UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA 

Elouise Pepion Cobell, et al.,:

:  
Plaintiffs,  : :  
v.  : :  Civil Action No. 96-1285 (JR)  

Dirk Kempthorne, Secretary of :
the Interior, et al., : 
: 
Defendants. : 


FINDINGS OF FACT AND CONCLUSIONS OF LAW 

These findings and conclusions are the result of a 10day bench trial in October 2007. The central purpose of the 
trial was to determine whether the Department of Interior has 
remedied or is remedying what Judge Lamberth found in Cobell v. 
Babbitt, 91 F. Supp. 2d 1, 58 (D.D.C. 1999) (Cobell V), affd, 
Cobell v. Babbitt, 240 F.3d 1081 (D.C. Cir. 2001) (Cobell VI), to 
be a breach of its duty under the Indian Trust Fund Management 
Reform Act of 1994 to produce an accounting for Individual Indian 
Money (IIM) account holders. In setting the matter for trial, I 
said that, although the details of the trial remained to be 
worked out, it was both appropriate and prudent to review the 
Interior Departments historical accounting project in detail, 
and to do so in open court, where the government might present, 
and plaintiffs might test or challenge, its methodology and 
results up to the time of the hearing [Dkt. 3312]. The end 
product of such a proceeding was to include the answers to at 
least the following questions: 


 Have the defendants cured (or are they curing) the
breaches of their fiduciary duty that were found in Cobell
V? 



 Do the defendants historical statements of account . . . 
satisfy defendants duties rooted in and outlined by the
relevant statutes and treaties . . . [and] defined in
traditional equitable terms? Cobell VI, 240 F.3d at 1099. 



 Have the defendants unreasonably delayed the completion of
the required accounting? 



 What further relief, if any, should be ordered? 
By the time the trial began, the issues for trial had 
been distilled to these four: 
First, its going to be about what youre doing and

what youre not doing. . . . Its going to be about both of
those things. 
Second, what would it cost to do the things that they

say that you should be doing and youre not doing? 
Third, taking into account the cost, because that, I

think, Im required to do by the Court of Appeals, is what
youre doing adequate? Is it an adequate accounting? 
And fourth -- and this is what you dont want to hear,

but I think Mr. Gingold is entitled to at least a record on
this point, fourth, what does it all add up to? Throughput
versus what you can prove, what are the big numbers? 

Hrg Tr. 76:23 - 77:10 (6/18/07). The question of what further 
relief, if any, should be ordered was left to another day. 

These findings and conclusions, derived not only from 
the trial, but also from the extensive record that preceded it, 
support and explain my decision (i) that, although the defendants 
have attempted and continue to attempt to cure the breach of 
their fiduciary duty that was found in Cobell V and affirmed by 

Cobell VI, they have not succeeded in doing so; (ii) that the 
historical statements of account contemplated by defendants 
latest accounting plan will not satisfy defendants duties 
rooted in and outlined by the relevant statutes and 
treaties . . . [and] defined in traditional equitable terms, 
Cobell VI, 240 F.3d at 1099; and (iii) that the defendants have 
unreasonably delayed the completion of the required accounting. 
Indeed, it is now clear that completion of the required 
accounting is an impossible task. 


BACKGROUND 

To say that the histories of the IIM trust and of this 
lawsuit have been exhaustively chronicled in district court and 
appellate opinions is to stretch the limits of understatement. 
See, e.g., Cobell v. Babbitt, 30 F. Supp. 2d 24, 27-29 (D.D.C. 
1998); Cobell v. Babbitt, 91 F. Supp. 2d 1, 6-12 (D.D.C. 1999); 
Cobell v. Norton, 240 F.3d 1081, 1086-94 (D.C. Cir. 2001); Cobell 

v.
 Norton, 226 F. Supp. 2d 1, 11-20 (D.D.C. 2002); Cobell v. 
Norton, 283 F. Supp. 2d 66, 72-86 (D.D.C. 2003). Those seeking 
CliffsNotes can even consult the Cobell v. Kempthorne Wikipedia 
entry (though the Court, of course, cannot vouch for its 
accuracy). At this date, there are 3,504 entries on the Cobell 


v.
 Kempthorne docket. Appellate panels hearing Cobell arguments 
have engaged ten of our Circuit judges, some of them more than 
once. Upon publication, this opinion will have the shorthand 



title Cobell XX. Nevertheless, those histories must be retold at 
least briefly in order to provide context for todays opinion. 

Plaintiffs are a certified class of present and former 
IIM account holders numbering in excess of 300,000. Some account 
holders have more than one IIM account. Hundreds of thousands of 
IIM accounts exist, managed for the United States by its trustee-
delegates, the Department of Interior and the Department of 
Treasury. Most of these IIM accounts exist to receive income the 
government collects for leasing or selling Indian-owned lands and 
then to distribute it to account holders when account balances 
reach certain thresholds (usually fifteen dollars). A small 
percentage of the funds flowing through the IIM trust are in 
Judgment and Per Capita accounts, which were created to hold 
funds derived from litigation settlements (Judgment accounts) and 
tribal revenues allocable to individual Native Americans (Per 
Capita accounts). By far the largest amount of trust funds flow 
through the land-based IIM accounts that contain lease, 
royalty, and land sale payments tied to individual land 
allotments. 

Individual Indian land allotments date to a period 
between the late 1800s and 1934 when the federal government 
attempted to dismantle tribes and instill the Anglo-American 
concept of private ownership in Native Americans by carving 
reservation land into individually owned parcels of up to 160 

acres (now known as tracts or allotments). See, e.g., 
Yakima v. Yakima Indian Nation, 502 U.S. 251, 254 (1992) (The 
objectives of allotment were simple and clear cut: to extinguish 
tribal sovereignty, erase reservation boundaries, and force 
assimilation of Indians into the society at large.), quoted in 
Cobell v. Norton, 240 F.3d 1081, 1087 (D.C. Cir. 2001). The 
governments pursuit of the allotment policy occurred alongside 
its official abandonment of treaty-driven relationships with 
tribes in favor of govern[ing] [tribes] by acts of Congress. 
United States v. Kagama, 118 U.S. 375, 382 (1886); see Act of 
March 3, 1871, ch. 120,  1, 16 Stat. 566 (1871) (codified as 
amended at 25 U.S.C.  71). This policy shift and its corollary 
acts -- such as coercive assimilation -- were carried out without 
so much as the pretense of tribal consent. See, e.g., Lone Wolf 

v. Hitchcock, 187 U.S. 553, 565-68 (1903). 

The allotment policy was first codified in the Indian 
General Allotment Act (Dawes Act), ch. 119, 24 Stat. 388 (1887) 
(codified as amended at 25 U.S.C.  331 et seq.), and was 
reflected in several subsequent allotment acts. In the Dawes 
Act, Congress granted unilateral authority to the executive 
branch to divide reservation land west of the Mississippi into 
plots for individual tribal members and families. It also 
allowed non-Indian settlement upon and exploitation of some 
reservation land, resulting in the alienation of millions of 

acres from tribal ownership. The statute required the federal 
government to hold the allotted land in trust for the individual 
allottees and their heirs for a period of 25 years -- a period 
subject to extension at the governments discretion -- after 
which fee patents would issue to the allottees. See Cobell VI, 
240 F.3d at 1087; Cobell v. Norton, 283 F. Supp. 2d 66, 74 

(D.D.C. 2003). While held in trust, allotted lands were to be 
immune from state taxation. The expectation was that, during 
that time, Indians would establish self-sufficient farms and earn 
enough money to pay their own taxes. At the close of the 19th 
Century, Congress passed several acts allowing the government to 
lease allotments that had not been successfully cultivated. See, 
e.g., An Act Making Appropriations for Current and Contingent 
Expenses of the Indian Department and Fulfilling Treaty 
Stipulations with Various Indian Tribes for the Fiscal Year 
Ending June Thirtieth, Eighteen Hundred and Ninety-Five, and for 
Other Purposes, ch. 290, 28 Stat. 286 (1894).1 Any income 

1This Act provided in part that 
[d]uring the trust period of twenty-five
years, such part of the lands which have
been allotted to members of the Yankton 
tribe of Indians in severalty, as the owner
thereof can not cultivate or otherwise use 
advantageously, may be leased for one or
more years at a time. But such leasing
shall be subject to the approval of the
Yankton Indian agent by and with the consent
of the Commissioner of Indian Affairs; and
provided that such leasing shall not in any 

generated from the land was to flow into IIM accounts established 
by the government. Native American landowners could not (and 
today still cannot) sell or lease allotted land without the 
governments consent. 

Congress soon realized that the allotment policy was 
responsible for innumerable problems, see, e.g., 1915 
Congressional Report to the Joint Commission of the Congress of 
the United States, PX-681, not least of which was the phenomenon 
known as fractionation. Fractionation occurs when Indian 
allotments are divided and divided again by inheritance through 
succeeding generations, diluting the ownership interests of 
allottees and causing enormous administrative difficulties for 
the BIA. The Indian Reorganization Act (Wheeler-Howard Act), ch. 
576, 48 Stat. 984 (1934), (codified as amended at 25 U.S.C.  461 
et. seq.), was supposed to reconsolidate Indian lands and reverse 
the allotment process, but the land reclamation effort prescribed 

case interfere with the cultivation of the 
allotted lands by the owner thereof to the
full extent of the ability of such owner to
improve and cultivate his holdings. The 
intent of this provision is to compel every
owner of allotted lands to cultivate the 
same to the full extent of his ability to do
so, before he shall have the privilege of
leasing any part thereof, and then he shall
have the right to lease only such surplus of
his holdings as he is wholly unable to
cultivate advantageously. 

28 Stat. 286, 316. 

by that statute was never properly funded and never materialized. 

Instead, the Act succeeded only in ending the creation of new 

allotments and, for allotted lands already held in trust, 
extending the trust period indefinitely. Cobell v. Norton, 283 

F. Supp. 2d 66, 75 (D.D.C. 2003). As of 1990, some eleven 
million acres were held in trust for the heirs of allottees, by 
now several generations removed.2 Many trust allotments are 
owned in common by hundreds or even thousands of beneficiaries -each with undivided (fractionated) interests in the whole 
parcel. 

The statute that gave rise to this litigation was 
enacted in 1994 as the Indian Trust Fund Management Reform Act, 
Pub. L. No. 103-412, 108 Stat. 4239 (codified at 25 U.S.C.  4001 
et seq.) (hereinafter the 1994 Act). The 1994 Act reflected 
many years of congressional frustration over Interiors handling 
of the IIM trust. It commanded Interior, among other things, to 
provide an historical accounting to trust beneficiaries. 25 

U.S.C.  4011(a). Two years after the enactment of the 1994 Act, 
concerned that the required accounting had been neither 
accomplished nor even begun, the plaintiffs filed this suit. 
They alleged that the defendants were in breach of their 

2Seventy years earlier, in 1920, 35.897 million acres ofallotted land were owned by individual Indians. FRANCIS PAUL PRUCHA, 2 THE GREAT FATHER: THE UNITED STATES GOVERNMENT ANDAMERICAN INDIANS 865 (1984). 
fiduciary duties, and they prayed for an accounting and various 
other forms of declaratory, injunctive, and other equitable 
relief. 

Judge Lamberth certified the plaintiff class on 
February 4, 1997 [Dkt. 27]. On November 5, 1998, he ruled that 
plaintiffs were not entitled to mandamus relief, but otherwise 
rejected the governments motion to dismiss the complaint. 
Cobell v. Babbitt, 30 F. Supp. 2d 24 (D.D.C. 1998) (Cobell I). 
On June 7, 1999, he denied defendants motion for summary 
judgment [Dkt. 317], and, six months later, he declared 
defendants to be in breach of their statutory trust obligations, 
dismissed plaintiffs common law claims, and remanded the case to 
the agency with an injunction to bring its actions into 
conformity with its fiduciary duties and to submit quarterly 
reports on its progress (which quarterly reports it has been 
submitting ever since). Cobell v. Babbitt, 91 F. Supp. 2d 1 

(D.D.C. 1999) (Cobell V). The Court of Appeals affirmed the 
declaration of breach, but vacated several of Judge Lamberths 
more specific findings. Cobell v. Norton, 240 F.3d 1081 (D.C. 
Cir. 2001) (Cobell VI). 

Judge Lamberth then divided the proceedings into two 
phases: one addressing the to-be plan, or the agencys plans to 
remedy its breach going forward, and another addressing 
defendants historical accounting work. After a 44-day trial, he 

issued an historical accounting opinion, a fixing the system 
opinion, and a structural injunction. Cobell v. Norton, 283 F. 
Supp. 2d. 1 (D.D.C. 2003) (Cobell X). The historical accounting 
portion of the structural injunction was reversed by the D.C. 
Circuit on December 10, 2004, Cobell v. Norton, 392 F.3d 461 

(D.C.
 Cir. 2004) (Cobell XIII); reinstated by Judge Lamberth 
after Congress failed to meet its self-imposed deadline for 
achieving the legislative settlement on which the Court of 
Appeals had relied in deciding Cobell XIII, Cobell v. Norton, 357 


F.
 Supp. 2d 298 (D.D.C. 2005) (Cobell XIV); stayed by the Court 
of Appeals, Cobell v. Norton, 2005 U.S. App. LEXIS 5788 (D.C. 
Cir. Apr. 7, 2005); and eventually reversed, Cobell v. Norton, 
428 F.3d 1070 (D.C. Cir. 2005) (Cobell XVII). On July 11, 2006, 
the Court of Appeals issued its eighth and ninth published 
opinions in the case, and directed that the case be reassigned. 
Cobell v. Kempthorne, 455 F.3d 301 (D.C. Cir. 2006) (Cobell 
XVIII); Cobell v. Kempthorne, 455 F.3d 317 (D.C. Cir. 2006) 
(Cobell XIX). On December 12, 2006, the case was assigned to me 
[Dkt. 3278]. 



During Judge Lamberths heroic stewardship of this 
case, he was beset by a host of important but ancillary issues: 
vulnerabilities within the Interior Departments information 
technology systems, civil contempt proceedings concerning several 
government employees, retaliatory action within the agency 

against agency employees testifying on plaintiffs behalf, 
objections to communication between the agency and the plaintiff 
class, and the appointment and removal of court monitors and 
special masters, to name a few. The nineteen published opinions 
in this case have yielded no definitive, undisturbed ruling on 
the core question that looms over this dispute, which is: What is 
the scope or nature of the accounting that is required by the 
1994 Act? This opinion seeks to answer that question. The 
outline set forth below emerges from the testimony taken in 
October 2007 on the trial questions identified above, and from 
the enormous record that has been compiled over the past eleven 
years. 

I. 	THE GOVERNMENTS ACCOUNTING EFFORT 

1. 	
Evolution of the current historical accounting project. 


2. 	
Activities the government has planned -- and now plans -- to 
discharge its accounting duty. 


3. 	
Activities the government has declared beyond the scope of 
its plan. 


4. 	
Cost to do what is not being done. 


5. 	
Throughput -- amount of money received into the IIM trust; 
amount distributed to IIM beneficiaries. 



II. 	COMPLIANCE WITH THE FIDUCIARY DUTY TO ACCOUNT 

1. 	
Does this court have jurisdiction? 


2. 	
Taking cost into account, will Interiors 2007 Historical 
Accounting Plan result in an adequate accounting that is 
compliant with the 1994 Act, prior Cobell opinions, and 
other precedent? 




I. 	THE GOVERNMENTS ACCOUNTING EFFORT 

I.1. Evolution of the current historical accounting project 

No real accounting, historical or otherwise, has ever 
been done of the IIM trust. What is now called the historical 
accounting project would have been unthinkable before the advent, 
some time in the 1980s, of automated systems that began to offer 
the possibility of merging the records and procedures that had 
been used for nearly 100 years in the various regions and 
agencies of the Bureau of Indian Affairs. This section describes 
the legacy computer systems that first held out some promise of 
doing an historical accounting, some of the problems that were 
encountered soon after the 1994 Act mandated an historical 
accounting, the exaggerated promises of Interiors 2003 
historical accounting plan, various ancillary IIM-related 
projects that Interior has undertaken, and the establishment in 
2004 of the American Indian Records Repository, which has brought 
some degree of order out of the chaos that was IIM trust record-
keeping. 

I.1.A. 	Systems used in administering the IIM trust 
The government uses an array of data and financial 

3

systems, referred to mostly by acronyms, to collect, manage, and
distribute IIM trust funds. The two major types of systems 

3See Appendix A. 
relevant to historical accounting contain land ownership data and 
financial data. 

i. Integrated Records Management System (IRMS) 

A major premise of the governments accounting effort 
is that the transition from paper to electrons took the accuracy, 
completeness and reliability of IIM trust data to a level that 
far surpassed the paper ledger era. The agencies refer to 
February 1985 as the beginning of the new electronic ledger 
era. The first electronic ledger was the Integrated Records 
Management System (IRMS). IRMS contained four platforms for the 
input and access of lease data, ownership data, account data, and 
transactional data by BIA employees. Tr. 2041:1-23 (Christie); 
Tr. 343:22-344:5 (Ramirez).4 The IIM platform within IRMS 
contained most of the accounting data. Tr. 343:23-25 (Ramirez). 
The government considers IRMS the beginning of the electronic 
ledger era, an era when data became putatively more uniformly 
handled and more easily accessible. Some BIA locations began 
using IRMS long before February 1985, however -- some as early as 
the 1970s. Tr. 288:13-20 (Ramirez). The first regional office 
to use IRMS was Billings, Montana (one of the twelve regional BIA 
offices, now called the Rocky Mountain regional office). 

4Transcript citations to the October 2007 bench trial willbe referenced only by page and line number and witness name.Transcript citations to other proceedings will also include theabbreviated title of the proceeding and the date of thetestimony. 
Tr. 1743:24-1744:2 (Infield). Interior did not require all BIA 
regions to use IRMS until the late 1980s. Tr. 1743:17-21 
(Infield). Because IRMS was implemented on a rolling basis, it 
is impossible to draw a hard line between the paper ledger era 
and electronic ledger era. 

Up until 1991, moreover, Interior deleted from IRMS 
data that were more than six years old, so as not to overwhelm 
their rudimentary computer systems. Data recorded before 1985 
has been erased. Tr. 1744:22-1746:11 (Infield). And the post1985 data on the IRMS system is incomplete and difficult to 

5

analyze, since some agencies and regional offices did not
convert to IRMS until after 1985, Tr. 693:1-6 (Herman), at least 
one agency (Osage) handled money collected from oil and gas 
leases in a unique way, Tr. 1737:4-1741:6 (Infield), bookkeeping 
within IRMS varied across regions, Tr. 572:19-573:15 (Herman), 
and even offices that did use IRMS did not always keep complete 
records on the system. Tr. 789:22-790:13 (Herman). 

ii. Trust Funds Accounting System (TFAS) 

In August 1998, Interior began its conversion from IRMS 
to the Trust Funds Accounting System (TFAS). The conversion was 
complete by March 2000. Tr. 450:18-24 (Herman). The upgrade to 

5Underneath the BIAs twelve regional offices are 93agencies or agency offices responsible for, among otherthings, processing IIM transactions. Feb. 2002 OHTA AccountingRecords Conference Materials at 213, AR-058. 
TFAS gave BIA the ability to send quarterly IIM statements, 
Tr. 866:15-867:9 (Winter), which it began to do in 2000. Those 
statements reflect opening and ending balances as well as posted 
transactions. Tr. 867:1-4 (Winter). Consequently, the agency 
uses that year as the end point of its HSA project. TFAS also 
contains data regarding the IIM funds that are pooled for 
investment purposes. Tr. 872:3-12 (Winter). Though 
transactional information has been recorded in many different 
ways over the life of the trust, the HSA project focuses 
primarily on information contained in paper records, and later in 
IRMS and TFAS. 

iii. Land Records Information System (LRIS) and Trust 
Asset and Accounting Management System (TAAMS) 

The Land Records Information System (LRIS) contains 
historical land ownership information that is used in Interiors 
historical accounting project, National Opinion Research Center 
(NORC) Analysis of LRIS Tract History Reports, AR-405 at 5, but 
at least some agencies determined that the ownership information 
in LRIS was out of date, and that LRIS data could not be relied 
upon for distributing trust funds. Tr. 1317:17-1321:25 
(Redthunder). 

Interior began converting from LRIS to a more robust 
land title system called the Trust Asset and Accounting 
Management System (TAAMS) in 2005. Tr. 69:6-13 (Cason). As of 
September 2007, all BIA agency offices had at least partially 

converted to TAAMS. Tr. 868:6-11 (Winter). TAAMS contains two 
different systems: realty and title. Tr. 903:15-904:2 (Winter). 
The TAAMS title system produces invoices for lease holders, who 
then send their payments along with the invoice to a lockbox. 
Tr. 868:6-11 (Winter). The invoice and lockbox procedures are 
very new: they accompanied the TAAMS title roll-out in 2005. 
Tr. 903:15-904:12 (Winter). It is not clear whether all agencies 
have fully implemented the TAAMS title system at this date, but 
those that have now have an accounts receivable system for the 
first time in the history of the IIM trust. Tr. 902:23-904:12 
(Winter). This accounts receivable system is referred to as the 
Trust Funds Receivable System (TFR), and permits the agency to 
follow up on leases to be sure that payments are made. 
Tr. 902:23-903:14 (Winter). Prior to the TAAMS conversion, using 
something like an honor system, Interior simply relied on lease 
holders to submit accurate, timely payments. 

iv. Other data systems 

Other systems, while not prominently featured in the 
historical accounting project, contribute to the functioning of 
the IIM trust. For example, the Treasury Department has systems 
that record IIM trust funds and balances. The Minerals 
Management Service within Interior (MMS) has a data system for 
processing payments received from lessees and sending payment and 
lease-level information (not broken down by beneficiary or 

allotment) to Treasury and the Bureau of Indian Affairs. BIA 
processes oil and gas monies from MMS in a system called the 
Royalty Distribution Reporting System (RDRS) in order to allocate 
oil and gas revenue among land owners. Tr. 919:6-920:1 (Winter). 
BIA relied on Osage computer systems to process quarterly annuity 
payments and some oil and gas income. Tr. 1736:2-32 (Infield). 
In the past, BIA used several different systems to distribute 
trust revenues, such as the ownership module within IRMS, the 
GLAD distribution system in the Great Plains Agency, and the MAD 
system used in the Aberdeen and Standing Rock Agencies. 
Tr. 1756:12-18 (Infield); Tr. 1321:20-1322:2 (Redthunder). 

I.1.B. 	Inconsistencies between agency and regional
offices 
The BIA is divided into twelve regions, under which a 
total of 93 agency offices operate. Feb. 2002 OHTA Accounting 
Records Conference Materials at 213, AR-058. As mentioned above, 
the use of electronic records systems varied among the twelve 
regional offices, and even among agency offices within a single 
region. Former Special Trustee Paul Homan recalled a contractor 
describing the information systems used by the regional offices 
as twelve islands of information without a ferry in between. 
Tr. 1552:21-23 (Homan). The regional offices, and agencies 

within those regions, each had their own ways of using -- or not 
using -- IRMS. Most agencies used the MMS system to process oil, 

gas, and mineral payments, but Osage was again an exception to 
this rule. Tr. 1737:4-24 (Infield). 

I.1.C. Destruction of documents 

Until very recently, Interior had no system for the 
preservation of trust records. Over the life of the IIM trust, 
trust documents were routinely destroyed in accordance with 
record retention schedules at National Archives and Records 
Administration (NARA) centers. Tr. 2054:10-2056:18 (Christie). 
Most documents and data were retained for only six years pursuant 
to standard NARA policy, until 1995, when Interior instructed 
NARA to cease destroying trust records according to the six year 
schedule. Trust records from 1989 forward have not been subject 
to the document destruction schedules. 

The loss of trust records before 1989 has been 
mitigated -- to what extent is a matter of dispute -- by the fact 
that, in many cases, Interior created several copies of IIM 
records. See Defendants Corrected Proposed Findings of Fact and 
Conclusions of Law [3459-1] at 8 (table listing types of IIM 
transactional documents, number of copies produced, and locations 
stored). Interiors expert contends that the existence of 
multiple copies of trust records stored in different locations 
renders the loss of trust records immaterial, as the loss or 
destruction rarely impacted all copies of a given document. 
Tr. 1264:8-11, Tr. 1282:3-7 (Angel). Defendants have located and 

centralized 43 miles of Indian records potentially relevant to 
the accounting at the National Archives and the American Indian 
Records Repository (AIRR) in Lenexa, Kansas, Tr. 1198:14-21 
(Angel), and they have access to another 10,000 cubic feet of MMS 
and United States Geological Survey (USGS) records potentially 
useful to those conducting the HSA accounting. Tr. 1181:5-10 
(Angel). Problems related to the disorganized or poor condition 
of records were noted early in this litigation and have been 
addressed by defendants contractors at the AIRR. Interiors 
Office of Historical Trust Accounting (OHTA) continues to work 
with NARA to collect data for the AIRR. Defendants have been 
surprised to discover that the records needed to perform the 
accounting are indeed available and accessible, Interiors 2007 
HSA Plan Part 1, AR-565 at 33-02-08, and they contend that 
plaintiffs complaints about the existence and condition of trust 
records are essentially based on outdated information. 

Plaintiffs acknowledge, as they must, that an enormous 
volume of records has been collected at Lenexa, but their 
response, essentially, is Compared to what? They suggest that 
the volume of records is meaningless without some assessment of 
the total number of trust documents produced over the history of 
the trust. They point out that in 1998, the BIA estimated that a 
total of approximately 1.425 billion pages of IIM trust records 
existed. (Government experts later determined that that number 

had been overestimated by some 1.205 billion pages, partially 
because they had not adequately accounted for destroyed 
documents. DOI memo stamped June 2002, AR-80 at 54-21-32; 
Tr. 1266:13-1268:15 (Angel)). Plaintiffs witnesses testified 
that a great deal of data was missing from the IRMS database, 
Tr. 1746:9-1747:14 (Infield), that the manual entry of 
information into BIAs Royalty Distribution and Reporting System 
(RDRS) was unreliable, Tr. 1749:24-1751:13 (Infield), and that 
some copies of documents necessary for determining the quantity 
of resources exploited from allotted land -- such as oil and 
timber -- were never recorded electronically and had been 
routinely destroyed. Tr. 2043:19-2049:17 (Christie). 

