addition, I want to thank the witnesses who will testify
    before the committee for their participation.
        For decades, the United States has been trying to resolve
    the accounting problems for both the individual Indian money
    and Indian tribal accounts. As a result, for 8 years now,
    litigants for individual Indian money account holders who filed
    a lawsuit in 1996 against then Secretary of the Interior, Bruce
    Babbitt, and now again Secretary of the Interior Gail Norton,
    have been waiting for an accurate and complete accounting of
    their individual trust accounts.
        The historical accounting of the individual Indian money
    accounts still has not been rendered. With the September 25,
    2003, memorandum and order that was issued by Judge Lamberth
    providing specific requirements for the Department to address
    as it completes it accounting by no later than 2007, the
    Department has indicated that preliminary estimates to comply
    with the order will cost somewhere between $10 billion and $12
    billion.
        Even though there is finally a deadline in which the
    Department must complete its accounting of these individual
    accounts, but I am still not certain that the Department will
    be able to fully comply with Judge Lamberth's memorandum and
    order.
        Mr. Chairman, for this reason, I am pleased that you have
    introduced S. 1770 with Senators Inouye and Senator Dominici.
    While I commend you for your efforts to bring forth this
    legislation to address the Government's responsibility to
    provide an accurate and complete accounting of the individual
    Indian money accounts, I would like to ensure that this
    legislation does not impede the opportunities to mediate this
    matter.
        I agree with the intent of S. 1770, and look forward to
    working with you, Mr. Chairman, and the committee. Again, I
    want to say thank you for holding this important hearing.
        The Chairman. Thank you, Senator Akaka.
        We will now start with our first witness, James Cason,
    associate deputy secretary, Department of the Interior,
    Washington, DC.
        Mr. Cason, please proceed.

         STATEMENT OF JAMES CASON, ASSOCIATE DEPUTY SECRETARY,
               DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

        Mr. Cason. Thank you, Mr. Chairman. It is my pleasure to be
    here again today talking about this very important issue. We
    have had an opportunity to chat on this issue a couple of times
    in the past. I appreciate another opportunity to do that.
        We are here to talk about the historical accounting.
    Senators have laid the ground work for the discussion. The
    problem has been ongoing for quite some time. I just want to
    make a few points before I answer questions.
        Senator Akaka made a great point that I would like to
    illustrate. This is the Government's responsibility to address
    this issue. Often we have the Department of the Interior being
    the root of the problem. We really are not. At the end of this,
    we have to recognize that ultimately Congress set up the trust
    as the trustor. The Department of the Interior is the principal
    trustee delegate on behalf of the Government. Congress, the
    executive branch, and the courts all have a role to play in
    laying out how we address this issue.
        This issue is not new. It has been ongoing for quite a long
    time. The issue to do an accounting, obviously, is one that
    seems to have been unresolved for a long time. If you take a
    look at where the courts are right now, it says that our duty
    to account goes all the way back to 1887. Therefore, we have
    not addressed this issue for a long time.
        Ultimately, all three branches of the Government are going
    to be involved in this as we are right now. Ultimately, the
    Congress is going to have to decide what will our trust
    responsibility be to settle this. That is what we are trying to
    decide. What exactly is an accounting. Ultimately, Congress
    will have to decide how to pay for it.
        The Department of the Interior does not have any
    independent funding to address this. Ultimately the bill comes
    here. We have to decide that nexus point of how much work do we
    do to address an accounting, and how much are we willing to pay
    for it? That is the struggle that we are going through right
    now.
        The court is principally addressing the issue of what do we
    have to do to do an accounting. Congress is struggling with
    both points of what do we do and how do we pay for it. The
    Department of the Interior is trying to do the same.
        Ultimately we get back to the initial point of this, and
    that is the 1994 act. In the 1994 act, the provision that is in
    question is section 102 of that act which basically says:

        The Secretary shall account for the daily and annual
    balance of all funds held in trust by the United States for the
    benefit of the Indian tribe or the individual Indian which are
    deposited and invested pursuant to the Act of June 24, 1938.

