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Historical Analysis of Individual Indian Money Accounts

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Bureau of Indian Affairs (BIA), Interior.


Notice of public meetings and opportunity for comment.


The Department of the Interior manages property it holds in trust for individual Indians and maintains revenue, in Individual Indian Monies (IIM) accounts, that accrues to individuals holding an interest in trust lands. The Department recognizes that as a result of past weaknesses in its accounting and information systems, IIM account holders have not always had sufficient information to be able to ascertain whether income from their trust assets was properly credited, maintained, and distributed to and from their IIM accounts. As directed by Congress, the Department is continuing development of a reconciliation process to evaluate the reliability of past account activity. This 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.


Written comments will be collected until June 30, 2000. The Department will also conduct public meetings to collect views, as outlined in this notice, at the following dates and locations:

Navajo Region

Western Agency

April 24, 2000; 10:00 A.M.; Western Agency, BIA, Building #407, Warrior Drive, Tuba City, Arizona

Chinle Agency

April 25, 2000; 10:00 A.M.; Chinle Agency, BIA, Bldg #136, Navajo Route 7, Chinle, Arizona

Fort Defiance Agency

April 26, 2000; 10:00 AM; Fort Defiance Agency, BIA, Bldg #40, Blue Canyon Road, Fort Defiance, Arizona

Shiprock Agency

April 27, 2000; 10:00 AM; Ship Rock Agency, BIA, N Highway 666, Shiprock, New MexicoStart Printed Page 17522

Eastern Navajo Agency

April 28, 2000; 10:00 AM; Eastern Navajo Agency, BIA, Bldg #222, Navajo Route 9, Crownpoint, New Mexico

Western Region

Colorado River Agency

April 25, 2000; 5:00 PM; Colorado River Agency Conference Room, Agency Road, Building 3, Parker, Arizona

Fort Apache Agency

April 25, 2000; 9:00 AM; Fort Apache Agency Annex Conference Room, State Route 73, West Elm Street, Whiteriver, Arizona

Fort Yuma Agency

April 29, 2000; 2:00 PM; Cocopah Tribal Chambers, County 15, Avenue G, Somerton, Arizona

Fort Yuma Agency

April 29, 2000; 10:00 AM; Quechan Community Center, 604 Picacho Road, Winterhaven, California

Hopi Agency

April 27, 2000; 10:00 AM; Hopi Agency Conference Room, Highway 264, One Main Street, Keams Canyon, Arizona

Papago Agency

April 29, 2000; 9:00 AM; Tohono O’odham Legislative Council, Main Street, (Downtown Sells), South of State Route 86, Sells Arizona

Pima Agency

May 3, 2000; 9:00 AM; Gila River Sprung (White Tent), 5550 W. Wild Horse Pass (Casino) I-10 and Maricopa Road, Chandler, Arizona

Salt River Agency

May 6, 2000; 10:00 AM; Salt River Community Building, 1880 North Longmore, Scottsdale, Arizona

San Carlos Agency

May 3, 2000; 9:00 AM; Apache Gold Casino, Highway 70—5 miles east of Globe, Globe, Arizona

Truxton Agency

April 27, 2000; 1:00 PM; Truxton Canon Field Office Conference Room, 13067 East Highway 66, Valentine, Arizona

Eastern & Western Nevada Agencies

May 6, 2000; 9:00 AM; Atlantis Hotel, 3500 S Virginia Street, Reno, Nevada

Southern Paiute Field Station

April 24, 2000; 8:00 AM; Southern Paiute Field Office Conference Room, 180 North 200 E., Suite 111, St. George, Utah

Uintah & Ouray Agency

May 2, 2000; 9:00 AM; Ute Tribal Auditorium, 988 South 7500 E., Fort Duchesne, Utah

Rocky Mountain Region

Blackfeet Agency

May 1, 2000; 9:00 AM; (A-F)

May 2, 2000; 9:00 AM; (G-N)

May 3, 2000; 9:00 AM; (O-T)

May 4, 2000; 9:00 AM; (U-Z); Blackfeet Agency, BIA, 531 SE Boundary St, Browning, MT

