<< COB0000001 >>
TN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
	ELOUISE PEPLON COBELL. et al.,	)
		)
	Plaintiffs,	)
		)
	V.	)	CaseNo. 1:96CV01285
		)	(Judge Lamberth)
	GALE A. NORTON, Secretary of the Interior,	)
	et al	)
		)
	     Defendants.	)
DEPARTMENT OF THE INTERIOR'S RESPONSE
TO THE FIFTH REPORT OF TIlE COURT MONITOR
	The Secretary of the Interior and the Assistant Secretary - Indian Affairs ("Interior
Defendants" or "Interior") submit this response to the Fifth Report of the Court Monitor ("Fifth
Report"), filed February 1, 2002. The Fifth Report addresses the Court Monitor's monitoring
and review of the progress of the Department of the Interior ("Interior") Office of Historical
Trust Accounting ("OHTA") "in complying with this Court's December 21, 1999 order to
provide the [Pilaintiffs, IN account holders, with an historical accounting of the Individual
Indian Money (LIM) trust accounts." Fifth Report at I.
	In the Fifth Report, the Court Monitor states that "OHTA has made more progress in [the
historical accounting] effort in six months than the past administration did in six years." Id. at
18.	Nonetheless, the Court Monitor believes that the Interior Defendants are still not in
compliance with this Court's December 21, 1999 ruling regarding the historical accounting, id. at
16-17, and recommends that the Court rule on Defendants' pending motions for summary
judgment and "set a briefing schedule in which the parties can further address any other issues
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<< COB0000002 >>
that they may wish to place before this Court on their inteI~retations of its December 21,1999
historical accounting declaratory judgment," id. at 17.
	Interior agrees with the Court Monitor's finding that OHTA has made progress in
developing historical accountings for lEvi account holders. However, Interior disagrees with the
premise of the Fifth Report that "no historical accounting process can be properly begun"
unless the Court rules on the pending summary judgment motions and on any other legal
limitations on the scope of the historical accounting. Id. at 18. In fact, a significant amount of
accounting work can be -~ and is being -- accomplished without implicating any "scope of the
historical accounting" issues. For example, as explained below. Interior is in the final stages of
preparing the accountings that will be provided to approximately 8,000 Judgment account
holders with IN balances totaling approximately $30 million (at September 30, 2001), and
expects these accountings to provide the basis for the Court's first review of Interior's accounting
work.
	Interior respectfully suggests that the Court Monitor may misapprehend the nature of the
"temporal scope" issues that remain unresolved. The Court Monitor assumes that open questions
about the scope of the historical accountings imply that Interior or its attorneys intend to
somehow limit or disregard this Court's declaratory judgment that "[tihe Indian Trust Fund
Management Reform Act ("1994 Act"), 25 U.S.C. § 162a et seq. & 4011 et seq., requires
[D]efendants to provide [P]laintiffs an accurate accounting of all money in the lIM trust held in
trust for the benefit of [P]laintiffs, without regard to when the funds were deposited." Cobell v.
Babbitt, 91 F. Supp. 2d 1, 58 (D.D.C. 1991). As explained below, Interior and its attorneys have
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<< COB0000003 >>
no such intent and agree that this Court and the Court of Appeals have, in broad terms, defined
the temporal scope of the historical accounting project.
	Interior is concerned that the Court Monitor may underestimate the complexity and
magnitude of the historical accounting project and the numerous factors that will affect singly or
in various combinations the accounting required for a particular JIM account holder (or
homogeneous group of account holders). Some of these factors, including but not limited to
relevant statute of limitations, the date an account was opened, the effect of probate proceedings
for the estate of a predecessor, and judgments or settlements of previous claims may affect the
"temporal scope" of the accounting due a particular individual. Determining the "start date" for
an individual accounting must take into consideration all of these factors (and perhaps others not
yet identified) and do so in compliance with the rulings of this Court and the Court of Appeals.
This complexity will likely prohibit the development of a single, uniform methodology and
across-the-board determinations regarding the scope of the accountings. Accordingly, Interior is
developing methodologies and performing accountings for relatively uncomplicated accounts and
transactions first, and intends to use the knowledge gained in the early accountings, as well as the
substantial body of knowledge already gained as discussed below, to develop methodologies and
perform accountings for increasingly complex accounts and transactions. With this approach,
work can progress as increasingly challenging accountings are developed, and decisions
regarding the "scope" of a particular accounting or group of accountings can be informed by
development of the relevant factual predicates.
	As explained below, these issues cannot, consistent with this Court's jurisdiction under
the Administrative Procedure Act, 5 U.S.C. §§ 701-706, be reviewed in the absence of a final
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agency decision and should not, in any event, be decided in the abstract without a dcvcloped
factual context. Accordingly, Interior respectfully submits that the Court Monitor's
recommendations that the Court rule on Interior's pending summary judgment motions,' set a
briefing schedule to address other issues, set a trial date, and decide "what will be expected as
proofof the historical accounting," Fifth Report at 17 n.8, are inconsistent with the nature of this
action.