        That is the language that is in question. It does not say
    anything about doing a historical accounting. It does not say
    go back to 1887. The legislative history does not say any of
    that. But we are where we are. The court has interpreted that
    what our responsibility is to satisfy this language--and if
    this language is not enough--then it is any other common law
    responsibility that we might have. Then we have to go back to
    1887 and reconstruct the history of the Indian trust since
    1887.
        Ultimately the three branches of Government are going to
    have to decide whether that, in fact, is the task that we have
    to do, and how we would go about approaching that task.
    Certainly in this language here, if this is the root of our
    responsibility, then one could think that funds invested
    pursuant to the 1938 act, maybe 1887 is a far way back.
    Ultimately Congress can make that decision, too.
        We need to get down to a point of being clear about what
    our accounting duty is and that the Department of the Interior
    needs to follow, and what are the parameters of that duty. Then
    we need to be clear of how we are going to fund the
    administrative process to undertake that accounting. We need
    also to be clear how we deal with the results.
        The litigation has been going on since 1996. That is a long
    time. This issue does need to be resolved. So far in the
    Department of the Interior we have spent $53 million on this
    issue. It has not been hundreds of millions or billions yet,
    but it could get there. We have spent $53 million trying to
    undertake an historical accounting.
        In the past what we have done is historical accounting on
    the named plaintiffs. This is an accounting for funds that have
    been placed in their accounts. What we have found through that
    process for the named plaintiffs is one check for $60 that went
    to the wrong place. We have spent $20 million getting there.
        Let me be fair. Looking just that far is not statistically
    relevant. There is a big field of accounts that are there. That
    would not be statistically relevant. That is what we have
    found. We have also done about 17,000 judgment per capita
    accounts. The error rate we find there is nominal.
        Unrelated in a past exercise we have also done tribal
    accounting. What we have found in the tribal accounting process
    is an error rate that was very low. But again, it is not
    complete. There is more work that could be done. There is a lot
    of history there. We could do more work.
        The issue is: How much more work do we do? Exactly what
    kind of work do we do?
        The plaintiffs believe that we owe, if the press accounts
    are accurate, $176 billion. There is a long way between where
    the Department of the Interior is and where the plaintiffs are.
    I think Senator Inouye's point that maybe what we need to do is
    take a look at the methodologies. That is probably a good idea.
    Take a look at the methodologies of exactly what we need to do
    to resolve this issue.
        When we went to court for trial 1.5, there were two
    dramatically different methodologies presented to the court.
    The methodology that the Department chose was an accounting for
    funds with a statistical verification process of the
    documentation in order to contain costs.
        The plan that we offered to the court cost approximately
    $335 million. We sought funding in the 2004 appropriations
    process to fund that. That was a total of about $100 million
    for fiscal year 2004 to undertake the accounting in our plan.
    It looks like our appropriations will be about $45 million.
    Congress is unwilling to fund that plan, or has been unwilling
    to fund that plan.
        On the other hand, the plan that the court gave us was a
    very broad accounting, going back to 1887, to account for every
    account that has ever been, and account for all the land
    transactions for every allotment that has ever been, in
    essence. That plan is estimated to cost billions. If we cannot
    get $100 million to do the accounting that we are looking for,
    I think it is harder to believe that we will get billions to do
    the plan that the court has asked for. But that is what the
    court has told us to do. We definitely have an issue there that
    somehow we need to bring to resolution.
        The key features of the court plan that is different than
    ours basically are: Who gets an accounting? We basically had
    the individuals who had accounts that were open as of the date
    of the 1994 act. The court has basically said that anyone who
    has ever had an IIM account is part of the class. How far back
    do we go? Our accounting was back to 1938 for the individuals
    that were in our pool. The court goes back to 1887 for anyone
    who has ever had an account.
        The court added lands requiring DOI to do an accounting for
    all land allotments and all their fractionated interests. The
    Department had not planned to do that. We believe that the
    litigation was about funds. The court has directed us to go
    after third party records in order to do the accounting. We
    would be out, under this plan, seeking records from third
    parties like individual Indians or tribes, or oil, gas, or
    timber companies. The cost is dramatically different. Our plan
    was about $335 million over 5 years. The court's plan is in the
    billions in order to get it done. It has about the same type of
    timeframe. The risk of implementation is substantially higher
    with the court's plan because of the huge acceleration of work
    that would have to be done in a very short timeframe.
        I want to applaud the committee in its leadership in
    introducing S. 1770. It is nice to see that the authorizing
    committees both in the Senate and in the House are actively
    engaged in the issue. Clearly this is needed. I would suggest
    that S. 1770, in our opinion, does not solve the problem
    because it offers a number of other alternatives on top of the
    accounting that we are looking at.
        Certainly it has the advantage of giving choice to the
    Indian community, but it does not move us any closer to
    resolution of the issues. It has the same fundamental problem
    that we have right now which is getting adequate funding to do
    whatever accounting is required to meet our trust
    responsibilities. That is not addressed.
        We would be happy to work with the committee in addressing
    some of the mechanics of making S. 1770 work.
        Mr. Chairman, you made an opening statement in introducing
    the bill that what we wanted was a full, fair, and final
    resolution of this issue. I could not agree more that that is
    what we need. I would like to add one other comment about
    fractionation, a fourth ``F.'' You had made a comment about
    fractionation. That is clearly an area that is a material
    problem that needs to be addressed. It is the root of a number
    of the problems that we have in administering this trust. We
    would certainly like to work with the committee in coming up
    with concrete ways to solve that problem as well.
        With that, thank you. I would ask that my statement be
    included in the record in its entirety.
        Thank you.
        The Chairman. Without objection, so ordered.
        [Prepared statement of James Cason appears in appendix.]
        The Chairman. Thank you.
        If S. 1770 does not solve the problem, I would ask you what
    does solve the problem? Giving more money does not seem to
    work. You mentioned yourself that we are far short of getting
    the amount that you need in the appropriations process. That is
    not going to change. We have a big deficit here. Senator Inouye
    and I, and I think most of the people on the committee here,
    have always supported as much as we can to go to Interior for
    any program, including trying to resolve this accounting mess.
        But we are 2 out of 100 on our side of the Hill. There are
    a whole bunch more on the other side of the Hill that have
    other priorities. If we just keep going at the rate we are now,
    you are not ever going to get the amount of money needed to do
    the accounting without changing the basic methodology.
        Let me ask you a couple of questions before I turn it over
    to Senator Inouye.
        What is the estimated cost for complying with the order
    only for activities to be conducted in 2004? Do you know that?
        Mr. Cason. Yes; in order to comply with the order and the
    timeframes in the order, our best estimate is approximately $3
    billion.
        The Chairman. $3 billion. Do you have a formal written
    estimate of that cost?
        Mr. Cason. Yes.
        The Chairman. As you know, we had that rider put on the
    appropriation bill yesterday. I have the feeling that very
    frankly that part of that was driven by the Administration.
    They did not do it through me or Senator Inouye. But that was
    the impression I had from hearing the dialog.
        Is it the Department's strategy to insert language in the
    appropriations bill to make this problem go away? In other
    words, was the Department behind that movement in the
    Appropriations Committee?
        Mr. Cason. Mr. Chairman, as I understand it, the Department
    was not behind the efforts. I could not attest to who
    specifically ramrodded the effort. As I understand it, it began
    with the Appropriations Committee. I had not seen the language
    until yesterday. I do not know who drafted it and who
    shepherded it.
        The Chairman. You said that on occasion that the Department
    of the Interior is open to reasonable settlement discussions. I
    guess that is still the case; is it not?
        Mr. Cason. Yes.
        The Chairman. We would be here all day, I suppose, if we
    tried to get you to explain what is a reasonable settlement
    discussion. Can you tell me in a nutshell what you call a
    ``reasonable settlement discussion'' when we are between $10
    billion and $175 billion poles?
        Mr. Cason. Mr. Chairman, I think at this point the
    Department of the Interior would love to settle this issue. We
    are consuming a ton of resources, senior management time, and
    lower staff time addressing this. We would love to see it be
    resolved so that we can begin the healing process with the
    Indian community for which we are the trustee. We would love to
    have this behind us.
        Ultimately what it takes, I think, to get it behind us is
    to sit down and have some concrete understanding about what
    exactly it is we are trying to solve, and that we introduce
    fact over fiction into the process so that we are solving some
    concrete issue. Basically what we have is an amalgam over time