It is likely that, in some cases, all copies of timber 
scaling tickets, distribution settlement worksheets, and run 
tickets were destroyed, since relatively few copies of these 
documents were created. Tr. 2044:3-2045:6 (Christie). Joe 
Christie, a 27-year veteran of the Interior Department, opined 
that distribution worksheets are essential if the historical 
accounting project seeks to verify who was considered the owners 
[of an allotment], the amount of funds that were collected, and 
who [the funds were] distributed to. Its the only document, by 
the way, that does that. Tr. 2042:5-8 (Christie). Plaintiffs 
witness Mona Infield, an Interior employee, also indicated that 
lease information was frequently destroyed. Tr. 1750:18-1751:13 

(Infield). Before 1990, cleared disbursement checks that had 
been issued to IIM beneficiaries were destroyed by Treasury. 
Motions Hearing Tr. 171:14-172:4 (Locks, 11/24/98) (no checks 
available pre-dating Oct. 1990); Oct. 19, 1994 Letter from Sandra 
Chambers (FMS) to James Parris (DOI), PX-3340 (records prior to 
1987 not available); Nov. 22, 1994 Letter from Leo Warring (FMS) 
to Jim Parris (DOI), PX-3342 (records unavailable prior to 1988). 

Interior has an abysmal record of failing to prioritize 
the maintenance and preservation of trust documents. Many court 
opinions, audits, and congressional committee reports have 
catalogued that record. As late as 1995, the Deputy Commissioner 
of Indian Affairs discovered that agencies were destroying 
financial and lease documents . . . required in the 
reconciliation process. 3/07/95 Memo from Hilda Manuel to Area 
Directors and Agency Superintendents, PX-0350. After decades of 
neglect, it is impossible to imagine that all documents necessary 
to perform a complete historical accounting are presently 
accessible to Interior. Nevertheless, the agency has made an 
impressive (and very expensive) effort in recent years to find, 
scan, and preserve whatever documents still exist. If the 
government has failed to prove that all documents necessary for 
the completion of its historical accounting have been or will be 

6

found, plaintiffs have also failed to establish that the problem
of lost or destroyed documents renders the historical accounting 
project entirely pointless. 

I.1.D. Predecessor historical accounting plans 

The 1994 Act did not tell the Interior Department how, 
or how thoroughly, to perform the historical accounting that it 
mandated. Associate Deputy Secretary James Cason said that 
because the agency had no model to follow, it had to engage in an 
iterative process where we learn and redesign, learn and 
redesign. Tr. 65:2-9 (Cason). 

The Departments initial compliance effort was the work 
of the Tiger Team; a group of Officer of Trust Fund Management 
(OTFM), BIA, and MMS employees assembled soon after the passage 
of the 1994 Act to study trust accounting issues. Tr. 1753:161754:4 (Infield). In August 1995, the team issued a report 
entitled IIM Related Systems Improvement Project: The Tiger 
Team, which was to be implemented by the end of 1996. August 
1995 Draft Tiger Team Report, PX-607 at 157. The Tiger Team 
report noted uncertainty about the accuracy of data entered in 

6Defendants contractors were still looking for 35,000 outof 80,000 requested documents at the date of trial, Tr. 466:4-11(Herman), Assistant Deputy Secretary Haspel acknowledged that,until we open all those boxes, the extent to which historicaltrust records may be missing remains unknown, Tr. 1138:4-11(Haspel), and defendants historian Edward Angel testified thathe could not say whether there are sufficient records to accountfor any particular year of the IIM trust. Tr. 1261:5-10 (Angel). 
IRMS, and it criticized the internal controls and inadequate 
automated systems relied upon in managing the IIM trust. Id. at 
2-8. The Teams efforts appear to have focused more on reforms 
going forward than on historical accounting. 

Two years after the issuance of the Tiger Team report, 
the first Special Trustee for American Indians Paul Homan 
finalized a Strategic Plan to Implement the Reforms Required by 
the American Indian Trust Fund Management Reform Act of 1994, PX
615. Homan submitted the report in April 1997 to the Secretary, 
who incorporated many of its recommendations into the 1998 High 
Level Implementation Plan (HLIP) for the Trust Management 
Improvement Project (TMIP), filed with the Court in August 1998. 
High Level Implementation Plan, PX-4154. The HLIP identified 
thirteen projects Interior planned to undertake to improve trust 
management and to correct shortcomings in data maintenance, 
records management, training, policies and procedures, system 
weaknesses and internal controls. Id. at 3-8. The 1998 HLIP 
called for the completion of the Internal Control Sub-project by 
June 1999, and of the whole HLIP within three years. As with the 
Tiger Team report, this project was focused on trust reform, 
though it devoted significant attention to historical weaknesses, 
particularly in the area of internal controls. 

A revised HLIP was filed in this litigation on March 1, 
2000 [Dkt. 438]. The expected dates of completion were extended, 

but many of the objectives remained the same, such as the 
intention of reviewing trust records to determine accurate title 
and resource management information. The updated HLIP remained 
focused on documenting and rectifying historical weaknesses, 
inconsistencies, and failures in the Departments trust 
management operations. 

In November 2001, after the Court of Appeals affirmed 
Judge Lamberths finding that defendants were in breach of their 
trust duties, the government filed an additional plan with the 
court titled DOI Trust Reform: Interim Report and Roadmap for 
TAAMS and BIA Data Cleanup [Dkt. 990]. That report, prepared by 
Electronic Data Systems, Inc., identified significant problems 
with missing data, inconsistent records, and conflicting 
information, and it recommended reforms that were to be completed 
within three years. Id. at 21-30. 

On July 2, 2002, after requests from House and Senate 
Appropriations Committees made during the FY 2001 and 2002 
budgeting processes, Interior submitted a report to Congress that 
detailed its historical accounting plan. Report to Congress on 
the Historical Accounting of Individual Indian Money Accounts, 
AR-561; Tr. 58:5-9 (Cason). The report informed Congress that 
Interior planned to conduct a transaction-by-transaction 
reconciliation of all funds in the IIM accounts through 
December 31, 2000, and that it expected the historical accounting 

project to cost $2.425 billion to complete. AR-561 at 25-02-15
16. The report indicated that the historical accounting would 
result in transaction histories for all accounts that resembled 
the account reconstructions done for the named plaintiffs in this 
case. Id. at 25-02-30. The historical statements of account 
envisioned in that report were to include ownership information 
for each account: allotment number and ownership interest. Id. 
at 25-02-87. Statements would be provided for the estates of 
deceased beneficiaries whose IIM accounts and allotment interests 
had been probated, for closed accounts, and for transactions 
dating back apparently from the inception of the trust (no 
beginning date is listed in the report). Id. at 25-02-40. The 
historical accounting process would involve the reconciliation of 
leases, land ownership interests, and the collection and 
disbursement of all IIM funds. Id. at 25-02-92. 

That report to Congress was prepared in response to 
House Appropriations Committee concerns about the costs 
associated with the historical accounting. Id. at 25-02-21. 
After its submission, the House Committee on Resources addressed 
a December 9, 2002 letter to then Interior Secretary Gale Norton, 
describing the report as troubling in several areas, and 
requesting that the Secretary promptly consider ways to reduce 
the costs and the length of time necessary for an 

accounting . . . [including] alternative accounting methods. 
AR-184. 

A month later, on January 6, 2003, the Interior 
Department issued an Historical Accounting Plan for Individual 
Indian Money Accounts (the 2003 HSA Plan), PX-507, that was 
strikingly different from the accounting project envisioned in 
the 2002 Report to Congress. The scope of the accounting was 
narrowed to exclude accounts closed before October 25, 1994, 
transactions occurring after December 31, 2000, and transactions 
in closed accounts or in the accounts of deceased beneficiaries. 
Id. at 8-9. While the accounting described to Congress in July 
2002 would have cost approximately $2.4 billion, the effort 
described in the 2003 HSA Plan was projected to cost $335 million 
over five years. Id. at 1. The implementation of the 2003 Plan 
began, though not quite according to plan, with the commencement 
of the Litigation Support Accounting Project in the fall of 2003. 
Tr. 95:20-98:2 (Cason). 

The 2003 Plan -- with its abandonment of a total 
transaction-by-transaction approach to land-based accounts in 
favor of a mixture of transaction-by-transaction and statistical 
sampling reconciliations -- reflected Interiors acquiescence to 
the House Committees request that it consider all available 
options regarding the use of alternative accounting methods. 
AR-184; 2003 Historical Accounting Plan, PX-507 at 17-18. 

Specifically, the Department indicated that, within the 
population of transactions occurring during or after 1985, all 
transactions over $5,000 would be reconciled, 10% of transactions 
between $500 - $5,000 would be reconciled, and .31% of 
transactions under $500 would be reconciled. PX-507 at 63. In 
total, 160,000 transactions less than $5,000 would be sampled, 
and the sampled transactions would be pulled from every agency 
within Interior. For transactions occurring before 1985 (the 
paper ledger era), all transactions of $5,000 or greater would 
be reconciled, and transactions below $5,000 would be sampled. 
The sampling plan for these transactions was not yet fully 
developed at the time of the 2003 HSA Plans publication. Id. at 

69. The governments 2003 estimate was that this stripped-down 
historical accounting would be completed in about four years: 
Judgment and Per Capita accounts were to be reconciled by 
June 30, 2004, land-based accounts by September 30, 2006, IIM 
systems tests by September 30, 2006, and Special Deposit Accounts 
by December 31, 2006.7 Id. at 32. The historical statements of 
account prepared for IIM account holders pursuant to the 2003 HSA 
Plan were to include Interiors assessment of the accuracy of the 
account transaction history and sufficient information for IIM 

7 All IIM funds in Special Deposit Accounts -- temporaryholding accounts used to deposit funds before they are creditedto specific accounts -- were to be transferred into theappropriate IIM accounts as part of the historical accountingprocess. 
beneficiaries to ascertain whether Interior has faithfully 
carried out its IIM Trust Fund duties. Id. at 4. 

On the same day it issued its 2003 HSA Plan, Interior 
filed a court-ordered Fiduciary Obligations Compliance Plan, PX
508. The purpose of this plan was to bring the Department into 
compliance with the 1994 Act. This plan recognized shortcomings 
in the HLIP and acknowledged the importance of verifying the 
accuracy of account balances, a step the government noted was 
crucial no matter how carefully future transactions may be 
recorded. Id. at 5. Defendants next issued a Comprehensive 
Trust Management Plan, which conceded failures to implement prior 
trust reform plans and announced a new strategic plan for doing 
so in the future [Dkt. 2050]. The government filed its To-Be 
Trust Business Model and its Fiduciary Trust Model on March 15, 
2005 [Dkt. 2882, attachments 2, 3]. According to the Special 
Trustee, implementation of the Fiduciary Trust Model would ensure 
future compliance with fiduciary obligations owed to IIM 
beneficiaries. 

I.1.E. IIM-related projects before the 2007 plan 

i. Paragraph 19 project 

In 1999, after Secretaries Babbitt and Rubin and 
Director Gover had been found in contempt for their noncompliance with orders of this Court, Cobell II, 37 F. Supp. 2d 
6, 17 (D.D.C. 1999), the government hired Arthur Andersen to help 

both the Treasury and Interior Departments comply with Paragraph 
19 of the First Order for Production of Information [Dkt. 16]. 
Under Paragraph 19, defendants were to produce all documents, 
records or tangible things which embody, refer to, or relate to 
the IIM accounts of the named Plaintiffs or their predecessors in 
interest. Id. at 19. Treasury produced over 2,000 documents 
pursuant to Paragraph 19, and Andersen ultimately concluded that 
Treasurys Paragraph 19 search had been thorough [and] 
well-executed [at or above] industry practices. Trial 1.5 
Tr. 51:15-52:9 (Brunner 6/6/03). Interior searched approximately 
80 facilities for documents responsive to Paragraph 19 and 
produced around 160,000 documents. Trial 1.5 Tr. 54:6-55:8, 
Tr. 66:5-7 (Brunner 6/6/03). A total of 37 accounts were 
analyzed during this project. The documents collected dated back 
to 1914. Interiors 2007 HSA Plan Part 2, AR-566 at 33-03-12. 

The records produced in response to Paragraph 19 were 
reviewed by Ernst & Young partner Joseph Rosenbaum in 2001. 
Trial 1.5 Tr. 53:3-10 (Rosenbaum 6/9/03). Rosenbaums report 
analyzed a virtual ledger of transactions reflecting the 
documents Interior had collected in response to Paragraph 19. 
Rosenbaum determined that the documents necessary for assembling 
transaction histories for the named plaintiffs and their 
predecessors were available, and that TFAS balances from 
December 31, 2000 were sufficiently supported by supplemental 

documentation. Trial 1.5 Tr. 56:15-22 (Rosenbaum 6/9/03). 
Supporting documentation was discovered for 86 percent of the 
12,617 transactions reviewed, representing 93 percent of the 
total dollar value of those transactions, or approximately $1.12 
million. Trial 1.5 Tr. 75:5-76:19, Tr. 77:6-19 (Rosenbaum 
6/9/03). Only small variances were noted. The total cost of the 
project, however, was around $20 million. AR-566 at 33-03-12. 
Interior concluded that, although the documents necessary to 
complete adequate accountings are available, the accounting 
process is extremely expensive, often dwarfing the dollar amounts 
reflected in beneficiaries accounts. 

Rosenbaum also performed an expected versus actual 
analysis by comparing information about leases, transactions, and 
ownership interests. Trial 1.5 Tr. 54:17-55:10 (Rosenbaum 
6/9/03). He identified and analyzed the majority of leases 
associated with the named plaintiffs that related to farming and 
oil and gas extraction, Trial 1.5 Tr. 57:20-58:3 (Rosenbaum 
6/9/03), finding a net of only $32.04 in unexplained differences 
between transaction ledger entries and leases. During the 
October 2007 bench trial, Associate Deputy Secretary James Cason 
testified that Interior understood the results of the Paragraph 
19 project as indicating that, although there were errors in the 
accounts, the errors were relatively few, the errors tended to be 

small, and the errors were on both sides of the ledger. 
Tr. 62:12-21 (Cason). 

The Paragraph 19 project ignored direct pay 
transactions, Trial 1.5 Tr. 44:13-23 (Rosenbaum), escheated 
interests, Trial 1.5 Tr. 7:18-23 (Rosenbaum), and other types of 
transactions. The analysis of disbursements typically ended when 
funds were disbursed from IIM accounts, not when beneficiaries 
received the funds. Trial 1.5 Tr. 84:25-85:3 (Rosenbaum 
6/10/03). 

ii. Mass cancellation project 

Historically, Treasury checks were of unlimited 
payability -- in other words, there were no temporal limits on 
when they could be cashed. That changed when Congress passed the 
Competitive Equality Banking Act of 1987 (CEBA), Pub. L. No. 
100-86, 101 Stat. 552 (1987), which provided that, as of 
October 1, 1989, Treasury checks would be of limited payability 
and could be cashed for only one year from the date of issuance. 
Treasury Bulletin No. 90-03, DX-231 at 1, 18; Tr. 323:17-324:4 
(Ramirez). CEBA also mandated the mass cancellation of all 
checks issued by Treasury that were at least one year old by 
April 1, 1991. DX-231 at 1, 3; Tr. 323:17-324:4, Tr. 325:13-20 
(Ramirez). At that time, some 10 million Treasury checks from as 
early as 1954 remained outstanding; approximately 60,000 of these 
checks were IIM checks with a combined value of approximately 

$1.9 million. Mass Cancellation Project, Analysis of Treasury 
Listing, DX-225 at 8; Tr. 324:8-328:16 (Ramirez); BIA Office of 
Trust Funds Management (OTFM) Instructions on Completing Mass 
Cancellation Project, DX-217 at 1-2. 

Certain provisions of CEBA were problematic as applied 
to IIM trust funds. For example, CEBA broadly prohibited re-
crediting to agencies the funds associated with the cancelled 
checks. DX-231 at 4. Generally, an agency will deposit funds at 
Treasury to cover the payments of checks issued pursuant to its 
authority. Under CEBA, all funds that had been deposited to 
cover mass cancelled checks were to remain in the Treasury 
general account rather than revert back to the agencies. At the 
time, legislators apparently were not focused on the fact that 
some funds -- like IIM and tribal trust funds -- were not tax 
dollars, but were monies that were only being held by Treasury 
after their collection and before their disbursement. 

To address this problem, BIA put Katherine Ramirez in 
charge of a Mass Cancellation Project, Tr. 323:11-15, 
Tr. 332:8-20 (Ramirez), whose mission was to identify IIM checks 
that had been mass cancelled and to re-credit their amounts to 
the proper accounts. Tr. 323:11-15, Tr. 331:8-14 (Ramirez); 
July 30, 1992 Letter from Mary Sandoval to Donald Gray, DX-207 at 

1. Interior had to obtain a special appropriation for the 
purpose of re-crediting IIM accounts, and, in 1992, Congress 

appropriated $3 million for this purpose. See Department of the 
Interior and Related Agencies Appropriations Act, 1993, Pub. L. 
No. 102-381, 106 Stat. 1374, 1391 (1992). The mass cancellation 
project discovered that approximately 22,000 of the approximately 
60,000 mass-cancelled IIM checks were zero dollar instruments,8 
and attempted to trace the 38,554 remaining checks to specific 
IIM accounts. Tr. 349:3-350:22, Tr. 352:18-353:4 (Ramirez). 

BIA traced $616,736.31 -- almost a third of the value 
of the 38,554 non-zero dollar, mass cancelled IIM checks -- to 
specific accounts or to voided checks, 1993 OTFM CEBA Report, 
DX-221 at 2; Tr. 353:5-8, Tr. 354:11-356:7 (Ramirez), leaving 
approximately $1.3 million in mass cancelled IIM checks 
unresolved. DX-221 at 2. Of that $616,726.31, BIA re-credited 
approximately $278,000 to IIM accounts; $338,000 was apparently 
attributable to voided checks. Tr. 356:12-357:9 (Ramirez). 

At trial, no evidence was presented as to Interiors 
post-1993 progress in resolving the remaining approximately $1.3 
million worth of mass cancelled IIM checks. Ramirez testified 

8Ramirez testified that the zero dollar instruments were not checks issued to beneficiaries in the amount of zero dollars, butcheck stock that had been voided, for any number of reasons.Tr. 349:3-351:15 (Ramirez). For example, the check stock mayhave contained typos, or may have been destroyed in the printer,or could not be used because it did not contain the limited payability instruction (void after one year). In those cases,Treasury would not be informed that a particular check number wasused, so Treasury officials would input a zero dollar amount.Tr. 349:6-350:24 (Ramirez). 
that Interior continues to maintain a fund totaling approximately 
$500,000 to pay claims on mass cancelled checks, although no 
claims against the fund have been made recently. 
Tr. 364:4-365:11 (Ramirez). It appears that reimbursement for 
mass cancelled checks occurs now only if an IIM beneficiary or 
BIA agency presents a mass-cancelled trust check to the agency 
for payment, and that unless and until such a check is presented, 
the trust funds associated with the mass cancelled check are not 
disbursed. Examining unrestored funds from mass cancelled checks 
is not part of Interiors 2007 HSA project. 

iii. 20-year tribal reconciliation project 

The original concept of the reconciliation project was 
to reconcile both the IIM trust and the tribal trust. After a 
preliminary assessment revealed significant problems relating to 
missing IIM records, however, Arthur Andersen informed Interior 
that reconciling the IIM trust would be infeasible under the $12 
million contract awarded by the government. May 1996 GAO Report 
to the Senate Committee on Indian Affairs Re: The Tribal 
Reconciliation Project, PX-710 at 3. Instead, Arthur Andersen 
endeavored to reconcile the tribal trust between the dates of 
July 1, 1972 and September 29, 1992. Tr. 2074:9-10 (Christie). 
The 20-year reconciliation project began in December 1992 and was 
terminated before completion in 1995, at a total cost of 

approximately $21 million. Tr. 2073:8-17, Tr. 2084:6-20 
(Christie); PX-710 at 2. 

The tribal reconciliation project was not an audit, but 
a contract governed by agreed upon procedures -- in other 
words, a contract in which the client defines the scope and 
nature of the project. Interiors tribal reconciliation project 
manager Joe Christie testified that the project accomplished its 
goal of reconciling tribal trust fund transactions to the extent 
possible . . . within the time frame we were given. 
Tr. 2076:14-19 (Christie). However, because they encountered 
lots of missing documents, Tr. 2076:21 (Christie), they were 
typically unable to put together reconcilable packages for Arthur 
Andersens analysis that met the highest standard set forth in 
the agreed-upon procedures (referred to as the C standard). 
Indeed, the vast majority of the packages assembled by BIA 
workers did not meet this standard. Tr. 2076:21-2080:2 
(Christie). When the reconciliation packages were ultimately 
presented to the relevant tribes, the tribes were told that they 
could accept or reject packages reconciled at levels other than 
the C level. Tr. 2080:3-9 (Christie). 

The results of the reconciliation project were mixed 
and inconclusive. Approximately 320 reconciliation packages were 
provided to tribes after Interior terminated the project. At 
least some supporting documentation was located for 86% of the 

non-investment transactions reviewed, but the government could 
not verify the remaining 14% of those transactions -representing $2.4 billion -- and abandoned an effort to test 
investment transactions after being stymied by instances of 
missing records. PX-710 at 5-6. The 1996 GAO Report on the 
Tribal Trust Fund Reconciliation Project reveals that BIA failed 
to certify that the reconciliation was performed in compliance 
with the contracts agreed upon procedures (a modest 
certification standard). PX-710 at 3. Notably, the 
reconciliation did not address the completeness of records, nor 
calculate receipts and disbursements that should have been 
recorded, and it revealed that BIA did not know the [complete] 
universe of leases. Id. at 5-6. 

This project did not involve an analysis of the IIM 
trust beyond Arthur Andersens initial conclusion that the 
problem of missing documentation within the universe of IIM trust 
records was more severe than within the universe of tribal trust 
records. 

iv. TIME project 

In 2000, Interior hired DataCom Sciences, Inc., to 
examine the accuracy of the current ownership document 
information in LRIS by comparing mandatory elements. DataCom 
Time Project Report, PX-4352 at 4. This became known as the 
TIME project. DataCom received a random sample of 93 of the 

239,311 tracts within the LRIS system at the Rocky Mountain Land 
Title Records Office, PX-4352 at 2, and analyzed 541 documents 
reflecting ownership information stored in LRIS at the time of 
the project. Operating on the assumption that the paper records 
used in the comparative analysis were accurate, Contempt II 
Tr. 3363:13-3364:2 (Nessi 2/01/02), DataCom determined that over 
30% of the 541 LRIS documents analyzed contained errors of 
different types. PX-4352 at 2. 

Interior later hired NORC to conduct a pilot study of 
the accuracy of probate entries contained in the Tract History 
Reports housed within LRIS. NORC Analysis of LRIS Tract History 
Reports, AR-405. After reviewing 99 probated IIM accounts, NORC 
reported no material errors and no evidence of an error rate as 
high as 33%, but the NORC report was narrower in scope than the 
TIME report and indicated that it was not to be used to 
extrapolate an error rate among probate entries. AR-405 at 4. 

The differences between the NORC and DataCom findings 
appear attributable -- at least in part -- to different 
definitions of error. NORC criticizes DataCom for over-
identifying errors, because DataComs definition of error was 
tied to conformance to requirements rather than fitness for 
use. A misspelling would be a conformance to requirements 
error, even if it did not affect the entrys fitness for use in 
the administration of the trust. NORC Analysis of LRIS Tract 

History Reports, AR-405 at 50-02-06-08; Tr. 1079:3-9 (Scheuren). 
The DataCom report indicates only that inconsistencies between 
hard copy documents and LRIS entries were treated as errors. The 
NORC pilot study operated with a more inquiring definition of 
error. For example, documents missing from LRIS due to the 
probate backlog were not considered errors, nor were incorrect 
IIM numbers. AR-405 at 50-2-6. 

Neither definition of error can be judged right or 
wrong. They are merely more and less sensitive to mistakes 
within the LRIS system. The error rate calculations of both 
approaches can be useful, if for different purposes. The record 
will not support plaintiffs submission that the high error rate 
found by DataCom is indicative of material errors throughout 
current LRIS ownership information. It is reasonable to 
conclude, however, that further analysis of LRIS ownership 
records should precede total reliance on that database for 
purposes of auditing or accounting for ownership interests. 

v. Straw Man project 

Dr. Scheuren drafted a document concerning a proposed 
Straw Man approach to the historical accounting during his 
early days as an Interior contractor, when he was just learning 
about this work. Tr. 1080:4-21 (Scheuren); Undated document 
titled Adaptive Testing Approach for Phase 1 Straw Man Design, 
AR-167; Undated Scheuren document titled Straw Man Pretest, 

AR-170; see also Tr. 1080:4-12 (Scheuren); Exchange containing 
07/08/02 email from Scheuren to Edwards mentioning straw man 
proposal, AR-304 at 14-02-04. The Straw Man Pretest was 
prepared after meetings between NORC and Interior and included 
several questions for Interior to consider as it planned its data 
gathering efforts. AR-170; AR-304. 

The documents describing the Straw Man Pretest focus 
on the benefits of adaptive sampling -- an approach that is 
heavily utilized in both the 2003 and 2007 HSA plans. In one 
document, the government notes that [t]he main benefit 
emphasized in an adaptive approach is obviously reduced expense, 
and identifies other benefits such as scalability, speed, 
suitability for targeting of efforts, likelihood that results can 
be reported as a series of successes, use of pilots to benefit 
from lessons learned by prior pilots, and increased accuracy. 
AR-167 at 57-29-01-02. Adaptive sampling links up nicely with 
the legitimate payment of a cash settlement, since inherently an 
adaptive approach admits error, even though it may well manage to 
keep it less than would have been the case in a full accounting. 
Id. at 57-29-02. The Straw Man approach appears to reflect 
Interiors initial reconsideration of the 100% transaction-bytransaction approach proposed in the 2002 Report to Congress: 
the adaptive strategy . . . is completely compatible with 
the . . . [July 2, 2002] Historical Accounting Report. The only 

difference is that we do not necessarily have to test every 
transaction. Id. 

vi. Recent audits of the IIM trust 

To the courts knowledge, there has never been an 
unqualified independent audit of the IIM trust. Qualified 
audits are issued when the auditor is unable to comply with 
generally accepted auditing standards. In the case of the IIM 
trust, auditors have issued qualified audits after discovering 
cash balances that conflicted with those reported by the U.S. 
Treasury, internal control deficiencies, records management 
problems, and irreconcilable ledgers, among other things. See, 
e.g., AR-343; AR-347; AR-350; AR-352; AR-355; AR-369; AR-374; PX575 at 3, 10-12. The first IIM trust audit performed by an 
independent auditor was the Arthur Andersen audit conducted in 
1988. PX-575 at 3. That audit documented internal controls 
weaknesses attributable to inadequate training, lack of 
experienced supervisors, understaffing, and out-of-date 
accounting manuals, and concluded that the accounting systems 
[were] unreliable. PX-575 at 10-12. These concerns have been 
reflected in more recent audits as well. See PX-695; AR-633; AR377; AR-374. The most recent independent audit -- prepared by 
KPMG for the year ending on September 30, 2006 -- noted that OST 
relied upon unreliable BIA data and unresolved financial 
reporting from prior periods, that OSTs processing of trust data 

relies upon the accuracy of information from BIA, MMS, and other 
bureaus and offices, and that current management is burdened 
with the ongoing impact of decades of accumulated discrepancies 
in the accounting records. AR-343 at 60-02-34. 

