[Senate Hearing 110-71]
[From the U.S. Government Publishing Office]
S. Hrg. 110-71
INDIAN TRUST FUND LITIGATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
ON
OVERSIGHT HEARING ON INDIAN TRUST FUND LITIGATION
__________
MARCH 29, 2007
WASHINGTON, DC
U.S. GOVERNMENT PRINTING OFFICE
34-405 PDF WASHINGTON DC: 2006
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COMMITTEE ON INDIAN AFFAIRS
BYRON L. DORGAN, North Dakota, Chairman
CRAIG THOMAS, Wyoming Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota PETE V. DOMENICI, New Mexico
DANIEL K. AKAKA, Hawaii GORDON SMITH, Oregon
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARIA CANTWELL, Washington RICHARD BURR, North Carolina
CLAIRE McCASKILL, Missouri TOM COBURN, M.D., Oklahoma
JON TESTER, Montana
Sara G. Garland, Majority Staff Director
David A. Mullon Jr. Minority Staff Director
(ii)
C O N T E N T S
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Page
Statements:
Bickerman, John, Bickerman Dispute Resolution................ 13
Cobell, Elouise, lead plaintiff, Cobell v. Kempthorne;
accompanied by Keith Harper, Partner, Kilpatrick Stockton,
LLP and James Otis Kennerly, Jr., individual Indian trust
account holder............................................. 24
Dorgan, Hon. Byron L., U.S. Senator from North Dakota,
chairman, Committee on Indian Affairs...................... 1
Echohawk, John, executive director, Native American Rights
Fund....................................................... 26
Kempthorne, Dirk, secretary, Department of the Interior;
accompanied by James Cason, associate deputy secretary..... 4
Martin, William, vice chairman, Intertribal Monitoring
Association on Indian Trust Funds and first vice president,
Central Council of the Tlingit and Haida Indian tribes of
Alaska..................................................... 28
Mercer, William W., acting associate attorney general,
Deprtment of Justice....................................... 12
Tester, Hon. Jon, U.S. Senator from Montana.................. 4
Thomas, Hon. Craig, U.S. Senator from Wyoming, vice chairman,
Committee on Indian Affairs................................ 3
Appendix
Prepared statements:
Bickerman, John (with attachment)............................ 40
Cobell, Elouise.............................................. 56
Echohawk, John (with attachment)............................. 70
Enos, Diane, president, Salt River Pima-Maricopa Indian
Community.................................................. 99
Juan-Saunders, Vivian, chairwoman, Tohono O'odham Nation
(with attachment).......................................... 108
Kempthorne, Dirk (with attachment)........................... 121
Martin, William.............................................. 157
Mercer, William W. (with attachment)......................... 226
Miles, Rebecca A., chairman, Nez Perce Tribal Executive
Committee.................................................. 179
Renfrew, Charles (with attachment)........................... 40
Stensgar, Ernest L., president, Affiliated Tribes of
Northwest Indians.......................................... 37
Thomas, Hon. Craig, U.S. Senator from Wyoming, vice chairman,
Committee on Indian Affairs................................ 37
Additional material submitted for the record:
Antonio, John, Governor, Pueblo of Laguna, Laguna, NM
[letter]................................................... 188
Carlyle, Delia M., chairman, Ak-Chin Indian Community,
Maricopa, AZ [comments].................................... 191
Colegrove, Nolan, Sr., president, Intertribal Timber Council,
Portland, OR [comments].................................... 194
Garcia, Joe A., president, National Congress of American
Indians,Washington, DC [resolution]........................ 207
Pesata, Levi, president, Jicarilla Apache Nation, Dulce, NM
[letter]................................................... 210
Shelly, Ben, vice chairman, Navajo Nation [letter]........... 215
Suazo, Sr., Gilbert, Governor, Taos Pueblo, Taos, NM [letter] 223
INDIAN TRUST FUND LITIGATION
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THURSDAY, MARCH 29, 2007
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to notice, at 9:15 a.m. in room
485 Senate Russell Office Building, Hon. Byron L. Dorgan,
(chairman of the committee) presiding.
Present: Senators Dorgan, Tester, and Thomas.
STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH
DAKOTA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
The Chairman. Good morning. I want to begin now. I am going
to make a brief opening statement, call on the secretary and
others to testify, and we will likely have to have a recess,
for which I apologize, but we don't have much choice.
Today's hearing will focus on the Administration's proposal
to settle the Cobell v. Kempthorne lawsuit, settle the 108
tribal lawsuits that are now pending, eliminate land
fractionation in Indian country, and convert the Indian Trust
into an owner-managed trust. I say it will focus on the
Administration proposal, it recommends these issues.
We will hear initial responses to the Administration's
proposal from Elouise Cobell, the lead plaintiff, from
mediators in the case, and two organizations that represent
Indian tribes who have brought similar trust mismanagement
cases against the Federal Government.
Senator Thomas, I just began a statement. I indicated to
them, it looks like we will have a minimum of three votes, and
perhaps more, so we will be required to recess at some point.
So let me finish my statement. I will call on you for any
additional statement, then we will have the secretary begin, if
that is satisfactory to you.
Senator Thomas. Fine. Or I can go vote and come back, or
whatever. The vote is going on right now.
The Chairman. Did they just start? Well, we have a minimum
of three votes, and the second two will be 10 minute votes, I
understand. So it would probably be hard for us to have a
continuous session.
Let me finish my statement, call on you, and then we will
decide how we proceed.
The issues surrounding the management of the trusts have
existed since the trusts were first created in 1887. At that
time and since, the Federal Government believed that Indians
were not competent to manage these trust themselves. Therefore,
the Federal Government as trustee would do so. It turns out the
Federal Government was not capable of managing the trust
accounts over the last century plus.
These management duties included the Federal Government
negotiating leases for the use of lands owned by individual
Indians and tribes; collecting revenues generated from those
leases; creating trust accounts for those revenues; and
depositing the moneys into those accounts; investing those
moneys; and finally, distributing those moneys to proper
beneficiaries.
Congress delegated these trust duties to Federal agencies,
and as the Federal courts have held several times in the Cobell
case, the agencies have done a poor job. In 2001, the Court of
Appeals noted the following:
The Federal Government does not know the precise number of
individual Indian trust accounts that it is to administer and
protect. The Federal Government does not know the proper
balances for each individual Indian trust account, and the
Government does not have sufficient records to determine the
value of each individual Indian trust account.
In 2005, the Federal Court of Appeals affirmed that it is
not disputed that the Government failed to be a diligent
trustee, and noted that in the 2 decades leading up to the
Cobell lawsuit, report after report denounced the Government's
management of individual Indian trust accounts. Congress should
not be surprised, then, by the court's conclusions. There have
been numerous reports since 1915 to the U.S. Congress
describing some of these problems in the management of Indian
trusts. These reports have described horrible conditions
surrounding the management of the trusts.
I would like to show a couple of examples. I have three
photographs that show the storage at Fort Berthold and Fort
Totten Agency of these documents surrounding the trusts. You
will see from the photographs the type of storage that exists,
and why the court has found the conclusions they have found.
So now we find ourselves in a very significant predicament.
The Cobell v. Kempthorne case is in its 11th year of
litigation, with no end in sight. The Federal courts have
continued to find the Government in breach of our fiduciary
responsibilities and duties. The Department of the Interior is
now conducting a costly and time-consuming accounting of
individual Indian trust accounts.
The legality and the adequacy of this accounting will
likely be litigated for years once it is completed. The case
has resulted in numerous cabinet officials being held in
contempt; the BIA and other parts of Interior going years
without access to the internet; several hundred millions of
dollars spent so far on litigation and related activities.
The case clearly, it seems to me, is a dark cloud over the
trust relationship between the Federal Government and the
Indians, and will continue to be until there is a reasonable
solution. Mrs. Cobell had every right to bring the lawsuit. She
was justified in doing so. There is no dispute about the
Federal Government's liability. The only remaining question is
how to value the Federal Government's liability.
Currently, the Department of the Interior is doing a
historical accounting of the individual trust accounts. This is
supposed to be indicative of the value of the Government's
mismanagement of the trusts. But there is a huge difference
between the accounting being done by the Interior versus the
accounting that the Federal District Court thought was
adequate. Photograph 4, if it will be shown, shows some of the
key differences between the Government accounting approach and
the approach that the Federal District Court believed to be
legally adequate back in 2003.
The key difference is cost. The Government's plan would
cost $335 million, while the District Court's plan would cost
$6 billion to $13 billion. Another key difference is the actual
trust accounts that will be provided an accounting. The
Government plans to provide an accounting for those accounts
that were open on or after October 31, 1994. The District
Court's plan would have required the Government to do an
accounting for all accounts that ever existed since 1887.
Given the limited scope of the Government's accounting
effort, I worry that the results of the accounting effort will
be litigated for years, and not produce an end that is
justified. I raise these issues, and I wanted to make a longer
opening statement because I want everyone to know how important
the settlement of this issue is. If there is no settlement,
this case will continue for probably more than a decade, in
addition to the 11 years that has already elapsed. I would like
to see a settlement of the Cobell lawsuit and an end to the
injustice that has been dealt to individual Indians. I would
like to see the Government's attention focused on the other
issues, Indian health care, education, housing for which we
hold hearings in this committee. But it is difficult to focus
on all of those issues when so many resources are spent on
litigation, and when this liability overhangs the Federal
Government.
For 4 years, Congress has considered ways to settle all or
part of the Cobell legislation. In 2003, this committee urged
the parties to participate in mediation. Mediators were chosen
by the plaintiffs and the Government in early 2004, and within
6 months the mediators realized that a negotiated resolution
was impossible. Both mediators agree that only congressional
action can resolve this dispute. We will hear more about the
mediation process today from John Bickerman.
The Administration has now submitted a global settlement
proposal that goes far beyond the claims at issue in the Cobell
lawsuit. Congress, who is the ultimate trustee to the Indians,
must now decide what role, if any, it will continue to play in
trying to formulate-some kind of a reasonable settlement.
Otherwise, I believe this case will languish, more breach of
trust cases will be brought, the Department of Justice will be
turned into the Department of Liability, a whole lot of
plaintiffs, many in this lawsuit, will long be dead before the
lawsuit is ever resolved.
My hope is that we can find through this process some
constructive way to address the grievances, to right the
wrongs, to provide a just settlement.
With that, I conclude my statement and call on Senator
Thomas.
STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM WYOMING, VICE
CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
Senator Thomas. Thank you, Mr. Chairman. I won't do my
statement right now. I think we are going to have to work out
how we are going to make the vote. It is important to have this
hearing. I simply want to welcome the secretary here and I look
forward to the witnesses.
[Prepared Statement of Vice Chairman Thomas appears in
appendix.]
The Chairman. Let me say, Senator Tester, we apparently
have 4 minutes left in this vote. So we, despite all of our
best intentions, are going to have to go cast this vote. It
appears as if there will be two votes following, so I think it
will be a minimum 30-minute recess. We will be back as soon as
we can. We apologize for the inconvenience to the witnesses and
to all of those who have gathered.
Senator Tester.
STATEMENT OF HON. JON TESTER, U.S. SENATOR FROM MONTANA
Senator Tester. First of all, I want to welcome Elouise
Cobell. I want to welcome James Kennedy, Mayor Kennedy; and
Bill Mercer. I welcome you all to this committee meeting.
I want thank you, Mr. Chairman, for holding this committee
meeting. I found out about the Cobell situation, oh, it has
been probably nearly 2 years ago, and I can't agree with you
more, Mr. Chairman. It is time to get everybody in the same
room. It is time to find a constructive solution to this
problem. It is not going to get better with time, and that is
just my perspective. It needs to be fixed sooner, rather than
later.
So with that, thank you very much.
The Chairman. The committee will stand in recess until 10
o'clock.
[Recess.]
The Chairman. The hearing will come to order.
Our profound apologies, Mr. Secretary, Mr. Bickerman and
others for the inconvenience. It turned out there were far more
votes and they were 10 minute votes and there was simply no way
to come back and forth. So thank you very much for your
patience.
Mr. Secretary, I know you have a full schedule, so let me
recognize you to begin and offer us your statement. If there
are any questions, we will ask them and then allow you to
depart.
