Cobell v. NortonCobell v. Norton
MEMORANDUM OPINION
This matter comes before the Court after a twenty-nine day bench trial to determine whether defendants Gale Norton, Secretary of the Interior, and Neal McCa-leb, Assistant Secretary of Interior for Indian Affairs, should be held in civil contempt of court. After carefully reviewing of all the evidence presented and representations made at trial, the record in this case, and the applicable law, the Court finds that these defendants are in civil contempt of court. The Court’s findings of fact and conclusions of law are detailed below.
I. INTRODUCTION
The Department of Interior’s administration of the Individual Indian Money (“HM”) trust has served as the gold standard for mismanagement by the federal government for more than a century. As the trustee-delegate of the United States, the Secretary of Interior does not know the precise number of IIM trust accounts that she is to administer and protect, how much money is or should be in the trust, or even the proper balance for each individual account. Because of the Secretary’s systemic failure as a trustee-delegate, the federal government regularly issues payments to benefieiaries-of their
own
money-in erroneous amounts. In fact, the Interi- or Department cannot provide an accurate accounting to the majority of the estimated 300,000 trust beneficiaries, despite a clear statutory mandate and the century-old obligation to do so. As the Court observed more than two years ago, “[i]t is fiscal and governmental irresponsibility in its purest form.”
Cobell v. Babbitt (“Cobell V”),
Equally troubling is the manner in which the Department of Interior has conducted itself during the course of this litigation. In February of 1999, the Court held Bruce Babbitt, then-Secretary of the Interior, and Kevin Gover, then-Assistant Secretary of Interior for Indian Affairs, in civil contempt for violating two of this Court’s discovery orders. Among other things, the Court found that almost immediately after proposing a clear and unambiguous order which the Court signed, “the defendants disobeyed that order and successfully covered up their disobedience through semantics and strained, unilateral, self-serving interpretations of their own duties.”
Cobell v. Babbitt (“Cobell IV”),
II. BACKGROUND
A. FACTUAL BACKGROUND 1
1. History
During the early 1800s, the United States’ policy towards Native Americans-which included entering into (and frequently violating) treaties as well as the use of force-led to the removal and relocation of many tribes from the East and Midwest to unsettled lands in the West. In the late 19th century, the United States’ policy of relocation was replaced with a policy of assimilation. Under this new policy, the federal government allotted land that had been set aside for tribes to individual tribe members instead. The policy of assimilation was designed “to extinguish tribal sovereignty, erase reservation boundaries, and force assimilation of Indians into society at large.”
Yakima v. Yakima Indian Nation,
The assimilationist policy, which began with individually negotiated treaties, became federal law when Congress passed the General Allotment Act of 1887, also known as the “Dawes Act.” Under the Dawes Act,
beneficial title of the allotted lands vested in the United States as trustee for individual Indians. The trust was to last for 25 years or more, at which point a fee patent would issue to the individual Indian allottee. During the trust period, individual accounts were to be set up for each Indian with a stake in the allotted lands, and the lands would be managed for the benefit of the individual allottees. Indians could not sell, lease, or otherwise burden their allotted lands without government approval. Where tribes resisted allotment, it could be imposed.
Cobell VI,
The United States’ policy of assimilation and its allotment of tribal lands ended with the enactment of the Indian Reorganization Act of 1934 (“IRA”). Although the IRA provided that unallotted surplus Indian lands would be returned to tribal ownership, the statute did not disturb lands already allotted to individual Indians, and actually extended the trust period for allotted lands indefinitely. Thus, under the IRA the federal government maintained
2. Federal IIM Trust Responsibilities
There is no question that as a result of the allotments made from 1887-1934 and the IRA’s indefinite extension of the trust period, the United States has assumed the fiduciary obligations of a trustee.
United States v. Mitchell ("Mitchell II"),
Within the Department of Interior, several agencies have' specific trust obligations. These agencies include, among others, Bureau of Indian Affairs (“BIA”), Office of Trust Fund Management (“OTFM”), and Office of the Special Trustee (“OST”). 3 BIA is primarily responsible for trust land management, including the approval of leases and land transfers, and income collection. The vast majority of transactions involving IIM trust lands must be approved by BIA. OTFM, in conjunction with the Treasury Department, deposits IIM land revenues, maintains the individual IIM accounts, and ensures that money is distributed to IIM account holders. OST, which was created in 1994, oversees the IIM trust reform efforts. 4
The Department of Interior and its su-bagencies have utterly failed to manage the IIM trust in a manner consistent with the fiduciary obligations of a trustee-delegate. The D.C. Circuit succinctly noted this failure in February of last year when it wrote that:
The federal government does not know the precise number of IIM trust accounts this it is to administer and protect. At present, the Interior Department’s system contains over 300,000 accounts covering an estimated 11 million acres, but the Department is unsure whether this is the proper number of accounts... [In fact,] [n]ot onlydoes the Interior Department not know the proper number of accounts, it does not know the proper balances for each IIM account, nor does Interi- or have sufficient records to determine the value of IIM accounts ... Current account reconciliation procedures are insufficient to ensure that existing account records, reported account balances, or payments to IIM beneficiaries are accurate... As a result, the government regularly issues payments to trust beneficiaries in erroneous amounts-from unreconciled accounts-some of which are known to have incorrect balances.
Cobell VI,
3. The Indian Trust Fund Management Reform Act
Concern over the Department of Interi- or’s management of the IIM trust is not a recent development. Since at least the mid-1980s there has been widespread disapproval of the manner in which the Department of Interior has administered the IIM trust. Time and again, however, Department officials pledged to address these concerns. Finally, in 1988, Congress began holding oversight hearings on the Interior Department’s management of the IIM trust. These hearings resulted in the issuance of a report in 1992, entitled Misplaced Trust: The Bureau of Indian Affairs’ Mismanagement of the Indian Trust Fund (“Misplaced Trust”), which harshly criticized the Department of Interior’s handling of the IIM trust accounts. Among other things, the report found “significant, habitual problems in BIA’s ability to fully and accurately account for trust fund moneys, to properly discharge its fiduciary responsibilities, and to prudently manage the trust funds.” Pis.’ Ex. 55 at 3.
As a result of the findings made in Misplaced Trust, Congress passed the Indian Trust Fund Management Reform Act in 1994 (“1994 Act”). The 1994 Act codified certain preexisting trust duties that the United States owes to the IIM beneficiaries. 5 In addition, the 1994 Act identified some of the Secretary of Interior’s duties to ensure “proper discharge of the trust responsibilities of the United States.” 25 U.S.C. § 162a(d). Moreover, because Congress recognized that the Interior Department’s pattern of historic failures could not be allowed to continue, the 1994 Act also created OST “to provide for more effective management of, and accountability for the proper discharge of, the Secretary’s trust responsibilities to Indian tribes and individual Indians[.]” 25 U.S.C. § 4041(1). OST is headed by the Special Trustee, a sub-cabinet level officer who reports directly to the Secretary of the Interior. Despite the “general oversight” duties of the Special Trustee, ultimate decision-making power over the IIM trust accounts remains with the Secretary of Interior. 25 U.S.C. § 4043(b)(1).
4. The High Level Implementation Plan
The 1994 Act requires the Special Trustee to develop a “comprehensive strategic plan” for trust management reform and an appropriate reform timetable to ensure “proper and efficient discharge of the Secretary’s trust responsibilities.” 25 U.S.C. § 4043(a)(1). In accordance with these obligations, the Special Trustee submitted a “strategic plan” to the Secretary of Interi- or and Congress in April of 1997. After reviewing the Special Trustee’s strategic plan, the Secretary of Interior issued his own plan in July of 1998, known as the High Level Implementation Plan
On March 1, 2000, the Department of Interior filed its Revised and Updated High Level Implementation Plan with the Court. Although the Revised HLIP was different than the original in many respects, for purposes of the instant matter it is sufficient to note that it maintained subprojects regarding BIA Data Cleanup and TAAMS. Since the Revised HLIP supplanted the original, it will be considered the HLIP for the remainder of this opinion.
fi. PROCEDURAL HISTORY
The plaintiffs filed the instant action against the Secretary of the Interior and other federal officials on June 10,1996, “to compel performance of trust obligations.” They alleged that the federal government’s trustee-delegates, including the Secretary of Interior, breached (and continue to be in breach of) their fiduciary duty to plaintiffs by mismanaging IIM trust accounts. On February 4, 1997, this Court certified the named plaintiffs under Federal Rule of Civil Procedure 23(b)(1)(A) and (b)(2) as class representatives for all present and former IIM account beneficiaries.
Cobell
I,
The Court denied the defendants’ motion to dismiss and their first motion for summary judgment on November 5, 1998. Specifically, the Court found that it had jurisdiction to adjudicate the plaintiffs’ claims since, pursuant to Section 702 of the Administrative Procedure Act, the government had waived its sovereign immunity.
Id.
at 30-42 (finding that “[t]he case law and legislative history with respect to § 702 clearly evince the federal government’s consent to suit in the present case.”).
6
At the same time, however, the Court granted the government’s motion to dismiss the plaintiffs’ claim for mandamus
On February 22, 1999, after a two-week bench trial, the Court found Bruce Babbitt, then-Secretary of the Interior, Robert Rubin, then-Secretary of the Treasury, and Kevin Gover, then-Assistant Secretary of Interior for Indian Affairs, in civil contempt for violating two of this Court’s discovery orders.
Cobell v. Babbitt (“Cobell II”),
On June 7, 1999, the Court denied another motion for summary judgment filed by the government.
Cobell v. Babbitt (“Cobell III”), 52
F.Supp.2d 11, 34 (D.D.C.1999). As an initial matter, the Court observed that “the controlling Supreme Court case law on point clearly provides [that] the establishment of this trust creates certain substantive rights in favor of its beneficiaries, the plaintiffs, and violations of these rights by actions taken or not taken by federal officials may be remedied by prospective relief.”
11
Id.
at
Having denied the government’s motion to dismiss and its motions for summary judgment, the Court held a six-week bench trial during the summer of 1999 to address the plaintiffs’ Phase I claims. The Court issued its Memorandum Opinion, which included extensive findings of fact and conclusions of law, on December 21, 1999. After determining that it had jurisdiction, the Court found that the federal government was in breach of certain fiduciary duties that it owed to plaintiffs. Specifically, the Court accepted a written stipulation filed by the defendants on the eve of trial in which they admitted that they were not in compliance with several obligations prescribed in the 1994 Act. In addition, the Court ruled, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Administrative Procedure Act, 5 U.S.C. §§ 702 & 706, that:
1.[The 1994 Act requires defendants to] provide plaintiffs an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs, without regard to when the funds were deposited.
2. [The 1994 Act requires defendants to] retrieve and retain all information concerning the IIM trust that is necessary to render an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs.
3. [Defendants owe plaintiffs, pursuant to the statutes and regulations governing the management of the IIM trust, the statutory trust duty to:
(a) establish written policies and procedures for collecting from outside sources missing information necessary to render an accurate accounting of the IIM trust;
(b) establish written policies and procedures for the retention of IIM-related trust documents necessary to render an accurate accounting of the IIM trust;
(c) establish written policies and procedures for computer and business systems architecture necessary to render an accurate accounting of the IIM trust; and
(d) establish written policies and procedures for the staffing of trust management functions necessary to render an accurate accounting of the IIM trust.
4. [D]efendant Lawrence Summers, Secretary of the Treasury, owes plaintiffs, pursuant to the statutes and regulations governing the management of the IIM trust, the statutory trust duty to retain IIM trust documents that are necessary to render an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs.
5. Defendants are currently in breach of the statutory trust duties declared in subparagraphs II(2)-(4).
6. Defendants have no written plans to bring- themselves into compliance with the duties declared in subparagraphs II(2)-(4).
7. Defendants must promptly come into compliance by establishing written policies and procedures not inconsistent with the court’s Memorandum Opinion that rectify the breaches of trust declared in subparagraphs II(2)-(4).
Cobell V,
The defendants appealed this Court’s decision, alleging that it improperly construed the nature and extent of the government’s fiduciary duties to the IIM trust beneficiaries. 14 After considering all of the arguments raised by the government, the D.C. Circuit affirmed this Court’s decision on February 23, 2001. Specifically, the D.C. Circuit found that:
The government’s broad duty to provide a complete historical accounting to IIM beneficiaries necessarily imposes substantial subsidiary duties on those gov-eminent officials with responsibility for ensuring that an accounting can and will take place. In particular, it imposes obligations on those who administer the IIM trust lands and funds to, among other things, maintain and complete existing records, recover missing records where possible, and develop plans and procedures sufficient to ensure that all aspects of the accounting process are carried out.
Cobell VI,
On the same day that the D.C. Circuit issued its Opinion affirming this Court’s order regarding the Phase I trial, Dominic Nessi (“Nessi”), then-Chief Information Officer for BIA and one of the principal witnesses for the Interior Department during the Phase I trial, sent a memorandum to the Special Trustee which stated, inter alia, “that trust reform is slowly, but surely imploding at this point in time.” See Pis.’ Ex. 2, Tab A at 1. In light of this memorandum, on April 16, 2001, the Court appointed-with the consent of the plaintiffs and the Interior defendants 15 -a Court Monitor to “monitor and review all of the Interior defendants’ trust reform activities and file written reports of his findings with the Court.” 16
The Court Monitor filed his First Report on July 11, 2001. The First Report addressed the DOI’s efforts towards conducting a historical accounting for the IIM trust beneficiaries. The Court Monitor found that “the status of the actual accounting, with few exceptions, was, for lack of a better term, at ground zero.” Pis.’ Ex. 1 at 2. The Court Monitor’s Second Report, filed on August 9, 2001, reviewed the DOFs actions regarding TAAMS. The Court Monitor concluded that the Quarterly Reports submitted by the DOI (beginning in March of 2000) did not accurately reflect the status of TAAMS. The Court Monitor’s Third Report, filed on September 17, 2001, addressed the HLIP’s BIA Data Cleanup subproject. The Court Monitor found that the DOI’s Quarterly Reports consistently failed to provide the Court with an accurate picture of BIA Data Cleanup. On October 16, 2001, the Court Monitor filed his Fourth Report. In the Fourth Report, the Court Monitor reviewed, among other things, the portion of the Interior Department’s Seventh Quarterly Report that addressed BIA Data Cleanup and TAAMS. The Court Monitor found that the Seventh Quarterly Report, like the first six, failed to describe accurately the status of the BIA Data Cleanup subproject or the TAAMS subproject.
On November _ 14, 2001, the Special Master submitted his Report and Recommendation Regarding the Security of Trust Data at the Department of Interior (“Report on IT Security”). In the Report on IT Security, the Special Master examined the trust data security systems of the Department of Interior. The security of these systems is critically important because they contain sensitive individual Indian trust information. After making extensive findings, the Special Master concluded that the Department of Interior “has demonstrated a pattern of neglect that has threatened, and continues to threaten, the integrity of trust data upon which Indian beneficiaries depend.” Pis.’ Ex. 15 at 153. In short, the Special Master found that the Department of Interior knew that its computer systems were insecure and did little to nothing about it. Id. at 141-53.
C. THE ORDER & SUPPLEMENTAL ORDER TO SHOW CAUSE
On November 28, 2001, the Court ordered Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of the Interior for Indian Affairs, to show cause why they should not be held in
1. Failing to comply with the Court’s Order of December 21, 1999, to initiate a Historical Accounting Project.
2. Committing a fraud on the Court by concealing the Department’s true actions regarding the Historical Accounting Project during the period from March 2000, until January 2001.
3. Committing a iraud on the Court by failing to disclose ‘the true status of the TAAMS project between September 1999 and December 21,1999.
4. Committing a fraud on the Court by filing false and misleading quarterly status reports starting in March 2000, regarding TAAMS and BIA Data Clean-up.
Cobell v. Norton,
5. Committing a fraud on the Court by making false and misleading representations starting in March, 2000, regarding computer security of IIM trust data.
Id. These five specifications formed the basis of the instant contempt trial. The Court will make findings of fact and conclusions of law relevant to each of these specifications below. Specifically, the Court will address the Department of Interior’s efforts to carry out a historical accounting project for the IIM trust accounts, which is relevant to the first two specifications; the Interior Department’s TAAMS and BIA Data Cleanup subpro-jects, which are relevant to the third and fourth specifications; and, finally, the defendants’ actions regarding IT security, which is relevant to the fifth specification.
Before turning to those issues, however, the Court must delineate the legal standards governing this proceeding. In this regard, the Court will provide the applicable law concerning civil contempt of court, fraud on the court, and courts’ inherent power to sanction litigation misconduct.
III. APPLICABLE LEGAL STANDARDS
A. CIVIL CONTEMPT
It is beyond peradventure that courts have the inherent authority to enforce their orders through the exercise of their contempt powers. Chambers v. NASCO, Inc.,
Two elements must be established before a party may be held in civil contempt for violating an order. Armstrong v. Executive Office of the President, 1 F.Sd 1274, 1289 (D.C.Cir.1993). First, the Court must have issued an order that is clear and reasonably specific. Id. at 1289; Project B.A.S.I.C. v. Kemp,
It is not necessary in civil contempt proceedings for the violation of the court order to be intentional or for the putative contemnor to have acted in bad faith.
18
McComb v. Jacksonville Paper Co.,
A declaratory judgment, by itself, cannot serve as the foundation for a finding of civil contempt. Armstrong,
even though a declaratory judgment has ‘the force and effect of a final judgment,’ 28 U.S.C. § 2201, it is a much milderform of relief than an injunction. Though it may be persuasive, it is not ultimately coercive; noncompliance with it may be inappropriate, but is not contempt.
Steffel v. Thompson,
The burden of proof in civil contempt proceedings rests on the moving party. Food Lion,
After the thoving party makes a prima fade showing of civil contempt-that is, demonstrates by clear and convincing evidence that the putative contemnor violated an unambiguous order-the party charged with contempt can still defend itself on the ground of "good faith substantial compliance" with the court order. Food Lion,
Courts have the power to impose both coercive and compensatory sanctions upon parties found in civil contempt. United States v. United Mine Workers,
The authority to respond to and punish fraud on the court is, like the contempt power, among a court's inherent powers. See, e.g., Universal Oil Products v. Root Refining Co.,
Courts appear to apply the same standard for determining if a party has committed a fraud on the court regardless of whether the misconduct is discovered before or after a final judgment has been entered. In both instances, the concept of fraud on the court "embraces that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases presented for adjudication.”
Transaero v. La Fuerza Area Boliviana,
tampering with the adof justice in the manner indisputably shown here involves far more than an injury to a single litigant. It- is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be to- lerated consistently with the good order of society. Id. at 246, 64
Id. at 246,S.Ct. 997. Similarly, in
Synanon Church v. United States,
the court found, before judgment had been entered in the case, that Synanon execu- tives and counsel had engaged in an exten- sive effort to destroy pertinent documents, to destroy pertinent documents,
The relief ordered based upon a finding of fraud on the court has consistently been both swift and severe. In cases where the fraud is unearthed prior to the entry of final judgment, courts almost always dismiss the case (if the plaintiff was the party that perpetrated the fraud) or enter a default judgment (if the defendant committed the fraud).
See, e.g., Aoude,
Because the sanctions imposed on the defrauding party are so severe, courts require the fraud to be proven-like civil contempt-by clear and convincing evidence.
Aoude,
In light of the severe sanctions and policy interests involved in determining that a party has committed a "fraud on the court," courts also require "a showing that one has acted with an intent to deceive or defraud the court." United States v. Buck,
To the extent the Court has framed four of the five specifications in terms of fraud on the court, it is important to note that the commission of a fraud on the court can form the basis for a finding of contempt. Cf. Pendergast v. United States,
C. POWER TO SANCTION LITIGATION MISCONDUCT
In addition to the powers discussed above, this Court undoubtedly has the inherent authority to address all types of party (and attorney) misconduct.
22
Shepherd,
District courts have "considerable discretion" in sanctioning party misconduct. Perkinson v. Gilbert/Robinson, Inc.,
IV. FINDINGS OF FACT
Upon consideration of all the evidence presented and representations made at trial, and in accordance with Federal Rule of Civil Procedure 52(a), the Court finds the following facts established by clear and convincing evidence.
See, e.g., Cifra
v.
As noted above, first the Court will address the Department of Interior’s effort to carry out a historical accounting project, which is relevant to Specifications 1 and 2. Next, the Court will address the Interior Department’s TAAMS and BIA Data Cleanup subprojects, which are relevant to Specifications 3 and 4. Finally, the Court will address IT security, which is relevant to Specification 5.
A. HISTORICAL ACCOUNTING PROJECT-SPECIFICATIONS 1 & 2
The Court has organized its findings of fact pertinent to Specifications 1 and 2 chronologically. To put the findings of fact relevant to these specifications in context, however, the Court will briefly discuss its earlier rulings regarding the historical accounting project and describe the circumstances surrounding the Department’s decision to publish a notice in the Federal Register.
1. Prior Decisions by this Couri Regarding the Historical Accounting (1998-1999)
The Court bifurcated this case on May 5, 1998. Specifically, the Court ordered that “to the greatest extent feasible, this case shall be divided between that aspect which seeks to institute new trust management practices, often referred to as ‘fixing the system,’ and that aspect which seeks to obtain an accounting or approximation thereof and to correct the accounts of the members of the plaintiff class, often referred to as ‘correcting the accounts.’ ” Order of May 5, 1998 at 2.
See also Cobell III,
Everyone understands that the second phase of this case will involve a trial regarding defendants’ rendition of an accounting. In general terms, that process will involve the government bringing forward its proof on IIM trust balances and then plaintiffs making exceptions to that proof. The government mistakenly assumes, however, that because ‘trial two’ involves the actual accounting then the scope of the required accounting-even at its most basic level-is a matter that need not be addressed today. On this point, the government is incorrect. The government alludes to the argument that theTrust Fund Management Reform Act does not require a ‘historical’ accounting. This argument necessarily brings the issue of whether the Act requires an accounting of all IIM trust money within the scope of today’s decision. Simply put, the Court cannot declare defendants’ duties and assess whether defendants are in compliance with these duties without establishing the funds to which the duties apply. The disposition of this narrow (but threshold) issue leaves all other accounting issues as matters for the second component of this litigation.
Id. at 31-32 (internal citations omitted).
In deciding whether “the Trust Fund Management Reform Act imposes on the United States, and,
a fortiori,
its trustee delegates, the duty to render a ‘historical’ accounting,”
see Cobell V,
The Court issued its decision regarding the Phase I trial on December 21, 1999.
Cobell V,
2. The Interior Department’s Actions From December 1999 Until January mi 24
Despite the fact that this Court certified its order regarding the Phase I trial for interlocutory appeal, the Justice Department — which manages this litigation on behalf of the federal government — informed the Department of Interior that it would not appeal the order unless Interior began “an administrative process towards a historical accounting.” Contempt II Tr. at
A. I wanted to point out that there had been conversation and it was my sense that a large measure of the Federal Register process was in order to respond to the solicitor general’s requirement for an administrative process towards a historical accounting.
It was my sense that a good portion of what we were doing was to deal with that request, demand if you will, from the Solicitor General’s Office.
Q. Now, why is it your understanding that the solicitor general made a request that this action had to be taken to support the appeal?
A. In conversations, it was stated specifically that the appeal — that the Federal Register notice was the, quote/unquote, price of the appeal, that without some specific action in hand, the appeal would not go forward, would not be argued.
Contempt II Tr. at 697-98. See also Contempt II Tr. at 46 (“I [Thompson] sensed that the primary purpose of the Federal Register notice was more likely to be in order to meet the price of the appeal by the Solicitor General who had to argue the case or present the case to the Appeals Court.”). Thus, the Department of Interi- or decided to publish a notice in the Federal Register so that it could appeal this Court’s Phase I trial ruling.
Having agreed to comply with the Justice Department’s condition for appeal, the Department of Interior petitioned the D.C. Circuit for permission to appeal this Court’s order regarding the Phase I trial in January of 2000.
26
The Interior Department (in its corrected petition) argued that this Court did not have jurisdiction to “initially define the scope of the agency’s action, or to hold a trial to resolve the accounting issue itself.” Corrected Petition For Permission to Appeal at 12. Rather, the Department contended that “[t]he complex question of how best to achieve an accounting or reconciliation of IIM accounts has been left by Congress to Interi- or to determine in the first instance.”
Id.
In support of this argument, the Interior Department stated that it will “implement a process under the APA to meet its remaining obligations regarding reconciliation and accounting,” and that “[tjhat pro
On March 1, 2000, the defendants filed a motion with this Court for an order finding that counsel for the Department of Interi- or would not violate any rules of professional conduct (including the rules concerning attorney contact with represented parties) by providing advice and assistance to the Department regarding the notice in the Federal Register. Motion For Entry of an Order at 1. In the motion, the Interi- or Department told the Court that it “has prepared a proposed notice for publication in the Federal Register ... [which] outlines an administrative process for fulfilling DOI’s statutory obligations and seeks comment, through a public process, from IIM account holders and the general public.” Id. at 2. The Interior Department stated that it was initiating this administrative process “to determine the most reasonable methods for providing account holders with information to evaluate their accounts and to determine whether there are discrepancies due to past management practices.” Id. at 6-7. The Department of Interior further noted that it drafted the proposed notice with the advice and assistance of counsel in the Solicitor’s Office. Id. at 4. In support of its motion, the Department of Interior attached the corrected petition for permission to appeal referenced above (as Exhibit 1) and a copy of the proposed notice (as Exhibit 2).
The plaintiffs filed their response to the Department of Interior’s motion on March 20, 2000. In their opposition, the plaintiffs argued that the notice in the Federal Register was “nothing more than a desperate attempt to end-run this Court, and should not be countenanced.” Pis.’ Opp’n at 4. Specifically, the plaintiffs argued that the notice in the Federal Register was devised to delay the historical accounting “for five years or more[,]” and to support the defendants’ recently filed appeal. Id. at 1-4.
The Department of Interior filed a reply brief in support of the motion on March 24, 2000. In its reply brief, the Interior Department argued that contrary to the insinuations of the plaintiffs, the meetings regarding the notice in the Federal Register were not meant to circumvent ethical rules against attorney contact with represented parties, and, in fact, were being held “in accordance with this Court’s findings that Defendants have a duty to account to IIM beneficiaries.” Defs.’ Reply at 7.
On March 28, 2000, the Court — relying upon the representations made by the Department of Interior — granted the defendants’ motion for the entry of an order regarding a public administrative process.
27
In particular, the Court found that the communications contained in and con
Having received approval from the Court, the Department of Interior published its notice in the Federal Register on April 3, 2000. Pis.’ Ex. 1, Tab 14. Consistent with the representations made to this Court and the D.C. Circuit, the Interior Department stated in the summary section that “[t]his notice initiates an information gathering process with IIM account beneficiaries, and the public, to comply with Congressional directives to determine the most reasonable methods for providing ac-countholders with information to evaluate their accounts and to determine whether there are discrepancies due to past management practices.” Pis.’ Ex. 1, Tab 14 at 17521. The notice presented respondents several accounting options to consider, including transaction-by-transaction, limited reconciliation, statistical sampling, analysis of current account data, and payment formula. 28 The Interior Department told the respondents that although it “intends to consider the widest possible range of options for meeting the goals stated above, [it] will be guided by a number of factors in evaluating the reasonableness of each option[,]” including cost, time, feasibility, and finality. Pis.’ Ex. 1, Tab 14 at 17525-26. Notwithstanding the fact that publication of the notice in the Federal Register was delayed by over a month, the public meetings (which were scheduled between April 24 and May 9, 2000) were not postponed. Pis.’ Ex. 1, Tab 14 at 17521-22. The Office of American Indian Trust (“OAIT”) was the agency responsible for conducting the meetings, and Jim Pace was the primary project officer from OAIT in charge of oversight. The notice also provided that written comments would be collected until June 30, 2000. Pis.’ Ex. 1, Tab 14 at 17521.
The Department of Interior filed • its opening brief with the D.C. Circuit on May 24, 2000.
29
In the brief, the Interior Department once again argued that it — rather than the Court — should have the opportunity in the first instance to define the parameter of any historical accounting pro
Despite the fact that it was still receiving written comments in response to the' Federal Register notice and compiling observations from the public meetings, the Department of Interior began seeking funding for a statistical sampling project in the summer of 2000.
30
On June 16, 2000,
By late July of 2000, the Solicitor’s Office became concerned that the Department was taking too long to decide officially how it was going to perform the historical accounting of the IIM trust accounts. Several months had passed since the Department published its notice in the Federal Register, and oral argument before the D.C. Circuit was scheduled for September 5, 2000. Contempt II Tr. at 388 (“because there had not been a decision, there hadn’t been much movement in recent months on the Federal Register notice, it was necessary in the minds of some to show some movement that could be offered to the appeals court with regard to the Federal Register notice.”). Accordingly, on August 2, 2000, Anne Shields, Chief of Staff for then-Seeretary Babbitt, chaired a meeting with certain senior Interior officials — including attorneys from the Solicitor’s Office — to discuss the historical accounting project. Contempt II Tr. at 2742-43; Contempt II Tr. at 388; Contempt II Tr. at 688.
The participants did not know prior to the meeting that they were going to discuss how the historical accounting should actually be performed. Rather, some officials, such as the Assistant Secretary for Budget and Finance, thought that the
Notwithstanding this uncertainty, the participants began discussing statistical sampling as the preferred method for performing the historical accounting soon after the meeting started. Contempt II Tr. at 419-20. In fact, the Office of the Special Trustee did not even have the opportunity to make its presentation regarding how the Department should go about deciding which approach to employ before the attendees began discussing using the statistical sampling method to perform the historical accounting. Contempt II Tr. at 75-76 (“We never got to that agenda item in the meeting ... as it turned pretty quickly to a discussion about statistical sampling and who would do it.”); Contempt II Tr. at 580 (same). Although there was some discussion of the other approaches identified in the Federal Register (including transaction-by-transaction), these methods were in effect summarily rejected. Contempt II Tr. at 453-54 (Principal Special Deputy Trustee agreeing that “[t]here was no sentiment for th[e] [transaction-by-transaction] method of accounting and the participants rejected it out of hand at the meeting.”). See also Contempt II Tr. at 432-33 (“[t]here was discussion in the meeting about other concerns and other issues on historical accounting, but the majority of the discussion and obviously the result of the discussion was selection of statistical sampling.”).
The Chief of Staff decided, with the approval of those attending the meeting (including the attorneys from the Solicitor’s Office), that the Department would utilize the statistical sampling method to perform the historical accounting of the IIM trust accounts. Contempt II Tr. at 432 (“There was clearly a decision in that meeting that statistical sampling would be the approach taken.”); Contempt II Tr. at 433 ■ (“Anne Shields was the senior person there and she [made the decision] based on a consensus or unanimous views of the people at the meeting.”). The Chief of Staff also decided that the Office of the Special Trustee would be in charge of the statistical sampling project. Contempt II Tr. at 434; Contempt II Tr. at 2753-54. In choosing a specific method to perform the historical accounting at the August 2, 2000 meeting, the participants explicitly discussed what they could do to support the appeal pending with the D.C. Circuit. Contempt II Tr. at 388.
32
Several officials thought that selecting a particular method to perform the historical accounting would
The Department of Interior did not research the merits of the statistical sampling approach before selecting it on August 2, 2000, see Contempt II Tr at 577-78, or the costs and benefits of the transaction-by-transaction method before summarily rejecting it at the August 2, 2000 meeting, see Contempt II Tr. at 281. Contempt II Tr. at 581. As the Special Trustee, Thomas Slonaker, testified during the contempt trial:
Q. The next conclusion of the Court Monitor is as follows: “The Interior Secretary’s decision was not supported by any legitimate decisionmaking process or research effort to determine the method to conduct an historical accounting.”
Do you agree with that?
A. Yes.
Q. Why do you agree with that?
A. On its face, there is no particular logical step to what was done.
Q. There was no logical step at the time the Federal Register Notice process occurred; is that a fair statement?
A. Yes.
Q. And is there any now?
A. To go to a statistical sampling?
Q. Correct.
A. I don’t believe so.
Q. You’ve never seen any research to support it, have you?
A. No.
Contempt II Tr. at 2190-91. In fact, the only action taken by the Department to determine how to perform the historical accounting was placing a notice in the Federal Register. 33 Contempt II Tr. at 289. Indeed, as explained above in footnote 31, during the summer of 2000 the Department of Interior considered (but ultimately decided against) joining a pilot study by the Justice Department which would have evaluated the potential use of the statistical sampling method to perform the historical accounting. Pis.’ Ex. 1, Tab 10; Tab 11. In a memorandum to Justice Department attorneys dated July 24, 2000, Robert Lamb, Deputy Assistant Secretary of Interior for Budget and Finance, wrote that the Department “obviously will learn about the strengths and weaknesses of the sampling methodology through the pilot process.” Pis.’ Ex. 1, Tab 11 (stating further that “[t]hat after all is the purpose of a pilot.”). 34 The pilot project became moot nine days later, however, when the Interi- or Department selected the statistical sampling method to perform the historical accounting. Contempt II Tr. at 280-81.
The Department of Interior also had not compiled or evaluated the results of the Federal Register process before deciding to use the statistical sampling approach to perform the historical accounting. Pis.’ Ex. 1, Tab 15. Indeed, as Deputy Assistant Secretary Lamb noted in the July 24,
the comments from the Federal Register process was just beginning and what I was trying to say there is that I am not deciding — I don’t know how ultimately we are going to do an historical accounting. We’ve got a Federal Register process, the one you and I have been talking about, that was wrapping up. We would have those results in, you know, in due course, we’re keeping an open mind, we’re not prejudging — I wasn’t prejudging the results.
Contempt II Tr. at 2740.
At the same time, however, the Department of Interior knew even before publishing the notice in the Federal Register that the Indian beneficiaries would want a full transaction-by-transaction accounting of their assets held in trust by the federal government. See, e.g., Contempt II Tr.at 72 (“For 15 years, we had heard from the Indians about their preference for a transaction by transaction accounting of their monies .... ”); Contempt II Tr. at 246 (The Federal Register process “was preordained in the sense that I [Thompson] knew the answer from the beneficiaries, that they would ask for a transaction by transaction analysis.”). Many senior officials at the Interior Department (including some attending the meeting) also knew, as of August 2, 2000, that the vast majority of the comments to the notice in the Federal Register favored the transaction-by-transaction approach. Contempt II Tr. at 290-91 (“it was generally known that the results across the board from the senior managers was that the — that the beneficiaries were asking for a transaction-by-transaction accounting.”).
Consequently, the Interior officials at the August 2, 2000 meeting recognized that the Department would have to explain why it selected the statistical sampling method to perform the historical accounting of the IIM trust accounts instead of the transaction-by-transaction approach. Contempt II Tr. at 284 (Principal Deputy Special Trustee, testifying that “[i]n the session I cautioned that you’ve got the Federal Register notice which didn’t lead you into this path. You’re going to have to reconcile that issue[.]”); Contempt II Tr. at 436 (recognizing that it was not going “to be acceptable to abandon the [Federal Register] process and leap strictly into statistical sampling without some explanation of why that decision was taken.”). The participants at the meeting discussed who would be in charge of writing a memorandum explaining the basis for the Department’s decision. Contempt II Tr. at 435. The Interior officials present at the meeting selected Kevin Gover, then-Assistant Secretary of Interior for Indian Affairs, to draft a memorandum that provided the reasons why the Department rejected the transaction-by-transaction approach in favor of the statistical sampling method. Contempt II Tr. at 435-36. In addition, the Special Trustee agreed to write a separate memorandum outlining the statistical sampling approach that the Department planned to use to perform the historical accounting. Contempt II Tr. at 435. Both of these memoranda were to be submitted to Secretary Babbitt since he had final decision making authority over the method that the Department of Interi- or would use to perform the historical accounting of the IIM trust accounts. Thomas Thompson, the Principal Deputy Special Trustee, agreed to draft a memorandum for Secretary Babbitt’s signature officially adopting statistical sampling as the approach that the Department would
On August 11, 2000, Jim Pace, the primary project officer from OAIT, drafted a memorandum on behalf of then-Assistant Secretary Gover summarizing the results of the Federal Register process. Pis.’ Ex. 1, Tab 15. 35 Pace began the memorandum by reiterating that Interior published the notice in the Federal Register “to initiate an information gathering process with IIM account holders” to determine how the Department should perform the historical accounting of the IIM trust accounts. Pis.’ Ex. 1, Tab 15 at 2. Pace then noted that more than one thousand individuals attended the public meetings (sixty percent of whom identified themselves as IIM account holders), and that most of the participants provided their comments orally. Pis.’ Ex. 1, Tab 15 at 3. He also observed that in addition to the seven written comments submitted at the public meetings, the Department received one-hundred- and-forty-six written comments by mail. Pis.’ Ex. 1, Tab 15 at 3. In summarizing the comments to the notice, Pace found that:
eighty-one of the respondents who wrote in, and an overwhelming majority of those who voiced their preferences at the public meetings wanted to see a transaction-by-transaction reconciliation, in spite of the discouraging language contained in the Federal Register Notice stating that such a solution was not very likely since Congress had already dismissed such a solution.
Pis.’ Ex. 1, Tab 15 at 3. The memorandum did not address the Department’s decision to use the statistical sampling method to perform the historical accounting. That is, Pace did not attempt to explain why the Department selected the statistical sampling method instead of the transaction-by-transaction approach.
On August 23, 2000, an attorney in the Solicitor’s Office named Edith Blackwell redrafted the memorandum that Pace had prepared summarizing the results of the Federal Register process. 36 Pis.’ Ex. 1, Tab 16. Blackwell redrafted the memorandum so that it would support the decision (made on August 2, 2000) to use the statistical sampling method. Contempt II Tr. at 290; Contempt II Tr. at 452-53. In revising the memorandum, Blackwell stated that she “tried to create a decisional document which provides the rationale] for the decision” to employ the statistical sampling method instead of the transaction-by-transaction approach. Pis.’ Ex. 1, Tab 16 at 1. In rejecting the latter approach, Blackwell wrote that:
the question of a historical accounting has been reviewed by Department staff, Congress, and outside third parties. A transaction-by-transaction accounting would cost hundreds of millions of dollars and take many years to complete. To accomplish this task would require the Department to significantly increase BIA staff and Congress to double BIA’s current appropriation. Based on informal discussions we do not believe that Congress is willing to fund a transaction-by-transaction reconciliation. Given the critical unmet educational, infrastructure and economic needs of Indian people, we believe that funding a transaction-by-transaction analysis is not appropriate.
