[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
            H.R. 4322, THE INDIAN TRUST REFORM ACT OF 2005

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

                          LEGISLATIVE HEARING

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                       Thursday, December 8, 2005

                               __________

                           Serial No. 109-38

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Eni F.H. Faleomavaega, American 
Elton Gallegly, California               Samoa
John J. Duncan, Jr., Tennessee       Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Barbara Cubin, Wyoming               Donna M. Christensen, Virgin 
  Vice Chair                             Islands
George P. Radanovich, California     Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Grace F. Napolitano, California
    Carolina                         Tom Udall, New Mexico
Chris Cannon, Utah                   Raul M. Grijalva, Arizona
John E. Peterson, Pennsylvania       Madeleine Z. Bordallo, Guam
Jim Gibbons, Nevada                  Jim Costa, California
Greg Walden, Oregon                  Charlie Melancon, Louisiana
Thomas G. Tancredo, Colorado         Dan Boren, Oklahoma
J.D. Hayworth, Arizona               George Miller, California
Jeff Flake, Arizona                  Edward J. Markey, Massachusetts
Rick Renzi, Arizona                  Peter A. DeFazio, Oregon
Stevan Pearce, New Mexico            Jay Inslee, Washington
Henry Brown, Jr., South Carolina     Mark Udall, Colorado
Thelma Drake, Virginia               Dennis Cardoza, California
Luis G. Fortuno, Puerto Rico         Stephanie Herseth, South Dakota
Cathy McMorris, Washington
Bobby Jindal, Louisiana
Louie Gohmert, Texas
Marilyn N. Musgrave, Colorado
Vacancy

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel


                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on Thursday, December 8, 2005.......................     1

Statement of Members:
    Pombo, Hon. Richard W., a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     2
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia.................................     3
        Prepared statement of....................................     4

Statement of Witnesses:
    Cason, James, Associate Deputy Secretary, U.S. Department of 
      the Interior...............................................     5
        Prepared statement of....................................     6
    Cobell, Elouise, Blackfeet Reservation Development Fund, 
      Browning, Montana..........................................    27
        Prepared statement of....................................    31


 LEGISLATIVE HEARING ON H.R. 4322, THE INDIAN TRUST REFORM ACT OF 2005.

                              ----------                              


                       Thursday, December 8, 2005

                     U.S. House of Representatives

                         Committee on Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to call, at 10:07 a.m. in Room 
1324 Longworth House Office Building, Hon. Richard W. Pombo 
[Chairman] presiding.
    Present: Representatives Pombo, Rahall, Duncan, 
Christensen, Drake, Hayworth, Inslee, Herseth, Kildee, Pearce, 
and Tom Udall.

  STATEMENT OF THE HON. RICHARD W. POMBO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    The Chairman. The Committee on Resources will come to 
order. The Committee is meeting today to hear testimony on H.R. 
4322.
    Under Rule 4[g] of the Committee Rules, any oral opening 
statements at hearings are limited to the Chairman and the 
Ranking Minority Member. This will allow us to hear from our 
witnesses sooner and help Members keep to their schedules. 
Therefore, if other Members have statements, they can be 
included in the hearing record under unanimous consent.
    Today's hearing is on H.R. 4322, the Indian Trust Reform 
Act of 2005, a bill I introduced with the Committee Ranking 
Democrat, Mr. Rahall. H.R. 4322 is a companion to S. 1439, a 
bill introduced this summer by Chairman McCain and Vice 
Chairman Dorgan. Our work on this issue has occurred on a 
bipartisan basis and bicameral basis. I should stress that H.R. 
4322 is not a done deal. It is a work in progress, and I think 
it is safe to say all the other sponsors feel the same way.
    As the title of the bill suggests, H.R. 4322 makes 
significant reforms in managing assets and accounts held in 
trust for Indians. While today's hearing concerns the entire 
bill, most of the focus will be on Title I, which provides a 
direct and conclusive settlement of the Cobell v. Norton 
lawsuit.
    This lawsuit is not anything new to the Committee. It has 
been in district and appeals courts for nine years. As I have 
said in a previous oversight hearing, the case has taken on 
almost legendary proportions in its acrimony, which points to a 
need to settle it. Having said that, I do not wish to dwell on 
the judicial combat because it does not advance the goal of 
writing a legislative settlement that is full, fair, and 
equitable.
    Two decisions in the U.S. Court of Appeals for the District 
of Columbia--one on December 10, 2004, and the other on 
November 15, 2005--provide us with important information on the 
laws pertaining to historic accounting of individual Indian 
money accounts. I expect to hear different interpretations of 
these decisions from our witnesses today, and the Committee can 
rest assured we will also seek briefings from neutral experts 
on these developments.
    But the fact remains that continuing to litigate the 
accounting claims poses risk for both parties. The people at 
the heart of the case, and I am talking about individual 
Indians, not trial lawyers or government lawyers, still await a 
conclusion after nine long years.
    Before I turn to the Ranking Member for his opening 
statement, I want to make one more remark. Title I contains a 
blank space in the parts dealing with a settlement figure. This 
is deliberate. It is one of the trickier issues to resolve. It 
has to be based on a combination of legal realities stemming 
from the recent Appeals Court decision, of common sense, and of 
a moral obligation to Indians touched by this case.
    The Chairman now recognizes the Ranking Minority Member for 
any statement he may have.
    [The prepared statement of Chairman Pombo follows:]

        Statement of The Honorable Richard W. Pombo, Chairman, 
                         Committee on Resources

    Today's hearing is on H.R. 4322, the Indian Trust Reform Act of 
2005, a bill I introduced with the Committee Ranking Democrat, Mr. 
Rahall. H.R. 4322 is a companion to S. 1439, a bill introduced this 
summer by Chairman McCain and Vice Chairman December 15, 2005Dorgan. 
Our work on this issue has occurred on a bipartisan and bicameral 
basis. I should stress that H.R. 4322 is not a done deal. It's a work 
in progress, and I think it's safe to say all the other sponsors feel 
the same way.
    As the title of the bill suggests, H.R. 4322 makes significant 
reforms in managing assets and accounts held in trust for Indians. 
While today's hearing concerns the entire bill, most of the focus will 
be on Title I, which provides a direct and conclusive settlement of the 
Cobell v. Norton lawsuit.
    This lawsuit isn't anything new to the Committee. It has been in 
District and Appeals Courts for nine years. As I've said in a previous 
oversight hearing, the case has taken on almost legendary proportions 
in its acrimony, which points to a need to settle it. Having said that, 
I don't wish to dwell on the judicial combat because it doesn't advance 
the goal of writing a legislative settlement that is full, fair, and 
equitable.
    Two decisions in the U.S. Court of Appeals for the District of 
Columbia--one on December 10, 2004, and the other on November 15, 
2005--provide us with important information on the laws pertaining to 
historic accounting of individual Indian money accounts. I expect to 
hear different interpretations of these decisions from our witnesses 
today, and the Committee can rest assured we will also seek briefings 
from neutral experts on these developments. But the fact remains that 
continuing to litigate the accounting claims poses risks for both 
parties. The people at the heart of the case--and I'm talking about 
individual Indians, not trial lawyers or government lawyers--still 
await a conclusion after nine long years.
    Before I turn to the Ranking Member for his opening statement, I 
want to make one more remark. Title I contains a blank space in the 
parts dealing with a settlement figure. This is deliberate. It is one 
of the trickier issues to resolve. It has to based on a combination of 
legal realities stemming from the recent Appeals Court decision, of 
common sense, and of a moral obligation to Indians touched by this 
case.
                                 ______
                                 

   STATEMENT OF THE HON. NICK J. RAHALL, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF WEST VIRGINIA

    Mr. Rahall. For more than a century, the Federal government 
has been the trustee of funds for Indian tribes and individual 
Indians. Dozens of reports over the years have documented the 
Department of Interior's inability to accurately account for 
trust fund money and manage the accounts on behalf of Indian 
Country.
    This Committee has worked with account holders and 
administrations of both parties to clean up the management 
problems and atone for inaccurate account balances. Frankly, we 
have been impeded by the administrations of both parties and 
undercut by various others who have sought to protect their own 
interests in this debacle.
    For some reason, the Administration, regardless of who is 
in the White House, is convinced that, if they just move some 
authority from one office to another, reorganize BIA, or buy 
another new computer system, it will be fixed. I have watched 
this happen--and fail--under every president since President 
Reagan.
    The Cobell v. Norton lawsuit achieves its early goals of 
bringing the problem to a head and getting the attention of all 
three branches of government. I fear, however, that the case 
has mutated into something I barely recognize from those early 
days.
    The animosity between the parties is as bad as any I have 
ever seen. While each side tries desperately to get the other 
to bend to its will, the Indian account holders still have not 
gotten a true accounting, and I have come to believe they never 
will.
    I greatly admire Ms. Elouise Cobell and have had the honor 
of working with her on this issue since the mid-1980's. Her 
tenacity for justice for Indian account holders and her 
steadfast focus on correcting decades of mishandling of Indian 
monies has been the driving force in drawing attention to this 
issue. I believe her cause is still as genuine as it was the 
day we first met. Unfortunately, I cannot say the same for all 
others involved.
    From my perspective, the Cobell Plaintiffs, long ago, 
proved their point that the government has mismanaged the trust 
fund accounts and the account holders need to be made whole.
    Numerous attempts at settlement of the lawsuit have failed, 
including one sponsored by myself and Chairman Pombo, along 
with Senators Campbell and Inouye during the 108th Congress. 
The time and money being spent on this lawsuit is affecting 
every decision made at DOI with regard to Native Americans, 
and, as a result, programs are suffering.
    Throughout our efforts to bring about settlement, we have 
been asked by several interested parties to formulate a 
potential legislative settlement and reform of the management 
process. In response to these requests, Chairman Pombo and I 
have introduced H.R. 4322; a companion bill, S. 1439, was 
introduced in the Senate by Indian Affairs Committee Chairman 
John McCain and Ranking Member Byron Dorgan.
    Today, we will receive testimony on Title I of the bill, 
which deals solely with settlement of Cobell v. Norton. I hope 
we have not lost the window of opportunity to gain 
congressional support for such legislation.
    I am, as always, committed to working with Chairman Pombo 
and Indian account holders to bring about fair compensation to 
those individuals wronged in the past and to ensure the 
integrity of the system for the future.
    This legislation could be an important opportunity to put 
the ``trust'' back in this government's management of Indian 
monies. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rahall follows:]

        Statement of The Honorable Nick Rahall, Ranking Member, 
                         Committee on Resources

    For more than a century, the federal government has been the 
trustee of funds for Indian tribes and individual Indians. Dozens of 
reports over the years have documented the Department of Interior's 
inability to accurately account for trust fund money and manage the 
accounts on behalf of Indian Country.
    This Committee has worked with account holders and Administrations 
of both parties to clean up the management problems and atone for 
inaccurate account balances. Frankly, we have been impeded by 
Administrations of both parties and undercut by various others who have 
sought to protect their own interests in this debacle.
    For some reason, the Administration, regardless of who is in the 
White House, is convinced that, if they just move some authority from 
one office to another, reorganize BIA, or buy another new computer 
system, it will all be fixed. I have watched this happen--and fail--
under every President since President Reagan.
    The Cobell v. Norton lawsuit achieved its early goals of bringing 
the problem to a head and getting the attention of all three branches 
of government. I fear, however, that the case has mutated into 
something I barely recognize from those early days.
    The animosity between the parties is as bad as any I have ever 
seen. While each side tries desperately to get the other to bend to its 
will, the Indian account holders still have not gotten a true 
accounting, and I have come to believe they never will.
    I greatly admire Ms. Eloise Cobell and have had the honor of 
working with her on this issue since the mid 1980's. Her tenacity for 
justice for Indian account holders and her steadfast focus on 
correcting decades of mishandling of Indian monies has been the driving 
force in drawing attention to this issue. I believe her cause is still 
as genuine as it was the day we first met. Unfortunately, I cannot say 
the same for all others involved.
    From my perspective, the Cobell Plaintiffs, long ago, proved their 
point that the Government has mismanaged the trust fund accounts and 
the account holders need to be made whole.
    Numerous attempts at settlement of the lawsuit have failed, 
including one sponsored by myself and Chairman Pombo, along with 
Senators Campbell and Inouye during the 108th Congress. The time and 
money being spent on this lawsuit is affecting every decision made at 
DOI with regard to Native Americans and, as a result, programs are 
suffering.
    Throughout our efforts to bring about settlement, we have been 
asked by several interested parties to formulate a potential 
legislative settlement and reform of the management process. In 
response to these requests, Chairman Pombo and I have introduced H.R. 
4322; a companion bill, S.1439, was introduced in the Senate by Indian 
Affairs Committee Chairman John McCain and Ranking Member Byron Dorgan.
    Today, we will receive testimony on Title 1 of the bill, which 
deals solely with settlement of Cobell v. Norton. I hope we have not 
lost the window of opportunity to gain Congressional support for such 
legislation.
    I am, as always, committed to working with Chairman Pombo and 
Indian account holders to bring about fair compensation to those 
individuals wronged in the past and to ensure the integrity of the 
system for the future.
    This legislation could be an important opportunity to put the 
``trust'' back in this government's management of Indian monies.
                                 ______
                                 
    The Chairman. Thank you. As I said, all other opening 
statements will be included as part of the record.
    At this point, I would like to turn to our first witness, 
Mr. James Cason, associate deputy secretary of Interior. He is 
accompanied by Ross Swimmer, the special trustee for American 
Indians.
    I would like to take this time to remind all of today's 
witnesses that, under Committee rules, oral statements are 
limited to five minutes. Your entire written statement will 
appear in the record. Deputy Secretary, if you are ready, you 
may begin.

  STATEMENT OF JAMES CASON, ASSOCIATE DEPUTY SECRETARY, U.S. 
   DEPARTMENT OF THE INTERIOR; ACCOMPANIED BY ROSS SWIMMER, 
 SPECIAL TRUSTEE FOR AMERICAN INDIANS, U.S. DEPARTMENT OF THE 
                            INTERIOR

    Mr. Cason. Mr. Chairman, I am pleased to be here today to 
discuss H.R. 4322, a bill that would attempt to resolve the 
Cobell v. Norton litigation. We appreciate the time and effort 
the Chairman and the Ranking Member and their staffs have taken 
to sponsor the legislation in an effort to reach a full, fair, 
and equitable settlement to this case and to clarify our 
individual Indian trust duties, responsibilities, and 
expectations. While many details remain to be negotiated and 
clarified, the bill represents an important step toward seeking 
closure on this matter.
    On November 15, 2005, the very day this legislation was 
introduced, the United States Court of Appeals vacated the 
district court's order reissuing the historical accounting 
injunction.
    The Court said that since neither congressional language 
nor common law trust principles establish ``a definitive 
balance between exactitude and cost,'' the district court owed 
substantial deference to Interior's plan. The Court found that 
reissuance of the historical accounting injunction was ``not 
properly grounded in either fact or law. What is more, the 
district court completely disregarded relevant information 
about the costs of its injunction.''
    The Court also found that Interior's decision to use 
statistical sampling was especially reasonable, and the 
district court had abused its discretion by barring the use of 
statistical sampling.
    So what does this all mean? Interior is no longer obligated 
to conduct an historical accounting costing billions of 
dollars. Interior's more reasonable effort is entitled to 
substantial deference. Interior has expended more than $100 
million to date and has made substantial progress on our 
historical accounting task. Today, it is abundantly clear that 
the plaintiffs' public claim that $176 billion is owed is 
vastly overstated, to say the least. Such assertions have 
misled many individual Indians and created expectations that 
are false. More recently, the plaintiffs' lawyers have offered 
to settle for $27.5 billion. This figure, too, is based on 
assumptions that available evidence simply does not support. 
What remains to be determined is how much more accounting needs 
to be done before we can resolve these claims through 
administrative, judicial, or legislative means.
    The accounting work done to date has identified differences 
between our accounting ledgers and the supporting 
documentation. These differences tend to be few. They tend to 
be small. They involve both overpayments to individual Indians 
and underpayments to individual Indians, and when added 
together, net out with a net overpayment. That overpayment 
principally involves the payment of interest to a broad range 
of accounts.
    Thus, the facts to date are in stark contrast to the 
rhetoric that surrounds this case. While more accounting work 
can be done, there is a base of substantial evidence upon which 
to begin forming conclusions about the merits of the case and 
the magnitude of any settlement offers that should be 
considered. The Administration supports the Committee's efforts 
to bring this matter to a close, provided the terms of the 
settlement are objective, reasonable, and consistent with the 
facts.
    We stand ready to work with the Committee and the Senate 
counterparts to seek comprehensive resolution of the case. We 
understand that there is still risk and uncertainty for the 
parts of the history that we have not examined yet and that we 
would prefer, if possible, to bring a complete resolution to 
this matter rather than continuing down an historical 
accounting path that ultimately, in the end, will likely prove 
unsatisfactory to all parties concerned.
    So with that, Mr. Chairman, I would be happy to answer 
questions.
    [The prepared statement of Mr. Cason follows:]

