[Senate Hearing 109-441]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-441
 
                   SETTLEMENT OF COBELL VERSUS NORTON

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

                             JOINT HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                                AND THE

                         COMMITTEE ON RESOURCES
                         UNITED STATES HOUSE OF
                            REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                   ON

OVERSIGHT HEARING ON POSSIBLE MECHANISMS TO SETTLE THE COBELL v. NORTON 
                                LAWSUIT

                               __________

                             MARCH 1, 2006
                             WASHINGTON, DC

                               __________

                           Serial No. 109-42

                               __________


                    U.S. GOVERNMENT PRINTING OFFICE
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                      COMMITTEE ON INDIAN AFFAIRS

                     JOHN McCAIN, Arizona, Chairman

              BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico         DANIEL K. INOUYE, Hawaii
CRAIG THOMAS, Wyoming                KENT CONRAD, North Dakota
GORDON SMITH, Oregon                 DANIEL K. AKAKA, Hawaii
LISA MURKOWSKI, Alaska               TIM JOHNSON, South Dakota
MICHAEL D. CRAPO, Idaho              MARIA CANTWELL, Washington
RICHARD BURR, North Carolina
TOM COBURN, M.D., Oklahoma

                 Jeanne Bumpus, Majority Staff Director

                Sara G. Garland, Minority Staff Director

                                 ______

                         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

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page
Statements:
    Bickerman, John, president, Bickerman Dispute Resolution, 
      PLCC.......................................................     4
    Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice 
      chairman, Senate Committee on Indian Affairs...............     3
    Eizenstat, Stuart, former ambassador, Covington and Burling..     7
    Faleomavaega, Hon. Eni F.H., U.S. Delegate, American Samoa...    20
    Frazier, Harold, chairman, Great plains Tribal Chairman's 
      Association................................................    28
    Garcia, Joseph, president, National Congress of American 
      Indians....................................................    26
    George, Keller, president, United South and Eastern Tribes...    27
    Johnigan, Sandra K., CPA, Johnigan, P.C......................    12
    Marchand, Mike, Affiliated Tribes of Northwest Indians and 
      First Vice President, Colville Confederated Tribes.........    25
    McCain, Hon. John, U.S. Senator from Arizona, chairman, 
      Senate Committee on Indian Affairs.........................     1
    Pombo, Hon. Richard W., U.S. Representative from California, 
      chairman, House Committee on Resources.....................     2

                                Appendix

Prepared statements:
    Bickerman, John (with attachment)............................    31
    Eizenstat, Stuart............................................    36
    Frazier, Harold..............................................    41
    Garcia, Joseph (with attachment).............................    45
    George, Keller (with attachment).............................    54
    Johnigan, Sandra K. (with attachment)........................   116
    Marchand, Mike...............................................   134
    Minthorn, Antone C., chairman, Board of Trustees, 
      Confederated Tribes of the Umatilla Indian Reservation.....   136
    Renfrew, Charles (with attachment)...........................    31


                   SETTLEMENT OF COBELL VERSUS NORTON

                              ----------                              


                        WEDNESDAY, MARCH 1, 2006


        U.S. Senate, Committee on Indian Affairs, Meeting 
            Jointly With the Committee on Resources, U.S. 
            House of Representatives,
                                                    Washington, DC.
    The committees met, pursuant to notice, at 9:30 a.m. in 
room 106 Senate Dirksen Office Building, Hon. John McCain 
(chairman of the committee on Indian Affairs) presiding.
    Present from the Senate Committee on Indian Affairs: 
Senators McCain and Dorgan
    Present from the Committee on Resources, House of 
Representatives: Representatives Pombo, Fortuno, Hayworth, 
Herseth, Inslee, Kildee, Renzi, Mark Udall, Tom Udall, and 
Faleomavaega.

   STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA, 
             CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    The Chairman. Good morning.
    I welcome Chairman Pombo and Ranking Member Rahall and 
other members of the House Committee on Resources to the 
Dirksen Building. I want to thank you very much for agreeing to 
convene this important hearing on the settlement of the Cobell 
v. Norton litigation, which has been the subject of the 
legislation being cosponsored by the chairman and ranking 
members in both chambers.
    Because of time constraints this morning imposed by the 
joint meeting of Congress later this morning, I would 
respectfully ask that opening statements be limited to chairmen 
and ranking members. As my colleagues know, the Prime Minister 
of Italy is addressing a joint session this morning.
    The principal purpose of this hearing is to gather views on 
approaches we might take in valuing the settlement of claims 
contemplated by S. 1439 and H.R. 4322. On our first panel, we 
will hear from John Bickerman, who worked as one of the two 
mediators in the Cobell matter during the 108th Congress; 
Sandra Johnigan, a forensic accountant who has a background in 
accounting claims; and Stuart Eizenstat, who among his other 
high profile positions, helped to negotiate financial 
settlements of class action suits with European banks and other 
entities involving accounts and other properties that were 
misappropriated, stolen or otherwise lost in the Holocaust in 
the years leading up to and during the Second World War.
    Ambassador Eizenstat's negotiations in those cases 
presented many of the same valuation problems that we are 
confronted with here today. The problems of valuing accounts of 
claims where documentation is either missing or has been 
destroyed, where critical information is several decades old, 
and where a thorough investigation of claims could cost many 
millions of dollars and take many years to complete, perhaps 
maybe even billions.
    I look forward to hearing from our second panel of 
witnesses, representatives of the Affiliated Tribes of 
Northwest Indians, the National Congress of American Indians, 
United South and Eastern Tribes, and the Great Plains Tribal 
Chairman's Association, and getting their views and insights on 
how we might approach the settlement valuation question.
    Because we have tight time constraints for this hearing, I 
am requesting all our witnesses to keep their statements to 5 
minutes.
    Finally, I would like to mention that the staff of the 
Committee on Indian Affairs and House Resources Committee 
recently traveled to Lenexa, KS, to tour the Department of the 
Interior's underground Indian records repository. At 
significant cost, the department has been gathering an enormous 
volume of Indian trust and non-trust records there, logging 
them into a database, and storing them in a controlled 
environment for their long-term preservation.
    The department employees have contracts for about 220 
people at Lenexa to index millions of documents, track 
thousands upon thousands of transactions in the historical 
accounting process involved in the Cobell litigation. Many of 
those transactions involve extremely small sums of money 
derived from tiny fractional interests in land. Surely, there 
is a better use for these funds in Indian country, and I look 
forward to working on a bipartisan, bicameral basis to resolve 
the litigation.
    Chairman Pombo, I would like to thank you and Ranking 
Member Rahall for the hard work you have been doing on this. I 
think you would agree with me, this is one of the most 
intransigent issues that we have ever faced, particularly 
considering the amount of money that has been involved here, 
and trying to put this thing back together. It has been one of 
the most daunting challenges I think that we have faced. I want 
to express my appreciation for the bipartisan, bicameral way 
that we have tried to address this issue.
    I think that you would agree with me, as other members on 
both sides of the aisle do, that we have to get this thing 
resolved and sooner rather than later. Thank you, Chairman 
Pombo. If it is all right with you, after you, Senator Dorgan, 
and then if Congressman Rahall was here. I guess he is not 
here.
    Go ahead, please.

 STATEMENT OF HON. RICHARD W. POMBO, U.S. REPRESENTATIVE FROM 
       CALIFORNIA, CHAIRMAN, HOUSE COMMITTEE ON RESOURCES

    Mr. Pombo. Thank you, Senator. I want to express my 
appreciation to you for holding this joint committee hearing. I 
cannot remember the last time that the two chairmen and ranking 
members with jurisdiction over Indian affairs cosponsored 
identical bills and then held a joint hearing on them. This 
speaks to the magnitude of the problem that we are trying to 
solve, and solving it depends on a bipartisan, bicameral 
effort.
    For years, our two committees have worked steadily in 
holding hearings and facilitating mediation to try and bring a 
Cobell lawsuit to a happy conclusion. Even though we have been 
able to introduce settlement bills, we are not there yet. I am 
disappointed that mediation did not bring about a settlement. 
This is not through any fault of our mediators. If it were not 
for the work of John Bickerman and Judge Charles Renfrew, we 
would not have arrived where we are today.
    We, and indeed Indian country, owe them a debt of gratitude 
for the fine work they have quietly and patiently done, and 
continue to do, in bringing about a final and fair resolution 
for thousands of individual Indian account holders.
    Today, we are exploring the key issue that will determine 
the fate of the settlement bill. It is the settlement amount 
and how it should be distributed. Unless a miracle occurs, 
neither party in the lawsuit can be expected to offer an 
acceptable amount to fill in the space that we left blank in 
our bills. Filling in that blank space is our job, and today's 
hearing should help us in that task.
    If we do not do this, the case will drag through the courts 
as it has dragged on for the last 10 years. The class of 
plaintiffs suffers, and all of Indian country suffers because 
rightly or wrongly, scarce Federal resources meant for 
important tribal services are being diverted to deal with it. 
While it may seem unusual for Congress to mandate a settlement, 
this is a unique type of case because of Congress' power to 
settle that stems from our constitutional authority over Indian 
affairs.
    It is clear that continuing with the litigation is not in 
the best interests of individual Indian account holders and of 
the taxpayers who pay the massive litigation support costs in 
attorneys fees.
    Again, Mr. Chairman, I am pleased we are holding this joint 
hearing with the distinguished roster of witnesses. I look 
forward to working with you and Senator Dorgan and Congressman 
Rahall in passing a settlement bill soon this year.
    Thank you.
    The Chairman. Senator Dorgan.

  STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH 
       DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    Senator Dorgan. Mr. Chairman, thank you. I will be 
mercifully brief.
    It is interesting that we talk about the word ``trust,'' 
Indian trust, when we refer to these accounts. In fact, 
``trust'' is an inappropriate word when we are dealing with 
these accounts because that trust was violated by the Federal 
Government. Report after report, investigation after 
investigation shows that the Federal Government did a miserable 
job in keeping the trust funds and properly accounting for 
those trust funds. It is not surprising to any of us, I 
suspect, that this litigation ensued.
    But the Cobell litigation, if it does continue, will 
eclipse almost everything. It will take years. Massive amounts 
of money will be spent. I am not sure what the result will be. 
To the extent that we can find a way to resolve this in an 
appropriate way and a satisfactory and a fair way, it makes 
sense for everybody.
    Senator McCain and I and the folks in the House introduced 
identical legislation to try to begin to address these issues, 
to encourage the parties to become actively involved in finding 
some way to reach agreement. My hope is that this hearing will 
advance that goal one more step. I am really appreciative of 
members of the House joining us here as well.
    The Chairman. I again would like to extend my appreciation 
to the members of the House who have taken the giant leap on 
the other side of the Capitol to join us today. We thank you 
very much for being here, including my friends from Arizona, 
New Mexico, and my old friend Dale Kildee.
    We would like to begin with our first set of witnesses, 
which is John Bickerman, the president of Bickerman Dispute 
Resolution; Stuart Eizenstat; and Sandra Johnigan, who is a 
CPA.
    Mr. Bickerman, we would like to begin with you. I want to 
thank you for your very hard work on this issue. We are here to 
learn the benefit of your experience and your recommendations.
    We thank all the witnesses for being here today.

