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COBELL v. NORTON

September 17, 2002

ELOUISE PEPION COBELL, ET AL., PLAINTIFFS,
V.
GALE A. NORTON, SECRETARY OF THE INTERIOR, ET AL., DEFENDANTS



The opinion of the court was delivered by: Royce C. Lamberth, United States District Judge.

                MEMORANDUM OPINION

This matter comes before the Court after a twenty-nine day bench trial to determine whether defendants Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of Interior for Indian Affairs, should be held in civil contempt of court. After carefully reviewing of all the evidence presented and representations made at trial, the record in this case, and the applicable law, the Court finds that these defendants are in civil contempt of court. The Court's findings of fact and conclusions of law are detailed below.

I. INTRODUCTION

The Department of Interior's administration of the Individual Indian Money ("IIM") trust has served as the gold standard for mismanagement by the federal government for more than a century. As the trustee-delegate of the United States, the Secretary of Interior does not know the precise number of IIM trust accounts that she is to administer and protect, how much money is or should be in the trust, or even the proper balance for each individual account. Because of the Secretary's systemic failure as a trustee-delegate, the federal government regularly issues payments to beneficiaries-of their own money-in erroneous amounts. In fact, the Interior Department cannot provide an accurate accounting to the majority of the estimated 300,000 trust beneficiaries, despite a clear statutory mandate and the century-old obligation to do so. As the Court observed more than two years ago, "[i]t is fiscal and governmental irresponsibility in its purest form." Cobell v. Babbitt ("Cobell V"), 91 F. Supp.2d 1, 6 (D.D.C. 1999).

Equally troubling is the manner in which the Department of Interior has conducted itself during the course of this litigation. In February of 1999, the Court held Bruce Babbitt, then-Secretary of the Interior, and Kevin Gover, then-Assistant Secretary of Interior for Indian Affairs, in civil contempt for violating two of this Court's discovery orders. Among other things, the Court found that almost immediately after proposing a clear and unambiguous order which the Court signed, "the defendants disobeyed that order and successfully covered up their disobedience through semantics and strained, unilateral, self-serving interpretations of their own duties." Cobell v. Babbitt ("Cobell IV"), 188 F.R.D. 122, 140 (D.D.C. 1999). The defendants' misconduct did not end there. Since holding then-Secretary Babbitt and then-Assistant Secretary Gover in contempt, the Court has had to sanction the Department of Interior for filing frivolous motions, enter several temporary restraining orders to prevent the Department from taking potentially adverse actions, and appoint both a Special Master (to oversee discovery) and a Court Monitor (to review the defendants' trust related activities). Moreover, there are several motions currently pending before the Court regarding alleged misconduct by the Interior Department. In short, the Department of Interior has handled this litigation the same way that it has managed the IIM trust-disgracefully.

The issue now before the Court is whether the Secretary of the Interior and the Assistant Secretary of Interior for Indian Affairs should again be held in civil contempt of court. Specifically, the Court ordered these two government officials to show cause why they should not be held in civil contempt for: (1) failing to comply with the Court's Order of December 21, 1999, to initiate a Historical Accounting Project; (2) committing a fraud on the Court by concealing the Department's true actions regarding the Historical Accounting Project during the period from March 2000, until January 2001; (3) committing a fraud on the Court by failing to disclose the true status of the TAAMS project between September 1999 and December 21, 1999; (4) committing a fraud on the Court by filing false and misleading quarterly status reports starting in March 2000, regarding TAAMS and BIA Data Cleanup; and (5) committing a fraud on the Court by making false and misleading representations starting in March 2000, regarding computer security of IIM trust data. The Court will address each of these specifications below in turn.

II. BACKGROUND

A. FACTUAL BACKGROUND*fn1

1. History

During the early 1800s, the United States' policy towards Native Americans-which included entering into (and frequently violating) treaties as well as the use of force-led to the removal and relocation of many tribes from the East and Midwest to unsettled lands in the West. In the late 19th century, the United States' policy of relocation was replaced with a policy of assimilation. Under this new policy, the federal government allotted land that had been set aside for tribes to individual tribe members instead. The policy of assimilation was designed "to extinguish tribal sovereignty, erase reservation boundaries, and force assimilation of Indians into society at large." Yakima v. Yakima Indian Nation, 502 U.S. 251, 254 (1992).

The assimilationist policy, which began with individually negotiated treaties, became federal law when Congress passed the General Allotment Act of 1887, also known as the "Dawes Act." Under the Dawes Act,

beneficial title of the allotted lands vested in the United States as trustee for individual Indians. The trust was to last for 25 years or more, at which point a fee patent would issue to the individual Indian allottee. During the trust period, individual accounts were to be set up for each Indian with a stake in the allotted lands, and the lands would be managed for the benefit of the individual allottees. Indians could not sell, lease, or otherwise burden their allotted lands without government approval. Where tribes resisted allotment, it could be imposed.

Cobell VI, 240 F.3d at 1087.

The United States' policy of assimilation and its allotment of tribal lands ended with the enactment of the Indian Reorganization Act of 1934 ("IRA"). Although the IRA provided that unallotted surplus Indian lands would be returned to tribal ownership, the statute did not disturb lands already allotted to individual Indians, and actually extended the trust period for allotted lands indefinitely. Thus, under the IRA the federal government maintained control of lands already allotted but not yet fee-patented, and accordingly retained its fiduciary obligations to administer the trust lands and funds arising therefrom for the benefit of individual Indian beneficiaries. These lands form the basis of the IIM trust accounts that are at the core of this lawsuit.*fn2

2. Federal IIM Trust Responsibilities

There is no question that as a result of the allotments made from 1887-1934 and the IRA's indefinite extension of the trust period, the United States has assumed the fiduciary obligations of a trustee. United States v. Mitchell ("Mitchell II"), 463 U.S. 206, 225 (1983) (noting that "a fiduciary relationship necessarily arises when the Government assumes . . . elaborate control over forests and property belonging to Indians."). Although the United States itself is the trustee of the IIM trust, under current law the Secretary of the Interior and the Secretary of the Treasury are the designated trustee-delegates. The failure of either Secretary to perform his or her particular fiduciary responsibilities results in the United States breaching its fiduciary obligations to the IIM trust beneficiaries. Cobell VI, 240 F.3d at 1088.

Within the Department of Interior, several agencies have specific trust obligations. These agencies include, among others, Bureau of Indian Affairs ("BIA"), Office of Trust Fund Management ("OTFM"), and Office of the Special Trustee ("OST").*fn3 BIA is primarily responsible for trust land management, including the approval of leases and land transfers, and income collection. The vast majority of transactions involving IIM trust lands must be approved by BIA. OTFM, in conjunction with the Treasury Department, deposits IIM land revenues, maintains the individual IIM accounts, and ensures that money is distributed to IIM account holders. OST, which was created in 1994, oversees the IIM trust reform efforts.*fn4

The Department of Interior and its subagencies have utterly failed to manage the IIM trust in a manner consistent with the fiduciary obligations of a trustee-delegate. The D.C. Circuit succinctly noted this failure in February of last year when it wrote that:

Cobell VI, 240 F.3d at 1089. 3. The Indian Trust Fund Management Reform Act

Concern over the Department of Interior's management of the IIM trust is not a recent development. Since at least the mid-1980s there has been widespread disapproval of the manner in which the Department of Interior has administered the IIM trust. Time and again, however, Department officials pledged to address these concerns. Finally, in 1988, Congress began holding oversight hearings on the Interior Department's management of the IIM trust. These hearings resulted in the issuance of a report in 1992, entitled Misplaced Trust: The Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund ("Misplaced Trust"), which harshly criticized the Department of Interior's handling of the IIM trust accounts. Among other things, the report found "significant, habitual problems in BIA's ability to fully and accurately account for trust fund moneys, to properly discharge its fiduciary responsibilities, and to prudently manage the trust funds." Pls.' Ex. 55 at 3.

As a result of the findings made in Misplaced Trust, Congress passed the Indian Trust Fund Management Reform Act in 1994 ("1994 Act"). The 1994 Act codified certain preexisting trust duties that the United States owes to the IIM beneficiaries.*fn5 In addition, the 1994 Act identified some of the Secretary of Interior's duties to ensure "proper discharge of the trust responsibilities of the United States." 25 U.S.C. § 162a(d). Moreover, because Congress recognized that the Interior Department's pattern of historic failures could not be allowed to continue, the 1994 Act also created OST "to provide for more effective management of, and accountability for the proper discharge of, the Secretary's trust responsibilities to Indian tribes and individual Indians[.]" 25 U.S.C. § 4041(1). OST is headed by the Special Trustee, a sub-cabinet level officer who reports directly to the Secretary of the Interior. Despite the "general oversight" duties of the Special Trustee, ultimate decision-making power over the IIM trust accounts remains with the Secretary of Interior. 25 U.S.C. § 4043(b)(1).

4. The High Level Implementation Plan

The 1994 Act requires the Special Trustee to develop a "comprehensive strategic plan" for trust management reform and an appropriate reform timetable to ensure "proper and efficient discharge of the Secretary's trust responsibilities." 25 U.S.C. § 4043(a)(1). In accordance with these obligations, the Special Trustee submitted a "strategic plan" to the Secretary of Interior and Congress in April of 1997. After reviewing the Special Trustee's strategic plan, the Secretary of Interior issued his own plan in July of 1998, known as the High Level Implementation Plan ("HLIP"). The HLIP consisted of twelve "subprojects" which focused on ensuring the accuracy of information regarding the IIM trust accounts and developing uniform policies and procedures to guide trust management in the future. The two subprojects that are particularly important to the instant proceeding are Data Cleanup and Computer Systems. Under the BIA portion of the Data Cleanup subproject, the Interior Department sought to "have a level of data in the [computer] system that allows for proper land title records and every allottee and every tribe to receive the correct dollars that they're supposed to get." Phase I Trial Tr. at 2504. As for the Computer Systems subproject, the Department of Interior committed itself to the acquisition and implementation of two new computer systems to help it better manage the IIM trust accounts. The principal new computer system is known as the Trust Asset and Accounting Management System ("TAAMS"). TAAMS, when implemented, is supposed to allow BIA to administer trust assets, generate timely bills, identify delinquent payments, track income from trust assets, and distribute proceeds to the appropriate account holders.

On March 1, 2000, the Department of Interior filed its Revised and Updated High Level Implementation Plan with the Court. Although the Revised HLIP was different than the original in many respects, for purposes of the instant matter it is sufficient to note that it maintained subprojects regarding BIA Data Cleanup and TAAMS. Since the Revised HLIP supplanted the original, it will be considered the HLIP for the remainder of this opinion.

B. PROCEDURAL HISTORY

The plaintiffs filed the instant action against the Secretary of the Interior and other federal officials on June 10, 1996, "to compel performance of trust obligations." They alleged that the federal government's trustee-delegates, including the Secretary of Interior, breached (and continue to be in breach of) their fiduciary duty to plaintiffs by mismanaging IIM trust accounts. On February 4, 1997, this Court certified the named plaintiffs under Federal Rule of Civil Procedure 23(b)(1)(A) and (b)(2) as class representatives for all present and former IIM account beneficiaries. Cobell I, 30 F. Supp.2d at 28. The Court bifurcated proceedings in the case on May 5, 1998 [Docket Entry # 94]. Phase I would address "fixing the system," or reforming the management and accounting of the IIM trust to bring the defendants into compliance with its fiduciary obligations. Phase II, on the other hand, would address "correcting the accounts," or performing a historical accounting of the IIM trust accounts.

The Court denied the defendants' motion to dismiss and their first motion for summary judgment on November 5, 1998. Specifically, the Court found that it had jurisdiction to adjudicate the plaintiffs' claims since, pursuant to Section 702 of the Administrative Procedure Act, the government had waived its sovereign immunity. Id. at 30-42 (finding that "[t]he case law and legislative history with respect to § 702 clearly evince the federal government's consent to suit in the present case.").*fn6 At the same time, however, the Court granted the government's motion to dismiss the plaintiffs' claim for mandamus "because the duties alleged by the plaintiffs in this case cannot be construed as ministerial[.]" Id. at 36.

