Media Briefing Regarding Claims Settlement Act of 2010 Remarks by Tom Vilsack, Secretary, U.S. Department of Agriculture David J. Hayes, Deputy Secretary, U.S. Department of Interior Thomas J. Perrelli, Associate Attorney General, U.S. Department of Justice | USDA Newsroom
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Media Briefing Regarding Claims Settlement Act of 2010 Remarks by Tom Vilsack, Secretary, U.S. Department of Agriculture David J. Hayes, Deputy Secretary, U.S. Department of Interior Thomas J. Perrelli, Associate Attorney General, U.S. Department of Justice

Monday, November 29, 2010

MODERATOR: [In progress] — Pigford II, final passage of the Claims Settlement Act of 2010. That Act, as you know, recently passed the Senate and would provide long-awaited funding for the agreements reached in the Pigford II lawsuit brought by the African-American farmers, the Cobell lawsuit brought by Native Americans over the management of Indian trust accounts and resources, and four separate water rights cases made by Native American Tribes.

As the President said, when the Senate passed this bill, the administration is urging the House to move forward with the legislation quickly. It is very similar to legislation they approved earlier this year. These issues are certainly a top priority for the President and for the administration.

Joining us on the call today are three people who have been very closely involved in these actions and in the work to get these settlements through the Congress: Agriculture Secretary Tom Vilsack; Deputy Secretary of the Interior, David Hayes; and Associate Attorney General Tom Perrelli, Department of Justice.

After each leader speaks, we will open it for questions. Please let us know at the top of your question, both who you are with and your affiliation as well as the individual to whom you would like your question directed.

If you have follow-up questions after this call, you can reach us at media_affairs@who.eop.gov, or you can certainly reach out to the Media Affairs staffs for each of the individual Departments.

With that, it is my pleasure to turn this call over to Secretary Vilsack. Mr. Secretary?

SECRETARY VILSACK: Thank you, Tom. Thanks very much for all who are on the call.

The President has been very clear to me in terms of USDA's efforts that we are to treat farmers, ranchers, and growers equally and fairly, and that means not only making sure we are doing the right thing today but also righting the wrongs from the past. Civil rights has become a top priority of mine since coming to USDA, and we have implemented a comprehensive program to correct past errors, to learn from our mistakes and take definitive action to ensure that all of our customers are treated fairly.

We have conducted civil rights training in our Farm Service Agency locations. We have doubled our compliance reviews, and we have seen the lowest number of Farm Service Agency complaints since we began keeping records. And we have also been working hard inside USDA on cultural transformation, and so today we have the lowest number of Equal Employment Opportunity complaints since the Department began keeping track.

We began a process of trying to resolve outstanding cases that have been brought against the Department, recently announcing a settlement with the American farmers, and we are certainly pleased with the Senate action in passing the appropriation that is required in order to adequately fund the settlement of the Pigford II litigation claims.

I want to take just this opportunity to lay out a couple of procedural things relating to this effort that I think are important to underscore. First of all, the proposal that has been passed by the Senate and which has been agreed upon by USDA lays out a very complicated and detailed method for individuals filing a claim seeking compensation. They must qualify as a class member, which means that they have to be someone who filed a late filing request under the Pigford I Consent Decree sometime after October of 1999 and before June of 2008. If they are not on the current timely list of folks who filed late requests, then they are going to have to provide some very significant and independent documentary evidence that they were, in fact, a late filing requestee.

In addition to being a member of the class, they also have to furnish a detailed complete claim form, which if they are represented by counsel includes a statement by the attorney representing the claimant under penalty of perjury that the claim is based on existing law and factual contentions that are true and correct.

In addition to this, we are also going to have a number of steps inherent in the review of these claims by the Comptroller General and by USDA's Inspector General to make sure that we are performing the settlement process appropriately, to make sure that we are legitimately reviewing these claims, and that we are paying those who are entitled to payment. When it is all said and done, payments will not be forthcoming until such time as the court has ultimately approved the final accounting of the expenditure of funds that are made available to us in this appropriation.

