IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ELOUISE PEPION COBELL, et al.__=., ) Plaintiffs, ) ) v. ) Case No. 1:96CV01285 ) (Judge Lamberth) GALE NORTON, Secretary of the Interior, et al__._., ) ) Defendants. ) ) NOTICE OF FILING OF THE TV_TELFTH QUARTERLY REPORT FOR THE D. EPARTMENT OF THE TREASURY / The Department of the Treasury has prepared its Twelfth Quarterly Report on Actions Taken By the Department of the D'easury to Retain I!M-Related Documents Necessary For an Accounting and submits it to the Court in accordance with this Court's Order of December 21, 1999. A copy of the report is attached hereto. Dated: December 2, 2002 Respectfully submitted, ROBERT D. McCALLUM, JR. Assistant Attorney General STUART E. SCHIFFER Deputy Assistant Attorney General J. CHRISTOPHER KOHN Director SANDRA P. SPOONER D.C. BarNo. 261495 Deputy Director w Senior Trial Counsel JOHN J. SIEMIETKOWSKI Trial Attorney Commercial Litigation Branch Civil Division P.O. Box 875 Bell Franklin Station Washington, D.C. 20044-0875 (202) 514-3368 (phone) (202) 514-9163 (fax) OF COUNSEL: Sabrina A. McCarthy Department of the Interior Office of the Solicitor ! 2 CERTIFICATE OF SERVICE I declare under penalty of perjury that, on December 2, 2002 1 served the foregoing Notice of Filing of the Twelfth Quarterly Report for the Department of the Treasury by facsimile in accordance with their written request of October 31,2001 upon: Keith Harper, Esq. Dennis M Gingold, Esq. Native American Rights Fund Mark Kester Brown, Esq. 1712 N Street, N.W. 1275 Pennsylvania Avenue, N.W. Washington, D.C. 20036-2976 Ninth Floor (202) 822-0068 Washington, D.C. 20004 (202) 318-2372 By U.S. Mail upon: Elliott Levitas, Esq. 1100 Peachtree Street, Suite 2800 Atlanta, GA 30309-4530 4 By facsimile and U.S. Mail upon: Alan L. Balaran, Esq. Special Master 1717 Pennsylvania Avenue, N.W. 12th Floor Washington, D.C. 20006 (202) 986-8477 Joseph S. Kieffer, IH Special Master Monitor 420 7 th Street, N.W. Apartment 705 Washington, D.C. 20004 (202) 478-1958 · J , / Kevin P. King'ton / - -- ///_ DEPARTMENT OF THE TREASURY BUREAU OF THE PUBLIC DEBT WASHINGTON, DC 20239-0001 December 2, 2002 MEMORANDUM FOR: ROBERT D. McCALLUM, JR. ASSISTANT ATTORNEY GENERAL U.S. DEPARTMENT OF JUSTICE CIVIL DIVISION FROM: BRIAN L. FE_LL,_F-''_ CHIEF COVNSEL// / BUREAU OF THEt'PUBLIC DEBT DEPARTMENT OF' THE TREASURY SUBJECT: TWELFTH QUARTERLY REPORT COBELL, ET AL. v. 3,T)RTON, ET AL. Included with this cover memorandum is the "Twelfth Quarterly Report on Actions Taken by the Department of the Treasury to Retain IIM-Related Documents Necessary for an Accounting" (tile "Report"). The Report has been prepared by the Department of the Treasury pursuant to the Court Order and Opinion in CobelI, et al. v. Babbitt, et al. (D.D.C. CV No. 96-1285), filed December 21, 1999. The Report includes information concerning the Financial Management Service, ("FMS"), Bureau of the Public Debt ("BPD") and certain Departmental Offices ("DO"). The Report was prepared based on intbnnation provided by a number of program offices from the above-described organizations. The preparation of the Report included circulation of drafts of the Report to program offices that are responsible for the actions described in the Report. Comments were received from those offices and incorporated in the Report. Prior to submitting the Report to the Department of Justice, senior officials ofFMS, BPD and DO reviewed a final draft of the Report. The Department of the Treasury stands ready, ill accordance with the Court's order, to respond to any questions or concerns the Court may have after reviewing the Report and attachments thereto. ww-w. publicdebt.treas.gov TWELFTH QUARTERLY REPORT ON ACTIONS TAKEN BY THE DEPARTMENT OF THE TREASURY TO RETAIN IIM-RELATED DOCUMENTS NECESSARY FOR AN ACCOUNTING Cobell, et al. v. Norton, et al. D.D.C. CV No. 96-1285 December 2, 2002 I. INTRODUCTION This is the Department of the Treasury's ("Treasury") Twelfth Quarterly Report, filed pursuant to the Court's December 21, 1999 Order ("Order") in the above-captioned case. It covers activities occurring over a three-month period from September 1, 2002 through November 30, 2002. The Order states that "[e]ach quarterly report shall be limited, to the extent practical, to actions taken since the issuance of the preceding quarterly report." Cobell, et al. v. Babbitt, et