Mr. Secretary, thank you.
STATEMENT OF DIRK KEMPTHORNE, SECRETARY, DEPARTMENT OF THE
INTERIOR, ACCOMPANIED BY JAMES CASON, ASSOCIATE DEPUTY
SECRETARY
Mr. Kempthorne. Mr. Chairman, thank you very much. Thank
you for your courtesy. I fully understand the dictates of the
Senate schedule and votes, having lived that life for some
time.
Mr. Chairman, I appreciate both the opportunity to be here
today, but also the opportunities that I have had to have
conversations with you about this issue. It is an issue that is
particularly important to the Department of the Interior and to
Indian country. As our March 1, 2007 letter states:
The Administration strongly supports a comprehensive
legislative package to resolve the issues facing us today with
regard to the Indian land trusts.
I have attached my statement, the 1 page summary of the key
facets the Administration believes are necessary to acceptable
Indian trust reform and settlement legislation.
On June 13, 2003, then-Chairman Campbell and Vice Chairman
Inouye sent a letter to tribal leaders asking for their help in
attacking three major tasks that would include the management
of the Indian trusts. The three items were: No. 1, stop the
continuing fractionation of Indian lands and focus on the core
problems of Indian probate by swiftly enacting legal reforms to
the Indian probate statute.
No. 2, to begin an intense effort to reconsolidate the
Indian land base by buying small parcels of fractionated land
and returning them to tribal ownership. And number three was to
explore creative, equitable and expedient ways to settle the
Cobell v. Norton lawsuit.
We agree that these are priorities for bringing a solution
to the issues facing the Indian trusts today. We would ask
settling tribal trust lawsuits as well. The Administration
strongly supports a comprehensive legislative package designed
to strengthen the partnership between the Federal Government
and American Indians.
To achieve these goals, the Administration supports
providing up to $7 billion over a 10 year period. I believe it
is time for the Administration and Congress to tackle an issue
that has been raised by a commission, a task force, a
commission for almost 100 years.
First, the overwhelming finding of almost every task force
and commission that has looked at Indian economic issues say
that a viable tribal land base is essential. The Indian
Reorganization Act of 1934 halted further allotments and
extended indefinitely the trust status of the allotted lands
not yet patented. As a result, individual Indian allotments
still held in trust have passed, through the generations, as
increasingly smaller fractionated interests.
Since 1934, time and again witnesses have come before this
Congress to detail the problems that have arisen as a result of
the fractionation. Specifically, as each generation inherits
interests in these lands, more and more individuals hold
interests in one parcel of land. Today, we have allotments of
40 and 80 acres, with more than 1,000 ownership interests.
What this means for Interior is that we manage each of
these individual interests. When its owner dies, we oversee the
distribution of the owner's interests. In 2000, then-Assistant
Secretary of Indian Affairs Kevin Gover said that he is an
account holder, having inherited one twenty-seventh of his
grandfather's share of land. He had 7 cents in his account when
it opened. It had 8 cents in 2000. He told the interviewer he
gets quarterly statements and that it cost the Government $435
a year to maintain his account. This is not a rare occurrence.
In fact, we have tens of thousands of similar accounts. The
cost of maintaining the accounts exceeds the value of the trust
assets being managed.
Think about what else we could be spending that money on,
Mr. Chairman. Just as you pointed out, I totally agree with
you. The opportunities to invest in Indian education, fighting
methamphetamines, Indian health issues, Indian housing issues.
The logical answer to this problem is that we must take a far
more aggressive stance on consolidating these interests and
then turn over the management of these Indian lands to Indians.
That is what the Administration is trying to accomplish. These
owner-managed lands would still stay in Indian ownership. They
would still be exempt from State taxation. They would still be
Indian country for purposes of tribal jurisdiction. With Indian
owners become empowered to make the decisions on land use and
leasing, the broad paternalistic roles of the Bureau of Indian
Affairs [BIA] and the Office of the Special Trustee can be
reduced significantly.
We recognize that many of the parcels of individual Indian
land are so highly fractionated that it would be unfair to
convert them to an owner-managed status at this point. That is
why our proposal includes an element that would provide us with
the tools to consolidate these interests before they are
converted. We propose including in trust reform legislation
both voluntary mechanisms and mandatory authority to
consolidate highly fractionated parcels.
In addition, our proposal includes incentives to enable
individual Indian landowners to undertake property management
sooner, rather than later.
I have heard our proposal described as ``termination'' of
the trust. Clearly, it is not. That policy was squarely
repudiated in 1970 and replaced with the policy of self-
determination. The policy that guides our relationship with
tribes today. We have seen great progress in this regard. This
is what NCAI President Joe Garcia said in January of this year
in the fifth annual State of Indian Nations Address:
As tribes take on major responsibilities, we find that we
need to improve the way our tribal governments function. Today,
tribes are governments with budgets and responsibilities
comparable to State governments, and we have become more self-
sufficient than we were in the past. As I traveled the country
in the past year, I heard from many tribal leaders about their
efforts to improve the effectiveness of their governments. Too
often tribes are saddled with federally-imposed models of
governance that do not fit our traditions and cultures. It is
time to address the barriers caused by these mismatched
governments.
He went to say:
Many of the Federal policies that many of the Federal
policies that impact tribal economic development were put into
place at a time when tribal governments did not have the
capacity that we have today. These policies need to be
revisited and tribal governments need to be given the same
tools for economic development that exist for other
governments.
I couldn't agree with President Garcia more. Not only must
we change our mindset about the management of individual Indian
land, but we must change it with respect to tribal land as
well. Frankly, I am troubled by a statutory and regulatory
paradigm that places Interior employees in the position of
second guessing management decisions tribal governments make
regarding their lands.
As a Governor of a western State, I had the opportunity to
work closely with the Indian tribes in the State of Idaho. As
those of you on the committee with Indian tribes in your States
know, tribes have made great strides in the last 30 years under
the policy of self-determination. Today, Indian tribes are full
service governments, offering Indians and non-Indians alike a
broad range of services.
As most of you know, it was President Richard Nixon who
ushered in the policy of self-determination for Indian tribes
and Indian people. I would like to share just a couple of
excerpts from his famous special message on Indian Affairs
dated July 8, 1970:
We must assure the Indian that he can assume control of his
own life without being separated involuntarily from the tribal
group. And we must make it clear that Indians can become
independent of Federal control without being cut off from
Federal concern and Federal support. But most importantly, we
have turned from the question of whether the Federal Government
has a responsibility to Indians, to the question of how that
responsibility can best be furthered. We have concluded that
the Indians will get better programs and that public monies
will be more effectively expended if the people who are most
affected by these programs are responsible for operating them.
Mr. Chairman, we have an opportunity to work together to
address several significant issues that are impediments to
progress in Indian country. We need to address the potential
for years of litigation. We need to restore the economic value
of individual Indian allotments through land consolidation. We
need to move beyond a century of well-meaning paternalism to
recognize an Indian country capable of managing its own affairs
if only we would let them.
Mr. Chairman, I look forward to working with you, the vice
chairman and the members of the committee, and the leadership
in Indian country to find a solution to this. Mr. Chairman, I
believe you have made a very telling point, and that is that if
we continue the path of litigation, the issue will outlast
virtually all of us who are in this room today. But if we can
find a settlement, then I believe that we can finally have a
path forward that many people will benefit from, in particular
Indian country.
Thank you very much.
[Prepared statement of Mr. Kempthorne appears in appendix.]
The Chairman. Mr. Secretary, thank you very much.
Senator Thomas.
Senator Thomas. Thank you, and thank you for your patience.
Voting is something that interrupts our lives around here.
Mr. Secretary, what is the status of the court order that
was estimated to cost $6 billion to $13 billion?
Mr. Kempthorne. Mr. Vice Chairman, the status of that is
that to date we have spent $250 million on this historical
accounting practice. We anticipate that for the foreseeable
future, some $56 million per year would allocated so that we
would continue this effort. I would point out, too, if I may,
Mr. Chairman with your indulgence, if I might go into a little
bit of detail of what we have thus far been able to determine
with that $250 million that has been expended.
The Chairman. Without objection.
Mr. Kempthorne. In a $20-million examination, we did, of
the five named plaintiffs in the Cobell case and the
predecessors, we looked at 12,500 transactions. We found net
overpayments of $3,250. Looking at judgment accounts, we have
77,818 of those. We have reconciled 84 percent of those
accounts, totaling $413 million, and found a net underpayment
of $19,100. We have reconciled 92 percent of our capital
accounts, totaling about $182 million. We found a net
overpayment of $2,700.
The litigation support accounting project is looking at the
accuracy of land-based individual Indian money accounts, and
reconciles all high dollar accounts, which would be $100,000 or
greater transactions, and does a statistical sample of smaller
value, those that are less than $100,000 transactions, drawn
from 1985 to 2000 land-based IIM accounts nationwide.
For the high dollar transactions, we have reconciled $483
million so far. We found a total net of $667 in overpayments.
That is out of $483 million. For the statistical sample, we
have looked at 4,480 transactions totaling $4.89 million and
found a net overpayment of $1,194.
Mr. Vice Chairman, the Department is fully prepared to
continue the historical accounting. We believe that we have the
tools necessary to do so, including the records.
Senator Thomas. Thank you, Mr. Secretary. That is basically
my question.
The Chairman. Senator Tester.
Senator Tester. Thank you, Mr. Chairman.
I apologize for being late, so I wasn't able to hear all of
your testimony, Secretary Kempthorne. So if this is repetitive
of what you said in the beginning, let me know.
My question revolves around money that I think is being
offered to be allocated to Indian country in this 110th
Congress, and there being some, I don't know, some language
around that, maybe not formally, but at least what I am hearing
in the halls, some of this money is going to be allocated for
purposes of the Cobell suit. In fact, maybe even the
perspective is do we settle with Cobell.
I have two questions. No. 1, I envision the suit being
settled by everybody getting in the same room and figuring out
how to settle it, and there being some remuneration toward that
settlement. So do you anticipate that being done?
No. 2, what is it about the money? Is this real? I mean, I
am hearing, I think $7 billion was tossed around. To my
understanding is that, well, I don't know if that is adequate
or not. I am not here to say that that is adequate, but there
have been figures of $200 billion being thrown around for the
settlement of the Cobell suit. So is that figure something that
has been agreed upon between Elouise Cobell and the department,
or tribal members and the department? Where did this come from?
Mr. Kempthorne. Senator Tester, I appreciate your question.
The $7 billion is in a letter which was sent to the chairman
and to the vice chairman, signed by both the attorney general
and myself. It is a figure, $7 billion, that has been derived
through a process working with the Department of Justice on
their view of litigation risk on the Department of the Interior
and the Office of Management and Budget.
I think what is most important, Senator, is the fact that
for the first time ever on this issue that the Administration
has come forward. We have said that we would like to see a
conclusion. For the first time ever, the Administration has put
a dollar figure on the table. It is $7 billion.
To follow through to the nature of your question, how that
might be identified and what the thoughts may be, there are
four major elements in that figure that we derived. The first
is to settle the Cobell case and any other future cases related
to management of individual Indian lands or assets that stem
from the lands.
The second is to settle similar tribal cases. It is also to
provide mechanisms and money for land consolidation, which we
think is absolutely important, so that individual Indian land
becomes more economic and is put to its best use. And also then
in converting Indian lands that are tied to a status where they
are owner-managed.
So this is the suggested approach by the Administration
with a dollar amount attached to it.
Senator Tester. Okay. I am not going to really talk about
the three or four items you talked about, the settlement of the
case and other items. What I do want to ask, and I will just
add this one more questions, the Department of Justice and
Interior and Office of Management and Budget were the ones who
came up with the figure. This wasn't arbitrarily done because
you had some standards, but my question is, inclusion also
means you have to bring the folks in who filed the suit. Were
they brought in as part of the discussion?
Mr. Kempthorne. Senator, this is a proposal that has been
brought forward by the Administration.
Senator Tester. Okay. Has there been any dialog with
Cobell?
Mr. Kempthorne. Senator, there has been. I will tell you
that there has not been by myself personally, having been in
this position for 10 months. But in the 11 years, there have
been at least two different efforts at arbitration. I believe
one of the individuals who was tasked with that responsibility
is here on the panel and will be addressing that.