We believe that [by] using statistical sampling we can perform a transaction-by-transaction analysis on a statistically significant portion of the total number of accounts. With a high degree of confidence we believe we can extrapolate to all account holders an error rate. We believe that this approach is best given the massive number of records, the complexity, and the condition of the records. We also note that GAO and Congress have suggested sampling.
Pis.’ Ex. 1, Tab 16 at 4. Blackwell went on to describe the manner in which the Department planned on carrying out the statistical sampling project. Pis.’ Ex. 1, Tab 16 at 4. Upon completion of her revised draft, Blackwell distributed the memorandum (via e-mail) to other attorneys in the Solicitor’s Office and to certain senior Interior officials to review. Pis.’ Ex. 1, Tab 16. Despite these substantial revisions, it is impprtant to note that then-Assistant Secretary Gover did not finalize his memorandum for then-Seeretary Babbitt until December 21, 2000. Pis.’ Ex. 1, Tab 3.
In the interim, on September 5, 2000, the D.C. Circuit heard oral argument regarding the Department’s interlocutory appeal. At the hearing, the Interior Department claimed-as it had in its corrected petition for permission to appeal and in its appellate briefs-that it was in the process of discharging properly its fiduciary obligations towards the Indian trust beneficiaries. Pis.’ Ex. 1, Tab 19. Specifically, with respect to the historical accounting (or reconciliation), the Department noted that it commenced an administrative process in April of 2000 by publishing a notice in the Federal Register. Pis.’ Ex. 1, Tab 19. In accordance with this representation, the Department argued that “Congress expected th[e] reconciliation process to be done administratively,” and that “it’s not something which can be done initially in court.” Pis.’ Ex. 1, Tab 19. 37 Thus, the Department argued, as it had previously, that this Court did not have jurisdiction to determine the scope of the historical accounting of the IIM trust accounts before the agency itself had decided how and to what extent it was going to do so. 38
In December of 2000, then-Assistant Secretary Gover, Special Trustee Slonaker, and Principal Deputy Special Trustee Thompson completed their memoranda re
Tim and I are not O.K. with the memo [written by the Principal Deputy Special Trustee] for the Secretary’s signature. In addition, Tom [Slonaker] your memo discusses the lack of funding but Congress gave us money for this project this year. Among other things, the letter for the Secretary’s signature states that the Secretary accepts the Special Trustee’s conditions, one of them being funding. I believe that this and other problems with the Secretary’s memo must be fixed and would advise the Special Trustee to update his letter to note that funding has been received.
Pis.’ Ex. 1, Tab 18. Shortly after Blackwell sent her response, Elliot showed his displeasure by writing that:
I agree with Edith’s comments. My earlier comments went only to the question asked (Kevin’s Memo). Edith, have you taken a stab at re-drafting the memorandum for the Secretary. If not, we probably should. I am particularly concerned that it does not mention the memorandum from Kevin, whose memo is the only one to explain why we are not following the majority of the comments received.
Pis.’ Ex. 1, Tab 18.
On December 21, 2000, after these revisions were made, the Assistant Secretary for Indian Affairs, the Special Trustee, and the Principal Deputy Special Trustee submitted their respective memoranda to then-Seeretary Babbitt. Pis.’ Ex. 1, Tab 3. Then-Assistant Secretary Gover included in his final draft the paragraph written by Blackwell which stated that:
Department staff, Congress, and outside third-parties have all reviewed the question of how to perform a historical accounting. Each agrees that a complete transaction-by-transaction accounting for every account would cost hundreds of millions of dollars and take many years to complete. Moreover, to accomplish this task would require the Department to significantly increase its BIA staff and would require Congress to double BIA’s current appropriation.
Pis.’ Ex. 1, Tab 3. He went on to note that Congress observed in the Conference Report accompanying the Department’s FY 2001 Appropriation that using the transaction-by-transaction approach to perform the historical accounting could cost hundreds of millions of dollars, and that “the managers have been concerned for years about the potential cost and effectiveness of any approach that might be used.” Pis.’ Ex. 1, Tab 3. Additionally, then-Assistant Secretary Gover justified using the decision to employ the statistical sampling method by writing that:
With the administrative process complete and with the above direction fromCongress, it is now up to the Department to decide on a course of action. Although the majority of comments received from the Federal Register notice preferred a complete transaction-by-transaction reconciliation, Congress has made it clear in the above language that they are unlikely to fund such a process. Furthermore, I must take into consideration the critical unmet educational, infrastructure and economic needs of Indian people in allocating the limited appropriations available to the BIA. I believe that through statistical sampling, we can perform a transaction-by-transaction analysis on a statistically significant portion of the total number of accounts. This approach is best, given the massive number of records, the complexity, and the condition of the records. Therefore, taking into consideration the entire Federal Register process, Congress’ directive and the other critical needs of the Department, I believe that a sampling approach represents the best alternative to meeting our goals under the 1994 American Indian Trust Fund Management Reform Act.
Pis.’ Ex. 1, Tab 3. In his memorandum, on the other hand, the Special Trustee outlined the process the Department would follow in carrying out the statistical sampling project. Pis.’ Ex. 1, Tab 3. It is worth noting that the scope of the statistical sampling project was limited to 1952-1993. Pis.’Ex. 1, Tab 3.
On December 29, 2000, then-Secretary Babbitt officially selected the statistical sampling method to perform the historical accounting of the IIM trust accounts. Pis.’ Ex. 1, Tab 4. In a one-page memorandum, then-Secretary Babbitt wrote that:
I have reviewed the attached memoran-da from the Special Trustee for American Indians and the Assistant Secretary-Indian Affairs. I concur with the recommendation of each that the Department should use statistical sampling instead of attempting a transaction-by-transaction historical reconciliation of all IIM accounts.
Pis.’ Ex. 1, Tab 4. Then-Secretary Babbitt went on to note that Congress had already appropriated approximately ten million dollars for a statistical sampling project-money that had been requested months earlier. Pis.’ Ex. 1, Tab 4. He also wrote in the memorandum that:
the Department ... believe[s] that. [it] must examine past account activity to discover information that will enable beneficiaries and the Department to evaluate whether income from individual trust assets was properly credited, maintained, and distributed to and from IIM accounts before October 25, 1994. As part of this process, the Department is exploring approaches to gather such information so as to fairly compensate beneficiaries and finally resolve any discrepancies.
Pis.’ Ex. 1, Tab 4 (emphasis added). Then-Secretary Babbitt concluded the memorandum by writing that “I have asked the Special Trustee to plan, organize, direct, and carry-out th[e statistical sampling project] including developing the detailed plan required by Congress in the Conference Report.” Pis.’ Ex. 1, Tab 4.
On January 8, 2001, the Department of Interior filed then-Secretary Babbitt’s de-cisional memorandum as well as the Assistant Secretary for Indian Affairs’ and the Special Trustee’s memoranda with the D.C. Circuit. Pis.’ Ex. 24. In the transmittal letter, the Department told the D.C. Circuit that, “[a]s indicated in these supporting memoranda, the Secretary’s decision flows out of the Federal Register process discussed in the Opening Brief for Appellants at 17, 60, and in the Appel-lees’ Response Brief at 33-34.” Pis.’ Ex. 24. The next day, the Department of In
In late January of 2001, Gale Norton replaced Bruce Babbitt as Secretary of the Interior. Contempt II Tr. at 4279.
3. The- Department of Interior’s Actions From February 2001-Febru-ary 2002
On February 27, 2001, Secretary Norton “opted to follow” former-Seeretary Babbitt’s decision to use the statistical sampling method to perform a historical accounting. Pis.’ Ex. 1, Tab 21; Tab 23. 40 Specifically, Secretary Norton issued a one-page memorandum entitled “Statistical Sampling of Individual Indian Money Accounts.” Pis.’ Ex. 1, Tab 21. After referencing the memoranda from Secretary Babbitt dated December 29, 2000, the Special Trustee for American Indians dated December 21, 2000, and the Assistant Secretary for Indian Affairs dated December 21, 2000, Secretary Norton wrote that:
I concur in the directive that the Department proceed with a form of statistical sampling using a methodology which will provide the basis for an historical accounting of the IIM accounts. The purpose for this process should be to fulfill the court’s directive to provide the IIM trust beneficiaries an accounting for their funds held in trust by the United States since the Act of June 24, 1938.
Pis.’ Ex. 1, Tab 21. Like former-Seeretary Babbitt, Secretary Norton also assigned the task of planning, organizing, and performing the statistical sampling project to the Special Trustee. Pis.’ Ex. 1, Tab 21.
The Department of Interior did not perform any additional research regarding the different accounting methods prior to Secretary Norton’s decision on February 27, 2001. Contempt II Tr. at 507-508; Contempt II Tr. at 4387. In fact, Secretary Norton did not even consider the other approaches listed in the Federal Register before affirming former-Seeretary Babbitt’s decision to use the statistical sampling method. Contempt II Tr. at 4387-88. As Secretary Norton testified during the contempt trial:
I didn’t really understand that memo as making a choice on the various models of accounting. I — the model that I knew of was statistical sampling. I look[ed] at the Court of Appeals decision. It said statistical sampling was something that the Department of Interior could choose, and so without realizing that that might be viewed as contrary to anything that this Court had said, we — I basically signed it and said get busy, go ahead and start moving on this activity and assigned to the Special Trustee fhe responsibility to move forward with that.
Contempt II Tr. at 4338.
As of March 2001, the Department of Interior had not yet begun collecting missing information from outside sources that would help it render a historical accounting of the IIM trust accounts.
41
Contempt
The overarching consideration was the appeal and the expectation that [this Court’s] order would be overturned. That figured into a lot of this discussion and a lot of this work. In preparing this report we first tried to focus the effort toward an accounting, what it took to do an accounting, but we were not allowed to really use the term accounting as we understood it in conjunction with this effort.
The earlier drafts of this report look radically different than what you see in the published report. The attorneys in this ease were arguing that we did not have a statutory duty to do an accounting before 1994, and were arguing that through the litigation process.
Contempt II Tr. at 766-67. See also Contempt II Tr. at 794 (“The basic argument was that there was not an obligation to perform an accounting before 1994. That was going to be appealed and it was going to be won.”).
Moreover, the Department failed to inform the Court that it was not going to attempt to locate pertinent documents produced prior to 1994. For example, in its Report on Collecting Information From Outside Sources, Interior stated that:
Although th[is] [Court’s Phase I trial] Order did not define the period to be covered by the directed accounting, the question of the scope and nature of Department’s responsibility to render an accounting prior to October 25, 1994, the effective date of the Indian Trust Fund Management Reform Act, is under appeal. Therefore, this document details the proposed strategies for collecting missing information to meet Interior’s statutory obligation.
Pis.’ Ex. 7 (Report on Collecting Informa,tion From Outside Sources) at 2. In addition, the Quarterly Reports submitted by the Department beginning in March of 2000 included similarly vague statements regarding the scope of the document collection project. See, e.g., Pis.’ Ex. 9 at 37. 43 Attorneys in the Solicitor’s Office also played a significant role in determining the language used in these reports. See, e.g., Contempt II Tr. at 766-67.
The Court appointed a Court Monitor in this case on April 16, 2001. The Court Monitor was directed to “monitor and review all of the Interior defendants’ trust
By memorandum dated July 10, 2001, Secretary Norton announced that the Department of Interior was going to reconsider which accounting method it should use to perform the historical accounting of the IIM trust accounts. Pis.’ Ex. 1, Tab 25. See also Contempt II Tr. at 336-342; Contempt II Tr. at 496 (“It would seem to me that the first memorandum, to coin a phrase, was no longer operative.”). That is, as of July 10, 2001, the Department of Interior did not know which method or methods it was going to use to perform a historical accounting of the IIM trust accounts. Rather, as Secretary Norton indicated in her memorandum, the Department was going to begin the process of selecting an accounting method anew. Pis.’ Ex. 1, Tab 25. Specifically, after recognizing that “an accounting to the IIM beneficiaries is long overdue!,]” Secretary Norton wrote that:
The next step in this process is to develop a comprehensive plan for the historical accounting. Although myriad accounting approaches may be employed in some form and to some degree in this endeavor, it is imperative that the Department’s approach satisfies our obligation to account and that the methods used to meet that goal meet appropriate fiduciary standards.
Pis.’ Ex. 1, Tab 25. To facilitate the decision-making process and the development of a comprehensive plan, Secretary Norton established (by issuing a Secretarial Order on the same date) the Office of Historical Trust Accounting (“OHTA”). Pis.’ Ex. 1, Tab 25. Secretary Norton explained in her memorandum that she was creating OHTA “to insure that [the Department] begin[s] this comprehensive planning process promptly but at the same time ha[s] the necessary information for due deliberation!.]” Pis.’ Ex. 1, Tab 25. In particular, Secretarial Order 3231 instructed OHTA “to plan, organize direct, and execute the historical accounting of Individual Indian Money Trust (IIM) accounts.” Pis.’ Ex. 1, Tab 25. Moreover, Secretarial Order 3231 directed OHTA to, within 60 days, “prepare a comprehensive description and timetable for completion of all steps that are needed to staff and develop a comprehensive plan for a historical accounting that meets the Department’s fiduciary obligations to IIM beneficiaries.” Pis.’ Ex. 1, Tab 25. Secretarial Order 3231 also directed OHTA to, within 120 days, “identify the preliminary work that can be done immediately.” Pis.’ Ex. 1, Tab 25.
On September 10, 2001, OHTA issued its Blueprint for Preparing the Comprehen
On November 7, 2001, OHTA issued its Report Identifying Preliminary Work for the Historical Accounting. Pis.’ Ex. 31. 45 In the Report, OHTA identified certain work that had begun already or would begin shortly to support the Department’s effort to perform a historical accounting of the IIM trust accounts. Pis.’ Ex. 31. In particular, OHTA stated that “[t]he projects described in the Report will assist development of the Comprehensive Plan in a number of ways while actually accomplishing part of the historical accounting for certain IIM accounts.” Pis.’ Ex. 31 (transmittal letter). Thus, for example, in describing its activities regarding Judgment and Per Capita Accounts, OHTA stated that a contractor to OST began (and completed) a pilot test in June of 2001 to reconcile ten Judgment accounts and five Per Capita transactions. 46 Pis.’ Ex. 31 at 14. At the same time, however, OHTA reiterated that it did not anticipate completing the Comprehensive Plan until the middle of 2002. Pis.’ Ex. 31 (transmittal letter).
On November 14, 2001, the Department of Interior filed with the Court its notice of proposed reorganization to improve Indian Trust Assets Management. Pis.’ Ex. 104. In the notice, the Department stated that “[t]he proposed reorganization results from concerted efforts by Interior to create a management structure that can effectively implement trust reform and eliminate problems identified by the Court, the Court Monitor, Interior, and Interior’s consultant, Electronic Data Systems Corporation (“EDS”).” Pis.’ Ex. 104 at (unnumbered) 1. In particular, the Department indicated that:
[t]he proposed reorganization consolidates Indian trust asset management functions in a new agency: the Bureau of Indian Trust Assets Management [“BITAM”]. The proposed Bureau will report to an Assistant Secretary for Indian Trust Assets Management.. .[Because] [t]he proposed reorganization impacts many interested parties[,] Interior has begun consultation with Indian tribes and with Congress... Trust reform activities will continue during this transition process. The final organization structure will depend upon the results of the consultation process.
Pis.’ Ex. 104 at (unnumbered) 2. While it would be both premature and unnecessary at this time for the Court to make any factual findings regarding the merits of the BITAM proposal, 47 it is worth noting an exchange between plaintiffs’ counsel and Tex Hall, a Tribal Chairman and an IIM account holder, at the contempt trial:
Q. I want turn you now to a discussion of what’s been referred to as the BITAM proposal. Do you know what the BITAM proposal is? Or I should say the Bureau of Trust Asset Management Proposal from the Department of Interior?
A. Yeah. I — we call it “bite 'em,” but you know—
Q. And could you tell us in your understanding — well, first of all, do you support that proposal? Do you believe that that’s the answer to trust reform?
A. No, sir.
Q. And do you believe that the tribal leadership that you have been involved with in this — in the task force believes that that is an appropriate proposal for trust reform?
A. The tribal leaders task force that I co-chair is 100 percent opposed to BITAM.
Contempt II Tr. at 4472. For purposes of this contempt trial, it is sufficient for the Court to find that no reorganization has occurred, and, in fact, the Department did not even have a final plan that it was ready to implement at the time the record closed.
Moreover, as of February 2002 (when the record in this trial closed), the Department of Interior did not know how it was going to perform a historical accounting of the IIM trust accounts. It still only had, as the Principal Deputy Special Trustee testified at trial, a plan for developing a plan. 48 Cf. Contempt II Tr. at 342; Contempt II Tr, at 1083-86.
B. TAAMS & BIA DATA CLEANUP-SPECIFICATIONS 3 & 4
In this section the Court will present its findings of fact regarding Specifications 3 and 4. Specifically, the Court will address in turn the TAAMS subproject, which relates to both of these specifications, and the BIA Data Cleanup subproject, which is relevant to Specification 4. The Court will make its factual findings regarding TAAMS and BIA Data Cleanup chronologically.
1. TAAMS
a) Background information on TAAMS
“TAAMS is a general trust land management system that is intended to efficiently manage” IIM and tribal trust accounts by “ensuring accurate distribution of funds to individuals and tribes through a proper management framework.” Pis.’ Ex.60 at 31. Although TAAMS will perform (if fully implemented) numerous functions for the Department of Interior,
see
Pis.’ Ex. 2, Tab 2 at 25-35, the system
The Department of Interior acquired TAAMS (and TFAS) to replace two older or “legacy” computer systems used by BIA. Phase I trial Tr. at 2786 (noting that “the TAAMS system really is intended to replace two legacy applications.”). The first system, which is known as the Land Records Information System (“LRIS”), “supports the land title function by providing land-title related information e.g. ownership and encumbrances.” Pis.’ Ex. 6 at 68.
See also Cobell V,
b) Phase I trial testimony regarding TAAMS (June 10, 1999-July 23, 1999) 51
The Department of Interior presented extensive testimonial and documentary evi
During the Phase I trial the Interior Department acknowledged that the two primary electronic database systems used by BIA to administer the IIM trust accounts-LRIS and IRMS-were inadequate in several critical aspects.
See, e.g.,
Phase I trial Tr. at 412-21; 1153-54. The Department admitted and the Court found that LRIS and IRMS do not enable the Department to administer properly the IIM trust accounts. Phase I trial Tr. at 148-53, 412-21, 441-42, and 1153-54;
Cobell V,
The Department of Interior argued that the deficiencies of LRIS and IRMS should not affect the outcome of the Phase I trial, however, since none of them are “applicable to the new system being developed and implemented by BIA at the time of trial, the Trust Asset and Accounting Management System[.]” Defs.’ Phase I trial proposed findings at ¶ 204. Interior stated that as a result of the legacy systems’ limitations, the Strategic Plan recommended and the (original) HLIP required the development and implementation of a new trust management system, which the Department referred to as TAAMS. Phase I trial Tr. at 989-90. Thus, the Department contended that the legacy systems’ admitted inadequacies were irrelevant at the time of trial because “TAAMS is, at heart, a data management system that contains all the essential functions to enable BIA to meet the requirements of the 1994 Reform Act.” Defs.’ Phase I trial proposed findings at ¶ 213. See also Defs.’ Phase I trial proposed findings at ¶ 443. Moreover, the Department argued, in large part based on the testimony regarding TAAMS, that injunctive relief was not appropriate. The Department specifically stated that:
[t]he testimony at trial showed that Interior is making good faith efforts to come into compliance with all legal obligations through promulgation and implementation of the HLIP. Plaintiffs have not shown that an injunction is necessary to prevent violations from persisting. There is no reason to conclude that an injunction is required to bring about compliance with these duties.
To support its position, the Department of Interior presented a large volume of testimonial and documentary evidence regarding the capabilities of TAAMS.
52
Specifically, witnesses for the Department stated that TAAMS will allow BIA to administer trust assets, generate timely bills, identify delinquent payments, track income from trust assets, and distribute proceeds to the appropriate account holders. Phase I trial Tr. at 1108, 2319, 2389-91, 2788, and 2810. The Department noted that the key features of TAAMS that will support these functions are an asset management system (with a master lease subsystem), a billing and accounts receivable subsystem, and a collection subsystem.
53
Defs.’ Phase I trial Ex. 82; Phase I trial Tr. at 2297-98. Witnesses for Interior also testified that TAAMS will have a major module for administering land title records, a sub-module for probate tracking, and a tickler system that will notify BIA employees of upcoming important events, such as when leases are about to expire, when it is time to advertise leases, and when collections are due. Phase I trial Tr. at 1150 and 2390. These witnesses further testified that TAAMS will also generate a report for each beneficiary covering all transactions related to leases on that beneficiary’s property. Phase I trial Tr. at 2389-91.
54
In sum, the Department argued during the Phase I trial that TAAMS was a first-rate land management system, and that it was significantly better than the legacy systems used by BIA.
See, e.g.,
BIA Press Release of June 25, 1999, TAAMS WORKS!!!, at 1 (quoting then-Assistant Secretary Gover as stating that “[tjhis system is state of the art, and it has been designed by those who know exactly what the Trust Management System needs to do for Tribes and individuals.”). Dominic Nessi, one of the primary Phase I trial
Q. As project manager, Mr. Nessi, can you describe for the Court in your view how good a system TAAMS is going to be?
A. It has the potential probably to be the best land management system in the United States. It has — it’s been built with the best technology that is available. It meets the needs of a user population because they’ve been intimately involved with its design. It’s easily expandable. We have an excellent vendor who is — stays on the leading edge of technology. It’s integratable into the Internet. I honestly can’t think of a flaw in the system right now. It’s that good.
Q. As project manager, is it your intention to work as hard as you can to see that it’s the best land management toll in the country?
A. Yes, absolutely.
Phase I trial Tr. at 2391. See also Phase I trial Tr. at 2668 (Nessi, testifying that “the work that we’re doing in the next month or two gives you a system that’s 20 times better than the Legacy systems.”).
The Department of Interior also presented a significant amount of evidence regarding the manner in which it would implement TAAMS. In particular, witnesses for Interior testified that despite initial delays the TAAMS project was on schedule at the time of trial. Phase I trial Tr. at 992, 2286-87, and 2753. The Department informed the Court that it began a 100-day pilot project in Billings, Montana in June 1999, during which both TAAMS and the legacy computer systems (LRÍS and IRMS) would run in parallel.
55
Phase I trial Tr. at 2280; Defs.’ Phase I trial Ex. 82 (noting that by “[u]sing live data in a parallel processing environment, [the Department] will be able to perform a detailed transactional review of each document as it flows through TAAMS to insure that it is properly recorded on the data base and that all calculations are in conformance with expected results.”). Dominic Nessi, Project Manager for TAAMS, explained that the pilot included unveiling the system, performing pre-deployment data cleanup, converting the data,
56
training the staff, testing the system,
57
conducting independent verification and validation (“IV & V”),
58
and completing post-deploy
The Department of Interior further informed the Court during the Phase I trial that it planned to begin implementing TAAMS on a geographic basis in late 1999. Phase I trial Tr. at 2280-81. See also Defs.’ Phase I trial Ex. 82. Dominic Nessi explained that:
[Interior] hope[s] to have the overwhelming majority of Billings completed by around October 1st. At that point in time we have plans to go on to Juneau, Aberdeen, Minneapolis. We’ve already started working towards those. But, you know, they’re tentative until we know that we have a good system that’s well tested and ready to move forward.
Q. Is there some point at which a decision is going to be made about whether to continue on to these other areas?
A. Well, we’ll have an official decision in approximately the last week of September, but we’ll have a pretty firm idea well in advance of that.
Q. At the end, how many sites will TAAMS be available at?
A. At the end of this initial deployment period, it will be the 12 area offices, the central office, OTFM, 86 agency offices, and approximately 120 tribes.
Q. Is there a grand total you can give us?
A. It’s about 230,1 believe, 240.
Phase I trial Tr. at 2280-81. Moreover, the Department indicated that the “TAAMS implementation schedule by Area Office” was as follows: Billings (June 1999); Juneau (October 1999); Aberdeen (October 1999); Minneapolis (November 1999); Eastern (January 2000); Anadarko (February 2000); Muskogee (March 2000); Albuquerque (March 2000); Navajo (March 2000); Phoenix (April 2000); Portland (June 2000); Sacramento (July 2000). Defs.’ Phase I trial Ex. 82. See also Phase I trial Tr. at 2354 (“Yes. This is the current roll-out that we have in mind.”). Thus, the Department planned on having TAAMS in all the area offices by the end of 2000. Defs.’ Phase I trial Ex. 82. As David Orr testified:
Q. But the system will be fully implemented when? What [is] the target date?
A. The target date is for all the area offices to be complete within the Year 2000. The infrastructure project needs to be complete prior to the Year 2000. So it makes sense to me that they’ll have to continue their procurement roll-out for infrastructure which they’ve already started now and are going from area to area prior to the end of this year in order to be Y2K-compliant everywhere.
Phase I trial Tr. at 2857-58. 59
Although the Department of Interior recognized that it had an aggressive de
I’m absolutely certain it will work, but prudent project management, prudent IT development knows that you have bugs in software, and that’s how you get them out, you test through them. TAAMS is — TAAMS is not an ALMRS. I mean, ALMRS had some other issues, from what I understand, just in terms of development time and some other things. That’s not TAAMS.
Q. If TAAMS — let me go back to my question. If TAAMS does not work, what is the impact on the trust beneficiary?
A. That’s a hypothetical question that I can’t answer because there’s — that’s not a possibility.
Phase I trial Tr. at 2579-80. 62
c) The TAAMS project during July and August 1999
The Court is deeply troubled that many of the findings detailed in this section occurred either during the Phase I trial or before the Department submitted its proposed findings of fact and conclusions of law on August 4, 1999. Although Specification 3 deals exclusively with the Department’s failure to disclose the true status of the TAAMS project between September 1999 and December 21, 1999, the evidence presented at this contempt trial clearly shows that the Department knew well before September that the testimony it had provided in June and July was no longer accurate. In fact, it is insulting to the plaintiffs and an affront to the Court for the Department to argue now that the problems with TAAMS only became apparent after the Phase I trial ended. That being said, the Court will proceed to make specific findings relevant to this time period.
The Department of Interior was not able to test fully TAAMS in July or August of 1999.
63
Contempt II Tr. at 2610-11 (“I
Q. Can you give me a sense about what happened with the system in say July, August of ’99?
A. Beginning in July, we were supposed to begin a combined system user test. That didn’t happen.
Q. Why?
A. The data conversion proved to be a far greater challenge than anyone could have imagined, and during the month of July, we actually had the test teams actually showed up, but the test wasn’t really conducted because there was just — every day the conversion team would say tomorrow we’ll have it done; tomorrow we’ll have it done. And that happened throughout July and it never was completed in July.
Q. The data conversion was not completed?
A. The data conversion, right.
Contempt II Tr. at 3292-93. See also Pis.’ Ex. 2, Tab 7F (noting that during an IV & V test that took place from July 6-July 9, 1999, “[mjajor problems with data conversion were found.”). 64
The Department of Interior was not able to resolve the data conversion problems that it had encountered in July before it attempted another test of TAAMS in August of 1999. See, e.g., Pis.’ Ex. 2, Tab 4B (noting that, as of August 5, 1999, “[a] data conversion from the legacy systems has yet to be successfully completed. This is absolutely critical.”). A later issued IV & V Report detailed the magnitude of the data conversion problems experienced by Interior during the August test:
The first critical problem discovered involved data conversion errors. That process had resulted in some of the data being shifted by 20 characters resulting in multiple data errors and causing difficulty in the test evaluation process.
The team was briefed on the developer-test DB [database] differences. The development DB had old Billings test data. The test team had been using a newer DB. Due to this, the programmers could not duplicate several problems found by the testers. This indicated that the data conversion was still causing problems, and the testers couldn’t tell when they had an application problem or a DB problem.
It was decided that the project schedule would be extended for several weeks to allow for data conversion and application fixes to be incorporated and tested prior to the next test event.
Pis.’ Ex. 2, Tab 7F at 18. See also Contempt II Tr. at 2974 (noting that there was “a terrible struggle with data conversions” at the August test.).
The limited testing of TAAMS that the Department was able to perform during July and August of 1999 revealed numerous problems with the land management system. Contempt II Tr. at 1125 (Principal Deputy Special Trustee, agreeing that “TAAMS failed its July and August 1999 user acceptance tests and could not be deployed in September 1999 as an integrated system on the schedule presented to this Court during trial.”); Pis.’ Ex. 2, Tab 6E (Draft IV & V Report noting that “[i]t was quickly apparent that the system was not yet ready for formal testing.”). That is, the portions of the system that the Department actually tested did not perform correctly during the summer of 1999.
See, e.g.,
Contempt II Tr. at 1141-42 (noting that “generally in the August time frame, at this point, we were aware that there were difficulties, unexpected difficulties being encountered.”). For example, SRA noted, in commenting on the August test, that “15 critical application problems were identified out of 26 total problems identified in the two days of test,” and that as a result “[t]he system was not [even] ready for formal testing, at this time.” Pis.’ Ex. 2, Tab 7F at 18.
66
Moreover, it became apparent that from a software development standpoint the title portion of TAAMS was much further along than the realty part of the system. Contempt II Tr. at 2621-22 (Snyder, testifying that “title was, in terms of the actual software development, where they were with it and the production, it was further along. Real
In addition to the problems discussed above, it also became clear during the summer of 1999 that there would need to be additional changes to the TAAMS software in order for it to meet the needs of the Department of Interior (and BIA). See, e.g., Pis.’ Ex. 2, Tab 3A (noting, on July 6, 1999, that “TAAMS is evolving every day and that all of the systems are in flux[.]”); Contempt II Tr. at 2983-84 (testifying that significant modifications needed to be made to TAAMS). In other words, during July and August of 1999 Interior determined that numerous changes needed to be made in order for TAAMS to perform the functions that had been discussed during the Phase I trial. 68 Pis.’ Ex. 6 at 69; Contempt II Tr. at 3294-95. The reason for the modifications was that Interior and ATS had not taken into account the unique business practices of BIA or its needed functionality when they designed TAAMS. Contempt II Tr. at 3297-98. See also Pis.’ Ex. 6 at 69. Consequently, “it became apparent during the system test conducted with BIA users during July and August 1999 that a significant level of analysis and system modification remained in order to ensure that all of the BIA’s unique business functions were addressed.” Pis.’ Ex. 6 at 69. 69
As a result of all of the problems the Department of Interior encountered in the summer of 1999, the agency tentatively decided to alter the manner in which it was going to implement TAAMS. Contempt II Tr. at 3292-96.
See also
Pis.’ Ex. 2, Tab 4G. Specifically, in August of 1999 the Department contemplated changing the implementation plan from a geographic based approach (whereby it would implement both the title and realty portions of TAAMS together) to a function based approach (whereby it would implement the title portion of TAAMS prior to the realty portion).
See, e.g.,
Pis.’ Ex. 2, Tab 3D (noting, on the same day that the August
the earlier deployment schedule was completely geographic-based with Area Offices being deployed in their entirety for all functions. The schedule has been tentatively revised (final decision to be made September 13, 1999) to implement the Title Plants in all geographic areas during the period of November and December. This change was considered for the following reasons:
• Implementing a single major functions across the BIA will allow a more focused integration of the new system into existing business processes....
• Simplify the data conversion process by transferring data from one system (LRIS then IRMS) to TAAMS rather than two at one time.
Pis.’ Ex. 2, Tab 4G. John Snyder, a computer specialist for the Department, further explained during this contempt trial that another reason the Department was considering implementing the title portion of TAAMS first was that the realty portion was not close to being ready at that time. Contempt II Tr. at 2622 (“the title approach made sense simply because title was, in terms of the actual software development, where they were with it and the production, it was further along. Realty still had some issues in terms of the interface, some other things related to that.”). That is, there was no reason to maintain the geographic based implementation schedule since the realty portion of TAAMS was not even close to being ready to do all of the things Interior had stated that it could during the Phase I trial. Contempt II Tr. at 2621-23. 73
The Department of Interior knew in early September 1999 that its Phase I trial testimony was not accurate and that it needed to inform the Court of the problems it was experiencing with the TAAMS project. Contempt II Tr. at 1126-27 (“We certainly felt we needed to let you-know that the tests had not been successful.”). On September 8, 1999, Chief of Staff Ann Shields chaired a meeting that was attended by several senior Interior officials (including then-Assistant Secretary for Indian Affairs Gover) to “[djiscuss [the] current TAAMS status and agree on Departmental Policy Positions.” Pis.’ Ex. 2, Tab 4E. The participants at the meeting acknowledged that as a result of the difficulties identified above, “[i]n effect, the TAAMS pilot [wa]s just beginning.” Pis.’ Ex. 2, Tab 4E. The attendees further recognized that “[t]he Department need[ed] to quickly inform” this Court about the lack of progress that had been made in implementing TAAMS. Pis.’ Ex. 2; Tab 4E. See also Contempt II Tr. at 1127 & 2550. Specifically, attorneys in the Solicitor’s Office indicated that the Department needed to file a memorandum with the Court by September 21, 1999, since Secretary Babbitt was scheduled to testify before Congress on September' 22, 1999. See, e.g., Pis.’ Ex. 2, Tab 5B (“the notice should go to the court before the hearing.”); Pis.’ Ex. 2, Tab 5C (“we also need to file something with the Court on Tuesday so that the Judge does not read this in the newspaper.”); . Contempt II Tr. at 2618 (“Mr. Babbitt had testimony on the 22nd, and so the thought was if any of this was going to come up in his testimony, then it should also go to the Court prior to that, because the last thing we thought — it didn’t make a lot of sense to have the Court find out about it after it had gone to Congress.”).
Department officials began drafting a memorandum to file with the Court shortly after the September 8, 1999 meeting ended. Pis.’ Ex. 2, Tab 5B. These officials, at the direction of an attorney in the Solicitor’s Office, used the memorandum written by Dominic Nessi back on August 31, 1999, see Pis.’ Ex. 2, Tab 4G, as a preliminary draft. Pis.’ Ex. 2, Tab 5B; Contempt II Tr. at 2615. 74 The first draft of the memorandum was circulated to several individuals within Interior (including attorneys in the Solicitor’s Office) on September 16, 1999. Pis.’ Ex. 2, Tab 5D. After circulating a revised draft on September 17, 1999, see Pis.’ Ex. 2, Tab 5E, John Snyder prepared a final version of the memorandum on September 20, 1999. Pis.’ Ex. 2, Tab 5F. See also Contempt II Tr. at 2617-18. The memorandum provided in pertinent part that:
Staff of the Bureau of Indian Affairs (BIA) and Applied Terravision Systems (ATS) of Dallas, Texas have recently completed a number of activities leading up to the September 7 installation of the Trust Asset and Accounting Management System (TAAMS) in the Billings Area. Work is now proceeding to complete the system pilot by conducting TAAMS system testing in Dallas and user acceptance testing in the Billings Area and Agency Offices. A final decision on. TAAMS deployment based on the pilot tests is expected near the middle or end of November....
The TAAMS Conversion team [experience] a number of problems in transferring the electronic data stored in the existing legacy systems into the new and completely different structure and format of TAAMS.... By August 30, 1999, conversion processing had reached a satisfactory level and a final data conversion was begun on September 1. The final data conversion was completed on September 6th in order to begin training in Billings using live Billings data..., In parallel with the data conversion activities, system testing continued with a team of BIA system users and ATS staff. System functions were tested repeatedly throughout August. Increasingly broader tests were conducted as new functions of the system were populated with converted data.
The culmination of system testing, conversion and data cleanup activities, allowed for an installation of TAAMS in the entire Billings Area beginning September 7, 1999. Deployment activities were initiated with the installation of TAAMS software in the Billings Title Plan and the training of approximately 30 Billings Title Plant staff.
Pis.’ Ex. 2, Tab 5F. The Department of Interior never filed this (or any other) memorandum with the Court to correct or update its Phase I trial testimony. Contempt II Tr. at 1127,1350, and 2528.
On September 22, 1999, then-Secretary Babbitt testified before the Senate Committee on Indian Affairs about several topics related to the IIM trust, including TAAMS. Pis.’ Ex. 2, Tab 5J. 75 Secretary Babbitt did not inform the committee that Interior had experienced numerous problems in implementing TAAMS since June of 1999. Instead, at the hearing then-Secretary Babbitt stated that:
[t]he development of the basic data processing system, the TAAMS system, is going exceedingly well. I was in Billings in June for the startup of that process with our partners from Applied Terra Vision and the other contractors. The system is moving along nicely. We now have it running in parallel with the existing systems. That’s a very important milestone..... I anticipate making a final deployment decision by late November ... I believe we’ll be back here in early November with a comprehensive report which says the TAAMS system is meeting expectations, that the original decision to go with off-the-shelf technology was entirely correct and that the validation and testing that is taking place demonstrates that.
Pis.’ Ex. 2, Tab 5J. Moreover, the prepared statement for then-Secretary Babbitt indicated that Interior “anticipate[s] minor system adjustments as a result of this testing process.” Pis.’ Ex. 2, Tab 5J (further stating that since June 25, 1999, the Department “developed data conversion programs to transfer the electronic information from the existing BIA systems to TAAMS.”).
The Court finds based on the overwhelming circumstantial evidence adduced at trial that the Department of Interior intentionally failed to submit the memorandum which described the status of TAAMS.