On February 22, 1999, after a two-week bench trial, the Court found Bruce Babbitt, then-Secretary of the Interior, Robert Rubin, then-Secretary of the Treasury, and Kevin Gover, then-Assistant Secretary of Interior for Indian Affairs, in civil contempt for violating two of this Court's discovery orders. Cobell v. Babbitt ("Cobell II"), 37 F. Supp.2d 6, 9 (D.D.C. 1999). In particular, the Court found by clear and convincing evidence that these defendants were in violation of its November 27, 1996 production order,*fn7 and its May 4, 1998 scheduling order.*fn8 Id. In concluding that these defendants were in civil contempt, the Court explicitly rejected their contention that they had made a good faith effort to produce the applicable documents to the plaintiffs. Id. at 38 (opining that "[t]he defendants have fallen far short of proving their defense of good faith substantial compliance."). Instead, the Court found that almost immediately after proposing a clear and unambiguous order which the Court signed, "the defendants disobeyed that order and successfully covered up their disobedience through semantics and strained, unilateral, self-serving interpretations of their own duties." Cobell IV, 188 F.R.D. at 140. Notwithstanding "defendants' reckless disregard for this court's orders and their attorneys' mismanagement of this case," the Court limited "compensatory relief to monetary sanctions*fn9 and coercive relief to the appointment of a special master."*fn10 Cobell II, 37 F. Supp.2d at 38. The Court noted, however, that "[s]hould it appear at any point that the defendants are not taking all reasonable steps to comply with the orders of this court, then harsher relief will be duly administered." Id. at 38.

On June 7, 1999, the Court denied another motion for summary judgment filed by the government. Cobell v. Babbitt ("Cobell III"), 52 F. Supp.2d 11, 34 (D.D.C. 1999). As an initial matter, the Court observed that "the controlling Supreme Court case law on point clearly provides [that] the establishment of this trust creates certain substantive rights in favor of its beneficiaries, the plaintiffs, and violations of these rights by actions taken or not taken by federal officials may be remedied by prospective relief."*fn11 Id. at 20. In accordance with this elementary yet fundamental finding, the Court concluded that, "[c]ontrary to defendants' position, Congress has subjected defendants to the full range of relief that plaintiffs seek, in terms of sovereign immunity." Id. The Court accordingly found that "plaintiffs may seek prospective redress for breaches of these duties through common law remedies such as an injunction and declaratory relief, with the ultimate goal being the rendering of an accounting."*fn12 Id. at 24. The Court also recognized, however, that "these remedies, as well as the [plaintiffs'] underlying substantive rights, must be construed in light of the common law of trusts." Id. at 28-29. Having denied the government's motion to dismiss and its motions for summary judgment, the Court held a six-week bench trial during the summer of 1999 to address the plaintiffs' Phase I claims. The Court issued its Memorandum Opinion, which included extensive findings of fact and conclusions of law, on December 21, 1999. After determining that it had jurisdiction, the Court found that the federal government was in breach of certain fiduciary duties that it owed to plaintiffs. Specifically, the Court accepted a written stipulation filed by the defendants on the eve of trial in which they admitted that they were not in compliance with several obligations prescribed in the 1994 Act. In addition, the Court ruled, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Administrative Procedure Act, 5 U.S.C. § 702 & 706, that:

1. [The 1994 Act requires defendants to] provide plaintiffs an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs, without regard to when the funds were deposited.
2. [The 1994 Act requires defendants to] retrieve and retain all information concerning the IIM trust that is necessary to render an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs.
3. [D]efendants owe plaintiffs, pursuant to the statutes and regulations governing the management of the IIM trust, the statutory trust duty to:
(a) establish written policies and procedures for collecting from outside sources missing information necessary to render an accurate accounting of the IIM trust; (b) establish written policies and procedures for the retention of IIM-related trust documents necessary to render an accurate accounting of the IIM trust; (c) establish written policies and procedures for computer and business systems architecture necessary to render an accurate accounting of the IIM trust; and (d) establish written policies and procedures for the staffing of trust management functions necessary to render an accurate accounting of the IIM trust.
4. [D]efendant Lawrence Summers, Secretary of the Treasury, owes plaintiffs, pursuant to the statutes and regulations governing the management of the IIM trust, the statutory trust duty to retain IIM trust documents that are necessary to render an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs.
5. Defendants are currently in breach of the statutory trust duties declared in subparagraphs II(2)-(4). 6. Defendants have no written plans to bring themselves into compliance with the duties declared in subparagraphs II(2)-(4).
7. Defendants must promptly come into compliance by establishing written policies and procedures not inconsistent with the court's Memorandum Opinion that rectify the breaches of trust declared in subparagraphs II(2)-(4).

Cobell V, 91 F. Supp.2d at 58.*fn13 In order to allow the defendants the opportunity to come into compliance with its fiduciary obligations, the court remanded "the required actions to defendants for further proceedings not inconsistent with the court's Memorandum Opinion." Id. at 58. In addition, the Court retained jurisdiction over the case for five years and ordered the defendants to submit "quarterly status reports setting forth and explaining the steps that [they] have taken to rectify the breaches of trust declared" by the Court and "to bring themselves into compliance with their statutory trust duties embodied in the" 1994 Act. Id. at 59.

The defendants appealed this Court's decision, alleging that it improperly construed the nature and extent of the government's fiduciary duties to the IIM trust beneficiaries.*fn14 After considering all of the arguments raised by the government, the D.C. Circuit affirmed this Court's decision on February 23, 2001. Specifically, the D.C. Circuit found that:

The government's broad duty to provide a complete historical accounting to IIM beneficiaries necessarily imposes substantial subsidiary duties on those government officials with responsibility for ensuring that an accounting can and will take place. In particular, it imposes obligations on those who administer the IIM trust lands and funds to, among other things, maintain and complete existing records, recover missing records where possible, and develop plans and procedures sufficient to ensure that all aspects of the accounting process are carried out.

Cobell VI, 240 F.3d at 1105. The D.C. Circuit further affirmed this Court's conclusion that the defendants were in breach of these fiduciary duties. Id. at 1105-08, 1110 (finding that "the Department [of Interior] is still unable to execute the most fundamental of trust duties-an accurate accounting."). In addition, the D.C. Circuit found that the plaintiffs could seek judicial relief to rectify these breaches by the defendants. Id. at 1105-10 (noting that "[f]ederal courts have repeatedly recognized the right of Native Americans to seek relief for breaches of fiduciary obligations. . . ."). At the same time, however, the D.C. Circuit observed that "[t]he actual legal breach is the failure to provide an accounting, not [the government's] failure to take the discrete individual steps that would facilitate an accounting." Id. at 1106. In accordance with these findings and conclusions, the D.C. Circuit remanded the case back to this Court for further proceedings. Id. at 1110 (stating that "[w]hile the district court may have mischaracterized some of the government's specific obligations, its broader conclusion that government officials breached their obligations to IIM beneficiaries is in accordance with the law and well supported by the evidentiary record. Therefore, we affirm the order of the district court and remand to that court for further proceedings.").

On the same day that the D.C. Circuit issued its Opinion affirming this Court's order regarding the Phase I trial, Dominic Nessi ("Nessi"), then-Chief Information Officer for BIA and one of the principal witnesses for the Interior Department during the Phase I trial, sent a memorandum to the Special Trustee which stated, inter alia, "that trust reform is slowly, but surely imploding at this point in time." See Pls.' Ex. 2, Tab A at 1. In light of this memorandum, on April 16, 2001, the Court appointed-with the consent of the plaintiffs and the Interior defendants*fn15-a Court Monitor to "monitor and review all of the Interior defendants' trust reform activities and file written reports of his findings with the Court."*fn16

The Court Monitor filed his First Report on July 11, 2001. The First Report addressed the DOI's efforts towards conducting a historical accounting for the IIM trust beneficiaries. The Court Monitor found that "the status of the actual accounting, with few exceptions, was, for lack of a better term, at ground zero." Pls.' Ex. 1 at 2. The Court Monitor's Second Report, filed on August 9, 2001, reviewed the DOI's actions regarding TAAMS. The Court Monitor concluded that the Quarterly Reports submitted by the DOI (beginning in March of 2000) did not accurately reflect the status of TAAMS. The Court Monitor's Third Report, filed on September 17, 2001, addressed the HLIP's BIA Data Cleanup subproject. The Court Monitor found that the DOI's Quarterly Reports consistently failed to provide the Court with an accurate picture of BIA Data Cleanup. On October 16, 2001, the Court Monitor filed his Fourth Report. In the Fourth Report, the Court Monitor reviewed, among other things, the portion of the Interior Department's Seventh Quarterly Report that addressed BIA Data Cleanup and TAAMS. The Court Monitor found that the Seventh Quarterly Report, like the first six, failed to describe accurately the status of the BIA Data Cleanup subproject or the TAAMS subproject.

On November 14, 2001, the Special Master submitted his Report and Recommendation Regarding the Security of Trust Data at the Department of Interior ("Report on IT Security"). In the Report on IT Security, the Special Master examined the trust data security systems of the Department of Interior. The security of these systems is critically important because they contain sensitive individual Indian trust information. After making extensive findings, the Special Master concluded that the Department of Interior "has demonstrated a pattern of neglect that has threatened, and continues to threaten, the integrity of trust data upon which Indian beneficiaries depend." Pls.' Ex. 15 at 153. In short, the Special Master found that the Department of Interior knew that its computer systems were insecure and did little to nothing about it. Id. at 141-53.

C. THE ORDER & SUPPLEMENTAL ORDER TO SHOW CAUSE

On November 28, 2001, the Court ordered Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of the Interior for Indian Affairs, to show cause why they should not be held in civil contempt of court in their official capacities for the following:

1. Failing to comply with the Court's Order of December 21, 1999, to initiate a Historical Accounting Project. 2. Committing a fraud on the Court by concealing the Department's true actions regarding the Historical Accounting Project during the period from March 2000, until January 2001.
3. Committing a fraud on the Court by failing to disclose the true status of the TAAMS project between September 1999 and December 21, 1999.
4. Committing a fraud on the Court by filing false and misleading quarterly status reports starting in March 2000, regarding TAAMS and BIA Data Clean-up.

Cobell v. Norton, 175 F. Supp.2d 24, 27 (D.D.C. 2001). On December 6, 2001, the Court issued a supplemental order that required these defendants to show cause why they should not be held in civil contempt for:

5. Committing a fraud on the Court by making false and misleading representations starting in March, 2000, regarding computer security of IIM trust data.

Id. These five specifications formed the basis of the instant contempt trial. The Court will make findings of fact and conclusions of law relevant to each of these specifications below. Specifically, the Court will address the Department of Interior's efforts to carry out a historical accounting project for the IIM trust accounts, which is relevant to the first two specifications; the Interior Department's TAAMS and BIA Data Cleanup subprojects, which are relevant to the third and fourth specifications; and, finally, the defendants' actions regarding IT security, which is relevant to the fifth specification. Before turning to those issues, however, the Court must delineate the legal standards governing this proceeding. In this regard, the Court will provide the applicable law concerning civil contempt of court, fraud on the court, and courts' inherent power to sanction litigation misconduct.

III. APPLICABLE LEGAL STANDARDS

A. CIVIL CONTEMPT

It is beyond peradventure that courts have the inherent authority to enforce their orders through the exercise of their contempt powers. Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991) (observing that "it is firmly established that `the power to punish for contempt is inherent in all courts.'"); Shillitani v. United States, 384 U.S. 364, 370 (1966) (stating that "[t]here can be no question that courts have inherent power to enforce compliance with their lawful orders through civil contempt."). Specifically, courts may utilize civil contempt proceedings to obtain compliance with an order or to compensate for damage sustained as a result of noncompliance with an order.*fn17 Food Lion, Inc. v. United Food and Commercial Workers Int'l Union, 103 F.3d 1007, 1016 (D.C. Cir. 1997); NLRB v. Blevins Popcorn Co., 659 F.2d 1173, 1184 (D.C. Cir. 1981). At the same time, however, because "[t]he judicial contempt power is a potent weapon," see Common Cause v. Nuclear Regulatory Comm'n, 674 F.2d 921, 927 (D.C. Cir. 1982), courts should be prudent in exercising that power. Joshi v. Professional Health Services, Inc., 817 F.2d 877, 879 n. 2 (D.C. Cir. 1987) (noting that "in light of the remedy's extraordinary nature, courts rightly impose it with caution."). Cf. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980) (admonishing courts to exercise their inherent powers with "restraint and discretion.").

