[Senate Hearing 111-550]
[From the U.S. Government Publishing Office]
S. Hrg. 111-550
COBELL V. SALAZAR SETTLEMENT AGREEMENT
=======================================================================
HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
DECEMBER 17, 2009
__________
Printed for the use of the Committee on Indian Affairs
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COMMITTEE ON INDIAN AFFAIRS
BYRON L. DORGAN, North Dakota, Chairman
JOHN BARRASSO, Wyoming, Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota LISA MURKOWSKI, Alaska
DANIEL K. AKAKA, Hawaii TOM COBURN, M.D., Oklahoma
TIM JOHNSON, South Dakota MIKE CRAPO, Idaho
MARIA CANTWELL, Washington MIKE JOHANNS, Nebraska
JON TESTER, Montana
TOM UDALL, New Mexico
AL FRANKEN, Minnesota
Allison C. Binney, Majority Staff Director and Chief Counsel
David A. Mullon Jr., Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on December 17, 2009................................ 1
Statement of Senator Barrasso.................................... 3
Statement of Senator Dorgan...................................... 1
Statement of Senator Franken..................................... 13
Statement of Senator Johnson..................................... 14
Statement of Senator Murkowski................................... 14
Witnesses
Cobell, Elouise, Lead Plaintiff, Cobell v. Salazar............... 17
Prepared statement........................................... 18
Perrelli, Hon. Thomas J., Associate Attorney General, U.S.
Department of Justice.......................................... 7
Prepared statement........................................... 8
Salazar, Hon. Ken, Secretary of the Interior, U.S. Department of
the Interior; accompanied by David J. Hayes, Deputy Secretary
and Hilary Tompkins, Solicitor, Department of the Interior..... 3
Prepared statement........................................... 5
Appendix
Jacobs, Eddie, Creek Indian Individual Indian Trust Account
Holder, prepared statement..................................... 25
Keel, Hon. Jefferson, President, National Congress of American
Indians, letter, dated December 17, 2009....................... 27
Response to written questions submitted by Hon. John Barrasso to:
Elouise Cobell............................................... 28
David J. Hayes............................................... 100
Hon. Thomas J. Perrelli...................................... 29
Response to written questions submitted to Hon. Ken Salazar by:
Hon. Tim Johnson............................................. 97
Hon. Lisa Murkowski.......................................... 98
Hon. Tom Udall............................................... 97
COBELL V. SALAZAR SETTLEMENT AGREEMENT
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THURSDAY, DECEMBER 17, 2009
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:39 p.m. in room
628, Dirksen Senate Office Building, Hon. Byron L. Dorgan,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
The Chairman. We will now turn to the hearing. We have the
Honorable Ken Salazar, who is the Secretary of the Interior,
with us today.
Secretary Salazar, while we are waiting, if you would come
forward, and you are accompanied the Honorable Hilary Tompkins,
the Solicitor at the Department of the Interior; the Honorable
David Hayes, Deputy Secretary of the United States Department
of the Interior; and the Honorable Thomas Perrelli, Associate
Attorney General, U.S. Department of Justice.
Let me say that we will now convene the hearing itself. The
hearing is an oversight hearing on the subject of Cobell v.
Salazar, and a settlement agreement of that court suit.
Earlier this month, the parties in the longstanding Cobell
litigation reached a settlement agreement. And we have asked
them here today to describe that agreement. I believe the
Cobell settlement agreement is really historic, and I know it
has been a long and very difficult journey to get to a
settlement.
The case has been in court for over 13 years. It is a
tragedy that many beneficiaries of this case have passed away
before the case has been resolved, and they certainly will not
benefit from the settlement.
I have long believed that settling rather than continuing
to litigate year after year after year is the best course of
action. In the 109th Congress, Senator McCain and I worked very
hard to see if we could create that settlement, and that was
not achievable.
The Cobell case itself was caused by a broken land
management system developed by the Federal Government over a
century ago. The U.S. was dividing up Indian reservations,
allocating land to individual Indians. Remaining lands were
sold to non-Indians. As part of these policies, the United
States became responsible for managing Indian lands, for
collecting and distributing revenues produced from those lands
to individual Indians.
The management duties became burdensome as ownership in the
lands became fractionated. I know of parcels of land that had
10,000 owners, fractionated ownership. But in addition to just
the complication, the fact is a number of American Indians
whose accounts were to be handled by the Federal Government
found that the accounts were mishandled. They were bilked, in
my judgment. Some were perhaps stolen. The accounts were
mismanaged.
What happened was a terrible blot on the Federal
Government. And there was required to be some redress for it,
and some people went to court to seek that redress. And as I
indicated, the court case lasted a long, long while.
Today, there are 150,000 Indian land allotments with 4
million interests. And for each of these allotments, there
could be as many as 1,000 owners. The problems is illustrated
with 2005 date from the Fort Berthold Reservation in my home
State. You can see on the chart that we are putting up, more
than one third of the land parcels have between 11 and 1,000
owners.
Other States have similar problems on their reservations.
Some are even much worse. The most fractionated Indian
allotment is in Wisconsin. If Indian land generates income,
then each owner will have a trust account and the United States
is responsible for managing that. In Fiscal Year 2009, there
were almost 400,000 individual Indian trust accounts.
Now, the courts have consistently held that the United
States failed to properly manage these accounts. But the
question of how much the plaintiffs have been owed or are owed,
and how to fix the problem, have remained. And I am really
pleased that the settlement agreement compensates the
individual Indians whose accounts I believe were mismanaged,
and takes a significant step towards decreasing the amount of
land fractionation in Indian Country. I think this will help
ensure that there will not be another Cobell case in the
future.
The terms of the settlement require that Congress approve
it before the end of this month. I don't know whether that will
happen, but we hope it will happen. And if it doesn't, we
intend to try to make it happen. If it does not happen, I hope
the parties will agree to a brief extension of time.
It would be an incredible disappointment to waste this
historic opportunity, and I pledge to you that I want to try to
find a way in these waning days to make this happen.
I do want to say that Secretary Salazar, you came to that
post of Interior Secretary and you perhaps more than anyone in
a dozen years decided you were going to try to make something
happen here that was good for everybody, that resolved a
longstanding dispute. And I think that is called leadership.
And I, for one, really appreciate your leadership to try to
bring us to this day and to this table. So thank you very much.
The Chairman. Vice Chairman Barrasso, please?
STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Thank you, Mr. Chairman, and thank you
for holding this hearing, a very important hearing.
I want to extend a warm welcome to my friend, Secretary
Salazar. I want to thank you for appearing in front of the
Committee this afternoon. I am very interested in hearing what
you have to say about this proposed settlement, so I will be
brief.
First and foremost, I think it is good that the parties in
this dispute were able to come together and reach an agreement.
For whatever reason, that didn't happen during the last 13
years. That said, I believe there are still many questions that
can and should be asked about the settlement.
For example, I would like to know exactly how the
settlement amount of $1.4 billion was arrived at. I would also
like to know how the Administration arrived at the figure of $2
billion for the fractionated land buy-back program, and how and
where they plan to spend that money.
Like many people, I am sure, I would like to know how much
of this money will go to attorneys' fees; $3.4 billion is an
incredible amount of money, and it is a lot of American
taxpayers' money.
So it is appropriate that we delve into the details of that
settlement with these and other questions, but I hope the
witnesses can give us answers to these and other important
questions this afternoon. If that can't be done, I would like
to receive follow-up or supplemental answers as soon as
possible after the hearing.
So I thank the witnesses for attending and preparing for
today's hearing on such short notice.
Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Barrasso.
Are there others on the Committee that wish to make a
comment prior to my calling on the Secretary?
If not, Secretary Salazar, I will call on you for
testimony. The testimony of all of the witnesses today will be
entered into the record in its entirety, and you may summarize.
Thank you so much for being here.
STATEMENT OF HON. KEN SALAZAR, SECRETARY OF THE
INTERIOR, U.S. DEPARTMENT OF THE INTERIOR;
ACCOMPANIED BY DAVID J. HAYES, DEPUTY SECRETARY AND HILARY
TOMPKINS, SOLICITOR, DEPARTMENT OF THE INTERIOR
Mr. Salazar. Thank you very much, Chairman Dorgan and
Ranking Member Barrasso, Senator Murkowski, Senator Johnson,
Senator Udall, Senator Franken and all the Members of the
Committee who are here today.
Let me at the outset first acknowledge your leadership,
Chairman Dorgan, along with the leadership of others who have
tried to wrestle with this issue for many years, including that
of Senator McCain, who over many years worked with you to try
to bring about a resolution to this longstanding and very
difficult and very bitter dispute.