    of hundreds of thousands of accounts that are alleged to have
    been improperly kept.
        At this point we do not have the facts to be able to say,
    ``Yes, that is true,'' or, ``No, that is not true,'' and to
    what degree. We do not know what exactly we are solving in
    trying to address the issue other than just doing an accounting
    to get all the facts.
        If we are going to sit down and do a settlement, obviously
    there is a cost avoidance issue and an opportunity cost that
    could be a parameter for dealing with this. I think that is
    part of the reason we have a complicated accounting
    prescription here so that there is a good parameter at one end.
    Certainly there is $176 billion at the other end. We would have
    to sit down and try to make a fact over fiction settlement.
        The Chairman. Well, you may never get the facts. Very
    clearly, we all know there are so missing documents. I do not
    think it is possible to get all the facts, in my view.
        In his written testimony, the plaintiff's lawyer, John
    Echohawk, indicated that the plaintiffs are willing to engage
    in mediation as an alternative method of resolving issues on
    Cobell. Has the Department ruled that out as a ``reasonable
    settlement discussion?''
        Mr. Cason. No; we have not.
        The Chairman. So I take it that your Department is willing
    to talk about some mediation efforts?
        Mr. Cason. Yes.
        The Chairman. Maybe my last question is: Are you willing to
    sit down with staff and try to work with the plaintiffs through
    staff to try to find a method of mediating it?
        Mr. Cason. Yes; we are, Mr. Chairman.
        The Chairman. Okay.
        Senator Inouye, do you have any questions?
        Senator Inouye. Thank you, Mr. Chairman.
        I was just intrigued by your testimony this morning in
    which you estimated that the cost of an historical accounting
    would be $335 million; am I correct?
        Mr. Cason. Yes.
        Senator Inouye. But yet in July 2002, in earlier testimony
    you estimated that it would be $2.4 billion. What has happened
    in the past year to alter your estimate?
        Mr. Cason. The accounting is basically an element of what
    it is you want to accomplish and how much work you put into it.
    At one end of the spectrum I think the Court has pretty well
    laid out the very end of one parameter which is do essentially
    everything back to 1887; reconstruct every single account as
    far back as they go to 1887; reconstruct all land ownership and
    every allotment back to 1887 and all the relationships of all
    the Indians involved since 1887. That is one end of the
    spectrum.
        At this end of the spectrum, you could make decisions about
    who you are going to do an accounting for. Our plan was
    basically do the accounting for the individuals who actually
    had open accounts in 1994 when the act passed. The court's plan
    said do it for everybody who ever had an account since 1887.
        So you cutoff work there that you do not do if you are not
    addressing deceased individuals or closed accounts in the past.
    You can do statistical work verifying accounts. Basically what
    we are saying there is if I had a transaction in 1945 where I
    received $10 of leasing income, then I could either sample that
    and go get the documentation on it, or as a statistical
    approach, I take 1 out of every 1,000 samples, 1 out of every
    5,000 samples, and if I can use statistical techniques, I can
    cut the work down substantially and still end up with a very
    high degree of accuracy as to what the results are.
        In our plan we used statistical verification to say that we
    would go after a certain set of the documentation to support
    the transactions on the ledger to a degree of 99 percent
    accuracy that we would be within the error rate identified in
    the process.
        We were able to cut down a substantial amount of work of
    not going to get documentation for every single transaction
    that has occurred, but get a statistical set of the transaction
    documentation. That would cut the work down. So we were able to
    get down to a manageable, within the budget and the work load,
    type of approach that would still give accurate results in the
    process.
        Senator Inouye. Has that methodology ever been employed by
    the Government?
        Mr. Cason. By the Government?
        Senator Inouye. Yes.
        Mr. Cason. I am not sure, Senator, whether it has been
    employed by the Government. But the way we developed the
    methodology was that we had a statistical firm with a Ph.D.
    statistician come assist the Department in designing the sample
    sizes. They were designed to give a 99-percent accuracy. We
    basically employed two times as many samples as were needed to
    get to that point. We also added in another process that if we
    actually identified errors that we would sit and explore that
    pocket of errors until we could get them resolved.
        So we put in a process to get a reasonably high degree of
    accuracy of 99 percent to identify whatever the error rate was,
    whether it was one-half percent or 10 percent, that would not
    require us to do every transaction.
        Ultimately, Senator, the cost on this is driven by how much
    work we have to do to get to the bottomline. In our plan, we
    were basically going to end up sampling around one-half of a
    million transactions in order to do the accounting. In the
    judge's plan, we would have to go do the documentation for
    about 61 million transactions.
        That is where the principal cost differences are.
        Senator Inouye. I am pleased to note in your testimony that
    you would not be against the mediation process. I think that is
    a good start for us. As indicated by you, there are countless
    numbers of different methodologies. Do you not think it would
    be well if we can sit down and be able to come to some mediated
    consensus as to what methodology to follow?
        Mr. Cason. Senator, I think that would be a wonderful thing
    if we could sit down and come to an agreement about how to
    resolve this.
        Senator Inouye. Could that be done legislatively or just
    administratively?
        Mr. Cason. I think it could be either.
        Senator Inouye. Well, I feel better now.
        Mr. Cason. Well, great.
        Senator Inouye. You have indicated a concern about the lack
    of clarity in S. 1770. I, for one, would be most pleased to
    have your staff provide us with language that would address
    this concern and thereby bring about greater clarity in the
    bill.
        Mr. Cason. We would be happy to do that.
        Senator Inouye. Thank very much, sir.
        The Chairman. Without objection, so ordered.
        Senator Inouye. Thank you, Mr. Chairman.
        The Chairman. Thank you, too, James. S. 1770 is certainly
    not a perfect bill. Very few of them are around here. In fact,
    I have never seen one yet that is happily supported by
    everybody involved. There are no perfect bills. It is a
    vehicle, as I mentioned earlier. We, very simply, need the
    Department of the Interior's help, as we need plaintiffs help,
    to bring this thing to closure. We just cannot find a solution
    by ourselves. Hopefully you are going to work with us, as you
    mentioned, with our staff.
        Mr. Cason. We would be happy to. The only thing I would
    suggest, Senator, is that choice is great. But what we would
    like to do is to see if we could get down to ``Let us choose
    this path,'' or, ``Let us choose this path,'' or, ``Let us
    choose this path,'' as opposed to trying to pursue multiple
    paths all at once.
        The Chairman. That may work. Sometimes the same path does
    not fit all moccasins.
        Mr. Cason. That is true.
        The Chairman. Thank you.
        Senator Thomas, do you have any questions?
        Senator Thomas. Thank you, Mr. Chairman.
        You talked about mediation. With whom would you sit down?
        Mr. Cason. Well, if we were going to do mediation, I think
    it is basically the Department of Interior, the Department of
    Justice, the plaintiffs, and some third party mediators.
    Certainly since the bill ultimately ends up with Congress in
    some fashion, or if we can do it as litigation settlement, and
    possibly someone from Congress who has the ability to actually
    settle involved in the process.
        Senator Thomas. If it were not for the court's
    intervention, would you have a process that works in the
    Department?
        Mr. Cason. With regard to what, Senator?
        Senator Thomas. With regard to solving this issue.
        Mr. Cason. I would say candidly probably no, because I do
    not think that the plaintiffs and we are close enough that we
    would end up agreeing mutually without some third party
    involved.
        Senator Thomas. So the court is an important component of
    this resolution; do you think?
        Mr. Cason. I think there is a role to play for all three
    branches of Government, and in this case, all three branches
    are actively engaged. Now that we are actively engaged, the
    problem that we have is that we are not engaged in a similar
    way.
        Senator Thomas. Well, you know, as you listen here--we have
    been at this for 10 years--you are talking about methodology.
        Mr. Cason. Yes.
        Senator Thomas. You do not have a methodology in mind after
    10 years?
        Mr. Cason. Well, actually we do, Senator. The Department
    has an accounting plan. The Department has actively engaged in
    implementing our plan. We were funded in 2003 to do it. We have
    substantial accomplishments under our plan.
        However, what the court has said is, ``Your plan is
    insufficient. We want you to do our plan.'' The difference is
    that their plan costs billions of dollars more. Congress is
    unwilling to fund our plan, much less what the court has. So
    that is the problem that we are in.
        Senator Thomas. I understand.
        Mr. Cason. We do have a plan. We know where we want to go.
    We think that we are approaching the accounting obligation in a
    cost effective way that will also meet our trust
    responsibilities and do it with a high degree of accuracy. But
    the court perceives that we have to have a much broader, more
    expensive plan. That is why we are here. We need to get that
    resolved.
        Senator Thomas. If the Congress agreed with you on the plan
    and instituted it in the bills and then defended it in the
    court, would we be successful?
        Mr. Cason. I believe so. Ultimately it is Congress' choice
    as the trustor, the settlor of the trust, to tell all of us
    what our obligations are to the trust. We do that through the
    statute. If Congress chooses to say:

