US Department of Justice Court Proceedings - 11012006 notice

8/14/2019 US Department of Justice Court Proceedings - 11012006 notice

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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

ELOUISE PEPION COBELL, et al., ))

Plaintiffs, ))

v. ) CaseNo. 1:96CV01285

) (Judge Lamb erth)DIRK KEMPTHORNE, Secretary of the)

Interior, et al., ))

Defendants. )

NOTICE OF FILING OF INTERIOR DEFENDANTS'TWENTY-SEVENTH STATUS REPORT

Interior Defendants hereby give notice of the filing of their twenty-seventhreport due in

accordance with the Order of December 21, 1999.

A copy of the report is attached hereto.

Dated: November 1, 2006 Respectfully submitted,PETERD. KEISLERAssistant Attorney GeneralSTUART E. SCHIFFERDeputy Assistant Attorney GeneralJ. CHRISTOPHER KOHNDirector

/5/ John J. Siemietkowski

ROBERT E. KIRSCHMAN, Jr.(D.C. Bar No. 406635)Assistant DirectorJOHN J. SIEMIETKOWSKITrial AttorneyCommercial Litigation BranchCivil DivisionP.O. Box 875Ben Franklin StationWashington, D.C. 20044-0875Phone (202) 514-3368Fax (202) 514-9163


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CERTIFICATE OF SERVICE

I hereby certify that, on November 1, 2006 the foregoing Notice of Filing ofInteriorDefendants' Twenty-Seventh Status Report was served by Electronic Case Filing, andon thefollowing who is not registered for Electronic Case Filing, by facsimile:

Earl Old Person (Pro se)Blackfeet TribeP.O. Box 850Browning, MT 59417Fax (406) 338-7530

/5/ Kevin P. KingstonKevin P. Kingston


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THE SECRETARY OF THE INTERIOR

J. Christopher KohnU.S. Department of JusticeCivil DivisionCommercial Litigation BranchP.O. Box 875

Ben Franklin StationWashington, D.C. 20044-0875

WASH! NGTO N

OCT! 12006

Re: Cobell v. Kempthorne - Status Report to the Court Number Twenty-Seven

Dear Mr. Kohn:

Enclosed is the Department of the Interior's Status Report to the Court NumberTwenty-Seven

(For the Period July 1, 2006 through September 30, 2006). Please forward a copyto the Court.

My signature on this report reflects my reliance on the assurances of those whohave compiled

the report that the information contained herein is accurate.

Thank you for your assistance.

DIRK KEMPTHORNE

Enclosure


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Status Report to the CourtNumber Twenty-Seven

For the PeriodJuly 1, 2006 through September 30, 2006

!4T

Op

4'!!!CH 3,!

November 1, 2006


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STATUS REPORT TO THE COURTNUMBER TWENTY-SEVEN

November 1, 2006 Table of Contents

TABLE OF CONTENTS

INTRODUCTION..........................................................1

I. OFFICE OF HISTORICAL TRUST ACCOUNTING.........................3II. OFFICE OF TIlE SPECIAL TRUSTEE FOR AMERICAN INDIANS...........9

A. TRUST SERVICES - CURRENT ACCOUNTING.........................11

B. OFFICE OF TRUST RECORDS.....................................15

C. TRUST ACCOUNTABILITY........................................191. TRUST BUSINESS PROCESS MODELING...........................19

2. TRUST DATA QUALITY AND INTEGRITY..........................21

3. INDIAN FIDUCIARY TRUST TRAINING PROGRAM...................25

4. RISK MANAGEMENT...........................................275. TRUST REGULATIONS, POLICIES AND PROCEDURES................29

D. TRUST REVIEW AND AUDIT......................................31

E. OFFICE OF APPRAISAL SERVICES................................33III. INDIAN AFFAIRS..............................................37

A. TRUST REGULATIONS, POLICIES AND PROCEDURES..................37IV. BUREAU OF INDIAN AFFAIRS....................................39