Crow Agency

May 2, 2000; 10:00 AM; Crow Agency (Multi-Purpose Building), Frontage/Fairground Road, Crow Agency, MT

Fort Belknap Agency

April 25, 2000; 1:00 PM; Ft. Belknap Agency (Fort Belknap Industries Bldg), Main Street/Airport Road, Fort Belknap, MT

Fort Peck Agency

May 4, 2000; 6:00 PM; Tribal Cultural Center, 211 Tribal Street, Poplar, MT

Northern Cheyenee Agency

April 26, 2000; 4:00 PM; Blessed Sacrament Catholic Church Basement, Cheynenne Ave., Lame Deer, MT

Wind River Agency

April 25, 2000; 9:00 AM; Rocky Mountain Hall Gymnasium, 15 Northfork Road, Fort Washakie, WY

Rocky Boy's Agency

May 3, 2000; 6:00 PM; Rocky Boy's Community Center, RR1 Box 542, Box Elder, MT

Northwest Region

Fort Hall Agency

May 4, 2000; 4:00 PM; Fort Hall Housing Authority Conference Room, 161 War Dance Circle, Fort Hall, ID

Colville Agency

May 6, 2000; 9:00 AM; Nespelem Community Center, Nespelem, WA

Flathead Agency

April 28, 2000; 9:00 AM; Tribal Council Chambers, Highway 93 West, Pablo, MT

Yakama Agency

May 3, 2000; 6:00 PM; Eagle Seelatsee Auditorium, Yakama Nation Headquarters Building, Fort Road, Toppenish, WA

Warm Springs Agency

April 26, 2000; 2:00 PM; Forestry Conference Room, Building #4430, Upper Dry Creek Road, Warm Springs, OR

Olympic Peninsula Agency

May 1, 2000; 1:00 PM; Nordic Inn—Convention Center, 1700 S. Boone, Aberdeen, WA

Metlakatla Field Office

May 1, 2000; 8:30 AM; Double Tree, 16500 S. Center Parkway, Seattle, WA

Puget Sound Agency

April 24, 2000; 1:00 PM; Cascadia Inn, 2800 Pacific Avenue, Everett, WA

Makah Field Office

May 1, 2000; 7:00 PM; Makah Community Hall, Neah Bay, WA

Umatilla Agency

May 4, 2000; 12:30 PM; Yellow Hawk Clinic, 73265 Confederated Way, Pendleton, OR

Northern Idaho Agency

May 9, 2000; 9:00 AM; Nez Perce Tribal Headquarters, Pineewau Community Building, Lapwai, ID

Taholah Field Office

April 26, 2000; 4:00 PM; Taholah Community Center, Taholah, WA

Spokane Agency

May 2, 2000; 5:00 PM; Spokane Tribal Community Center Gym, Wellpinit, WA

Northwest Regional Office

April 27, 2000; 9:00 AM; BIA Regional Headquarters, Main Auditorium, 911 N.E. 11th Avenue, Portland, OR

Southern Plains Region

Anadarko Agency

May 3, 2000; 9:00 AM; Anadarko High School Auditorium, U.S. Highway 62 & Warrior Drive, Anadarko, OK

Pawnee Agency

April 26, 2000; 9:00 AM; International Trade Center—OSU Campus Exhibit Hall, 105 Watkins Center, Stillwater, OK

Horton Agency

May 5, 2000; 10:00 AM; Horton Field Office Conference Room, Horton, KA

Concho Field Office

May 3, 2000; 1:00 PM; Redlands Community College Conference Center, 1300 South Country Club Road, El Reno, OK

Southern Plains Regional Office

April 27, 2000; 9:00 AM; Clarion Hotel on Meridian, 737 South Meridian, Oklahoma City, OKStart Printed Page 17523

Midwest Region

Great Lakes Agency

April 26, 2000; 5:00 PM; Northern Great Lakes Visitor Center, 2-88 County Trump 6, Ashland, WI

Michigan Agency

April 28, 2000; 1:00 PM; BIA Agency Office, 2901 Point 5 I-75 Business Spur, Sault Ste Marie, MI

Minnesota Agency

April 29, 2000; 1:00 PM; Palace Casino/Hotel, 6280 Upper Cass Frontage RD NW, Cass Lake, MN