        What we meant in this language in the 1994 Act, or what we
    meant in previous language that has become common law is this,
    then this is how we want the accounting to be.

        If Congress tells the Department of the Interior, ``What
    the court told you to do is exactly what we meant. We are going
    to fund it for $10 billion.'' Okay, great. The Department will
    charge off and go do the work that we are supposed to do. But
    if Congress is not willing to fund that kind of approach, and
    that is not what Congress meant, and Congress meant something
    else, then we need to be clear about what that is so that we,
    the Department, can fulfill our trust responsibilities as
    prudently as we can, and that we have a solution that Congress
    is willing to support with the funding to implement it. So,
    yes.
        Senator Thomas. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Mr. Cason, thank you for appearing today.
        With that, we will take a 10-minute break to vote.
        [Recess taken.]
        The Chairman. The committee will come to order.
        We have a conflict. We are dealing with the supplemental
    for Iraq, Afghanistan, and the war effort. Senator Inouye had
    to go to that meeting. He will not be with us for the rest of
    that testimony. He may submit some questions in writing.
        Our second panel is John Echohawk, executive director,
    Native American Rights Fund, Boulder, CO.
        John, welcome. Please proceed.

    STATEMENT OF JOHN ECHOHAWK, EXECUTIVE DIRECTOR, NATIVE AMERICAN
                        RIGHTS FUND, BOULDER, CO

        Mr. Echohawk. Thank you, Mr. Chairman.
        I am very pleased to see the interest in the committee in
    addressing these trust fund mismanagement problems. I am very
    pleased to be invited to participate here in this hearing
    today.
        As you know, the Native American Rights Fund is co-counsel
    for the 500,000 current and past individual Indian money
    account holders. We have been involved in this litigation since
    1996 on a class action basis.
        In April, Mr. Chairman, you and the vice chairman sent us a
    letter that also went to the Secretary suggesting a mediated
    resolution of this case. We responded positively to that letter
    in May indicating that we were willing to engage in mediation.
    Of course, we repeated that pledge in the hearing that the
    committee had on that proposal in July. We had not heard an
    official Government response whether they were willing to
    participate in an attempt to settle the case through mediation
    until this morning. I was very pleased to hear Mr. Cason say
    that the Department would be willing to engage in an effort to
    resolve this case through mediation. I think that is a very
    positive development.
        I think what has happened since we had the hearing in July
    when we started talking about mediation has been very
    significant. Judge Lamberth's decision of September 25 was
    basically holding that the Government's responsibility is to do
    the full historical accounting back to 1887. This is based upon
    the legal obligations that the U.S. Government has undertaken
    under the trust responsibility.
        This is rejecting the efforts by Interior and the arguments
    they made to try to limit that full historical accounting. Both
    the District Court and the Court of Appeals have held this is
    required under the Federal Government's trust responsibility,
    under the 1994 act, which, of course, the courts have upheld.
    This has basically codified the Federal Government's trust
    responsibility in terms that require them to act as any normal
    trustee in any regular trust.
        That has led the Department to talk about how much that
    would cost. As we have discussed here this morning, I think
    that is all the more reason why we should think about a
    mediated resolution of this case.
        I know the efforts of this committee to try to resolve this
    issue and that S. 1770 has been introduced. We commend the
    committee for its interest there. We believe that the goals of
    the resolution process should include certain criteria that I
    have laid out in my written testimony, including that the
    proposal be fair, that it expedite rather than delay resolution
    of the case, that it not be a forum to re-litigate settled
    issues--issues that have already been determined by the
    District Court and the Court of Appeals, and that the proposal
    be consistent with trust law--which again is what the courts
    have held--is required in this situation; and the proposal must
    be constitutional.
        We understand that S. 1770 is a starting point by the
    chairman and others who sponsored it to try to reach a
    resolution in this case. We feel as though it is only a
    starting point. It has many defects contained within the bill
    that leads us to think that it is not really a good bill and we
    should not go down that avenue. My written testimony contains
    three pages of problems that we see included in the current
    language in S. 1770. I will not repeat all of that here.
        I would just conclude once again by emphasizing the
    importance of the mediation. We feel that is very possible to
    end the litigation. It has come out that the Cobell plaintiffs
    and the Federal Government both agree that since the IIM
    accounts were started in 1887, approximately $13 billion has
    gone into those accounts. We both agree on that. In our view,
    that should be the start of this mediation and settlement
    process.
        The next step is simply to ask the Government to produce
    its records on how much of that $13 billion has been dispersed.
    How much can they prove they paid out? Whatever is the
    difference is what is owed, plus the interest on that money. It
    seems to us a pretty straightforward process that would
    eliminate these requests for $10 billion or so for some
    historical accounting which cannot be done.
        I do not believe the Department thinks it can be done. I
    think they have admitted as much in court. I think they wanted
    to try to put all kinds of parameters around it to be able to
    perform what they would call an accounting that would basically
    just take into account the records that it does have. But they
    do not have very many records. Of course, the court rejected
    their plan out of hand because it is not consistent with trust
    law. It is not consistent with the 1994 act and the obligations
    that the Federal Government has undertaken.
        In summary, I think we can hopefully take the
    Administration at its word and start these discussions about a
    mediated settlement along the lines that I just suggested. If
    the Government wants to try to re-litigate everything that we
    have litigated in the last 7 years in that mediation, we are
    not going to get very far at all. But if we can start where are
    now in terms of what the courts have ruled, I think we can
    resolve this case.
        Thank you, Mr. Chairman. I would ask that my statement be
    included in the record in its entirety.
        [Prepared statement of John Echohawk appears in appendix.]
        The Chairman. Thank you.
        In your written testimony you were quoting from an April
    2003 letter that Senator Inouye and I sent to you and the
    Federal defendants, but you quoted only a small part of it. Let
    me read the whole thing:

        We believe that the most effective and equitable way to
    resolve this threshold matter, that is, the accounting, is to
    engage the services of an enhanced mediation team that will
    bring to bear trust accounting and legal expertise to develop
    alternative models that will resolve the Cobell case fairly and
    honorably for all parties.

        Yet, as I understand your testimony, S. 1770 is totally out
    of the blue. What we did with S. 1770 is really mirror what
    that letter said that we had sent to you. Tell me where the
    disparity is.
        Mr. Echohawk. Mr. Chairman, I think if we were able to
    start a mediation process, that the panel idea that you have
    included in S. 1770 may well be something that could help us
    sort through this process that I outlined in my statement. I
    think that is a good concept.
        The Chairman. Okay. Normally when a client has an attorney
    they can discuss things when they make a decision. This one is
    a little difficult. As the counsel for the individual holders,
    I understand there are about 500,000 in this class action. How
    often do you communicate with all 500,000?
        Mr. Echohawk. Well, as you might guess, that is a little
    difficult to do. We go to as many meetings as we can, as
    requested by individual account holders. Of course, basically
    we have a small team. But we do the best we can between the
    named plaintiffs and the plaintiffs' counsel.
        The Chairman. Well, when you are having these meetings, I
    do not know if you are hearing the same thing we are hearing.
    But when we talk with Indian people, they would rather have
    some measure of immediate relief than take a chance of waiting
    5 years or 10 years and going through all the court room
    gymnastics that we have been going through over the past 8
    years, and maybe another 10 years in the process.
        Nine out of ten are saying they want to settle the thing,
    they want to settle it now, and they want immediate relief. Are
    you not hearing that?
        Mr. Echohawk. I think we are hearing that, too, but at the
    same time it has to be a fair settlement. It has to be a fair
    settlement. That is what we are proposing.
        The Chairman. That is what the mediation team would be all
    about, is trying to find some equitable settlement that would
    be accepted by the plaintiffs and by the Department, too.
        Are you under any obligation to communicate with all of the
    plaintiffs? Do you just call a meeting and invite whoever wants
    to come to it? How do you do that?
        Mr. Echohawk. We do the best we can, Mr. Chairman. These
    problems are inherent in a class action, and that is why the
    class action approach is undertaken. In the end, of course,
    there are due process safeguards in any settlement that would
    be reached. We would, of course, have that approved by the
    court with all the due process safeguards that are inherent in
    that class action process.
        The Chairman. There has been some talk today about what
    kind of methodology should be used to conduct an historical
    accounting. I think that is a very important concern to the
    plaintiffs. As the plaintiffs' lawyer, would you oppose any
    methodology that would substantially understate the true
    balances of your clients IIM accounts? I assume you would.
        Mr. Echohawk. Substantially understate? No, I do not
    believe we would, Mr. Chairman. Again, I think we are looking
    to the decisions by the District Court and the Court of Appeals
    in terms of what is a fair methodology and what is required in
    terms of an accounting. I think that shows us the way to go.
        The Chairman. If the Committee were to adopt legislation
    calling for some sort of mediated settlement, would you agree
    that the ultimate goal of the legislation would be to come up
    with a settlement that reflects the true balances of your
    clients IIM accounts, the true balances?
        Mr. Echohawk. Yes; Mr. Chairman.
        The Chairman. The true balances might not be what your
    plaintiffs now claim and they might not be what the Interior
    Department claims. If we did have a methodology that was pretty
    foolproof and it was not anywhere near what the original number
    was of $176 billion, and yet it was not the same as the
    Department is claiming, would that methodology receive your
    support?
        Mr. Echohawk. Well, Mr. Chairman, again it would have to be
    consistent with trust law as determined by the District Court
    and the Court of Appeals.
        The Chairman. Let me ask you the same thing I asked the
    Department of the Interior. Are you willing to commit to some
    substantial time and resources to work with Senator Inouye and
    my senior staff, in a good faith effort, to try to produce some
    sort of settlement legislation that is equitable to both sides
    of the issue?
        Mr. Echohawk. We certainly would, Mr. Chairman. I think
    with your help and with the help of the vice chairman and other
    members of the committee, we can get this done.
        The Chairman. I think so, too, but it has to be a good
    faith effort by the Department and by the attorneys for the
    plaintiffs, too.
        I have no further questions. Senator Thomas, do you have
    any comments or questions?
        Senator Thomas. Thank you, Mr. Chairman.
        I am sorry I did not hear all of your testimony. I did read
    some of it. If you were in charge of the world, would you have
    the Congress appropriate billions of dollars for accounting
    now?
        Mr. Echohawk. No, sir; I would not. I think through a
    mediated process we can come up with a settlement to this case
    that would eliminate the necessity to do that. I think doing
    the full historical accounting is impossible to do. I think the
    Interior Department has admitted as much.
        If it cannot be physically done, I do not know why all
    these billions should be appropriated to do that. We should sit
    down and figure out what we do in lieu of that. It just cannot
    be done.
        Senator Thomas. Well, is not the result of the Cobell case
    requiring that kind of thing?
        Mr. Echohawk. That is the requirement. But again if the
    Government cannot do that, then we need to figure out some
    other way to do that. Again, if we work together, I think we
    could find a way.
        Senator Thomas. I would hope so. It seems like the Indian
    people in my State are more interested in a settlement. It does
    not appear that the attorneys or the plaintiffs over these
    years have been very interested in doing anything except what
    they want to do in the lawsuit.
        Mr. Echohawk. Well, as we pointed out in our letter to the
    chairman and the vice chairman suggesting a mediated resolution
    that we sent up in May, we are willing to engage in a process
    to talk about mediation and settlement.
        On several occasions since 1996 when we started the
    litigation, we have attempted to do that with the Federal
    Government, but none of those attempts have been fruitful.
        Senator Thomas. Fruitful depends upon which point of view;
    does it not?
        Mr. Echohawk. Well, it has not achieved a settlement.
        Senator Thomas. Absolutely.
        Mr. Echohawk. My point is that we have been willing to
    talk.
        Senator Thomas. You have been willing to change your
    position some?
        Mr. Echohawk. We are willing to talk, yes.
        Senator Thomas. That is not the answer to my question.
        Mr. Echohawk. Again, in a negotiation, it is a give-and-
    take process.
        Senator Thomas. That is right, but sometimes it requires
    changes on the part of all of the parties.
        Mr. Echohawk. Then yes, maybe we can change some of our
    positions as well, depending on what the trade-offs are. That
    is the nature of negotiations.
        Senator Thomas. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, John. I appreciate your being
    here.
        Let me just reiterate, as I did for Mr. Cason, what
    happened in the Appropriations Committee yesterday was not
    particularly satisfying to me or to Senator Inouye. We have a
    year before I think something that is going to be really
    unacceptable happens to this committee, to the plaintiffs, and
    maybe to Interior, too. I think there is going to be a move to
    take it away from us and put it in an appropriations bill which
    is going to really complicate it.
        There probably will be further court challenges to that. It
    will just go on and on. We have a year to get this thing done.
    If we do not, we are going to be in some pretty deep stuff
    around here. So I hope you are going to be serious about
    working with us and with the Committee as we are going to try
    to make sure that the Interior is going to, also.
        Mr. Echohawk. We certainly are, Senator.
        The Chairman. Thank you very much.
        The last panel will be Tex Hall, president, National
    Congress of American Indians, Washington, DC; Fred Matt,
    chairman, Confederated Salish and Kootenai Tribes, Pablo, MT;
    and Jim Gray, principal chief, Osage Tribal Council, Pawhuska,
    OK.
        I have a 12:30 p.m. commitment that I cannot get out of, so
    I would appreciate keeping this to 15 minutes per person.
        Tex, please proceed.

