[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


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                            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.]


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                            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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