Pacific Region

Southern California Agency

April 27, 2000; 10:00 AM; Best Western Escondido Hotel, 100 Seven Oaks Road, Escondido, CA

Northern California Agency

April 27, 2000; 10:00 AM; Golden Bear Casino, 156 Klamath Beach Road, Klamath, CA

Central California Agency

May 1, 2000; 10:00 AM; Heritage Hotel, 1280 Tribute Road, Sacramento, CA

Palm Springs Field Office

May 5, 2000; 10:00 AM; Spa Hotel and Casino, 100 N. Indian Canyon Drive, Palm Springs, CA

Eastern Oklahoma Regional Office

Talihina Agency

April 24, 2000; 1:00 PM; Talihina School Theater, 600 1st Street, Talihina, OK

Chickasaw Agency

April 25, 2000; 9:00 AM; Chicasaw Nation Bingo Hall, 1500 North Country Club Road, Ada, OK

Okmulgee Field Office

April 26, 2000; 9:30 AM; Creek Nation Complex, Former Elderly Citizens Cafeteria, Okmulgee, OK

Wewoka Agency

April 27, 2000; 9:00 AM; Mekusukey Mission Council House, Seminole, OK

Regional Office

May 1, 2000; 9:00 AM; Cherokee Nation Complex, Tribal Council Chambers, Tahlequah, OK

Osage Agency

May 2, 2000; 9:00 AM; American Legion Hall, 1449 W. Main Street, Pawhuska, OK

Miami Field Office

May 2, 2000; 6:00 PM; Miami Tribe of OK Cafeteria, 202 South 8 Tribes Trail Road, Miami, OK

Alaska Regional Office

Anchorage Agency

May 1, 2000; 9:00 AM; Anchorage Agency Conference Room, 1675 C Street, Anchorage, AK

Fairbanks Agency

May 2, 2000; 9:00 AM; Fairbanks Agency Conference Room, 1012 12th Ave., Fairbanks, AK

Great Plains Region

Cheyenne River Agency

April 27, 2000; 1:00 PM; Cheyenne Eagle Butte High School Auditorium, 2006 Main, Eagle Butte, SD

Crow Creek Agency

May 3, 2000; 1:00 PM; Crow Creek Sioux Tribal Gym, Highway 47, Fort Thompson, SD

Fort Berthold Agency

April 28, 2000; 1:00 PM; Civic Center, 103 Soo Place, New Town, ND

Fort Totten Agency

May 2, 2000; 11:00 AM; Fort Totten Community Center-Tribal Conference Rm, Main Street, Fort Totten, ND

Lower Brule Agency

April 26, 2000; 1:00 PM; Golden Buffalo Convention Center, 321 Crazy Horse St, Lower Brule, SD

Pine Ridge Agency

May 3, 2000; 10:00 AM; Billy Mills Hall, Highway 18 and 279, Pine Ridge, SD

Rosebud Agency

April 28, 2000; 1:00 PM; St. Thomas Hall, U.S. Highway 18, Mission, SD

Sisseton Agency

April 24, 2000; 10:00 AM; Community Gym, Veterans Memorial Drive, Agency Village, SD

Standing Rock Agency

May 4, 2000; 9:00 AM; Fort Yates High School Gym, U.S. Highway 1806, Fort Yates, ND

Turtle Mountain Agency

May 3, 2000; 1:00 PM; Turtle Mountain Casino—Sprung Building, Highway 5, Belcourt, ND

Winnebago Agency

May 3, 2000; 9:00 AM; Blackhawk Community Center, Highway 77, Winnebago, NE

May 3, 2000; 1:00 PM; Gilpin Building, Tribal Avenue, Macy, NE

May 4, 2000; 9:00 AM; Frazier Memorial Building, David Frazier Avenue, Sanatee, NE

Yankton Agency

April 25, 2000; 1:00 PM; Yankton Agency—Conference Room, 29775 South Main St, Wagner, SD

