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Cobell v. Kempthorne

January 30, 2008

ELOUISE PEPION COBELL, ET AL., PLAINTIFFS,
v.
DIRK KEMPTHORNE, SECRETARY OF THE INTERIOR, ET AL., DEFENDANTS.



The opinion of the court was delivered by: James Robertson, United States District Judge

FINDINGS OF FACT AND CONCLUSIONS OF LAW

These findings and conclusions are the result of a 10-day bench trial in October 2007. The central purpose of the trial was to determine whether the Department of Interior has remedied or is remedying what Judge Lamberth found in Cobell v. Babbitt, 91 F. Supp. 2d 1, 58 (D.D.C. 1999) (Cobell V), aff'd, Cobell v. Babbitt, 240 F.3d 1081 (D.C. Cir. 2001) (Cobell VI), to be a breach of its duty under the Indian Trust Fund Management Reform Act of 1994 to produce an accounting for Individual Indian Money (IIM) account holders. In setting the matter for trial, I said that, although the details of the trial remained to be worked out, it was both appropriate and prudent to review the Interior Department's historical accounting project in detail, and to do so in open court, where the government might present, and plaintiffs might test or challenge, its methodology and results up to the time of the hearing [Dkt. 3312]. The end product of such a proceeding was to include the answers to at least the following questions:

* Have the defendants cured (or are they curing) the breaches of their fiduciary duty that were found in Cobell V?

* Do the defendants' historical statements of account . . . satisfy defendants' duties "rooted in and outlined by the relevant statutes and treaties . . . [and] defined in traditional equitable terms"? Cobell VI, 240 F.3d at 1099.

* Have the defendants unreasonably delayed the completion of the required accounting?

* What further relief, if any, should be ordered?

By the time the trial began, the issues for trial had been distilled to these four:

First, it's going to be about what you're doing and what you're not doing. . . . It's going to be about both of those things.

Second, what would it cost to do the things that they say that you should be doing and you're not doing?

Third, taking into account the cost, because that, I think, I'm required to do by the Court of Appeals, is what you're doing adequate? Is it an adequate accounting?

And fourth -- and this is what you don't want to hear, but I think Mr. Gingold is entitled to at least a record on this point, fourth, what does it all add up to? Throughput versus what you can prove, what are the big numbers?

H'rg Tr. 76:23 - 77:10 (6/18/07). The question of what further relief, if any, should be ordered was left to another day.

These findings and conclusions, derived not only from the trial, but also from the extensive record that preceded it, support and explain my decision (i) that, although the defendants have attempted and continue to attempt to cure the breach of their fiduciary duty that was found in Cobell V and affirmed by Cobell VI, they have not succeeded in doing so; (ii) that the historical statements of account contemplated by defendants' latest accounting plan will not satisfy defendants' duties "rooted in and outlined by the relevant statutes and treaties . . . [and] defined in traditional equitable terms," Cobell VI, 240 F.3d at 1099; and (iii) that the defendants have unreasonably delayed the completion of the required accounting. Indeed, it is now clear that completion of the required accounting is an impossible task.

BACKGROUND

To say that the histories of the IIM trust and of this lawsuit have been exhaustively chronicled in district court and appellate opinions is to stretch the limits of understatement. See, e.g., Cobell v. Babbitt, 30 F. Supp. 2d 24, 27-29 (D.D.C. 1998); Cobell v. Babbitt, 91 F. Supp. 2d 1, 6-12 (D.D.C. 1999); Cobell v. Norton, 240 F.3d 1081, 1086-94 (D.C. Cir. 2001); Cobell v. Norton, 226 F. Supp. 2d 1, 11-20 (D.D.C. 2002); Cobell v. Norton, 283 F. Supp. 2d 66, 72-86 (D.D.C. 2003). Those seeking CliffsNotes can even consult the Cobell v. Kempthorne Wikipedia entry (though the Court, of course, cannot vouch for its accuracy). At this date, there are 3,504 entries on the Cobell v. Kempthorne docket. Appellate panels hearing Cobell arguments have engaged ten of our Circuit judges, some of them more than once. Upon publication, this opinion will have the shorthand title Cobell XX. Nevertheless, those histories must be retold at least briefly in order to provide context for today's opinion.

Plaintiffs are a certified class of present and former IIM account holders numbering in excess of 300,000. Some account holders have more than one IIM account. Hundreds of thousands of IIM accounts exist, managed for the United States by its trustee-delegates, the Department of Interior and the Department of Treasury. Most of these IIM accounts exist to receive income the government collects for leasing or selling Indian-owned lands and then to distribute it to account holders when account balances reach certain thresholds (usually fifteen dollars). A small percentage of the funds flowing through the IIM trust are in "Judgment" and "Per Capita" accounts, which were created to hold funds derived from litigation settlements (Judgment accounts) and tribal revenues allocable to individual Native Americans (Per Capita accounts). By far the largest amount of trust funds flow through the "land-based" IIM accounts that contain lease, royalty, and land sale payments tied to individual land allotments.

Individual Indian land allotments date to a period between the late 1800's and 1934 when the federal government attempted to dismantle tribes and instill the Anglo-American concept of private ownership in Native Americans by carving reservation land into individually owned parcels of up to 160 acres (now known as "tracts" or "allotments"). See, e.g., Yakima v. Yakima Indian Nation, 502 U.S. 251, 254 (1992) ("The objectives of allotment were simple and clear cut: to extinguish tribal sovereignty, erase reservation boundaries, and force assimilation of Indians into the society at large."), quoted in Cobell v. Norton, 240 F.3d 1081, 1087 (D.C. Cir. 2001). The government's pursuit of the allotment policy occurred alongside its official abandonment of treaty-driven relationships with tribes in favor of "govern[ing] [tribes] by acts of Congress." United States v. Kagama, 118 U.S. 375, 382 (1886); see Act of March 3, 1871, ch. 120, § 1, 16 Stat. 566 (1871) (codified as amended at 25 U.S.C. § 71). This policy shift and its corollary acts -- such as coercive assimilation -- were carried out without so much as the pretense of tribal consent. See, e.g., Lone Wolf v. Hitchcock, 187 U.S. 553, 565-68 (1903).

The allotment policy was first codified in the Indian General Allotment Act (Dawes Act), ch. 119, 24 Stat. 388 (1887) (codified as amended at 25 U.S.C. § 331 et seq.), and was reflected in several subsequent allotment acts. In the Dawes Act, Congress granted unilateral authority to the executive branch to divide reservation land west of the Mississippi into plots for individual tribal members and families. It also allowed non-Indian settlement upon and exploitation of some reservation land, resulting in the alienation of millions of acres from tribal ownership. The statute required the federal government to hold the allotted land in trust for the individual allottees and their heirs for a period of 25 years -- a period subject to extension at the government's discretion -- after which fee patents would issue to the allottees. See Cobell VI, 240 F.3d at 1087; Cobell v. Norton, 283 F. Supp. 2d 66, 74 (D.D.C. 2003). While held in trust, allotted lands were to be immune from state taxation. The expectation was that, during that time, Indians would establish self-sufficient farms and earn enough money to pay their own taxes. At the close of the 19th Century, Congress passed several acts allowing the government to lease allotments that had not been successfully cultivated. See, e.g., An Act Making Appropriations for Current and Contingent Expenses of the Indian Department and Fulfilling Treaty Stipulations with Various Indian Tribes for the Fiscal Year Ending June Thirtieth, Eighteen Hundred and Ninety-Five, and for Other Purposes, ch. 290, 28 Stat. 286 (1894).*fn1 Any income generated from the land was to flow into IIM accounts established by the government. Native American landowners could not (and today still cannot) sell or lease allotted land without the government's consent.