Secondly, let me also say thank you to the members of the
team who are here with me today as witnesses on the Cobell
settlement. Tom Perrelli, the Associate Attorney General from
the Department of Justice has worked tirelessly on this matter,
really for almost much of his last year, along with David
Hayes, the Deputy Secretary of Interior, who spent an enormous
amount of time working with Hilary Tompkins, who is the
Solicitor General for the Department of Interior. So I thank
them for their particular efforts.
Let me at the outset just say the history of this case has
been a long and tortured and painful history. It was born 13
years ago, and you on this Committee have been familiar with
the different chapters of it. Perhaps there are two ways of
looking at this case and the journey that it has taken.
One of the ways it to look at it through the acrimony that
has been created between the United States of America and the
Indian nations around our Country, and the individual Indians
who are represented in this class, where the issues that we are
trying to deal with on reservations from law enforcement to
education to economic development frankly have been hindered
because of the fact that this has been a huge cloud over the
relationship between the Department of the Interior and Indian
Country.
And so hopefully what this settlement does is it brings
about a turn in direction relative to the relationship between
the United States of America in carrying out its trust
responsibilities with respect to Indian Country.
Secondly, you can also tell the story of this journey
through some of the numbers that have been dealt with that I
think Dr. Barrasso, Senator Barrasso, you might know some of
these numbers. But at some point in time, there was
conversation about the fact that there was a claim here for
$176 billion. There were plaintiffs' requests in 2004, they
were public at $40 billion. There was a National Congress of
American Indians Task Force which worked hard and had come up
with a number of $27.4 billion.
And then in March 1 of 2007, under President Bush's
Administration, Attorney General Gonzalez and my predecessor,
Secretary Kempthorne, put forth a proposal for an amount of $7
billion to try to attempt to settle this case.
Between that time and this time, the litigation has
continued, and in part as a result of the decisions that have
been made in the courts, and the leadership of the court itself
through the efforts of Judge Robertson, we were able to arrive
a number that is $3.4 billion. So that is significantly less
than had been talked about in the history. So that is part of
telling the story of this case.
Now, what does the settlement do? I think in two broad
ways, you should be thinking about this settlement in the same
way that we thought about them, and Chairman Dorgan touched on
those two things in his opening statement.
The first is that it does deal with past wrongs. When you
think about the past wrongs we are trying to right here, these
past wrongs to way back to over 100 years. And so what we will
do is correct those past wrongs so we don't have to look at the
past anymore, and we can look to the future.
The second thing that it does is it sets up a program so
that we avoid the problem from occurring again in the future.
It would do us not much good, in my view, to essentially settle
the damages portion of this case, and not to move forward with
a proactive effort to try to make sure that we are not back in
the same problem five years and 10 years and 20 years from now.
And I think some of the numbers that Senator Dorgan spoke
about relative to fractionation is only going illustrate that
the problem is simply going to exacerbate and become larger.
There are now 4 million interests that we are dealing with
here. But if the fractionation issue continues to move forward
in the same direction that it has moved in, our projection is
that we will be dealing with 11 million fractionated interests
by the year 2030.
So when we think about having to deal with this complex
problem, it is only going to get more complex unless we are
able to figure out away of moving forward with it. And so that
is why the buy-out provisions on the $2 billion, Senator
Barrasso, that you talk about will deal with that very
substantive problem to ensure that this problem does not occur
again.
So it is for those reasons that I think that this is a fair
and reasonable settlement.
And in conclusion, as Senator Dorgan, Senator Barrasso and
the Members of this Committee know, one of the priorities that
I have for the Department of Interior is making sure that we
address the problems that First Americans are facing all across
our Country. And getting this litigation behind us will allow
us to move forward in major efforts we have already launched to
deal with the issues of public safety and law enforcement, to
deal with what hopefully will be a new educational era in
Indian Country, as well as to deal with energy development on
Indian Country.
So there are major issues that proactively require
attention. This will allow us to do that.
So I appreciate the opportunity to testify, Chairman
Dorgan, and if you wish, I would like my colleague from the
Department of Justice, Tom Perrelli, also to make a comment, as
well as my Deputy Secretary for Interior.
[The prepared statement of Secretary Salazar follows:]
Prepared Statement of Hon. Ken Salazar, Secretary of the Interior, U.S.
Department of the Interior; accompanied by David J. Hayes, Deputy
Secretary and Hilary Tompkins, Solicitor, Department of the Interior
Good afternoon Mr. Chairman, Vice Chairman, and members of the
Committee. Thank you for the opportunity to provide the views of the
Department of the Interior (Department) regarding the settlement that
has been reached between the United States and the plaintiffs in the
Cobell class-action lawsuit and accompanying legislation, the
``Individual Indian Money Account Litigation Settlement Act.'' The
Cobell case, which devolved into contentious and acrimonious litigation
over the Department's trust management and accounting of hundreds of
thousands of individual Indian trust accounts, has hindered U.S.
efforts to work effectively in Indian Country for more than a decade.
During these years many members of this Committee have signaled a
desire for the agencies involved in this litigation to find a way to
bring the case to resolution. And this month, we have achieved an
agreement. I am very pleased to say that the settlement we have reached
is a fair one, a forward-looking one, and one that I am certain will
strengthen the relationship between the Federal Government and Native
Americans. This settlement will enable us to move ahead together and to
focus on the many pressing issues facing Indian Country.
The agreement is the product of good faith, arms-length
negotiations between the United States and plaintiffs. It not only
resolves litigation over the U.S. government's management of hundreds
of thousands of individual Indian trust accounts, but also forges a
solution to an ongoing--and worsening--problem. This negotiated
agreement lays out a path for the responsible management of Indian
trust assets in the 21st century. The agreement strengthens the trust
relationship between the United States and our Native American
citizens, a relationship that has at times been fraught with challenges
but a relationship which the members of this Committee have long sought
to develop into one of mutual respect and understanding. In this
statement, I will briefly describe the components of the proposed
settlement and related steps being taken by the Department to improve
our management of Indian assets. I am accompanied today by David J.
Hayes, the Deputy Secretary of the Department of the Interior, who led
our negotiations on my behalf, and by Hilary Tompkins, the Solicitor
for the Department and the first American Indian to hold that post. Ms.
Tompkins also participated actively in the negotiations.
Accounting and Trust Administration Claims Settlement
The first part of this settlement agreement resolves claims related
to the class-action lawsuit brought by the plaintiffs in Cobell v.
Salazar. The case centers around the U.S. government's trust management
and accounting of over three hundred thousand individual American
Indian trust accounts. The settlement would resolve not only the
plaintiffs' claims for an historical accounting for funds that the
government holds in individual American Indian trust accounts, but also
all claims associated with the management of these trust funds and the
underlying trust assets (consisting of land and resources that are held
in trust for individual Indian members of the plaintiff class). The
settlement addresses all existing and potential trust-related claims
that the plaintiffs may have against the United States to date, and
thus brings final closure to this long and difficult issue.
Under the terms of the settlement regarding trust management and
accounting issues, approximately $1.4 billion would be distributed to
the class members, which consist of certain American Indians and Alaska
Natives, as defined in the Settlement. Each class member will receive
$1,000 for their historical accounting claims and may receive
additional funds related to trust management claims under a formula set
forth in the settlement agreement. By addressing alleged mismanagement
as well as accounting-related claims, this settlement fund will fully
resolve all potential claims by individual class members and avoid all
further ``look-backs'' regarding prior fund accounting and trust
management issues.
Correcting Fractionation
The second part of this settlement contains provisions designed to
address the daunting problem called ``fractionation.'' This problem
consists of the continued proliferation of new trust accounts as land
interests held in trust for individual American Indians continue to
subdivide (or ``fractionate'') through inheritance processes. The
settlement and legislation provide for a $2 billion fund for the buy-
back and consolidation of fractionated land interests. The land
consolidation fund addresses an historic legacy of the General
Allotment Act of 1887 (the ``Dawes Act'') and other related allotment
statutes, which divided tribal lands into parcels of between 40 and 160
acres in size, allotted them to individual Indians, and sold off
remaining unallotted Indian lands. As original allottees died, their
intestate heirs received equal, undivided interests in the allottees'
lands. Today, it is not uncommon to have hundreds of Indian owners for
one parcel.
The result of the continued proliferation of thousands of new trust
accounts caused by the fractionation of land interests through
succeeding generations is that millions of acres of land continue to be
held in such reduced ownership interests that only a small percentage
of the individual owners derive a meaningful financial benefit from
their ownership. Indeed, as of September 30, 2009, there were 143,663
individual Indian allotments and more than four million fractionated
interests. It has been estimated that these four million interests will
expand to eleven million interests by the year 2030 if the actions
contemplated in this settlement are not taken. This situation creates
more harm than good for the individual owners, the tribes and the
Federal Government. In too many instances, tribes find economic
development efforts stymied by their inability to utilize heavily
allotted tracts of land for much needed energy, commercial and
agricultural development.