   STATEMENT OF JOHN BICKERMAN, PRESIDENT, BICKERMAN DISPUTE 
                        RESOLUTION, PLCC

    Mr. Bickerman. Thank you.
    Chairman McCain, Chairman Pombo, Vice Chairman Dorgan, 
Ranking Member Rahall, members of both committees, my name is 
John Bickerman. I am appearing here on behalf of both myself 
and Judge Charles Renfrew. Judge Renfrew regrets that he could 
not be here today due to an unavoidable conflict.
    With the permission of the Chair, I would just like to read 
two very short paragraphs because he and I have worked on this 
testimony, and it is his testimony as much as mine. I want to 
make sure that I get his words right. So with your indulgence, 
I am just going to read two quick paragraphs, and then 
summarize the rest of my testimony.
    Our assignment was to engage the parties in negotiations to 
seek a resolution of all claims brought by plaintiffs in their 
class action lawsuit. We were consensually chosen by the 
parties. Our mission was also much broader than traditional 
mediation. From the outset, both the parties and congressional 
staff requested that we periodically report back to Congress 
regarding our efforts and our progress.
    This request was made for three reasons. First, any 
resolution we achieved through negotiation would likely require 
congressional action. Second, Congress wanted to know if either 
plaintiffs or defendants were behaving in a dilatory manner or 
otherwise negotiating in bad faith. And third and most 
importantly, Congress wanted to know if a resolution was 
impossible so that it could decide whether to take action.
    Indeed, in October 2004, we reported back to the then-
leaders of these two committees and in fact told you that we 
did not think that a successful conclusion could be made. I am 
going to read again.
    We continue to believe that only congressional action can 
resolve this dispute for the benefit of the beneficiaries of 
the IIM Trust, and allow the United States to devote its 
resources to the traditional services it has provided Indian 
country. If Congress takes no action, the litigation path will 
take years, if not decades, to reach finality. Many deserving 
beneficiaries will have died in the interim. Those 
beneficiaries who are alive will not be made whole.
    We also believe that the Department of the Interior's 
ability to serve Indian country will be severely compromised. 
So much of the policy affecting Indian country seems now to be 
made through the prism of the Cobell litigation. We are 
concerned that the historically beneficial trust relationship 
between the Federal Government and Indian country is in 
jeopardy as a result of this litigation.
    Now, I will summarize the rest of our testimony.
    First, there is no dispute about liability. Courts have 
proven it. The plaintiffs have been successful in their 
efforts, and liability is just not an issue anymore. What is an 
issue and why we are here today is to try to value the 
liability that the United States has. While there is no serious 
question about the liability, the gulf that exists between the 
parties is enormous.
    Initially, the plaintiffs took the position that strict 
common law fiduciary principles ought to apply. ``If you can't 
show it, then you owe it.'' Based on the calculations that they 
initially made, that led to a conclusion that the liability of 
the United States was somewhere between $100 billion to $170 
billion.
    Now, we believe that those kind of statements have created 
very unrealistic expectations that make this dispute even more 
difficult to resolve. More recently, the plaintiffs at a 
hearing in December suggested that a settlement demand of $27.5 
billion, for settlement purposes, was a reasonable demand, 
based on an error rate of 20 percent, assuming that 20 percent 
of the funds were not paid to beneficiaries as a measure of 
rough justice. But again, there is no supporting data.
    Similarly, we think the United States' position is somewhat 
suspect. The department has spent considerable sums tracing the 
record of transactions. If you follow their testimony to its 
logical conclusion, you come up with a number of less than $500 
million, maybe less than $100 million. So $27.5 billion on one 
side, and less than $500 million on the other side. That is 
quite a gulf.
    Now, if we try to analyze where the gulf is and why it 
exists, we believe that there are three potential sources of 
error. The first source of error is the money was not 
collected. The second source of error was the money was 
collected and it was deposited, but it was not properly 
deposited. And the third is the money was not properly 
disbursed.
    Now, let's take a look at the first issue with respect to 
the money not being collected. To the best of our knowledge, 
the administration has not really been able to take a hard and 
close look at this source of error. These missing funds, (or if 
the funds were paid late and interest was due on them,) could 
reflect a very, very significant amount of money. I would 
describe this as ``funds mismanagement.'' In the legislation 
there is an effort, to deal with this issue.
    Funds mismanagement we believe would be and ought to be 
covered under any settlement under title I. This is a claim 
that we think belongs with the general accounting claims.
    But we want to distinguish it from what we would describe 
as ``lands mismanagement.'' Lands mismanagement relates to the 
underlying assets--the underlying assets of an individual's 
property was not let out at a fair price, or a lease was not 
fairly acquired. That is a very individualized, particularized 
kind of claim, and we do not believe that it is properly part 
of this litigation.
    The plaintiffs have never asserted it was part of this 
litigation. No evidence has ever been brought to bear on this 
issue, and that those sort of claims should survive whatever 
you do. We believe that those kind of claims would be 
individual claims that would properly be brought in the Court 
of Claims, and as a result we think they should be able to be 
brought.
    Now, the second potential source of error is that the funds 
were not properly deposited, and the administration has done a 
good deal of analyzing that. We do not say anything more about 
that at this time.
    But I do want to talk to you about the fact that ultimately 
this is an arbitrary solution. There is no right number. As 
mediators, we are frequently asked to give a number. We often 
say ``based on the legal merits, one number is as good as the 
other.''
    By way of example, I have provided at the end of the 
testimony a bunch of numbers.
    The Chairman. One number is as good as the other, $100 
million or----[Laughter.]
    Mr. Bickerman. No; not exactly. Let me be more specific. 
Clearly, there is an error rate. Clearly, we know that $13 
billion went through the system. Okay? The plaintiffs used a 
20-percent error rate. We did some analysis and we said, 
``let's assume a 20-percent error rate and an interest rate of 
3 percent compounded.''
    What does that lead to? And we made some assumptions. We 
said, most of the money, and this is an important assumption, 
that was paid through the system occurred from 1970 forward. 
Obviously, money that was paid a long time ago is much more 
valuable now than money paid more recently because of the 
compound interest effect.
    So if you assume that $3 billion was paid prior to 1970, 
and only $500 million was paid prior to World War II, which we 
think are reasonable assumptions, then you generate a number of 
$7.2 billion. If you assume an error rate of 10 percent and an 
interest rate of 4 percent, you come up with a $5.6-billion 
number. But if you move that interest rate just a point, and 
assume the same error rate of 10 percent and assume an interest 
rate of 5 percent, then the number jumps to $9.8 billion.
    What is the point of this? We are not recommending any of 
these numbers. What we are saying is the thought that we can 
define with precision the error rate and the interest rate, we 
can't, but there is a range that the committee ought to be 
looking at that could resolve this dispute. It is not the 
administration's number and it is not the plaintiffs' number, 
but there ought to be a number that you should be able to 
determine and we do not think that a lot of time spent on 
coming up with a methodology will improve the accuracy of a 
number.
    So our recommendation, and here I will, if I can, just read 
our statement again because Judge Renfrew endorses this. On 
behalf of Judge Renfrew and myself, we continue to offer our 
assistance to the committee. We believe that the prompt 
enactment of S. 1439 and H.R. 4322 is an imperative. It is in 
the best interest of the plaintiffs, of the United States, and 
we encourage the committee to schedule these bills for markup 
as soon as possible.
    [Prepared statement of Mr. Bickerman appears in appendix.]
    The Chairman. Thank you very much.
    Ambassador Eizenstat, welcome.