Statement of James Cason, Associate Deputy Secretary, and Ross Swimmer, 
   Special Trustee for American Indians on the Cobell Lawsuit, U.S. 
                       Department of the Interior

    I am pleased to be here today to discuss the legislation before the 
Committee that would attempt to resolve the Cobell v. Norton 
litigation. We appreciate the time and effort the Chairman and Ranking 
Member and their staffs, along with their Senate counterparts, have 
taken to develop this legislation in an effort to reach a full, fair 
and final settlement of this case and to clarify individual Indian 
trust duties, responsibilities, and expectations. The introduction of 
H.R. 4322 and S. 1439 is the first serious congressional effort we have 
seen to comprehensively resolve the issues involved in the Cobell 
lawsuit. While many details remain to be negotiated and clarified, the 
bill represents an important step towards seeking closure on this 
matter.
    This Administration has appeared before this Committee on this 
issue numerous times. The landscape for the resolution of this case and 
the underlying trust challenges changes with each new court decision. 
We continue to narrow the magnitude and scope of the potential 
settlement terms as we learn more through our historical accounting 
work. Today's effort is a critical step in providing statutory 
guidance. It is important though to understand what the Court of 
Appeals has done since we testified in July on the Senate bill 
identical to this one.
    On November 15, 2005, the very day this legislation was introduced, 
the United States Court of Appeals for the District of Columbia Circuit 
vacated the district court's order reissuing the historical accounting 
structural injunction.
    The Court noted in the opinion that the district court, in issuing 
a contempt citation against Secretary Norton, disregarded ``Interior's 
affirmative accomplishments on Norton's watch''.
    The Appeals Court went on to note that while the American Indian 
Trust Fund Management Reform Act of 1994 (1994 Act) includes an 
accounting requirement, ``its text offers little help in defining the 
accounting's scope.'' Even plaintiffs' counsel, the Court notes, 
conceded some need for practicality when asked hypothetically about 
spending $1 million in accounting expenses for a $1,000 trust. The 
Court took note of the fact that in the 1994 Act ``Congress was, after 
all, mandating an activity to be funded entirely at taxpayers' 
expense.'' Because the Individual Indian Money (IIM) trust differs from 
ordinary private trusts in a number of ways, the Court said ``the 
common law of trusts doesn't offer a clear path for resolving statutory 
ambiguities.''
    The Court also took note of the fact that for two fiscal years in a 
row, Congress limited Interior's annual expenditures for historical 
accounting to $58 million, an amount that includes funding for tribal 
accounting as well. If that pattern continued with the district court's 
historical accounting structural injunction in place, it reasoned, the 
district court's accounting would not be completed for about two 
hundred years.
    More importantly, the Court said that since neither congressional 
language nor common law trust principles establish ``a definitive 
balance between exactitude and cost,'' the district court owed 
substantial deference to Interior's plan. They said that the district 
court ``erroneously displaced Interior'' as the body that should work 
out compliance with the 1994 Act and erred by reinstating its September 
2003 injunction in February 2005 without considering the Court of 
Appeals' 2003 decision and subsequent developments after 2003. The 
reissuance of the injunction, according to the Court, was ``not 
properly grounded in either fact or law. What is more the district 
court completely disregarded relevant information about the costs of 
its injunction.'' In summary, the Court said the district court acted 
``on the ill-founded assumption that the 1994 Act gave it the freedom 
of a private-law chancellor to exercise its discretion.''
    The Court did say that this opinion was issued without prejudice to 
the plaintiffs' argument on appeal that execution of the reissued 
injunction is impossible or to future claims such as challenges to the 
correctness of specific account balances. It also addressed the 
district court's bar on using statistical sampling as part of the 
accounting. The Court found Interior's decision to use statistical 
sampling in its proposed plan ``especially reasonable'' because the 
cost of accounting for transactions valued under $500 would exceed the 
average value of those transactions. They found the district court had 
abused its discretion by barring use of statistical sampling.
    So what does this all mean? Interior is no longer obligated to 
conduct an accounting costing billions of dollars. Interior's more 
reasonable effort is entitled to substantial deference. Interior has 
expended more than $100 million to date and has made substantial 
progress. Today, it is abundantly clear that the plaintiffs' public 
claim that $176 billion is owed is vastly overstated, to say the least. 
Such assertions have mislead many individual Indians and created 
expectations that were false. More recently the plaintiffs' lawyer 
offered to settle for $27.5 billion. This figure is also based on 
assumptions that the available evidence simply does not support. What 
remains to be determined is how much more accounting needs to be done 
before we can resolve these claims through administrative, judicial or 
legislative means.
HISTORICAL ACCOUNTING: WHAT DO WE KNOW TO DATE?
    As we have stated to this Committee repeatedly, as part of the 
Cobell litigation, Interior collected over 165,000 documents for the 
historical analysis of IIM trust fund activity through December 31, 
2000, for the named plaintiffs and agreed-upon predecessors. Of these 
documents, about 21,000 documents were used to support the 
transactional histories, which dated back as far as 1914, and which 
included a total of about 12,500 transactions.
    Pursuant to the requirement in Section 131 of the FY 2003 
Appropriations Act, on March 25, 2003, the Department of the Interior 
provided Congress with a summary of the expert opinion of Mr. Joseph 
Rosenbaum, a partner in Ernst & Young, LLP, regarding the five named 
plaintiffs in Cobell v. Norton. This report describes the process the 
contractor went through and also contains a summary of his opinions. 
These conclusions included:
      The historical IIM ledgers were sufficient to allow DOI 
to create virtual ledgers that were substantially complete for the 
selected accounts.
      The documents gathered by DOI supported substantially all 
of the dollar value of the transactions in the analyzed accounts.
      The documents gathered by the Department of the Interior 
do not reveal any collection transactions not included in the selected 
accounts, with a single exception in the amount of $60.94 that was paid 
to another account holder, due to a transposed account number entered 
in the recording process.
      An analysis of relevant contracted payments, evidenced 
primarily by lease agreements, showed that substantially all expected 
collection amounts were properly recorded and reflected in the IIM 
accounts.
      There was no indication that the accounts are not 
substantially accurate, nor that the transactions were not 
substantially supported by contemporaneous documentation.
    This analysis, including the named plaintiffs and the selected 
predecessors in interest, found both non-interest transaction 
overpayments to class members (37 instances totaling $3,462) and 
underpayments (14 instances totaling $244).
    As of September 30, 2005, Interior's Office of Historical Trust 
Accounting (OHTA) had reconciled more than 22,900 Individual Indian 
Money (IIM) judgment accounts with balances totaling more than $57.6 
million and 25,551 additional judgment accounts with no balance as of 
December 31, 2000. This accounting effort found non-interest 
overpayments (2 instances totaling $2,205) and underpayments (21 
instances totaling $52).
    As of September 30, 2005, OHTA had also reconciled 5,708 IIM per 
capita accounts with balances of over $43.9 million and an additional 
approximately 6,214 accounts with no balance as of December 31, 2000. 
In this per capita accounting effort, only one individual on a tribal 
roll did not receive a payment of $100.
    Interest recalculations identified a particular set of IIM judgment 
transactions (786 instances totaling $25,000) where principal had been 
distributed without associated interest amounts (an underpayment). More 
broadly, interest amounts for judgment and per capita accounts appear 
to have been overpaid (a net amount approximating $365,000 on about 
13,800 accounts).
    Based upon the historical accounting results so far, Interior 
suggests that Congress consider exempting Judgment and Per Capita funds 
from any proposed legislation.
    The National Opinion Research Center (NORC) at the University of 
Chicago, a national organization for research and statistics, was 
contracted in 2001 to assist Interior with interpreting historical 
accounting data and results. On September 30, 2005, the NORC issued a 
progress report entitled ``Reconciliation of the High Dollar and 
National Sample Transactions from Land-Based IIM Accounts,'' looking at 
land-based IIM accounts that were open on or after October 25, 1994. 
The goal of the project is to assess the accuracy of the land-based IIM 
account transactions contained in the two IIM Trust electronic systems 
(Integrated Records Management System and Trust Funds Accounting 
Systems) for the electronic era 1985-2000. Accuracy is being tested by 
reconciling all transactions of $100,000 or more and a large 
statistically representative random sample of non-interest transactions 
under $100,000. That historical accounting initiative ended in August 
2005. The NORC has found:
      Over 99% of the sampled transactions needed for 
preliminary estimates have been reconciled for all twelve BIA regions 
as have 99% of all the transactions greater than or equal to $100,000.
      A completion rate of 99% is extremely high in a sample 
such as this. The report states: ``This very high completion rate for 
searching and locating documentation should put to rest concerns about 
the impact that the 1% remaining unreconciled transactions might have 
on results.''
      The reconciliation identified both overpayments (63 
instances totaling $53,797) and underpayments (48 instances totaling 
$62,250).
      Reconciliation shows the debit difference rate to be 
0.4%.
      Reconciliation results show the credit difference rate to 
be 1.3%.
    As of September 30, 2005, OHTA also resolved residual balances in 
9,452 special deposit accounts, identifying the proper ownership of 
more than $47 million belonging to individual Indians, Tribes, and 
private entities.
H.R. 4322, THE INDIAN TRUST REFORM ACT OF 2005
    We appreciate the fact that legislation has been introduced to 
attempt to address the issues in Cobell. We are pleased to see the bill 
focuses on consolidation of fractionated Indian lands and supports a 
more aggressive land acquisition program than the one currently under 
way. We do, however, have some serious concerns with the bill as 
currently drafted.
    Title I. H.R. 4322 would provide a yet undetermined number of 
dollars to resolve the historical accounting claims of the class 
members of the Cobell litigation. However, it does not provide for 
settlement of all of the elements of the Cobell litigation. In 
addition, in determining what is a reasonable amount, Congress should 
be aware that the $27.487 billion requested by the plaintiffs as 
settlement does not include money to resolve damage claims for 
potential mismanagement of trust assets that could be filed in the 
future. Such a future claim may begin by plaintiffs demanding an 
historical accounting. The legislation therefore should resolve or 
restrict any claims that might permit the reinstatement of historical 
accounting litigation comparable to the Cobell case. We also believe 
that Congress should look carefully at the distribution system provided 
in legislation for the settlement funds. It would be far better to 
provide clear guidance as to the amounts to which individuals are 
entitled, rather than leaving the decision of what individuals receive 
to a formula developed by the Secretary. Congress should craft a 
distribution method with as much clarity and direction as possible. 
Congress should also be aware that 25 tribal trust cases involving 
similar issues have also been filed.
    Indian Trust Asset Management Demonstration Project Act. H.R. 4322 
includes provisions allowing for a pilot project for 30 tribes to take 
over management of Indian trust assets. Many Indian trust assets are 
already managed by the tribes through PL 93-638 compacts and contracts. 
In the legislation, it is critical to transfer the responsibility for 
results along with authority and funding. We do not believe the United 
States should remain liable for any losses resulting from a Tribe's 
management of its trust assets under the demonstration project. This is 
particularly true because the bill would allow Tribes to develop and 
carry out trust asset management systems, practices, and procedures 
that are different and potentially incompatible with those used by 
Interior in managing trust assets. In a normal trust, this action would 
be considered a merger of Trustee and beneficiary and thus end the 
Trust relationship. Of course this would have no impact on the 
government-to-government relationship.
    We look forward to discussing further the following key aspects of 
this provision. For example, if program reassumption became necessary, 
how would Interior take back program responsibilities and integrate 
information back into our trust asset management environment when it 
has been collected and processed in different systems? What kind of 
monitoring of tribal activities will Interior have to do to ensure the 
tribe is living up to the standards in the bill? What performance 
standard would apply: the imminent jeopardy standard associated with PL 
93-638 or the ``highest and most exacting fiduciary'' standard being 
required of Interior? Under the 1994 Act, Tribes are permitted to 
withdraw and manage their trust funds and the Secretary is held 
harmless for losses or mismanagement that may occur. A similar 
provision related to other trust assets would be a logical extension of 
self-governance.
    Fractional Interest Purchase and Consolidation Program. The bill 
also places a priority on developing an aggressive program for the 
purchase of interests in individual Indian land. The President's FY 
2005 budget request included an unprecedented $70 million request for 
Indian land consolidation. Congress chose to appropriate $34.5 million 
for the program in FY 2005. In light of this, we requested and received 
$34.5 million for FY 2006.
    As structured, the program in H.R. 4322 provides incentives where a 
parcel of land is held by 20 or more individuals and where an 
individual sells all interests in trust land. In cases where a parcel 
of land of land is held by over 200 individuals, the bill provides 
procedures for noticing interest holders and moving ahead with 
consolidation of the interests. These provisions will greatly help 
consolidate interests and reduce the costs of management of the 
individual Indian trust.
    Care must be given, however, to ensure that this bill does not work 
as an incentive to further fractionate land so that individuals can 
become eligible for the bill's incentives. So far, there has been no 
lack of willing sellers. In addition, we would like to work with you 
further on the criteria, thresholds and amounts included in this title. 
We have some serious concerns as to the cost of the significant 
premiums provided in the bill. In addition, we would like to explore 
the possibilities for consolidation sale authority to reduce the 
associated public financing burden of addressing the fractionation 
issue. We need to analyze the costs of the new incentives, the 
mechanisms for funding land acquisitions and the impact of the American 
Indian Probate Reform Act on the rate of fractionation as a part of our 
implementation plan.
    Restructuring the Bureau of Indian Affairs and the Office of the 
Special Trustee for American Indians. H.R. 4322 includes a number of 
concepts that were discussed by the Joint Department of the Interior/
Tribal Leaders Task Force on Trust Reform in 2002. This task force was 
formed during the period when the Department was examining ways to 
restructure the trust functions of the Department in response to the 
trust reform elements of the Cobell court. The task force ended in an 
impasse with regard to implementing legislation on matters that were 
not related to organizational alignment. In the face of no legislation, 
the Department implemented a reorganization plan that could be achieved 
administratively.
    This title of the bill also extends the Indian preference hiring 
policy to the new Office of Trust Reform Implementation and Oversight 
created by the bill and abolishes the Office of the Special Trustee for 
American Indians. Interior would appreciate the opportunity to discuss 
these policy choices in some detail.
    While Interior is receptive to the concepts of establishing an 
Undersecretary position and merging Indian programs under new 
leadership, we would like to discuss the objectives of such a proposal. 
In Interior's view, such an initiative is unlikely to materially alter 
Indian trust performance due to the presence of other, more pressing, 
structural concerns about the trust, such as the lack of a clear trust 
agreement to guide responsibilities and expectations, appropriations 
that do not track with all program trust responsibilities, the lack of 
an operative cost-benefit paradigm to guide decision-making priorities, 
the challenges of incorporating PL 93-638 compacting and contracting, 
and the requirements associated with Indian preference hiring policies. 
These issues have frustrated the beneficiaries, the administrators, and 
a various times Congress throughout the lifespan of this trust. We 
encourage Congress to speak clearly in whatever legislative direction 
it chooses to write, and carefully consider the impacts the language 
will have in allowing us to meet the objectives of your constituents.
    It is clear that moving from today's organization into a 
beneficiary services-oriented organization of excellence will demand 
the highest of financial, information technology and managerial skills. 
American Indians make up less than one percent of the American public. 
When we restrict hiring to this small fraction of potential employees, 
instead of reaching out to whomever may be most qualified, we deprive 
ourselves of 99% of the available talent pool. While the Indian 
preference hiring policy does permit the hiring of non-Indians, it 
serves as a significant disincentive for non-Indian applicants. To 
improve Indian program performance and results, we would like the 
opportunity to serve Indian Country by including a broader range of 
applicants so as to create an applicant pool large enough to ensure we 
are hiring well qualified employees.
    Audit of Indian Funds. The last title of H.R. 4322 requires the 
Secretary to prepare financial statements for Indian trust accounts in 
accordance with generally accepted accounting principles of the Federal 
Government. The Comptroller General of the United States is then 
required to contract with an independent external auditor to audit the 
financial statements and provide a public report on the audit. The 
Secretary is required to transfer funding for this audit to the 
Comptroller General from ``administrative expenses of the Department of 
the Interior'' to be credited to the account established for salaries 
and expenses of the GAO. For the last ten years, the trust funds have 
been audited by independent public accounting firms. In addition, 
Interior encourages additional discussion to ensure that accounting is 
accomplished under proper fiduciary accounting standards to avoid any 
conflicts with standard fiduciary accounting practices.
    In closing, I want to make it clear that we believe the November 
2005 Court of Appeals decision was an extremely important one. As 
Congress assesses what is a reasonable amount to provide for settlement 
of the plaintiffs' claims, Congress must consider that we are no longer 
looking at a $13 billion accounting cost nor are we looking at an 
accounting in which statistical sampling cannot be used. Further, 
Congress should also take into consideration what we have learned so 
far from the more than $100 million we have spent looking at IIM 
accounts to date.
    Thank you. I'd be happy to answer any questions you might have at 
this point.
                                 ______
                                 