A.	OHTA Is Making Diligent Progress On The Historical Accounting.
	Interior respectfully takes issue with the Court Monitor's conclusion that it is "[sitill (niot
[ijn [cjompliance [~vjith [tlhis Court's December 21, 1999 [r]uling [r]egarding [tihe [hlistorical
[a]ccounting. "2 Fifth Report at 16. OHTA is making diligent progress; indeed, it is in the final
stages of preparing the accountings that will be provided to approximately 8,000 JIM account
holders.
	On December 21, 1999, this Court entered a declaratory judgment that "[t]he Indian Trust
Fund Management Reform Act, 25 U.S.C. §§ 162a et seq. & 4011 et seq., requires defendants to
provide [Pilaintiffs an accurate accounting of all money in the JIM trust held in trust for the
benefit of [P]laintiffs, without regard to when the funds were deposited." Cobell v. Babbitt, 91
F. Supp. 2d 1, 58 (D.D.C. 1999). The United States Court of Appeals for the District of
	Defendants filed a motion to withdraw these pending summary judgment motions on
the same day the Fiflh Report was filed.
	2 Obviously, if the Court Monitor believes being "in compliance" with this Court's
December 21, 1999 ruling means completing the historical accounting project, compliance will
take considerable time.
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Columbia Circuit described this duty slightly differently in accordance with the language of the
statute:
...	Section 102 of the 1994 Act makes clear that the Interior
Secretary owes TIM trust beneficiaries an accounting for "all funds
held in trust by the United States for the benefit of an Indian tribe
or an individual Indian which are deposited or invested pursuant to
the Act of June 24, 1938." 25 U.S.C. § 4011(a) (emphasis added
[by Court of Appeals]). "All funds" means all funds , irrespective
of when they were deposited (or at least so long as they were
deposited after the Act of June 24, 1938).
Cobell v. Norton, 240 F.3d 1081, 1102 (D.C. Cir. 2001).
	The Secretary of the Interior ("Secretary") has agreed with this Court and the Court of
Appeals that an accounting to the hIM beneficiaries is long overdue, and, as explained in the
response to the First Report of the Court Monitor, understands that there is no easy shortcut to
the development and implementation of a satisfactory accounting, which undeniably will take
considerable time at substantial expense. On July 10, 2001, the Secretary issued Secretarial
Order No. 3231, which created OHTA and charged it specifically with planning, organizing,
directing, and executing that historical accounting.
	Although the Court Monitor observes that OHTA has "made more progress in [the
historical accounting] effort in six months than the past administration did in six years," Fifth
Report at 18, hc makes little mention of the historical accounting work that is underway. In a
section entitled "The Eighth Quarterly Report," the Court Monitor simply reports that "[t]he
OHTA staff provided the Court Monitor an update on the prototype projects and the status of
consultant retention" and "[t]hey believed that they would be able to meet their self-imposed
midyear suspense date for preparation and filing of the Comprehensive Plan." Fifth Report at 15.
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In the Analysis section, the Court Monitor states that "[tihe prototype projects that are being
touted as the start of the accounting, and xviii allegedly address much of the monies in the fiM
Trust, are in their infancy." Id. In the Remarks section, the Court Monitor states that the
historical accounting process "is not much further along than the [P]laintiffs' description of it as
a 'plan for a plan."' Id. at 18. Interior respectfully suggests that this does not sufficiently
describe the significant work taking place on the historical accounting.
	As reported in Interior's Status Report to the Court Number Eight ("Interior's Eighth
Report"), the work identified in Interior's Report Identifying Preliminary Work for the Historical
Accounting is xvell underway. Chevarria, Dunne & Lamey ("CD&L"), a certified public
accounting firm under contract with Interior, has completed a pilot project in which it examined
JIM accounts and transactions affected by the ten largest tribal judgment awards. This work has
resulted in the reconciliation of approximately 8,000 JIM accounts with an aggregate balance (as
of September 30, 2001) of approximately $30 million, which represents nearly 8% of the IIM
trust fund balance. See Interior's Eighth Report at 23-24. Reconciliation of these accounts did
not implicate any "temporal scope" issues because the activity in the accounts related to the
judgment awards. OHTA has hired a second certified public accounting firm, Grant Thornton
LLP, to conduct a quality review of the accounting work for these Judgment accounts. When the
quality review is complete, and Interior and its advisors have reviewed the results, Interior
expects to send accounting statements to approximately 8,000 IIM account holders.
	The historical accounting for Per Capita accounts is also ongoing. Per capita payments
may result when tribal revenues (from, for example, natural resources) are distributed to tribe
members. See id. at 24. Analysis of the five largest per capita distributions has resulted in the
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reconciliation of 23,200 transactions totaling $51.6 million which will contribute to the
reconciliation of 17,400 JIM accounts. Id. at 24.
	Contractors and consultants are now in place to undertake the historical accounting for
the Agua Caliente Indians served by the Palm Springs Field Office of the Bureau of Indian
Affairs ("BIA") as well as for the active IIM accounts in the BIA's Eastern Region. Id. at 25-26.