STATEMENT OF STUART EIZENSTAT, FORMER AMBASSADOR, COVINGTON AND 
                            BURLING

    Mr. Eizenstat. Thank you, Mr. Chairman.
    Chairman McCain, Senator Dorgan, Chairman Pombo, 
Congressman Rahall, and members of the joint committees, thank 
you for asking me to testify. I have been asked to testify 
because of my experience during the Clinton administration 
where, in addition to holding a series of four international 
positions, I was simultaneously the leader of the 
administration's efforts to bring belated justice to Holocaust 
survivors and other victims of Nazi atrocities, and to return 
as much as possible their confiscated property from World War 
II.
    I want to make it clear at the outset that I am in no way, 
underscore no way, trying to compare the Nazi genocide of 6 
million Jews and millions of others to the gross mistreatment 
of America's first residents, Native Americans. Each historical 
event stands on its own.
    But the way in which we sought to provide what I call 
imperfect justice to victims of the Third Reich in a series of 
negotiations from 1995 to 2001 have, I believe, some useful 
lessons on how Congress might provide justice to American 
Indians in the Government's mishandling of their trust fund 
assets.
    Congress has repeatedly found, in the words of the U.S. 
Court of Appeals, that these funds were hopelessly and ineptly 
managed, with the resulting chaos. And that it was not disputed 
that the Government failed to be a diligent trustee. A 1992 
congressional report cited the Interior Department's dismal 
history of inaction and incompetence.
    Despite the very different historical origins of the Indian 
claims and the Holocaust claims, there are lessons from our 
work that may be useful as you consider your work on these two 
important bills. The class action Holocaust cases were brought 
against French and Swiss banks for Holocaust-era bank accounts 
never returned to their rightful owners after World War II.
    Class action suits were also brought against German and 
Austrian slave labor companies that employed slave-enforced 
labor; against German and Austrian and other insurance 
companies for unpaid insurance policies for confiscated real 
and personal property and artworks never returned.
    In each case, the class action suits were crucial in 
highlighting the historical wrong, but were unable to resolve 
it in a judicial context. In each case, the beneficiaries were 
dying in the Holocaust cases at the rate of 10 percent a year, 
while the class action litigation droned on. Indeed, our cases 
were founded in many instances on legal quicksand, as 
demonstrated by the dismissal of the two major slave labor 
cases by Federal courts in New Jersey.
    In the Cobell case, there appears to be a stronger legal 
argument by the plaintiffs, but the case has been batted around 
like a volleyball for almost a decade between the District 
Court and the Court of Appeals, with no benefit to the 
aggrieved Indians and at great cost to both sides.
    So let me suggest the following. First, courts are not 
suitable instruments for resolving historical wrongs. Class 
action lawyers may be able to raise a historical wrong, but are 
incapable of solving the problem themselves.
    It was only the intervention of the Clinton administration, 
and may I say, with the bipartisan support of the Congress, in 
mediating the Holocaust cases that led to our dramatic results, 
with $8 billion in settlements for victims, Jewish and non-
Jewish alone, indeed the majority non-Jews; payment of 1.5 
million slave-enforced laborers; the identification of over 
20,000 Holocaust-era bank accounts; payments of thousands of 
life insurance policies; the return of hundreds of properties 
and hundreds of pieces of looted art.
    So I applaud all of you for your work on this legislation. 
Legislation is absolutely essential. There will never be a 
piece of legislation that will satisfy both sides, but 
legislation will be infinitely preferable to the endless 
prospect of uncertain litigation.
    Second, the way in which you craft the legislation bears 
striking similarities to the efforts we made in the Holocaust 
cases. Your legislation, for example, would create a global 
settlement fund which would be allocated among the claimants. 
Your concept of allocating that capped amount partly by a per 
capita amount and partly by a formula, taking into 
consideration the flow of funds through the benefiaries' IIM 
accounts, compared to the total throughput of all other 
beneficiaries, is eminently reasonable.
    Permit me to give you several examples from my experience. 
In the Swiss bank case, we capped $1.25 billion to be divided 
among an unknown, at that point, number of claimants at the 
time of settlement. We simply did not know how many people 
would come forward and claim bank accounts. There was a major 
controversy in the Cobell case about the accounting required 
and the costs of performing it.
    You may wish to note that we created a committee chaired by 
former Federal Reserve Board Chairman Paul Volcker, which 
employed four major accounting firms and cost the Swiss banks 
$200 million in audit fees to get at one million accounts 
created in Swiss banks from 1938-45.
    At the time of our negotiations, indeed at the time of 
their conclusion, we still did not know the results of the 
Volcker investigation. So while it was historically useful, and 
indeed is now important in terms of claims, it did not help us 
determine how to reach the $1.25-billion settlement.
    We also took into account, as we have done in the insurance 
cases, the interest lost over the decades since the end of 
World War I by adding 10 times the amount in the bank accounts 
to the actual recovery. We came to that figure by employing an 
eminent economist, Henry Kaufman, who helped us determine the 
basis of the plus-up.
    In the German Holocaust labor cases, we employed a per 
capita concept in our capped 10 billion Deutschmark, $5 billion 
settlement. We estimated from records available to us that 
there were around 1 million surviving laborers in Europe and 
elsewhere from World War II. We divided that number into the 
capped amount we negotiated. All slave laborers, and this is a 
very important point on your per capita issue, all slave 
laborers were paid the same per capita amount, $7,500, whether 
they worked for 1 day, 1 year, the entire war; whether they 
came out healthy or wrecked for life.
    Likewise, forced laborers who worked under harsh, but 
somewhat better conditions, received $2,500, again without any 
individual hearings. It was impossible to have individual 
hearings for 1 million-plus people and determine their 
individual circumstances.
    In the Austrian labor cases, we negotiated a $400-million 
capped fund and allocated again on a per capita basis to forced 
and slave laborers. We overfunded the account to assure that 
each category would receive the maximum $7,500 or $2,500 
figure.
    In the Austrian property settlement, we agreed upon a $210-
million capped fund which we called the General Settlement 
Fund. By the way, it has just been funded 5 years later, a few 
weeks ago. Here again, we have an unknown number of claimants. 
It appears now that there will be 19,000.
    We agreed in our negotiations that there would be up to a 
$2-million payment to people whose property was taken in 
Austria, but that would depend on how many claims there were. 
It now appears with 19,000 claims, if most of these are 
validated, and I will get to that in a moment, that they will 
receive less than that $2 million. So again, there is an 
element of arbitrariness.
    That gets to my third point. We employed a concept we 
called ``rough justice'' in our determinations of the amount of 
the recoveries. As you seek to fill in the blank in your 
proposed global settlement amount, you might consider the same.
    We recognized that there was an arbitrariness to any 
figure. How do you place a value on the damage done 60 years 
after a war to a slave or forced laborer? How do you determine 
how much the Swiss bank should pay for their perfidy in hiding 
Holocaust era bank accounts for decades from their owners, even 
taking it into the profits of the bank? Indeed, how do you here 
measure the injustice to Indians who misplaced their trust in 
the United States?
    We did our best to try to come to reasonable figures, but 
in the end it was a case of getting the maximum for victims 
that the offending foreign corporations were willing to pay. It 
was simply a case of finding the middle ground on which the 
parties could agree.
    You have this unenviable task. There will be no figure that 
will satisfy both sides. You labor, as I did, with an imperfect 
set of historical records. Indeed, evidently the state of the 
trust fund accounts is abysmal. If there is to be an 
accounting, I believe there must be one that uses statistical 
analysis and not cost, as the Volcker audit did, a 
disproportionate amount to what is recovered. But it is far 
better, as you have done in your legislation, to simply forget 
the audit. It is not worth paying money to auditors. Let that 
money go to the Indians.
    So you should simply avoid further costly accounting on an 
incomplete and poorly managed set of records, some of which are 
destroyed or otherwise inaccessible. In coming to a number 
which almost certainly should be in the billions, the committee 
should take into account the passage of time, the lost 
investment opportunities, the massive negligence or worse at 
the Department of the Interior, and the fact that you are 
really returning their money, not appropriating Government 
money. This will have to be done for IIM beneficiaries and 
individual Indians, and should be done as quickly as possible 
because they will never be able to recover an adequate amount 
in the courts.
    You might also consider on attorneys fees what we did. In 
all of our agreements, we capped attorneys fees at roughly 1 
percent. By the way, in the Swiss cases, some of the leading 
plaintiffs' attorneys donated their services. So the class 
action lawyers did not take a disproportionately large 
percentage of the ultimate recovery.
    Now, here for sure, the class action lawyers have spent a 
very long time and a tremendous amount of effort. They deserve 
to be compensated. I am not suggesting 1 percent is the 
appropriate figure here, but I do mention that is a figure that 
we used.
    Fourth, you might consider the institutions we created to 
administer the Holocaust funds as you consider how to 
administer these funds. In your legislation, there is a 
significant dispute, as in the case itself, over who should 
administer the funds. The plaintiff Indians, with their 
rightful suspicion of the Interior Department and to a lesser 
degree the Treasury Department, want the Federal District Court 
to administer the funds.
    I strongly suggest you not do that. Your legislation 
proposes that the Treasury Department administer the funds. 
There is frankly a problem in giving either Interior or 
Treasury such a fiduciary role, given that they are defendants 
in the cases and in light of their failure to live up to their 
fiduciary responsibility since 1887.
    We created administrative mechanisms. For example, in the 
Swiss bank case, the claims resolution tribunal functions to 
this very day under a Federal judge with a special master 
helping him. The average recovery in bank accounts, by the way, 
plused-up, is $100,000. In the Austrian property claims, we 
created administrative tribunals with three persons, one 
appointed by the Austrian Government, one by the United States 
Government, the third by the other two.
    In the German slave labor cases, a German controlled board 
makes decisions, but the U.S. Government and the plaintiffs 
have representation. Insurance claims are processed by an 
organization headed by former Secretary of State Larry 
Eagleburger. You might consider in your legislation, 
establishing an independent administrative tribunal in the 
Indian cases.
    Because of the suspicion on Interior and Treasury, perhaps 
they could report to the Attorney General, but I understand 
that there is suspicion of the Justice Department here, so let 
me make a fresh suggestion. Because of the distrust that the 
plaintiffs have of all the major departments that might have a 
role in administration, permit me to suggest the following, and 
that is an independent executive branch commission.
    You might call it the Indian Claims Settlement Commission, 
which would be modeled after the U.S. Foreign Claims Settlement 
Commission, which has done things like certify 5,911 Cuban 
claims going back to the 1970's, but with authority to 
adjudicate and pay claims, like those tribunals we created in 
the German, Austrian, and French Holocaust cases. But avoid at 
all costs sending this back to the Federal courts.
    Sending the administration of the payments back to the 
courts that have already failed for a decade to resolve the 
matter is a prescription for further delay in doing justice to 
Indians. The key is to make rapid decisions in the lifetime of 
the majority of the claimants, the key consideration here and 
with aging Holocaust victims.
    The regimes we created that are individual claims-based, 
like the ICHEIC process for insurance or the Swiss Bank Claims 
Resolution Tribunal, are slow and laborious. It has taken more 
than 7 years since the Swiss bank case was settled, and more 
than 3 years after their tribunal was created, because it is a 
claim by claim enterprise. The more you can do this on a per 
capita basis, the more you can do rough justice; the more 
people will be benefited and the more rapidly.
    Fifth, I want to address legal certainty and 
constitutionality. In our cases, we created a unique statement 
of interest in which the U.S. Government pledged to support the 
defendants, the foreign corporations, in dismissing all cases 
on any valid legal ground and stating that there was a national 
security interest in having the cases dismissed, and that the 
negotiated settlement we reached go forward. In every single 
case, Federal courts have deferred to our executive branch 
statement of interest.
    As I understand your proposed bill, you will extinguish 
claims for mismanagement of funds, but not for improper 
decisions on land management. I am going to ask you to do 
something that is uncomfortable. Claims might still be made, I 
understand, as John said, relating to the mismanagement of the 
underlying assets. But I am sympathetic to the Department of 
the Interior's concern that in any settlement, if you do not 
wipe out all claims, all you are going to do is invite another 
round of suits for mismanagement of the underlying assets.
    As long as you are going to bite the political bullet, go 
ahead and bite it. Bite it once. Make a larger sum, perhaps, to 
settle all elements of the claim. You have ample protections 
built into the legislation to survive constitutional challenge.
    I also believe that the Department of the Interior is 
correct in asserting that Congress should 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.
    I urge you in the strongest terms, do not leave anything to 
the discretion that you possibly can solve in the legislation. 
Make it clear. Make the formula clear so that when you set up 
an administrative mechanism, that administrative tribunal will 
have clear rules and will not have to spend years trying to 
develop a system themselves.
    Our Holocaust experience demonstrated that the more precise 
we could be, the fairer and speedier were the administrative 
tribunals for the benefit of victims.
    In conclusion, you are to be congratulated for embarking on 
a politically courageous course to rectify over 100 years of 
wrongs committed by our Government against individual Indians 
who ceded their accounts to the Department of the Interior in 
the expectation they would be properly managed. Your 
legislation broadly sets the right course.
    Thank you.
    [Prepared statement of Mr. Eizenstat appears in appendix.]
    The Chairman. Thank you very much, Ambassador. This has 
been very helpful, I think, to this committee. Don't you agree?
    Ms. Johnigan.

      STATEMENT OF SANDRA K. JOHNIGAN, CPA, JOHNIGAN, P.C.