Under the provisions of the settlement for land consolidation
efforts, the Department would use a $2 billion fund for the buy-back of
fractionated land interests. The Department would use existing programs
and law to make these acquisitions, with additional authority that
would be provided under the proposed settlement legislation for the
conveyance of interests held by persons who cannot be located after
engaging in extensive efforts to notify them and locate them for a
five-year period. As part of the class notice process that will notify
individuals of this settlement, the Department will notify individuals
of the opportunity to convey their interest. The $2 billion fund will
cover administrative costs to undertake the process of acquiring
millions of fractionated interests.
The fund will also cover up to $60 million that will be contributed
to an existing non-profit organization for the benefit of educating
American Indians and Alaska Natives. In addition to consolidating and
preserving tribal homelands, settlement parties desired to connect with
the next generation of Indians. Under the settlement terms, the sale
and release of fractionated interests are directly linked to
education--an overall benefit to Indian country. With each acquisition
of an interest, an additional amount will be contributed to the
educational Indian scholarship based on the value of the interest. For
instance, for an interest worth $500 or more, five (5) percent of the
value will be contributed to the scholarship fund.
The settlement implementing legislation would authorize the $2
billion fund to be established in the U.S. Treasury and the transfer of
a portion of this fund to the non-profit organization for Indian
education scholarship purposes, and also authorize the conveyance of
interests held by persons who cannot be located after five years, as
described above.
Long-term Trust Reform
To address the future of Indian trust management, on December 8,
2009, I signed a Secretarial order to establish a five-member national
commission to evaluate ongoing trust reform efforts. The commission
will make recommendations on the future management of individual trust
account assets and the need for comprehensive auditing of these
operations. While the Department has made significant progress in
improving and strengthening the management of Indian trust assets, our
work is not over. The Commission will make recommendations regarding
how to improve trust management services on a going-forward basis, such
as recommendations regarding the appropriate roles of various Interior
agencies including the Office of Special Trustee and the Bureau of
Indian Affairs.
Conclusion
I hope you will help us to secure swift enactment of the necessary
legislation. As the members of this Committee are aware, this
settlement is a starting point, not an ending point. It is time now to
move beyond the litigation and to commit to working cooperatively with
American Indian and Alaska Native communities to address education, law
enforcement, and economic development challenges. With this settlement
we will turn the page on a dark chapter in Indian Country and begin to
move forward, together, towards our common goals.
Thank you for the opportunity to appear before you today. I look
forward to answering your questions.
The Chairman. All right. Mr. Perrelli, you may proceed.
Thank you so much.
And thank you, Secretary Salazar.
STATEMENT OF HON. THOMAS J. PERRELLI, ASSOCIATE ATTORNEY
GENERAL, U.S. DEPARTMENT OF JUSTICE
Mr. Perrelli. Thank you, Chairman Dorgan and Vice Chairman
Barrasso, and the other Members of the Committee.
This Committee is quite familiar with the litigation now
called Cobell v. Salazar, and has worked over the years with
the Department of Interior to address it. And I think you have
observed over time how this has drained Federal resources from
Indian Country and has created a poor atmosphere for the
administration of the Federal Government's trust
responsibilities in Indian Country.
And you, as well as the courts, have encouraged parties to
settle the litigation, and at times have directly supported
efforts to mediate it.
Built in great part on direction that Members of the
Committee have provided over the years, on December 7, we
signed a settlement agreement that hopes to turn the page on
that history. As previously indicated, the settlement does
require legislative and judicial approval to become effective,
but we believe it is fair to the plaintiffs, is responsible for
the United States and provides a path forward to the future.
The settlement contains many of the elements that Members
of this Committee have sought to include in prior efforts to
resolve the matter. First, the settlement resolves plaintiffs'
claims for an historical accounting, and will result in cash
payment to class members and will bring the government and each
holder of an individual Indian money account into agreement on
the balance of each account, something that has been contested
since this litigation began. Those payments are $1,000 a
person, and will be in conjunction with other payments under
the settlement.
Second, the settlement resolves what are called trust
administration claims. Those are claims based on allegations
that the government may have mismanaged hundreds of thousands
of acres of land and millions of dollars, including proceeds
from those lands it holds in trust for individual Native
Americans.
Now, to date, few of those claims have been brought, but
they remain a threat to rebuilding a long-term relationship
with the Department of Interior and Native Americans, because
there has always been concern that if the Cobell case were to
settle, it would simply be followed by mismanagement cases that
would continue the acrimony.
Under the settlement, the plaintiffs will amend their
complaint to add these claims, which will then be resolved. And
each and every plaintiff of that class will receive an
additional payment based on a formula to be approved by the
court. Those payments, which are in addition to the accounting
class payments, will start at $500 and go up from there, and
for certain plaintiffs who hold valuable assets, will result in
very significant amounts.
The total of those two class resolutions will be $1.4
billion approximately.
And then lastly, as Secretary Salazar mentioned, the
settlement provides an important framework for the Department
of the Interior to address one of the principal factors that
has led us down this path, the problem of fractionation.
The legislation required to implement this settlement
accomplishes a number of things, some of which I think are
relatively technical. But the primary substantive provisions,
much like the bill that Senators Dorgan and McCain put forward
in the 109th Congress, authorizes the Secretary to administer
the land consolidation program that is critical to the
settlement.
We think this is a successful resolution for Native
Americans and for all Americans, and hope that we are able to
obtain the approvals we need so that we can move forward. Thank
you to the Committee for its support over the years.
[The prepared statement of Mr. Perrelli follows:]
Prepared Statement of Hon. Thomas J. Perrelli, Associate Attorney
General, U.S. Department of Justice
Good afternoon and thank you to Chairman Dorgan, Vice-Chairman
Barrasso, and the other members of the Committee. The litigation that
is today known as Cobell v. Salazar has lasted thirteen years, and for
nearly as long, members of this Committee have taken a keen interest in
it. Members have worked with the Department of the Interior to address
the challenges at issue in it. They have observed that the litigation
has drained federal resources from Indian Country, and has created a
poisonous atmosphere for the administration of the Federal Government's
trust responsibilities in Indian Country. They have encouraged the
parties to settle the litigation, and at times have directly supported
efforts to mediate it.
That interest is well-placed, as Cobell v. Salazar is one of the
largest class actions ever brought against the U.S. government. What
began in 1996 has seen 7 full trials constituting 192 trial days; has
resulted in scores of judicial decisions; has been up to the Court of
Appeals ten times; and has been the subject of intense, and sometimes
difficult, litigation.
Thanks in large part to the direction and support that the members
of this Committee have provided over the years, on December 7, Mrs.
Cobell's attorneys and the United States signed a settlement that would
turn the page on that history. The settlement, which will require
legislative and judicial approval to become effective, is fair to the
plaintiffs, is responsible for the United States, and provides a path
forward for the future.
The settlement contains many of the key elements that members of
this Committee have sought to address in prior efforts to resolve this
matter. First, the settlement resolves the plaintiffs' claims for an
historical accounting. The resolution on this issue, like other aspects
of the settlement, is important both for the past and the future. It is
important for the past, because it will result in a $1,000 check being
sent to each member of the class. And it is important for the future,
because it brings the Government and each holder of an Individual
Indian Money account into agreement on the balance of each account--
something that has been contested since this litigation began.
Second, the settlement resolves what have been called the ``trust
administration'' claims. Such claims allege that over the years, the
Government has mismanaged the hundreds of thousands of acres of land
and millions of dollars--including proceeds from those lands--that it
holds in trust for individual Native Americans. Although to date few
such claims have been brought, allegations of trust mismanagement have
remained a possible threat to rebuilding the long-term relationship
between the Department of the Interior and Native Americans. There has
always been concern that, even if the Cobell case settled, it would
simply be followed by a slew of mismanagement cases that would continue
the acrimony. Under the settlement, the plaintiffs will amend their
complaint to add these claims, which will then be resolved. Each and
every plaintiff in this class will receive a payment, based on a
formula to be approved by the Court. And the Department of the Interior
will know that it has put those trust administration claims, too,
behind it.
Between the accounting claims and the trust administration claims,
the plaintiff class will be receiving approximately $1.4 billion.
Finally, the settlement provides a framework through which the
Department of the Interior can address one of the principal factors
that has led down this path. The trust system that the Government
manages has become increasingly complex over the years, as lands that
were jointly owned by a small handful of individuals many decades ago
are now often owned by several times that number, as the individual
owners have passed away and left those interests to be divided among
their heirs. Much of this land, divided up among sometimes hundreds of
owners, has severely limited economic potential.