Senator Tester. And if any of these questions can be
answered, they are the members of the panel that have further
information that I would like to have. It just seems to me that
that is a critical component we may be missing in this whole
thing.
Thank you.
The Chairman. Mr. Secretary, first of all, I agree with you
that the fact that the Federal Government has propositioned
that there is a potential $7 billion liability here is a very
significant step, because the Federal Government has not
previously indicated that kind of liability, with the exception
of the Attorney General who I think testified in another venue
that the potential liability could be $200 billion, as I
understand it. I will ask Mr. Mercer about that. But Mr. Cason
previously, and Ross Swimmer, testifying have indicated that
the exposure is limited to less than $500 million perhaps. And
so this is a significant change.
But let me respond to the details you were talking about
with respect to the survey of the information that leads you to
a certain conclusion. My understanding is that the analysis
conducted by the department was focused on per capita accounts
for the periods for which electronic records were kept, roughly
1985 to present. And these accounts are a very small fraction
of the total accounts, and they are the ones that are the most
easily administered. In short, they are not representative. In
fact, I am quoting from Mr. Bickerman's testimony now: ``This
analysis is not representative of the potential claims.''
I do want to show, if I can, photograph 2 and 3 again. My
understanding as I show this is that there is a new repository,
a new facility in Kansas, the American Indian Records
Repository, and if I showed a picture of that we would see a
very nice repository of records that are kept in perfect order.
But the question is, what kind of records went to the new
repository, when this is a picture of the records at the Fort
Totten Agency. Take a look at that, and ask yourself, what do
you think somebody gleaned from that? And then we show the
second picture, the second photograph. The reason I show these
is to demonstrate how unbelievably inept the keeping of these
records were, and why I said at the start of this that Mrs.
Cobell and others as plaintiffs had every right to file a suit
and to be very concerned about this.
The circumstances it seems to me, and thank you for the
photographs, are what has been the error rate and what interest
rate do you use over a period of well over a century in order
to try to calculate some kind of settlement here. I want to ask
you specifically, Mr. Secretary, the Administration settlement
proposal goes well beyond the circumstances of the Cobell
lawsuit.
I don't disagree at all that fractionation is a very
serious problem and we have to find a way to fix it, perhaps
even in these circumstances. But the proposal includes a
settlement of tribal claims and the conversion of Indian trust
into owner-managed trusts. In your remarks, first of all, you
indicated these issues are requirements for any settlement
legislation.
My question is, first of all, we don't even know the extent
of the tribal claims really. Isn't that right? And I think that
probably gave rise to the attorney general testifying
previously in another venue in Congress that potential
liability may be up to $200 billion. But to require the Cobell
case be settled in conjunction with all tribal claims, the
universe of which we don't even know, is I think one that
probably means that it cannot be settled under those
circumstances.
So the question is, would the Administration remain
supportive of a settlement at some level if some but not all of
the issues in the Administration's settlement proposal are
included in a legislative bill?
Mr. Kempthorne. Mr. Chairman, because, as has been pointed
out, this issue has been going on for virtually a century, we
believe this is an opportunity based on the actions brought
forward by Ms. Cobell. To reach a settlement, and because of
the issues that are both individual related and tribal related
are interrelated, we believe that this is an opportunity for us
to look at all of these issues and how they do relate to one
another so that we don't expend the resources, the time of the
last 11 years and solve just one component part, and then
continue what may be another decade or two decades to take each
next component part.
If in fact this is an opportunity, with your leadership,
and the leadership of others that have been involved with this,
and see if on our watch we can find a solution, that is our
preference.
The Chairman. Are the tribal claims an essential
requirement for the Administration in terms of resolving this?
Let me tell you why I ask that question. Mr. Bickerman, as you
know, was one of the two mediators. Both mediators worked at
great length and tried very hard to find a resolution, and
could not. But Mr. Bickerman in his testimony today says that
more time and analysis will not yield a result that is more
precise or less arbitrary. He talks about a number in the range
of $7 billion to $9 billion to settle the Cobell litigation can
be supported by available data using reasonable economic
assumptions.
But Mr. Bickerman's proposition here of the $7 billion to
$9 billion settlement does not include an analysis or any
attempt at an analysis of the tribal claims, which are a
completely separate set of issues.
Mr. Kempthorne. I appreciate that, Mr. Chairman. We would
be very interested to see what his analysis is, Mr.
Bickerman's, and how he derived those figures. That would be
part of this. But at the Administration, it would be our hope
and our intent that we could find a solution to these issues
concerning Indian country, individual and tribal, and put them
together so we can have a resolution that would be a path
forward for Indian country.
The Chairman. Mr. Secretary, I have a list of questions I
want to submit to you, because we would like to exchange on the
record answers to a series of inquiries. We regret very much
the 1 hour and 45 minute delay that could not be avoided.
Because you are a former member of the U.S. Senate, you
understand that. But I am going to let you go, and thank you
very much for being here, and say this. I think on behalf of
Senator Thomas, myself and other members of this committee, we
really want to continue the discussion that starts with this
hearing to see if there is a way to resolve this issue, because
it casts a shadow over virtually everything else that we are
doing. It is going to take a substantial amount of resources.
It is also going to mean a fair number of people are going to
die before there is a result if this continues in the court
system for 10 years.
I want to continue in an aggressive way to work with you
and with everyone involved in these issues to see if there is a
way to solve this, to settle it, in a manner that is fair to
the plaintiffs and in a manner that is fair to the Federal
Government, without requiring that other issues be resolved
attendant to it, for which we don't have adequate information.
So Secretary Kempthorne, thank you very much for being with
us today.
Senator Thomas.
Senator Tester? Anything else?
Senator Thomas. No; I think I have a couple of questions,
too, Mr. Secretary, that we will submit.
The Chairman. We will submit that. And Mr. Cason will
remain, I expect?
Mr. Secretary, thank you very much.
Mr. Kempthorne. Mr. Chairman, thank you very much. I
appreciate again your reaching out as you are in this
leadership capacity, and the vice chairman. We would like to
see the resolution. As you point out, we may not know all of
the answers. As I have gone into more and more detail on this,
to try and understand the last 11 years of the history, to see
how complicated it is, the fact that now have some 300 million
pages of documents such as you have reflected in that picture.
In 1999, yes, that is where they were, but now they are in one
of the state of the art archival retrieval programs.
Therefore, again we believe now that while we have done a
sample, we now can go forward with about 99 percent of the
records that exist.
So Mr. Chairman, again, I except the atmosphere that you
have established here, and we look forward to being a full part
of it.
The Chairman. Mr. Secretary, thank you very much.
Mr. Kempthorne. Thank you.
The Chairman. Next, we will hear from the two additional
witnesses on this panel: William Mercer, acting associate
attorney general at the Department of Justice. I know Mr.
Mercer had some other engagements this morning which probably
have fallen by the wayside. We appreciate your patience as
well.
And then we will hear from John Bickerman, who was one of
the mediators.
Mr. Mercer, why don't you proceed? Your entire statement
will be made a part of the record, and we would ask you to
summarize.
STATEMENT OF WILLIAM W. MERCER, ACTING ASSOCIATE ATTORNEY
GENERAL, DEPARTMENT OF JUSTICE
Mr. Mercer. Good morning, Mr. Chairman and Mr. Vice
Chairman and Senator Tester.
As you know, Attorney General Gonzales and Secretary
Kempthorne recently proposed resolution to a group of Indian
trust issues and offered to spend up to $7 billion implementing
that proposal. I know that the committee is very familiar with
these issues, so I won't spend too much time on the history of
these problems.
The Cobell and tribal trust cases and trust management
issues more generally have taken up a great deal of the
committee's time in recent years, as well as the time of the
executive branch agencies and the courts. In fact, the
Washington, DC Circuit Court of Appeals has emphasized how time
consuming this litigation has been in the courts, and urged the
parties to come together and find a resolution. That is what we
have tried to do in developing our legislative proposal.
As Secretary Kempthorne has already discussed, our
legislative proposal does more than settle the pending
litigation. It also addresses the structural problems that give
rise to the litigation, with the goal of getting individual
Indians and tribes more control over their lands and resources.
I want to say at the outset that we will work together to put
together a proposal that is fair and equitable. Our proposal is
to settle litigation claims, so it needs to provide just
compensation for those claims of individual Indians and to
Indian tribes.
At the same time, it is not fair to ask the taxpayer to pay
more in settlement than plaintiffs would receive in court. The
Department of the Interior's ongoing review of these accounts
and of the historical record continues to confirm that the rate
of error in these trust accounts is low. The United States also
has a number of defenses in these cases and we are prepared to
present those defenses in court should the litigation continue.
That said, we strongly support the legislative settlement
which we believe is in the best interests of all the parties
involved. These complex historical cases are not well suited to
be handled by courts. The Cobell litigation has been underway
for 11 years so far, and the tribal cases before the Indian
Claims Commission were not resolved for over 30 years. The
process of analyzing and reading millions of pages of
historical records relating to individual and tribal accounts
is still ongoing and promises to be very costly.
Those costs are a deadweight loss to the plaintiffs and the
taxpayers. Everyone benefits if these claims are resolved
without the costs and litigation, and with the moneys going to
individual Native Americans and tribes, and to otherwise
advance reform.
A settlement will also provide a prompt and definite
payment to individuals and tribes. By contrast, litigation
could take many years and some plaintiffs will ultimately
receive no recovery.
To realize these benefits, any resolution must provide
finality; otherwise the benefits of settlement and perhaps the
settlement money itself could be swallowed up in unnecessary
litigation. Thus, our proposal seeks to resolve all of the
claims together, through a streamlined and fair administrative
process, and provides a number of safeguards to ensure that
this is the final resolution.
Our claims settlement proposal, taken together with our
proposal to resolve fractionation and improving trust
management, provides an opportunity for historic change in the
management of the Indian trust. The existing relationship has
been dominated by litigation. That adversarial relationship has
interfered with the ability of individuals and tribes who own
these lands and resources to enjoy the full benefits of their
own property.
Our proposal would keep these lands in trust, but provide
the trust beneficiaries with more direct control over their own
assets. It would also eliminate the fractionation that has
burdened the management of these lands.
For many years, there has been a trend in Indian country of
tribes to seek more sovereignty over their own property
decisions. Our proposal is a natural continuation of that
process. We hope that these changes will help break the cycle
of disputes and litigation that has gone on for so long, and
open the doors to productive management of these lands by the
tribes, who are the true owners.
We look forward to working with the committee, and hope
that by working together, we can carry out the reforms we have
proposed.
Thank you very much.
[Prepared statement of Mr. Mercer appears in appendix.]
The Chairman. Mr. Mercer, thank you very much.
Next, we will hear from John Bickerman, who was one of the
mediators that was chosen by both parties. Mr. Bickerman, you
may proceed, and your entire statement will be made a part of
the record, and you may summarize.
STATEMENT OF JOHN BICKERMAN, BICKERMAN DISPUTE RESOLUTION
Mr. Bickerman. Thank you, Chairman Dorgan.
Chairman Dorgan, Vice Chairman Thomas and members of the
committee, Judge Charles Renfrew and I thank the committee for
giving us the opportunity to testify regarding the most recent
offer by the Administration to resolve the Cobell litigation.
The Administration's March 1 letter provides a very
valuable opportunity to advance a settlement. The committee
should not hesitate to seize this chance to act. Our remarks
may be uncharacteristically direct for mediators used to seeing
both sides of every dispute. However, the committee needs a
frank, unvarnished appraisal of settlement options by a
disinterested party so that it can move ahead to resolve this
litigation that has done so much to poison the relationship
between the executive branch and Indian country for more than a
decade and two administrations.
I thought it would be useful to give just a little bit of
background because I know there are some new members to the
committee. Our testimony needs to be understood in light of the
context of our involvement in this matter. In March 2004, this
committee and the House Committee on Resources contacted Judge
Renfrew and myself to mediate the Cobell dispute. 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.
However, our mission was much broader than a traditional
mediation. From the outset, both the parties and the
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
achieved through negotiation likely would 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 whether a negotiated resolution would be
possible, and that if it was impossible we needed to tell the
committee so they could decide whether to take action.
In most mediations, confidentiality of 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 through
this committee.
