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S. HRG. 110–71

INDIAN TRUST FUND LITIGATION

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

ON

OVERSIGHT HEARING ON INDIAN TRUST FUND LITIGATION 

MARCH 29, 2007

WASHINGTON, DC

(

COMMITTEE ON INDIAN AFFAIRS 

BYRON L. DORGAN, North Dakota, Chairman 

CRAIG THOMAS, Wyoming Vice Chairman 

DANIEL K. INOUYE, Hawaii 

KENT CONRAD, North Dakota 

DANIEL K. AKAKA, Hawaii 

TIM JOHNSON, South Dakota 

MARIA CANTWELL, Washington 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

JOHN McCAIN, Arizona 

PETE V. DOMENICI, New Mexico 

GORDON SMITH, Oregon 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

TOM COBURN, M.D., Oklahoma 

SARA G. GARLAND, Majority Staff Director 

DAVID A. MULLON JR. Minority Staff Director 

(II) 

(III)

C O N T E N T S 

Page 

Statements: 

Bickerman, John, Bickerman Dispute Resolution ......................................... 13

Cobell, Elouise, lead plaintiff, Cobell v. Kempthorne; accompanied by 

Keith Harper, Partner, Kilpatrick Stockton, LLP and James Otis 

Kennerly, Jr., individual Indian trust account holder ............................... 24

Dorgan, Hon. Byron L., U.S. Senator from North Dakota, chairman, 

Committee on Indian Affairs ....................................................................... 1

Echohawk, John, executive director, Native American Rights Fund ........... 26

Kempthorne, Dirk, secretary, Department of the Interior; accompanied 

by James Cason, associate deputy secretary .............................................. 4

Martin, William, vice chairman, Intertribal Monitoring Association on 

Indian Trust Funds and first vice president, Central Council of the 

Tlingit and Haida Indian tribes of Alaska .................................................. 28

Mercer, William W., acting associate attorney general, Deprtment of Justice .................................................................................................................. 12

Tester, Hon. Jon, U.S. Senator from Montana ............................................... 4

Thomas, Hon. Craig, U.S. Senator from Wyoming, vice chairman, Committee on Indian Affairs ............................................................................... 3

APPENDIX

Prepared statements: 

Bickerman, John (with attachment) ............................................................... 40

Cobell, Elouise .................................................................................................. 56

Echohawk, John (with attachment) ................................................................ 70

Enos, Diane, president, Salt River Pima-Maricopa Indian Community ...... 99

Juan-Saunders, Vivian, chairwoman, Tohono O’odham Nation (with attachment) ....................................................................................................... 108

Kempthorne, Dirk (with attachment) ............................................................. 121

Martin, William ................................................................................................ 157

Mercer, William W. (with attachment) ........................................................... 226

Miles, Rebecca A., chairman, Nez Perce Tribal Executive Committee ........ 179

Renfrew, Charles (with attachment) ............................................................... 40

Stensgar, Ernest L., president, Affiliated Tribes of Northwest Indians ...... 37

Thomas, Hon. Craig, U.S. Senator from Wyoming, vice chairman, Committee on Indian Affairs ............................................................................... 37

Additional material submitted for the record: 

Antonio, John, Governor, Pueblo of Laguna, Laguna, NM [letter] .............. 188

Carlyle, Delia M., chairman, Ak-Chin Indian Community, Maricopa, AZ 

[comments] .................................................................................................... 191

Colegrove, Nolan, Sr., president, Intertribal Timber Council, Portland, 

OR [comments] .............................................................................................. 194

Garcia, Joe A., president, National Congress of American Indians,Washington, DC [resolution] ................................................................. 207

Pesata, Levi, president, Jicarilla Apache Nation, Dulce, NM [letter] .......... 210

Shelly, Ben, vice chairman, Navajo Nation [letter] ....................................... 215

Suazo, Sr., Gilbert, Governor, Taos Pueblo, Taos, NM [letter] ..................... 223

(1)

INDIAN TRUST FUND LITIGATION 

THURSDAY, MARCH 29, 2007

U.S. SENATE, COMMITTEE ON INDIAN AFFAIRS, Washington, DC. 

The committee met, pursuant to notice, at 9:15 a.m. in room 485 

Senate Russell Office Building, Hon. Byron L. Dorgan, (chairman 

of the committee) presiding. 

Present: Senators Dorgan, Tester, and Thomas. 

STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM 

NORTH DAKOTA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS 

The CHAIRMAN. Good morning. I want to begin now. I am going 

to make a brief opening statement, call on the secretary and others 

to testify, and we will likely have to have a recess, for which I 

apologize, but we don’t have much choice. 

Today’s hearing will focus on the Administration’s proposal to 

settle the Cobell v. Kempthorne lawsuit, settle the 108 tribal lawsuits that are now pending, eliminate land fractionation in Indian 

country, and convert the Indian Trust into an owner-managed 

trust. I say it will focus on the Administration proposal, it recommends these issues. 

We will hear initial responses to the Administration’s proposal 

from Elouise Cobell, the lead plaintiff, from mediators in the case, 

and two organizations that represent Indian tribes who have 

brought similar trust mismanagement cases against the Federal 

Government. 

Senator Thomas, I just began a statement. I indicated to them, 

it looks like we will have a minimum of three votes, and perhaps 

more, so we will be required to recess at some point. So let me finish my statement. I will call on you for any additional statement, 

then we will have the secretary begin, if that is satisfactory to you. 

Senator THOMAS. Fine. Or I can go vote and come back, or whatever. The vote is going on right now. 

The CHAIRMAN. Did they just start? Well, we have a minimum 

of three votes, and the second two will be 10 minute votes, I understand. So it would probably be hard for us to have a continuous 

session. 

Let me finish my statement, call on you, and then we will decide 

how we proceed. 

The issues surrounding the management of the trusts have existed since the trusts were first created in 1887. At that time and 

since, the Federal Government believed that Indians were not comVerDate 0ct 09 2002 12:57 Jul 23, 2007 Jkt 034405 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\DOCS\34405.TXT JACKF PsN: JACK
2

petent to manage these trust themselves. Therefore, the Federal 

Government as trustee would do so. It turns out the Federal Government was not capable of managing the trust accounts over the 

last century plus. 

These management duties included the Federal Government negotiating leases for the use of lands owned by individual Indians 

and tribes; collecting revenues generated from those leases; creating trust accounts for those revenues; and depositing the moneys 

into those accounts; investing those moneys; and finally, distributing those moneys to proper beneficiaries. 

Congress delegated these trust duties to Federal agencies, and as 

the Federal courts have held several times in the Cobell case, the 

agencies have done a poor job. In 2001, the Court of Appeals noted 

the following:

The Federal Government does not know the precise number of individual Indian 

trust accounts that it is to administer and protect. The Federal Government does 

not know the proper balances for each individual Indian trust account, and the Government does not have sufficient records to determine the value of each individual 

Indian trust account.

In 2005, the Federal Court of Appeals affirmed that it is not disputed that the Government failed to be a diligent trustee, and 

noted that in the 2 decades leading up to the Cobell lawsuit, report 

after report denounced the Government’s management of individual Indian trust accounts. Congress should not be surprised, 

then, by the court’s conclusions. There have been numerous reports 

since 1915 to the U.S. Congress describing some of these problems 

in the management of Indian trusts. These reports have described 

horrible conditions surrounding the management of the trusts. 

I would like to show a couple of examples. I have three photographs that show the storage at Fort Berthold and Fort Totten 

Agency of these documents surrounding the trusts. You will see 

from the photographs the type of storage that exists, and why the 

court has found the conclusions they have found. 

So now we find ourselves in a very significant predicament. The 

Cobell v. Kempthorne case is in its 11th year of litigation, with no 

end in sight. The Federal courts have continued to find the Government in breach of our fiduciary responsibilities and duties. The Department of the Interior is now conducting a costly and time-consuming accounting of individual Indian trust accounts. 

The legality and the adequacy of this accounting will likely be 

litigated for years once it is completed. The case has resulted in numerous cabinet officials being held in contempt; the BIA and other 

parts of Interior going years without access to the internet; several 

hundred millions of dollars spent so far on litigation and related 

activities. 

The case clearly, it seems to me, is a dark cloud over the trust 

relationship between the Federal Government and the Indians, and 

will continue to be until there is a reasonable solution. Mrs. Cobell 

had every right to bring the lawsuit. She was justified in doing so. 

There is no dispute about the Federal Government’s liability. The 

only remaining question is how to value the Federal Government’s 

liability. 

Currently, the Department of the Interior is doing a historical accounting of the individual trust accounts. This is supposed to be indicative of the value of the Government’s mismanagement of the 

3

trusts. But there is a huge difference between the accounting being 

done by the Interior versus the accounting that the Federal District 

Court thought was adequate. Photograph 4, if it will be shown, 

shows some of the key differences between the Government accounting approach and the approach that the Federal District 

Court believed to be legally adequate back in 2003. 

The key difference is cost. The Government’s plan would cost $335 million, while the District Court’s plan would cost $6 billion 

to $13 billion. Another key difference is the actual trust accounts 

that will be provided an accounting. The Government plans to provide an accounting for those accounts that were open on or after 

October 31, 1994. The District Court’s plan would have required 

the Government to do an accounting for all accounts that ever existed since 1887. 

Given the limited scope of the Government’s accounting effort, I 

worry that the results of the accounting effort will be litigated for 

years, and not produce an end that is justified. I raise these issues, 

and I wanted to make a longer opening statement because I want 

everyone to know how important the settlement of this issue is. If 

there is no settlement, this case will continue for probably more 

than a decade, in addition to the 11 years that has already elapsed. 

I would like to see a settlement of the Cobell lawsuit and an end 

to the injustice that has been dealt to individual Indians. I would 

like to see the Government’s attention focused on the other issues, 

Indian health care, education, housing for which we hold hearings 

in this committee. But it is difficult to focus on all of those issues 

when so many resources are spent on litigation, and when this liability overhangs the Federal Government. 

For 4 years, Congress has considered ways to settle all or part 

of the Cobell legislation. In 2003, this committee urged the parties 

to participate in mediation. Mediators were chosen by the plaintiffs 

and the Government in early 2004, and within 6 months the mediators realized that a negotiated resolution was impossible. Both 

mediators agree that only congressional action can resolve this dispute. We will hear more about the mediation process today from 

John Bickerman. 

The Administration has now submitted a global settlement proposal that goes far beyond the claims at issue in the Cobell lawsuit. 

Congress, who is the ultimate trustee to the Indians, must now decide what role, if any, it will continue to play in trying to formulate-some kind of a reasonable settlement. Otherwise, I believe this 

case will languish, more breach of trust cases will be brought, the 

Department of Justice will be turned into the Department of Liability, a whole lot of plaintiffs, many in this lawsuit, will long be dead 

before the lawsuit is ever resolved. 

My hope is that we can find through this process some constructive way to address the grievances, to right the wrongs, to provide 

a just settlement. 

With that, I conclude my statement and call on Senator Thomas. 

STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM 

WYOMING, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS 

Senator THOMAS. Thank you, Mr. Chairman. I won’t do my statement right now. I think we are going to have to work out how we 

4

are going to make the vote. It is important to have this hearing. 

I simply want to welcome the secretary here and I look forward to 

the witnesses. 

[Prepared Statement of Vice Chairman Thomas appears in appendix.] 

The CHAIRMAN. Let me say, Senator Tester, we apparently have 

4 minutes left in this vote. So we, despite all of our best intentions, 

are going to have to go cast this vote. It appears as if there will 

be two votes following, so I think it will be a minimum 30-minute 

recess. We will be back as soon as we can. We apologize for the inconvenience to the witnesses and to all of those who have gathered. 

Senator Tester. 

STATEMENT OF HON. JON TESTER, U.S. SENATOR FROM 

MONTANA 

Senator TESTER. First of all, I want to welcome Elouise Cobell. 

I want to welcome James Kennedy, Mayor Kennedy; and Bill Mercer. I welcome you all to this committee meeting. 

I want thank you, Mr. Chairman, for holding this committee 

meeting. I found out about the Cobell situation, oh, it has been 

probably nearly 2 years ago, and I can’t agree with you more, Mr. 

Chairman. It is time to get everybody in the same room. It is time 

to find a constructive solution to this problem. It is not going to get 

better with time, and that is just my perspective. It needs to be 

fixed sooner, rather than later. 

So with that, thank you very much. 

The CHAIRMAN. The committee will stand in recess until 10 

o’clock. 

[Recess.] 

The CHAIRMAN. The hearing will come to order. 

Our profound apologies, Mr. Secretary, Mr. Bickerman and others for the inconvenience. It turned out there were far more votes 

and they were 10 minute votes and there was simply no way to 

come back and forth. So thank you very much for your patience. 

Mr. Secretary, I know you have a full schedule, so let me recognize you to begin and offer us your statement. If there are any 

questions, we will ask them and then allow you to depart. 