Congress soon realized that the allotment policy was responsible for innumerable problems, see, e.g., 1915 Congressional Report to the Joint Commission of the Congress of the United States, PX-681, not least of which was the phenomenon known as 'fractionation'. Fractionation occurs when Indian allotments are divided and divided again by inheritance through succeeding generations, diluting the ownership interests of allottees and causing enormous administrative difficulties for the BIA. The Indian Reorganization Act (Wheeler-Howard Act), ch. 576, 48 Stat. 984 (1934), (codified as amended at 25 U.S.C. § 461 et. seq.), was supposed to reconsolidate Indian lands and reverse the allotment process, but the land reclamation effort prescribed by that statute was never properly funded and never materialized. Instead, the Act succeeded only in ending the creation of new allotments and, for allotted lands already held in trust, extending the trust period indefinitely. Cobell v. Norton, 283 F. Supp. 2d 66, 75 (D.D.C. 2003). As of 1990, some eleven million acres were held in trust for the heirs of allottees, by now several generations removed.*fn2 Many trust allotments are owned in common by hundreds or even thousands of beneficiaries --each with undivided ("fractionated") interests in the whole parcel.

The statute that gave rise to this litigation was enacted in 1994 as the Indian Trust Fund Management Reform Act, Pub. L. No. 103-412, 108 Stat. 4239 (codified at 25 U.S.C. § 4001 et seq.) (hereinafter "the 1994 Act"). The 1994 Act reflected many years of congressional frustration over Interior's handling of the IIM trust. It commanded Interior, among other things, to provide an historical accounting to trust beneficiaries. 25 U.S.C. § 4011(a). Two years after the enactment of the 1994 Act, concerned that the required accounting had been neither accomplished nor even begun, the plaintiffs filed this suit. They alleged that the defendants were in breach of their fiduciary duties, and they prayed for an accounting and various other forms of declaratory, injunctive, and other equitable relief.

Judge Lamberth certified the plaintiff class on February 4, 1997 [Dkt. 27]. On November 5, 1998, he ruled that plaintiffs were not entitled to mandamus relief, but otherwise rejected the government's motion to dismiss the complaint. Cobell v. Babbitt, 30 F. Supp. 2d 24 (D.D.C. 1998) (Cobell I). On June 7, 1999, he denied defendants' motion for summary judgment [Dkt. 317], and, six months later, he declared defendants to be in breach of their statutory trust obligations, dismissed plaintiffs' common law claims, and remanded the case to the agency with an injunction to bring its actions into conformity with its fiduciary duties and to submit quarterly reports on its progress (which quarterly reports it has been submitting ever since). Cobell v. Babbitt, 91 F. Supp. 2d 1 (D.D.C. 1999) (Cobell V). The Court of Appeals affirmed the declaration of breach, but vacated several of Judge Lamberth's more specific findings. Cobell v. Norton, 240 F.3d 1081 (D.C. Cir. 2001) (Cobell VI).

Judge Lamberth then divided the proceedings into two phases: one addressing the "to-be plan," or the agency's plans to remedy its breach going forward, and another addressing defendants' historical accounting work. After a 44-day trial, he issued an historical accounting opinion, a "fixing the system" opinion, and a structural injunction. Cobell v. Norton, 283 F. Supp. 2d. 1 (D.D.C. 2003) (Cobell X). The historical accounting portion of the structural injunction was reversed by the D.C. Circuit on December 10, 2004, Cobell v. Norton, 392 F.3d 461 (D.C. Cir. 2004) (Cobell XIII); reinstated by Judge Lamberth after Congress failed to meet its self-imposed deadline for achieving the legislative settlement on which the Court of Appeals had relied in deciding Cobell XIII, Cobell v. Norton, 357 F. Supp. 2d 298 (D.D.C. 2005) (Cobell XIV); stayed by the Court of Appeals, Cobell v. Norton, 2005 U.S. App. LEXIS 5788 (D.C. Cir. Apr. 7, 2005); and eventually reversed, Cobell v. Norton, 428 F.3d 1070 (D.C. Cir. 2005) (Cobell XVII). On July 11, 2006, the Court of Appeals issued its eighth and ninth published opinions in the case, and directed that the case be reassigned. Cobell v. Kempthorne, 455 F.3d 301 (D.C. Cir. 2006) (Cobell XVIII); Cobell v. Kempthorne, 455 F.3d 317 (D.C. Cir. 2006) (Cobell XIX). On December 12, 2006, the case was assigned to me [Dkt. 3278].

During Judge Lamberth's heroic stewardship of this case, he was beset by a host of important but ancillary issues: vulnerabilities within the Interior Department's information technology systems, civil contempt proceedings concerning several government employees, retaliatory action within the agency against agency employees testifying on plaintiffs' behalf, objections to communication between the agency and the plaintiff class, and the appointment and removal of court monitors and special masters, to name a few. The nineteen published opinions in this case have yielded no definitive, undisturbed ruling on the core question that looms over this dispute, which is: What is the scope or nature of the accounting that is required by the 1994 Act? This opinion seeks to answer that question. The outline set forth below emerges from the testimony taken in October 2007 on the trial questions identified above, and from the enormous record that has been compiled over the past eleven years.

I. THE GOVERNMENT'S ACCOUNTING EFFORT

1. Evolution of the current historical accounting project.

2. Activities the government has planned -- and now plans -- to discharge its accounting duty.

3. Activities the government has declared beyond the scope of its plan.

4. Cost to do what is not being done.

5. "Throughput" -- amount of money received into the IIM trust; amount distributed to IIM beneficiaries.

II. COMPLIANCE WITH THE FIDUCIARY DUTY TO ACCOUNT

1. Does this court have jurisdiction?

2. Taking cost into account, will Interior's 2007 Historical Accounting Plan result in an adequate accounting that is compliant with the 1994 Act, prior Cobell opinions, and other precedent?

I. THE GOVERNMENT'S ACCOUNTING EFFORT

I.1. Evolution of the Current Historical Accounting Project

No real accounting, historical or otherwise, has ever been done of the IIM trust. What is now called the historical accounting project would have been unthinkable before the advent, some time in the 1980s, of automated systems that began to offer the possibility of merging the records and procedures that had been used for nearly 100 years in the various regions and agencies of the Bureau of Indian Affairs. This section describes the legacy computer systems that first held out some promise of doing an historical accounting, some of the problems that were encountered soon after the 1994 Act mandated an historical accounting, the exaggerated promises of Interior's 2003 historical accounting plan, various ancillary IIM-related projects that Interior has undertaken, and the establishment in 2004 of the American Indian Records Repository, which has brought some degree of order out of the chaos that was IIM trust record-keeping.