Senator Tester asked before whether the parties had ever
met. The answer was yes, frequently. We tried, but our efforts
were utterly unavailing. Although we made some small progress
with respect to information technology, after a relatively
short period of time, we realized that we could not as neutrals
bring the two sides to a point where they could settle the
dispute.
And so within 6 months, we were back before the committee's
leadership. In October 2004, we met with the leaders of the
committee, at that time, Senators Inouye and Senator Campbell,
the House Resources Committee leaders Congressmen Pombo and
Rahall to report our conclusions, and urge the Congress to take
the lead for enacting a resolution. We said then and we will
repeat now 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.
Nothing has changed. In the winter of 2005, we met with the
chairman of this committee to urge that the committee not
abandon the effort to find a legislative solution. He agreed
and directed the staff to draft legislation. Throughout the
last Congress, Senator McCain and Senator Dorgan devoted
significant time and effort to the development of a legislative
settlement, often in the face of unfounded criticism from many
quarters.
Then on August 1, 2006, Senators Dorgan and McCain and
Secretary Kempthorne and Attorney General Gonzales convened a
meeting. Although we weren't there, we understand that the
participants of this August 1 meeting directed their staffs to
draft legislation that could be passed in the last Congress.
Almost immediately, senior staff from the Departments of
Justice, Interior and Treasury and the Office of Management and
Budget began high-level meetings with congressional staff to
carryout the direction of their principals. An extraordinary
amount of creative energy went into these discussions. While
the final result did not produce the intended legislation,
there are many worthwhile ideas that are worth retaining and
that were discussed.
Complex litigation like this takes many years to pass. The
time is ripe to solve this problem forever.
I want to add, this is not a partisan issue, and way too
much time and resources have already been wasted and more will
be wasted attempting to make a broken system work if Congress
fails to act. I am often asked, well, why don't we just leave
it to the courts. Well, the courts are not in the position to
solve this problem, and Congress has an independent trust
responsibility to do something, and that is why I believe we
are here today.
No reasonable person questions whether trust beneficiaries
have been harmed by the failure of the United States over many
decades to account for assets and management of the assets, and
many deserving beneficiaries have died in the interim. Those
beneficiaries who are alive will never be made whole without
your attention.
I want to skip a good chunk of what I had put in my written
testimony, to address what I think are the elements of the
deal, and in particular talk about the values.
While there is no serious dispute over the question of
liability, the gulf that divides the parties over the magnitude
of the liability is still enormous. The Administration contends
that the exposure of Cobell is less than $500 million. The
plaintiffs have been publicly asserting that the value of their
claim is in excess of $100 billion. They are both wrong. Judge
Renfrew and I say it unequivocally. The reason we think they
are both wrong is that the Administration's $500 million
number, while it focuses on the pure calculation of the
accounts that are managed, that the Secretary described, it
fails to account for the other pieces that are part of what the
Administration calls the other related Cobell claims. Let me
give you an example.
We have reason to believe that over the course of the last
100 and some odd years, that the Administration did not collect
all of the income that the trust beneficiaries were entitled
to. Indeed, after 1980, under the Grace Commission, under the
direction of its chairman Mr. Linowes, reported that about 10
percent of moneys that the Department of the Interior was
supposed to collect from lessees was never collected. If it was
never collected from non-tribal lessees, it is reasonable to
conclude that it was never collected from tribal lessees. The
value of dollars 50, 75, or 100 years ago are much greater than
the value of dollars now.
We looked at using that percentage of the value of the
funds that were not collected, or if they were collected, were
collected late. And when we used very reasonable assumptions
that were in the record from the 1980's, and applied reasonable
interest rates, and assumed what a certain amount of that money
would return over a period of 3 years, we came up with a range
of estimates based on the interest rates between $4 billion to
$7 billion. Those were the numbers that were included in last
year's testimony. I think that that is a reasonable place for
this resolution to focus on.
But I would like also to talk about the elements of a
settlement. I was very pleased to hear the Secretary talk about
self-determination, because we think that without voluntary
self-determination and control, a resolution of this dispute
will just not be possible politically. That is a key element.
In the 109th Congress, the settlement of Cobell was married
to trust reform and it would be a mistake to resolve the
accounting litigation without fixing the basic flaws in the
system. However, in doing so, Congress must be sensitive to the
historical context of the relationship between the United
States and its beneficiaries.
Fixing fractionated interests is a key element. There is a
consensus that highly fractionated interests in trust land
limits the productivity of the land, reduces the value of the
land, impedes efficient trust accounting, and leads to errors
because keeping track of beneficiaries with very small
interests becomes almost impossible. A sensible solution here
would be to encourage the voluntary exchange or substitution of
fractionated interests for cash or shares of ownership in the
land.
If I can digress here for just 1 minute. I just spent the
last 2 days with the Yakama Nation in the Yakima Valley. We
passed acre after acre of land that was often farmed as
vineyards or land that was being put to good use. And then we
come across some fallow land. I turned to the person who I was
with, and I said, ``well, why isn't that land being farmed?''
And he said, ``well, it takes 2 years to lease that land.'' I
said, ``why does it take 2 years?'' ``Well, that land is so
highly fractionated, by the time all the interest owners can be
collected and vote on what to do, it takes 2 years to sign a
least.'' ``Is the value of that land worth much?'' This woman
said, ``absolutely it is worth less because it's so
fractionated.''
Dealing with fractionation is a hidden value that we can
capture if we can resolve this litigation.
The Chairman. Mr. Bickerman, I want you to summarize. We
are about out of time for your testimony.
Mr. Bickerman. Okay.
In conclusion, Mr. Chairman, I would just like to emphasize
the importance of having voluntary self-governance, dealing
with fractionation, and resolving all the pending issues. I
would in closing say that we have not looked at the tribal
claims and we do not have a sense of what they are worth.
Thank you.
[Prepared statement of Mr. Bickerman appears in appendix.]
The Chairman. Mr. Bickerman, thank you for your testimony,
and thank you for the work that you have put in to trying to
understand and work on this issue.
Mr. Mercer, in a statement to the House Subcommittee on
Justice Department Appropriations in March 2005, Attorney
General Gonzales estimated that the Government's liability for
tribal trust claims would be over $200 billion. Is this still
the Department of Justice's estimate?
Mr. Mercer. It is not, Mr. Chairman. I am familiar with the
statement. I guess I have a couple of points I would like to
make on the statement.
I believe that that text talks about the allegations that
have been set forth in claims as part of the tribal trust
litigation. Going to the question that you posed, Mr. Chairman,
we have already seen dismissal of a claim for $100 billion as
part of that ongoing litigation.
So we certainly believe that that figure represents claims
that were set forth by the parties. We have already prevailed
in one of those cases and we believe that the ultimate value is
much, much, much less than what the stated claims were by those
parties.
The Chairman. Do you believe that there is a liability of
some type or of some quantity with respect to tribal claims?
Mr. Mercer. I think, Mr. Chairman, the proposal that the
Administration set forth is a reflection that we have some
reform goals that we would like to see achieved, and we also
believe, as part and parcel of that settlement, that we can
resolve claims brought as part of the tribal trust litigation
and as part of the Cobell litigation.
The Chairman. Mr. Mercer, do you think there is a
distinction between the plaintiffs represented by Mrs. Cobell
with respect to the individual accounts that they allege have
been mismanaged and for which there is some evidence of
substantial mismanagement. Is there a distinction between those
issues and the issues of a tribal government that makes claims
on its behalf?
Mr. Mercer. Well, certainly the course of the litigation, I
think, is one thing that distinguishes it. As you noted, Mr.
Chairman, the litigation is now past 1 decade in terms of the
case in the District Court here in Washington, DC. That
litigation seeks an accounting, at least in the view of the
Government. So we are at a stage in that process where the
Department of the Interior is attempting to complete the
accounting as ordered by the court. That is the threshold.
That is something that can then be litigated and probably
will be litigated in terms of the viability of the accounting.
We would then, at some point, I think individual claimants
could then go to the Court of Claims or District Courts if the
claims were of small value, and litigate those claims. We are
concerned that this will be endless litigation because we will
see not only the accounting itself being litigated, but appeals
of that process, and then the litigation of the claims
themselves in other courts, and the potential appeals there.
The Chairman. But Mr. Mercer, you saw the pictures that I
showed, the photographs today of the condition of certain
records. Unbelievable, of course. You have to see that to
believe that incompetence. If you were an individual with a
claim and feel you have been cheated because of improper record
keeping and so on over a long, long period of time, if you were
an individual you would feel the right to seek redress in the
courts as an individual.
My question to you is, is that not distinct and different
than a claim that a tribe will make at some point on behalf of
tribal assets?
Mr. Mercer. Certainly one thing they both share in common
is, as Secretary Kempthorne noted, the fact that the kind of
records that are depicted there, to the extent that those
records are being recovered and are being entered into this
data tracking system that allows the accountants to perform the
full accounting, the thing that the tribal trust cases share in
common with the claims made by individuals is that there are
accountings that need to be done with respect to furthering
those claims. We are well down the path of completing that
accounting, which certainly informs the Government's view of
the value.
So that is a common theme here in developing that threshold
of information, which we certainly believe is being developed
in the course of the process.
The Chairman. You are still not answering the question I
think I am asking. Isn't there a difference between individuals
whose accounts have been mismanaged, who filed to seek redress
in the courts, and the attempt to settle that? Isn't there a
difference between that and tribal governments, which are
sovereign governments, whose assets have been mismanaged and
wish to file a tribal claim? Isn't there a difference between
the two? And why do you insist on marrying the two with respect
to the settlement of the Cobell case?
Mr. Mercer. There is a difference in that we are talking
about the [inaudible] and the accounting that is being
performed to determine what the error rate is and what the loss
would be. I think the tribal trust claims are different in that
that litigation is, although it is still tried to determine
what the value of some assets are, it is true that I think the
nature of the claims are the same.
The Chairman. But there is a difference in ownership?
Individual ownership versus tribal ownership. That is what I am
trying to get you to say. Isn't that the case?
Mr. Mercer. I think that is true, Senator.
The Chairman. And so if you were the owner of an individual
trust account, felt you had been cheated on it, and it had been
mismanaged and so on, and you went to the court and said, I am
going to file a claim to get what is owed me. And they said,
I'll tell you what, we will settle it only but we will settle
it, if you are willing to settle other issues over here, the
extent of which we don't even understand, and the liabilities
for which accrue to a tribe that had nothing to do with
individual accounts.
Do you understand their angst about that?
Mr. Mercer. I certainly do, but I think all the things that
the Government has set forth in terms of principles of this
proposal are related. One of the things that we are talking
about is the fact that if we are going to resolve this in a
fashion with full and fair compensation, there is an interest
in saying, let's make a determination about the value, whether
we are talking about individual accounts or whether we are
talking about what is being owed to the tribes.
If we are going to continue down the litigation path, which
is not what the Administration would choose to do at this point
because we believe that if we can resolve it, it inures to the
benefit of all. But there isn't anything that says we can't
continue to litigate. It is just not a good way to do it. It
will take decades, as the Indian Claims Commission experience
represents.
The Chairman. Mr. Mercer, if Mr. Bickerman, one of the
mediators, concludes, having looked at what he has looked at,
that $7 billion to $9 billion is probably a fair range of
settlement for the individual accounts, your proposal seems to
suggest that tribal accounts are worth nothing. I am talking
about the potential claims.
Mr. Mercer. As Mr. Bickerman said, I think we are happy to
continue the conversation in terms of his valuation, but you
are right, Mr. Chairman. Our valuation based upon what we are
seeing in the accounting, which may, I think, I can't remember
exactly when Mr. Bickerman's work ended, but it is clear that
that accounting has continued and the error rates, as Secretary
Kempthorne talked about, and the fact that all these records
have been entered into the system, we have a data set that
would suggest the error rates are quite low. We do have a
different approximation of value to this.
The Chairman. But Mr. Mercer, that set of data has
virtually nothing, well, I shouldn't say nothing, but that set
of data would be the kindest evaluation of the circumstances.
You have taken that data which has been recorded and mechanized
from 1985 forward. We are talking about liabilities for
accounts that have been mismanaged for well over a century. I
have looked at some of the details of that, and what has
happened. I think there are plaintiffs here that have had
assets stolen from them, unbelievable mismanagement.