Mr. Secretary, thank you. 

STATEMENT OF DIRK KEMPTHORNE, SECRETARY, DEPARTMENT OF THE INTERIOR, ACCOMPANIED BY JAMES CASON, 

ASSOCIATE DEPUTY SECRETARY 

Mr. KEMPTHORNE. Mr. Chairman, thank you very much. Thank 

you for your courtesy. I fully understand the dictates of the Senate 

schedule and votes, having lived that life for some time. 

Mr. Chairman, I appreciate both the opportunity to be here 

today, but also the opportunities that I have had to have conversations with you about this issue. It is an issue that is particularly 

important to the Department of the Interior and to Indian country. 

As our March 1, 2007 letter states:

The Administration strongly supports a comprehensive legislative package to resolve the issues facing us today with regard to the Indian land trusts.

5

I have attached my statement, the 1 page summary of the key 

facets the Administration believes are necessary to acceptable Indian trust reform and settlement legislation. 

On June 13, 2003, then-Chairman Campbell and Vice Chairman 

Inouye sent a letter to tribal leaders asking for their help in attacking three major tasks that would include the management of the 

Indian trusts. The three items were: No. 1, stop the continuing 

fractionation of Indian lands and focus on the core problems of Indian probate by swiftly enacting legal reforms to the Indian probate statute. 

No. 2, to begin an intense effort to reconsolidate the Indian land 

base by buying small parcels of fractionated land and returning 

them to tribal ownership. And number three was to explore creative, equitable and expedient ways to settle the Cobell v. Norton 

lawsuit. 

We agree that these are priorities for bringing a solution to the 

issues facing the Indian trusts today. We would ask settling tribal 

trust lawsuits as well. The Administration strongly supports a comprehensive legislative package designed to strengthen the partnership between the Federal Government and American Indians. 

To achieve these goals, the Administration supports providing up to $7 billion over a 10 year period. I believe it is time for the Administration and Congress to tackle an issue that has been raised 

by a commission, a task force, a commission for almost 100 years. 

First, the overwhelming finding of almost every task force and 

commission that has looked at Indian economic issues say that a 

viable tribal land base is essential. The Indian Reorganization Act 

of 1934 halted further allotments and extended indefinitely the 

trust status of the allotted lands not yet patented. As a result, individual Indian allotments still held in trust have passed, through 

the generations, as increasingly smaller fractionated interests. 

Since 1934, time and again witnesses have come before this Congress to detail the problems that have arisen as a result of the fractionation. Specifically, as each generation inherits interests in 

these lands, more and more individuals hold interests in one parcel 

of land. Today, we have allotments of 40 and 80 acres, with more 

than 1,000 ownership interests. 

What this means for Interior is that we manage each of these individual interests. When its owner dies, we oversee the distribution 

of the owner’s interests. In 2000, then-Assistant Secretary of Indian Affairs Kevin Gover said that he is an account holder, having 

inherited one twenty-seventh of his grandfather’s share of land. He 

had 7 cents in his account when it opened. It had 8 cents in 2000. 

He told the interviewer he gets quarterly statements and that it 

cost the Government $435 a year to maintain his account. This is 

not a rare occurrence. In fact, we have tens of thousands of similar 

accounts. The cost of maintaining the accounts exceeds the value 

of the trust assets being managed. 

Think about what else we could be spending that money on, Mr. 

Chairman. Just as you pointed out, I totally agree with you. The 

opportunities to invest in Indian education, fighting 

methamphetamines, Indian health issues, Indian housing issues. 

The logical answer to this problem is that we must take a far more 

aggressive stance on consolidating these interests and then turn 

6

over the management of these Indian lands to Indians. That is 

what the Administration is trying to accomplish. These owner-managed lands would still stay in Indian ownership. They would still 

be exempt from State taxation. They would still be Indian country 

for purposes of tribal jurisdiction. With Indian owners become empowered to make the decisions on land use and leasing, the broad 

paternalistic roles of the Bureau of Indian Affairs [BIA] and the Office of the Special Trustee can be reduced significantly. 

We recognize that many of the parcels of individual Indian land 

are so highly fractionated that it would be unfair to convert them 

to an owner-managed status at this point. That is why our proposal 

includes an element that would provide us with the tools to consolidate these interests before they are converted. We propose including in trust reform legislation both voluntary mechanisms and 

mandatory authority to consolidate highly fractionated parcels. 

In addition, our proposal includes incentives to enable individual 

Indian landowners to undertake property management sooner, 

rather than later. 

I have heard our proposal described as ‘‘termination’’ of the trust. 

Clearly, it is not. That policy was squarely repudiated in 1970 and 

replaced with the policy of self-determination. The policy that 

guides our relationship with tribes today. We have seen great 

progress in this regard. This is what NCAI President Joe Garcia 

said in January of this year in the fifth annual State of Indian Nations Address:

As tribes take on major responsibilities, we find that we need to improve the way 

our tribal governments function. Today, tribes are governments with budgets and 

responsibilities comparable to State governments, and we have become more selfsufficient than we were in the past. As I traveled the country in the past year, I 

heard from many tribal leaders about their efforts to improve the effectiveness of 

their governments. Too often tribes are saddled with federally-imposed models of 

governance that do not fit our traditions and cultures. It is time to address the barriers caused by these mismatched governments.

He went to say:

Many of the Federal policies that many of the Federal policies that impact tribal 

economic development were put into place at a time when tribal governments did 

not have the capacity that we have today. These policies need to be revisited and 

tribal governments need to be given the same tools for economic development that 

exist for other governments.

I couldn’t agree with President Garcia more. Not only must we 

change our mindset about the management of individual Indian 

land, but we must change it with respect to tribal land as well. 

Frankly, I am troubled by a statutory and regulatory paradigm 

that places Interior employees in the position of second guessing 

management decisions tribal governments make regarding their 

lands. 

As a Governor of a western State, I had the opportunity to work 

closely with the Indian tribes in the State of Idaho. As those of you 

on the committee with Indian tribes in your States know, tribes 

have made great strides in the last 30 years under the policy of 

self-determination. Today, Indian tribes are full service governments, offering Indians and non-Indians alike a broad range of 

services. 

As most of you know, it was President Richard Nixon who ushered in the policy of self-determination for Indian tribes and Indian 

7

people. I would like to share just a couple of excerpts from his famous special message on Indian Affairs dated July 8, 1970:

We must assure the Indian that he can assume control of his own life without 

being separated involuntarily from the tribal group. And we must make it clear that 

Indians can become independent of Federal control without being cut off from Federal concern and Federal support. But most importantly, we have turned from the 

question of whether the Federal Government has a responsibility to Indians, to the 

question of how that responsibility can best be furthered. We have concluded that 

the Indians will get better programs and that public monies will be more effectively 

expended if the people who are most affected by these programs are responsible for 

operating them.

Mr. Chairman, we have an opportunity to work together to address several significant issues that are impediments to progress in 

Indian country. We need to address the potential for years of litigation. We need to restore the economic value of individual Indian allotments through land consolidation. We need to move beyond a 

century of well-meaning paternalism to recognize an Indian country capable of managing its own affairs if only we would let them. 

Mr. Chairman, I look forward to working with you, the vice 

chairman and the members of the committee, and the leadership 

in Indian country to find a solution to this. Mr. Chairman, I believe 

you have made a very telling point, and that is that if we continue 

the path of litigation, the issue will outlast virtually all of us who 

are in this room today. But if we can find a settlement, then I believe that we can finally have a path forward that many people will 

benefit from, in particular Indian country. 

Thank you very much. 

[Prepared statement of Mr. Kempthorne appears in appendix.] 

The CHAIRMAN. Mr. Secretary, thank you very much. 

Senator Thomas. 

Senator THOMAS. Thank you, and thank you for your patience. 

Voting is something that interrupts our lives around here. 

Mr. Secretary, what is the status of the court order that was estimated to cost $6 billion to $13 billion? 

Mr. KEMPTHORNE. Mr. Vice Chairman, the status of that is that 

to date we have spent $250 million on this historical accounting 

practice. We anticipate that for the foreseeable future, some $56 

million per year would allocated so that we would continue this effort. I would point out, too, if I may, Mr. Chairman with your indulgence, if I might go into a little bit of detail of what we have 

thus far been able to determine with that $250 million that has 

been expended. 

The CHAIRMAN. Without objection. 

Mr. KEMPTHORNE. In a $20-million examination, we did, of the 

five named plaintiffs in the Cobell case and the predecessors, we 

looked at 12,500 transactions. We found net overpayments of 

$3,250. Looking at judgment accounts, we have 77,818 of those. We 

have reconciled 84 percent of those accounts, totaling $413 million, 

and found a net underpayment of $19,100. We have reconciled 92 

percent of our capital accounts, totaling about $182 million. We 

found a net overpayment of $2,700. 

The litigation support accounting project is looking at the accuracy of land-based individual Indian money accounts, and reconciles all high dollar accounts, which would be $100,000 or greater 

transactions, and does a statistical sample of smaller value, those 

8

that are less than $100,000 transactions, drawn from 1985 to 2000 

land-based IIM accounts nationwide. 

For the high dollar transactions, we have reconciled $483 million so far. We found a total net of $667 in overpayments. That is out 

of $483 million. For the statistical sample, we have looked at 4,480 

transactions totaling $4.89 million and found a net overpayment of 

$1,194. 

Mr. Vice Chairman, the Department is fully prepared to continue 

the historical accounting. We believe that we have the tools necessary to do so, including the records. 

Senator THOMAS. Thank you, Mr. Secretary. That is basically my 

question. 

The CHAIRMAN. Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. 

I apologize for being late, so I wasn’t able to hear all of your testimony, Secretary Kempthorne. So if this is repetitive of what you 

said in the beginning, let me know. 

My question revolves around money that I think is being offered 

to be allocated to Indian country in this 110th Congress, and there 

being some, I don’t know, some language around that, maybe not 

formally, but at least what I am hearing in the halls, some of this 

money is going to be allocated for purposes of the Cobell suit. In 

fact, maybe even the perspective is do we settle with Cobell.

I have two questions. No. 1, I envision the suit being settled by 

everybody getting in the same room and figuring out how to settle 

it, and there being some remuneration toward that settlement. So 

do you anticipate that being done? 

No. 2, what is it about the money? Is this real? I mean, I am 

hearing, I think $7 billion was tossed around. To my understanding 

is that, well, I don’t know if that is adequate or not. I am not here 

to say that that is adequate, but there have been figures of $200 

billion being thrown around for the settlement of the Cobell suit. 

So is that figure something that has been agreed upon between 

Elouise Cobell and the department, or tribal members and the department? Where did this come from? 

Mr. KEMPTHORNE. Senator Tester, I appreciate your question. The $7 billion is in a letter which was sent to the chairman and 

to the vice chairman, signed by both the attorney general and myself. It is a figure, $7 billion, that has been derived through a process working with the Department of Justice on their view of litigation risk on the Department of the Interior and the Office of Management and Budget. 

I think what is most important, Senator, is the fact that for the 

first time ever on this issue that the Administration has come forward. We have said that we would like to see a conclusion. For the 

first time ever, the Administration has put a dollar figure on the 

table. It is $7 billion. 

To follow through to the nature of your question, how that might 

be identified and what the thoughts may be, there are four major 

elements in that figure that we derived. The first is to settle the 

Cobell case and any other future cases related to management of 

individual Indian lands or assets that stem from the lands. 

The second is to settle similar tribal cases. It is also to provide 

mechanisms and money for land consolidation, which we think is 

9

absolutely important, so that individual Indian land becomes more 

economic and is put to its best use. And also then in converting Indian lands that are tied to a status where they are owner-managed. 

So this is the suggested approach by the Administration with a 

dollar amount attached to it. 

Senator TESTER. Okay. I am not going to really talk about the 

three or four items you talked about, the settlement of the case and 

other items. What I do want to ask, and I will just add this one 

more questions, the Department of Justice and Interior and Office 

of Management and Budget were the ones who came up with the 

figure. This wasn’t arbitrarily done because you had some standards, but my question is, inclusion also means you have to bring 

the folks in who filed the suit. Were they brought in as part of the 

discussion? 

Mr. KEMPTHORNE. Senator, this is a proposal that has been 

brought forward by the Administration. 

Senator TESTER. Okay. Has there been any dialog with Cobell? 

Mr. KEMPTHORNE. Senator, there has been. I will tell you that 

there has not been by myself personally, having been in this position for 10 months. But in the 11 years, there have been at least 

two different efforts at arbitration. I believe one of the individuals 

who was tasked with that responsibility is here on the panel and 

will be addressing that. 

Senator TESTER. And if any of these questions can be answered, 

they are the members of the panel that have further information 

that I would like to have. It just seems to me that that is a critical 

component we may be missing in this whole thing. 

Thank you. 

