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[Senate Report 107-138]
[From the U.S. Government Publishing Office]

                                                      Calendar No. 316
107th Congress     }                                     {      Report
                                 SENATE
 2d Session        }                                     {     107-138

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        TO ENCOURAGE THE NEGOTIATED SETTLEMENT OF TRIBAL CLAIMS

                                _______
                                

               February 15, 2002.--Ordered to be printed

                                _______
                                

    Mr. Inouye, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1857]

    The Committee on Indian Affairs, to which was referred the 
bill, S. 1857, to encourage the negotiated settlement of tribal 
claims, having considered the same, reports favorably thereon 
with an amendment in the nature of a substitute, and recommends 
that the bill as amended do pass.

                                purpose

    The purpose of S. 1857, as amended, is to address the 
possibility that the statute of limitations is running or has 
run on legal claims that Indian tribal governments may assert 
against the United States related to the management of tribal 
funds that are held in trust by the United States, as a result 
of reconciliation reports provided to the tribes by the 
Department of Interior in response to Sec. 304 of the American 
Indian Trust Fund Management Reform Act of 1994, P.L. 103-412 
(October 25, 1994) (``AITFMRA''). The bill does not address 
issues relating to Individual Indian Money (``IIM'') accounts.

                               background

    As a function of treaties and the course of dealings 
between the United States and Indian tribes, the United States 
holds legal title to lands held in trust for individual Indians 
as well as Indian tribal governments. The revenues derived from 
trust lands are also held in trust by the United States for the 
benefit of individual Indians and tribal governments.
    In August of 2001, the U.S. General Accounting Office 
reported to the Committee that an independent public accounting 
firm audit of Indian trust funds for fiscal year 2000 showed 
that the Department of the Interior was maintaining 
approximately 1,400 accounts for 315 Indian tribes with assets 
in excess of $2.6 billion, and over 260,000 individual Indian 
money (IIM) trust fund accounts with a balance of $400 million 
as of September 30, 2000.
    Receipts are deposited to these accounts primarily from 
land use agreements, royalties on natural resource depletion, 
enterprises related to trust resources, judgment awards, 
settlement of Indian claims, and investment income. However, 
the audit report noted that reliance cannot be placed on the 
balances reflected in the trust funds accounts until many 
tribal accounts are reconciled and/or resolved through 
negotiation and settlement and class action litigation on 
behalf of the individual Indian money account holders is 
resolved (Cobell v. Babbitt, retitled Cobell v. Norton).
    The Congress first established an Indian trust fund account 
reconciliation requirement in the Supplemental Appropriations 
Act of 1987 (P.L. 100-202) in response to tribal concerns that 
the Interior Department had not consistently provided them with 
statements on their account balances, that their trust fund 
accounts had never been reconciled, and that the Department 
planned to contract with a third party for the management of 
trust fund accounts. The original provision required that the 
accounts be audited and reconciled before the Department 
transferred the responsibility for managing the trust funds to 
a third party. From 1990 to 1995, provisions in the 
appropriations acts for the Department of the Interior added a 
requirement that the accounts be reconciled to the earliest 
possible date and that the Department obtain an independent 
certification of the reconciliation work.\1\
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    \1\ P.L. 101-121 (Department of the Interior and Related Agencies 
Appropriations Act 1990), P.L. 101-512 (Department of the Interior and 
Related Agencies Appropriations Act 1991), P.L. 102-154 (Department of 
the Interior and Related Agencies Appropriations Act 1992), P.L. 102-
381 (Department of the Interior and Related Agencies Appropriations Act 
1993), P.L. 103-138 (Department of the Interior and Related Agencies 
Appropriations Act 1994), P.L. 103-332 (Department of the Interior and 
Related Agencies Appropriations Act 1995).
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    Meanwhile, recognizing that it would be unfair to allow the 
statute of limitations to run on claims until each account 
holder was provided with an accounting, in 1991, the Department 
of the Interior Appropriations Act, P.L. 101-512, included a 
provision stating that: ``the statute of limitations shall not 
commence to run on any claim concerning losses to or 
mismanagement of trust funds until the affected tribe or 
individual Indian has been furnished with the accounting of 
such funds.'' In the appropriations act for the following year, 
through the present, the provision was altered to refer to ``an 
accounting of such funds from which the beneficiary can 
determine whether there has been a loss.''
    To address these requirements, the Department contracted 
with two independent public accounting firms, one to reconcile 
the trust accounts and the other to conduct an independent 
certification that the reconciliation resulted in the most 
complete reconciliation possible. Following a preliminary 
assessment in March of 1992 by the Department's reconciliation 
contractor, the Departmentdecided to have the contractor 
reconcile the tribal accounts for fiscal years 1973 through 1992 and to 
omit accounts for individual Indians from the reconciliation project 
due to the potential lack of supporting documents and the cost and 
level of effort that would be needed to include them in the project. 
Later, the Department charged the Bureau of Indian Affairs with 
reconciling the tribal accounts for fiscal year 1993 through 1995 to 
comply with the American Indian Trust Fund Management Reform Act's 
requirement that the Department provide Indian tribes with reconciled 
account statements as of September 30, 1995.
    In late 1995, the Department of Interior terminated the 
certification contract with Coopers & Lybrand. According to the 
General Accounting Office, however, even completing the 
process, as modified, may not have provided the assurances that 
Congress intended.