I.1. A. Systems Used in Administering the IIM Trust

The government uses an array of data and financial systems, referred to mostly by acronyms,*fn3 to collect, manage, and distribute IIM trust funds. The two major types of systems relevant to historical accounting contain land ownership data and financial data.

i. Integrated Records Management System (IRMS)

A major premise of the government's accounting effort is that the transition from paper to electrons took the accuracy, completeness and reliability of IIM trust data to a level that far surpassed the "paper ledger era." The agencies refer to February 1985 as the beginning of the new "electronic ledger era." The first electronic ledger was the Integrated Records Management System (IRMS). IRMS contained four platforms for the input and access of lease data, ownership data, account data, and transactional data by BIA employees. Tr. 2041:1-23 (Christie); Tr. 343:22-344:5 (Ramirez).*fn4 The "IIM platform" within IRMS contained most of the accounting data. Tr. 343:23-25 (Ramirez). The government considers IRMS the beginning of the "electronic ledger era," an era when data became putatively more uniformly handled and more easily accessible. Some BIA locations began using IRMS long before February 1985, however -- some as early as the 1970s. Tr. 288:13-20 (Ramirez). The first regional office to use IRMS was Billings, Montana (one of the twelve regional BIA offices, now called the Rocky Mountain regional office).

Tr. 1743:24-1744:2 (Infield). Interior did not require all BIA regions to use IRMS until the late 1980s. Tr. 1743:17-21 (Infield). Because IRMS was implemented on a rolling basis, it is impossible to draw a hard line between the paper ledger era and electronic ledger era.

Up until 1991, moreover, Interior deleted from IRMS data that were more than six years old, so as not to overwhelm their rudimentary computer systems. Data recorded before 1985 has been erased. Tr. 1744:22-1746:11 (Infield). And the post-1985 data on the IRMS system is incomplete and difficult to analyze, since some agencies*fn5 and regional offices did not convert to IRMS until after 1985, Tr. 693:1-6 (Herman), at least one agency (Osage) handled money collected from oil and gas leases in a unique way, Tr. 1737:4-1741:6 (Infield), bookkeeping within IRMS varied across regions, Tr. 572:19-573:15 (Herman), and even offices that did use IRMS did not always keep complete records on the system. Tr. 789:22-790:13 (Herman).

ii. Trust Funds Accounting System (TFAS)

In August 1998, Interior began its conversion from IRMS to the Trust Funds Accounting System (TFAS). The conversion was complete by March 2000. Tr. 450:18-24 (Herman). The upgrade to TFAS gave BIA the ability to send quarterly IIM statements, Tr. 866:15-867:9 (Winter), which it began to do in 2000. Those statements reflect opening and ending balances as well as posted transactions. Tr. 867:1-4 (Winter). Consequently, the agency uses that year as the end point of its HSA project. TFAS also contains data regarding the IIM funds that are pooled for investment purposes. Tr. 872:3-12 (Winter). Though transactional information has been recorded in many different ways over the life of the trust, the HSA project focuses primarily on information contained in paper records, and later in IRMS and TFAS.

iii. Land Records Information System (LRIS) and Trust Asset and Accounting Management System (TAAMS)

The Land Records Information System (LRIS) contains historical land ownership information that is used in Interior's historical accounting project, National Opinion Research Center (NORC) Analysis of LRIS Tract History Reports, AR-405 at 5, but at least some agencies determined that the ownership information in LRIS was out of date, and that LRIS data could not be relied upon for distributing trust funds. Tr. 1317:17-1321:25 (Redthunder).

Interior began converting from LRIS to a "more robust land title system" called the Trust Asset and Accounting Management System (TAAMS) in 2005. Tr. 69:6-13 (Cason). As of September 2007, all BIA agency offices had at least partially converted to TAAMS. Tr. 868:6-11 (Winter). TAAMS contains two different systems: realty and title. Tr. 903:15-904:2 (Winter). The TAAMS title system produces invoices for lease holders, who then send their payments along with the invoice to a lockbox. Tr. 868:6-11 (Winter). The invoice and lockbox procedures are very new: they accompanied the TAAMS title roll-out in 2005. Tr. 903:15-904:12 (Winter). It is not clear whether all agencies have fully implemented the TAAMS title system at this date, but those that have now have an accounts receivable system for the first time in the history of the IIM trust. Tr. 902:23-904:12 (Winter). This accounts receivable system is referred to as the Trust Funds Receivable System (TFR), and permits the agency to follow up on leases to be sure that payments are made. Tr. 902:23-903:14 (Winter). Prior to the TAAMS conversion, using something like an honor system, Interior simply relied on lease holders to submit accurate, timely payments.

iv. Other Data Systems

Other systems, while not prominently featured in the historical accounting project, contribute to the functioning of the IIM trust. For example, the Treasury Department has systems that record IIM trust funds and balances. The Minerals Management Service within Interior (MMS) has a data system for processing payments received from lessees and sending payment and lease-level information (not broken down by beneficiary or allotment) to Treasury and the Bureau of Indian Affairs. BIA processes oil and gas monies from MMS in a system called the Royalty Distribution Reporting System (RDRS) in order to allocate oil and gas revenue among land owners. Tr. 919:6-920:1 (Winter). BIA relied on Osage computer systems to process quarterly annuity payments and some oil and gas income. Tr. 1736:2-32 (Infield). In the past, BIA used several different systems to distribute trust revenues, such as the ownership module within IRMS, the GLAD distribution system in the Great Plains Agency, and the MAD system used in the Aberdeen and Standing Rock Agencies. Tr. 1756:12-18 (Infield); Tr. 1321:20-1322:2 (Redthunder).

I.1.B. Inconsistencies Between Agency and Regional Offices

The BIA is divided into twelve regions, under which a total of 93 agency offices operate. Feb. 2002 OHTA Accounting Records Conference Materials at 213, AR-058. As mentioned above, the use of electronic records systems varied among the twelve regional offices, and even among agency offices within a single region. Former Special Trustee Paul Homan recalled a contractor describing the information systems used by the regional offices as "twelve islands of information without a ferry in between." Tr. 1552:21-23 (Homan). The regional offices, and agencies within those regions, each had their own ways of using -- or not using -- IRMS. Most agencies used the MMS system to process oil, gas, and mineral payments, but Osage was again an exception to this rule. Tr. 1737:4-24 (Infield).

I.1.C. Destruction of Documents

Until very recently, Interior had no system for the preservation of trust records. Over the life of the IIM trust, trust documents were routinely destroyed in accordance with record retention schedules at National Archives and Records Administration (NARA) centers. Tr. 2054:10-2056:18 (Christie). Most documents and data were retained for only six years pursuant to standard NARA policy, until 1995, when Interior instructed NARA to cease destroying trust records according to the six year schedule. Trust records from 1989 forward have not been subject to the document destruction schedules.

The loss of trust records before 1989 has been mitigated -- to what extent is a matter of dispute -- by the fact that, in many cases, Interior created several copies of IIM records. See Defendants' Corrected Proposed Findings of Fact and Conclusions of Law [3459-1] at 8 (table listing types of IIM transactional documents, number of copies produced, and locations stored). Interior's expert contends that the existence of multiple copies of trust records stored in different locations renders the loss of trust records immaterial, as the loss or destruction rarely impacted all copies of a given document.