76
The Court makes this finding for several reasons. First, the Depart
e) The TAAMS project from September 27, 1999 until December 20, 1999
The Department of Interior (and ATS) continued to experience difficulties testing TAAMS in the fall of 1999. The initial test during this period occurred from September 27-September 30, 1999. Pis.’ Ex. 2, Tab 51. There were several problems with this particular test. First, it was clear from the outset that the Department was still not prepared to test TAAMS at this time. Pis.’ Ex. 2, Tab 51. As John Snyder testified during this contempt trial:
Q. What was your overall impression [] of how the testing [process] itselfwent [ ] in that September ’99 system test?
A. The process didn’t go as well as— didn’t go like it was supposed to be planned to at all. The individual reviewers didn’t get, like the IV & V and the GAO people did not get copies of the script so they could mark up as they were going. They only got them because I xeroxed them, so I spent a fair amount of time doing that, which took me from being able to observe the test, because I was trying to get the information to the players.
We didn’t get the daily follow-up that I had expected to get because the intent was you get a tremendous amount of— you know, 600 plus pages of scripts to go through. At the end of the day we should all sit down and go through what failed, what worked, what are the errors and how are they going to be taken care of.
Q. Sort of a recap at the end of the day?
A. Sort of — and then the same thing should occur the following morning, because what they were going to do, what Artesia was going to do was to give those errors and those problems to their programming staff and they would work the evening and the night to make changes, corrections, whatever else, and then come back to tell us what the intent was.
Then when we started off with our morning kick-off of saying here’s what we’ve completed over the night, this is what we fixed, this is what is still a problem, you know, there are some other issues; those kind of things. And then lay the ground work for the coming day.
Q. And those things weren’t happening?
A. And that was not happening.
Contempt II Tr. at 2628-2629. See also Pis.’ Ex. 2, Tab 51 (“ATS was not prepared for conducting the test... ATS didn’t have all the test scripts completed nor were they sure which requirements they needed to test.”).
Second, the majority of the portions of TAAMS that Interior was able to examine still were not demonstrated successfully during this test. As the IV & V contractor detailed in its draft report:
The TAAMS system testing through September 27 tested about two thirds of the mandatory requirements SRA was to look at. While only about 10 percent of those requirements tested failed, nearly 50% of the requirements were only partially demonstrated successfully and the demonstrated success was often highly variable... A numerical summary of the requirements reviewed by SRA for this report looks like this. Of the 66 requirements reviewed by the IV & V team:
-24 still need testing because they were not demonstrated during the Sept, test
-1 needs additional analysis
Of the 41 that were demonstrated:
-7 failed
-32 were partially demonstrated and;
-2 were fully demonstrated.
This means we are at risk if we accept the results other than the two requirements that were demonstrated successfully.
Pis.’ Ex. 2, Tab 6E. The Principal Deputy Special Trustee explained the importance of these findings during the contempt trial:
[Q.] Do you understand what this means, Mr. Thompson?
A. Yes, I do.
Q. And what does it mean as you understand it?
A. That the systems test failed.
Q. Now, there has been some history on the meaning of that term, “the system test failed.” Do you mean the system failed the test or test failed, Mr. Thompson?
A. I think I am safe to say both of those are affirmative answers.
Contempt II Tr. at 1231-32.
Third, it became increasingly clear during this test that the RFP (or contract) itself was inhibiting the Department’s ability to test adequately the functionality of TAAMS. The IV & V Report made repeated reference to the fact that the lack of specificity in the RFP made it difficult to conduct a thorough and complete evaluation of the testing process. Two of the identified “Constraints” on the IV & V process, for example, addressed this issue:
Constraint: Since the original contract envisioned a COTS procurement, the more rigorous development activities associated with Testing, Configuration Management or Quality Assurance standards were not initially levied on the products or processes.
Actual Impact: While there was testing, CM and QA throughout the duration of the project there were no development standards identified in the contract for these areas, project documentation sometimes not up to par with typical government deliverables for a system of this complexity. This resulted in reviews and comments on documents being subject to individual preferences. The IV & V team applied selected best practices, used in SRA’s government business area for systems similar to TAAMS.
Constraint: The requirements lacked sufficient clarity was a major constraint on TAAMS development and test.
Actual Impact: Because many requirements were inadequate and/or too complex, software development and test script development schedules were difficult to maintain, and many test scripts had an extremely large number of steps or did not completely test all nuances of the requirement.
Pis.’ Ex. 2, Tab 7F at 5. See also Contempt II Tr. at 3318-21 (Nessi, stating that “my concern here was that SRA really didn’t have the opportunity to do a good IV & V because we didn’t set the stage properly at the very beginning.”). 80
Due to the difficulties encountered during the September test, the Department decided to schedule another test in November of 1999. Pis.’ Ex. 2, Tab 51 (recommending that “ATS conduct another full systems test using several BIA users as testers.”); Pis.’ Ex. 2, Tab 6D (noting that “TAAMS will need another monitored ‘test.’ ”); Pis.’ Ex. 2, Tab 6E (suggesting that “a second testing be conducted in Billings at a later date using actual users.”). See also Pis.’ Ex. 2, Tab 7F (“A number of critical requirements had not been tested. Some of these were planned for the future, so a judgment on the quality of that testing and the requirement validation process could not be made. Since the scripts for testing were delivered just before testing began, a review was not possible until after the testing was completed. The results of this first analysis indicated that most of the requirements were only partially validated. A second test was planned for the week of November 22nd.”).
Second, SRA identified numerous things that the Department needed to do before it would be in a position to implement TAAMS. Pis. Ex. 2, Tab 7F at iv-vi. For instance, SRA noted, among other things, in its report that:
Any failures (Prs) that occurred during the System test, the Billings pilot or User Tests that are judged as critical or major should be fixed and retested prior to any deployment.
The critical requirements that were not validated, failed validation, or were partially validated during the functional testing should be tested and totally validated; any important or non-critical requirements should be analyzed for further testing...
One critical area that has not been tested yet is the TFAS and MMS interfaces. A functional test of the TAAMS interface with TFAS and MMS should be conducted as soon as possible; certainly prior to any full TAAMS capability deployment, otherwise any measure of total system effectiveness or suitability won’t be possible...
TAAMS business rules should be incorporated, a detailed network load analysis conducted and any remaining instability resolved prior to deployment beyond Billings.
Pis.’ Ex. 2, Tab 7F at iv-vi. SRA ended this part of its report by stating that “[a]s-suming the forgoing recommendations and risk mitigation strategies are implemented the IV & V team feels that deployment beyond Billings could proceed with minimized risk and a reasonable assurance of success.” Pis.’ Ex. 2, Tab 7F at vi. While some Interior officials apparently viewed the results of the tests and this statement in the report as “favorable,” see, e.g., Pis.’ Ex. 2, Tab 8B, SRA did not. Pis.’ Ex. 2, Tab 8C. Specifically, Jerry Manesis, the SRA representative in charge of the IV & V testing, stated that “my opinion of the overall report is that it was not favorable. I think it was favorable in spots but generally it pointed out a significant number of problem areas that I believe offset the positive things we found. I’m not certain what words [the Department] might want to use to describe the overall report but my choice would not be favorable.” Pis.’ Ex. 2, Tab 8C. 81
Q. And just for purposes' — I just want to run through and see if these are the same functionality as was described at the trial in 1999. And if you turn your attention to paragraph 213 [of the Defendants’ Phase I trial proposed findings], do you see that on that page?
A. Yes.
Q. Page 71. And it reads:
“TAAMS is the heart of data management system that contains all the essential functions to enable BIA to meet the requirements of the 1994 Reform Act. TAAMS allows BIA to administer trust assets, generate timely bills, identify delinquent payments, track income from trust assets, and distribute proceeds to the appropriate accountholders.” Now at this point in time, does TAAMS actually operate anywhere in the country to do any of that function?
A. No. It’s still in testing.
Q. The next sentence reads:
“The key feature of TAAMS that supports these functions are an asset management system with a master lease subsystem, a billing and accounts receivable subsystem and collections subsystem.”
Now let me ask you first, does the asset management system with a master lease subsystem, does that operate anywhere in this country today, within BIA?
A. I’m not sure what they mean exactly about asset, but no, that would still be in the realty, so it is not in production, no.
Q. If the TAAMS realty was successfully tested in the November ’99 time frame, what was the importance of the decision to just proceed only with the title portion? Why was that a sound business decision?
A. Title is more uniform. They already have their business process across BIA. Realty didn’t have that luxury. They never pulled together before TAAMS. Title had one system; realty has multiple systems. Title had a team of people that worked together way before TAAMS ever came involved that set the standard across BIA. Realty had never done that; they run as individual companies, if you may, in their own areas.
So the decision was made that realty needed more time to come up with our business rules and they needed to set a standard across BIA and make a decision what are really regulations they need to follow or was it just becausethat’s the way they did their business. That’s why we made that decision.
Contempt II Tr. at 3128-29, 3132-33. 82 Thus, it was clear that after the November test TAAMS still was not capable of performing the numerous functions that the Department had told the Court it could do during the Phase I trial. 83
f) This Court’s Memorandum Opinion of December 21, 1999
The Court issued its Memorandum Opinion regarding the Phase I trial on December 21, 1999.
Cobell V,
[TAAMS] is currently in the phot stages of implementation, specifically in the Billings Area BIA office... TAAMS, when implemented, will allow BIA to administer trust assets, generate timely bills, identify delinquent payments, track income from trust assets, and distribute proceeds to the appropriate account holders. The key features of TAAMS that will support these functions are a billing and accounts receivable subsystem and a collection subsystem. TAAMS also will have a major module for administering land title records, a sub-module for probate tracking, and a tickler system that will notify BIA employees of upcoming important events, such as when leases are about to expire, when it is time to advertise leases, and when collections are due.
Id. at 19.
The Court also made several conclusions of law in its Phase I trial ruling. The Court began, as all courts must, by considering whether it had jurisdiction to adjudicate plaintiffs’ claims against the Secretary of Interior. Id. at 24-30. The Court concluded that it had jurisdiction and that the plaintiffs could bring suit against the Secretary of Interior pursuant the 1994 Act. Id. The Court ultimately concluded, as noted above, see Section II. B, that the Secretary of Interior was in breach of certain fiduciary duties owed to plaintiffs. Id. at 58. In particular, the Court accepted a written stipulation filed by the Department on the eve of trial in which it admitted that it was not in compliance with several obligations prescribed in the 1994 Act. Id. at 32-34. The Court further found that defendants owed an accounting to plaintiffs of all money held in trust for their benefit, and that, in addition to the breaches admitted to in its stipulation, defendants were in breach of four other statutory duties owed to plaintiffs. Id. at 58. Having found the defendants in breach of their fiduciary obligations, the Court was left with the difficult task of determining what relief to grant plaintiffs.
The Secretary of Interior (and the other defendants) argued that the Court should not issue injunctive relief because they were in the process of bringing themselves into compliance with the 1994 Act and discharging properly their fiduciary obligations. They contended that it was up to the administrative agency to rectify the breaches and to determine the manner in which it would so do. Plaintiffs, on the other hand, argued that the Court should appoint a receiver over the trust or at least a special master to oversee the corrective actions taken by the Department. As the Court noted in the opinion:
One of plaintiffs’ primary goals in the prospective component of this litigation is to have the IIM trust put under court supervision. Plaintiffs’ requests range from receivership to a Special Monitor with investigatory powers. The government, on the other hand, takes the position that it is not in breach of any trust duties and, even if it is, there is already sufficient supervision of the IIM trust to warrant the court’s denial of all continuing supervision requests.
Cobell V,
defendants have the type of historical record of recalcitrance that troubles the court. The court is aware that defendants, especially Interior, ha[ve] made promises similar to those relied upon today each time that it has come up for review on the IIM trust. Indeed, these broken promises are what necessitated the passage of the Trust Fund Management Reform Act. Promises made in court, however, are different than the puffing to Congress that Interior has done over the past few decades. The court can ensure that these promises are kept, and it has the contempt power that will allow it to do so when appropriate. Despite defendants’ history, the court has decided to give defendants one last opportunity to carry through on their promises. The HLIP, defendants’ most comprehensive plan to eventually bring themselves into compliance with their duty to render an accurate accounting, isa substantial step in the right direction, as even plaintiffs admit. This time, there is substance to support defendants’ promises. The court feels that it is therefore its constitutional duty to allow defendants the opportunity to cure the breaches of trust declared in this Memorandum Opinion. Given separation of powers concerns, the court will deny for the time being plaintiffs’ request to appoint a receiver or Special Master over the IIM trust. Should the court find in the future upon proper motion by plaintiffs that defendants have been less than truthful in their representations or that defendants’ adherence to prompt remedial action turns out to have been feigned, then the court may well decide to exercise its authority to ensure that its orders are carried out.
For the time being, the court will give the government, perhaps for the last time in this case, the benefit of the doubt. The court will declare the statutorily based trust rights of plaintiffs under the IIM trust as described above, declare that defendants have breached their trust duties in certain specific respects that warrant prospective relief, and remand the administrative record to the Department of the Interior and the Department of the Treasury for further proceedings not inconsistent with this Memorandum Opinion.
Id.
In addition to the relief noted above, the Court also ordered defendants to file with the Court quarterly status reports detailing the steps that they have taken to rectify the breaches of trust declared by the Court and to bring themselves into compliance with the duties enumerated in the 1994 Act. Id. at 58-59. Specifically, the Court ordered that:
1. Beginning March 1, 2000, defendants shall file with the court and serve upon plaintiffs quarterly status reports setting forth and explaining the steps that defendants have taken to rectify the breaches of trust declared today and to bring themselves into compliance with their statutory trust duties embodied in the Indian Trust Fund Management Reform Act of 1994 and other applicable statutes and regulations governing the IIM trust.
2. Each quarterly report shall be limited, to the extent practical, to actions taken since the issuance of the preceding quarterly report. Defendants’ first quarterly report, due March 1, 2000, shall encompass actions taken since June 10,1999.
8. Defendants Secretary of the Interior and Assistant Secretary of the Interi- or — Indian Affairs shall file with the court and serve upon plaintiffs the revised or amended High Level Implementation Plan. The revised or amended HLIP shall be filed and served upon completion but no later than March 1, 2000.
4. Defendants shall provide any additional information requested by the court to explain or supplement defendants’ submissions. Plaintiffs may petition the court to order defendants to provide further information as needed if such information cannot be obtained through informal requests directly to defendants.
5. The court DENIES plaintiffs’ requests for prospective relief that have not already been granted by this order. The court has based much of its decision today — especially the denial of more extensive prospective relief — on defendants’ plans (in both substance and timing) to bring themselves into compliance with their trust duties declared today and provided for explicitly by statute. These plans have been represented to the court primarily through the HighLevel Implementation Plan, but also through the representations made by government witnesses and government counsel. Given the court’s reliance on these representations, the court ORDERS defendants, as part of their quarterly status reports, to explain any changes made to the HLIP. Should plaintiffs believe that they are entitled to further prospective relief based upon information contained in these reports or otherwise learned, they may so move at the appropriate juncture. Such a motion will then trigger this court’s power of judicial review.
Id.
g) The Department of Interior’s Quarterly Status Reports (March 1, 2000-January 16, 2002)
The Department began filing quarterly status reports with the Court in March of 2000. Pis.’ Ex. 7. Interior recognized in these reports, as it had during the Phase I trial, that TAAMS was an integral part of the trust reform effort. See, e.g., Pis.’ Ex. 7 at 1. The Department also noted (particularly in the First Quarterly Status Report) that while it had experienced problems in the summer and early fall of 1999, see e.g., Pis.’ Ex. 7 (Revised HLIP) at 69-71, “significant headway” had been made towards implementing TAAMS and the subproject would be completed in due course. See, e.g., Pis.’ Ex. 7 (Revised HLIP) at 77 (stating that “[t]he Title portion of TAAMS is scheduled for completion May 2000. The mandatory realty functions, including the necessary interfaces with MMS and TFAS to process distribution transactions, are scheduled for completion in August 2000.”). The Department continued reporting progress on the TAAMS project through the fall of 2000. See generally Pis.’ Ex. 8, 9. In each of these status reports, the Department provided the Court with little to no indication that there were still considerable obstacles to implementing TAAMS. Id. Beginning with the quarterty report filed in the winter of 2000, the Department finally started to report, in a superficial, incomplete, and misleading manner, that it was continuing to experience problems that might hinder its ability to implement TAAMS. See, e.g., Pis.’ Ex. 12. In these reports, the Department still managed, however, to provide the Court with a positive assessment of TAAMS because it limited its reporting, for the most part, to the milestones set forth in the Revised HLIP. 84 See, e.g., Pis.’ Ex. 12. Thus, Interior failed to inform the Court, until the eve of this contempt trial, that it would not be able to implement the realty portion of the land management system or the historical part of the title portion in the foreseeable future. Pis.’ Ex. 13. The failure by the Department of Interior to apprise the Court of how far TAAMS really was from being implemented (or even deployed) can only be described as a fraud on the court. See, e.g., Pis.’ Ex. 38-41. The Court will address each of the Department’s Quarterly Status Reports below.
1. The First Quarterly Status Report and the Revised High Level Implementation Plan (June 10, 1999-Jan-uary SI, 2000) 85
The Department of Interior filed its First Quarterly Status Report (“First Re
The Department of Interior acknowledged, as it had during the Phase I trial, the importance of the TAAMS project to its overall trust reform effort in the First Report. As a general matter, Interior noted in the Executive Summary that the “keystone to effective trust asset management in the Department is a comprehensive trust asset management system that includes accurate information on land ownership, leases, billing and accounts receivable, and collections.” Pis.’ Ex. 7 at 1. Moreover, with respect to its specific statutory obligations, the Department recognized in the First Report that “TAAMS will help to address the following provisions of the [1994 Act]: [l][p]ro-viding adequate systems for accounting for and reporting trust fund balanees[;][2] [providing adequate controls over receipts and disbursements!;®] [providing periodic timely reconciliations to assure the accuracy of accounts[;][4][d]etermin-ing accurate cash balances[;][5] [preparing and supplying account holders with periodic statements of their account performance and with balances of their account which shall be available on a daily basis[;][6][a]ppropriately managing the natural resources located within the boundaries of Indian reservations and trust lands[;][7][p]reparing accurate and timely reports to account holders on a
The Department of Interior admitted in the First Report (HLIP) that it had experienced several problems testing and implementing TAAMS during the summer and early fall of 1999. In particular, the agency observed that:
the initial design meetings did not fully capture the entire scope of the BIA’s needed functionality ... [and] it became apparent that the lack of consistent business rules and processes across the BIA ... placed the software vendor in a very difficult position as it attempted to modify the software to meet the BIA’s needs. Although it was always assumed that additional adjustments would be necessary after the first prototype, it was initially believed that a large part of the basic functionality was present in the late-June 1999 release of TAAMS. This was not the case and it became apparent during the systems tests conducted with BIA users during July and August 1999 that a significant level of analysis and system modification remained in order to ensure that all of the BIA’s unique business functions were addressed .. .The net result of these events during the late summer and early fall was that the deployment schedule outlined in the TAAMS contract could not be achieved as originally planned. In retrospect, the Department concedes that the plan was overly optimistic given the complexity of the task at hand.
Pis.’ Ex. 7 (HLIP) at 69-71. 88 Interior failed to inform the Court, however, that these problems persisted through the latter part of 1999 and that they continued to affect significantly the TAAMS project in January of 2000. Id. In fact, the Department actually ended this section of the HLIP on a positive note by stating that “the progress achieved could not have been accomplished without this direct attack on the problem and, of course, the initiative and cooperation of hundreds of BIA staff and contractor employees across the country.” Pis.’ Ex. 7 (HLIP) at 71. 89
Despite the fact that the problems identified during the summer and fall of 1999 still plagued the TAAMS project in Janu
In addition to providing the Court with a positive assessment of the status of TAAMS, the Department also made several false and misleading representations to the Court in the First Report to support its deployment schedule. See, e.g., Pis.’ Ex. 7 at 14. 90 First, in his cover letter to the HLIP, which is dated February 29, 2000, then-Secretary Babbitt made the patently false statement that TAAMS was operational at the pilot site in Billings, Montana. Specifically, then-Secretary Babbitt told the Court that:
[significant headway has been made in establishing new trust management and financial systems that will handle the millions of records that are the foundation of a reliable trust management program. The Trust Funds Accounting System (TFAS) is operational in all but three offices and those sites will be converted to the new system shortly. The Trust Asset and Accounting Management System (TAAMS) is operational at the pñot site in Billings, Montana, and we are currently working towards nationwide deployment in other BIA locations.
Pis.’ Ex. 7. The Court’s findings above make clear that TAAMS-as described during the Phase I trial-was not even close to being operational in Billings, Montana in February of 2000, and, in fact, still is not fully operational at that or and other site. See e.g., Section IV. B(l)(e). See also Contempt II Tr. at 2095-2098 (Principal Deputy Special Trustee, testifying that “I do not consider this to be a very clear statement of what was going on at Billings. A test part of TAAMS was being tested at the phot site in Billings. I would not call it operational.”). As Dominic Nessi explained during this contempt trial:
[Q.] Was it operational at that point in time, since you were the project manager for TAAMS? You probably would know, wouldn’t you?
A. No, it wasn’t operational. We had — they hadn’t had the second user test by that point.
Q. I’d like to turn your attention to Plaintiffs’ Exhibit 6, which is the HLIP, which is HLIP 2000, that I believe you were questioned by [defense counsel] about. Do you have that in front of you?
A. Yes, sir.
Q. I’d like you to turn in this exhibit to what is the fourth page of the exhibit. It’s not numbered, but it’s the fourthpage of the exhibit, and it — it’s a letterhead with the Secretary of the Interior at the top, Washington. Do you see that?
A. Yes.
Q. I’d like to turn your attention to the third paragraph. I’d like you to turn your attention to the third line from the bottom of that paragraph. It states as follows:
“The trust asset and accounting management system (TAAMS) is operational at the pilot site in Billings, Montana, and we are currently working towards nationwide deployment in all — in other BIA locations.”
Is that a correct statement?
A. No, it’s not.
Q. I’d like to turn your attention to the second page. I’d like to turn your attention to the signature page. Do you notice this appears to be the signature of Bruce Babbitt?
A. Yes, sir.
Contempt II Tr. at 3396-97. 91
Second, consistent with former Secretary Babbitt’s statement, the Department of Interior falsely represented to the Court that “[t]he land ownership module of [TAAMS] was designed,
implemented,
piloted, tested, and subjected to independent verification and validation (IV & V) at the pilot test site in Billings, Montana.” Pis.’ Ex. 7 at 1 (emphasis added). During the Phase I trial, Interior used the terms “deploy” and “implement” interchangeably because it thought that TAAMS would, in due course, be fully functional.
See e.g.,
Phase I trial Tr. at 2280-81; Defs.’ Phase I trial Ex. 82.
See also
Contempt II Tr. at 1777 (Principal Deputy Special Trustee testifying that “[t]he original definition for deployment, in my mind, included full implementation of the system.”); 1923-24 (noting that “there was no distinction between those terms through the fall of 1999[.]”). In the First Report, however, the Department decided to distinguish these two terms.
92
Pis.’ Ex. 7 at 81; Contempt II Tr. at 1150-51. Specifically, Interior stated that “[deployment begins with the loading of TAAMS software on the desktops of the individual workstations at the office site[,J” and then involves the performance of a series of tasks to ensure
Third, the Department of Interior falsely represented in the First Report that “[s]ystem testing for the pilot site was successfully conducted during September and November 1999.” Pis.’ Ex. 7 at 14. The evidence presented at trial and the Court’s findings above make clear that the September and November 1999 tests were not successful. 93 See supra IV. B(1)(e). During the course of this contempt trial there were several exchanges between the parties over whether the term “successful” simply meant that the tests were completed or whether it meant that TAAMS itself functioned properly. The Court does not need to enter this fray because the statement was patently false under either interpretation. First, with respect to the tests being completed, the Court’s findings above make clear that the Department was not able to test several important aspects of the land management system and that many portions that Interior did test in September and November actually failed or were only partially validated. Id. Second, as the Court detailed extensively above, the tests conducted in both September and November 1999 revealed considerable problems with TAAMS and showed that the land management system was not capable of performing the numerous functions described by the Department during the Phase I trial. See supra IV. B(1)(e). 94 Thus, it is disingenuous for Interior to assert now that even though TAAMS was not (and is not) capable of performing many of the functions described during the Phase I trial, the systems tests were nonetheless “successful” because the software itself was working. 95 A fundamental assumption with any systems test is that if the system works properly, it will be able to carry out the functions that it was designed to perform. In this case, the evidence clearly demonstrates that TAAMS could not then and it cannot now perform the functions represented to the Court during the summer of 1999. Id.
Fourth, the Department misled the Court when it stated in the First Report that “[s]ince the time of trial, it has been determined that deploying TAAMS on first a functional rather than a geographic basis is a better approach.” Pis.’ Ex. 7 at 13. This representation was deceptive because it implied that the Department had reevaluated the different methods by which it could implement TAAMS and determined that a function based approach was superi- or to a geographic based approach. As noted above, however, the real reason why the Department selected the functional method over the geographic approach was that it had experienced considerable problems with the realty portion of TAAMS in 1999, making it impossible to implement that part of the system along with the title portion. Thus, the function based approach was not really a better method for deploying TAAMS, rather it was the only
Finally, the Department misled the Court when it stated in the First Report that “[assuming the foregoing recommendations and risk mitigation strategies are implemented, the IV & V team [SRA] feels that deployment beyond the Rocky Mountain Region could proceed with minimized risk and a reasonable assurance of success.” Pls.’Ex. 7 (HLIP) at 79. As the Court recognized above, see IV.B(l)(e), SRA noted significant problems with TAAMS that needed to be addressed prior to deploying the system beyond the phot site at Billings, Montana. Id. Even a representative for the IV & V contractor stated in February of 2000 that there were considerable problems with TAAMS and that he did not view the results of the IV 6 V tests as “favorable.” Pis.’ Ex. 2, Tab 8C. In summarizing the results of the IV & V tests, the Department focused on the positive aspects of the system and minimized or completely disregarded the negative comments provided by SRA. Pis.’ Ex. 7 at 79. Furthermore, the Department did not disclose the fact that work still needed to be done on the title portion and the realty portion was not even close to being completed. In addition, the Principal Deputy Special Trustee explained during this contempt trial that the recommendation by SRA only applied to the title portion of TAAMS. Contempt II Tr. at 1874-75.
2. Quarterly Status Reports 2-7 (February 1, 2000-July 31, 2001)
Before addressing each of these reports separately, the Court will make two preliminary findings that are pertinent to all of them. First, the defendants failed to explain the steps that they had taken to bring themselves into compliance with the obligations prescribed in the 1994 Act in these reports. Contempt II Tr. at 2083-86. That is, the Department-in clear derogation of this Court’s December 21, 1999 order-failed to report the steps that it had taken (assuming that there are some) to bring itself into compliance with the 1994 Act. Thus, in the 18 month period after the Court issued its Phase I trial ruling, Interior did not provide the Court with any substantive description of its efforts to correct the statutory breaches of trust that it had stipulated to in the summer of 1999. Second, like the initial status report, attorneys in the Solicitor’s Office also participated in (and had considerable control over) these reports as well. See, e.g., Contempt II Tr. at 1649-50.
a) Quarterly Status Report 2 (February 1, 2000-April 30, 2000)
Interior filed its Second Quarterly Status Report (“Second Report”) on June 1, 2000. Pis.’ Ex. 8.
96
In the Second Report,
[w]e frequently find when making day-to-day decisions that none of the alternatives are really preferable and we oftentimes have to chose the least disadvantageous. We also find that no matter how many hours worked, the task continues to grow as we uncover additional items that need correction. As I have worked on TAAMS for the past year, it has become obviously apparent that this initiative is far different from what was originally conceived two years ago. The problems are far greater than originally projected and the resources needed must be continually reevaluated to ensure adequacy.
Pis.’ Ex.2, Tab 9F at 2. The Court was told nothing about the Project Manager’s concerns about TAAMS. Second, the Department failed to inform the Court that only current data was ready to be placed in the title portion of TAAMS; that is, the title portion did not then (and it does not now) have historical information in the system. Contempt II Tr. at 2024-25. Thus, in effect, the Department was only capable of deploying, after years of development and several rounds of testing, a system that could provide present ownership information for a limited number of trust beneficiaries. Third, the Department did not inform the Court that the February 2000 tests of the title portion of TAAMS revealed significant problems with that portion of the system. Pis. Ex. 2, Tab 9B.
The Department filed its Third Quarterly Status Report (“Third Report”) on September 1, 2000. 98 Like the prior two status reports, the Third Report provided the Court with a positive assessment of TAAMS. Pis.’ Ex. 9 at 18-20. Specifically, the Department told the Court that:
[t]he Land Title and Records Functionality of TAAMS has been completed and is now fully loaded on the desktops in the Rocky Mountain Region, Southern Plains Region and Alaska Region Land Title and Records Offices (LTRO), as well as some limited deployment to all other BIA and tribal LTROs. Plans are proceeding for deployment to the Pacific Region in September. The TAAMS title functionality has been well received by the user community and appears to meet their needs for properly managing Indian land ownership records.
A thorough and in-depth reanalysis and review of the original leasing, distribution and accounts receivable modules was conducted from May through August. The leasing functions underwent extensive testing from August 14-25. Initial results from the contractor and the users participating in the system test were positive, and the limited errors discovered during the system test have been fixed and retested satisfactorily. Feedback from the users participating in the system test was encouraging and their eagerness to have TAAMS deployed at their work is evident.
Re-deployment to the Rocky Mountain (Billings) Region (RMRO) of the leasing distribution and accounts receivable functionality of TAAMS is expected to begin early in September. An eight-week deployment is planned!.]
TAAMS is scheduled to be implemented (system of record) in the Rocky Mountain region in mid-November, replacing the legacy system.
Pis.’ Ex. 9 at 18-19. The Department also provided the Court with a chart detailing the milestones for the TAAMS System Subproject and whether the scheduled completion dates were met. Pis.’ Ex. 9 at 21. Out of the twenty-two milestones identified, the Department reported that sixteen were completed, and another two (complete system modification effort and deployment to BIA and tribal sites) were completed with respect to the title portion of TAAMS. Pis.’ Ex. 9 at 21. Thus, this chart deceptively indicated that the Department was making considerable progress towards finishing the TAAMS project.
At the same time, however, it is important to note that the Department observed, for the first time in a quarterly status report, that “[t]here are areas that remain a significant challenge and must be over
Although it appears on the surface that the Department was more forthright in this report, a close examination reveals that the Third Report was still, like the initial two status reports, misleading. First, the Department again failed to inform the Court that the title portion of TAAMS was only functional with respect to current title. That is, the Department touted the “Land Title and Records functionality of TAAMS” as being “completed and .. .fully loaded on the desktops in the Rocky Mountain Region, Southern Plains Region and Alaska Region Land Title and Records Offices[,]” knowing that it had absolutely no historical data to support it. Contempt II Tr. at 3121-22. 100 Second, the Department actually changed portions of the Special Trustee’s observations section prior to filing the Third Report with the Court. Specifically, in a draft, the Special Trustee wrote that:
[significant management intervention will be required to ensure that all BIA users accept TAAMS. It is expected that the DOI decision on the deployment of TAAMS, and the commencing of deployment beyond Billings will not occur by August 31, 2000 as planned.
Pis.’ Ex. 2, Tab 9H. Thus, the Special Trustee was going to tell the Court explicitly that the Department was not going to meet the August 31, 2000 milestone. This language was subsequently changed, however, in the version filed with the Court. In the final draft, the Department told the Court that:
[a]n 8 week re-deployment of the TAAMS realty functionality is underwayin Billings. It is expected that the DOI decision on the deployment of the realty-portion of TAAMS beyond Billings will occur later in the fall of this year.
Pis.’ Ex. 9 at 3. Interior had completely sidestepped the completion date of August 31, 2000, and instead simply stated that it would decide sometime in the fall of 2000 whether to deploy the realty portion of TAAMS. Third, the Department of Interi- or reported that the realty portion of TAAMS underwent “thorough and in-depth” reanalysis in August of 2000, and that the “[i]nitial results ... [of] the system test were positive, and the limited errors discovered during the system test have been fixed and retested satisfactorily.” Pis.’ Ex. 9 at 18. This representation was misleading because they suggested that the realty portion was functioning well. It completely disregarded the fact, like the comment in the Special Trustee’s section, that the milestone set in the Revised HLIP was not going to be met. That is, the Department knew that the realty portion of TAAMS would not be ready to “deploy” by the milestone date, yet it still only informed the Court that the results of the systems test were “positive.”
c) Quarterly Status Report 4 (August 1, 2000-October SI, 2000)
The Department of Interior filed its Fourth Quarterly Status Report (“Fourth Report”) with the Court on December 1, 2000. In the Fourth Report, the Department had no choice but to inform the Court that it had not been able to meet the August 31, 2000 milestones for the realty portion of TAAMS. Notwithstanding the fact that it had failed to complete these milestones, Interior reassured the Court that the modifications it needed to make to the system work were minor, and that deployment would take place in the early to middle part of 2001. Pis.’ Ex. 10 at 31. Specifically, with respect to the two milestones scheduled to be completed during this period, Interior told the Court that:
Complete System Modification Effort-Realty Functions and Interfaces. This milestone was scheduled to be completed by August 31, 2000. This milestone was not met.... Preliminary results from the transactional verification analysis of the leasing module in the Rocky Mountain Regional Office and subordinate agency offices indicate that the vendor may need to make additional modifications to TAAMS before it can be used as the system of record in this region. The additional modifications are not major design changes, however, they are integral to the leasing process and must be completed prior to its full-time use.
Realty Functions and Interfaces Start. This milestone was scheduled to be completed by August 31, 2000. This milestone was missed, as it is dependent upon the completion of Milestone K2, Complete System Modification Effort-Realty Functions and Interfaces, discussed above. Upon the completion of system testing, transactional verification and analysis, TAAMS will be released for use as the system of record. It is expected that this will occur shortly after the completion of the ‘follow-up’ system and user test scheduled to begin February 12, 2001. Deployment will occur 30-60 days after the modifications are complete and the Department has notified Congress.
Pis.’ Ex. 10 at 31. While providing this rough time estimate, the Department recognized that it needed new dates for these two milestones. Pis.’ Ex. 10 at 33. In addition to these representations, the Department also told the Court that it had conducted a meeting in September of 2000 to review the status of the TAAMS project. Pis.’ Ex. 10 at 32. Interior indicated that it had decided, based on “activities
While the Department was more forthright in this report than the previous three, it still accentuated the positive aspects of TAAMS and presented the Court with a favorable view of the land management system despite the numerous problems with it. That is, even though the milestone deadlines for the realty portion of the system had been missed, the Department still told the Court that only minor adjustments were necessary and the testing of the system was “successful” in that it showed Interior what needed to be done. Pis.’ Ex. 10 at 32. Moreover, the Department again failed to provide the Court with information regarding the title portion’s ability to support historical data, see Pis.’ Ex. 10 at 31-34, despite the fact that the issue was specifically raised at the September meeting. Pis.’ Ex. 2, Tab 9J (writing, in reference to the September 2000 meeting, that “[a] definite division between ‘current’ and ‘history’ was noted. Only the ‘current’ portion was demonstrated. It was mentioned that there were still some issues with the ‘current’ portion and some data clean up still needed to be done... History is not in the system, i.e. a chain of title could not be accomplished from the data currently present.”). In addition, the Department failed to inform the Court the present status of the conversion of data from IRMS into the realty portion of TAAMS-namely that “they are going to scrap the existing IRMS conversion programs and an Artesia person and a BIA person are going to remap the data bases and start over on the IRMS data conversion.” 101 Pis.’ Ex. 2, Tab 9J.
d) Quarterly Status Report 5 (November 1, 2000-January 1, 2001)
The Department of Interior submitted its Fifth Quarterly Status Report (Fifth Report) on March 1, 2001. 102 In the Report, the Department once again provided the Court with a positive assessment of TAAMS. In particular, with respect to the title portion of the system, Interior wrote that:
Effective December 29, 2000, TAAMS was made the system of record for current title for the Rocky Mountain, Southern Plains, Eastern Oklahoma and Alaska Regions. These four title plants represent all offices designated in Group A for deployment ... The title history data is not complete. As necessary, field staff will continue to supplementhistorical title information in TAAMS with data and information from legacy systems and hard copy data.
Pis.’ Ex. 11 at 27. Moreover, with respect to the realty portion of TAAMS, Interior reported that the complete system modification effort would be completed by May 31, 2001. Pis.’ Ex. 11 at 27. In support of this date, the Department indicated that BIA finished its transactional verification analysis of the leasing module, and that a review was being conducted to determine “the remaining functions that must be included for the realty portion to be completely operational.” Pis.’ Ex. 11 at 27. Additionally, the Department indicated, with respect to the “Realty Functions and Interfaces Start” milestone, that “[b]ased on the schedule discussed above, TAAMS title and realty modules are scheduled to be fully implemented by June 1, 2001 in the Rocky Mountain Region.” Pis.’ Ex. 11 at 28.
Like the previous reports, the Department of Interior continued to report progress on the TAAMS system notwithstanding the fact that the originally scheduled milestones had long since passed. Thus, despite the fact that Interior was incapable of even deploying (as opposed to implementing) the realty portion of the land management system at the pilot site at Billings, it nonetheless provided the Court with a positive assessment of the system’s status and indicated that it would be fully operational within a matter of months. These completion dates represented to the Court can only be described, in light of the later filed quarterly status reports, see generally Pis.’ Ex. 66, as being based on nothing more than speculation and wishful thinking. That is, there does not appear to have been any support for these arbitrarily set completion dates. See generally Pis.’ Ex. 66. Worse yet, the Department deceptively informed the Court in the Fifth Report that “[effective December 29, 2000, TAAMS was made the system of record for current title for the Rocky Mountain, Southern Plains, Eastern Oklahoma and Alaska Regions.” Pis.’ Ex. 11 at 27. A December 6, 2000 memorandum from Sharon Blackwell, Deputy Commissioner of Indian Affairs, clearly indicated that TAAMS was only considered the system of record for these locations in part. The memorandum provided that:
Effective December 29, 2000 [TAAMS] shall be considered the system of record for all current activities in the Land Title and Records Offices in the[se] [four regions], with the following considerations:
Alaska Region-All transactions in regional areas for which data had been loaded into TAAMS.