          The certification requirement was imposed to obtain 
        independent assurance of the accuracy and reliability 
        of the reconciled balances. After the certification 
        contract was awarded in September, 1993, BIA limited 
        the scope of certification contract to ensure only that 
        the reconciliation effort was performed in accordance 
        with the reconciliation contract. Therefore the 
        certification effort as designed did not address 
        whether the reconciliation provided as complete an 
        accounting as possible, and it would not, in our view, 
        have provided the additional assurance originally 
        contemplated.\2\
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    \2\ GAO, Responses to Questions From June 11, 1996 Hearing, B-
272352 (June 24, 1996).

    In January of 1996, the Department provided a report 
package to each tribe containing the tribes' reconciliation 
results, including unreconciled account statements with 
schedules of proposed adjustments based on reconciliation 
project results for each year covered by the reconciliation, 
and a transmittal letter that described the information 
provided. During a February 1996 meeting at which Interior 
officials and the reconciliation contractor summarized the 
reconciliation results, tribes raised questions about the 
adequacy and reliability of the reconciliation results. The 
U.S. General Accounting Office also reported shortcomings in 
the Interior Department's reconciliation project. [Financial 
Management: BIA's Tribal Trust Fund Account Reconciliation 
Results (GAO/AIMD-96-63, May 3, 1996)]
    Many Indian tribes believe the Department has mismanaged 
their tribal trust fund accounts or have suffered losses to 
their underlying trust lands and resources, and are accordingly 
contemplating the initiation of law suits against the United 
States seeking a full accounting of the funds held by the 
United States on their behalf.
    Although it is not at all clear that the reconciliation 
reports at issue did in fact provide tribes with notice 
sufficient to commence the running of the statute of 
limitations, tribal governments would not want to take the 
chance that their claims would be held to be time-barred, and 
would thus feel compelled to initiate legal action in time to 
prevent the statute of limitations from being applied. These 
legal actions initiated to preserve tribal claims will be filed 
and have been filed in Federal courts across the country, 
thereby holding the potential for multiple adjudications with 
varying and inconsistent results, as well as potentially 
exposing the United States to liability.
    The Committee is concerned that filing of such claims could 
interfere with the opportunity for the United States and tribal 
governments to pursue negotiations for the settlement of tribal 
accounting or resource management claims. During the 105th 
Congress, the Committee held a joint hearing with the House 
Committee on Resources to consider H.R. 3782, which would have 
established a process for settling disputes regarding tribal 
trust fund accounts.
    Since that joint hearing in July of 1998, the United States 
District Court for the District of Columbia issued a ruling in 
Cobell v. Babbitt, which was affirmed by the Court of Appeals 
as Cobell v. Norton in February 2001. The appellate ruling 
explicitly recognizes the United States' responsibility to 
provide an accounting for all funds deposited pursuant to the 
Act of June 24, 1938 (25 U.S.C. Sec. 162a). The court's ruling 
reaffirms the principle that the United States' 
responsibilities as trustee are not merely constrained to those 
established in statutes. In addition, the court concluded that 
``the 1994 Act [AITFMRA] reaffirms the government's preexisting 
fiduciary duty to perform a complete historical accounting of 
trust fund assets.''
    The Committee looks forward to working with the 
Administration to develop a settlement process that is grounded 
in the Cobell court's sound reasoning.