I.1.F. Establishment of the AIRR in Lenexa, Kansas 

In 2004, the government opened the American Indian 
Records Repository (AIRR) in an underground limestone mine in 
Lenexa, Kansas. AR-563 at 11-12; Tr. 378:19-379:17 (Ramirez). 
The AIRR is within NARAs Federal Records Center, which is one of 
many government offices and private businesses occupying space in 
the 90 acre mine. Tr. 368:3-8; Tr. 370:13-14 (Ramirez). Retired 
Indian records are sent to Lenexa for storage and as a resource 
for research. The government now reports that 165,825 boxes of 
Indian records are stored at the AIRR (not all of which contain 
IIM trust records). OTR Activity Report for December 2007 
(Jan. 15, 2008) [Dkt. 3479]. 

Two Interior offices have outposts at the AIRR: the 
Office of Historical Trust Accounting (OHTA) and the Office of 
Trust Records (OTR). Tr. 367:1-8 (Ramirez). OTR is within the 
Office of the Special Trustee for American Indians (OST). The 
AIRR is under the overall management of OTR, but OHTA requires 
access to trust records that are stored on-site, so OHTA sublets 
space from OTR and employs on-site contractors who search for 
(searchers) and code (coders) documents. Id. OTR also has 

an off-site annex facility, where boxes of records destined for 
the AIRR are initially received from BIA, OST, and regional 
offices across the United States. These sealed boxes are 
indexed, inventoried, and labeled according to strict procedures 
before they are sent into the cave and officially transferred 
from the custody of the DOI into the custody of NARA. 
Tr. 372:12-373:7 (Ramirez). Kathy Ramirez -- the former manager 
of the mass cancellation project -- manages OHTAs contract staff 
at the AIRR. Tr. 366:25-367:1 (Ramirez). 

Two primary systems are used for indexing, storing, 
searching for, coding, and scanning specific documents at the 
AIRR: the Box Index Search System (BISS) and Account 
Reconciliation Tool (ART). After they have been delivered and 
labeled, the boxes numbers and indexing information are entered 
into the BISS by annex contractors before the records are 
transferred to NARA for storage. Tr. 372:18-373:7, 
Tr. 377:5-378:9, Tr. 385:19-386:19 (Ramirez). OHTAs accounting 
contractors (Clifton Gunderson) use the BISS system to identify 
records that will be potentially useful in conducting historical 
accounting work. Tr. 381:3-25 (Ramirez). After identifying 
potentially relevant boxes on the BISS, these searchers submit 
requests to NARA, and NARA delivers the requested boxes to OHTAs 
searchers. Tr. 382:1-383:9 (Ramirez). Once the searchers 
identify relevant documents within the requested boxes, another 

group of contractors (the coders) images and codes the 
responsive documents and loads them into the ART system where 
they are accessible to OHTA contractors performing historical 
accounting work. Tr. 383:20-384:11, Tr. 385:3-11, 
Tr. 387:2-389:15 (Ramirez). Quality control measures are 
observed throughout the process. 

It is evident from the photographs presented and 
testimony given at trial that the AIRR is a state of the art, 
climate-controlled, organized, and sizable facility suitable to 
the storage and research obligations of the Interior Department. 
Storage bays containing Indian trust records were constructed in 
accordance with the highest standards, the facility maintains low 
temperature and low humidity, and particulate matter and 
ultraviolet light are controlled. Tr. 370:17-19 (Ramirez). 

While the facility reflects a significant improvement 
in the conditions and treatment of the records that have survived 
the cramped, disorganized, flooded, rat-infested storage 
facilities in which some of them were found, it is unclear from 
the evidence presented at trial what percentage of total IIM 
records that should have been maintained over the life of the 
trust have actually been recovered and shipped to the AIRR. 
Document requests still present vexing challenges for the 
considerable number of searchers working in the AIRR. At the 
time of trial, of the 80,000 requests FTI has submitted to AIRR 

in connection with its DCV work, approximately 35,000 requests 
remained pending, and some requests can take over a year to fill. 
Tr. 505:3-14 (Herman). As recently as June 2007, the government 
estimated that it could cost up to $37.4 million to search the 
AIRR for documents related to plaintiffs request for the trust 
records of less than one hundred specific beneficiaries. [Dkt. 
3340] at 3-4. The development of the AIRR has streamlined the 
analysis of trust records to some extent, but difficulties in 
locating documents and the inability to certify that all relevant 
documents have been consolidated in the facility prevent a 
finding that the records management problems chronicled in 
earlier opinions have been fully rectified. 


I.2. The 2007 Historical Accounting Plan 

The historical accounting plan announced by Interior in 
May 2007 -- the 2007 HSA Plan -- is dramatically different from 
the far more ambitious plan announced four years earlier. It 
reflects Interiors decisions, sometimes made for cost reasons 
and sometimes because of its legal interpretation of the statute, 
to rely much more heavily on sampling and statistics. Interior 
will reconcile only a small sample of IIM transactions (which it 
believes will yield statistically significant results), test its 
existing electronic data for completeness, test the process by 
which revenues collected from allotments are transferred into IIM 
accounts (again on a sample basis), and then begin issuing 

historical statements of account to IIM holders -- with 
Interiors assurance that they are correct. 

I.2.A. 	Major changes to the Historical Accounting Project
reflected in the 2007 HSA Plan 
The Interior Departments 2007 HSA Plan builds upon 
and replaces the 2003 HSA Plan. Interiors 2007 Historical 

Accounting Plan, AR-566 at 33-03-03. Many significant changes 
are reflected in the Departments newest plan. 

i. Cost and Schedule 

When it adopted the 2003 HSA Plan, Interior estimated 
that the IIM historical accounting project would cost $335 
million to perform and would be completed within five years. 
Between 2003 - 2007, however, not only did Interior receive only 
$127.1 million in appropriations for its IIM historical 
accounting work, but it also discovered that the accounting 
process it had envisioned would be both more costly and more 
time-consuming than it had anticipated. Tr. 67:24-68:7 (Cason). 
Even with the dramatic reduction in the number of land-based 
transactions that will be sampled under the 2007 Plan, Interior 
expects that the 2007 Plan work will not be completed until the 
end of 2011. That estimate is contingent upon congressional 
appropriations for IIM historical accounting totaling $144 
between 2007 and 2011. 

ii. Transactions and Accounts to be Reconciled 

The 2003 plan relied on statistical sampling of lower 
value transactions in land-based accounts, but the number of 
transactions to be reconciled under the new plan is considerably 
smaller. A chart may help to illustrate the differences: 

2003 HSA Plan  2007 HSA Plan  
Reconciliations of transactions from land-based accounts post-1985(the ElectronicLedger Era)  < transactions $ $5,000: 100%transaction-bytransaction approach(73,000transactions)< transactions btw $500-$5,000:80,000transactions sampled< transactions < $500: 80,000transactions sampled samples must bedrawn from everyagency < projected total . 233,000transactions reconciled  AR-566 at 33-03-22 - 33-03-23  < transactions $ $100,000: 100%transaction-bytransaction approach(2,099transactions)< transactions < $100,000: 4,500transactions sampled all agenciessubject tosampling, but norequirement thatsamples be drawnfrom each agency < projected total =6,599transactions reconciled  AR-566 at 33-03-22 - 33-03-23  

Reconciliations of transactions from land-based accounts pre-1985(the Paper LedgerEra)  < transactions $ $5,000: 100%transaction-bytransaction approach(100,000transactions)< transactions < $5,000: 160,000transactions sampled < projected total . 260,000transactions reconciled AR-566 at 33-03-22  < transactions of all dollar amounts subject tostatistical sampling; unknownnumber of sampledtransactions < projected total =unknown AR-566 at 33-03-23 33-03-24  
Reconciliations of  100% transaction-by 100% transaction-by 
transactions from  transaction approach  transaction approach 
Judgment and Per 86% complete; 
Capita accounts  further reconciliations deferred indefinitely  
< projected total . all transactions in 96,823 accountsreconciled AR-566 at 33-03-24  < projected total =unknown (reconciliationsof all transactions in at least 83,226accounts complete)AR-566 at 33-03-24  

The bulk of the reconciliation work that remains to be 
done under Interiors 2007 HSA plan involves pre-1985 
transactions in land-based accounts. Because most of the 
materials necessary for this work are in paper form, the process 
is considerably more time consuming. Even though only 
approximately 65,000 of the total 267,949 land-based accounts 

Interior intends to reconcile were opened prior to 1985, 
analyzing them is by far the most expensive and labor intensive 
effort. At the time of the trial, preparations for paper ledger 
era land-based account reconciliations had begun, but the work 
had not commenced in earnest. 

Most of the other reconciliation work contemplated in 
the 2007 HSA Plan is complete. Interior has finished its 
analysis of 6,599 post-1985 transactions within land-based 
accounts, and has reconciled all transactions within 86% of the 
Judgment and Per Capita accounts. It has suspended 
reconciliation work on Judgment and Per Capita accounts in order 
to focus on the more time-consuming paper ledger era land-based 
accounts, and has deferred consideration of whether to complete 
transaction-by-transaction reconciliations of the remaining 14% 
of Judgment and Per Capita accounts. Interior plans to produce 
HSAs for all Judgment and Per Capita account holders, but it may 
conclude that reconciliation of transactions within the remaining 
approximately 13,600 accounts is unnecessary. In other words, 
its reconciliation work on Judgment and Per Capita accounts may 
also be complete. 

iii. Special Deposit Accounts 

Special Deposit Accounts (SDAs) are temporary accounts 
used to hold trust funds until they are identified for transfer 
to specific accounts. AR-566 at 33-03-27. The 2003 Plan 

revealed that $67.9 million in residual balances were in SDAs 
awaiting distribution. Id. As part of the historical accounting 
project described in the 2003 Plan, Interior planned to identify 
the proper owners of those funds and distribute the funds 
accordingly. Id. Interior reports that it has since distributed 
over $51 million in residual SDA balances at a cost of $48 
million. Id. No documentation supporting those numbers is 
contained in the Administrative Record submitted for the October 
2007 bench trial, but testimony at trial echoed the total figures 
reported in the 2007 Plan. Tr. 158:12-19 (Cason). 

Interiors current position is that SDA work . . . is 
not truly part of the historical accounting, as money 
distributed from SDAs are part of current accounting 
distributions. AR-566 at 33-03-27. Consequently, while OHTA 
will continue to work on distributing funds in SDAs as part of 
its trust reform efforts, the resolution of these accounts is no 
longer an element of the HSA project. Id. 

iv. Asset statements 

The 2003 HSA plan reflected Interiors intent to 
include, as part of its historical statements of all land-based 
IIM accounts, statements of land assets owned as of December 31, 
2000. AR-566 at 33-03-28. In the 2007 HSA plan, Interior has 
changed its mind. Now statements of land assets will not be 
provided to beneficiaries in HSAs. Id. Instead, Interior 

indicated that it would begin to send combined statements that 
would include current land ownership, encumbrance, and financial 
information to IIM account holders in late 2007, after the TAAMS 
lease management module is fully implemented and the TFAS/TAAMS 
interface enables the agency to produce such statements. Id. 
This change reflects Interiors judgment that producing land 
asset ownership statements as of Decemeber 31, 2000 would be 
costly and complicated, and would add little value to the 
historical statements of account. Id. 

I.2.B. 	Rationale for changes to the historical accounting
project 
Several interrelated factors caused Interior to revise 
the plan it had adopted in 2003. Original cost and time 
estimates were off by several multiples, and Congress failed to 
appropriate the funds Interior had requested and expected. 
Interior initially estimated that reconciliation work would cost 
around $100 per transaction, but experience in recent years has 
revealed that reconciling a single transaction costs between 
$3,000 - $3,500 when searching, imaging, coding, computer 
support, accounting services, quality review, and statistical 
analysis are taken into account. AR-566 at 3303-09. While 
Interior estimated that the 2003 Plan would cost $335 million to 
implement, its received only $127 million in congressional 

appropriations for IIM historical accounting between 2003 - 2007. 
In any event, the agency now estimates that the 2003 Plan would 

have cost approximately $1.675 billion to complete. See AR-566 
at 33-03-05 (noting that 2003 Plan is now estimated to cost 
about five times the original cost estimate). 

Interior expected that it could complete the historical 
accounting activities described in the 2003 plan -- including the 
reconciliation of hundreds of thousands of transactions in land-
based accounts -- by 2007, but by years end it had completed a 
small fraction of those reconciliations. Indeed, at the time of 
trial, it had not even finalized its accounting plan for pre-1985 
transactions in land-based accounts and the remaining 
Judgment/Per Capita accounts. 

Judicial decisions and congressional action following 
the issuance of the 2003 HSA Plan affected the agencys 
implementation of its historical accounting project. Shortly 
after the plans issuance, Judge Lamberth issued a structural 
injunction rejecting the Departments plan and mandating a 
significant expansion of the historical accounting project. 
Cobell X, 283 F. Supp. 2d 1 (D.D.C. 2003). On November 10, 2003, 
less than two months after the issuance of that opinion (and 
after receiving estimates from the Interior Department that 
compliance with the structural injunction would cost the agency 
approximately $3 billion, Tr. 200:17-201:1 (Cason)), Congress 
included a provision in an appropriations act that granted 
Interior relief from performing an historical accounting of the 

IIM trust until the earlier of the following shall have 
occurred: (a) Congress [amends the 1994 Act] to delineate the 
specific historical accounting obligations of the Department of 
the Interior with respect to the Individual Indian Money Trust; 
or (b) December 31, 2004. Department of the Interior and 
Related Agencies Appropriations Act, 2004, Pub. L. No. 108-108, 
117 Stat. 1241, 1263 (2003). 

On December 10, 2004, exactly one year after the 
passage of the appropriations bill, the Court of Appeals for the 

D.C. Circuit reversed Cobell X, holding that the structural 
injunction had no legal basis after the passage of the 2004 
appropriations bill. Cobell XIII, 392 F.3d 461 (D.C. Cir. 2004). 
Congress failed to step up to the problem, however -- it did not 
delineate the specific historical accounting obligations of the 
Department of the Interior with respect to the Individual Indian 
Money Trust before December 31, 2004 -- so, on February 23, 
2005, Judge Lamberth reinstated his structural injunction. 
Cobell XIV, 357 F. Supp. 2d 298 (D.D.C. 2005). The reinstated 
injunction was stayed soon thereafter, Cobell v. Norton, 2005 

U.S. App. LEXIS 5788 (D.C. Cir. Apr. 7, 2005), and eventually 
reversed in late 2005, Cobell XVII, 428 F.3d 1070. 

During this turbulent period, defendants did perform 
some historical accounting work, even if that work did not always 
conform to the scope or methodology described in the 2003 Plan. 

The results of work done during that period informed the agencys 
adjustments to its historical accounting project. Defendants 
began to implement the 2003 plan for statistical sampling of 
post-1985 land-based transactions within the Alaska Region, but 
that beginning was aborted because of the judicial decisions and 
congressional actions described above. Tr. 971:16-972:9 
(Scheuren). The land-based transaction reconciliation work 
performed after the issuance of the 2003 Plan was largely part of 
a project entitled Litigation Support Accounting, or LSA, which 
was conducted between October or November 2003 and November 2004. 
Tr. 199:1 (Cason); Tr. 974:7-12 (Scheuren). Interior borrowed 
the term litigation support from the appropriations bill 
discussed above, which temporarily halted both the agencys 
obligation to perform an historical accounting of the IIM trust 
and, arguably, temporarily prohibited any work other than 
litigation support on land-based IIM accounts: 

[O]f the amounts available under this heading not to
exceed $45,000,000 shall be available for records
collection and indexing, imaging and coding, accounting
for per capita and judgment accounts, accounting for
tribal accounts, reviewing and distributing funds from
special deposit accounts, and program management of the
Office of Historical Trust Accounting, including
litigation support. 

Pub. L. 108-108 at 23, (emphasis added). Noticeably absent from 
this list of permissible expenditures in the period between 
November 10, 2003 and December 31, 2004 was any allowance for 
reconciliation of land-based accounts. Interior interpreted the 

reference to litigation support, however, as authorizing an 
accounting project that involved analyzing -- as well as reducing 
liability arising out of -- a small sample of land-based 
accounts. Tr. 199:11-23, Tr. 205:16-19 (Cason). Part of the 
rationale for the Litigation Support Accounting project was that 
it would develop information that would facilitate 
Congressionally directed settlement discussions that were 
occurring during that time. Tr. 62:2-64:5 (Cason).

 The government retained NORC to draw samples for the 
LSA project, which ultimately involved the reconciliation of 
6,599 transactions from land-based accounts in the electronic 
era. NORCs goal in performing the LSA project was to deepen its 
understanding of the system in order to better target future 
historical accounting efforts. Tr. 974:18-975:1 (Scheuren). 
NORC -- along with various accounting firms assisting with the 
LSA project -- learned many lessons while performing this 
relatively small number of reconciliations. First, it learned 
that the cost of reconciling transactions in land-based accounts 
is significant. Tr. 964:23-965:16 (Scheuren). Second, however, 
NORC encountered far fewer errors and missing records than it had 
expected to discover. Tr. 977:15-22 (Scheuren). The large 
sample sizes contained in the 2003 Plan had been based on 
Interiors assumption -- an assumption informed by historical 
reports, anecdotal evidence, and decades of criticism -- that 

records would be missing, erroneous, and in disarray. Those 
assumptions, NORC concluded, were overblown and incorrect. 

The positive results of the LSA project caused NORC to 
suggest that the Interior Department reassess the sample design 
in the 2003 Plan. Tr. 1003:3-11 (Scheuren). In fact, although 
NORC had reconciled less than 3% of the transactions to be 
reconciled under the 2003 HSA Plan, AR-566 at 33-3-22, it 
recommended that Interior cease conducting reconciliation work on 
post-1985 land-based transactions. NORC based this 
recommendation on the small number of errors it had encountered, 
and on its estimation that additional work would be expensive and 
would not meaningfully lower the margin of error around estimated 
error rates. Tr. 1004:17-1005:7 (Scheuren); 3/15/07 email from 
Scheuren to Edwards, AR-427 at 4-5. NORC did make certain 
recommendations for additional historical accounting work, which 
will be described in further detail below. 

I.2.C. Producing the historical statements of account 

Interiors 2007 historical accounting project utilizes 
several different computer systems, contracting firms, and 
methodologies. It involves six discrete steps, which are set out 
in the 2007 HSA Plan in deceptively simple terms. AR-565 at 3302-08-09. They will be described broadly below, and in further 
detail in the discussion that follows. 

The first step is to gather credit and debit ledgers 
and to assemble data from each IIM account. Id. Next, the 
agency reconciles selected transactions (see chart above) to 
determine accuracy -- comparing ledgers to contemporaneous 
records -- and tests the integrity of the data systems. Id. 
After completing that process, the DOI petitions the court for 
permission to assemble and mail HSA packages to beneficiaries. 
Id. Upon receipt of the courts permission, the agency assembles 
HSA packages and mails them to beneficiaries. Id. Each HSA 
package will contain a list of all transactions in the 
beneficiarys account along with available references for each 
transaction, as well as a statement regarding the accuracy and 
completeness of the information provided. Id. Finally, the 
Department will implement an administrative appeal process, by 
which account holders may challenge information contained within 
the HSAs within a specific period of time. Id. 

I.2.D. Information Contained in the Historical Statements 

of Account 

Historical Statements of Account are to include two 
main elements: a report of the transaction history within each 
account, listing all transactions posted to IRMS or TFAS, and 
Interiors conclusions regarding the accuracy and completeness 
of the accounting provided. AR-565 at 33-02-03-04; 33-02-06-11. 
Information that will not be included in the HSAs will be 
discussed in the further detail below. 

I.2.E. 	Beneficiaries Receiving Historical Statements of
Account 
Under the 2007 HSA Plan, Interior intends to prepare 
HSAs for all IIM accounts that were open at any time between 
October 25, 1994 and December 31, 2000. For all IIM accounts 

open at any point on or between those dates, the agency intends 
to prepare an HSA listing transactions dating back to the opening 

of the account or June 24, 1938, whichever is later.  Defendants 

will not prepare HSAs for accounts closed before October 25, 1994 
or opened after December 31, 2000. AR-565 at 33-02-03-06. 
Defendants estimate that HSAs may be prepared for approximately 
364,772 accounts. AR-565 at 33-02-11. It is worth noting that 
there is not a 1:1:1 relationship among accounts, beneficiaries, 
and allotments. A beneficiary may have multiple accounts 
relating to a single allotment, or a beneficiary may own multiple 
allotments that have never been leased and never led to the 
creation of IIM accounts. For this reason, the number of 
accounts reconciled will not be equal to the number of 
beneficiaries receiving accounting statements. 

I.2.F. Transactions Reconciled under the 2007 HSA Plan 

i. Judgment and Per Capita accounts 

In its 2007 Historical Accounting Plan, Interior 

explains that 

When a tribe receives money as part of a legal judgment

or negotiated settlement, the tribe may elect or be

required to pass along some, or all, of the money to 

its enrolled members or their descendents [sic].
Similarly, other income to the tribe may be distributed
to tribal members in accordance with a tribal 
resolution specifying the amount of the payment and the
eligibility of members to receive payment. In most 
cases, money is distributed directly to tribal members;
however, for minors or other tribal members who are not
eligible to receive direct payment, the money is
deposited on their behalf into an IIM account. 

Interiors 2007 HSA Plan, AR-565 at 33-02-11. 

The majority of the Judgment and Per Capita accounts -indisputably the easiest funds to reconcile -- have been 
reconciled under an 100% transaction-by-transaction approach. 
Interior has no immediate plans to reconcile the remaining 13,122 
funds; it has put that work on hold indefinitely in order to 
focus on higher priority accounting work. AR-565 at 33-02-13. 
The reconciliations that have already been completed were 
conducted pursuant to a contract with Chevarria, Dunne & Lamey 
and reviewed by the governments quality control contractor, 
Grant Thorton. The steps followed by CD&L in reconciling 
Judgment and Per Capita accounts were as follows: (1) query IRMS 
and TFAS to produce account transaction histories; (2) use 
document indexes to identify record boxes; (3) search for records 
necessary to reconcile transactions; (4) compare account details 
with supporting documentation; (5) calculate interest based on 
historical interest factor and compare with interest posted; 

(6) produce and seek authorization to mail HSAs. Reconciliations 
were performed according to the Accounting Standards Manual. 

Some of the funds were listed in CD&Ls reports as fully 
reconciled, while others were listed as partially reconciled. 
Scant attention was paid to the reconciliation of these accounts 
in the October 2007 trial. 

ii. Land-Based Accounts: 1985 - 2000 

The LSA project reconciled non-interest transactions in 
land-based accounts posted on IRMS and TFAS between 1985-2000. 
The sample design for the LSA project involved a 100% 
reconciliation of the 2,099 transactions of $100,000 or more. 
The sample of lower value transactions reconciled consisted of 
289 transactions taken from the Eastern Region, 442 transactions 
from the Alaska region, and, initially, a sample of approximately 
20,000 transactions from the remaining 10 regions (the national 
sample). Tr. 990:12-994:10 (Scheuren); see chart  I.2.A.ii. 
The 20,000+ transactions in the national sample were drawn from 
1,020 accounts across 10 regions, and were divided into four 
replicates of approximately 5,000 transactions each. In the end, 
the LSA contractors only analyzed transactions from one of the 
four replicates. Tr. 993:7-994:7 (Scheuren). The transactions 
analyzed were within a replicate of 5,128 transactions, but 
contractors attempted to reconcile only 3,769 of those 
transactions because the others were apparently outside the scope 
of the analysis (interest transactions, transactions occurring 
after 2000, etc.). Between the Eastern Region sample (289 

transactions), the Alaska Region sample (442 transactions), and 
National Sample replicate (3,769 transactions), contractors 
attempted to reconcile 4,500 lower-value transactions pursuant to 
the LSA project. 

Accounting firms working with the sampled transactions 
provided by NORC were able to reconcile 2,363 of the 2,372 debit 
transactions sampled, and 2,117 of 2,128 credit transactions 
sampled. Tr. 997:1-12, Tr. 1000:2-12 (Scheuren); AR-438 (tables 
4 and 7). A posted transaction from the IRMS or TFAS database 
was considered reconciled if contractors found supporting 
documents sufficient to determine whether the transaction was 
correct or erroneous. Tr. 997:5-8 (Scheuren); see Section 1.2.G. 
below. No errors were found among the reconciled debit 
transactions, and 25 errors were found among the reconciled 
credit transactions. Tr. 997:1-12, Tr. 1000:7-20 (Scheuren). 
For statistical purposes, NORC also considered all unreconciled 
transactions erroneous (nine debit transactions and eleven credit 
transactions). 9/30/2005 NORC LSA Report, AR-438 at 14, 17. 
Both variable and attribute sampling were employed in the LSA 
project, as contractors noted both the presence of errors as well 
the total amount of dollars in error. 

The population from which samples were drawn for the 
LSA -- the target population -- was not the entire population 
analyzed under the 2007 plan, nor was it the entire electronic 

era population. Tr. 2149:1-8, Tr. 2169:119-22 (Hinkins). 
Certain transactions from the electronic ledger era were not in 
the population sampled in the LSA project, as not all 
transactional data from the electronic era had been restored to 
the data set when the samples were drawn. Tr. 689:11-24 
(Herman). 

NORC acknowledges that the positive inferences that can 
be drawn from the LSA work are only applicable to the population 
sampled -- that is, to transactions between 1985-2000 in land-
based accounts available in electronic form at the time the 
sampling was conducted. Tr. 2152:9-16, Tr. 2152:17-2153:3 
(Hinkins). Interior believes that other projects will address 
transactions missing from the target population in the LSA work, 
such as the Data Completeness Validation and Land-to-Dollars 
tests discussed below. Tr. 2171:5-8, Tr. 2172:1-5 (Hinkins). 
Interior contractor Michelle Herman also suggested that Interior 
plans to draw another sample after the entire data set is 
restored, but no defense witnesses testified as to the details of 
such plans at trial. Tr. 574:8-574:1, Tr. 702:16-24, Tr. 704:1014 (Herman). 