So we think that we have responded to concerns that have been raised throughout this process. We are hopeful that the House will take action quickly because we would like to put this chapter at USDA behind us, and we would like to be able to then focus our attention on getting other cases that have been pending against the Department, at least give folks an option to resolve their claims.

So this is very consistent with the work that we have been doing, very consistent with the instructions the President gave me in terms of how he wanted the USDA to operate under his administration, and we are very hopeful that the House will respond as the Senate did in a bipartisan way to get these settlement proceeds available.

MODERATOR: Thank you, Mr. Secretary. With that, I will turn it to Deputy Secretary Hayes. Mr. Secretary?

DEPUTY SECRETARY HAYES: Thanks very much, and thanks for everyone dialing in here.

Echoing Secretary Vilsack's comment about wanting to right past wrongs, similar to the conversation the Secretary had with the President, Ken Salazar had a conversation early on where we resolved and the President encouraged us to try to resolve the longstanding Tribal trust litigation known as Cobell, which has been in the courts for 14 years. The basis of the litigation, as you know, is an allegation that for the hundreds of thousands, literally, of individual trust accounts that the Interior Department has an obligation to track for individual Indians who have interest in land that we are holding in trust, that the accounting through the years has not been adequate. And there has been a related allegation that the funds have been mismanaged, and that the individuals have not gotten their due in terms of appropriate payouts for those lands that are earning income through oil and gas, grazing or other productive purposes.

We were very pleased to strike a settlement at the end of last year. We worked it through the House, and we are very pleased to have the bipartisan support of the Senate to confirm the settlement. It is a $3.4 billion agreement that will completely resolve these historical issues. 1.5 billion will be paid out to several hundred thousand individual class members in response to the claims both for accounting and for mismanagement, and there will be a $1.9 billion fund established to help collect, essentially, and turn over to Tribes the highly fractionated individual interest in land that Indians have that are nonproductive but that can be put to productive use via land purchased and transferred to Tribes. It has the potential to unlock tremendous potential, land resources for Tribes.

So we are very pleased about that settlement and are hopeful the House will act soon. They previously approved it. We are hoping they will reaffirm it once again.

In addition, very briefly, the Senate also accompanied this passage of the Cobell settlement with four very important Indian water rights settlements in the West. This is a historic package of settlements. For those of you who follow the western water issues, you know that Tribes have senior water rights, Federal-reserved water rights under the Winters Doctrine that typically have not been adjudicated.

These four matters have been, in fact, in litigation for cumulatively over 100 years of litigation. We brought all of them to settlements to resolve the rights of the Tribes and their senior water rights in a way that balances them against the existing water rights of the typically non-Indians in the basin. All four of the settlements will deliver what we call as "wet water" to these Tribes, provide clean water opportunities, irrigation opportunities, the use of water for the Tribes, which, of course, is the fundamental concept of the reserved water right.

They are for the Crow Tribe in Montana, for the Taos Pueblo in New Mexico, and for the White Mountain Apaches in Arizona, and there are four other small Pueblos in northern New Mexico under the Aamodt decision that will also be settled.

This is a historic development. Never before have this large a package of water settlements gone through. It is good news both for Indians and non-Indians alike in those basins.

So, with that, I will await questions after we hear from Tom Perrelli.

MODERATOR: Mr. Perrelli?

MR. PERRELLI: Thank you.

I will echo what Secretary Vilsack and Deputy Secretary Hayes said about being truly historic settlements. It's because they just don't resolve litigation, but they put large classes of our citizens in a new relationship with the agencies that play a critically important role in their lives, the Department of Agriculture for African-American farmers and the Department of the Interior for Native Americans whose land is held in trust.

I want to focus on a different aspect of the settlements, which is why we think the settlements are responsible deals for the United States, and that is an important reason to keep them moving through Congress.

As both Secretary Vilsack and Deputy Secretary Hayes said, these cases have been going on in the courts for decades and have been incredibly hard fought. Both judges and Congress have repeatedly heard the parties, to settle them, and there has never been any doubt that the significant sums were necessary to resolve them.

With our colleagues at the Department of Interior in the case of Cobell and the water rights cases and the Department of Agriculture in the case of Pigford II, we focused on reaching resolutions that made sense for the United States, were fair in terms of the dollars expended, and want to allow each agency to fulfill its mission which has been tested at time by each of these cases.