Look, I think that working with the Department of the
Interior, the Justice Department, and others, it seems to me
that it is in the interests of this country to find a way to
resolve this. Otherwise, we will in the next decade or perhaps
2 decades see this bouncing around forever. Those who should
get redress in the courts will not get it. And virtually
everything else that we try to do will be affected by it, that
is trying to find funds for crises in health care and education
and housing and so on.
So I want us to continue to work with the Attorney General
and the Secretary of the Interior and the Administration. I
want us to get to the right result, but I would like to find a
way for us to constructively reach agreement if it is possible.
Senator Thomas.
Senator Thomas. Thank you.
Mr. Mercer, I am a little confused, did the DOJ not say the
Government was potentially liable for $200 billion. The
Department said that the exposure was there for $200 billion.
Is that correct?
Mr. Mercer. The statement that you refer to, Mr. Vice
Chairman, is that the department suggests that it needed a
certain amount of money to defend the claims for allegations of
potential exposure in these cases. As I have noted, since the
time of that testimony, we have already prevailed in a case in
which the allegation by the plaintiff in a tribal trust case
was for $100 billion. So it is the Government's position at
this point that the exposure based upon what has been
articulated by plaintiffs far exceeds what we believe the
values are.
Senator Thomas. Okay. I just wanted to make that clear.
Is it practical do you think to resolve the hundreds of
lawsuits in one piece of legislation?
Mr. Mercer. Well, we believe that this reform package,
which as I have noted, includes $7 billion, an amount that the
Administration has set forward to try to resolve the number of
claims, not only deals with the litigation that is presently
ongoing in various courts, but achieves the reform agenda that
was set forth by Secretary Kempthorne. We believe that as part
of the conversation with this committee, and collaborating with
the parties, that we can advance the goals that the chairman
has talked about and that are part of the Administration's
principles.
Senator Thomas. We have this question for Mr. Bickerman.
The Chairman. Yes; let's do that.
Senator Thomas. Mr. Bickerman, apparently your testimony
indicates that the plaintiffs and the Government have taken
unreasonable positions with regard to the claims. If that is
the case, do you think we can compromise and negotiate? And if
not, why not?
Mr. Bickerman. Yes; I do think that a compromise is
possible, Mr. Vice Chairman. I think that the Administration's
efforts with the congressional staff last year that ended in
December was a step in the right direction. I think the
Administration's willingness to put a number on the table on
March 1 and have a comprehensive package of ideas is a further
step in the right direction. I think with further work by this
committee that a resolution is possible and maybe even within
sight in this Congress. Absolutely.
Senator Thomas. Of course, if it is done in this Congress,
why Congress will come up with its own solution, somewhere
between the two parties. Do you think either of them will ever
accept that kind of an agreement? Or does it matter?
Mr. Bickerman. Well, if it becomes law, I think they will
accept it. My sense is that at this juncture in time, everybody
recognizes that the past can't be the future, that it has been
so destructive. Federal policies are being made through the
prism of Cobell, and that is not healthy, and I think that
there is a willingness to work together. I think that the
issues you are dealing with in your questions with respect to
the inclusion of tribal claims is a very valid one to have a
discussion about. I think in particular there is an issue of
self-governance, and making it voluntary. I think there are
ways that historically Congress has done that through Public
Law 93-638, and that is a good model. It needs to be tinkered
with.
I also think that the avoided costs, the amount of money
that we will spend if we do nothing will swamp what we could
spend to fix it now. So there is enormous incentive to get it
right and do it now.
Senator Thomas. Thank you. Do you suggest a figure
somewhere between $7 billion and $9 billion, was that both for
individual claims and tribal claims?
Mr. Bickerman. That analysis was just focused on the
individual claims. It was focused on what the other Cobell
related claims, but it was just the IIM accounts that I had
looked at, and I am not, and Judge Renfrew and I have not
looked the tribal claims. The tribal claims came into the
picture in December for the first time.
Senator Thomas. The proposition before us, however, applies
to both. Isn't that correct?
Mr. Bickerman. The Administration's proposal does, yes,
sir.
Senator Thomas. Thank you.
The Chairman. Senator Tester.
Senator Tester. Thank you, Mr. Chairman.
For Bill Mercer, Bill, I think there is a letter, a March 1
letter that [inaudible] and future liabilities, if this is
sound. Is that correct?
Mr. Mercer. It is, Senator. Yes.
Senator Tester. Okay. And so I guess the first question
would be, do you anticipate future mismanagement with
[inaudible]
Mr. Mercer. Well, a big part of the reform package,
Senator, is the fact that we believe that we can change the way
this relationship has worked. And so, we are hopeful that in
fact we will be able to reform it in a way that will be an
effective change for the future.
Senator Tester. I would hope that would be the case,
because quite frankly I would hate to see us pass a law where
it said that the bank can do whatever they want with my money
and I would have no recourse. Do you understand what I am
saying?
To make it proactive and settle all future settlements, I
mean, that is a huge step. It could create some major problems.
From our conversation, in about June 2005 you were selected
to be here in Washington, DC and your assistant [inaudible] I
think that happened in September 2006. The dates don't matter.
But in the meantime, you still filled the job as U.S. Attorney
for Montana.
The question I have for you, has that had impacts on job
performance here and in Montana? Are we short-changing folks in
Montana or here? And as it particularly applies to each of
those jobs, and as it applies to this lawsuit, is there a
problem there?
I feel, because I am trying to fill two jobs right now, one
2,200 miles away, as yours was, and this one. It is very
difficult to do. What is your perspective on that?
Mr. Mercer. Well, let me talk about the operations of U.S.
attorneys offices first, and note that the Sentencing
Commission just recently issued its data for fiscal year 2006.
When you compare the work that we are doing in the District of
Montana with what we have done historically, and with my peers,
I am very pleased to report that production in terms of the
number of cases charged that resulted in sentences has
continued to go up during that time period.
If you take a look at the sentence length as a proxy for
the seriousness of the case, I think you will see that the
productivity of the men and women that are serving as assistant
U.S. attorneys in Montana is extraordinary. I think things are
going very well there. Again, if you take a look at the
historic comparison, it figures out to be very favorable.
So I am happy to talk to you in great detail and give you
all those statistics, but I think by any fair measure of what
it is that we are doing day to day in court, it is I think
going very, very well. I continue to go back. I was back last
week. I continue to go back and I continue to have daily
communication with the leadership team I have in place there.
In terms of issues here, I think it bridges the two in that
here is an issue that as a Montanan, I have a significant
amount of perspective on, having basically been born and raised
in the State and understanding some of the challenges that this
presents for Native Americans and tribes in the State of
Montana. I think there is a value to having people that serve
in the Administration that have that perspective from the
field, if you will.
And so I think you can get value and efficiencies by having
those sorts of perspectives, and I hope I can bring that to
this issue.
Senator Tester. So ultimately in the end, Montana doesn't
need a full-time prosecutor?
Mr. Mercer. Montana has 22 full-time Assistant U.S.
attorneys and a person as U.S. attorney that is engaged every
day in terms of the work of that office. If you look at, again,
2001 data, 2002 data, and 2006 data, you will see that that
productivity continues to go up every year.
Senator Tester. Can I just ask about one specific issue as
it applies to Montana and the tribes? It is methamphetamines.
It is a huge issue in Indian country. It is a huge issue all
over the State of Montana. How are those prosecutions been
going?
Mr. Mercer. Well, I am delighted to report that ONDCP has
just funded a new task force that is going to cover Crow and
Northern Cheyenne. We have the Safe Trails Task Force that does
Indian country meth work on the Blackfeet Reservation. We have
the Tri-Agency Task Force that is based out of Havre--in your
region--that does the drug investigations both on Rocky Boy and
Fort Belknap. And in Fort Peck, there is Federal money that
goes to something called the Big Muddy Task Force.
My office does as many felony prosecutions dealing with
drugs in Indian country as presented by those task forces. We
are not going to prosecute our way out of that problem. That
is, number one, a prevention job. We are there as the backstop
to prosecute people who distribute and who are bringing the
poison into Indian country. I am happy with that cooperative
effort.
Senator Tester. It is a huge scourge on our society, but I
think its impacts on Indian country are even more [inaudible]
You are right. It is going to take a multi-pronged approach.
Unfortunately, over the past [inaudible], you have been in
the press dealing with the Department of Justice with the U.S.
Attorneys. I think there were some e-mails released by the
Department of Justice that showed you were intimately involved
in an effort to push out U.S. attorneys that were very capable.
My question is real straightforward. If there is a
committee that asks you to come forth in Montana, are you
willing just to come forth and do it in the light of day with
transparency so we can find out your side of the story, without
Fifth Amendments and that kind of stuff?
Mr. Mercer. Yes.
Senator Tester. Thank you.
A question for Mr. Bickerman. Mr. Bickerman, you said that,
the [inaudible] has a very good question from Senator Thomas on
the $7 billion to $9 billion for individual claims only. You
said the tribal claims were not involved in that $7 billion to
$9 billion. Is there any estimate work being done on what that
might cost?
Mr. Bickerman. On tribal claims? No, sir.
Senator Tester. None. No idea what it is?
Mr. Bickerman. Not by me, sir.
Senator Tester. Okay. The other question is that you said
the groups got together and you couldn't get them together. Let
me get the exact words. There was an opportunity to get the
parties together because you thought you had an agreement, and
you couldn't get them in the same room to agree on much, and so
it fell apart. Why? Was it money? Was it some of the other
factors--self determination, control? Or was it that it didn't
address the tribal? Was it all of the above? Was it lack of
respect? What was it?
Mr. Bickerman. Judge Renfrew and I tried assiduously to
identify issues and work with the parties. We have never, and
both of us have mediated a long time, and Judge Renfrew truly
regrets that he couldn't be here today. But we had never seen a
more emotional, acrimonious dispute as we saw here. It was
impossible to get the parties to sit in the same room and
negotiate.
As a result, we tried different ideas, but we never got a
lot done.
Senator Tester. Did you or [inaudible], I can't remember
which, but [inaudible] that talked about a claimed dismissal of
$100 billion? Which one of you said that? Was that you, Bill?
Mr. Mercer. Yes.
Senator Tester. When was that dismissed and by whom?
Mr. Mercer. I don't have a date. We can certainly get it
for you.
Senator Tester. About [inaudible] Spring of whatever,
month?
Mr. Mercer. Evidently in the past couple of years.
Senator Tester. In the past couple of years.
Mr. Mercer. I understand the past couple of years.
Senator Tester. Okay. If we could get data on that. And who
dismissed it?
Mr. Mercer. I don't know. We will get that to you, too.
Senator Tester. Okay. Great. Thank you very much.
And thank you, panelists for coming and being so patient. I
really appreciate that.
The Chairman. Let me thank the panel for being here. We
appreciate your willingness to come and testify.
Mr. Cason, you have not had to participate orally, but we
know that questions we will send will have your active
participation on responses.
Mr. Cason. I have had my opportunities before. [Laughter.]
The Chairman. And if this ever gets settled, you won't have
to come to these hearings in the future.
Mr. Cason. That would be great.
The Chairman. We thank all three witnesses.
I would like to invite the final panelists to come forward.
Elouise Cobell is the lead plaintiff in Cobell v. Kempthorne.
Elouise Cobell is from Browning, MT. She will be accompanied by
Keith Harper, who is a partner in Kilpatrick Stockton, LLP, in
Washington, DC.
John Echohawk is the executive director of the Native
American Rights Fund in Boulder, CO.
William Martin is vice chairman, InterTribal Monitoring
Association on Indian Trust Funds in Albuquerque, NM. He is
also first vice president of Central Council of the Tlingit and
Haida Indian Tribes of Alaska.
Let me thank all of you for being with us today, and for
your patience as well.
Ms. Cobell, as I have indicated to others and I will to
this panel, we regret the delay today, but it was not to be
helped because of the votes in the Senate.
I will ask that you proceed with your entire statements
being made a part of the record. You may summarize as you
choose.
Let me begin with you, Elouise Cobell.
STATEMENT OF ELOUISE COBELL, LEAD PLAINTIFF IN COBELL v.