    The Chairman. Thank you. I will start off, Mr. Cason, and 
ask, what is the Interior Department's position with regard to 
reaching a settlement of the claims brought by the Plaintiff? 
Is the Department prepared to support a legislative solution?
    Mr. Cason. Yes, Mr. Chairman.
    The Chairman. Land-based accounts represent about 75 
percent of all individual Indian money accounts and hold about 
half of the total balance of all such accounts. The other 
accounts are judgment accounts, per capita accounts, and 
special deposit accounts. Is that accurate?
    Mr. Cason. Yes, Mr. Chairman, it is.
    The Chairman. Can you tell me what documentation the 
Department has for the transactions, including leases, 
payments, and deposits, in the land-based accounts?
    Mr. Cason. Mr. Chairman, we have a substantial base of 
information regarding all types of accounts that we have. In 
the historical accounting effort that we have done thus far, we 
have accounted for around 50,000 of our judgment per capita 
accounts and, in large part, have all of the information 
necessary to do those. Those relatively are simple to do. They 
involve a judgment or a settlement of some type that is paid to 
numerous accounts from a single core event, and then it is 
initially deposited in an account plus interest transactions. 
Those are relatively simple.
    In the case of land-based accounts, we have a substantial 
record of those as well. Depending on the time period involved, 
the availability of the records varies somewhat, but the 
experience that we have had so far is generally we have 
somewhere between 85 percent and 99 percent of the records 
necessary to do the reconciliations that we are doing in our 
accounting project.
    The Chairman. Is the accuracy of the accounting in the 
other accounts at all likely to be repeated in an accounting of 
the land-based accounts?
    Mr. Cason. It is my understanding, Mr. Chairman, that we do 
have difference that involve both our judgment per capita 
accounts and land-based accounts, but as I said in my opening 
statement, they tend to be few, they tend to be small, and they 
tend to net near zero when you add both overpayments and 
underpayments together.
    So a conclusion is there are errors or differences between 
what is in our ledger and what the supporting documents say, 
but there are not many of them. I have asked our Office of 
Historical Trust Accounting to inquire with the firms that are 
actually conducting the accounting, and it is my understanding 
these represent four of the five largest accounting firms in 
the country that are involved, to ask the question whether 
there appears to be any evidence of systemic error in our 
accounting processing system or whether there has been any 
evidence of fraud or whether there has been any evidence of our 
electronic data being altered by hacking or other intrusions in 
our systems, and the answer to those questions so far has been 
no, that what we have identified in error so far appear to be 
random errors associated with just human work as opposed to any 
systemic problems with our system.
    The Chairman. How do you respond to the argument that a 
statistical sampling analysis does not consider missing 
documents? Specifically, does a statistical sampling just 
confirm the existence of documents already in the possession of 
the Interior Department?
    Mr. Cason. Well, the way we approach the statistical 
sampling process is, in our land-based accounts, we have 
basically gone through a process of looking at the 1985-to-2000 
tranche, which represents approximately $5.5 billion of 
throughput through these accounts, and in so doing, using the 
electronic information, we had a statistical accounting firm 
select a statistically based set of accounts and then within 
those accounts select statistically selected transactions to do 
further evaluation of. In that particular tranche, we basically 
identified all of the documents we needed to do the 
reconciliation that we were undertaking.
    It is my understanding, Mr. Chairman, that we basically had 
99 percent plus of all of the documents that we sought to do 
the reconciliation, and the document types that are involved 
are checks, incoming checks or copies of checks; the internal 
transaction documentation that we use to deposit checks and 
distribute the checks to where they belong.
    As an example, what I mean by that is if I have a tract of 
land that is leased and has 500 different owners on it due to 
fractionation, we have to have documentation of how we 
distributed one common check to the 500 recipients of the 
check.
    We also have documentation when we are making disbursements 
from accounts, and that is used as part of the reconciliation 
process for looking both at the incoming and the outgoing 
transactions in an account. In that particular tranche, in 
land-based accounts, we have virtually all of the documents 
that we needed. I think it is fair to say, if you go further 
back in time, the further back you go, the more likelihood that 
you will have to find that there are missing documents, and it 
would be up to the statisticians in this case to make an 
interpretation of how significant the missing information is.
    The Chairman. Thank you. I am going to recognize Mr. 
Rahall.
    Mr. Rahall. Thank you, Mr. Chairman.
    Deputy Secretary Cason, let me ask you, how do the error 
rates that you have calculated in a judgment and the per capita 
accounts compare to the error rates in other programs that are 
run by the Federal government?
    Mr. Cason. I am sorry, Congressman Rahall. I am not aware 
that we have actually gone through an exercise of trying to 
calculate error rates of program performance across the Federal 
government to do that kind of comparison. When we have done the 
historical accounting process, the focus has been on the 
differences that we identify between ledger amounts and 
supporting documentation in our historical accounting effort. I 
imagine that it would be possible to cobble together some sort 
of comparison to other programs, but I am not aware of that.
    Mr. Rahall. Could you do any of that cost comparison?
    Mr. Cason. Yes. I imagine that is possible.
    Mr. Rahall. If it is not too much time and effort involved, 
if you could have somebody do that and just submit it for the 
record.
    Mr. Cason. Sure.
    Mr. Rahall. OK. Is it reasonable to assume that modern 
accounting accuracy is a good proxy for what took place for the 
first 50 to 75 years for the trust?
    Mr. Cason. Congressman Rahall, I cannot really give you a 
good answer on that. What I can tell you, we are attempting not 
to speculate about what will happen in older time periods 
without actually having gone to look at the them through the 
accounting process.
    Our experience so far in the historical accounting effort 
is very limited in the older time periods, so what information 
we have available right now would suggest that there is not a 
materially higher rate of error for the older time periods, but 
it is completely insufficient to draw an accurate, fact-based 
conclusion on.
    We have more information about a more current time period 
that represents about $5.5 billion of the throughput, and 
before we could really give you an accurate answer, we would 
actually have to go do some work in that area, and we have not 
done that work yet. So we are trying not to speculate one way 
or the other as to what the error rate would be with older 
periods.
    Mr. Rahall. In your testimony, you state: ``What remains to 
be determined is how much more accounting needs to be done 
before we can resolve these claims through administrative, 
judicial, or legislative means.''
    Mr. Cason. Yes.
    Mr. Rahall. My final question would be, how do we determine 
how much more accounting is needed?
    Mr. Cason. Congressman Rahall, I do not think there is any 
one specific definition that would get there, and from our 
standpoint as we are going through this, it will be a 
combination of effort between what is occurring in the 
judiciary system, what is occurring here on Capitol Hill, and 
the discussions we have within the Administration.
    What is happening right now is, if you look at where we 
were four or five years ago, we basically had no historical 
accounting effort or facts that had been completed at that 
time, and now we are $100 million into the process. We have 
done 50,000 judgment per capita accounts and found very few 
errors. We have done a statistical sampling of the data base 
for the last 15 years and found relatively few errors. We have 
a body of evidence associated with the Arthur Andersen 
accounting and tribal accounts from 1972 to 1992. So if you go 
back another 15-year tranche, basically back to 1972, the error 
rate associated with the tribal accounts was very, very low.
    So we are having a growing body of evidence that suggests 
to us we do not have, at least, so far, any appearance of a 
systemic problem with our accounting system or any evidence of 
systemic fraud involved with our employees who account for 
these monies, and at some point in time, we will get to a point 
where Congress, as an institution, will say, ``OK. I have 
enough evidence to draw a conclusion,'' or the Administration 
will come to Congress and say, ``We think we have enough 
evidence to draw a conclusion about where this is all headed.''
    We are hopeful that the efforts to settle this will 
actually precede that level of accounting, that we can actually 
bring this thing to close because we think it is more positive 
if we can actually reach a mutually acceptable solution to this 
process through legislation and bring the issue to a close. In 
the absence of that, then it looks like we have years more of 
accounting that we will need to do and years more of constant 
to'ing and fro'ing in court.
    Mr. Rahall. Thank you for your response.
    Mr. Cason. You are welcome.
    Mr. Rahall. Thank you, Mr. Chairman.
    The Chairman. Mr. Duncan?
    Mr. Duncan. Thank you, Mr. Chairman, and I appreciate and 
understand and respect what you and Mr. Rahall are trying to do 
because this, as I understand it, has been in the courts for 
nine and a half years, and we want to bring this to some type 
of conclusion. I believe that you probably feel the same way 
that I do that because this does involve probably many billions 
of dollars, that we need to be very careful of this 
legislation. Right now, we do not have enough information on 
how many legitimate claimants there are, how much they would 
get per claimant, and what is the total cost of the bill. The 
bill, as you said, is a work in progress, but it contains more 
blanks than any bill I have ever seen. Section 103 says blank 
billions on the initial deposit, also blank percentage on 
attorneys' fees, blank percentage on the cost of 
administration. Section 104 has blank billions on the general 
distribution and share of the claim. In Section 108, blank per 
hour on attorneys' fees.
    That is what concerns me the most, I think, because I was a 
lawyer and a judge before I came to Congress. Sadly, we have 
sent so many millions of good jobs to other countries for so 
many years, we have half of the kids in the country either 
going to law school or thinking about it. We have such a 
surplus of lawyers out there, we have really good lawyers who 
would come in and work on this for $100 an hour, and yet these 
Washington law firms charge just ungodly fees, and we have to 
put some kind of limits on these attorneys' fees. I know, in 
the early nineties, in the savings and loan scandal, there were 
firms up here charging $650 and $850 an hour, and that was in 
the early nineties. I hate to think what some of them might 
charge now if we do not put some limits on it.
    In addition, in many of the major bankruptcies, the 
bankruptcy trustees and the bankruptcy lawyers have been 
awarded almost all of the money in some gigantic bankruptcies 
where the creditors got very little. This blank on the cost of 
administration concerns me, and I think we need to put some 
real strict limits on these things, or there are going to be 
some scandalous ``60 Minutes,'' ``20/20,'' ``Dateline''-type 
shows out of this legislation.
    I do not have any questions, but I did want to, at least, 
put those remarks on the record. Thank you.
    The Chairman. Thank you, Mr. Duncan. I know that Mr. Rahall 
and I agree with much of what you said in terms of the concerns 
about the overall cost, which is why when this bill was 
drafted, we did look at addressing those specific areas. I 
think when we get into filling in some of those blanks, 
hopefully you will be more comfortable, and I know I will be 
more comfortable where we are going with the legislation, but 
that is a very legitimate point you bring up.
    Mr. Kildee?
    Mr. Kildee. Thank you, Mr. Chairman. Thank you again for 
your efforts in this very difficult question.
    I have been involved in legislative attempts to bring 
justice to our Native Americans for 41 years next month, and I 
would like to back up just a bit for maybe some of the newer 
Members here. We have been at this nine years, I think, in this 
Committee here.
    Generally speaking, what led to where we are today is a 
combination of nonfeasance, misfeasance, and malfeasance, just 
to give an historical background to the cause for this.
    Mr. Cason. Well, Congressman Kildee, I would take a 
different position. There is certainly lots of public rhetoric 
about the lack of feasances, all three of those, within the 
Department of the Interior and the implementation of this 
program. I think there is a different causal factor that is 
associated with this than that, and it is my sense that if you 
take a look at the statutory history of this trust, there has 
never been any instruction from Congress regarding what sort of 
accountings needed to be done at any point prior to 1994.
    So when you take a look at the operation of this trust over 
time, there has not been any instruction from Congress that 
said do this kind of accounting provided in this time period 
and have this kind of information involved. That first happened 
in 1994. Where we are with this litigation is that the 
Plaintiffs have made a point with the court, and the court 
agreed, that there is some inherent obligation to do accounting 
that the Department had not complied with and that we have been 
in nine years' worth of effort to try and define what exactly 
that accounting requirement is. Even after nine years of 
litigation, it is still not clear exactly what is required of 
the Department to do an accounting.
    What we have at this point is the Department's plan, which 
we submitted to Congress and to the court, and Congress thus 
far has not decided to even fund that plan. We also have the 
district court's plan that has been vacated now by the Court of 
Appeals twice. That was a much more expensive, much more 
exacting plan that Congress equally was unwilling to fund.
    So I would say the root of it is not so much malfeasance, 
misfeasance of the case; it is, rather, there has not been any 
clear direction over the last 100 years as to what the 
expectations are, and that is one of the fundamental flaws or 
problems associated with managing this trust.
    Mr. Kildee. I thank you for your response, and I think, 
too, also we have to recognize here in the Congress that the 
trust responsibility toward the Native Americans is with the 
entire Federal government.
    Mr. Cason. That is correct.
    Mr. Kildee.--not just the Department of the Interior. It is 
the Congress also, and, therefore, we cannot dodge maybe our 
nonfeasance, if that be that.
    So the trust responsibility certainly is not just in the 
Department of the Interior or the BIA; it is also here with the 
Congress. We are trying to ferret out all of the facts and 
trying to get justice in this.
    Let me ask you this question. Judge Lamberth feels that the 
comprehensive accounting would cost about $12 billion, and I 
think the Department figures that can be done for about $335 
million. How do you account for the wide disparity between 
Lamberth's costs for the accounting and what you feel the cost 
of the accounting will be?
    Mr. Cason. That is a great question. The principal 
differences that lead to the dollar figure differences: first, 
is the class for whom you would do an accounting. In our case, 
we basically defined the class of who we would do an accounting 
for as those individuals who had an account open on or after 
the date of the 1994 Act. So we would be doing around 275,000 
to 300,000 accounts.
    The Judge Lamberth plan basically is an accounting for all 
accounts that have ever been since 1887, so there is a much 
wider panoply of accounts that needed to be done.
    The second major driver is the approach used to do the 
accounting. The big driver for money is in the land-based 
accounts, and it is particularly a problem due to fractionation 
of Indian individual allotments, and in that particular case, 
for land-based accounts, what we had proffered to do was to use 
a statistical sampling process for reconciling transactions 
with the underlying supporting data. So we would not attempt to 
do every transaction. We would do a statistical sample of them 
to do that reconciliation. In Judge Lamberth's plan, 
reconciliation way exceeds the value of the transaction. So 
those are two principal drivers.
    There was also a requirement to do an accounting for all 
land-based transactions that occurred since 1887. That 
materially added to the cost as well.
    Mr. Kildee. Thank you very much, Mr. Cason.
    Mr. Cason. You are welcome.