Eastern Region

Syracuse Field Office

April 29, 2000; 10:00 AM; Plummer Building, 3582 Center Rd, Salamanca, NY

Albuquerque Region

Northern Pueblos Agency

April 25, 2000; 10:00 AM; Northern Pueblos Agency Office, San Juan Pueblo, NM

Southern Ute Agency

May 3, 2000; 9:00 AM; Rolling Thunder Hall, 14826 Hwy 172 North, Ignacio, CA

Laguna Agency

May 3, 2000; 9:30 AM; Laguna Tribal Auditorium, I-40 West—Exit 114, Pueblo of Laguna, NM

Southern Pueblos Agency

May 3, 2000; 9:30 AM; Laguna Tribal Auditorium, I-40 West—Exit 114, Pueblo of Laguna, NM

Mescalero Agency

April 26, 2000; 10:00 AM; Carrizo Community Center, Carrizo Canyon Road, Mescalero, NM

Ute Mountain Ute Agency

April 24, 2000; 6:00 PM; Council Chambers, 125 Mike Washroad, Towaoc, CO


Written comments or suggestions about the processes that should be undertaken by the Department to meet the stated goals of this notice should be mailed to Bureau of Indian Affairs Office of American Indian Trust, Attention: Director, Loretta Tuell, 1849 C Street, NW, Mail Stop 2472-MIB, Washington, DC 20240.

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Loretta Tuell, Dierector, Office of American Indian Trust, at the above address or by telephone at (202) 208-3338.

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I. Background


Further background information, including historic information on IIM accounts, to aid comments on this notice will be available at these locations prior to the Start Printed Page 17524scheduled meeting times. Please contact your preferred location for further.

Currently, approximately 11 million acres of land are administered in trust by the Secretary of the Interior for the benefit or more than 300,000 individual Indian beneficiaries. In 1997 Departmental auditors estimated approximately $300 million is generated annually from the management of the lands and passes through the IIM accounts. This is a significant expansion since the 1955 GAO Audit report which reported that in 1950 there were only 88,000 IIM accounts and in fiscal year 1955 approximately $66 million was handled within the IIM system. As outlined below, this dramatic growth in beneficiaries since the inception of the IIM system overburdened the existing accounting and distribution systems of the Department. By Congressional mandate, those systems are currently being modernized. However, the Department recognizes, as has the General Accounting Office, that it is not feasible or practicable to re-create past transactions with the same precision that the Department expects the new systems to provide when fully operational.

The Department's obligation to reconcile accounts was initially raised by Congress in the 1987 Supplemental Appropriations Act; and Congress has continued to oversee the development of various options to carry out this obligation. The American Indian Trust Fund Management Reform Act of 1994, 25 U.S.C. 162a. et seq., & 4011, et seq., (the Act or the 1994 Act), anticipates that the Bureau of Indian Affairs will complete a reconciliation of IIM accounts that provides account holders “with a fair and accurate accounting” of trust accounts. 25 U.S.C. 4043. The Act also required the Department account for fund balances and commence “periodic, timely reconciliations to assure the accuracy of accounts.” 25 U.S.C. 162a & 4011. The combined effect of these provisions is a requirement to develop a reconciliation process to determine the reliability of account balances. Pursuant to Congress' mandate in the Act, the Department has been designing and installing new accounting and trust management systems to modernize and improve the administration of IIM accounts. The Department believes the new systems and procedures will provide account holders with accurate information about current transactions that affect the balances of their account.

In 1887, Congress enacted the Indian General Allotment Act of 1887, 24 Stat. 388. The Allotment Act authorized the President to allot portions of reservation land to individual Indians. Title to the allotted land was to remain with the United States in trust for at least 25 years, after which it was to be conveyed in fee to the Indian beneficiary. The Allotment Act resulted in a loss of over 90 million acres of Indian-held land, primarily through the distribution to non-Indians of reservation lands remaining after allotment. Land also passed out of the hands of many Indian allottees who received fee title after 25 years through forced sales and the operation of state intestacy laws.

In 1934, Congress enacted the Indian Reorganization Act to protect (and enhance, when possible) the remaining land base of Indian tribes and their members and to permit the tribes to engage in self-government. See 25 U.S.C. 452. The Reorganization Act ended the practice of allotment and indefinitely extended the trust period for allotments that had already been made.

