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'Settlement concepts' offer remains viable in Cobell case

Part one

WASHINGTON - Among the thorny issues left over from one Congress to the next is the Cobell v. Kempthorne litigation, now in its 10th year, over the Individual Indian Money trust. But as part of an effort to settle the case legislatively and resolve some of the problems that fuel it, the presidential administration has put forward a handful of suggestions that not only aroused substantial criticism from Indian country, but also struck some tribal leaders and observers as reasonable.

The ''settlement concepts,'' as the administration termed its views, would ordain a federal withdrawal from management of the IIM trust in two phases over a 10-year period. The priority of the first phase would be consolidation of fractionated lands by voluntary and involuntary mechanisms. Among other details, tribes and individuals would retain land title; the land would remain inalienable, in trust, not subject to taxation.

Interior Department Secretary Dirk Kempthorne, in brief remarks on the settlement concepts made on Nov. 16, 2006, said the administration hopes to help Indian trust account beneficiaries move from litigation to economic development and prosperity. He emphasized the administration's willingness to ''invest billions'' in a ''material adjustment'' to trust management that will ultimately increase the value of the trust estate.

James Cason, associate deputy secretary for Indian Affairs at Interior and a regular participant in consultations on Cobell-related legislation, expanded on the settlement concepts in an interview shortly after they became public knowledge. In response to a line of questioning, he took Kempthorne's remarks as his starting point.

''There are several key elements in the [settlement concepts] offer. One of the elements, in particular when you're talking about making an investment for return of improved capital values within Indian country, is in the area of how we manage land fractionation.''

With 130,000 land allotments to account for - some of them not fractionated at all, but most others fractionated among dozens, hundreds or even thousands of ownership interests - Interior has focused on the cost of fractionation to the total value of land parcels owned by individuals and tribes. ''And what happens with the fractionation,'' Cason said, ''is to each degree that a parcel is fractionated, it has a corresponding degree of reduced value for that parcel. Because you [individual Indians and tribes] can't use the entire bundle of rights associated with the parcel when you have multiple owners who may or not agree upon the use of the property, and none of them effectively get to have the benefit of using the parcel, part of the administration's proposal was to put money into consolidating the interest in parcels.''

Using uniform appraisal standards recognized throughout the United States, Interior calculates that when between 10 and 20 percent of a parcel is fractionated among multiple ownership interests, Cason explained, the market value of that parcel becomes zero, compared with an approximately $25,000 market value for a property of undivided possessory interest.

''So part of what we were offering was, let's make a commitment on the part of the government to get to these parcels and consolidate the interest in the parcels so that whoever ends up owning these parcels at the end can actually have meaningful, beneficial use and enjoyment of their property right, which they're denied right now, and that we actually restore the market value of the parcel so that they have something they can leverage [into greater value].''

One proposal that is being discussed as a legislative possibility, Cason said, is leaving the possessory interests of the top nine or 10 interest owners intact, so as to focus on consolidating the many much smaller interests with a minimum of disruption to the larger interest holders. The smaller interests might even be offered, collectively, to the top nine or 10 interest holders, he added.

''We found that with pretty rare exceptions, that if you took the top nine or 10 owners, that in most cases they owned a significant majority of the property interest. And so we felt like that approach ... would enable a lot of the continuity in Indian country but take away all the disruption from fractionation.''

The approach might well require a mechanism for involuntary land transfers, Cason said, though no final consensus has been reached. ''But I think that it's envisioned as part of the discussions that at some point you would need to do that. And there are tools, through [land] condemnation, or other tools that you could use. Those tend to be pretty expensive, so we would probably look into legislation for some easier mechanism that's more cost-efficient to do than that.''

(Continued in part two)