    Ms. Johnigan. Thank you.
    I am pleased to appear before the committee. I am happy 
that I was requested to appear by the chairman of the 
committee.
    I am going to summarize my testimony that I have prepared, 
and will go through the major points of my ideas and 
suggestions.
    First of all, though, I would like to say that the basic 
reason that I believe I am here is that I am representing 
myself as a forensic accountant, a CPA. I am not a lawyer. I am 
not an attorney, so I will not be speaking about anything that 
has to do with legal issues.
    My background includes the recent settlement in principle 
of one of the tribal trust cases that is in the Court of 
Federal Claims, where I was the lead consultant. I am also 
working with the Intertribal Monitoring Association on a 
cooperative effort with the Government in trying to create a 
methodology for tribal claims settlement in the 1972-92 era.
    That information and background, as well as my private 
trust experience, informs my thinking in what I have presented 
today.
    Generally, where I want to go are the kinds of things that 
I would suggest if I were working with someone in terms of 
trying to settle this type of a claim. I am going to go through 
some of the same kinds of things that I believe are of 
interest, whether or not you are talking about creating the 
number in legislation or whether you are looking at the number 
if you were trying to settle the amount as a set of individual 
parties, because the number that you are going to put on the 
table is still going to be a number in legislation that in some 
level is going to have to be mutually agreed upon within 
Congress and yourselves as you put the legislation forward.
    So there are a couple of key things to me. First, what 
questions you asked; and second, what you basically do in terms 
of gaining this mutual agreement about what the process is to 
come to a conclusion on a number. The questions that I think 
are most important here to begin with are, what are you trying 
to settle with this legislation?; what in fact were the 
plaintiffs trying to resolve with the claim?
    In my reading of the information and my background on this, 
my understanding is the initial claim was for an accounting. I 
understand there is a dispute with regard to that, as to how 
that would be performed. I believe that the most important 
thing in terms of asking questions about what could inform the 
creation of a number is to make sure you understand the 
elements of the accounting that are in fact being considered 
and argued in this case.
    From my perspective, those are pretty simple. I believe you 
have heard some of that today already in terms of receipts and 
disbursements. That is about as simple as accounting gets. What 
are the receipts that came in? What are the amounts that went 
out? Where I think there is some confusion from reading the 
record I have to date read, is do we really even agree on the 
receipts, because the number of $13 billion has been raised a 
number of times in these conversations about the receipts, and 
that there is some agreement.
    Yet when I read testimony on this subject, as I read the 
testimony from the assistant secretary, Mr. Cason, it is my 
understanding that in fact the proposals that they have talked 
about are regarding the statistical sampling, not necessarily 
embracing the dollar amount of the receipts.
    I think part of that is because of the question that was 
previously raised. What are receipts beyond those that have 
actually come in the door? One of the questions that has been 
raised in the tribal cases and I believe will be raised in this 
case is the issue of receipts that should have been received, 
those moneys that should have been received, that were 
contracted for, but for some reason did not make it into the 
accounts. The other is what was previously again mentioned with 
regard to the asset mismanagement, that the fair value of the 
receipts did not come in. Those are two different kinds of 
receipts.
    I do not think those have been addressed in this discussion 
of the $13 billion, and I do not think that they are embraced 
in the statistical sampling that I have seen discussed today.
    So those are some of the questions. Do the parties 
generally agree with the $13 billion of total receipts? If so, 
do they agree on the timing of the receipts? If there are 
differences, what are the bases for the differences? Does the 
$13 billion really represent all claims or all amounts, or does 
it exclude the amount of receipts for that which should have 
been received, but was not collected? Are there claims for 
those additional receipts on fair value?
    Those are some of the things that have been discussed. 
Those are major open questions that have to be addressed, I 
believe, as you decide what your number should be.
    I am not going to go through in this discussion things that 
could be done with regard to developing information about what 
should have been received. I have some of that in my written 
testimony. There is a body of knowledge and approaches that are 
being developed to date with work on cooperative agreements in 
the tribal arena with regard to how to do that. That could 
inform this process if you have an interest in delving into 
that. The main thing is that there is some mutual agreement on 
how you would approach that if you are in fact going to 
calculate a number that includes that.
    In addition, there is another question that has to be 
addressed even with receipts. That is, work done to date by the 
U.S. Government in the statistical work appears to be generally 
from the 1985 period forward. It does not include the older 
years. Work in some manner is going to need to be done, whether 
it is in depth or whether it is analytical, using reports from 
GAO and other types of information to inform the parties, but 
something needs to be done to help someone understand how are 
you going to apply the information that has been accumulated to 
date, to periods where you have done no work. That is a key 
issue, I think, in coming up with something that would be 
considered a relevant and reliable number that you are, even if 
you are doing it somewhat arbitrarily, having some bases for.
    The more open question, I believe, though, however, then is 
disbursements. Disbursement seems to be a widely battled issue, 
if you want to call it a battle, with regard to whether or not 
you need documents; whether or not there is 20 percent of the 
documents that have not been collected, and therefore there is 
an amount that should be applied for a claim for the tribal 
members, or I should say the IIM accounts.
    The other side of that is that there is statistical work 
saying that documents have been found by the government in 
their work, but again only from 1985 forward, as far as I can 
tell from the work that has been done for land based accounts.
    So there are some questions in this whole area that I think 
again need to be asked. Do the plaintiffs, who then would be, 
as you look at this, part of who would be receiving these 
moneys, agree that the results of the study that have at least 
been done by the Government for the period that it was done, is 
that considered something that is acceptable? If there is some 
mutual agreement there, could you use that at least for the 
period where it was done?
    And second, if there is agreement or not between the 
parties and therefore informing you as to for the older years, 
if there is no information that has been created that can be 
carried back, then you begin to do the arbitrary type of work 
that we are talking about or we have talked about.
    I think any forensic information that is looked at over a 
long period of time is going to have missing documents. My 
background in private sector is informed by the fact that I 
worked on a case where the State of California and all public 
municipalities of the State of California had sued the Bank of 
America.
    One of the major issues in that had to do with the 
documents. As the court in preliminary findings in that 
particular case stated, you could use other means to fill the 
gap for those kinds of situations where you did not have the 
documents, but you had data that you could analytically fill 
the gap with. I think that is important to this type of case.
    So I believe in terms of looking at where you are and how 
you can fill the gap, I have a number of ideas that I believe 
could be applied. I do not believe that level of detail is 
appropriate for this hearing today, but I will say that in 
terms of finding a way to resolve a number, I think the first 
step is to have the statistical work prepared by the Government 
that has been prepared to date, be reviewed by an independent 
party to determine how it could be used for the current period.
    I think that the older periods and where there are error 
rates that could be created based on true problems perceived in 
periods during the older years where there are known error and 
known problems, where you create a more robust error rate for 
those periods. If that were applied, that would satisfy a lot 
who believe that the rates that are very low for the more 
current periods are not applicable to the older years.
    So bottomline, from my perspective, if you cannot have 
mutual agreement of the parties, when you need to have some 
mutual agreement among yourselves as you are presenting it to 
Congress as to what the bases would be a number beyond just 
arbitrarily picking a number from zero to 100, finding 
something that at least has some bases in the work that has 
been done to date, and also applied with regard to some of the 
errors and the problems that are known from the past.
    [Prepared statement of Ms. Johnigan appears in appendix.]
    Mr. Pombo. Thank you.
    I do want to thank all of our witnesses.
    We will begin the questions. The Senators had a vote on the 
floor, and we will begin the questions, and I will begin with 
the House members.
    I will start with Ambassador Eizenstat. In the Holocaust 
case that you oversaw, you talked about plusing-up some of the 
payment accounts at a factor of 10. How did you arrive at that? 
Was that, as you described it, rough justice or was that based 
on a formula?
    Mr. Eizenstat. Mr. Chairman, first of all, we only plused-
up those things which were tangible, for example, policies and 
bank accounts. We did not try to plus-up what a worker might 
have made if he or she had been paid by one of the slave labor 
companies over a 10-year period.
    What we did is we retained the services of economist Henry 
Kaufman, and he basically took Government bond rates and then 
calculated what the compound interest would be over that 50-
year period. So there was a solid statistical basis for that.
    Mr. Pombo. Do you happen to remember what that interest 
rate was?
    Mr. Eizenstat. I can get that very easily. It was somewhere 
around 3 percent, but I can get that. And there again, you do 
have the issue that has been raised by my colleagues about what 
time period you are talking about. So what he basically did is 
just took an average over that period of time.
    Now, interestingly for the French cases, the multiplier was 
1.7 and the reason, and this provoked a great deal of 
controversy, the reason was that there was a massive 
devaluation of the French franc after the war. That was taken 
into account in coming to a lower multiplier figure. I will be 
glad to get those precise figures for you, Mr. Chairman.
    Mr. Pombo. Thank you.
    You also talked about including the land mismanagement 
claims. We have gotten different advice even from this panel in 
terms of that. I think in dealing with that particular issue, I 
would ask Mr. Bickerman, you have suggested not including that. 
Ambassador Eizenstat has suggested that we do include it. Can 
you enlighten us as to why you believe it should not be 
included?
    Mr. Bickerman. Yes; in fact if I could rely on Ambassador 
Eizenstat's testimony, I think it is key that you have clear 
criteria by which to allocate the funds that you are going to 
allocate. That is one of the central lessons, I think, we 
learned from the experience of Ambassador Eizenstat. You can do 
that with the fund based mismanagement. But the land based 
mismanagement is very particularized.
    Take, for example, the woman who has an oil well on her 
property, it has been pumping for 40 years, and she is not 
getting what she thinks would have been a fair return. Well, 
the investigation would require you to take a look at the lease 
that she got and the lease that other people got, and was it a 
fair deal that had been struck. That is very special, specific 
information.
    So if you were to come up with one gross number, it would 
be very hard to take that number and adequately distribute it 
among individuals who believe that their assets had been 
mismanaged. And that is the reason, I believe in trying to wrap 
up as much as you possibly can in a settlement, but it is for 
that reason that I think those claims should survive.
    Moreover, I think the risk of there being a class action of 
those type of lawsuits is very minimal. I think because they 
are such particularized claims, and they are claims for money 
damages, they have to go to the Federal Court of Claims as 
opposed to the Federal District Court. That is a more proper 
venue for them as a result. I also have a hunch that you are 
not going to have that many claims for mismanagement, but that 
is an intuition.
    Mr. Eizenstat. May I comment on that, Mr. Chairman?
    Mr. Pombo. Please do.
    Mr. Eizenstat. In our cases, the government's involved, 
Germany, Switzerland, Austria, France, et cetera, and their 
companies, wanted to know if they were paying billions of 
dollars, that all future claims arising out of World War II 
would be covered. They called it legal peace. And that was the 
essence of the settlement we reached. Once we arrived at the 
figure, the U.S. Government did everything it could to make 
sure that all claims arising our of World War II would be 
covered. Otherwise, they would have been paying billions of 
dollars and still be subject to some creative lawsuit.
    Now, I take what John says seriously, about the difference 
between land based claims and fund based mismanagement. But 
this legislative window comes once in a lifetime. Once you have 
gone through the trauma of dealing with this, you are not going 
to want to take it on again, number one. So you ought to be as 
inclusive as possible.
    No. 2, whatever settlement comes up is going to involve a 
tremendous amount of money. The government has I think a 
justifiable reason to say, okay, we want to do this, but we 
want to make sure that everything is included and that we do 
not have to spend more money on more defenses for other claims.
    No. 3, there is a way of dealing with the concern that John 
mentioned, and again we did his in our cases. We created in the 
property cases, again it was a capped fund, but an 
individualized hearing, unlike the slave labor cases where we 
could not possibly have individual hearings for 1.5 million 
people and we simply said, if you are a slave laborer and we 
defined it, you get $7,500; if you are a forced laborer and we 
defined it, you get $2,500, regardless of circumstance.
    For the property cases and the insurance cases, there are 
individualized hearings. It takes longer, but there are 
individualized hearings, but with a capped amount.
    So I think that you could have in your legislation a 
separate settlement amount that would be for these land based 
claims. Again, it would be perhaps difficult to come to any 
figure, but no more difficult than it will be for the fund 
mismanagement claims.
    So I think it is eminently doable. We created that system 
in ours. Don't end up going through all this trauma and end up 
with still more people going through court processes, taking 
years of time, everybody's expense, when you could solve 
everything at the same time.
    Mr. Pombo. In that case, you had a capped amount per 
individual, but you had individual hearings where whatever 
their claim was, they had the ability to have their day.
    Mr. Eizenstat. Yes; we did in some, like the Austrian 
property claims, which are now literally being adjudicated. The 
first claims are just now being heard. A $210-million cap, we 
said any individual who lost property could make a claim up to 
$2 million. The amount you get depends on the value of your 
claim.
    But in the insurance claims the insurance companies agreed 
that if there is a valid policy, they will pay whatever that 
face amount is plused-up in the way that I described. But in 
the German and Austrian cases there was a capped overall 
amount. In the Swiss bank account, of the $1.25 billion 
settlement, we set aside $800 million as a cap for claims on 
real bank accounts, no rough justice, real bank accounts, 
proven by evidence, but only up to that capped amount.
    So there are a variety of ways you can do it, but the point 
is you can have a capped amount as we did with the Swiss bank 
accounts. You could cap an amount here for these land based 
claims. That is, I think, still far fairer to the Indian 
plaintiffs than going through this whole legislative trauma and 
then telling them, well, on those claims, go to the Court of 
Claims or go back to Federal court and start all over again.
    Mr. Pombo. Thank you.
    I am going to turn this back over to Senator McCain.
    The Chairman. Thank you very much, Chairman Pombo. My 
colleagues came a long way, so I will be very brief in my 
questions.
    Mr. Bickerman, you don't believe there is going to be a 
negotiated settlement. Right?
    Mr. Bickerman. Never.
    The Chairman. Mr. Eizenstat, from your experience with 
this?
    Mr. Eizenstat. I have no reason to think, given the 
mediation that has been done, that there will ever be one, and 
legislation is the only reasonable outcome.
    The Chairman. Do you agree with that, Ms. Johnigan?
    Ms. Johnigan. Yes; I do.
    The Chairman. So Mr. Bickerman, as I understand it, Mr. 
Eizenstat has come up with three I think strong 
recommendations, and I would like your views on them. One is 
the establishment of an independent administrative tribunal; 
another one is the extinguish claims for mismanagement of 
funds, and additionally for improper decisions on land 
management; and third, that Congress should 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 shall craft a 
distribution method with as much clarity and direction as 
possible.
    Do you agree with all three of those recommendations of Mr. 
Eizenstat?
    Mr. Bickerman. We have just had a little colloquy on the 
land mismanagement, and I am not totally in Ambassador 
Eizenstat's court, but I am beginning to be convinced that if 
there was enough money, we could come to a conclusion. Maybe 
that is an alternative way to deal with it.
    As to the other two issues, I think they are excellent 
suggestions. I think the clarity of the criteria is very key, 
so that the money can get distributed and distributed quickly.
    The Chairman. And you also agree that whatever we come up 
with, and Chairman Pombo and I do intend, after 10 years, I 
believe it has been 10 years now, or 12, I am not sure, to come 
up with legislation and we will be roundly criticized by all 
participants.
    Mr. Bickerman. I can guarantee you will be roundly 
criticized, but I think the right and courageous thing to do is 
to pick a number and try to end this.
    Mr. Eizenstat. Tell them to read Bleak House by Charles 
Dickens. [Laughter.]
    Jaundra v. Jaundra, and that will be your best defense.
    The Chairman. They did a magnificent job on Masterpiece 
Theater, in case you missed that.
    I want to thank you all very much. Again, I want to say to 
everyone that reads the record of this that I intend to work 
closely with Congressman Pombo and the House so that we can 
come up with a solution which we are fully aware will cause us 
some difficulties, but this issue has to be brought to some 
kind of closure. I want to thank again Chairman Pombo, as well 
as my friend Byron Dorgan and Mr. Rahall for their cooperation. 
This has to be a bipartisan solution, obviously. Thank you, 
Chairman Pombo.
    Congressman Udall.
    Mr. T. Udall. Thank you, Chairman McCain. Thank you for 
holding this very important hearing on a matter that is 
absolutely vital to tribal members. I appreciate all of the 
panel members and your testimony. I view this as excellent 
testimony. I think it truly does shed light on the issue that 
is before us.
    Ambassador Eizenstat, one issue similar in the Holocaust 
cases and the Cobell case is the uncertainty of the exact 
number of account holders and where they or their heirs reside. 
Many potential American Indian beneficiaries live in desolate 
areas and extreme poverty. Do you have any suggestion on how we 
might be able to find people once the Bureau of Indian Affairs 
files are exhausted? Did you mandate advertising or other 
avenues to get the word out?
    Mr. Eizenstat. Thank you. First of all, I have to say there 
was another Udall with whom I used to testify. It is a sign of 
my age, I suppose.
    Yes, what we did was particularly for the Swiss bank cases, 
and for the insurance cases, we did a massive notification 
process. We used the news media. We put full page ads in major 
newspapers, radio advertisements. We did a full blown media 
effort to try to reach account holders.
    Now, in addition, we had the advantage, particularly in the 
bank and insurance cases, of having names assigned to accounts, 
so we actually created a website with those names. Some, by the 
way, were misspelled or had German or Swiss spellings, but 
still we did create a website with the names we knew existed, 
and advertised that website. That is also a very useful way of 
presumably, even with the sad state of the records here, there 
must be some record of individual account holders or trust fund 
holders.
    Mr. T. Udall. Thank you.
    Just one more question, Ambassador Eizenstat. Our 
committees have been working with the parties of the Cobell 
lawsuit and the mediators, as you are aware. As our mediators 
can attest, the sides in this dispute have become bitter 
enemies, with the debate often taking unhealthy and unhelpful 
turns. We have been told time and time again that the animosity 
between the sides is the worst that veteran lawyers and 
mediators have ever seen. I am guessing that at that time you 
had persons who were taking too hard a line or generally not 
working in good faith to settle.
    How do we get past such situations?
    Mr. Eizenstat. Well, Chairman McCain alluded to this. We 
would not have succeeded if we had a mediation involving 
private parties, even people as eminent as Judge Renfrew and 
John Bickerman. Our mediation succeeded because of a 
combination of events, which do not exist here, but for which 
the legislation will be a substitute.
    No. 1, we had the support of the President of the United 
States, who invested me with the authority to speak on his 
behalf as the mediator. We had the clout of the U.S. 
Government. We had the bipartisan support of everyone from Al 
D'Amato to Chuck Schumer and others in dealing with this. So we 
knew we spoke with the full authority of the United States.
    The plaintiffs' attorneys, I mean, if you want to read my 
book you can get more of this, but if you think that things 
were bitter there, the plaintiffs' attorneys took out full page 
ads in the New York Times and the Wall Street Journal and the 
Washington Post. One that I can recount was about Bayer, the 
maker of aspirin, that was also a slave labor manufacturer. The 
headline effectively was, ``If you really want a headache, 
Bayer, then you won't settle with Ambassador Eizenstat and his 
negotiations.''
    I mean, this went all the way. There were all sorts of 
pressures put on. And not the least of which in the Swiss bank 
cases and in the German cases, were threats by major pension 
funds, including CalPERS, Congressman Pombo, in your State, 
that they would withdraw funds from either Swiss banks or 
German slave labor companies unless they settled.
    So there were all sorts of external pressures. You do not 
have that here. You do not have a Government appointed 
mediator, but you have the power of the Congress. When I talked 
about bipartisan support for what I was doing, you have 
bipartisan support. It is remarkable, the joint hearing, the 
joint bills, bipartisan. This speaks volumes and will provide I 
think a very strong political message that substitutes for all 
the influences we had in our Holocaust cases.
    Mr. T. Udall. Thank you very much. I think that my uncle, 
if he was here, who I think you alluded to testifying before 
earlier, would say that you may be older, but you are probably 
wiser. With that, I would like to thank you.
    Mr. Eizenstat. Since there is not much levity here, in the 
1976 primary campaign, all the primary candidates including 
Jimmy Carter were asked the simple question, what would you do 
about inflation. And everybody had 10 different answers. 
Congressman Udall's was the simplest. He said, ``I would give 
it to the Post Office. They can slow anything down.'' 
[Laughter.]
    Mr. T. Udall. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. He also said, and I steal his jokes all the 
time, he also said, ``Everything that can possibly be said on 
this subject has been said, only not everyone has said it.'' 
And that certainly applies to this issue, I think. [Laugher.]
    Senator Dorgan.
    Senator Dorgan. Mr. Chairman, are you referring to the 
questions I might ask [Laughter.]
    First of all, the chairman and I had a vote, as you know, 
and we were necessarily absent for a bit. The testimony from 
this panel I think has been really very interesting and very 
instructive. I think the last thing that you said, Mr. 
Eizenstat, is important, that the House and Senate working 
together, Republicans and Democrats working together, is a very 
powerful statement here.
    If we do not resolve this issue, I think Mr. Bickerman 
said, and perhaps all of you have said it, we are going to be 
in this predicament for one-half decade, 1 decade, or probably 
more. And we know already from this year's budget submission by 
the President that this issue impacts most other issues as well 
Native Americans.
    That is why it is so important for us to do everything we 
possibly can do to see if we can effect a solution here.
    I am going to defer on questions. I will submit questions 
to the panel, but let me again say that I think your testimony 
is particularly and especially useful, given all that we have 
heard at various hearings. I think that you offer some unique 
judgments and perspectives about these things, and I appreciate 
very much your being here today.
    The Chairman. Thank you very much.
    Mr. Faleomavaega.