Under the Indian General Allotment Act of 1887, 24 Stat. 388, as amended, the Department of the Interior has managed land held in trust for individual Indians which often generates revenue for the beneficial owners. Generally, the primary mechanism for distributing money earned on allotted lands to the beneficiaries has been the IIM account. Historically, funds collected from the use of allotted lands were deposited in either the Federal Treasury or private banks. The funds were then divided based on each individual's proportional interest in the land generating the funds. Each individual's share of the funds was then placed in an IIM account, where it was held until distribution. With certain exceptions, the income was then distributed to the account holder (beneficiary) by a bonded disbursing officer. Funds also have been derived from per capita payments from the Indian Claims Commission, U.S. Court of Claims, and appropriations from legislative claims settlements and were distributed in a similar manner.

As interests in individual allotments continued to pass to subsequent generations, the number of owners of an individual allotment multiplied to the extent that some of the 40, 80, or 160 acre allotments which originally had one owner, today may have hundreds, or even more. While the amount of money generated has increased significantly since the inception of the IIM system, the number of beneficiary accounts has increased at a much greater rate. Today, many of these interests, having been passed through many generations, may entitle the owner to such a small portion of the proceeds generated that the beneficiary receives only pennies a year.

After the passage of the Act, the Department's Special Trustee conducted an examination of the IIM accounts in order to produce the Strategic Plan required by the Act. The Strategic Plan identified a number of problems with the historic management of the accounts. For example, since the record keeping and distribution of money was historically handled at the local level, multiple accounts could be formed if an individual either owned land in several areas or moved and was serviced at a different BIA office. Moreover, the Department's systems for managing IIM accounts have not kept pace with systems available to the private sector. These problems compounded each other and in the end overwhelmed the system such that the Department has been unable to provide many beneficiaries with basic information such as the source of funds, gains and losses, and periodic statements of account performance. As a result, many beneficiaries have been unable to fairly evaluate the management of their accounts to verify they are receiving their proper share of the income collected through the Department's management of their land interests.

In response to accountholder demands and Congressional findings that the systems must be overhauled, Congress enacted The American Indian Trust Fund Management Reform Act of 1994, PL 103-412, which prescribed specific information that would henceforth be required to be provided to individuals about the Department's management of their accounts. The Department believes the systems currently being developed and implemented will comply with the mandates of the Act.

In 1994 Congress, through passage of the Act, mandated a series of specific reforms to the ongoing management of Indian trust funds. See for example, 25 U.S.C. 162a. Once the systems are in place to carry out the duties specified in the Act on an ongoing basis, the Department will undertake a process, likely with the aid of the new systems, to provide required information on accounts back to October 25, 1994. As this will involve different requirements and levels of available information, this period will be addressed within this separate process, not necessarily the one that will be developed from this notice.

Although the requirements of the Act are primarily forward-looking, some of the prospective requirements such as periodic reconciliations and determining accurate cash balances necessarily require some level of Start Printed Page 17525historical investigation. For example, Department audits have revealed discrepancies between the ledges of the Department and the Department of the Treasury, the Department will have to continue work on resolving these discrepancies. The implementation of new systems, in and of themselves, will not provide an analysis of transaction which took place before the passage of the Act. To address investigation of historical discrepancies, the Act built on the Department's process for historically reconciling Tribal Trust Fund accounts, requiring the Special Trustee to “monitor” the process and setting a deadline for its completion. The Act required the Secretary to submit a “reconciliation report” to the relevant congressional committees identifying a balance reconciled as of September 30, 1995 for each Tribal Trust Fund account, the methodology used, attestations of account holders as to whether they accepted the balances as reconciled and if not, a statement outlining efforts the Secretary will undertake to resolve the dispute. See 25 U.S.C. 4043 & 4044. Reconsilitation reports were submitted in January of 1996.