    Mr. Kildee. Thank you, Mr. Chairman.
    The Chairman. Mr. Hayworth?
    Mr. Hayworth. Thank you, Mr. Chairman. Mr. Cason, thank you 
and my colleagues. When I was listening to my good friend from 
Michigan, I thought back to the Trust Fund Task Force that he 
and I co-chaired nearly a decade ago, and listening to both his 
comments and those of our friend from Tennessee, this challenge 
of trying to get our arms around this is considerable, to say 
the least, and I commend the Chairman and the Ranking Member, 
as well as Senator McCain in the other body, for trying to make 
order--we really cannot call it order out of chaos; it is, to a 
large degree, order out of the unknown.
    Mr. Cason, you pointed out, again, historically, the 
difference in the assessments of Judge Lamberth, going back to 
the 19th century. A point more recently as you take a look, 
there is a lot to get our arms around.
    Let me take something that is of great importance to a 
tribe in the Fifth Congressional District of Arizona. I 
represent the Salt River Pima-Maricopa Indian community as part 
of what is known as the ``Section 122 tribes,'' the Tribal 
Trust Reform Demonstration Project. One of the concerns the 
tribe has mentioned to me is obtaining some of the funding it 
is entitled to under this demonstration project. Could you give 
me an update as to where the Department is with regard to 
funding the Section 122 tribes?
    Mr. Cason. Sure. Congressman, I, personally, meet 
periodically with the 122 tribes. I think it used to be 139 
tribes and 131 tribes before that because it has been going 
through a succession of appropriations bills and being placed 
in different sections. But we go through a periodic meeting 
schedule with the tribes to talk about what is involved in 
their demonstration project, what sorts of accommodations they 
want from the Department of the Interior.
    The principal core funding that comes to these tribes is in 
the form of compacts or contracts that they get through our 
Indian self-determination process, and each of these tribes is 
given those funds that they are entitled to under self-
determination and have been for the last several years and 
would be under 2006. We also had requirements through those 
sections to do audits of each of those groups to make sure that 
they were implementing their programs properly. The OST--Ross 
could comment on--has done that, and, in large part, we found 
that they were doing a job that was equally as proficient as 
what we were doing.
    So I think that the process is ongoing and that they are 
getting the funding to which they are entitled, and we are 
looking to ensure that there is a good, solid relationship to 
facilitate and enable their ability to make more decisions for 
themselves.
    Mr. Hayworth. So, again, just to make sure I understand, 
this is being funded through the compacts and contracts 
commensurate with self-determination.
    Mr. Cason. Right.
    Mr. Hayworth. By and large, the audits are showing a 
proficiency equal to what is transpiring.
    One other question. Gosh, we are always dealing with money 
up here.
    Mr. Cason. It is a problem.
    Mr. Hayworth. To say the least. How much funding do you 
anticipate distributing to these tribes?
    Mr. Cason. I am sorry. I do not know off the top of my 
head. I have not added up how much that particular subset of 
tribes gets. I know, overall, in our appropriations, for 
instance, for 2006, we are anticipating sending out on the 
order of $760 million through compacts and contracts to all 
tribes that fit there, but I do not know about this particular 
subset.
    Mr. Hayworth. And when these Section 122 tribes are, in 
fact, funded, do you intend this to be a one-time 
appropriation, recurring appropriation, phased in?
    Mr. Cason. The intent of the program is it is basically 
recurring appropriations, as we do with a wide variety of other 
tribes that are subject to Indian self-determination compacting 
and contracting. So each year, we are passing out funds through 
those programs.
    Mr. Hayworth. All right, sir. Thank you very much.
    Again, Mr. Chairman, Ranking Member, and colleagues on the 
Committee, it is a challenge, to say the least, putting it 
euphemistically. I thank you, Mr. Chairman.
    The Chairman. Thank you. Ms. Christensen?
    Ms. Christensen. Mr. Chairman, I would pass on to my 
colleague to my left, if that is all right with you, and come 
back later.
    The Chairman. OK. Mr. Inslee?
    Mr. Inslee. Thank you. There is such a sour history here, I 
can understand why settlement discussions may be difficult. I 
am wondering if you can suggest some positive actions to help 
to increase trust, to the extent that that is possible, on 
either side. What can the Federal Government and your 
Department specifically do in the next 90 days that could help 
restore trust with the claimants that it has not done, even if 
not compelled by Congress or a court, but that you could take 
on your own merits?
    That is my first question, and, second, what do you think 
the claimants could do in that same direction that have not 
been compelled by law or statute?
    Mr. Cason. A good question, and one thing I would like to 
challenge just a little bit is the opening premise about the 
animosity stuff. Certainly, this is a very difficult issue, and 
it is very complicated and has been complicated with nine 
years' worth of history in litigation and 100 years' worth of 
history of the Federal government implementing our trust. There 
is certainly lots and lots of rhetoric and lots and lots of 
real experiences associated with how the trusts have been 
implemented over time.
    What I think we in the Department have attempted to do is 
to not personalize the issues that are involved and to actually 
be open and candid and forthright in what we are trying to do 
and what we think is reasonable under the circumstances, and I 
would suggest we would continue to do that. But I would also 
suggest that there is a very wide gap in perception about what 
is reasonable in this field.
    For example, based on the facts that we have collected so 
far----
    Mr. Inslee. Can I interrupt you just for a second?
    Mr. Cason. Yes.
    Mr. Inslee. I usually do not like to interrupt, but----
    Mr. Cason. No, go ahead.
    Mr. Inslee.--I really am looking for a positive statement 
here. When you say there is maybe not emotion on this or anger, 
I want to tell you there is a lot of anger about this because I 
am very angry about this. I am very angry that the Federal 
government treated these people like Enron treated its 
shareholders for years and decades, in a continued pattern with 
a people that underwent a lot of this for centuries. And I want 
to tell you, I am very angry about this, so I do not want you 
to explain to me why people are not angry about this. I would 
like you to explain to me what you can do to try to get this 
off dead center to do more than you have done to date, if there 
is anything that could possibly get this thing moving forward, 
and the same thing with the claimants, and if there is nothing, 
just tell us, and we will just take it from there.
    Mr. Cason. OK. Well, I think the reason that we are here is 
to try to find some amicable solution to this and that we in 
the Department of the Interior have been active participants, 
at least in this Administration while I have been involved in 
the process, active participants in a variety of efforts to try 
to find solutions to this. Those have not been successful so 
far, not because of personal rancor but because of the 
differences of opinion about what is fair and reasonable.
    We have gone through a very exhaustive process during the 
last four years to do historical accounting to actually build 
the fact set so that we could properly inform Congress and 
properly inform the Department of Justice, who is managing this 
litigation, as to what the facts are.
    So what I was suggesting to the panel is that we try to 
divorce personal feelings about it, and I am sorry you are 
angry about the process. There are lots of people in the 
process who are angry for a variety of reasons on both sides of 
the fence, but the anger does not solve any problem, and what 
we are trying to do is be reasonably dispassionate about what 
are the facts, what is reasonable under the circumstances, and 
what can we find common ground on, and that is what we have 
been doing, what we would continue to do, and that is what our 
plan would be, to work with the Committee to try to find that 
common ground.
    I would suggest that the Plaintiffs have the same sort of 
obligation, if we are going to bring it to settlement, because 
I think there is a reasonable point in the middle somewhere, 
and what we need to do is define what that reasonable point is 
in a way that both Congress is willing to settle there and that 
the Plaintiffs and the Administration are willing to settle 
there, and that is a big, undefined area that has risk and 
uncertainty for all parties. We are at the table trying to do 
that, and we appreciate the fact that the Committee is at the 
table trying to do that.
    Mr. Inslee. I listened very carefully to what you said, and 
I failed to hear a single thing suggested that you could do to 
go in the directions that I requested. Did I miss something?
    Mr. Cason. What direction are you requesting?
    Mr. Inslee. Well, I am sorry to go over my time, Mr. 
Chairman, if you would give me another minute, if that is 
permissible, thank you.
    What I am asking you about is, is there anything you think 
that your Department could do that you have not done to date to 
increase the level of trust that exists in the hopes that we 
can continue this ball rolling and to ask what the claimants 
could do in that direction? What could you do? What additional 
thing could you do to increase the trust level of the people on 
the other side of this dispute?
    Mr. Cason. Do you want to comment on that?
    Mr. Swimmer. If I might, I think, as Mr. Cason has stated 
before, there has been a lot of disagreement in the past about 
the level of responsibility in this trust and how it has been 
administered. One of the things that I believe has been lacking 
in that sense is what I call and we have coined as a 
``beneficiary focus.''
    For many, many years, this trust was treated as a program. 
In the early years, it was treated as the agency, BIA, being 
the banker on the reservation for individual Indian people, 
collecting the money, giving them money for their house, for 
their horse, for whatever it might be, and the ledger is 
replete with that kind of information.
    In more modern times, because of the fractionation issue, 
it has been extremely difficult to have personal contact with 
the beneficiaries. It is not unusual to have 200 to 300 or 
1,000 owners of an 80-acre or 160-acre parcel of land. So that 
distance between the manager of the trust and the beneficiary, 
I think, has caused a lot of the animosity that we see today 
outside from the accounting issue.
    What we have tried to do, certainly in the last three 
years, is, through a comprehensive study of how this trust is 
administered to how it should be, how we think it should be, 
administered, with the help of the beneficiaries, with the help 
of lay people and lots of resources in the field, to reform the 
trust and to do it with a sense of a beneficiary focus, setting 
up, for instance, trust administrators and trust officers.
    One of the things the court mentioned in the beginning is 
that there was no one at the Department of the Interior that 
had a fiduciary trust background. It is not something you would 
normally find in a Federal agency unless they were dealing with 
banking matters or trust matters, as such. What we have done is 
made it a conscious effort to bring people into this program 
with a trust background. We made a conscious effort, then, to 
reach out to beneficiaries by setting up a call center where, 
not unlike other trust companies, an individual can call, 
identify themselves, and get information almost immediately on 
whatever matter it is they want to know about: What is in my 
account? When was the lease issued? When does the lease expire? 
When do you expect the oil and gas payments to be made? What 
about my probate? What is the status?
    So we are trying to set up a mechanism where instead of 
someone walking into an agency and trying to button hole 
someone to get information and then being routed to a dozen 
different people, they have a phone number they can call. They 
have a trust officer whose sole responsibility at that agency 
is to the beneficiary. That is all they have to do is work with 
the beneficiaries trying to find, for instance, ``whereabouts 
unknown,'' as we call them. We have 46,000 people with about 
$60 million in their accounts, and we cannot locate them. We 
are making a conscious effort, an extremely strong effort, with 
tribes, with relatives, with newspapers, with the Internet, any 
way we can, to locate those people to get that money out there.
    We have made many adjustments in the way that the trust is 
operated itself in bringing new software in, coordinating 
systems, bringing the title systems current, working on getting 
probates brought up to date, bringing a state-of-the-art 
accounting system so that when a person receives their 
quarterly statement, they know what they own, they know what 
came in on their income, and they know what went out on their 
income.
    So those are the kinds of things that we are trying to do 
now with the beneficiaries to make a difference, and that is 
all in addition, really, to the lawsuit issue over the 
accounting, and the accounting is to go back and, of course, 
provide them with a history of what they have received in the 
past. But going forward, it is the beneficiary focus, I think, 
that is going to make a difference in how the relationship 
works between the individual Indian beneficiary in the field 
and the Department of the Interior.
    Mr. Inslee. Thanks for your courtesy, Mr. Chair.
    The Chairman. Ms. Drake?
    Ms. Drake. Thank you, Mr. Chairman. Certainly, as a new 
Member of Congress, I have not heard this every extended debate 
on this issue, and as a representative from Virginia where we 
do not have federally recognized tribes or Indian lands, my 
first question, sitting here, that I really do not want you to 
answer is, how in the world did we ever get here?
    I thought it was interesting, Mr. Cason, when you talked 
about defining the inherent obligation, since there was no 
instruction from Congress, I would think that you would have an 
absolute obligation to account for someone else's money, 
whether it is something that is very informal like helping a 
relative or something that is very formal with the Federal 
government managing people's money.
    So all that said, I have two questions, and the first is, 
are we continuing to have problems from 1994 on, or is 
everything that we are talking about now 1994 and before?
    And the second question is, you have explained that you 
have found very little error in what you have looked at so far, 
yet this has been in court for nine years. You mentioned $176 
billion in a claim and a proposed settlement of $27.5 billion. 
Have you or someone in the Department reviewed why do they 
think this amount of money is owed, and why do you think it is 
not, and what is going on in between that the Department would 
think this is probably not a lot of error, yet there are people 
who receive the money who think there is, obviously, a very 
glaring error. So those are my two questions.
    Mr. Cason. Good questions. As you said, I won't explain the 
history because it is long and complicated.
    Regarding the $176 billion and why the Plaintiffs think 
that is owed, they are going to be up next, so I would suggest 
that you just ask them to explain.
    Ms. Drake. I think that is where Mr. Inslee is coming from. 
I mean, obviously, if someone thinks you owe them $176 billion, 
I would have hoped you would have gone to look and say, is 
there any reason for this? If someone told me I owed them a 
month's rent that I had not paid them, I would go see if I made 
that payment, and did they not get my check.
    Mr. Cason. Yes.
    Ms. Drake. So, to me, if you are not willing to look at 
that question----
    Mr. Cason. Well, that is exactly what we have been looking 
at.
    Ms. Drake. You have looked at it. We will get them to 
explain why they think they owe so much.
    Mr. Cason. Good.
    Ms. Drake.--but, I guess, my question is, I would think, if 
I were in that department, and someone thought I owed that 
amount of money, and I do not think I owed it, I would at least 
have an explanation why I thought there was a discrepancy in 
the two numbers.
    Mr. Cason. Yes. That is fine, and that is exactly what the 
historical accounting process is all about. There is an 
assertion that the funds that have come into the Department 
have not been accurately managed. There is an assertion that 
opening balances of all of the accounts that we currently have 
on the books does not reflect an accurate opening balance.
    The historical accounting process is basically designed to 
go back and take a look at the transactions that have occurred 
in those accounts to see if that opening balance carried on 
from 1994 represents an accurate opening balance. So what we 
have is an assertion that there is not accuracy, that the funds 
have been mistreated over time. What we are doing in the 
historical accounting process is basically going account by 
account looking backwards and saying, ``Well, tell me about the 