In addition, OHTA has engaged a contractor to build upon an analysis of large dollar transactions
undertaken for the Department of Justice to produce complete accounting results that can be
reported to TIM account holders. Id. OHTA has also engaged a contractor to examine accounts
opened since the Trust Fund Accounting System ("TEAS") was installed in 1999. Id. at 26. This
project is expected to produce accounting results to LIM account holders, as well as identify and
resolve issues related to the reconciliation of automated and manual JIM records. Id. at 26-27.
	In addition to the ongoing projects that will result in final accountings for thousands of
TIM beneficiaries, OHTA and its contractors have initiated several projects to improve the
accuracy and efficiency of the overall historical accounting effort. These projects include an
inventory of JIM records at the Indian Trust Accounting Division of the General Services
Administration and a project to identify' and link multiple accounts associated with a single HIM
account holder. Id. at 27. OHTA has also assumed responsibility for the collection of missing
information from third parties. Id. at 28, 31-38. The Court Monitor correctly notes that OHTA
has no date limitation on its efforts to collect missing information from third party custodians.
See Fifth Report at 7 n.2.
	OHTA's work builds on projects initiated during the previous administration. As
reported in Interior's Response to the First Report of the Court Monitor, Ernst & Young, LLP
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<< COB0000008 >>
was retained to reconcile the accounts of the five named Plaintiffs using the documents located
during the search for records responsive to Paragraph 19 of the Court's First Order for
Production of Information. See hiterior's Response To The First Report Of The Court Monitor
at 4 & Ex. 3 attached thereto. Ernst & Young submitted a report to Interior (which was
subsequently filed with the Court) that concludes that the documents gathered by Interior support
substantially all of the dollar value of the transactions in each of the named Plaintiffs' TIM
accounts and provide sufficient contemporaneous evidence that the relevant transactions
occurred and were recorded accurately in the ledgers. j~±
	Morgan Angel & Associates, L.L.C. and Historical Research Associates, Inc. have
prepared reports and case studies examining the historical policies and business practices
affecting TIM accounts. See id. at 5-6 & Exs. 4, 7 & 8 attached thereto. These reports will be
invaluable in informing OHTA's efforts. Arthur Andersen, L.L.P. is reconciling high-dollar non-
interest collections recorded between 1985 and 1998, and has in the process analyzed "over $1.2
billion in credit throughput and over 250 thousand transactions." Id. at 6 & Ex. 9 attached
thereto. As noted above, OHTA is building on this work to prepare accountings that can be
reported to IIM account holders.
	Thus, Interior's work is further along than a "plan for a plan." The Judgment pilot project
is complete, is undergoing quality review, and will result in accounting statements for
approximately 8,000 JIM account holders. The Per Capita pilot project is nearing completion,
and is expected to contribute to accountings for many additional account holders. As explained
above, Interior is focusing first on relatively straightforward accounting projects, and will build
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<< COB0000009 >>
on the knowledge gained from those projects as increasingly difficult accounting projects are
undertaken.
B.	The Historical Accounting Effort Will Be Enormously Complex And Will Take
Considerable Time At Substantial Expense.
	The myriad types of transactions that flow through the UNI trust indicate that LIM
accounts are in no sense homogeneous. There is no common source of trust income. Some
individuals do not own trust land, but instead have trust funds derived only from judgment
awards or tribal per capita distributions. Other individuals own allotments that generate funds
from oil and gas royalties, farming or grazing leases, timber cutting contracts, hospitality leases,
land sales, or rights of way. Many individuals receive trust income from several different
sources. Some individuals have entered settlement agreements with Interior in the past that may
affect Interior's duty to account to a particular individual for periods covered by a settlement
agreement. Statute of limitations issues may affect the accounting to which a particular
individual is entitled, as this Court and the Court of Appeals recognized. See Cobell v. Norton,
240 F.3d at 1110; Cobell v. Babbitt, 91 F. Supp. 2d at 32 n.22. The effect of probate of a
predecessor's account may or may not be relevant in determining the accounting required for an
individual. Thus, numerous fact-based details will affect singly or in various combinations the
accountings required for individual IIM account holders or subclasses of account holders.
Interior anticipates that research into and analysis of these factual issues will provide an
appropriate factual context for decisions affecting the scope of the accountings due particular
individuals (or homogeneous subclasses of individuals).
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	To put the historical accounting project in context, it is instructive to examine the work of
the Indian Claims Commission ("Commission"), which was established in 1 946 as a quasi-
judicial independent agency for the purpose of hearing and determining Indian claims against the
United States that accrued prior to August 13, 1946. Accounting cases were "the second most
numerous type of claim." Final Report, United States Indian Claims Commission, August 13,
1946 - September 30, 1978 ("ICC Final Report") at 8 (attached as Exhibit 1). The enabling act
that created the Commission "granted it a 10-year life span and did not provide for extension on
the contingency that it might not complete its work." Id. at 12. But "fi]t soon became obvious
that the job was too complex to be accomplished within the time limit[;] . . . [t]he number of
claims, the difficulty and complexity of the cases and the large amounts of highly technical and
historical evidence necessary to decide each case were factors which proved to be barriers to any
hope of speedy disposition of cases." 1969 Annual Report, Indian Claims Commission at 2
(attached as Exhibit 2). Therefore, "Congress extended the life of the Commission in 1956, and
again in 1961, 1967, 1972, and 1976 because the job was still unfinished." ICC Final Report at
12 (Ex. 1). The Commission stated:
The fact was that the time span of 20 years (or even 32 as it
developed) was not an exorbitant one to resolve the immense and
complex backlog of work involved in over 600 claims covering
150 years. The case exhumation and presentation, and the defense
in the courtroom context was inherently a lengthy procedure.