         SUMMARY OF THE AMENDMENT IN THE NATURE OF A SUBSTITUTE

    Under the amendment approved by the Committee, the 
reconciliation reports provided to Indian tribes beginning in 
January of 1996 will be deemed to have been received no earlier 
than December 31, 1999. As a result, even if the United States 
were to assert that a reconciliation report commenced the 
running of the statute of limitations, it would take until 
December 31, 2005 for a six-year statute of limitations to run 
from the date the day the tribe was deemed to have received the 
report. The Committee is aware that in some cases an Indian 
tribe may have received a report more than six years before 
this bill is enacted into law, namely between January 1996 and 
a date six years before the effective date of this legislation. 
Even where this may have occurred, the Committee has received 
assurances that the United States will not assert a defense 
that the statute of limitations has commenced to run at a date 
other than the date the tribe is deemed by this legislation to 
have received the report.
    Both in testimony before the Committee by the Department's 
Associate Solicitor for the Division of Indian Law and in 
discussions with other Departmental Officials, the Committee 
and Committee staff, respectively, were assured that the 
Departments of Justice and Interior were aware that asserting 
such a defense would frustrate the objectives of this 
legislation. Were such a defense to be asserted by the United 
States, it would compel an Indian tribe to file its claims 
immediately. Even if such an argument were to be made, the 
committee is convinced that it has sufficiently addressed this 
question to satisfy even the most exacting standard for 
demonstrating Congressional intent to effect what is arguably a 
retroactive application of this bill as it applies to tribes 
that received reconciliation reports six years or more before 
the effective date of this legislation.
    Subsection (b) of the amendment clarifies the Committee's 
intent in approving the amendment. Because of the Committee's 
acute concern that Indian tribes will be forced to immediately 
file claims to prevent the United States from asserting that 
the statute of limitations has or will run on their claims for 
losses to or mismanagement of their trust funds, the Committee 
has approved a bill which addresses only this discrete issue. 
By including a ``statement of purpose,'' the Committee 
memorializes this limited purpose within the language of the 
provision itself. Because the purpose of S. 1857 is so limited, 
neither the bill nor Congress' action in approving this bill 
should be construed to favor any one of the competing 
interpretations of the provisions of appropriations acts which 
preclude the statute of limitations from commencing to run 
until an Indian tribe has received an ``accounting'' and/or 
``an accounting of such funds from which the beneficiary can 
determine where there has been a loss.''
    The Committee takes no position on whether the receipt of 
reconciliation reports does in fact commence the running of a 
statute of limitations on tribal claims against the United 
states related to the United States' management of tribal trust 
funds.

                          LEGISLATIVE HISTORY

    S. 1857 was introduced on December 19, 2001, by Senator Ben 
Nighthorse Campbell, for himself and Senator Daniel K. Inouye, 
and was referred to the Committee on Indian Affairs. On 
February 7, 2002, the Committee held an hearing on S. 1857. At 
an open business meeting on February 13, 2002, the Committee 
approved an amendment to S. 1857 in the nature of a substitute.