    STATEMENT OF TEX HALL, PRESIDENT, NATIONAL CONGRESS OF AMERICAN
                        INDIANS, WASHINGTON, DC

        Mr. Hall. I will be as brief as I possibly can.
        Senator Campbell, Senator Thomas, and members of the
    committee, thank you for the opportunity to testify today on S.
    1770 on behalf of member tribes and individuals of the National
    Congress of American Indians. I would like to express our
    appreciation of the committee for its commitment to this issue
    and to Indian people.
        I believe this legislation can be viewed in two ways. If
    this is considered as an immediate legislative proposal that
    would be quickly passed by Congress, then we have a great deal
    of concern, as we all know. This bill would give the Federal
    Government the ability to pick the panel of experts who would
    decide how much money the Federal Government owes. Indian
    people simply could not trust a proposal as drafted like that.
        However, we believe the bill can be viewed as an effort to
    put forward some serious concepts for settlement and to create
    discussions that will push settlement forward. In that light,
    we welcome the bill because it could serve as a vehicle for
    Congress to establish a fair and equitable process for settling
    the Cobell v. Norton litigation.
        As you know, tribal leaders have supported the goals of the
    Cobell plaintiffs and seek a correct trust funds accounting. At
    the same time, tribes are concerned about the impacts of the
    litigation on the capacity of the United States to deliver
    services to tribal Indian communities and nations, and to
    support the government-to-government relationship.
        We believe it is in the best interest of tribes and
    individual Indian account holders that tribal leaders
    participate in the resolution of trust related claims and the
    development of an effective system for management of the trust
    assets.
        On July 1 we testified before this committee on Cobell v.
    Norton settlement options. At that time NCAI set forth a set of
    principles for how a settlement process should be structured.
    Today we will respond to S. 1770 in light of those principles
    from our earlier testimony.
        First of all, tribal leaders are impatient for Congress to
    put forward a serious settlement proposal. We are very
    appreciative of this. They really do not care about the process
    so much as they care about a serious signal from Congress that
    is willing to shoulder the costs of settling a lawsuit, and
    that these costs will not be taken from existing Indian
    programs.
        Second, tribal leaders have seen a lot of quick fixes in
    trust reform. S. 1770 feels a little bit like another quick
    fix. A real solution is going to require that all parties come
    to an agreement. That includes the Department of the Interior,
    BIA, the Congress, and the tribes.
        Third, as we look to settle the historical accounting,
    Congress should also address the problem of fractionation
    through land purchases as part of the settlement and support a
    state-of-the-art trust management system and standards so that
    these problems do not reoccur in the future.
        In our written testimony we have outlined settlement
    process principles which tribal leadership developed earlier
    this summer. I have kept my oral remarks brief, but please
    refer to my written testimony. My main statement is: We need to
    begin a settlement process now.
        We also support the mediation. I urge again all the
    parties, with support from the Congress and from this
    committee, to sit down and begin these discussions in the very
    near future.
        Indian country cannot afford another appropriations cycle
    to begin without action to begin a settlement process. We are
    very concerned about the appropriation rider that was
    introduced. Again, that is not the way we should be conducting
    business. It should come before the appropriate authorizing
    committee, like this one here.
        We thank Senator Campbell, Senator Inouye, and Senator
    Dominici for the introduction of S. 1770. I appreciate your
    leadership in putting this bill forward to push serious
    discussions to address this very important issue. This is the
    number one issue in Indian country right now of fixing the
    trust and settling the trust.
        Please consider our recommendations to enhance your bill
    and put forward a process that all tribes can support. In
    closing, Mr. Chairman and members of the committee, Indian
    tribes are in support of settling the trust. But the Indians
    have to be involved in that process. If they are involved in
    that process, we can begin to trust that this will be a fair
    process. Without the Indian involvement, that trust of this
    process will not be there.
        Thank you for giving me a brief opportunity to testify. I
    look forward to answering questions afterwards. I would ask
    that my statement be included in the record in its entirety.
        Thank you.
        The Chairman. Without objection, so ordered.
        [Prepared statement of Tex Hall appears in appendix.]
        The Chairman. Thank you, Tex.
        I was reflecting in my own mind while you were speaking
    about how much in the past history that American Indians have
    been involved in the process. The answer is about that much.
    Just darn near nothing. You know it, and I know it, too.
        This bill was not meant to be a quick fix. We started
    talking about mediation over 1 year ago with anybody who would
    listen, including the NCAI, by the way. It is meant to be a
    vehicle and a place holder to prevent something from happening
    through the appropriations process that Indian people are not
    going to like.
        Senator Inouye and I, and most of the committee members,
    have worked just as hard as we can to try to find a solution on
    this. The bottom line is that Congress is losing its patience.
    I say that from a generic standpoint. There are a number of our
    colleagues who are just fed up with it, tired of it, and want
    to settle it through putting more riders on the appropriations
    bill. We are trying to not let that happen.
        But we cannot stop it, very frankly. We cannot stop it
    unless we get some help from both Interior and the plaintiffs.
    We cannot just dig in and say, ``I am not going to move. I will
    not do it. They are wrong. The other side is wrong. We are
    supposed to get this much money.'' The other one is saying,
    ``You are not supposed to get anywhere near that.''
        We have to find a solution, or it is just simply going to
    be taken away from us. That is my personal view on it. I would
    hope that you, as John Echohawk and James Cason have already
    said, that you will also be committed to try to find a solution
    to this thing. This is not an end bill. It is a beginning. It
    is a vehicle, as I said. But we have to do something. The way I
    figure it, we have about 1 year, or we are going to be in deep
    trouble.
        We will go on now with Fred Matt.