Two elements must be established before a party may be held in civil contempt for violating an order. Armstrong v. Executive Office of the President, 1 F.3d 1274, 1289 (D.C. Cir. 1993). First, the Court must have issued an order that is clear and reasonably specific. Id. at 1289; Project B.A.S.I.C. v. Kemp, 947 F.2d 11, 16-17 (1st Cir. 1991) (noting that in order for a party to be held in civil contempt, the court must have issued "a clear and unambiguous order that left no reasonable doubt as to what behavior was expected and who was expected to behave in the intended fashion."). In determining whether an order is clear and reasonably specific, courts apply "an objective standard that takes into account both the language of the order and the circumstances surrounding the issuance of the order." United States v. Young, 107 F.3d 903, 907 (D.C. Cir. 1997). See also Project B.A.S.I.C., 947 F.2d at 16-17 (finding that "the party enjoined must be able to ascertain from the four corners of the order precisely what acts are forbidden" or what acts are required."). Second, the putative contemnor must have violated the court's order. Armstrong, 1 F.3d at 1289 (recognizing that "civil contempt will lie only if the putative contemnor has violated an order that is clear and unambiguous.").

It is not necessary in civil contempt proceedings for the violation of the court order to be intentional or for the putative contemnor to have acted in bad faith.*fn18 McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949) (opining that since the purpose of civil contempt is remedial, "it matters not with what intent the defendant did the prohibited act."); Food Lion, 103 F.3d at 1016 (observing that "the law is clear in this circuit that `the [contemnor's] failure to comply with the court decree need not be intentional" and that a "finding of bad faith on the part of the contemnor is not required.") (emphasis in original). In fact, for purposes of civil contempt, "the intent of the recalcitrant party is irrelevant." Blevins, 659 F.2d at 1184.

A declaratory judgment, by itself, cannot serve as the foundation for a finding of civil contempt. Armstrong, 1 F.3d at 1290 (noting that a finding of civil contempt may not be based on a declaratory judgment alone); Burgess v. Ryan, 996 F.2d 180, 184 (7th Cir. 1993) (recognizing that "declaratory judgments . . . are not enforced by contempt[.]"). The reason why noncompliance with a declaratory judgment cannot result in a contempt citation is that:

even though a declaratory judgment has `the force and effect of a final judgment,' 28 U.S.C. § 2201, it is a much milder form of relief than an injunction. Though it may be persuasive, it is not ultimately coercive; noncompliance with it may be inappropriate, but is not contempt.

Steffel v. Thompson, 415 U.S. 452, 471 (1974) (quoting Perez v. Ledesma, 401 U.S. 82, 125-126 (Brennan, J., concurring)). See also Armstrong, 1 F.3d at 1289. For example, in Perez v. Ledesma, the plaintiffs sought declaratory and injunctive relief from a criminal obscenity law that they believed was unconstitutional. Perez, 401 U.S. at 83-84. In his concurring opinion (in which he also dissented in part), Justice Brennan observed that declaratory relief would have a significantly different impact on the administration of the state's criminal law than an injunction. Id. at 124. Specifically, he recognized that while an injunction against enforcement of the statute "paralyzes the [s]tate's enforcement machinery," a declaratory judgment, in contrast, merely delineates the parties' "legal status and rights; it neither mandates nor prohibits state action." Id. Thus, in the context of state criminal laws, a prosecutor can not be held in civil contempt for charging an individual under a statute declared unconstitutional by a court, while she presumptively could be found in civil contempt if the court had enjoined enforcement of the statute altogether. Id. at 124-25; see also Steffel, 415 U.S. at 469-71.*fn19 Applying this principle in a slightly different context, in Armstrong v. Executive Office of the President, several private parties challenged certain federal agencies' guidelines regarding the retention of records stored on their computer systems. Armstrong, 810 F. Supp. 335 (D.D.C. 1993). Ruling in favor of the plaintiffs, the Court "ORDERED, that the Plaintiff[s] shall have a Declaratory Judgment that the guidelines issued by and at the direction of the Defendant Agencies are inadequate and not reasonable and are arbitrary and capricious and contrary to law in that they permit the destruction of records contrary to the Federal Records Act[.]" Id.at 350. The Court did not, however, rule that the agencies had to promulgate new guidelines. Id. Nevertheless, the Court subsequently found those agencies in civil contempt for failing to take such action. Armstrong, 821 F. Supp. 761 (D.D.C 1993). On appeal, the D.C. Circuit vacated the contempt citation on the ground that the agencies "were never directly ordered to promulgate new regulations." Armstrong, 1 F.3d at 1289. In so doing, the D.C. Circuit explicitly relied upon the reasoning provided by the Supreme Court in Ledesma and Steffel. It is worth noting that a party can, consistent with these cases, be held in civil contempt for violating an order issued in a case, notwithstanding the fact that the ultimate relief sought in the action is a declaratory judgment. See, e.g., Doe v. General Hospital of the District of Columbia, 434 F.2d 427, 429-32 (D.C. Cir. 1970).

The burden of proof in civil contempt proceedings rests on the moving party. Food Lion, 103 F.3d at 1016. In particular, the party seeking a finding of contempt must "demonstrate by clear and convincing evidence that the alleged contemnor violated the court's prior order."*fn20 Id. See also Blevins, 659 F.2d at 1183 (noting that "[i]n civil contempt proceedings the clear and convincing evidence standard applies[.]"). The "clear and convincing evidence" standard requires the Court to "reach a firm conviction of the truth of the evidence about which he or she is certain." United States v. Montague, 40 F.3d 1251, 1255 (D.C. Cir. 1994).

After the moving party makes a prima facie showing of civil contempt-that is, demonstrates by clear and convincing evidence that the putative contemnor violated an unambiguous order-the party charged with contempt can still defend itself on the ground of "good faith substantial compliance" with the court order. Food Lion, 103 F.3d at 1017.*fn21 The burden of proving good faith substantial compliance "is on the party asserting the defense[.]" Id. In order to raise this defense successfully, the putative contemnor must demonstrate "that it took all reasonable steps within [its] power to comply with the court's order." Id. Good faith alone, however, is not sufficient to relieve a party from a finding of civil contempt. Id. at 1017-18 (noting that "[a]lthough a party's good faith may be a factor in determining whether substantial compliance occurred, and may be considered in mitigation of damages, good faith alone is not sufficient to excuse contempt").

Courts have the power to impose both coercive and compensatory sanctions upon parties found in civil contempt. United States v. United Mine Workers, 330 U.S. 258, 303-04 (1947). Specifically, courts may impose coercive sanctions "to compel the contemnor into compliance with an existing court order" and compensatory sanctions to "compensate the complainant for losses suffered as a result of the contumacy." United States v. Dowell, 257 F.3d 694, 699 (7th Cir. 2001). See also Consolidated Rail Corp. v. Yashinsky, 170 F.3d 591, 595 (6th Cir. 1999) (noting that "[c]ompensatory contempt orders compensate the party harmed by the other party's contemptuous actions; coercive orders seek to cajole the party in contempt to act in the manner desired by the court."). Moreover, courts have considerable discretion in imposing coercive and compensatory sanctions. United States v. Berg, 20 F.3d 304, 311 (7th Cir. 1994) (recognizing that "the district court has broad discretion in imposing those sanctions."); Rodriguez v. IBP, Inc., 243 F.3d 1221, 1231 (10th Cir. 2001) (noting that "[a] district court may exercise broad discretion in using its contempt power to assure compliance with its orders."). In fact, "[t]he measure of the court's power in civil contempt proceedings is determined by the requirements of full remedial relief." McComb, 336 U.S. at 193. Thus, for example, "[w]hen fashioning a sanction to secure compliance, a district court should `consider the character and magnitude of the harm threatened by the continued contumacy and the probable effectiveness of any suggested sanction in bringing about the result desired.'" Citronelle-Mobile Gathering, Inc. v. Watkins, 943 F.2d 1297, 1304 (11th Cir. 1991) (quoting United Mine Workers, 330 U.S. at 304).

B. FRAUD ON THE COURT

The authority to respond to and punish fraud on the court is, like the contempt power, among a court's inherent powers. See, e.g., Universal Oil Products v. Root Refining Co., 328 U.S. 575, 580 (1946) (noting that the "inherent power of a federal court to investigate whether a judgment was obtained by fraud, is beyond question."); Aude v. Mobil Oil Corp., 892 F.2d 1115, 1119 (1st Cir. 1989) (recognizing that "[t]here is an irrefragable linkage between courts' inherent powers and the rarely-encountered problem of fraud on the court."). Most cases addressing the concept have arisen where a party seeks to set aside a judgment already entered, invoking the court's inherent power, Federal Rule of Civil Procedure 60(b), or both. See, e.g., Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 244 (1944), rev'd on other grounds; Standard Oil Co. v. United States, 429 U.S. 17 (1976); Baltia Air Lines, Inc. v. Transaction Management, Inc., 98 F.3d 640, 642-43 (D.C. Cir. 1996). Courts have also utilized their power to punish fraud on the court, however, during the pendency of a case. See, e.g., Aude, 892 F.2d at 1118; Synanon Church v. United States, 579 F. Supp. 967, 972 (D.D.C. 1984) (noting that "[a]llegations of fraud upon the court arise in two contexts: first, as in this case, before there has been an adjudication, and second, in cases where a party seeks to overturn a final judgment, usually under Fed.R.Civ.P. 60(b)."), aff'd, 820 F.2d 421 (D.C. Cir. 1987).

Courts appear to apply the same standard for determining if a party has committed a fraud on the court regardless of whether the misconduct is discovered before or after a final judgment has been entered. In both instances, the concept of fraud on the court "embraces that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases presented for adjudication." Transaero v. La Fuerza Area Boliviana, 24 F.3d 457, 460 (2d Cir. 1994) (internal quotation marks omitted). See also Aude, 892 F.2d at 1118 (stating that a fraud on the court occurs when "a party . . . sentiently set[s] in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense."). For example, in Hazel-Glass Company v. Hartford-Empire Company, the court found out — several years after the entry of final judgment — that Hartford (with the assistance of counsel) had procured the publication of an article, ostensibly written by a disinterested expert, supporting its legal position. Hazel-Glass, 322 U.S. at 239-43. The court learned that the article, which Hartford relied upon greatly, was actually written by Hartford's officials and attorneys. Id. In concluding that this misconduct constituted a fraud on the court, the Supreme Court found that:

tampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society.

The relief ordered based upon a finding of fraud on the court has consistently been both swift and severe. In cases where the fraud is unearthed prior to the entry of final judgment, courts almost always dismiss the case (if the plaintiff was the party that perpetrated the fraud) or enter a default judgment (if the defendant committed the fraud). See, e.g., Aude, 892 F.2d at 1119 (noting that "the caselaw [is] fully consonant with the view that a federal district judge can order dismissal or default where a litigant has stooped to the level of fraud on the court."). Likewise, in cases where the fraud is discovered after judgment has already been entered, courts typically vacate or set aside the fraudulently begotten judgment no matter how long it has been in effect. See, e.g., Hazel-Atlas Co., 322 U.S. at 244 (observing that "[f]rom the beginning there has existed . . . a rule of equity to the effect that under certain circumstances, one of which is after discovered fraud, relief will be granted against judgments regardless of the term of their entry."). For example, in Hazel-Atlas, the Supreme Court held that "[t]he total effect of all this fraud . . . calls for nothing less than a complete denial of relief to Hartford[.]" Id. at 250. Similarly, in Synanon Church, the court found that its inherent powers were "properly invoked to dismiss Synanon's case to regain its tax-exempt status because Synanon engaged in a `deliberately planned and carefully executed scheme to defraud.'" Id. at 974.