  STATEMENT OF HON. ENI F.H. FALEOMAVAEGA, U.S. DELEGATE FROM 
                         AMERICAN SAMOA

    Mr. Faleomavaega. Thank you, Mr. Chairman.
    I certainly want to thank you and commend you and Chairman 
Pombo for calling this joint hearing. Not only is it critical, 
but most important, in all the years that I have tried to 
follow it with some concern, you know, we have had this issue 
now, it started off at $2 billion and then the following year 
there was a bidding that went up to $8 billion to $10 billion 
in question. So now we are somewhere between $13 billion and 
$27 billion.
    I remember years ago, Mr. Chairman, that Congress even 
appropriated $20 million just to try to attempt to audit the 
accounts in question, and came up with absolutely zero results. 
So I really do think that the initiative that you and Chairman 
Pombo have taken has been really, really, 10 years, I believe, 
is long overdue in trying to provide some settlement.
    I really do appreciate the testimonies that have been 
shared with us this morning by Ambassador Eizenstat and Mr. 
Bickerman and Ms. Johnigan. I want to ask members of the panel 
just one question. Do you think it was fair for the 
administration to subtract the legal fees that have been 
collected over the years to cut the appropriations for the 
badly needed funding that is needed by Indian country, to be 
part of this?
    I was under the impression this should come under the good 
faith, what do you call it, clause of United States, of the 
general fund. But the latest I heard, unless I heard it wrong, 
whatever amount of money that is being subtracted, that it 
should be going to the critical needs of current Indian 
programs, to be taken out of this very issue. I have to 
disagree.
    But I wanted to ask the members of the panel how they feel 
about this. I do not know if you are aware of the situation.
    Mr. Bickerman. Yes; I am aware of it. No, I do not think it 
was fair.
    Mr. Faleomavaega. Well, that should answer it. Thank you 
very much. [Laughter.]
    I have listened with interest to the problem, as Ms. 
Johnigan said earlier, about just simply the difference between 
receipts and disbursements. The problem is, as simple as these 
two terms may be, but it has become so complicated that we 
found nothing but some real sense of bitterness between the two 
parties. In fairness to both parties, I believe that Ambassador 
Eizenstat's suggestions have been very, very valid, very, very 
similar to the situation of the Holocaust claims.
    I wondered also how Congress was able to determine what was 
the capped amount that we gave to the Japanese Americans when 
they also had a similar situation. Maybe lesser numbers, but 
certainly it is something that we ought to look at.
    Mr. Eizenstat. This was actually, members of the panel and 
Mr. Chairman, this was actually a useful benchmark for us. 
Congress in 1988, I believe it was, finally tried to provide 
some belated justice for Japanese Americans. There again, it 
was a per capita amount, no individual hearings, $20,000 per 
claimant. You could have been in a camp in Washington State or 
California for 1 month or for 1 year or for the whole war. You 
got $20,000.
    Now, obviously there is a degree of arbitrariness to that. 
But there was also a degree of fairness to it, because had all 
of those people had to have individual hearings and try to 
prove what happened to their health and what happened to their 
livelihoods, they would never have been able to recover. So 
that $20,000 figure was actually a useful figure when we were 
trying to determine how much was reasonable to give to a slave 
and forced laborer.
    Mr. Faleomavaega. I want to say to Ambassador Eizenstat, 
Mr. Chairman, this also is another complication that we have 
just, at least hopefully there may be legislation introduced, 
and it is in reference to the plight of the Marshallese people 
when they were, practically all of them, subjected to nuclear 
radiation during our nuclear testing program after World War 
II.
    To this day, to this day the people of the Marshall Islands 
still have not been properly compensated or even given proper 
medical treatment by our Government, which is something that I 
find very similar to the situation that we find ourselves in 
among our Native American community.
    Do you think, Ambassador Eizenstat and Mr. Bickerman, is it 
really not the amount that is at issue. It is how we go about 
in developing a formula. Like you said, we have to bite the 
bullet, and some way or somehow we just cannot wait another 20 
years for this issue to continue on. I get the sense that it 
has got to be done legislatively because if we leave it to the 
courts, it is not going to be resolved. Do I get that 
impression from the members of the panel?
    Mr. Eizenstat. I was asked only about 10 days ago to 
testify, so I started reading some of the opinions. I mean, it 
is amazing that here we are almost 10 years into litigation, 
the last Court of Appeals decision just 2 months ago, the 
interpretation, you know, the typical thing of the Court of 
Appeals, remanded for actions not inconsistent with this 
opinion. And the plaintiffs and the Government disagree after 
10 years, with what the latest decision was by the court.
    They have had their chance and they are not going to do it. 
As I indicated, you cannot have courts settle historical 
wrongs. They are not created to do that. Their expertise is on 
case by case adjudication or class actions where people fall in 
and you have clear evidence. They cannot handle a situation 
like this where the evidence is poor, the number of claimants 
is uncertain. This will be batted around between the District 
Court and the Court of Appeals until all of us are gone and all 
of the claimants are gone. So legislation is absolutely 
essential.
    The formula has to be precise; do as much on a per capita 
basis as you can; and again bite the bullet. It is not totally 
arbitrary. John gave you some ranges. You basically know how 
much flowed in. It is not clear how much flowed out. The 
Government itself by its own figures says it is about $500 
million that is unaccounted for, that did not get paid out. 
Even if you just plus that up over however many years you want 
to do that, you couldn't do it over 120 years, but over a 
reasonable period of time. You start to get into a range which 
is understandable.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    The Chairman. Congressman Inslee.
    I am sorry. Go ahead.
    Mr. Bickerman. I just wanted to respond very quickly. As a 
mediator, one of our occupational hazards is optimism, but when 
we first started the discussions, I actually thought that the 
criteria that both the administration and the plaintiff had for 
the formula to allocate money was actually pretty close. I am 
reasonably optimistic that if we can agree on a sum, developing 
the criteria to distribute that will not be that arduous a 
process.
    Mr. Faleomavaega. Thank you, Mr. Chairman. Thank you.
    The Chairman. Congressman Inslee.
    Mr. Inslee. Thank you.
    I really appreciate your thoughts. This is most troublesome 
to many of us because we recognize the literary value of 
Jamdyce v. Jamdyce. We also understand of not wanting to 
continue this scar that so many people in our country have felt 
and not being treated by their Federal Government. So it really 
is a tough issue, I think.
    I have kind of a general question. If we are looking for 
resolution, a legislative solution, should we be thinking of 
Congress picking a number? Or should we be thinking of Congress 
picking a process to get to that number that should be narrowly 
defined and achievable through some mechanism that might give 
the parties more confidence that at least they had their day in 
court and these decisions were not made just in the back rooms 
of Congress? What would be the most, and is there any such 
process that could actually get to a number within our lifetime 
to achieve that end?
    Ms. Johnigan. If I could respond to that first. Obviously, 
what I was presenting was the idea that there would be a 
process using what has been done to date and refining it for 
those pieces that appear to be the most contentious and where 
the least work has been done, and creating it in such a fashion 
that it at least provides a basis for why the number was 
created by Congress.
    Whether you pick a number based on that work or you set the 
process for that number to be created through that work by 
other parties, so that you could get the legislation through. 
One way or the other, from my personal perspective, it you want 
some broader based support for whatever number you are going to 
create, there needs to be some process behind it besides the 
arbitrary selection of some portion from the plaintiffs and 
some portion from what the Government has done today.
    That is not to say that I would propose a process that 
would take a long period of time, but rather look at what has 
been done and see what would be backfilled into that in a 
process that would be more streamlined. It would not be 
something that would make either party happy. It would just, I 
think, create more of an informed basis for the answer.
    Mr. Inslee. In your proposal, would you view that as being 
a binding process, that we are going to go through this 
process, the number will be generated, Congress will adopt it? 
Or is this just a hearing process you are talking about?
    Ms. Johnigan. I would see that as a binding process, if you 
are going to finish this. I mean, you have to have a binding 
process that creates a number you are going to have in the 
legislation that is just the number. Because one of the things 
that I have heard as people have answered questions today and 
asked questions, is that there is in some ways always the 
assumption that a large enough number was created, or a number 
was created that would actually satisfy some of the issues. 
Because two of the issues in terms of the accounting, the 
amounts that should have been received that are not part of the 
$13 billion throughput, and the amounts that are in dispute in 
terms of what should have been received that perhaps was from 
mismanagement.
    There has been, as far as I can tell, no real work on that 
issue at all for the IIM accounts, so that the numbers that are 
being discussed are being discussed from the standpoint of only 
that which is known to be received. That is a very different 
calculus. As I have worked with the tribal accounts in this 
area, what I have seen is that you have already some processes 
in place to calculate what should have been received, but very 
little has been done on the asset mismanagement where the fair 
values have not been received.
    So I do think there needs to be some thought about a 
process that says, have we really created a number that is 
sufficient enough in order to satisfy an allocation that will 
be considered to be at some level, although somewhat arbitrary, 
fair. I think that is a process that I highly recommend you go 
through.
    Mr. Bickerman. I respectfully disagree with my colleague 
here. The point of my numbers that I present in my testimony 
was to show that with just very small changes, these numbers 
bounce all over the place. I think that a process would give 
one the false sense of precision when there really isn't 
precision.
    There are so many missing documents. This goes back over 
100 years. A process I think would just be delayed justice. I 
think this has gone on for 10 years. I think it would be 
infinitely more difficult to negotiate a process than it would 
be to negotiate a number at this point. If you can negotiate a 
number, my strong, strong recommendation is you do it.
    Mr. Eizenstat. There is certainly no reason not to have a 
small panel of experts as you are going through the legislative 
process look at the existing data, not start recreating, doing 
new audits and so forth, and giving you the best judgment they 
can about the status of things. But you are not going to be 
much better off at the end of that process. I think to satisfy 
the fact that you exercised due diligence on the legislative 
side, it is not a bad idea.
    But what would be a genuinely bad idea is to go through 
this legislation, leave the figure blank and then leave it to 
some mythical party, a claims commission, to determine what the 
amount should be. That is what legislation is for.
    After all, you really do this in a sense all the time. When 
you legislate, you create appropriations for amounts, you have 
to make a rough estimate. How much are Katrina victims entitled 
to? You appropriate a figure. You try to make the roughest kind 
of calculation, and then you realize you will come back if you 
have to another time, but you make the best judgment you can. 
That is really what you are trying to do here.
    So certainly you do not want to be totally arbitrary and 
blind yourself to the work that has been done. It is probably 
worth having some type of small group advise you, of looking at 
the current data, giving you some sense of where that data is, 
and how confused it is, and giving you the best estimate they 
can of where things stand.
    On the plus-up figure that Chairman Pombo mentioned, there 
I think we can be much more precise. There is very clear 
agreement, I think, about how you plus-up accounts over the 
years. We will be glad to share the figures that we used and 
the methodology that was used.
    So I would really urge in the process, yes, if you want to 
take a few experts and have them look at the state of things 
now, fine. But do not think you can create a process that is 
going to give you much more clarity than you have now. That is 
the whole problem, the data does not exist.
    Mr. Inslee. The only concern I would have about that 
approach is this is not exactly Katrina. The hurricane was 
caused by either an act of the Creator or global warming, 
depending on your belief system. This situation is an 
extinguishment of a property right by the entity that caused 
it, which is the Federal Government.
    Mr. Eizenstat. So were the Japanese claims, so were the 
Holocaust claims. They were all extinguishing a right or a 
theoretical right by either a legislative or a government 
mediated process.
    Mr. Inslee. I have made my point.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    I thank the witnesses. This has been extremely helpful to 
us. Thank you.
    Mr. Eizenstat. I am sure we will be more than happy to 
continue to work with you during this process, Mr. Chairman.
    The Chairman. Thank you. We would be pleased to do that.
    Finally, we have Mike Marchand, who is with the Affiliated 
Tribes of Northwest Indians and the vice president of the 
Colville Confederated Tribes; Joseph Garcia is the president of 
the NCAI; Keller George, who is the president of the United 
South and Eastern Tribes; and Harold Frazier, the chairman of 
the Great Plains Tribal Chairman's Association.
    I want to apologize to our witnesses because we have to 
shut down here in just a few minutes. I would like to say that 
your complete statements will be made part of the record. We 
appreciate your patience, and I hope you understand that we 
have a joint session of Congress to be addressed by the Prime 
Minister of Italy. So if you could briefly summarize and give 
us your position very rapidly, we would appreciate it. I am 
sure we will be meeting formally and informally again in the 
future on this issue.
    Mr. Marchand.