Eastern Oklahoma-All transactions for which data has been loaded into TAAMS.
Rocky Mountain Region-In response to your letter of November 29, 2000, [several] actions will be taken... We expect a quick resolution and we do not believe it is necessary to delay this decision pending its completion.
Southern Plains Region-TAAMS as the system of record shall be effective December 26, 2000, at the conclusion of the Southern Plains Land Title and Records Office initial review and parallel test of the system.
Pis.’ Ex. 2, Tab 10G. The qualification that it would be considered the system of record for transactions for which data had been loaded into TAAMS was critically important because, as the Court later learned, there was relatively little data input into TAAMS at that time in the Alaska and Eastern Oklahoma regions. Therefore, the Department considered TAAMS to be the system of record notwithstanding the fact that a relatively small amount of data had been put into the system. Later quarterly status reports filed by the Department confirmed the lim
e) Quarterly Status Report 6 (February 1, 2001-April SO, 2001)
The Department filed its Sixth Quarterly Status Report (“Sixth Report”) on June 1, 2001. 103 As an initial matter, Interior noted that no milestone due dates fell within this reporting period. Pis.’ Ex. 12 at 25. The Department went on to report that it completed a system test on April 12, 2001, in which “the functions tested appeared to be sound and functions as defined for the test were met by the application.” Pis.’ Ex. 12 at 26. Interior also noted that it conducted a Test Readiness Review on April 18, 2001, to identify and resolve any issues that could cause a delay in the test schedule. Pis.’ Ex. 12 at 26. Based in part on the results of that test, the Department decided to include a new milestone, “User Review,” that was completed on May 4, 2001. Pis.’ Ex. 12 at 27. As a result of the new milestone, Interior indicated that it had extended the “Realty Functions” milestone from May 31, 2001 until June 25, 2001. Pis.’ Ex. 12 at 25. In the Sixth Report, the Department of Interior also told the Court that after the Executive Management Decision on June 25, 2001, “the deployment schedule will be finalized with major milestones identified for the following groups: Group A[;] Group B[;] and Group C[.]” Pis.’ Ex. 12 at 27-28. Interior further presented the Court with a tentative deployment schedule for the title and realty portions of TAAMS for these regions. Pis.’ Ex. 12 at 28. In particular, the Department indicated that the tentative deployment schedule was “[bjased on a successful UAT of TAAMS and successfully running [the system in] parallel with the legacy systems!.] Pis.’ Ex. 12 at 28. For purposes of this opinion, it is sufficient to note that Group A (Rocky Mountain, Southern Plains, Eastern Oklahoma, and Alaska) were set to be completed by December of 2001. Pis.’ Ex. 12 at 28. The Department recognized, however, that “[d]ata cleanup and training could have a major impact on the deployment schedule for TAAMS.” Pis.’ Ex. 12 at 28. 104
The second report filed during Secretary Norton’s tenure with the Department
f) Quarterly Status Report 7 (May 1, 2001-July SI, 2001)
The Department of Interior submitted its Seventh Quarterly Status Report (“Seventh Report”) on October 3, 2001.
105
Before considering the Seventh Report proper, the Court will briefly address the process that led up to the filing of the report. The Seventh Report was originally due on September 1, 2001. On August 27, 2001, however, William Myers, the Solicitor for Interior, informed Secretary Norton that he wanted to discuss the Special Trustee’s observations section of the report, in which Thomas Slonaker wrote that he “was not satisfied with the completeness or the quality of the information provided in this quarterly report.” Pis.’ Ex. 36. Solicitor Myers informed Secretary Norton that the draft report had to be finalized by August 31, 2001, and that he wanted to meet with her on August 28, 2001 to discuss the matter. Pis.’ Ex. 36. On August 29, 2001, Secretary Norton wrote the Special Trustee a memorandum in which she stated, referring to the above quoted portion of the Special Trustee’s draft observations section, that “[s]ince I have not heard from you on this subject prior to my review of the draft, and since your office compiled the report, I assume that your concerns were of insufficient severity or immediacy for you to recommend a delay in filing the report.” Pis. Ex. 4, Tab 1. The Court finds Secretary Norton’s memorandum to the Special Trustee very peculiar in light of the Special Trustee’s earlier observations,
see, e.g.
Pis.’ Ex. 12 at 3, in which he indicated his growing concern about the accuracy of the quarterly status reports, as well as the Court Monitor Reports, which discussed some of the Special Trustee’s concerns.
See, e.g.,
Pis’ Ex. 2 at 104-05. On August 31, 2001, the Special Trustee indicated to the Solicitor’s Office that he would not verify the quarterly report. Defs.’ Ex. P, Tab 36. Consequently, Interior filed a motion for
Turning now to the Seventh Report, Interior reported as an initial matter that it had recently entered into a contract with Electronic Data Systems (“EDS”) to provide an independent assessment of the TAAMS project. Pis.’ Ex. 13 at 29. The Department then stated that, although the Integrated User Acceptance Test (IUAT) conducted at the Rocky Mountain Region “showed that significant progress continues and the IUAT methodology proved effective, this test confirmed [that] the software was not ready for deployment.” Pis.’ Ex. 13 at 29. The Department went on to provide the Court with a summary of the test results, which confirmed that the system was indeed not ready for deployment. Pis.’ Ex. 13 at 29. Thus, Interior had no choice but to concede that the “Realty Functions and Interfaces” milestone of May 31, 2001, was not met. Pis.’ Ex. 13 at 31. 106 As a result, the Department informed the Court that it was in the process of developing new milestone dates. Pis.’ Ex. 13 at 34. With respect to the title portion of TAAMS, the Department reported that the “[t]itle module is operational only in Group A ... Regions, and the exact status of each of the four regional offices will be provided in the next quarterly report.” Pis.’ Ex. 13 at 33.
The Seventh Report, like the previous six, failed to portray accurately the status of TAAMS. Specifically, Interior presented a positive picture of TAAMS despite the fact that the agency was not ready to deploy or implement the land management system as scheduled, and, after the Integrated User Acceptance Test, clearly was not going to be able to deploy or implement it anytime soon. Importantly, the Department made no mention of the “Data Analysis” section of the IUAT report, which explicitly noted that “[failures were spread across all applications and disciplines, and none of the applications appear mature enough for implementation.” Pis.’ Ex. 2, TablC at 2. Thus, while conceding that the milestone had been missed and that the system was not ready for deployment, Interior did not provide the Court with anything close to what can be construed as a complete picture of the system’s status. Indeed, the Special Trustee himself indicated in his observations section that he was “not satisfied with the completeness or the quality of the information provided in this quarterly report.” Pis.’ Ex. 13 at 6. Even before the Seventh Report was filed with the Court, the Special Trustee advised the Secretary that he did not believe the Department (and the project managers) had sufficient evidence to corroborate the representations made in the report. Pis.’ Ex. 4, Tab 3. As the Special Trustee testified during this contempt trial:
I had lost confidence by that time in the reporting of the completeness of some of the subprojects, partly becauseI believed, as I mentioned a few minutes ago, that they perhaps were not properly conceived, and there might even be areas of the subproject that were not being properly monitored by the subpro-ject manager who had never even dreamed that a particular aspect of the subproject really had to be part of his plan.
Contempt II Tr. at 2224-25. Moreover, even after telling the Court that the current title portion of TAAMS was the system of record for the Group A Regions and that it was operational, the Department failed to provide the Court with the actual status at the Group A Regions. Pis.’ Ex. 13 at 33. Instead, the agency simply stated that it would provide that information to the Court in the next quarterly status report. Pis.’ Ex. 13 at 33. The problem with this representation is that the Department did know at the time it filed the report with the Court, at least in part, the status of TAAMS at these locations, and the status was not as positive as Interior had led the Court to believe in the Fifth Report. Pis.’ Ex. 3 at 22-25 (this was filed with the Court on September 17, 2001, well before Interior submitted the Seventh Report). In sum, the Seventh Report was no closer to providing the Court with a complete and accurate assessment of TAAMS than the previous six reports. Indeed, Secretary Norton herself testified during the contempt trial that “it was an insufficient picture” and “it’s not a particularly good document.” Contempt II Tr. at 4381.
3. Quarterly Status Report 8 (August 1, 2001-December 81, 2001) & The Status of TAAMS at the Time of the Contempt Trial
The Department of Interior filed its Eighth Quarterly Status Report (“Eighth Report”) on January 16, 2002. 107 In the Eighth Report, before addressing the status of specific trust reform efforts, Secretary Norton made three important concessions that are worth mentioning. First, Secretary Norton recognized that the previous seven reports did not provide the Court with a sufficiently detailed or objective assessment of trust reform. 108 Pis.’ Ex. 66 at 6. Specifically, Secretary Norton wrote in her observations section that:
[a]s indicated in the introduction, the style, methodology and content of this report differ from previous reports. We are introducing a new format that is designed to be more readable, and theinformation is based upon a methodology to document more objectively both accomplishments and lack of progress. The previous format focused on the steps we have taken and the completion of milestones. In retrospect, this format exacerbated the ordinary human inclination to report accomplishments and to ignore obstacles, difficulties and problems that were not directly related to the. milestones. With this report, we have demanded that managers report both progress and problems. Our report also includes the key recommendations of outside management consultants who have criticized the current approach to some trust reform goals. The overarching goal is to provide the Court with a more comprehensive and candid reflection of trust reform.
Pis.’ Ex. 66 at 6. Second, Secretary Norton acknowledged that the Department now considers the HLIP, the plan by which trust management reform progress was measured and reported to the Court in the past, to be obsolete. Pis.’ Ex. 66 at 7. In particular, she wrote that “HLIP milestones have become increasingly disconnected from the overall objectives of trust reform[,]” and, “[mjore fundamentally, the HLIP does not reflect an adequately coordinated and comprehensive view of the trust reform process.” Pis.’ Ex. 66 at 7 (writing further that “[m]any of its identified activities have been designated as being completed; however, little material progress is evident.”). Third, Secretary Norton noted that the Eighth Report “marks the beginning of the transition from a narrow, non-integrated, task oriented set of activities related to trust reform, to an integrated, goal focused approach to managing and accounting for trust assets.” Pis.’ Ex. 66 at 8. Specifically, she informed the Court that:
The senior management team will coordinate a new management strategic plan to replace the HLIP. This will incorporate a broad variety of perspectives, including those offered by tribes, individual Indians, outside consultants, and other agencies. This plan will incorporate ways to overcome challenges and obstacles identified in this report by the subproject managers, EDS, Inc., the Special Trustee and the Director of Indian Trust Transition. Our objectives are (1) to plan and conduct a valid, cost-effective and timely accounting of the IIM trust in a manner that satisfies the Department’s fiduciary duty to account to IIM beneficiaries, (2) to develop a beneficiad] approach to trust management and service delivery, (3) to record and maintain comprehensive, up-to-date and accurate land and natural resource ownership records, and (4) to develop a workforce plan and associated activities to attract and maintain a qualified, effective workforce.
Pis.’ Ex. 66 at 8.
Ross Swimmer, the Director of the Office of Indian Trust Transition (OITT), also provided the Court with -a detailed observations section in the Eighth Report. Pis.’ Ex. 66 at 15. Secretary Norton created OITT in November of 2001 to establish a temporary office within the Office of the Secretary that would be responsible for planning and implementing the transition of the Department’s Indian trust functions, which were (and are) currently dispersed throughout the Department. Pis.’ Ex. 66 at 15. As part of his effort to assist the Department in compiling the Eighth Report (and to ‘ensure that the report was both complete and accurate), Swimmer participated in interviews with all subproject managers regarding their individual reports. Pis.’ Ex. 66 at 15. Swimmer reported to the Court that during the course of these interviews it became readily apparent that there had not been sufficient documentation to support
During the interview process, questions were asked such as: You state you did this task or training or report, etc., where is the documentation? Often the response was similar to: I really believe it was done, but I will have to do more checking to confirm. In other words, subproject managers were willing to state certain progress was made but when challenged could not always defend their position. In other instances, I would hear that subproject managers had completed a task, but when asked what happened with their work to insure that the beneficiary received his/her income, the answer often was: That is not my area....
It is very alarming to read and hear reports of progress being made and, in some instances, projects completed without having this work fit into an overall context of trust management.
Pis.’ Ex. 66 at 15-16.
EDS, the independent contractor that had been hired by the Department in June of 2001 to evaluate the status of TAAMS, submitted an interim report on November 12, 2001. In its interim report, which was summarized in the Department’s Eighth Report, EDS observed that:
progress has been made in implementing the current Title application with the name & address module. The current title application is being used in four-regions. Title history is dependent upon BIA Data Cleanup tasks and is not yet available in production. The business functions in the Realty area are much more complex than Title. During development, critical requirements for defining the Realty application were not appropriately captured, partially due to its accelerated development schedule. This resulted in extensive re-coding, so that the COTS product is at this point a custom design. The original COTS product was focused on the leasing and did not have a title component that reflected BIA land management practices. In addition to being time consuming and expensive, the extensive set of changes exposes the system to an increased risk of operating problems when placed in production.
Pis.’ Ex. 66 at 124. In addition to this general description, EDS flagged several issues for Interior that needed to be addressed, including the fact that different business models and processes throughout the regions and field offices make TAAMS development complex and costly, the TAAMS requirements determination and gathering process is inadequate, and testing teams do not have detailed requirements to test against, making it difficult to measure success. Pis.’ Ex. 66 at 125. As the Principal Deputy Special Trustee testified at trial:
EDS’ assessment was that the project needed a thorough replanning; that probably before we were ready to embark on a reinvestigation, a reinvestment in TAAMS, it would be upwards of a year’s time. In the interim we need to do things like requirements analysis, planning, outreach, et cetera, and then in something short of two years time that they would present, as I recall, options for what to do with TAAMS, either to abandon it, to re-do it, to look at other off-the-shelf options, so forth.
Contempt II Tr. at 146. Based on its findings, EDS recommended that the Department should appoint a single individual accountable for TAAMS and BIA Data Cleanup, accelerate
109
TAAMS title and
The Department of Interior radically changed its assessment of TAAMS, in part based on the observations and recommendations of EDS, in the Eighth Report. Interior informed the Court that, in accordance with EDS’ recommendations, the agency “is deferring realty and accounting functionality until the business processes are documented and defined.” Pis.’ Ex. 66 at 121. Moreover, the Department indicated that several significant steps remain and that there are numerous additional issues and concerns that must be addressed. Pis.’ Ex. 66 at 122-23. Thus, Interior finally-after over two years-recognized that there were significant impediments to implementing (or even deploying) the realty portion of TAAMS. That is, without resolving these underlying issues the land management system described in great detail to the Court in the summer of 1999 would remain no more a reality than the Department’s non-existent historical accounting project. 110
There is no question that, based on the representations made by the Department in the Eighth Report as well as the substantial testimony during this contempt trial, TAAMS will not perform the functions described to the Court during the summer of 1999 for several years, if ever. See, e.g., Contempt II Tr. at 1124 (Principal Deputy Special Trustee agreeing that “TAAMS ... presently e[an] not support the Court-directed trust reform effort and will not be capable of supporting for years, if ever[.]”); 2210 (Special Trustee, agreeing that TAAMS cannot now and may not ever be implemented); 3456 (Nessi, testifying that “there were three findings: lack of executive leadership, which I would completely concur with; they told me that title was salvageable, which I would probably agree with because I thought it was a pretty good piece of software; and they told me that leasing needed to be scrapped, which, based on the last time I saw TAAMS in March, I would agree with that.”). The problems associated with interfacing TAAMS with TFAS, which are critically important to the successful implementation and functioning of the land management system, still have not been resolved. Contempt II Tr. at 1255-57; 1296-98. Indeed, TFAS itself continues to rely on unverifiable data. Contempt II Tr. at 1227-28, 1427-29. Moreover, not only has the Department failed to implement (or deploy) .the Accounting module of TAAMS, which tracks the billing and accounts receivable of the trust, it has made little to no progress since the Phase I trial in doing so. Contempt II Tr. at 1221-25. As the Principal Deputy Special Trustee testified during this contempt trial:
Q. Now, sir, was the accounts receivables system deferred, then?
A. In a sense, that would be correct because the accounts receivable piece is going to be in the realty side of TAAMS, the portion that they have not been able to successfully test.'
Q. Is the accounts receivable system implemented today?
A. No.
Q. What is the consequence of not having an accounts receivable system, Mr. Thompson?
A. Well, as we discussed yesterday or the day before, absent an accounts receivable system, you have no way to project, for want of a better term, the due ends off of leases. An accounts receivable gives you an extra check and balance that once a lease is established, there is a pattern for payment and you can use that information, then, as a cross-check against whether you’re receiving your payments on time and fully for each lease itself there.
Q. ' So if, in fact, accounts receivable is — the deployment of an accounts receivable system is deferred, there would be no need to have all the leases recorded, would there?
A. I guess I would argue, you need to have your lease universe captured somewhere. In order to manage that lease universe and the production of income from it, it’s necessary to have an accounts receivable system as well as a collection system to complement the work that’s done in the trust fund accounting system.
Q. Is it correct that yesterday, you testified that you felt among the current leases, at least 50 percent of those leases are — short-term leases are not recorded?
A. My information is that more than 50 percent of the leases managed in BIA are not presently recorded in an automated system.
Q. And it’s also your testimony there is no accounts receivable system today, correct?
A. There is some accounts receivable systems on the trust fund side. There may be some independent, but there is not a national or uniform accounts receivable system in existence.
Q. So is it fair to say as of today, you do not know whether you are receiving for the individual Indian trust all the monies that are being paid for the use of the Indian trust lands?
A. I could say that it makes it much more difficult to ascertain whether you’re receiving all of those funds or not. It means that there is not an independent or an automated way to assure yourself that, in fact, that’s going on.
Q. Are there manual audits to confirm it on an annual basis, Mr. Thompson?
A. Not uniformly.
THE COURT: There is nothing different about that, then, than from the trial in ’99, is there?
THE WITNESS: No, Your Honor, there is not.
Contempt II Tr. at 1221-25. It is equally clear that the legacy systems do not enable the Department to discharge properly its fiduciary responsibilities. See, e.g., Contempt II Tr. at 1623-25; Phase I trial Tr. at 148-53, 412-21, 441-42, and 1153-54. Thus, while the Department has already spent 33 million dollars on TAAMS, see Contempt II Tr. at 650-51, for all practical purposes the project is in a state of disrepair. Pis.’ Ex. 66 at 121.
2. BIA Data Cleanup
a) Background information on BIA Data Cleanup
Because there are many sources of errors in electronic data, Interior recognized the need for a subproject — in both the Original, and Revised HLIP — devoted to data cleanup. The Department, in describing this problem, observed that:
[t]he data maintained electronically in support of land title and resource management requires cleanup and reconciliation across systems. Incorrect or inconsistent data is the result of, amongother things, a) multiple manual entries of the same information into the automated system, b) the tendency to use the same information inconsistently or unsystematically across automated systems and functions, and c) the use of different automated systems for the land resource management function.
Pis.’ Ex. 6 at 21. See also Pis.’ Ex. 7 at 7 (noting that “data that is stored in the legacy systems can be inconsistent, inaccurate, or incomplete.”). The ultimate goal of the data cleanup subproject “is to ensure correct and updated data such that Indian trust records are accurate, meet management and operational standards, and establish permanent data integrity at all BIA levels.” Pis.’ Ex. 6 at 24. See also Pis.’ Ex. 6 at 5 (noting that “[t]he Data Cleanup subprojects within OST and BIA are aimed at ensuring that data housed in existing or new systems are accurate and complete, and aimed at eliminating transaction processing backlogs to ensure records are up-to-date-particularly land ownership information and records.”).
The BIA Data Cleanup effort focuses primarily on preparing data for conversion from the existing legacy systems (LRIS and IRMS) to TAAMS and then bringing that data up to a sufficient level of reliability and quality. Contempt II Tr. at 3759. The first step in this process is “pre-de-ployment” cleanup, which brings the data to a quality level that can support the initial TAAMS deployment. Pis.’ Ex. 6 at 30. Interior explained this process in the revised HLIP:
Based on the results of the analysis task and the developed Data Cleanup Strategy, data/records needing cleanup prior to deployment of TAAMS will be addressed during this task at each geographic location. This includes necessary Data Cleanup to support the TAAMS Pilot and deployment, as well as all subsequent locations.
Pre-deployment Data Cleanup focuses on ensuring that ‘key’ data fields such as tract number and owner ID are unique and correct, inconsistencies between the legacy systems are researched and amended as necessary. Eliminating these errors ensures that TAAMS data conversion can be processed effectively.
Pis.’ Ex. 6 at 30. Even after TAAMS is deployed in a particular region, the Department recognized that additional cleanup activities, known as “post-deployment” cleanup, would be required. Pis.’ Ex. 6 at 30. Interior also explained what this entails in the revised HLIP:
Examples of post-deployment Data Cleanup include reviewing standard BIA reports, such as the Title Status Report, from the legacy system against TAAMS reports, addressing inconsistencies, researching and making corrections to data errors and entering document processing backlogs, such as completed probates.
Pis.’ Ex. 6 at 33. The Department selected DataCom Sciences, Inc. (“DataCom”) as the contractor for this subproject in January of 1999. Pis.’ Ex. 3, Tab ID. In the Original HLIP, the Department indicated that it planned on completing the pre-deployment data cleanup by May 31, 1999, and the post-deployment data cleanup by June 30, 2000. Pis.’ Ex. 6 at 7.
The Department of Interior has acknowledged the importance of data cleanup for several years.
See, e.g.,
Pis.’ Ex. 3, Tab 1A; Phase I trial Tr. at 3110-11, 3121-22. Specifically, Interior recognized during the summer of 1999 that the BIA Data Cleanup subproject was vitally important to the TAAMS initiative because without complete and accurate electronic data, it would not matter how well the new land management system functioned. Phase I trial Tr. at 3121-22 (“I don’t think there is any doubt, even on the plaintiffs’
b) The First Quarterly Status Report and The Revised HLIP
In the First Report (which, as noted above, included the Revised HLIP), the Department of Interior informed the Court that it was not going to be able to meet the schedule presented in the Original HLIP. 111 Pis.’ Ex. 7 at 7. Specifically, Interior reported to the Court that it had encountered (and continued to face) problems in performing the data cleanup sub-project, as well as in measuring the overall progress that it had made towards completing the subproject. The agency wrote that:
One of the difficult aspects of the BIA Data Cleanup task is that the data needed to properly plan the effort from beginning to end, including precise milestones, are essentially unavailable. When the Data Cleanup process began in January 1999, the extent to which this factor would impact planning had not yet been determined. While the BIA has learned a great deal about the character of its data, it is difficult to quantify the extent of the data problem in any comprehensive manner. We have found that: 1) each BIA and tribal site’s Data Cleanup issues are very different; 2) the nature of processing backlogs is difficult to assess; 3) the lack of uniform nationwide legacy systems makes gathering information difficult; 4) data definitions differ from region to region and, in some cases, agency to agency within the same region; and 5) the BIA’s business process has permitted regional variation in its data rules to the extent that key information such as the format of Indian owner identification numbers differs considerably from one region to another.
Pis.’ Ex. 6 at 22; id. at 24 (“it is difficult to estimate a total cost and duration for the entire cleanup effort at this time.”). Nonetheless, Interior informed the Court that it anticipated completing the post-deployment cleanup by sometime in 2003. Pis.’ Ex. 7 at 7.
As a result of these difficulties as well as its initial efforts, Interior told the Court that it was going to take a decentralized approach to performing data cleanup. The Department explained in the HLIP that:
Some BIA sites present such great Data Cleanup challenges that it could be years before the data is sufficiently ready for system deployment using our initial standard. As a result, it was determined that a separate strategy would be determined for each Data Cleanup site, concentrating on ensuring that the most basic requirements of data integrity were met, such as elimination of duplicate records in the legacy systems.
Pis.’ Ex. 6 at 23. Each region, and offices within the regions, had been operating independently and had developed their own processes for land title and resource management functions, including different uses of automated systems. Pis.’ Ex. 6 at 20.
See also
Contempt II Tr. at 3434. Each
.. .the local office sets a priority with the data cleanup contractor. It was originally and initially determined that in terms of the BIA, only the local offices would have the best knowledge on what their data cleanup issues are. There is absolutely no way somebody sitting in Washington is going to be able to tell a local office what their data cleanup priorities are.
Contempt II Tr. at 3432.
Even though Interior chose to take a decentralized approach to BIA Data Cleanup, the agency identified in general terms what the subproject would entail at each site. In particular, the Department reported in the HLIP that:
The BIA Data Cleanup subproject will:
• Identify missing documents/data and enter the pertinent data in to the appropriate systems;
• Insure that data in existing legacy systems are consistent prior to migration to the new system;
• perform manual research and data entry at sites;
• Verify/reconcile current and historical data; Prepare data for conversion to new TAAMS which includes LRIS capabilities;
• Establish effective data administration policies and procedures; ...
• Provide clean land records and title data in time for the initial implementation of the TAAMS system pilot and full deployment to BIA regions[.]
Pis.’ Ex. 6 at 25. Thus, while Interior did not have a uniform approach to fulfilling these requirements, the end goal for data cleanup at each location was to have accurate and complete data in TAAMS. Contempt II Tr. at 3432 (“It’s to ensure that accurate and complete data is in TAAMS.”).
In the First Report, the Department also recognized-as it had during the summer of 1999-the importance of BIA Data Cleanup as well as its relationship to the other subprojects (especially TAAMS). Pis.’ Ex. 6 at 25-26. Specifically, in terms of the data cleanup itself, Interior observed that “[vjerification and validation of data is essential to providing accurate and reliable information to account holders.” Pis.’ Ex. 6 at 24. Thus, the Department understood that this subproject had to be completed in order for the Department to discharge its fiduciary obligations properly. Pis.’ Ex. 6 at 25-26. That is, the information contained in the Department’s computer systems-whether it be LRIS, IRMS or TAAMS-must be both accurate and complete. Moreover, with respect to the interrelationship between the BIA Data Cleanup subproject and the TAAMS subproject, Interior wrote that “[t]he BIA Data Cleanup effort has a direct impact and bearing on the TAAMS deployment. The TAAMS potential for cost savings and operational efficiencies will be negated if the underlying data quality is poor.” Pis.’ Ex. 6 at 26. Thus, Interior knew that its efforts to deploy TAAMS would be limited based on the progress (or lack thereof) in completing the BIA Data Cleanup subpro-ject.
Notwithstanding the fact that Interior had failed to establish meaningful metrics to describe the overall progress of the BIA Data Cleanup subproject and that it had to postpone its anticipated completion date by three years, the agency reported several accomplishments to the Court in the First Report. Pis.’ Ex. 7 at 7. Specifically, the Department stated that:
• Pre-migration clean-up was completed in August 1999 at all locations within the Rocky Mountain Region where TAAMSis being pilot-tested. More than 2,000 records were analyzed, researched and corrected prior to conversion.
• A detailed Data Management Plan in support of TAAMS was completed in August 1999....
• Data for 18,000 tracts in the Alaska Region, where no legacy systems exist, was entered into the new TAAMS database by the contractor....
• A Configuration Management Plan was prepared in August and revised in October 1999 to guide development and deployment of software modifications in order to ensure the continuing integrity of the data.
Pis.’ Ex. 7 at 7-8. The Department did not, however, explain to the Court how much closer these accomplishments actually got the agency to completing this particular subproject. The Department also did not tell the Court how much closer it was to completing the subproject at the particular regional offices.
c) Quarterly Status Reports 2-7 (February 1, 2000-July 31, 2001)
Before turning to each of these quarterly status reports individually, it is important to note that Ross Ridgeway, of Data-Com, explained at this contempt trial how the cleanup process was actually carried out during this time period. He testified that at the local offices where DataCom conducted cleanup activities, BIA would first generate anomaly reports, which are basically a list of records that might have a certain type of error. Contempt II Tr. at 3733-34, 3772-73, 3795. DataCom, in turn, would prepare a task plan for addressing the anomaly. Contempt II Tr. at 3734, 3773-74. DataCom personnel would address each instance of the anomaly, conducting research using hard copy, legacy system data and reports, and other data. Contempt II Tr. at 3735. DataCom would then make a recommendation to BIA regarding whether and how to correct the particular instance of the anomaly. If BIA concurred with the recommendation, Data-Com would make the change. Contempt II Tr. at 3735-36. DataCom kept track of its progress on a task by task basis. Contempt II Tr. at 3804, 3813, 3815.
1. Quarterly Status Report 2 (February 1, 2000-Apnl 30, 2000)
In the Second Report, the Department of Interior summarized the progress that DataCom had made in performing specific tasks in several regional offices. Pis.’ Ex. 8 at 6-7. For example, Interior noted that in the Rocky Mountain Region (Billings), “to date more than 2,000 LRIS cases, involving over 16,000 tracts, have been researched by DataCom employees. Totals for IRMS include just over 2,500 cases completed encompassing more than 2,300 tracts.” Pis.’ Ex. 8 at 6. Moreover, with respect to the Alaska Region, the Department wrote that “[djuring the month of March, the contractor continued to examine, review and encode tracts into TAAMS.” Pis.’ Ex. 8 at 6. The Department informed the Court that in the Mas-ka Region it had decided to focus on one particular area at a time, starting with Cook Inlet. Pis.’ Ex.8 at 6. Interior did not, however, provide the Court with any indication or explanation as to how much progress had been made towards completing the BIA Data Cleanup subproject as a whole, or even at the individual regional offices. That is, while Interior provided the Court with a summary of what tasks had been completed (or at least initiated) during this time period, it failed to indicate, even at the regional level, how much work remained or how those tasks fit into an overall plan to complete the subproject.
2. Quarterly Status Report 3 (May 1, 2000-June 31, 2000)
The Department of Interior again reported on the progress that DataCom had
Moreover, as noted above, the Special Trustee took over responsibility for compiling the status reports during this time period and began including his own observations section in the reports. In the Third Report, the Special Trustee wrote that “[indications are that the BIA Data Cleanup effort continues to present serious challenges and may delay implementation of TAAMS at some locations... The Special Trustee will work with the BIA subproject manager to obtain meaningful metrics on the progress of the BIA data cleanup effort.” Pis.’ Ex. 9 at 3. While these statements are a step in the right direction, there are four significant problems with them. First, the Special Trustee’s recognition that there were not “meaningful metrics” for the BIA Data Cleanup subproject demonstrates that Interior was aware of the fact that the progress it was reporting to the Court on specific tasks were not put into context for the Court. That is, the Department knew that it had failed to provide the Court with “meaningful metrics” in the past two quarterly status reports and that the Court had only been told that a high percentage of specific tasks were completed or initiated. Second, this observation by the Special Trustee meant that Interior was aware of the fact that it had failed to provide the Court with such information in the Third Report as well. Third, there is no indication that the representations made by the Special Trustee were meant to be read by the Court as the Department’s official assessment of the subpro-ject. Indeed, the portion of the status report devoted exclusively to the BIA Data Cleanup subproject itself made no mention of this concern. Finally, an earlier draft of this section, which was later changed by the Department, reveals that it deliberately tempered the language used in the only portion of the report that indicated there may be problems with the BIA Data Cleanup subproject. Specifically, the earlier draft provided that:
Recent indications are that the BIA Data Cleanup and data conversion effort continues to present serious obstacles tothe successful implementation of TAAMS. The BIA data cleanup effort continues to uncover significantly greater data cleanup challenges than were previously anticipated. For instance, more than 15 months after data cleanup commenced in Billings, the data is still not completely converted, nor cleaned up sufficiently to implement TAAMS in Billings.
Pis.’ Ex. 2, Tab 9H. It is ironic that the Department now argues that the Special Trustee’s observations demonstrate how forthright it was with the Court.
3. Quarterly Status Report k (August 1, 2000~October 31, 2000)
The Department of Interior continued its practice of summarizing the progress that DataCom had made in performing specific tasks in the Fourth Report. For example, Interior noted that in the Alaska Region, “Cook Inlet is 84% complete (592 allotment documents entered)[;] Koniag is 78% complete (455 allotment documents entered)!;] Chugach is 32% complete (105 allotment documents entered)[;][and] Aht-na is 29% complete (287 allotment documents entered).” Pis.’ Ex. 10 at 15. Moreover, with respect to the Great Plains Region, Interior wrote that the multiple owner ID task is 71% complete (8,535 cases), the document processing task is 20% complete (2,622 of 13,000 Joint Tribal Advisory Committee deeds); and that 94% of the current agency global processing requests have been processed. Pis. Ex. 10 at 15. Interior never informed the Court of the overall status of the subproject or how much (or little) progress had been made at the different regional offices. The only indication that there may be problems with the subproject was provided by the Special Trustee, who stated in his observations section that BIA Data Cleanup “will remain a difficult challenge!,]” and that BIA management was working with DataCom to establish more precise indicators of progress. Pis.’ Ex. 10 at 6. 112 For the reasons stated above, the Court finds that the Special Trustee’s observations section does not purge the report itself from being grossly misleading.
4. Quarterly Report 5 (November 1, W00-Jarmary 31, 2001)
The Department sealed its fate with respect to Specification 4 by filing the Fifth Report.
113
In this quarterly status report, the Special Trustee began his observation section, which preceded the BIA Data Cleanup subproject portion of the report, by writing that “Data cleanup progress has been provided in chart form in Appendix B of this report to provide a more user-friendly representation of the project.” Pis.’ Ex. 11 at 5. In light of the Eighth Report,
see
Pis.’ Ex. 66, and the EDS Report,
see
Pis.’ Ex. 60, it is clear that Appendix B to the Fifth Report did just the opposite; that is, it gave the Court the false impression that significant progress was being made towards completing the data cleanup subproject (even at the regional level) when in reality it was not. Specifically, these charts indicated that a relatively high percentage of the tasks assigned to DataCom were either completed or were nearing completion at the regional
Q Can you give us an example of some of the issues that gave you the greatest concern?
A Well, as I mentioned earlier, one of my concerns was the BIA data cleanup project, because it didn’t seem to have the attention focused on it that I thought necessary in that the data was needed to be able to run TAAMS, and because of the consuming nature of the TAAMS project, most attention was focused there.
As we tried to figure out where they were in terms of data cleanup, the data that was needed to run TAAMS, we weren’t getting very good metrics information about what was actually being done, what was actually being corrected, what was being fixed. So we called for a series of reports and requested information from the BIA project managers about what’s going on, give us some numbers, show us where you are in this effort.
They were using a contractor at our insistence and there were some 200 people — at some point, up to 200 people working in the field on BIA data cleanup and there didn’t seem to be much central direction or central management. They submitted a series of charts and information and numbers that basically reflected what the contractor was doing, and it was the contractor’s status report and, you know, we had a thousand of these to fix and we have done 900 of them; we had ten of these to fix and we’ve done nine of them. The way the charts were ‘portrayed — you ivould get the impression that great progress was being made, the data was almost fixed, but I didn’t believe that was very representative of the actual status of the data. As we probed further and further, we learned later that there wasn’t — there wasn’t really much of a dedicated staff on BIA on this project in the field. They were doing it in the course of their business. It was just not a well managed project.
Contempt II Tr. at 92-94 (emphasis added). Interior made matters worse by also providing the Court with a summary of the status of the specific tasks assigned to DataCom in the BIA Data Cleanup section of the report. Pis.’ Ex. 11 at 14-15.
5. Sixth Quarterly Report (February 1, 2001-April SO, 2001)
The Sixth Report was just as misleading as the prior five quarterly status reports with respect to the BIA Data Cleanup subproject.
114
The Department of Interior presented, as it had in the Fifth Report, a chart detailing the progress that DataCom had made in completing certain enumerated tasks. Pis.’ Ex. 12 at B-l-B-9. The chart indicated that DataCom had made considerable progress towards completing the tasks Interior had assigned to it.
Id.
As the Court noted above in its discussion of the Fifth Report, these charts clearly created a misconception about the status of the BIA Data Cleanup subproject, particularly in light of the Eighth Report,
see
Pis.’ Ex. 66, and the EDS Report,
see
Pis.’ Ex. 60. There was simply no way for the
In addition, the representations made by the Special Trustee in his observations section do not relieve the Department of responsibility for filing this misleading quarterly status report. In his observations section, the Special Trustee wrote that he “continue[d] to be concerned about the progress in the BIA Data Cleanup project.” Pis.’ Ex. 12 at 4. There are two reasons why this statement (and his other observations) do not absolve . Interior. First, while the Special Trustee’s concerns certainly appear (in light of the Eighth Report) to have been warranted, it does not change the fact that the Sixth Report itself failed to provide the Court with an accurate assessment of the subproject’s status. That is, the Department cannot escape responsibility for filing a misleading quarterly status report based on the scant representations of the Special Trustee alone. In this regard, it is important to note that there was no indication in the report that the views expressed by the Special Trustee represented the position of the Department itself. Second, it became clear during this contempt trial that attorneys in the Solicitor’s office and other senior Interior officials tempered the language used by the Special Trustee in both this and earlier filed reports. Contempt II Tr. at 1649-51 (“It was a negotiation process. Each paragraph, each line, each word debated over.”). Consistent with this finding, the Special Trustee himself did not provide a meaningful assessment of the project’s status. Rather, he simply indicated to the Court that he was concerned about the Department’s ability to complete the cleanup effort. Pis.’ Ex. 12 at 3 — 4.