To address this problem of fractionated lands, the settlement
contributes additional funds to a land consolidation program that
provides critical benefits to every party. For individuals who own a
fractional amount of land and wish to sell it, it will put money
directly into their hands. The tribes that will ultimately own these
newly consolidated interests will have productive assets that they can
finally put to beneficial economic use. And over time, the Department
of the Interior will reduce the hundreds of thousands of small accounts
that it has been managing at a highly disproportionate cost.
As I mentioned, this settlement is not final. It requires
authorization from Congress and approval from the court. We hope that
both will happen quickly.
The legislation that is required to implement this settlement
accomplishes a number of things. Among other things, it ensures that
the United States District Court for the District of Columbia, which
has been handling the litigation, can continue to assert jurisdiction
over it after the plaintiffs amend their complaint. The legislation
also sets up two funds within the Treasury of the United States,
permits the court to certify a single class of trust administration
claims, and--much like the bill that Senators Dorgan and McCain put
forward to resolve Cobell in the 109th Congress--authorizes the
Secretary to administer the land consolidation program that is critical
to the settlement. We believe that Congress should move forward with
this legislation as quickly as possible.
The settlement also requires approval from the court. Once
legislation has passed, the parties will present their proposed
settlement to the court, and will begin the process of explaining it to
class members across the country. Those individuals and others will
have an opportunity to review the settlement and express their views on
it, and the court will ultimately decide whether it represents a fair
resolution of the claims.
Throughout our discussions with the plaintiffs, we have been guided
by two principles. First, we wanted true peace for the parties. We
wanted to turn the page on history. The resolution of the accounting
and trust administration pieces of this litigation will do that. And
second, we wanted to put Interior on a new path for the future, and
give it tools to address some of the underlying conditions that have
contributed to its challenges. The land consolidation program will do
that.
This settlement is a successful resolution for Native Americans,
and for all Americans, and I hope that it will receive swift approvals
so we can bring the litigation fully to an end. We appreciate the
Committee's support over the years, and I look forward to any questions
you may have.
The Chairman. Mr. Perrelli, thank you very much.
We will now hear from Mr. David Hayes.
Mr. Hayes?
Mr. Hayes. Thank you, Mr. Chairman.
I want to just add a few brief comments about the
operational aspects of this settlement in terms of the
Department of Interior's plans, if approved, for moving out on
the land consolidation program and also the trust reform
efforts that are part of the settlement, actually part of a
separate secretarial order that grew out of our discussions in
the settlement.
In terms of the land consolidation program, the $2 billion,
we believe, will make a huge dent in the problem that you
identified, Mr. Chairman. We will be targeting tracts that have
20 or more interest holders. Those tracts contain 84 percent of
the total number of interests. That is of 4 million interests
total, 84 percent of them are in tracts that have 20 or more
interest holders. That is 37,000 tracts, with a total acreage
of almost 5 million acres.
We believe that, based on fair market value estimates, that
our $2 billion will take a huge chunk out of that problem, and
diminish the extrapolation of interests that the Secretary
referred to.
I would also like to say that in addition to streamlining
our trust obligation by reducing the number of individual trust
holders through this land consolidation program, we will save a
significant amount of money going forward in our trust efforts.
By putting a close to our historical accounting efforts, we
expect to save about $250 million going forward. We are
spending $25 million a year. We expected to have to continue to
do that until 2019 if we were not able to resolve and end the
historical accounting dispute with individual account holders.
And in addition, while we have not done a complete
calculation of how much money we will save by virtue of having
a smaller number of trust accounts to account for, we have
examples of one 40-acre parcel, for example, that has 500
owners and that, produces only $2,000 in income. It is valued
at $22,000. The administrative costs each and every year to
administer these 500 individual trust accounts is over $42,000
a year for a parcel that is worth $2,000.
So if we can diminish the number of individual trusts, as
we expect to do, we expect enormous savings going forward in
administering the program. And, of course, we expect, as the
Secretary said, to be able to take better care of the accounts
that we are following.
The final point I will make is in terms of trust reform. An
important part of the effort here is the secretarial order that
the Secretary signed that will establish a commission upon
approval of the settlement to look at organizationally how we
should go forward in terms of administering the trusts, to do a
full audit of the function as we start fresh without having to
look backwards, and instead looking forward.
Thank you very much, Mr. Chairman.
The Chairman. Mr. Hayes, thank you very much.
Would you just for purposes of illustration go over again
the paragraph in which you described the single parcel of land,
I think, worth $20,000? Describe that again because it so aptly
describes the dilemma that we have all inherited here.
Mr. Hayes. Certainly. This was a tract identified in 2003.
We can get you the specifics of exactly where it is, but it is
a 40-acre tract. There are 505 individual owners for that
tract, meaning we have to undertake an accounting of individual
trusts for 505 owners for that 40 acres. That 40-acre parcel is
producing $2,000 in income annually. So we have to take that
$2,000 and divide it appropriately into individual accounts and
follow that money.
The 40-acre parcel is valued at $22,000. The administrative
costs for the accounting that we have to do was estimated in
2003 by us at $42,800 a year, annually.
The Chairman. Well, that pretty well--although I must say
you are a pretty expensive accountant.
[Laughter.]
The Chairman. Five hundred accounts and $42,000. But I
think it really well describes the dilemma here of this
fractionated ownership, and I appreciate your doing that.
Let me call on the Vice Chairman for comments or questions.
Senator Barrasso. A couple of questions, Mr. Chairman, if I
may.
First, Mr. Secretary, I know reaching this settlement was
no easy matter, and there have been many attempts over the past
number of years. I am going to submit some detailed questions,
but based on what you know, two quick questions for you, Mr.
Secretary. Based on what you know about the case and the issues
that would be resolved by this settlement, is this settlement
fair to the Indian account holders and the landowners?
Mr. Salazar. The answer to that is yes. And at the end of
the day, because of the litigation and its history, I can tell
you that the plaintiffs and the United States did not come
together under the leadership of Judge Robertson to get to this
settlement if it hadn't been a fair and reasonable compromise.
So it is a fair and reasonable compromise that does reach that
objective.
Senator Barrasso. And that is the second question. Is it a
good settlement for the United States and the American
taxpayer?
Mr. Salazar. Absolutely.
Senator Barrasso. And if I could go to Mr. Perrelli, if you
wouldn't mind. As my background is a physician, I would like to
ask about attorneys' fees.
[Laughter.]
Senator Barrasso. The settlement agreement provides that
the amount to which plaintiffs are entitled for attorneys' fees
is, I believe, ``within the discretion of the Court in
accordance with controlling law.'' How much in attorneys' fees
do you expect the plaintiffs to request from the court?
Mr. Perrelli. Well, let me take a quick step back. As the
Committee knows, this is a historic settlement, and ultimately
we had to make a decision; even if we couldn't ultimately come
to agreement on attorneys' fees, was this a settlement that was
in the interests of the United States? And we decided that it
was.
I think we share your concern about attorneys' fees, in
particular in this case where every dollar of attorneys' fees
actually will come not from the United States, but every dollar
of attorneys' fees will actually come out from individual class
members' distribution, will come out of the $1.4 billion.
We also had to balance, in considering this issue, the fact
that if this case were litigated for another 3, 5, 10 years, at
the end of that, we would likely be facing a substantial
petition for attorneys' fees in that context. And even though
at that point we might well have very strong arguments against
it, it was something we had to balance.
We didn't ultimately reach agreement on fees. There are a
few things, a few agreements that I think are worth informing
the Committee about.
First of all, as I indicated, the funds do come out of the
$1.4 billion, so there is no additional outlay by the U.S.
Treasury. Second, the court will decide the ultimate fee award,
based on existing law. The parties, however, also agreed that
they would litigate within a range. That wouldn't bind the
court. It wouldn't bind individual class members as to what
arguments they could make regarding fees. But they would
litigate in a range between $50 million and $99.9 million in
attorneys' fees.
When you look at that in the overall context of the
settlement, if you were to take that as a ratio of over $1.4
billion, if the court were to determine that were the
appropriate fund to look at, you are looking at between 3.5
percent and 7 percent.
Senator Barrasso. So if the attorneys' fees are awarded as
a percentage of the final amount, that was what the percentage
would be, in that range, if you stay between $50 million and
$100 million.
Mr. Perrelli. If you use the $1.4 billion as the
denominator. If you use the $3.4 billion, the numbers change.
Mr. Salazar. If I may, Senator Barrasso, may I, Mr.
Chairman, make a quick comment on that issue because I know it
is central to your thinking?
Having served as Attorney General of my State for six years
and having watched what happened in other circumstances,
including the tobacco litigation, this was a central issue of
concern for us as we drove down to the final goal line on
reaching this settlement.