       STATEMENT OF FRED MATT, CHAIRMAN, CONFEDERATED SALISH AND
     KOOTENAI TRIBES, PABLO, MT, ACCOMPANIED BY BRIAN UPTON, LEGAL
    DEPARTMENT, CONFEDERATED SALISH AND KOOTENAI TRIBES, PABLO, MT;
                           AND GEORGE WATERS

        Mr. Matt. Thank you, Chairman Campbell and members of this
    Committee. My name is Fred Matt. I am the Chairman for the
    Council of the Confederated Salish and Kootenai Tribes. With me
    today I have a member of our Legal Department, Brian Upton, and
    George Waters.
        Thank you for the opportunity to provide this committee
    with views of the Confederated Salish and Kootenai Tribes. I
    bring you greetings from God's country. As you have heard me
    say many times, when you are in Western Montana on a
    reservation, and you pray to the Creator in the evening, it is
    a local call. [Laughter.]
        So I bring you greetings from Montana.
        The Chairman. That same sun before it gets to you comes
    over our reservation in Lame Deer. I just wanted you to know
    that. [Laughter.]
        Mr. Matt. I knew you would have a comeback. Thank you.
        I will summarize my written testimony. I also want to point
    out that the version that is on the table is not our final
    version. We were still making revisions as I came here
    yesterday on the plane. I will try to be brief. I know this is
    an important hearing. Once again, thank you for this
    opportunity.
        The Salish and Kootenai Tribes have been very active in the
    area of trust funds management. We have participated in many
    intertribal discussions on how to best resolve the problems
    with the Federal management of the trust funds. We have also
    taken a more direct approach. We manage our own financial trust
    services program. We can report to you that our tribal
    government and tribal members alike are very happy with our
    experience in taking over administration of these Federal trust
    functions.
        Due to this experience, we have an unique insight into the
    trust funds management issue since we can view it from the
    perspectives of both the account manager and the account
    holders. As the managers of these accounts, we appreciate the
    complexities in resolving the accounting issues. As an account
    holder, we know as well as anyone that Federal mismanagement of
    the trust funds has long worked great injustices to the many
    tribal and individual Indian beneficiaries. These injustices
    would not have been tolerated had they occurred in any other
    segment of America's society. I know many of you have mentioned
    those same thoughts.
        As you are aware, the filing of the Cobell litigation has
    resulted in the trust funds mismanagement issue receiving the
    attention that is long deserved. Unfortunately, that litigation
    was filed over seven years ago, but it was only last month that
    an initial decision was rendered by the Federal District Court.
        We agree with you, Senator Campbell, in your introductory
    remarks accompanying S. 1770, that the litigation will take
    many more years. I believe it is both appropriate and
    productive for Congress to try its hand at fixing this
    situation.
        We, too, oppose spending $9 billion doing an historical
    accounting. If Congress has that kind of money, it would be
    better going toward a compensation fund, or it could be better
    spent on tribal land consolidation. Consolidation would help
    alleviate the problems associated with fractionations of lands.
        As this committee knows, fractionation creates trust fund
    accounting nightmares. I am truly concerned about helping our
    account holders. I am particularly concerned about our elders
    who may not live to see the end of this lawsuit.
        The Salish and Kootenai Tribes oppose the concept of a
    receiver being appointed to manage Indian trust funds. We are
    glad to see that S. 1770 does not include this misguided
    proposal. A receiver may ultimately demand control over trust
    resources that generate income into IIM accounts.
        As a self-governance tribe, we are the manager of trust
    resources on our reservation. Creation of a receiver would be a
    step backwards. It also would have shown little regard for
    tribal governments in our pivotal role in resource management
    on our reservation.
        We are also concerned about the potential conflict between
    the creation of the new trust standards for the rights of the
    tribes to manage resources. The Confederated Salish and
    Kootenai Tribes are proud of our system and of trust asset
    management. We are proud of meeting high standards. However, we
    urge Congress to keep an eye on the development of these new
    standards.
        The reason self-governance works is that it allows tribal
    governments to keep flexibility while still adhering to Federal
    standards. We must retain this flexibility even if new
    standards are adopted.
        A few days ago, Chairman Campbell, you introduced S. 1770.
    Our tribal staff and tribal council are still in the process of
    reviewing this bill. But we generally think that the
    legislation is creating a settlement mechanism that can work.
    The bill would ensure a determination is arrived at in a
    reasonable amount of time so that individuals could have their
    trust account settled and receive their full payment.
        The bill includes an option to remain in the class action
    lawsuit, but it does make me wonder when we will be able to
    finally put this case behind us. A reason for introducing this
    bill is to address the problems and move forward on this issue.
    That will not happen if a large number of individuals in the
    Cobell class decide to remain in the lawsuit.
        I believe it is absolutely critical that the plaintiffs are
    able to access the judgment fund. I believe the bill has been
    drafted to protect this access. However, there is reason to
    doubt that the current bill will be signed into law if the
    United States still retains the liability of the Cobell class
    action. This committee may want to consider whether the bill
    should settle the suit in finality.
        A concern that I have, and one which I am hearing from
    other tribes in Montana is: Where will the money come from to
    fund S. 1770? Will it come from the BIA's budget and,
    therefore, out of the services that are funded to tribes? The
    bill would authorize $40 million. The money of this bill must
    not come from programs funding tribal governments. We ask you
    to work with the Budget Committee to help resolve this concern.
        It is important to remember that tribes need to be part of
    the solution, as many have said, to this problem. Tribal
    governments, like my own, can help to prevent future problems.
    We are the closest to the tribal beneficiaries. We have the
    strongest motivation to properly handle these monies for our
    constituents. This is why we pressed for inclusion of a trust
    fund demonstration project for fiscal year 2004 in the
    Interior's appropriations bill. This project ensures our
    ability to continue our effective management without being
    impaired by any reorganization of trust functions within the
    Department of the Interior.
        Over the last decade a great deal of energy and resources
    has gone into trust fund management issues. I welcome
    Congressional efforts to bring proper relief to individual
    Indian account holders. S. 1770 appears to be a good faith
    effort by Congress to resolve the problems at hand. S. 1770 and
    the recent House Resources Committee oversight hearing
    demonstrates that Congress is not content to sit on its hands
    and have the issue dealt with by the courts and the Federal
    agencies. I believe this engagement by Congress, with active
    participation of the tribal governments, can be productive in
    reaching the solution to a long-standing problem. S. 1770 is an
    important step in that direction.
        Once again, Mr. Chairman, I thank you for the opportunity
    to provide testimony. I would ask that my statement be included
    in the record in its entirety.
        Thank you.
        The Chairman. Without objection, so ordered.
        [Prepared statement of Fred Matt appears in appendix.]
        The Chairman. Thank you.
        You asked a rhetorical question. Where would the $40
    million come from that is authorized in this bill? You have to
    ask the same question: Where is the $10 billion going to come
    from if we let this thing go on for another 8 or 10 years?
    There is always that worry on our behalf that someone around
    here may say, ``Well, it ought to come out of existing Indian
    programs.'' None of us want that. When you are facing a $400-
    billion deficit, believe me, everything is a tug-of-war around
    here for money. That deficit is apparently is going to be here
    for the next few years, too.
        Let us go on now to Jim Gray, who will be our last speaker.