6) Seventh Quarterly Report (May 1, 2001-July 31, 2001)
The Department of Interior once again failed to provide the Court with an accurate assessment of the BIA Data Cleanup subproject when it filed its Seventh Quarterly Status Report. In particular, the Department indicated to the Court that “[t]he exact status of the BIA Data Cleanup and Management, including work performed by BIA personnel, will be in the next quarterly report.” Pis.’ Ex. 13 at 13;
see id.
at 16 (describing several milestones simply as “ongoing.”). This statement effectively summarizes the problem with the prior six reports in that the agency reported on the progress that DataCom had made in performing specific tasks but failed to put these tasks into context for the Court.' That is, the Court was consistently told that DataCom had completed or was in the process of completing certain assigned tasks, but it was never informed about how close or far the Department was from finishing the BIA Data Cleanup subproject as a whole (or even at each regional office). The fact that the Department still could not provide the Court with such information two years after the Phase I trial ended is both inexcusable and pathetic. As noted above, even the Special Trustee refused to verify the Seventh Report because he was “not satisfied with the completeness or the quality of the information provided” in the report. Pis.’ Ex. 13 at 6. It is worth noting that in the Seventh Report Interior went on to summarize the activities at the different regional offices in general terms. Pis.’ Ex. 13 at 13. These summaries, however, utterly failed to assist the Court in understanding the status
d) The Current Status of BIA Data Cleanup and the Eighth Quarterly Status Report 115
In its November 12, 2001 report, EDS documented extensive problems with the BIA Data Cleanup subproject. Pis.’ Ex. 60. Of particular importance to this contempt trial was the company’s findings regarding “measurement systems,” which it defined as “[quantitative status and forecasts that provides a shared understanding of the current program performance among all stakeholders.” Pis.’ Ex. 60 at 141. In this regard, EDS specifically found that:
BIA never defined the size of the BIA Data Cleanup Project, therefore making it impossible to forecast the cost, effort, and schedule to complete the cleanup activities. There is not an agreed upon position on the status of TAAMS and BIA Data Cleanup. Program-level planning has been ineffective; an effort to produce a manageable, integrated schedule that encompasses the tasks for all affected parties, including the Department’s tasks, is not underway. Managing the schedule has been neither robust nor proactive. The failure to plan effectively has in turn resulted in deficient program tracking and forecasting....
The HLIP and Quarterly Report are the main measurement tools used to evaluate Reform related efforts. They are not granular enough, however, to truly measure progress....
Pis.’ Ex. 60 at 141-43. See also id. at 34 (“The roles and expectations of the contractor and BIA field staff have not been well defined, in terms of the impact on the overall effort.”). Thus, the Department never had a cohesive strategy or plan to complete the BIA Data Cleanup subpro-ject. 116
Moreover, in the Eighth Report, the Department of Interior confirmed that it had experienced and was experiencing considerable problems with the BIA Data Cleanup project. Pis.’ Ex. 66 at 89. In particular, the Deputy Special Trustee for American Indians for Trust Systems and Projects wrote that, in assessing the sub-project, the definition of the project was not well defined, the universe of work was not established prior to its inception, there was inadequate project management, there was inadequate direction and performance metrics for contractor tasks, and the BIA had the unrealistic expectation that its staff performing daily operations could also develop cleanup plans, oversee the contractor, and verify and substantiate work. Pis.’ Ex. 66 at 89-90. Interior further reported that much work remained in this subproject in each regional office. Pis.’ Ex. 66 at 94-97. For example, in the Alaska region, the Department indicated that “[t]here are approximately 17,753 tracts that need to be encoded into TAAMS[,]” and “927 tracts have been completed to date.” Pis.’ Ex. 66 at 94. Even assuming the Department increases
In the Eighth Report, Interior went on to state that in the latter part of 2001 it recognized the need to reevaluate the manner in which it was approaching the BIA Data Cleanup subproject. Pis.’ Ex. 66 at 80. The agency indicated that “[d]uring this reporting period [August 1, 2001-De-cember 31, 2001] emphasis was placed on re-structuring the data cleanup subpro-ject.” Pis.’ Ex. 66 at 80. Specifically, the Department reported that it did a number of things which, it now believes, will ultimately enable it to complete this particular subproject. Pis.’ Ex. 66 at 80-81, 91-102. For instance, Interior indicated that during this reporting period it conducted site assessments at four regional offices. Pis.’ Ex. 66 at 82. While these efforts may ultimately prove to be beneficial, the Department recognized that at this point it still does not have “a clear picture of the entire magnitude of the cleanup project.” Defs.’ Proposed Findings at 96. Indeed, in the Eighth Report Interior noted that it is “still gathering information on the types and volume of data cleanup by region. Each region is unique in how they enter data into the legacy systems. As we do the site assessments and load data into an automated system, we will undoubtedly uncover errors we have not encountered in other regions.” Pis.’ Ex. 66 at 86.
e) Conclusions in light of the Eighth Report and the EDS Report
The EDS Report and the Department’s Eighth Report do not affect the Court’s findings above regarding the misleading nature of the other quarterly status reports. Specifically, the Court detailed above how the Department provided it with no meaningful way of measuring either the overall progress of the subproject or even the progress of the subproject at each regional office. Rather, Interior simply provided the Court with essentially a list of tasks assigned to its contractor, DataCom, and then reported on the progress DataCom had made in completing those tasks. This method of reporting gave the Court the impression that a significant amount of progress was being made when in reality the Department was (and is) still many years away from completing this subproject even at the regional level.
The Department argues, in its proposed findings, that since there were no mean
Interior also argues that, in light of the EDS Report and the Eighth Report, the Court must distinguish between “failures of project management, on the one hand, and reporting, on the other[.]” Defs.’ Proposed Findings at 147. The Department concedes that the subproject was incompetently managed, but nonetheless argues that the reports themselves were not misleading.
Id.
at 144. The Court rejects the Department’s position in this regard. As an initial matter, the Court agrees (and finds) that the BIA Data Cleanup subpro-ject has been grossly mismanaged from its inception. Contempt II Tr. at 2413-15. The EDS report explains in great detail how the Department failed to manage adequately this particular subproject. The Court also agrees that there is a difference between poor management and filing misleading quarterly status reports. The problem for the government, however, is that these two concepts are not mutually exclusive. It is clear that in this particular case the subproject was not only horribly mismanaged, but that at the same time the Department misled the Court into believing that significant progress was being made. That is, the fact that the Court now knows that the Department never had a specific plan to finish the data cleanup subproject (even at the regional level), does not change the fact that the status reports filed with the Court were very misleading. Contempt II Tr. at 1353 (Principal Deputy Special Trustee testifying that “I have great discomfort with the data cleanup effort in BIA, both how it was being executed and how it was being reported. That comment is reflected in the Special Trustee’s observations, third quarterly report and beyond. I think it’s fair to say that the reporting was certainly not accurate and particularly not clear on the status of BIA data cleanup.”); 2221 (Special Trustee, agreeing that “Interior defendants’ quarterly reports have consistently failed to provide this Court with a truthful, accurate and clear picture of the status of BIA data clean-up.”). If anything, the incompetent manner in which the subproject was managed reinforces the Court’s finding that it reported misleading information to the Court because it is now clear that the agency never understood the scope of the subproject and all of the work that was necessary to complete it. Thus, for example, the Court now knows that the agency had no basis for making certain representations, such as “[t]he revised schedule extends the post-deployment date to
C. INFORMATION TECHNOLOGY (“IT”) SECURITY-SPECIFICATION 5 120
The Court will now address the Fifth Specification levied against Secretary Norton and Assistant Secretary McCaleb. This specification concerns the representations made to the Court by defendants regarding computer security of IIM trust data. The Court has to the greatest extent possible organized its findings of fact pertinent to this specification chronologically.
1. Interior’s March 2000 Representations-TRO Hearing
Beginning in March of 2000, the plaintiffs started questioning the manner in which Interior secured the vast quantities of confidential trust information stored in its computer systems. Specifically, on March 7, 2000, the plaintiffs filed a motion for a temporary restraining order (“TRO”) (Docket Entry # 450), claiming that the private contractors negotiating the Office of Information Resources Management 121 (“OIRM”) move from Albuquerque, New Mexico to Reston, Virginia were being provided access to confidential trust data in violation of, inter alia, the Privacy Act. 122 Pis.’ Motion for a TRO at 3 (contending that “on February 29, 2000, ... BIA contractors were granted official access to all OIRM IIM hardcopy and electronic trust records.”). The plaintiffs asserted that, in contravention of several federal statutes, these contractors “have unfettered access to all IIM trust information in the OIRM BIA systems.” Pis.’ Motion for TRO at 4.
I have observed that systems applications fail on a daily basis; ISSDA reports to the Treasury Department have not worked since at least January; there currently exists no published standards or procedures; metrics are lacking, for measuring application code changes, requirement documentation, data center run times or recovery help calls received; there exists no run books for the data center; and to my knowledge, Uni-sys software has not been updated since installation two years ago. Most importantly, there exists no written operating procedures or security manuals in the current work environment. ISI has been tasked to remedy these deficiencies during and after the relocation of OIRM from Albuquerque to Reston.
Defs.’ Opp’n to PI, Tab 9 at ¶7. 123 In addition, Assistant Secretary Gover noted in his declaration that “[ojver the past four years, Interior’s Office of the Inspector General (OIG) has issued audit reports that found 22 separate findings regarding data security in BIA’s Office or Information and Resource Management of which 18 were determined to be high-risk.” Defs.’ Opp’n to PI, Tab 3 at ¶ 5.
The Department of Interior emphasized in opposing the TRO motion that moving the OIRM facility from Albuquerque to Reston was a critical first step toward getting a handle on and correcting the prevailing IT security problems. Defs.’ Opp’n to PI, Tab 3 at ¶¶ 6-7 (Declaration of Assistant Secretary Gover. “I determined that relocation and consolidation of all BIA administrative operations to the Washington metropolitan area was a critical first step. I believed that information resources management is a critical part of the administrative operations and that the management of the transition to TAAMS would be improved if the OIRM office were located here. I am confident that face-to-face, direct supervision of the accounting and information resources management staff will result in improved financial and information technology services.”). That is, Interior argued that the motion for a temporary restraining order should be denied because one of the reasons why it was moving OIRM to Reston was to make the trust information stored in the computer systems more secure. Id.; see also Tr. of March 7, 2000 Hrng. at 26-27 (counsel for defendants: “The delay would, of course — if an injunction were entered, it would delay the improvements that Secretary Gover is trying to accomplish by moving this office to Washington so that it can be under closer supervision, and reorganized as necessary.”). During the TRO hearing on March 7, 2000, counsel for the Department explicitly told the Court that Interi- or was “on the verge” of correcting these problems and that moving OIRM to Re-ston was a necessary initial step:
THE COURT: ... I must say, looking at this picture in the long range, which I look at it at, I was dumbfounded to read paragraph seven of this Marshall affidavit to say this whole critical system has no existing published standards or procedures, has no application codes, no existing runs books, never been updated, no existing written operating procedures, no security manuals in the current work environment. I mean, to be this far down the road in trust reform, and I know you’re trying to save yourself from this TRO, but this is the most shocking information I’ve seen yet, I think, since my whole trial here.
MR. FINDLAY: This — this needs correcting.
THE COURT: It’s very disappointing to read this kind of stuff. We have nothing now. You know, we have no safeguards now so we can’t be any worse off, is what you’re telling me. I mean, it’s shocking what he has in that last paragraph, isn’t it?
MR. FINDLAY: It is discouraging, Your Honor, I agree.
THE COURT: Discouraging, to say the least.
MR. FINDLAY: I agree, and it is all the more reason to get on with this. Make the move, get it under the thumb of management here in Washington, improve these systems.
THE COURT: We have no written operating procedures, no security manuals in the current environment. We have nothing. Boy, I just don’t know how that squares with the trial we had, all the great plans Interior had. And you find the most critical system, the heart of everything we’re operating now, and this is what you come in and tell me: We have nothing to protect any of this? MR. FINDLAY: Your Honor, we’re on the verge of correcting this, Your Hon- or. This is — this is one reason that this step in trust reform is coming early in the process. Congress has directed the department to move with it quickly.
Tr. of March 7, 2000 Hrng. at 31-33; see also id. at 23-24 (“The move, importantly, is part of trust reform. Specifically, in this case the movement of this office is being conducted in order to bring it under closer supervision by management in Washington, and also to address particular deficiencies in the office, and improving those by consolidating them with other functions and giving them much more attention.”). While the Court initially granted the plaintiffs’ request for a TRO, it kept the defendants’ arguments (and representations) in mind when considering whether to issue a preliminary injunction.
2. March 2000 Representations-The Preliminary Injunction Pleadings and Hearing
In seeking a preliminary injunction (“PI”), the plaintiffs reiterated their position that IIM beneficiaries would be irreparably injured if BIA contractors, as part of the planned OIRM move from Albuquerque to Reston, were given access to certain electronic data systems that housed information relating to IIM trust accounts.
Similarly, in its opposition to the plaintiffs’ motion for a preliminary injunction, the Department of Interior once again argued that moving OIRM to Reston was necessary in order to improve the security of its computer systems. In the opposition itself, Interior represented that moving the facility to Reston is “expected to solve the fundamental problem of management at OIRM by ensuring closer supei-vision of the security and operation of several trust and non-trust computer systems essential to the operation of BIA.” Defs.’ PI Opp’n at 2 (noting further that the move “[is] expected to permit modifications to these systems that would improve their stability
Upon consideration of the defendants’ representations that IT security (and computer system management overall) would be improved by moving OIRM from Albuquerque to Reston, the Court denied the plaintiffs’ motion for a preliminary injunction on April 4, 2000. Specifically, the Court stated on the record that:
I do this because I have concluded, albeit reluctantly, that as of today plaintiffs are unable to establish a sufficient likelihood of success on the merits to warrant granting the extraordinary remedy of granting a preliminary injunction.
It’s clear that the defendants were, in fact, acting in violation of the law on March 7th, when this Court granted the temporary restraining order. But as of today, the government appears to have brought itself into compliance by assuring that both the contractor for the move, Interior Systems, Incorporated, and its contractual partner, PRT Group, Incorporated, are legally obligated to keep all trust data confidential. The contract and subcontract now have specific privacy act confidentiality clauses, and the contractual relationships appear to be authorized by law for purposes of the Trade Secrets Act. Although the question is not free from doubt, for purposes of today’s ruling, the Court finds as a preliminary matter that the confidentiality provisions imposed on the contractors are sufficient to insure against violation of the Indian Minerals Development Act, assuming that the Interior Department is entitled to some deference under Chevron in its interpretation of that particular statute.
The Court continues to be alarmed and disturbed by the revelation that BIA had no security plan for the preservation of this data before this TRO was brought, and that BIA has now placed itself in the incredible position that it cannot now create such a plan with its own employees, but that it can do so only if this Court allows BIA to go forward with these government contractors creating the plan, and then insuring that this critical data is preserved and protected.
This entire fiasco is vivid proof to this Court that Secretary Babbitt and Assistant Secretary Gover have still failed to make the kind of efforts that are going to be required to ever make trust reform a reality. Coming so soon after their trial testimony last summer, and all of the personal assurances they gave this Court about the priority they were now placing on trust reform, the facts brought to light in this proceeding provide overwhelming proof to the Courtthat the defendants simply continue to provide more empty promises.
Nevertheless, the Court cannot enjoin this operation at this time without inflicting substantial harm on third parties and, indeed, without harming the very beneficiaries of these trust records who will have critical payments delayed by the disruption of operations that would occur if the preliminary injunction issued.
The defendants argued to this Court that the risk of data loss increases with every day that the Court denies access to these government contractors, and I find this is, in fact, true. The sheer incompetence of BIA and the way they undertook these moves can now only be saved by their own contractors. The defendants admit that they will still not be in compliance with OMB circular A-130, requiring a security plan, but they say that only the contractors can now prepare such a plan so that they can come into compliance.
Tr. of April 4, 2000 Hrng. at 10-13.
3. November 2000 Representations-The Progress Report
On November 30, 2000, the Department of Interior provided the Court with an eight-page “Progress Report” on “significant developments since April 2000, including the successful relocation of trust data in Reston, Virginia, and the formal commencement of ‘live operations’ in the Re-ston data center.” 124 Progress Report of November 30, 2000 at 1 [Docket Entry # 585], As an initial matter, Interior explained to the Court how it performed the data move from Albuquerque to Reston, as well as some of the changes that were made to the agency’s original plan. Progress Report of November 30, 2000 at 1-3.
The Department of Interior went on to discuss the physical security measures that it had taken at the Reston facility. Progress Report of November 30, 2000 at 3~i. Specifically, Interior indicated that after a theft occurred at OIRM in October of 2000, BIA “put 24-hour guards on duty in the building and have begun strict procedures to handle traffic and visitors to the offices.” Progress Report of November 30, 2000 at 4 (further noting that “BIA plans to install security cameras with a closed-circuit television monitoring system.”). These representations led the Court to believe that at least in terms of physical security at the facility the Department had taken and was taking both necessary and appropriate steps to ensure the security of trust data.
Interior also explicitly discussed IT security and the development of security plans in its Progress Report of November 30, 2000. With respect to IT security, the Department informed the Court that:
There is still significant work to be done in this regard, but now that the new data center has been safely relocated, more effort can focus on long-term IT security matters. Recently, the BIA Chief Information Officer hired a National Information Technology Security Officer, John Curran, to oversee development of information technology security policy and plans. Furthermore, the security function at the Bureau of Indian Affairs’ Office of Information Resources Management (OIRM) has been elevated to report directly to the Director of OIRM.
Progress Report of November 30, 2000 at 6. Based on these representations, the Court believed that while the computer systems were not yet secure, the Depart
4. Site Visit of the Special Master to OIRM (February 8, 2001)
On February 8, 2001, the Special Master (accompanied by an attorney from the Department of Justice, an attorney from the Solicitor’s Office, and a representative from plaintiffs’ class) visited OIRM’s facility in Reston Virginia. Special Master Report (March 12, 2001) at 1 [Docket Entry # 678]. Upon arrival, the Special Master and the DOJ attorney “entered the facility via a construction entrance and, with the assistance of an employee who did not request that [they] produce any identification, passed by the front security desk twice without being detected, questioned or detained.” Id. (further noting that “[t]here were no security cameras in sight.”). The Special Master and the DOJ attorney proceeded to the OIRM office area, where the Special Master was able to remove from a shredder a “computer-generated printout labeled ‘Individual Indian Monies Interest Calculations.’ ” 125 Id. The Special Master subsequently introduced himself to several employees, including Deputy Director Ken Russell. Id. at 2. Deputy Director Russell “expressed no surprise when [the Special Master] described the ease with which [he] gained entry into the facility and with which [he] was able to enter [OIRM’s] work area.” Id. at 2. The Special Master recounted that Deputy Director Russell “characterized the security at the facility as ‘terrible!,]’ ” and that Deputy Director Russell actually produced a memorandum dated February 6, 2001 from the Chief Information Officer that explicitly stated that “[t]he Data Center in Reston is currently less secure than the data center in Albuquerque that we transitioned from in November 2000[.]” Id. 126
5. April 2001 Opposition to Plaintiffs’ Motion For Special Master Investigation 127
Prompted by the Special Master’s Site Visit Report, which was filed with the Court on March 12, 2001, the plaintiffs requested that the special master investigate the Department’s “failure to implement adequate security measures to protect IIM-related trust data at” the OIRM facility in Reston. Pis.’ Motion For Special Master Investigation [Docket Entry
The Department of Interior filed its opposition to the plaintiffs’ motion for a special master investigation into computer security on April 25, 2001. Although the Department acknowledged (as it had back in March of 2000) that its computer systems were not entirely secure, it “vehemently” argued that it “has made security a top priority and has taken numerous steps to improve the security of the Reston facility since the Special Master’s visit.” Id. at 2. Defs.’ Opp’n at 2-8 [Docket Entry # 716] (further stating that Interior has significantly improved both physical and computer security at OIRM). The Department went on to outline the security measures-both computer and physical-that had been completed since the November, 2000 move to Reston, and the security measures that it planned on taking in the future.
In particular, with respect to completed computer security improvements, the Department stated that “[i]n the past year, Interior has embarked on several analyses of computer security at IRM” and has hired John Curran to “oversee development of IT security policy and plans.” Id. at 6-7. Interior further noted that it “has developed security awareness training” and that Mr. Curran was “in the process of implementing three levels of training for IRM personnel: security briefing for managers, computer users, and IT staff.” Id. at 8. Finally, the Department pointed out that Mr. Curran has developed an “Information Technology Security • Program” (ITSP) that “provides a bureau-wide plan for meeting the statutory and practical requirements that accompany the use of IT processing, storage and transmission capabilities” and “prescribes the standards for IT security programs, in accordance with existing laws, regulations and Executive branch orders.” Id. at 6-7.
As to future computer security improvements, the defendants stated that “plans are underway for the protection of applications and support systems.” Id. at 7. Interior noted that “SeNet has developed draft security plans for a number of major applications and general support systems.” Id. The Court was told that these security plans would provide “instructions and guidance to all system owners on steps needed to protect systems and data.” Id.
With respect to physical security, the Department noted that, in the wake of the Special Master’s February 2001 on-site visit, several changes had been made, including (i) the implementation of 24-hour guard service; (ii) the addition of perimeter foot patrols; (iii) the adjustment of the data center doors to ensure automatic closure; (iv) the issuance of memoranda by both Deputy Commissioner Blackwell and the Deputy Director of OIRM (Ken Russell) to all OIRM employees reiterating the physical security rules and regulations; and (5) the connection of a computer monitor in the IT security room to cameras, thus permitting the monitoring (and recording) of activity in the data center, Uni-sys room, and corridors leading to the data center.”
Id.
at 4-6. Work that still needed to be done with respect to physical security included the installation of card
In sum, the Department of Interior reiterated the same arguments concerning computer security in its April 25, 2001 filing that it made back in March of 2000. Specifically, Interior argued that while the computer systems were not yet entirely secure, the agency had made the systems considerably more secure than they were before the move to Reston through its extensive efforts, and that it would continue to make the systems more secure in the future. Thus, Interior boldly argued in its April 25, 2001 filing that:
there is no basis for a Special Master investigation of security at IRM. While the new facility in Reston needed immediate physical security improvements, IRM has identified the problems and taken corrective action. Moreover, IRM has taken significant steps to improve IT security and is developing plans and programs for both physical and computer security to provide guidance on maintaining the proper level of effective security.
Defs.’ Opp’n at 8; see also id. at 13 (asserting that “the move of IRM to Reston has been accomplished successfully and security has undergone numerous improvements.”), 14 (arguing that “the requested Special Master investigations and assessments related to IRM are without merit. In the five months since IRM successfully completed its move, BIA has made a concerted effort to provide IRM with reliable physical and computer security.”).
Upon consideration of the plaintiffs’ motion and the representations by the defendants in their opposition, the Court directed the Special Master to examine the trust data security systems in the custody or control of the Department of Interior. Report on IT Security at 2.
6. May 2001 Opposition to Plaintiffs’ Motion for a TRO and PI
On May 17, 2001, plaintiffs moved for a temporary restraining order and a preliminary injunction after Dominic Nessi was quoted in Government Executive, a monthly business magazine, as stating that:
[f]or all practical purposes, we have no security, we have no infrastructure, ... Our entire network has no firewalls on it.' I don’t like running a network that can be breached by a high school kid. I don’t like running a program that is out of compliance with federal statutes, especially when I have no ability to put it into compliance.
Report on IT Security at 1-2. In its opposition, which was filed on May 29, 2001, the defendants argued yet again that the plaintiffs’ “position is wholly without merit.” Defs.’ Response at 8. In light of the Department’s representations in its response to this motion as well as in its April 25, 2001 filing, the Court declined to enter injunctive relief at that point in time. That is, notwithstanding the fact that the Court had directed the Special Master to examine the state of IT security at the Interior Department, it specifically declined to order further injunctive relief based on the Department’s representations that the plaintiffs’ position was “without merit.” Defs.’ Response at 13 (April 25, 2001); Defs.’ Response at 8 (May 29, 2001).
7. Report and Recommendation of the Special Master Regarding the Security of Trust Data at the Department of Interior (“Report on IT Security”)
In accordance with the Court’s request that he examine the trust data security systems in the custody or control of Interior, the Special Master “interviewed government employees and private con
First, the Special Master found that the Department of Interior has known about pervasive IT security deficiencies for more than a decade.
See, e.g.,
Report on IT Security at 17 (finding that “[t]o date, there have been at least 30 reports generated by both governmental and private organizations including the Office of the Inspector General (“OIG”), the General Administration Office (“GAO”), a House of Representatives Subcommittee, Arthur Anderson & Co. (“Anderson”), SeNet International (“SeNet”), the Special Master and Predictive Systems, Incorporated (“Predictive”) which have addressed the state of IT Security at the DOT”), 141 (finding that “[a]fter ten years of blistering reviews generated by federal agencies and private contractors, this deplorable condition is inexcusable. It can not be argued that Interior was unaware of the hundreds of deficiencies and suggested remedies chronicled in this Report.”). In his Report, the Special Master chronicled in great detail the findings of several private and public organizations that had examined IT security at the Department of Interior. Report on IT Security at 17-133. Every one of these organizations found considerable problems with the security of the Department’s computer systems.
See, e.g., id.
at 18-19 (noting that Arthur Anderson found in 1989 that “[t]he ability of the computer specialists to access and alter the master data files and the application files permits the programmers the ability to compromise the integrity of the data and the data processing. A computer specialist has the ability to create a new account, transfer funds to the account and process a check.”), 34 (observing that a May 2000 report by the Inspector General’s Office found that “[u]ser codes are not routinely removed for terminated employees or transferred employees; passwords are not changed on a regular basis; [and] complete documentation does not exist to readily identify the owner of each user code.”),
128
40 (noting that a House of Representatives subcommittee ranked Interior lowest out of the entire executive branch on its Computer Security Report Card), 50 (noting that SeNet found that “[w]eak perimeter protection is by far the most common cause of security breaches (intrusions)
Second, the Special Master found that the Department of Interior has not taken necessary actions to correct its numerous and longstanding IT security deficiencies. Id. at 143-54. Specifically, the Special Master found that “[i]n truth, the system is in its current state of disrepair because protecting trust funds is not now, and has never been, a ‘priority' deserving adequate resources.” Id. at 148. The Special Master detailed how, “[f]or example, the lack of firewalls and adequate perimeter security have been repeatedly identified by the [Inspector General] Reports and the SeN-et Reports as among the most grievous risks threatening trust data.... Notwithstanding, the BIA removed the firewalls from one of the only two locations where they were in use and the Office of the Solicitor now questions the prudence of allocating funds for their purchase.” Id. at 144-45. The Special Master further noted that as late as June of 2001, “after the publication of tens of thousands of pages detailing every conceivable problem challenging the agency’s security systems,” the Chief Information Officer for Interior soughtf, rather than to take corrective action,] to “conduct [instead] yet another ‘review of the current state of Trust Management IT security across the Department^] [b]ased on the results of [which], Interior will be prepared to make decisions on how to proceed with implementing IT security as part of the Trust Management program .... ” Id. at 148. This finding is particularly troubling to the Court in light of the fact that the Department does not appear to even have read many of the earlier commissioned reports. Id. at. 146-54. The Special Master’s findings in this regard are critically important because they eviscerate the position put forth by the Department beginning in March of 2000-namely that while significant IT security problems exist, Interior has taken and is taking necessary steps to secure its computer systems that house IIM trust data. That is, these findings demonstrate that despite the Department’s representations to the contrary, it has not taken and is not taking necessary actions to ensure the security of trust information stored on its computer systems. In light of the Special Masters findings, all of the agency’s representations regarding the improvements to IT security now ring conspicuously hollow. 129
[t]he critical data of concern to the Court remains housed on systems that have:
no firewalls, no staff currently trained/capable of building and maintaining firewall devices, no hardware/software solution for monitoring network activity including but not limited to hacking, virus and worm notification :.. [and] a serious lack of wide area networking and security personnel in general. The BIA is also far behind the other bureaus in Interior regarding staffing of messaging systems and infrastructure support ... There is currently no capacity for the systems and infrastructure support .. .There is currently no capacity for the OIRM to analyze daily system logs generated by the IRMS system to look for unusual or possibly nefarious activities or to track changes made to each data file.... Likewise, there are insufficient current staff to handle t[he] day to day configuration issues of the data communication wide area network (WAN) let alone monitor, log and report the increasing “hacking” type activity.
Id. at 141. The Special Master recounted how Predictive Systems was able, as part of its initial penetration test, “to gain access to both critical systems (IRMS and TAAMS) identified by BIA.” Id. at 134 (noting further that “Predictive achieved access to these systems that allowed creating shared directories, accessing data, and making changes to these systems (including adding user accounts.”). The Special Master further detailed how, after the Director of OIRM intimated that Predictive was only able to penetrate the systems since OIRM had “in essence, ‘turned over the keys to the store[,]” ’ Predictive Systems once again penetrated the BIA systems (this time using only free tools and utilities, which are widely available on the internet), and actually was able to create a false account in the name of the Special Master by altering the name of an existing account belonging to a beneficiary located in Oregon. Id. at 137-38. The penetration tests performed by Predictive Systems demonstrated that Interior’s computer systems housing IIM trust data remain completely insecure.
Based on these findings, the Special Master concluded (and recommended) that:
Interior-in derogation of court order, common-law, and statutory and regulatory directives-has demonstrated a pattern of neglect that has threatened, and continues to threaten, the integrity of trust data upon which Indian beneficiaries depend. Rather than take any remedial action, its senior management has resorted to the condescending refrain that has consistently insinuated itself into the federal government’s relationship with Native Americans, in general, and with IIM holders, in particular. And that is one that requestsforbearance and trust on the grounds that reform continues to be the ‘highest priority.’ It is the view of the Special Master that, in this instance, such trust is not warranted, requests for forbearance should be denied and promises of future compliance should not be credited. The stakes are simply too high. An agency that ignores its own commissioned reports and those generated by other federal agencies; ignores pleas from its own staff for adequate funding; and spends tens of millions of dollars funding computer systems when the integrity of the very data to be loaded on those systems.has been open to compromise for so many years, inspires little confidence.
The security of systems housing trust data is no better today than it was ten years ago. The circumstances leading to the Court’s alarm ‘that BIA had no security plan for the preservation of [trust] data,’ ... speak with compelling application today. The continued lack of trust data security is ‘vivid proof that Interior has ‘still failed to make the kind of effort that they are going to be required to ever make trust reform a reality.’ It is the recommendation of the Special Master that the Court intervene and assume direct oversight of those systems housing Indian trust data. Without such direct oversight, the threat to records crucial to the welfare of hundreds of thousands of IIM beneficiaries will continue unchecked.
Id. at 153-54 (internal citations omitted).
8. Subsequent Injunctive Relief Granted by the Court
In light of the findings made by the Special Master in his Report on IT Security, the plaintiffs filed an additional emergency alternative motion for a temporary restraining order on December 4, 2001. After the Department of Interior failed to present any reason for not granting the plaintiffs’ request at the additional hearings held on the matter, the Court had no choice but to order, on December 5, 2001, that the Interior defendants “immediately disconnect from the Internet all information technology systems that house or provide access to individual Indian trust data;” and that the Department “immediately disconnect from the Internet all computers within the custody and control of the Department of Interior, its employees and contractors, that have access to individual Indian trust data.” Order of December 5, 2001 [Docket Entry # 1036]. 130 This injunctive relief was both necessary and warranted in light of the Department’s wholesale failure to protect the vast quantities of commercially sensitive trust information stored on its computer systems.
On December 17, 2001, after another round of hearings and discussions between the parties on the issue of IT security (or the lack thereof) at the Department of Interior, the Court entered a “consent”
131
order regarding information technology. The order superseded the temporary restraining order entered by the Court on December 5, 2001, and provided a mechanism by which the Department of Interior would be able to bring its computer systems back online. Order of December 17, 2001 at 5-8 [Docket Entry # 1063]. The order further provided that it “may be vacated by this Court once the Court has determined that the Interior Defendants are in full compliance with this Consent Order and Interior’s relevant information
D. REORGANIZATION OF TRUST FUNCTIONS AT THE DEPARTMENT OF INTERIOR
There was a considerable amount of testimony adduced at this contempt trial regarding the organization of the Department’s trust management functions as well as the individuals currently in charge of certain aspects of the trust reform effort. See, e.g., Contempt II Tr. at 3937-38. In particular, every witness during this contempt trial that was asked about and commented on Interior’s organizational framework agreed that it was and is a significant impediment to the agency’s ability to discharge properly its fiduciary obligations. See, e.g., Contempt II Tr. at 4332-33. For example, Deputy Secretary Griles testified that:
... over time it became evident that there was some inherent conflicts with the current organization. In talking with Mr. Slonaker specifically, he indicated that he believed that in having the oversight responsibility of Special Trustee to oversee the trust responsibilities and obligations and trying to be — and I will use the term the IG, if you will, of the Department to oversee the implementation and how it was being done, he believed he had inherent conflict with the implementation of trust reform specifically with the management of the funds and the collection of the funds and disbursement of the funds, that that resulted in him having an inherent conflict in how he should go forward.
At the same time it was clear that within the Bureau of Indian Affairs, in my opinion, there were inherent problems of lack of leadership and lack of direction, and that we needed to bring all this together into some format that would allow for the Department to have a much better organization to respond to the demands of the Department.
Contempt II Tr. at 3935-37. Moreover, Secretary Norton herself recognized that Interior needed to make changes both at the personnel and organizational levels. Specifically, she testified during this contempt trial that:
A. I think we still have a long way to go in looking at the people who are performing various tasks and making sure that those people are the appropriate people for those various tasks. We’re still in the process of identifying the deficiencies in our organization and putting in place the procedures to be able to correct those deficiencies.
Q. So you’re engaged in — is the restructuring critical to trust reform, as you understand it?
A. I believe it is important that we do some type of improvement in our structure, and to me, it seems that we certainly need to be able to have a clear structure that is going to have accountability, responsibility. It is going to have a consistent way of identifying what needs to be done for the various elements of trust reform and getting those things done.
Q. And today, those elements aren’t in place, correct?
A. Unfortunately, we have found ourselves with a system that is not sufficient. We’re working to put those changes in place, but we still have a long way to go. We still have reorganization to do, we still have improvements that need to be done in a great many ways.
Contempt II Tr. at 4331-32.
See also
Contempt II Tr. at 2413-15 (Special Trustee testifying that he considered there to be significant management problems with the TAAMS and BIA Data Cleanup subpro-ject). In addition, there was also both documentary and testimonial evidence concerning intra-agency disputes that affected
Y. CONCLUSIONS OF LAW
In this section of the opinion the Court will make conclusions of law based on the findings of fact presented above. Specifically, the Court will address in turn each of the five specifications enumerated in the show cause orders of November 28, 2001, and December 6, 2001.
A. SPECIFICATION 1: FAILURE TO INITIATE A HISTORICAL ACCOUNTING PROJECT
The Court concludes based on the findings of fact detailed above that the defendants failed to initiate a historical accounting project as required by the Order of December 21, 1999. The findings of fact presented above clearly establish that the Department of Interior did not take any substantive measures (except publishing a sham notice in the Federal Register) during the eighteen month period following the Court’s Phase I trial decision to provide the plaintiffs with the accounting that they are legally entitled to receive. The Court is both saddened and disgusted by the Department’s intransigence in the face of the Phase I trial ruling.
In an order dated May 5, 1998, the Court bifurcated this case into that aspect which seeks to institute new trust management practices, known as the “fixing the system” portion, and that aspect which seeks to obtain an accounting of the funds held in the IIM trust by the defendants, known as the “correcting the accounts” portion. In the summer of 1999, the Court held the Phase I trial in this action, which encompassed both the fixing the system portion of the case as well as the threshold issue of determining the scope of the accounting that would be required for the correcting the accounts portion of the action (Phase II trial).
In the Phase I trial ruling of December 21, 1999, the Court explicitly found that the 1994 Act requires the Interior defendants to provide plaintiffs with an accurate accounting of all money in the IIM trust held in trust for the benefit of plaintiffs, without regard to when the funds were deposited. As a corollary to that finding, the Court further ruled that the 1994 Act requires defendants to retrieve and retain all information concerning the IIM trust that is (or will be) necessary to render an accurate accounting of the above mentioned funds. While the Court thus ruled that the defendants had to perform a historical accounting of the IIM trust ae-counts-indeed, there would be no Phase II trial without the accounting-the Court refrained from prescribing a specific method by which the accounting had to be performed. That is, the Court remanded the matter back to the Department of Interior to perform the historical accounting that would form the basis of the Phase II trial without ordering the Department to utilize a specific accounting method.
Between December 21, 1999 and July 10, 2001, the Department of Interior failed
The evidence presented at this contempt trial confirmed that Interior only began taking the initial steps to develop a plan to perform the historical accounting after more than eighteen months had passed since the Court issued its Phase I trial ruling, and after the Court Monitor had examined the agency’s efforts (or lack thereof) to date. It still remains to be seen whether the actions taken by the Department since July of 2001 were taken in good faith and whether they will prove to be fruitful.
The defendants argue that, notwithstanding the Department’s wholesale failure to initiate a historical accounting project during the eighteen-month period following the Court’s Phase I trial ruling, there are three reasons why they should not be held in civil contempt of court. In particular, the defendants contend that: (1) they complied with the Court’s December 21, 1999 ruling; (2) the Court’s Phase I trial ruling is not clear and reasonably specific regarding initiating a historical accounting project; and (3) the Court’s Phase I trial ruling is a declaratory judgment, and a declaratory judgment alone cannot form the basis for a contempt citation. Defs.’ Proposed Findings at 139. The Court will address each of these contentions in turn.
The Court rejects the defendants’ argument that they should not be held in civil contempt because they complied with the Court’s Phase I trial ruling. The Court’s findings of fact presented above amply demonstrate that the agency failed to take any substantive actions to facilitate the rendition of an accounting in the eighteen month period following the Phase I trial ruling. The defendants argue, however, that they initiated a historical accounting project by creating the Office of Historical Trust Accounting, conducting a pilot accounting of certain judgment fund and per capita accounts, and performing work on the accounts of the five named plaintiffs. The Court will address each of these contentions separately.