Id.
	Of course, differences exist between the claims heard by the Commission and the claims
advanced by Plaintiffs in this case. The Commission addressed only tribal claims because
"[aicceptance of individual claims.., was against the intent of Congress and would have
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resulted in a docket too huge to manage." !~ at 10. The claims were more akin to Tucker Act
claims than APA claims. However, many of the obstacles reported by the Commission are now
facing Interior. The Commission reported that the accounting cases "required an accounting by
the Government of any funds belonging to Indians, how they came into being, how they were
expended, and what balances were held in the United States Treasury." j~ at 8. "Many of these
records were quite old and the accounting involved thousands of transactions." Id. In this case,
Plaintiffs are advancing several hundred thousand individual claims — hundreds of times the
number of claims examined by the Commission — that may cover a time period of up to 115
years. Providing an historical accounting for each of several hundred thousand Plaintiffs xvill
obviously require considerable time and expcnse.
	As the Court Monitor notes, this Court has previously stated that". . . lack of funding
cannot be allowed to legally impair the United States' trustee-delegates' exacting fiduciary duties
toward management of this trust." Fifth Report at II n.5 (quoting Cobell v. Babbitt, 91 F. Supp.
2d at 48). The Court Monitor concludes that "[t]he best and most complete, not the cheapest,
method to perform the accounting should be the goal of the Secretary of the Interior and her
Executive Director." Id. Neither the Secretary nor the Executive Director of OHTA has stated
that the goal of the historical accounting project is to find the "cheapest" method to perform the
accounting. What Interior has stated is that the mission of the historical accounting project is "to
plan and conduct a valid, cost-effective, and timely accounting of the 11N4 trust in a manner that
satisfies the Department 'sfiduciar-y duty to account to JIM beneficiaries." Blueprint For
Developing The Comprehensive Historical Accounting Plan for Individual Indian Money
Accounts at 20 (emphasis added). Plainly, Interior recognizes that the historical accountings
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must be performed in a manner that satisfies the Department's fiduciary duty regardless of thc
methods selected to conduct the accounting.
C.	Judicial Consideration of Potential Issues Relating to the Scope of an Accounting
Should Await Issuance of Final Agency Decisions on Such Matters.
	The Court Monitor concludes that this Court should rule on Defendants' pending
summary judgment motions and "set a briefing schedule in which the parties can further address
any other issues that they may wish to place before this Court on their interpretations of its
December 21,1999 historical accounting declaratory judgment." Fifth Report at 16-17. The
Court Monitor also suggests in a footnote that the Court consider Plaintiffs' pending motion to
set a trial date for the Phase II trial, and decide "what will be expected as proof of the historical
accounting." Id. at 1 7 n.8. These conclusions and recommendations are inconsistent with the
nature of this action.
1.	The Administrative Procedure Act.
	Both this Court and the Court of Appeals clearly held that the APA provides the waiver
of the United States' sovereign immunity for this action. This Court held that "Section 702 of
the APA waives [Defendants'] sovereign immunity for all of[P]laintiffs' claims that this court
will consider." Cobell v. Babbitt, 91 F. Supp. 2d at 24. The Court of Appeals ruled that
"[i Insofar as the [P]laintiffs seek specific injunctive and declaratory relief— and, in particular
seek the accounting to which they are entitled — the government has waived its sovereign
immunity under [section 702 of the APA]," and, accordingly, "federal courts have jurisdiction to
hear such claims under the APA." Cobell v. Norton, 240 F.3d at 1094-95 (citing Bowen v.
Massachusetts, 487 U.S. 879, 894-95 (1988)).
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	However, the APA defines the scope of the Court's jurisdiction to review Plaintiffs'
claims. Both this Court and the Court of Appeals recognized that "[w]hether there is a final
agency action is [] a jurisdictional question." Id. at 1095; see Cobell v. Babbitt, 91 F. Supp. 2d at
35-36 ("Finality of agency action is generally a jurisdictional prerequisite under the APA.").
The Court of Appeals questioned whether the High Level Implementation Plan or the preexisting
accounting system used to administer the IN trust constituted final agency action, but
determined that this Court had jurisdiction over Plaintiffs' claims because the APA permits
federal courts to "exercise jurisdiction to compel agency action 'unlawfully withheld or
unreasonably denied."' Cobell v. Norton, 240 F.3d at 1095 (quoting 5 U.S.C. § 706). The Court
of Appeals agreed with this Court that Dcfcndants "unreasonably delayed the discharge of their
fiduciary obligations," and upheld this Court's exercise ofjurisdiction under 5 U.S.C. § 706 on
that basis. Id. at 1097.
