[Senate Report 107-138]
[From the U.S. Government Publishing Office]
Calendar No. 316
107th Congress } { Report
SENATE
2d Session } { 107-138
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TO ENCOURAGE THE NEGOTIATED SETTLEMENT OF TRIBAL CLAIMS
_______
February 15, 2002.--Ordered to be printed
_______
Mr. Inouye, from the Committee on Indian Affairs, submitted the
following
R E P O R T
[To accompany S. 1857]
The Committee on Indian Affairs, to which was referred the
bill, S. 1857, to encourage the negotiated settlement of tribal
claims, having considered the same, reports favorably thereon
with an amendment in the nature of a substitute, and recommends
that the bill as amended do pass.
purpose
The purpose of S. 1857, as amended, is to address the
possibility that the statute of limitations is running or has
run on legal claims that Indian tribal governments may assert
against the United States related to the management of tribal
funds that are held in trust by the United States, as a result
of reconciliation reports provided to the tribes by the
Department of Interior in response to Sec. 304 of the American
Indian Trust Fund Management Reform Act of 1994, P.L. 103-412
(October 25, 1994) (``AITFMRA''). The bill does not address
issues relating to Individual Indian Money (``IIM'') accounts.
background
As a function of treaties and the course of dealings
between the United States and Indian tribes, the United States
holds legal title to lands held in trust for individual Indians
as well as Indian tribal governments. The revenues derived from
trust lands are also held in trust by the United States for the
benefit of individual Indians and tribal governments.
In August of 2001, the U.S. General Accounting Office
reported to the Committee that an independent public accounting
firm audit of Indian trust funds for fiscal year 2000 showed
that the Department of the Interior was maintaining
approximately 1,400 accounts for 315 Indian tribes with assets
in excess of $2.6 billion, and over 260,000 individual Indian
money (IIM) trust fund accounts with a balance of $400 million
as of September 30, 2000.
Receipts are deposited to these accounts primarily from
land use agreements, royalties on natural resource depletion,
enterprises related to trust resources, judgment awards,
settlement of Indian claims, and investment income. However,
the audit report noted that reliance cannot be placed on the
balances reflected in the trust funds accounts until many
tribal accounts are reconciled and/or resolved through
negotiation and settlement and class action litigation on
behalf of the individual Indian money account holders is
resolved (Cobell v. Babbitt, retitled Cobell v. Norton).
The Congress first established an Indian trust fund account
reconciliation requirement in the Supplemental Appropriations
Act of 1987 (P.L. 100-202) in response to tribal concerns that
the Interior Department had not consistently provided them with
statements on their account balances, that their trust fund
accounts had never been reconciled, and that the Department
planned to contract with a third party for the management of
trust fund accounts. The original provision required that the
accounts be audited and reconciled before the Department
transferred the responsibility for managing the trust funds to
a third party. From 1990 to 1995, provisions in the
appropriations acts for the Department of the Interior added a
requirement that the accounts be reconciled to the earliest
possible date and that the Department obtain an independent
certification of the reconciliation work.\1\
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\1\ P.L. 101-121 (Department of the Interior and Related Agencies
Appropriations Act 1990), P.L. 101-512 (Department of the Interior and
Related Agencies Appropriations Act 1991), P.L. 102-154 (Department of
the Interior and Related Agencies Appropriations Act 1992), P.L. 102-
381 (Department of the Interior and Related Agencies Appropriations Act
1993), P.L. 103-138 (Department of the Interior and Related Agencies
Appropriations Act 1994), P.L. 103-332 (Department of the Interior and
Related Agencies Appropriations Act 1995).
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Meanwhile, recognizing that it would be unfair to allow the
statute of limitations to run on claims until each account
holder was provided with an accounting, in 1991, the Department
of the Interior Appropriations Act, P.L. 101-512, included a
provision stating that: ``the statute of limitations shall not
commence to run on any claim concerning losses to or
mismanagement of trust funds until the affected tribe or
individual Indian has been furnished with the accounting of
such funds.'' In the appropriations act for the following year,
through the present, the provision was altered to refer to ``an
accounting of such funds from which the beneficiary can
determine whether there has been a loss.''
To address these requirements, the Department contracted
with two independent public accounting firms, one to reconcile
the trust accounts and the other to conduct an independent
certification that the reconciliation resulted in the most
complete reconciliation possible. Following a preliminary
assessment in March of 1992 by the Department's reconciliation
contractor, the Departmentdecided to have the contractor
reconcile the tribal accounts for fiscal years 1973 through 1992 and to
omit accounts for individual Indians from the reconciliation project
due to the potential lack of supporting documents and the cost and
level of effort that would be needed to include them in the project.
Later, the Department charged the Bureau of Indian Affairs with
reconciling the tribal accounts for fiscal year 1993 through 1995 to
comply with the American Indian Trust Fund Management Reform Act's
requirement that the Department provide Indian tribes with reconciled
account statements as of September 30, 1995.