Tr. 1264:8-11, Tr. 1282:3-7 (Angel). Defendants have located and centralized 43 miles of Indian records potentially relevant to the accounting at the National Archives and the American Indian Records Repository (AIRR) in Lenexa, Kansas, Tr. 1198:14-21 (Angel), and they have access to another 10,000 cubic feet of MMS and United States Geological Survey (USGS) records potentially useful to those conducting the HSA accounting. Tr. 1181:5-10 (Angel). Problems related to the disorganized or poor condition of records were noted early in this litigation and have been addressed by defendants' contractors at the AIRR. Interior's Office of Historical Trust Accounting (OHTA) continues to work with NARA to collect data for the AIRR. Defendants have been surprised to discover that the records needed to perform the accounting are indeed available and accessible, Interior's 2007 HSA Plan Part 1, AR-565 at 33-02-08, and they contend that plaintiffs' complaints about the existence and condition of trust records are essentially based on outdated information.

Plaintiffs acknowledge, as they must, that an enormous volume of records has been collected at Lenexa, but their response, essentially, is "Compared to what?" They suggest that the volume of records is meaningless without some assessment of the total number of trust documents produced over the history of the trust. They point out that in 1998, the BIA estimated that a total of approximately 1.425 billion pages of IIM trust records existed. (Government experts later determined that that number had been overestimated by some 1.205 billion pages, partially because they had not adequately accounted for destroyed documents. DOI memo stamped June 2002, AR-80 at 54-21-32; Tr. 1266:13-1268:15 (Angel)). Plaintiffs' witnesses testified that a great deal of data was missing from the IRMS database, Tr. 1746:9-1747:14 (Infield), that the manual entry of information into BIA's Royalty Distribution and Reporting System (RDRS) was unreliable, Tr. 1749:24-1751:13 (Infield), and that some copies of documents necessary for determining the quantity of resources exploited from allotted land -- such as oil and timber -- were never recorded electronically and had been routinely destroyed. Tr. 2043:19-2049:17 (Christie).

It is likely that, in some cases, all copies of timber scaling tickets, distribution settlement worksheets, and run tickets were destroyed, since relatively few copies of these documents were created. Tr. 2044:3-2045:6 (Christie). Joe Christie, a 27-year veteran of the Interior Department, opined that distribution worksheets are essential if the historical accounting project seeks to "verify who was considered the owners [of an allotment], the amount of funds that were collected, and who [the funds were] distributed to. It's the only document, by the way, that does that." Tr. 2042:5-8 (Christie). Plaintiffs' witness Mona Infield, an Interior employee, also indicated that lease information was frequently destroyed. Tr. 1750:18-1751:13 (Infield). Before 1990, cleared disbursement checks that had been issued to IIM beneficiaries were destroyed by Treasury. Motions Hearing Tr. 171:14-172:4 (Locks, 11/24/98) (no checks available pre-dating Oct. 1990); Oct. 19, 1994 Letter from Sandra Chambers (FMS) to James Parris (DOI), PX-3340 (records prior to 1987 not available); Nov. 22, 1994 Letter from Leo Warring (FMS) to Jim Parris (DOI), PX-3342 (records unavailable prior to 1988).

Interior has an abysmal record of failing to prioritize the maintenance and preservation of trust documents. Many court opinions, audits, and congressional committee reports have catalogued that record. As late as 1995, the Deputy Commissioner of Indian Affairs discovered that agencies were destroying "financial and lease documents . . . required in the reconciliation process." 3/07/95 Memo from Hilda Manuel to Area Directors and Agency Superintendents, PX-0350. After decades of neglect, it is impossible to imagine that all documents necessary to perform a complete historical accounting are presently accessible to Interior. Nevertheless, the agency has made an impressive (and very expensive) effort in recent years to find, scan, and preserve whatever documents still exist. If the government has failed to prove that all documents necessary for the completion of its historical accounting have been or will be found,*fn6 plaintiffs have also failed to establish that the problem of lost or destroyed documents renders the historical accounting project entirely pointless.

I.1.D. Predecessor Historical Accounting Plans

The 1994 Act did not tell the Interior Department how, or how thoroughly, to perform the historical accounting that it mandated. Associate Deputy Secretary James Cason said that because the agency had no model to follow, it had to engage in an "iterative process where we learn and redesign, learn and redesign." Tr. 65:2-9 (Cason).

The Department's initial compliance effort was the work of the "Tiger Team;" a group of Officer of Trust Fund Management (OTFM), BIA, and MMS employees assembled soon after the passage of the 1994 Act to study trust accounting issues. Tr. 1753:16-1754:4 (Infield). In August 1995, the team issued a report entitled "IIM Related Systems Improvement Project: The Tiger Team," which was to be implemented by the end of 1996. August 1995 Draft Tiger Team Report, PX-607 at 157. The Tiger Team report noted uncertainty about the accuracy of data entered in IRMS, and it criticized the internal controls and inadequate automated systems relied upon in managing the IIM trust. Id. at 2-8. The Team's efforts appear to have focused more on reforms going forward than on historical accounting.

Two years after the issuance of the Tiger Team report, the first Special Trustee for American Indians Paul Homan finalized a Strategic Plan to Implement the Reforms Required by the American Indian Trust Fund Management Reform Act of 1994, PX-615. Homan submitted the report in April 1997 to the Secretary, who incorporated many of its recommendations into the 1998 High Level Implementation Plan (HLIP) for the Trust Management Improvement Project (TMIP), filed with the Court in August 1998. High Level Implementation Plan, PX-4154. The HLIP identified thirteen projects Interior planned to undertake to improve trust management and to correct shortcomings in data maintenance, records management, training, policies and procedures, system weaknesses and internal controls. Id. at 3-8. The 1998 HLIP called for the completion of the Internal Control Sub-project by June 1999, and of the whole HLIP within three years. As with the Tiger Team report, this project was focused on trust reform, though it devoted significant attention to historical weaknesses, particularly in the area of internal controls.

A revised HLIP was filed in this litigation on March 1, 2000 [Dkt. 438]. The expected dates of completion were extended, but many of the objectives remained the same, such as the intention of reviewing trust records to determine accurate title and resource management information. The updated HLIP remained focused on documenting and rectifying historical weaknesses, inconsistencies, and failures in the Department's trust management operations.

In November 2001, after the Court of Appeals affirmed Judge Lamberth's finding that defendants were in breach of their trust duties, the government filed an additional plan with the court titled "DOI Trust Reform: Interim Report and Roadmap for TAAMS and BIA Data Cleanup" [Dkt. 990]. That report, prepared by Electronic Data Systems, Inc., identified significant problems with missing data, inconsistent records, and conflicting information, and it recommended reforms that were to be completed within three years. Id. at 21-30.