The CHAIRMAN. Mr. Secretary, first of all, I agree with you that 

the fact that the Federal Government has propositioned that there 

is a potential $7 billion liability here is a very significant step, because the Federal Government has not previously indicated that 

kind of liability, with the exception of the Attorney General who I 

think testified in another venue that the potential liability could be 

$200 billion, as I understand it. I will ask Mr. Mercer about that. 

But Mr. Cason previously, and Ross Swimmer, testifying have indicated that the exposure is limited to less than $500 million perhaps. And so this is a significant change. 

But let me respond to the details you were talking about with 

respect to the survey of the information that leads you to a certain 

conclusion. My understanding is that the analysis conducted by the 

department was focused on per capita accounts for the periods for 

which electronic records were kept, roughly 1985 to present. And 

these accounts are a very small fraction of the total accounts, and 

they are the ones that are the most easily administered. In short, 

they are not representative. In fact, I am quoting from Mr. 

Bickerman’s testimony now: ‘‘This analysis is not representative of 

the potential claims.’’

I do want to show, if I can, photograph 2 and 3 again. My understanding as I show this is that there is a new repository, a new 

facility in Kansas, the American Indian Records Repository, and if 

I showed a picture of that we would see a very nice repository of 

records that are kept in perfect order. 

10

But the question is, what kind of records went to the new repository, when this is a picture of the records at the Fort Totten Agency. Take a look at that, and ask yourself, what do you think somebody gleaned from that? And then we show the second picture, the 

second photograph. The reason I show these is to demonstrate how 

unbelievably inept the keeping of these records were, and why I 

said at the start of this that Mrs. Cobell and others as plaintiffs 

had every right to file a suit and to be very concerned about this. 

The circumstances it seems to me, and thank you for the photographs, are what has been the error rate and what interest rate 

do you use over a period of well over a century in order to try to 

calculate some kind of settlement here. I want to ask you specifically, Mr. Secretary, the Administration settlement proposal goes 

well beyond the circumstances of the Cobell lawsuit. 

I don’t disagree at all that fractionation is a very serious problem 

and we have to find a way to fix it, perhaps even in these circumstances. But the proposal includes a settlement of tribal claims 

and the conversion of Indian trust into owner-managed trusts. In 

your remarks, first of all, you indicated these issues are requirements for any settlement legislation. 

My question is, first of all, we don’t even know the extent of the 

tribal claims really. Isn’t that right? And I think that probably 

gave rise to the attorney general testifying previously in another 

venue in Congress that potential liability may be up to $200 billion. 

But to require the Cobell case be settled in conjunction with all 

tribal claims, the universe of which we don’t even know, is I think 

one that probably means that it cannot be settled under those circumstances. 

So the question is, would the Administration remain supportive 

of a settlement at some level if some but not all of the issues in 

the Administration’s settlement proposal are included in a legislative bill? 

Mr. KEMPTHORNE. Mr. Chairman, because, as has been pointed 

out, this issue has been going on for virtually a century, we believe 

this is an opportunity based on the actions brought forward by Ms. 

Cobell. To reach a settlement, and because of the issues that are 

both individual related and tribal related are interrelated, we believe that this is an opportunity for us to look at all of these issues 

and how they do relate to one another so that we don’t expend the 

resources, the time of the last 11 years and solve just one component part, and then continue what may be another decade or two 

decades to take each next component part. 

If in fact this is an opportunity, with your leadership, and the 

leadership of others that have been involved with this, and see if 

on our watch we can find a solution, that is our preference. 

The CHAIRMAN. Are the tribal claims an essential requirement 

for the Administration in terms of resolving this? Let me tell you 

why I ask that question. Mr. Bickerman, as you know, was one of 

the two mediators. Both mediators worked at great length and 

tried very hard to find a resolution, and could not. But Mr. 

Bickerman in his testimony today says that more time and analysis 

will not yield a result that is more precise or less arbitrary. He 

talks about a number in the range of $7 billion to $9 billion to setVerDate 0ct 09 2002 12:57 Jul 23, 2007 Jkt 034405 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 S:\DOCS\34405.TXT JACKF PsN: JACK
11

tle the Cobell litigation can be supported by available data using 

reasonable economic assumptions. 

But Mr. Bickerman’s proposition here of the $7 billion to $9 billion settlement does not include an analysis or any attempt at an 

analysis of the tribal claims, which are a completely separate set 

of issues. 

Mr. KEMPTHORNE. I appreciate that, Mr. Chairman. We would be 

very interested to see what his analysis is, Mr. Bickerman’s, and 

how he derived those figures. That would be part of this. But at 

the Administration, it would be our hope and our intent that we 

could find a solution to these issues concerning Indian country, individual and tribal, and put them together so we can have a resolution that would be a path forward for Indian country. 

The CHAIRMAN. Mr. Secretary, I have a list of questions I want 

to submit to you, because we would like to exchange on the record 

answers to a series of inquiries. We regret very much the 1 hour 

and 45 minute delay that could not be avoided. Because you are 

a former member of the U.S. Senate, you understand that. But I 

am going to let you go, and thank you very much for being here, 

and say this. I think on behalf of Senator Thomas, myself and 

other members of this committee, we really want to continue the 

discussion that starts with this hearing to see if there is a way to 

resolve this issue, because it casts a shadow over virtually everything else that we are doing. It is going to take a substantial 

amount of resources. It is also going to mean a fair number of people are going to die before there is a result if this continues in the 

court system for 10 years. 

I want to continue in an aggressive way to work with you and 

with everyone involved in these issues to see if there is a way to 

solve this, to settle it, in a manner that is fair to the plaintiffs and 

in a manner that is fair to the Federal Government, without requiring that other issues be resolved attendant to it, for which we 

don’t have adequate information. 

So Secretary Kempthorne, thank you very much for being with 

us today. 

Senator Thomas. 

Senator Tester? Anything else? 

Senator THOMAS. No; I think I have a couple of questions, too, 

Mr. Secretary, that we will submit. 

The CHAIRMAN. We will submit that. And Mr. Cason will remain, 

I expect? 

Mr. Secretary, thank you very much. 

Mr. KEMPTHORNE. Mr. Chairman, thank you very much. I appreciate again your reaching out as you are in this leadership capacity, and the vice chairman. We would like to see the resolution. As 

you point out, we may not know all of the answers. As I have gone 

into more and more detail on this, to try and understand the last 

11 years of the history, to see how complicated it is, the fact that 

now have some 300 million pages of documents such as you have 

reflected in that picture. In 1999, yes, that is where they were, but 

now they are in one of the state of the art archival retrieval programs. 

12

Therefore, again we believe now that while we have done a sample, we now can go forward with about 99 percent of the records 

that exist. 

So Mr. Chairman, again, I except the atmosphere that you have 

established here, and we look forward to being a full part of it. 

The CHAIRMAN. Mr. Secretary, thank you very much. 

Mr. KEMPTHORNE. Thank you. 

The CHAIRMAN. Next, we will hear from the two additional witnesses on this panel: William Mercer, acting associate attorney 

general at the Department of Justice. I know Mr. Mercer had some 

other engagements this morning which probably have fallen by the 

wayside. We appreciate your patience as well. 

And then we will hear from John Bickerman, who was one of the 

mediators. 

Mr. Mercer, why don’t you proceed? Your entire statement will 

be made a part of the record, and we would ask you to summarize. 

STATEMENT OF WILLIAM W. MERCER, ACTING ASSOCIATE 

ATTORNEY GENERAL, DEPARTMENT OF JUSTICE 

Mr. MERCER. Good morning, Mr. Chairman and Mr. Vice Chairman and Senator Tester. 

As you know, Attorney General Gonzales and Secretary Kempthorne recently proposed resolution to a group of Indian trust 

issues and offered to spend up to $7 billion implementing that proposal. I know that the committee is very familiar with these issues, 

so I won’t spend too much time on the history of these problems. 

The Cobell and tribal trust cases and trust management issues 

more generally have taken up a great deal of the committee’s time 

in recent years, as well as the time of the executive branch agencies and the courts. In fact, the Washington, DC Circuit Court of 

Appeals has emphasized how time consuming this litigation has 

been in the courts, and urged the parties to come together and find 

a resolution. That is what we have tried to do in developing our 

legislative proposal. 

As Secretary Kempthorne has already discussed, our legislative 

proposal does more than settle the pending litigation. It also addresses the structural problems that give rise to the litigation, with 

the goal of getting individual Indians and tribes more control over 

their lands and resources. I want to say at the outset that we will 

work together to put together a proposal that is fair and equitable. 

Our proposal is to settle litigation claims, so it needs to provide 

just compensation for those claims of individual Indians and to Indian tribes. 

At the same time, it is not fair to ask the taxpayer to pay more 

in settlement than plaintiffs would receive in court. The Department of the Interior’s ongoing review of these accounts and of the 

historical record continues to confirm that the rate of error in these 

trust accounts is low. The United States also has a number of defenses in these cases and we are prepared to present those defenses 

in court should the litigation continue. 

That said, we strongly support the legislative settlement which 

we believe is in the best interests of all the parties involved. These 

complex historical cases are not well suited to be handled by 

courts. The Cobell litigation has been underway for 11 years so far, 

13

and the tribal cases before the Indian Claims Commission were not 

resolved for over 30 years. The process of analyzing and reading 

millions of pages of historical records relating to individual and 

tribal accounts is still ongoing and promises to be very costly. 

Those costs are a deadweight loss to the plaintiffs and the taxpayers. Everyone benefits if these claims are resolved without the 

costs and litigation, and with the moneys going to individual Native Americans and tribes, and to otherwise advance reform. 

A settlement will also provide a prompt and definite payment to 

individuals and tribes. By contrast, litigation could take many 

years and some plaintiffs will ultimately receive no recovery. 

To realize these benefits, any resolution must provide finality; 

otherwise the benefits of settlement and perhaps the settlement 

money itself could be swallowed up in unnecessary litigation. Thus, 

our proposal seeks to resolve all of the claims together, through a 

streamlined and fair administrative process, and provides a number of safeguards to ensure that this is the final resolution. 

Our claims settlement proposal, taken together with our proposal 

to resolve fractionation and improving trust management, provides 

an opportunity for historic change in the management of the Indian 

trust. The existing relationship has been dominated by litigation. 

That adversarial relationship has interfered with the ability of individuals and tribes who own these lands and resources to enjoy 

the full benefits of their own property. 

Our proposal would keep these lands in trust, but provide the 

trust beneficiaries with more direct control over their own assets. 

It would also eliminate the fractionation that has burdened the 

management of these lands. 

For many years, there has been a trend in Indian country of 

tribes to seek more sovereignty over their own property decisions. 

Our proposal is a natural continuation of that process. We hope 

that these changes will help break the cycle of disputes and litigation that has gone on for so long, and open the doors to productive 

management of these lands by the tribes, who are the true owners. 

We look forward to working with the committee, and hope that 

by working together, we can carry out the reforms we have proposed. 

Thank you very much. 

[Prepared statement of Mr. Mercer appears in appendix.] 

The CHAIRMAN. Mr. Mercer, thank you very much. 

Next, we will hear from John Bickerman, who was one of the mediators that was chosen by both parties. Mr. Bickerman, you may 

proceed, and your entire statement will be made a part of the 

record, and you may summarize. 

STATEMENT OF JOHN BICKERMAN, BICKERMAN DISPUTE 

RESOLUTION 

Mr. BICKERMAN. Thank you, Chairman Dorgan. 

Chairman Dorgan, Vice Chairman Thomas and members of the 

committee, Judge Charles Renfrew and I thank the committee for 

giving us the opportunity to testify regarding the most recent offer 

by the Administration to resolve the Cobell litigation. 

The Administration’s March 1 letter provides a very valuable opportunity to advance a settlement. The committee should not hesiVerDate 0ct 09 2002 12:57 Jul 23, 2007 Jkt 034405 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 S:\DOCS\34405.TXT JACKF PsN: JACK
14

tate to seize this chance to act. Our remarks may be 

uncharacteristically direct for mediators used to seeing both sides 

of every dispute. However, the committee needs a frank, unvarnished appraisal of settlement options by a disinterested party so 

that it can move ahead to resolve this litigation that has done so 

much to poison the relationship between the executive branch and 

Indian country for more than a decade and two administrations. 

I thought it would be useful to give just a little bit of background 

because I know there are some new members to the committee. 

Our testimony needs to be understood in light of the context of our 

involvement in this matter. In March 2004, this committee and the 

House Committee on Resources contacted Judge Renfrew and myself to mediate the Cobell dispute. Funding for our services was 

provided by the Department of Justice, but we were assured we 

would have complete independence in our actions and, indeed, we 

have enjoyed the traditional independence and neutrality that neutral mediators require. 