Indeed, defendants position on post-LSA sampling and 
reconciliation of land-based transactions within the electronic 
era after data restoration projects is confusing. In some 
instances, Interior indicates that it has completed its sampling 

and transaction reconciliation of electronic era land-based 
transactions through the Litigation Support Accounting project 
described above. See, e.g., AR-566 at 33-03-14 (no further 
reconciliation is necessary for the electronic era). Elsewhere, 
the agency expresses an intention to conduct further sampling 
after data gaps are restored to the IRMS and TFAS databases. 
See, e.g., AR-566 at 33-03-19 (Interior plans to reconcile a 
sample of these restored transactions to determine if they have 
an error rate significantly different from that found in the LSA 
sample.); Susan Hinkins Responding Expert Report [Dkt. 3393-2] 
at 23 ([T]he 2007 Plan clearly shows that DOI has not claimed to 
have completed tests for the Electronic Ledger Era.). 

A close reading of the 2007 HSA Plan reveals that 
further testing of restored, electronic era transactions from 
land-based accounts is not a task that Interior will necessarily 
accomplish before land-based account HSAs from the electronic 
era are mailed. According to the plan, the completion of the 
Data Completeness Validation, Interest Recalculation, and Landto-Dollars Posting Tests constitute all the [remaining] steps 
necessary to mail land-based account HSAs[.] AR-566 at 33-03
18. Because the government represents (1) that the mailing of 
HSAs discharges its accounting duty and (2) that HSAs can be 
mailed to beneficiaries prior to further reconciliation of land-
based transactions within the electronic era after the data set 

is restored, my reading of the 2007 Plan is that Interior 
considers the land-based electronic era reconciliation work to be 
complete. 

iii. Pre-1985 transactions in land-based accounts 

Interiors plan for sampling and reconciling paper 
era transactions -- a project Interior has yet to begin --
remains vague. Defendants estimate that approximately 65,000 of 
the nearly 268,000 land-based IIM accounts within the historical 
accounting population were open before 1985. AR-565 at 33-02-10. 
This reconciliation work will be more expensive, since the 
records are older. They may have been destroyed. If they can be 
located at all, they must be translated into digital form and 
uploaded into an electronic database before reconciliations can 
be attempted. 

On May 25, 2007, NORC recommended to the Interior 
Department that it begin its paper ledger era land-based 
reconciliation work by testing the hypothesis that the error rate 
in the paper ledger era is similar to the error rate in the 
electronic era. 5/25/07 memo from Scheuren to Edwards, AR-426. 
Six days later, DOI officially adopted this approach by including 
it in its 2007 HSA Plan. AR-565 at 33-02-15. 

The initial hypothesis recommended was influenced by, 
among other things, a meta-analysis conducted by NORC. A 
meta-analysis is a process by which statisticians consider 

studies from several different sources on similar or related 
subjects to draw together what is known about the subject. 
Tr. 1019:14-19 (Scheuren). The purpose of NORCs meta-analysis 
was to examine whether historical studies of the IIM trust -- an 
incomplete but voluminous collection of around 900 documents, 
including some 263 audits -- suggested that the proposed 
hypothesis was way off base. Tr. 1020:9-1021:6, Tr. 1043:14-21, 
Tr. 1066:21-25 (Scheuren). NORCs meta-analysis played a minor 
role in the adoption of the initial hypothesis for paper ledger 
era testing: it did not result in the hypothesis, but was 
instead one technique NORC used in considering whether the 
hypothesis was within the realm of possibility. 
Tr. 1021:16-1022:2 (Scheuren). Dr. Scheuren described it as a 
due diligence step. Tr. 1020:3 (Scheuren). Nothing NORC 
uncovered in its meta-analysis caused the statisticians to 
reconsider their initial hypothesis that the error rate in the 
paper ledger era resembles that of the electronic ledger era. 
Tr. 1022:4-7 (Scheuren). Complete copies of all documents relied 
upon in the meta-analysis have not been disclosed, nor has NORCs 
internal work product summarizing those documents. See, e.g., 
Tr. 1443:25-1444:6 (Duncan). 

Following NORCs recommendation, Interior will draw a 
small sample of accounts from a virtual electronic ledger 
compiled from the paper ledger era, and a small sample of 

transactions from within those accounts. AR-565 at 33-02-15; 
Tr. 1018:9-17 (Scheuren). The exact size of those samples has 
not been revealed. If Interior discovers that the error rate in 
the paper ledger era is similar to that of the electronic 
ledger era, the conclusion will be that the findings of the 
electronic ledger era apply to the paper ledger era as well and 
no further sampling will be conducted. AR-565 at 33-02-15. If, 
however, they are not, the Interior Department plans to broaden 
the sample of paper era transactions, and will probably have to 
extend its projected schedule to complete its work. Tr. 269:7-19 
(Cason). 

1.2.G. Reconciliation Process 

i. Contractors involved in the reconciliation work 

Interiors historical accounting project now underway 
is a classic case of government outsourcing. It employs five 
accounting firms, two historian firms, and firms to assist in 
statistical matters and project design. AR-565 at 33-02-07. Of 
the five accounting firms, three (Clifton Gunderson LLC, Deloitte 
& Touche LLP, and Reznick Group, P.C.) are performing 
reconciliations and account analyses; one (FTI Consulting, Inc.) 
is conducting forensic accounting; and one (Grant Thornton LLP) 
is performing quality control reviews of all the historical 
accounting activities. Id. 

FTI worked on the first three steps in the historical 
accounting as detailed in the 2007 Plan, Tr. 438:2-441:20 
(Herman), and has been primarily responsible for gathering 
account data on IIM transactions, Tr. 438:2-10 (Herman). FTI has 
also done reconciliation work as part of the LSA project, along 
with the other accounting firms. Tr. 438:18-439:13 (Herman). 
Michelle Herman is a Managing Director of FTI Consulting. 
Tr. 434:7-11 (Herman). Over the past ten years -- practically 
her entire post-graduate career -- she has worked for three 
contractor firms involved with the historical accounting project. 
Tr. 437:9-17, Tr. 435:4-6 (Herman). 

The National Opinion Research Center (NORC) works on 
statistical matters. AR-565 at 33-02-7. Doctors Fritz Scheuren 
and Susan Hinkins have led most of the historical accounting work 
at NORC. Morgan, Angel & Associates, LLC, and Historical 
Research Associates Inc., which specializes on Indian issues, 
provide information on leasing, the allotment process, 
reservation histories, and other matters. AR-565 at 33-02-07. 
The five accounting firms and NORC have contributed to the 
development and updating of the Accounting Standards Manual. 
AR-8 at 2. 

NORC was engaged to address measurement and quality 
issues for Interiors July 2, 2002 report to Congress; 
statistical sampling was not a significant consideration at that 

time. Tr. 932:12-20 (Scheuren); AR-561. NORC was thereafter 
engaged to design and propose a sampling approach for Interiors 
January 2003 Plan. Tr. 934:11-15 (Scheuren). NORC designed the 
sample for testing by Grant Thornton with respect to performing 
quality assurance reviews of reconciliation work performed by 
Interiors accounting contractors. Tr. 1032:9-17 (Scheuren). 

ii. Accounting Standards Manual 

Contractors doing the reconciliation work are guided by 
the Accounting Standards Manual (ASM), a 581-page compilation of 
historical accounting standards. AR-566 at 33-03-11. Its 
purpose is to ensure quality and uniformity among the various 
firms performing historical accounting work; it is also used by 
the firm performing quality control services. Tr. 2109:20-24 
(Dunne). The ASM governs both paper ledger era and electronic 
ledger era reconciliations. Tr. 580:2-12 (Herman); Tr. 2111:919 (Dunne). It details a reconciliation process in three steps: 

(1) identifying document types that might support a given 
transaction and searching for those documents; (2) tracing the 
transaction back to its initial entry in the IIM system using 
documents collected in step (1); and (3) quality control 
procedures, both within the firm conducting the reconciliation 
and by the QC firm, Grant Thorton. Accounting Standards Manual, 
AR-8 at 44-01-13. Contractors are to assess reconciliation 
results on a scale of 1 to 4, depending on how conclusively the 

supporting documents verify the transaction posted. The ASM 
makes reference to auditing standards, but as the historical 
accounting work is a consulting engagement and not an audit, 
accountants and other consultants using the ASM are not bound by 
those standards. Tr. 2119:16-19 (Dunne). 

iii. Materials Relied Upon in the Reconciliation 
Process 

Pursuant to the Accounting Standards Manual, 
accountants reconciling transactions are to specify whether 
documentation supporting a particular transaction is level 1, 
level 2, level 3, or level 4. All documents within levels 
one and two are utilized or created by the federal government in 
the process of managing the IIM trust; a document meets the level 
one standard only if it is utilized or created by the government 
in the normal operations of processing [IIM] transactions. 
Tr. 2112:15-19 (Dunne). Level three is the subject of 
considerable controversy, as it may be assigned case-by-case, 
using alternative procedures undefined by the manual, thus 
allowing accountants to use their judgment in validating 
transactions with atypical supporting documentation. Tr. 2113:823 (Dunne). 

Well over half of the 581-page ASM is comprised of 
examples of supporting documentation that may be used in the 
reconciliation process. Different types of supporting documents 
are used for reconciliation, depending on whether the transaction 

is a receipt or a disbursement. Tr. 2121:16-2122:5 (Dunne). A 
receipt (or credit transaction) must be linked to a document 
reflecting expectation of a collection, such as a lease. 
Tr. 2121:21-23 (Dunne). A disbursement (or debit transaction) 
requires evidence that the government issued the check, such as a 
check register. Tr. 2122:2-18 (Dunne). 

iv. Systems relied upon 

The reconciliation work uses transactions systems (IRMS 
and, later, TFAS), and ownership systems (LRIS and, later, 
TAAMS). In order to reconcile electronic era transactions, DOI 
contractor FTI loaded data from TFAS and the IIM module of 
IRMS -- along with restored transactions discovered in the course 
of the Data Completeness Validation project - into a database 
called the SQL server. Tr. 449:13-24, Tr. 450:5-17, Tr. 453:1
454:17 (Herman). The financial information has also been loaded 
onto the Account Reconciliation Tool, or ART. Tr. 596:15-25 
(Herman). The ART, demonstrated at trial, is a powerful database 
that allows for extensive searching, linking, and reconciling of 
transactions with supporting documentation. Tr. 599:1-644:14 
(Herman). Because the IRMS database was inconsistently used 
across agencies and some transactions are missing from all 
systems, the database is incomplete. Tr. 1036:8-15 (Scheuren); 
Tr. 2042:1-4 (Christie). The Data Completeness Validation 
project (described below) aims to find electronic ledger era 

data that is not available on IRMS or TFAS and then input the 
restored data into the ART as it is discovered. Ownership 
information utilized in performing transaction reconciliations is 
typically derived from the LRIS excerpt BIA provided OHTA at the 
beginning of its historical accounting work. Tr. 614:10-17, 
Tr. 639:24-640:5, Tr. 760:6-8 (Herman). Contractors engaged in 
reconciliation work rely on that excerpt in determining ownership 
interests in allotments, although the LRIS ownership data is 
incomplete. 

v. Definition of error 

The validity of defendants definition of errors in 
its historical accounting analysis was the subject of 
considerable testimony, confusion, and disagreement at trial. It 
is not for me to determine the best error definition for 
purposes of statistical analysis, but it is worth sorting out 
what defendants error rates do and do not reflect. 

Defendants plan employs both attribute and variable 
sampling. Attribute sampling answers yes or no questions (such 
as whether there is a discrepancy between a transaction recorded 
on IRMS and the supporting documentation), while variable 
sampling records the value of the error/difference (such as, 
recorded transaction is for $10 less than supporting 
documentation would indicate). As I understand it, there are 
differences in the definition of error between the different 

historical accounting tests. For example, in discussing the LSA 
project, Dr. Scheuren testified that any transactions LSA 
contractors attempted but were unable to reconcile were treated 
as errors, even though they had no reason to believe that the 
inability to reconcile those transactions reflected errors. 
Tr. 997:13-1001:15 (Scheuren). Dr. Hinkins also testified that, 
when contractors informed NORC that they were unable to reconcile 
transactions, NORCs statisticians treated those unreconciled 
transactions as errors. Tr. 2155:9-22 (Hinkins). Michelle 
Herman testified that, in conducting transaction reconciliations, 
any disparity of two cents or more was recorded as an error. 
Tr. 615:21-616:2 (Herman). After some internal debate within 
Interior, the agency decided that, in the transaction-bytransaction reconciliations, the failure to locate supporting 
documentation should be recorded as an error. Tr. 1949:15-20, 
Tr. 1958:15-17 (Zippin). 

In other instances, however, it appears that the 
failure to locate supporting data is not recorded as an error. 
The 2007 HSA Plan notes that an error indicates only that the 
actual transaction posting to an account is different from the 
amount expected to be posted based on the contemporaneous 
records. AR-565 at 33-02-30. James Cason testified that an 
inability to find supporting data is not automatically recorded 
as an error. Tr. 187:14-188:8, Tr. 190:20-191:1 (Cason). 

Michelle Herman testified that she consider[s] an error a 
transaction that wasnt posted correctly, not transactions that 
are missing from the record set. Tr. 789:15-20 (Herman). It 
appears that the definition of error employed by NORC in its 
statistical analysis of the LSA reconciliation work, and relied 
upon for the claimed 1% error rate, is broader than the 
definition used elsewhere in the historical accounting project. 
Error statistics, however, do not reflect the failure to 
reconcile transactions intentionally left out of the LSA sample 
because of expected reconciliation difficulties, NORC Interim LSA 
Report dated 12/28/04, AR-416 at 51-09-17, or transactions left 
out of the sample because they had not yet been restored 
through the DCV project. 

I.2.H. Data Completeness Validation Project 

Michelle Herman has designed and directed the Data 
Completeness Validation (DCV) Project for Interior: a battery of 
tests on IIM data that together comprise a major component of the 
historical accounting project referenced in the 2007 Plan. 
According to Interiors plan, the project goals are 
(1) identifying and resolving gaps in electronic data, 

(2) verifying the transfer of accounts and balances through 
system conversions (from paper ledgers to IRMS and from IRMS to 
TFAS), and (3) assessing the integrity of the underlying 
electronic data. AR-566 at 33-03-15. Ms. Herman testified that 

the primary goal is to assess the completeness of the electronic 
ledger era for historical statements, and when I mention 
completeness, its of the data today versus the data as posted 
historically. Tr. 458:2-6 (Herman). 

This project has been a massive undertaking. At FTI, 
between four and eight employees have worked between three and 
four years conducting DCV testing on some 113 million 
transactions, or 50,000 annual man-hours, Tr. 502:19-503:9, 
Tr. 465:9-21 (Herman), not including the work of other 
contractors who support DCV testing through projects like 
scanning and coding, etc. 

The DCV project carries out tests for electronic data 
gaps and system conversion that were contemplated in the 2003 HSA 
Plan. Tr. 451:1-10 (Herman). The data gaps test is to determine 
whether the electronic data stored in the IRMS system was 
complete, and the system conversion test was to make sure that 
data were successfully transferred from the IRMS system to the 
TFAS system when Interior rolled out TFAS between 1998-2000. 
Id.; Tr. 450:20-21 (Herman). The DCV project primarily relies on 
information taken from the IIM module of IRMS from between 1985 2000 and information from TFAS from between 1998 - present. To 
some extent, the DCV project has also relied upon TAAMS in the 
account number analysis. Tr. 453:9-11 (Herman). 

FTI has produced a national report describing its DCV 
work in all 12 BIA regions, and an additional six more detailed 
reports on six specific regions. Tr. 455:1-12 (Herman). The six 
regions for which DCV work is largely complete are the largest 
ones, including the first three to convert from IRMS to TFAS. 
Tr. 456:15-18; 21-24 (Herman). Within each of the regional 
reports, FTI describes the months and years of available data for 
each agency within the region, the transactions restored to the 
database, accounts out of balance, results of the reused 
accounts test, and the results of transaction mapping efforts. 
Tr. 482:2-483:12 (Herman); see DX-153A, DX-154A, DX-155A, DX156A, DX-157A, DX-158A (updated regional reports). 

Transaction mapping is another component of the DCV 
project. Tr. 465:1-4 (Herman). Transfer transactions - such as 
a debit from an SDA account and a credit to one or more IIM 
accounts - should sum to zero, so when FTI identifies instances 
where that has not happened, it attempts to identify 
documentation explaining the apparent (or actual) discrepancy. 
Tr. 484:15-484:17 (Herman). Efforts to map transactions can 
result in one of several outcomes: (1) the transfer can be mapped 
successfully (sum of transfers is zero); (2) the transfer can be 
an explained difference (sum of transfers is not zero, but not 
because an error was made); (3) the transfer can be unresolved 
(sum of transfers is not zero, FTI awaiting further documentation 

to complete forensic analysis); (4) the transfer can reveal a 
posting error; or (5) the transfer can indicate that data is 
missing from the system. Tr. 496:14-20 (Herman). Bookkeeping 
mistakes uncovered during transaction mapping will be reflected 
on HSAs in the statement of known difference column. 
Tr. 520:1-7 (Herman). Transaction mapping takes place 
electronically in almost all cases. Tr. 498:1-499:-1, Tr. 500:47 (Herman). When discrepancies cannot be mapped with electronic 
information on the SQL server, FTI will put in a request (through 
OHTA) for searchers to look for supporting documents at the AIRR 
in Lenexa. Tr. 504:16-23 (Herman). If the searchers find 
supporting documentation, the documents are loaded onto the ART 
system which can be accessed by FTI in Los Angeles. Transaction 
mapping was helpfully demonstrated by Michelle Herman during the 
October 2007 trial. 

Examples of mapping activities include comparing 
balance files and transactions within a single account (the 
roll-forward analysis), Tr. 525:13-528:15, Tr. 552:2-21 
(Herman), analyzing the transfer of account balances from paper 
ledgers to the IRMS system, Tr. 523:23-525:2 (Herman), and check 
disbursement mapping, to follow disbursement data available in 
the database through to Treasury records. Tr. 535:4-536:13 
(Herman). When FTI workers (or other DCV contractors) discover a 
hard copy document (such as a bill for collection, journal 

voucher, or a transaction register print out) indicating that a 
certain transfer took place that is not reflected on the IRMS and 
TFAS systems available on the SQL database, they input the 
transaction into the database in an effort to complete the data 
set: these are referred to as restored transactions. 
Tr. 529:19-530:9 (Herman). Transactions occurring both before 
and after 1985 have been restored to the electronic data set, so 
that the database will ultimately be utilized for paper era 
accounting work, too. At the time of trial, approximately 113 
million transfers had been mapped as part of this effort. 
Tr. 551:16-19 (Herman). FTI had placed approximately 80,000 DCV-
related documents requests of the AIRR searchers; 35,000 remained 
outstanding. Tr. 505:3-10 (Herman). It can take searchers from 
a week to longer than a year to find a document at AIRR. 
Tr. 505:11-14 (Herman). 

Because account numbers have been re-used over time, 
HSAs cannot be prepared according only to account numbers. The 
DCV project thus assigns each account a new, unique Native 
American Account Number or NAAN, and each beneficiary a unique 
Native American Beneficiary Number or NABN. Tr. 460:1-461:11 
(Herman). 

FTI discovered approximately 645,000 IIM accounts that 
are open, or have been open, on the IRMS and TFAS systems between 
1985 and present. Tr. 459:11-22 (Herman). All but 786 accounts 

had been analyzed in the re-used account test at the time of 
trial. Tr. 487:15-24 (Herman). This set of accounts is broader 
than the set of accounts for which Interior is performing an 
historical accounting. Tr. 487:25-288:3 (Herman). 

ii. Results of DCV Testing 

FTI and other contractors had restored 451,875 
transactions to the electronic data set at the time of trial: 
276,118 of those transactions occurred after February 1985, and 
175,757 occurred before February 1985. 9/30/07 DCV Interim 
Report, DX-152A at 20; Tr. 721:21-722:15 (Herman). The record 
does not establish what percentage of originally missing 
transactions this figure represents. Plaintiffs expert 
suggested that the number may be in the realm of only 7%, but 
because significant pieces of information were not included in 
his calculations, I do not consider his estimate reliable. 
Tr. at 1387:13-1390:14, Tr. 1469:19-1476:18 (Duncan). FTI has 
also mapped over 6 million of the 6.4 million checks issued to 
IIM beneficiaries during the electronic era. Tr. 535:2-536:13 
(Herman). More than 97% of the checks analyzed between 1987 and 
2002 were successfully mapped. Tr. 565:2-566:6 (Herman). At the 
time of trial, FTI had confirmed that 266,285 accounts 
successfully transitioned from IRMS to TFAS. DX-152A at 20. Of 
the 355,320 accounts FTI has identified as falling within the 
scope of the historical accounting Interior now plans to 

accomplish, 54,618 accounts still have unreconciled differences 
or data gaps, which FTI believes is largely attributable to the 
unavailability of many balance files before 1989. DX-152 at 271. 
FTI has completed mapping the majority (93.9%) of IRMS and TFAS 
transactions from the electronic era. DX-152A. 

I.2.I. Posting Test/Land-to-Dollars Test 

i. Test purpose

 The LSA project looks only at transactions posted to 
IRMS and TFAS, it does not detect the failure to collect, 
deposit, and record collection transactions. 3/31/07 memo from 
Jeffrey Zippin to Susan Hinkins re Land to Dollar Completeness 
Test at Horton Agency, AR-435 at 38-01-01. To identify any such 
omissions, Interiors historical accounting plan includes a test 
designed to start with the land and examine whether revenue 
generated by IIM allotments has actually made it into the proper 
IIM accounts. Tr. 2121:13-15 (Dunne). The goal of this Land-to-
Dollars (or posting) test -- which is to be conducted on a 
sample basis -- is to confirm that funds generated by leased 
allotments were actually received and properly entered into the 
IIM system. AR-565 at 33-02-21. Since Interior has only 
recently instituted an accounts receivable system, this test 
responds to a very credible concern that not all payments owed by 
lessees were received into the IIM trust. 

ii. Initial effort: the Alaska prototype 

In 2003, NORC documented its initial effort to design a 
sample for such a test. AR-389 at 47-03-04. Thirty-three land-
related documents were selected from Lees Summit in the Alaska 
Region. The process of linking these documents to transactions 
proved to be challenging, as the documents necessary for the test 
were in multiple locations, in formats and maintained according 
to systems that were subject to wide variations between regions. 
Id. at 47-03-10. NORCs 2003 conclusion was that the sampling 
process utilized in the Land-to-Dollars testing needed to be 
rethought. Id. 

iii. Pilot Test at the Horton Agency 

In 2006, Interior conducted a pilot Land-to-Dollars 
test at the Horton Agency in Kansas. 3/31/07 memo from Susan 
Hinkins to Jeffery Zippin re: Land to Dollar Completeness Test at 
Horton Agency, AR-435 at 38-01-01. The Horton Agency was chosen 
because it processed farming and grazing leases, making more 
straightforward document collection possible, and because agency 
staff were not already burdened by requests from the LSA project. 
Id. at 38-01-02. Interior does not claim that the results of 
this test are representative of collection and posting patterns 
throughout the IIM trust, and expects that further testing in 
other locations will be more challenging. Id. Interior does not 
have a complete list of land records, and compiling a complete 

list of such documents would be, at the very least, extremely 
difficult. Id. at 38-01-01. Trial testimony revealed, indeed, 
that lease information in some cases has been routinely deleted 
from Interiors electronic systems. Tr. 1750:18-1751:13 
(Infield). NORC, however, believes that a complete inventory is 
not necessary to successfully conduct these sorts of tests, AR435 at 38-01-02, and Interior has adopted this view. Tr. 247:517 (Cason). 

NORC discovered that land records at the Horton Agency 
were in good order. AR-435 at 38-01-02. NORC analyzed 21 of the 
812 allotments within the Horton Agency, AR-435 at 38-01-03, 
reviewing agency data to determine what sort of revenue 
generating activity was processed by Horton between 1985 - 2000. 
Of the 21 allotments analyzed, only ten showed evidence of 
farming and grazing revenue generation during that time period; 
two showed evidence of potential revenue from subsurface 
interests which were not analyzed. Id. For the ten allotments 
that did appear to have farming/grazing revenue during those 16 
years, NORC drew a sample (a sample of a sample) of expected 
annual revenues. Id. at 38-01-04. Revenue generating documents 
were located for 33 of 35 samples analyzed, and for 32 of those 
33 samples (all of the ones within the temporal scope of the 
study), accountants verified that revenue was received for the 
listed owners. Id. There is no indication that the test 

considered the accuracy of revenue postings, or whether the 
listed owners were the correct owners. The test was performed 
on a very small sample of allotments, and no statistical 
conclusions can be drawn from it. AR-435 at 38-01-03. 

iv. Plans for future posting tests 

OHTA plans to conduct more land-to-dollars tests: at 
least one test for each of the twelve BIA regions. Michelle 
Herman testified that some were underway at the time of the 
evidentiary hearing, but no evidence reflecting these tests was 
introduced or contained in the Administrative Record. 
Tr. 587:3-17 (Herman); AR-566 at 18. Nor was any evidence 
presented to demonstrate how (or whether) Interior plans to 
address apparently missing lease data: a problem encountered in 
two of the 35 samples analyzed in the Horton Agency pilot. AR435 at 38-01-04. 

I.2.J. Interest Recalculation Project 

Each historical statement of account will include 
interest posted to the beneficiarys account in the electronic 
record. Tr. 115:22-25 (Cason). Interior will perform 
independent recalculations of the interest posted in the ledgers 
to confirm that the interest listed in the HSAs reflects the 
interest actually earned. Tr. 114:15-19 (Cason). The interest 
postings listed in each account will be recalculated using 
historical interest factors. Tr. 1963:23-1964:4 (Zippin). IIM 

funds earn interest in the following manner: monies from IIM 
accounts that are entitled to earn interest are pooled for 
investment in certain types of securities or bonds that pay a 
dividend or earn interest. Tr. 1966:18-24, Tr. 1967:7-13 
(Zippin). At certain intervals, the interest earned by the 
pooled funds is transferred into a single Special Deposit 
Account. In accordance with applicable interest payment rules, 
the dollars in that SDA are then divided by the total IIM dollars 
in accounts to which the interest is applicable. That fraction 
is then used to calculate interest owned to eligible IIM 
accounts. Tr. 1965:12-1967:13 (Zippin). At trial, Jeffrey 
Zippin hesitantly confirmed that the calculation assumes . . . 
that the pooled funds that were invested reflects [sic] 
accurately the total of all of the individual IIM accounts. 
Tr. 1967:14-18 (Zippin) (Ill have to say that would be my 
understanding. I dont have direct knowledge of that.). The 
pooled investments did not always reflect the complete sum of the 
IIM account balances, however, and the Interest Recalculation 
Project does not address any problems relating to understated 
interest resulting from this discrepancy. Tr. 1967:22-1969:7 
(Zippin); see also 914:17-917:25 (Winter). 