On July 2, 2002, after requests from House and Senate Appropriations Committees made during the FY 2001 and 2002 budgeting processes, Interior submitted a report to Congress that detailed its historical accounting plan. Report to Congress on the Historical Accounting of Individual Indian Money Accounts, AR-561; Tr. 58:5-9 (Cason). The report informed Congress that Interior planned to conduct a transaction-by-transaction reconciliation of all funds in the IIM accounts through December 31, 2000, and that it expected the historical accounting project to cost $2.425 billion to complete. AR-561 at 25-02-15-16. The report indicated that the historical accounting would result in transaction histories for all accounts that resembled the account reconstructions done for the named plaintiffs in this case. Id. at 25-02-30. The historical statements of account envisioned in that report were to include ownership information for each account: allotment number and ownership interest. Id. at 25-02-87. Statements would be provided for the estates of deceased beneficiaries whose IIM accounts and allotment interests had been probated, for closed accounts, and for transactions dating back apparently from the inception of the trust (no beginning date is listed in the report). Id. at 25-02-40. The historical accounting process would involve the reconciliation of leases, land ownership interests, and the collection and disbursement of all IIM funds. Id. at 25-02-92.

That report to Congress was prepared in response to House Appropriations Committee concerns about the costs associated with the historical accounting. Id. at 25-02-21. After its submission, the House Committee on Resources addressed a December 9, 2002 letter to then Interior Secretary Gale Norton, describing the report as "troubling in several areas," and requesting that the Secretary "promptly consider ways to reduce the costs and the length of time necessary for an accounting . . . [including] alternative accounting methods." AR-184.

A month later, on January 6, 2003, the Interior Department issued an Historical Accounting Plan for Individual Indian Money Accounts (the "2003 HSA Plan"), PX-507, that was strikingly different from the accounting project envisioned in the 2002 Report to Congress. The scope of the accounting was narrowed to exclude accounts closed before October 25, 1994, transactions occurring after December 31, 2000, and transactions in closed accounts or in the accounts of deceased beneficiaries. Id. at 8-9. While the accounting described to Congress in July 2002 would have cost approximately $2.4 billion, the effort described in the 2003 HSA Plan was projected to cost $335 million over five years. Id. at 1. The implementation of the 2003 Plan began, though not quite according to plan, with the commencement of the Litigation Support Accounting Project in the fall of 2003. Tr. 95:20-98:2 (Cason).

The 2003 Plan -- with its abandonment of a total transaction-by-transaction approach to land-based accounts in favor of a mixture of transaction-by-transaction and statistical sampling reconciliations -- reflected Interior's acquiescence to the House Committee's request that it "consider all available options regarding the use of alternative accounting methods." AR-184; 2003 Historical Accounting Plan, PX-507 at 17-18.

Specifically, the Department indicated that, within the population of transactions occurring during or after 1985, all transactions over $5,000 would be reconciled, 10% of transactions between $500 - $5,000 would be reconciled, and .31% of transactions under $500 would be reconciled. PX-507 at 63. In total, 160,000 transactions less than $5,000 would be sampled, and the sampled transactions would be pulled from every agency within Interior. For transactions occurring before 1985 (the "paper ledger era"), all transactions of $5,000 or greater would be reconciled, and transactions below $5,000 would be sampled. The sampling plan for these transactions was not yet fully developed at the time of the 2003 HSA Plan's publication. Id. at 69. The government's 2003 estimate was that this stripped-down historical accounting would be completed in about four years: Judgment and Per Capita accounts were to be reconciled by June 30, 2004, land-based accounts by September 30, 2006, IIM systems tests by September 30, 2006, and Special Deposit Accounts by December 31, 2006.*fn7 Id. at 32. The historical statements of account prepared for IIM account holders pursuant to the 2003 HSA Plan were to include Interior's assessment of the accuracy of the account transaction history and sufficient information for IIM beneficiaries to "ascertain whether Interior has faithfully carried out its IIM Trust Fund duties." Id. at 4.

On the same day it issued its 2003 HSA Plan, Interior filed a court-ordered Fiduciary Obligations Compliance Plan, PX-508. The purpose of this plan was to bring the Department into compliance with the 1994 Act. This plan recognized shortcomings in the HLIP and acknowledged the importance of verifying the accuracy of account balances, a step the government noted was crucial "no matter how carefully future transactions may be recorded." Id. at 5. Defendants next issued a Comprehensive Trust Management Plan, which conceded failures to implement prior trust reform plans and announced a new strategic plan for doing so in the future [Dkt. 2050]. The government filed its "To-Be" Trust Business Model and its Fiduciary Trust Model on March 15, 2005 [Dkt. 2882, attachments 2, 3]. According to the Special Trustee, implementation of the Fiduciary Trust Model would ensure future compliance with fiduciary obligations owed to IIM beneficiaries.

I.1.E. IIM-Related Projects Before the 2007 Plan

i. Paragraph 19 Project

In 1999, after Secretaries Babbitt and Rubin and Director Gover had been found in contempt for their non-compliance with orders of this Court, Cobell II, 37 F. Supp. 2d 6, 17 (D.D.C. 1999), the government hired Arthur Andersen to help both the Treasury and Interior Departments comply with Paragraph 19 of the First Order for Production of Information [Dkt. 16]. Under Paragraph 19, defendants were to produce all "documents, records or tangible things which embody, refer to, or relate to the IIM accounts of the named Plaintiffs or their predecessors in interest." Id. at ¶19. Treasury produced over 2,000 documents pursuant to Paragraph 19, and Andersen ultimately concluded that Treasury's Paragraph 19 search had been "thorough [and] well-executed [at or above] industry practices." Trial 1.5 Tr. 51:15-52:9 (Brunner 6/6/03). Interior searched approximately 80 facilities for documents responsive to Paragraph 19 and produced around 160,000 documents. Trial 1.5 Tr. 54:6-55:8, Tr. 66:5-7 (Brunner 6/6/03). A total of 37 accounts were analyzed during this project. The documents collected dated back to 1914. Interior's 2007 HSA Plan Part 2, AR-566 at 33-03-12.

The records produced in response to Paragraph 19 were reviewed by Ernst & Young partner Joseph Rosenbaum in 2001. Trial 1.5 Tr. 53:3-10 (Rosenbaum 6/9/03). Rosenbaum's report analyzed a virtual ledger of transactions reflecting the documents Interior had collected in response to Paragraph 19. Rosenbaum determined that the documents necessary for assembling transaction histories for the named plaintiffs and their predecessors were available, and that TFAS balances from December 31, 2000 were sufficiently supported by supplemental documentation. Trial 1.5 Tr. 56:15-22 (Rosenbaum 6/9/03). Supporting documentation was discovered for 86 percent of the 12,617 transactions reviewed, representing 93 percent of the total dollar value of those transactions, or approximately $1.12 million. Trial 1.5 Tr. 75:5-76:19, Tr. 77:6-19 (Rosenbaum 6/9/03). Only small variances were noted. The total cost of the project, however, was around $20 million. AR-566 at 33-03-12. Interior concluded that, although the documents necessary to complete adequate accountings are available, the accounting process is extremely expensive, often dwarfing the dollar amounts reflected in beneficiaries' accounts.