KEMPTHORNE, ACCOMPANIED BY KEITH HARPER, PARTNER, KILPATRICK
STOCKTON, LLP; AND JAMES OTIS KENNERLY, Jr., INDIVIDUAL INDIAN
TRUST ACCOUNT HOLDER
Ms. Cobell. Thank you, Chairman Dorgan and thank you Vice
Chairman Thomas and thank you, Senator Tester.
I would like to thank you for inviting me here today to
provide the testimony to the committee in the most critical of
issues: Bringing justice to 500,000 individual Indians by
resolving fairly the Individual Indian Trust Fund lawsuit,
Cobell v. Kempthorne.
Mr. Chairman, I will admit that I am frustrated. Year after
year, I have been asked by this committee and the Natural
Resources Committee in the House to testify. Year after year, I
do so, hoping that this will be the time when a fair resolution
is reached and that the fraud and corruption regarding the
management of individual Indian trust assets will end.
People often speak about the cost of the mismanagement in
monetary terms. But as the Court of Appeals has reminded us,
this case is not solely about money, but help and the very
existence for the many individual Indian beneficiaries that
rely on the funds for their daily existence.
Here in Washington, DC, it is a bit easier to overlook the
real-life consequences of the Department of the Interior's
breaches of trust. With me today is such an individual Indian
beneficiary. He is a friend and a Blackfeet Indian from my
reservation, James Kennerly, Jr. James is the son of James Otis
Kennerly, or as the Department of the Interior referred to him
as ``allottee 1997.'' Like prisoners, Government officials
often refer to us, to our people, by their number.
James Otis Kennerly, Sr., was a World War I veteran and
disabled in combat fighting for this Nation. He was allotted
trust land back in 1907, and it included considerable oil and
gas resources in the Cutbank, a resource-rich area of the
Blackfeet Reservation. Today, his son owns this land with his
siblings.
As early as 1930, and most likely much earlier, oil
companies pumped thousands of barrels a week off Kennerly's
land. This is documented in records by the Department of the
Interior's own experts. Documents established that payments
were made to the Department of the Interior, in connection with
the leasing of Kennerly's allotment.
However, according to the Department of the Interior's own
historians, after 1946, there were no documents regarding the
lease of his land, no statements, no deposits, and no files.
And there was no money deposited into his account.
So what happened? There is no doubt that the oil wells
continued to pump on the land of James Otis Kennerly. You can
see it for yourself. He would take you out there today,
tomorrow. Yet, after the 1930's, James, Sr., did not receive
any payments. That continues to be the situation today with
James, Jr. And every call or visit to the Department of the
Interior, he recounts hundreds of visits, ends in the same way:
We can't give you an explanation.
Department of the Interior's historians now speculate that
his lease was unlawfully unitized with other lands of the
Blackfeet Tribe and that the tribe now receives all of his
moneys, but they don't really know, despite hundreds of hours
of looking at his documents. This is all in a report these
historians submitted in the court case of Cobell.
What are the consequences to the Kennerlys of this theft?
For James, Sr., a disabled vet unable to work, it meant that he
lived in abject poverty the remainder of his life, as he was
not provided his VA benefits either. This poverty contributed
to declining health, and he passed away in the 1940's.
Of course, with no money, he could not afford to take care
of his children during his lifetime. So his son, James, Jr.,
here with us today, was raised in an orphanage. After that, he
was sent to Government boarding schools, with all of the
incumbent problems of that system that we in Indian country are
all too familiar with.
He and his siblings share James, Sr.'s land now, but they
do not receive any money from the oil that still comes from
that land. James, Jr., has had more than his share of hardship.
I can personally attest, based on the decades of long
friendship, that he has led an impoverished existence. The
Government's theft of his trust funds did not on its own
bankrupt James Kennerly, Jr., but it certainly eliminated any
options for improving his situation. It robbed him of his
health and education and opportunity, and the abuse continues
today.
He should be a millionaire, but like his father, he lives
in great poverty. In many ways, the broken trust has robbed him
of his life, and the pain it causes continues every day.
This is not an isolated tragedy. James Kennerly, Jr., is
not alone. Indeed, there are hundreds of James Kennerlys on
every Indian reservation. They, too, have been robbed of
health, education, and opportunities, and the abuse continues
today. They, too, like Mr. Kennerly, pay the price for a
failure to resolve this matter.
Understand, Senators, that this is a life and death
situation. It is for these Americans that we must try and forge
a resolution. Let us end the malfeasance and the suffering. The
time is to act, for now, for all the James Kennerlys across
Indian country.
The $7 billion is insufficient to settle the Cobell case
standing alone, particularly since the proposal contemplates
paying this money over 10 years. Given the time value of money,
this means that the actual figure is much lower, and the
Government's own experts put their liabilities between $10
billion to $40 billion.
Of course, they do not seek to settle just the Cobell case
with this $7 billion proposal. The Government proposes to use
the $7 billion to buy much, much more, including paying for a
multi-billion dollar debacle called fractionation,
extinguishing all past, present and future, and indeed future
trust claims against individual Indians for mismanagement,
claims that go far beyond the Cobell case, paying for trust
reform, paying for information technology security, and
redressing all tribal trust claims, which Mr. Gonzales has
conceded is $200 billion standing alone.
If that were not enough, the Government proposes to end all
future liability. That means irrespective of how blatant and
how significant future breaches are, the Government cannot be
sued. This is in no uncertain terms a license to steal provided
to an entity, the Department of the Interior, which has
demonstrated itself to be dishonest. This is not an offer.
Instead, it is a slap in the face for every individual Indian
trust beneficiary.
Now, I am here reacting to the Government's first call
settlement proposal. I guess I should be happy that after 11
years of litigation, they have actually put some kind of an
offer on the table, but the proposal of Secretary Kempthorne
and Attorney General Gonzales is so absurd that it cannot
really be called a settlement offer.
I want to conclude to talk just briefly about where do we
go next. What for Congress? What is it that you can do? There
is a way to proceed. You can compare a bill that puts forward a
reasonable settlement. This proposal should not seek to address
every issue in the sun in Indian country. Instead, it should
address the matter that has brought us all to this point: The
Cobell historical accounting and restatement of claims, and
their underlying malfeasance that Cobell seeks to redress.
That is where we begin. We cannot begin with an unfair,
unjust, insulting proposal that the Department of Interior and
the Department of Justice have brought forward. We need to
begin with a solution that is fair.
Thank you very much.
[Prepared statement of Ms. Cobell appears in appendix.]
The Chairman. Ms. Cobell, thank you very much. We
appreciate your testimony. As always, it is very direct.
John Echohawk, executive director of the Native American
Rights Fund, Boulder, CO. Mr. Echohawk, welcome. You may
proceed, and your entire statement will be made a part of the
record, and we would ask you to summarize.
STATEMENT OF JOHN ECHOHAWK, EXECUTIVE DIRECTOR, NATIVE AMERICAN
RIGHTS FUND
Mr. Echohawk. Thank you, Mr. Chairman.
Although the Native American Rights Fund is part of the
Cobell legal team for the last 11 years, I am here today on
behalf of 15 tribes that the Native American Rights Fund
represents in tribal trust fund litigation, plus possibly 220
more tribes if the Federal District Court in Washington, DC
certifies one of those cases as a class action.
I would like to make three points briefly for the committee
this morning. One is just to educate them about the status of
tribal trust cases. There are currently 108 of those cases
pending in either Federal District Courts or the Court of
Federal Claims. They are on behalf of 69 tribes, and again, if
some of these cases are certified as class action cases, that
number could go up to 285 tribes.
Over 70 of these cases were newly filed because of the
December 31 deadline that existed for tribes to challenge these
Arthur Andersen reconciliation reports that were given to the
tribes in 1996. I submit that there is a financial crisis in
Indian country with all of these tribal cases on the table now,
together with the Cobell case and the individual claims. I
think it is in the magnitude of the range for action that the
Congress provided back during the savings and loan scandal, and
the bailout that Congress provided for that.
I submit, too, it is in the magnitude of this mortgage
crisis that the Nation faces now and Congress is thinking about
a bailout there as well. I think that we need a bailout here in
the Indian trust fund mess as well.
As we have talked about in the hearing today, Attorney
General Alberto Gonzales had talked about the Government's
liability being potentially $200 billion. For the record, I
just want to read into the record his exact words during that
testimony. He said, ``The United States' potential exposure in
these cases is more than $200 billion.'' That is his exact
language.
The second point I would like to make to the Committee is
that this proposal by the Administration is unacceptable to our
tribal clients. As has been discussed, there was no tribal
consultation with tribes on this proposal to include their
tribal claims in this proposal. It is arbitrary. There has been
no valuation, no analysis of these tribal claims. As we have
discussed as well, there are objections to the fact that there
is no future Federal liability for the administration of what
would be left of the trust. More than that, there would be the
termination of this historical trust. Anyone familiar with
Indian country knows how important the trust responsibility is
to tribes.
I think at a minimum we need to talk about separating out
consideration of the tribal claims from the Cobell settlement
and all of these various proposals that are included within
this settlement offered from the Administration. We have to
keep tribal claims separate.
And finally, I want to suggest to the committee that it may
be possible to fashion some legislative proposals for
settlement of some of these tribal claims. I would submit to
the Committee that that would be worth exploring. I think that
exploration would have to protect the prerogative of tribes to
pursue their tribal trust claims in whatever form or through
whatever avenues they pursue to resolve those claims. Any
settlement proposal must certainly be voluntary and not be
forced on tribes.
I do think that with all of these claims potentially on the
table, that it is certainly worth the time of the committee to
explore a possible legislative solution for at least some of
those tribal claims.
[Prepared statement of Mr. Echohawk appears in appendix.]
The Chairman. Mr. Echohawk, thank you very much for being
with us.
William Martin is vice chairman of the InterTribal
Monitoring Association on Indian Trust Funds in Albuquerque,
NM. Mr. Martin, welcome and you may summarize.
STATEMENT OF WILLIAM MARTIN, VICE CHAIRMAN, INTERTRIBAL
MONITORING ASSOCIATION ON INDIAN TRUST FUNDS, AND FIRST VICE
PRESIDENT, CENTRAL COUNCIL OF THE TLINGIT AND HAIDA INDIAN
TRIBES OF ALASKA
Mr. Martin. Thank you, Mr. Chairman, Mr. Tester.
My name is William Martin. I am first vice president of the
Tlingit and Haida Indian Tribes of Alaska. I also serve on the
board of directors for the InterTribal Monitoring Association
on Indian Trust Funds.
I am pleased to appear today to present ITMA's views
regarding the Administration proposal.
The Administration proposes a single initiative to address
the Cobell litigation, pending tribal lawsuits, and the
continuing fractionation of Indian land ownership. The proposal
would also eliminate Government liability for future trust
administration. ITMA does not regard this as trust reform, but
rather as a proposal for termination or buy-out of the trust
responsibility.
With respect to tribal lawsuits, more than 100 are
currently pending against the Government. Some of these have
been in courts for almost 30 years. Scores of them were filed
as recently as December 2006, however, purely as a protection
against the possibility that they would thereafter be barred by
the statute of limitations. Others involve such diverse issues
as range management and uranium processing.
In other words, these tribal cases are emphatically not all
alike.
With regard to land consolidation, reducing the number of
Indian-owned interests in trust lands is a centerpiece of the
Administration's proposal. The tribes and the Government might
find some common ground in addressing this issue, but not if
the Government insists on driving a wedge between the tribes
and their members on constitutionally protected property
rights.
Based on these observations, ITMA offers the following
recommendations. Regarding the Cobell litigation, 1 year ago
this committee held an important joint hearing with the House
on similar cases where lawsuits succeeded in bringing historic
wrongs to the public's attention. That discussion, in which
Chairman Dorgan was a very active participant, might be a
helpful starting point for the committee's consideration of any
role it might play in bringing about a resolution of the Cobell
litigation.
The Administration's proposal to settle these claims or
restructure trust responsibility for up to $7 billion is
illusory at best [inaudible].
Finally, we do not believe there is any support for
combining the settlement of Cobell with the settlement of
tribal claims, but we believe there is a strong interest in
taking affirmative steps to facilitate and encourage a
settlement of the tribal claims.
ITMA would like to propose certain affirmative steps that
Congress can take to encourage settlement of the tribal claims.