transactions that have occurred in this account.'' It is a 
fairly complicated process in that when you take an account by 
account, you find an opening balance, you find all of the 
transactions that occurred in that account, both incoming 
checks and outgoing checks, and you go to an ending balance, 
just like your bank statement. So that is basically what we are 
going through.
    Our assessment of the $176 billion issue is it is entirely 
specious, that the assumption, as we understand it, is that the 
assertion is that $13 billion came in, never a penny was paid 
out, and then you put compound interest on it for 100 years, 
and that is how you get the $176 billion. I think that 
completely is inconsistent with the facts. But the assertion is 
there, and it is my understanding of the $27.5 billion is 
instead of assuming that 100 percent of the money did not go 
out, you just assume that 20 percent of the money did not go 
out, and then you add compound interest on that, and that is 
how you get the $27.5 billion.
    What we are trying to do is get beyond the rhetoric and get 
to actual accounting facts. On an account-by-account basis, 
what are the facts about this account? Are there errors in this 
account? Does the ending balance represent what should be in 
the account? And in large part, what we have found is the 
answer is yes, so far. We have not done all of the accounting. 
It is possible that as we go further and further back in time, 
we will find some issue of fraud or find some issue where the 
accounting system was not working properly, but so far, after 
$100 million worth of accounting, we have not found that. We 
found a few random errors.
    Ms. Drake. How about the 1994 question? That should be 
easier. Are there still problems alleged, 1994 on, or is this 
all before 1994, other than the account balance in 1994?
    Mr. Cason. Yes. The way I would answer that is, since 1994, 
we use that as how we define the class of who we would do the 
accounting for, and we basically, in our plan, said we would 
account for anybody that had an open account from 1994 forward. 
In terms of the accounting process, we were using electronic 
means to account 1994 and after, and we have actually converted 
about 1999 into a new system called SEI, and they do a lot of 
the trust accounting in the country, and we use their system 
from 1999 forward.
    So it is arguable whether there was any issue between 1994 
and 1999. We have not found any material issue there, but it is 
arguable. Since about the year 1999-2000, we have been putting 
out periodic quarterly statements to people, and we have 
balanced the accounts down to the penny every day. So we think 
that there is no issue there at all.
    The Chairman. Mr. Udall?
    Mr. Tom Udall. Thank you, Mr. Chairman.
    Secretary Cason, in the course of this case, the judge made 
a ruling that shut down your computer system, and you were 
unable to pay many people, and many out in my district were 
hurt by that. Has that been completely resolved now? Is that 
system up and running and people getting paid?
    Mr. Cason. Yes, at the moment. The issue is not completely 
resolved. We just finished a 59-day, evidentiary trial in the 
district court. The district court judge issued a decision on 
that. We appealed. The decision was basically an order for us 
to disconnect from the Internet and the Intranet any computer 
that housed or provided access to individual trust data. We 
asked for a stay from the court, and within about 18 hours got 
an administrative stay from the Court of Appeals. It is being 
briefed right now in terms of getting a permanent stay, and the 
appeal documents are being filed now.
    So the issue is not completely resolved at this point. We 
are up and running right now. We are able, with the 
administrative stay, to keep our computer systems up and 
collect the information necessary to actually make payments to 
Indians, and we are doing that right now was a routine part of 
business, but the issue itself has not been resolved.
    Mr. Tom Udall. But as far as you know, the Indians are 
being paid----
    Mr. Cason. Yes.
    Mr. Tom Udall.--on their accounts, and there is not anybody 
that is not being paid.
    Mr. Cason. Not that I am aware of, no.
    Mr. Tom Udall. OK. Because that was a situation where many 
people, as you probably know, were living on those checks on a 
monthly basis, and it is very, very important to them and their 
families and their livelihood and all of that, so we appreciate 
you getting it up and running.
    Has the Department or you taken a position on terminating 
the trust?
    Mr. Cason. Are you talking about on individuals or overall?
    Mr. Tom Udall. Yes.
    Mr. Cason. I think there is a pretty consistent opinion 
within the Department of the Interior that no one is talking 
about terminating the trust. There is a lot of discussion, 
Congressman, about the character of the trust, that there are 
elements of this trust that do not make any sense, and we would 
sure like to work with Congress and continue to work with 
Congress to try to amend some of those. And what I mean by that 
is we have a terrible problem with fractionation, that 
individual Indian allotments that passed on over time are 
passed down on divided interests, and we have circumstances 
where we have individual allotments that have more than 1,000 
owners on them. So no one ends up with real beneficial use, and 
the property gets devalued as a result of having multiple 
owners. So we would like to have a better way of consolidating 
those interests together so that some Indian individual would 
be able to have beneficial use of their property.
    Ross has circumstances where he has thousands of accounts 
that have less than a dollar in them that we end up having to 
pay an administrative fee to keep track of in trust on an 
amount that is less than a dollar, for thousands of accounts. 
That does not make any sense. In the banking world, you would 
close those out through administrative fees.
    So there are certain elements of the trust that do not make 
a lot of sense in terms of trying to produce a dollar's worth 
of benefit for a dollar's worth of invested appropriations, and 
we would like to see if there is some way that we can address 
some of those. But it is not a repudiation of the trust that we 
are really talking about; it is more of how can we ensure that 
we spend money wisely to actually produce material benefits 
where we do it?
    Mr. Tom Udall. Congressman Inslee asked the question about 
settlement and how you were moving forward on settlement.
    Mr. Cason. Yes.
    Mr. Tom Udall. Is it your sense that in the next six months 
or a year, you would be able to bring to us a proposal with 
regard to settlement, something that will give us something to 
work on and to bite into on this? Are those kinds of 
discussions going on?
    Mr. Cason. The discussions certainly have been going on for 
quite a while, and it is our intent to work with this Committee 
and the Senate counterparts, Senators McCain and Dorgan, to see 
if there is some way we can actually define a common ground for 
settlement. We need to develop together some sort of paradigm 
of how you would actually construct a number and how you would 
construct a payout from that number to get it down to the 
individuals that feel like they are aggrieved in the process.
    We stand ready to do everything that we can to help with 
that. We have been exploring it for a long time. We have 
proffered different methodologies that could be used to 
approach developing a number and a settlement, but so far, we 
have not found one that has actually gained traction where 
everybody says, ``Oh, yeah. That is the right way.''
    So we plan to work with this Committee in looking at all of 
the options that the Committee would like to explore. We 
certainly have ideas on it, and we would like to share those as 
well.
    Mr. Tom Udall. Thank you, and if you come up with 
something, we would like to work with you on it.
    Thank you, Mr. Chairman.
    The Chairman. Ms. Herseth?
    Ms. Herseth. Thank you, Chairman Pombo and Ranking Member 
Rahall, for the opportunity to discuss the Indian Trust Reform 
Act of 2005. This is obviously an issue of great importance for 
communities within South Dakota and the entire region. Roughly 
one-third of the individual Indian money account holders reside 
throughout the Great Plains region.
    I want to talk through a little bit with you about 
grappling with this problem of fractionation.
    Mr. Cason. Yes.
    Ms. Herseth. Chairman Pombo had a hearing--I believe it was 
either early this year or at the end of last year in which one 
of my constituents, Charlie Pallone, testified about this 
problem in particular, and then, in July, this Committee held a 
joint hearing with the House Financial Services Committee on 
improving land-grant title procedures for Native Americans, and 
Mr. Arch Wells, acting director of the Office of Trust 
Services, testified about DOI's efforts to modernize and 
improve its trust records.
    Now, in particular, he referred to an effort to clean up 
data used to process title status requests in the trust asset 
and accounting management system. Can you tell me this morning 
how close this project is to completion, Mr. Cason?
    Mr. Cason. Well, we have a plan that we are operating 
against right now that it is our hope to get all of our title 
records up to date in the computer system by November 30, 2007. 
There is a substantial amount of backlogged information that 
has not been put in the computer systems, and as Arch probably 
explained to you, we have gone through a process here recently 
during the last four years of moving from the legacy system, 
the Land Record Information System, to a new system called 
TAMS, and we have converted all of the software. It is 
available to all of our regions now, so that has been done. The 
data base has been converted over from ELWES to TAMS, so that 
is done. What we are doing right now is basically all of the 
records that have not been entered into either system that is 
backlogged right now; we have a plan for bringing all of that 
up to date, and the due date is November of 2007.
    Ms. Herseth. And at this stage, do you feel you have 
adequate funding to fully implement the system?
    Mr. Cason. That is a good question. We are hopeful that the 
resources we have available and that we would anticipate as 
part of the 2007 budget would be adequate to get the job done. 
We are actually partnering with OST and BIA together to utilize 
funds in both houses to make sure that we get the resources on 
the ground to do the job, and we are hopeful that those 
resources will be adequate.
    Ms. Herseth. And do you have any concerns that the 
personnel dedicated to the conversion and implementing the plan 
fully take away from the office's ability to do the accounting 
under the process that you have set forth?
    Mr. Cason. Well, I would say yes and no. I am sorry to be 
ambiguous. We do have an issue, and that is our land title 
records office is a nexus point for a number of efforts that we 
have ongoing. One of those efforts is getting all of the 
information into our TAMS system so that it is current. Part of 
it is our probate process where we need to get records from 
them to conduct probates, and we have four or five different 
efforts like that that all have a nexus point, the LTROs. It is 
one of the things that we are watching very closely to make 
sure that we do not overwhelm the system at that nexus point, 
and if we are getting to that point, we will be looking fairly 
routinely at adding more resources or prioritizing the workload 
so we can get the most important stuff done within that 
organization.
    Ms. Herseth. OK. I appreciate your responses. It is an 
issue of particular concern, so I will be working with you to 
monitor the progress.
    If I could just switch gear with another question, I think 
you replied to a question from Mr. Kildee that under the 
accounting process that DOI prefers that would cost roughly the 
$335 million, you are looking at accounts after 1994, and so 
you would be analyzing approximately 275,000 to 300,000 
accounts.
    Mr. Cason. Yes.
    Ms. Herseth. How many individual Indian money accounts does 
the Department manage overall?
    Mr. Cason. That would include all that we manage right now, 
so if you pick $300,000, it includes all of the ones that we do 
right now. Those would be part of the process, and then the 
differentiation is we are considering the historical accounting 
period to be those accounts that were open in the year 2000 
plus all of the ones that had been opened as of 1994 and closed 
prior to 2000. Those are in the historical accounting period. 
Then we have a current accounting process that does all of the 
ones that were open after 2000, and all of those individuals 
get a quarterly statement routinely.
    Ms. Herseth. May I follow up with one more question, Mr. 
Chairman?
    I will seek a little bit further clarification from you on 
that. As you described the differences between the accounting 
process that Judge Lamberth set forth that I understand, on 
appeal, questions have been raised, but then as you described 
the differences from that process versus DOI's process, the 
$335 million, talking about the differences, did DOI ever 
consider a more expensive accounting procedure? In other words, 
when you decided upon the one that you would prefer, did DOI 
examine, say, three or five alternatives and estimate what they 
would cost, and where did the $335 million accounting process 
fall in that category? I am just wondering the breadth of DOI's 
evaluation, dealing with various factors that would be fair to 
the Plaintiffs as well as the costs to DOI.
    Mr. Cason. Yes, we did. If you would like, I will get you a 
copy of the plan that we submitted to the Court because part of 
what we looked at is what were the relative variables 
associated with an accounting, and it had variables for whom do 
you an accounting, over what time do you do an accounting, how 
much information you would need to constitute an accounting? Do 
you look at land as well as cash or cash only? So there were a 
number of variables that we looked at, and the considerations 
that we built into that process were things like how much will 
it cost, how long will it take to reach a conclusion, what is 
the relative level of accuracy that would be the output of this 
product or process?
    So we looked at those variables in line with the variables 
of what would constitute an accounting and drew a conclusion 
about what we thought was the most productive way to go about 
this between cost and time and accuracy, and that is where we 
ended up with the plan that we have. Clearly, it is subject to 
debate. Other people who look at that have other opinions about 
how it ought to be done, but that is what we were trying to get 
to is a point of reasonable accuracy with reasonable time and 
reasonable cost to provide an assurance that the accounting 
system either was working reasonably well, or there were 
systemic flaws, and we needed to do a much broader, grander 
effort. So that is how we got to where we were.
    Ms. Herseth. And the process is the last expensive, the one 
that you----
    Mr. Cason. No. I would not say it is the least expensive. 
Certainly, you could find an accounting that would cost less 
than $335 million, but it was one that we thought was a 
reasonable plan under the circumstances. And part of it is 
right now the balance for individual accounts as of that 2000 
time period was $400 million, so what we were proffering as a 
plan cost $335 million to assure that the opening balance of 
$400 million was reasonably representative of what should have 
been there.
    So, at some point, when we are introducing the cost element 
into it, you go, there is a balance of $400 million. How much 
do you want to spend on ensuring that $400 million is an 
accurate representation of what should have been there?
    Ms. Herseth. I appreciate it, and, Mr. Chairman, thank you 
for extending additional time. I will look forward to seeing 
the document you submitted to the Court, as well as what Mr. 
Rahall had requested in terms of putting together an assessment 
of different error rates and different programs and processes. 
So, Mr. Chairman, thank you.
    The Chairman. Thank you. I want to thank the witness for 
the testimony. Members of the Committee may have additional 
questions. Those will be submitted to you in writing, if you 
can answer those in writing so that they can be included as 
part of the hearing record. I know several Members have asked 
you for additional information. I am sure other Members will 
have additional questions as well.
    Mr. Cason. That is fine, Mr. Chairman. Thank you for the 
opportunity to be here.
    The Chairman. Thank you very much.
    I would like to now call up our second witness. Welcome, 
Elouise Cobell, a Blackfeet Indian from Montana and the lead 
Plaintiff in the Cobell v. Norton litigation. She is 
accompanied today by Keith Harper of the Native American Rights 
Fund and a member of her legal team in this litigation.
    Ms. Cobell, welcome back to the Committee. Although I think 
we are all happy to see you today, I wish we were not and that 
it was over with, but it is nice to have you come back. Thank 
you again for giving us your time to be here. Again, I will 
remind you that your entire statement will be included in the 
record. If you could limit your oral testimony to five minutes, 
it will help us move along. So thank you, and when you are 
ready, you can begin.