  STATEMENT OF MIKE MARCHAND, AFFILIATED TRIBES OF NORTHWEST 
 INDIANS AND FIRST VICE PRESIDENT, COLVILLE CONFEDERATED TRIBES

    Mr. Marchand. Good morning. I am very honored to be here 
today.
    My name is Mike Marchand. I am a councilman with the 
Colville Confederated Tribes located in Washington State. We 
are composed of 12 tribes on a reservation that was created in 
1872, when our people were forcibly marched from their 
homeland, at gunpoint in many instances.
    The Chairman. Mr. Marchand, you are going to have to make 
your opening statement very brief. Please proceed.
    Mr. Marchand. Well, my only point was that this trust 
system was imposed on our people. We did not ask for it. There 
have been comparisons by the administration that this is very 
much like a commercial banking operation. I would just contend 
that it is not. We are doing the best we can to work with the 
system.
    ATNI, the Affiliated Tribes of Northwest Indians, is a 
consortium of 57 tribes in the Pacific Northwest, and our 
leadership in the Northwest has been discussing this issue and 
watching the litigation as best we can. It is the conclusion of 
most of our leaders in the Northwest that we need to come to a 
settlement. The parties in the litigation do not appear to be 
getting any closer to settlement. In fact, they seem to be 
getting farther and farther away each day.
    We believe that it is creating a lot of problems and 
retaliation against tribal governments. It is creating problems 
with redefining the trust relationship between our people and 
the United States. We really think it is really time that we 
need to draw this to a conclusion.
    I would just like to say, I guess briefly, that I think it 
has really caused a whole change in the climate between the 
tribe and the United States relations. In the 1960s, we went 
through a period of termination. Under President Nixon, I think 
he turned that around to self-determination and 638 
contracting. Tribes were given a large voice in their day to 
day matters in life. I think we have seen a couple, two or 
three decades of steady progress.
    But today, I think things are kind of reversed. It seems 
like we are going backward again. I think a lot of the 
solutions that are being imposed on Indian people. Our voices 
are not listened to anymore. I think there is a real problem 
with the administration in place today. They do not seem to 
have a lot of knowledge about life on reservations or how to 
communicate with our people. I think it is a real problem. I 
think we have gone backward.
    I think a lot of that has kind of spun out of this Cobell 
case because of the litigation.
    [Prepared statement of Mr. Marchand appears in appendix.]
    The Chairman. Thank you very much, sir. I apologize, but we 
really have to move through the witnesses. I appreciate it. 
Your written statements will be made part of the record and 
carefully examined. I thank you and I want to apologize for 
this time constraint to all the witnesses.
    President Joe Garcia.

  STATEMENT OF JOSEPH GARCIA, PRESIDENT, NATIONAL CONGRESS OF 
                        AMERICAN INDIANS

    Mr. Garcia. Good morning, everyone.
    Chairman McCain, Chairman Pombo, Vice Chairman Dorgan, 
Ranking Member Rahall, and members of the Senate Committee on 
Indian Affairs and House Resources Committee, thank you, Mr. 
Chairman, Chairman McCain, and Senator Dorgan for coming to our 
NCAI meeting yesterday. That was very important, your presence.
    We have a lot of tribal leaders here this week. I think it 
is important that they hear the dialog that you provided. I 
will now move on to the testimony part.
    The National Congress of American Indians strongly believes 
that it is time for Congress to move forward with a fair 
settlement for the Cobell v. Norton litigation. Tribal leaders 
throughout the country support the goals of the Cobell 
plaintiffs. At the same time, tribes are concerned about the 
impacts of the litigation upon the ability of the United States 
to deliver services to tribal communities and to support 
Federal policies of tribal importance.
    As you know, hundreds of millions of dollars have been 
diverted for this effort, and we continue to battle for years 
and years. Continual litigation will continue to cost millions 
of dollars. The continued historical accounting activities by 
the department may cost billions and are very unlikely to 
achieve satisfactory results.
    Three years ago, NCAI passed a resolution stating that it 
is in the best interest of the tribes and individual account 
holders that tribal leaders participate in a Cobell settlement, 
and development of an effective system for management of trust 
assets in the future. Former NCAI President Tex Hall worked 
very hard over the last 3 years to push for a settlement, and I 
plan to continue that effort.
    Earlier this year, the NCAI executive committee passed 
another resolution on the settlement litigation. First, we want 
to mention that NCAI supports S. 1439. We also support H.R. 
4322, and the efforts of Senators McCain and Dorgan and 
Congressmen Pombo and Rahall in introducing this legislation.
    Second, NCAI strongly urges the Cobell plaintiffs, the 
Department of the Interior and the Congress to increase their 
efforts to develop a viable settlement proposal for the Cobell 
litigation. Specifically, we would encourage settlement options 
that will engage the participation of individual Indian account 
holders. I believe that is what we are hearing today.
    Third, NCAI urges the Senate Committee on Indian Affairs 
and the House Resources Committee to move forward with the 
markup of the legislation, based on the comments received from 
Indian country, and to develop a more definitive settlement 
proposal for the Cobell litigation than what is currently found 
in title I. We encourage you to continue to consult Indian 
country as you move forward to the markup of the bill.
    Cobell litigation has had some positive effects. It has 
focused attention on the important issue of trust reform. 
However, there are also increasing costs and side effects that 
the litigation has caused, and that is provided in the written 
testimony. So we want Congress to either put a stop to these 
unreasonable burdens on the tribes, or to settle the 
litigation, and the settling the litigation is the thing that 
we would propose as well.
    I will conclude my remarks at this point, in the interest 
of time. Thank you.
    [Prepared statement of Mr. Garcia appears in appendix.]
    The Chairman. Thank you very much.
    Mr. President, we look forward to working with you, and 
congratulations on your new position, as I mentioned before.
    Mr. Garcia. Thank you.
    The Chairman. President George.

STATEMENT OF KELLER GEORGE, PRESIDENT, UNITED SOUTH AND EASTERN 
                             TRIBES

    Mr. George. Thank you, Senator McCain, and also thank you 
Chairman Pombo, Vice Chairman Dorgan, and Ranking Member 
Rahall.
    We thank you for this opportunity to briefly give some 
insights on this case. Cobell litigation has been going on for 
over 10 years. But I want to urge your committees to seize the 
opportunity to settle the Cobell case now and reform the DOI's 
administration of trust-related functions by acting on S. 1439 
and H.R. 4322 this session.
    As to the Cobell provisions of these bills, title I 
includes a section that will specifically identify an amount 
that will be made available to settle the case. Ideally, it 
should be up to the plaintiffs and the Government to agree upon 
a settlement account. Previous witnesses have said that 
probably is not going to happen, but we call upon the Congress 
to act very swiftly so to come to a conclusion because we know 
that if it does not, it will erode the trust responsibility 
that the United States Government has toward Indian tribes.
    As USET member tribes, we will stand with you in your 
efforts to seek a resolution of the Cobell lawsuit and to 
implement needed reforms to DOI's administration of trust 
functions. The choice we face today is clear. Millions more can 
be spent on litigation and an accounting that likely will tell 
us little more than we already know, while the trust 
relationship continues to erode, or legislation can be enacted 
that settles the lawsuit in a fair and equitable manner, and 
implements much-needed reform on DOI's management of trust 
resources.
    USET member tribes strongly believe that the second choice 
is far better an option.
    Thank you.
    [Prepared statement of Mr. George appears in appendix.]
    The Chairman. Thank you very much.
    I believe Congresswoman Herseth would like to acknowledge 
the next witness.
    Ms. Herseth. Thank you, Mr. Chairman.
    I thank you and my good friend from North Dakota, Mr. 
Dorgan, as well as my Chairman on the House Resources 
Committee, Mr. Pombo, for this opportunity. I appreciate the 
opportunity to introduce Chairman Harold Frazier, also a good 
friend, chairman of the Cheyenne River Sioux Tribe, whose 
members predominantly reside in North Central South Dakota. I 
am working with Chairman Frazier not only in his capacity as 
chairman of the Cheyenne River Sioux Tribe, but also as 
chairman of the Great Plains Tribal Chairman's Association.
    I would commend his testimony to you as someone who has 
been focused and tenacious in his efforts, as well as 
approaching settlement negotiations in the Cobell lawsuit in 
good faith, in working hard to meet the objectives that I know 
you have, that Ranking Member Dorgan has, that Chairman Pombo 
and Ranking Member Rahall have. But that any settlement really 
reflect to the best interests of Indian country.
    So I appreciate the opportunity to introduce him to you 
today.
    The Chairman. Thank you very much.
    Welcome, sir.