     STATEMENT OF JIM GRAY, PRINCIPAL CHIEF, OSAGE TRIBAL COUNCIL,
                              PAWHUSKA, OK

        Mr. Gray. Thank you, Chairman Campbell. I appreciate the
    opportunity to speak to the committee this day.
        I would like to present the views of the Osage Tribe. I
    will briefly go over some of my comments in regard to the
    interest of time. Most of my comments are in my written
    testimony that I have submitted.
        We agree with the sponsors of S. 1770 that it is in the
    best interest of Indian account holders and the United States
    to have a voluntary alternative claims resolution process that
    will lead to a full, fair, and final settlement of existing and
    potential Indian money account claims.
        We are concerned about provisions in this bill,
    particularly the definition of accounting and claim contained
    in section 3 of the bill. We believe that the process should be
    established by S. 1770 as fundamentally fair. It does not,
    however, take into account the unique situation of the Osage
    Tribe and its hybrid trust fund scheme. Any fair resolution of
    the trust fund situation should deal specifically with the
    Osage. We would like to work with the committee to address the
    concerns discussed in my testimony.
        In the legislation we also have serious misgivings on the
    definition of accounting. We believe an IIM account holder
    should have enough information to make an informed decision
    about whether to accept an amount the Task Force recommends.
    Based on the particularly vague standards of both (a) and (b)
    of this definition, accounting may be an inaccurate confusing
    name for a determination.
        We recommend that this legislation either adopt common law
    accounting standards or call the determination something other
    than an accounting, and require the Task Force to make clear
    the deficiencies, if any, in coming to a determination. IIM
    account holders have a legal right to a full accounting. This
    legislation should ensure that they are not confused or
    deceived by a determination.
        We are also concerned that the definition of claim could
    create particular problems for the Osage Tribe. The management
    and the distribution of Osage trust funds are unique. In 1906,
    Congress directed the Secretary of the Interior to create a
    roll of all living Osages through July 1907. All persons on
    that roll received allotments of Osage reservation lands and a
    pro rated share of the Osage mineral estate.
        These pro rated shares have been passed along over the
    years to Indians and non-Indians and have come to be known as
    head rights or the rights to receive quarterly distributions of
    funds derived from the Osage mineral estate. Only Osages with
    head rights have political rights to participate in Osage
    government through voting or running for elective office. Their
    voting powers are equal to their head right fraction.
        The Osage mineral estate continues to be held in trust by
    the United States for the Osage Tribe. Funds derived from the
    Osage mineral estate are placed into a tribal trusts account in
    the name of the Osage Tribe. The tribal council can draw up to
    $1 million annually from the minerals' income for purposes of
    council and mineral estate administration. Each quarter the
    balance of the funds in the Osage tribal account is distributed
    to the head right holders in accordance with their head rights
    share. A few head right holders have more than one head right,
    while most have a fraction.
        The Department of the Interior has established three
    categories of head right holders: Osage, non-Osage Indian, and
    non-Indian. Osage and non-Osage Indians with head rights have
    Indian money accounts that funds from the mineral estate are
    deposited into. The non-Indians do not have an IIM account, but
    receive a check every quarter.
        Mr. Chairman, the Osage trust fund is an unique hybrid in
    which funds common to a tribal account. Congress has called
    these funds tribal funds in statutes. The tribe has rights to
    these funds. The Indian head right holders receive
    distributions into IIM accounts, while non-Indian head right
    holders get a check.
        The U.S. Court of Claims recently ruled that the Osage
    Tribe has standing to represent the right of the head right
    holders in litigation involving Federal mismanagement of Osage
    trust funds. Furthermore, a Federal statute makes clear that
    the Osage Tribe is the appropriate entity to bring claims
    against the United States. Thus, the Osage Tribe and its head
    right holders do not comfortably fit into the otherwise simple
    dichotomy of tribal claims and individual claims.
        We are concerned that the definition of claim in section 3
    of the bill is overly broad as it includes any duty that
    pertains in any way to the IIM account. Such broad terms
    subjects the definition to varying degrees of interpretations.
    The definition includes more than an accounting, and appears to
    include activities that occur prior to the time the money is
    deposited into the IIM account.
        We are concerned that this definition may result in harm to
    Osage tribal claims brought in the Court of Federal Claims, or
    one we plan to bring in Federal District Court. Even though the
    stated intent of the bill is to resolve individual Indian
    account claims, Indian head right holders would appear to meet
    the qualifications as eligible individuals under S. 1770. Head
    right holders claims could subsume the Osage Tribe's existing
    claims contrary to the intent of the tribe to represent the
    head right holders. Therefore, we would like to work with the
    committee to amend this definition.
        Thank you for the opportunity to testify today. I would ask
    that my statement be included in the record in its entirety.
        Thank you.
        The Chairman. Without objection, so ordered.
        [Prepared statement of Jim Gray appears in appendix.]
        The Chairman. Thank you.
        You brought up another wrinkle, of course, in this whole
    big picture. It may be that the Osage may be better off doing
    their own accounting somehow. I do not know. But we will
    certainly work with you.
        Let me ask a question or two of each of you. First of all,
    if you remember in your discussion with John Echohawk, the
    number of 500,000 plaintiffs came up. Let me ask all three of
    you.
        The national average for life expectancy in America now is
    76.5 years--getting older, living longer, and better health.
    There are all kinds of reasons for that, but not for Indians.
    You know as well as I do that the national average for Indians
    is 60.6 years, living 16 years shorter life than non-Indians.
        What I would ask you is this. Have you met any people now
    who are plaintiffs who are in their sixties? Tex?
        Mr. Hall. Yes; I have, on my reservation and on several
    other reservations, Senator Campbell. But your point is well
    taken.
        The Chairman. Do you see what I am getting at?
        Mr. Hall. I believe they need to be prioritized in the
    settlement process.
        The Chairman. Sure.
        Mr. Hall. It is also culturally appropriate that the elders
    come first. They are our first teachers. They do not have that
    much time to live.
        The Chairman. You are exactly right. They do not have that
    much time. For all the reasons that you know as well as I do--
    poor health, diet, and all kinds of different problems. But the
    bottomline is if this thing goes on another 10 years, most of
    those American Indian people that are now plaintiffs that are
    65, I think a very high percentage of them will not be around
    to even get the benefits that they deserve and that we owe to
    them.
        I guess that is the reason that I keep coming back to the
    question: How much longer do we want to go? We have to move
    something forward.
        Let me ask all three of you, but Tex, you first. When we
    are talking about a mediator or mediating, would it be more
    important, or equally important to do mediating over
    methodology or over accounting, or both?
        Mr. Hall. I would say probably both, Mr. Chairman. We could
    spend a long time talking about the methodology. The accounting
    probably; I would say yes. As was mentioned, the common law
    standard needs to apply. We could spend time disagreeing on the
    type of accounting. But the priority would be methodology.
        The Chairman. I think we have been disagreeing for 8 years.
    That would not be a surprise.
        Mr. Hall. That is correct.
        The Chairman. Mr. Matt.
         Mr. Matt. I would just echo what President Hall has
    mentioned. I think the methodology is probably the first step
    in that process. I do not think you are ever going to have a
    complete accounting.
        The Chairman. When we are talking about accounting, for
    instance, do you think that we should try to arrive through
    some mediating efforts a total or global settlement figure up
    front and that money would later be distributed, or should the
    process focus on an account by account mediation or something
    in between?
        Mr. Matt. I do not have a good feel for that. I know those
    are some of the things that I think we need to continuously try
    to evaluate and see what the best process would be. But I do
    believe that that question can be answered and we can go
    forward.
        The Chairman. Tex.
        Mr. Hall. I would definitely say, Mr. Chairman, that a
    figure should be put in place. If it is $13 billion--we have to
    have a starting point. Anybody has ownership in any kind of
    account, they want to know what type of money is on the table.
    So I think we need to have that.
        The Chairman. It might not be what some people expect,
    however, when you have a disparity of $175 billion on one side
    and $10 billion on the other. I agree.
        Mr. Gray. Senator, I think what we need to look at in terms
    of any mediation before we come to the table, we should not
    preclude any particular process of methodology for discussion
    before we sit. I think by arbitrarily selecting one particular
    methodology and saying, ``Okay, let us mediate,'' I think is
    undermining to certain positions that may be more acceptable in
    other avenues.
        I think forensic accounting certainly would be a good
    method to be able to reconstruct some of the missing documents.
    Even through my understanding of what a statistical sample is,
    it does not take into account many of the missing documents
    that we all know are unrecoverable. In many cases, historically
    you see $100 leases here and $100 leases there. In the Osage
    case, in the 1920's, it was $1a million here and $1 million
    there.
        So any kind of gap that does not take the forensic account
    activity of the oil and gas activity in the Osage, would
    certainly undermine our efforts to achieve a fair settlement.
        The Chairman. I see. Fred, as well as you have the
    microphone there, did you attend Chairman Pombo's hearing in
    Billings last Saturday.
        Mr. Matt. Yes; I did.
        The Chairman. What was the tone of that hearing from the
    Indian people who spoke?
        Mr. Matt. I would say that you heard some of the same
    concerns at that hearing as we are hearing today. Some of the
    things are very apparent that were at least seeming to come to
    some sort of an agreement that we need to get this process in
    place to where we can have a settlement or we can arrive at
    some sort of a process. I think the same thing was said there.
        The Chairman. I understand, Chairman Matt, that you are
    record of opposing the idea of a receiver to take over the
    functions of the BIA or the Department of the Interior; is that
    correct.
        Mr. Matt. Yes, sir; I was hoping you might ask that. If you
    just look at what you hear in the media, and if you look at
    where this issue has gone, you would also get the impression
    that we are back in the 1880's. But there are a lot of tribes
    like ours that are out there that really have, through the Self
    Governance Act and other means, taken over these trust programs
    and have done an excellent job.
        Indian people are humble in nature. I do not want to sound
    like we are bragging or that we are better than any other
    tribe, but we have done things on our reservation that I think
    really benefit our beneficiaries, the tribal members there.
    What we do not want to see is other layers of government added
    to this mix because of some court order. We feel as though we
    are a model program. We would like to show that off, so to
    speak, to Indian country. I think it does speak to what we can
    do if we have the chance to do it ourselves. That is part of
    the problem. We have had our Big Brother, BIA, watching over
    us.
        The Chairman. I understand your tribe, too, has really set
    a fine progressive example of trying to reconsolidate the
    fractionated lands on your reservation. Many people say that
    the problem that we have with fractionated lands makes this
    problem of trust even worse.
        Mr. Matt. It is one of the big problems.
        The Chairman. Jim, you pointed out some of the
    complications that the Osage have special to that tribe in
    dealing with the settlement. Would the Osage Tribe prefer to be
    left out of the settlement legislation altogether and to deal
    with it some other way?
        Mr. Gray. Well, I think the Osages would be open to having
    cemented with the staff to see if there might be some amenable
    language that might protect the Osage's interest in all this.
    Short of that, then maybe that would be the final option.
        I just appreciate the fact that you are open to hearing our
    point of view on this. We are in an unique situation here.
        The Chairman. Are the head right owners or at least some of
    the head right owners included as a member of the Cobell
    plaintiffs class action suit?
        Mr. Gray. I think to a degree they are. I think that while
    the definition of the right of the Osage tribal council to
    represent the interests of the shareholders has been worked out
    in the Federal Court of Claims as the legal entity to represent
    the interest of the tribe. You can understand my hesitancy to
    fully answer that question because the litigation is ongoing.
        With respect to the Cobell plaintiffs, their arguments,
    their discussion, and their claims are in general and in theory
    the same direction we believe this discussion should go. Where
    there are differences of opinion pertaining to the Osage, I
    think we have the right to be able to protect those interests
    whenever we can. With respect to the actual Cobell case, once
    the funds are distributed to the IIM account holders, I think
    there is an interest there that the Cobell people can represent
    the interest of those individuals of our tribe.
        The Chairman. Well, hopefully you will also work with the
    committee staff on trying to make sure that whatever we do that
    there is some language in there that protects the Osage people
    and the Osage Tribe.
        I have no further questions. Chief Gray, if you would give
    my best to the Imholas, the Pratts, the Good Eagles, and all my
    old friends there that I use to pow wow with, I would
    appreciate that.
        Mr. Gray. I will do that.
        The Chairman. Tex, the same to you. Ed and Linda Lone
    Fighter are friends from years and years back. I never see them
    anymore. But give my best to them, if you will.
        Mr. Hall. He is back in the BIA again.
        The Chairman. Oh, he is. Well, tell him hello.
        I am sure that Senator Inouye will have questions to ask of
    each of you and that will be inserted in the record at this
    point.
        Without objection, so ordered.
        With that, we will keep the record open for 2 weeks for any
    further comments.
        Without objection, so ordered.
        I look forward to taking everybody up on the offer to work
    with our staff to try to get some resolution to this very
    difficult problem so that we are not dealing with the same
    thing 5 more years from now.
        With that, the committee stands adjourned.
        [Whereupon, at 12:05 p.m., the committee was adjourned, to
    reconvene at the call of the Chair.]