Because the sanctions imposed on the defrauding party are so severe, courts require the fraud to be proven-like civil contempt-by clear and convincing evidence. Aude, 892 F.2d at 1118 (noting that the fraud must be demonstrated "clearly and convincingly[.]"). In this regard, courts have recognized the strong policy interests in favor of both finality of judgments and adjudications on the merits. With respect to the former, "[f]ederal courts, both trial and appellate, long ago established the general rule that they would not alter or set aside their judgments after the expiration of the term at which the judgments were finally entered." Hazel-Atlas Glass Co., 322 U.S. at 244. The reason for this rule is that courts have usually found that society is best served by putting an end to litigation after a case has been tried and judgment entered. Id. (recognizing further the "deep rooted policy in favor of the repose of judgments entered during past terms[.]"). At the same time, however, courts have also acknowledged "the fundamental importance of trying cases on the merits. . . ." Shepherd v. American Broadcasting Companies, Inc., 62 F.3d 1469, 1476 (D.C. Cir. 1995). See also Shea v. Donohoe Construction Co., 795 F.2d 1071, 1076 (D.C. Cir. 1986) (noting that "our system favors the disposition of cases on the merits[.]"). The reason for this rule is that parties should normally be allowed to present their case or defense to a court for adjudication. Aude, 892 F.2d at 1118 (stating that courts "should carefully balance the policy favoring adjudication on the merits with competing policies such as the need to maintain institutional integrity and the desirability of deterring future misconduct.").

In light of the severe sanctions and policy interests involved in determining that a party has committed a "fraud on the court," courts also require "a showing that one has acted with an intent to deceive or defraud the court." United States v. Buck, 281 F.3d 1336, 1342 (10th Cir. 2002). The reason for this requirement, at least in the context of granting relief from a final judgment, is that "[a] proper balance between the interests underlying finality on the one hand and allowing relief due to inequitable conduct on the other makes it essential that there be a showing of conscious wrongdoing-what can properly be characterized as a deliberate scheme to defraud-before relief from a final judgment is appropriate[.]" Id. (quoting Robinson v. Audi Aktiengesellschaft, 56 F.3d 1259, 1267 (10th Cir. 1995)). The same principle (and requirement) applies in the context of dismissing actions and entering default judgments based on fraudulent conduct by a party. Wyle v. R.J. Reynolds Industries, Inc., 709 F.2d 585, 589 (9th Cir. 1983) (noting that "courts have inherent power to dismiss an action when a party has wilfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice.").

To the extent the Court has framed four of the five specifications in terms of fraud on the court, it is important to note that the commission of a fraud on the court can form the basis for a finding of contempt. Cf. Pendergast v. United States, 317 U.S. 412 (1943) ("To use bribery and fraud on the Court to obtain its order for disbursement of nearly $10,000,000 in trust in its custody is not only contempt but contempt of a kind far more damaging to the Court's good name and more subtly obstructive of justice than throwing an inkwell at a Judge or disturbing the peace of a courtroom.") (Jackson, J., dissenting). See also United States v. Williams, 622 F.2d 830, 838 (5th Cir. 1980) (noting that "[t]he defendants in Pendergast perpetrated a fraud on the court, punishable as criminal contempt[.]"); South Beach Suncare, Inc. v. Sea and Ski Corp., 1999 WL 350458 (S.D.Fla. May 17, 1999) (observing that "a district court may hold a party in contempt for fraudulently presenting evidence."); Kelly v. SEG Sports Corp., 1997 WL 374745 (Mich. June 4, 1997) (finding that "while the representations were not incorporated in an injunction or order, the court refrained from considering and possibly issuing an injunction on the strength of these representations. If they were made with the knowledge that the promises could not or would not be kept, the making of the representations might constitute fraud on the court, leading to contempt penalties.").

C. POWER TO SANCTION LITIGATION MISCONDUCT

In addition to the powers discussed above, this Court undoubtedly has the inherent authority to address all types of party (and attorney) misconduct.*fn22 Shepherd, 62 F.3d at 1472 (D.C. Cir. 1995) (recognizing that "[t]he inherent power encompasses the power to sanction attorney or party misconduct, and includes the power to enter a default judgment."); F.J. Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244 F.3d 1128, 1136-37 (9th Cir. 2001) (noting that "[c]ourts have the ability to address the full range of litigation abuses through their inherent powers."); Penthouse Int'l, Ltd. v. Playboy Enterprises, Inc., 663 F.2d 371, 386 (2d Cir. 1981) (observing that "[a] federal district court possesses broad inherent power to protect the administration of justice by levying sanctions in response to abusive litigation practices."). Indeed, there is no question that courts have "broad authority through means other than contempt-such as by striking pleadings, assessing costs, excluding evidence, and entering default judgment-to penalize a party's failure to comply with the rules of conduct governing the litigation process." International Union v. Bagwell, 512 U.S. 821, 833 (1994). See also Shepherd, 62 F.3d at 1475 (observing that "inherent power sanctions available to courts include fines, awards of attorney's fees and expenses, contempt citations, disqualifications or suspensions of counsel, and drawing adverse evidentiary inferences or precluding the admission of evidence.").

District courts have "considerable discretion" in sanctioning party misconduct. Perkinson v. Gilbert/Robinson, Inc., 821 F.2d 686, 689 (D.C. Cir. 1987). As the Supreme Court noted in Chambers v. NASCO, 501 U.S. at 44-45, "[a] primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process." In this regard, the entry of a default judgment or outright dismissal of a complaint, though severe, is within the court's discretion. Chambers, 501 U.S. at 45. In deciding the appropriate sanction to impose on the wrongdoing party, courts "must properly `calibrate the scales' to ensure that the gravity of [the] inherent power sanction corresponds to the misconduct." Shepherd, 62 F.3d at 1479 (noting further that "[t]he graver the sanction under consideration, the more precision this calibration requires."). See also Republic of the Philippines v. Westinghouse Electric Corp., 43 F.3d 65, 73 (3d Cir. 1995) (finding that "a district court must ensure that there is an adequate factual predicate for flexing its substantial muscle under its inherent powers, and must also ensure that the sanction is tailored to address the harm identified."). "This does not mean that courts must first impose a lesser sanction, for . . . a district court need not exhaust other options before dismissing a suit or imposing a default judgment." Shepherd, 62 F.3d at 1479 (emphasis in original). See also Webb v. District of Columbia, 146 F.3d 964, 971 (D.C. Cir. 1998). Rather, it means that before imposing a litigation-ending sanction, such as default or dismissal, the court must explain why lesser sanctions were likely to be ineffective. Id. See also Bonds v. District of Columbia, 93 F.3d 801, 808 (D.C. Cir. 1996) (stating that "[p]articularly in the context of litigation-ending sanctions," courts have found that "dismissal is a sanction of last resort to be applied only after less dire alternatives have been explored without success or would obviously prove futile."). In addition, before a court can impose a litigation-ending sanction, the misconduct must be proven by clear and convincing evidence. Shepherd, 62 F.3d at 1476-78. On the other hand, the imposition of lesser sanctions, such as adverse evidentiary rulings, "do not require a heightened standard of proof." Id. In order to impose those sanctions, the misconduct need only be proven by a preponderance of the evidence. Id. (noting that "[b]ecause issue related sanctions are fundamentally remedial, rather than punitive and do not preclude a trial on the merits, we conclude that they do not require a heightened standard of proof.").

IV. FINDINGS OF FACT

Upon consideration of all the evidence presented and representations made at trial, and in accordance with Federal Rule of Civil Procedure 52(a), the Court finds the following facts established by clear and convincing evidence. See, e.g., Cifra v. General Electric, Co., 252 F.3d 205, 215 (2d Cir. 2001) (noting that the "obligations of the court as the trier of fact are to determine which of the witnesses it finds credible, which of the permissible competing inferences it will draw, and whether the party having the burden of proof has persuaded it as factfinder that the requisite facts are proven.").*fn23

As noted above, first the Court will address the Department of Interior's effort to carry out a historical accounting project, which is relevant to Specifications 1 and 2. Next, the Court will address the Interior Department's TAAMS and BIA Data Cleanup subprojects, which are relevant to Specifications 3 and 4. Finally, the Court will address IT security, which is relevant to Specification 5.

A. HISTORICAL ACCOUNTING PROJECT-SPECIFICATIONS 1 & 2

The Court has organized its findings of fact pertinent to Specifications 1 and 2 chronologically. To put the findings of fact relevant to these specifications in context, however, the Court will briefly discuss its earlier rulings regarding the historical accounting project and describe the circumstances surrounding the Department's decision to publish a notice in the Federal Register. 1. Prior Decisions by this Court Regarding the Historical Accounting (1998-1999)

The Court bifurcated this case on May 5, 1998. Specifically, the Court ordered that "to the greatest extent feasible, this case shall be divided between that aspect which seeks to institute new trust management practices, often referred to as `fixing the system,' and that aspect which seeks to obtain an accounting or approximation thereof and to correct the accounts of the members of the plaintiff class, often referred to as `correcting the accounts.'" Order of May 5, 1998 at 2. See also Cobell III, 52 F. Supp.2d at 19 (noting that "[t]he second phase of this suit concerns plaintiffs' claim for an accounting, which is their ultimate goal in this case and unambiguously provided for by statute."). Notwithstanding this bifurcation, the Court observed in its Memorandum Opinion regarding the Phase I trial that "[t]he interplay between the two components . . . is an important issue." Cobell V, 91 F. Supp.2d at 31. In particular, the Court found that:

Everyone understands that the second phase of this case will involve a trial regarding defendants' rendition of an accounting. In general terms, that process will involve the government bringing forward its proof on IIM trust balances and then plaintiffs making exceptions to that proof. The government mistakenly assumes, however, that because `trial two' involves the actual accounting then the scope of the required accounting-even at its most basic level-is a matter that need not be addressed today. On this point, the government is incorrect. The government alludes to the argument that the Trust Fund Management Reform Act does not require a `historical' accounting. This argument necessarily brings the issue of whether the Act requires an accounting of all IIM trust money within the scope of today's decision. Simply put, the Court cannot declare defendants' duties and assess whether defendants are in compliance with these duties without establishing the funds to which the duties apply. The disposition of this narrow (but threshold) issue leaves all other accounting issues as matters for the second component of this litigation.

Id. at 31-32 (internal citations omitted).

In deciding whether "the Trust Fund Management Reform Act imposes on the United States, and, a fortiori, its trustee delegates, the duty to render a `historical' accounting," see Cobell V, 91 F. Supp.2d at 40, the Court had to determine if the statutory provision that requires the Secretary of Interior to account for the daily and annual balance of "all funds" held in trust by the United States for the benefit of an individual Indian really means all funds. 25 U.S.C. § 4011. As the Court found this statutory interpretation question rather straightforward, its analysis was necessarily brief. The Court concluded that "all funds" does mean all funds-as opposed to only some subset of the individual Indian trust funds managed by the Department of Interior. Cobell V, 91 F. Supp.2d at 41 (emphasis added). The Court could not then and it can not now "put a finer point on it than that." Id. Accordingly, the Court ruled that the 1994 Act "requires defendants to provide plaintiffs an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs, without regard to when the funds were deposited." Id. at 58. As a corollary to that finding, the Court further ruled that the 1994 Act "requires defendants to retrieve and retain all information concerning the IIM trust that is necessary to render an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs." Id. at 58. The Court did not, however, prescribe the precise manner in which the accounting should be performed. Id. at 40 n. 32. Rather, the Court "explicitly left open the choice of how the accounting would be conducted, and whether certain accounting methods, such as statistical sampling or something else, would be appropriate." Cobell VI, 240 F.3d at 1104.

The Court issued its decision regarding the Phase I trial on December 21, 1999. Cobell V, 91 F. Supp.2d at 1. On the same date, the Court certified its order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Cobell V, 91 F. Supp.2d at 57. In so doing, the Court expressly noted that "[o]ther proceedings in this matter shall not be stayed during the pendency of any interlocutory appeal that is taken." Id. at 57.