al., 91 F. Supp. 2d 1, 59 (D.D.C. 1999). During thc trial in 1999 oil issues related to the operation of tile system for handling IIM assets, Treasury agreed to a series of eight stipulations designed to address matters involving IIM under Treasury's control, in its Memorandum and Opinion.' Findings of Fact and Conclusions of Law ("Opinion"), also issued on December 21, 1999 [91 F. Supp. 2d 1 (D.D.C. 1999)], the Court held that Treasury committed a single breach of its trust responsibilities by destroying IIM trust materials "after their age exceeded six years and seven months, without regard to the fact that the United States (through its trustee-delegates) has not rendered an accounting of plaintiffs' IIM trust money." Id. at 50. The Court further stated in its Opinion: "It may very well be that the agreement reached in that instance [Stipulation paragraphs 4, 5 and 6, addressing record retention] would satisfhctorily discharge Treasury's duty to retain these [IIM-related trust] documents beyond this litigation." Id. at 51. The Court held that Treasury's stipulations mooted the plaintiffs' concerns regarding non-segregability of IIM trust checks by payee name and the "fi'ont-end float" (Stipulation paragraphs 1, 2, 3, mad 7). Id. at 34-35. Stipulation 8 addressed "back-end float." In previous Quarterly Reports, Treasury reported on steps it had taken to address the single breach the Court had tbund with respect to Treasury and to report Treasury's progress on all of the Stipulations. Treasury restated in its Ninth Quarterly Report how and when Stipulations 1, 2, 3, 4, 5, 7 and 8 were completed. Pending approval of Treasury's proposed revised retention schedules (which Treasury submitted to the National Archives and Records Administration more than two years ago) and Treasury's proposed new retention order and proposed amendment of Stipulation 6 (which Treasury filed sixteen months ago), Treasury continues to take steps to ensure, on an ongoing basis, that records are retained as required by the Court's August 12, 1999 retention order and in fulfillment of Stipulation 6. In light of these actions, Treasury filed a motion with the Court on January 26, 2001 seeking a determination that the Secretary of the Treasury had rectified the single breach of his trust responsibilities lbund by the Court and seeking to be released fi'om the quarterly reporting obligation. On September 28, 2001, the Court denied the motion, without opinion. Accordingly, this Tweltkh Quarterly Report sets forth the status of Stipulation 6 dealing with record retention. The full text of Treasury's Stipulation is set forth as Attachment A. II. STIPULATION 6 (RECORD RETENTION) Stipulation 6 provides: 6. Until the new retention schedules are in effect, Treasu_ _ will preserve: a. original checks, and digitized and microfilm copies of negotiated checks; b. check information from these same checks in electronic form (i.e., check serial number, date and amount); c. monthly reports of canceled checks (either in electronic form or hard copy as retained in the normal course of business); and, d. IIM deposit fund investment records (either in electronic form or hard copy as retained in the normal course of business), specifically requests for investment/redemption, transaction confirmations, and monthly account statements. As of the date of this Twelfth Quarterly Report, the National Archives and Records Administration ("NARA") still has not taken any formal action with respect to the proposed revised retention schedules that Treasury submitted to NARA at the end of September 2000, in fulfillment of Stipulation 5.1 Whatever action NARA takes, Treasury's schedules will remain subject to the Court's August 12, 1999 Order Regarding Treasury Department IIM Records Retention ("August 12, 1999 Order"), or any modification or replacement of it. Treasury continues to preserve its IIM-related documentation pursuant to the August 12, 1999 Order. As previously reported in Treasury's Seventh Quarterly report filed September 4, 2001, on July 9, 2001, the Department of Justice ("Justice") filed the "Motion for a [New] Treasury Department Document Retention Order and Replacement of Paragraph 6 of the Stipulation Entered July 6, 1999" which is still pending. The proposed new retention order would exclude non-IIM records and certain duplicative IIM records, but otherwise would include