	The APA permits judicial review of "[ajgency action made reviewable by statute and
final agency action for which there is no other adequate remedy in a court." 5 U.S.C. § 704. "A
preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject
to review on the review of the final agency action." Id. The APA defines the scope of judicial
review as follows:
To the extent necessary to decision and when presented, the
reviewing court shall decide all relevant questions of law, interpret
constitutional and statutory provisions, and detennine the meaning
or applicability of the terms of an agency action. The reviewing
court shall —
	(1)	compel agency action unlawfully withheld or
unreasonably delayed; and
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	(2)	hold unlawful and set aside agency action, findings, and
conclusions found to be —
	(A)	arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law;
	(B)	contrary to constitutional right, power, privilege,
or immunity;
	(C)	in excess of statutory jurisdiction, authority, or
limitations, or short of statutory right;
	(D)	without observance of procedure required by
law;
	(E)	unsupported by substantial evidence in a case
subject to sections 556 and 557 of this title or otherwise
reviewed on the record of an agency hearing provided by
statute; or
	(F)	unwarranted by the facts to the extent that the
facts are subject to trial de novo by the reviewing court.
5 U.S.C. § 706.
	Thus, the APA dictates the nature, extent, and timing of any review of Interior's historical
accounting efforts.3 Both this Court and the Court of Appeals noted that courts "cannot 'become
	enmeshed in the minutiae' of agency administration."' Cobell v. Norton, 240 F.3d at 1108
(quoting Cobell v. Babbitt, 91 F. Supp. 2d at 54, in turn quoting Bell v. Wolfish, 441 U.s. 520,
562 (1979)). Rather, "[i]t is proper for a court to allow the goverrunent 'the opportunity to cure
the breaches of trust declared' by the court." Id. at 1 108-1109 (quoting Cobell v. Babbitt 91 F.
Supp. 2d at 54). Accordingly, the Court of Appeals presumed that "the district court plans to
	~	As for the standard of review, the Court of Appeals ruled that deference under Chevron
U.S.A.. Inc. v. NRDC, 467 U.S. 837 (1984), "is not applicable in this case." Cobell v. Norton.
240 F.3d at 1101. Rather, '[tihe governing canon of construction requires that 'statutes are to be
construed liberally in favor of the Indians, with ambiguous provisions interpreted to their
benefit."' 14. (quoting Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766 (1985). Thus,
"even where [an] ambiguous statute is one entrusted to an agency, [courts] give the agency's
interpretation 'careful consideration' but '[] do not defer to it."' 14. (quoting Musco~ee (Creek)
Nation v. Hodel, 851 F.2d 1439, 1445 n.8 (D.C. Cir. 1988).
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wait until a proper accounting can be performed, at which point it will assess [Defendants']
compliance with their fiduciary obligations." Id. at 1110.
	As explained above, Interior is taking thc actions necessary to bring itself into compliance
with law by planning and implementing the historical accounting for tIM funds. It is obvious
that, regardless of the approach taken, significant portions of this project will be enormously
complex, and developing an appropriate approach to all aspects of the required historical
accounting, and the implementation of such a plan, will take a considerable amount of time. At
this point, Interior must be allowed to do its work. The Court of Appeals cautioned:
[W]e expect the district court to be mindful of the limits of its
jurisdiction. It remains to be seen whether in preparing to do an
accounting the Department takes steps so defective that they would
necessarily delay rather than accelerate the ultimate provision of an
adequate accounting, and the detection of such steps would fit
within the court's jurisdiction to monitor the Department's
remedying of the delay; beyond that, supervision of the
Department's conduct in preparing an accounting may well be
beyond the district court's jurisdiction.
Id. at 1110. The Court plainly has jurisdiction to monitor Interior's actions in coming into
compliance ~vith its duty to account. Nonetheless, the APA limits the Court's jurisdiction to act
in the absence of final agency action.
	As the Supreme Court stated,
[a]s a general matter, two conditions must be satisfied for agency
action to be "final:" First, the action must mark the consummation
of the agency's decisionmaking process — it must not be of a
merely tentative or interlocutory nature. And second, the action
must be one by which rights or obligations have been determined
or from which legal consequences will flow.
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Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (internal quotations and citations omitted).
Interior has not yet taken final agency action with regard to any of the historical accountings.4 As
described above, many outstanding legal and practical issues (some recognized explicitly by this
Court as well as the Court of Appeals) potentially affect the scope of the accounting for particular
individual account holders (or subclasses of account holders), including but not limited to the
effect of relevant statutes of limitations, the date an account 'vas opened, the effect of probate
proceedings for the estate of a predecessor, and prior settlements of JIM account holders' claims.
These issues, which involve the application of law to potentially diverse factual predicates,
cannot, consistent with this Court's jurisdiction under the APA, be reviewed in the absence of a
final agency decision and should not, in any event, be decided in the abstract without factual
context.