However, our mission was much broader than a traditional mediation. From the outset, both the parties and the congressional staff 

requested that we periodically report back to Congress regarding 

our efforts and our progress. This request was made for three reasons: First, any resolution achieved through negotiation likely 

would require congressional action; second, Congress wanted to 

know if either the plaintiffs or the defendants were behaving in a 

dilatory manner or otherwise negotiating in bad faith; and third, 

Congress wanted to know whether a negotiated resolution would be 

possible, and that if it was impossible we needed to tell the committee so they could decide whether to take action. 

In most mediations, confidentiality of negotiations is a bedrock 

principle. In this case, very little of the content of our discussions 

remained confidential. Indeed, we were expected to periodically disclose our conclusions to Congress through this committee. 

Senator Tester asked before whether the parties had ever met. 

The answer was yes, frequently. We tried, but our efforts were utterly unavailing. Although we made some small progress with respect to information technology, after a relatively short period of 

time, we realized that we could not as neutrals bring the two sides 

to a point where they could settle the dispute. 

And so within 6 months, we were back before the committee’s 

leadership. In October 2004, we met with the leaders of the committee, at that time, Senators Inouye and Senator Campbell, the 

House Resources Committee leaders Congressmen Pombo and Rahall to report our conclusions, and urge the Congress to take the 

lead for enacting a resolution. We said then and we will repeat now 

that only congressional action can resolve this dispute for the benefit of the beneficiaries of the IIM Trust and allow the United 

States to devote its resources to the traditional services it has provided Indian country. 

Nothing has changed. In the winter of 2005, we met with the 

chairman of this committee to urge that the committee not abandon the effort to find a legislative solution. He agreed and directed 

the staff to draft legislation. Throughout the last Congress, Senator 

McCain and Senator Dorgan devoted significant time and effort to 

15

the development of a legislative settlement, often in the face of unfounded criticism from many quarters. 

Then on August 1, 2006, Senators Dorgan and McCain and Secretary Kempthorne and Attorney General Gonzales convened a 

meeting. Although we weren’t there, we understand that the participants of this August 1 meeting directed their staffs to draft legislation that could be passed in the last Congress. Almost immediately, senior staff from the Departments of Justice, Interior and 

Treasury and the Office of Management and Budget began highlevel meetings with congressional staff to carryout the direction of 

their principals. An extraordinary amount of creative energy went 

into these discussions. While the final result did not produce the 

intended legislation, there are many worthwhile ideas that are 

worth retaining and that were discussed. 

Complex litigation like this takes many years to pass. The time 

is ripe to solve this problem forever. 

I want to add, this is not a partisan issue, and way too much 

time and resources have already been wasted and more will be 

wasted attempting to make a broken system work if Congress fails 

to act. I am often asked, well, why don’t we just leave it to the 

courts. Well, the courts are not in the position to solve this problem, and Congress has an independent trust responsibility to do 

something, and that is why I believe we are here today. 

No reasonable person questions whether trust beneficiaries have 

been harmed by the failure of the United States over many decades 

to account for assets and management of the assets, and many deserving beneficiaries have died in the interim. Those beneficiaries 

who are alive will never be made whole without your attention. 

I want to skip a good chunk of what I had put in my written testimony, to address what I think are the elements of the deal, and 

in particular talk about the values. 

While there is no serious dispute over the question of liability, 

the gulf that divides the parties over the magnitude of the liability 

is still enormous. The Administration contends that the exposure 

of Cobell is less than $500 million. The plaintiffs have been publicly asserting that the value of their claim is in excess of $100 billion. They are both wrong. Judge Renfrew and I say it unequivocally. The reason we think they are both wrong is that the Administration’s $500 million number, while it focuses on the pure calculation of the accounts that are managed, that the Secretary described, it fails to account for the other pieces that are part of what 

the Administration calls the other related Cobell claims. Let me 

give you an example. 

We have reason to believe that over the course of the last 100 

and some odd years, that the Administration did not collect all of 

the income that the trust beneficiaries were entitled to. Indeed, 

after 1980, under the Grace Commission, under the direction of its 

chairman Mr. Linowes, reported that about 10 percent of moneys 

that the Department of the Interior was supposed to collect from 

lessees was never collected. If it was never collected from non-tribal 

lessees, it is reasonable to conclude that it was never collected from 

tribal lessees. The value of dollars 50, 75, or 100 years ago are 

much greater than the value of dollars now. 

16

We looked at using that percentage of the value of the funds that 

were not collected, or if they were collected, were collected late. 

And when we used very reasonable assumptions that were in the 

record from the 1980’s, and applied reasonable interest rates, and 

assumed what a certain amount of that money would return over 

a period of 3 years, we came up with a range of estimates based 

on the interest rates between $4 billion to $7 billion. Those were 

the numbers that were included in last year’s testimony. I think 

that that is a reasonable place for this resolution to focus on. 

But I would like also to talk about the elements of a settlement. 

I was very pleased to hear the Secretary talk about self-determination, because we think that without voluntary self-determination 

and control, a resolution of this dispute will just not be possible politically. That is a key element. 

In the 109th Congress, the settlement of Cobell was married to 

trust reform and it would be a mistake to resolve the accounting 

litigation without fixing the basic flaws in the system. However, in 

doing so, Congress must be sensitive to the historical context of the 

relationship between the United States and its beneficiaries. 

Fixing fractionated interests is a key element. There is a consensus that highly fractionated interests in trust land limits the 

productivity of the land, reduces the value of the land, impedes efficient trust accounting, and leads to errors because keeping track 

of beneficiaries with very small interests becomes almost impossible. A sensible solution here would be to encourage the voluntary 

exchange or substitution of fractionated interests for cash or shares 

of ownership in the land. 

If I can digress here for just 1 minute. I just spent the last 2 

days with the Yakama Nation in the Yakima Valley. We passed 

acre after acre of land that was often farmed as vineyards or land 

that was being put to good use. And then we come across some fallow land. I turned to the person who I was with, and I said, ‘‘well, 

why isn’t that land being farmed?’’ And he said, ‘‘well, it takes 2 

years to lease that land.’’ I said, ‘‘why does it take 2 years?’’ ‘‘Well, 

that land is so highly fractionated, by the time all the interest owners can be collected and vote on what to do, it takes 2 years to sign 

a least.’’ ‘‘Is the value of that land worth much?’’ This woman said, 

‘‘absolutely it is worth less because it’s so fractionated.’’

Dealing with fractionation is a hidden value that we can capture 

if we can resolve this litigation. 

The CHAIRMAN. Mr. Bickerman, I want you to summarize. We 

are about out of time for your testimony. 

Mr. BICKERMAN. Okay. 

In conclusion, Mr. Chairman, I would just like to emphasize the 

importance of having voluntary self-governance, dealing with fractionation, and resolving all the pending issues. I would in closing 

say that we have not looked at the tribal claims and we do not 

have a sense of what they are worth. 

Thank you. 

[Prepared statement of Mr. Bickerman appears in appendix.] 

The CHAIRMAN. Mr. Bickerman, thank you for your testimony, 

and thank you for the work that you have put in to trying to understand and work on this issue. 

17

Mr. Mercer, in a statement to the House Subcommittee on Justice Department Appropriations in March 2005, Attorney General 

Gonzales estimated that the Government’s liability for tribal trust 

claims would be over $200 billion. Is this still the Department of 

Justice’s estimate? 

Mr. MERCER. It is not, Mr. Chairman. I am familiar with the 

statement. I guess I have a couple of points I would like to make 

on the statement. 

I believe that that text talks about the allegations that have been 

set forth in claims as part of the tribal trust litigation. Going to the 

question that you posed, Mr. Chairman, we have already seen dismissal of a claim for $100 billion as part of that ongoing litigation. 

So we certainly believe that that figure represents claims that 

were set forth by the parties. We have already prevailed in one of 

those cases and we believe that the ultimate value is much, much, 

much less than what the stated claims were by those parties. 

The CHAIRMAN. Do you believe that there is a liability of some 

type or of some quantity with respect to tribal claims? 

Mr. MERCER. I think, Mr. Chairman, the proposal that the Administration set forth is a reflection that we have some reform 

goals that we would like to see achieved, and we also believe, as 

part and parcel of that settlement, that we can resolve claims 

brought as part of the tribal trust litigation and as part of the 

Cobell litigation. 

The CHAIRMAN. Mr. Mercer, do you think there is a distinction 

between the plaintiffs represented by Mrs. Cobell with respect to 

the individual accounts that they allege have been mismanaged 

and for which there is some evidence of substantial mismanagement. Is there a distinction between those issues and the issues of 

a tribal government that makes claims on its behalf? 

Mr. MERCER. Well, certainly the course of the litigation, I think, 

is one thing that distinguishes it. As you noted, Mr. Chairman, the 

litigation is now past 1 decade in terms of the case in the District 

Court here in Washington, DC. That litigation seeks an accounting, 

at least in the view of the Government. So we are at a stage in that 

process where the Department of the Interior is attempting to complete the accounting as ordered by the court. That is the threshold. 

That is something that can then be litigated and probably will 

be litigated in terms of the viability of the accounting. We would 

then, at some point, I think individual claimants could then go to 

the Court of Claims or District Courts if the claims were of small 

value, and litigate those claims. We are concerned that this will be 

endless litigation because we will see not only the accounting itself 

being litigated, but appeals of that process, and then the litigation 

of the claims themselves in other courts, and the potential appeals 

there. 

The CHAIRMAN. But Mr. Mercer, you saw the pictures that I 

showed, the photographs today of the condition of certain records. 

Unbelievable, of course. You have to see that to believe that incompetence. If you were an individual with a claim and feel you have 

been cheated because of improper record keeping and so on over a 

long, long period of time, if you were an individual you would feel 

the right to seek redress in the courts as an individual. 

18

My question to you is, is that not distinct and different than a 

claim that a tribe will make at some point on behalf of tribal assets? 

Mr. MERCER. Certainly one thing they both share in common is, 

as Secretary Kempthorne noted, the fact that the kind of records 

that are depicted there, to the extent that those records are being 

recovered and are being entered into this data tracking system that 

allows the accountants to perform the full accounting, the thing 

that the tribal trust cases share in common with the claims made 

by individuals is that there are accountings that need to be done 

with respect to furthering those claims. We are well down the path 

of completing that accounting, which certainly informs the Government’s view of the value. 

So that is a common theme here in developing that threshold of 

information, which we certainly believe is being developed in the 

course of the process. 

The CHAIRMAN. You are still not answering the question I think 

I am asking. Isn’t there a difference between individuals whose accounts have been mismanaged, who filed to seek redress in the 

courts, and the attempt to settle that? Isn’t there a difference between that and tribal governments, which are sovereign governments, whose assets have been mismanaged and wish to file a tribal claim? Isn’t there a difference between the two? And why do you 

insist on marrying the two with respect to the settlement of the 

Cobell case? 

Mr. MERCER. There is a difference in that we are talking about 

the [inaudible] and the accounting that is being performed to determine what the error rate is and what the loss would be. I think 

the tribal trust claims are different in that that litigation is, although it is still tried to determine what the value of some assets 

are, it is true that I think the nature of the claims are the same. 

The CHAIRMAN. But there is a difference in ownership? Individual ownership versus tribal ownership. That is what I am trying 

to get you to say. Isn’t that the case? 

Mr. MERCER. I think that is true, Senator. 

The CHAIRMAN. And so if you were the owner of an individual 

trust account, felt you had been cheated on it, and it had been mismanaged and so on, and you went to the court and said, I am going 

to file a claim to get what is owed me. And they said, I’ll tell you 

what, we will settle it only but we will settle it, if you are willing 

to settle other issues over here, the extent of which we don’t even 

understand, and the liabilities for which accrue to a tribe that had 

nothing to do with individual accounts. 

Do you understand their angst about that? 

Mr. MERCER. I certainly do, but I think all the things that the 

Government has set forth in terms of principles of this proposal are 

related. One of the things that we are talking about is the fact that 

if we are going to resolve this in a fashion with full and fair compensation, there is an interest in saying, let’s make a determination about the value, whether we are talking about individual accounts or whether we are talking about what is being owed to the 

tribes. 

If we are going to continue down the litigation path, which is not 

what the Administration would choose to do at this point because 

19

we believe that if we can resolve it, it inures to the benefit of all. 

But there isn’t anything that says we can’t continue to litigate. It 

is just not a good way to do it. It will take decades, as the Indian 

Claims Commission experience represents. 

The CHAIRMAN. Mr. Mercer, if Mr. Bickerman, one of the mediators, concludes, having looked at what he has looked at, that $7 

billion to $9 billion is probably a fair range of settlement for the 

individual accounts, your proposal seems to suggest that tribal accounts are worth nothing. I am talking about the potential claims. 

Mr. MERCER. As Mr. Bickerman said, I think we are happy to 

continue the conversation in terms of his valuation, but you are 

right, Mr. Chairman. Our valuation based upon what we are seeing 

in the accounting, which may, I think, I can’t remember exactly 

when Mr. Bickerman’s work ended, but it is clear that that accounting has continued and the error rates, as Secretary Kempthorne talked about, and the fact that all these records have been 

entered into the system, we have a data set that would suggest the 

error rates are quite low. We do have a different approximation of 

value to this. 