The ASM instructs contractors to recalculate interest 
by applying the interest factor described above to historical 
balances in IIM accounts. Tr. 2122:8-10 (Dunne). In their HSAs, 

beneficiaries will be informed of the new, independent 
calculation of interest, and any limitations on that calculation. 
Tr. 114:21-115:2 (Cason); Tr. 1968:23-1969:4 (Zippin). This 
project responds to OHTAs concerns over whether interest was 
calculated and credited properly to IIM accounts. Tr. 1964:5-9 
(Zippin); 9/13/02 Memo from Chavarria to Edwards, Issues 
Regarding Interest Yields, AR-367 at 60-26-02; 11/1/02 Memo from 
Chavarria to Zippin, IIM Trust Funds System Level Issues, 
AR-361 at 60-20-02-05. After applying this test to Judgment and 
Per Capita accounts, Interior concluded that most discrepancies 
in individual accounts were minor, typically only a dollar over 
or two dollars under the posted interest amount. Tr. 116:4-9 
(Cason). 

The interest recalculation test proposed in the 2007 
HSA Plan has significant limitations. Problems with pooled IIM 
investments have been extensively documented. See, e.g., AR-361 
at 60-20-02. Unfortunately, Interiors approach is of minimal 
value if the actual balance on which the interest is calculated 
[is] believed to be inaccurate. Office of Historical Trust 
Accounting, Bank of America Contract #1435-01-02-CT-85121 
(undated), AR-579 at 31-06-01. Actual investments will not be 
reconstructed. The interest factor is not about interest 
earned; its about the total amount that was available to be paid 
from the interest, and the factor is what [Interior] use[d] to 

apply to the money in the accounts. Tr. 1966:10-17 (Zippin). 
At trial, OHTA acknowledged that recalculating the historical 
interest factor will only reflect how much interest should have 
been posted to IIM accounts if the pooled funds accurately 
reflect the IIM funds available for investment. Tr. 1968:15-25 
(Zippin). 

I.2.K. Land title records 

i. Problems with land title records 

Concerns over the accuracy of ownership records have 
plagued the IIM trust for years. Early in the historical 
accounting project, Interiors accountants advised that project 
teams will need the ownership records for subject land and will 
need to know that the ownership records are correct. 3/12/02 
Ernst & Young OHTA Accounting Methods memo, AR-25 at 1-18-03. 
NORC has also advised defendants that land ownership records 
must be verified in order to confirm the correct distribution of 
income derived from land allotments as part of the historical 
accounting. 12/2/02 NORC memo re: sampling plan, AR-235 at 0802-07. Unfortunately, testimony at trial echoed findings in the 
Misplaced Trust Report (as well as other studies) suggesting that 
Interiors electronic land ownership records are inconsistently 
updated, inaccurate, and unreliable. Tr. 2064:6-11 (Christie). 
There was anecdotal testimony that, at least in some regional 
offices, LRIS was not timely implemented; that the IRMS ownership 

module was outdated, inconsistently used, or and not relied upon 
at all, and that, when agencies sent their ownership data to Land 
Title Records Offices (LTROs), it was not always uploaded to LRIS 
in a timely fashion. Tr. 1742:21-1743:15 (Infield); Tr. 1318:211322:14 (Redthunder). 

Interiors contractors have discovered, however, that 
although LRIS is the only electronic source of historical 
ownership information, some data that cannot be found on LRIS can 
be found elsewhere in hard copy. NORC Analysis of LRIS Tract 
History Reports, AR-405 at 50-02-10. Note that LRIS is not used 
for disbursing IIM funds, but instead as an historical record of 
allotment ownership. AR-405 at 50-02-05. For that reason, LRIS 
data is critical to an historical accounting. 

ii. Land Title Records Office test 

Beginning in 2001, defendants started testing land 
title records kept at BIA Land Title Records Offices (LTROs). 
See NORCs 11/25/01 Design Report on Sampling and Economic 
Applications, AR-399 at 49-03-17. After completing this 
project, Interiors contractor determined that the LRIS data 
examined adequately reflected land ownership reported by the 
Bureau of Indian Affairs (BIA) LTROs[;] [and] [a]s a result of 
the project, Interior is confident in the information held within 
the LTROs for use in the historical accounting. Interiors 
Thirteenth Status Report dated May 1, 2003, AR-549 at 24-18-02. 

The land title records study was performed by NORC and 
OHTA. Four reports in the administrative record reveal the 
studys design and major findings. See AR-404; AR-405; AR-406; 
AR-407. The purpose of the test was to determine whether the 
land title systems could be relied upon in the historical 
accounting. AR-407 at 50-04-05. Using statistical sampling, 
NORC examined randomly selected allotments and traced a small 
number of tract ownership histories from LRIS, through probate 
proceedings for some of those tracts. AR-407 at 50-04-03; AR-565 
at 33-02-19. Between November 2001 and May 2002, NORC and OHTA 
visited LTROs in Aberdeen, Alaska, Albuquerque, Anadarko, 
Billings, Muskogee, Portland, and Sacramento. AR-407 at 50-0403-05. The intention was to examine: (1) the completeness and 
accuracy of the tract records underlying IIM accounts; 

(2) whether ownership transfers resulting from probate were 
accurately captured; and (3) how the land and lease records might 
be used in the historical accounting. Id. 

NORC encountered difficulties in executing these tests. 
This courts December 5, 2001, temporary restraining order 
related to IT security shut down the LRIS computer database and 
significantly affected NORCs performance of these tests. Also, 
because each LTRO was different, NORC had to customize its 
approach to each offices filing systems. AR-407 at 50-04-06. 

In November 2001, Interior conducted its first review 
of an LTRO in Albuquerque, AR-407 at 50-04-05, before the courts 
shutdown of Interiors computers. Albuquerque was the only LTRO 
where Interior was fully able to examine LRIS reports. LRIS was 
unavailable in Alaska by March 2002, but NORC was able to review 
the LTROs offline data. AR-407 at 50-04-07. Aberdeen, the 
largest LTRO, had a title service area covering the Great Plains 
and Midwest BIA regions, comprising approximately 7.2 million 
acres of allotted lands (individual and tribal). AR-404 at 5001-06. NORC sampled 50 tracts at the Aberdeen LTRO and then drew 
a sub-sample of 12 tracts within that population. AR-404 at 5001-07. NORC reported that the contents of the Aberdeen LTRO 
systems that we examined appear complete and accurate, within the 
scope of the checking we did. We therefore are ready to 
recommend their fuller use in the historical accounting to come. 
AR-404 at 50-01-08. 

NORC reported similar findings in other LTROs. AR-407 
at 50-04-07-13; AR-565 at 33-02-19; AR-404 at 50-01-13 
(Anchorage), 50-01-25-26 (Anadarko), 50-01-32-33 (Billings), 5001-44-45 (Portland). Tests examining ownership changes by 
operation of probate orders were narrowed to focus on recent 
beneficiaries, however, using the electronic database that 
covered from the mid-1980s forward. The results of the ownership 
testing were based on a random sample taken from LRIS Tract 

History Reports (THRs) in the Aberdeen, Albuquerque, Anadarko, 
Billings, and Portland LTROs. AR-405 at 50-01-04. NORC found no 
material errors in the LRIS probate entries it sampled, AR-405 at 
50-01-04, but the sample used for this testing addressed only 99 
probated estates and was, therefore, not large enough for 
estimating an error rate among the probate entries at 
conventional assurance levels. AR-405 at 50-01-04-05. 

NORC qualified its report on the LTROs in the following 
manner: Given the importance of LRIS for the historical 
accounting, it is clearly desirable to use the knowledge gained 
so far to design a larger statistical sample which will allow us 
to estimate the accuracy of the data on LRIS with a higher level 
of confidence. AR-405 at 50-02-22-23. For reasons unexplained 
on this record, no further testing has been conducted, or, 
apparently, is contemplated. 

I.2.L. Mailing historical statements of account 

Interior asserts in its 2007 Plan that its duty to 
account is discharged by the mailing of HSAs. AR-565 at 33-02
09. Interior acknowledges that, while HSA packages will be 
mailed to the most current known address for each beneficiary, it 
will encounter difficulty identifying current addresses for 
former account holders. Even many current account holders are 
whereabout unknowns, for whom Interior lacks accurate mailing 
addresses. AR-565 at 33-02-08. Consequently, Interior expects 

that many HSAs will be returned. Id. at 33-02-09. Interiors 
quality control procedures for the HSA mailing process involve 
sampling HSAs to confirm that the envelope includes the relevant 
inserts and that the inserts are consistent with the listed 
addresses. Id. at 57-14-04-05. 

I.2.M. Anticipated administrative appeals process 

Interior is currently drafting regulations for an 
administrative appeals process under which a beneficiary who 
objects to his or her HSA can petition OHTA for review. AR-566 
at 33-03-20-21. Generally, the agency would like to establish a 
process by which beneficiaries must challenge information in the 
HSA within a certain number of days from the date of the HSA, in 
order to allow the agency to fix the mistake in the first 
instance; the failure to raise a challenge within the set time 
period would likely result in the HSA becoming conclusively 
deemed accurate and complete for all purposes. See Draft 
Administrative Appeals Proposed Rule, [Dkt. 3356-2] at 26. The 
agency plans to issue a notice of proposed rule-making in the 
Federal Register to seek public comment on the rule. Tr. 88:215, 221:24-222:11 (Cason). At the present time, the Department 
is unable to issue a notice of proposed rule-making in the 
Federal Register because of the class communication orders in 
this case, which defendants have moved to vacate [Dkt. 3348]. 
Plaintiffs have strenuously opposed the administrative appeals 

process they expect defendants to propose based on previous 
drafts released [Dkt. 3356]. A ruling on that motion will follow 
the release of this opinion. 


I.3. Areas Outside the Historical Accounting Plan 

A central purpose of the October 2007 bench trial was 
to allow a more thorough consideration of whether the historical 
accounting underway is legally sufficient. That process requires 
consideration, not only of the activities that are underway in 
the historical accounting project, but also of the accounting 
activities that will not be performed under the 2007 Plan. A 
review of areas that Interior has declared outside the scope of 
its accounting effort follows. 

I.3.A. Account sampling 

Interior has no plans to reconcile each and every 
transaction within any single land-based account: the sampling 
design in the 2007 Plan involves reconciling a small number of 
transactions from within a small number of land-based accounts. 
Tr. 2164:15-17, Tr. 2167:10-16 (Hinkins); Tr. 1084:13-1085:5, 
Tr. 1105:7-10 (Scheuren); Tr. 111:8-10 (Cason). It is Interiors 
judgment that this approach is the best balance between the twin 
aims of controlling costs and providing reasonable assurances of 
the accuracy of transactions within all land-based accounts in 
the sampled pool. Tr. 1085:3-7 (Scheuren). 

I.3.B. Reconciliation of account balances 

The focus of the historical accounting work is on the 
reconciliation of sampled transactions. Defendants contractor 
confirms that [t]he 2007 plan clearly states that an accuracy 
and completeness statement will be provided with respect to 
transactions, not with respect to account balances. . . . NORC 
was never asked to design a sample which would provide the 
individual with a statistical statement about his or her account 
balance. Hinkins Response to Duncans Expert Report, DX-4 at 
36; see also Tr. at 2161:11-23, Tr. 2163:3-16, Tr. 2167:10-16 
(Hinkins). Interiors position appears to be that, as a result 
of sampled transaction reconciliations and tests designed to 
probe the reliability and completeness of the systems themselves, 
beneficiaries HSAs should provide meaningful assurance that 
account balances are accurate. 

At trial, much was made of the discrepancy between the 
total balance of all subsidiary IIM accounts and Interiors 
general ledger balance, or control account. Tr. 907:19-917:25 
(Winter). A Comptroller General Report from 1982 indicated a $25 
million aggregate out-of-balance condition between the two 
totals. Comptroller Generals Sept. 8, 1992 Report to Congress, 
PX-4174; Tr. 909:5-24 (Winter). Defendants witness testified 
that the agency has reduced this out-of-balance condition to the 
point where the current aggregate out-of-balance condition is 

$5.2 million, Tr. 912:13-917:22 (Winter), and that that balance 
discrepancy results in $5.2 million more in beneficiaries 
accounts than the total of funds in the asset pool for 
investment. Tr. 914:21-914:23 (Winter). Interior has determined 
the cause of a portion of that remaining out-of-balance 
condition, Tr. 915:22-916:5 (Winter), but has no plans to 
reconcile the remaining out-of-balance condition between the 
subsidiary and general ledger as part of the historical 
accounting. 

I.3.C. Reconciliation of opening balances 

The reconciliation of opening balances in Judgment and 
Per Capita accounts is a relatively simple matter. Transaction-
by-transaction reconciliation of these accounts is 86% complete. 
AR-565 at 33-03-12. Land-based accounts are not so simple. If 
an account was opened during the sampling frame for the LSA 
project, its initial credit -- reflecting its opening balance -was subject to possible reconciliation as part of the sampled 
population. Tr. 2154:17-20, Tr. 2178:24-2179:16 (Hinkins); 
Tr. 1105:11-1107:21 (Lasater). If an account was opened before 
the beginning of the sampling frame (June 24, 1938), however, its 
opening balance will not be reconciled, even when reconciliation 
is accomplished in the future paper era sampling test, the 
design of which has not been revealed to the court. Tr. 1105:11
1107:21 (Lasater). No other testing of opening balances has 
occurred or is contemplated under the 2007 Plan. 

Interior concedes that it is impossible to determine 
the accuracy of an account balance without confirming the 
accuracy of the accounts opening balance. Tr. 112:25-113:6 
(Cason). Interior nevertheless intends to include within HSAs 
its conclusions about the accuracy of the [beneficiarys] 
account balance as of December 31, 2000, apparently based on its 
conclusions regarding the overall integrity of transactions 
within the IIM trust system and the possibility of sampling 
opening balances in the reconciliation samples. For opening 
balances established with proceeds of probated estates, no 
accounting will be performed for the funds in those probated 
estates. 

I.3.D. Reconciliation of DOI records and Treasury records 

The long-standing discrepancy between IIM balances at 
the Department of Interior and the Department of Treasury has 
been one of the principal reasons that all independent auditors 
have qualified their audits of IIM management. When the BIA 
assumed exclusive control over IIM accounting functions in 1971, 
there was a net difference in account balances of over $70 
million between the ledgers maintained by BIA and Treasury, 
respectively. Tr. 1557:5-1558:21 (Homan). In 2002, Interiors 
IIM balance exceeded Treasurys IIM balance by $33 million. 

12/09/03 Memo from DOI Asst. I.G. for Audits to OST, AR-352 at 
60-11-22. In 2004, OST resolved a $4 million out-of-balance 
condition between IIM balances at Interior and Treasury: 
Treasury simply reduced their reported balances, as requested by 
OST, to amounts that reflect the trust asset balances maintained 
by OST. AR-352 at 60-11-22; 906:5-8 (Winter). No effort to 
reconcile the historical differences that have admittedly been 
present through the majority of the life of the trust is being 
made a part of the historical accounting project. Tr. 904:16
905:7 (Winter). Any reconciliation of aggregate balance 
differences reflects only the consistency between the balances 
recorded within the two departments, and does not reflect on the 
accuracy of either total balance. Tr. 906:9-909:25 (Winter). 

I.3.E. Asset statements 

Defendant no longer plans to provide asset statements 
as part of the historical statements of account. Under the 2003 
Plan, beneficiaries were to be informed of their land ownership 
interests as of December 31, 2000. That element was removed from 
the 2007 Plan. Interiors explanation is that the change of plan 
allows OHTA to focus on providing beneficiaries information about 
funds. Tr. 148:23-150:7 (Cason). Interior states that OST will 
include asset statements with periodic statements of account 
mailed to beneficiaries once TAAMS is fully implemented, but 

submits that asset statements are part of Interiors trust reform 
efforts, not part of its historical trust accounting. 

I.3.F. Special Deposit Accounts 

Special Deposit Accounts (SDAs) are used to hold funds 
until the proper owner is identified and transfer to IIMs can be 
effected. When income is received from trust property with 
multiple owners, it is typically deposited in an SDA until the 
funds are allocated and transferred to IIM accounts. 
Tr. 560:11-23, Tr. 743:19-745:8 (Herman). Over the years, there 
has been a build-up of unidentified funds in SDAs. Money 
sometimes remains in SDAs for extended periods before it is 
disbursed. Griffin and Associates, Interiors independent 
auditors, identified $104 million in 24,000 SDAs within the IIM 
system in 1998 and $81 million in 18,000 SDAs within the IIM 
system in 1999. Independent Audit for FY 1998 and FY 1999, AR375 at 60-34-44. Interest earned on funds held in SDAs often has 
not been disbursed to the beneficiaries. Interior 
representatives testified that significant progress has been made 
in distributing historically accumulated funds held in Special 
Deposit Accounts, but this work is not reflected in the 
administrative record. As with asset statements, Interior plans 
to continue pursuing this project, but no longer considers it to 
be part of the historical accounting work. AR-566 at 33-03-27. 

1.3.G. Predecessor accounts 

Interior is not going to reconcile accounts that were 
closed before October 25, 1994, the effective date of the 1994 
Act. Tr. 182:11-15 (Cason). This decision was preceded by 
considerable discussion between Interior officials, contractors, 
and accountants. Several Interior contractors or employees have 
opined that a reconciliation of predecessor accounts is the only 
way to accurately confirm opening balances of present accounts, 
and is therefore a necessary part of the accounting. See, e.g., 
Tr. 1575:9-1576:15 (Homan) (discussing opinion of Deloitte & 
Touche); March 2002 OHTA accounting conference materials, AR-056 
at 04-02-33; 04/03/02 letter from Ross Swimmer to Secretary 
Norton, AR-511 at 61-37-02. The decision, however, was that 
probate orders would be considered final and conclusive with 
respect to the balances of probated IIM accounts. Tr. 141:5-10 
(Cason). The Interior Department does not contend that the 
Interior Board of Indian Appeals (IBIA) probate process amounts 
to an accounting. Tr. 139:18144:24 (Cason). 

I.3.I. Cadastral surveys 

Cadastral surveys, conducted for the federal government 
by the Bureau of Land Management, are land surveys detailed 
enough to provide exact property boundaries and locations. 
Tr. 174:1-4 (Cason); June 2003 Cadastral Resurvey Pilot, AR-394 
at 48-01-04. Cadastral surveys of some allotted lands were last 

performed during the allotment period, that is, between the late 
1800s and the 1930s. Cadastral surveys performed before 1910 
were crude, resulting in typical error rates of between negative 
8.9% to positive 20.7%. June 2003 Cadastral Resurvey Pilot, BLM 
Acreage and Location Results, AR-395 at 48-02-09-11. Though 
Interior developed a small scale cadastral resurvey pilot project 
in 2001 in connection with the historical accounting work, it 
does not intend to review cadastral surveys as part of its 2007 
HSA plan. Tr. 174:24-181:18 (Cason). 

I.3.J. 	IIM trust funds managed by compacting/contracting
tribes utilizing their own record systems 
Pursuant to the Indian Self-Determination Act of 1975, 
Pub. L. No. 93-638, 88 Stat. 2203, as amended, 25 U.S.C.  450, 
Interior defendants permit compacting and contracting of the 

management or administration, at a local level, of certain 
aspects of IIM trust management. Cobell X, 283 F. Supp. 2d at 

180. According to Associate Deputy Secretary James Cason, 
Interior has an obligation to account for IIM funds managed by 
tribes pursuant to compact or contract. Tr. 122:20-123:6 
(Cason). Cason stated that five tribes manage their own IIM 
funds (by collecting cash, processing cash, and managing 
distributions) but three of those tribes use Interiors systems 
and are therefore included within the current scope of the 2007 
HSA Plan. Tr. 119:6-11, Tr. 120:8-16 (Cason). As to the two 
remaining tribes who process their own IIM funds, Interior has 

yet to develop an historical accounting project for their IIM 
monies. Cason did not know whether other tribes since 1975 had 
collected, processed, and distributed their own IIM funds on 
their own accounting systems that might not be captured in the 
2007 HSA project. Tr. 122:15-19 (Cason). 

I.3.K. Direct pay accounts 

Some leases of IIM land allotments are structured so 
that IIM alottees receive proceeds from their land directly from 
lessees. These arrangements are referred to as direct pay, 
where the lease payments never pass through the governments IIM 
trust system but instead are sent straight from the entity 
renting the property to the IIM property owner or owners. 
Tr. 2087:14-21 (Christie). IIM accounts within Interiors system 
are not established for direct pay arrangements. Tr. 268:8-18 
(Cason). The funds transferred in direct pay arrangements retain 
the character of IIM trust funds as they derive from land in 
trust, but they are not in any literal sense taken into trust by 
the Interior IIM Trust Fund system. July 2002 Report to 
Congress, AR-561 at 25-02-25. 

Only the Interior Department may enforce the terms of 
direct pay leases; beneficiaries are not empowered to do so. 
Tr. 135:2-10 (Cason). Regulations require Interior to collect 
statements from lessees on direct pay leases, 25 C.F.R.  13.18, 
but Associate Deputy Secretary Cason could not confirm that this 

is in fact being done. Tr. 134:19-23 (Cason). There was 
anecdotal testimony that at least some agency superintendents 
demand copies of cancelled direct pay checks to verify payment. 
Tr. 2037:16-2038:2, Tr. 2039:5-7 (Christie); Tr. 1338:20-23 
(Redthunder). Mr. Cason acknowledged that the government retains 
a duty to verify direct payments when the Department is 
informed of an error, but that he was not clear about whether 
this carries over to the historical accounting duty that we have 
and what its implications would be. Tr. 127:3-8 (Cason). Cason 
was also unable to definitively state whether direct pay leases 
are ever initiated by area directors without a beneficiarys 
consent, but he said the approach of the Department is to 
initiate direct pay leases only when the beneficiaries affected 
have agreed. Tr. 135:11-136:16 (Cason). Interior has 
consistently maintained that it is not required to account for 
funds on direct pay leases as part of its historical accounting 
effort. AR-561 at 25-02-15. 

I.3.L. Routine collection of third party records 

While the ASM contains guidance on collecting records 
from third parties as necessary, the historical accounting 
project does not typically collect third party records because 
Interior has determined that its own documentation is sufficient 
to perform the historical accounting under the 2007 Plan. 
Tr. 139:7-13 (Cason). Eight years ago, Judge Lamberth ordered 

defendants to establish written policies and procedures for 
collecting from outside sources missing information necessary to 
render an accurate accounting of the IIM trust. Cobell V, 91 F. 
Supp. 2d at 58. The Court of Appeals observed that [t]here may 
not literally be a duty to have such written policies and 
procedures. Were there a means of ensuring discharge of 
appellants fiduciary obligations absent such steps, there would 
be no breach. Nonetheless, though the failure to take such steps 
may not constitute a breach, it surely provides substantial 
evidence that such a breach has occurred. Cobell VI, 240 F.3d 
at 1105-06. 

Some third party records maintained in Interiors 
files -- such as copies of marriage or death certificates -- have 
been part of Interiors historical accounting analysis. 
Tr. 490:5-14 (Herman). However, the benefit of collecting third 
party records from other entities is not only that the documents 
and document types will be different from those maintained by 
Interior, but that documents stored by third parties may not have 
been subject to the same problems with internal controls that 
have plagued Interiors record retention systems. For example, 
the Navajo Nation consults third party records to verify 
production and revenue data, not because it does not have access 
to that type of information in MMS systems, but because of 
concerns over the unreliability of data in MMS systems. 

Tr. 1775:16-1776:20 (Gambrell). Although Mr. Cason testified 
that Interior has not found the need to [pursue third party 
documents] so far, Tr. 137:18-21 (Cason), in many instances, the 
incompleteness of Interiors data may not be evident unless it is 
compared to third party records. In the case of Judgment and Per 
Capita account reconciliation, CD&L did not consult tribal rolls 
to confirm that every enrolled participant [of a given tribe] 
received payment. 7/16/02 letter from Chevarria to Edwards, 
AR-314 at 19-07-02. This example illustrates how the failure to 
collect third party records, in certain instances, may result in 
an incomplete accounting. 

I.3.M. Analysis of other IIM-related data systems 

The Minerals Management Service (MMS) is a bureau 
within the Interior Department that processes oil, gas, and 
mineral lease payments on behalf of the Federal Government. When 
oil, gas, and mineral lease payments are delivered into the 
Department of the Treasury, before the funds are posted to 
individual accounts, MMS receives the production reports. 
Tr. 160:21-161:6 (Cason). MMS systems contain lease records and 
resource production information, but do not contain information 
regarding how proceeds from such leases are allotted among 
individual Indians. Tr. 1182:23-1183:9 (Angel); Tr. 161:23-25, 
Tr. 162:18-19 (Cason). To process IIM oil, gas, and mineral 
revenue, MMS collects the data regarding production and reports 

to OST a statement of the amounts collected on each lease. 
Tr. 919:15-19, Tr. 920:11-13 (Winter). OST posts those amounts 
to a general holding account. Tr. 919:19-20 (Winter) (it was 
not clear whether the witness was referring to a SDA). Then MMS 
sends data to BIA and BIA consults its Royalty Distribution and 
Reporting System (RDRS) to determine ownership. Tr. 919:21-24 
(Winter). BIA then conveys the ownership information to OST, 
where the disbursements are made to the account holders from the 
holding account. Tr. 919:24-920:1 (Winter). OST relies on BIA 
for the accuracy of the ownership information, Tr. 920:17-21 
(Winter), and on MMS for the accuracy of its transactional data. 

Approximately $500 million to a $1 billion a month pass 
through the MMS system. Most of those funds are payments to the 
Federal Government; only one to two percent of those funds belong 
to Indian oil and gas lessors. Tr. 132:13-17, Tr. 165:11-16 
(Cason). Because of the magnitude of data processed by MMS, 
Interior has determined that it is neither worthwhile nor 
feasible to perform an historical accounting of MMS systems. 
Accordingly, the 2007 Plan does not address the issue of whether 
MMS lease-level information is correct. Interior sees its job as 
preparing HSAs on an account-by-account basis, as opposed to 
auditing the entire process, including MMS. Tr. 165:22-166:2 
(Cason). 

I.3.N. Administrative fees deducted from IIM accounts 

The Interior Department is authorized to charge 
administrative fees for certain transactions related to IIM 
lands. See generally 25 U.S.C.  413. Interior represented at 
trial that [i]n large part, for most of our program [sic], we 
dont charge fees, Tr. 231:9-10 (Cason), but it is undisputed 
that administrative fees were charged to beneficiaries (deducted 
from revenues) from the sale of timber -- up to 10% of the total 
timber sale. Tr. 1343:11-21 (Redthunder); Tr. 230:24-233:14 
(Cason). In some instances, administrative fees are charged when 
Interior leases or sells IIM allotted land. Tr. 1702:16-1704:12 
(McCarthy). Fees have also been deducted from IIM accounts in 
connection with the probate process. 8/21/02 email from Edwards 
re: meeting with OHA, AR-190 at 56-21-02. Interior does not 
intend, as part of its 2007 Historical Accounting Plan, to 
account for administrative fees charged to IIM beneficiaries, or 
to confirm that such fees were in compliance with applicable law. 
Mr. Cason testified that the possibility of accounting for 
administrative fees charged to beneficiarys accounts was not 
discussed within Interior as part of the historical accounting 
project planning process. Tr. 233:1-14 (Cason). HSAs will 
reflect only transactions within a beneficiarys account, not any 
gross amount collected before the deduction of an administrative 
fee. Tr. 231:4-12 (Cason). 