There are two problems with the defendants’ argument regarding the ere-
The Court similarly finds that there are two reasons why it must reject the defendants’ argument concerning the pilot accounting of certain judgment fund and per capita accounts. First, the Department did not begin this pilot until June of 2001, more than seventeen months after the Court issued its Phase I trial ruling. For the reasons provided above, Interior cannot rely on efforts undertaken at such a late date to avoid a contempt citation. Second, OHTA’s own report observed that this pilot project involved “IIM accounts that are often based on a single transaction and the accounts rarely include income based on allotted land revenues or from other sources.” Pis.’ Ex. 31 at 11. Thus, even assuming the pilot was timely, it is not sufficient to constitute initiating a historical accounting project within the context of the Court’s December 21, 1999 Order. That is, conducting a pilot accounting project for a subset of funds is not enough to warrant discharging Specification 1.
Finally, the Court rejects the defendants’ contention that they initiated a historical accounting project because of the work Ernst & Young performed on the accounts of the five named plaintiffs. This argument is particularly weak even for the Department of Interior. Notwithstanding the fact that the work performed by Ernst & Young may prove to be valuable in terms of providing those plaintiffs with an accounting, the work was not meant to be part of a larger historical accounting project.
133
In other words, the work Ernst &
The defendants also argue that they should not be held in civil contempt of court because the Court’s Order of December 21, 1999 is not clear and reasonably specific regarding initiating a historical accounting project. In fact, the defendants go so far as to state that the order does not even “direct that such a project be initiated.” Defs.’ Proposed Findings at 139. The Court rejects this argument by the defendants. In May of 1998, the Court bifurcated the proceedings in this case so that it would address the fixing the system portion of the case first (Phase I), and then, after an accounting was performed, the correcting the accounts portion of the action (Phase II). Order of May 5, 1998 [Docket Entry # 94].
134
In June of 1999, before the Phase I trial was held, the Court specifically noted that “the second phase of this suit concerns plaintiffs’ claim for an accounting, which is their ultimate goal in this case.”
Cobell III, 52
F.Supp.2d at 19. Moreover, in the Phase I trial ruling itself, the Court explicitly ruled that the defendants had to perform an accounting of
all
funds held in the IIM trust for the benefit of plaintiffs.
135
Given this procedural history, it is inconceivable that the defendants would now argue that they do not even have to initiate a historical accounting project. That being said, the Court agrees with the defendants that in the Phase I trial ruling it did not prescribe a specific accounting method for the agency to employ. This fact does not, however, vindicate the defendants’ contention in this regard. As an initial matter, it is important to note that the Court correctly refrained at that time from ordering Interior to use a specific accounting method.
Cobell VI,
Notwithstanding the above analysis and the extensive findings of fact regarding this specification, the Court will not issue a contempt citation at this time with respect to Specification 1. Instead, the Court finds that it is sufficient simply to hold that the defendants unreasonably delayed initiating the historical accounting project that they were required to perform in accordance with this Court’s Order of December 21, 1999, and that such delay falls within the broad category of litigation misconduct that courts have the inherent power to redress.
Shepherd,
B. SPECIFICATION 2: CONCEALING THE DEPARTMENT’S TRUE ACTIONS REGARDING THE HISTORICAL ACCOUNTING PROJECT FROM MARCH 2000 UNTIL JANUARY 2001
The Court concludes based on the findings of fact detailed above that the defendants committed a fraud on the Court by concealing the Department’s true actions regarding the Historical Accounting Project during the period from March 2000, until January 2001. The evidence presented and representations made at this contempt trial with respect to this specification prove just how deceitful and disingenuous the defendants can be towards both the individual Indian trust beneficiaries and this Court. The Court’s factual findings further demonstrate the lengths the Department will go to avoid having to provide the 300,000 plaintiffs in this action with an accounting of their money held in trust by the United States.
The Department of Interior represented to this Court (and the plaintiffs) that it was placing a notice in the Federal Register to determine the most reasonable method for
The Department of Justice would not permit the Interior defendants to appeal this Court’s Phase I trial ruling unless the agency began an administrative process towards a historical accounting. Notwithstanding the fact that Interior never intended to use any accounting method other than statistical sampling, 138 the agency paid the “price of the appeal” and published a notice in the Federal Register anyway. In the notice, the Department outlined four potential accounting methods that it could use to perform the historical accounting of the IIM trust accounts, including statistical sampling and transaction-by-transaction. Believing that this was a good faith effort on Interior’s part to gather information, numerous IIM beneficiaries, at their own expense, traveled to and provided comments at numerous meetings across the country. These beneficiaries overwhelmingly favored the transaction-by-transaction approach.
On appeal, the Department of Interior contended both in its written briefs and during oral argument that it, rather than this Court, should have the opportunity in the first instance to define the parameter of any historical accounting project. To support this contention, the Department represented to the D.C. Circuit (again, both in its written submissions and during oral argument) that it had recently undertaken an administrative process to ascertain the most reasonable approach to performing the historical accounting. 139 The Department of Justice felt that it was imperative to show action by the historically recalcitrant agency, and that publishing a notice in the Federal Register provided the avenue by which it could do so. These representations formed the factual foundation of the agency’s appellate argument that it, rather than this Court, should determine as an initial matter the scope of the historical accounting project. The Department also used the notice in the Federal Register to show that it was taking steps to provide plaintiffs with an accounting of their money held in trust by the agency. Thus, Interior argued before the D.C. Circuit that this Court’s Phase I trial ruling was premature and should be reversed because the agency was in the process of determining for itself the scope of the historical accounting.
Despite Interior’s representations to this Court (and the D.C. Circuit), the
One of the more disheartening aspects of this unconscionable scheme was the pervasive involvement of attorneys in the Solicitor’s Office. Attorneys in the Solicitor’s Office assisted in preparing the notice published in the Federal Register, participated in the meeting where Interior officially selected statistical sampling as the method it would use to perform the historical accounting, and drafted the memoranda used by the agency to support its predetermined choice to employ the statistical sampling approach. These attorneys took such actions knowing that the agency had never considered any of the other options enumerated in the notice published in the Federal Register, or even the comments to the notice provided by the trust beneficiaries. The Court is very disappointed that attorneys, particularly those that work for the government, would engage in such subterfuge.
The Court concludes that the gross misbehavior described above by the Interior defendants and their counsel rises to the level of fraud on the court,
see Aoude,
The Court finds that there are two additional substantive arguments raised by the defendants that are worth addressing. First, in their consolidated opposition to plaintiffs’ show cause motions, the defendants argue that this Court cannot sanction the defendants for conduct engaged in during its appeal to the D.C. Circuit. Consolidated Opp’n at 28 n.20 (citing, for example,
Conner v. Travis County,
The second issue worth addressing is defendants’ contention that to the extent plaintiffs are not satisfied with the manner in which the Federal Register process was carried out, they should file an action under the APA against the defen
C. SPECIFICATION 3: FAILING TO DISCLOSE THE TRUE STATUS OF THE TAAMS PROJECT BETWEEN SEPTEMBER 1999 and DECEMBER 21,1999
The Court concludes based on the findings of fact above that the defendants committed a fraud on the Court by failing to disclose the true status of the TAAMS project between September 1999 and December 21, 1999. The Department of Interior (and its attorneys) knew, even before the Phase I trial ended, that many of the representations it had made during that trial with respect to TAAMS were inaccurate. Notwithstanding the fact that Interior was aware of these false statements and the need to correct them, the agency intentionally failed to inform the Court about the massive problems it was experiencing with the new land management system. Thus, the record upon which this Court based its Phase I trial decision was infected with numerous false statements and inaccurate documents put forth by the Interior defendants.
In the Phase I trial, which was held during the summer of 1999, the Department of Interior presented extensive testimonial and documentary evidence regarding TAAMS. Interior argued that while its legacy computer systems had many shortcomings, TAAMS did not. In particular, the Department represented to the Court that TAAMS would allow BIA to administer trust assets, generate timely bills, identify delinquent payments, track income from trust assets, and distribute proceeds to the appropriate account holders. Dominic Nessi, the project manager for TAAMS, even went so far as to state that TAAMS “has the potential probably to be the best land management system in the United States.” Phase I tidal Tr. at 2391. The Department also described the manner in which the agency was going to implement the land management system and the general time frame for doing so. Specifically, the agency indicated that it would first conduct a 100 day pilot project in Billings, Montana. After completing the pilot project, the Department planned on implementing TAAMS on a geographical basis to the different Area Offices in the coming year (2000).
In the late summer and early fall of 1999 it became obvious to the Department that it would not be able to implement TAAMS either in the manner that it had described or during the time period that it had provided to the Court in the Phase I trial. The reason was that the agency experienced significant problems with the land management system in July and August that precluded it from even beginning the pilot project in Billings, Montana. Moreover, at this time the Department identi
As a result of these developments, the Department of Interior, including several attorneys in the Solicitor’s Office, knew that they needed to inform the Court about the significant problems the agency was experiencing with its new land management system. Despite this knowledge and the fact that these officials and attorneys had actually drafted a memorandum to provide to the Court, the Department of Interior chose to say and do nothing. That is, the agency made a conscious and deliberate decision not to correct the patently false statements that its officials had made during the Phase I trial. Moreover, even assuming arguendo that the Department intended to file the memorandum that it had prepared, the agency still would not have provided the Court with anything approaching an accurate status of the TAAMS project. Indeed, as the Court noted above, the memorandum itself demonstrates that the Department never intended to inform the Court of all the problems it was experiencing with TAAMS.
The Court concludes that the defendants committed a fraud on the Court by failing to disclose the true status of the TAAMS project between September 1999 and December 21, 1999,
see Aoude,
As a corollary to this conclusion, it is important to note that parties in general and attorneys in particular have a continuing duty to apprise a court of developments which may affect the outcome of a case.
See, e.g., Board of License Commissioners v. Pastore,
Our adversary system for the resolution of disputes rests on the unshakable foundation that truth is the object of the system’s process which is designed for the purpose of dispensing justice. However, because no one has an exclusive insight into truth, the process depends on the adversarial presentation of evidence, precedent, and custom, and argument to reasoned conclusions-all directed with unwavering effort to what, in good faith, is believed to be true on matters material to the disposition. Even the slightest accommodation of deceit or lack of candor in any material respect quickly erodes the validity of the process. As soon as the process falters in that respect, the people are then justified in abandoning support for the system in favor of one where honesty is preeminent... The system can provide no harbor for clever devices to divert the search, mislead opposing counsel or the court, or cover up that which is necessary for justice in the end.
Shaffer Equipment Company,
D. SPECIFICATION 4: FILING FALSE AND MISLEADING QUARTERLY STATUS REPORTS STARTING IN MARCH 2000, REGARDING TAAMS AND BIA DATA CLEANUP
The Court concludes based on the findings of fact detailed above that the defendants committed a fraud on the Court by filing false and misleading quarterly status reports starting in March 2000, regarding TAAMS and BIA Data Cleanup. The evidence presented and representations made during this contempt trial clearly demonstrate that the Interior defendants intentionally filed the false and misleading quarterly status reports to make this Court (and the plaintiffs) believe that significant headway had been made on these two critical subprojects. In reality, only minimal progress-if any at all-had been made during this time period, and
This sorry saga began when the Department of Interior filed its First Report along with the Revised HLIP in March of 2000. In the First Report Interior failed to inform the Court that the difficulties the agency had experienced with TAAMS during the late summer and early fall of 1999 persisted through the winter months, and that the problems were still impeding the implementation of the land management system. Instead, the Department left the Court with the distinct impression that while there were difficulties in the summer and fall of 1999, progress was now being made towards deploying the land management system. In addition to mischaracter-izing the overall status of TAAMS, the Department also included several patently false and misleading statements in the report about the land management system, including that: (1) TAAMS was operational at the pilot site in Billings, Montana; (2) the land ownership module was implemented at the pilot site in Billings, Montana; (3) the system testing was successful in September and November 1999; (4) the functional approach to implementing TAAMS was better than the geographical method; and (5) the IV & V contractor felt that there was a reasonable assurance of successfully implementing the land management system.
The First Report and the Revised HLIP also failed to portray accurately the status of the BIA Data Cleanup subproject. Although the agency was more forthright about the difficulties it was experiencing with this subproject than the TAAMS sub-project, Interior still intentionally misled the Court by making it seem that significant progress had been made towards ensuring accurate data in the agency’s computer systems. 143
The next six quarterly status reports filed by the Department both perpetuated and in many respects supplemented the false and misleading representations made in the First Report and the Revised HLIP. Because it would be a needless exercise to recount all of the false and misleading representations made in these six reports (particularly since the Court already did so above), the Court will simply note that there is no question that the Department of Interior intentionally failed to provide the Court with a complete and accurate picture of the TAAMS subproject and the
The egregious nature of the Department’s conduct in this regard is exacerbated by the fact that attorneys in the Solicitor’s Office actively participated in the drafting of these false and misleading quarterly status reports. It is abundantly clear that these lawyers played a significant role in the reporting process and that they specifically and consistently tempered the language used in the reports. Although there is no excuse for anyone to engage in this type of misconduct, it is particularly troubling when attorneys, particularly those that work for the federal government, do so. As the Court noted in its ruling after the first contempt trial:
The federal government here did not just stub its toe. It abused the rights of the plaintiffs to obtain these trust documents, and it engaged in a shocking pattern of deception of the court. I have never seen more egregious misconduct by the federal government. In my own experience, government lawyers always strived to set the example by following the highest ethical standards that were then a model for the rest of the legal profession, and the Justice Department always took the position that its job was not to win an individual case at all costs, but to see that justice was done. Justice has not been done to these Indian beneficiaries.
Cobell II,
In the Eighth Report, which was filed during this contempt trial, the Department of Interior essentially conceded that the prior seven quarterly status reports did not accurately portray the status of either the TAAMS or BIA Data Cleanup subpro-jects, and that the reporting format the agency selected “exacerbated the ordinary human inclination to report accomplishments and to ignore obstacles, difficulties and problems!)]” Pis.’ Ex. 66 at 6. While the Court appreciates these admissions by Secretary Norton and views the Eighth Report as much more candid than the previous seven reports, it in no way absolves the defendants for intentionally filling seven false and misleading quarterly status reports over a period of a year and a half.
Thus, in accordance with the foregoing analysis, the Court has no trouble finding that the Department of Interior committed a fraud on the Court by filing false and misleading quarterly status reports (beginning in Mach 2000) regarding the TAAMS and BIA Data Cleanup sub-projects,
Aoude,
E. SPECIFICATION 5: MAKING FALSE AND MISLEADING REPRESENTATIONS STARTING IN MARCH 2000, REGARDING COMPUTER SECURITY OF IIM TRUST DATA
In light of the findings of fact detailed above, the Court has no difficulty concluding that the defendants committed a fraud on the Court by making false and misleading representations starting in March 2000, regarding computer security of IIM trust data.
Beginning in March 2000, the plaintiffs started questioning the manner in which Interior secured the vast quantities of confidential trust information stored in its computer systems. Specifically, the plaintiffs filed several motions between March 2000 and May 2001 in which they argued that the Department of Interior was not taking proper measures to ensure the security of the trust information maintained in the agency’s computer systems. In response to these motions, the Interior Department and its attorneys consistently represented to this Court that while there was a problem with data security, the agency was in the process of making the pertinent computer systems more physically and electronically secure. One Jus
Interior-in derogation of court order, common-law, and statutory and regulatory directives-has demonstrated a pattern of neglect that has threatened, and continues to threaten, the integrity of trust data upon which Indian beneficiaries depend. Rather than take any remedial action, its senior management has resorted to the condescending refrain that has consistently insinuated itself into the federal government’s relationship with Native Americans, in general, and with IIM holders, in particular. And that is one that requests forbearance and trust on the grounds that reform continues to be the ‘highest priority.’ It is the view of the Special Master that, in this instance, such trust is not warranted, requests for forbearance should be denied and promises of future compliance should not be credited. The stakes are simply too high. An agency that ignores its own commissioned reports and those generated by other federal agencies; ignores pleas from its own staff for adequate funding; and spends tens of millions of dollars funding computer systems when the integrity of the very data to be loaded on those systems has been open to compromise for so many years, inspires little confidence.
The security of systems housing trust data is no better today than it was ten years ago. The circumstances leading to the Court’s alarm ‘that BIA had no security plan for the preservation of [trust] data,’ ... speak with compelling application today. The continued lack of trust data security is ‘vivid proof that Interior has ‘still failed to make the kind of effort that they are going to be required to ever make trust reform a reality-’
Report on IT Security at 153-54 (internal citations omitted).
There is no question that the defendants, by representing to the Court (and plaintiffs) for more than a year that they were in the process of making their computer systems more secure when in reality they were doing virtually nothing, committed a fraud on this Court,
see Aoude,
In addition to making conclusions of law with respect to Specification 5 proper, at this time the Court will also address the Special Master’s contention that a fiduciary duty of the defendants-of which they are currently in breach-is to ensure that the computer systems that house confidential IIM trust data are adequately secured. Report on IT Security at 3-4 (“It is the thesis of this Report that a fundamental component of Interi- or’s duty to monitor and verify trust information ‘contained in and processed by the computer systems’ necessarily includes an obligation to ensure its integrity.”). Although the Court believes that the Special Master construed the defendants’ fiduciary obligations in this regard too narrowly, it nonetheless agrees with the fundamental proposition articulated by the Special Master in his Report on IT Security.
147
Specifically, the Court finds that the Department of Interior has the fiduciary obligation to ensure the security of trust information regardless of whether that information is stored on a computer or in a warehouse. Thus, the Court will declare today, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Administrative Procedure Act, 5 U.S.C. §§ 702
&
706, that the Department of Interior is under the duty to ensure that all information regarding the IIM trust (regardless of whether it is in paper or electronic form) that is necessary to perform an accurate accounting of all IIM trust funds held in trust by the United States is properly secured and maintained. The Court reaches this conclusion for two reasons. First, the Court finds that the text of the 1994 Act itself requires the Department to take such action. The 1994 Act enumerates certain things that the Secretary of Interior must do in order to discharge properly her fiduciary duties. These responsibilities include, for example, “determining accurate account balances[,] providing periodic, timely reconciliations to assure the accuracy of accounts[,] and accounting for the daily and annual balance of all funds held in trust by the United States for the benefit of an Indian tribe or individual Indian ....” 25 U.S.C. § 162a(d); 25 U.S.C. § 4011. The Court finds that in order to perform these duties properly the Secretary of Interior must ensure that the IIM trust information is secure. To be sure, there is simply no possible way for the Secretary to provide plaintiffs with, for instance, an accurate accounting if the data upon which she relies to do so is subject to unauthorized manipulation. The Court’s finding today is entirely consistent with and is actually a corollary to this Court’s ruling in December 1999. In that opinion, the Court noted, among other things, that “a fundamental requirement of defendants’ responsibilities in rendering an accurate accounting is retaining the documents necessary to reach that end[.]” The Court similarly finds and declares today that the defendants’ accounting responsibilities also includes the duty to ensure the security of the information upon which that accounting will be based. The second reason why the Court reaches this conclusion is that even if the duty to secure IIM trust information does not fall within the ambit of one of the enumerated obligations in the 1994 Act, in light of the trust law principles that govern this action it is clearly one of the agency’s subsidiary duties.
F. DEFENDANTS’ ARGUMENTS THAT THE COURT SHOULD EXERCISE ITS DISCRETION AND NOT HOLD THEM IN CIVIL CONTEMPT
Despite the foregoing legal conclusions, the Department of Interior makes several arguments why this Court should refrain from holding Secretary Norton and Assistant Secretary McCaleb in civil contempt of court. The Court will address each of these arguments below.
The defendants first argue that “even if the Court views the evidence as sufficient to find contempt, it should nonetheless decline to do so.” Defs.’ Proposed Findings at 152. To support this contention, the defendants cite numerous eases in which the court ultimately declined to hold a party in contempt. Id. at 152-53. There are two reasons why the Court rejects this argument. First, while I agree that Courts must be mindful of the impact a contempt citation will have on a party, it does not stand to reason that once the necessary facts establishing contumacious conduct are proven the Court should simply decline to hold the wrongdoing party in contempt. To do so would make the contempt proceedings themselves a complete waste of time, which in this case would be quite substantial. Second, the extent of defendants’ transgressions recounted above are so egregious that the Court has no difficulty concluding that the contempt citations levied today are warranted.
The second argument raised by Interior is that the Court must consider the good faith efforts of the agency to comply with the orders of this Court. Defs.’ Proposed Findings at 154. In particular, the defendants argue that the Court should consider the actions taken by Secretary Norton during her tenure in office before finding her in contempt of court. As an initial matter, the Court finds that to the extent the defendants are asserting the defense of good-faith substantial compliance, that particular defense does not help them defend against the five specifications at issue in this contempt trial. The Court’s extensive findings of fact provided above demonstrate in great detail numerous actions taken by the Interior defendants that were taken in bad faith. Indeed, four of the five specifications enumerated in the orders to show cause are expressed in terms of fraud on the court. The commission of a fraud on the court almost by definition involves actions that were taken in bad faith. In addition, the Court’s findings regarding the other specification, which involved the agency’s failure to initiate a historical accounting project, amply demonstrate that the Department failed to take any substantive action for eighteen months after this Court issued its Phase I trial ruling. Such indifference by the defendants hardly constitutes either good faith conduct or substantial compliance with the Court’s Order
of
December 21, 1999. In light of the Court’s findings above, the defendants’ contention that the Court should consider
Consistent with the preceding contention, the defendants argue that this Court should not hold the current Secretary of Interior in contempt of court based on the contumacious conduct of her predecessor or actions taken during her predecessor’s term in office. Defs.’ Proposed Findings at 157-58. In other words, Secretary Norton argues that she should not be held in contempt of court for the misconduct that occurred during Bruce Babbitt’s tenure as Secretary of the Interior. The Court rejects this contention in its entirety. As an initial matter, it is important to remember that both this lawsuit in general and this contempt trial in particular are against the Secretary of Interior in her official capacity. That is, this action is not maintained against Gale Norton as an individual, just as the previous contempt trial was not against Bruce Babbitt in his individual capacity. Rather, both trials were against the Secretary of Interior-it did not matter who actually occupied the office at the time. In light of this fact, to the extent these contempt specifications are against the Secretary of Interior in her official capacity only, the caselaw is cleai’ that “a substituted party steps into the same position of the original party.”
See, e.g., Alberti v. Klevenhagen,
The defendants further argue that “[a]ny time a request is made by a party in civil litigation to have a Cabinet officer held in contempt, considerations of interbranch comity arise.” Defs.’ Pro
Although we unequivocally affirm the principle that no person is above the law, .. .we cannot ignore the fact that a contempt sanction imposed on the Attorney General in his official capacity has greater public importance, with separation of powers overtones, and warrants more sensitive judicial scrutiny than such a sanction imposed on an ordinary litigant.
In re Attorney General,
Finally, the defendants argue that “[t]he Court is obliged to consider the prospective impact of a contempt finding upon the Secretary’s ability to carry out the very reforms that all parties agree are essential to effective trust administration.” Defs.’ Proposed Findings at 160-61. During this contempt trial, Deputy Secretary Griles was not quite as diplomatic in the way he articulated this argument. Specifically, he testified that:
I also know that from people around the Department who I would never — the inference around the Department is once that [contempt finding] was determined, people’s efforts kind of — they went, well, he has already done the worst he can do to us; we are going to go on and do the other things.
So I guess if we can find a way to move forward together, that is a lot better than the adversarial role, and that allows us to do it in a meaningful fashion without — I mean, this Secretary and us, if — the IIM accountholders and the tribal leaders and the people who we have to work with have to believe that we are going to do this if you give us a chance. If contempt is issued, I think that is going to put a big stigma on us, that, well, this Judge has already said they’ve already been in contempt.
VI. RELIEF
The most taxing aspect of this case has been and continues to be fashioning appropriate relief for the plaintiffs. Each time it has been confronted with this difficult issue the Court has stuck to its constitutional roots by awarding only that relief which it finds to be absolutely necessary.For example, following the first contempt trial in this action, in which the Court held former-Secretary Babbitt and former-Assistant Secretary Gover in civil contempt of court after the plaintiffs proved by clear and convincing evidence that these defendants disobeyed two discovery orders and successfully covered up their disobedience through semantics and strained, unilateral, self-serving interpretations of their own duties, the Court took the moderate steps of appointing a special master to oversee the discovery process and awarding plaintiffs reasonable expenses and attorneys’ fees incurred as a result of defendants’ failure to obey the orders.
Cobell II,
In light of the Court's extensive findings of fact and conclusions of law provided above, there is no question that the plaintiffs are entitled to relief as a result of the defendants' disgraceful actions. The difficulty in this case, however, lies in fashioning specific relief to award plaintiffs based on the contumacious and sanctionable conduct of the defendants. In making this determination, the Court notes that it is well settled that courts have considerable discretion in imposing coercive and compensatory sanctions to redress contumacious conduct, see, e.g., McComb,
A. THE APPOINTMENT OF A RECEIVER OVER THE IIM TRUST
The plaintiffs vigorously argue that the only adequate remedy to redress the defendants’ egregious misconduct in this case is the appointment of a receiver over the IIM trust. Specifically, the plaintiffs contend that this Court should “be dissuaded no longer by any further misrepresentation or pettifoggery and promptly appoint a receiver so that trust reform may finally commence.” Pis.’ Consolidated Motion of October 19, 2001 at 64. In response, the defendants (arrogantly) fail to argue that the appointment of a receiver is not warranted in this case. Rather the defendants contend only that “[t]he relief Plaintiffs seek is beyond this Court’s authority to provide because the United States Constitution prohibits appointment of a receiver to assume the trust management and reform duties Congress has conferred on the Secretary [of Interior].” Defs.’ Opposition to Pis.’ October 19, 2001 Motion at 1. As the Court explains below, while it finds that the appointment of a receiver in this case would be consistent with both the 1994 Act and the United States Constitution, the Court will refrain from granting such relief at this time. Instead, the Court has determined that the more sound approach is to schedule and conduct further proceedings to determine what additional relief (other than a receiver) is warranted with respect to the fixing the system portion of the case, and approve an approach to conducting a historical accounting of the IIM trust accounts. The Court will discuss these future proceedings and what they will entail in the next section of this opinion.
a) Courts’ Equitable Power to Appoint a Receiver
It is well settled that courts can take broad remedial action pursuant to
Specifically, in the context of trusts, "there is a long history of equitable supervision of trusts and trustees by courts, which, at the behest of beneficiaries, routinely compel trustees to perform duties, enjoin breaches of trust, compel redress of breaches of trust, remove faithless trustees, and appoint receivers to administer trust property." First Fiduciary Corp. v. Commissioner of Banks,
Similarly, state courts have appointed receivers over their executive counterparts to compel compliance with court orders.
See, e.g., Judge Rotenberg Educ. Center,
b) The 199^. Act Does Not Prevent the Court from Appointing a Receiver
Before addressing the constitutional arguments raised by the defendants the Court must determine whether the 1994 Act itself precludes the appointment of a receiver over the IIM trust. To the extent that the 1994 Act provides the primary basis for plaintiffs’ claims in this action, the Court has to consider if that statute prohibits the remedy of receivership. After carefully reviewing the 1994 Act, the Court finds that the statute does not prevent it from appointing a receiver over the IIM trust so long as the appointment is otherwise justified. The Court reaches this conclusion for several reasons.
First, the text of the 1994 Act itself does not limit this Court’s ability to grant relief to the plaintiffs. The Court’s inquiry begins, as it must, with the text of the applicable statute.
Cf. Duncan v. Walker,
Second, the legislative history of the 1994 Act supports the Court granting relief that will ensure that the fiduciary obli
By the mid-1980s there was uniform disapproval of the manner in which Interior was administering the IIM trust. In 1988, Congress began to hold oversight hearings related to the handling of government trust accounts. On April 22, 1992, the House Committee on Government Operations issued a report entitled Misplaced Trust: The Bureau of Indian Affairs’ Mismanagement of the Indian Trust Fund, H.R. No. 102-499 (1992) (Pis.’ Ex. 1). This thoroughly documented report concluded that Interior had made no credible effort to address the problems in trust administration in a “wide range of areas” and that Interior had disobeyed many congressional directives aimed at forcing Interior to correct trust management practices and reconcile the Indian trust accounts. Pis.’ Ex. 1.... Based largely on the findings made in Misplaced Trust, Congress passed the Indian Trust Fund Management Reform Act. See Pub.L. No. 103-412 (1994) (Pis.’ Ex. 1).
Cobell V,
Third, the Court finds that the 1994 Act does not limit this Court's power to appoint a receiver over the IIM trust because it is well settled that "if a right of action exists to enforce a federal right and Congress is silent on the question of remedies, a federal court may order any appropriate relief." Franklin v. Gwinnett County Public Schools, 503 U.s. 60, 69,
Fourth, and finally, even assuming that the 1994 Act is ambiguous on this point, the Court should interpret the act to permit such relief that is otherwise available because the statute must be "construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit." Cobell VI,
c) The Constitution Does Not Bar the Appointment of a Receiver in this Case
The eases cited above in Section VI.A(1) amply demonstrate that this Court, as a general matter, possesses broad equitable power to ensure compliance with its orders. The extent to which the Court can exercise this power in the instant case has specifically been examined by both this Court and the Court of Appeals. In June of 1999, this Court observed that, “[c]on-trary to defendants’ position, Congress has subjected defendants to the full range of relief that plaintiffs seek, in terms of sovereign immunity.”
Cobell III,
Neither logic nor the case law supports defendants’ position; to the contrary, both point toward the availability of these remedies... .With the exception of the removal of the government as trustee, plaintiffs are entitled to seek standard common law remedies for breach of their IIM trust rights.
Id. On appeal, the D.C. Circuit explained in more detail the scope of this Court’s equitable power in this case. In particular, the D.C. Circuit found that:
the district court has substantial ability to order that relief which is necessary to cure [defendants’] legal transgressions:
The essence of equity jurisdiction has been the power of the Chancellor to do equity and to mould each decree to the necessities of the particular case. Flexibility rather than rigidity has distinguished it. The qualities of mercy and practicality have made equity the instrument for nice adjustment and reconciliation between the public interest and private needs as well as between competing private claims...
Once a right and a violation have been shown, the scope of a district court’s equitable powers to remedy past wrongs is broad, for breadth and flexibility are inherent in equitable remedies. Because the agencies involved delayed performance of their legal obligations, the court was justified in fashioning equitable relief that would ensure the vindication of plaintiffs’ rights. That this case involves decades-old Indian trust funds rather than segregated schools does not change the nature of the court’s remedial powers.
Cobell VI,
Despite the clear import of this Court’s and the Court of Appeals’ findings, the defendants nonetheless maintain that the appointment of a receiver over the IIM trust is unconstitutional. Specifically, the defendants maintain that such relief would “contravene the Appointments Clause, general principles of separation of powers, and Articles I, II, and III of the Constitution, and would be limited by the Appropriations Clause.” Defs.’ Opposition at 2. The Court will address each of these contentions in turn.
1. Appointments Clause
The defendants contend that appointing a receiver over the IIM trust would violate the Appointments Clause of the Constitution. The
Appointments
First, the defendants maintain that by appointing a receiver over the IIM trust the Court would be usurping the power of the President to appoint all principal officers of the United States. Defs.' Opposition at 3. The defendants assert that the receiver would be a principal officer because the duties he would perform (exercising authority over the IIM trust) "are those of a principal officer-the secretary of Interior-appointed by the President with the advice and consent of the Senate." Id. The Court finds that while the defendants are correct that the Secretary of Interior is a principal officer, see Edmond v. United States,
Second, defendants maintain that if the court-appointed receiver is an inferior officer, then the Court lacks the power to make such an appointment because Congress has not vested the Court with such authority. Defs.’ Opposition at 5 (referring to the portion of the Appointments Clause that provides that “Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Pleads of Departments.”). The defendants’ argument in this regard is misplaced. The numerous cases cited above demonstrate that federal district courts are vested with the power to appoint a receiver to ensure compliance with its orders.
See, e.g., Morgan,
The final argument raised by the defendants is that “Congress could not authorize appointment of a receiver in this case” because it would be “incongruous with the judicial power.” Defs.’ Opposition at 6. That is, even if Congress wanted to permit this Court to appoint a receiver, it did not have the power to do so since administering trusts are not within the purview of judicial duties. Because this contention closely fits into the defendants’ general separation of powers argument which the Court addresses in the next section, it is sufficient for the Court simply to note at this point that all of the cases cited above involving prisons, schools, mental hospitals, water treatment plants, and child welfare centers belie defendants’ position in this regard. Defendants fail to appreciate that courts appoint receivers over public (and private) institutions to remedy illegal conduct.
Morgan,
2. General Separation of Powers Principles
The heart of the defendants’ constitutional claim is that the “appointment of a receiver would contravene the separation of powers doctrine by permitting the court to intrude on functions entrusted to the other branches of the federal government.” Defs.’ Opposition at 7. The Court will address and reject in turn each of the arguments the defendants present to support this contention.
First, the defendants argue that the separation of powers doctrine seeks to prevent the aggrandizement of power in any one of the three branches of government. Defs.’ Opposition at 7. They make the fallacious contention that the Court would be placing itself over the executive branch in contravention of the separation of powers doctrine if it chooses to appoint a receiver over the IIM trust. In making this argument, the defendants completely fail to comprehend the reason why courts appoint receivers over public institutions. Courts do not appoint receivers over executive agencies or officials to usurp the power of the executive branch. To the contrary, receiverships are only imposed as equitable relief after a particular executive official has demonstrated that she will not comply with the less intrusive remedies already granted by the court.
Morgan,
The second argument raised by the defendants is that the appointment of a receiver would be inconsistent with the Court’s Article III power, which is limited to deciding cases and controversies. Defs.’ Opposition at 9. As a corollary to this argument, the defendants argue that it is the Executive branch’s constitutionally prescribed responsibility to ensure that the laws are faithfully executed, and the Court cannot interfere with the exercise of that responsibility.
Id.
Once again, the defendants have misconstrued and misunderstood what courts do when they appoint a receiver in a particular case. A necessary component of this Court’s jurisdiction is the ability to determine what relief to grant if the plaintiff prevails in the action. The Court undertakes this responsibility on a daily basis without even the slightest hint that it does so in contravention to Article III. In this case, after the plaintiffs proved that the defendants were in breach of the fiduciary duties that they owe to the
Having placed into context what courts do when they appoint a receiver, it is clear that the defendants’ Article II argument similarly must fail. By appointing a receiver, the Court would not be usurping the executive branch’s authority and responsibility to ensure that the laws are faithfully executed. Rather, the Court would simply be granting the relief necessary to cure the defendants’ continuing breach of its fiduciary obligations towards the IIM beneficiaries. As the Seventh Circuit observed in a similar context: “the fact that it is a federal agency or officer charged with an act of racial discrimination does not alter the pertinent standards, since it would be unthinkable that the same Constitution would impose a lesser duty on the Federal Government.
Gautreaux v. Romney,
The third separation of powers argument raised by the defendants is that, in accordance with the Supreme Court’s decisions in cases such as
Morrison v. Olson,
The fourth argument put forth by defendants is that “a receiver would be controlled by the Court and accountable only to the Court, stripping the President of the power to remove an executive official[.]” Defs.’ Opposition at 13. Yet again, the defendants’ strained interpretations of the Constitution and the corresponding case law can not be accepted by this Court. A court-appointed receiver is an officer of the Court, not the executive branch. As such, all of the cases cited by defendants in this section of their brief are wholly inapplicable to the appointment of a receiver in the instant matter. Even if the Court appointed a receiver over the IIM trust, the President would still maintain the power to remove any official within the Department of Interior, including Secretary Norton herself, that he so desired.
Moreover, the Court finds that the cases cited by defendants where certain duties were placed outside the President’s immediate control, such as
Printz v. United States,
Consistent with their fourth argument, the defendants’ fifth contention is that the appointment of a receiver over the IIM trust would be unconstitutional because Congress has already made the Secretary of Interior the trustee-delegate for the United States. Initially, the Court notes that this argument is really a statutory rather than constitutional question. As the Court found above, the 1994 Act (and the other applicable statutes) do not inhibit this Court’s authority to appoint a receiver over the IIM trust. Indeed, the statutory sections that the defendants cite are the very provisions that the Secretary was found to be in breach of during the Phase I trial, and are the same provisions of which she is still not in compliance. The fact that Congress codified the Secretary of Interior’s status as trustee-delegate for the United States is by itself irrelevant. That is, by appointing a receiver, the Court would in no way be acting in contravention to the 1994 Act or the views expressed by Congress in that statute. Indeed, in virtually every case in which a receiver is appointed an executive branch official was originally tasked with carrying
The sixth argument raised by defendants is that there is no difference between removing the United States as trustee and appointing a receiver to administer the IIM trust, and as such the Court cannot do either. The Court rejects this position by the defendants because there is a significant difference between these two remedies. Initially, it is worth noting that the difference between appointing a receiver and removing the trustee is well recognized in the case law, and by commentators. See, e.g., Restatement (Second) Trusts at § 199. More importantly, this Court recognized back in June of 1999 that while it probably could not remove the United States as the trustee, the other remedies ordinarily available to beneficiaries-including the appointment of a receiver-are available to the plaintiffs in this case. Cobell III, 52 F.Supp.2d at 24-25, 28 n. 17. While the Court will not describe all of the differences between the two remedies, it will note that the primary difference between removing a trustee (or trustee-delegate) and appointing a receiver is that a receivership lasts only so long as is necessary to ensure that the trust is being administered properly, while the removal of the trustee or trustee-delegate is permanent. Restatement (Second) Trusts at § 199, Comment d (“The receivership will be terminated by the court when it is determined by the court that the trustee [or trustee-delegate] may properly continue as trusteed]”); Comment e (“[I]f the trustee who is removed is one of several trustees, the remaining trustees may be permitted to administer the trust or the court may appoint a new trustee.”). Thus, appointing a receiver in this case would not entail removing the Secretary of Interior as the trustee-delegate for the United States.