	The Court Monitor's conversations with the Executive Director and the Deputy Director
5
of OHTA reveal that the agency is in the midst of a decision making process. As facts are
developed, final agency actions will be taken by the Secretary and her factual and legal
determinations ~vill be subject to review by the Court. The Court Monitor's speculation that
	'~ As explained above, Interior expects that final agency action on the accountings for
approximately 8,000 Judgment accounts will provide the basis for the Court's first review of the
accounting work.
	' The Court Monitor states that the discussion in Interior's Eighth Report regarding the
collection of information from outside sources and statements in OHTA's "Blueprint For
Developing The Comprehensive Historical Accounting Plan For Individual Indian Money
Accounts" and its "Report Identifying Preliminary Work for the Historical Accounting"
"indicated that the Executive Director had come to a decision on the legal scope of the
accounting he would follow." Fifth Report at 14. Interior respectfully disagrees that any of the
quoted passages indicate that such decisions have been made. Indeed, the Court Monitor's
reporting of his January 22, 2002 meeting with OHTA makes clear that no such decisions have
been made. See Fifth Report at 14-15.
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<< COB0000017 >>
"someone — perhaps Defendants' attorneys — believe that the Court-defined scope of the
historical accounting can be properly limited by an administrative decision by the Secretary,"
Fifth Report at 18, is not correct. The Court of Appeals made clear that this is an APA case, and
the APA permits review of "final agency action." No final agency action that is inconsistent with
this Court's declaratory judgment order or otherwise not in accordance with law would survive
such review.
2.	Response To The Court Monitor's Recommendations Regarding Defendants'
Three Motions For Partial Summary Judgment and Plaintiffs' Niotion To Set
A Trial Date.
	Defendants coincidentally filed a motion to withdraw their three pending summary
judgment motions on the same day the Court Monitor filed his Fifth Report.6 As Defendants
explained in their motion, the summary judgment motions have been overtaken by events in this
case (most notably the decision of the Court of Appeals and the creation of OHTA) and should
not be decided by the Court at this time. Permitting the withdrawal of those motions will be
consistent with the Court's APA jurisdiction and avoid potential problems with opinions that are
advisory in nature. Thus, Interior disagrees with the Court Monitor's conclusion that the Court
should "consider the Defendants' partial summary judgment motions at this time," Fifth Report
17, and with his suggestion that the Court "set a briefing schedule in which the parties can further
address any other issues that they may wish to place before this Court on their interpretations of
its December 21, 1999 historical accounting declaratory judgment," id. Proceeding as the Court
	6 In the motion, Defendants request the opportunity to file supplemental briefs to address
the effect of events subsequent to the filing of the original motions should the Court not permit
withdrawal of the partial summary judgment motions.
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<< COB0000018 >>
Monitor suggests would be inconsistent with the APA and would likely result in premature (and
constitutionally impermissible) advisory opinions.
	The Court Monitor also suggests that thc Court consider Plaintiffs' outstanding motion to
set a trial date for the Phase 11 trial. Fifth Report at 17 n.8. The Court Monitor believes that "[a]
decision on that trial date and what will be expected as proof of the historical accounting could
well give the Defendants and Congress a better idea of the necessary resources and funds to
complete the historical accounting in the time allotted by this Court." Id. The Court Monitor
appears to suggest that this Court set a trial date as the deadline for completion of the entire
historical accounting effort and dictate the specific requirements of the historical accounting.
This suggestion is not consistent with the nature of this case.
	As this Court observed, "the focal point of [the] court's APA review 'should be the
administrative record already in existence, not some new record made initially in the reviewing
court."' Cobell v. Babbitt, 91 F. Supp. 2d at 37 (quoting Camp v. Pitts, 411 U.S. 138, 142
(1973)). "The task of the reviewing court is to apply the appropriate APA standard of review, 5
U.S.C.	§ 706, to the agency decision based on the record the agency presents to the reviewing
court." Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985); see 5 U.S.C. § 706
("[T]he court shall review the whole record or those parts of it cited by a ..... .
	Thus, the record before the agency, not some new record developed at trial, should form
the basis of this Court's review of Interior's actions. Indeed, the Special Master recognized this
in his September 2001 Opinion and Order addressing the effect of the Court of Appeals decision
on discovery:
- 18-
<< COB0000019 >>
Acknowlcdging that "supervision of the Department's conduct in
preparing an accounting may well be beyond the district court's
jurisdiction," Cobell, 240 F.3d at 1110, the D.C. Circuit observed
that, "the choice of how the accounting would be conducted, and
whether certain accounting methods, such as statistical sampling or
something else, would be appropriate. . . are properly left in the
hands of administrative agencies." Id. at 1104. In keeping with
this acknowledgment and the Circuit's general admonition to the
District Court to remain "mindful" of its jurisdiction, it appears
that if there is any arena within which defendant agencies might be
expected to exercise their discretion and expertise, it should be in
the choice and implementation of an accounting method.
Pennitting the agencies to formulate their own methodology
without subjecting every nuance of the decision-making process to
inspection and challenge is ultimately in the interest of the plaintiff
class, insofar as it should expedite the ultimate resolution in this
case. The natural corollary of granting agencies some deference is,
however, the required expectation that an administrative record
will be created in accordance with traditional APA standards.