I will start by talking just a second about Cobell. As we've discussed, it has gone on for more than 14 years. There have been numerous attempts to settle it. Congress has repeatedly asked the parties to settle it or tried to legislate settlement, but never before had the United States and the plaintiffs reached an agreement, an agreement which we are happy to say Senators from both parties recognized it was a responsible resolution at $3.4 billion. It's critical because it focuses on both the past and the future.

As Deputy Secretary Hayes said, $1.5 billion will be paid as quickly as possible to class members. In so doing, it both settles the current Cobell lawsuit for a historical accounting, but it also resolved what I think all agreed was likely to be the next lawsuit or a next set of lawsuits that would challenge not how much money is in these accounts currently but whether there should be different amounts had the government managed the hundreds of thousands of acres of land and millions of dollars that it holds in trusts for individual Native Americans differently.

So we are not just settling one lawsuit only to bring on another one, and in so doing, it provides the basis for the Federal Government to meet its trust obligations in the future because it allows the government and each holder of an individual Indian money account to have certainty as to the amount of funds in each account. That's something that has been in doubt since the litigation began.

In addition, the settlement provides $1.9 billion for the land consolidation program that Deputy Secretary Hayes talked about, and as planned, that will put Interior on a new track forward in working with Tribal communities and the program we think will greatly benefit Native Americans by compensating them for their fractions of parcels that can't be economically used today and by consolidating land, so that it can be put to use for the benefit of Native American communities in the future.

With respect to Pigford, the Pigford II settlement, I think as folks on this call are aware, in the 2008 farm bill, Congress on a bipartisan basis gave new claims to a group of African-American farmers who had submitted late claims to the original Pigford I settlement. Working with our colleagues and the Secretary at the Department of Agriculture, we at DOJ took that class of individuals that Congress had identified as having new claims, didn't make one additional person eligible, and thought that we could either be fighting this class for years in court or we could see if there was a more responsible way to resolve it, and we think this settlement does that.

The President committed early in the administration to working with Congress to provide funds for that, for this settlement, and we reached agreement with the plaintiffs on a fair resolution that would compensate those to whom Congress gave new claims but placed a cap on the government's overall liability. It has the benefit of ensuring that farmers who have been waiting for compensation for many years will receive it in a streamlined claims process over which more than a decade of litigation that followed the Pigford I settlement and protects the United States against unexpected or unlimited liability. The Senate bill, I would note also contains a number of anti-fraud provisions, which we very much support.

So the bottom line on these cases is we think that they are fair deals for the plaintiffs that we settled with and move us into new chapters at both agencies, but they are also very fair deals for the taxpayers, and we, too, hope that the House will agree once more and move the legislation through to the President's desk.

Thank you.

MODERATOR: Very good, and thank you for the opening statements.

TELECONFERENCE OPERATOR: And we will go to the line of April Ryan with American Urban Radio Network.

SECRETARY VILSACK: Hi, April.

QUESTIONER (American Urban Radio Network): Hello. Hello, all. This is for everyone but particularly Secretary Vilsack. As you talk about the long and arduous process, even if it gets final approval in the House, realistically how long would it be for these payments to be allotted not just for the Pigford claimants or class but the Cobell and also the water rights persons.

And also, Secretary Vilsack, what are the results from that internal and external audit of the USDA on matters of discrimination that occurred 10 to 20 years ago?

SECRETARY VILSACK: To the audit question, I'm not sure, but I think you may be referring to our efforts for the Jackson Lewis Group to take a look at our current efforts to make sure that we are not making the same mistakes that were made 20 years ago, and that report is due the latter part of next month.

We have done an audit of claims that were not examined during the course of the previous administration. We found roughly 3,000 claims that required further investigation and probably 600 or so that might very well lead to claims. We have asked Congress to take a look at that in terms of the statute of limitations, and that has not yet been responded to by Congress.