The final argument raised by the defendants is that the cases where a federal (or state) court appointed a receiver over a state agency are not applicable to the instant matter. The Court disagrees. These cases provide an important starting point for assessing this Court’s power under Article III, and its equitable power to remedy illegal conduct by defendants. To the extent that the Court’s power must be evaluated in light of the fact that the defendants in this action are federal rather than state officials, the Court has done so. There is nothing in either the Constitution or the corresponding case law that prevents the Court from granting such relief.
3. Appropriations Clause
The final constitutional argument presented by the defendants is that the “appointment of a receiver would violate the Appropriations Clause to the extent that the receivership would require expenditures from the Treasury.” Defs.’ Opposition at 18. The defendants’ argument on this point is sorely misplaced. Initially, the Court notes that it has already determined that “claims of lack of funding cannot be allowed to legally impair the United States’ trustee-delegates’ exacting fiduciary duties toward management of this trust.”
Cobell V,
d) The Court Declines to Appoint a Receiver at his Time
Having found that the appointment of a receiver is constitutionally permissible, the Court must now undertake the difficult task of deciding whether to grant such relief at this time. Courts have generally recognized that the appointment of a receiver should be the remedy of last resort.
See, e.g., Bracco,
The more usual remedies contempt proceedings and further injunctions were plainly not very promising, as they invited further confrontation and delay; and when the usual remedies are inadequate, a court of equity is justified, particularly in aid of an outstanding injunction, in turning to less common ones, such as a receivership, to get the job done.
Morgan,
After carefully examining the extensive record in this case (which is replete with instances of misconduct by the defendants), the Court has decided not to appoint a receiver at this juncture. Instead, the Court has determined that it will grant further injunctive relief
154
to make the defendants correct the breaches of trust
B. FUTURE PROCEEDINGS-PHASE 1.5 TRIAL
It is now abundantly clear that the Phase II trial envisioned and described by the Court in the Memorandum Opinion issued on December 21, 1999, will not occur anytime in the foreseeable future.
Cobell V,
In light of the current posture of this case, it is now obvious that this relief was and is insufficient. The recalcitrance exhibited by the Department of Interior in complying with the orders of this Court is only surpassed by the incompetence that the agency has shown in administering the IIM trust. Accordingly, the Court concludes that while its factual findings and legal conclusions in the Phase I trial ruling were correct (and will therefore not be disturbed), the relief granted by the Court at that time is no longer adequate.
155
Consistent with this conclu
In accordance with the foregoing analysis, the Court will schedule and conduct further proceedings (which shall hereinafter be referred to as the Phase 1.5 trial) to determine what additional relief is warranted in this matter.
157
Specifically, the Phase 1.5 trial will encompass additional remedies with respect to the fixing the system portion of the case, and approving an approach to conducting a historical accounting of the IIM trust accounts. In this regard, the Court will order the Interior defendants to file with the Court and serve upon the plaintiffs a plan for conducting a historical accounting of the IIM trust accounts. This plan shall be filed and served upon completion but no later than January 6, 2003. In addition, the Court will order the defendants to file with the Court and serve upon the plaintiffs a plan for bringing themselves into compliance with the fiduciary obligations that they owe to the IIM trust beneficiaries. As part of this plan, the defendants shall describe, in detail, the standards by which they intend to administer the IIM trust
There are two additional issues worth addressing before moving on to the next section. First, since the Phase I trial ended, the Department of Interior has annoyingly persisted in arguing that this Court lacks jurisdiction to review its efforts to conduct a historical accounting of the IIM trust accounts because it has not taken final agency action, as required by the APA.
159
See, e.g., Defs.' Response to the Fifth Report of the Court Monitor at 12-15. The Court finds the Department's contention in this regard to be misplaced. Numerous courts have recognized, and in fact the APA specifically provides, that where a federal court has jurisdiction to hear challenges to an agency action it also has jurisdiction over claims of unreasonable delay. Telecommunications Research and Action Center v. FCC,
Moreover, the Court finds that even assuming a'rguendo that its Phase I trial decision "reset the clock for a finding of unreasonable delay, [defendants'] reasonable time to discharge its fiduciary obligations has expired." Cobell VI,
Upon consideration of the first two factors-length of time that has elapsed and the reasonableness in light of the statutory scheme-the evidence presented and representations made during this contempt trial undeniably show that since this Court issued its Phase I trial ruling the defendants have unnecessarily delayed performing an accounting of the IIM trust accounts, and discharging properly their fiduciary obligations. In the thirty two months since this Court issued its Phase I trial ruling, the defendants have not only failed to develop a final plan for performing a historical accounting of the IIM trust accounts, but they have abandoned as obsolete the Revised HLIP, which was their plan to ultimately enable them to discharge their fiduciary obligations properly. Moreover, although the 1994 Act did not provide a specific timetable as to when these reforms were to take place, the fact that this Court found nearly three years ago (and the Court of Appeals one and a half years ago) that the agency had already waited too long to take appropriate action means that the agency cannot now come forward and present the same argument.
With respect to the third factor-the consequences of the agency’s delay-the Court has no trouble finding that the delay in this case is particularly harmful to the plaintiffs. As the D.C. Circuit noted in February of last year:
[T]he consequences of further agency delay are potentially quite severe. Documents necessary for a proper accounting and reconciliation have been lost or destroyed, and the district court found little reason to believe that this would change in the near future. The longer defendants delay in creating the plans necessary to render an accounting, the greater the chance that plaintiffs will never receive an actual accounting of their own trust money. Given that many plaintiffs rely upon their IIM trust accounts for their financial well-being, the injury from delay could cause irreparable harm to plaintiffs’ interests as IIM trust beneficiaries. Thus, it seems that the interests at stake are not merely economic interests in an administrative scheme, but personal interests in life and health.
Cobell,
With respect to the fourth factor-administrative convenience-the Court finds that although the tasks charged to the Department are certainly complex, that is not an excuse for the failure by the defendants to develop a plan to perform a historical accounting within the last three years or
to
discharge their fiduciary duties properly. Indeed, the D.C. Circuit specifically noted that “[w]hat little progress the government has made appears more due to the litigation than diligence in discharging fiduciary obligations.”
Cobell,
The second issue that the Court will briefly address is its decision to permit the plaintiffs to file their own plan for the Phase 1.5 trial. Although the defendants did not raise this issue in the instant contempt proceeding, in other filings they have argued that "[t]he 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." Defs.' Response to the Fifth Report of the Court Monitor at 18 (quoting Florida Power & Light Co. v. Lorion,
The Secretary cannot escape h[er] role as trustee by donning the mantle of administrator to claim that courts must defer to h{er] expertise and delegated authority.. .The Secretary has an overriding duty ... to deal fairly with Indians. This duty necessarily constrains the Secretary’s discretion. When faced with several choices, an administrator is generally allowed to select any reasonable option. Yet this is not the case when acting as a fiduciary for Indian beneficiaries as stricter standards apply to federal agencies when administering Indian programs.
Cobell VI,
the defendant does not shoulder its burden at the remedy stage merely by coming forward with a plan. The defendant must come forward with a plan that promises realistically to work, and promises to work now. The district court has not only the power but the duty to ensure that the defendant’s proposal represents the most effective means of achieving desegregation. Thus, when the City proposed its alternative plan to desegregate Yonkers, the district court was under a duty to weigh that claim in light of the facts at hand and in light of any alternative which may be shown as feasible and more promising in their effectiveness.
United States v. Yonkers Board of Education,
The second reason why the Court will permit the plaintiffs to file a plan is the unconscionable delay by the defendants in performing a historical accounting and discharging their fiduciary duties properly. As noted above, both this Court and the D.C. Circuit found that:
[i]n the case at bar, it is clear that the federal government has been under an obligation to discharge the fiduciary duties owed to IIM trust beneficiaries for decades. It is also clear that refusing to hear plaintiffs’ claims could unduly prejudice their rights as trust beneficiaries. [It is] clear that insofar as the federal government owes trust beneficiaries a duty to maintain records and provide an accounting, delaying review is tantamount to denying review altogether.
Cobell VI,
The Court will leave all other matters regarding any such plan submitted by the plaintiffs until such time as the parties submit their motions for summary judgment. Thus, for example, the Court does not decide today how it will evaluate the plan submitted by plaintiffs with the plans filed by the Department of Interior. The Court only decides, as an initial matter, that the plaintiffs shall- be permitted to make such a filing.
C. PLAINTIFFS’ REASONABLE EXPENSES & ATTORNEYS’ FEES
There is no question that the defendants must be ordered to pay the reasonable expenses, including attorneys' fees, incurred by plaintiffs as a result of having to litigate this contempt trial. Courts have long recognized that such relief is appropriate to redress both contumacious and sanctionable conduct by a litigant. Food Lion,
In deciding to award the plaintiffs reasonable expenses, including attorneys’ fees, the Court notes that at least some courts have held that sovereign immunity prevents courts from imposing monetary sanctions against the federal government for litigation misconduct.
See, e.g., United States v. Horn,
While I agree with these courts that sovereign immunity is a vitally important doctrine, I do not believe that it precludes this Court from ordering the defendants to pay the plaintiffs’ reasonable expenses, including attorneys’ fees, that they incurred as a result of having to prosecute this contempt trial. There are three reasons why I have reached this conclusion.
First, under the law-of-the-case doctrine, this Court can order the defendants to pay such costs based on their eontuma-cious behavior and litigation misconduct. In February of 1999, this Court held then-Secretary Babbitt and then-Assistant Secretary Gover in civil contempt for violating two of this Court’s discovery orders.
Cobell II,
Second, even if the law-of-the-case doctrine did not apply, this Court would still find that it has the authority to order the government to pay such expenses. The reason is that I believe there has been a waiver of sovereign immunity in this case. The APA expressly waives sovereign immunity in actions other than those seeking money damages.
162
5 U.S.C. § 702. Thus,
Third, even if the sovereign immunity doctrine applies to the instant matter, the Court finds that its inherent power to award expenses, including attorneys’ fees, to a prevailing party in a civil contempt proceeding trumps that doctrine.
Alyeska Pipeline Service Co. v. Wilderness Society,
courts have a duty to hold government officials responsible for their conduct when they infringe on the legitimate rights of others. These officials are responsible for seeing that the laws of the United States are faithfully executed. In this case, the laws-the orders of this court-were either ignored or thwarted at every turn by these officials and their subordinates. The court must hold such government officials accountable; otherwise, our citizens-as litigants-are reduced to mere supplicants of the government, taking whatever is dished out to them. That is not our system of government, as established by the Constitution. We have a government of law, and government officials must be held accountable under the law.
Cobell,
D. THE PLAINTIFFS’ MOTION FOR NON-PARTY EMPLOYEES AND COUNSEL TO SHOW CAUSE WHY THEY SHOULD NOT BE HELD IN CONTEMPT OF COURT
In the order to show cause issued against Secretary Norton and Assistant Secretary McCaleb, the Court deferred ruling on the plaintiffs’ motion filed on October 19, 2001, as it related to 37 non-party employees and counsel. Upon consideration of the memoranda filed in support of and in opposition to the plaintiffs’ motion, the record in this case, and the applicable law, the Court finds that it is not appropriate to order these individuals to show cause at this time why they should not be held in contempt of court. The Court does conclude, however, that the record in this case warrants referring the matter to Special Master Balaran so that he may examine the culpability of these 37 individuals.
Cf. Universal Oil Products,
E. THE APPOINTMENT OF A SPECIAL MASTER-MONITOR
Although the Court declines at this juncture to place the IIM trust into receivership, the Court concludes that the appointment of a special master to monitor the status of trust reform is clearly warranted. The Court has decided to appoint another special master rather than expand the powers of Special Master Balaran in this regard because the scope of this lawsuit is such that it is not practical to have only one individual perform all of the required duties.
This Court has the authority to appoint a special master to monitor the manner in which the defendants discharge their statutory trust duties. United States v. Microsoft Corp.,
First, there is no doubt that the appointment of a special master-monitor is justified as a result of the recalcitrance exhibited by the Department of Interior in complying with the orders of this Court, reporting on the current status of trust reform, and discharging its fiduciary obligations.
Id.
(concluding that the appointment of a special master was appropriate because “[t]he record here is replete with instances of administrative recalcitrance.”).
See also Hook v. Arizona,
It is important to note that despite the above analysis, the Court’s decision to appoint a special master-monitor is not dependent on its legal conclusions regarding the perpetration of a fraud on the Court. Even assuming arguendo that the defendants did not commit a fraud on the Court, the appointment of a special master-monitor is still clearly necessary to ensure that this Court and the plaintiffs receive timely, accurate information regarding the status of trust reform and the defendants’ efforts to discharge properly their fiduciary duties. The defendants have conceded, both during this contempt trial proper and in their Eighth Report, that the first seven quarterly status reports did not provide the Court with complete and accurate information regarding the TAAMS and BIA Data Cleanup subprojects, IT security, the Department’s efforts to perform a historical accounting of the IIM trust accounts, or the seven statutory breaches that the agency stipulated to on the eve of the Phase I trial. In light of these failures on the part of the Interior defendants (irregardless of whether they amount to a fraud on the court), the Court finds it both appropriate and necessary to appoint a special master-monitor. Of course, the Court’s ultimate conclusion that the Department did commit such a fraud provides further support for the appointment of a special master-monitor.
Second, the appointment of a special master-monitor in this matter is also appropriate because of the extensive daily involvement required in monitoring the defendants’ efforts to bring themselves into compliance with their trust duties declared by the Court and prescribed in the 1994 Act.
Hook,
The Court recognizes that most of the cases cited above involve situations where a structural injunction has already been entered by the Court and, as a result, the special master-monitor actually oversees in many respects the defendants’ efforts to bring themselves into compliance with that order.
See, e.g., Apex Fountain Sales v. Kleinfeld,
In accordance with the foregoing analysis, the Court will appoint a special master-monitor in this action pursuant to Rule 53(b) to monitor the status of trust reform and the defendants’ progress towards bringing themselves into compliance with their fiduciary duties as declared by the Court and prescribed in the 1994 Act. The special master-monitor shall ensure that the Court (and the plaintiffs) receive complete and accurate information regarding these matters by periodically filing status reports.
166
In these reports, the special master-monitor may apprise the Court of any other matters that he deems pertinent to this litigation, but take no further action without prior approval of the Court, as well as provide the Court with any recommendations he may have regarding issues identified in the reports. The special master-monitor shall also oversee the discovery process and administer document production, except insofar as the issues raised by the parties relate to IT security, records preservation and retention, the De
Nothing in this section of the Memorandum Opinion shall affect the appointment of Special Master Balaran, except that he shall only oversee the discovery process to the extent that it involves issues related to IT security, records preservation and retention, the Department of Treasury, and Paragraph 19 documents. 167 All other future discovery matters shall be within the purview of the newly appointed special master-monitor unless the Court specifically directs that they be handled by Special Master Balaran. 168
F.FURTHER RELIEF-DISCOVERY
The defendants have amply demonstrated during the two and a half years since this Court’s Phase I trial ruling that they cannot be trusted to report in a timely manner complete and accurate information regarding the status of trust reform and their efforts to discharge their fiduciary responsibilities properly. At the time the Court issued its Phase I trial decision, the Court found that it was sufficient for the defendants to file quarterly status reports and for plaintiffs to then “petition the court to order defendants to provide further information as needed if such information cannot be obtained through informal requests directly to defendants.”
Cobell V,
G. IT SECURITY
Although the Court continues to be deeply concerned about the deplorable status of IT security and the fact that the defendants committed a fraud by making false and misleading representations regarding this matter, the Court has decided that further injunctive relief is not warranted at this time. Thus, the Court will not vacate or modify the consent order regarding information technology entered on December 17, 2001. The Court reaches this conclusion in large part based on the representations made by the Special Master that Associate Deputy Secretary James Cason is working closely and cooperatively with him on these issues. If it appears in the future that further relief is warranted, however, the Court can and will take appropriate measures at that time.
H. ISSUE PRECLUSION
The Court has decided that in addition to the Phase II trial, which will address
I. CERTIFICATION OF ORDER FOR INTERLOCUTORY APPEAL
The Court certified its Order of December 21,1999 for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) because it found that “an immediate appeal of the court’s order may materially advance the ultimate termination of the litigation.”
Cobell V,
VII. CONCLUSION
In February of 1999, at the end of the first contempt trial in this matter, I stated that “I have never seen more egregious misconduct by the ■ federal government.”
Cobell II,
Over a two year period, the defendants successfully led this Court and the plaintiffs to believe that they were bringing themselves into compliance with the 1994 Act, and that they were taking steps that would one day provide the foundation for a historical accounting of the IIM trust accounts. In reality, as the Court chronicled in painstaking detail above, the Interior Department was experiencing so many difficulties in so many different aspects of its trust reform effort that the agency is still only at best marginally closer to discharging its fiduciary obligations properly than it was three years ago when the Court held the Phase I trial. Moreover, in terms of the historical accounting project, the
Congress has mandated, the Court has ordered, and the beneficiaries have pleaded for meaningful reform of the IIM trust. This Court need not sit supinely by waiting, hoping that the Department of Interi- or complies with the orders of this Court and the fiduciary obligations mandated by Congress in the 1994 Act. To do so would be futile. I may have life tenure, but at the rate the Department of Interior is progressing that is not a long enough appointment. Accordingly, the Court has ordered relief today that it views as being absolutely necessary to getting both this case and trust reform back on track. In the meantime, Secretary Norton and Assistant Secretary McCaleb can now rightfully take their place alongside former-Secretary Babbitt and former-Assistant Secretary Gover in the pantheon of unfit trustee-delegates.
A separate order shall issue this date detailing the legal conclusions and relief granted by the Court.
ORDER
For the reasons stated in the Court’s corresponding Memorandum Opinion issued this date, the Court HEREBY ORDERS as follows:
I.Contempt Specifications
1. Defendants Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of Interior for Indian Affairs, are ADJUDGED and DECREED to have engaged in litigation misconduct by failing to comply with the Court’s Order of December 21, 1999, to initiate a Historical Accounting Project.
2. Defendants Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of Interior for Indian Affairs, are ADJUDGED and DECREED to be in civil contempt of court for committing a fraud on the Court by concealing the Department’s true actions regarding the Historical Accounting Project during the period from March 2000, until January 2001.
3. Defendants Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of Interior for Indian Affairs, are ADJUDGED and DECREED to be in civil contempt of court for committing a fraud on the Court by failing to disclose the true status of the TAAMS subproject between September 1999 and December 21,1999.
4. Defendants Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of Interior for Indian Affairs, are ADJUDGED and DECREED to be in civil contempt of court for committing a fraud on the Court by filing false and misleading quarterly status reports starting in March 2000, regarding TAAMS and BIA Data Cleanup.
5. Defendants Gale Norton, Secretary of the Interior, and Neal McCaleb, Assistant Secretary of Interior for Indian Affairs, are ADJUDGED and DECREED to be in civil contempt of court for committing a fraud on the Court by making false and misleading representations starting in March 2000, regarding computer security of IIM trust data.
II. Declaratory Judgment
Pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Administrative Procedure Act, 5 U.S.C. §§ 702 & 706, the Court HEREBY DECLARES that:
1. The Indian Trust Fund Management Reform Act, 25 U.S.C. §§ 162a
et.
III. Further Relief
In accordance with the Memorandum Opinion issued this date, it is hereby
1. ORDERED that the Phase 1.5 trial in this action, which will encompass additional remedies with respect to the fixing the system portion of this case and approving an approach to conducting a historical accounting of the IIM trust accounts, shall begin on May 1, 2003, at 10:00a.m.
2. It is further ORDERED that the Interior defendants shall file with the Court and serve upon plaintiffs a plan for conducting a historical accounting of the IIM trust accounts. This plan should be filed and served upon completion but no later than January 6, 2003.
3. It is further ORDERED that the Interior defendants shall file with the Court and serve upon plaintiffs a plan for bringing themselves into compliance with the fiduciary obligations that they owe to the IIM beneficiaries. As part of this plan, defendants shall describe, in detail, the standards by which they intend to administer the IIM trust accounts, and how their proposed actions would bring them into compliance with those standards. This plan should be filed and served upon completion but no later than January 6, 2003.
4. It is further ORDERED that the plaintiffs shall be given leave to file any plan or plans of their own regarding the aforementioned matters. If the plaintiffs wish to make such a filing, they must do so no later than January 6, 2003, and should provide the defendants with a copy.
5. It is further ORDERED that the Department of Treasury may file any plan pertaining to the issue mentioned above. Any plan by the Treasury Department should be filed no later than January 6, 2003.
6. It is further ORDERED that the parties shall file any motions for summary judgment with respect to the Phase 1.5 trial no later than January 31, 2003.
7. It is further ORDERED that the parties shall be granted leave to file any response to the plans of the other party. These responses shall be filed with the Court and served on the other party no later than January 31, 2003.
8. It is further ORDERED that dates for pretrial and motions hearings will be set in subsequent orders.
9. It is further ORDERED that the defendants shall pay plaintiffs’ reasonable expenses, including attorneys’ fees, incurred by plaintiffs as a result of having to litigate this contempt trial.
10. It is further ORDERED that the plaintiffs shall submit to the Court within 60 days an appropriate filing detailing the amount of reasonable expenses and attorneys’ fees incurred as a result of having to litigate this contempt trial. Defendants’ response shall be submitted within 30 days thereafter.
11. It is further ORDERED that the plaintiffs’ motion for order to show cause, filed October 19, 2001, shall be REFERRED to Special Master Balaran. Special Master Balaran shall issue a report and recommendation with respect to each of the 37 non-party individuals named in the plaintiffs’ motion.
12. It is further ORDERED that the plaintiffs’ motion for order to show cause why Interior defendants and their counsel should not be held in contempt for destroying e-mail, filed March 20, 2002, shall
13. It is further ORDERED that another special master shall be appointed by the Court in this case pursuant to Rule 53 of the Federal Rules of Civil Procedure. This special master shall be referred to by the Court and the parties as the Special Master-Monitor. The Special Master-Monitor shall be named in a separate order.
14. It is further ORDERED that the Special Master-Monitor shall monitor the status of trust reform and the Interior defendants’ efforts as they relate to the duties declared by the Court and prescribed in the 1994 Act. The Special Master-Monitor shall ensure that the Court (and the plaintiffs) receive complete and accurate information regarding these matters by periodically filing status reports. In these reports, the Special Master-Monitor may apprise the Court of any other matters that he deems pertinent to this litigation, but take no further action without prior approval of the Court, as well as provide the Court with any recommendations he may have regarding issues identified in the reports. The Special Master-Monitor shall also oversee the discovery process and administer document production, except insofar as the issues raised by the parties relate to IT security, records preservation and retention, the Department of the Treasury, or Paragraph 19 documents. Special Master Balaran shall henceforth only oversee the discovery process to the extent that it involves issues related to IT security, records preservation and retention, the Department of the Treasury, and Paragraph 19 documents. Special Master Balaran shall also be tasked with addressing those motions currently pending or referring such motions to the Special Master-Monitor.
15. It is further ORDERED that, in light of the Court’s decision to appoint a Special Master-Monitor, the Court’s order of April 15, 2002, which extended the appointment of Joseph Kieffer, III as Court Monitor, be terminated.
16. It is further ORDERED that the plaintiffs shall be able to conduct discovery on matters that they were otherwise not entitled to explore prior to this decision. The Special Master-Monitor shall ensure that such discovery does not unreasonably interfere with the defendants’ ability to develop their plans for submission to the Court.
SO ORDERED.
Notes
. The underlying facts of this case have already been detailed by both this Court,
see, e.g., Cobell v. Babbitt (“Cobell I"),
.Two later developments in the United States-Indian relationship are worth mentioning. In the early 1950s, the federal government switched course yet again by adopting the "termination policy.” Under this policy, the federal government sought to terminate its relationship with the Indian tribes, and, specifically, sever the trust relationship. The termination policy was short lived, however, and was soon replaced with the current policy of "self-determination and self governance.” The highlight of the current policy came in 1975 when Congress enacted the Indian Self-Determination and Education Assistance Act. That statute authorizes tribes to assume some of the management functions currently imposed on the Bureau of Indian Affairs ("BIA”) and Office of Trust Fund Management ("OTFM”).
. For a more extensive discussion of their responsibilities, see
Cobell V,
. While most of the United States’- fiduciary duties are performed by the Department of Interior, the Treasury Department has significant trust responsibilities as well. Specifically, the Treasury Department maintains and invests IIM funds at the Interior Department's direction and provides accounting and financial management services.
. It is worth noting that the 1994 Act did not create the government's IIM trust duties, but rather explicitly acknowledged some of them.
. The Court also rejected the government’s arguments that the administration of its trust duties is not subject to judicial review because the duties are committed solely to agency discretion.
Cobell I,
. Paragraph 19 of the Court's First Order of Production of Information required the defendants to produce “[a]ll documents, records, and tangible things which embody, refer to, or relate to IIM accounts of the five named plaintiffs or their predecessors in interest.”
. The Court’s May 4, 1998 order set June 30, 1998 as the final deadline for production of the pertinent documents.
. On August 10, 1999, the Court awarded $624,643.50 in expenses and attorneys’ fees to the plaintiffs.
Cobell IV,
[it] is aware of the unfortunate consequences of today’s ruling on American taxpayers. Ultimately these taxpayers will be forced to pay for the misconduct of their government's officials and their government’s attorneys. This is a troublesome concept for the court.
Id. at 140.
. The Court appointed a special master pursuant to Rule 53 of the Federal Rules of Civil Procedure. The order accompanying the Court's memorandum opinion provided that:
The Special Master shall oversee the discovery process and administer document production, compliance with court orders, and related matters. Further duties of the special master shall be set out in a forthcoming order.
Cobell II, 37 F.Supp,2d at 40.
. The Court also recognized, however, that "the fiduciary relationship that serves as the basis of plaintiffs’ breach of trust claims is grounded in and defined by statute and has
. It is worth noting that the Court also "recognize[d] that one available remedy, putting the trustee into receivership, more clearly implicates separation of powers concerns."
Cobell III,
. It is worth noting that the Court dismissed with prejudice plaintiffs’ pure common law claims as well as their claims regarding obstruction of the Special Trustee.
Cobell V,
. This Court certified its order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Cobell V, 91 F.Supp.2d at 59.
. At the hearing on April 16, 2001, counsel for the government stated, "the government wants to put on the record that it consents to this order and appreciates the court's time and attention to this[.]” Tr. of Hearing on April 16, 2001 at 5.
. The Court appointed the Court Monitor pursuant to its inherent powers.
. It is important to distinguish between civil contempt proceedings-like the instant matter- and criminal contempt proceedings. The D.C. Circuit has explained that:
Traditionally, whether a contempt is civil or criminal has depended on the 'character and purpose' of the sanction. A sanction is considered civil if it is remedial, and for the benefit of the complainant. But if it is for criminal contempt the sentence is punitive, to vindicate the authority of the court.”
Evans v. Williams, 206 F.3d 1292, 1294-95 (D.C.Cir.2000) (internal quotations omitted).
. In criminal contempt proceedings, on the other hand, the putative' contemnor must have willfully violated the court's order.
United States v. Young,
. In this regard, the Supreme Court observed in both Perez and Steffel that not only do different standards govern the imposition of the two forms of relief, but that there are important reasons for the distinctions as well.
. The burden of proof in criminal contempt proceedings is “beyond a reasonable doubt.”
Young,
. As the Court noted in its Memorandum Opinion after the first contempt trial, "[a]l-though the viability of this defense has not been squarely, resolved in this circuit, ... the plaintiffs have not made such a challenge in this case.” Cobell,
. It is important to note that "[s]uch judicial sanctions never have been considered criminal, and the imposition of civil, coercive fines to police the litigation process appears consistent with this authority.”
International Union v. Bagwell,
. Although the Court Monitor addressed many of these issues in his reports, see Pis.' Exs. 1-5, the Court has not based any of its findings of fact on his findings and conclusions. Rather, the Court has conducted its own independent review of the evidence presented and representations made at this contempt trial. The Court’s findings of fact are based exclusively on that review. It is worth noting, however, that the Court has conducted this review notwithstanding the fact that the defendants failed to file timely responses to many factual allegations raised in the first three reports of the Court Monitor, as required by the Court’s order entered April 15, 2001. Order of April 15, 2001 at 2 (stating that "[t]he parties shall ... have 10 days from the date of notice to submit any objections or comments to the report.”).
. Although the time period covered in Specification 2 is March 2000 until January 2001, this section of the Court's findings of fact will begin in December 1999. The reason is that while the Department did not begin making the representations that form the basis for Specification 2 regarding the historical accounting until March 2000, events that occurred during the preceding months are pertinent to those filings.
. It is important to note that the Solicitor General’s Office, which is part of the Department of Justice, is different than the Solicitor’s Office, which is part of the Department of Interior.
. The Department of Interior filed a petition for permission to appeal on January 3, 2000, and a corrected petition for permission to appeal on January 5, 2000.
. On March 27, 2000, the day before the Court ruled on the defendants' motion concerning the notice in the Federal Register, the Department of Interior filed the first of three motions for partial summary judgment regarding the historical accounting of IIM trust accounts. In the motion, the Interior Department argued that the plaintiffs are not entitled to a common law-style historical accounting that reconciles each credit or debit that was or should have been made to each IIM account from the beginning of the trust, and that the plaintiffs' claim for a court-ordered restatement or correction of IIM accounts is a claim for money damages, which is beyond this Court's jurisdiction.
See
Dels.' Memo, in Supp. of Mot. at 23-45. In addition to these
. For a detailed explanation of what each of these methods entails, see Pis.’ Ex. 1, Tab 14 at 17526-27. Since the parties have focused on the transaction-by-transaction and statistical sampling approaches, the Court will briefly describe these two methods of performing the historical accounting. A transaction-by-transaction reconciliation "would involve attempting to research all transactions that have occurred in each account in order to try and locate documents which could demonstrate each transaction was correct and then applying appropriate verification procedures to the reconstruction.” Id. at 17526. A statistical sampling approach, in contrast, would involve using "a statistically relevant sample of accounts, transactions, or tracts of land to support a reasonable inference about the accuracy of past account transaction activity.” Id. at 17527. With respect to the statistical sampling method, it is worth noting that the Department of Interior did not provide any details in the Federal Register notice on how the statistical sampling approach would be performed.
. On May 12, 2000, the Department of Interior filed its second motion for partial summary judgment with this Court. In the motion, the Department argued that the 1994 Act did not require it to perform an accounting for funds not actually held in trust and deposited or invested pursuant to the Act of June 24, 1938. Defs.’ Second Phase II Motion at 1.
. Although the documentary evidence states that the funding was for a "statistical sampling” proposal, certain Interior Department officials testified at trial that the terms “statistical sampling” and “historical accounting” were ill-defined and used very loosely, often interchangeably, during this period. See, e.g., Contempt II Tr. at 270 (Thompson); Contempt II Tr. at 2738-40 (Lamb). Indeed, Robert Lamb, Deputy Assistant Secretary for Budget and Finance, testified that "[a] person could be speaking and they would use both terms in the same sentence and kind of mean the same thing.” Contempt II Tr. at 2739-40. Some Interior officials also testified that the Department had not yet made a decision regarding which accounting method it would use to perform a historical accounting at the time of these funding requests. See, e.g., Contempt II Tr. at 247-48. They contend that the Department decided to use the statistical sampling approach on August 2, 2000. Consistent with these representations, the Department of Interior contends that the decision regarding how to perform the historical accounting had not yet been made, and that these funding requests were only a placeholder; that is, funding for whatever method of accounting the Department ultimately selected. See Defs.’ Proposed Findings at 10-11. Plaintiffs, in contrast, argue (and the Court Monitor found) that these documents demonstrate that the Department of Interior had already decided to conduct the historical accounting project by using a statistical sampling approach. See Pis.’ Proposed Findings at 12.
The Court rejects the Department’s interpretation of these documents. Specifically, the Court finds by clear and convincing evidence that these funding requests were for exactly what they said, a "statistical sampling proposal.” Although the Department did not know the precise manner in which the statistical sampling would occur (which is why the proposal is at times referred as a pilot project), the evidence adduced at trial shows that statistical sampling was the chosen methodology for performing the historical accounting of the IIM trust accounts. Thus, the Court finds that the Department had decided — albeit not officially — to use statistical sampling as the method of performing the historical accounting no later than June of 2000. This finding is important because it supports the plaintiffs’ contention that the publication of the notice in the Federal Register was a sham. That is, if the Department selected a specific method to perform the historical accounting before the comments to the notice in the Federal Register were collected and evaluated, then the plaintiffs would be well on their way to proving that the Federal Register process was a farce and that the Department committed a fraud on this Court (as well as the D.C. Circuit).
The Court makes these findings for several reasons. First, the Department of Interior had considered using statistical sampling to perform the historical accounting for several years.
See generally
Tr. of October 21, 1997 Hearing; Defendants’ June 30, 1998 Motion to Adopt Defendants' Sampling Approach. There is no evidence, however, that the Department ever actually contemplated utilizing the transaction-by-transaction method. In fact, the evidence suggests that the Department had rejected the latter approach out of hand based on unsubstantiated cost and time projections as well as the Department’s view that Congress would never fund such an accounting. Thus, it is highly improbable that
Even if the Court were to assume that these funding requests were just a place holder and that the Department did not decide to use the statistical sampling method until August 2, 2000, it would not change the Court’s ultimate conclusions regarding either Specification 1 or Specification 2.
. It is worth noting that at this time the Department of Interior along with the Department of Justice appear to have been discussing a limited statistical sampling pilot project known as the Wecker proposal. See Pis.’ Ex. 1, Tab 10; Tab 11. Ultimately, however, the Department of Interior decided not to fund or participate in the Wecker proposal. Pis.’ Ex. 1, Tab 13.
. It is important to note that "[i]n the backdrop of these decisions and these considerations about whether [this] Courl['s] order was being complied with was a heavy reliance that, on appeal, the Interior Department would be sustained.” Contempt II Tr. at 463-64. That is, the Interior Department and its attorneys from the Department of Justice thought that the appeal was a “slam dunk.” Contempt II Tr. at 1018.
. As noted above, the Department actually published the notice in the Federal Register so that it could appeal this Court’s Phase I trial ruling.
. In fact, in Deputy Assistant Secretary Lamb's memorandum dated July 24, 2000, the Department of Interior offered to participate in and help fund the Justice Department's statistical sampling pilot project. Pis.’ Ex. 1, Tab 11 (Deputy Assistant Secretary Lamb writing that “the Department is willing to fund the cost of the pilot.”). This offer was subsequently withdrawn, however, since the Interior Department decided (nine days later) to use the statistical sampling approach to perform the historical accounting. Contempt II Tr. at 280-81 ("this was no longer necessary and not probably a good use of Interior's resources, since we already made a decision to do statistical sampling on the 2nd of August.”). See also Pis.’ Ex. 1, Tab 13.
. It is important to note that this was the first (and only) memorandum by the Department addressing the comments to the notice in the Federal Register.
. It is worth noting that Edith Blackwell attended the meeting held on August 2, 2000, in which the Department decided to use the statistical sampling approach to perform the historical accounting. Contempt II Tr. at 388.
. It is worth noting that the D.C. Circuit did not find the Department's argument persuasive. In particular, one judge on the panel stated that:
we spend our lives reviewing judicially those things which are to be done first administratively. I am not sure why you think it advances the ball any to say Congress meant for it to be done administra-tivelyb]
. There were two other developments at this time worth mentioning. First, on September 19, 2000, the Department of Interior filed its third motion for partial summary judgment with this Court. In the motion, the Department argued that neither the 1994 Act nor any other law required it to account for transactions that occurred in IIM accounts before 1951. Defs.’ Third Phase II Mot. at 1-2. The Department asserted that prior to 1951 the IIM accounts were "settled” by the Department of Treasury (until 1921) and the General Accounting Office (between 1921 and 1951). Id. Second, on September 29, 2000, Congress approved the Department's funding request for a statistical sampling project. Pis.’ Ex. 1, Tab 2. In so doing, it noted that "while approving the request to begin an IIM sampling approach, the managers direct the Department to develop a detailed plan for the sampling methodology it adopts, its costs and benefits, and the degree_ of confidence that can be placed on the likely results.” Pis.’ Ex. 1, Tab 2.
. It is important' to note that Tim Elliot also attended the August 2, 2000 meeting. Contempt II Tr. at 388.
. It is worth noting that Secretary Norton made her decision four days after the D.C. Circuit issued its opinion affirming this Court's Phase I trial ruling.
Cobell VI,
. As of February 2002, it was still unclear to the Court what efforts, if any, have been made by the Department of Interior to locate missing documents. Contempt II Tr. at 804 (The Department is “working on the planning and replanning [of] this information collection ef
. The Department assumed that it had "in its possession the bulk of documents, information and data generated since 1994[.]” Pis.’ Ex. 7 (Report on Collecting Information From Outside Sources) at 2.
. It is worth noting that even the Department describes its reports as containing oblique and fleeting references to the fact that the collection project did not include documents produced prior to 1994. See Defs.' Proposed Findings at 14.
. The Department of Interior filed a copy of the report with the Court on September 12, 2001.
. The Department of Interior filed a copy of the report with the Court on November 9, 2001.
. Of course, in the same report OHTA recognized that: [tjhese IIM accounts are often based on a single transaction and the accounts rarely include income based on allotted land revenues or from other sources." Pis.' Ex. 31 at 11. See also Contempt II Tr. at 1085-87 (Principal Deputy Special Trustee testifying that this was a "fairly discrete” pilot project.).
. This is particularly true in light of the fact that Secretary Norton has subsequently informed the Court that the proposal has been abandoned by the Department.
. In addition, Secretary Norton testified about work that Ernst & Young has performed on the accounts belonging to the five named plaintiffs. See, e.g., Contempt II Tr. at 4298-4330. The Court finds that while the work performed on these accounts may assist the agency in performing an accounting for those individuals, it was not done as part of a general effort to provide the IIM trust beneficiaries with an accounting and there is no indication that the work can be or will be used towards that end. It is absurd for the Secretary to now argue that the work performed by Ernst & Young brings her into compliance with the Court’s Phase I trial ruling.