In late 1995, the Department of Interior terminated the
certification contract with Coopers & Lybrand. According to the
General Accounting Office, however, even completing the
process, as modified, may not have provided the assurances that
Congress intended.
The certification requirement was imposed to obtain
independent assurance of the accuracy and reliability
of the reconciled balances. After the certification
contract was awarded in September, 1993, BIA limited
the scope of certification contract to ensure only that
the reconciliation effort was performed in accordance
with the reconciliation contract. Therefore the
certification effort as designed did not address
whether the reconciliation provided as complete an
accounting as possible, and it would not, in our view,
have provided the additional assurance originally
contemplated.\2\
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\2\ GAO, Responses to Questions From June 11, 1996 Hearing, B-
272352 (June 24, 1996).
In January of 1996, the Department provided a report
package to each tribe containing the tribes' reconciliation
results, including unreconciled account statements with
schedules of proposed adjustments based on reconciliation
project results for each year covered by the reconciliation,
and a transmittal letter that described the information
provided. During a February 1996 meeting at which Interior
officials and the reconciliation contractor summarized the
reconciliation results, tribes raised questions about the
adequacy and reliability of the reconciliation results. The
U.S. General Accounting Office also reported shortcomings in
the Interior Department's reconciliation project. [Financial
Management: BIA's Tribal Trust Fund Account Reconciliation
Results (GAO/AIMD-96-63, May 3, 1996)]
Many Indian tribes believe the Department has mismanaged
their tribal trust fund accounts or have suffered losses to
their underlying trust lands and resources, and are accordingly
contemplating the initiation of law suits against the United
States seeking a full accounting of the funds held by the
United States on their behalf.
Although it is not at all clear that the reconciliation
reports at issue did in fact provide tribes with notice
sufficient to commence the running of the statute of
limitations, tribal governments would not want to take the
chance that their claims would be held to be time-barred, and
would thus feel compelled to initiate legal action in time to
prevent the statute of limitations from being applied. These
legal actions initiated to preserve tribal claims will be filed
and have been filed in Federal courts across the country,
thereby holding the potential for multiple adjudications with
varying and inconsistent results, as well as potentially
exposing the United States to liability.
The Committee is concerned that filing of such claims could
interfere with the opportunity for the United States and tribal
governments to pursue negotiations for the settlement of tribal
accounting or resource management claims. During the 105th
Congress, the Committee held a joint hearing with the House
Committee on Resources to consider H.R. 3782, which would have
established a process for settling disputes regarding tribal
trust fund accounts.
Since that joint hearing in July of 1998, the United States
District Court for the District of Columbia issued a ruling in
Cobell v. Babbitt, which was affirmed by the Court of Appeals
as Cobell v. Norton in February 2001. The appellate ruling
explicitly recognizes the United States' responsibility to
provide an accounting for all funds deposited pursuant to the
Act of June 24, 1938 (25 U.S.C. Sec. 162a). The court's ruling
reaffirms the principle that the United States'
responsibilities as trustee are not merely constrained to those
established in statutes. In addition, the court concluded that
``the 1994 Act [AITFMRA] reaffirms the government's preexisting
fiduciary duty to perform a complete historical accounting of
trust fund assets.''
The Committee looks forward to working with the
Administration to develop a settlement process that is grounded
in the Cobell court's sound reasoning.
SUMMARY OF THE AMENDMENT IN THE NATURE OF A SUBSTITUTE
Under the amendment approved by the Committee, the
reconciliation reports provided to Indian tribes beginning in
January of 1996 will be deemed to have been received no earlier
than December 31, 1999. As a result, even if the United States
were to assert that a reconciliation report commenced the
running of the statute of limitations, it would take until
December 31, 2005 for a six-year statute of limitations to run
from the date the day the tribe was deemed to have received the
report. The Committee is aware that in some cases an Indian
tribe may have received a report more than six years before
this bill is enacted into law, namely between January 1996 and
a date six years before the effective date of this legislation.
Even where this may have occurred, the Committee has received
assurances that the United States will not assert a defense
that the statute of limitations has commenced to run at a date
other than the date the tribe is deemed by this legislation to
have received the report.
Both in testimony before the Committee by the Department's
Associate Solicitor for the Division of Indian Law and in
discussions with other Departmental Officials, the Committee
and Committee staff, respectively, were assured that the
Departments of Justice and Interior were aware that asserting
such a defense would frustrate the objectives of this
legislation. Were such a defense to be asserted by the United
States, it would compel an Indian tribe to file its claims
immediately. Even if such an argument were to be made, the
committee is convinced that it has sufficiently addressed this
question to satisfy even the most exacting standard for
demonstrating Congressional intent to effect what is arguably a
retroactive application of this bill as it applies to tribes
that received reconciliation reports six years or more before
the effective date of this legislation.