	Partially shielding defendants from discovery relating to
their decision-making process does not, however, immunize that
process from review. If, after a record is proffered (or if no record
is proffered after a reasonable amount of time as determined by the
Court), plaintiffs can make a showing that it is insufficient, either
on its face, or because it excludes relevant documents, discovery
relating to those infirmities may be permitted.
Sept. 28, 2001 Opinion and Order of Special Master at 13-14.
	Accordingly, the Court Monitor's suggestion that it is appropriate for the Court to decide
"what will be expected as proof of the historical accounting" is not consistent with the scope of
judicial review permitted by the APA. Deciding "what will be expected as proof of the historical
accounting" would be deciding what must be in the administrative record and, therefore, how the
historical accountings must be conducted — a decision left to Interior, as the Court of Appeals
made clear.
- 19-
<< COB0000020 >>
	As for the Court Monitor's suggestion that the Court fix a trial date, Defendants
explained in their response to Plaintiffs' motion to set a trial date that the request is not
consistent with the Court of Appeals decision outlining the limits of this Court's jurisdiction,
and, in any event, asks for relief that is not feasible by requiring that all of the historical
accountings be completed by a date certain. See Defendants' Opposition To Plaintiffs' Motion
To Set A Trial Date For Phase II Of This Action. As explained above, the review of Interior's
final historical accountings should be based on the administrative record prepared and submitted
to the Court. In an APA case, the district court is a reviewing court; it does not normally act as a
fact finder. Florida Power & Light Co., 470 U.S. at 744 ("The factfinding capacity of the district
court is. . . typically unnecessary to judicial review of agency decisionmaking."). A
determination regarding the extent — if any — to which factfinding will be necessary cannot be
made until the administrative record supporting a final agency action is before the Court.
	Moreover, setting a trial date would prematurely compel the completion of the historical
accountings by a date certain. Interior agrees with this Court and the Court of Appeals that an
accounting is long overdue, and has taken substantial steps to begin what can only be described
as a monumentally complex task (and, according to the Court Monitor, "has made more progress
in that effort in six months than the past administration did in six years," Fifth Report at 18). The
Court of Appeals presumed that "the district court plans to wait until a proper accounting can be
performed, at which point it will assess appellants' compliance with their fiduciary obligations.~~
Cobell v. Norton, 240 F.3d at 1110. Of course, this Court will continue to monitor Interior's
progress in discharging its fiduciary duties through the quarterly reporting process. As
accountings which constitute final agency action are completed for individual JIM account
- 20 -
<< COB0000021 >>
holders or subclasses of account holders, the Court will review Interior's work. For the reasons
set forth in Defendants' Opposition to Plaintiffs' Motion To Set A Trial Date For Phase II Of
This Action, however, it is premature at this point to establish a date certain for the completion of
several hundred thousand historical accountings.
D.	Response To The Court Monitor's Reporting On The Mental Processes of OHTA
Officials.
	Also inconsistent with the nature of this case are the significant portions of the Fifth
Report addressing the mental processes of OHTA oflicials who are in the midst of decision
making.7 Probing of the mental processes of administrative officials is disfavored when a final
agency action is reviewed.8 ~ ~ Citizens To Preserve Overton Park. Inc. v. Volpe, 401 U.s.
	~	See ~ Fifth Report at 15 ("The accounting method that was and still is to be
determined by the Defendants has apparently become not only a method for accomplishing the
accounting but also, in the mind of the mind of the Executive Director, a vehicle for determining
the scope of that accounting due to outstanding and yet-to-be-discovered legal issues."); j~ at II-
12 ("[The Deputy Director], when first asked by the Court Monitor to define his understanding of
the 'scope' of the historical accounting as addressed by the Executive Director in his reports
could not explain what the terminology meant in either document. . . It was his understanding
that, using various techniques, it might be possible to compile an accurate accounting of those
records without the need to examine all records going back to the award of the first Indian Trust
allotments. That would be the practical method for determining the scope of the accounting in
his view. However, he was not aware of whether that would satisfy this Court's and the Circuit
Court's decisions addressing the scope of the historical accounting. He also had no clear idea of
whether it would be necessary to account for direct pay monies or those accounts settled prior to
1951 by the Treasury or GAO."); ~ at 12 ("[I]t was [the Executive Director's] understanding
that the question of whether this Court's decision regarding 'all funds' included a requirement to
reconcile funds deposited in deceased account holders' accounts as opposed to living account
holders was still unanswered. Thus, in Edwards' opinion, the scope of the accounting might
properly be limited to the accounts of living account holders.").
	~	In the context of discovery, probing the mental processes of decision makers is
"permissible in only two circumstances: when it 'provides the only possibility for effective
judicial review and. . . there have been no contemporaneous administrative findings' (so that
without discovery the administrative record is inadequate for review), and when 'there has been a
(continued...)