In contrast to the Tribal trust funds, for which Congress provided a framework for applying the Department's reconciliation process, the Act contains no such guidance for the reconciliation of IIM accounts. At the time the Act was enacted, the Department had not identified a satisfactory methodology for historical IIM reconciliation, given the availability and condition of the records and the high cost of gathering and analyzing relevant documents. The Act simply provided that an IIM reconciliation process would be “monitored” by the Special Trustee to ensure a “fair and accurate accounting” is provided to accountholders. 25 U.S.C. 4043. While Congress did not specify the nature of the remedy, the Act does recognize the existence of both the historical problems and ongoing attempts to devise an approach to resolving them. Given the acknowledged problems with past account management systems, and the 1994 Act's intent to resolve the account management deficiencies, the Department wishes to address the fact that these deficiencies may have resulted in accountholder losses through the development of a fair, reasonable, and practicable solution. Because the Act does not provide the Department with guidance on what type of process should be used to provide beneficiaries with information about their accounts' histories, the Department believes Congress left the initial determination of how, and to what extent, it would achieve an accounting or reconciliation of IIM accounts to the Department.

In 1996, the Cobell v. Babbitt litigation was filed in the U.S. District Court for the District of Columbia, asserting beneficiaries were due an accounting of their funds. The scope and nature of any such accounting has not yet been fully addressed in the case but the Court has made it clear that it lacks jurisdiction to award damages for losses beneficiaries may have incurred. See Cobell v. Babbitt, No. 1:96CV01285, slip op. at 55 (Dec. 21, 1999). In addition, because many beneficiaries have very small account balances or little historical activity, the Department believes it would best serve the interests of the beneficiaries and the United States to develop a methodology to foster compensation without the necessity of case-by-case litigation. Therefore, the Department now proposes beginning an information gathering process with beneficiaries to weigh the costs, benefits, and feasibility or alternative approaches to give IIM account holders reasonable confidence that income from their trust assets was properly credited, maintained, and distributed to and from their IIM accounts before October 25, 1994. In addition, because the Department believes that it is in the best interests of most, if not all beneficiaries to develop a process that not only provides assurance that current balances are reliable, but also provides for a final resolution to past discrepancies discovered, the Department also intends to explore approaches to fairly compensate beneficiaries and finally resolve discrepancies.

The Department notes that, although the goals of this process go beyond the remedies available in the Cobell case, the Court has pending before it issues related to the scope and nature of an accounting due beneficiaries. The Department intends to keep the Court apprised of the progress on this process. The Department recognizes that future decisions by the Court may affect this process.

II. Goals

Pursuant to this obligation, this notice is intended to initiate a process with beneficiaries and the public to gather information about available options to enable the Department to determine the best process to meet the following goals:

(1) Develop a methodology, consistent with Congressional directives, to examine past account activity and discover information appropriate to enable beneficiaries and the Department to evaluate whether income from their trust assets was properly credited, maintained, and distributed to and from their IIM accounts before October 25, 1994;

(2) Explore approaches to fairly compensate beneficiaries and finally resolve discrepancies.

This process is focused on developing a general methodology to investigate IIM account activity in order to provide reasonable information to account holders. This process will not, for example, address allegations of mismanagement, or other allegations of taking, of the underlying property interests. Although the methodology selected may ultimately result in a procedure which includes bringing individualized grievances related to lost income, these grievances will not be addressed within the process outlined in this notice.

III. Factors To Consider in Evaluating Options

Although the Department intends to consider the widest possible range of options for meeting the goals stated above, the Department will be guided by a number of factors in evaluating the reasonableness of each option. Each approach would require some tradeoff among the level of precision of account information provided to beneficiaries, the cost of obtaining and providing information, the impact on BIA's and OST's other responsibilities, and time needed to develop a basis for compensation. It is important that these tradeoffs be considered in evaluating the various options.

In addition, it is important to consider what has been proposed and rejected in the past and what the Department has learned from studying the accounts. Past proposals to perform IIM reconciliation have been dismissed by both Indian groups and Congress as being too expensive for the limited information produced. From 1988 to 1994, the Department, with the aid of Arthur Andersen, investigated the possibility of performing a reconciliation that would develop information on accounts without regard to the size of the account or transaction. Many of these proposals were dismissed by Congress, the Department, and the Intertribal Monitoring Association (“ITMA”) as not being worth the cost. For example, in 1995 Congress declined to fund IIM reconciliation tasks and the Appropriations Committee instructed the Department to, “recommend alternative, less costly approaches to the reconciliation and clarify the implications of not reconciling [IIM] Start Printed Page 17526accounts.” H.R. Rep. No. 104-173, at 55. ITMA similarly advocated finding alternatives that will discover the largest discrepancies at the least cost. This experience indicates that the Department should focus on methods that discover discrepancies in the areas that are most reasonably calculated to have had significant problems in the past.