For those of you who know how contingency case litigation
and costs are paid out, at $1.4 billion in the damages part of
this case, one third of that would have been about $500
million. Okay? And so what we were able to do because of the
very concern that I knew that Chairman Dorgan and the Members
of this Committee would have, we were basically able to come
about the bracketing of these amounts in what I think is a very
reasonable amount.
Senator Barrasso. And then, Mr. Hayes, if I could ask you,
could you explain to me how the Administration decided that $2
billion is the appropriate amount of money to spend on buying
back fractionated land? And then maybe where most of that money
is going to be spent? And then, specifically, if any of that is
going to be used on the Wind River Indian Reservation in
Wyoming?
Mr. Hayes. Yes, Senator. A lot of work had been done by the
prior Administration in connection with some of the work with
this Committee in evaluating potential land consolidation
programs on a grand scale. And we had the advantage of having
estimates of land values broken down by parcels and
fractionated interest numbers.
In order to truly resolve this entire problem, we estimate
it would cost $6 billion to $8 billion, frankly. But the
largest problem are the highly fractionated shares, and as I
mentioned in my brief comments before, we think that $2 billion
has the potential to clear out as much as 80 percent of the
number of interests overall held.
And frankly, as you get into parcels that have fewer
owners, where they are earning income, you don't tend to have
the fractionation problem because those owners are thinking
about their future and their children's futures, and so you
don't have that issue.
In terms of how we are going to target within this, we are
essentially going to have a rolling process that targets, first
of all, those fractionated lands that have 20 or more
interests. We will start with lands that do not have mineral
interests because those mineral interests are harder to value,
frankly.
And within the 37,000 parcels of land that have more than
20 owners, there are 20,000 parcels that don't have mineral
interests, that look like they are easier to value, and in fact
we have already valued more than half of those.
So there are a number of parcels throughout Indian Country
that fall in this first tranche, including some in the Plains,
and we would be happy to go over with you and your staff,
Senator, the situation in terms of the Wind River tribes in
particular.
Senator Barrasso. Thank you, I would appreciate that.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Franken indicated he has to leave and has one
question. With the help of my colleagues, I will call on him
for one question, and then come back to our colleagues.
STATEMENT OF HON. AL FRANKEN,
U.S. SENATOR FROM MINNESOTA
Senator Franken. Thank you, Mr. Chairman, and I would like
to thank my colleagues.
What I am interested in is that for Indians to receive
money in the settlement, I guess they would have to know about
the settlement and whether they are entitled to it. So my only
question really is what is the plan to let people know that
they are entitled to part of this settlement?
Mr. Salazar. There is an exact process that has been
formulated, and I will have the Associate Attorney General
respond to the process.
Mr. Perrelli. Certainly, Senator.
There is a notice process that will include the Department
of Interior, working with the plaintiffs and a contractor who
does notice professionally to, among other things, translate
notice into appropriate languages. We will send notice to all
the addresses that we have, so hundreds of thousands of pieces
of mail, as well as publication notice and appropriate papers.
I think we will also work with individual tribes to ensure
publication on reservations, and I think a number of other
steps as well.
The Chairman. Senator Johnson?
STATEMENT OF HON. TIM JOHNSON,
U.S. SENATOR FROM SOUTH DAKOTA
Senator Johnson. Welcome, Secretary Salazar.
How many IIM account holders in South Dakota will be
affected by this settlement? Do you have any idea, or could you
get me that number?
Mr. Salazar. Deputy Secretary Hayes?
Senator Johnson. Yes?
Mr. Hayes. We can get you that number, and will, Senator.
There are over 300,000 total and a number are in South Dakota.
And it is being handed to me right now: 19,811 individual
accounts held in your State.
Senator Johnson. In South Dakota, several of the tribes
purchased land in the 1970s and 1980s using loans from the
Department of Agriculture. Some of those tribes are so heavily
impacted by this debt. Will these tribes be able to use the
settlement money to pay down the debt on those loans, since
they were used for land acquisition, including fractionated
land?
Mr. Salazar. I am not certain of that. Let me see if either
David or Tom or Hilary have a response to that question.
Mr. Hayes. I think, Senator, there is no restriction on how
individual account holders getting their settlement money will
use their money. They will have complete discretion to use it
as they see fit. I assume that would include the ability to pay
down loans that they may owe, but we would be happy to follow
up and confirm that.
Senator Johnson. Yes.
Mr. Perrelli, this settlement covers individual claims. Are
there remaining lawsuits filed by the tribes? Is so, how many?
Mr. Perrelli. There are approximately 99 cases brought by
tribal governments against the United States raising similar
types of claims. There are a small number of those that have
been settled, and I think the Department of Interior and the
Justice Department are very committed to working on trying to
find resolution of those matters as well.
Senator Johnson. I have no further questions.
The Chairman. Thank you.
Senator Murkowski?
STATEMENT OF HON. LISA MURKOWSKI,
U.S. SENATOR FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman.
And nice to see you back in the Committee here, Mr.
Secretary, and I appreciate your leadership on this settlement
and the opportunity to ask a few questions.
The questions that I have this afternoon are probably more
technical in nature, so I don't know whether they are directed
to you, Mr. Perrelli, or perhaps you, Mr. Hayes, or to Ms.
Tompkins, but they are as the settlement may relate to Alaska
Natives.
The first one is regarding the settlement as it pertains to
the land administration's claim, and the minimum payment of
$500 per claimant, assuming that the settlement is approved.
The question is whether every owner of an Alaska Native
allotment will be eligible for these minimum payment amounts,
assuming that they choose to not opt out of the class and are
willing to forego their land administration claims relative to
past conduct of the Federal Government. So will the Native
allottees be eligible for these payments?
Ms. Tompkins. Senator Murkowski, yes they will. There are
class members who are Alaska Natives, and some of them do hold
allotments, and so they will be eligible for payment under the
trust administration portion of this settlement.
Senator Murkowski. Okay, that is good to hear.
The second question, then, is similar to what Senator
Johnson asked about the individual Indian money accounts. And
Mr. Hayes, it looks like you must have the list there, and I
would be curious to know how many Alaskans have individual
Indian money accounts and whether or not there is any
indication in terms of how much each might expect to receive if
the settlement is approved.
Mr. Hayes. Senator, I do have information about the number
of accounts, and there are 5,365 individual accounts held by
Alaska Natives. I don't have the information about the funds,
although they presumably will get the basic allocation, $500,
and then there is a formula that applies depending upon the
amount of transactions and essentially the money flow through
those accounts with the account holders that are on land that
is being more productive, being awarded more funds.
Senator Murkowski. Okay. Thank you.
Another question involves the scholarship funds and whether
or not Alaska Natives will be eligible to apply for these
scholarship funds. And also, whether you think that there is
going to be any particular blood quantum that will be applied
as a form of eligibility cutoff.
Mr. Salazar. Senator Murkowski, this is an important part
of the settlement that creates an incentive for individual
Indians to participate in the fractionation buy-back program. I
am going to have Solicitor Tompkins report on exactly how that
would work.
Ms. Tompkins. Senator Murkowski, under current existing
law, the Alaska Native communities are not eligible for buy-
backs under the land consolidation program under current
existing law. However, the scholarship fund, which will be a
part of that program under the settlement agreement, will be
administered by a nonprofit entity. And presumably that entity
would provide scholarships to Alaska Natives, as well as other
Native Americans. That is one of the criteria we have in the
settlement agreement.
Senator Murkowski. I appreciate that answer. You mentioned
that Alaska is not part of the Indian Land Consolidation Act
and it doesn't apply there. So am I correct in assuming that
the Department of Interior will not be acquiring Native
allotments within the State for donation to tribe using the
proceeds of the land consolidation program?
Ms. Tompkins. That is correct. We are working within the
current legal framework that exists.
Senator Murkowski. I appreciate that. Thank you for the
responses.
And again, Mr. Secretary, thank you for your leadership on
this issue.
Thank you, Mr. Chairman.
The Chairman. Senator Murkowski, thank you very much, and
thanks for your work on these issues as well, along with
Senator McCain and myself over a long period of time.
Secretary Salazar, let me thank you and your team, and the
Solicitor as well. Thank you for coming today to explain to us.
Our Committee, of course, is the Committee of jurisdiction and
we wanted to, prior to Congress taking action, have an
opportunity to query you and those who were involved in the
negotiations. We will hear as well from Ms. Elouise Cobell
today, and we appreciate very much her being here.
So do you have other things to say before you leave, Mr.
Secretary?
Mr. Salazar. If I may, Mr. Chairman, just in conclusion.
Again, I want to thank you and the bipartisan leadership here
in the U.S. Senate on this Committee who have worked so hard on
this issue. It truly has been a herculean effort to get to
where we are today, and it truly is a historic effort.
I also want to thank President Obama for his support of
this effort, and Senator Murkowski, who actually came to the
White House Tribal Conference with the President a few weeks
ago.