  STATEMENT OF HAROLD FRAZIER, CHAIRMAN, GREAT PLAINS TRIBAL 
                     CHAIRMAN'S ASSOCIATION

    Mr. Frazier. Thank you, Congresswoman Herseth.
    I want to begin by thanking Senators McCain and Dorgan and 
Congressmen Pombo and Rahall for having this joint hearing. I 
will get right to the points.
    I think it is essential that a settlement amount comes from 
a claims judgment fund and not from the BIA budget or any other 
Federal program or budgets that serve Indian people. Section 
102, this section would bar tribal landowners and heirs from 
any recovery from claims prior to 1994. It is important that 
the settlement only, that we go beyond. There have been a lot 
of issues that have been done to a lot of our people in the 
past, especially the ones who have served our country in wars 
and protecting our rights and our freedom.
    It is also important that the settlement only addresses 
individual accounting claims, and not any land based or asset 
claims. Our concerns are for Congress to protect the budgets of 
the tribal programs from being robbed to pay attorney fees.
    All the regulations resulting from this act may be subject 
to negotiated rulemaking. That will ensure that a bureaucratic 
process is not used to misconstrue the provisions of the act.
    We urge congressional leaders to write the appeal section 
to streamline the appeal process and allow class action appeals 
and allow the claimant to appeal in local courts and 
consolidate the appeal claims.
    Again, we strongly urge congressional leaders to be crystal 
clear in section 110(d) that tribal trust accounts are 
inclusive of tribal IIM accounts. This clarification would 
avoid any misinterpretation that tribes should not be 
considered claimants for purposes of settlements.
    I thank you for this opportunity and I urge you to maintain 
the principle of inclusive decision making when addressing all 
areas of trust reform. It is important that tribal leaders 
should be at the table when trust reform is being discussed. We 
are the ones who have the most to lose.
    Thank you.
    [Prepared statement of Mr. Frazier appears in appendix.]
    The Chairman. Thank you very much.
    Chairman Pombo.
    Mr. Pombo. Mr. Chairman, any questions I have I will submit 
in writing to our panel. Thank you.
    The Chairman. Senator Dorgan.
    Senator Dorgan. Mr. Chairman, I will do that, too. Let me 
just say that as has always been the case with us on the 
Committee on Indian Affairs, and I am sure our House 
counterparts, consultation is really important. Consultation is 
critical. I think the witnesses today have provided some 
excellent statements. We are sorry for the brevity, but we 
intend to continue to be involved with you and to consult 
closely with you as we try to resolve these issues.
    So thank you very much for being here.
    The Chairman. Mr. Faleomavaega.
    Mr. Faleomavaega. Mr. Chairman, just shortly, to commend 
members of the panel for their testimony. I would like to make 
emphasis again in the spirit of bipartisanship, that this 
should really not be a politicized issue, and I sincerely hope 
and look forward to working with you and our Chairman Pombo and 
Mr. Rahall on our side, and Mr. Dorgan. Hopefully in this 
Congress we will make some form of a settlement in this 
legislation.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Congressman Inslee.
    Mr. Inslee. I have no questions. I just want to say, of all 
the times we have ever had an obligation to have close 
relationships with the tribes and an open dialogue, this is the 
time. I hope that we will all fulfill that obligation.
    Thank you.
    The Chairman. Thank you.
    Congresswoman Herseth.
    Ms. Herseth. I also will submit my questions for the 
record, but just thank the panel of witnesses for their 
leadership and for their willingness to offer their insights on 
the pending legislation.
    The Chairman. I want to thank the witnesses. I want to 
thank the members who came to this important hearing. We will 
be moving forward. Chairman Pombo and I have agreed, as we have 
already, that a bipartisan, bicameral piece of legislation will 
be moving forward soon on this issue. As we go through this 
process, we would very much appreciate your continued 
participation and input. I can assure you, you will not like 
the outcome.
    Mr. Garcia. Mr. Chairman.
    The Chairman. Go ahead.
    Mr. Garcia. Mr. Chairman, if I can make one more statement.
    I would like the panel to know, as well as the Congressmen 
to know that the statements that were made earlier with Mr. 
Bickerman and Mr. Eizenstat, I think the formula and the ideas 
they presented are very, very, very good, and that will help 
focus on the settlement. And so we would support those efforts.
    The Chairman. You know, that means a lot to us, Joe, and I 
thank you, because we think they gave us a very good framework 
to work on, and we are very grateful for your conditioned 
approval. Thank you.
    This hearing is adjourned.
    [Whereupon, at 11:10 a.m., the committee was adjourned, to 
reconvene at the call of the Chair.]


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                            A P P E N D I X

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              Additional Material Submitted for the Record

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        Prepared Statement of Charles Renfrew and John Bickerman

    Chairman McCain, Chairman Pombo, Vice Chairman Dorgan, Ranking 
Member Congressman Rahall, members of the Senate Committee on Indian 
Affairs, and the House Resources Committee, my name is John Bickerman 
and I appear here today on behalf of myself and Charles Renfrew. Judge 
Renfrew regrets that he cannot be here today due to an unavoidable 
conflict but wants to assure the committee that the comments I am about 
to deliver are his as well. We have worked on this testimony together 
and they accurately reflect our joint views.
    First, I would like to provide some background about our role, for 
it has not been the traditional role in which mediators normally serve. 
Two years ago this month, the staff of your committees contacted both 
of us to inquire about our interest in assisting the parties in the 
Cobell v. Norton dispute reach a consensual settlement. We were 
interviewed separately by the plaintiffs' counsel and senior officials 
from the Departments of the Interior and Justice, but with the strong 
encouragement by the committee's staffs that the parties should engage 
in mediation. Soon thereafter both the plaintiffs and the 
administration chose us to help them. Funding for our services was 
provided by the Department of Justice, but we were assured we would 
have complete independence in our actions and, indeed, we have enjoyed 
the traditional independence and neutrality that neutral mediators 
require. Although we had not met prior to this assignment, Judge 
Renfrew and I have worked together seamlessly and have been in complete 
accord with respect to all aspects of the mediation and the testimony 
we present today.
    Our assignment was to engage the parties in negotiation to seek a 
resolution of all claims brought by plaintiffs in their class action 
lawsuit now pending in the United States District Court for the 
District of Columbia. But our mission was also broader than traditional 
mediation. From the outset, both the parties and Congressional staff 
requested that we periodically report back to Congress regarding our 
efforts and our progress. This request was made for three reasons: 
first, any resolution we achieved through negotiation would likely 
require Congressional action; second, Congress wanted to know if either 
the plaintiffs or the defendants were behaving in a dilatory manner or 
otherwise negotiating in bad faith; and third, Congress wanted to know 
if a resolution was impossible, so that it could decide whether to take 
action. In most mediations, confidentiality of the negotiations is a 
bedrock principle. In this case, very little of the content of our 
discussions remained confidential. Indeed, we were expected to 
periodically disclose our conclusions to Congress.
    Although we are both experienced in mediating complex, high 
conflict public disputes, neither one of us could have predicted the 
difficult task we were about to face. Never before had we seen the 
level of acrimony or the inability to agree on even the simplest of 
logistical or procedural matters. We could not even get the parties to 
sign a mediation agreement that set out basic ground rules for the 
parties' conduct. Although we made some small progress, especially in 
the area of developing a model to resolve the information technology 
disputes regarding the security of Individual Indian Money [IIM] Trust 
data, within 6 months, we realized that a negotiated resolution was 
impossible.
    In October 2004, we met with the leaders of the two Congressional 
authorizing committees to report our conclusions and urge that Congress 
take the lead in crafting a resolution. We continue to believe that 
only Congressional action can resolve this dispute for the benefit of 
the beneficiaries of the IIM Trust and allow the United States to 
devote its resources to the traditional services it has provided Indian 
country. If Congress takes no action at this time, the litigation path 
will take years if not decades to reach finality. Many deserving 
beneficiaries will have died in the interim. Those beneficiaries who 
are alive will not be made whole. We also believe that the Department 
of the Interior's ability to serve Indian country will be compromised. 
So much of the policy affecting Indian country seems now to be made 
through the prism of the Cobell litigation. We are concerned that the 
historically beneficial trust relationship between the Federal 
Government and Indian country is in jeopardy as a result of this 
litigation.
    There is no dispute that the historical conduct of the United 
States in managing and accounting for the IIM Trust has been flawed. 
The Federal District Court of the District Columbia has so held and its 
judgment has been affirmed by the Court of Appeals. Indeed, Congress 
recognized the problem when it passed the Indian Trust Fund Management 
Reform Act, P.L. No. 103-412, 108 Stat. 4239 (codified as amended at 25 
U.S.C. Sec. 162a et seq. & Sec. 4001 et seq.) in 1994. More than 10 
years later, the problem persists. Substantial sums have been spent 
trying to fix a system that, without legislative changes, may be beyond 
repair. The pending legislation will go a long way toward addressing 
the underlying structural problems and compensating IIM beneficiaries 
for the Government's past negligence by restating the account balances 
for individual beneficiaries. Without legislation to fix the system, 
the problem will grow exponentially. However, we confine our testimony 
to title I and, specifically, how to value the Plaintiffs' Claim.
    While there is little serious dispute over the question of 
liability, the gulf that divides the parties over the magnitude of the 
liability is enormous. The most vexing problem facing your committees 
is properly valuing the claims and assigning a number that adequately 
compensates the IIM beneficiaries for the discrepancies between what is 
in their trust accounts and what should have been there. This is a hard 
task for which good, reliable data may not readily exist. But the 
difficulty and the imprecision of deriving a figure should not deter 
Congress from making a decision now and advancing the very fine 
legislation that your committees have drafted.
    As mediators we are accustomed to seeing the validity of the 
arguments of both sides to a dispute. This case is no different. We 
believe that the arguments of both the administration and the 
plaintiffs regarding the amount of adjustment that needs to be made are 
both partially correct and partially flawed.
    Initially, we understood the plaintiffs' position to be that strict 
common law fiduciary principles ought to apply. Absent the United 
States showing that funds were collected and paid to beneficiaries, the 
Government was obligated to restate the IIM individual accounts to the 
full amount in dispute plus interest. They said, ``If you can't show 
it, you owe it.'' In public statements in Indian country plaintiffs' 
counsel and the lead plaintiff have told beneficiaries that the amount 
that they are entitled to receive exceeds $100 billion and is in the 
range of $170 billion. We believe that these statements have created 
unrealistic expectations that have complicated efforts to resolve this 
dispute. More recently, the plaintiffs presented a settlement demand of 
$27.5 billion, assuming for settlement purposes, a 20-percent rate of 
funds not paid to beneficiaries as a measure of ``rough justice,'' but 
without data supporting this rate. Testimony of Elouise C. Cobell 
before the House Committee on Resources Hearing on H.R. 4322, Indian 
Trust Reform Act of 2005, December 8, 2005, at 7. As we show later in 
this testimony the choice of assumptions regarding the distribution of 
unpaid funds over the course of the trust fund, the ``error rate,'' the 
rate of interest used, and whether the interest is compounded annually 
dramatically impact the settlement value. The values chosen by the 
plaintiffs appear to us to be without foundation.
    The position of the United States is also suspect. The Department 
of the Interior has spent considerable funds to trace the record of 
transactions in the IIM system to determine if the payment made to the 
accounts of trust fund beneficiaries accurately reflects what should 
have been paid. The possible outcomes include both underpayments and 
overpayments. The preliminary results of this investigation are that 
the observed error rate is very small. Testimony of James Cason, 
Associate Deputy Secretary and Ross Swimmer, Special Trustee for 
American Indians on the Cobell Lawsuit, before the House Committee on 
Resources Hearing on H.R. 4322, Indian Trust Reform Act of 2005, 
December 8, 2005, at 3-5. Indeed, taken to its logical conclusion, 
Department of the Interior estimate of a settlement value would be far 
less than $500 million. This calculation may also be based on arbitrary 
and false assumptions.
    We believe that there are three potential sources of error in the 
IIM system: (1) money was not collected; (2) money was not properly 
deposited; and, (3) money was not properly disbursed. With respect to 
the money that was not collected, funds due IIM beneficiaries either 
never made it into the system in the first place or may have been 
collected late. The missing funds or the interest due beneficiaries for 
late payments could reflect a significant amount of money. This is 
particularly true in the land-based IIM accounts.
    We would designate this type of error as ``funds mismanagement.'' 
We believe fund mismanagement is sufficiently related to the claims in 
the pending litigation that it should be resolved under title I of the 
proposed legislation. But, fund mismanagement should be distinguished 
from ``land mismanagement.'' By contrast, land mismanagement would 
encompasses claims by individual beneficiaries over the failure of the 
United States to negotiate a fair compensation for their oil, mineral, 
grazing, real estate, or other assets that have been held in trust by 
the United States. We do not believe that these land mismanagement 
claims should be part of the resolution of the Cobell litigation. These 
claims have never been asserted by plaintiffs and are much more 
susceptible to individualized proofs and thus capable of being more 
accurately evaluated.
    The second potential source of error is that once in the system, 
the funds were not properly deposited in the beneficiaries' trust 
accounts. This has been the focus of the efforts of the Department of 
the Interior to value the plaintiffs' claim. While analyzing the 
administration of funds that have been received by the Department is a 
good start, it is not sufficient. Moreover, the Government appears not 
yet to have included in its analysis the land-based accounts where 
logically many more of the errors should arise. Because the analysis by 
the Office of Special Trustee only considers the second step of the 
process and does not analyze land-based accounts, we believe its 
estimates significantly understate the true exposure of the United 
States.
    The third source of error is whether beneficiaries actually 
received the disbursements that they were intended to receive. Did the 
beneficiaries get their checks and cash them? We have been advised by 
the Department of Treasury that the amount of checks that go un-cashed 
is relatively small. Nonetheless, there is no way of knowing whether 
these checks reached the intended payees.
    Frequently, as mediators we are asked to value a settlement in a 
dispute. In many instances the value of a case may depend on the 
litigation risk or the probability of a party prevailing at trial. What 
seems certain to us is that there will not be a quick end to this 
litigation. If Congress does not act, we believe that there will be 
many more rounds of appeals. Inevitably, one of the parties will 
petition the Supreme Court for review. By then, many of the IIM 
beneficiaries will be dead.
    There is no perfect or ``night'' number. Especially, as in this 
case, where missing documents may make an accurate assessment 
impossible, an arbitrary number may be the best path to a settlement. 
Consequently, we do not favor an extended effort to develop and apply a 
methodology to arrive at a number. We do not believe that it is worth 
the time and expense of such an effort because, at best, a methodology 
will only give the appearance of precision. It is our opinion that 
there are too many unknown and unknowable pieces of information that 
would be needed to support an analysis of a settlement value.
    What we do know is this: The parties seem to agree that 
approximately $13 billion should have been paid to beneficiaries over 
the time the IIM trust has been in existence. Neither side disagrees 
that a portion of these funds was indeed paid to the IIM beneficiaries. 
Where there is disagreement is in calculating the amount still owed 
trust beneficiaries. Other factors influence greatly the calculation of 
a settlement. Because of the time-value of money, moneys not paid a 
long time ago can greatly increase the total liability calculation. 
However, the Department of the Interior reports that the vast bulk of 
funds that went through the IIM system did so in the last 30 years. 
This seems like a reasonable conclusion that has been supported by 
verifiable data.
    By way of example and for illustrative purposes only--we want to be 
clear that we are not recommending a specific settlement value--we 
calculated the amount that the IIM Trust would need to be restated 
using various assumptions. According to the Department of the Interior 
figures, $10 billion of the $13 billion in IIM Trust receipts were 
realized after 1970. We further assumed that only $500 million of Trust 
Fund assets moved through the IIM Trust prior to World War II. Assuming 
a 20-percent error rate, a 3-percent compound interest rate, the fund 
would need to be restated by $7.2 billion. If we change our assumptions 
and consider a 10-percent error rate and a 4-percent compound interest 
rate, the restated balance is $5.6 billion. Raising the compound 
interest rate to 5 percent, but holding the error rate at 10 percent 
yields a value of $9.8 billion. The point of this exercise is not to 
recommend a settlement but to show the significant fluctuations in 
value with small changes in assumptions, especially the compound 
interest rate. Parenthetically, we note that the use of a compound 
interest rate is a hotly contested issue between the parties. If simple 
interest was used, these values would fall. Indeed, what these 
calculations show is that a final settlement is extremely arbitrary 
depending on the assumptions one uses. We do not believe that more time 
and analysis will yield a result that is more precise or less 
arbitrary.
    An alternative approach would be to look at the avoided costs 
associated with the Office of Special Trustee. Since 2001, the Office 
of Special Trustee has received more than $3 billion. If this 
litigation is not settled, how much more will Congress spend to comply 
with its legal obligations to perform an accounting? We believe that 
these funds would be better directed to the IIM beneficiaries.
    On behalf of Judge Renfrew and myself, we continue to offer our 
assistance to both committees in whatever roles you see fit for us to 
serve. We believe that the prompt enactment of S. 1439 and H.R. 4322 is 
an imperative and we encourage the committees to schedule these bills 
for markup as soon as possible.
    Thank you again for the opportunity to testify today. I will be 
pleased to answer any questions the committees may have.