2. The Interior Department's Actions From December 1999 Until January 2001*fn24

Despite the fact that this Court certified its order regarding the Phase I trial for interlocutory appeal, the Justice Department-which manages this litigation on behalf of the federal government-informed the Department of Interior that it would not appeal the order unless Interior began "an administrative process towards a historical accounting." Contempt II Tr. at 697. Specifically, the Solicitor General's Office*fn25 told the Department of Interior that it had to initiate a historical accounting project consistent with this Court's order before the Justice Department would agree to appeal the ruling to the D.C. Circuit. Contempt II Tr. at 45-46 ("this had to be done in order to file an appeal of the Court's decision of December 1999."). The reason for this condition was that the Department of Justice felt "there needed to be some action, some motion indicating that [the Interior Department was] moving forward with complying with the order to do a historical accounting." Contempt II Tr. at 698. See also Contempt II Tr. at 46-47 ("in order to argue the appeal, [Interior] had to be somewhat responsive to the Court order and explain why-what we were doing to follow through on the Court's order."). Consequently, in early January 2000, the Department of Interior decided to publish a notice in the Federal Register regarding the performance of a historical accounting project. Contempt II Tr. at 44. As Thomas Thompson, Principal Deputy Special Trustee, explained during the contempt trial:

A. I wanted to point out that there had been conversation and it was my sense that a large measure of the Federal Register process was in order to respond to the solicitor general's requirement for an administrative process towards a historical accounting.
It was my sense that a good portion of what we were doing was to deal with that request, demand if you will, from the Solicitor General's Office.
Q. Now, why is it your understanding that the solicitor general made a request that this action had to be taken to support the appeal?
A. In conversations, it was stated specifically that the appeal — that the Federal Register notice was the, quote/unquote, price of the appeal, that without some specific action in hand, the appeal would not go forward, would not be argued.

Contempt II Tr. at 697-98. See also Contempt II Tr. at 46 ("I [Thompson] sensed that the primary purpose of the Federal Register notice was more likely to be in order to meet the price of the appeal by the Solicitor General who had to argue the case or present the case to the Appeals Court."). Thus, the Department of Interior decided to publish a notice in the Federal Register so that it could appeal this Court's Phase I trial ruling.

Having agreed to comply with the Justice Department's condition for appeal, the Department of Interior petitioned the D.C. Circuit for permission to appeal this Court's order regarding the Phase I trial in January of 2000.*fn26 The Interior Department (in its corrected petition) argued that this Court did not have jurisdiction to "initially define the scope of the agency's action, or to hold a trial to resolve the accounting issue itself." Corrected Petition For Permission to Appeal at 12. Rather, the Department contended that "[t]he complex question of how best to achieve an accounting or reconciliation of IIM accounts has been left by Congress to Interior to determine in the first instance." Id. In support of this argument, the Interior Department stated that it will "implement a process under the APA to meet its remaining obligations regarding reconciliation and accounting," and that "[t]hat process will include consultation with Indian Tribes, an opportunity for comment by account beneficiaries and the public, and will commence with a notice published in the Federal Register on or before March 1, 2000." Id. at 13. On February 17, 2000, the D.C. Circuit granted the Interior Department's request for permission to appeal this Court's decision regarding the Phase I trial. The D.C. Circuit did not, however, stay the order entered by this Court. Oral Argument was subsequently scheduled for September 5, 2000.

On March 1, 2000, the defendants filed a motion with this Court for an order finding that counsel for the Department of Interior would not violate any rules of professional conduct (including the rules concerning attorney contact with represented parties) by providing advice and assistance to the Department regarding the notice in the Federal Register. Motion For Entry of an Order at 1. In the motion, the Interior Department told the Court that it "has prepared a proposed notice for publication in the Federal Register . . . [which] outlines an administrative process for fulfilling DOI's statutory obligations and seeks comment, through a public process, from IIM account holders and the general public." Id. at 2. The Interior Department stated that it was initiating this administrative process "to determine the most reasonable methods for providing account holders with information to evaluate their accounts and to determine whether there are discrepancies due to past management practices." Id. at 6-7. The Department of Interior further noted that it drafted the proposed notice with the advice and assistance of counsel in the Solicitor's Office. Id. at 4. In support of its motion, the Department of Interior attached the corrected petition for permission to appeal referenced above (as Exhibit 1) and a copy of the proposed notice (as Exhibit 2).

The plaintiffs filed their response to the Department of Interior's motion on March 20, 2000. In their opposition, the plaintiffs argued that the notice in the Federal Register was "nothing more than a desperate attempt to end-run this Court, and should not be countenanced." Pls.' Opp'n at 4. Specifically, the plaintiffs argued that the notice in the Federal Register was devised to delay the historical accounting "for five years or more[,]" and to support the defendants' recently filed appeal. Id. at 1-4.

The Department of Interior filed a reply brief in support of the motion on March 24, 2000. In its reply brief, the Interior Department argued that contrary to the insinuations of the plaintiffs, the meetings regarding the notice in the Federal Register were not meant to circumvent ethical rules against attorney contact with represented parties, and, in fact, were being held "in accordance with this Court's findings that Defendants have a duty to account to IIM beneficiaries." Defs.' Reply at 7. On March 28, 2000, the Court-relying upon the representations made by the Department of Interior-granted the defendants' motion for the entry of an order regarding a public administrative process.*fn27 In particular, the Court found that the communications contained in and contemplated by the proposed notice would not contravene applicable ethical rules concerning attorney contact with represented parties. At the same time, however, the Court stated that it "makes no ruling at this time on any other legal question presented by the Proposed Notice." Order of March 28, 2000 [Docket Entry 479].

Having received approval from the Court, the Department of Interior published its notice in the Federal Register on April 3, 2000. Pls.' Ex. 1, Tab 14. Consistent with the representations made to this Court and the D.C. Circuit, the Interior Department stated in the summary section that "[t]his notice initiates an information gathering process with IIM account beneficiaries, and the public, to comply with Congressional directives to determine the most reasonable methods for providing accountholders with information to evaluate their accounts and to determine whether there are discrepancies due to past management practices." Pls.' Ex. 1, Tab 14 at 17521. The notice presented respondents several accounting options to consider, including transaction-by-transaction, limited reconciliation, statistical sampling, analysis of current account data, and payment formula.*fn28 The Interior Department told the respondents that although it "intends to consider the widest possible range of options for meeting the goals stated above, [it] will be guided by a number of factors in evaluating the reasonableness of each option[,]" including cost, time, feasibility, and finality. Pls.' Ex. 1, Tab 14 at 17525-26.

Notwithstanding the fact that publication of the notice in the Federal Register was delayed by over a month, the public meetings (which were scheduled between April 24 and May 9, 2000) were not postponed. Pls.' Ex. 1, Tab 14 at 17521-22. The Office of American Indian Trust ("OAIT") was the agency responsible for conducting the meetings, and Jim Pace was the primary project officer from OAIT in charge of oversight. The notice also provided that written comments would be collected until June 30, 2000. Pls.' Ex. 1, Tab 14 at 17521.

By late July of 2000, the Solicitor's Office became concerned that the Department was taking too long to decide officially how it was going to perform the historical accounting of the IIM trust accounts. Several months had passed since the Department published its notice in the Federal Register, and oral argument before the D.C. Circuit was scheduled for September 5, 2000. Contempt II Tr. at 388 ("because there had not been a decision, there hadn't been much movement in recent months on the Federal Register notice, it was necessary in the minds of some to show some movement that could be offered to the appeals court with regard to the Federal Register notice."). Accordingly, on August 2, 2000, Anne Shields, Chief of Staff for then-Secretary Babbitt, chaired a meeting with certain senior Interior officials-including attorneys from the Solicitor's Office-to discuss the historical accounting project. Contempt II Tr. at 2742-43; Contempt II Tr. at 388; Contempt II Tr. at 688.

Notwithstanding this uncertainty, the participants began discussing statistical sampling as the preferred method for performing the historical accounting soon after the meeting started. Contempt II Tr. at 419-20. In fact, the Office of the Special Trustee did not even have the opportunity to make its presentation regarding how the Department should go about deciding which approach to employ before the attendees began discussing using the statistical sampling method to perform the historical accounting. Contempt II Tr. at 75-76 ("We never got to that agenda item in the meeting . . . as it turned pretty quickly to a discussion about statistical sampling and who would do it."); Contempt II Tr. at 580 (same). Although there was some discussion of the other approaches identified in the Federal Register (including transaction-by-transaction), these methods were in effect summarily rejected. Contempt II Tr. at 453-54 (Principal Special Deputy Trustee agreeing that "[t]here was no sentiment for th[e] [transaction-by-transaction] method of accounting and the participants rejected it out of hand at the meeting."). See also Contempt II Tr. at 432-33 ("[t]here was discussion in the meeting about other concerns and other issues on historical accounting, but the majority of the discussion and obviously the result of the discussion was selection of statistical sampling.").

The Chief of Staff decided, with the approval of those attending the meeting (including the attorneys from the Solicitor's Office), that the Department would utilize the statistical sampling method to perform the historical accounting of the IIM trust accounts. Contempt II Tr. at 432 ("There was clearly a decision in that meeting that statistical sampling would be the approach taken."); Contempt II Tr. at 433 ("Anne Shields was the senior person there and she [made the decision] based on a consensus or unanimous views of the people at the meeting."). The Chief of Staff also decided that the Office of the Special Trustee would be in charge of the statistical sampling project. Contempt II Tr. at 434; Contempt II Tr. at 2753-54. In choosing a specific method to perform the historical accounting at the August 2, 2000 meeting, the participants explicitly discussed what they could do to support the appeal pending with the D.C. Circuit. Contempt II Tr. at 388.*fn32 Several officials thought that selecting a particular method to perform the historical accounting would help the Department's pending appeal because it would show that the agency was making progress towards fulfilling its fiduciary obligations. Contempt II Tr. at 388.

The Department of Interior did not research the merits of the statistical sampling approach before selecting it on August 2, 2000, see Contempt II Tr at 577-78, or the costs and benefits of the transaction-by-transaction method before summarily rejecting it at the August 2, 2000 meeting, see Contempt II Tr. at 281. Contempt II Tr. at 581. As the Special Trustee, Thomas Slonaker, testified during the contempt trial:

Q. The next conclusion of the Court Monitor is as follows: "The Interior Secretary's decision was not supported by any legitimate decisionmaking process or research effort to determine the method to conduct an historical accounting." Do you agree with that?

A. Yes.

Q. Why do you agree with that?

A. On its face, there is no particular logical step to what was done.
Q. There was no logical step at the time the Federal Register Notice process occurred; is that a fair statement?

A. Yes.

Q. And is there any now?

A. To go to a statistical sampling?

Q. Correct.

A. I don't believe so.

Q. You've never seen any research to support it, have you?

A. No.

Contempt II Tr. at 2190-91. In fact, the only action taken by the Department to determine how to perform the historical accounting was placing a notice in the Federal Register.*fn33 Contempt II Tr. at 289. Indeed, as explained above in footnote 31, during the summer of 2000 the Department of Interior considered (but ultimately decided against) joining a pilot study by the Justice Department which would have evaluated the potential use of the statistical sampling method to perform the historical accounting. Pls.' Ex. 1, Tab 10; Tab 11. In a memorandum to Justice Department attorneys dated July 24, 2000, Robert Lamb, Deputy Assistant Secretary of Interior for Budget and Finance, wrote that the Department "obviously will learn about the strengths and weaknesses of the sampling methodology through the pilot process." Pls.' Ex. 1, Tab 11 (stating further that "[t]hat after all is the purpose of a pilot.").*fn34 The pilot project became moot nine days later, however, when the Interior Department selected the statistical sampling method to perform the historical accounting. Contempt II Tr. at 280-81.

The Department of Interior also had not compiled or evaluated the results of the Federal Register process before deciding to use the statistical sampling approach to perform the historical accounting. Pls.' Ex. 1, Tab 15. Indeed, as Deputy Assistant Secretary Lamb noted in the July 24, 2000 memorandum mentioned above, "the analysis of comments is just beginning[.]" Pls.' Ex. 1, Tab 11. Assistant Secretary Lamb explained in more detail during the contempt trial what he meant when he wrote this particular part of the memorandum:

the comments from the Federal Register process was just beginning and what I was trying to say there is that I am not deciding — I don't know how ultimately we are going to do an historical accounting. We've got a Federal Register process, the one you and I have been talking about, that was wrapping up. We would have those results in, you know, in due course, we're keeping an open mind, we're not prejudging — I wasn't prejudging the results.

Contempt II Tr. at 2740.