STATEMENT OF ELOUISE COBELL, BLACKFEET RESERVATION DEVELOPMENT 
FUND, BROWNING, MONTANA; ACCOMPANIED BY KEITH HARPER, ATTORNEY 
              FOR THE NATIVE AMERICAN RIGHTS FUND

    Ms. Cobell. Good morning and thank you for those 
statements, Chairman Pombo and Ranking Member Rahall and 
distinguished members of this Committee. First, let me say how 
much I appreciate the work you and your staff have done on this 
important issue. I welcome your continued involvement and 
leadership. We join with you in the hopes that this will point 
the way toward a resolution of this, thus far, intractable 
problem.
    I know that I am not telling you anything new when I say 
that the mismanagement of individual Indian trusts has been one 
of the biggest injustices ever perpetrated by the 
representatives of our government. Study after study by 
Congress itself, the GAO, and many others, as well as now 
nearly 10 years of judicial findings and opinions in both 
district and appellate courts, confirm that the injustice is 
pervasive, longstanding, and continuing and that the financial 
loss to hundreds of thousands of Native Americans has been 
incredibly large.
    Let me read you just one statement. Secretary Norton has 
admitted and urged the court to adopt the undisputed facts in 
this statement: ``Indian trust data is wholly unreliable and 
utterly useless as an accurate measurement of anything except 
to confirm the manifest negligence and malfeasance inherent in 
Indian trust management.'' I would like to just read that one 
more time. ``Indian trust data is wholly unreliable and utterly 
useless as an accurate measurement of anything except to 
confirm the manifest negligence and malfeasance inherent in 
Indian trust management.''
    For the record, I have submitted a list of just some of 
these studies and reports that confirm the magnitude of this 
problem. I hope you agree with me that this is the time; study 
and reflection is well in the past. It is time to do something. 
You are well-acquainted with this injustice, and we applaud you 
for moving to try to do something constructive about it. I hope 
you share my frustration that the United States government has 
not been similarly constructive.
    In thinking about how to settle this case, we must bear in 
mind certain salient considerations. First, it is the 
government that has caused this problem. In a fit of 
paternalism, they imposed this trust on us. They mismanaged our 
assets. They lost billions of dollars. Our only role was to 
suffer the consequences of their mistakes. The Cobell case is 
about saying no longer will we tolerate this abuse.
    Second, we must always bear in mind that this is our money, 
and this is our land. This is not a Federal handout. This is 
not a Federal program. We are asking for a full accounting of 
our money and restitution of any of it that is missing. Over 
500,000 Indians have had their assets mismanaged. In the total 
amount of financial loss and the total number of victims, this 
scandal dwarfs all of the corporate misdeeds we have heard so 
much about. Enron, WorldCom, and others are petty crimes in 
comparison.
    Third, settlement is entirely possible. There is an 
impediment to settlement: the Departments of Justice and 
Interior. We have participated in complete good faith. They 
have not. Consider this: This Committee and the Senate Indian 
Affairs Committee, early in 2005, requested that Indian Country 
work together to develop a comprehensive plan to resolve this 
case. We did exactly that. In a united effort, we worked 
closely with leaders throughout Indian Country. The product was 
a detailed set of 50 principles with specific explanations for 
why each is important.
    Then Senators McCain and Dorgan introduced their settlement 
bill. We continued to work in good faith. We provided specifics 
on what we liked and what we needed to be revised. We have 
engaged the Senate and presented detailed comments on its 
draft. We regularly met with the staff. We have come forward 
with proposed settlement numbers.
    The government's response to your effort stands in stark 
contrast. Oh, they certainly pay lip service to cooperating, 
but what proposals have they put on the table? They have never 
said, not once, what they believe specific terms and their 
acceptable settlement amounts. They have refused to take a 
position on the bill.
    Members of the Committee, if you wish to exert leadership, 
you must call the government to account. Do not allow their 
foot dragging to continue. Call them to task. Demand that they 
participate in the legislative process. Demand that they inform 
you of the specific contours of a settlement they will support. 
If there is hope for a legislative settlement, they must no 
longer be allowed to simply sit back and say no to all 
settlement offers without members of this Committee denouncing 
their objections. If not, a legislative settlement will never 
occur.
    Use your influence to raise the profile of this issue to 
call their continued delays what they are, a continuing slap in 
the face to Indians and to innate sense of justice of all 
Americans. That magnifies the underlying wrongdoing. By failing 
to acknowledge the problems and refusing to work to resolve it, 
government officials continue the more than century-old 
tradition of kicking the problem to the future as victims die 
off. Meanwhile, beneficiaries who have been mistreated their 
entire lives do not see a resolution as even possible in their 
lifetime. Many have given up hope after so many false starts.
    As you proceed, I cannot, in good conscience, fail to 
remind you that the government's behavior in this matter has 
gone well beyond delay and obstruction. It includes a sad 
history of misrepresentation and deceit. That sorry record 
includes a glossy progress report put out this summer that is 
deceptive, misleading, and inaccurate from beginning to end. 
Sworn testimony before the courts and Congress and, more 
recently, a complete misrepresentation of the Cobell XVII 
decision; after 10 years of litigation, we have been forced to 
the sad conclusion that the word of the government officials is 
not trusted. The government has seized on some language in 
Cobell XVII that is not relevant to the issue at hand, and, 
more importantly, not controlling in this case.
    They will not tell you about something called ``the first-
in-time rule.'' This rule, a very basic rule in the D.C. 
Circuit and virtually all other circuits, says that when there 
is discrepancy between the language of appellate panels, the 
first in time controls. The rulemakes clear that Cobell VI, 
Cobell XII, and Cobell XIII remain the controlling law in this 
case and that the words that the government has so fondly 
seized upon and that we heard so much from Mr. Cason are not 
important. This is a legal matter I have covered more 
thoroughly in my written testimony. More importantly, it would 
be a serious mistake for the members of this Committee or 
anyone else to be persuaded by government officials who have 
been repeatedly cited by the courts for misrepresenting 
judicial decisions that anything in Cobell XVII lessens by one 
penny the government's huge liability in this case.
    I want to talk about H.R. 4322 as a starting point. We are 
encouraged that you have said that H.R. 4322 is a starting 
point and a placeholder and that dialog, discussion, and 
negotiations are encouraged. I hope that we will be able to 
begin a constructive dialog with this Committee similar to the 
one we have engaged in with Senator McCain and Senator Dorgan.
    I believe there are some critical shortcomings to the bill 
as presently drafted. There are two sources of guidance that 
should inform any appropriate legislative settlement: first, 
the 50 Principles for Settlement, which present a consensus 
roadmap to resolution from Indian Country; second, the decision 
that the courts have issued in Cobell litigation over the past 
nine and a half years, which must be honored. We believe the 
bills should better reflect the ideas and legal concepts 
encapsulated in these two sources. We appreciate that you are 
actively soliciting our input on the bill.
    With that in mind, we offer a number of additional specific 
comments on the bill in our written testimony. I would like to 
highlight three of the most important. The Treasury Department 
should not be in charge of the settlement funds. It is one of 
the historic wrongdoers in the case, and putting it in charge 
of the settlement is like letting the fox guard the hen house. 
Treasury is not only a Defendant but has also been held in 
contempt of court for violating court orders. Moreover, it has 
routinely and intentionally destroyed trust records to hide its 
malfeasance. In one documented instance, the Treasury 
Department destroyed 162 boxes, untold millions of pages of 
irreplaceable data. Simply put, it cannot be trusted any longer 
and should not be involved in any way with the distribution of 
funds.
    The courts have the greatest institutional competence to 
make distributions in a fair manner and are the appropriate 
institution to do so. Importantly, the Indian Land Working 
Group, the largest national association of allottee groups, has 
specifically said that they do not want Treasury involved. As 
we do, they have endorsed the Federal courts as the appropriate 
body to handle any distribution.
    The Cobell case is far more than the past mismanagement. It 
is also about the trust lands and monies of Indian people and 
how it will be managed in the future. Quite obviously, a 
settlement of this case requires cessation of the persistent 
and continuing wrongdoing; in other words, a real trust reform.
    My written submission has detailed what we believe it must 
include. The settlement that Native American leaders proposed 
is a good deal, especially for taxpayers. The proposed amount 
of $27.5 billion is a large number, but large crimes incur 
large consequences. Moreover, it is a bargain for a government 
that has acknowledged its responsibility for a 118-year-old 
mess.
    First, it would resolve a dispute that Members of Congress 
have said has run too long and cost too much. It is estimated 
that the government alone has spent more than $100 million on 
this lawsuit. Those expenses grow every single day. The 
government's liability is growing. The courts have declared 
that Indian trust beneficiaries are entitled to both the 
principal amounts that should have been recorded in their 
accounts plus compounded interest. A fundamental principle of 
trust law confirmed by the Court of Appeals is that the 
government is liable for any funds that it cannot prove with 
appropriate and competent evidence that it paid to the 
beneficiaries.
    Since both sides agree that the government should have paid 
roughly $13 billion into the individual Indian trusts since 
1887, that means that the government must be able to prove each 
of those transactions. Any amount not proven to have been paid 
plus interest is what is owed. This puts potential liability of 
the Federal government well in excess of $100 billion.
    The historical accounting will continue to be costly. The 
Interior Department is now telling you that it will cost at 
least $12 billion to try to reconstruct those records. That is 
far too expensive for an accounting. Well before the Court of 
Appeals reached that conclusion, we were saying that in court.
    A 2002 study conducted by the Interior Department and made 
public in our lawsuit places the liability for the government 
on trust accounts at anywhere between $10 billion and $40 
billion. These are the government's own experts. That is why 
Indian Country's $27.5 billion proposal is a bargain. I would 
argue that it is far better for the taxpayers to be spending 
this money directly on giving Indian account holders what is 
rightfully theirs than wasting money on what we and the courts 
regard as a highly questionable accounting and delaying 
exercise.
    We have put out a settlement number in good faith for all 
to see. We encourage the government and the Congress to do the 
same.
    On a final note, the Court of Appeals recently remanded the 
case of the district court, as we had requested. The court made 
clear that the district court was well within its authority to 
hold a trial on whether it is impossible for the government to 
perform an accounting required by law. We will now proceed to 
ask for an evidentiary hearing on the impossibility of doing an 
accounting. We believe that this will lead to a more expedited 
resolution than we had previously expected.
    Make no mistake about it: We think a settlement will be 
good for everyone, but if this process of looking for a just 
settlement fails, we will continue the litigation, and we will 
expect to win and prevail. Any statements to the contrary by 
the government are nothing more than wishful thinking.
    Finally, I would like to say that I do not just speak for 
myself; I speak for a class of 500,000 victims of this 
travesty. The largest allottee group, the Indian Land Working 
Group, specifically endorses the decisions I have made and 
trusts my judgment and that of my team. I have attached the 
Indian Land Working Group's recent resolution of support to the 
written submission, and I ask that it be made part of the 
record. I also ask that my total written statement be made part 
of the record at this time.
    I would like to thank you very much for your leadership on 
this important issue, and we look forward to working with you 
in the coming weeks. Thank you.
    [The prepared statement of Ms. Cobell follows:]