-21-
<< COB0000022 >>
402, 420 (1971) ("[I]nquiry into the mental processes of administrative decisionmakors is usually
to be avoided."), overruled on other grounds by Califano v. Sanders, 430 U.S. 99(1977); United
States v. Morgan, 313 U.S. 409, 422 (1941) (It is "not the function of the court to probe the
mental processes of [administrative officials;] Wust as ajudge cannot be subjected to such a
scrutiny.. . , so the integrity of the administrative process must be equally respected."); Gottlieb
v. Pena, 41 F.3d 730, 737 (D.C. Cir. 1994) ("[P]arties have no right to inquire into an agency's
mental processes."); Louisiana Ass'n of Indep. Producers v. Federal Energy Regulatory Comm'n,
958 F.2d 1101, 1114 n.5 (D.C. Cir. 1992) (same); National Courier Assoc. v. Board of
Governors of the Federal Reserve Sys., 516 F.2d 1229, 1242 (D.C. Cir. 1975) ("Unless he has
left no other record of the reasons for his decision, the mental processes of an administrator may
not be probed."). Where no final agency action has yet been taken, probing the mental processes
of decision makers as they make their decisions is particularly questionable, and risks premature
judicial interference with the agency's decision making process. The decision making process is
dynamic; it evolves as information is obtained and knowledge is gained. Snapshots of the mental
.continued)
strong showing of bad faith or improper behavior' (so that without discovery the administrative
record cannot be trusted)." Saratoga Dev. Corp. v. United States. 21 F.3d 445, 458 (D.C. Cir.
1994) (quoting Community for Creative Non-Violence v. Lujan, 908 F.2d 992, 997 (D.C. Cir.
1990) and Overton Park, 401 U.S. at 420); see also AMFAC Resorts v. United States Dep't of
the Interior, 143 F. Supp. 2d 7, 12 (D.D.C. 2001) ("[Al party must make a significant showing —
variously described as a 'strong,' 'substantial,' or 'prima facie' showing — that it will find
material in the agency's possession indicative of bad faith or an incomplete record."). Here,
inasmuch as no final agency action has occurred, it is premature to determine whether the record
is sufficient to permit review. There has been no allegation of bad faith or improper behavior on
the part of the decisionmakers at OHTA. Accordingly, as discussed above, the Special Master
has precluded discovery for the time being as to Interior's decision making processes.
- 22 -
<< COB0000023 >>
processes of decision makers before a final decision is made and speculation about what a
decision maker might decide should not be the subject ofjudicial inquiry.
- 23 -
<< COB0000024 >>
CONCLUSION
	For the reasons set forth above, Interior objects to the Court Monitor's conclusion that it
is still not in compliance with this Court's December 21, 1999 declaratoryjudgment. The agency
is making diligent progress on an enormously complex historical accounting project, and, indeed,
is in the final stages of preparing accountings for approximately 8,000 JIM account holders.
Moreover, for the reasons set forth above, Interior submits that the Court Monitor's
recommendations that the Court (1) rule on the pending summary judgment motions Defendants
have sought leave to withdraw, (2) set a briefing schedule in which the parties can address
additional issues, (3) set a trial date, and (4) decide what will be expected as proof of the
historical accounting are inconsistent with the nature of this action and the Court's APA
jurisdiction.
Dated: March 1, 2002	Respectfully suhmitted,
ROBERT D. McCALLUM, JR.
	Assistant Attorney General
	STUART E. SCHIFFER
Deputy Assistant Attorney General
	J. CHRISTOPHER KOHI'I
Director
	u~KJ-.
	SAND	P. SPOONER
	D.C. Bar No. 261495
	Deputy Director
	JOHN T. STEMPLEWICZ
	Senior Trial Attorney
	CYNTHIA L. ALEXANDER
OF COUNSEL:	Trial Attorney
Sabrina A. McCarthy	Commercial Litigation Branch
Department of the Interior	Civil Division
Office of the Solicitor	P.O. Box 875
	Ben Franklin Station
	Washington, D.C. 20044-0875
	(202) 514-7194
- 24 -
<< COB0000025 >>
CERTIFICATE OF SERVICE
I declare under penalty of perjury that, on March 1, 2002,1 served the foregoing
Department of the Interior's Response to The Fifth Report of The Court Monitor, by facsimile
only, in accordance with their written request of October 31, 2001, upon:
Keith Harper, Esq.	Dennis M Gingold, Esq.
Native American Rights Fund	Mark Brown, Esq.
1712 N Street, NW	1275 Pennsylvania Avenue, N.W.,
Washington, D.C. 20036-2976	Ninth Floor
202-822-0068	Washington, D.C. 20004
	202-318-2372
by facsimile, and by ordinary mail, upon:
Alan L. Balaran, Esq.
Special Master
1717 Pennsylvania Ave., N.W.
12th Floor
Washington, D.C. 20006
by U.S. Mail upon:
Elliott Levitas, Fsq.
1100 Peachtree Street, Suite 2800
Atlanta, GA 30309-4530
and by hand delivery upon:
Joseph S. Kieffer
Court Monitor
420 7th Street, NW
Apt 705
Washington, DC 20004
/4
f(evin P. K~in~gston