The issues that we are facing for Alaska Natives and for
Native Americans are huge and they are real. And all of you
have shown a great amount of interest in helping this move
forward and help us address those issues, so I want to thank
you.
And finally, I also want to thank Elouise Cobell because
she raised issues that were important, which had been
unresolved for a very long time, and has brought us to this
point in history where we are in front of this Committee today
presenting what we all believe is a fair and reasonable way
forward.
Thank you.
The Chairman. Well, Mr. Secretary, thank you. Having met
many, many times with Ms. Cobell, she has a backbone of steel,
I can tell you, and we invited her to testify today as well.
So let me thank you and your team, and we will excuse you
and have Ms. Cobell come to the table.
Good luck to you, Mr. Secretary.
Ms. Cobell, Elouise Cobell, is the lead plaintiff in the
Cobell v. Salazar class action. Ms. Cobell is from Browning,
Montana. She is accompanied by Mr. Keith Harper, who is the
Class Counsel and Partner, Kilpatrick Stockton, LLP,
Washington, D.C.
Ms. Cobell, thank you very much for being here today. It
has been a long and difficult road, I know, and we are anxious
to hear your perspective about the settlement that is the
subject of this hearing. Your entire statement will be made a
part of the permanent record, and you may summarize. You may
proceed.
STATEMENT OF ELOUISE COBELL, LEAD PLAINTIFF, COBELL V. SALAZAR
Ms. Cobell. Thank you, Chairman Dorgan. And once again, I
am here representing the class of over 500,000 individual
Indians as the lead plaintiff in this case initially entitled
Cobell v. Babbitt, and now referred to as Cobell v. Salazar,
you know, pending in the United States Court for the District
of Columbia, presently being presided over by Judge James
Robertson.
Since inception more than 13 years ago, this Committee and
this House Committee on Resources have taken keen interest in
this litigation and key objectives reforming individual Indian
trusts, ensuring a full accounting, and correcting and
restating each individual's account balances, and other trust
assets.
I have been here numerous times, and on each occasion I
have emphasized my willingness to explore settlement of this
case. Resolution takes two parties willing to come to the table
to negotiate in good faith and attempt to reach what might be
an equitable settlement that would set the foundation for
improved trust management and accountability in the future.
The President showed great leadership during the campaign
when he committed to seeking fair resolution to this case. And
when elected, he followed through and charged Secretary Salazar
and Attorney General Holder with carrying out this commitment.
Having been through seven failed settlements before, I was
not optimistic of these negotiations and that we would reach
agreement. But we sat down in good faith with the
Administration. The issues to discuss and resolve were gravely
challenging, and I repeatedly felt we had reached an impasse.
But both my team and the government continued on, knowing that
resolution was the best thing for all individual Indian trust
beneficiaries, and for a healthier foundation of trust
relationships for the future.
The settlement, from my perspective, is not perfect. But
after months of discussion, I am here to testify that we have
reached an agreement and that I support this agreement. It is
time to look forward, not backward. We must never forget the
past. The settlement can move us forward together as it
represents the best resolution we can hope for under the
circumstances and is a partial atonement for historical
mismanagement of individual Indian trusts.
Although we have reached an historical settlement totaling
more than $3.4 billion, there is no doubt this is far less than
the full amount to which each individual Indians are entitled.
We could prolong our struggle, fight longer, and perhaps one
day know down to the penny how much every individual Indian is
owed. Perhaps we could even litigate long enough to increase
the settlement amount. But we are compelled to settle now by
the sobering reality that our class grows smaller each year,
each month and every day as our elders and infirm class members
die, forever preventing them from receiving which is theirs.
We also face the uncomfortable unavoidable fact that a
large number of individual Indian trust beneficiaries are among
the most vulnerable people in this Country, existing in sheer
poverty.
Now that the Cobell case has brought heightened attention
to this matter, I am optimistic that this settlement will lay
the foundation for genuine and meaningful reform of the trust.
I am hopeful that the commission that Secretary Salazar has
announced with this settlement will ensure that additional
critical reforms are made and that we set the underlying for
the safe and sound management of our assets in the future.
I know that Assistant Attorney General Perrelli has talked
about the settlement, so I will skip that detail. But I am
particularly pleased about the incentive program that is part
of the land consolidation effort. This will create post-
secondary academic and vocational scholarships for Indian
youth.
When Indian parents and grandparents talk to me about our
litigation, they always commit to use any money recovered from
this case to improve their children's and their grandchildren's
lives. These funds can establish a great legacy for our Indian
children and grandchildren, providing them the education
necessary to break the cycle of poverty that has held too many
Indians in grips for generations.
I think the settlement will do a lot of good. It will get
more than $3 billion in the hands of beneficiaries. It will
provide monies for land consolidation. It will create the $60
million scholarship fund. Moreover, there will be a secretarial
commission to recommend additional trust reforms.
When I embarked on this settlement process, I was skeptical
that this result could be achieved, but we were able to reach a
resolution. I now ask Congress to swiftly enact the necessary
implementing legislation so we can start on the challenges of
distribution without further delay. Hundreds of thousands of
individual Indians have waited patiently for far too long. It
is time that they see the proceeds of their efforts.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Cobell follows:]
Prepared Statement of Elouise Cobell, Lead Plaintiff, Cobell v. Salazar
Good afternoon, and thank you Chairman Dorgan, Ranking Member
Barrasso, and members of the Committee. I am here today once more
representing a class of over 500,000 individual Indians as the lead
plaintiff in the case initially entitled Cobell v. Babbitt and now
referred to as Cobell v. Salazar, pending in the United States District
Court for the District of Columbia and presently presided over by Judge
James Robertson. Since virtually its inception more than 13 years ago,
this Committee and the House Committee on Resources have taken keen
interest in this litigation and its key objectives--reforming the
Individual Indian Trust (``Trust''), ensuring a full accounting, and
correcting and restating each individual's account balance and all
other Trust assets.
By any measure, this litigation has proven exceptional and
extraordinary. Not only is it one of the largest class actions ever
brought against the United States as it addresses over 120 years of
mismanagement of Indian trust assets and involves over 500,000
individual Indians, but the litigation has been intense and
contentious. Moreover, there have been more than 3,600 docket entries
in the district court and over 80 published decisions, including ten
appeals--the most recent appellate opinion is referred to as Cobell
XXII.
I have been before you numerous times, and, on each occasion, I
have emphasized my willingness to explore settlement of this case. But
of course, resolution takes two parties willing to come to the table to
negotiate in good faith and attempt to reach what might be an equitable
settlement that would set the foundation for improved trust management
and accountability in the future. Until very recently, however, we did
not have such a willing partner on the other side. The President showed
great leadership during the campaign when he committed to seeking a
fair resolution to this case and, when elected, he followed through and
charged Secretary Salazar and Attorney General Holder with carrying out
this commitment.
Having been through seven failed settlement efforts before, I was
not optimistic at the outset of these negotiations that we would be
able to reach agreement. Over the past few months though, we sat down
in good faith and so did the Administration. Associate Attorney General
Tom Perrelli, Interior Deputy Secretary David Hayes, and Interior
Solicitor Hilary Tompkins were involved in the day-to-day negotiations.
The issues to discuss and resolve were gravely challenging, and I
repeatedly felt we had reached impasse. But both my team and the
government soldiered on, knowing that resolution was the best thing for
all individual Indian trust beneficiaries and for a healthier
foundation of the trust relationship for the future.
Reaching agreement was certainly not easy, and the settlement from
my perspective is not perfect. But after months of discussion, I am
here to testify that we have reached agreement and that I support this
agreement. It is time to look forward, not backward. And though we must
never forget the past, this settlement can move us forward together as
it represents the best resolution we can hope for under the
circumstances and, resolving past claims, is a partial atonement for
the historical mismanagement of the Individual Indian Trust.
Although we have reached an historical settlement totaling more
than $3.4 billion dollars, there is little doubt this is far less than
the full amount to which individual Indians are entitled. Yes, we could
prolong our struggle, fight longer, and, perhaps one day, know--down to
the penny--how much individual Indians are owed. Perhaps we could even
litigate long enough to increase the settlement amount. But we are
nevertheless compelled to settle now by the sobering reality that our
class grows smaller each year, each month, and every day, as our elders
and infirm class members die, forever prevented from receiving that
which is theirs. We also face the uncomfortable, but unavoidable fact
that a large number of individual Indian trust beneficiaries are among
the most vulnerable people in this country, existing in the direst of
poverty. This settlement can begin to provide hope and a much needed
measure of justice.
In addition, now that the Cobell case has brought heightened
attention to this matter, I am optimistic that this settlement will lay
the foundation for genuine and meaningful reform of the Trust. There
remains considerable room for improvement, as Secretary Salazar and
Deputy Secretary Hayes have recognized. I am hopeful that the
Commission that Secretary Salazar has contemporaneously announced with
this settlement will ensure that additional critical reforms are made
and that we set the underpinning for safe and sound management of our
assets in the future.
