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Africa and Aboriginal Tuesdays: Congress And The Individual Indian Trust - Statement By Elouise Cobell And The Fifty Principles For Legislation.


My fellow trust beneficiaries,

Almost six months ago, Senator McCain asked me to work with Indian Country to reach a consensus on finding a solution to one of America's last, great injustices: the mismanagement of Indian Trusts. Over the course of several months, Native American leaders from all across this great country were consulted.

In the end, we agreed on 50 trust principles, a roadmap to resolution of this national shame. We share an interest in an equitable legislative solution to this century-old scandal.

I was disappointed that most of the 50 trust principles that Indian Country put forth to the Congress are not incorporated in the draft legislation.

However, I look forward to working with Chairman McCain and Vice-Chairman Dorgan and the members of the Committee on Indian Affairs to implement the trust principles that we submitted in June. Those principles are the views of Indian Country.

Any legislation that has a hope of gaining the support of Indian Country has to strongly reflect those views. This is a historic issue that all of Indian Country has rallied behind. Historic issues require historic solutions.

We have a long way to go, but I am confident that the Committee shares my view that we have to end with a bill that all of Indian Country can support.

The proposed bill is not in accord with important judicial rulings made over the nine years of Cobell litigation. An equitable settlement must honor and reflect the judicial decisions from the many hard fought victories won in the District Court and United States Court of Appeals.

For nine years, Native American owners of individual trust lands have sought justice in the courts. For nine years, they have won victory after victory on the merits of their case. For nine years, government lawyers have subverted justice with a strategy of obstruction, delay, and misrepresentation. For their misdeeds, government officials - both Democrats and Republicans - have been routinely and repeatedly sanctioned and held in contempt of court. Moreover, the government has spent more than $1 billion dollars on bogus fixes to the system and their own lawyers.

The district court has already ruled that plaintiffs are likely to prevail in this litigation - a string of unqualified victories on the merits makes this a certainty. However, it might take years to reach a resolution if the government continues its policy of obstruction and delay. Too many generations have already died without justice.

Members of the Committee asked Indian leaders to come together behind a unified set of principles reflecting the concerns of Indian Country. After five months of consultations and deliberations taking into account decades of hard experience, we delivered on that request. The degree of unity reflected in these principles is without precedent.

I look forward to the public hearings and to vigorous and constructive participation in the legislative process. I also look forward to the anticipated involvement of the House of Representatives Committee on Resources, which has been dealing with these issues as well.

Elouise Cobell
Lead Plaintiff
Blackfeet Reservation Development Fund, Inc.


* Editor's note. The following is a list of principles for legislation as drafted by The Trust Reform and Cobell Settlement Workgroup. The rationale, for each principle, and additional details, can be found on the Cobell Vs Norton - Indian Trust website.

The Trust Reform and Cobell Settlement Workgroup presents these Principles for Legislation as the basis for resolving the nine-year court battle in Cobell v. Norton concerning the federal government’s failure to account for trust funds held for Americans Indians and for reforming the federal government’s systems for tribal and individual trust management. The Workgroup was organized by National Congress of American Indians (NCAI) President Tex Hall and Inter-Tribal Monitoring Association (ITMA) Chairman Jim Gray and includes the Cobell Plaintiffs, tribes, individual Indian allottees, and Indian organizations.

The Principles were drafted in response to a request by Senator John McCain (R-AZ), Chairman of the Senate Indian Affairs Committee, Senator Byron Dorgan (D-ND), Vice Chairman of the Senate Indian Affairs Committee, Congressman Richard Pombo (R-CA), Chairman of the House Resources Committee, and Congressman Nick Rahall (D-WV), Ranking Member of the House Resources Committee. The lawmakers asked Indian Country to provide a set of principles that would guide the lawmakers’ drafting of legislation to provide for a prompt and fair resolution of the trust issue.

The Principles include four major areas: (1) historical accounting of individual Indian trust accounts, (2) reforming the individual and tribal trust systems, (3) Indian land consolidation, and (4) individual Indian resource mismanagement claims.

Historical Accounting of Individual Indian Trust Accounts

1. Any funds used for the settlement of the historical accounting claim should not be scored against any agency nor should any agency appropriations be diminished to satisfy any judgment. The Claims Judgment Fund is a perfect source since it is a permanent and indefinite appropriation.

2. Settlement legislation should expressly recognize that adequate accountings in conformity with law cannot be performed. Because of the loss and destruction of so many of the trust documents needed to perform an adequate accounting required of a trustee, it is impossible to do an accounting except to the extent an alternative methodology is used as set forth in Principle 3 and 4.