As it relates to the amount of time it is going to take, I don't know that anyone can give you a very good estimate in terms of how much time it is going to take. Obviously, an independent arbitrator and decider of these claims has got to be appointed with the consent of all who are engaged and involved. That person or persons will have to set up shop. Claims will have to be filed and reviewed. Obviously, it is going to take some time. We want to make sure it is done right, and we want to make sure that as it is looked at by the Comptroller General or by the Inspector General that there aren't any problems with the process.

So we are going to take the time that is required in order to do it right, understanding that folks have waited a long time, and we will do it as expeditiously as possible.

TELECONFERENCE OPERATOR: Thank you. And we now have a question from the line of Ledge King with Gannett.

QUESTIONER (Gannett): Hi. This is for anybody who wants to answer this. There are — obviously, this administration has made it a point to try to resolve a lot of these cases. There are others in the pipeline, are there not, Hispanic farmers, women farmers? Are you — can you talk about where those stand, and are you concerned or perhaps hopeful that other groups may step forward knowing that this administration is interested perhaps in dealing with them?

SECRETARY VILSACK: Well, I'll take a stab. Generally, the issue involving Hispanic and women farmers, we obviously are engaged in an effort to try to provide opportunities for a quicker resolution potentially for individual claimants in those cases. They are a little different than the Pigford II case because there was not a congressional directive nor was there a certification by the courts as a class, so these are actually individual claims brought by individuals, and there is not one single case or group of plaintiffs' lawyers representing all of the claimants.

So what we hope to be able to do at some point in time in the not-too-distant future is to take a look at how we might be able to set up a process in which those claims could at least be given the option of resolving their dispute with the government on a case-by-case individual basis, and we are hopeful that we will get that done very quickly. And as soon as the Pigford bill is passed, we will obviously try to finalize that effort.

DEPUTY SECRETARY HAYES: I would also say that there are parallel cases similar to Cobell brought by Native American Tribes that are ongoing. There are about 99 cases currently, and we are actively looking at and working towards trying to resolve those matters as well.

TELECONFERENCE OPERATOR: Our next question comes from the line of Stewart Doan with Agri-Pulse.

QUESTIONER (Agri-Pulse): Yes, good afternoon. Secretary Vilsack, Stewart Doan with Agri-Pulse.

John Boyd with the National Black Farmers Association, while appreciative of the action getting the funding through Congress, has said that ultimate justice for black farmers won't come until the administration takes action against USDA employees responsible for the discrimination. Has USDA and the White House, the President rather — have you completely shut the door on looking at the past?

You talked early on about righting the wrongs of the past. Does that include perhaps going back and looking at some of these discrimination cases and seeing who is responsible and taking action?

SECRETARY VILSACK: Stewart, my focus has been on making sure that we don't get the government and the United States Department of Agriculture in the same situation it's been in for the last 20 or 30 years, and that is by taking a look at our current practices and procedures and making sure that we are not making the same mistakes again either intentionally or unintentionally. This is why we have an outside consulting group that is taking a look at our procedures and giving us a set of recommendations at the end of this year for improvements. It is also why we are engaged in cultural transformation within the USDA to make sure that we are treating our own employees properly and that we have an employment base that is reflective of the America that we serve.

I think it might be somewhat difficult to be able to establish responsibility of something that may have occurred 20 or 30 years ago, and I think what we ought to be doing is focusing our time and attention and resources on making sure that we are serving today's farmers as well as we possibly can, making sure that we try to resolve these cases as quickly and as fairly as we can, and getting resources to folks who are entitled to them as quickly as we can. Now, that's going to be our focus and direction at least for the USDA perspective.

TELECONFERENCE OPERATOR: And we now have a question from the line of Robert Capriccioso with Indian Country Today.

QUESTIONER (Indian Country Today): Hi. Thank you. To Mr. Hayes and Mr. Perrelli, please explain the changes that were made to the Cobell settlement early this fall, and along those lines, at times since last December, key players had indicated that the settlement terms could not be changed, or else they said the settlement would become, quote, "null and void," unquote. Were those indications an attempt in any way to mislead Indian class members and the American public?

DEPUTY SECRETARY HAYES: Sure. I will take a crack at that. This is David Hayes.