                    Statement of Elouise C. Cobell, 
                   Lead Plaintiff in Cobell v. Norton

The Trust Debacle has Gone on for Too Long
    Good morning, Chairman Pombo, Ranking Member Rahall, and 
distinguished Members of the Committee on Resources. First, let me say 
how much I appreciate the work you and your staffs have done on this 
important issue. I welcome your continued involvement and leadership. 
We join with you in the hopes that this will point the way towards a 
resolution of this, thus far intractable, problem.
    The mismanagement of the Individual Indian Trusts has been one of 
the biggest injustices ever perpetrated by representatives of our 
government. As the Court of Appeals has said, ``the trusts at issue 
here were created over one hundred years ago through an act of 
Congress, and have been mismanaged nearly as long.'' Study after study 
by the Congress itself, the GAO, and now nearly ten years of judicial 
findings and opinions in both the district and appellate courts confirm 
that the injustice is pervasive, longstanding, and continuing--and the 
financial loss to hundreds of thousands of Native Americans has been 
incredibly large. For the record, I'd like to submit a list of just 
some of these studies and reports that confirm the magnitude of this 
problem. (See Appendix A.) It truly is amazing how many times and for 
how many years there has been a recognition of this massive problem, 
going back to the very inception of the Trust, in 1887. ``Fraud, 
corruption and institutional incompetence almost beyond the possibility 
of comprehension'' is how one bipartisan report characterized it. I 
hope you agree with me that the time for study and reflection is well 
past. It is time to do something about it. You and your staffs are well 
acquainted with this injustice, and we applaud you for moving to try to 
do something constructive about it. I hope you share my frustration 
that the U.S. Government has not similarly been constructive.
    Quite the contrary. The U.S. Government is responsible for this 
outrage. Lands and resources--in many cases the only source of income 
for some of our nation's poorest and most vulnerable citizens--have 
been grossly mismanaged. The Government forced this trust on Indian 
peoples in 1887 because it thought it knew better than we how to manage 
our own property. Adding injury to insult, the Government then 
completely failed to faithfully discharge even the most basic trust 
responsibilities. A couple of examples are helpful. Although since the 
late 1970s, reports from all corners--including internal auditors--have 
stated that a lack of an accounts receivable system is an intolerable 
material weakness, even now, decades later, Interior has not even 
instituted this most basic reform. Further, they cannot tell 
beneficiaries how much they have in their accounts. Indeed, they cannot 
even produce an accurate list of beneficiaries. The Government itself 
is responsible for bringing us to this sorry state by failing to 
maintain and even destroying records. What is even worse, government 
now utilizes every possible mechanism of bureaucratic and legalistic 
delay, obfuscation and misrepresentation to prevent the wrong it did 
from being made right. This is shocking behavior, and as long as we 
work on this issue, none of us should ever lose sight of that fact. It 
is one thing to look at the sorry state of the trust and think that 
this is a wrong from the past. It is quite another to see that the 
wrong persists up to the present day and is magnified and perpetuated 
by the government's continued failure to do the right thing.
    If you went to your personal bank to ask how much you had in your 
account, and the bank could not tell you how much money you had, what 
interest you were owed, what would you do? How would you feel? And if 
you were to find that the bank itself had deliberately destroyed the 
records of your account and continued to destroy your records even 
after you had asked for an accounting, and if your bank then tried to 
duck responsibility because of lack of records, what would you do? 
That's just what has happened for over a hundred years. We have come to 
the courts and to you, our elected representatives, to seek justice.
    Over 500,000 Indians have had their assets mismanaged. In total 
amount of funds mismanaged, this scandal--and lets call this what it 
is--a scandal--dwarfs all of the corporate misdeeds we've heard so much 
about. Enron, WorldCom, and others in the headlines are truly petty 
crimes next to the magnitude of this century-long and continuing 
injustice.
    Yet the Government has not been constructive at all in trying to 
find a fair and final resolution. Time after time in the litigation, 
they have proven to be obstinate, difficult, and foot-dragging. But 
don't take my word for it--the Court of Appeals has criticized:
        [the] ``record of agency recalcitrance and resistance to the 
        fulfillment of its legal duties'' and ``intransigent'' conduct. 
        Cobell v. Norton, 391 F.3d 251, 255, 257 (D.C. Cir. 2004).
    Time and again, both the district court and the appellate court 
have called out the government for its bad behavior. When anyone 
complains that this process has gone on too long and been too complex, 
they have only to look at these unfortunate tactics pursued by the 
Government in this case to see why this has been so.
    A mediator was appointed to try to find common ground and work 
toward a settlement of this case. Our side worked in good faith with 
the mediator for a year and a half. In that time, the Government did 
not make one proposal for resolving the case. Not one: not even a 
counter-offer. Ultimately, the mediation process collapsed under the 
weight of the Government's arrogance and intransigence.
    Now, as committees of jurisdiction in both houses of Congress have 
taken up the matter, the Government is still actively countering 
progress. We have done our part in furthering this legislative 
settlement effort. We worked with Indian Country to develop 50 
Principles for settling the case--including specifics on the amount of 
a fair resolution. After the settlement bill was introduced in the 
Senate, our side continued in good faith. We made clear what we agreed 
with as well as our concerns. We came to the table to negotiate and 
discuss. We have heard nothing from the Government that suggests it 
will approach this process any more constructively than it has 
approached the litigation and mediation. They have not provided any 
specific suggestions whatsoever. They have yet to say specifically what 
a fair number for resolving the historical accounting is or what they 
believe is an acceptable amount. In short, they have taken no position 
and offered no guidance.
    Members of the Committee, if you wish to exert leadership in 
bringing this terrible injustice to an end, you must call the 
Government to account. Do not allow their foot-dragging to continue. 
Call them to task. Demand that they participate in the legislative 
process. Demand that they inform you of the specific contours of a 
settlement they will support. If there is hope for a legislative 
settlement, they should no longer be allowed to simply sit back and say 
``no'' to all settlement offers without members of this committee 
denouncing their recalcitrance. If not, a legislative settlement will 
never occur. Use your influence to raise the profile of this issue to 
call their continued intransigence what it is--a continuing slap in the 
face to Indians that magnifies the underlying wrongdoing. For by 
failing to acknowledge the problem and working to resolve it, they 
continue the more than a century old tradition of kicking the problem 
to the future with no justice for anyone in sight. Meanwhile, 
beneficiaries who have been mistreated their entire lives do not see a 
resolution as even possible in their lifetimes. Many have given up hope 
after so many false starts in the past.
H.R. 4322 is a Starting Point, But More Work is Needed
    We are encouraged that you have said that H.R. 4322 is a starting 
point and a placeholder and that dialogue, discussion and negotiation 
are encouraged and welcomed. We have been engaging in a very 
constructive dialogue with Sen. McCain and Ranking Member Morgan on 
their bill, and we look forward to a similarly constructive process 
with you, Chairman Pombo and Ranking Member Rahall.
    We are encouraged by some aspects of this preliminary bill. The 
fact that any settlement would be paid out of the Claims Judgment Fund 
is indeed necessary so that fixing this problem will not diminish the 
Interior Department's budget. This would further punish the victims by 
reducing funding for vital Indian programs.
    We are also encouraged that the bill recognizes that the settlement 
amount must range in the billions of dollars, although we also believe 
it is time for those in Congress to put forward a specific proposed 
settlement amount.
    Further, since any settlement would be a return of the victims' own 
money, we are pleased that the bill insures that beneficiaries will not 
be disqualified from any other benefit for which they are eligible and 
that it will not be treated as taxable income.
    However, I believe there are some critical shortcomings to the bill 
as presently drafted. There are two sources of guidance that should 
inform any appropriate legislative settlement. First, the 50 Principles 
for Settlement which present a consensus roadmap to resolution from 
Indian Country.
    The 50 Principles for Settlement represent an unprecedented coming 
together of Indian Country at the request of both the leadership of 
this Committee and the Senate Indian Affairs Committee to offer 
guidance. The result was an extraordinary product that set out detailed 
principles and the rationale for each Principle. No longer can it be 
said that Indian Country does not--in the main--agree on the proper 
approach to fixing this century of malfeasance and mismanagement. To 
the extent that a resolution followed the roadmap set out by the owners 
of the land and assets in question, it would be a success.
    We are disappointed that the vast majority of the Principles have 
not, at this point, been included in this bill and request that you 
take another look at this historic document and the ideas it puts 
forward.
    The second source of guidance for an appropriate settlement is the 
rulings in the Cobell case itself. Plaintiffs have waged a long and 
hard battle against difficult odds, and have achieved a remarkable 
record of success. The plaintiffs cannot accept a settlement that fails 
to honor the many victories won at the District Court and the United 
States Court of Appeals.
    We appreciate that you are actively soliciting our input on the 
bill before us. Candidly, we believe the bill needs a lot of work. We 
are heartened by your commitment to this process and also by your 
comments that this bill is intended to mark a starting point on a 
possible road to resolution. With that in mind, we offer these specific 
comments on the bill. These are not intended nor should they be 
construed as a comprehensive list of the areas of concern. But these 
are the areas of greatest concern and require serious consideration and 
modification.
Any Settlement Should not be Overseen by One of the Wrongdoers
    One of the most disturbing aspects of H.R. 4322 is the placing of 
the Secretary of Treasury--a defendant in the Cobell lawsuit and one of 
the parties principally responsible for the historic and continuing 
victimization of Indian trust beneficiaries--as the person in charge of 
the settlement funds. While it is certainly true that the Treasury 
Department is better than the Interior Department as far as failed 
trustee-delegates, frankly, that is not saying much. The Treasury 
Department has been Interior's partner in crime for far too long. It 
has been found in breach of trust. It has failed to reform. Is it 
reasonable, given the history of this case, to ask trust beneficiaries 
to accept their victimizer as the entity to provide for a fair 
distribution? Of course not.
    To make matters worse, the Department of Treasury has had a record 
of bad faith in the Cobell litigation. In February 1999, after a three 
week trial, the Secretary of Treasury along with the Secretary of 
Interior was held in contempt of Court for flouting Court orders, 
orders that they had consented to. See Cobell v. Babbitt, 37 F.Supp.2d 
6 (D.D.C. Feb 22, 1999). Adding insult to injury, the plaintiffs and 
the district court learned months afterwards than during the contempt 
trial itself, Treasury Department employees, in violation of court 
orders and in contradiction of representations made to the Court, 
destroyed 162 boxes of disbursement related documents--including untold 
numbers of IIM account related information. Treasury Department lawyers 
waited over three months to report the destruction to the Court. See, 
e.g., Cobell v. Babbitt, 91 F.Supp.2d 1, 60 (D.D.C. Dec 21, 1999) 
(determining that the destruction of the 162 boxes and the government's 
failure to report the incident ``misconduct'').
    Simply put, the Treasury Department has a record of cover-up, 
malfeasance, breach of trust, lack of candor with the Courts, 
spoliation of evidence and contempt of Court. The suggestion that any 
settlement fund be handled by such an entity cannot be acceptable to 
the beneficiary class.
    I routinely go out to Indian Country to speak with members of the 
beneficiary class. Virtually every time, I am asked whether we will 
agree to have the government--meaning the Executive Branch--handle the 
monies when we prevail. Always, I promise, we will never agree to that 
to cheers from the allottees I speak with. I can say with confidence 
that an Executive Branch entity will not be acceptable to the 
beneficiary class.
    Equally infirm is the appointed Special Master who answers to the 
Administration. Bear in mind that Indian Country has considerable 
experience with this Administration appointing individuals that are to 
serve a salutary function on behalf of the Indian Trust. Take by way of 
example the experience with the 1994 Indian Trust Fund Reform Act.
    Mr. Chairman, I along with many other Indians sought for nearly a 
decade legislation to remediate the government's failure as trustee for 
our assets. We worked hand-in-hand with both the Houses--in particular, 
Representative Mike Synar and his distinguished colleague Bill Clinger 
and the Senate. Finally, in October of 1994, the Trust Reform Act was 
enacted. One of the core aspects of the law was to establish the Office 
of the Special Trustee. Indian Country representatives wanted the 
Special Trustee to be independent. But the Interior Department 
vigorously objected to that. So the Act was watered down and the 
Special Trustee reported to the Secretary of Interior. That was the 
first problem--inadequate independence. One of the principal rationales 
for supporting the establishment of the OST was to get proper direction 
and guidance in the management from individuals with considerable 
applicable reform and trust experience. Also, it was to keep people who 
did not know what they were doing--like Ross Swimmer who was so 
disastrous as Assistant Secretary for Indian Affairs for 
beneficiaries--as far away from our money as possible.
    Then to my utter dismay, in 2003, Secretary Norton fired then 
Special Trustee Thomas Slonaker and replaced him with none other than 
Ross Swimmer. Imagine all our hard work just to have our trust, our 
assets, and trust reform put in the hands of a person universally 
recognized by Indian Country as hostile to Indian interest and a failed 
trustee-delegate. That, of course, is not the only example. After all, 
Jim Cason as we speak is acting as Assistant Secretary for Indian 
Affairs.
    It is with these considerations in mind that we analyze whether it 
makes sense to work hard for nearly a decade to get a settlement and 
then have the settlement put under the control of a person appointed by 
an Administration that has put Mr. Swimmer in charge of trust reform. 
Under what rationale would that make sense to us? I struggle to 
comprehend why anyone would think it would.
    Worse than who the Bill empowers--namely Treasury Department and 
the Special Master appointed by Administration--is who the Bill 
disempowers--the Court. Over the century of mismanagement, one entity 
has stood up for trust beneficiaries--the Court. Even detractors from 
our lawsuit--Steven Griles, Jim Cason, Kevin Gover, Bruce Babbitt and 
many others--have admitted under oath that this lawsuit has been the 
impetus for any improvements that have been made. Under this 
legislation, the only ameliorative entity--the Court--would be 
eliminated from the picture entirely.
    That makes no sense for a number of reasons. Courts have the 
greatest institutional competence to make distributions in a fair 
manner. They are often called upon to do just that. Courts are armed 
with Rule 23 and related case law that provides sound guidance in 
resolving difficult distribution issues. Courts are best at providing 
an opportunity to be heard and other due process protections to the 
beneficiary class and weighing the evidence presented to it through 
well-settled rules of procedure and evidence. More importantly, unlike 
the ``political branches'' (i.e. the Executive Branch and Congress), 
Courts make judicial and not political determinations. A court sitting 
in equity--like the Cobell court--is charged with considering the 
evidence and acting equitably in fashioning appropriate remedies. That 
is precisely the type of institution that should be figuring out how to 
divide the funds among the beneficiary class. It is the most competent 
to do so.
    And what possible justification is there to eliminate the Court's 
role? Because the Executive Branch doesn't like this Court? The 
Administration has no legitimate interest in dictating how the 
settlement funds are distributed. None. If there is a settlement, their 
liability for the agreed-to period for the accounting claim would 
cease. Who gets what after that is an issue for the beneficiary class 
and the court to determine. Nobody wants the involvement of the 
malfeasor in that process; they have done quite enough damage in their 
century of mismanagement.
    At bottom, this is an issue of trust. We cannot trust the people 
who have abused us for a century. We can trust the courts and the 
judicial process.
    Importantly, the Indian Land Working Group, the largest national 
association of allottee groups has specifically said that they do not 
want Treasury involved. Specifically, they have said that they 
``support the named representatives of the class and their counsel in 
making decisions on what is a fair settlement and a fair manner to 
distribute the funds.'' As we do, they have endorsed the federal courts 
as the appropriate body to handle any distribution. (See Appendix B)
A Settlement Must Include Real Trust Reform
    The Cobell case is far more than merely about the mismanagement of 
our assets in the past. It is also about the future--how the trust 
lands and monies of Indian people will be managed in the future. Quite 
obviously then, a settlement of this case requires cessation of this 
persistent and continuing wrongdoing, in other words, real trust 
reform. If the underlying problems with administration of the trust are 
not corrected, then much of our effort to ensure that our children will 
not suffer the same indignities and abuse as their parents and 
grandparents will have been for naught.
    I have called for the appointment of a receiver during the period 
of reform. I continue to think that is the most effective way to make 
sure that the needed changes are made, and we don't all find ourselves 
with a trust problem needing your attention again in a few years and 
additional lawsuits in the future.
    I understand that the government has resisted the receivership 
approach. While we will continue to press for a receivership in the 
litigation, I believe that some other measures may be sufficient for 
reliable and meaningful trust reform. Chief among them is to codify in 
statute the trust duties and standards, provide for enforceability in 
courts of equity with meaningful remedies against a trustee breaching 
its responsibilities, and independent oversight with substantial 
enforcement authority to ensure that beneficiary rights are protected. 
Right now, the Individual Indian Trust is missing all of these 
elements, and that is part of the reason that this problem has 
persisted for so long. These missing elements of accountability are the 
sole germane distinctions between this trust and all other trusts 
throughout this nation that are safely and soundly managed. Without 
these elements, there is no accountability. If Congress truly wants to 
fix this problem once and for all, it must fundamentally reform the 
trust. Anything less will invite the same problems and abuses we are 
all too aware of.
    Without a resolution of these three issues, there is no use in 
moving forward with settlement negotiations, since these three 
positions are critical to the beneficiary class who are counting on me 
to make sure this problem gets resolved in a full and fair manner.
A Fair and Just Settlement for Taxpayers and Indians
    We have supported the 50-point settlement proposal that was 
developed by Native American leaders this summer for several reasons. 
First, we believe it is in the best interests of all Americans to 
resolve this dispute. Secondly, we would like to end this unhappy 
chapter in our history in a spirit of compromise. Third, we want to see 
the trust reorganized now to prevent a continuation of this massive 
failure.
    Our lawsuit has dragged on for almost 10 years, largely because of 
the government's policy of delaying any resolution. In truth, we stand 
ready to end this costly litigation with the fair and just settlement 
proposed by Indian Country. Simply put, too many of our Trust 
beneficiaries are dying while this case remains in the courts. I want 
to get them access to their money--or at least a portion of it--now--in 
their lifetimes.
    The settlement the Native American leaders proposed is a good 
deal--especially for taxpayers. While the price tag comes to nearly 
$27.5 billion, it is a bargain for a government that has acknowledged 
its responsibility for this 118-year-old mess.
    Here's why:
    First, it would resolve a dispute that Members of Congress have 
said has run too long and cost too much. It is estimated that the 
government alone has spent more than $100 million on this lawsuit. 
Those expenses will only grow as Attorney General Gonzales presses 
ahead with plans to hire even more lawyers for trust litigation.
    Secondly, the government's liability is growing. That's because the 
courts have declared that Indian Trust beneficiaries are entitled to 
both the principal amounts that should have been recorded in their 
accounts--plus compounded interest on that money.
    A fundamental principle of trust law, confirmed by the court of 
appeals, is that the government is liable for any funds that it cannot 
prove with appropriate and competent evidence that it paid to the 
beneficiaries. Since both sides agree that the government should have 
paid roughly $13 billion into the individual Indian Trust accounts 
since 1887, that means that the government must be able to prove each 
of those transactions. And amount not paid plus interest on what is 
owed. This puts potential liability of the federal government well in 
excess of $100 billion.
    The historical accounting will continue to be costly. The Interior 
Department is now telling you that it will cost at least $12 billion to 
reconstruct those records. That's far too expensive for an accounting. 
Well before the court of appeals reached that conclusion, we were 
saying that in the district court.
    A 2002 study conducted for the Interior Department--and made public 
in our lawsuit--places the liability for the government on trust 
accounts at anywhere between $10 billion and $40 billion. That's their 
internal number.
    That's why Indian Country's $27.5 billion proposal is a bargain. 
After all, I would argue that it is a far better bargain for the 
taxpayers to be spending this money directly on making Indian account 
holders than wasting money on what both we--and the courts--regard as a 
highly questionable accounting.
    The proposed settlement makes a generous assumption on behalf of 
the government. It assumes for purposes of calculation that the 
government has enough records to prove that it accurately made 80 
percent of the payments it was supposed to have made to trust 
beneficiaries and that it made them on time. That's an exceedingly kind 
estimate considering that independent assessments of the 
``accountings'' the government has completed to date plainly 
demonstrate that in actuality they can account or prove less than 1% of 
the transactions that have occurred. In other words, while they, as 
trustee-delegate, have the unconditional obligation to prove each 
transaction, they can prove almost none of them, yet our proposal still 
would presume they made the vast majority of them properly.
    Moreover, these funds would not have to be appropriated. They would 
come from the Treasury Department's Judgment Fund. The funds would be 
disbursed by the courts over several years based on provisions and 
guidance set forth in the settlement bill..
    Remember, too, this is not welfare, a social program, or 
reparations for past abuses and discrimination. This is money that all 
along belonged to the individual Indians. It was never properly 
recorded to their accounts because of the government's continuing 
inability to serve as a proper trustee. The government repeatedly has 
acknowledged this failure and that failing has been documented in 
scores of reports. Now, the government has a chance to settle this 
issue for all time and at a price that is far less than the account 
holders are entitled to by law.
Government Has Repeatedly Acted in Bad Faith
    It is especially regrettable that the government's unwillingness to 
deal in good faith with the courts, the Congress, mediators, and the 
plaintiffs has been matched by a continuing, persistent pattern of 
deception and misrepresentation. Two recent examples are worthy of this 
committee's attention.
    Last month, the Court of Appeals granted a request from both sides 
of the Cobell case that a structural injunction requiring a detailed 
accounting methodology be set aside. We also requested that the case be 
returned to the district court for further proceedings including the 
district court considering the issue of ``impossibility'' of doing a 
traditional and fair accounting, and determining an alternative 
equitable restitution methodology. The Court of Appeals, in its recent 
decision, opens the door to just such a determination.
    In essence, the Court of Appeals recognized that it is appropriate 
for the district court to adjudicate whether the loss and willful 
destruction of records by government officials has made an historical 
accounting impossible. For years, we have consistently argued for and 
the government has vigorously opposed such a determination. This 
appellate mandate has set the table for an early and fair resolution of 
the Cobell case by the district court. With the weight of an 
uncontested record of evidence and the government's admissions that a 
complete and fair accounting is futile, impossibility will be 
conclusively demonstrated. At that point an alternative to an 
historical accounting must be selected to decide what is a fair 
equitable restitution. We will be seeking such a proceeding at the 
proper time.
    The government however, would have you believe that this decision 
was a victory. It has seized on some comments or ``dicta'' from Judge 
Williams to suggest that this decision has a favorable legal impact on 
procedural matters not even at issue before this court. As you know, 
commentary, not necessary to the holding of the court on issues before 
it is not binding on the district court or indeed any court. This 
dicta, as lawyers call it, has no precedential impact. Moreover, where, 
as here, the judicial commentary contravenes the decisions of prior 
appellate panels, it is entitled to no weight whatsoever. The clear 
rule in this and almost every other federal judicial circuit is that 
when there is a conflict between panels of the circuit, the decision of 
the panel that first decided the issue prevails over the later 
decision. This ``first-in time rule'' applies with great force in this 
matter since the language upon which Interior Defendants rely directly 
contravenes at least three prior appellate panel decisions. To 
illustrate what this means, we submit the following:
     
    [GRAPHIC] [TIFF OMITTED] T5102.001
    
    [GRAPHIC] [TIFF OMITTED] T5102.002
    

    For further illustration of this point, see Appendix C. At the 
proper time, we intend to seek a ruling from the court that will make 
this explicit. In short, don't believe what you may be hearing from the 
government about their legal victory. Like so much else that they have 
said to the Courts, the Congress, and the public, it is simply not the 
truth.
``Progress Report'' is No Progress
    The second example is equally stark. In September, the government 
put out a self-congratulatory ``progress report'' on its handling of 
trust issues. I am sure it was made available to members of the 
Committee. It is deceptive, misleading and inaccurate from beginning to 
end. It would have you believe that the management of Indian Trust 
accounts has been and is satisfactory, availability of financial 
records is good, and losses suffered by Indians insignificant. None of 
that is true. Hundreds of reports, findings, and studies from the 
Congress, the GAO, Inspectors General, Federal Courts, and the 
Government's own experts have concluded that the handling of these 
accounts has ranged from incompetent to fraudulent. And, the damage to 
Native Americans has been massive.
    Mr. Chairman, we have called on the government to allow the Court 
to examine this document for accuracy. They have, thus far, refused. 
And, there is good reason for their reluctance. Ask government 
officials who come before you if they are prepared to swear to the 
truthfulness of this document in a court where sanctions for perjury 
are available.
    We have prepared a brief rebuttal to the Government's brochure and 
I would like to make it part of the record. (See Appendix D.) It 
clearly demonstrates that the ``Progress Report'' is just one more 
attempt to deceive the Congress and the public. If the Government wants 
to test their report against our rebuttal, we would welcome it. Let's 
see who is telling the truth.
Conclusion
    Thank you very much for this opportunity to testify and your 
leadership on this important issue. We look forward to working with you 
in the coming weeks to address these concerns and remain hopeful that a 
legislative settlement can be reached that will best serve the 
interests of the government, the American people, and the beneficiaries 
who have been victimized for far too long. But, we remain mindful that 
should a legislative settlement that is fair to the beneficiaries not 
be reached, we must and we will continue to press our case in the 
courts and we fully expect that we will, in time, prevail.
    NOTE: Attachments to Ms. Cobell's statement have been retained in 
the Committee's official files.
                                 ______
                                 