all records that contain or could contain IIM information, including summary level information. Stipulation 5 provided: "Following consultation with Interior, Treasury will evaluate and submit its proposed revised record retention schedules for llM-related documents to the Archivist of the United States, pursuant to 44 U.S.C. chapters 29, 31 and 33, and the corresponding regulations .... " With respect to the 55 findings cited by GAO in its January 31, 2002 report titled "Financial Management Service: Significant Weaknesses in Computer Controls Continue" (GAO-02-317), at this time only three findings remain outstanding, none of which is specific to IIM-related systems. On February 27, 2002, Treasury filed a motion for a protective order in regard to (1) FMS' March 1, 2002 position paper concerning the GAO report and (2) the attachments to the position paper. Pending a ruling on the motion, the Special Master directed the Plaintiffs, in a letter dated March 14, 2002, to keep the contents of the FMS position paper confidential. On November 27, 2002, the Special Master granted, in part, Treasury's motion and issued a Protective Order and Opinion, providing that FMS' March 1, 2002 position paper and one attachment (Attachment A) are "protected material" and imposing limitations on their disclosure. In letters dated June 7, 2002 and September 16, 2002, the Federal Reserve Board informed the Bureau of the Public Debt (BPD) and FMS of the measures taken by the Board, the twelve Reserve Banks, internal auditors, and a public accounting firm during 2001, and again this year, to continually review and assess information security and records retention at each Reserve Barhk. The Board confirmed that, during 2001, it did not identify any material weaknesses related to internal controls associated with its fiscal agency activities, and that its 2002 audit is still underway. As previously reported in Treasury's Eleventh Quarterly Report, FMS transferred 91 boxes and 11 ledgers of investment records from the Washington National Federal Records Center in Suitland, Maryland (WNRC) to FMS' facility in Hyattsville, Maryland, on August 2, 2002. On September 23, 2002, FMS located an additional 18 boxes and 15 ledgers of investment records at WNRC and transferred those records to its Hyattsville, Maryland facility. FMS segregated the Interior investment records, organized them, and compiled an inventory of the dates, fund names, and types of records. On November 5, 2002, BPD sent letters to Iron Mountain Records Management in Collegeville, Pennsylvania and Records Imaging & Storage in Parkersburg, West Virginia, reminding them that the retention order remains in effect and that the records they are maintaining for BPD must not be destroyed. (See Attachment B.) Treasury continues to stand by to search for any check records requested by the Department of the Interior (Interior), as Interior provides Treasury with the necessary predicate information. As set forth on page 79 of Interior's Eleventh Report to the Court, filed November 1, 2002, Interior's Office of Special Trustee has sought Treasury's cooperation to resolve the IIM trust fund imbalance between Interior and Treasury. On November 8, 2002, Treasury sent a letter to the Acting Special Trustee, naming the Treasury representative to contact in regard to that efibrt. (See Attachment C.) INDEX TO ATTACHMENTS The Department q/'the TreasulT's Twel/?h Quarterly Report December 2, 2002 Attachment A The Department of the Treasury's Stipulation dated July 6, 1999 Attachment B November 5, 2002 letters from BPD to Iron Mountain Records Management and Records Imaging & Storage, reminding them of the continuing requirement to preserve the records that they are maintaining on behalf of BPD Attachment C November 8, 2002 letter fi'om Treasury Fiscal Assistant Secretary Donald V. Hammond to Acting Special Trustee Donna Erwin, naming the Treasury represemative to contact regarding the IIM trust l_nd imbalance _, -2* ATTACHMENT A IN TE[E UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ELOUISE PEPION COBELL, et. al., ) ) Plaintiffs, ) ) ) Civil Action v. ) Case No. 96-185 (RCL) ) BRUCE BABBITT, et al., ) - ) Defendants. ) ) STIPULATION In a good faith cffort at rcsolGng thc dispute between the parties and consistcnt with its smmmry and regulatory authority, the Dcpa._aent of the Treasury has cngaged in a comprehensive assessment as _o how to address the issues between Treasury and thc plaintiffs. Thus. defendant Department of' the Treasury hereby stipulates and agrees to the following: _ I RECORDS RiZTR.IEVAL: DE_LOPMENT QF__EW SYSTEMS 1. Treasury's current system does not allow Treasury to search and retrieve IIM checks drawn on the Treasury for individual payees without predicate information (i.e., check symbol, serial number) from Interior. 