.TFAS is the other computer system that the Department of Interior acquired to assist it in managing the IIM trust accounts.
See supra
part 11(A)(4). Unlike TAAMS, which is a trust asset management system, TFAS is a trust fund financial system.
Cobell V,
. It is worth noting that "[s]ome BIA offices use these systems, some use modified versions of these systems, some use their own 'in house’ electronic databases, and others continue to use manual paper systems.” Cobell V, 91 F.Supp.2d at 19.
. Although the Phase I trial ended on July 23, 1999, the Department of Interior did not submit its proposed findings of fact and con-
.Before explaining the capabilities of TAAMS, the Department initially noted that the system was a commercial-off-the shelf system ("COTS”). Phase I trial Tr. at 2760. Interior contended that it prudently elected to use a COTS rather than build new software from the ground up since there was software commercially available that did many of the things that BIA needed to accomplish, and because it would result in significant time savings. Phase I trial Tr. at 992, 2359-60. See also Defs.' Phase I trial Ex. 82 ("DOI decided that a COTS effort would be the most efficient, effective and expedient process to replace the existing legacy systems.”). At the same time, the Department recognized that some modifications were (and would be) made to the system to address the particular needs of BIA. The Department explicitly stated, however, that "these modifications were not unusual in terms of changes the [vendor] ha[s] made for other customers.” Defs.' Phase I trial proposed findings at ¶ 209 n.40. Interior further noted that, prospectively, TAAMS has the capacity for expansion as the needs of BIA change. Phase I trial Tr. at 2361, 2391, 2375, and 2778.
. It is worth noting, in light of the recent cases filed by certain tribal beneficiaries, that the Department stated that "TAAMS includes both tribal lands and individual allotments and will be used as the primary tool in asset and resource management by BIA.” Defs.' Phase I trial proposed findings at ¶ 214 (citing Phase I trial Tr. at 994 and 180).
. The Interior Department also explicitly noted that TAAMS will be able to interface with TFAS. Phase I trial Tr. at 1154, 2273, and 2618. The Department further noted that "TFAS is integrally related to TAAMS through electronic interfaces for a seamless trust management system.” Defs.’ Phase I trial Ex. 82.
. The Department also noted the steps that it had taken and the work that it had done prior to conducting the pilot project. Dels.' Phase I trial Ex. 82. See also Phase I trial Tr. at 2348-51.
. Data conversion refers to the process by which the Department planned on getting the data stored in the legacy systems into TAAMS.
. The Department indicated that it planned on conducting thorough user acceptance tests (UAT) of TAAMS in July 1999. Defs.’ Phase I trial Ex. 82 (“Detailed User Acceptance Testing” from July 6, 1999 until July 10, 1999.). Dominic Nessi explained at trial that UATs are internal project management team tests conducted to evaluate the status or functionality of the system. Phase I trial Tr. at 2358 and 2366-67. Moreover, David Orr testified that UATs are "the first phase of testing where we take actual TAAMS users, allow them to go into the programs, [and] run them.” Phase I trial Tr. at 2783-84. He went on to state that the Department (and ATS) will use the UATs "as a confirmation process to confirm that the design and the functionality in the systems actually meets the needs of the individual users out in the area and agency offices.” Phase I trial Tr. at 2845. In addition to these UATs, the Department also informed the Court that it would conduct systems tests in July of 1999. Defs.’ Phase I trial Ex. 82.
.Dominic Nessi explained the IV & V process during the Phase I trial. He testified that:
Verification is verifying that we built the system — we built the system correctly. Validation is ... ensuring that we built thecorrect system. So the first one means that the system just runs properly, all the gears move and the programs work, but, as I had said earlier, you could have a system that works, but the users don't like it or it doesn't meet all of the functions. That's what validation does. So, as we do our verification and validation testing next week and then again in August, we will have an independent contractor view our testing methods.
Phase I trial Tr. at 2384-85.
. The Department also indicated during the Phase I trial that it would continue to improve and modify TAAMS after this implementation period elapsed. See, e.g., Phase I trial Tr. at 1156.
. It is worth noting that while the Department argued during the Phase I trial that its implementation schedule was realistic and that it expected to meet the schedule, it now relies on the contrary testimony elicited during that trial to argue that the schedule was still only tentative at that point.
. As the Court finds below, this factual representation was patently untrue.
. ALMRS refers to the Bureau of Land Management’s ("BLM”) automated land and mineral records system, which was intended to be BLM’s computerized land management system. ALMRS had been under development for several years at enormous expense to BLM (around $450,000,000) before it was finally abandoned. Phase I trial Tr. at 125-26 and 1129-30.
.Despite the fact that the Department indicated during the Phase I trial that there would be both systems tests and user acceptance tests, see generally Defs.’ Phase I trial Ex. 82, it appears that in July of 1999 Interior decided to combine these two tests. Contempt II Tr. at 1139-40 and 3291.
. Earlier drafts of the IV & V report that were provided to the Department made the same findings regarding these tests. See, e.g., Pis.’ Ex. 2, Tab 6E, 1C.
. Daryl White explained at the contempt trial that "[a] test script is — it's almost like a script perhaps in a play. It tells you exactly who the actors are, in this case, who is the operator, what kind of equipment are you using, what is it that you're exactly going to accomplish. Is this a transaction, and how do you accomplish that step by step. And it’s important for the observer so the observer can see, as the operator steps through the script, if there is a problem, you can identify it exactly, where the problem occurs. For example, you might hit return, the transaction should be taken by the system, but the system is in a constant loop. It’s processing, but not giving us any screen output. That would be noted by the observer at this script level, at this point, and then if you saw that as recurring, then you could report back later these areas need to be fixed.” Contempt II Tr. at 2473-74.
. It is important to note that SRA considered this testing to be "successful” because "the problems were found in test, not after release.” Pis.’ Ex. 2, Tab 7F at 18. While this description may (although it is unlikely) be appropriate in an IV & V report, it clearly is not an appropriate way to describe the results of these tests to a Court or to an opposing party.
. It is important to note that significant problems were identified at this time concerning the interface between TAAMS and TFAS. Contempt II Tr. at 2693-95. Moreover, the Department recognized that these problems had to be resolved in order for TAAMS to perform the functions identified during the Phase I trial. Contempt II Tr. at 2693-95.
. These changes converted TAAMS from a commercial off the shelf system (COTS) to what Interior now refers to as a modified off the shelf system (MOTS). Contempt II Tr. at 2689-90 (Q. So in the June 1999 time frame, was TAAMS at that point a COTS or a MOTS?
A. June of ’99. I mean, I would say that it was a MOTS because we were going to have to make changes from something off the shelf.). The development and implementation of a MOTS is much more complex and time consuming than a COTS. Contempt II Tr. at 2689-91. In fact, as the Court explains below, the realty portion of TAAMS still is not ready for implementation more than three years after the Phase I trial, and a moratorium has been placed on that portion of TAAMS until the Department has a better understanding of what it needs to do.
.It is worth noting that the Department of Interior relies on this language, which was quoted from the Revised HLIP that was filed in March 2000, as demonstrating that it reported accurately to the Court on the status of TAAMS. The trouble with this argument, of course, is that the Department knew that it had not taken into account the unique business practices of BIA and that it was going to have to perform substantial modifications to the system back in the summer of 1999, but waited until March of 2000-after the Court had already issued its Phase I trial ruling-to inform the Court. See, e.g., Contempt II Tr. at 2998-99. It is like a defendant admitting liability the day after summary judgment is granted in his favor. Moreover, as the Court discusses below, this description did not inform the Court in March of 2000 that these problems persisted and would greatly delay the implementation of the realty portion of TAAMS.
. "The configuration board would, review all software changes [to TAAMS] and they would make the decision of what release it would go into and if it was ready for production or if it was ready for user acceptance test. They reviewed all test scripts and the software requirement itself.” Contempt II Tr. at 3133-34.
. It is interesting to note that the Department characterized this choice, which was based on the fact that it could not implement both the title and realty portions of TAAMS together as an integrated system, as a decision to accelerate the Title portion. Use of the word accelerate is particularly misleading in light of the schedule presented to the Court during the Phase I trial.
. It is worth noting that Nessi prepared the memorandum at the request of an attorney in the Solicitor’s Office named Michael Carr, see Contempt II Tr. at 3310-11, and that another attorney in the Solicitor's Office named Edward Cohen received (and had knowledge of) this memorandum. Pis.’ Ex. 2, Tab 5B.
.The Department repeatedly stated during this contempt trial that the decision to implement the title portion first was "based purely on a desire to move forward with implementing TAAMS in an efficient and effective manner.”
See
Defs.’ Proposed Findings at 28. Interior further noted that "the decision to deploy title first was at that time viewed as a change to the rollout
process,
rather than a change to the end
product
that would be delivered. Defs.' Proposed Findings at 28 (emphasis in original). These arguments miss the mark and are irrelevant. It may very well be true that as of August 1999 it became more efficient and effective to implement first the title portion of TAAMS. It may also have been true that when fully implemented TAAMS would be the same system that was described at the Phase I trial. The weakness with Interior's position is that the reason why it would be more efficient to implement the title portion first was that there were so many problems with the realty portion of the system and with tiying to implement both title and realty together as an integrated system. Moreover, while the final system may have been consistent with what the Department
. It is important to note that Nessi’s memorandum specifically stated that the "schedule has been tentatively revised” to implement the title portion of TAAMS first, as opposed of implementing both the title and realty parts of TAAMS together. Pis.’ Ex. 2, Tab 5B.
. It is worth noting that on September 21, 1999, the Configuration Management Board decided (by a vote of 5-0) to recommend that the Department proceed with the function based approach to implementing TAAMS. Pis.' Ex. 2, Tab 5G. Among the reasons given for the decision was that the title first approach would simplify "the conversion process by focusing on LRIS data only.” Pis.’ Ex. 2, Tab 5G.
. There is no question that the Court can infer intent based on circumstantial evidence. The Department itself recognized during this contempt trial that "fraud does not require the proof of the proverbial smoking gun. It does not require a specific statement: I in
. It is worth noting that Edith Blackwell indicated in a memorandum drafted in June ' of 2000 that the Court was not given an update on the status of TAAMS ”[s]ince the record for the Phase I trial had closed, and this Court, in response to Plaintiffs' oral request to open the record, told the parties that it would not reopen the record[.]” Pis.’ Ex. 63 at DEF0040882 (June 1, 2000 draft). While it is not clear that this was in fact the reason why the memorandum was not filed, it suggests that there was a conscious decision made by attorneys for the Department not to file the memorandum. Of course, to the extent that this is not the reason why Interior failed to file the memorandum, it demonstrates Edith Blackwell's propensity for not being candid with this Court. This memorandum, like the one discussed above, was never filed with the Court because a Justice Department attorney decided that it is "better to say nothing at all than give [a] weak reason for not informing [the] Court. Pis.' Ex. 63 at DEF004078. In this regard, it is also very important to note that while the Court would not and did not reopen the record based on plaintiffs’ request, it certainly would have reopened the record if the Department had indicated that TAAMS, the backbone of its trust reform effort and the centerpiece of its Phase I trial defense, was not functioning properly and was not nearly as developed as witnesses such as Dominic Nessi had stated at trial.
. It is important to note that the Court's finding in this regard is not inconsistent with the testimony by Interior officials at the contempt trial that they thought the Court would be provided a copy of the memorandum.
See,
. Although certain documents referred to this as a tentative decision, Dominic Nessi, the TAAMS project manager, testified that by the fall of 1999 the Department had decided to implement tire title portion first. Contempt II Tr. at 3314-15. Moreover, John Snyder testified during this contempt trial that even he could not have figured out from the memorandum that it was referring exclusively to the title portion of TAAMS. Contempt II Tr. at 2705-06.
. It is worth noting that while these problems improved during the fall of 1999, even as of November there were still significant issues that had not been resolved. See, e.g., Contempt II Tr. at 2647-50 (Snyder, testifying that “[tjhere still wasn't a quality assurance documented process, but they were at least going through the configuration management side.”).
. It is also worth noting that the Department had not satisfactorily conducted a user accep
. It is important to note that attorneys in the Solicitor’s Office knew about the problems the Department was experiencing with TAAMS. See, e.g., Contempt II Tr. at 1282 (Principal Deputy Special Trustee testifying that "I think I'm fair in saying that representatives of the Solicitor's office would have participated in meetings on TAAMS development, TAAMS status, and would have had some knowledge.”).
. Ms. McLeod testified at great length during the contempt trial that the September and November tests were "successful,” and that they proved TAAMS worked. See, e.g., Contempt II Tr. at 3127-28. The Court finds Ms. McLeod’s testimony not to be credible in this respect. First, the other documentary and testimonial evidence presented at trial demonstrates the multitude of problems Interior experienced (and continues to experience) with the TAAMS project. It is inconceivable, given the current status of the project, that the testing of TAAMS nearly three years ago showed that the land management system worked. Second, Ms. McLeod's contention that the system functioned well during this time period is belied by the fact that the Department had to change the manner in which it planned to implement TAAMS. It is clear that the Department was not even close to being able to implement the realty portion (or the history part of the title portion) of TAAMS during the fall of 1999. In fact, the Department years later is still not even close to being able to implement those portions of TAAMS. Third, Dominic Nessi, the TAAMS Project Manager for Interior, threatened to quit after learning about the IV & V report and its assessment of TAAMS. Pis.' Ex. 2, Tab 7E (stating that he was "really disappointed” with the IV & V report.). In short, Ms. McLeod was not a credible witness regarding TAAMS at this contempt trial.
. The Court rejects Interior’s effort to blame the misleading nature of the reports on the fact that it simply followed the Revised HLIP. The Department itself selected the manner in which it would submit the quarterly reports, and there is no reason why it could not (and should not) have changed its reporting method to better inform the Court.
. It is important to note that no significant changes occurred with respect to the TAAMS project between December 21, 1999 and January 31, 2000. That is, all of the problems
. The HLIP was actually included as an attachment to the First Report. Pis.’ Ex. 7.
. The Court will consider the Revised HLIP as part of the First Report for purposes of this opinion.
. Later in the HLIP, however, the Department stated that "[immediately following the unveiling [of TAAMS in Billings on June 25, 1999,] an extensive set of testing procedures and user reviews was conducted to insure that TAAMS met the contract requirements and user needs.” Pis.' Ex. 7 (HLIP) at 80. It is difficult to reconcile this statement with the one discussed above.
. It is worth noting that the Court rejects Interior’s contention that this section of the First Report demonstrates how candid the agency was concerning the status of TAAMS. The fallacy with the Department's argument lies in the fact that this information was not conveyed to the Court until more than six months after the agency identified the problems and two months after the Court issued its Phase I trial ruling. Moreover, as the Court finds below, while the Department did report on the difficulties that it encountered during the summer and early fall of 1999, it represented to the Court that it would nonetheless be able to implement TAAMS in due course.
. It is important to note that the false and misleading representations made by Interior in the First Report led the Court to believe that the agency could meet the schedule presented in the First Report.
. In this regard, the Court rejects the utterly implausible and unconvincing interpretation of former-Secretary Babbitt’s statement by Daryl White, Chief Information Officer for Interior. Contempt II Tr.at 2499-2500 (stating that "I would get from that, that they are actively engaged in a pilot test of the system without having any other knowledge of what they might actually be doing. But the key word there is 'pilot site,’ and to me, that’s a test situation.”). Additionally, the Court rejects the preposterous interpretation that Dominic Nessi offered later in his testimony. Contempt II Tr. at 3672-74 (testifying that "[t]o me, the term operational means that the software — I'm speaking of just the software— is working. The reverse side being it's not inoperable.”). There simply was not and is not any ambiguity in what then-Secretary Babbitt told this Court. These two officials should be ashamed for offering such farcical interpretations of the statement made by then-Secretary Babbitt.
. Several Interior officials recognized that changing the meaning of the terms at this late of date would leave the Department vulnerable to allegations that it was being deceptive about the true status of TAAMS. Pis.' Ex. 2, Tab 71 (stating that "[w]e believe that attempting to "deploy” out of Billings at this time, while the system is not "implementable,” may open us to accusations by the Co-bell Court and the Congress that we are being deceptive about the status of TAAMS.”). In a memorandum dated February 23, 2000, the chairman of the Field User Group wrote that the group "discussed the idea of defining “deploying” TAAMS as being something that is separate and apart from "implementing” TAAMS. In other words, it was suggested that the Bureau should certify that the software is "deployable” but not "implementable” at this time. Pis.’ Ex. 2, Tab 71.
. In a draft report, the word successful had actually been crossed out. Pis.’ Ex. 2, Tab 8D.
. This statement by the Department is particularly egregious with respect to the September test.
.As noted above, see supra IV.B(l)(e), this latter contention by Interior was simply not true.
. The Department of Interior indicated in the First Report that ''[fjuture quarterly reports will track each of the milestones through completion.” Pis.' Ex. 7 at 1. Thus, each of the subsequent status reports were based on, and perpetuated the representations made in, the First Report (including the HLIP). Indeed, the later reports simply tracked the milestones provided to the Court by the Department in the First Report (and HLIP). As Secretary Norton recognized in the Eighth Report, see. Pis.’ Ex. 66 at 6, this method of reporting insulated the Department of Interior from providing the Court with an objective and complete assessment of trust reform in general and TAAMS in particular. The Office of Policy Management and Budget was in charge of preparing the First and Second Reports. Contempt II Tr. at 2260.
. Specifically, the Department did not present any evidence during this contempt trial that suggested that Interior had addressed the problems with TAAMS that it had identified months earlier. Of course, given the current state of TAAMS, no such evidence exists.
. The Office of Special Trustee assumed responsibility for compiling the quarterly reports in August of 2000. Pis.’ Ex.9 (transmittal letter). The Special Trustee and the Principal Deputy Special Trustee testified at great length during this contempt trial that each of the reports they compiled became a "negotiated” process in which the Department (including attorneys in the Solicitor's Office) would temper the language drafted by the Office of Special Trustee. See, e.g., Contempt II Tr. at 160-63; 782-83. As a result of this process, the Special Trustee and Principal Special Trustee testified that they became increasingly worried about the accuracy of the representations made in the quarterly status reports. See, e.g., Contempt II Tr. at 2280-87. Of particular concern was their view that the Department accentuated the positive aspects of TAAMS while minimizing (or simply not mentioning at all) the problems that the agency was experiencing with the land management system. See, e.g., Contempt II Tr. at 160-63; 2218-20.
. It is important to note that the Special Trustee added this section to the quarterly reports because he was not satisfied with the totality of the representations made by the Department in the First and Second Reports. Contempt II Tr. at 1553.
. The Court recognizes that Special Trustee stated in the portion of his observations section devoted to BIA Data Cleanup that "in the Rocky Mountain Regional Office (Billings), the historical records for land title and records are not complete and cannot immediately be placed into TAAMS until the missing electronic records are researched and entered into the legacy database.” Pis.' Ex. 9 at 3. This representation fails, however, to purge the misleading statements regarding the title part of TAAMS detailed above for several reasons. First, the representation itself does not indicate that the title portion of TAAMS was incapable of supporting historical data at this time. It only indicated that some of the historical information had not been put into TAAMS because of lingering issues concerning BIA Data Cleanup. Second, there was no connection between this statement in the BIA Data Cleanup section of the Special Trustee’s observations and the section in the Third Report devoted to TAAMS. That is, the fact that the Special Trustee placed this comment in his observations section does not absolve the Department of the misleading representations it made in the TAAMS section of the actual report. Indeed, the Department itself did not point to this statement during the contempt trial. Rather, the Court, after reviewing the quarterly status reports again in their entirety, recently found this particular comment. Third, as the Court notes below in its findings regarding BIA Data Cleanup, this particular observation was not even in the original draft of the Third Report. Initially, the Special Trustee wrote, in commenting on the bleak state of BIA Data Cleanup, that "more than 15 months after data cleanup commenced in Billings, the data is still not completely converted, nor cleaned up enough sufficiently to implement TAAMS in Billings.” Pis.’ Ex. 2, Tab 9H. This statement was ultimately replaced with the one discussed above.
. In addition to the Department’s failures regarding TAAMS, the agency also did not disclose to the Court that it had selected a method (statistical sampling) for performing the historical accounting project. This was a rather important omission.
. This is the first quarterly status report filed during Gale Norton's tenure as Secretary of Interior. Contempt II Tr. at 4279. The Court recognizes that Assistant Secretary McCaleb did not take office until July of 2001.
. As noted above, Gale Norton was sworn in as Secretary of Interior in late January 2001. Contempt II Tr. at 4279. Thus, this is the first quarterly status report that covered dates for which she is entirely responsible. Secretary Norton did not get off to a good start, as the Department of Interior submitted the Sixth Report notwithstanding the fact that the Special Trustee failed to verify its accuracy and completeness. Pis.’ Ex. 12 (May 31, 2001 letter from Special Trustee to Cruden, DOJ); Pis.' Ex. 5, Tab A at 5.
. The Special Trustee’s observations were particularly circumspect in this report. Pis.’ Ex. 12 at 3-5. Specifically, the Special Trustee wrote that:
As indicated in the last three Quarterly Reports, the Special Trustee has expressed heightened concern about the project management capabilities assigned to several major HLIP subprojects. Those concerns center on such matters as a lack of clear strategy, adequate financial and staff planning, communications, and the appropriate direction of contractors.... Given the complexity of several projects, we may not know the full depth of the problems in those projects until the management issues are resolved satisfactorily. The Department has several options under active consideration to strengthen the management of those subprojects.. .The Special Trustee continues to have concerns regarding the capability of the BIA project management to implement TAAMS across all twelve regions. As noted above, these concerns are being addressed.
. Assistant Secretary McCaleb took office prior to the filing of this report.
. Il is worth pointing out that, despite recognizing that it was unable to deploy the system as planned, the Department nonetheless told the Court that several "major activities for the TAAMS Completion Schedule" were completed during this reporting period. Pis.' Ex. 13 at 30.
. On November 26, 2001, the Department requested that the Court accept the reports generated by EDS in lieu of a traditional quarterly status report. The Court denied the defendants' request on December 17, 2001, but provided the Department an additional 30 days to submit the Eighth Report pursuant to the December 21, 1999 order.
. While Secretary Norton’s admission in this respect is a step in the right direction, there are nevertheless three significant problems with it. First, it became apparent during the contempt trial that the Department knew before even the Seventh Report had been submitted that by limiting the information to the HLIP, Interior would be providing the Court with an inaccurate assessment of the TAAMS subproject. Contempt II Tr. at 4381-82. Thus, there is no excuse for the Department not changing the manner in which it organized the reports at an earlier date. Second, the Department itself initially tried simply to file the EDS report as the Eighth Report. See Defs.' Mot. to Permit Filing Modified Form of Trust Reform Status Report. The Department only made these concessions after the Court denied Interior's motion. Order of December 17, 2001. Third, these admissions came only after the Court initiated contempt proceedings against Secretary Norton and Assistant Secretary McCaleb. The Court finds that it is highly unlikely that the Department would have made these concessions or created a new format for the quarterly reports if the Court had not ordered the Secretary and Assistant Secretary to show cause why they should not be held in civil contempt for filing false and misleading quarterly status reports.
. EDS subsequently defined "accelerate” to mean "focusing existing resources on the data cleanup activities required to support the nation-wide deployment of core title functionality.” Pis.’ Ex. 98, Tab 6.
. The Department also mentioned in the Eighth Report the status of the Land Title and Records Offices. Pis.' Ex. 66 at 123-24. As discussed above, the Department confirmed that the current title portion of TAAMS was being used with limitations, and LRIS, courthouses, and/or manual processes are. still being used at the Group A locations. Pis.' Ex. 66 at 123-24. For an almost amusing illustration of how little progress has been made in implementing the title portion of TAAMS, see Contempt II Tr. at 3120-22.
. As indicated above, the Court will consider the Revised HLIP as part of the First Quarterly Status Report lor purposes of this opinion.
. The Department also included in this report an appendix that described the pre-and post-deployment tasks. Pis.' Ex. 10 at 67. While this appendix helped the Court understand what the specific tasks entailed, it failed to give the Court a sense of the overall status of the subproject. In other words, it may have helped the Court understand what Data-Com was actually doing, but it did not provide the Court with an overall assessment of the progress made (or not made) towards completing the subproject.
. As noted above, this was the first quarterly status report filed during Secretary Norton's tenure.
. In light of the Court’s findings in this section, it is clear that the replacement of Secretary Babbitt with Secretary Norton made absolutely no difference in terms of these reports.
. It is important to note that the Department made, as noted above in the section of the opinion addressing TAAMS, numerous concessions regarding its earlier reports in the Eighth Report.
. It is worth mentioning that EDS also found that the Department "has not applied an adequate number of resources to the effort!,]” and "[t]he shortages of resources can cause synchronization problems given that the underlying data can change and the delayed approval can be based on inaccurate data.” Pis.' Ex. 60 at 34.
. At the current rate it would take Data-Com more than a decade to complete this portion of the project in the Alaska Region. Contempt II Tr. at 3754-56.
. Indeed, the TAAMS Information Migration Evaluation tests, which were meant to measure the accuracy of the data placed into TAAMS, see Contempt II Tr. at 3742-43, demonstrated that the data in the land management system was not reliable. Contempt II Tr. at 3365-67.
. As an aside, it is incredible for the Secretary, particularly considering that she is a trustee-delegate, to concede that the Department incompetently managed this critically important subproject.
. For purposes of this opinion, IT security will be defined as it is in the Clinger-Cohen Act, 40 U.S.C. § 1401(3)(A), i.e. "any equipment or interconnected system or subsystem of equipment, that is used in the automatic acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information by [an] executive agency." This is consistent with the manner in which the term "IT security” was defined in the Report and Recommendation of the Special Master. Pis.' Ex. 15 at 3 n.6.
. The plaintiffs noted in their motion that "OIRM maintains the legacy trust software applications and other software applications used by the BIA on a nationwide basis.” Pls. Motion for a TRO at 2.
. In support of their motion, tire plaintiffs attached the declaration of Mona Infield, an OIRM employee with extensive training and experience in computer systems. In her declaration, Infield stated that "[cjorruption of IIM trust data caused by the dismantling and relocation of the OIRM operations and data center may be irreparable; IIM trust data lost may not be recoverable.” Pis.' Motion for a TRO.
. Prior to the TRO hearing on March 7, 2000, Interior provided the Court with several declarations, like the one given by Marshall, but did not file them on the public record. Tr. of March 7, 2000 Hrng. at 21. The Department subsequently attached these declarations to its opposition to the plaintiffs’ motion for a preliminary injunction. For ease of reference, the Court will cite to these declarations as they were attached to defendants' preliminary injunction opposition.
. Although not directly applicable to the Fifth Specification, it is worth noting that the move to Reston took considerably longer than Interior (and the Court) expected. Progress Report of November 30, 2000 at 2.
. The Special Master was informed that this “printout constituted an IIM daily report and that the calculations it contained were located on a computer backup tape.” Special Master Report (March 12, 2001) at 2.
. It is important to note that in a memorandum dated February 13, 2001, Director Deborah Maddux attempted to address the concerns raised by the CIO. Special Master Report (March 12, 2001) at 3.
.As noted above, Secretary Norton took office in late January of 2001.
. It is worth noting that a January 2001 report by the Inspector General’s Office found that these problems still existed. Report on IT Security at 35.
. In its November 29, 2001 response to the Special Master's report, the Department of Interior argued that it was, as of late September 2001 taking actions to correct the longstanding IT security issues. Defs.' Response
. This order was amended on December 6, 2001 to reflect that it only applied to the Interior defendants. Order of December 6, 2001 [Docket Entry # 1038].
. This order was labeled as a "consent” order because the defendants consented to it, not because both parties consented to it.
. It is also worth noting that, perhaps as a result of his testimony during this contempt trial or other public statements that were critical of the Department, Thomas Slonaker resigned as Special Trustee. While the Court makes no findings at this time regarding the reason for his resignation, the timing is certainly curious to say the least.
. In fact, the record of this case indicates that the Department of Interior planned (and perhaps still plans) on using the Ernst & Young Report to demonstrate that no historical accounting is required because the accounts of the five named plaintiffs were managed properly. While it is not appropriate for
. At that point in time it was still up to the plaintiffs to prove that they were legally entitled to an accounting.
. It is important to note that there is no difference between a "historical accounting” and an "accounting.” Indeed, these terms have often been used interchangeably by both the parties and the Court. Any accounting of funds necessarily involves examining past transactions and events that could effect the current balance. In this opinion, the Court has predominantly used the term historical accounting to emphasize that the Interior Department must take past transactions into consideration to ensure that the current balances in the IIM trust accounts are accurate.
.The D.C. Circuit further noted that the accounting must be for all funds (or at least so long as they were deposited after the Act of June 24, 1938).
. This is particularly true in light of the fact that Interior made no attempt to retrieve documents produced prior to 1994.
. This, of course, assumes that the Department intended to actually perform some type of an accounting of the IIM trust accounts. In light of the agency's history of recalcitrance towards such an endeavor, the assumption is dubious at best.
. As the Court explains in more detail below, it does not rely on any of the defendants' representations to the D.C. Circuit to support the conclusion that the agency committed a fraud on this Court. Rather, the representations to the D.C. Circuit demonstrate the reasoning behind the scheme perpetrated by the defendants. This Court recognizes that it is the responsibility of the D.C. Circuit to address fraudulent representations made before it.
. Even if the Court were to agree with the defendants that the egregious actions taken by the defendants did not constitute a "fraud on the court” as that term has been defined in other instances, like when a party is trying to obtain relief from judgment, it would not vindicate the defendants in this matter. It is clear that at the very least the defendants’ actions fall within the category of general litigation misconduct that this Court has the inherent power to redress. To the extent the Court has the inherent power to redress such behavior, regardless of how the parties choose to label it, the Court clearly has the authority to redress the actions by the Interior defendants in this specification.
. Even if the Court were to assume for the sake of argument that the actions by the defendants did not rise to the level of fraud on the court, there is no question that the failure to inform the Court of the true status of the land management system after the agency became aware of its deplorable condition is sanctionable litigation misconduct that this Court can redress. Furthermore, even if the Court were to ignore completely the record developed at this contempt trial and focus exclusively on the current condition of TAAMS, it is clear that one of the principal bases for this Court's December 21, 1999 decision-that TAAMS will enable the agency to administer properly the IIM trust accounts-is no longer valid. Both of these findings would warrant the relief that the Court has decided to grant below.
. The lack of progress the Department of Interior has made in completing these two subprojects during the three years since the Phase I trial is remarkable.
. The Court concludes that the false and misleading information contained in this report alone would be sufficient to sustain a finding of fraud on the court and civil contempt. In fact, the Court finds that each of the first seven quarterly status reports submitted by the Department of Interior constitute a fraud on the court and warrants a finding of civil contempt. To the extent that all of the reports fall within the ambit of Specification 4, however, the Court will group them together for purposes of this opinion.
. It is also worth noting that the quarterly status reports were filed pursuant to the Court's Order of December 21, 1999. The Court has no difficulty finding that that order
. Again, even if the Court were to conclude that the actions by the defendants did not formally represent a fraud on the court, it undeniably would still constitute sanctionable litigation misconduct that this Court can redress.
Shepherd,
. Even assuming arguendo that the defendants' actions did not constitute a fraud on the court, they clearly amounted to sanctiona-ble litigation misconduct that this Court has the inherent power to redress.
. It is important to note that the reason why the duty was narrowly construed in the Report on IT Security was because that report only dealt with electronic information. In the Special Master's previously filed reports he made clear that the Department has a similar obligation with respect to paper trust records.
. The defendants further argue, in this regard, that the Secretary is entitled more deference than other litigants because this action is brought under the APA. The Court rejects this contention. First, the D.C. Circuit made clear in February of last year that in this case the Secretary cannot simply don the mantle of administrator. Rather, the Secretary's actions are subject to the more stringent standards of a fiduciary.
Cobell VI,
. The manner in which the Court has handled IT security is yet another example of how this Court has not only used great care in fashioning relief for the plaintiffs, but also how the Court has recognized its role in the tripartite framework established in the Constitution. When it became clear in the spring of 2000 that the Department could not move OIRM from Albuquerque to Reston without using third-party contractors, this Court nonetheless denied the plaintiffs’ motion for a preliminary injunction. Specifically, the Court stated that:
[It] cannot enjoin this operation at this time without inflicting substantial harm on third parties and, indeed, without harming the very beneficiaries of these trust records who will have critical payments delayed by the disruption of operations that would occur if the preliminary injunction issued.
Tr. of April 4, 2000 Hrng. at 10-13. While the Court eventually ordered the defendants to disconnect their computers from the internet, it did so only after it became abundantly clear in December of 2001 that the Interior Department still, more than a year and a half later, had not secured the confidential trust data stored on its computer systems. Even at that late date, the Court still tried to give the agency every opportunity to avoid injunctive relief. Alas, through its own incompetence and recalcitrance the Department forced the Court into the position of having to harm the very beneficiaries who have brought this lawsuit because the agency left their confidential trust information virtually unprotected from manipulation through the internet. Thus, there is no question that, with respect to IT security, this Court has exhibited both a tremendous amount of patience with the Department of Interior and a great amount of respect for the separation of powers doctrine. In this regard, the Court ultimately denied the plaintiffs' request for further injunctive relief in the form of a preliminary injunction because the defendants offered their own order concerning information technology on December 17, 2001. That order still remains in effect today.
. Of course, the Court's legal conclusions detailed above certainly provide further support for this relief.
. It appears that Judge Hogan and Judge Robinson considered their cases like the state cases cited above, as opposed to involving the appointment of a receiver over a federal agency or official.
. It is also well recognized that the tenure of court-appointed receivers last no longer than necessary, and that their powers are sharply delimited and circumscribed by the appointment order itself. These facts further support the "inferior officer" status of court-appointed receivers.
Edmond,
. The defendants also make the unremarkable contention that this Court cannot exercise equitable power in contravention of the Constitution. The better formulation of this argument is that this Court's equitable power is limited by the Constitution. The problem for the defendants is that the appointment of a receiver in this case would not contravene any provision of the Constitution.
. Specifically, the Court plans on entering a structural injunction in this case. Structural injunctions are somewhat different than ordinary injunctions, "in that their goal is not merely to halt a single wrongful practice, but to halt a group of wrongful practices by restructuring a social institution such as a mental hospital, school, or prison."
See
Dobbs, Law of Remedies (2nd Edition) at § 7.4(4). While most of the cases in which structural injunctions have been entered involve constitutional claims,
see, e.g., Hutto v. Finney,
. The Court will not disturb the relief that it granted in its order of December 21, 1999 at this time. Thus, for example, the defendants still must submit quarterly status reports and must bring themselves into compliance with the requirements of the 1994 Act. The relief granted by the Court in this opinion thus supplements rather than supplants the relief provided by the Court in its Phase I trial ruling. The Court also plans, at the appropriate time, to hold the Phase II trial as described in the Court's Memorandum Opinion of December 21, 1999. Thus, even after the Court issues further relief in this matter, the defendants will still ultimately have to put forth their proof that an accounting has been performed for the 300,000 IIM beneficiaries and that they are discharging their fiduciary obligations properly.
. As noted above, although the Court finds that appointing a receiver over the IIM trust is both constitutionally permissible and justified on the record in this case, the Court concludes that the better approach is to, as an initial matter, grant injunctive relief. This, of course, assumes that in the interim the Department does not take further action that is so inimical to the proper administration of the IIM trust that the immediate appointment of a receiver is warranted.
. The relief granted by the Court at the conclusion of these proceedings will thus, as noted above, supplement rather than supplant the relief granted by the Court at the conclusion of the Phase I trial.
. The Court will also grant leave to the Treasury defendant to make a pertinent submission in this regard, but such a filing should be made no later than January 6, 2003.
. This is a rather peculiar legal position to take in light of Specification 1.
. Although the defendants do not appear to take this position, it is important for the Court to note that the same analysis would apply to the fixing the system portion of the case. That is, the Court find that the defendants
. In reaching this conclusion, the Court recognizes (as it has in the past) that the plaintiffs’ claims in this case are statutorily-based, and that the federal government’s fiduciary obligations may not be coextensive with those of an ordinary trustee.
. The Court recognizes that another statutory waiver of sovereign immunity can be found in the Equal Access to Justice Act, 28
. This view of the sovereign immunity doctrine does not mean, however, that courts can order the government to compensate a party for losses sustained as a result of the government’s contumacious violation of an injunction.
See Coleman v. Espy,
. It is disappointing, to say the least, that the Inspector General would conclude that there was no intentional misconduct when such a large number of key participants were never even interviewed. Nevertheless, the Inspector General's Report is a virtual compendium of information that shows an agency in total disarray.
. The special master-monitor shall provide copies of his reports to the parties.
. The appointment of the special master-monitor in no way affects the defendants’ obligation to continue to file quarterly status reports as provided in the Court’s Order of December 21, 1999.
. To the extent that Special Master Balaran has already started working on pending discovery motions, he shall be tasked with addressing those motions or referring them to the Special Master-Monitor for disposition. The newly appointed special master-monitor will be empowered to address discovery motions filed after this date or referred to him by Special Master Balaran.
. In light of the Court’s decision to appoint a Special Master-Monitor at this time, the Court will terminate the consent order of April 15, 2002, in which it extended the appointment of the Court Monitor for another year.
. The Court acknowledges that defendants have sought to delay even today's ruling in order to try to obtain additional evidence from an on-going proceeding before Special Master Balaran. The Court has in fact read the Special Master's depositions of the Special Trustee and his Principal Deputy, since portions were filed under seal in connection with the defendants' motion to revoke the appointment of the Court Monitor, and the Court obtained the full unredacted depositions. Nothing therein would affect this Court’s view of the credibility of Mr. Slonaker or Mr. Thompson even if it were considered, so the Court agrees with plaintiffs (in their opposition to defendants’ motion to defer resolution of this contempt proceeding) that this is much ado about nothing.