Any approach ultimately selected must also provide a final resolution for both the Department and beneficiaries with regard to the pre-1994 period that is necessary for the Department to fully correct the management of the IIM system into the future. While the level of finality needed may vary according to such issues as the level of precision achieved, it is important to note that a primary consideration for any process selected must be to end uncertainty and achieve finality as to past account activity.

It may well be that accountholders will have differing views on what is necessary to provide them with a satisfactory “accounting.” Those with larger accounts may be more interested in an option which offers great precision, even though achieving the desired level of precision will take a long time and substantial resources. In contrast, accountholders with smaller accounts—those with less than $100 in income per year, for example—may be satisfied with a methodology that does not yield a precise result but that leads to a fast result with certain assumptions built in to compensate for the reduced precision. As discussed more fully below, it may not be necessary to use the same methodology for all accountholders. Distinctions among accounts may be made based, for example, on the size of the account or the nature of the underlying assets owned by the accountholder.

The approach selected must provide accountholders with confidence that they have been treated fairly. The Department is spending in excess of $190 million to clean up the trust fund accounts, to install new systems to administer trust resources and trust funds, and to train Departmental officials in meeting their obligations. While the Department is confident it will be able to meet its obligations for the future, it is equally important that this process develop a result that will satisfy accountholders as to the past.

Another factor to be considered is the cost of the process. While achieving the goals of this notice is likely to be expensive regardless of which approach is selected, there is a very large cost range within the various options—from millions of dollars for the sampling or settlement approach to hundreds of millions or more for a traditional transaction-by-transaction reconciliation for all accounts. As an example, the Department's current estimates are that it could cost over $15 million just to locate and organize all documents associated with the transactions of the five named plaintiffs (and 31 related individuals) in the Cobell litigation. Using this estimate as a guide, it is reasonable to conclude that merely collecting and organizing—but not analyzing—documents for the approximately 300,000 current accountholders would cost hundreds of millions of dollars.

Closely associated with the overall cost of the process are the cost/benefit considerations of the options. This factor may not be as relevant for large accounts through which tens or even hundreds of thousands of dollars pass each year. This issue more likely arises with respect to the small accounts. If it costs hundreds of dollars, or even more, to undertake a particular analysis for each account, is it cost effective and reasonable to do so for an account that generates $25 or less per year?

The amount of time that a particular process may take is also a consideration. One option, a transaction-by-transaction reconciliation, for example, would doubtless take many years to complete while others, such as a sampling or settlement process, would take considerably less time. Some accountholders may find that they can achieve a sufficient level of certainty to assess past discrepancies with much less information than others may require, particularly if their account has had little activity or they can reasonably determine their interest in the property was unlikely to produce significant income. In such a case, the accountholder may wish to expedite the process in order to receive fair compensation and resolve this issue. Moreover, a process that takes many years to complete will continue to consume the finite resources of the Bureau which accountholders may believe should be better expended on other programs of benefit to Indian people.

Indeed, the Bureau has broad mandates and responsibilities, including programs of importance to many aspects of the lives of individual Indians and Tribes. These include programs relating to education, law enforcement, probate, realty and trust asset administration, and stewardship of the environment. Regardless of which methodology is employed, it will require the substantial attention of Bureau employees and expenditure of significant amounts of money. These expenditures likely do not fit within the current budget estimates and staffing of the Department, and therefore the Department will have to seek new funds from Congress to undertake any process finally selected.

IV. Examples of Alternative Approaches

The following alternative approaches are offered merely as examples to illustrate the range of options the Department could consider. This list is not exhaustive, and other constructive alternatives are invited. As previously noted, the Department recognizes it is possible that no single alternative will serve the interests of all types of accountholders. Accordingly, an approach could be designed that integrates principles from various alternatives to provide a combined methodology depending on the characteristics of the accounts, including, size of the account, region of the country, and nature of the underlying assets producing income for the account.