These would allow more Indian tribes to postpone the filing of
additional lawsuits, result in voluntary dismissal of a number
of tribal lawsuits, and create a process for resolving many
tribal claims without litigation.
We do not think that tribal claims should compete for a
settlement pot. The principle in that is any number should be
the result of deliberations, not legal. Congress should first
break apart the issues into manageable-size pieces, starting
with the Cobell litigation. If Congress chooses to wade into
the fray, it should deal with its resolution separately.
Regarding land consolidation, Congress should consider
following up on the successes of its voluntary purchase program
of recent years. This program should be greatly expanded and
the Government should look to the tribes themselves for
approaches that will work on a tribe by tribe basis and will
not diminish human service programs in order to ameliorate a
bureaucratic problem of the Government's own making.
Regarding tribal litigation and settlement alternatives,
first, the committee should not do anything pending the Arthur
Andersen Act providing tribes with the opportunity to delay the
filing of additional lawsuits, until a lot of these tribes have
[inaudible] agreements to dismiss these lawsuits.
Second, Congress should authorize tribal trust fund
settlements outside of litigation and provide authorization to
access the U.S. Judgment Fund for payment of such settlements.
In cooperation with the Department of the Interior, ITMA has
been engaged in developing and implementing a tribal trust
funds settlement project to develop a methodology by which the
Government and non-litigating tribes could assess and negotiate
resolution of tribes' fiscal claims against the Government.
Both parties have expressed hope that, if a resolution of
fiscal claims could be reached on the basis of an
intellectually rigorous methodology applied to empirical data,
then even broader settlements as well might be within reach.
Both ITMA and the Government look forward to continuing to
develop a settlement methodology contemplated by the tribal
trust fund settlement project.
In order to avoid setting up a system that results in the
raiding of existing tribal programs for payment of these
settlements, ITMA strongly believes that Congress must
authorize payment of these settlements through the U.S.
Judgment Fund, with a directive that any replenishment to the
Fund not be charged to or otherwise offset by existing or
future appropriated or budgeted funds for Indian programs.
The committee should begin dialog between interested Indian
tribes and the Administration to authorize a voluntary
settlement procedure for those Indian tribes that wish to take
advantage of such an opportunity. Such efforts should recognize
that every Indian tribe should have the opportunity to brings
its claim in the court or courts of its choice, but that many
Indian tribes would probably prefer a more expedient and
certain claim settlement process.
On a related issue, ITMA reiterates its position in regard
to the DOI proposal, regulatory initiative part 112, Tribal
Trust Fund Accounting and Appeals. ITMA objects to the rule and
has requested the Administration withdraw the draft regulation.
The rule would greatly diminish the ability of Indian tribes to
access Federal courts with regard to Federal management and
administration of tribal trust fund accounts. ITMA questions
whether DOI has the authority to unilate-rally through an
administrative rule undermine the Indian Tucker Act.
ITMA also recommends that Congress eliminate administrative
fees on Indian trust transactions.
In closing, Mr. Chairman, ITMA is eager to work with this
committee in a new Congress to bring a new sense of trust to
the Indian trust, and bring an end to a period of contentious
litigation; and to bring honorable resolution to claims too
long evaded.
Thank you, Mr. Chairman.
[Prepared statement of Mr. Martin appears in appendix.]
The Chairman. Mr. Martin, thank you very much.
Ms. Cobell, you referred to Mr. Kennerly in your testimony.
Did you indicate he is with us?
Ms. Cobell. Yes;, he is.
The Chairman. Could you identify him? You are Mr. Kennerly?
And do you still own the land that was previously owned in the
family on which oil and gas was produced? Is that correct?
Mr. Kennerly. Yes.
The Chairman. Is there currently oil production on that
land?
Mr. Kennerly. Yes there is.
The Chairman. Are you receiving any benefits from that oil
production?
Mr. Kennerly. [Remark made off microphone.]
The Chairman. Thank you for being with us today.
Mr. Kennerly. Thank you.
The Chairman. I think, Ms. Cobell, your story is
compelling. We always deal in the aggregate with large numbers,
but actually these accounts are all accounts that deal with
real human beings who have ownership, and have an expectation
that the trust responsibility is being met. I thought I heard
you say that he was in the audience. I appreciate your
identifying yourself.
Well, Elouise Cobell, you have, as I indicated, been very
direct with the committee, once again. You say you are
frustrated. You are not the only one that is frustrated. That
is not a condition that inures exclusively to yourself. I am
frustrated. I think that a lot of people are very frustrated by
this situation.
I feel that if something isn't done, this will go on at
least for 1 decade and perhaps more. But what I want to ask you
about is this. There are areas of liability, one of which is
represented by you as a plaintiff, and the case that has now
been I guess in the courts for 12 or 13 years. That is the
individual Indian trust accounts case and the claims of
irresponsible treatment of those accounts and those claims
encompass a lot of things.
Second, there are the issues raised in the tribal claims
that are now being filed and have been filed, last year
especially.
Third, there is the other issue with respect to individual
land mismanagement claims. That is separate and apart from the
trust accounting claims.
Let me ask you, with respect to the individuals. Now, set
aside tribal claims for a moment. Individuals, their trust
accounts and the land management claims, do you feel like there
is a capability of merging those two, at least as the Cobell
case is settled with respect to the trust accounts, that there
could also be some settlement with respect to land management
claims?
Ms. Cobell. I think that we are dealing with just the money
in the Cobell case, the mismanagement of money. And we have
never in fact, as the Department of the Interior reminds us all
the time, is the damage to the trust assets are not part of our
case. What we have talked about is the fact that trust asset
claims could be included if there was an amount of money set
aside and that Cobell plaintiffs could opt out and take on the
other Indian trust assets, put claims on the trust asset
damages that they have received, because our case is not about
the damages. So that is one idea.
But to lump them together, I don't think that we can do
that. We have to take into consideration that that is a
separate issue on the damages.
The Chairman. I understand your point. You understand that
those of us who represent all of the taxpayers in this country
and are trying to figure out what the potential liability is
here, and indeed there is a liability. I think the last thing
anyone wants is to have settlement after settlement after
settlement, and then there is the next claim.
My personal feeling is I don't think tribal claims have any
role to play here at all. I think they are different. I was
asking the representative of the Justice Department those
questions, and he finally admitted they are distinct and
different and should not be related.
There is, it seems to me, a relationship with respect to
the individual claims, both with respect to the trust fund
accounts, which is about money, but also the management of the
assets. At least some here in Congress would say, wait a
second, you are going to settle this and the management of the
assets is not part of the settlement? So then we are right back
into the same issue, and you will have filings on behalf of
class actions, and we will be right back in the same situation
as we are now.
I want you to understand. That is why some would believe
there should be some connection between the money accounts and
also the land management with respect to individuals.
Ms. Cobell. The problem that I have is that I don't
represent those individuals on these issues. Our lawsuit has
been concentrated on the mismanagement of the money, the money
that came in, and it is very difficult for me to answer that
question. You know, I certainly think that the solution that I
gave you a little bit earlier if the settlement amount was
substantial, it would give an opportunity to have individual
Indians opt out of our lawsuit and take on the claims that they
feel has been mismanaged on the land assets. But that has to be
substantial.
The figures that we have come up with and the $10 billion
to $40 billion that the Government's experts have come up with,
all have been related to the money that went into these
accounts.
The Chairman. What do you say to the statement by the
mediator this morning that with respect to the individual trust
accounts, he thought $7 billion to $9 billion was a range that
was plausible?
Ms. Cobell. Versus to the $10 billion to $40 billion that
the Government experts have come up with?
The Chairman. I am asking you not about that. I am asking
you about the testimony this morning by the person who had been
involved in the mediation.
Ms. Cobell. I think that I felt good about the fact that
Mr. Bickerman separated the tribal from the individuals, and he
said he would at least take $7 billion to $9 billion to settle
Cobell alone.
The Chairman. How do you feel about that statement?
Ms. Cobell. I think that is a very good statement. Is that
what we would settle for? Is that the real question? I would
like an opportunity to talk about it and visit with you about
it a little bit more. I think that we all understand that we
are never going to get what is owed us as individual Indians.
The amount is surmountable, and every time the report that
I just explained, Mr. Kennerly's case is very crucial because
that would never have been found by Mr. Bickerman, anybody. It
just happened the Government hired some experts to take a look
at the accounts and they pulled out Mr. Kennerly's account to
take a view, and all the documents were missing. They found out
where the pump was pumping, and the oil money was being
transferred from USGS and illegally unitized with the tribal
lease and the money didn't come to Mr. Kennerly.
Those things will never be found. And so to say, as Mr.
Bickerman did, right on $7 billion to $9 billion, at least he
is getting in the ballpark.
The Chairman. And those records would not be included in a
part of the discussion the Secretary mentioned, and also the
Justice Department mentioned this morning, because what they
described were records that were from 1985 forward. You are
describing a circumstance where you can't find records dating
back to the early 1900's for Mr. Kennerly's father.
I am tempted to ask Mr. Cason, but I will not do that. I
will ask him some questions about these kinds of things in
writing, not about the individual accounts, but the likelihood
of the error rate being very substantial when you start going
back to the 1930's, the 1910's, the 1890's.
The photograph I showed, I showed for a reason today. I
think what was going on there was almost criminal. Whoever was
responsible for keeping those records on behalf of the Indians
and maintaining the accounts and being honest with the people
who owned these assets, that kind of record keeping was almost
criminal. No one is going to sort through those bags and boxes
in that old building and come up with the right set of records.
That describes, I think, the concern that there is
substantial liability by the Government. The question is what
is it, and how is it resolved.
I promised that this committee will provide transparency,
and part of that is open hearings where we will hear from
witnesses and try to evaluate what can we do to try to resolve
this. Some have asked me, why on earth are you involved in
this? Why not let the courts decide whatever they decide? Well,
we are involved as a committee because we have been asked to be
involved by the parties, number one.
And number two, if this languishes another 5 years, 10, or
15 years, the consequences of that are very significant and
very detrimental, in my judgment, to all of the things that we
care about on this committee with respect to our trust
responsibilities for American Indians. So that is why we are
involved.
Will we be able to participate in resolving this? I don't
know the answer to that, but I am determined, I continue to be
determined to try. And this hearing I wanted to hold today to
develop some additional information and get some additional
thoughts on the record. And then from this hearing, Senator
Thomas, I and others will be discussing the next steps.
The three of you have presented I think thoughtful
testimony with respect to your perspective about how we might
proceed. I know all of you have come a long distance,
Albuquerque, Denver, Boulder, and Montana. So I appreciate very
much your being here today to help us try to think through this
and give us your testimony.
I am going to call on Senator Tester for any comments and
questions he has.
Senator Tester. Thank you, Mr. Chairman. I think your
comment about openness and transparency in Government is
probably one of the reasons why we are here. So I appreciate
your perspective on that.
I have to ask. I wasn't going to, and then it came up again
and so now I have to ask it. When you are getting $70 a month,
this is the fellow that didn't testify, that is in the
audience, James, you are getting $70 a month. Where is the rest
of the money going, to whom?
Mr. Kennerly. The BIA.
Senator Tester. The BIA? All right.
Well, the hearing has gone on for quite a while. There have
been a lot of good questions asked, and there has been a lot of
good testimony given. I want to echo the Chairman's comments
about expressing my appreciation for you to be here.
I am just going to ask one question, and you all three can
answer it, or one of you can answer it if that is adequate. I
will direct it to Elouise to begin with.
Elouise, you have been at this for 11 years. What is the
key? What are the keys to bringing this to a conclusion so you
can find a solution that is equitable for the folks that are
involved?
Ms. Cobell. I think that there are two things. We have to
figure out the historical wrong, the historical accounting that
we can settle. But going forward, we are going to have to
really, really think about how we are going to have trust
reform that will probably be done. And I am going to tell you
right now, the Department of the Interior is not capable of
managing our assets. They are not. They have proven it over the
100 years. We have zillions of reports that have been filed
with this committee, and the Department of the Interior is not
capable.
And so we need to look at ways that we move forward in the
future, and I think that we need to take them out of the trust
business. Let's look at something totally different. Let's look
at a receiver. What is wrong, I mean, with this horrible,
horrible mismanagement that has been going on for hundreds of
years. Senator Dorgan, you have done a great job in recapping
it.