I.3.O. Youpee escheated interests 

The Indian Land Consolidation Act (ILCA), Pub. L. No. 
97-459, tit. II, 96 Stat. 2517 (1983), was intended to address 
the problem of fractionation. It provided that allotted land 
interests that fell below a minimum threshold should not be 
inherited by individual Indians but instead escheated to the 
tribes. See 25 U.S.C.  2206. ILCA escheatments were declared 
unconstitutional takings without just compensation in violation 
of the Fifth Amendment by the U.S. Supreme Court in Hodel v. 
Irving, 481 U.S. 704 (1987), and an amendment to the ILCA was 
subsequently rejected by the Supreme Court in Babbit v. Youpee, 
519 U.S. 234 (1997). See also 2/28/03 NORC Analysis of Tract 
History Reports, AR-405 at 50-02-19-21. 

During these challenges to the escheatment process, BIA 
was instructed to place the money in question in a special 
account. Tr. 1335:21-1336:8 (Redthunder). After Youpee was 
issued, BIA was instructed to transfer ownership of the land back 
to the proper heirs and to get the money back to the proper 
landowners. Tr. 1336:9-16 (Redthunder); AR-405 at 50-02-21. 

Interior estimates that 775,000 fractional land 
interests belonging to IIM beneficiaries escheated to tribes 
prior to the Youpee opinion. Tr. 235:17238:8 (Cason). Interior 
is presently acting on the escheatment issue, albeit somewhat 
begrudgingly, since the interests are tiny, generally of very low 

value, and the cost of reversing the escheatments is high. 
Tr. 236:2-246:8 (Cason). Fractionation has significantly 
increased the number of Youpee escheated interests that Interior 
has to try to recapture and return. Tr. 237:13-238:8 (Cason). 

Mr. Cason could not testify in any detail as to the 
Departments present approach to the escheatment issue, but it is 
clear that Interior does not intend to account for the escheated 
interests as part of its historical accounting project. The 
rationale is that to do so would constitute an accounting for 
land, and the historical accounting project accounts only for 
funds. Tr. 239:20-25 (Cason). Interior has not addressed 
whether or how it will account for any income that has derived 
from the lands that were covered by the escheated interest. 
James Cason testified that this issue has not been discussed 
directly within Interior, and that no decision has been made. 
Tr. 240:3-14 (Cason). 

I.3.Q. 	Accounts and transactions outside the temporal
scope of the 2007 HSA Plan 
As noted above,  I.3.G., the Department of the 
Interior does not consider that the 1994 Act requires it to 
provide an historical accounting to beneficiaries for accounts 
that were closed prior to October 25, 1994. Tr. 90:3-91:1, 
Tr. 92:3-9 (Cason). Nor does Interior plan to prepare HSAs for 

accounts that were opened after Dec. 31, 2000, or for any 
transactions occurring after that date -- the date it began 

issuing periodic statements of account pursuant to the 1994 Act. 
If accounts were open as of October 25, 1994, historical 
transactions within those accounts will be reflected in HSAs back 
to June 24, 1938, if the accounts contain transactions that old. 
Transactions earlier than that date are outside the temporal 
scope of the 2007 Plan, even if the account was open during the 
period that is within scope. 1957:24-1958:2 (Zippin); AR-565 at 
33-02-03. This decision was driven by legal conclusions rather 
than cost estimates, see 10/28/02 Agenda: Historical Accounting 
Planning Meeting with Secretary Norton, AR-485 at 61-11-02, but 
Interior considered the costs and benefits of performing an 
historical accounting for transactions and accounts outside the 
temporal scope of the accounting, recognizing that the courts 
might disagree with its legal interpretation of its duties. 
Tr. 83:17-84:10, Tr. 85:10-18, Tr. 90:17-91:24 (Cason). Its 
conclusion was that it is less important to provide accountings 
for individuals over the entire course of the last 100 years than 
to provide accountings for individuals with whom it has a 
continuing trust relationship. Tr. 83:17-25 (Cason). 


I.4. Cost Of Performing The Historical Accounting 

The high cost of historical accounting is attributable 
to a host of factors, such as inconsistent practices over 
numerous agency offices and twelve regions, missing records or 
data gaps in electronic systems, and the time and effort required 

to locate necessary documents. The reconciliation of a single 
transaction costs on average between $3,000 - $3,500. AR-566 at 
33-03-09. OHTA has approximately 35 employees and 400 
contractors. Document searches at AIRR in Lenexa for a single 
document supporting a transaction can take between a week and a 
year to complete. Tr. 505:11-14 (Herman). 

I.4.A. Cost of historical accounting work 

Interior estimates that it has spent $127,000,000 on 
its historical accounting work since the adoption of the 2003 HSA 
Plan. AR-565 at 33-02-03; Tr. 1133:6-9 (Haspel); AR-566 at 3303-09.9 Appropriations for historical accounting work have been 
lower than Interior requested or expected. The outsourcing of 
historical accounting projects has been expensive: in FY 2006, 
for example, Interior paid over $6 million to the firm charged 
with coding documents in Lenexa, and over $16 million to one of 
its accounting firm contractors, CD&L. AR-175 at 56-06-06. 

Completion of the 2007 HSA Plan, Interior estimates, 
will cost another $144,000,000. AR-565 at 33-02-03; AR-566 at 
33-02-09. The total estimated cost of historical accounting work 
from the adoption of the 2003 Plan to the expected completion of 
the 2007 Plan is thus $271,000,000. AR-565 at 33-02-03. The 
estimate of future costs is received with several grains of salt, 

9The record does not reveal the cost to Interior between 
1994 and 2003 of responding to the requirements of the 1994 Act. 

-108
however. Past estimates have proven to be unrealistically low; 
the defendants do not yet have a complete understanding of the 
work that will be involved in the paper ledger era. 

I.4.B. 	Cost estimates for an expanded historical
accounting 
Given the importance the Court of Appeals has attached 
to cost -- with its observation that Interior must strike a 
balance between exactitude and cost, Cobell XVII, 428 F.3d at 
1076 -- I posed as one of the trial questions, How much would it 
cost to do what is not being done? I expected the parties, and 
particularly the defendants, to devote considerable energy to 
that subject. What was presented, instead, was the high level, 
generalized, and essentially unchallenged testimony of Assistant 
Deputy Secretary Abraham Haspel. The estimated cost to provide 
HSA packages in the 2007 Plan for all IIM accounts that existed 
between 1909 and 2006 is between $2.921 and $3.410 billion, 
almost all of which would be for land-based accounts. DX-098 at 
9; Tr. 1124:20-1125:11 (Haspel). If the historical accounting 
period were limited to the years 1938 to 2006, the cost would run 
between $2.304 and $2.586 billion. DX-099-COR; Tr. 1125:12-16 
(Haspel). These numbers reflect only the expansion in temporal 
scope, and not the inclusion of methodologies or accounts that 
have been excluded from the 2007 Plan. Thus, the cost of 

performing cadastral surveys is estimated at another $1.1 
billion. Tr. 1138:14-19 (Haspel). The cost of accounting for 

direct pay transactions, IIM funds managed by compacting or 
contracting tribes, or funds never collected is not estimated at 
all. Tr. 1138:20-1139:8 (Haspel). If historical accounting were 
extended back as far as 1909, it would cost an estimated $1.365 
billion to $1.817 billion to link closing balances in predecessor 
accounts to successor accounts. DX-098 at 9; Tr. 1120:18-1121:7 
(Haspel). (Linking closing balances in predecessor accounts to 
successor accounts is not an element of the 2007 Plan, even 
within its limited temporal scope, Tr. 1121:9-11 (Haspel), but it 
would be necessary in analyzing closed accounts to ensure that 
money was accurately transferred to successor accounts. 
Tr. 1121:12-23 (Haspel).) The other major elements responsible 
for this expected steep increase in costs would be imaging and 
coding all boxes of ledgers, probates, and financial 
documentation ($766 million) and digitizing transactions not 
included in sampling ($637 million). DX-098 at 9; DX-098 at 2; 
Tr. 1119:16-1120:16 (Haspel). 

In 2005, Interior estimated that the cost of complying 
with the Judge Lamberths structural injunction (which did not 
require accounting for direct pay transactions) would have been 
approximately $12.9 billion. DX-100; Tr. 1125:19-1126:14 
(Haspel). Haspel said that estimate would be higher today. 
Tr. 1126:12-14 (Haspel). 

I.4.C. Congressional appropriations for HSA work 

The Office of Historical Trust Accounting was created 
by Secretarial Order in July 2001. In its first two fiscal years 
of operation, it was funded from the budgets of other Interior 
offices. Tr. 78:12-24, Tr. 79:3-19 (Cason). The first 
congressional appropriation for the Office of Historical Trust 
Accounting was $15.9 million for FY 2003. For each of the next 
three years (FY 2004, FY 2005, and FY 2006), Interior submitted 
budget requests of over $100 million for historical accounting 
work, but Congress appropriated much less: $44 million (FY 2004), 
$57 million (FY 2005), and $56 million (FY 2006). Congress 
basically sent the message back in their appropriations 
decisions that they were not willing to spend that much money on 
the historical accounting process. Tr. 73:23-74:10 (Cason); DX
102. Based on this experience, Interior submitted a FY 2007 
budget request of only $54 million, so that it would have more 
control over its budget. See Tr. 74:11-22, Tr. 75:15-76:16 
(Cason). The estimated 2007 OHTA appropriation at the time of 
trial was $56 million. 


I.5. Throughput 

One of the core questions the October 2007 trial was to 
address was the dollar amount of the IIM trust throughput,10 

10I suggested at trial that one of plaintiffs witnesses maynot have used the term in his report because he prefers to speakEnglish, Tr. 1676:10-13 (Fasold), but no better term has been 
i.e., the funds that have flowed into and out of the IIM trust. 
Sorting out throughput involves two distinct but related 
questions. The first is how many of the total dollars are 
accounted for in some way by the procedures proposed in the 2007 
plan. The second is whether the work done so far permits any 
reliable estimate of the difference (if any) between dollars in 
and dollars out. Defendants resisted the idea of exploring 
throughput, on the ground that throughput is an issue that 
relates to damages. So it may be, but knowledge of how much 
money has been received in the IIM trust, and how much has been, 
will be, or can be accounted for, is also relevant to the 
question of whether or not Interiors historical accounting has 
been, is, or ever can be adequate. 

The response of both parties to the throughput question 
can best be described as desultory. The development of 
throughput data was limited by Interiors historical failure to 
record aggregate IIM figures of receipts and disbursements, and 
by the refusal of plaintiffs expert to utilize Interior records 
or reveal documentation supporting his work. What follows is an 
attempt to make sense of the sparse and largely unsupported 
evidence of throughput that was presented at trial. 

offered to represent this concept, and throughput is now firmly
established in the Cobell lexicon. 

I.5.A. Aggregate trust fund value estimates 

The governments records of IIM receipts and 
disbursements have been kept primarily at the individual level 
rather than the aggregate level. Tr. 1161:10-17 (Angel). In 
fact, Interior did not begin tracking annual trust receipts and 
disbursements until 1997. DX-260. Thus, for 111 years, from 
1887 to 1997, IIM trust account throughput data is limited to 
year-end trust balances. Tr. 1166:17-1169:6 (Angel). In 1997, 
the first year the United States began tracking all government 
receipts and disbursements, Indian trust receipts and 
disbursements were not divided into IIM and tribal categories. 
From 1998 until the present these reports have separated the two 
trusts in the summation of receipts and disbursements. First 
annual report of receipts and disbursements, DX-259; Tr. 1167:241168:17 (Angel). Official government throughput calculations of 
the IIM trust therefore date back only to 1998. 

Interiors initial attempt to estimate throughput was 
reflected in its 2002 Report to Congress. At that point, 
Interiors contractors estimated the aggregate receipts of the 
IIM trust between 1909 and 2001 (or between 1877 and 2001)11 at 

11In AR-368, NORCs report to OHTA on the 2002 reportsthroughput estimate, the $13 billion estimate covers the years1909 - 2001; $3 billion between 1909 - 1971. However, in notesfollowing the chart on AR-561 at 25-02-64 -- the actual report toCongress in 2002 -- the $3 billion revenue estimate in the earlyyears of the trust is associated with the time period between1877 - 1971. This appears to be a typographical error, however, 
approximately $13 billion. On June 30, 1909, the recorded trust 
fund balance (the earliest one that has been found) was $6.5 
million. Interior reported to Congress that IIM Trust receipts 
totaled somewhere around $3 billion between 1909 - 1971 (or 
1877 - 1971), and approximately $10 billion between 1972 - 2001. 
AR-561 at 25-02-64. The $13 billion estimate did not include 
direct pay transactions or IIM funds managed by tribes pursuant 
to compact or contract. Tr. 124:15-25 (Cason). 

The estimate set forth in the 2002 report to Congress 
was a rough one, and it has been refined since that time. AR
430. Two significant assumptions informed the initial $13 
billion figure. First, to reach the $3 billion revenue estimate 
for the earlier years, NORC assumed that, as with the years 
1972 - 2001, annual balances and annual receipts were roughly the 
same. AR-368 at 60-27-02. No one at Interior verified these 
historic annual balances, however, nor does Interior seriously 
posit that they are good proxies for collections or receipts.12 

as defense witnesses testified at trial that the 2002 estimate 
dated back only to 1909. See Tr. 217:10-19 (Cason); Tr. 657:812, Tr. 840:23-841:6 (Herman). 

12Indeed, this is a bizarre assumption. It amounts to a suggestion that, in any given year, the IIM trust is likely totake in the same number of dollars that remain un-disbursed at the end of the year. But these two variables should be based on different factors and have no obvious relationship: the amountthat comes into the trust is based on receipts that the trustmade (or didnt) in that year; the annual balance is basedprimarily on the difference between receipts and disbursements(as well as opening balance). 
Second, for the 32 years for which NORC lacked year-end balances, 
missing balance values were interpolated using the end points of 
each gap. Id. 

Michelle Herman did not work on the original $13 
billion estimate but has since worked on refining it. 
Tr. 648:18-650:1 (Herman). At trial, Ms. Herman presented and 
discussed a detailed chart, color coded by source, reflecting 
throughput estimates between 1909 and 2005. See AR-171. In the 
governments most recent throughput calculations, no estimates 
are made for the period 1887 to 1909, as defendants could find no 
data with which to estimate year end IIM balances during the 
earliest years of the trust. Tr. 841:2-6 (Herman); Tr. 1278:3-14 
(Angel). The time periods 1909 to 1922 and 1933 to 1971 include 
the revenue estimates calculated by NORC, apparently in the 
dubious fashion outlined above. For the years 1972 to 2005, 
Herman lists the annual IIM beginning balance, and separates 
estimated trust revenue into the following five categories: 

(1)
 interest revenue; (2) Osage quarterly annuity funds; 


(3)
 Judgment and Per Capita (where available); (4) tribal IIM 
revenue; and (5) all other IIM trust revenue. Id. For the years 
1972 to 2005, the chart also contains: (1) disbursements by year; 


(2)
 the closing balance listed in the accounting system at the 
close of those years; (3) the closing balance calculated by 
adding beginning balance to all receipts and subtracting 



disbursements; (4) the difference between those two closing 
balances; and (5) the closing balance reported to Congress in 
July 2002. Id. The numbers in the chart were provided by Morgan 
Angel & Associates and NORC, and also include IRMS and TFAS 
values from FTIs historical accounting work. 

Tribal IIM receipts and Osage quarterly annuity figures 
reflect two instances where non-IIM funds were commingled with 
IIM accounts. Tribal trust money has been deposited into the IIM 
system over the years, even though it is not attached to IIM 
allotments. Tr. 659:22-660:10 (Herman). Tribes utilized IIM 
accounts for convenience -- as a relatively easy way to obtain 
checks from the IIM system. Such accounts, oxymoronically, are 
referred to as tribal IIM accounts containing tribal IIM 
money. Tr. 342:14-343:18 (Ramirez). FTI estimates that between 
1934 - 2005, approximately $1.513 billion worth of revenue in the 
overall IIM system was, in fact, tribal IIM money. Notably 
missing from the chart is disbursement estimates between 1909 1971: years for which the chart estimates some $3.2 billion in 
collections. The bottom line, which becomes clear only after the 
reader performs the critical calculations that are curiously 
missing from the chart itself, is that between 1909 and 2005, the 
total estimate of IIM receipts (including Osage and Tribal IIM) 
is approximately $14.3 billion, the total disbursements is around 
$10.7 billion, and the difference between the two is $3.6 

billion. If one were to assume the unproven proposition that the 
$3.2 billion collected before 1971 was, in fact, disbursed, the 
unaccounted for collections would total only $400 million -- a 
number that government attorneys have repeatedly said represents 
the average float in the IIM trust (primarily constituting 
funds in restricted accounts). 

These figures are of course estimates, calculated 
according to unverified hypotheses, using data that are opaque. 
They provide only a starting point in assessing the size of the 
IIM trust fund that cannot be accounted for. 

I.5.B. Dollars covered by accounting procedures 

In a series of charts prepared by Abe Haspel and 
produced in the midst of trial, the government breaks down 
estimates of collections into the IIM trust (excluding tribal 
IIM) between 1909 - 2006, and credits into individual IIM 
accounts between those dates. DX-365. The eras are further 
broken down into 1909 - 1937, 1938 - 1984, 1985 - 2000, and 
2001 - 2006. The total estimated collections between 1909 and 
2006 reflected in this chart is $13.186 billion. DX-365 at 1-3. 
For the period between 1938 and 2000 (the years addressed in the 
2007 plan) the estimate is $10.696 billion. Id. This is where 
it gets complicated. 

Haspel prepared nine different charts, each of which 
assumes different average life spans for IIM accounts. Recall 

that Interior only plans to sample from and reconcile 
transactions within accounts that were open on or after 
October 25, 1994 but not later than December 31, 2000. That 
means that many transactions will neither be mapped nor within 
any population sampled for reconciliation. Depending on the 
average account life span (that is, the average paper tail of 
accounts open during the frame described above), Interior 
estimates that at least one of the 2007 Plans tests will address 
between 52% and 68% of the total funds collected between 19092006 -- in other words, somewhere between 52% and 68% of the 
throughput revenue dollars will be part of a sampled population, 
or subject to DCV tests, etc. These estimates would be lower if 
not for the fact that the bulk of the trusts revenue is of more 
recent vintage  most of the dollars have entered since 1972, and 
the 2007 Plan involves much more testing in more recent years. 
Sampling of older dollars is expected to be extremely sparse, 
see, e.g., DX-365 at 4 (positing a 15-year average lifespan, 
transaction reconciliation and interest recalculation would only 
reach 18% of revenue between 1938 and 1984), and even then, it is 
the more recent dollars within that group that are the most 
likely to be tested. This is despite the fact that it is the 
older dollar transactions that may be more likely to prove either 
erroneous or impossible to reconcile, and which in real (i.e., 
inflation adjusted) terms, could account for a much more 

considerable portion of the value that has passed through the 
trust. 

Roughly summarizing all these calculations, Cason 
testified that, as he understood it, the 2007 Plan will account 
for approximately 50-55% of the nominal dollars received into 
IIM accounts. Tr. 258:10-20 (Cason). Interiors estimate of the 
funds covered under its accounting plan is not reassuring. 

I.5.C. Dollars in vs. dollars out 

Perhaps the most striking, though entirely unexplained, 
throughput evidence is Interiors current[] estimate[] that, 
between 1909 and 2006, 77% of total IIM revenue collected (not 
including tribal revenue) was posted to IIM beneficiaries 
accounts. DX-365. This, defendants note, is a provisional 
estimate, subject to revision as historical accounting work 
continues. Id. Applying the 77% factor to the Interiors 
estimate of IIM collections between 1909 and 2006 ($13.186 
billion) results in IIM account postings of $10.101 billion. The 
difference between collections and postings, depending on the 
temporal scope, is therefore again in the range of $3 billion. 

These numbers, presented by Mr. Haspels demonstrative 
exhibit, were neither explained nor effectively cross-examined. 
Mr. Haspel did not elaborate on the striking disparity that the 
numbers suggested. He only noted that if one is talking about 
collections, that tends to be a larger number than credits, and 

so if youre doing a division between the amount of collections 
or the amount of credits that are proven to be - which are 
proven coverage, then depending on what you use as the 
denominator changes the answer. Tr. 1112:3-7 (Haspel); see also 
Tr. 154:14-156:14 (Cason) (distinguishing between receipts and 
collections, and describing some collections that IIM 
beneficiaries are not entitled to, such as the deposits of 
potential lessees). The estimated 23% of IIM collections that 
have not entered IIM accounts is only mentioned in a bold 
footnote at the bottom of each page of the nine-page exhibit, and 
the court is left to wonder what this disparity represents. 
Presumably the government did not mean to suggest that between 
$2.5 and $3 billion of funds intended for IIM accounts were lost 
or misdirected, as it has resisted such suggestions throughout 
this litigation. Perhaps Mr. Haspels assumption means that the 
government expects there to be supporting documentation for $13 
billion in receipts, but only documentation for $10 billion of 
the expected $13 billion in credits. All this is speculation suffice it to say that although on the face of Haspels exhibit 
there appears to be a shortfall of about $3 billion, I do not 
believe that is what the exhibit intended to communicate. 

Plaintiffs calculations of throughput and shortfall 
are no more tangible or helpful. Tellingly, plaintiffs chose not 
to argue the validity of -- or even mention -- their experts 

financial model in their proposed findings of fact. That was a 
wise choice, as I found some of his criticisms of defendants 
model helpful but found his own estimates largely impenetrable. 
Since plaintiffs have elected not to rely upon that financial 
model, I will not review it in any detail. It is sufficient to 
note that it was an attempt to calculate revenue generated by IIM 
land historically. It contained no disbursement data and assumed 
no disbursements, and Mr. Fasold attempted to ignore Interiors 
records while depending entirely upon the $13 billion figure 
presented in Interiors 2002 report to Congress. (After he 
estimated revenues from natural resources, he calculated other 
collections by subtracting his total from Interiors $13 billion 
figure. Tr. 1674:8-1675:3 (Fasold).) He was frank in 
acknowledging there were no details supporting his models 
estimate of other collections. Plaintiffs did not produce 
worksheets supporting Mr. Fasolds revenue estimates. 
Tr. 1659:10-1660:14 (Fasold). 

We are therefore left with defendants throughput 
estimate, which uses odd assumptions to calculate total 
throughput of about $13 billion and appears to show an expected 
shortfall of about $3 billion between receipts and postings. 
There are also heaps of records suggesting that the numbers 
informing these calculation are unreliable, and considerable 
evidence -- anecdotal and otherwise -- of instances in which IIM 

beneficiaries did not receive funds to which they were apparently 
entitled. It remains to be seen whether more accurate or more 
reliable throughput estimates can be achieved by any of the 
knowledgeable and diligent professionals working on this case. 
If the mysterious $3 billion shortfall in Haspels charts 
demonstrates anything, it is that even the broadest questions --
and therefore, the easiest questions to answer with statistical 
sampling -- do not seem to have been answered so far by the 2007 
Plan, and that there is little reason to be confident that 
answers are forthcoming. 




II. COMPLIANCE WITH THE FIDUCIARY DUTY TO ACCOUNT 

From the undersigned judge, at least, the Interior 
Department deserves substantial credit for its effort to strike a 
balance between exactitude and cost. Cobell XVII, 428 F.3d at 
1076. The requirement of exactitude comes from Interiors preexisting fiduciary duty to account and from the mandate of the 
1994 Act. The cost factor comes from common sense -- it would 
indeed be nuts to spend several billion dollars to account for 
a trust fund worth around the same amount -- and from the limits 
Congress has placed on what it will spend for the project. 
Cobell XIII, 392 F.3d at 466, quoting 149 CONG. REC. S13,784, 
13,786 (2003) (statement of Sen. Dorgan). Interiors 2007 plan 
reflects the efforts of dedicated public servants to do the 
impossible. There have been substantial improvements in the 
administration of the trust: TFAS and TAAMS are clearly superior 
to the obsolete financial and land ownership systems they 
replaced. Those improvements are for future beneficiaries, 
however. Their implementation at the close of the 20th Century 
has not remedied and cannot remedy the failures of the past, nor 
do they -- together with all the other projects Interior has 
implemented -- amount to the accounting required by the 1994 Act 
and by Interiors fiduciary duty as trustee. 


II.1. Jurisdiction 

Three jurisdictional requirements must be satisfied 
before a federal court may entertain an action against an officer 
or agency of the United States. The first is subject matter 
jurisdiction. That requirement is undisputed, as plaintiffs 
claims arise under the laws of the United States. See 28 U.S.C. 
 1331; Cobell VI, 240 F.3d at 1094. The second is the waiver of 
sovereign immunity. It has long been settled that the 
Administrative Procedure Act waived the governments immunity to 
this suit. 5 U.S.C.  702; see also Cobell I, 30 F. Supp. 2d. at 
38-42; Cobell V, 91 F. Supp. 2d at 24-28; Cobell VI, 240 F.3d at 
1094-94; Cobell XVIII, 455 F.3d at 304. Plaintiffs assert a 
legal wrong because of agency action or inaction (Interiors 
breach of its fiduciary duty to account), and their claim is for 
relief other than money damages. (The dispute about the nature 
of the relief plaintiffs seek has not been resolved. The agency 
contends that plaintiffs would not be entitled to any sort of 
monetary relief since their action relies on the waiver sovereign 
immunity in 5 U.S.C.  702. Plaintiffs insist that the recovery 
of ones own unaccounted for trust funds is not money damages but 
equitable disgorgement, relying on Bowen v. Massachusetts, 487 

U.S. 879, 897 (1988). These arguments have been considered in 
past Cobell decisions, see, e.g., Cobell V, 91 F. Supp. 2d at 28 
n.20, and will surely be addressed again. For jurisdictional 

purposes, it is enough to note that the government has waived 
sovereign immunity at least insofar as the relief sought by 
plaintiffs is not money damages.) 

The third jurisdictional requirement for suits under 
the Administrative Procedures Act is that the subject matter be 
either final agency action or a claim that final agency action 
has been unreasonably delayed. This case certainly has one or 
another of those elements, and perhaps both. 