A. FRACTIONATION...............................................39B. PROBATE.....................................................41

V. OTHER TOPICS..................................................43

A. INFORMATION TECHNOLOGY......................................43

B. CADASTRAL SURVEY............................................53

C. MINERALS MANAGEMENT SERVICE.................................57ACRONYMS AND ABBREVIATIONS..........................................59


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November 1, 2006

THIS PA GE INTENTIONALL Y BLANK


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November 1, 2006 Introduction

INTRODUCTION

This Status Report to the Court Number Twenty-Seven (Report) represents the

period fromJuly 1, 2006, through September 30, 2006. The Report is presented for the purposeof informingthe Court of actions taken since the issuance of the preceding quarterly report.In addition, theReport references some matters that might be of interest to the Court, includingdelays in andobstacles to trust reform activities, and a report on the progress of thehistorical accounting ofindividual Indian beneficiary funds managed by Interior.'

This Report is prepared in a manner consistent with previous reports to theCourt. Managers

from the Office of Historical Trust Accounting, Office of the Special Trustee forAmericanIndians, Office of the Chief Information Officer, Bureau of Indian Affairs,Bureau of LandManagement, and Minerals Management Service submit reports on the status of theirrespectiveIndian trust activities.

A change in the Report format Interior brings to the Court's attention is thatthe order ofpresentation of the various reports has been changed to focus attention on thestatus of thehistorical accounting and trust reform and improvements to the management of the

Indianfiduciary trust.

A glossary of acronyms and abbreviations is included in this Report. The glossaryis located atthe end of the Report.

1 This Report contains information on the broad tmst reform efforts underway atInterior. Accordingly, it mayinclude information on reform efforts that are not within the scope of the Cobelllitigation.

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November 1, 2006 Introduction


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November 1, 2006 Office of Historical Trust Accounting

I. OFFICE OF HISTORICAL TRUST ACCOUNTING

Introduction

OHTA was established by Secretarial Order No. 3231 on July 10, 2001, and ischarged withplanning, organizing, directing and executing the historical accounting of TIM andtribal trustaccounts. OHTA's historical accounting includes all transactions in TIM accountsopen on orafter October 25, 1994 (the enactment date of the American Indian Trust FundManagementReform Act), through December 31, 2000. OST has issued quarterly accountstatements sincethe end of 2000.

Current Status

Meta-Analysis Report

As previously reported, NORC, a contractor for OHTA, issued its report on a meta-analysis ofreconciliations and audits of the TIM and Tribal Trust Funds on June 23, 2006. TheNORCreport provides a qualitative assessment of the reconciliations and audits toidentify those withsufficient data to support a judgment about the reliability of the meta-analysisfindings. NORCfound no evidence of widespread fraud and reported that the Indian trust system

has performedfar better than is generally recognized. NORC is planning to develop aquantitative meta-analysis to bring results into sharper focus with more rigorous statistical dataanalysis.

Treasury and GAO Account Settlement Packages

Treasury regularly examined and settled accounts containing TIM transactions fromthe early1 890s through 1920, and GAO from 1921 through 1951. Over 20,000 Treasury and31,000GAO account settlement packages have been located at the NARA Archives II facility

in CollegePark, Maryland. A sample of both Treasury and GAO settlement packages has beenreviewed bya professional independent public accounting firm for OHTA. A statistical analysisby NORC iscurrently underway of these Treasury and GAO settlement packages, which includecertificationsTreasury and GAO issued on TIM and Tribal Trust Fund accounts handled by IndianSpecialDisbursing Agents at BIA agencies. OHTA expects NORC to complete its statisticalanalysis


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during the next reporting period.

Judgment and Per Capita IIM Accounts

OHTA continues to perform historical accounting procedures on Judgment and PerCapita TIMaccounts. During this reporting period, OHTA reconciled an additional 3,839Judgment TIM

accounts and 236 Per Capita TIM accounts.

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Results through September 30, 2006, are summarized in the table below.