There were some modest adjustments to the settlement made in collaboration with the plaintiffs and the Senate. The primary change was that $100 million of the 2 billion that originally had been allocated for the land consolidation program was transferred to the mismanagement — alleged mismanagement class action payout, so that there will be $100 million of additional, more immediate payout to class members than there was under the original settlement.

You are correct that there needed to be acquiescence by all the parties in order for that kind of a change to occur, and there has been, and that will be memorialized in a revised settlement agreement.

The other adjustments were very minor. They dealt with the process by which the Indian Scholarship Fund would be administered and also an understanding of how the court would review under existing law and controlling law, applications for attorney's fees, and those changes also will be reflected in a revised settlement agreement.

We felt that these were improvements to the settlement and worked with the plaintiffs and a bipartisan way with the Senate to make those adjustments.

Tom, do you want to give any additional perspective?

MR. PERRELLI: No. I think that covers it. I do think those changes, which I think were responsive to some of the concerns that were expressed at different times by Tribal leaders, I think some of those changes are really directly responsive to those.

TELECONFERENCE OPERATOR: Thank you. And we now have a question from the line of Jerry Hagstrom with National Journal.

QUESTIONER (National Journal): Yes. Secretary Vilsack, I understand that one of the ways of paying for the black farmer settlement is to use budget authority from the WIC program. Can you explain this and whether people need to be worried that there are going to be children who don't get their WIC benefits because this settlement is being paid?

SECRETARY VILSACK: Jerry, thanks for the question.

No one should be concerned about children or WIC participants being negatively impacted or affected by the offset that was identified by Congress. This comes from a surplus account that was in WIC, which we are fairly confident is not going to be needed, given the fact that we are seeing slightly declining levels of participation in WIC.

We have seen increases in SNAP but a slight decline in participation in WIC, which makes this resource that was set aside for significant increases in WIC available. So no one is going to lose their WIC benefits. No one is going to be impacted negatively by the use of this fund as an offset.

TELECONFERENCE OPERATOR: Okay. We now have a question from Jenna Bagat [ph] with Politics 365.

QUESTIONER (Politics 365): Yeah, hi. I have a question about the — and this is for anyone who wants to answer, to what extent you think there may be some sort of obstruction by Members of Congress on the House Side. I know that there was initial — some concern about the portion that was tied to the legislation, so if someone can speak to whether that's going to be a concern or there's any — you know, if that's been addressed entirely. Thank you.

SECRETARY VILSACK: Well, this is Tom Vilsack. I can only speak as I did initially to the WIC issue.

I would say that, you know, obviously the Senate worked hard to try to find appropriate offsets, and the House has passed funding for Pigford II on several occasions, so our hope is that they will follow suit and hopefully this week, so that we can begin working on implementation of this settlement, which we think is fair and reasonable.

TELECONFERENCE OPERATOR: And we will now move on to the line of Mark Grayhant [ph] who is a blogger.

QUESTIONER: Hi. My question is what about — where do you see the accounting issues for Cobell and particularly going forward? Is there certainty now about the accounts?

DEPUTY SECRETARY HAYES: Yes. This is David Hayes. That's a good question. There is. That is one of the benefits of the Cobell litigation, has been the accounting that has proceeded over the last 10 years. Literally tens of millions of dollars have been spent to straighten out the accounting and to have a solid accounting going forward, and part of the settlement essentially validates the accounting as it exists today based on the work that has been done. And the class action payments are addressed to the potential historical accounting problems and alleged mismanagement problems.

So we will need to account going forward and ensure that we do not have a lapse going forward in terms of how we account for trust assets, but we are confident that we have the right numbers now and have a good baseline for moving forward.

TELECONFERENCE OPERATOR: Our next question comes from the line of Jim Raleigh with Bloomberg.

QUESTIONER (Bloomberg): General Perrelli, can you describe what these anti-fraud provisions are? Are they aimed at preventing fraudulent claims? There has been a lot of chatter in the Blogosphere about these settlements encouraging and Pigford encouraging fraudulent claims.

MR. PERRELLI: Well, let me start with something I talked about before, which is the Pigford settlement arises out of a specific legislation by Congress that created a class of individuals, essentially a known class of between 65- and 66,000 individuals who had filed claims late in the original Pigford I settlement, so there is this specific class of people that the legislation was aimed at and that it's covered by this settlement, and that was a bipartisan piece of legislation enacted in the 2008 farm bill.