Rosenbaum also performed an "expected versus actual" analysis by comparing information about leases, transactions, and ownership interests. Trial 1.5 Tr. 54:17-55:10 (Rosenbaum 6/9/03). He identified and analyzed the majority of leases associated with the named plaintiffs that related to farming and oil and gas extraction, Trial 1.5 Tr. 57:20-58:3 (Rosenbaum 6/9/03), finding a net of only $32.04 in unexplained differences between transaction ledger entries and leases. During the October 2007 bench trial, Associate Deputy Secretary James Cason testified that Interior understood the results of the Paragraph 19 project as indicating that, although there were errors in the accounts, the errors were relatively few, the errors tended to be small, and the errors were on both sides of the ledger. Tr. 62:12-21 (Cason).

The Paragraph 19 project ignored direct pay transactions, Trial 1.5 Tr. 44:13-23 (Rosenbaum), escheated interests, Trial 1.5 Tr. 7:18-23 (Rosenbaum), and other types of transactions. The analysis of disbursements typically ended when funds were disbursed from IIM accounts, not when beneficiaries received the funds. Trial 1.5 Tr. 84:25-85:3 (Rosenbaum 6/10/03).

ii. Mass Cancellation Project

Historically, Treasury checks were of unlimited payability -- in other words, there were no temporal limits on when they could be cashed. That changed when Congress passed the Competitive Equality Banking Act of 1987 (CEBA), Pub. L. No. 100-86, 101 Stat. 552 (1987), which provided that, as of October 1, 1989, Treasury checks would be of "limited payability" and could be cashed for only one year from the date of issuance. Treasury Bulletin No. 90-03, DX-231 at 1, 18; Tr. 323:17-324:4 (Ramirez). CEBA also mandated the "mass cancellation" of all checks issued by Treasury that were at least one year old by April 1, 1991. DX-231 at 1, 3; Tr. 323:17-324:4, Tr. 325:13-20 (Ramirez). At that time, some 10 million Treasury checks from as early as 1954 remained outstanding; approximately 60,000 of these checks were IIM checks with a combined value of approximately $1.9 million. Mass Cancellation Project, Analysis of Treasury Listing, DX-225 at 8; Tr. 324:8-328:16 (Ramirez); BIA Office of Trust Funds Management (OTFM) Instructions on Completing Mass Cancellation Project, DX-217 at 1-2.

Certain provisions of CEBA were problematic as applied to IIM trust funds. For example, CEBA broadly prohibited re-crediting to agencies the funds associated with the cancelled checks. DX-231 at 4. Generally, an agency will deposit funds at Treasury to cover the payments of checks issued pursuant to its authority. Under CEBA, all funds that had been deposited to cover mass cancelled checks were to remain in the Treasury general account rather than revert back to the agencies. At the time, legislators apparently were not focused on the fact that some funds -- like IIM and tribal trust funds -- were not tax dollars, but were monies that were only being held by Treasury after their collection and before their disbursement.

To address this problem, BIA put Katherine Ramirez in charge of a "Mass Cancellation Project," Tr. 323:11-15, Tr. 332:8-20 (Ramirez), whose mission was to identify IIM checks that had been mass cancelled and to re-credit their amounts to the proper accounts. Tr. 323:11-15, Tr. 331:8-14 (Ramirez); July 30, 1992 Letter from Mary Sandoval to Donald Gray, DX-207 at 1. Interior had to obtain a special appropriation for the purpose of re-crediting IIM accounts, and, in 1992, Congress appropriated $3 million for this purpose. See Department of the Interior and Related Agencies Appropriations Act, 1993, Pub. L. No. 102-381, 106 Stat. 1374, 1391 (1992). The mass cancellation project discovered that approximately 22,000 of the approximately 60,000 mass-cancelled IIM checks were zero dollar instruments,*fn8 and attempted to trace the 38,554 remaining checks to specific IIM accounts. Tr. 349:3-350:22, Tr. 352:18-353:4 (Ramirez).

BIA traced $616,736.31 -- almost a third of the value of the 38,554 non-zero dollar, mass cancelled IIM checks -- to specific accounts or to voided checks, 1993 OTFM CEBA Report, DX-221 at 2; Tr. 353:5-8, Tr. 354:11-356:7 (Ramirez), leaving approximately $1.3 million in mass cancelled IIM checks unresolved. DX-221 at 2. Of that $616,726.31, BIA re-credited approximately $278,000 to IIM accounts; $338,000 was apparently attributable to voided checks. Tr. 356:12-357:9 (Ramirez).

At trial, no evidence was presented as to Interior's post-1993 progress in resolving the remaining approximately $1.3 million worth of mass cancelled IIM checks. Ramirez testified that Interior continues to maintain a fund totaling approximately $500,000 to pay claims on mass cancelled checks, although no claims against the fund have been made recently.

Tr. 364:4-365:11 (Ramirez). It appears that reimbursement for mass cancelled checks occurs now only if an IIM beneficiary or BIA agency presents a mass-cancelled trust check to the agency for payment, and that unless and until such a check is presented, the trust funds associated with the mass cancelled check are not disbursed. Examining unrestored funds from mass cancelled checks is not part of Interior's 2007 HSA project.

iii. 20-Year Tribal Reconciliation Project

The original concept of the reconciliation project was to reconcile both the IIM trust and the tribal trust. After a preliminary assessment revealed significant problems relating to missing IIM records, however, Arthur Andersen informed Interior that reconciling the IIM trust would be infeasible under the $12 million contract awarded by the government. May 1996 GAO Report to the Senate Committee on Indian Affairs Re: The Tribal Reconciliation Project, PX-710 at 3. Instead, Arthur Andersen endeavored to reconcile the tribal trust between the dates of July 1, 1972 and September 29, 1992. Tr. 2074:9-10 (Christie). The 20-year reconciliation project began in December 1992 and was terminated before completion in 1995, at a total cost of approximately $21 million. Tr. 2073:8-17, Tr. 2084:6-20 (Christie); PX-710 at 2.

The tribal reconciliation project was not an audit, but a contract governed by "agreed upon procedures" -- in other words, a contract in which the client defines the scope and nature of the project. Interior's tribal reconciliation project manager Joe Christie testified that the project accomplished its goal of reconciling tribal trust fund transactions "to the extent possible . . . within the time frame we were given."

Tr. 2076:14-19 (Christie). However, because they encountered "lots of missing documents," Tr. 2076:21 (Christie), they were typically unable to put together reconcilable packages for Arthur Andersen's analysis that met the highest standard set forth in the agreed-upon procedures (referred to as the "C" standard). Indeed, the "vast majority" of the packages assembled by BIA workers did not meet this standard. Tr. 2076:21-2080:2 (Christie). When the reconciliation packages were ultimately presented to the relevant tribes, the tribes were told that they could accept or reject packages reconciled at levels other than the "C" level. Tr. 2080:3-9 (Christie).

The results of the reconciliation project were mixed and inconclusive. Approximately 320 reconciliation packages were provided to tribes after Interior terminated the project. At least some supporting documentation was located for 86% of the non-investment transactions reviewed, but the government could not verify the remaining 14% of those transactions --representing $2.4 billion -- and abandoned an effort to test investment transactions after being stymied by instances of missing records. PX-710 at 5-6. The 1996 GAO Report on the Tribal Trust Fund Reconciliation Project reveals that BIA failed to certify that the reconciliation was performed in compliance with the contract's agreed upon procedures (a modest certification standard). PX-710 at 3. Notably, the reconciliation did not "address the completeness of records," nor calculate "receipts and disbursements that should have been recorded," and it revealed that "BIA did not know the [complete] universe of leases." Id. at 5-6.