The CHAIRMAN. But Mr. Mercer, that set of data has virtually 

nothing, well, I shouldn’t say nothing, but that set of data would 

be the kindest evaluation of the circumstances. You have taken 

that data which has been recorded and mechanized from 1985 forward. We are talking about liabilities for accounts that have been 

mismanaged for well over a century. I have looked at some of the 

details of that, and what has happened. I think there are plaintiffs 

here that have had assets stolen from them, unbelievable mismanagement. 

Look, I think that working with the Department of the Interior, 

the Justice Department, and others, it seems to me that it is in the 

interests of this country to find a way to resolve this. Otherwise, 

we will in the next decade or perhaps 2 decades see this bouncing 

around forever. Those who should get redress in the courts will not 

get it. And virtually everything else that we try to do will be affected by it, that is trying to find funds for crises in health care 

and education and housing and so on. 

So I want us to continue to work with the Attorney General and 

the Secretary of the Interior and the Administration. I want us to 

get to the right result, but I would like to find a way for us to constructively reach agreement if it is possible. 

Senator Thomas. 

Senator THOMAS. Thank you. 

Mr. Mercer, I am a little confused, did the DOJ not say the Government was potentially liable for $200 billion. The Department 

said that the exposure was there for $200 billion. Is that correct? 

Mr. MERCER. The statement that you refer to, Mr. Vice Chairman, is that the department suggests that it needed a certain 

amount of money to defend the claims for allegations of potential 

exposure in these cases. As I have noted, since the time of that testimony, we have already prevailed in a case in which the allegation 

by the plaintiff in a tribal trust case was for $100 billion. So it is 

the Government’s position at this point that the exposure based 

upon what has been articulated by plaintiffs far exceeds what we 

believe the values are. 

20

Senator THOMAS. Okay. I just wanted to make that clear. 

Is it practical do you think to resolve the hundreds of lawsuits 

in one piece of legislation? 

Mr. MERCER. Well, we believe that this reform package, which as I have noted, includes $7 billion, an amount that the Administration has set forward to try to resolve the number of claims, not only 

deals with the litigation that is presently ongoing in various courts, 

but achieves the reform agenda that was set forth by Secretary 

Kempthorne. We believe that as part of the conversation with this 

committee, and collaborating with the parties, that we can advance 

the goals that the chairman has talked about and that are part of 

the Administration’s principles. 

Senator THOMAS. We have this question for Mr. Bickerman. 

The CHAIRMAN. Yes; let’s do that. 

Senator THOMAS. Mr. Bickerman, apparently your testimony indicates that the plaintiffs and the Government have taken unreasonable positions with regard to the claims. If that is the case, do 

you think we can compromise and negotiate? And if not, why not? 

Mr. BICKERMAN. Yes; I do think that a compromise is possible, 

Mr. Vice Chairman. I think that the Administration’s efforts with 

the congressional staff last year that ended in December was a step 

in the right direction. I think the Administration’s willingness to 

put a number on the table on March 1 and have a comprehensive 

package of ideas is a further step in the right direction. I think 

with further work by this committee that a resolution is possible 

and maybe even within sight in this Congress. Absolutely. 

Senator THOMAS. Of course, if it is done in this Congress, why 

Congress will come up with its own solution, somewhere between 

the two parties. Do you think either of them will ever accept that 

kind of an agreement? Or does it matter? 

Mr. BICKERMAN. Well, if it becomes law, I think they will accept 

it. My sense is that at this juncture in time, everybody recognizes 

that the past can’t be the future, that it has been so destructive. 

Federal policies are being made through the prism of Cobell, and 

that is not healthy, and I think that there is a willingness to work 

together. I think that the issues you are dealing with in your questions with respect to the inclusion of tribal claims is a very valid 

one to have a discussion about. I think in particular there is an 

issue of self-governance, and making it voluntary. I think there are 

ways that historically Congress has done that through Public Law 

93–638, and that is a good model. It needs to be tinkered with. 

I also think that the avoided costs, the amount of money that we 

will spend if we do nothing will swamp what we could spend to fix 

it now. So there is enormous incentive to get it right and do it now. 

Senator THOMAS. Thank you. Do you suggest a figure somewhere 

between $7 billion and $9 billion, was that both for individual 

claims and tribal claims? 

Mr. BICKERMAN. That analysis was just focused on the individual 

claims. It was focused on what the other Cobell related claims, but 

it was just the IIM accounts that I had looked at, and I am not, 

and Judge Renfrew and I have not looked the tribal claims. The 

tribal claims came into the picture in December for the first time. 

Senator THOMAS. The proposition before us, however, applies to 

both. Isn’t that correct? 

21

Mr. BICKERMAN. The Administration’s proposal does, yes, sir. 

Senator THOMAS. Thank you. 

The CHAIRMAN. Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. 

For Bill Mercer, Bill, I think there is a letter, a March 1 letter 

that [inaudible] and future liabilities, if this is sound. Is that correct? 

Mr. MERCER. It is, Senator. Yes. 

Senator TESTER. Okay. And so I guess the first question would 

be, do you anticipate future mismanagement with [inaudible] 

Mr. MERCER. Well, a big part of the reform package, Senator, is 

the fact that we believe that we can change the way this relationship has worked. And so, we are hopeful that in fact we will be 

able to reform it in a way that will be an effective change for the 

future. 

Senator TESTER. I would hope that would be the case, because 

quite frankly I would hate to see us pass a law where it said that 

the bank can do whatever they want with my money and I would 

have no recourse. Do you understand what I am saying? 

To make it proactive and settle all future settlements, I mean, 

that is a huge step. It could create some major problems. 

From our conversation, in about June 2005 you were selected to 

be here in Washington, DC and your assistant [inaudible] I think 

that happened in September 2006. The dates don’t matter. But in 

the meantime, you still filled the job as U.S. Attorney for Montana. 

The question I have for you, has that had impacts on job performance here and in Montana? Are we short-changing folks in 

Montana or here? And as it particularly applies to each of those 

jobs, and as it applies to this lawsuit, is there a problem there? 

I feel, because I am trying to fill two jobs right now, one 2,200 

miles away, as yours was, and this one. It is very difficult to do. 

What is your perspective on that? 

Mr. MERCER. Well, let me talk about the operations of U.S. attorneys offices first, and note that the Sentencing Commission just recently issued its data for fiscal year 2006. When you compare the 

work that we are doing in the District of Montana with what we 

have done historically, and with my peers, I am very pleased to report that production in terms of the number of cases charged that 

resulted in sentences has continued to go up during that time period. 

If you take a look at the sentence length as a proxy for the seriousness of the case, I think you will see that the productivity of the 

men and women that are serving as assistant U.S. attorneys in 

Montana is extraordinary. I think things are going very well there. 

Again, if you take a look at the historic comparison, it figures out 

to be very favorable. 

So I am happy to talk to you in great detail and give you all 

those statistics, but I think by any fair measure of what it is that 

we are doing day to day in court, it is I think going very, very well. 

I continue to go back. I was back last week. I continue to go back 

and I continue to have daily communication with the leadership 

team I have in place there. 

In terms of issues here, I think it bridges the two in that here 

is an issue that as a Montanan, I have a significant amount of perVerDate 0ct 09 2002 12:57 Jul 23, 2007 Jkt 034405 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 S:\DOCS\34405.TXT JACKF PsN: JACK
22

spective on, having basically been born and raised in the State and 

understanding some of the challenges that this presents for Native 

Americans and tribes in the State of Montana. I think there is a 

value to having people that serve in the Administration that have 

that perspective from the field, if you will. 

And so I think you can get value and efficiencies by having those 

sorts of perspectives, and I hope I can bring that to this issue. 

Senator TESTER. So ultimately in the end, Montana doesn’t need 

a full-time prosecutor? 

Mr. MERCER. Montana has 22 full-time Assistant U.S. attorneys 

and a person as U.S. attorney that is engaged every day in terms 

of the work of that office. If you look at, again, 2001 data, 2002 

data, and 2006 data, you will see that that productivity continues 

to go up every year. 

Senator TESTER. Can I just ask about one specific issue as it applies to Montana and the tribes? It is methamphetamines. It is a 

huge issue in Indian country. It is a huge issue all over the State 

of Montana. How are those prosecutions been going? 

Mr. MERCER. Well, I am delighted to report that ONDCP has just 

funded a new task force that is going to cover Crow and Northern 

Cheyenne. We have the Safe Trails Task Force that does Indian 

country meth work on the Blackfeet Reservation. We have the TriAgency Task Force that is based out of Havre—in your region—

that does the drug investigations both on Rocky Boy and Fort 

Belknap. And in Fort Peck, there is Federal money that goes to 

something called the Big Muddy Task Force. 

My office does as many felony prosecutions dealing with drugs in 

Indian country as presented by those task forces. We are not going 

to prosecute our way out of that problem. That is, number one, a 

prevention job. We are there as the backstop to prosecute people 

who distribute and who are bringing the poison into Indian country. I am happy with that cooperative effort. 

Senator TESTER. It is a huge scourge on our society, but I think 

its impacts on Indian country are even more [inaudible] You are 

right. It is going to take a multi-pronged approach. 

Unfortunately, over the past [inaudible], you have been in the 

press dealing with the Department of Justice with the U.S. Attorneys. I think there were some e-mails released by the Department 

of Justice that showed you were intimately involved in an effort to 

push out U.S. attorneys that were very capable. 

My question is real straightforward. If there is a committee that 

asks you to come forth in Montana, are you willing just to come 

forth and do it in the light of day with transparency so we can find 

out your side of the story, without Fifth Amendments and that 

kind of stuff? 

Mr. MERCER. Yes. 

Senator TESTER. Thank you. 

A question for Mr. Bickerman. Mr. Bickerman, you said that, the 

[inaudible] has a very good question from Senator Thomas on the 

$7 billion to $9 billion for individual claims only. You said the tribal claims were not involved in that $7 billion to $9 billion. Is there 

any estimate work being done on what that might cost? 

Mr. BICKERMAN. On tribal claims? No, sir. 

Senator TESTER. None. No idea what it is? 

23

Mr. BICKERMAN. Not by me, sir. 

Senator TESTER. Okay. The other question is that you said the 

groups got together and you couldn’t get them together. Let me get 

the exact words. There was an opportunity to get the parties together because you thought you had an agreement, and you 

couldn’t get them in the same room to agree on much, and so it 

fell apart. Why? Was it money? Was it some of the other factors—

self determination, control? Or was it that it didn’t address the 

tribal? Was it all of the above? Was it lack of respect? What was 

it? 

Mr. BICKERMAN. Judge Renfrew and I tried assiduously to identify issues and work with the parties. We have never, and both of 

us have mediated a long time, and Judge Renfrew truly regrets 

that he couldn’t be here today. But we had never seen a more emotional, acrimonious dispute as we saw here. It was impossible to 

get the parties to sit in the same room and negotiate. 

As a result, we tried different ideas, but we never got a lot done. 

Senator TESTER. Did you or [inaudible], I can’t remember which, 

but [inaudible] that talked about a claimed dismissal of $100 billion? Which one of you said that? Was that you, Bill? 

Mr. MERCER. Yes. 

Senator TESTER. When was that dismissed and by whom? 

Mr. MERCER. I don’t have a date. We can certainly get it for you. 

Senator TESTER. About [inaudible] Spring of whatever, month? 

Mr. MERCER. Evidently in the past couple of years. 

Senator TESTER. In the past couple of years. 

Mr. MERCER. I understand the past couple of years. 

Senator TESTER. Okay. If we could get data on that. And who 

dismissed it? 

Mr. MERCER. I don’t know. We will get that to you, too. 

Senator TESTER. Okay. Great. Thank you very much. 

And thank you, panelists for coming and being so patient. I really appreciate that. 

The CHAIRMAN. Let me thank the panel for being here. We appreciate your willingness to come and testify. 

Mr. Cason, you have not had to participate orally, but we know 

that questions we will send will have your active participation on 

responses. 

Mr. CASON. I have had my opportunities before. [Laughter.] 

The CHAIRMAN. And if this ever gets settled, you won’t have to 

come to these hearings in the future. 

Mr. CASON. That would be great. 

The CHAIRMAN. We thank all three witnesses. 

I would like to invite the final panelists to come forward. Elouise 

Cobell is the lead plaintiff in Cobell v. Kempthorne. Elouise Cobell 

is from Browning, MT. She will be accompanied by Keith Harper, 

who is a partner in Kilpatrick Stockton, LLP, in Washington, DC. 

John Echohawk is the executive director of the Native American 

Rights Fund in Boulder, CO. 