Second, I would note that with respect to any concerns about fraud, the government's liability here is capped, so that I think would give some protection to the government.

And then more directly on specific examples of fraud, you have an independent adjudicator who is responsible for making sure that the process is fair and without fraud who is directed, as the Senate bill does, if there is any concern about fraud to seek additional information and appropriate information from individual claimants. Plus, there are then specific audit provisions that will examine whether or not there was fraud more broadly so. The independent adjudicator is going to focus on individual examples or instances, and then you will have multiple audits which will focus across the whole.

So we think that these are appropriate protections against fraud, and as I indicated, the risk to the government and the Treasury is already bound.

MODERATOR: David, we have time for one last question.

TELECONFERENCE OPERATOR: Okay. And that last question will come from the line of Lorna Thackeray with the Billings Gazette.

QUESTIONER (Billings Gazette): Yes. This question is for Mr. Hayes. As I understand it, no one will be forced to sell their fractionated interest in land. What kind of incentive do you have for people who resist selling even this fraction of their heritage?

DEPUTY SECRETARY HAYES: Yes, thank you. That's a good question. You're right. There will certainly be no forced requirement for folks who have fractionated interest in land to sell their land.

We think there are at least a couple of strong incentives that will be put in place, but let me first say that our plan is to prioritize the land that will be targeted for potential buyback in consultation with Tribal governments, and that gets to part of the point.

The concept is, of course, that the Federal Government will pay the individual land owners the value of their land. That land will remain in trust. It will remain in trust now for the benefit of the Tribal community and not only the individual. So we are hopeful that the Tribe, Tribal governments working with the individual land owners will be able to chart a course ahead that will demonstrate that that land actually will become of greater benefit to the Tribal community by diminishing the fractionation of it.

As you may know, some of these lands have hundreds, literally hundreds of individual land owner interest in them, which means that as a practical matter, they cannot be used by Tribal governments or even by the individuals because they simply can't get the approval of the necessary 50 percent of the owners to use those lands, so that's a huge incentive, we believe, that individuals will want to have the benefit of that land maintained in trust, but for the broader good of the community. Plus, of course, they will get fair market value.

And in addition, the settlement provides the opportunity and expectation that we will offer individuals and assure them that if they sell their parcel, that we will make a contribution into an Indian Scholarship Fund that is authorized up to $60 million. So we will be putting together a plan, again, in consultation with the Tribe to figure out how best to provide that specific incentive. So any individual will know that if they sell their land back to the government for transfer to the Tribe, they will be getting — they will be setting aside, in essence, money for Indian scholarships that will be administered under a non-profit organization that will provide those scholarships to needy American Indians.

So we believe this combination will make this a very attractive program. The one $1.9 billion is a lot of money, but it is a percentage of the amount really needed to completely deal with the fractionation interest, so this will not be an opportunity that will be open to every individual Indian land owner, and we think that those who have the opportunity to transfer their land for the benefit of their communities, that many of them will take up this opportunity.

SECRETARY VILSACK: This is Tom Vilsack. I wonder if I could just add not to that last question but to the question before it, a chance to jump in, to what General Perrelli indicated, just a couple of points.

One is that the Senate in a bipartisan way took a look at this issue of how to make sure that there were ample reviews and sets of eyes on what is transpiring as a result of implementing the settlement, and both the Comptroller General and the Inspector General's request and reports and reviews are a part of that request from a bipartisan group of Senators.

Also, I think we also want to point out that there is a court approval required of the final accounting to make sure that there are, again, another set of eyes within the court proceeding, and that this is really focused on activities and events that occurred quite sometime ago within USDA, and so there is a standard of proof required for the individual and independent arbitrator to be satisfied that there are legitimate claims, and if there is a need for additional information, the arbitrator has the capacity and the power to request it.

So I think that there are a number of steps along the way to guard against any concerns that folks may raise relative to people trying to seek resources that they are not entitled to.

MODERATOR: With that, I want to thank our speakers and thank our reporters.