To be sure, the nineteen published decisions in this 
case have left its precise jurisdictional underpinnings less than 
clear. In Cobell I, Judge Lamberth considered claims beyond the 
APA, noting that plaintiffs 

primarily assert a claim that does not implicate the
APA. Instead, they sue under the law of trusts for
breaches of trust duties by the trustee who, in this
case, is the government. Again, the Supreme Court has
looked to this substantive body of law to define the
duties and remedies afforded to the beneficiaries of 
the Indian trust relationship. See Mitchell II, 463

U.S. at 226. The defendants have not contested the 
premise that the plaintiffs can sue for breaches of
trust duties based on legal authority outside the
context of the APA, and the APA clearly allows such
suits to be brought. 

Cobell I, 30 F. Supp. 2d at 33. In Cobell V, however, Judge 
Lamberth dismissed plaintiffs pure common law claims, 91 F. 
Supp. 2d at 28-31, and concluded that, [b]ecause the court 
ultimately holds today that plaintiffs proved breaches of trust 
are actionable under the [APA], the court will not address the 

merits of plaintiffs non-statutory review allegations. Id. at 
24 n.18. 

The Court of Appeals has generally referred to 
plaintiffs claims as arising under the APA, but recent opinions 
have qualified that description without clarifying the situation: 
Although plaintiffs core claim is under the APA, Cobell VI, 240 
F.3d at 1095, this is not an ordinary APA case, Cobell XVII, 428 
F.3d at 1074 (emphasis added); we looked primarily to 
administrative law concepts in resolving jurisdictional issues, 
Cobell XVIII, 455 F.3d at 304 (emphasis added). These slight 
qualifications apparently refer to the incorporation of common 
law duties into the statutory obligations at issue. See, e.g., 
Cobell XVIII, 455 F.3d at 307 (We rely on the common law to 
flesh out the statutory mandates and determine the precise 
contours of the governments responsibilities.) (internal 
quotations omitted). In Cobell XVIII, the court explained that 
the jurisdiction is limited to addressing specific agency action 
or inaction, a clear reference to the APA. Id. Nevertheless, 
and even though the Court of Appeals stated six years ago that 
the agencys reasonable time to discharge its fiduciary 
obligations has expired, Cobell VI, 240 F.3d at 1095, the 
existence of APA jurisdiction cannot be taken for granted. 
Cobell VI contains an admonition -- one that the government has 
quoted many times: 

Nonetheless, we expect the district court to be mindful
of the limits of its jurisdiction. It remains to be
seen whether in preparing to do an accounting the
Department takes steps so defective that they would
necessarily delay rather than accelerate the ultimate
provision of an adequate accounting, and the detection
of such steps would fit within the courts jurisdiction
to monitor the Departments remedying of the delay;
beyond that, supervision of the Departments conduct in
preparing an accounting may well be beyond the district
courts jurisdiction. 

Cobell VI, 240 F.3d at 1110 (emphasis added). 

The questions that were explored at the October 2007 
bench trial were thus designed, in part, to permit an assessment 
of whether agency action has been unlawfully withheld or 
unreasonably delayed. They were also designed to facilitate 
review of Interiors 2007 historical accounting plan, as final 
agency action, and to determine whether it is arbitrary, 
capricious, an abuse of discretion, or otherwise not in 
accordance with law. 5 U.S.C.  706(2)(A). The trial record 
establishes that the 2007 HSA Plan mark[s] the consummation of 
the agencys decisionmaking process. Bennett v. Spear, 520 U.S 
154, 178 (1997) (internal quotations omitted). It specifies 
which beneficiaries will receive what Interior calls an 
accounting and what sort of accounting will be performed, so that 
the rights . . . [of plaintiffs] have been determined by its 
adoption. Id. Defendants resist calling the 2007 HSA plan final 
agency action, suggesting that only the plans completion will be 
final agency action. Defendants Proposed FF/CL [3459-1] at 190. 

The Court of Appeals did reject the finding in Cobell V that the 
preexisting accounting system used to administer the IIM trust 
constituted a final agency action, since an on-going program or 
policy is not, in itself, a final agency action under the APA, 
Cobell VI, 240 F.3d at 1095, but the panel did not consider 
plaintiffs argument that the High Level Implementation Plan then 
under review was final agency action. In any event, the 2007 
Plan now reflects a final agency plan to complete -- rather than 
initiate -- its historical accounting obligation. 

II.2.  Taking cost into account, Interiors 2007 HistoricalAccounting Plan will not result in an adequateaccounting that is compliant with the 1994 Act, priorCobell opinions, and other precedent.  
II.2.A.  Accounting methodology, scope, and results  
This is not an ordinary APA case. Cobell XVII, 428  

F.3d at 1074. The deferential standard that typifies judicial 
review of an agencys statutory interpretation is inapplicable 
here. Cobell XVIII, 455 F.3d at 303-07. I am to give Interiors 
interpretation of the 1994 Act careful consideration, but 
Chevron deference is trumped by the requirement that statutes 
are to be construed liberally in favor of the Indians, with 
ambiguous provisions interpreted to their benefit. Cobell 
XVIII, 455 F.3d at 304 (internal quotations and citations 
omitted); see also Rosebud Sioux Tribe v. Kneip, 430 U.S. 584, 
586 (1977); Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 
766 (1985); Albuquerque Indian Rights v. Lujan, 930 F.2d 49, 59 

(D.C. Cir. 1991); Muscogee (Creek) Nation v. Hodel, 851 F.2d 
1439, 1445 n.8 (D.C. Cir. 1988). 

Because this is not only an Indian law case, but a case 
involving the actions of a fiduciary, Interiors administrative 
discretion in performing the historical accounting is somewhat 
constrained. Cobell XVIII, 455 F.3d at 307. It may not choose 
any reasonable option in designing its plan, because its 
actions must satisfy fiduciary standards. Id. (internal 
quotations omitted). Accordingly, [t]he common law of trusts 
limit[s] the deference [afforded] to Interiors interpretation of 
the Act. Id. at 306. When it comes to striking a definitive 
balance between exactitude and cost in performing the 
accounting, however, neither statutory language nor trust 
principles provide clear guidance, and the court owes 
substantial deference to Interiors plan. Id. (quoting Cobell 
XVII, 428 F.3d at 1076). 

In short, both the APA and the common law of trusts 
apply in this case; the specific question to be addressed 
determines which body of law becomes most prominent. Cobell 
XVIII, 455 F.3d at 303-04. Obedient to that direction, I proceed 
to consider which body of law is more prominent with respect to 
specific aspects of Interiors 2007 accounting plan: (1) its 
methodology; (2) its scope; and (3) its result in terms of the 

information it proposes to include in the IIM account holders 
historical statements of account. 

The methodology of Interiors plan is owed the greatest 
deference. The use of statistical sampling -- especially in 
light of the discussion of the method in Cobell XVII -- reflects 
a reasonable effort to balance cost and accuracy. See 428 F.3d 
at 1077-79. By Interiors own account, however, its 
understanding of the proper scope of the accounting obligation is 
not the result of a cost-benefit analysis. It is the result, 
rather, of a legal interpretation of the 1994 Act and other 
statutes governing the IIM trust.13 See Tr. 89:20-91:6, 
Tr. 92:3-9, Tr. 129:15-130:4 (Cason). 

Unlike accounting methodology, the proper 
interpretation of the statutes temporal scope is not a matter 
committed to agency discretion and informed by agency expertise. 
In interpreting the statutes scope, I must look toward the 
common law of trusts and be guided by the canon of construction 
directing that ambiguous statutes be resolved in favor of 

13Interior has calculated cost estimates relevant to various interpretations of the 1994 Act in designing its accounting plan,see Tr. 81:12-87:5 (Cason), in part because of its awareness thatthere are two other major parties within government who have asay in [the historical accounting] process, and thats both theCourt and the Congress. Tr. 91:2-6 (Cason). The testimony ofInterior officials at trial as well as defendants brief regarding the nature and scope of the historical accountingreveal, however, that decisions regarding the scope of theaccounting are the result of the Departments legalinterpretation of the 1994 Act [Dkt. 3339]. 
Indians. See, e.g., County of Oneida v. Oneida Indian Nation of 
New York State, 470 U.S. 226, 247-48 (1985). 

Nor is scope only a temporal matter. It also relates 
to the elements that are present within and missing from the 
statements of account Interior proposes to issue -- for example, 
past transactions (within scope, as Interior sees it) and asset 
statements (out of scope). These choices were not dictated by 
administrative cost-benefit analyses to which judicial deference 
is owed, but by Interiors idea of what is meant by historical 
accounting. Interior sometimes blurs this line by arguing that 
the information owed to beneficiaries under the accounting is a 
function of how much Congress has provided for the project. Cost 
is certainly a factor in the agencys assessment of how an 
accounting should be done. But the core concept of an 
accounting is a matter of law, and not some kind of Procrustean 
bed that may be stretched or shrunk to fit available resources. 
It is ultimately the responsibility of the courts to determine 
whether the thing that Interior proffers as an accounting is 
sufficient to serve the purposes for which a trust accounting is 
typically conducted. Cobell VI, 240 F.3d at 1103; see also, 
Cobell XIII, 392 F.3d at 472 (once a statutory obligation is 
identified, the court may look to common law trust principles to 
particularize that obligation.). 

I inquire into the scope of the accounting -- and the 
necessary elements of an adequate accounting statement -- with 
caution, mindful that common law precedents dont map directly 
onto the context. Cobell XVII, 428 F.3d at 1078. I may to a 
degree use the common law of trusts as a filler of gaps left by 
the statute, but in doing so [I] may not assume a fictional 
plaintiff class of trust beneficiaries completely and uniformly 
free of bars or limitations that the common law may provide. 
Id. at 1079. My consideration of common law will be guided by 
discussions of its applicability in prior Cobell opinions. 
Ultimately -- despite confusion over the concept of a trust 
accounting, the unique qualities of the IIM trust, and the 
awkward fit of common law trust principles with the trust under 
consideration -- it is clear for reasons that will be set forth 
below that the results contemplated by the 2007 Plan fall short 
of this standard. The HSAs contemplated by the plan will not 
contain sufficient information for the beneficiary readily to 
ascertain whether the trust has been faithfully carried out. 
Cobell VI, 240 F.3d at 1103. 

i. Methodology 

Because the Interior Department is the actor with 
primary responsibility for working out compliance with the broad 
statutory mandate, Cobell XVII, 428 F.3d at 1076 (quoting 
Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55, 66-67 

(2004)), the district court cannot bluntly treat[] the character 
of the accounting as its domain. Id. Neither the statutes 
governing the IIM trust nor the common law of trusts delineates 
the specific accounting methodology for Interior to use in 
performing the historical accounting. Cobell XVIII, 455 F.3d at 

306. Discussions of administrative discretion in previous Cobell 
opinions suggest that, of the three elements of Interiors plan 
currently under review, the agency is entitled to the greatest 
latitude in selecting its accounting methodology. See generally 
Cobell XVII, 428 F.3d at 1074-79. Indeed, according to the 
testimony of Interior Department officials, it is the essentially 
the only one of the three elements (methodology, scope, and 
results) that arises out of an administrative balancing of cost, 
time, and accuracy. I must approach Interiors judgment 
regarding the allocation of scarce resources . . . under the same 
[deferential] principles the Court of Appeals applied to the 
question of sampling,14 Cobell XVII, 428 F.3d at 1079. 

14During a pre-trial conference, plaintiffs insisted that,despite the clear statement of the Court of Appeals that cost isa valid methodological consideration, the common law of trustdictates that the full cost of a proper accounting must be borneby the trustee if the high cost of the accounting is entirely dueto his malfeasance. Hrg Tr. 27:5-28:24 (6/18/07). Plaintiffs insisted that the Court of Appeals did not have a record on whichto consider this argument when it stressed the importance ofcost. Id. at 27:5-9. This argument must be rejected, asdefendants responsibility for the difficulties it faces inperforming an accounting was extensively documented by JudgeLamberth in several published opinions, and the Court of Appealshas already considered (and rejected) the suggestion that thecommon law of trusts could be invoked here in that manner: 
I am instructed to defer to policies reasonably 

resulting from cost-benefit analyses, as neither congressional 

language nor common law trust principles (once translated to this 

context) establish a definitive balance between exactitude and 

cost. Cobell XVII, 428 F.3d at 1076; see also Cobell VI, 240 

F.3d at 1104 (noting approvingly that Judge Lamberth explicitly 

left open the choice of how the accounting would be conducted, 

and whether certain accounting methods, such as statistical 

sampling or something else, would be appropriate. Such decisions 

are properly left in the hands of administrative agencies). 

Where a trustee has by misconduct or negligence made a
proper accounting more difficult, the trustee may be
charged for the accountings cost, and no precept of
common law constrains the cost of such an accounting,
see GEORGE GLEASON BOGERT & GEORGE TAYLOR BOGERT, THE
LAW OF TRUSTS AND TRUSTEES  963, at 459 n.36 (rev. 2d
ed. 1983) (citing Haas v. Wishmiers Estate, 99 Ind.
App. 31, 190 N.E. 548 (Ind. App. 1934)), though
obviously bargaining between trustee and beneficiaries
might eliminate some excesses. Absent such misconduct 
or negligence, however, the costs of an accounting
would fall on the trust estate itself, which, as we
said before, would automatically give private
beneficiaries an incentive not to urge extravagance.
Cobell XIII, 392 F.3d at 473. While Congress in the
1994 Act plainly faulted the United States management,
see, e.g., H.R. REP. NO. 103-778, at 9-11 (1994), the
Acts general language doesnt support the inherently
implausible inference that it intended to order the
best imaginable accounting without regard to cost. 

Cobell XVII, 428 F.3d at 1075. In short, despite plaintiffs
presentation of countless historical reports illustrating the
Interior Departments poor handling of the IIM trust, I find that
the Court of Appeals was no less aware of these problems when it
instructed that cost was a relevant consideration in designing
and reviewing the historical accounting plan. 

Choices regarding how to perform the accounting require[] both 
subject-matter expertise and judgment about the allocation of 
scarce resources, classic reasons for deference to 
administrators. Cobell XVII, 428 F.3d at 1076. 

Interiors reliance on statistical sampling remains 
controversial. It means that only a tiny fraction of land-based 
transactions under $100,000 will be reconciled, see chart, 
section I.2.A.ii., and plaintiffs objections to the practice 
have only grown more strident since the agency reduced the sample 
size. As Judge Lamberth noted in Cobell X, defendants have not 
identified a single instance apart from the present case where a 
trust accounting was performed by statistical sampling, and the 
use of such a procedure in any conventional accounting would 
likely be frowned upon. Cobell X, 283 F. Supp. 2d at 188. This 
is not a conventional accounting case, however, and the absence 
of precedent [for relying on statistical sampling in performing 
an accounting] . . . [cannot] properly be deemed controlling. 
Cobell XVII, 428 F.3d at 1078. The treatment of statistical 
sampling in Cobell XVII, along with evidence presented at trial, 
informs my conclusion that the statistical sampling in Interiors 
plan is not a per se violation of Interiors accounting duty.15 

15The reason given by the Court of Appeals when it vacatedJudge Lamberths ban on statistical sampling was merely that itreflected no deference to defendants expertise or to theirjudgment regarding the allocation of scarce resources, CobellXVII, 428 F.3d at 1078, but the court showed no reluctance toapply its own expertise and judgment to the subject, concluding, 
While the number of land-based, electronic ledger era 
transactions sampled and reconciled has dropped from 233,000 
under the 2003 plan to 6,599 under the 2007 plan, and the number 
of paper ledger era transactions sampled may be lower yet, the 
agency now indicates that the average cost of reconciling a 
single transaction is not $100, as it had thought, but $3,000$3,500. AR-566 at 3303-09. In reviewing the sampling ban in 
the structural injunction, the Court of Appeals seemed 
particularly struck by evidence that the average cost of 
accounting, per transaction, would exceed the average value of 
the transactions. Cobell XVII, 428 F.3d at 1078. That 
observation is likely even more true today. 

Unlike when the statistical sampling issue was last 
before the Court of Appeals, the bulk of the sampling in 
Interiors current plan is part of the Litigation Support 
Accounting (LSA) project. Plaintiffs have been quite critical of 
this project and have fixated on its title, contending that its 
purpose was not to satisfy Interiors fiduciary duty to account, 
but rather to limit the agencys liability for settlement 
negotiation purposes. Interior responds that it chose the name 
as a way of fitting its activities within the narrow compass of 
the FY 2004 appropriations bill, which authorized land-based 

after considering reconciliation cost estimates, that the
decision to use statistical sampling seems especially
reasonable. Id. 

historical accounting only for litigation support, Department 
of the Interior and Related Agencies Appropriations Act, 2004, 
Pub. L. No. 108-108, 117 Stat. 1241, 1263 (2003), and that 
estimating the governments liability exposure was only one 
purpose of the project. Tr. 62:2-64:5 (Cason). The main purpose 
of the LSA project, according to the contractor who designed it, 
was to deepen the governments understanding of electronic 
ledger era transactions. Tr. 974:18-975:1 (Scheuren). Indeed, 
it was not Interiors original intent for the LSA project to 
satisfy its reconciliation responsibilities, but, as the 
principal statistician began analyzing the data, he realized that 
further reconciliation of electronic ledger era land-based 
transactions would be unnecessary. Tr. 1004:17-1005:7 
(Scheuren); AR-427 at 4-5. Interior essentially came to the 
conclusion that, without meaning to, it had satisfied its 
accounting duty with respect to electronic ledger era 
transactions in land-based accounts through its LSA work. 

Plaintiffs offered only the opinion testimony of an 
economist with some statistical training, Dwight Duncan, to 
criticize NORCs work on the LSA project. One of Duncans 
primary objections -- that NORC inappropriately applied 
inferences drawn from the sampled population to transactions 
beyond the population set -- was deflated by Dr. Susan Hinkins 
from NORC, both in her rebuttal report and at trial. She openly 

acknowledged that the LSA project drew samples from an incomplete 
population of transactions, and that no statements regarding the 
reliability of electronic era transactions as a whole could be 
made on the basis of the sampling conducted to date. She 
clarified the definition of error -- noting that unreconciled 
transactions were treated as errors -- Hinkins Responding Report 
[Dkt. 3393] at 4, she demonstrated that errors were not netted to 
reduce total dollars in error, and she illustrated that the LSA 
project employed both attribute and variable sampling. 

It is therefore conceded that the population sampled in 
the LSA project was incomplete. No assurance has been offered, 
either that the entire population can be restored, or that 
additional sampling of the restored population will precede 
completion of the historical accounting project. Since Interior 
represents that the HSAs may be mailed before testing of the 
complete population takes place, see discussion in  I.2.F.ii, 
AR-566 at 33-03-18, and since neither paper ledger era 
transaction sampling nor further sampling of the restored 
electronic ledger era population is described in any detail in 
the HSA Plan, the ultimate statistical validity of the HSA plan 
has yet to be demonstrated. As described in  I.2.I. and 
I.2.J., the completeness of the transactions recorded in 
government ledgers cannot be established until several other 
tests are done, chief among them, the Land-to-Dollars tests, see 

 I.2.I, which so far have only been performed on the simplest of 
leases and resulted in no statistical conclusions. 

Nevertheless, I am not prepared to state that the 
agencys methodological approach to historical accounting is 
wrong or invalid. It does appear that the various projects 
reviewed in the findings of fact will generally produce helpful 
information concerning the history of the IIM trust. It is the 
Departments prerogative to decide, as a routine matter, not to 
collect third party trust records (for example) to aid in the 
performance of its accounting. That decision may limit the 
degree to which the agency is able to restore missing 
transactions from the data set, which would in turn limit the 
extent to which sampling exercises can reflect accurately the 
characteristics of the IIM trust. It is not methodology, 
however, but scope and expected results, that are ultimately 
fatal to the adequacy of Interiors accounting project. 

ii. Scope and Coverage 

a. Scope: years covered 

Nothing in the 1994 Act limits the temporal scope of 
Interiors accounting obligation. See e.g., Cobell VI, 240 F.3d 
at 1104. The historical aspect of that accounting duty has been 
declared by this Court and affirmed by the Court of Appeals. It 
was established by the statutory language: 

(a) Requirement to account
The Secretary shall account for the daily and annual
balance of all funds held in trust by the United States
for the benefit of an Indian tribe or an individual 
Indian which are deposited or invested pursuant to the
Act of June 24, 1938 (25 U.S.C. 162a). 

25 U.S.C.  4011(a). The Interior Department reads limitations 
into those words that are not there. The reference to the Act 
of June 24, 1938 does not set a start date for the accounting. 
All it does is identify the funds for which Congress has mandated 
an accounting. The parties hunt for the meaning of the 1994 
Acts reference to the 1938 Act was diverted by the Court of 
Appeals notation, in Cobell VI, that all funds means all funds, 
irrespective of when they were deposited (or at least so long as 
they were deposited after the Act of June 24, 1938) 240 F.3d at 
1102 (emphasis in original). That reference to the date of the 
Acts passage turns out to be a red herring. The Act of June 24, 
1938, also known as the Indian Reorganization Act and codified at 
25 U.S.C.  162a, sets forth the Interior Departments authority 
to deposit Indian trust funds in banks and to invest them subject 
to certain limitations. 25 U.S.C.  162a(a)-(c); see also 
Tr. 1278:15-1279:1 (Angel) (defendants historian confirms that 
the central purpose of the 1938 act was to provide assurance 
that if funds were to be deposited in commercial banks, that they 
would be in interest-bearing accounts; and that the Act 
provides for investment in Treasury securities as well). The 
1938 Act expressly contemplated the management of funds already 

held in the Treasury for Indian trust beneficiaries at the time 
of the Acts passage. See Tr. 1276:17-1277:14 (Angel) 
(testifying that the government has been holding and managing 
funds in trust for allotted landowners since the late 1800s). It 
also outlined some of the [t]rust responsibilities of the 
Secretary of the Interior[,] including the duty to account. 25 

U.S.C.
  162a(d). The 1938 Act was not the first statute 
affirming Interiors duty to account for Indian Funds, see, e.g., 
30 Stat. 495, 55th Cong., Sess. II, Ch. 545 at 1399 (1899), but, 
even if the duty to account had not been mentioned in any 
statute, the governments preexisting duty to provide an 
accounting to IIM trust beneficiaries . . . inheres in the trust 
relationship itself. Cobell VI, 240 F.3d at 1103; United States 


v.
 Mitchell, 463 U.S. 206, 224-46 (1983)(Mitchell II)(statutes 
granting United States control over Indian resources and land 
establish fiduciary relationship). 



The most logical reason for the 1994 Acts reference to 
the 1938 Act is that it more fully describes the governments 
current handling of IIM trust funds. [B]y its very terms the 
1994 Act identified a portion of the governments specific 
obligations and created additional means to ensure that the 
obligations would be carried out. Cobell VI, 240 F.3d at 1100. 
The specific obligations emphasized in the statute are the duty 
to perform an historical accounting, and the duty to reform the 

trust going forward. A legislative command to trace IIM trust 

funds only as far back as June 24, 1938 would have been 

nonsensical, and no legislative history supports such a reading. 

June 24, 1938 was neither the date when the duty to account 

originated nor the date of any prior accounting. The correct 

reading of the 1994 Acts reference to the 1938 Act is that it 

instructs Interior to account for all funds the Secretary 

invests pursuant to the authority given him under 25 U.S.C. 

 162a: it clarifies the global command to account for all 

funds.16 
Interior has decided to conclude its historical 

accounting period at December 31, 2000, not because of any 

statutory interpretation, but because December 31, 2000 is the 

beginning of the current accounting period in which IIM account 

holders receive quarterly statements of account pursuant to the 

16As I mentioned in court on June 18, 2007, I am aware thatJudge Lamberth has given the scope of the accounting moreattention than anyone. 6/18/07 Hrg Tr. 6:2-16. Though hisrulings in Cobell X are not the law of the case, I treat hisreasoning as presumptively correct and depart from it only withcaution. See Actional Alliance of Senior Citizens v. Sullivan,930 F.2d 77, 83 (D.C. Cir. 1991) (vacated holdings, in theabsence of contrary authority, remain persuasive precedent). In this instance, I agree with his ruling that the accountingobligation precedes June 24, 1938, but my reasoning is somewhatdifferent. He found that while the 1994 Act does not itself require an accounting for transactions before 1938, Interior mustnevertheless account for all funds deposited since the passage ofthe Dawes Act in 1887 because of its pre-existing duty toaccount. My conclusion that the express terms of the statuteplace no temporal limits on the accounting is based on a readingof the statute that was apparently not suggested to JudgeLamberth. 
1994 Act. Interiors HSA Plan, Part 1, AR-565 at 33-02-06 n.10. 
But fixing the start date for quarterly statements of account 
should not have also fixed the stop date for historical 
accounting -- for accounts opened after December 31, 2000. The 
mailing of periodic statements that were compliant with the 1994 
Act was a milestone, to be sure, but it did not terminate the 
Departments obligation to assure current and future account 
holders of the accuracy of their assets and opening balances. 
Periodic statements of account issued in the 21st Century are to 
identify: (1) the source, type, and status of the funds; (2) the 
beginning balance; (3) the gains and losses; (4) receipts and 
disbursements; [and] (5) the ending balance. 25 U.S.C. 
 4011(b). Because the Departments historical accounting work 
was unfinished in January 2001 and remains unfinished today, 
however, its 2007 HSA plan gives no assurance to the holders of 
IIM accounts opened after December 31, 2000 that their opening 
balances or asset statements are accurately stated.

 It would be absurd, of course, to read the 1994 Act as 
requiring that, for as long as the IIM trust exists, new IIM 
account holders must be provided with voluminous records tracing 
their assets and initial credits back to their origins in the 
late 19th Century. Surely, after the entirety of the IIM trust 
is properly accounted for, opening balances for new accounts can 
be presumed accurate and new IIM beneficiaries will not be 

entitled to historical accountings. If a complete and final 
accounting can never be done, as I have concluded, how long will 
an historical accounting requirement exist for new IIM accounts? 
That will be a question for the next, remedial phase of this 
case. 

b. Scope: funds accounted for 

Interiors accounting project does not cover every 
account that existed and every transaction that occurred, even 
between June 24, 1938 and December 31, 2000. 

1. Held in trust 

It is Interiors position that certain funds derived 
from allotted lands are beyond the scope of the accounting 
mandated by the 1994 Act because those funds were never held in 
trust. 25 U.S.C.  4011(a). 

Allotment owners who receive payments directly from 
lessees, in so-called direct pay arrangements, are not covered 
by the 2007 HSA Plan; payments that do not pass through the 
governments custody will not be analyzed, and beneficiaries will 
not receive HSA statements for them. AR-565 at 33-03-05. 
Associate Deputy Secretary Cason testified that while he was 
aware that the Department has a duty to verify that direct 
payments are in fact being made, he was not clear about whether 
this carries over to the historical accounting duty that we have 
and what its implications would be. Tr. 126:16-128:3 (Cason). 