3. A “lump sum” amount reflecting the aggregate correction of accounts should be adopted as the settlement figure.

4. For the reasons outlined in Principle 2, an adequate accounting is impossible; but that does not mean there is not a way to calculate the necessary aggregate correction of accounts and determine a reasonable settlement amount consistent with trust law. Importantly, there is general agreement between the parties about the aggregate amount which has been generated by the trust (i.e. between $13 and $14 billion for a designated period). Those deposits earn compound interest. The requirement that interest and imputed yields are due has been confirmed by the District Court and Court of Appeals in Cobell v. Norton. Any amounts which can be proved to have been properly distributed to the correct beneficiary could be deducted. But, the records are not there to make such a determination. Even when significantly discounted and substantially reduced in consideration of litigation risks, this analysis justifies a sum specific settlement amount of $27.487 Billion.

5. No settlement legislation should seek to individualize the claims of beneficiaries – this is an inherently unfair approach. The settlement must be on a class-wide basis.

6. The agreed settlement amount must be fair. To ensure a fair amount, class representatives must consent to the aggregate settlement amount.

7. The settlement sum shall be paid into the court registry. Court approved payment to beneficiaries, along with the other settlement provisions, shall constitute a full, fair, and final settlement of Cobell v. Norton.

8. Because this is income derived from trust property, legislation should include an express clause that any monies received by an individual beneficiary will not be considered in determining eligibility for state or federal benefits including but not limited to TANF, Social Security, Medicaid and Medicare and that such monies shall not be taxable income. Furthermore, an additional provision shall be included expressly stating that no sums paid hereunder shall be utilized as offsets by the federal government for claims it may have against the recipient.

9. Rulings of the Trial Court and Appellate Court in Cobell v. Norton shall be followed and applied in providing, implementing, and interpreting the legislative settlement.

10. The distribution or allocation of the settlement amount to the IIM beneficiaries should be determined by the district court in conformance with the customary method of resolving class action litigations in federal courts. Federal Rule of Civil Procedure 23 shall be used, including a fairness hearing and in the resolution of other administrative matters.

11. There should be a severability clause providing for severing the Cobell settlement provisions from the rest of the legislation. There also should be a non-severability clause relating to the provisions within the IIM accounting provisions of the legislation.

12. The following is an example of language that could be implemented to settle the historical accounting claim of the Cobell case:
”The Congress authorizes and directs the Department of Treasury to correct the account balances of the Individual Indian Trust held in Account 14X6039, in the aggregate amount of $2 7.487 billion. This represents a fair and final settlement of the historical accounting claim in the case entitled Cobell v. Norton Civ. No. 96-1285(RCL) before the United States District Court of the District of Columbia. To the extent funds are needed for this purpose, the Congress authorizes and directs the use of the Claims Judgment Fund, 31

U.S.C. § 1301 et seq. to pay for the settlement of the lawsuit. The Federal District Court shall determine a fair and equitable distribution of the settlement proceeds to the trust beneficiaries in accordance with Rule 23 of the Federal Rules of Civil Procedure.”

13. Legislation should address the unique situation of the Osage Tribe, whose income from tribal trust assets are distributed to individuals through “headright” interests that belong not only to Osages, but Indians of other tribes, and non-Indians.

Reforming the Individual and Tribal Trust Systems.

14. Legislation should affirm and clarify the specific standards for the administration of trust funds and transactions that involve those funds which prescribe what needs to be done, but not how to do it.

15. To the extent practicable, the legislation should establish resource-specific, generic standards where possible (e.g. sustained yield requirements for Indian timber).

16. Legislation should clarify that fulfillment of fiduciary duties must be administered in accordance with applicable law, including tribal law.

17. The legislation shall codify the applicability of the following duties to the Indian Trust:

Duty of Loyalty and Candor
Duty to Keep and Render Accounts
Duty to Exercise Reasonable Care and Skill Duty to Administer the Trust
Duty not to Delegate (this does not negatively impact compacting or contracting.)
Duty to Furnish Information
Duty to Take & Keep Control
Duty to Preserve the Trust Property
Duty to Enforce Claims and Defend Actions Duty to Keep Trust Property Separate Duty with Respect to Bank Deposits Duty to Make Trust Property Productive Duty to Pay Income to Beneficiaries Duty to Deal Impartially with Beneficiaries Duty with Respect to Co-Trustees
Duty with Respect to Persons Holding Power of Control

18. The legislation should state that in the absence of more specific statutory law or specific agreements between the trustee and the beneficiary, common law duties shall govern the administration of the trust.

19. The legislation should reaffirm that Indian beneficiaries have a cause of action in federal courts for breach of fiduciary duties and granting of equitable and legal relief.

20. An independent Executive Branch entity is needed to provide oversight and enforcement authority for federal trust administration.

21. The independent Executive Branch entity should not diminish the inherent sovereign authority of tribal governments to make their own laws, nor should it interfere with tribal management of tribal land and other tribal resources where tribes assume these responsibilities through self-determination contracting or compacting.