2. New S.„stem for Negotiated Checks - Within one year of the filing of this stipulation, _r Treasury will install a new system to retrieve by payee name (and potentially an additional mfiquc identifier such as .an alplm-nnrn_ric designation .titan Interior) inFom_ation from IIM checks negotiated after the new system becomes operational. 3. New System e_r27,_ but ng.LN_g_ia_ed- Prox;tded that thc Office of Trust Fund Management (OITM) provides payee atones and poteutially an additional unique ! idOntifier to Treasury (as it pre,se.atly provide,s' other informat/on· on disbursed checks), .... Treasury will install, withln one yc_,r of thc filing ofthls stipulation, a new gystem to retrieve by pays name (and potentially an additional unique identifier such as an alpha. numeric designation from Ir/£efior) information for IIM checks issued by OTFM after the new system becomes operational. This system will provide information on checks that have been issued but not negotiated. 4. Treasury will consult with the Department of the Interior to identify IIM-relatcd documents maintained or created by Treasury necessary to meet thc goverruneat's trust obligations. 5. Following consultation with Interior, Treasury will evaluate and submit its proposed revised record retention schedules for IlM-related documents to thc Archivist of the United States, pursuant to 44 U.S,C. chapters 29, 31 and 33, and the corresponding regulations. 'Ibc revised schedules '.viii address the ex/sting undifihmntiated check records as well as differentiated records Once 11191 check information is segregated. See '13I 2-3. 6. Until the new retention schedules are tn effect, Treasury will pr_w.erve: a. original checks, and digitized and microfilm copies of negotiated checks; b. check information from these samech_ks hi electronic form (i.e. check serial number, date and amount); c. monthly reports of canceled checks (either in electronic form or hard copy as retained in the normal course of business); and, -2- · ,.r d. llM doposit fund invc,s-tm_ reco_ (either {n electroni c form or hurd · copy as retained in the normal cour_ of business), specifically requests, for investment/redemption, transaction confirmations, ai_d monthly account statcments, o POSlTs Fo.r INVt __ 7. Although current OTFM practic_ wi th restx:ct to timing of inve.qtment coliform to industry standards, Treasury will nevertheless, within fifteen (15) days of the filing of this stipulation, allow OTFM, on the morning of the next business day, to invest "as of" the prior business day, all deposits that were available to Treasury the prior bus/.uess day bu! were not__ included irt that day's OTFlvl ovemigbt investment request. .__T_Y TODETEj_MINE CI-_._._' _z,zf,.,-,,,-, ....... ....... - - _ - r_l,,- CTiCES 8. Tre:asury will undertake a study, which il anticipates completing wittLin one year of thc filing of this stipulation, to determine the average time betwecu thc date of OTFM check ..... _ issuance and thc date of presentation of those checks to the Federal Reserve for paymenl. Thc results of tiffs study could be used in analyzing the feasibility and desirabi it-/of Posslble modifications to the existing practices for disburscment of IIM cheeks or thc disinvestment of funcks, Dated: July 6, 1999 Respectfully subdtted, LOIS I. SCHIFFER Assistant Attorney General -3- '"'_", TOM C. CLARK II, Calif,, Bar No. 109098 _. ) . Senior Counsel U,S, I_pm'Uncnt of Justi_ Environment & Natural Resources Division P.O. Box 7611 Wmqhtngton, D,C, 20044-7611 (202) 514-3333 ·_LI., Trial Attorney U.S. Department of Justice Envirotmaent & Natural Resources Division P.O. Box 663 Washington, D,C. 20044-0663 (202) 30543428 OF COUNSEL: Edith R, Black'well Connie Lundgren Francinc Kemcr Michael S. Catv Department of the Treasury Departrnent of the Interior Office.of thc General Counsel f- _ Office of the Solicitor -4- ; } CI_R1/FICATi_ QP gERVICF. The undersigned hereby certifies