This project did not involve an analysis of the IIM trust beyond Arthur Andersen's initial conclusion that the problem of missing documentation within the universe of IIM trust records was more severe than within the universe of tribal trust records.

iv. TIME Project

In 2000, Interior hired DataCom Sciences, Inc., to "examine the accuracy of the current ownership document information in LRIS by comparing mandatory elements." DataCom Time Project Report, PX-4352 at 4. This became known as the "TIME project." DataCom received a random sample of 93 of the 239,311 tracts within the LRIS system at the Rocky Mountain Land Title Records Office, PX-4352 at 2, and analyzed 541 documents reflecting ownership information stored in LRIS at the time of the project. Operating on the assumption that the paper records used in the comparative analysis were accurate, Contempt II Tr. 3363:13-3364:2 (Nessi 2/01/02), DataCom determined that over 30% of the 541 LRIS documents analyzed contained errors of different types. PX-4352 at 2.

Interior later hired NORC to conduct a pilot study of the accuracy of probate entries contained in the Tract History Reports housed within LRIS. NORC Analysis of LRIS Tract History Reports, AR-405. After reviewing 99 probated IIM accounts, NORC reported no material errors and no evidence of an error rate as high as 33%, but the NORC report was narrower in scope than the TIME report and indicated that it was not to be used to extrapolate an "error rate" among probate entries. AR-405 at 4.

The differences between the NORC and DataCom findings appear attributable -- at least in part -- to different definitions of "error". NORC criticizes DataCom for over-identifying errors, because DataCom's definition of error was tied to 'conformance to requirements' rather than 'fitness for use.' A misspelling would be a 'conformance to requirements' error, even if it did not affect the entry's fitness for use in the administration of the trust. NORC Analysis of LRIS Tract History Reports, AR-405 at 50-02-06-08; Tr. 1079:3-9 (Scheuren). The DataCom report indicates only that "inconsistencies" between hard copy documents and LRIS entries were treated as errors. The NORC pilot study operated with a more inquiring definition of "error". For example, documents missing from LRIS due to the probate backlog were not considered errors, nor were incorrect IIM numbers. AR-405 at 50-2-6.

Neither definition of "error" can be judged "right" or "wrong." They are merely more and less sensitive to mistakes within the LRIS system. The error rate calculations of both approaches can be useful, if for different purposes. The record will not support plaintiffs' submission that the high error rate found by DataCom is indicative of material errors throughout current LRIS ownership information. It is reasonable to conclude, however, that further analysis of LRIS ownership records should precede total reliance on that database for purposes of auditing or accounting for ownership interests.

v. Straw Man Project

Dr. Scheuren drafted a document concerning a proposed "Straw Man" approach to the historical accounting during his early days as an Interior contractor, when he was "just learning about this work." Tr. 1080:4-21 (Scheuren); Undated document titled "Adaptive Testing Approach for Phase 1 Straw Man Design," AR-167; Undated Scheuren document titled "Straw Man Pretest," AR-170; see also Tr. 1080:4-12 (Scheuren); Exchange containing 07/08/02 email from Scheuren to Edwards mentioning straw man proposal, AR-304 at 14-02-04. The "Straw Man Pretest" was prepared after meetings between NORC and Interior and included several questions for Interior to consider as it planned its data gathering efforts. AR-170; AR-304.

The documents describing the "Straw Man Pretest" focus on the benefits of adaptive sampling -- an approach that is heavily utilized in both the 2003 and 2007 HSA plans. In one document, the government notes that "[t]he main benefit emphasized in an adaptive approach is obviously reduced expense," and identifies other benefits such as scalability, speed, suitability for targeting of efforts, likelihood that results can be reported as "a series of successes," use of pilots to benefit from lessons learned by prior pilots, and increased accuracy. AR-167 at 57-29-01-02. Adaptive sampling "links up nicely with the legitimate payment of a cash settlement, since inherently an adaptive approach admits error, even though it may well manage to keep it less than would have been the case in a full accounting." Id. at 57-29-02. The "Straw Man" approach appears to reflect Interior's initial reconsideration of the 100% transaction-by-transaction approach proposed in the 2002 Report to Congress: "the adaptive strategy . . . is completely compatible with the . . . [July 2, 2002] Historical Accounting Report. The only difference is that we do not necessarily have to test every transaction." Id.

vi. Recent Audits of the IIM Trust

To the court's knowledge, there has never been an unqualified independent audit of the IIM trust. "Qualified" audits are issued when the auditor is unable to comply with generally accepted auditing standards. In the case of the IIM trust, auditors have issued qualified audits after discovering cash balances that conflicted with those reported by the U.S. Treasury, internal control deficiencies, records management problems, and irreconcilable ledgers, among other things. See, e.g., AR-343; AR-347; AR-350; AR-352; AR-355; AR-369; AR-374; PX-575 at 3, 10-12. The first IIM trust audit performed by an independent auditor was the Arthur Andersen audit conducted in 1988. PX-575 at 3. That audit documented internal controls weaknesses attributable to inadequate training, lack of experienced supervisors, understaffing, and out-of-date accounting manuals, and concluded that the "accounting systems [were] unreliable." PX-575 at 10-12. These concerns have been reflected in more recent audits as well. See PX-695; AR-633; AR-377; AR-374. The most recent independent audit -- prepared by KPMG for the year ending on September 30, 2006 -- noted that OST relied upon unreliable BIA data and unresolved financial reporting from prior periods, that OST's processing of trust data relies upon the accuracy of information from BIA, MMS, and other bureaus and offices, and that "current management is burdened with the ongoing impact of decades of accumulated discrepancies in the accounting records." AR-343 at 60-02-34.

I.1.F. Establishment of the AIRR in Lenexa, Kansas

In 2004, the government opened the American Indian Records Repository (AIRR) in an underground limestone mine in Lenexa, Kansas. AR-563 at 11-12; Tr. 378:19-379:17 (Ramirez). The AIRR is within NARA's Federal Records Center, which is one of many government offices and private businesses occupying space in the 90 acre mine. Tr. 368:3-8; Tr. 370:13-14 (Ramirez). Retired Indian records are sent to Lenexa for storage and as a resource for research. The government now reports that 165,825 boxes of Indian records are stored at the AIRR (not all of which contain IIM trust records). OTR Activity Report for December 2007 (Jan. 15, 2008) [Dkt. 3479].

Two Interior offices have outposts at the AIRR: the Office of Historical Trust Accounting (OHTA) and the Office of Trust Records (OTR). Tr. 367:1-8 (Ramirez). OTR is within the Office of the Special Trustee for American Indians (OST). The AIRR is under the overall management of OTR, but OHTA requires access to trust records that are stored on-site, so OHTA sublets space from OTR and employs on-site contractors who search for ("searchers") and code ("coders") documents. Id. OTR also has an off-site annex facility, where boxes of records destined for the AIRR are initially received from BIA, OST, and regional offices across the United States. These sealed boxes are indexed, inventoried, and labeled according to strict procedures before they are sent into the cave and officially transferred from the custody of the DOI into the custody of NARA.