Will we ever get to the bottom of all this corruption? I
don't think we will until we move it out and we like moving it
out to a receiver and start over. That is what big financial
institutions do when there are huge problems. They move it out.
They put the people on the bench and look at and move to a
fresh way of correcting historical problems.
So that is, I know, a long answer, but I needed to tell you
how I felt.
Senator Tester. Would anybody else like to respond to that?
Nobody disagrees? Then that is fine.
The issue about parties not being able to get together. I
asked why that was to the gentleman who was sitting over here
in the first panel, why that was the case. From your
perspective, why is that the case?
Ms. Cobell. Because this is the first proposal that the
Government has ever brought forward. They have never, and I
think Mr. Bickerman said that, they have never put anything on
the table for us to respond to. We have put proposals on the
table that the Government would not respond to. So we have
always been ready to sit down and negotiate.
Senator Tester. Good. So you actually see the direction
that even though there is some question of whether the offer
was adequate or fair, you do see it as a step in the right
direction, and there is some progress here after 11 years, but
we have more to do. Right?
Ms. Cobell. I guess I do see at least the fact that there
is a proposal on the table, but it is a horrible proposal. I
just want to make sure that you understand that I don't endorse
that proposal.
The Chairman. Ms. Cobell, it appears to me you have called
it an insult, but positive. So it is a positive insult.
[Laughter.]
Ms. Cobell. See? I knew I would get trapped.
The Chairman. I don't expect you to answer that, and I
don't mean to make light of any of this. This is very serious
business.
Let me on behalf of Senator Thomas and myself say that both
of us appreciate that Senator Tester has joined us on this
committee, and has expressed a real significant interest in
trying to help. It takes a lot of effort on this committee to
be active and involved and to really dig into some of these
things. I think, Senator Tester, we very much appreciate your
involvement, both Senator Thomas and myself.
We are going to keep the record open for 2 weeks. We would
invite any other submissions for the record to this hearing. We
will then, Senator Thomas, myself and other members of the
committee, we will then convene and begin some discussions
about what the next steps might be.
I say to all of you who gathered, that this has been an
exceptionally busy morning here in the Senate, which explains
the absence of many of our colleagues. We have many other
committee hearings being completed today because this will be
the last day, really, for any Senate business prior to next
week in which the Senate will be in recess. So as a result,
Senator Thomas and myself and Senator Tester wanted to proceed
with the hearing even though we had the disruption of votes.
Mr. Kennerly, thank you for traveling all the way to
Washington, DC to be a part of this testimony.
Ms. Cobell, Mr. Echohawk, Mr. Martin, thank you very much.
We appreciate very much the attendance of those who have come.
This hearing is adjourned.
[Whereupon, at 12:25 p.m., the committee was adjourned.]
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A P P E N D I X
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Additional Material Submitted for the Record
=======================================================================
Prepared Statement of Hon. Craig Thomas, U.S. Senator from Wyoming,
Vice Chairman, Committee on Indian Affairs
Good morning, and thank you Chairman Dorgan for holding this
important hearing today.
Earlier this month I received the letter dated March 1 2007, and
signed by both Secretary Kempthorne and Attorney General Gonzales
regarding the Administration's proposal for resolving Indian trust
litigation and reforming the trust asset management system.
The problems relating to the management of individual Indian and
tribal trust lands, resources and funds have been present for over 100
years. Many if not most of the laws creating the current system for
trust land and resource management were enacted many decades ago, some
over 100 years ago. One can only wonder whether modern, 21st Century
land and resource use transactions are compatible with a management
system created for an earlier time.
The Administration's proposal is ambitious, if nothing else, and I
do appreciate that we have Secretary Kempthorne and Mr. Mercer from the
Department of Justice with us today to discuss the proposal further. I
am also very interested in hearing from the representatives of the
plaintiffs and the tribes, and from the two mediators who worked to
resolve the Cobell case during the 108th and 109th Congress. In the
months ahead I am sure we will be hearing from other voices in Indian
country about the trust litigation and trust reform as well.
It is clear from the testimony of the non-Federal witnesses and
from some feedback we have already gotten back from the tribes and
other stakeholders that the Administration's proposal has some strong
critics in Indian country. Nevertheless, it is a serious proposal
involving a lot of money, and I look at it as an excellent opportunity
to begin the settlement dialog yet again. I would like my staff to work
with yours, Chairman Dorgan, to see whether we can come up with some
acceptable solutions to these problems, which have been around far too
long.
I thank all of the witnesses for attending the hearing to provide
their views on the proposals and look forward to their testimony.
Thank you, Mr. Chairman.
______
Prepared Statement of Ernest L. Stensgar, President, Affiliated Tribes
of Northwest Indians
Good morning Chairman Dorgan, Vice Chairman Thomas, and
distinguished members of the committee. My name is Ernest Stensgar and
I am the president of the Affiliated Tribes of Northwest Indians
[ATNI]. Today, I am pleased to provide ATNI's views on the
Administration's proposed legislative settlement as set forth in the
March 1, 2007 letter from Interior Secretary Kempthorne and Attorney
General Gonzales to the chairmen of the respective committees of
jurisdiction. I am also pleased to provide ATNI's views on how the
committee can continue to pursue trust reform in the 110th Congress and
our thoughts on the pending tribal trust lawsuits.
BACKGROUND ON ATNI'S TRUST REFORM EFFORTS
Founded in 1953, ATNI represents 57 tribal governments from Oregon,
Idaho, Washington, southeast Alaska, northern California, and western
Montana. As the committee is aware, ATNI and its member tribes in the
Pacific Northwest have been outspoken supporters of a legislative
settlement to the Cobell litigation and forwardlooking trust reform,
and invested substantial time and resources in the 109th Congress
securing tribal support for S. 1439.
ATNI's support for trust reform legislation has been and is
grounded in the negative impact the Department of the Interior's
[Department's] response to the Cobell litigation has had on our member
tribes' day-to-day business. Problems associated with the Department's
current trust policies continue to negatively impact non-trust issues
on our member tribes' reservations, such as economic and social
development within our communities. Our support for trust reform
legislation is also grounded in our desire to reign in what has been
the unchecked growth of the Office of the Special Trustee [OST].
THE ADMINISTRATION'S $7 BILLION PROPOSAL
ATNI understands that what this Administration ultimately demands
for a multi-billion dollar settlement of the Cobell litigation may
never be acceptable to ATNI or to Indian country under any
circumstances. The Administration's March 1 letter essentially attaches
a $7-billion figure to the package of concepts that was disseminated
late last year in the form of a 2-page paper. As the committee will
recall, that 2-page concept paper was--as a single, complete proposal--
rejected by ATNI and Indian country as a whole. Like that concept
paper, the theme behind the Administration's $7 billion dollar proposal
is for the United States to phaseout the trust relationship with
Indians and ultimately ``get out of the Indian business'' entirely. For
ATNI, this is simply a non-starter. Even assuming that the March 1
letter allows some room for negotiation, the breadth of the
Administration's demands now makes clear that a multi-billion dollar
settlement of the Cobell litigation alone will not be possible during
this Administration.
On February 15, 2007, ATNI unanimously enacted a resolution at its
Winter Session in Portland, OR that supports the reintroduction of
legislation with the key provisions that were included in S. 1439 in
the 109th Congress--but without provisions relating to settlement of
the Cobell litigation. That resolution also advocated that any new
legislation provide for new voluntary authority for tribal management
of tribal trust lands and related assets as an amendment to the Indian
Self-Determination and Education Assistance Act of 1975.
The key trust reform concepts in S. 1439 that ATNI would like to
see the committee pursue in the 110th Congress include the following:
\\\\\\Elimination of OST--ATNI strongly supports the
elimination of OST and the merging of its functions back into
the BIA. OST has grown exponentially since the mid-1990's. This
growth has adversely affected ATNI's member tribes' ability to
carryout day-to-day business with the BIA and has resulted in
the siphoning of funds from programs that serve Indian people.
\\\\\\Land Consolidation--ATNI reaffirms its support for
efforts to consolidate individual Indian trust lands and
recognizes that a simple, aggressive land consolidation program
must be implemented to reduce the costs of administration of
fractionated lands. ATNI strongly disagrees with the
Administration's view that the consolidation of fractionated
lands must necessarily include the termination of Federal
responsibilities over individual Indians and tribes. However,
ATNI agrees with a goal of consolidating allotments into a
manageable number of owners. While a Secretary initiated sale
may be appropriate for highly fractionated trust lands [that
is, land with more than 100 owners], any sale of trust lands
with a manageable number of owners should be initiated by one
or more of the owners, not by the Secretary.
\\\\\\Beneficiary-Managed Trust--ATNI continues to oppose
any proposal for a mandatory beneficiary-managed trust that
would encompass unallotted tribal trust lands. The voluntary
demonstration project set forth in title III of the last
redraft of S. 1439, if adequately funded, provides, in ATNI's
view, an attractive incentive to encourage tribal management of
tribal trust lands and resources. This type of tribal
management regime would also encourage tribal economic
development for those tribes that choose to participate by
reducing the need for time consuming Federal approvals.
For individual Indian trust lands, ATNI agrees in principle with a
program that would provide for a beneficiary-managed trust so long as
the program maintains the Federal trust obligations to tribes and
Indian people. Such a program, however, must in the first instance be
voluntary and be adequately funded to ensure that beneficiaries are
fully informed and equipped to manage their lands. ATNI also reaffirms
its support for a related concept that would provide for a land
exchange program whereby interests in highly fractionated tracts would
be transferred to--and the corresponding tract managed by--a separate,
tribal-affiliated entity with a separate board of directors.
ATNI strongly opposes any attempt to arbitrarily and prospectively
limit the liability of the United States for mismanagement of trust
resources. A ``trust relationship'' as memorialized in Federal law
includes the ability to seek redress against the trustee for breach. A
``trust'' relationship without this element is not a trust relationship
at all, but rather an entirely different relationship. ATNI supports,
however, the voluntary authority of Indian tribes to manage their trust
resources.
SETTLEMENT OF TRIBAL TRUST CLAIMS
ATNI strongly opposes the mandatory settlement of tribal trust-
related claims in any legislation, whether or not part of a trust
reform package or an appropriations bill. The filing of the 103 Federal
court lawsuits that are currently pending is a foreseeable result of
the Administration's failure to support the extension of Public Law
107-153, which provided that any reconciliation report received by an
Indian tribe shall be deemed received by the tribe on December 31,
1999. Faced with the possibility that a court could construe the Arthur
Andersen reports to be an ``accounting'' for purposes of the 6 year
statute of limitations, Indian tribes with potential trust claims had
no other choice than to file lawsuits to preserve their rights.
The pending tribal accounting and mismanagement lawsuits stand on
their own merits, and each tribe's trust accounts vary widely in terms
of account activity and the underlying nature of the trust assets.
These lawsuits therefore do not lend themselves to a mandatory, ``one-
size-fits all'' settlement. However, ATNI supports legislation that
would provide for a voluntary settlement regime of tribal trust claims
for those tribes that do not wish to litigate or otherwise expend
resources pursuing their claims.
The Department has indicated that it intends to promulgate new
regulations relating to historical accounting of tribal trust funds.
The most recent discussion draft of these regulations would establish
an administrative process whereby the Department would furnish
statements of historical account to Indian tribes. If an Indian tribe
does not object or otherwise respond to the statement furnished by the
Department, the tribe is deemed to have accepted the account balances
set forth in the statement.
ATNI understands that the Department my attempt to apply these
regulations to those tribes that have already filed trust accounting
lawsuits. The validity of such a post hoc administrative action to
affect previously filed Federal court lawsuits is dubious at best.
Nonetheless, ATNI asks that the committee monitor the Department's
initiative closely to ensure that the Department is not allowed to use
this rulemaking as a backdoor attempt to impose settlement on the
pending tribal accounting claims and divest tribes of their day in
court.
ATNI is grateful for the committee's attention to trust reform in
the 110th Congress and has appreciated the consideration the committee
has given to the proposals and input offered by ATNI and its member
tribes. ATNI looks forward to working with the committee in any way it
can in addressing these issues.
______
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