William Martin is vice chairman, InterTribal Monitoring Association on Indian Trust Funds in Albuquerque, NM. He is also first 

vice president of Central Council of the Tlingit and Haida Indian 

Tribes of Alaska. 

24

Let me thank all of you for being with us today, and for your patience as well. 

Ms. Cobell, as I have indicated to others and I will to this panel, 

we regret the delay today, but it was not to be helped because of 

the votes in the Senate. 

I will ask that you proceed with your entire statements being 

made a part of the record. You may summarize as you choose. 

Let me begin with you, Elouise Cobell. 

STATEMENT OF ELOUISE COBELL, LEAD PLAINTIFF IN COBELL v. 

KEMPTHORNE, ACCOMPANIED BY KEITH HARPER, PARTNER, KILPATRICK STOCKTON, LLP; AND JAMES OTIS KENNERLY, Jr., 

INDIVIDUAL INDIAN TRUST ACCOUNT HOLDER 

Ms. COBELL. Thank you, Chairman Dorgan and thank you Vice 

Chairman Thomas and thank you, Senator Tester. 

I would like to thank you for inviting me here today to provide 

the testimony to the committee in the most critical of issues: Bringing justice to 500,000 individual Indians by resolving fairly the Individual Indian Trust Fund lawsuit, Cobell v. Kempthorne.

Mr. Chairman, I will admit that I am frustrated. Year after year, 

I have been asked by this committee and the Natural Resources 

Committee in the House to testify. Year after year, I do so, hoping 

that this will be the time when a fair resolution is reached and 

that the fraud and corruption regarding the management of individual Indian trust assets will end. 

People often speak about the cost of the mismanagement in monetary terms. But as the Court of Appeals has reminded us, this 

case is not solely about money, but help and the very existence for 

the many individual Indian beneficiaries that rely on the funds for 

their daily existence. 

Here in Washington, DC, it is a bit easier to overlook the reallife consequences of the Department of the Interior’s breaches of 

trust. With me today is such an individual Indian beneficiary. He 

is a friend and a Blackfeet Indian from my reservation, James 

Kennerly, Jr. James is the son of James Otis Kennerly, or as the 

Department of the Interior referred to him as ‘‘allottee 1997.’’ Like 

prisoners, Government officials often refer to us, to our people, by 

their number. 

James Otis Kennerly, Sr., was a World War I veteran and disabled in combat fighting for this Nation. He was allotted trust land 

back in 1907, and it included considerable oil and gas resources in 

the Cutbank, a resource-rich area of the Blackfeet Reservation. 

Today, his son owns this land with his siblings. 

As early as 1930, and most likely much earlier, oil companies 

pumped thousands of barrels a week off Kennerly’s land. This is 

documented in records by the Department of the Interior’s own experts. Documents established that payments were made to the Department of the Interior, in connection with the leasing of 

Kennerly’s allotment. 

However, according to the Department of the Interior’s own historians, after 1946, there were no documents regarding the lease 

of his land, no statements, no deposits, and no files. And there was 

no money deposited into his account. 

25

So what happened? There is no doubt that the oil wells continued 

to pump on the land of James Otis Kennerly. You can see it for 

yourself. He would take you out there today, tomorrow. Yet, after 

the 1930’s, James, Sr., did not receive any payments. That continues to be the situation today with James, Jr. And every call or 

visit to the Department of the Interior, he recounts hundreds of 

visits, ends in the same way: We can’t give you an explanation. 

Department of the Interior’s historians now speculate that his 

lease was unlawfully unitized with other lands of the Blackfeet 

Tribe and that the tribe now receives all of his moneys, but they 

don’t really know, despite hundreds of hours of looking at his documents. This is all in a report these historians submitted in the 

court case of Cobell.

What are the consequences to the Kennerlys of this theft? For 

James, Sr., a disabled vet unable to work, it meant that he lived 

in abject poverty the remainder of his life, as he was not provided 

his VA benefits either. This poverty contributed to declining health, 

and he passed away in the 1940’s. 

Of course, with no money, he could not afford to take care of his 

children during his lifetime. So his son, James, Jr., here with us 

today, was raised in an orphanage. After that, he was sent to Government boarding schools, with all of the incumbent problems of 

that system that we in Indian country are all too familiar with. 

He and his siblings share James, Sr.’s land now, but they do not 

receive any money from the oil that still comes from that land. 

James, Jr., has had more than his share of hardship. I can personally attest, based on the decades of long friendship, that he has led 

an impoverished existence. The Government’s theft of his trust 

funds did not on its own bankrupt James Kennerly, Jr., but it certainly eliminated any options for improving his situation. It robbed 

him of his health and education and opportunity, and the abuse 

continues today. 

He should be a millionaire, but like his father, he lives in great 

poverty. In many ways, the broken trust has robbed him of his life, 

and the pain it causes continues every day. 

This is not an isolated tragedy. James Kennerly, Jr., is not alone. 

Indeed, there are hundreds of James Kennerlys on every Indian 

reservation. They, too, have been robbed of health, education, and 

opportunities, and the abuse continues today. They, too, like Mr. 

Kennerly, pay the price for a failure to resolve this matter. 

Understand, Senators, that this is a life and death situation. It 

is for these Americans that we must try and forge a resolution. Let 

us end the malfeasance and the suffering. The time is to act, for 

now, for all the James Kennerlys across Indian country. 

The $7 billion is insufficient to settle the Cobell case standing 

alone, particularly since the proposal contemplates paying this 

money over 10 years. Given the time value of money, this means 

that the actual figure is much lower, and the Government’s own experts put their liabilities between $10 billion to $40 billion. 

Of course, they do not seek to settle just the Cobell case with this 

$7 billion proposal. The Government proposes to use the $7 billion 

to buy much, much more, including paying for a multi-billion dollar 

debacle called fractionation, extinguishing all past, present and future, and indeed future trust claims against individual Indians for 

26

mismanagement, claims that go far beyond the Cobell case, paying 

for trust reform, paying for information technology security, and redressing all tribal trust claims, which Mr. Gonzales has conceded 

is $200 billion standing alone. 

If that were not enough, the Government proposes to end all future liability. That means irrespective of how blatant and how significant future breaches are, the Government cannot be sued. This 

is in no uncertain terms a license to steal provided to an entity, 

the Department of the Interior, which has demonstrated itself to be 

dishonest. This is not an offer. Instead, it is a slap in the face for 

every individual Indian trust beneficiary. 

Now, I am here reacting to the Government’s first call settlement 

proposal. I guess I should be happy that after 11 years of litigation, 

they have actually put some kind of an offer on the table, but the 

proposal of Secretary Kempthorne and Attorney General Gonzales 

is so absurd that it cannot really be called a settlement offer. 

I want to conclude to talk just briefly about where do we go next. 

What for Congress? What is it that you can do? There is a way to 

proceed. You can compare a bill that puts forward a reasonable settlement. This proposal should not seek to address every issue in 

the sun in Indian country. Instead, it should address the matter 

that has brought us all to this point: The Cobell historical accounting and restatement of claims, and their underlying malfeasance 

that Cobell seeks to redress. 

That is where we begin. We cannot begin with an unfair, unjust, 

insulting proposal that the Department of Interior and the Department of Justice have brought forward. We need to begin with a solution that is fair. 

Thank you very much. 

[Prepared statement of Ms. Cobell appears in appendix.] 

The CHAIRMAN. Ms. Cobell, thank you very much. We appreciate 

your testimony. As always, it is very direct. 

John Echohawk, executive director of the Native American 

Rights Fund, Boulder, CO. Mr. Echohawk, welcome. You may proceed, and your entire statement will be made a part of the record, 

and we would ask you to summarize. 

STATEMENT OF JOHN ECHOHAWK, EXECUTIVE DIRECTOR, 

NATIVE AMERICAN RIGHTS FUND 

Mr. ECHOHAWK. Thank you, Mr. Chairman. 

Although the Native American Rights Fund is part of the Cobell 

legal team for the last 11 years, I am here today on behalf of 15 

tribes that the Native American Rights Fund represents in tribal 

trust fund litigation, plus possibly 220 more tribes if the Federal 

District Court in Washington, DC certifies one of those cases as a 

class action. 

I would like to make three points briefly for the committee this 

morning. One is just to educate them about the status of tribal 

trust cases. There are currently 108 of those cases pending in either Federal District Courts or the Court of Federal Claims. They 

are on behalf of 69 tribes, and again, if some of these cases are certified as class action cases, that number could go up to 285 tribes. 

Over 70 of these cases were newly filed because of the December 

31 deadline that existed for tribes to challenge these Arthur AnderVerDate 0ct 09 2002 12:57 Jul 23, 2007 Jkt 034405 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 S:\DOCS\34405.TXT JACKF PsN: JACK
27

sen reconciliation reports that were given to the tribes in 1996. I 

submit that there is a financial crisis in Indian country with all of 

these tribal cases on the table now, together with the Cobell case 

and the individual claims. I think it is in the magnitude of the 

range for action that the Congress provided back during the savings and loan scandal, and the bailout that Congress provided for 

that. 

I submit, too, it is in the magnitude of this mortgage crisis that 

the Nation faces now and Congress is thinking about a bailout 

there as well. I think that we need a bailout here in the Indian 

trust fund mess as well. 

As we have talked about in the hearing today, Attorney General 

Alberto Gonzales had talked about the Government’s liability being 

potentially $200 billion. For the record, I just want to read into the 

record his exact words during that testimony. He said, ‘‘The United 

States’ potential exposure in these cases is more than $200 billion.’’ 

That is his exact language. 

The second point I would like to make to the Committee is that 

this proposal by the Administration is unacceptable to our tribal 

clients. As has been discussed, there was no tribal consultation 

with tribes on this proposal to include their tribal claims in this 

proposal. It is arbitrary. There has been no valuation, no analysis 

of these tribal claims. As we have discussed as well, there are objections to the fact that there is no future Federal liability for the 

administration of what would be left of the trust. More than that, 

there would be the termination of this historical trust. Anyone familiar with Indian country knows how important the trust responsibility is to tribes. 

I think at a minimum we need to talk about separating out consideration of the tribal claims from the Cobell settlement and all 

of these various proposals that are included within this settlement 

offered from the Administration. We have to keep tribal claims separate. 

And finally, I want to suggest to the committee that it may be 

possible to fashion some legislative proposals for settlement of 

some of these tribal claims. I would submit to the Committee that 

that would be worth exploring. I think that exploration would have 

to protect the prerogative of tribes to pursue their tribal trust 

claims in whatever form or through whatever avenues they pursue 

to resolve those claims. Any settlement proposal must certainly be 

voluntary and not be forced on tribes. 

I do think that with all of these claims potentially on the table, 

that it is certainly worth the time of the committee to explore a 

possible legislative solution for at least some of those tribal claims. 

[Prepared statement of Mr. Echohawk appears in appendix.] 

The CHAIRMAN. Mr. Echohawk, thank you very much for being 

with us. 

William Martin is vice chairman of the InterTribal Monitoring 

Association on Indian Trust Funds in Albuquerque, NM. Mr. Martin, welcome and you may summarize. 

28

STATEMENT OF WILLIAM MARTIN, VICE CHAIRMAN, INTERTRIBAL MONITORING ASSOCIATION ON INDIAN TRUST 

FUNDS, AND FIRST VICE PRESIDENT, CENTRAL COUNCIL OF 

THE TLINGIT AND HAIDA INDIAN TRIBES OF ALASKA 

Mr. MARTIN. Thank you, Mr. Chairman, Mr. Tester. 

My name is William Martin. I am first vice president of the 

Tlingit and Haida Indian Tribes of Alaska. I also serve on the 

board of directors for the InterTribal Monitoring Association on Indian Trust Funds. 

I am pleased to appear today to present ITMA’s views regarding 

the Administration proposal. 

The Administration proposes a single initiative to address the 

Cobell litigation, pending tribal lawsuits, and the continuing fractionation of Indian land ownership. The proposal would also eliminate Government liability for future trust administration. ITMA 

does not regard this as trust reform, but rather as a proposal for 

termination or buy-out of the trust responsibility. 

With respect to tribal lawsuits, more than 100 are currently 

pending against the Government. Some of these have been in 

courts for almost 30 years. Scores of them were filed as recently as 

December 2006, however, purely as a protection against the possibility that they would thereafter be barred by the statute of limitations. Others involve such diverse issues as range management and 

uranium processing. 

In other words, these tribal cases are emphatically not all alike. 

With regard to land consolidation, reducing the number of Indian-owned interests in trust lands is a centerpiece of the Administration’s proposal. The tribes and the Government might find some 

common ground in addressing this issue, but not if the Government 

insists on driving a wedge between the tribes and their members 

on constitutionally protected property rights. 

Based on these observations, ITMA offers the following recommendations. Regarding the Cobell litigation, 1 year ago this 

committee held an important joint hearing with the House on similar cases where lawsuits succeeded in bringing historic wrongs to 

the public’s attention. That discussion, in which Chairman Dorgan 

was a very active participant, might be a helpful starting point for 

the committee’s consideration of any role it might play in bringing 

about a resolution of the Cobell litigation. 