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 Prepared Statement of Mike Marchand, First Vice President, Affiliated 
                      Tribes of Northwest Indians

    Chairman McCain, Chairman Pombo, Senator Dorgan, Representative 
Rahall, and members of the Senate Committee on Indian Affairs and the 
House Committee on Resources, my name is Mike Marchand, I am the First 
Vice President of the Affiliated Tribes of Northwest Indians [ATNI] and 
a member of the Colville Tribal Council. On behalf of ATNI, I thank you 
for your leadership on the trust reform issue and this hearing today. 
We are grateful for the work that has gone into S. 1439 and H.R. 4322, 
the Indian Trust Reform Act of 2005. ATNI supports enactment of this 
legislation and we are hopeful that the Congress will act on it this 
year.
    I am delighted to be here today with Keller George, the president 
of the United South and Eastern Tribes [USET]. USET has been in the 
forefront of tribal efforts to bring about meaningful reform of the 
management and administration of the Federal trust responsibility. For 
the last several months, ATNI and USET have been working together to 
develop recommendations for amendments to S. 1439 and H.R. 4322. We 
hope to be able to forward to the committees our joint proposals for 
amendments in the next few weeks. We look forward to working with the 
committees to help ensure enactment of legislation this year.
    We are very pleased that the committees are examining ways to place 
a value on the claims in the Cobell v. Norton case. Even though the 
case seeks an accounting for the IIM funds and the Federal District 
Court is powerless to award damages to the plaintiffs, everyone who is 
familiar with the case has known for years that funds will be required 
to settle the case. This understanding is reflected in title I of S. 
1439 and H.R. 4322 and by this hearing today. The plaintiffs have 
estimated the value of the claim to be somewhere between $27.8 billion 
and $170 billion. The Departments of the Interior, Justice, and 
Treasury have not been willing to openly state an estimate of value for 
the claims.
    The Department of the Interior has indicated that it might cost as 
much as $10 to $12 billion to do an itemized accounting for the IIM 
funds. That estimate led ATNI, among others, to suggest that an 
appropriate value for the claim might be in the range of $14 billion on 
the premise that it would be far better to provide the funds that would 
otherwise be paid to accounting firms to the account holders 
themselves. And to further complicate the search for a solution, the 
November 15 decision in the U.S. Court of Appeals for the Washington, 
DC Circuit held that the Department of the Interior can use statistical 
sampling to determine what is owed, which has led some to estimate the 
cost for the accounting problem to be around $350 million.
    We do not know what the correct method is for valuing the claims in 
the Cobell case, nor do we know the value of those claims. What we do 
know is to date:
    (A) there has been no success in getting the parties together to 
negotiate a compromise settlement figure.
    (B) that if the present course is left unchanged it is not at all 
likely that the IIM account holders will receive any compensation 
during the lifetime of many, especially those who need it most.
    (C) we will continue to see an erosion of the gains that tribal 
governments have made under the policies of self-determination and 
self-governance.
    We understand that it will be necessary for the committees to place 
a value on the settlement of the plaintiff's claims in order to move S. 
1439 and H.R. 4322 through the legislative process. We do not know 
which method would be best in the Cobell case, but we will work with 
the committees to assess the options. We trust the committees to be 
fair in their evaluation of those options.
    We note with interest that the Congress has appropriated over $3 
billion since 2001 to provide for the defense of the Cobell case and 
the reform and restructuring of the administration of the trust funds 
and assets by the Department of the Interior. Most of this money has 
been provided to the Office of Special Trustee--an office that was 
created in the Trust Reform Act of 1994 and was intended to be 
temporary. That is a lot of money to spend in a short period of time, 
particularly when it is provided in the absence of a defined plan and 
for poorly understood purposes. It is clear that the tribes have not 
supported or requested these appropriations because in most instances 
they involve the reallocation of funds that are desperately needed for 
education, law enforcement, and for fighting epidemics of alcohol and 
substance abuse. It has been more than a little difficult to get the 
administration and the Congress to focus on these areas in light of the 
significant commitment of appropriations to the Department's response 
to the Cobell case.
    We are also seeing the very nature of the trust responsibility 
redefined by the Department in response to the Cobell case. In some 
instances the changes that have been made or that are underway run 
directly counter to the Congressional policies of self-determination 
and self-governance and undermine the huge investment of fiscal 
resources that the Congress has made in those policies since 1975. In 
effect the Cobell litigation has come to hold the tribes and the 
Congress hostage to the Department's assessment of what it must do in 
order to comply with the real or anticipated orders of the Federal 
District Court. We are weary of policies that are developed in the 
context of advancing an adversarial position in the Cobell litigation 
and are concerned of the implications if this is allowed to continue 
any longer.
    There has been some improvement in the day-to-day administration of 
trust funds and trust assets by the Department. Those changes are 
welcome, even if the cost benefit ratio is not. At the same time, we 
are mindful of the fact that those who were supposed to be served by 
the Cobell litigation have received little. IIM account holders who 
have been told that they are owed tens of billions, or hundreds of 
billions of dollars are no closer to being made whole today than they 
were the day before the Cobell case was filed 10 years ago. Scores of 
account holders have died since the case was filed. Without a 
settlement the litigation is likely to go on for another decade or 
more. And, even if the plaintiffs prevail, the Federal District Court 
cannot make the account holders whole.
    Only the Congress or the U.S. Court of Federal Claims can provide 
financial relief to the account holders. Only the Congress can provide 
the direction for the real reform that is needed to ensure the proper 
management of the trust funds and assets. And, only the Congress can 
ensure that the tribal governments have the opportunity to assume the 
day-to-day responsibility for the protection and enhancement of the 
corpus of the trust.
    It has been 10 months since this legislation was first introduced 
and this is its third hearing. To date the administration and the 
Department have had ample opportunity to lead or be an active 
participant but have done next to nothing to work with the plaintiff's 
tribes or the committees to find a workable solution. We stand prepared 
to work with the committees to arrive at a value for the Cobell claims 
and to work for the prompt enactment of S. 1439 and H.R. 4322. We ask 
that the committees schedule these bills for markup in the next 30 
days.
    Thank you again for the opportunity to testify today. I will be 
pleased to answer any questions the committees may have.

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