At the same time, however, the Department of Interior knew even before publishing the notice in the Federal Register that the Indian beneficiaries would want a full transaction-by-transaction accounting of their assets held in trust by the federal government. See, e.g., Contempt II Tr.at 72 ("For 15 years, we had heard from the Indians about their preference for a transaction by transaction accounting of their monies. . . ."); Contempt II Tr. at 246 (The Federal Register process "was preordained in the sense that I [Thompson] knew the answer from the beneficiaries, that they would ask for a transaction by transaction analysis."). Many senior officials at the Interior Department (including some attending the meeting) also knew, as of August 2, 2000, that the vast majority of the comments to the notice in the Federal Register favored the transaction-by-transaction approach. Contempt II Tr. at 290-91 ("it was generally known that the results across the board from the senior managers was that the — that the beneficiaries were asking for a transaction-by-transaction accounting.").

Consequently, the Interior officials at the August 2, 2000 meeting recognized that the Department would have to explain why it selected the statistical sampling method to perform the historical accounting of the IIM trust accounts instead of the transaction-by-transaction approach. Contempt II Tr. at 284 (Principal Deputy Special Trustee, testifying that "[i]n the session I cautioned that you've got the Federal Register notice which didn't lead you into this path. You're going to have to reconcile that issue[.]"); Contempt II Tr. at 436 (recognizing that it was not going "to be acceptable to abandon the [Federal Register] process and leap strictly into statistical sampling without some explanation of why that decision was taken."). The participants at the meeting discussed who would be in charge of writing a memorandum explaining the basis for the Department's decision. Contempt II Tr. at 435. The Interior officials present at the meeting selected Kevin Gover, then-Assistant Secretary of Interior for Indian Affairs, to draft a memorandum that provided the reasons why the Department rejected the transaction-by-transaction approach in favor of the statistical sampling method. Contempt II Tr. at 435-36. In addition, the Special Trustee agreed to write a separate memorandum outlining the statistical sampling approach that the Department planned to use to perform the historical accounting. Contempt II Tr. at 435. Both of these memoranda were to be submitted to Secretary Babbitt since he had final decision making authority over the method that the Department of Interior would use to perform the historical accounting of the IIM trust accounts. Thomas Thompson, the Principal Deputy Special Trustee, agreed to draft a memorandum for Secretary Babbitt's signature officially adopting statistical sampling as the approach that the Department would use to perform the historical accounting. Contempt II Tr. at 435.

On August 11, 2000, Jim Pace, the primary project officer from OAIT, drafted a memorandum on behalf of then-Assistant Secretary Gover summarizing the results of the Federal Register process. Pls.' Ex. 1, Tab 15.*fn35 Pace began the memorandum by reiterating that Interior published the notice in the Federal Register "to initiate an information gathering process with IIM account holders" to determine how the Department should perform the historical accounting of the IIM trust accounts. Pls.' Ex. 1, Tab 15 at 2. Pace then noted that more than one thousand individuals attended the public meetings (sixty percent of whom identified themselves as IIM account holders), and that most of the participants provided their comments orally. Pls.' Ex. 1, Tab 15 at 3. He also observed that in addition to the seven written comments submitted at the public meetings, the Department received one-hundred-and-forty-six written comments by mail. Pls.' Ex. 1, Tab 15 at 3. In summarizing the comments to the notice, Pace found that:

eighty-one of the respondents who wrote in, and an overwhelming majority of those who voiced their preferences at the public meetings wanted to see a transaction-by-transaction reconciliation, in spite of the discouraging language contained in the Federal Register Notice stating that such a solution was not very likely since Congress had already dismissed such a solution.

Pls.' Ex. 1, Tab 15 at 3. The memorandum did not address the Department's decision to use the statistical sampling method to perform the historical accounting. That is, Pace did not attempt to explain why the Department selected the statistical sampling method instead of the transaction-by-transaction approach.

On August 23, 2000, an attorney in the Solicitor's Office named Edith Blackwell redrafted the memorandum that Pace had prepared summarizing the results of the Federal Register process.*fn36 Pls.' Ex. 1, Tab 16. Blackwell redrafted the memorandum so that it would support the decision (made on August 2, 2000) to use the statistical sampling method. Contempt II Tr. at 290; Contempt II Tr. at 452-53. In revising the memorandum, Blackwell stated that she "tried to create a decisional document which provides the rational[e] for the decision" to employ the statistical sampling method instead of the transaction-by-transaction approach. Pls.' Ex. 1, Tab 16 at 1. In rejecting the latter approach, Blackwell wrote that:

the question of a historical accounting has been reviewed by Department staff, Congress, and outside third parties. A transaction-by-transaction accounting would cost hundreds of millions of dollars and take many years to complete. To accomplish this task would require the Department to significantly increase BIA staff and Congress to double BIA's current appropriation. Based on informal discussions we do not believe that Congress is willing to fund a transaction-by-transaction reconciliation. Given the critical unmet educational, infrastructure and economic needs of Indian people, we believe that funding a transaction-by-transaction analysis is not appropriate.
We believe that [by] using statistical sampling we can perform a transaction-by-transaction analysis on a statistically significant portion of the total number of accounts. With a high degree of confidence we believe we can extrapolate to all account holders an error rate. We believe that this approach is best given the massive number of records, the complexity, and the condition of the records. We also note that GAO and Congress have suggested sampling.

Pls.' Ex. 1, Tab 16 at 4. Blackwell went on to describe the manner in which the Department planned on carrying out the statistical sampling project. Pls.' Ex. 1, Tab 16 at 4. Upon completion of her revised draft, Blackwell distributed the memorandum (via e-mail) to other attorneys in the Solicitor's Office and to certain senior Interior officials to review. Pls.' Ex. 1, Tab 16. Despite these substantial revisions, it is important to note that then-Assistant Secretary Gover did not finalize his memorandum for then-Secretary Babbitt until December 21, 2000. Pls.' Ex. 1, Tab 3.

In the interim, on September 5, 2000, the D.C. Circuit heard oral argument regarding the Department's interlocutory appeal. At the hearing, the Interior Department claimed-as it had in its corrected petition for permission to appeal and in its appellate briefs-that it was in the process of discharging properly its fiduciary obligations towards the Indian trust beneficiaries. Pls.' Ex. 1, Tab 19. Specifically, with respect to the historical accounting (or reconciliation), the Department noted that it commenced an administrative process in April of 2000 by publishing a notice in the Federal Register. Pls.' Ex. 1, Tab 19. In accordance with this representation, the Department argued that "Congress expected th[e] reconciliation process to be done administratively," and that "it's not something which can be done initially in court." Pls.' Ex. 1, Tab 19.*fn37 Thus, the Department argued, as it had previously, that this Court did not have jurisdiction to determine the scope of the historical accounting of the IIM trust accounts before the agency itself had decided how and to what extent it was going to do so.*fn38

In December of 2000, then-Assistant Secretary Gover, Special Trustee Slonaker, and Principal Deputy Special Trustee Thompson completed their memoranda regarding the decision to utilize the statistical sampling method. Pls.' Ex. 1, Tab 18. In an e-mail dated December 18, 2000, the Special Trustee indicated that he was satisfied with the latest draft of the Assistant Secretary's memorandum. Pls.' Ex. 1, Tab 18. The Special Trustee then asked Edith Blackwell and Tim Elliot,*fn39 two attorneys in the Solicitor's Office, whether they agreed with his assessment. Pls.' Ex. 1, Tab 18. While it is unclear whether these two attorneys had additional comments to make to the Assistant Secretary's memorandum (Blackwell had, as noted above, already redrafted it back in August of 2000), they did express dissatisfaction with both the Special Trustee's and the Principal Deputy Special Trustee's memoranda. Specifically, Blackwell wrote in response to the Special Trustee's e-mail message that:

Tim and I are not O.K. with the memo [written by the Principal Deputy Special Trustee] for the Secretary's signature. In addition, Tom [Slonaker] your memo discusses the lack of funding but Congress gave us money for this project this year. Among other things, the letter for the Secretary's signature states that the Secretary accepts the Special Trustee's conditions, one of them being funding. I believe that this and other problems with the Secretary's memo must be fixed and would advise the Special Trustee to update his letter to note that funding has been received.

Pls.' Ex. 1, Tab 18. Shortly after Blackwell sent her response, Elliot showed his displeasure by writing that:

I agree with Edith's comments. My earlier comments went only to the question asked (Kevin's Memo). Edith, have you taken a stab at re-drafting the memorandum for the Secretary. If not, we probably should. I am particularly concerned that it does not mention the memorandum from Kevin, whose memo is the only one to explain why we are not following the majority of the comments received.

Pls.' Ex. 1, Tab 18.

On December 21, 2000, after these revisions were made, the Assistant Secretary for Indian Affairs, the Special Trustee, and the Principal Deputy Special Trustee submitted their respective memoranda to then-Secretary Babbitt. Pls.' Ex. 1, Tab 3. Then-Assistant Secretary Gover included in his final draft the paragraph written by Blackwell which stated that:

Department staff, Congress, and outside third-parties have all reviewed the question of how to perform a historical accounting. Each agrees that a complete transaction-by-transaction accounting for every account would cost hundreds of millions of dollars and take many years to complete. Moreover, to accomplish this task would require the Department to significantly increase its BIA staff and would require Congress to double BIA's current appropriation.

Pls.' Ex. 1, Tab 3. He went on to note that Congress observed in the Conference Report accompanying the Department's FY 2001 Appropriation that using the transaction-by-transaction approach to perform the historical accounting could cost hundreds of millions of dollars, and that "the managers have been concerned for years about the potential cost and effectiveness of any approach that might be used." Pls.' Ex. 1, Tab 3. Additionally, then-Assistant Secretary Gover justified using the decision to employ the statistical sampling method by writing that:

Pls.' Ex. 1, Tab 3. In his memorandum, on the other hand, the Special Trustee outlined the process the Department would follow in carrying out the statistical sampling project. Pls.' Ex. 1, Tab 3. It is worth noting that the scope of the statistical sampling project was limited to 1952-1993. Pls.' Ex. 1, Tab 3.

On December 29, 2000, then-Secretary Babbitt officially selected the statistical sampling method to perform the historical accounting of the IIM trust accounts. Pls.' Ex. 1, Tab 4. In a one-page memorandum, then-Secretary Babbitt wrote that:

I have reviewed the attached memoranda from the Special Trustee for American Indians and the Assistant Secretary-Indian Affairs. I concur with the recommendation of each that the Department should use statistical sampling instead of attempting a transaction-by-transaction historical reconciliation of all IIM accounts.

Pls.' Ex. 1, Tab 4. Then-Secretary Babbitt went on to note that Congress had already appropriated approximately ten million dollars for a statistical sampling project-money that had been requested months earlier. Pls.' Ex. 1, Tab 4. He also wrote in the memorandum that:

the Department . . . believe[s] that [it] must examine past account activity to discover information that will enable beneficiaries and the Department to evaluate whether income from individual trust assets was properly credited, maintained, and distributed to and from IIM accounts before October 25, 1994. As part of this process, the Department is exploring approaches to gather such information so as to fairly compensate beneficiaries and finally resolve any discrepancies.

Pls.' Ex. 1, Tab 4 (emphasis added). Then-Secretary Babbitt concluded the memorandum by writing that "I have asked the Special Trustee to plan, organize, direct, and carry-out th[e statistical sampling project] including developing the detailed plan required by Congress in the Conference Report." Pls.' Ex. 1, Tab 4.

On January 8, 2001, the Department of Interior filed then-Secretary Babbitt's decisional memorandum as well as the Assistant Secretary for Indian Affairs' and the Special Trustee's memoranda with the D.C. Circuit. Pls.' Ex. 24. In the transmittal letter, the Department told the D.C. Circuit that, "[a]s indicated in these supporting memoranda, the Secretary's decision flows out of the Federal Register process discussed in the Opening Brief for Appellants at 17, 60, and in the Appellees' Response Brief at 33-34." Pls.' Ex. 24. The next day, the Department of Interior filed all three memoranda with this Court. Pls.' Ex. 23. Specifically, the Department told this Court that "[n]otice is hereby given of the filing of the attached Memorandum from Secretary Bruce Babbitt regarding the statistical sampling of Individual Indian Money accounts, with supporting memoranda from Tom Slonaker, Special Trustee for American Indians, and Kevin Gover, Assistant Secretary for Indian Affairs." Pls.' Ex. 23.

In late January of 2001, Gale Norton replaced Bruce Babbitt as Secretary of the Interior. Contempt II Tr. at 4279.