that on this 6th day of'July, 1999, a true nad correct copy of thc foHgoing StipuLation was served on i he following by hand delivery: Dennis M. Git, gold, Esq. 1275 P_m_ylvanla Avenue, N.W. 9 th Floor Washington, D.C. 20004 Fax: (202) 637-0497 Kcilh Harper , Esq. Native American Rights Fund 1712 N Street NW Washington, D.C. 2003 6-2976 Fax: (202) 822-0068 Thaddeus Holt, Esq. P.O. Box 440 Point Clem', AL 36564 Elliott H. Levitas 1100 Peachtree St. Stc. 2800 ...... _ Atlanta, GA 303094530 Courtesy copy sent by facsimile to Dennis Gingold and Keith Harper. -_1 ? '0 DEPARTMENT OF THE TREASURY ATTACHMENT B BUREAU OF THE PUBLIC DEBT · PArKERSBURG_ WV 26106-1328 November 5, 2002 Mr. Bob Miller President Iron Mountain Records Management 1000 Campus Drive Collegeville, PA 19426 Re: Contract No. TPD99-C-0003 Dear Mr. Miller, Thank you for your letter of October 8, 2002, advising that Iron Mountain Confidential Destruction has been renamed Iron Mountain Secure Shredding. The Secretary of the Treasury is a defendant in the case of Cobcll et al. v. Norton et at.. which challenges the government's management of the Individual Indian Monies (IIM) by thc Department of the Interior for individual Indian beneficiaries. As a result of this litigation, we are required to preserve all documents and records that may relate to HM. As you were previously advised, destruction of Public Debt records has been suspended until further notice. This letter is a reminder that the preservation order remains in effect and records maintained on Public Debt's behalf may not be destroyed. Further, please be advised that Special Master Alan Balaran should continue to have unfettered access to Public Debt's vault and record center records. Finally, you should note that Ms. Deem's mailing address has changed. She is now located in Room 212, Resource Management Branch, Division of Support Services, 200 Third Street, Parkersburg, WV 26106-1328. We appreciate your cooperation. If you have any questions, please feel fi-ee to contact Ms. Deem at (304) 480-6320. Alternatively, I can be reached at (304) 480-6268. Director Division of Support Services cc: B. Liphlski, Boyers Facility L. Deem ' '_'/__ DEPARTMENT OF THE TREASURY BUREAU OF THE PUBLIC DEBT ' PARKERSBURG, WV 26106-1328 November 5, 2002 Ms. Canna Curry President ., Records Imaging & Storage 2305 Ohio Avenue Parkersburg, XW 26101 Re: Contract No. TPD-01-C-0003 Dear Ms. Curt-y, As you know, the Secretary of the Treasury is a defendant in the case of Cobell et al. v, Norton et al., which challenges the govermnent's management of the Individual Indian Monies (IIM) by the Department of the Interior for individual Indian beneficiaries. As a result of this litigation, we are required to preserve all documents and records that may relate to I1M, and destruction of Public Debt records has been suspended until further notice. The preservation order remains ill effect and records maintained on Public Debt's behalf may not be destroyed. Further, please be advised that Special Master Alan Balaran should continue to have unfettered access to Public Debt's records. We appreciate your cooperation. If you have any questions, please feel fi-ee to contact Lucy Deem, Contracting Officer's Representative, at (304) 480-6320. Alternatively, I can be reached at (304) 480-6268. Director Division of Support Sen, ices cc: L. Deem __! DEPARTMENT OF THE TREASURY ATTACHMENT C '!_ WA5 MI NG'T'O N -_"_ November 8, 2002 ASS 15TaNT _E¢I_ £TARY Ms. Donna Erwin Acting Special Trustee for American Indians 505 Marquette Street, NW Suite 800 Albuquerque, NM 87102 This is in response to your telephone conversation of October 25, 2002, with Lach Seward concerning the trust fund imbalance between Interior and Treasury. Treasury and h_terior have worked closely aver the past several years to sigrfificmltly reduce the imbalance. Our understanding is that the IIM trust fund imbalance between Treasury and Inter/or stands at approximately $2.5 million, while the corresponding Tribal trust fund imbalance is approximately $30 million. You requested that we write to you with the name of our contact so that we could formalize a team to bring closure to the process. R.ita Bratcher of FMS will be our project lead. Rita can be reached at (202) 874-8462. We stand ready to work with you to finish this project. Sincerely, Donald V. Hammond ' Fiscal Assistant Secretary