22. The legislation should prohibit the independent Executive Branch entity from engaging in any trust management functions.

23. The legislation should require that the independent entity be separate from the Department of the Interior and not under its control.

24. The legislation should charge the independent entity with ensuring that proper audits are conducted in accordance with generally accepted auditing standards. The independent entity should then be required to review the audits and ensure that corrective measures are taken.

25. The legislation should require the independent entity to be governed by presidential appointees for five year terms from a list of nominated candidates.

26. Legislation should create the permanent position of the Deputy Secretary to be responsible for Indian Affairs including the management and administration of the Indian trust. The trust functions of BLM, OTFM, MMS, and other federal agencies with fiduciary responsibilities within Interior should also come under the jurisdiction of the Deputy Secretary.

27. Legislation should require that tribal leaders be consulted with respect to the appointment of the Deputy Secretary and Indian preference shall apply to the Office of the Deputy Secretary.

28. The legislation should expressly state that the Deputy Secretary shall have the primary duty to fulfill the fiduciary duties of the Secretary of the Interior and protect the interests of Indian beneficiaries including the authority to employ independent trust counsel to advise on ensuring compliance with trust duties.

29. The independent entity should assume the oversight responsibilities of the OST, and the Deputy Secretary should assume OST management and administrative responsibilities. Legislation should sunset the Office of the Special Trustee.

30. The legislation should not diminish the rights and responsibilities set forth in the Indian Self-Determination Act.

31. With respect to federal laws relating to use or management of tribal trust assets, legislation should permit and support the development of tribal, reservation-specific plans that provide specific standards for management of tribal trust resources.

32. Legislation should protect the sovereign authorities and reserved rights of tribes to regulate the lands within their jurisdictions.

33. Legislation should support government-to-government agreements between a tribe and the United States for management of all trust resources within the tribe’s jurisdiction, provided that the agreements ensure processes and remedies to protect the interests of allottees, including allottees of other tribes.

34. Irrespective of what entity is administering individual Indian trust assets, the same duties and standards of conduct apply. Notwithstanding, tribes involved in self-determination or self-governance management and administration can utilize alternative means to carry out fiduciary duties so long as they meet the generally applicable standards.

35. Legislation should ensure that individual allottees can bring claims for failure to discharge fiduciary duties in managing individual trust assets.

Indian Land Consolidation

36. Congress should enact new laws or amend existing ones that promote consolidation of fractionated interests in land as an element of a Cobell Settlement/Trust Reform legislative package.

37. For highly fractionated lands (greater than 50 owners), legislation should focus on expanding the voluntary buy back program and allow the Secretary to take into account other factors in determining land values such as avoided costs.

38. For less fractionated land, legislation should focus on providing mechanisms that encourage land consolidation, such as low interest loans for individuals to purchase fractionated land, and good ownership practices (i.e. family trusts).

39. Legislation should set forth enforceable rights and clear standards as to what constitutes adequate information so that landowners can give knowing and informed consent when making decisions whether to sell their lands.

40. Legislation should have a process for repurchasing undivided fee interests to consolidate ownership of allotments into trust or restricted status.

41. The legislation should state that land consolidation payments will not diminish eligibility for federal benefits such as TANF, Social Security, Medicare/Medicaid and VA Benefits, and such payment should not be taxable.

42. Legislation should provide a fair process for notifying persons whose whereabouts are unknown and protection of their interests including in the consolidation of lands.

43. Congress should reconsider the use of liens on lands repurchased under ILCA programs in light of its administrative costs. Liens should be waived when the income from the land will not cover the purchase price.

44. Legislation should promote tribal government efforts to repurchase fractionated lands that allow flexibility for cultural needs and priorities.

45. Legislation should promote tribal land ownership systems while preserving the rights of allottees that are willing to trade their land to a tribe or United States for an assignment or some form of an indefinite individual interest.

46. Congress should ensure adequate funding and staffing for efficient land consolidation.

47. The appraisal system should be fixed in any legislation. Problems like the lack of timeliness of appraisals, the significant backlog, the improper valuation, and the overall transfer of fractional interest lands including voluntary buyback should be addressed. The system should also be consolidated under the Bureau of Indian Affairs.

Individual Indian Resource Mismanagement Claims

48. Congress should provide a fair offer to individual Indians for decades of federal mismanagement of their trust resources.

49. Congress should treat the federal mismanagement of individual Indian resources as a matter of national interest as it has the savings and loan scandal. Congress cannot leave the individual allottee to the mercy of the federal bureaucrats as there is a documented history of widespread, systematic, and continuing mismanagement of Indian resources.

50. Congress should not involuntarily terminate the rights of individuals to seek redress for federal mismanagement of individual trust resources.


Tuesday, August 9, 2005

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