3. The Department of Interior's Actions From February 2001-February 2002

On February 27, 2001, Secretary Norton "opted to follow" former-Secretary Babbitt's decision to use the statistical sampling method to perform a historical accounting. Pls.' Ex. 1, Tab 21; Tab 23.*fn40 Specifically, Secretary Norton issued a one-page memorandum entitled "Statistical Sampling of Individual Indian Money Accounts." Pls.' Ex. 1, Tab 21. After referencing the memoranda from Secretary Babbitt dated December 29, 2000, the Special Trustee for American Indians dated December 21, 2000, and the Assistant Secretary for Indian Affairs dated December 21, 2000, Secretary Norton wrote that:

I concur in the directive that the Department proceed with a form of statistical sampling using a methodology which will provide the basis for an historical accounting of the IIM accounts. The purpose for this process should be to fulfill the court's directive to provide the IIM trust beneficiaries an accounting for their funds held in trust by the United States since the Act of June 24, 1938.

Pls.' Ex. 1, Tab 21. Like former-Secretary Babbitt, Secretary Norton also assigned the task of planning, organizing, and performing the statistical sampling project to the Special Trustee. Pls.' Ex. 1, Tab 21.

The Department of Interior did not perform any additional research regarding the different accounting methods prior to Secretary Norton's decision on February 27, 2001. Contempt II Tr. at 507-508; Contempt II Tr. at 4387. In fact, Secretary Norton did not even consider the other approaches listed in the Federal Register before affirming former-Secretary Babbitt's decision to use the statistical sampling method. Contempt II Tr. at 4387-88. As Secretary Norton testified during the contempt trial:

I didn't really understand that memo as making a choice on the various models of accounting. I — the model that I knew of was statistical sampling. I look[ed] at the Court of Appeals decision. It said statistical sampling was something that the Department of Interior could choose, and so without realizing that might be viewed as contrary to anything that this Court had said, we — I basically signed it and said get busy, go ahead and start moving on this activity and assigned to the Special Trustee the responsibility to move forward with that.

Contempt II Tr. at 4338.

As of March 2001, the Department of Interior had not yet begun collecting missing information from outside sources that would help it render a historical accounting of the IIM trust accounts.*fn41 Contempt II Tr. at 760. See also Contempt II Tr. at 473-76. In particular, the Department made no attempt to obtain missing documents produced prior to 1994.*fn42 Contempt II Tr. at 803-04 ("there was no effort proposed or attempted of a concerted effort to locate missing documents from the period 1994 and [backward]."). Attorneys in the Solicitor's Office played a significant role in the Department's decision not to begin collecting pertinent documents made prior to 1994. Contempt II Tr. at 765; 779; 788-89; 792-93. Specifically, the attorneys in the Solicitor's Office did not think that the Department had any obligation to collect such documents and believed that doing so would be inconsistent with its legal position before the D.C. Circuit. Contempt II Tr. at 766-67. As the Principal Deputy Special Trustee testified at trial:

The overarching consideration was the appeal and the expectation that [this Court's] order would be overturned. That figured into a lot of this discussion and a lot of this work. In preparing this report we first tried to focus the effort toward an accounting, what it took to do an accounting, but we were not allowed to really use the term accounting as we understood it in conjunction with this effort. The earlier drafts of this report look radically different than what you see in the published report. The attorneys in this case were arguing that we did not have a statutory duty to do an accounting before 1994, and were arguing that through the litigation process.

Contempt II Tr. at 766-67. See also Contempt II Tr. at 794 ("The basic argument was that there was not an obligation to perform an accounting before 1994. That was going to be appealed and it was going to be won.").

Moreover, the Department failed to inform the Court that it was not going to attempt to locate pertinent documents produced prior to 1994. For example, in its Report on Collecting Information From Outside Sources, Interior stated that:

Although th[is] [Court's Phase I trial] Order did not define the period to be covered by the directed accounting, the question of the scope and nature of Department's responsibility to render an accounting prior to October 25, 1994, the effective date of the Indian Trust Fund Management Reform Act, is under appeal. Therefore, this document details the proposed strategies for collecting missing information to meet Interior's statutory obligation.

Pls.' Ex. 7 (Report on Collecting Information From Outside Sources) at 2. In addition, the Quarterly Reports submitted by the Department beginning in March of 2000 included similarly vague statements regarding the scope of the document collection project. See, e.g., Pls.' Ex. 9 at 37.*fn43 Attorneys in the Solicitor's Office also played a significant role in determining the language used in these reports. See, e.g., Contempt II Tr. at 766-67.

By memorandum dated July 10, 2001, Secretary Norton announced that the Department of Interior was going to reconsider which accounting method it should use to perform the historical accounting of the IIM trust accounts. Pls.' Ex. 1, Tab 25. See also Contempt II Tr. at 336-342; Contempt II Tr. at 496 ("It would seem to me that the first memorandum, to coin a phrase, was no longer operative."). That is, as of July 10, 2001, the Department of Interior did not know which method or methods it was going to use to perform a historical accounting of the IIM trust accounts. Rather, as Secretary Norton indicated in her memorandum, the Department was going to begin the process of selecting an accounting method anew. Pls.' Ex. 1, Tab 25. Specifically, after recognizing that "an accounting to the IIM beneficiaries is long overdue[,]" Secretary Norton wrote that:

The next step in this process is to develop a comprehensive plan for the historical accounting. Although myriad accounting approaches may be employed in some form and to some degree in this endeavor, it is imperative that the Department's approach satisfies our obligation to account and that the methods used to meet that goal meet appropriate fiduciary standards.

Pls.' Ex. 1, Tab 25. To facilitate the decision-making process and the development of a comprehensive plan, Secretary Norton established (by issuing a Secretarial Order on the same date) the Office of Historical Trust Accounting ("OHTA"). Pls.' Ex. 1, Tab 25. Secretary Norton explained in her memorandum that she was creating OHTA "to insure that [the Department] begin[s] this comprehensive planning process promptly but at the same time ha[s] the necessary information for due deliberation[.]" Pls.' Ex. 1, Tab 25. In particular, Secretarial Order 3231 instructed OHTA "to plan, organize direct, and execute the historical accounting of Individual Indian Money Trust (IIM) accounts." Pls.' Ex. 1, Tab 25. Moreover, Secretarial Order 3231 directed OHTA to, within 60 days, "prepare a comprehensive description and timetable for completion of all steps that are needed to staff and develop a comprehensive plan for a historical accounting that meets the Department's fiduciary obligations to IIM beneficiaries." Pls.' Ex. 1, Tab 25. Secretarial Order 3231 also directed OHTA to, within 120 days, "identify the preliminary work that can be done immediately." Pls.' Ex. 1, Tab 25.

On September 10, 2001, OHTA issued its Blueprint for Preparing the Comprehensive Plan for the Historical Accounting of IIM Accounts ("Blueprint"). Pls.' Ex. 28.*fn44 OHTA designed the Blueprint to serve as "the initial plan for the development of the `comprehensive plan for a historical accounting' or simply the Comprehensive Plan." Pls.' Ex. 28 at 8. Thus, as Bert Edwards, Executive Director of OHTA, stated in his transmittal letter to Secretary Norton, "[t]he Blueprint will be used as a starting point for the work that will transform it into the Comprehensive Plan." Pls.' Ex. 28. See also Contempt II Tr. at 114 (referring to the Blueprint as a plan to develop a plan to perform the historical accounting). OHTA estimated that it would "complete the Comprehensive Plan by mid-year 2002." Pls. Ex. 28. In other words, the actual plan (as opposed to the plan to develop a plan) would not be ready until more than thirty months after this Court issued its Phase I trial ruling.

On November 7, 2001, OHTA issued its Report Identifying Preliminary Work for the Historical Accounting. Pls.' Ex. 31.*fn45 In the Report, OHTA identified certain work that had begun already or would begin shortly to support the Department's effort to perform a historical accounting of the IIM trust accounts. Pls.' Ex. 31. In particular, OHTA stated that "[t]he projects described in the Report will assist development of the Comprehensive Plan in a number of ways while actually accomplishing part of the historical accounting for certain IIM accounts." Pls.' Ex. 31 (transmittal letter). Thus, for example, in describing its activities regarding Judgment and Per Capita Accounts, OHTA stated that a contractor to OST began (and completed) a pilot test in June of 2001 to reconcile ten Judgment accounts and five Per Capita transactions.*fn46 Pls.' Ex. 31 at 14. At the same time, however, OHTA reiterated that it did not anticipate completing the Comprehensive Plan until the middle of 2002. Pls.' Ex. 31 (transmittal letter).

On November 14, 2001, the Department of Interior filed with the Court its notice of proposed reorganization to improve Indian Trust Assets Management. Pls.' Ex. 104. In the notice, the Department stated that "[t]he proposed reorganization results from concerted efforts by Interior to create a management structure that can effectively implement trust reform and eliminate problems identified by the Court, the Court Monitor, Interior, and Interior's consultant, Electronic Data Systems Corporation ("EDS")." Pls.' Ex. 104 at (unnumbered) 1. In particular, the Department indicated that:

[t]he proposed reorganization consolidates Indian trust asset management functions in a new agency: the Bureau of Indian Trust Assets Management ["BITAM"]. The proposed Bureau will report to an Assistant Secretary for Indian Trust Assets Management . . . [Because] [t]he proposed reorganization impacts many interested parties[,] Interior has begun consultation with Indian tribes and with Congress . . . Trust reform activities will continue during this transition process. The final organization structure will depend upon the results of the consultation process.

Pls.' Ex. 104 at (unnumbered) 2. While it would be both premature and unnecessary at this time for the Court to make any factual findings regarding the merits of the BITAM proposal,*fn47 it is worth noting an exchange between plaintiffs' counsel and Tex Hall, a Tribal Chairman and an IIM account holder, at the contempt trial:

Q. I want turn you now to a discussion of what's been referred to as the BITAM proposal. Do you know what the BITAM proposal is? Or I should say the Bureau of Trust Asset Management Proposal from the Department of Interior?
A. Yeah. I — we call it "bite `em," but you know —
Q. And could you tell us in your understanding — well, first of all, do you support that proposal? Do you believe that that's the answer to trust reform?

A. No, sir.

Q. And do you believe that the tribal leadership that you have been involved with in this — in the task force believes that that is an appropriate proposal for trust reform?
A. The tribal leaders task force that I co-chair is 100 percent opposed to BITAM.

Contempt II Tr. at 4472. For purposes of this contempt trial, it is sufficient for the Court to find that no reorganization has occurred, and, in fact, the Department did not even have a final plan that it was ready to implement at the time the record closed.

Moreover, as of February 2002 (when the record in this trial closed), the Department of Interior did not know how it was going to perform a historical accounting of the IIM trust accounts. It still only had, as the Principal Deputy Special Trustee testified at trial, a plan for developing a plan.*fn48 Cf. Contempt II Tr. at 342; Contempt II Tr. at 1083-86.

B. TAAMS & BIA DATA CLEANUP-SPECIFICATIONS 3 & 4

In this section the Court will present its findings of fact regarding Specifications 3 and 4. Specifically, the Court will address in turn the TAAMS subproject, which relates to both of these specifications, and the BIA Data Cleanup subproject, which is relevant to Specification 4. The Court will make its factual findings regarding TAAMS and BIA Data Cleanup chronologically.

1. TAAMS

a) Background information on TAAMS

"TAAMS is a general trust land management system that is intended to efficiently manage" IIM and tribal trust accounts by "ensuring accurate distribution of funds to individuals and tribes through a proper management framework." Pls.' Ex.60 at 31. Although TAAMS will perform (if fully implemented) numerous functions for the Department of Interior, see Pls.' Ex. 2, Tab 2 at 25-35, the system itself can be divided into three primary areas. Pls.' Ex. 60 at 31. First, the "Title" portion will enable TAAMS to identify all tracts of land held in trust for IIM beneficiaries, maintain basic ownership data (current and history), and generate summary reports with all ownership and encumbrance information (including active leases, contracts, and agreements). Pls.' Ex. 2, Tab 2 at 25-27. See also Phase I trial Tr. at 2316-18 (testifying that "in order to have a proper land title records system, you have to establish a chain of title. And in the case of Indian records, it's typical to go back to the original patent, you know, which is 1887, or in that — in that — and that's our goal, is to have TAAMS have a full chain of title."). Second, the "Realty" or "Lease" part of TAAMS will report all activity on the individual tracts of land, establish and maintain payor information, and incorporate modifications to specific leases. Pls.' Ex. 2, Tab 2 at 28-30. See also Phase I trial Tr. at 2321-24 (noting that the Realty portion will, among other things, keep information on payors). Third, the "Accounting" portion will allow TAAMS to maintain a history of all account transactions, generate a payment schedule for and record payments received from payors, and interface with the Trust Fund Accounting System ("TFAS").*fn49 Pls.' Ex. 2, Tab 2 at 31-33. See also Phase I trial Tr. at 2326-30 (noting that it will generate "a payment schedule to the lessee and the lessor, the payor, and provide[] a bill so that they have . . . all the correct information on it[.]"). Because of its ancillary nature, the Accounting portion of TAAMS is designed to be implemented in conjunction with the Realty portion. Pls.' Ex. 60 at 31 (noting that "[t]he Accounting module tracks billings and accounts receivable of the trust and is to be implemented in conjunction with Realty.").