The Settlement
The settlement is rather straightforward. There shall be set aside
$1.412 billion for the resolution of the accounting, trust
administration and mismanagement claims. These funds will be
distributed as follows. Each individual Indian trust beneficiary who
has an account open on government systems as of October 25, 1994, will
receive $1,000.00 as a payment in lieu of the government providing an
historical accounting. The remainder of this settlement fund, less the
cost of settlement implementation, shall be distributed pro rata,
calculated on the transactional activity in a beneficiaries' trust
account over a designated period of time, with a baseline minimum
payment of $500.00. Accordingly, the vast majority of beneficiaries
will receive at least $1,500.00 from this settlement, and many will
receive considerably more than that.
In addition, the agreement addresses the longstanding challenge of
the increasing fractionation of individual Indian lands. The Interior
Department repeatedly has acknowledged that managing these small
interests--many of low monetary value--is one of the problems causing
the Trust's mismanagement. The amount of $2 billion is set aside to
purchase lands from willing sellers. This will provide additional funds
to individual Indians and can establish a more stable foundation for
prospective management.
I am particularly pleased about the incentive program that is part
of the land consolidation effort. This will create post-secondary
academic and vocational scholarships for Indian youth. When Indian
parents and grandparents talk to me about our litigation, they
passionately explain that they would use the money we recover to
improve their children's and grandchildren's lives. I am confident this
will prove an important incentive for land consolidation. More
importantly, these funds should establish a great legacy for our Indian
children and grandchildren, providing them the education necessary to
break the cycle of poverty that has held too many Indians in its grip
for generations.
I think this settlement will do a lot of good. It will get more
than $3 billion in the hands of beneficiaries. It will provide monies
for land consolidation. It will create a $60 million scholarship fund.
Moreover, there will be a Secretarial Commission to recommend
additional trust reforms that are needed. And there is an agreement to
perform an audit of the Trust. No audit has ever been done of this
Trust. To heal the division between individual Indian trust
beneficiaries and the government and to establish greater confidence
that the IIM Trust is managed in accordance with trust law,
transparency is essential. Too many records have been destroyed. Too
much deception has occurred. Importantly, this settlement will allow
individual Indians to look forward and work collaboratively with their
trustee to ensure a better tomorrow.
We know this settlement does not solve all of the serious
underlying problems plaguing this Trust. We know that reform cannot
stop here. We will continue our efforts to ensure accountability. We
have had to spend too much time looking backwards, trying to address
the terrible wrongs of the past. Now my hope is that we look forward to
ensure that in the future individual Indian trust beneficiaries finally
receive that which rightfully is theirs.
Conclusion
When I embarked on this settlement process, I was skeptical that
this result could be achieved. But we were able to reach a resolution.
I now ask Congress to swiftly enact the necessary implementing
legislation so we can begin to distribute our trust funds without
further delay. Hundreds of thousands of individual Indians have waited
patiently for far too long. Time is of the essence.
The Chairman. Ms. Cobell, thank you very much.
And as I have indicated, you have been very patient, but
very resolute throughout this. You and I have had a number of
discussions, and you have always been particularly generous in
being willing to sit down with anybody at any time and try to
talk through and discuss this case. And I have always been
appreciative of that.
I want to ask a couple of questions. You talk about the
incentive program and its ability to improve children's and
grandchildren's lives. Give me a little better description of
that. How do you see this incentive program investing in
children?
Ms. Cobell. Many of the individual Indians that we
represent in this case are living in poverty. They don't have
any means to send their children to school. And I think that
has been the driving force of my work on this case as the lead
plaintiff is to better and improve the lives of our children.
And it is the place that we need to start.
So many times that I have been in meetings with elders and
individual Indians, it is always for my children, if I can have
this for my children, if I can better the lives for my
grandchildren. And I am always under the impression that if we
can get our young people educated, this will never happen
again. We can never allow the United States Government to
behave like this and treat individual Indians the way that they
have treated individual Indians. And I feel that if educating
our young people, this will be the opportunity, that we can
hold people accountable.
The Chairman. You are the lead plaintiff, but of course,
there are many plaintiffs. Tell me about the reaction of the
other plaintiffs in the class. I assume there are differences
of opinion. How significant are those differences?
Ms. Cobell. Well, I think out of every 10 people that I
hear from, you know, maybe one that is negative. But they have
a little confusion of what does this really mean? What does
this mean to us? Does it mean our tribal trusts?
So there is a lot of confusion that has to be, you know,
described to them, that this is as a result of the Allotment
Act or the Dawes Act.
Everybody has been ecstatic, let me tell you. At my home, I
go into the grocery store and everybody runs and shakes my hand
and thanks me for fighting for justice for them. Because, you
know, $1,000 means a lot, and people don't understand that I
think maybe living in the D.C. area, you know, what is $1,000?
Well, $1,000 will buy, you know, maybe two or three months
groceries for your family out where I am from.
And so, I think that the $1,000 means that maybe the
government, for once in their lives, will pay up, will be
honest to them; will actually, you know, have the ability to
say, we did wrong and let's move forward, and so here is a
first payment. But under the distribution plan, many
individuals will receive a lot more money.
The Chairman. The historical accounting that the court
would have required would be long, arduous and very, very
expensive to do. And yet I understand why some would probably
want that because there is evidence in the late 1800s and the
early 1900s, there is evidence of Indians and tribes being
completely bilked by representatives of the Interior who
claimed that their land was producing no income, when in fact
it was. And so there is such a shameful history here.
And I guess the question I have is I have the greatest
respect for Secretary Salazar. We served with him here in the
United States Senate. He is an extraordinary man. And he has
committed himself, I know, to try to reach a settlement. He has
also committed this Interior Department to a future that is
vastly different than the past.
Tell me your feelings about viewing the Interior
Department's actions going forward. Do you feel like you have
extracted sufficient protections here that we are not going to
see 50 years from now another lead plaintiff come to a table
and say, we were wronged?
Ms. Cobell. Well, you know, I have to believe that they are
going to correct this trust. I was very encouraged by the fact
that the secretarial order was coming out that would establish
a commission. And I worried about the fact that, you know, will
that change if the Administration changes? How do we make sure
that it continues on?
And I think it is something that we can't leave out of our
sight, is that we will have to continue to watch and monitor
and make sure that the commitments that have been made, and
this Committee, I think, will have to continue to monitor, to
make sure that we get trust reform. We can't let this happen
again. We can't.
And, you know, I don't know, the sadness that I have, every
single day that I go back to Black Butte is seeing another
person die and another person die without their money. You
know, we talked about fractionated heirship lands, and my
feeling is that if these systems weren't broken in 1887, you
know, we would have been able to account for the different
types of land that was being inherited by other people.
You know, if it was done properly, but have broken systems
and they don't change overnight. And we have to make sure that
the Secretary is held accountable on this commission. And I
compliment the Secretary and the Administration for taking this
head-on because it is the first time that we have really seen
this type of cooperation.
The Chairman. What is your understanding of the time of
distribution of these funds, provided that Congress meets the
end of the year deadline?
Ms. Cobell. Well, my understanding if they met the
deadline, and I am hoping that we are still able to do that. I
am, you know, I am a little concerned about going back home and
telling everybody again, well, sorry, we are going to be
delayed again. You know, people just get tired of that.
And so I think by the fall that there would be distribution
that would, you know, that would take place, that we would be
able to have proper notice and a fairness hearing, and there
could actually be money distributed by the fall of 2010.
The Chairman. Well, Ms. Cobell, I support the decision. I
think it is a wise choice, probably not an easy choice, but
nonetheless a wise one, and one that I think will provide
substantial benefits to those who have been injured.
My hope is, and I certainly commit as the Chairman of this
Committee, to continue to hold oversight hearings to make sure
that when we start fresh now and begin anew, that we not allow
to happen in the future what happened in the past.
And I think the fact that you and others in the class, you
as the lead in this class, have brought action against the
Interior Department was entirely appropriate. As you know, the
courts have spoken in the publishing of a lot of material over
some years now about what happened in the Interior Department,
and it is a sad chapter. But it needn't continue, and I think
this suit and the subsequent settlement of the suit is an
admonishment that things must change and will change. And as I
said, I have great confidence in the Secretary and applaud him
for the conclusion of these settlement negotiations.
Well, I want to thank you for flying to Washington, D.C. to
testify. As the Committee of jurisdiction, we wanted to have,
even though it was on short notice, we wanted to have a
hearing, a formal hearing with the Secretary here, and invited
you to be present as well. And we will now do all that we can
to see that the terms of the settlement are carried out by the
Federal Government.