Subsection (b) of the amendment clarifies the Committee's
intent in approving the amendment. Because of the Committee's
acute concern that Indian tribes will be forced to immediately
file claims to prevent the United States from asserting that
the statute of limitations has or will run on their claims for
losses to or mismanagement of their trust funds, the Committee
has approved a bill which addresses only this discrete issue.
By including a ``statement of purpose,'' the Committee
memorializes this limited purpose within the language of the
provision itself. Because the purpose of S. 1857 is so limited,
neither the bill nor Congress' action in approving this bill
should be construed to favor any one of the competing
interpretations of the provisions of appropriations acts which
preclude the statute of limitations from commencing to run
until an Indian tribe has received an ``accounting'' and/or
``an accounting of such funds from which the beneficiary can
determine where there has been a loss.''
The Committee takes no position on whether the receipt of
reconciliation reports does in fact commence the running of a
statute of limitations on tribal claims against the United
states related to the United States' management of tribal trust
funds.
LEGISLATIVE HISTORY
S. 1857 was introduced on December 19, 2001, by Senator Ben
Nighthorse Campbell, for himself and Senator Daniel K. Inouye,
and was referred to the Committee on Indian Affairs. On
February 7, 2002, the Committee held an hearing on S. 1857. At
an open business meeting on February 13, 2002, the Committee
approved an amendment to S. 1857 in the nature of a substitute.
COMMITTEE RECOMMENDATION AND TABULATION OF THE VOTE
In an open business session on February 13, 2002, the
Committee on Indian Affairs, by a voice vote, adopted the
amendment in the nature of a substitute and ordered the bill
favorably reported to the Senate, with the recommendation that
the Senate do pass S. 1857 as reported.
COST AND BUDGETARY CONSIDERATIONS
At the time of filing this report, the cost estimate of the
Congressional Budget Office on S. 1857 has not yet been
received. Compliance with Senate Rule XXVI, paragraph 11(a) is
therefore impracticable at this time.
SECTION-BY-SECTION ANALYSIS OF AN AMENDMENT IN THE NATURE OF A
SUBSTITUTE TO S. 1857
Section (1). Settlement of tribal claims
Under the provisions of the American Indian Trust Fund
Management Reform Act, the Department of the Interior was
required to provide Indian tribes with reconciliation reports and to
report to Congress on the status of its efforts.
Subsection (a) provides that notwithstanding any other
provision of law, the date an Indian tribe received a
reconciliation report is deemed to be on December 31, 1999.
Subsection (b) is a statement of purpose for the bill,
which indicates that S. 1857, as amended, is intended to
facilitate the voluntary settlement of tribal claims and to
enable Indian tribes to forgo the filing of claims against the
United States for losses to or mismanagement of tribal trust
funds.
regulatory impact statement
Paragraph 11(b) of rule XXVI of the Standing Rules of the
Senate requires that each report accompanying a bill evaluate
the regulatory paperwork impact that would be incurred in
carrying out the bill. The Committee believes that S. 1857 will
have minimal regulatory or paperwork impact.
executive communications
The testimony of the Associate Solicitor for Indian Affairs
for the Department of the Interior on S. 1857 is set forth
below:
Statement of Phil Hogen, Associate Solicitor, Division of Indian
Affairs, Department of the Interior
Good morning, Mr. Chairman, and members of the Committee.
My name is Phil Hogen. I am the Associate Solicitor for Indian
Affairs at the Department of the Interior. Thank you for the
opportunity to present the Department of the Interior's views
on S. 1857, and act ``To Encourage the Settlement of Tribal
Claims.''
The Department supports the intent of S. 1857, although we
suggest clarifying changes in order to make the language of the
bill consistent with the intent. S. 1857 attempts to establish
a date certain on which the statute of limitations would
commence to run on claims concerning alleged losses to or
mismanagement of tribal trust funds. The bill seeks to provide
the Tribes and the Government with additional time to address
and determine a process to encourage and facilitate the
resolution of tribal trust fund mismanagement claims based on
the results of the Arthur Andersen reconciliation reports that
were provided to the Tribes in 1996. The proposed legislation
would also provide Tribes that have already filed litigation
with a sufficient basis to obtain a stay of their pending
claims, until the Tribes and the Department have had further
opportunity to engage in attempts to resolve those claims,
before resorting to what will almost certainly be expensive and
burdensome litigation for both sides. We support this approach,
but recommended the following changes:
With respect to subsection (a), we recommend that the
language be amended to state as follows:
(a) In General.--Solely for purposes of providing an
opportunity to explore the settlement of tribal claims,
the statute of limitations shall be tolled through
September 30, 2003, for any claim not already time-
barred concerning losses to or mismanagement of tribal
trust funds.
This recommended change would obviate the need for the language
currently found in subsection (b) of the bill. As such, we
recommend that subsection (b) be deleted.
Once again, I would like to thank you for the opportunity
to testify on this legislation. I would be pleased to answer
any questions you may have.
changes in existing law
In compliance with subsection 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that the
amendment in the nature of a substitute to S. 1857 will not
effect any changes in existing law.
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