[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





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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

                              ----------                              
                                                                   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

                              ----------                              


                        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.]
=======================================================================


                            A P P E N D I X

                              ----------                              


              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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