The Administration’s proposal to settle these claims or restructure trust responsibility for up to $7 billion is illusory at best [inaudible]. 

Finally, we do not believe there is any support for combining the 

settlement of Cobell with the settlement of tribal claims, but we believe there is a strong interest in taking affirmative steps to facilitate and encourage a settlement of the tribal claims. 

ITMA would like to propose certain affirmative steps that Congress can take to encourage settlement of the tribal claims. These 

would allow more Indian tribes to postpone the filing of additional 

lawsuits, result in voluntary dismissal of a number of tribal lawsuits, and create a process for resolving many tribal claims without 

litigation. 

We do not think that tribal claims should compete for a settlement pot. The principle in that is any number should be the result 

29

of deliberations, not legal. Congress should first break apart the 

issues into manageable-size pieces, starting with the Cobell litigation. If Congress chooses to wade into the fray, it should deal with 

its resolution separately. 

Regarding land consolidation, Congress should consider following 

up on the successes of its voluntary purchase program of recent 

years. This program should be greatly expanded and the Government should look to the tribes themselves for approaches that will 

work on a tribe by tribe basis and will not diminish human service 

programs in order to ameliorate a bureaucratic problem of the Government’s own making. 

Regarding tribal litigation and settlement alternatives, first, the 

committee should not do anything pending the Arthur Andersen 

Act providing tribes with the opportunity to delay the filing of additional lawsuits, until a lot of these tribes have [inaudible] agreements to dismiss these lawsuits. 

Second, Congress should authorize tribal trust fund settlements 

outside of litigation and provide authorization to access the U.S. 

Judgment Fund for payment of such settlements. In cooperation 

with the Department of the Interior, ITMA has been engaged in developing and implementing a tribal trust funds settlement project 

to develop a methodology by which the Government and non-litigating tribes could assess and negotiate resolution of tribes’ fiscal 

claims against the Government. 

Both parties have expressed hope that, if a resolution of fiscal 

claims could be reached on the basis of an intellectually rigorous 

methodology applied to empirical data, then even broader settlements as well might be within reach. Both ITMA and the Government look forward to continuing to develop a settlement methodology contemplated by the tribal trust fund settlement project. 

In order to avoid setting up a system that results in the raiding 

of existing tribal programs for payment of these settlements, ITMA 

strongly believes that Congress must authorize payment of these 

settlements through the U.S. Judgment Fund, with a directive that 

any replenishment to the Fund not be charged to or otherwise offset by existing or future appropriated or budgeted funds for Indian 

programs. 

The committee should begin dialog between interested Indian 

tribes and the Administration to authorize a voluntary settlement 

procedure for those Indian tribes that wish to take advantage of 

such an opportunity. Such efforts should recognize that every Indian tribe should have the opportunity to brings its claim in the 

court or courts of its choice, but that many Indian tribes would 

probably prefer a more expedient and certain claim settlement 

process. 

On a related issue, ITMA reiterates its position in regard to the 

DOI proposal, regulatory initiative part 112, Tribal Trust Fund Accounting and Appeals. ITMA objects to the rule and has requested 

the Administration withdraw the draft regulation. The rule would 

greatly diminish the ability of Indian tribes to access Federal 

courts with regard to Federal management and administration of 

tribal trust fund accounts. ITMA questions whether DOI has the 

authority to unilate-rally through an administrative rule undermine the Indian Tucker Act. 

30

ITMA also recommends that Congress eliminate administrative 

fees on Indian trust transactions. 

In closing, Mr. Chairman, ITMA is eager to work with this committee in a new Congress to bring a new sense of trust to the Indian trust, and bring an end to a period of contentious litigation; 

and to bring honorable resolution to claims too long evaded. 

Thank you, Mr. Chairman. 

[Prepared statement of Mr. Martin appears in appendix.] 

The CHAIRMAN. Mr. Martin, thank you very much. 

Ms. Cobell, you referred to Mr. Kennerly in your testimony. Did 

you indicate he is with us? 

Ms. COBELL. Yes;, he is. 

The CHAIRMAN. Could you identify him? You are Mr. Kennerly? 

And do you still own the land that was previously owned in the 

family on which oil and gas was produced? Is that correct? 

Mr. KENNERLY. Yes. 

The CHAIRMAN. Is there currently oil production on that land? 

Mr. KENNERLY. Yes there is. 

The CHAIRMAN. Are you receiving any benefits from that oil production? 

Mr. KENNERLY. [Remark made off microphone.] 

The CHAIRMAN. Thank you for being with us today. 

Mr. KENNERLY. Thank you. 

The CHAIRMAN. I think, Ms. Cobell, your story is compelling. We 

always deal in the aggregate with large numbers, but actually 

these accounts are all accounts that deal with real human beings 

who have ownership, and have an expectation that the trust responsibility is being met. I thought I heard you say that he was 

in the audience. I appreciate your identifying yourself. 

Well, Elouise Cobell, you have, as I indicated, been very direct 

with the committee, once again. You say you are frustrated. You 

are not the only one that is frustrated. That is not a condition that 

inures exclusively to yourself. I am frustrated. I think that a lot of 

people are very frustrated by this situation. 

I feel that if something isn’t done, this will go on at least for 1 

decade and perhaps more. But what I want to ask you about is 

this. There are areas of liability, one of which is represented by you 

as a plaintiff, and the case that has now been I guess in the courts 

for 12 or 13 years. That is the individual Indian trust accounts case 

and the claims of irresponsible treatment of those accounts and 

those claims encompass a lot of things. 

Second, there are the issues raised in the tribal claims that are 

now being filed and have been filed, last year especially. 

Third, there is the other issue with respect to individual land 

mismanagement claims. That is separate and apart from the trust 

accounting claims. 

Let me ask you, with respect to the individuals. Now, set aside 

tribal claims for a moment. Individuals, their trust accounts and 

the land management claims, do you feel like there is a capability 

of merging those two, at least as the Cobell case is settled with respect to the trust accounts, that there could also be some settlement with respect to land management claims? 

Ms. COBELL. I think that we are dealing with just the money in 

the Cobell case, the mismanagement of money. And we have never 

31

in fact, as the Department of the Interior reminds us all the time, 

is the damage to the trust assets are not part of our case. What 

we have talked about is the fact that trust asset claims could be 

included if there was an amount of money set aside and that Cobell 

plaintiffs could opt out and take on the other Indian trust assets, 

put claims on the trust asset damages that they have received, because our case is not about the damages. So that is one idea. 

But to lump them together, I don’t think that we can do that. We 

have to take into consideration that that is a separate issue on the 

damages. 

The CHAIRMAN. I understand your point. You understand that 

those of us who represent all of the taxpayers in this country and 

are trying to figure out what the potential liability is here, and indeed there is a liability. I think the last thing anyone wants is to 

have settlement after settlement after settlement, and then there 

is the next claim. 

My personal feeling is I don’t think tribal claims have any role 

to play here at all. I think they are different. I was asking the representative of the Justice Department those questions, and he finally admitted they are distinct and different and should not be related. 

There is, it seems to me, a relationship with respect to the individual claims, both with respect to the trust fund accounts, which 

is about money, but also the management of the assets. At least 

some here in Congress would say, wait a second, you are going to 

settle this and the management of the assets is not part of the settlement? So then we are right back into the same issue, and you 

will have filings on behalf of class actions, and we will be right 

back in the same situation as we are now. 

I want you to understand. That is why some would believe there 

should be some connection between the money accounts and also 

the land management with respect to individuals. 

Ms. COBELL. The problem that I have is that I don’t represent 

those individuals on these issues. Our lawsuit has been concentrated on the mismanagement of the money, the money that 

came in, and it is very difficult for me to answer that question. You 

know, I certainly think that the solution that I gave you a little bit 

earlier if the settlement amount was substantial, it would give an 

opportunity to have individual Indians opt out of our lawsuit and 

take on the claims that they feel has been mismanaged on the land 

assets. But that has to be substantial. 

The figures that we have come up with and the $10 billion to $40 

billion that the Government’s experts have come up with, all have 

been related to the money that went into these accounts. 

The CHAIRMAN. What do you say to the statement by the mediator this morning that with respect to the individual trust accounts, he thought $7 billion to $9 billion was a range that was 

plausible? 

Ms. COBELL. Versus to the $10 billion to $40 billion that the Government experts have come up with? 

The CHAIRMAN. I am asking you not about that. I am asking you 

about the testimony this morning by the person who had been involved in the mediation. 

32

Ms. COBELL. I think that I felt good about the fact that Mr. 

Bickerman separated the tribal from the individuals, and he said 

he would at least take $7 billion to $9 billion to settle Cobell alone. 

The CHAIRMAN. How do you feel about that statement? 

Ms. COBELL. I think that is a very good statement. Is that what 

we would settle for? Is that the real question? I would like an opportunity to talk about it and visit with you about it a little bit 

more. I think that we all understand that we are never going to 

get what is owed us as individual Indians. 

The amount is surmountable, and every time the report that I 

just explained, Mr. Kennerly’s case is very crucial because that 

would never have been found by Mr. Bickerman, anybody. It just 

happened the Government hired some experts to take a look at the 

accounts and they pulled out Mr. Kennerly’s account to take a 

view, and all the documents were missing. They found out where 

the pump was pumping, and the oil money was being transferred 

from USGS and illegally unitized with the tribal lease and the 

money didn’t come to Mr. Kennerly. 

Those things will never be found. And so to say, as Mr. Bickerman did, right on $7 billion to $9 billion, at least he is getting in the ballpark. 

The CHAIRMAN. And those records would not be included in a 

part of the discussion the Secretary mentioned, and also the Justice Department mentioned this morning, because what they described were records that were from 1985 forward. You are describing a circumstance where you can’t find records dating back to the 

early 1900’s for Mr. Kennerly’s father. 

I am tempted to ask Mr. Cason, but I will not do that. I will ask 

him some questions about these kinds of things in writing, not 

about the individual accounts, but the likelihood of the error rate 

being very substantial when you start going back to the 1930’s, the 

1910’s, the 1890’s. 

The photograph I showed, I showed for a reason today. I think 

what was going on there was almost criminal. Whoever was responsible for keeping those records on behalf of the Indians and 

maintaining the accounts and being honest with the people who 

owned these assets, that kind of record keeping was almost criminal. No one is going to sort through those bags and boxes in that 

old building and come up with the right set of records. 

That describes, I think, the concern that there is substantial liability by the Government. The question is what is it, and how is 

it resolved. 

I promised that this committee will provide transparency, and 

part of that is open hearings where we will hear from witnesses 

and try to evaluate what can we do to try to resolve this. Some 

have asked me, why on earth are you involved in this? Why not 

let the courts decide whatever they decide? Well, we are involved 

as a committee because we have been asked to be involved by the 

parties, number one. 

And number two, if this languishes another 5 years, 10, or 15 

years, the consequences of that are very significant and very detrimental, in my judgment, to all of the things that we care about on 

this committee with respect to our trust responsibilities for American Indians. So that is why we are involved. 

33

Will we be able to participate in resolving this? I don’t know the 

answer to that, but I am determined, I continue to be determined 

to try. And this hearing I wanted to hold today to develop some additional information and get some additional thoughts on the 

record. And then from this hearing, Senator Thomas, I and others 

will be discussing the next steps. 

The three of you have presented I think thoughtful testimony 

with respect to your perspective about how we might proceed. I 

know all of you have come a long distance, Albuquerque, Denver, 

Boulder, and Montana. So I appreciate very much your being here 

today to help us try to think through this and give us your testimony. 

I am going to call on Senator Tester for any comments and questions he has. 

Senator TESTER. Thank you, Mr. Chairman. I think your comment about openness and transparency in Government is probably 

one of the reasons why we are here. So I appreciate your perspective on that. 

I have to ask. I wasn’t going to, and then it came up again and 

so now I have to ask it. When you are getting $70 a month, this 

is the fellow that didn’t testify, that is in the audience, James, you 

are getting $70 a month. Where is the rest of the money going, to 

whom? 

Mr. KENNERLY. The BIA. 

Senator TESTER. The BIA? All right. 

Well, the hearing has gone on for quite a while. There have been 

a lot of good questions asked, and there has been a lot of good testimony given. I want to echo the Chairman’s comments about expressing my appreciation for you to be here. 

I am just going to ask one question, and you all three can answer 

it, or one of you can answer it if that is adequate. I will direct it 

to Elouise to begin with. 

Elouise, you have been at this for 11 years. What is the key? 

What are the keys to bringing this to a conclusion so you can find 

a solution that is equitable for the folks that are involved? 