Jud2ment Accounts Per Capita Accounts

Number of Percent Number of PercentAccounts of Total Accounts of Total

Total at December 31, 2000(including accounts open at orafter October 25, 1994, but closedprior to December 31, 2000) 80,539 100% 19,033 100%

Reduction for accounts subsequentlydetermined to be outside of thescope of the population (901) (1%) (28) 0%

Reconciled January 1, 2001, through

June 30, 2006 (59,208) (74%) (17,108) (90%)Reconciled this reporting period (3.839) (!!) (236) (1%)

Remaining to be reconciled atSeptember 30, 2006 16591 2!o L661 9%

Mailings to Judgment and Per Capita IIM Account Holders

As previously reported, on March 9, 2006, a fourth submission for permission tomail 20,402Historical Statements of Account was filed with the U.S. District Court. The thirdsubmission tomail 28,107 Historical Statements of Account was filed on March 24, 2005. Mailing

of these48,509 Historical Statements of Account still awaits approval from the Court.

In its October 22, 2004, Order, the Court permitted OHTA to transmit Statements to17,096Judgment TIM account holders. During this reporting period, OHTA mailed anadditional 155Historical Statements of Account to account holders for whom addresses had beenlocated,bringing the total number of Statements mailed to 13,103. As of the end of thisreporting period,3,993 WAU Statements remain to be mailed. OHTA will re-mail any Statements thatare

returned as forwarding addresses become available.

Confirming Accuracy of Electronic Records Era Accounting

During FY2006, the following activity occurred to provide assurances for theaccuracy oftransactions and accounts in the Electronic Records Era (1985-2000).

Land-Based JIM Transactions

* During this reporting period, the last of 2,100 identified High Dollar


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transactions($100,000 or larger) were reconciled. This includes an additional 278

transactions from

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the 1,822 previously reported. NORC will update its September 30, 2005,Report2 to

include these results and additional completions of the National Sample of

4,500transactions under $100,000 during the next reporting period. NORC does not

expectany significant statistical change for these transactions that were

reconciled after itsSeptember 30, 2005, Report.

As previously reported, a land-to-dollars pilot test was commenced at the BIAHorton

and Colville agencies, which is designed to detect whether surface orsubsurface revenues

were recorded in the TIM system. This test is expected to be completed duringthe next

reporting period.

All IlMAccounts (Land-Based, Judgment, and Per Capita)

Data completeness validation is a process consisting of multiple tests designedto detect

accounts and transactions missing from the electronic data set, as well aspotential posting

errors.

* Transaction Mapping - This test confirms that all transfer and reversaltransactions

posted within the system are in balance, i.e., that no funds leaked out of

the system. Todate, over 50.9 million transfer and reversal transactions have been mapped

within theIRMS and TFAS systems. This represents over 96% of all of the transactions

that maybe mapped for the period February 1985 through December 2000. Additionally,

over88% of the Treasury Check Payment and Reconciliation (CP&R) system records

betweenMarch 1987 and December 2002 have been mapped to the corresponding

disbursement inthe IRMS or TFAS systems. The CP&R system is maintained by Treasury and

tracks the

status of all Treasury checks cancelled after one year and returned to theTIM Trust, or

other status. All transfers that were mapped between or among TIM accountswere

determined to be in balance. OHTA plans to complete transaction mappingsduring

future reporting periods.

* Balance Comparison Test - A balance comparison test confirms thattransactions

included in a Historical Statement of Account correspond to the final balance


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shown. Asa result of performing this test, transactions have been restored to the

electronic data setfrom contemporaneously prepared system reports and financial documentation.

To date,almost 175,000 transactions have been restored in eight of the twelve BIA

regions for theperiod February 1985 through December 1996. An additional 111,000

transactions havebeen restored in six of the twelve BIA regions for the period April 1982

through January1985. Currently, only eight land based accounts in the historical accounting

populationin the Alaska, Pacific, and Western Regions still appear to be out of

balance. Over56,000 accounts were analyzed for these three regions.