The Departments position is clear, however: the Secretary has 
announced the conclusion that direct pay funds were never held 
in trust by the United States and therefore do not fall within 
the requirement in the 1994 Act that Interior account for all 
funds held in trust by the United States. AR-565 at 33-03-05 
(internal quotations omitted); see also Tr. 129:15-130:4 (Cason). 

The Secretary appears to be correct on this point. The 
funds that must be accounted for pursuant to the 1994 Act are 
all funds held in trust. 25 U.S.C.  4011(a) (emphasis added). 
Direct payments, by definition, are never held in trust. Even 
if the statute were ambiguous - which it is not - the common 
law of trusts is silent on this question since there is no 
analogue for direct payments in the world of private trusts. See 
Trial 1.5 Tr. 72:18-73:7 (Langbein 6/02/03). The government may 
have duties relating to such funds, but they do not arise out of 
the statute, and they are not cognizable in this suit. 

Similarly, funds that would ordinarily be IIM account 
funds but are instead managed by tribes (apparently only two 
tribes handle such funds, Tr. 121:8-18 (Cason)), while 
undoubtedly trust funds, are never held in trust by the United 
States, and are thus outside the purview of the 1994 Act. As 
with direct payments, the statute is not ambiguous on this point, 
and even if it were, there is no common law precedent for trust 
funds processed by a third party that could conceivably serve as 

a filler of gaps left by the statute. Cobell XVII, 428 F.3d at 
1079. 

2. 	Administrative fees & Youpee 
escheatments 

Plaintiffs complain that the HSAs will be incomplete if 
they fail to account for IIM ownership interests that unlawfully 
escheated to tribes pursuant to the Indian Land Consolidation Act 
before the Supreme Court declared such escheatments 
unconstitutional (for a second time) in Babbitt v. Youpee, 519 

U.S. 234, 243-45 (1997). The 2007 Plan contains no mention of 
escheated Youpee interests, but the subject was discussed 
somewhat at trial. In addition, plaintiffs object to the 
governments failure to account for administrative fees 
occasionally deducted from gross IIM revenues before net IIM 
funds are posted in beneficiaries accounts (for services such as 
timber sales). Tr. 232:19-24 (Cason). 

Associate Deputy Secretary Casons testimony was that 
Interior officials had not decided whether or not ultimately to 
account for administrative fees deducted from beneficiaries 
funds, or for escheated interests that had not yet been returned 
to IIM accounts, Tr. 232:19-233:14, Tr. 239:1-240:12 (Cason), but 
it is undisputed that no accounting for such funds will be done 
pursuant to the 2007 Plan, which, according to the Department, 
discharges its historical accounting obligation. 

Administrative fees and unconstitutional escheatments 
likely amount to a tiny fraction of the monies that pass through 
the IIM trust. It is the Departments prerogative to prioritize 
its accounting activities, and Interior is, of course, free to 
decide that it should reconcile high value transactions first and 
escheatments last, or even to calculate the value of 
administrative fees and escheatments after sampling. I may not, 
however, simply ignore two categories of funds held in trust 
under the 1994 Act, both of which operate to diminish the value 
of IIM accounts or assets, however slight the diminution may be. 
Neither unrestored Youpee interests nor administrative fees will 
be captured in the accounting activities as they are now 
designed, as the fees are not reflected as specific IIM account 
transactions, Tr. 231:9-14 (Cason), and the escheatments are 
invisible on the IIM systems if they have not been reversed. 
The absence of any discussion of such topics, Tr. 233:7-14, 
Tr. 240:3-8 (Cason), reinforces my conclusion that Interior 
cannot perform a complete accounting. 

3. Special Deposit Accounts 

At first blush, it may appear that the same criticisms 
could be applied to Interiors decision to exclude Special 
Deposit Accounts from the 2007 HSA Plan. In the 2003 Plan, 
Interior treated Special Deposit Accounts as a fourth type of 
account to be reconciled as part of its historical accounting 

exercise (in addition to land-based accounts, Judgment accounts, 
and Per Capita accounts). PX-507 at III-1. By the time it 
adopted its 2007 HSA Plan, however, the Department had decided to 
eliminate the reconciliation of SDAs from its historical 
accounting project, because the funds in those accounts are, by 
definition, not associated with particular IIM accounts. IIM 
funds held in SDAs are indeed held in trust under the 1994 Act. 
My conclusion, however, is that Interiors treatment of SDA 
monies is the result of a considered cost-benefit analysis, is 
entitled to deference, and is not improper. 

SDAs are used to hold funds temporarily, until the 
proper recipients are identified. SDA accounts include funds 
belonging to IIM beneficiaries, tribes, lease bidders, and 
others. Tr. 2065:2-24 (Christie). Thus, while current balances 
in SDAs are not reconciled as part of the historical accounting 
project, to the extent that SDAs consist of IIM funds, those 
funds will be within the populations tested in the LSA and DCV 
projects after they have been transferred to IIM accounts. 

At times the amount of money held in SDA accounts has 
been excessively high. In July 2002, there were approximately 
21,000 open SDAs, containing a total of almost $68 million funds 
waiting to be identified and distributed. Tr. 157:8-12 (Cason). 
As a result of Interiors efforts to assess, reconcile, and 
distribute the SDA funds, the total balance of funds in SDAs as 

of October 2007 had been reduced to about $16-17 million, and 
Interior had distributed 75% of the funds that had been held in 
SDAs in July 2002. AR-566 at 33-03-27; Tr. 158:12-19 (Cason). 
Interior continues to work on the remaining funds in Special 
Deposit Accounts, and has chosen to prioritize its SDA work by 
reconciling high value accounts before reconciling lower value 
accounts. Tr. 158:20-159:2 (Cason). So far, Interior has spent 
approximately $48 million distributing residual balances from 
Special Deposit Accounts. AR-566 at 33-03-27. 

Interior intends to complete its distribution of the 
SDA funds; the Office of Historical Trust Accounting, Bureau of 
Indian Affairs, and Office of the Special Trustee are all working 
on the project. Tr. 159:3-6 (Cason); Tr. 752:4-7, 22-25 
(Herman). At Trial, Associate Deputy Secretary Cason could not 
state for certain when this project would be complete. 
Tr. 159:3-160:3 (Cason). As Interior gets into the smaller value 
SDAs, it reaches a point where the cost of reconciling the 
accounts exceeds the funds in the accounts themselves. 
Tr. 159:11-17 (Cason). When that occurs, the Department plans to 
make pacing decisions in order to move the historical 
accounting process along more rapidly. Tr. 159:18-22 (Cason). 

Interiors approach to SDA accounting is entitled to 
deference because the record reflects extensive consideration of 
the problem by three bureaus or offices within the Department and 

a determination to deal with it after projects with higher 
priorities are complete. This stands in sharp contrast to the 
Youpee escheatment question, for example, about which Associate 
Deputy Secretary Cason could give only vague testimony, and which 
may be meeting with internal bureaucratic resistance. 
Tr. 2016:24-2022:1 (Willett). 

4. Closed accounts and probated estates 

Interiors duty to account for all funds in the IIM 
trust is enforceable in this suit, not by or on behalf of every 
beneficiary who ever walked the earth, but by a plaintiff class, 
certified by Judge Lamberth on February 4, 1997, and consisting 
of present and former beneficiaries of the IIM trust [Dkt. 27]. 
That expansive definition of the class, appropriate at that early 
stage of the litigation, now needs to be refined. 

On October 25, 1994, a statutory right to an accounting 
accrued for all then-living IIM beneficiaries: those who held or 
at any point in their lives had held IIM accounts. Even if the 
government sold allotted land owned by Beneficiary X in 1992 and 
closed Xs account by mailing her a check for Xs share of the 
sale price, X is entitled to an accounting under the statute. If 
beneficiary Y, the owner of a 10% interest in an IIM allotment, 
died on October 24, 1994, the night before the 1994 Act became 
law, his right to an accounting never accrued -- the government 
is not required to prepare an accounting and mail it to his 

grave -- but Ys heirs do have a right to an accounting of any 
IIM funds and assets they inherited, and since the probate 
process does not produce an accounting, Tr. 139:21144:24 
(Cason), Interiors duty to those heirs includes accounting for 
the allotment assets and IIM funds that were their inheritance 
from Y. The rationale for including predecessor accounts in the 
historical accounting process is simply that beneficiaries are 
entitled to know where their money came from. 

The only limitation on the entitlement of the members 
of the plaintiff class to demand an accounting for all funds 
are those imposed by the law of standing, by reasonable 
methodological shortcuts taken to conserve funds (e.g., 
sampling), and by whatever restrictions may be present in the 
common law. See Cobell XVII, 428 F.3d at 1079. Limiting the 
historical accounting process by excluding accounts that were 
closed prior to October 25, 1994, and by refusing to examine IIM 
accounts behind probated estates, narrows the scope of the 
accounting. This adjustment is substantive, not methodological. 
It is not sanctioned by the common law of trusts or the plain 
terms of the 1994 Act. And the members of the plaintiff class -IIM beneficiaries alive on October 25, 1994 -- have standing to 
challenge it. 

5. Asset statements 
The most serious deficiency of the historical 

accounting project reflected in the 2007 Plan is that it will not 
provide beneficiaries with information about the assets from 
which IIM funds have been derived. A review of statutory and 
common law trust accounting principles reveals why HSAs so 
limited cannot meet the adequacy and fairness standard.17 

The most relevant statute for ascertaining the 
defendants duty to provide an historical accounting is the 1994 
Act[.] Cobell XVII, 428 F.3d at 1074. The Act itself contains 
few clues indicating what the historical accounting must entail 
and the what accounting statements must contain, but it is clear 
from the Special Trustees oversight duties that account holders 
are entitled to a fair and accurate accounting of all trust 
accounts. 25 U.S.C.  4043(b)(2)(A). The Court of Appeals has 
spoken on this subject, noting that [defendants] never explain 
how one can give a fair and accurate accounting of all accounts 
without first reconciling the accounts, taking into account past 
deposits, withdrawals, and accruals. Indeed, the governments 
own expert acknowledged that one could not determine an accurate 

17Note that an HSA is not the historical accounting itselfbut rather a by-product of the historical accounting. Interiors position is that the mailing of the HSAs discharges thegovernments duty to account. 
account balance without confirming historical account balances. 

Cobell VI, 240 F.3d at 1103 (emphasis added). 

The 1994 Act amended 25 U.S.C.  162a and 

identified some of the Interior Secretarys duties to
ensure proper discharge of the trust responsibilities
of the United States. 25 U.S.C.  162a(d). These 
include (but are not limited to) the following: 

Providing adequate systems for accounting for and
reporting trust fund balances;
Providing adequate controls over receipts and
disbursements;
Providing periodic, timely reconciliations to
assure the accuracy of accounts;
Preparing and supplying . . . periodic statements
of . . . account performance" and balances to
account holders; and
Establishing consistent, written policies and
procedures for trust fund management and
accounting. 

Cobell VI, 240 F.3d at 1090 (quoting 25 U.S.C.  162a(d)). The 

periodic statements of . . . account performance are described 

in greater detail in 25 U.S.C.  4011(b). They are to be 

provided to tribes and individual beneficiaries [n]ot later than 

20 business days after the close of a calendar quarter, and are 

to identify (1) the source, type, and status of the funds; 

(2) the beginning balance; (3) the gains and losses; (4) receipts 
and disbursements; (5) the ending balance. Id. 

These periodic statements of performance -- though they 
are part of the 1994 Acts trust reform mandate -- have an 
important bearing on the elements of an adequate historical 
accounting statement. [P]eriodic statements of . . . account 

performance are simply accountings going forward, rather than 

historical accountings. 5 U.S.C.  162a(d). For that reason, 

their required contents are probative of what a fair and 

accurate historical accounting of all funds is. 

Notably, the first element that must be identif[ied] 

in the periodic statement of performance is the source . . . 

of the funds, 25 U.S.C.  4011(b)(1), meaning, obviously, 

information sufficient to allow a recipient to connect her 

receipt of funds to specific assets. This requirement to include 

historical asset ownership in historical statements of account 

was identified and declared by the Court of Appeals years ago, in 

Cobell VI: 

The 1994 Act requires that the Interior Department
perform an adequate accounting. This indicates that
the accounting must be sufficient to serve the purposes
for which a trust accounting is typically conducted. By
this standard, the district courts conclusion that the
management of a trust and rendering of an adequate
accounting requires the locating and retention of
records, operational computer systems, and adequate
staffing was, in plaintiffs words, self-evident.
Anything less would produce an inadequate accounting. 

It is black-letter trust law that [a]n accounting
necessarily requires a full disclosure and description
of each item of property constituting the corpus of the
trust at its inception. Engelsmann v. Holekamp, 402
S.W.2d 382, 391 (Mo. 1966); see also BLACKS LAW
DICTIONARY (7th ed. 1999) (defining accounting as the
report of all items of property, income, and expenses
prepared by the trustee for the beneficiary). 

240 F.3d at 1103 (emphasis added). The requirement to include 
asset information in historical accounting statements is 
consistent with both the statute and the common law.18 

iii. Summary of legal deficiencies 

It is Interiors responsibility to work[] out 
compliance with the broad statutory mandate, Cobell XVII, 428 
F.3d at 1076 (internal quotations omitted), but in reviewing that 
compliance, I must determine whether the accounting will be 
sufficient to serve the purposes for which a trust accounting is 
typically conducted, and whether the HSAs will contain 
sufficient information for the beneficiary readily to ascertain 
whether the trust has been faithfully carried out. Cobell VI, 
240 F.3d at 1103. My answers to both questions are in the 
negative: the accounting will not serve the purposes of a trust 
accounting, and the HSAs will not enable beneficiaries to 
determine whether their trustee has discharged its fiduciary 
duties. 

18The description of the trust corpus in Cobell XII asconsist[ing] of the revenues derived from land that was carvedout of preexisting Indian reservations under the 1887 Act, 391F.3d at 254, was accurate but incomplete. Mitchell II clarifies that the Indian trust corpus consists of [natural resources],lands, and funds. United States v. Mitchell, 463 U.S. 206, 225(1983). Since Cobell XVIII tells us that the alleged conflictbetween prior Court of Appeals opinions in this case isillusory, 455 F.3d at 303, and the Cobell XII passage citedabove explicitly cited the history of the trust laid out inCobell VI, the declaration in Cobell VI that the trust corpusincludes property remains controlling precedent. 
The absence of a verified opening balance and an asset 
statement is the most serious defect in the 2007 Plan. A simple 
illustration explains why this is so. If I demand an accounting 
for funds in my non-interest earning checking account, a list of 
transactions -- credits and debits with supporting 
documentation -- would probably be a sufficient response. 
Presumably, I would have firsthand knowledge that the account was 
indeed opened with, for example, a $500 deposit. By contrast, 
IIM plaintiffs who receive HSAs containing a list of 
transactions, however accurate, will have no ability to 
contextualize those transactions. Beneficiaries are provided no 
records indicating their historical ownership interests. In most 
cases, the source of a beneficiarys funds is a plot of land that 
was carved out of a tribal reservation, allotted to her 
ancestors, and placed in trust. The beneficial interest in that 
land, and perhaps the size of the allotment, likely diminished 
over time (due to fractionation and land sales) as it worked its 
way down to the current beneficiary. Without information tying 
revenue collected to her land ownership, it will be utterly 
impossible for her to determine whether the duties of the trust 
have been faithfully carried out and whether her assets, funds, 
and transactions are correctly stated, and she will be prejudiced 
from enforc[ing] [her] rights under the trust or [] prevent[ing] 
or redress[ing] a breach of trust. RESTATEMENT (THIRD) OF 

TRUSTS  173. That, as I understand it, is the purpose of an 
accounting. 

Relatedly, the proposed accounting falls short of its 
promise to provide beneficiaries reasonable assurance that their 
account balances are accurate, as opening balances are not 
confirmed and the funds are not traced back through predecessor 
accounts. See Tr. 2167:10-16 (Hinkins). The confirmation of 
accurate account balances is surely one of the basic fiduciary 
responsibilities which we would expect out of any trustee, and 
one that the 1994 Act was passed to enforce. 140 CONG. REC. 
H10483, 10488 (1994) (statement of Rep. Synar). Even in its 
letter expressing concern over the estimated cost of the 
accounting in Interiors July 2002 Report to Congress -- at that 
time, $2.4 billion -- the House Committee on Resources qualified 
its request that the agency consider alternative accounting 
methods with the proviso, [c]learly, any such accounting should 
be sufficient to ensure beneficiaries of the trust that they can 
rely on their account balances. 12/9/02 Letter from House 
Committee on Resources Chairman James V. Hansen to Interior 
Secretary Gale Norton, AR-184. 

The basic purpose of a trust accounting -- to provide 
sufficient information for beneficiaries to discover whether the 
trust has been properly administered -- is not thrown into doubt 
by the absence of a uniform definition for the term accounting, 
nor by the unique qualities of the IIM trust. Trust law is 

typically state law, and there is very little federal common law 
that addresses the concept of an accounting. Defendants trust 
law expert Professor John Langbein -- while noting that he was 
not a trust accounting person, Trial 1.5 Tr. 110:18 (Langbein 
6/02/03 PM), but rather an expert on the relative importance of 
statute and common law, id. at 121:22-23 -- stressed that there 
are at least five separate legal definitions of an accounting. 
Trial 1.5 Tr. 87:20-22 (Langbein 6/02/03 PM). The basic 
dictionary definition of an accounting, however, is simple 
enough: it is the report of all items of property, income, and 
expenses prepared by the trustee for a beneficiary. BLACKS LAW 
DICTIONARY (7th ed. 1999) (cited in Cobell VI, 240 F.3d at 1103). 
There may be up to five different definitions of an accounting to 
suit different contexts, but of the five described in Professor 
Langbeins testimony, only two describe the sort of accounting 
plainly contemplated by the 1994 Act. The first is described in 
the RESTATEMENT (THIRD) OF TRUSTS  172, and involves an 
internal audit. Trial 1.5 Tr. 88:1-4 (Langbein 6/02/03 PM). 
The second is described in the RESTATEMENT (THIRD) OF TRUSTS 
 173, and is the sort of accounting to which the Court of 
Appeals has determined plaintiffs are entitled under the 1994 
Act. That section is described by Professor Langbein as 
reporting and disclosure to the beneficiaries, Trial 1.5 
Tr. 88:6 (Langbein 6/02/03 PM), and provides that 

[t]he trustee is under a duty to the beneficiary to
give him upon his request at reasonable times complete
and accurate information as to the nature and amount of 
the trust property, and to permit him or a person duly
authorized by him to inspect the subject matter of the
trust and the accounts and vouchers and other documents 
relating to the trust . . . the beneficiary is always
entitled to such information as is reasonably necessary
to enable him to enforce his rights under the trust or
to prevent or redress a breach of trust. 

RESTATEMENT (THIRD) OF TRUSTS  173. Professor Langbein stresses 

that the reasonableness concept referenced in this section is 

tied to the situational prudence norm, which would take account 

of the governments budgetary restrictions. Langbein Phase 1.5 

Expert Report [Dkt. 3395-2] at 6-7 (citing RESTATEMENT (SECOND) 

OF TRUSTS  174 (1959)). Moreover, the accounting duty described 

in  173, like all other common law trust duties, may be 

abrogated by the trust instrument (in this case, the statutes 

setting forth the governance of the IIM trust). 

To be sure, as Professor Langbein notes, [t]he common 

law of trusts is default law, which yields to the contrary terms 
of the particular trust. Id. at 3. He submits that 
legislation bearing on the trust trumps any invocation of 
common law, id. at 6, and asserts that, if an Act of Congress may 
reasonably be interpreted as overriding common law, it does, even 
if Congress has not expressly abrogated traditional trust law 
duties. Trial 1.5 Tr. 108:14-110:5 (Langbein 6/02/03 PM). It 
was his testimony that various trust law duties yield to 
contrary congressional expression, which is contained in the 

statutes, and which includes in my view funding as well. Trial 

1.5 Tr. 110:3-5 (Langbein 6/02/03 PM). [C]ontrary congressional 

expression, however, cannot be inferred from the subtext of 
appropriations bills without some evidence that Congress 
understood itself to be amending the 1994 Act. Both the canon 
against implied repeal and the canon construing legislation in 
favor of Indians recommend strongly against it. Indeed, 
Congresss own behavior reveals that it never believed itself to 
have accomplished so much: it once derailed this litigation by 
suspending certain accounting activities and giving itself one 
year to clarify the precise accounting duties owed. That action 
reflects congressional awareness that, in order to alter the 
legal entitlements of the beneficiaries arising out of the 1994 
Act, it must do so explicitly. 

In any event, the trial judges ear is more sensitive 
to what the Court of Appeals has said on such matters -- in this 
case to the dicta of Cobell XVII that, while the funds Congress 
has appropriated for historical accounting work cant be 
completely disregarded, the significance of appropriations 
bills is of course limited. 428 F.3d at 1075. The Court, 
indeed, has been strongly cautioned against identifying wholesale 
changes to fiduciary duties in ambiguous congressional 
directives: 

While the governments obligations are rooted in and

outlined by the relevant statutes and treaties, they

are largely defined in traditional equitable terms. 

-160
Where Congress uses terms that have accumulated
settled meaning under either equity or the common law,
a court must infer, unless the statute otherwise
dictates, that Congress means to incorporate the
established meaning of these terms. NLRB v. Amax Coal 
Co., 453 U.S. 322, 329 (1981). Courts must infer that 
Congress intended to impose on trustees traditional
fiduciary duties unless Congress has unequivocally
expressed an intent to the contrary. Id. at 330. 
Much as the Supreme Court has regularly turned to the
Restatement and other authorities to construe trust 
responsibilities, it is appropriate for the district
court to consult similar sources. 

Cobell VI, 240 F.3d at 1099. This case must be governed by 

Congresss plain demand for an accounting of all funds held in 

trust by the United States for the benefit of an . . . individual 

Indian. In its refusal to appropriate enough money to pay for 

such an accounting, Congress has not amended that demand or the 

common law of accounting. What it has done, instead, is to 

render a real accounting impossible -- or, perhaps, to recognize 

that such an accounting is impossible, unless it is nuts enough 

to pay more than $3 billion to hunt down perhaps $3 billion of 

unexplained variances in the governments accounts.19 

19Defendants may object that they are unfairly surprised bymy finding of impossibility, because I resisted plaintiffsinvitation to refer to the October 2007 trial as an impossibilitytrial and have given little weight to plaintiffs impossibilitymodel. See Tr. 9:15-20 (Interiors opening statement). The impossibility issue nonetheless emerges irresistibly from thisrecord as a conclusion of law, not because the 2007 Plan does notoutline the accounting that the plaintiffs believe should beperformed, id., but because the 2007 plan does not, anddefendants cannot, achieve an accounting that passes muster as atrust accounting. 



CONCLUSION 

This case has been in this courthouse for over eleven 
years. A long procession of [judges] has come in and gone out 
during that time. The suit has, in course of time, become so 
complicated that no two lawyers can talk about it for five 
minutes without coming to a total disagreement as to all the 
premises. It has been on my docket for one year, during which 
time I have dismissed persons who were still parties in [the 
suit] without knowing how or why, resolved dozens of motions, 
enforced an attorneys fee award that pre-dated the invasion of 
Iraq, and studied the case enough to be among the few people 
alive [who] know[] what it means. Innumerable children have 
been born into the cause, and, as plaintiffs have reminded us on 
occasion, innumerable old [plaintiffs] have died out of it. I 
held the October 2007 bench trial in order to review defendants 
historical accounting work and to demonstrate that a just 

resolution of this dispute, despite what has been said, is not 

perennially hopeless.20 

My conclusion that Interior is unable to perform an 

21

adequate accounting of the IIM trust does not mean that a just
resolution of this dispute is hopeless. It does mean that a 
remedy must be found for the Departments unrepaired, and 
irreparable, breach of its fiduciary duty over the last century. 
And it does mean that the time has come to bring this suit to a 
close. 

The Court in this case retains substantial latitude, 
much more so than in the typical agency case, to fashion an 
equitable remedy, Cobell XII, 391 F.3d at 257, but the 1994 Act 
does not have language in any way appearing to grant courts the 
same discretion that an equity court would enjoy in dealing with 
a negligent trustee. Cobell XVII, 428 F.3d at 1075. Nor do I 
have the authority to order broad, programmatic reform or to 
provide the agency with a detailed plan of action. Cobell 
XVIII, 455 F.3d at 307. What has been determined to this point 
is that the Department of the Interior has not - and cannot 
20The quotations are from Charles Dickenss opening
description of Jarndyce and Jarndyce in Bleak House. 

21I do not reach the conclusion urged by plaintiffs: that anadequate accounting is impossible because of the problem ofmissing records. The record before me is inconclusive on that point. The record is not inconclusive, however, on the tensionbetween the expense of an adequate accounting and congressionalunwillingness to fund such an enterprise. 
remedy the breach of its fiduciary duty to account for the IIM 
trust. The Clerk is directed to schedule a hearing for about 30 
days after the issuance of this opinion for the purpose of 
discussing a process for determining an appropriate remedy.

 JAMES ROBERTSON 
United States District Judge 

APPENDIX A 
List of Acronyms 

AIRR: American Indian Records Repository

ASM: Accounting Standards Manual

ART: Account Reconciliation Tool 

BIA: Bureau of Indian Affairs (within DOI)

BISS: Box Index Search System

BLM: Bureau of Land Management (within DOI)

CEBA: Competitive Equality Banking Act of 1987

CD&L: Chevarria, Dunne, & Lamey

DCV: Data Completeness Validation

HLIP: High Level Implementation Plan

HSA: Historical Statement of Account 

IBIA: Interior Board of Indian Appeals

IIM: Individual Indian Money

ILCA: Indian Land Consolidation Act of 1983 

IRMS: Integrated Resource Management System

LRIS: Land Records Information System

LSA: Litigation Support Accounting

LTRO: Land Titles Records Office (within BIA)

MMS: Minerals Management Service (within DOI)

NARA: National Archives and Records Administration 

NORC: National Opinion Research Center

OHTA: Office of Historical Trust Accounting (within OST)

OST: Office of the Special Trustee (within DOI)

OTFM: Office of Trust Funds Management (within OST)

OTR: Office of Trust Records (within OST)

RDRS: Royalty Distribution Reporting System

SDA: Special Deposit Account

TAAMS: Trust Asset and Accounting Management System

TFAS: Trust Fund Accounting System

TMIP: Trust Management Improvement Project

TFR: Trust Funds Receivable 

USGS: United States Geological Survey (within DOI)