Ms. COBELL. I think that there are two things. We have to figure 

out the historical wrong, the historical accounting that we can settle. But going forward, we are going to have to really, really think 

about how we are going to have trust reform that will probably be 

done. And I am going to tell you right now, the Department of the 

Interior is not capable of managing our assets. They are not. They 

have proven it over the 100 years. We have zillions of reports that 

have been filed with this committee, and the Department of the Interior is not capable. 

And so we need to look at ways that we move forward in the future, and I think that we need to take them out of the trust business. Let’s look at something totally different. Let’s look at a receiver. What is wrong, I mean, with this horrible, horrible mismanagement that has been going on for hundreds of years. Senator 

Dorgan, you have done a great job in recapping it. 

Will we ever get to the bottom of all this corruption? I don’t think 

we will until we move it out and we like moving it out to a receiver 

and start over. That is what big financial institutions do when 

there are huge problems. They move it out. They put the people on 

34

the bench and look at and move to a fresh way of correcting historical problems. 

So that is, I know, a long answer, but I needed to tell you how 

I felt. 

Senator TESTER. Would anybody else like to respond to that? Nobody disagrees? Then that is fine. 

The issue about parties not being able to get together. I asked 

why that was to the gentleman who was sitting over here in the 

first panel, why that was the case. From your perspective, why is 

that the case? 

Ms. COBELL. Because this is the first proposal that the Government has ever brought forward. They have never, and I think Mr. 

Bickerman said that, they have never put anything on the table for 

us to respond to. We have put proposals on the table that the Government would not respond to. So we have always been ready to 

sit down and negotiate. 

Senator TESTER. Good. So you actually see the direction that 

even though there is some question of whether the offer was adequate or fair, you do see it as a step in the right direction, and 

there is some progress here after 11 years, but we have more to 

do. Right? 

Ms. COBELL. I guess I do see at least the fact that there is a proposal on the table, but it is a horrible proposal. I just want to make 

sure that you understand that I don’t endorse that proposal. 

The CHAIRMAN. Ms. Cobell, it appears to me you have called it 

an insult, but positive. So it is a positive insult. [Laughter.] 

Ms. COBELL. See? I knew I would get trapped. 

The CHAIRMAN. I don’t expect you to answer that, and I don’t 

mean to make light of any of this. This is very serious business. 

Let me on behalf of Senator Thomas and myself say that both 

of us appreciate that Senator Tester has joined us on this committee, and has expressed a real significant interest in trying to 

help. It takes a lot of effort on this committee to be active and involved and to really dig into some of these things. I think, Senator 

Tester, we very much appreciate your involvement, both Senator 

Thomas and myself. 

We are going to keep the record open for 2 weeks. We would invite any other submissions for the record to this hearing. We will 

then, Senator Thomas, myself and other members of the committee, we will then convene and begin some discussions about 

what the next steps might be. 

I say to all of you who gathered, that this has been an exceptionally busy morning here in the Senate, which explains the absence 

of many of our colleagues. We have many other committee hearings 

being completed today because this will be the last day, really, for 

any Senate business prior to next week in which the Senate will 

be in recess. So as a result, Senator Thomas and myself and Senator Tester wanted to proceed with the hearing even though we 

had the disruption of votes. 

Mr. Kennerly, thank you for traveling all the way to Washington, 

DC to be a part of this testimony. 

Ms. Cobell, Mr. Echohawk, Mr. Martin, thank you very much. 

We appreciate very much the attendance of those who have come. 

This hearing is adjourned. 

35

[Whereupon, at 12:25 p.m., the committee was adjourned.] 

(37)

A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM WYOMING, VICE

CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

Good morning, and thank you Chairman Dorgan for holding this important hearing today. 

Earlier this month I received the letter dated March 1 2007, and signed by both 

Secretary Kempthorne and Attorney General Gonzales regarding the Administration’s proposal for resolving Indian trust litigation and reforming the trust asset 

management system. 

The problems relating to the management of individual Indian and tribal trust 

lands, resources and funds have been present for over 100 years. Many if not most 

of the laws creating the current system for trust land and resource management 

were enacted many decades ago, some over 100 years ago. One can only wonder 

whether modern, 21st Century land and resource use transactions are compatible 

with a management system created for an earlier time. 

The Administration’s proposal is ambitious, if nothing else, and I do appreciate 

that we have Secretary Kempthorne and Mr. Mercer from the Department of Justice 

with us today to discuss the proposal further. I am also very interested in hearing 

from the representatives of the plaintiffs and the tribes, and from the two mediators 

who worked to resolve the Cobell case during the 108th and 109th Congress. In the 

months ahead I am sure we will be hearing from other voices in Indian country 

about the trust litigation and trust reform as well. 

It is clear from the testimony of the non-Federal witnesses and from some feedback we have already gotten back from the tribes and other stakeholders that the 

Administration’s proposal has some strong critics in Indian country. Nevertheless, 

it is a serious proposal involving a lot of money, and I look at it as an excellent 

opportunity to begin the settlement dialog yet again. I would like my staff to work 

with yours, Chairman Dorgan, to see whether we can come up with some acceptable 

solutions to these problems, which have been around far too long. 

I thank all of the witnesses for attending the hearing to provide their views on 

the proposals and look forward to their testimony. 

Thank you, Mr. Chairman. 

PREPARED STATEMENT OF ERNEST L. STENSGAR, PRESIDENT, AFFILIATED TRIBES OF

NORTHWEST INDIANS

Good morning Chairman Dorgan, Vice Chairman Thomas, and distinguished 

members of the committee. My name is Ernest Stensgar and I am the president of 

the Affiliated Tribes of Northwest Indians [ATNI]. Today, I am pleased to provide 

ATNI’s views on the Administration’s proposed legislative settlement as set forth in 

the March 1, 2007 letter from Interior Secretary Kempthorne and Attorney General 

Gonzales to the chairmen of the respective committees of jurisdiction. I am also 

38

pleased to provide ATNI’s views on how the committee can continue to pursue trust 

reform in the 110th Congress and our thoughts on the pending tribal trust lawsuits. 

BACKGROUND ON ATNI’S TRUST REFORM EFFORTS 

Founded in 1953, ATNI represents 57 tribal governments from Oregon, Idaho, 

Washington, southeast Alaska, northern California, and western Montana. As the 

committee is aware, ATNI and its member tribes in the Pacific Northwest have been 

outspoken supporters of a legislative settlement to the Cobell litigation and 

forwardlooking trust reform, and invested substantial time and resources in the 

109th Congress securing tribal support for S. 1439. 

ATNI’s support for trust reform legislation has been and is grounded in the negative impact the Department of the Interior’s [Department’s] response to the Cobell 

litigation has had on our member tribes’ day-to-day business. Problems associated 

with the Department’s current trust policies continue to negatively impact non-trust 

issues on our member tribes’ reservations, such as economic and social development 

within our communities. Our support for trust reform legislation is also grounded 

in our desire to reign in what has been the unchecked growth of the Office of the 

Special Trustee [OST]. 

THE ADMINISTRATION’S $7 BILLION PROPOSAL 

ATNI understands that what this Administration ultimately demands for a multibillion dollar settlement of the Cobell litigation may never be acceptable to ATNI 

or to Indian country under any circumstances. The Administration’s March 1 letter 

essentially attaches a $7-billion figure to the package of concepts that was disseminated late last year in the form of a 2-page paper. As the committee will recall, that 

2-page concept paper was—as a single, complete proposal—rejected by ATNI and Indian country as a whole. Like that concept paper, the theme behind the Administration’s $7 billion dollar proposal is for the United States to phaseout the trust relationship with Indians and ultimately ‘‘get out of the Indian business’’ entirely. For 

ATNI, this is simply a non-starter. Even assuming that the March 1 letter allows 

some room for negotiation, the breadth of the Administration’s demands now makes 

clear that a multi-billion dollar settlement of the Cobell litigation alone will not be 

possible during this Administration. 

On February 15, 2007, ATNI unanimously enacted a resolution at its Winter Session in Portland, OR that supports the reintroduction of legislation with the key 

provisions that were included in S. 1439 in the 109th Congress—but without provisions relating to settlement of the Cobell litigation. That resolution also advocated 

that any new legislation provide for new voluntary authority for tribal management 

of tribal trust lands and related assets as an amendment to the Indian Self-Determination and Education Assistance Act of 1975. 

The key trust reform concepts in S. 1439 that ATNI would like to see the committee pursue in the 110th Congress include the following: 

• Elimination of OST—ATNI strongly supports the elimination of OST and the 

merging of its functions back into the BIA. OST has grown exponentially since 

the mid-1990’s. This growth has adversely affected ATNI’s member tribes’ ability to carryout day-to-day business with the BIA and has resulted in the siphoning of funds from programs that serve Indian people. 

• Land Consolidation—ATNI reaffirms its support for efforts to consolidate individual Indian trust lands and recognizes that a simple, aggressive land consolidation program must be implemented to reduce the costs of administration 

of fractionated lands. ATNI strongly disagrees with the Administration’s view 

that the consolidation of fractionated lands must necessarily include the termination of Federal responsibilities over individual Indians and tribes. However, 

ATNI agrees with a goal of consolidating allotments into a manageable number 

of owners. While a Secretary initiated sale may be appropriate for highly 

fractionated trust lands [that is, land with more than 100 owners], any sale of 

trust lands with a manageable number of owners should be initiated by one or 

more of the owners, not by the Secretary. 

• Beneficiary-Managed Trust—ATNI continues to oppose any proposal for a 

mandatory beneficiary-managed trust that would encompass unallotted tribal 

trust lands. The voluntary demonstration project set forth in title III of the last 

redraft of S. 1439, if adequately funded, provides, in ATNI’s view, an attractive 

incentive to encourage tribal management of tribal trust lands and resources. 

This type of tribal management regime would also encourage tribal economic 

development for those tribes that choose to participate by reducing the need for 

time consuming Federal approvals. 

39

For individual Indian trust lands, ATNI agrees in principle with a program that 

would provide for a beneficiary-managed trust so long as the program maintains the 

Federal trust obligations to tribes and Indian people. Such a program, however, 

must in the first instance be voluntary and be adequately funded to ensure that 

beneficiaries are fully informed and equipped to manage their lands. ATNI also reaffirms its support for a related concept that would provide for a land exchange program whereby interests in highly fractionated tracts would be transferred to—and 

the corresponding tract managed by—a separate, tribal-affiliated entity with a separate board of directors. 

ATNI strongly opposes any attempt to arbitrarily and prospectively limit the liability of the United States for mismanagement of trust resources. A ‘‘trust relationship’’ as memorialized in Federal law includes the ability to seek redress against 

the trustee for breach. A ‘‘trust’’ relationship without this element is not a trust relationship at all, but rather an entirely different relationship. ATNI supports, however, the voluntary authority of Indian tribes to manage their trust resources. 

SETTLEMENT OF TRIBAL TRUST CLAIMS 

ATNI strongly opposes the mandatory settlement of tribal trust-related claims in 

any legislation, whether or not part of a trust reform package or an appropriations 

bill. The filing of the 103 Federal court lawsuits that are currently pending is a foreseeable result of the Administration’s failure to support the extension of Public Law 

107–153, which provided that any reconciliation report received by an Indian tribe 

shall be deemed received by the tribe on December 31, 1999. Faced with the possibility that a court could construe the Arthur Andersen reports to be an ‘‘accounting’’ 

for purposes of the 6 year statute of limitations, Indian tribes with potential trust 

claims had no other choice than to file lawsuits to preserve their rights. 

The pending tribal accounting and mismanagement lawsuits stand on their own 

merits, and each tribe’s trust accounts vary widely in terms of account activity and 

the underlying nature of the trust assets. These lawsuits therefore do not lend 

themselves to a mandatory, ‘‘one-size-fits all’’ settlement. However, ATNI supports 

legislation that would provide for a voluntary settlement regime of tribal trust 

claims for those tribes that do not wish to litigate or otherwise expend resources 

pursuing their claims. 

The Department has indicated that it intends to promulgate new regulations relating to historical accounting of tribal trust funds. The most recent discussion draft 

of these regulations would establish an administrative process whereby the Department would furnish statements of historical account to Indian tribes. If an Indian 

tribe does not object or otherwise respond to the statement furnished by the Department, the tribe is deemed to have accepted the account balances set forth in the 

statement. 

ATNI understands that the Department my attempt to apply these regulations to 

those tribes that have already filed trust accounting lawsuits. The validity of such 

a post hoc administrative action to affect previously filed Federal court lawsuits is 

dubious at best. Nonetheless, ATNI asks that the committee monitor the Department’s initiative closely to ensure that the Department is not allowed to use this 

rulemaking as a backdoor attempt to impose settlement on the pending tribal accounting claims and divest tribes of their day in court. 

ATNI is grateful for the committee’s attention to trust reform in the 110th Congress and has appreciated the consideration the committee has given to the proposals and input offered by ATNI and its member tribes. ATNI looks forward to 

working with the committee in any way it can in addressing these issues. 

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