99–010

Calendar No. 316

107TH CONGRESS REPORT

2d Session " ! SENATE 107–138

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

§ 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

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1P.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).

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

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 Department decided 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

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2GAO, Responses to Questions From June 11, 1996 Hearing, B–272352 (June 24, 1996).

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

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.

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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.

§ 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.

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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 volVerDate 11-MAY-2000 05:19 Feb 16, 2002 Jkt 099010 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\SR138.XXX pfrm01 PsN: SR138
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untary 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.

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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.

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