The Department of Interior acquired TAAMS (and TFAS) to replace two older or "legacy" computer systems used by BIA. Phase I trial Tr. at 2786 (noting that "the TAAMS system really is intended to replace two legacy applications."). The first system, which is known as the Land Records Information System ("LRIS"), "supports the land title function by providing land-title related information e.g. ownership and encumbrances." Pls.' Ex. 6 at 68. See also Cobell V, 91 F. Supp.2d at 19. The second system, which is known as the Integrated Records Management System ("IRMS"), "supports the land resource management function and is primarily used at the Agency level for generating lease bills and for income/revenue distribution to Indian owners." Pls.' Ex. 6 at 68.*fn50 See also Cobell V, 91 F. Supp.2d at 19.

b) Phase I trial testimony regarding TAAMS (June 10, 1999-July 23, 1999)*fn51

During the Phase I trial the Interior Department acknowledged that the two primary electronic database systems used by BIA to administer the IIM trust accounts-LRIS and IRMS-were inadequate in several critical aspects. See, e.g., Phase I trial Tr. at 412-21; 1153-54. The Department admitted and the Court found that LRIS and IRMS do not enable the Department to administer properly the IIM trust accounts. Phase I trial Tr. at 148-53, 412-21, 441-42, and 1153-54; Cobell V, 91 F. Supp.2d at 19. Based upon the representations made by the Department's witnesses, the Court found the inadequacies of LRIS and IRMS to include (among other things): "(1) inconsistent data, making it difficult to identify the appropriate owners of allotments or beneficiaries' appropriate land interests therein; (2) inconsistent use of the legacy systems; (3) significant backlogs in the certification of title; (4) the absence of important information, such as the schedules for payments due on leases; (5) the absence of an adequate general ledger system; (6) the nonexistence of a master list of leases and assets; and (7) insufficient internal controls and audits of the systems." Id.

The Department of Interior argued that the deficiencies of LRIS and IRMS should not affect the outcome of the Phase I trial, however, since none of them are "applicable to the new system being developed and implemented by BIA at the time of trial, the Trust Asset and Accounting Management System[.]" Defs.' Phase I trial proposed findings at ¶ 204. Interior stated that as a result of the legacy systems' limitations, the Strategic Plan recommended and the (original) HLIP required the development and implementation of a new trust management system, which the Department referred to as TAAMS. Phase I trial Tr. at 989-90. Thus, the Department contended that the legacy systems' admitted inadequacies were irrelevant at the time of trial because "TAAMS is, at heart, a data management system that contains all the essential functions to enable BIA to meet the requirements of the 1994 Reform Act." Defs.' Phase I trial proposed findings at ¶ 213. See also Defs.' Phase I trial proposed findings at ¶ 443. Moreover, the Department argued, in large part based on the testimony regarding TAAMS, that injunctive relief was not appropriate. The Department specifically stated that:

[t]he testimony at trial showed that Interior is making good faith efforts to come into compliance with all legal obligations through promulgation and implementation of the HLIP. Plaintiffs have not shown that an injunction is necessary to prevent violations from persisting. There is no reason to conclude that an injunction is required to bring about compliance with these duties.

To support its position, the Department of Interior presented a large volume of testimonial and documentary evidence regarding the capabilities of TAAMS.*fn52 Specifically, witnesses for the Department stated that TAAMS will allow BIA to administer trust assets, generate timely bills, identify delinquent payments, track income from trust assets, and distribute proceeds to the appropriate account holders. Phase I trial Tr. at 1108, 2319, 2389-91, 2788, and 2810. The Department noted that the key features of TAAMS that will support these functions are an asset management system (with a master lease subsystem), a billing and accounts receivable subsystem, and a collection subsystem.*fn53 Defs.' Phase I trial Ex. 82; Phase I trial Tr. at 2297-98. Witnesses for Interior also testified that TAAMS will have a major module for administering land title records, a sub-module for probate tracking, and a tickler system that will notify BIA employees of upcoming important events, such as when leases are about to expire, when it is time to advertise leases, and when collections are due. Phase I trial Tr. at 1150 and 2390. These witnesses further testified that TAAMS will also generate a report for each beneficiary covering all transactions related to leases on that beneficiary's property. Phase I trial Tr. at 2389-91.*fn54 In sum, the Department argued during the Phase I trial that TAAMS was a first-rate land management system, and that it was significantly better than the legacy systems used by BIA. See, e.g., BIA Press Release of June 25, 1999, TAAMS WORKS!!!, at 1 (quoting then-Assistant Secretary Gover as stating that "[t]his system is state of the art, and it has been designed by those who know exactly what the Trust Management System needs to do for Tribes and individuals."). Dominic Nessi, one of the primary Phase I trial witnesses for the Department, provided a noteworthy example of such testimony:

Q. As project manager, Mr. Nessi, can you describe for the Court in your view how good a system TAAMS is going to be?
A. It has the potential probably to be the best land management system in the United States. It has — it's been built with the best technology that is available. It meets the needs of a user population because they've been intimately involved with its design. It's easily expandable. We have an excellent vendor who is — stays on the leading edge of technology. It's integratable into the Internet. I honestly can't think of a flaw in the system right now. It's that good.
Q. As project manager, is it your intention to work as hard as you can to see that it's the best land management toll in the country?

A. Yes, absolutely.

Phase I trial Tr. at 2391. See also Phase I trial Tr. at 2668 (Nessi, testifying that "the work that we're doing in the next month or two gives you a system that's 20 times better than the Legacy systems.").

The Department of Interior also presented a significant amount of evidence regarding the manner in which it would implement TAAMS. In particular, witnesses for Interior testified that despite initial delays the TAAMS project was on schedule at the time of trial. Phase I trial Tr. at 992, 2286-87, and 2753. The Department informed the Court that it began a 100-day pilot project in Billings, Montana in June 1999, during which both TAAMS and the legacy computer systems (LRIS and IRMS) would run in parallel.*fn55 Phase I trial Tr. at 2280; Defs.' Phase I trial Ex. 82 (noting that by "[u]sing live data in a parallel processing environment, [the Department] will be able to perform a detailed transactional review of each document as it flows through TAAMS to insure that it is properly recorded on the data base and that all calculations are in conformance with expected results."). Dominic Nessi, Project Manager for TAAMS, explained that the pilot included unveiling the system, performing pre-deployment data cleanup, converting the data,*fn56 training the staff, testing the system,*fn57 conducting independent verification and validation ("IV & V"),*fn58 and completing post-deployment data cleanup. Phase I trial Tr. at 2280-81. The Department indicated that the Billings Pilot period provided it an opportunity "to fully and thoroughly test TAAMS, data conversion techniques, the capacity of the communications infrastructure, and the data cleanup approach before moving on to other AO jurisdictions." Defs.' Phase I trial Ex. 82 (also noting that "Billings will provide a robust system test" that "tests all of the functionality of TAAMS.").

The Department of Interior further informed the Court during the Phase I trial that it planned to begin implementing TAAMS on a geographic basis in late 1999. Phase I trial Tr. at 2280-81. See also Defs.' Phase I trial Ex. 82. Dominic Nessi explained that:

[Interior] hope[s] to have the overwhelming majority of Billings completed by around October 1st. At that point in time we have plans to go on to Juneau, Aberdeen, Minneapolis. We've already started working towards those. But, you know, they're tentative until we know that we have a good system that's well tested and ready to move forward.
Q. Is there some point at which a decision is going to be made about whether to continue on to these other areas?
A. Well, we'll have an official decision in approximately the last week of September, but we'll have a pretty firm idea well in advance of that.

Q. At the end, how many sites will TAAMS be available at?

A. At the end of this initial deployment period, it will be the 12 area offices, the central office, OTFM, 86 agency offices, and approximately 120 tribes.

Q. Is there a grand total you can give us?

A. It's about 230, I believe, 240.

Phase I trial Tr. at 2280-81. Moreover, the Department indicated that the "TAAMS implementation schedule by Area Office" was as follows: Billings (June 1999); Juneau (October 1999); Aberdeen (October 1999); Minneapolis (November 1999); Eastern (January 2000); Anadarko (February 2000); Muskogee (March 2000); Albuquerque (March 2000); Navajo (March 2000); Phoenix (April 2000); Portland (June 2000); Sacramento (July 2000). Defs.' Phase I trial Ex. 82. See also Phase I trial Tr. at 2354 ("Yes. This is the current roll-out that we have in mind."). Thus, the Department planned on having TAAMS in all the area offices by the end of 2000. Defs.' Phase I trial Ex. 82. As David Orr testified:

Q. But the system will be fully implemented when? What [is] the target date?
A. The target date is for all the area offices to be complete within the Year 2000. The infrastructure project needs to be complete prior to the Year 2000. So it makes sense to me that they'll have to continue their procurement roll-out for infrastructure which they've already started now and are going from area to area prior to the end of this year in order to be Y2K-compliant everywhere.

Phase I trial Tr. at 2857-58.*fn59

Although the Department of Interior recognized that it had an aggressive deployment schedule for TAAMS, it explicitly told the Court that the schedule was realistic and that it expected to meet the dates listed in the schedule. Phase I trial Tr. at 2281, 2286-87, 2574-76, 2849, and 2857-58.*fn60 In particular, the Department stated that it "has already tested the software and established that it works and, therefore, `there is not really much chance of a catastrophic failure.'" Defs.' Phase I trial proposed findings at ¶ 229.*fn61 The Department went on to note that "[t]o deal with the problems that do arise, Interior has contracted for independent validation and verification . . . with an outside contractor," which will "help tell Interior whether TAAMS is ready for full-scale deployment." Defs.' Phase I trial proposed findings at ¶ 229. Moreover, in terms of the functionality of TAAMS, Dominic Nessi testified during cross-examination that:

I'm absolutely certain it will work, but prudent project management, prudent IT development knows that you have bugs in software, and that's how you get them out, you test through them. TAAMS is — TAAMS is not an ALMRS. I mean, ALMRS had some other issues, from what I understand, just in terms of development time and some other things. That's not TAAMS.
Q. If TAAMS — let me go back to my question. If TAAMS does not work, what is the impact on the trust beneficiary?
A. That's a hypothetical question that I can't answer because there's — that's not a possibility.

Phase I trial Tr. at 2579-80.*fn62

c) The TAAMS project during July and August 1999

The Court is deeply troubled that many of the findings detailed in this section occurred either during the Phase I trial or before the Department submitted its proposed findings of fact and conclusions of law on August 4, 1999. Although Specification 3 deals exclusively with the Department's failure to disclose the true status of the TAAMS project between September 1999 and December 21, 1999, the evidence presented at this contempt trial clearly shows that the Department knew well before September that the testimony it had provided in June and July was no longer accurate. In fact, it is insulting to the plaintiffs and an affront to the Court for the Department to argue now that the problems with TAAMS only became apparent after the Phase I trial ended. That being said, the Court will proceed to make specific findings relevant to this time period.

Q. Can you give me a sense about what happened with the system in say July, August of '99?
A. Beginning in July, we were supposed to begin a combined system user test. That didn't happen.

Q. Why?

A. The data conversion proved to be a far greater challenge than anyone could have imagined, and during the month of July, we actually had the test teams actually showed up, but the test wasn't really conducted because there was just — every day the conversion team would say tomorrow we'll have it done; tomorrow we'll ...

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