A. Transaction-by-Transaction Reconciliation

The most precise and extensive information possible would be developed by attempting to undertake a transaction-by-transaction reconstruction of each account. This would involve attempting to research all transactions that have occurred in each account in order to try to locate documents which could demonstrate each transaction was correct and then applying appropriate verification procedures to the reconstruction. This would be the most time consuming and expensive approach. For example, the Department's experience in the Cobell litigation suggests that researching and cataloging the millions of documents that would be required would very likely cost hundreds of millions of dollars and take many years. Furthermore, the reconciliation of over one thousand Tribal accounts in the early 1990's consumed $20 million and left the final amounts still in question due to missing documents and other difficulties encountered in the reconciliation process. Given the enormous scope and costs of an account-by-account, transaction-by-transaction reconstruction, it is unlikely to expect that the Congress would provide the Department with the staggering appropriations needed to fund such a process.Start Printed Page 17527

B. Limited Reconciliation

Another approach could be to perform a more limited reconciliation for a fixed period of time which would allow some reasonable conclusions to be drawn which could then be applied to the remaining historical period. This is similar to the approach taken by Arthur Andersen for the Tribal reconciliation project. Applying this approach to the IIM accounts would include a search for documentation to confirm data that was contained in the electronic systems used from approximately the mid-1980's to the mid-1999's and develop an error rate based on that comparison. This error rate could then be used to estimate whether accountholders had experienced losses and to arrive at a formula for compensation. Although this would be less expensive than a search for all transaction documents, there would still be significant costs associated with this process due to the fact that it involves reconstructing accounts for a particular period of time through extensive research (Arthur Anderson estimated the cost of this approach for the IIM accounts as somewhere between $108 million and $281 million).

In 1995, the Inter-Tribal Monitoring Association (ITMA) voiced their opposition to the Arthur Andersen limited reconciliation approach and proposed a limited reconciliation that did not involve reconciling transactions in IIM accounts. The ITMA approach included, in part, reconciliation of balances between the IIM subsidiary ledger and the general ledger control account. ITMA advocated focusing on high volume, high dollar activities in active years; not every lease and every property.

C. Sampling

Another approach could involve using statistical sampling to calculate potential losses. One example methodology could be to use a statistically relevant sample of accounts, transactions, or tracts of land to support a reasonable inference about the accuracy of past account transaction activity.

It may also be useful to mix a sampling approach with a more precise transactional analysis based on the general criteria of the likelihood of loss. Under this approach, a sampling methodology could be used for groups of accounts that are unlikely to have many losses (such as accounts which do not have much income) and a more precise, individualized analysis for accounts where the potential for significant loss is greater. For example, a loss amount for accounts with historical annual income of less than $100 may be broadly estimated through sampling, while accounts with annual income over $100,000 may be analyzed on an individual basis. More extensive sampling could be used for accounts in between these ranges.

D. Analysis of Current Account Data

Another approach might be to use data currently collected and tracked electronically on individual accounts to determine if the past level of account activity is consistent. Since the information that is currently tracked is more extensive than the readily available information on the past, this analysis would both provide some context for the historical information and allow some conclusions to be drawn as to its accuracy.

E. Payment Formula

Another approach could be to define a formula to quantify a “rough justice” payment to each accountholder. Such a formula could be based on a variety of factors, including; the amount of money that has flowed through the account each year, the number of years the account has been open, the location of the account, and the type of assets that produced revenue for the account. To counter-balance the lack of precision in this process, the formulas could be weighted to resolve uncertainty in favor of the beneficiary. While this approach lacks precision in determining past losses, the major advantage of this approach is that it is relatively simple to administer, could be done fairly quickly, and would be the least expensive methodology to implement.

VI. Scope of Comments Requested

The Department is soliciting comment on what factors accountholders consider the most important in developing the proper methodology for meeting the goals stated in this notice.

Start Signature

Dated: March 29, 2000.

Kevin Gover,

Assistant Secretary for Indian Affairs.

End Signature End Supplemental Information

[FR Doc. 00-8120 Filed 3-31-00; 8:45 am]