    The Chairman. Ms. Cobell, the recent appeals court ruling 
explicitly acknowledged the Department's right to conduct an 
audit using a statistical sampling. Should the Department have 
a chance to complete that accounting?
    Ms. Cobell. No. The Department knows it cannot do an 
accounting. There are too many missing documents, and the 
procedure that was described by Mr. Cason today is not an 
accounting, and you have to understand that. I think that the 
Department continues to mislead Congress by saying that the 
recent decision by the appellate court does not provide for 
them to do an historical accounting. As I explained in my oral 
testimony, first-in-time rule prevails, and in Cobell VI and 
Cobell XII and Cobell XIII, the government is obligated to do 
an accounting from 1887 forward.
    If the government feels that it can actually do an 
accounting, then we ought to go to Court and let them prove it.
    The Chairman. Can you describe the method by which you 
calculated the amount of money that should be restored to the 
individual money account holders, and what is the data you used 
to arrive at that number?
    Ms. Cobell. Well, both the Plaintiffs and the government 
agree that $13 billion flowed through these accounts. The 
appellate court ruling provided that compounded interest has to 
apply. If you take that into consideration, that brings us up 
to $176 billion.
    What we did in calculating the $27.5 billion is that we 
assumed, just assumed, and gave the government the benefit of 
the doubt that they had paid out 80 percent of that particular 
amount of money, and taking that into calculation and then 
actually deducting certain issues such as waiving the taxes 
that would be applied on this particular amount of payment and 
making sure that people's payments, such as Social Security, 
were not affected by this payment--so taking all of those 
calculation into effect, we came up with $27.5 billion.
    Let me tell you that the appellate court ruling where 
compounded interest applies is very important because the $176 
billion continues to grow. The liability of the government 
continues to grow. So taking in that particular discounted 
amount and why we discounted it is why we came up with $27.5 
billion. I think maybe Keith might want to add something.
    The Chairman. Before he does, just so I understand this, 
the $176 billion is making the assumption that none of the 
money was paid out, and then you add interest on top of that. 
The $27 billion is based on 80 percent of it was paid out and 
20 percent was not, and you add the compounded interest on 
that.
    Ms. Cobell. That is correct. We have to remember that the 
Ernst & Young report, the only accounting report that has been 
made public, verifies that 99 percent of the transactions 
cannot be verified at all. They cannot account for 99 percent 
of the transactions. So we could actually go up to 99 percent, 
but we gave them the benefit of the doubt of 80 percent.
    The Chairman. But none of that is based on any kind of 
accounting of the actual accounts.
    Ms. Cobell. Yes, it is. It is based on the amount of money 
that has flowed through those accounts.
    The Chairman. Wait a minute. You are confusing me even 
more.
    Ms. Cobell. OK.
    The Chairman. If 99 percent of the accounts--maybe I have 
misunderstood you, but if 99 percent of the accounts, they have 
no records for, then how do you come up with a number?
    Ms. Cobell. Well, we came up with the number of the amount 
of money that flowed through those accounts. OK? In Trial 1.5, 
we presented an alternative method of accounting which 
reflected $13 billion that flowed through those accounts. The 
government's estimate was $13 billion, so we agreed on that.
    The Chairman. So there was agreement on how much money 
should have gone in. There is no agreement on how much was 
actually paid.
    Ms. Cobell. Yes. They do not know how much is actually paid 
because their own accountants cannot verify 99 percent of the 
transactions, and that is the issue here because there are so 
many documents that are destroyed, it is impossible, and we 
have known that it has been impossible to do an accounting. So 
you take an alternative method of an accounting. That is what 
we did, and what went through those accounts, the compounded 
interest, and then giving the government the benefit of the 
doubt that they paid out 80 percent of the money, and we came 
out with the discounted amount of $27.5 billion.
    The Chairman. But you do not know whether they paid out 50 
percent of the money or 90 percent of the money.
    Ms. Cobell. They are the trustee.
    The Chairman. But nobody knows.
    Ms. Cobell. Nobody knows. Nobody knows what they paid. They 
do not know what they paid. They destroyed so many documents, 
they do not know what they paid. The Ernst & Young report that 
they talked about in their testimony where only there is a 
small amount missing; that report basically said that they 
could not account for 99 percent of the transactions.
    The Chairman. Now, as far as dealing with my colleagues on 
what the cost of this is, your numbers are an educated guess as 
to what you think would be owed. Interior's number is an 
educated guess on what they think should be owed or what is 
owed on this, and we are somewhere in that ball park.
    Ms. Cobell. Well, I guess I would say that theirs is a 
total guess; ours is more right on. And you have to understand 
that the government experts themselves say that 10 to $40 
billion of liability exists here. We bring the amount of $27.5 
billion. Ours is not an educated guess; it is based on our 
methodology that we presented in our Trial 1.5.
    The Chairman. Well, I am not disputing that at all. I 
understand that, but you really do not know how much was paid 
out because they do not know how much was paid out. You are 
making the assumption that 80 percent was.
    Ms. Cobell. And it could be a lot less that was paid, yeah. 
We are giving the government the benefit of the doubt. Probably 
there are many beneficiaries that would like to see the total 
liability of $176 billion paid out because according to common 
trust law standards, it is that you have to account for every 
single document. I am a banker. I understand this. Every single 
document has to be accounted for. You do not get away with 
saying, ``Oh, well, maybe we can find 50 percent of the 
records, or maybe we can find 80 percent.'' You cannot do that. 
So what we did is we gave the government the benefit of the 
doubt, if we want to come to a settlement amount, in saying 
that they distributed 80 percent of the money, and I think that 
is more than fair.
    The Chairman. Thank you. Mr. Rahall?
    Mr. Rahall. Thank you, Mr. Chairman. Elouise, in your 
testimony, you indicate that the Plaintiffs have ``achieved a 
remarkable record of success.'' You also say the recent ruling 
in the Appeals Court for the D.C. Circuit has ``set the table 
for an early and fair resolution of the Cobell case by the 
district court.''
    So my question would be, do you consider the November 15, 
2005, Appeals Court decision to be a victory for the 
Plaintiffs, and, if so, do you still welcome a legislative 
settlement?
    Ms. Cobell. Yes, I do. I welcome a legislative settlement, 
but we do feel that Cobell XVII, the November 15th ruling was 
in our favor. It basically vacated the structural injunction 
that the judge laid out for a way that the accounting was to be 
done which would have taken up until 200 years to accomplish, 
just by our calculations. But the judge did that because the 
government was not responding to any of the other decisions of 
the court to do an accounting.
    So it basically took it back to the district judge that 
will now hear a trial on the accounting that has to be done, 
and we look forward to that. We look forward to the Department 
of the Interior getting up and telling us how they plan on 
doing an accounting before a judge because we know it is 
impossible.
    Mr. Rahall. How do you respond to, and do you accept, last 
year's Appeals Court for the D.C. Circuit when they said that 
the Department's trust duties are grounded in statute, not in 
the common law?
    Ms. Cobell. I think I am going to refer to Keith. He is 
more an expert on----
    Mr. Harper. Congressman Rahall, the question goes back to a 
number of the different appellate court decisions. One thing 
that is absolutely clear, and this comes from Cobell VI--there 
are now 17 of these decisions, so they get a bit confusing, but 
Cobell VI, February 23, 2001, very clearly articulated the 
general principle, which is that although the duty must be in 
statute, it does not have to be express in statute. It can be 
implicit in the trust relationship itself that is created by 
that statute. So once the statute creates the trust 
relationship, then it is inferred from that that all of the 
normal trust duties, common law trust duties, are applicable to 
this trust, and that has been the consistent rule in all of the 
appeals.
    One of the things that Elouise touched upon a little 
earlier is what is called the ``first-in-time rule.'' Cobell VI 
being the first appellate decision, is the one that has 
precedential value. Any later decisions, including to the 
extent Cobell XVII, the most recent decision, is inconsistent 
with that prior one, that has no legal effect. That is the rule 
of the D.C. Circuit as well as all of the other circuits.
    Mr. Rahall. Thank you. I appreciate that.
    With respect to our legislation and who distributes a 
settlement, this bill, of course, is a work in progress, as I 
am sure you recognize. Elouise, you have stated your position 
as far as having Treasury in charge, and I am sure that will be 
something we will consider, but I, quite frankly, do not see 
giving this job to the district court. So if I am correct, what 
ideas would you have for managing a settlement and 
distribution? You do not want Treasury in charge. Right?
    Ms. Cobell. Yes. Thank you, Congressman Rahall. It is 
important to understand----
    Mr. Rahall. You mean, no, you do not want Treasury in 
charge.
    Ms. Cobell. It is important to understand that we do not 
want Treasury. They are one of the defendants. They have been 
held in contempt of court, and so we do not want them in charge 
of the distribution. I think that the settlement funds have to 
be given to the court, and I do have to tell you that Judge 
Lamberth has probably been one of the most fairest [sic] people 
in the history of the United States in regard to making sure 
that we get true justice on this horrible mismanagement mess. 
So if it is distributed in his court, you know, that is fine. I 
do not know any other specifics on how other than that it 
should be addressed. Maybe Keith can add to that. I am only 
familiar with the district court.
    Mr. Harper. Congressman Rahall, we believe that the 
district court or a court in general is the appropriate place 
to do a distribution, and that is because they have the 
institutional competence to hear evidence, to waive various 
issues, and to make determinations that are appropriate in 
light of the evidence that they receive, and how that 
distribution gets done is very important to our class members.
    We, as representatives of that class, have a fiduciary 
obligation to make sure absentee class members are fairly 
represented, and we think that the most appropriate entity, the 
one with the highest competence to do that, are the courts. 
Also, they are not a political branch. They apply legal rules, 
which, for us, and given the history of this litigation, they 
have been the solace in a history of mismanagement, and so, for 
us, it really is the courts which are in the best posture to do 
this.
    Could I just mention one other thing because I think that 
there has been an implicit--well, there has been a campaign--
let us just put it out there--there has been a campaign in some 
quarters against this judge, and Elouise, I think, said it 
quite fairly. I do not know what the complaints are. If you are 
a Federal judge, and you get lied to, and you call people out 
for it, is that a bad judge? If you have a malfeasance that the 
Court of Appeals says is unconscionable--``malfeasance,'' that 
means evil doing--and you are a Federal judge, a district court 
judge, and you call them out on that, is that a bad judge? What 
makes this judge problematic other than to make something that 
has been nonaccountable for a century have some accountability?
    So I caution a little bit the notion that this judge is 
somehow misguided in his approach. Yes, this is a very 
complicated case, and there have been individual legal issues 
that have gone to the Court of Appeals, and they have disagreed 
with him, but there have been many that they have agreed with 
him, and they have affirmed him in toto in the most important 
of the decisions, Cobell VI.
    So I just put that out there because I want to counter the 
perception or the attempt out there to paint this judge as some 
kind of rogue. We do not believe that is the case. We think 
that the record is plain that what he has done is to treat the 
parties fairly.
    Mr. Rahall. I appreciate you laying that on the record. I 
did not mean to join that campaign or cast any aspersions when 
I said what I did about the D.C. court. That was not my 
intention whatsoever.
    Thank you both your testimony, and, Elouise, again, as I 
said in my opening comments, I certainly applaud your tenacity 
and your determination and your persistence, and you are 
certainly a driving force for a fair and equitable settlement 
here. Thank you.
    The Chairman. Mr. Pearce?
    Mr. Pearce. Thank you, Mr. Chairman. Ms. Cobell, has the 
trust relationship outlived its usefulness overall?
    Ms. Cobell. I think that if the trust relationship was 
implemented properly, according to standards that were spelled 
out in the 50 Principles, that it could work well for Indian 
people.
    Mr. Pearce. I am asking, do the Indian people need that 
trust relationship to represent them?
    Ms. Cobell. Well, there are certainly certain issues that 
we have to take into consideration that have to be solved 
before any change is made, and that is that people have to have 
an accounting of their trust assets.
    Mr. Pearce. I am saying, once we clear the accounting up, 
has the trust relationship outlived its usefulness? Do the 
Native Americans need someone to oversee their affairs?
    Ms. Cobell. I think, Congressman, that once we have this 
resolved, that Indian people can be provided options, and we 
could take a good look at those options.
    Mr. Pearce. Thank you, Mr. Chairman.
    The Chairman. Mr. Kildee?
    Mr. Kildee. Thank you, Mr. Chairman, and thank you, Ms. 
Cobell.
    Abraham Lincoln referred to Harriet Beecher Stowe as the 
lady who started the Civil War that freed the slaves, and I 
think you have jump started this pursuit of justice for 
Indians, and while you are not seeking it, your name will go 
down in history. It is a very quantum leap that you started for 
justice for Indians, and if I can play some small role in 
helping you achieve that justice and a remedy for the 
injustice, I feel I will have accomplished an important mission 
here in Congress.
    I thank you for your courage. It is not that easy to put 
your name out there and get both praise but a lot of stones, 
and I personally appreciate it. I have known your name for a 
number of years now, and some people might not agree with you, 
but I think that you have had the courage to really take on a 
gross injustice that occurred toward the Indians in this 
country, and I deeply appreciate what you are doing. The trust 
responsibility does lie with the entire U.S. Government, 
including this Congress here, and we want to make sure that we 
are sensitive to really having as much justice as we can 
achieve, and I, frankly, think your proposal, how you have 
figured the 80 percent, is modest and reasonable and certainly 
not outlandish at all. I just want to commend you.
    I do not think I can ask any question that you have not 
answered already. I have read much of what you have said 
before. I have followed you and just commend you, keep up the 
work, keep us informed, and keep us aware of our responsibility 
to that trust that we have.
    Now, the trust responsibility really came in not as a 
patronizing trust. The trust responsibility came in very often, 
and this is not the case here because this is the Federal 
government abusing the Indians--the trust responsibility came 
into being, to a great extent, to protect you from the state 
government, and the Federal government is supposed to be the 
great protector, to protect you against intrusion by state 
government. I know my own State of Michigan intruded upon 
Indian rights. But when the protector who was in that trust 
responsibility not only abdicated the role of protection but 
abused the Indians, then we really have to find a solution for 
that, and I think you have started this on a path that 
hopefully will arrive at full justice for the Indians, as much 
justice as we, in our frailty, can put together. But I think 
you have acted in a very determined, tough, and reasonable way. 
Thank you very much. God bless you.
    Ms. Cobell. Thank you very much, Congressman Kildee. Your 
words mean a lot to me.
    The Chairman. Well, thank you to our witness. Ms. Cobell, 
there may be additional questions that Members have. Those will 
be submitted to you in writing, if you can answer those in 
writing so that they can be included in the hearing record.
    I know this is something this Committee has been dealing 
with for a long time. It has gone on way too long, and I think 
we are at the point where, both in the House and the Senate, we 
want to deal with this, and hopefully we will not be doing a 
lot more of these hearings. So thank you very much for being 
here.
    Ms. Cobell. You are very welcome.
    The Chairman. If there is no further business before the 
Committee, I again thank our witnesses and the members of the 
Committee. The Committee stands adjourned.
    [Whereupon, at 11:57 a.m., the Committee was adjourned.]

                                 
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