          COMMITTEE RECOMMENDATION AND TABULATION OF THE VOTE

    In an open business session on February 13, 2002, the 
Committee on Indian Affairs, by a voice vote, adopted the 
amendment in the nature of a substitute and ordered the bill 
favorably reported to the Senate, with the recommendation that 
the Senate do pass S. 1857 as reported.

                   COST AND BUDGETARY CONSIDERATIONS

    At the time of filing this report, the cost estimate of the 
Congressional Budget Office on S. 1857 has not yet been 
received. Compliance with Senate Rule XXVI, paragraph 11(a) is 
therefore impracticable at this time.

    SECTION-BY-SECTION ANALYSIS OF AN AMENDMENT IN THE NATURE OF A 
                         SUBSTITUTE TO S. 1857

Section (1). Settlement of tribal claims

    Under the provisions of the American Indian Trust Fund 
Management Reform Act, the Department of the Interior was 
required to provide Indian tribes with reconciliation reports and to 
report to Congress on the status of its efforts.
    Subsection (a) provides that notwithstanding any other 
provision of law, the date an Indian tribe received a 
reconciliation report is deemed to be on December 31, 1999.
    Subsection (b) is a statement of purpose for the bill, 
which indicates that S. 1857, as amended, is intended to 
facilitate the voluntary settlement of tribal claims and to 
enable Indian tribes to forgo the filing of claims against the 
United States for losses to or mismanagement of tribal trust 
funds.

                      regulatory impact statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires that each report accompanying a bill evaluate 
the regulatory paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that S. 1857 will 
have minimal regulatory or paperwork impact.

                        executive communications

    The testimony of the Associate Solicitor for Indian Affairs 
for the Department of the Interior on S. 1857 is set forth 
below:

   Statement of Phil Hogen, Associate Solicitor, Division of Indian 
                  Affairs, Department of the Interior

    Good morning, Mr. Chairman, and members of the Committee. 
My name is Phil Hogen. I am the Associate Solicitor for Indian 
Affairs at the Department of the Interior. Thank you for the 
opportunity to present the Department of the Interior's views 
on S. 1857, and act ``To Encourage the Settlement of Tribal 
Claims.''
    The Department supports the intent of S. 1857, although we 
suggest clarifying changes in order to make the language of the 
bill consistent with the intent. S. 1857 attempts to establish 
a date certain on which the statute of limitations would 
commence to run on claims concerning alleged losses to or 
mismanagement of tribal trust funds. The bill seeks to provide 
the Tribes and the Government with additional time to address 
and determine a process to encourage and facilitate the 
resolution of tribal trust fund mismanagement claims based on 
the results of the Arthur Andersen reconciliation reports that 
were provided to the Tribes in 1996. The proposed legislation 
would also provide Tribes that have already filed litigation 
with a sufficient basis to obtain a stay of their pending 
claims, until the Tribes and the Department have had further 
opportunity to engage in attempts to resolve those claims, 
before resorting to what will almost certainly be expensive and 
burdensome litigation for both sides. We support this approach, 
but recommended the following changes:
    With respect to subsection (a), we recommend that the 
language be amended to state as follows:

         (a) In General.--Solely for purposes of providing an 
        opportunity to explore the settlement of tribal claims, 
        the statute of limitations shall be tolled through 
        September 30, 2003, for any claim not already time-
        barred concerning losses to or mismanagement of tribal 
        trust funds.

This recommended change would obviate the need for the language 
currently found in subsection (b) of the bill. As such, we 
recommend that subsection (b) be deleted.
    Once again, I would like to thank you for the opportunity 
to testify on this legislation. I would be pleased to answer 
any questions you may have.

                        changes in existing law

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that the 
amendment in the nature of a substitute to S. 1857 will not 
effect any changes in existing law.

                                  [all]
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