Do you have additional comments, Ms. Cobell?
Ms. Cobell. I just want to thank you, and I appreciate the
fact that you will continue to have oversight hearings to make
sure. And I just pray that you do everything in your power to
make this legislation happen by the end of the year. And I will
be available to do any way that we can to help.
And I would like to ask maybe Keith Harper if he would like
to have a closing statement.
Mr. Harper. The only thing I can add, Senator, is that from
the legal team, that we also thank the leadership of this
Committee. The Committee has been a staunch supporter of this
litigation and has urged the parties to see resolution. And we
strongly believe that that has led the parties to reach this
settlement.
It was, again, across the table, very difficult, took
months. But we are here and we do ask that you continue that
leadership to get this legislation enacted for those
beneficiaries out in Indian Country.
Thank you.
The Chairman. When you say before the end of the year, it
certainly appears to me we will be here until the end of the
year.
[Laughter.]
The Chairman. Let me also note that former colleague,
Elliott Levitas, former Member of the House of Representatives
is here, I believe a part of the team that was involved.
Elliott, it is nice to see you. Thank you very much for
being here.
This hearing is adjourned.
[Whereupon, at 3:34 p.m., the Committee was adjourned.]
A P P E N D I X
Prepared Statement of Eddie Jacobs, Creek Indian Individual Indian
Trust Account Holder
Mr. Chairman and members of the Committee, I am a member of the
present Cobell plaintiff class. I would also be a member of both
proposed plantiff classes which this legislation would authorize the
U.S. District Court for the District of Columbia to bind as a matter of
law in settlement of the Cobell litigation. For several years I have
sought to intervene in this litigation and have been opposed at every
turn by the plaintiffs' attorneys. In addition, I have been advised by
representatives of defendants' Special Trustee that they cannot address
my claims directly with me because I have become a ``represented
party,'' represented by plaintiffs' counsel. I have been locked out of
all deliberations and out of all consideration. And now I am advised
that all my claims, including those that have never been part of this
litigation, are to be resolved by this proposed ``settlement,'' which
is manifestly unfair to me and to individual Indians in my situation.
I urge the members of this Committee to reject those portions of
the proposed legislation which would authorize settlement of matters
that are not and never have been a part of the underlying litigation.
This Committee's long-standing interest in settlement of this
litigation is well known, but never before has this Committee proposed
to sell out claims that are not part of the litigation in order to
settle those matters that are actually before the court.
Class Members Have Been Assured They Will Be Paid Before Attorneys
In addition, Senator McCain has stated in public hearings on an
earlier settlement proposal that no settlement would be approved by
this Committee that does not provide for actual payment to the Indians
before payment of untold millions of dollars to the attorneys in this
matter. Under this proposal, not only the attorneys but also the named
plaintiffs would be paid scores, or perhaps hundreds, of millions of
dollars before any other class member would receive a dime.
Per Capita Payment Neither Fair nor Equitable
The per capita payment proposed for the Historical Accounting Class
will treat individuals who inherited minuscule shares of Indian trust
estates as recently as September 2009 the same way as Indians like
myself who have been entitled to 100 percent of the revenue from my
trust lands that have been significantly underpaid for many years. I
have personally assisted other Indian trust landowners in collecting
several thousands of dollars in partial payment of what they were owed
for oil and gas production from their lands. By any standard of
fairness these individuals should receive a greater payment than those
whose interests can only be expressed by fractions with seven- or
eight-digit denominators. A ``Claims Administrator'' should be
permitted to make payments based on some reasonable estimate or
evidence of loss and not on an across-the-board basis that will provide
a huge windfall to some account holders while grossly underpaying those
who have truly suffered significant losses through the years.
Payments Should Take into Consideration Shares of Ownership Interests
For owners of divided interests in trust land, the per capita
payments will pay to an owner of a very small interest in a tract of
land the same amount that is paid to the single owner of 75 percent or
more of the very same tract. In my case, I am the owner of 100 percent
of the land allotted to my father, and my payment will be the same as
the payments to neighboring landowners whose ownership interests can
only be expressed in numbers with seven or eight digits to the right of
a decimal point. There is no fairness, equity, or otherwise sensible
basis for such a settlement arrangement. My payment for losses should
certainly reflect my 100 percent ownership interest in all the revenues
generated and paid into the IIM system by my 100 percent ownership
interest. It is not enough to say that these losses are to be
compensated by payments to the second class of payees this proposed
settlement would create. My losses for revenues generated in past years
are indisputably included in the Historical Accounting Class that will
be compensated in the initial round of per capita payments. My losses
on 100 percent of the revenues generated by my land over many years
cannot reasonably be compared to those suffered by someone who only
inherited a small interest in an already divided account as recently as
three months ago.
Pro Rata Payments Based on Receipts, not on Losses
Ms. Cobell has spoken eloquently throughout this litigation of her
concern for those Indians like myself who have actually suffered losses
as a result of the government's failures to administer the Indian trust
appropriately. This proposed settlement makes a mockery of those
expressions. Under this proposal, those individuals who have already
sold their land, some several years ago, would receive higher payments
than those of us who have maintained our trust landholdings and have
actually suffered the losses that Ms. Cobell claims to redress. Those
of us who have been deprived of income we were entitled to receive
would receive smaller payments for the very reason that we have been
underpaid in the past.
Proposed Land Consolidation Fund Benefits Only Attorneys, not Indians
In an earlier hearing, Senator McCain asked Ms. Cobell to disclose
the terms under which her attorneys would be compensated, and she
agreed to provide that information for the record. I do not believe
that information was ever provided to the Committee. Under this
proposal, according to news releases, the proposed $2 billion Land
Consolidation Fund is considered part of the settlement. In fact, no
part of that money will be used to settle any loss that any Indian has
ever suffered for anything. The only Indians who will receive any part
of that money are those who agree to part with their birthrights in the
future. On the other hand, if the attorneys are paid on any contingency
fee basis that is calculated on a ``settlement'' that includes this
Fund, the result will be that the initial $1.4 billion payment for
Indians will be further reduced by taking the attorneys' percentage of
the Land Consolidation Fund out of that portion of the settlement
designated as the Historic Accounting Settlement. In other words. if
the attorney fees are calculated at only one percent (1.0 percent), the
Land Consolidation Fund will generate another $20 million in attorney
fees, which will have to be taken from the $1.43 billion intended to
compensate Indians. If the attorney fees are even capped at ten per
cent, the result will be to reduce the money available to pay the
Indians by a staggering $200 million which will go to the attorneys
instead. At the very least, I urge this Committee to shed some light on
this part of the settlement. The $2 billion Land Consolidation Fund
should not be considered any part of a ``settlement,'' for purposes of
reducing the amount available to pay the Indians.
Cobell is not Afghanistan, nor Health Care; Time is Not of the Essence
There are two only conceivable reasons for the urgency presented by
this proposal. One is to prevent anyone from fully examining or
understanding it The schedule presented by the settlement and this
legislation makes a mockery of any pretense of consulting with class
members, or even permitting the Congress to consider the consequences
of its actions. The other conceivable reason is that the attorneys and
named plaintiffs need relief. If the attorneys and the named plaintiffs
are in desperate need of an immediate cash infusion, the Administration
could arrange a bridge loan, or Congress could consider a private
relief bill for them that would not involve selling out the very
Indians that this settlement claims to benefit.
Recommendation
If the Committee is determined to act on this proposed settlement,
common decency demands that Indians such as myself not be sold out just
to appease the named plaintiffs who collectively have not shown losses
amounting to a single, $1,000 per capita payment under this proposal,
much less the estimated $15 million they will share in incentive
payments. If the Congress is determined to act, then I respectfully
recommend that the Claims Administrator should be authorized to review
the documents and actual claims of individuals in the second-tier
(Trust Administration) class which will be created by this settlement,
and to make settlement payments based on some evidence of actual claims
and actual losses rather than just on the amount that has gone through
the accounts. Otherwise, those who have been the most mistreated in the
past will be the most mistreated and least compensated in the
settlement.
Thank you for this opportunity to present my views, and I am
willing to work with the Committee in any way possible to make any
settlement of this litigation truly honorable.
______
______
Response to Written Questions Submitted by Hon. John Barrasso to
Elouise Cobell
______
Response to Written Questions Submitted by Hon. John Barrasso to
Hon. Thomas J. Perrelli
Attachments
______
Response to Written Questions Submitted by Hon. Tom Udall to
Hon. Ken Salazar
______
Response to Written Questions Submitted by Hon. Tim Johnson to
Hon. Ken Salazar
______
Response to Written Questions Submitted by Hon. Lisa Murkowski to
Hon. Ken Salazar
______
Response to Written Questions Submitted by Hon. John Barrasso to
David J. Hayes