    =======================================================================

                                A P P E N D I X

                                  ----------

                  Additional Material Submitted for the Record

    =======================================================================

       Prepared Statement of hon. John McCain, U.S. Senator from Arizona

        Mr. Chairman, thank you for scheduling today's hearing as part of
    this committee's continuing oversight on issues associated with the
    Federal Government's management of individual and tribal trust funds
    accounts.
        Today's hearing addresses a voluntary, alternative claims
    resolution process to reach settlement of the class action lawsuit
    known as Cobell v. Norton.
        As I have stated before, history and the Cobell case demonstrate
    that the Department of the Interior has flagrantly failed to fulfill
    its trust duties. Hundreds of millions of dollars have been spent on
    failed efforts to either identify reconciliation efforts, or have been
    spent on consultants to evaluate the extent of the Federal Government's
    liability for mismanagement. Despite these efforts, we still have not
    reached a reasonable solution.
        However, the topic today addresses a potential settlement solution
    that is only a partial answer to a larger problem: It is merely one
    aspect of trust reform.
        My colleagues, Senators Daschle and Johnson, and Representatives
    Udall and Rahall in the House, and I previously introduced ``Indian
    Trust Asset and Trust Fund Management and Reform Act of 2003.'' Our
    bill, S. 175, would revise trust reform legislation to address the
    tribes, highest priority areas to improve trust funds and trust assets
    management. Our bill still has not received a hearing.
        I urge the committee to consider our bill as part of the overall
    need for legislative reforms and to schedule a hearing as soon as
    possible.
        Mr. Chairman, I take no position at this point on the legislation
    being discussed today until I receive input from Native American
    constituents and conduct a thorough review of the proposed legislation.
    I look forward to what the committee has to say.
        I commend the committee for its continued efforts and focus on this
    critical issue.
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