Tr. 372:12-373:7 (Ramirez). Kathy Ramirez -- the former manager of the mass cancellation project -- manages OHTA's contract staff at the AIRR. Tr. 366:25-367:1 (Ramirez).

Two primary systems are used for indexing, storing, searching for, coding, and scanning specific documents at the AIRR: the Box Index Search System (BISS) and Account Reconciliation Tool (ART). After they have been delivered and labeled, the boxes' numbers and indexing information are entered into the BISS by annex contractors before the records are transferred to NARA for storage. Tr. 372:18-373:7, Tr. 377:5-378:9, Tr. 385:19-386:19 (Ramirez). OHTA's accounting contractors (Clifton Gunderson) use the BISS system to identify records that will be potentially useful in conducting historical accounting work. Tr. 381:3-25 (Ramirez). After identifying potentially relevant boxes on the BISS, these "searchers" submit requests to NARA, and NARA delivers the requested boxes to OHTA's searchers. Tr. 382:1-383:9 (Ramirez). Once the searchers identify relevant documents within the requested boxes, another group of contractors (the "coders") images and codes the responsive documents and loads them into the ART system where they are accessible to OHTA contractors performing historical accounting work. Tr. 383:20-384:11, Tr. 385:3-11, Tr. 387:2-389:15 (Ramirez). Quality control measures are observed throughout the process.

It is evident from the photographs presented and testimony given at trial that the AIRR is a state of the art, climate-controlled, organized, and sizable facility suitable to the storage and research obligations of the Interior Department. Storage bays containing Indian trust records were constructed in accordance with the highest standards, the facility maintains low temperature and low humidity, and particulate matter and ultraviolet light are controlled. Tr. 370:17-19 (Ramirez).

While the facility reflects a significant improvement in the conditions and treatment of the records that have survived the cramped, disorganized, flooded, rat-infested storage facilities in which some of them were found, it is unclear from the evidence presented at trial what percentage of total IIM records that should have been maintained over the life of the trust have actually been recovered and shipped to the AIRR. Document requests still present vexing challenges for the considerable number of "searchers" working in the AIRR. At the time of trial, of the 80,000 requests FTI has submitted to AIRR in connection with its DCV work, approximately 35,000 requests remained pending, and some requests can take over a year to fill. Tr. 505:3-14 (Herman). As recently as June 2007, the government estimated that it could cost up to $37.4 million to search the AIRR for documents related to plaintiffs' request for the trust records of less than one hundred specific beneficiaries. [Dkt. 3340] at 3-4. The development of the AIRR has streamlined the analysis of trust records to some extent, but difficulties in locating documents and the inability to certify that all relevant documents have been consolidated in the facility prevent a finding that the records management problems chronicled in earlier opinions have been fully rectified.

I.2. The 2007 Historical Accounting Plan

The historical accounting plan announced by Interior in May 2007 -- the 2007 HSA Plan -- is dramatically different from the far more ambitious plan announced four years earlier. It reflects Interior's decisions, sometimes made for cost reasons and sometimes because of its legal interpretation of the statute, to rely much more heavily on sampling and statistics. Interior will reconcile only a small sample of IIM transactions (which it believes will yield statistically significant results), test its existing electronic data for completeness, test the process by which revenues collected from allotments are transferred into IIM accounts (again on a sample basis), and then begin issuing historical statements of account to IIM holders -- with Interior's assurance that they are correct.

I.2.A. Major changes to the Historical Accounting Project reflected in the 2007 HSA Plan

The Interior Department's 2007 HSA Plan "builds upon and replaces" the 2003 HSA Plan. Interior's 2007 Historical Accounting Plan, AR-566 at 33-03-03. Many significant changes are reflected in the Department's newest plan.

i. Cost and Schedule

When it adopted the 2003 HSA Plan, Interior estimated that the IIM historical accounting project would cost $335 million to perform and would be completed within five years. Between 2003 - 2007, however, not only did Interior receive only $127.1 million in appropriations for its IIM historical accounting work, but it also discovered that the accounting process it had envisioned would be both more costly and more time-consuming than it had anticipated. Tr. 67:24-68:7 (Cason). Even with the dramatic reduction in the number of land-based transactions that will be sampled under the 2007 Plan, Interior expects that the 2007 Plan work will not be completed until the end of 2011. That estimate is contingent upon congressional appropriations for IIM historical accounting totaling $144 between 2007 and 2011.

ii. Transactions and Accounts to be Reconciled

The 2003 plan relied on statistical sampling of lower value transactions in land-based accounts, but the number of transactions to be reconciled under the new plan is considerably smaller. A chart may help to illustrate the differences:

 2003 HSA Plan2007 HSA Plan Reconciliations of transactions from land-based accounts post-1985 (the "Electronic ledger Era")transactions } $5,000: 100% transaction-by transaction approach (73,000 transactions)transactions } $100,000: 100% transaction-by transaction approach (2,099 transactions)  transactions btw $500-$5,000: 80,000 transactions sampledtransactions { $100,000: 4,500 transactions sampled  transactions { $500: 80,000   samples must be drawn from every agencyall agencies subject to sampling, but no requirement that samples be drawn from each agency  projected = total 233,000 transactions reconciledprojected total = 6,599 transactions reconciled  AR-566 at 33-03-22 - 33-03-23AR-566 at 33-03-22 - 33-03-23 Reconciliations of transactions from land-based accounts pre-1985 (the "Paper Ledger Era")transactions } $5,00: 100% transaction-by transaction approach (100,000 transactions)transactions of all dollar amounts subject to statistical sampling; unknown number of sampled transactions  transactions { $5,000: 160,000 transactions sampled   projected total 260,000 transactions reconciledprojected total = unknown  AR-566 at 33-03-22AR-566 at 33-03-23 - 33-03-24 Reconciliations of transactions from Judgment and Per Capita accounts100% transaction-by-transaction approach100% transaction-by-transaction approach 86% complete; further reconciliations deferred indefinitely  projected total = all transactions in 96,823 accounts reconciledprojected total = unknown (reconciliations of all transactions in at least 83,226 accounts complete)  AR-566 at 33-03-24AR-566 at 33-03-24

The bulk of the reconciliation work that remains to be done under Interior's 2007 HSA plan involves pre-1985 transactions in land-based accounts. Because most of the materials necessary for this work are in paper form, the process is considerably more time consuming. Even though only approximately 65,000 of the total 267,949 land-based accounts Interior intends to reconcile were opened prior to 1985, analyzing them is by far the most expensive and labor intensive effort. At the time of the trial, preparations for "paper ledger era" land-based account reconciliations had begun, but the work had not commenced in earnest.

Most of the other reconciliation work contemplated in the 2007 HSA Plan is complete. Interior has finished its analysis of 6,599 post-1985 transactions within land-based accounts, and has reconciled all transactions within 86% of the Judgment and Per Capita accounts. It has suspended reconciliation work on Judgment and Per Capita accounts in order to focus on the more time-consuming "paper ledger era" land-based accounts, and has deferred consideration of whether to complete transaction-by-transaction reconciliations of the remaining 14% of Judgment and Per Capita accounts. Interior plans to produce HSAs for all Judgment and Per Capita account holders, but it may conclude that reconciliation of ...


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