2 The report is entitled Reconciliation of the High Dollar and National SampleTransactions From Land-Based JIM

Accounts (AllRegions), September 30, 2005.

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* Account Number Review - An account number review ensures thatreused/duplicate

account numbers and account holders with multiple account numbers were

appropriatelyidentified. This review allows OHTA to provide Historical Statements of

Account withthe appropriate transactions for each account holder. To date, the reused

account numberanalysis has been completed for over 98% of all of the Land-Based, Judgment

and PerCapita accounts in the IRMS and TFAS systems. To date, only 225

reused/duplicateaccount numbers have been identified in the more than 600,000 accounts

reviewed.

OHTA SDA Distribution Project - Undistributed SDA Balances at December 31, 2002

SDA are temporary accounts for the deposit of trust funds that could notimmediately be creditedto the proper owners. The SDA project has two sub-projects: the retrospective(pre-January 1,2003, receipts) and the prospective (post-December 31, 2002, receipts) phases.OHTA hasresponsibility for "resolution" (i.e., research and distribution of funds) of theretrospective phase,while BIA has comparable responsibility for the prospective phase. This section ofthe report tothe Court addresses only the retrospective phase.

During this reporting period, 119 SDA involving $960,658 were resolved anddistributed. Thereremain 11,435 SDA involving $16,619,694 to resolve and distribute. Distributionsof SDAbalances to the owners during the period January 1, 2003, through September 30,2006, total$42,136,400, including interest of $3,266,697 posted from January 1, 2003, throughthe date ofdistribution. Of the SDA remaining at September 30, 2006, 8,445 accounts havebalances lessthan $500 (74% of SDA) involving $700,848 (4.2% of SDA dollar balances).

Imaging/Coding - Individual Indian Trust Documents

OHTA and its contractors continue to collect and image TIM transaction documentsand encodethe data to be used to perform historical accounting. The imaging process convertsthe originalpaper records into electronic images. The initial coding process captures specificidentifyinginformation, such as an TIM account number, from an imaged document so that theimageddocument can be retrieved at a later time. A document may consist of severalrelated records


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(images) that can be grouped together for further analysis. All coded documentsare quality-control checked for accuracy before they are loaded into the AccountingReconciliation Tool foranalysis. OHTA and its contractors have never stored TIM transaction data used toperformhistorical accounting on any system connected to the Internet.

During this reporting period, OHTA completed scanning 145,351 TIM pages, coding15,054 TIMdocuments and loading 15,114 TIM documents into ART. As of September 30, 2006, ARTcontained 8.8 million coded TIM images and 6.1 million coded tribal images (14.9million totalcoded TIM and tribal images). In addition, 409,385 tribal documents were loadedinto ARTduring this reporting period. These images constitute 1.9 million TIM and tribaldocuments.

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OHTA's Federal Records Management

The Archivist of the United States approved the OHTA records schedule on September

28, 2006.As a result of NARA's approval, OHTA now is able to transfer its non-activerecords to theAmerican Indian Records Repository in Lenexa, KS, for long-term storage,preservation, andaccess to Interior and/or other federal agencies and researchers.

Historical Accounting Plan for Individual Indian Money Accounts

As previously reported, Interior expects to issue a revised Historical AccountingPlan for TIMaccounts. The Plan will be based on lessons learned from work already completed,court

decisions, statistical sampling parameters, accounting costs, and congressionalfunding.

Delays and Obstacles

Enacted appropriations for FY2003 through FY2006 have been below the President'srequests,thus limiting the historical accounting that could be performed. Until Congresspasses anappropriations bill for FY2007, OHTA expects to be operating under a continuingresolution of$21,353,000 versus the FY2006 appropriation of $56,000,000. If this reduction iscontained in

the final budget, historical accounting progress would be substantially reducedand completiondates lengthened.

Assurance Statement

I concur with the contents of the information contained in the Office ofHistorical TrustAccounting section of the Status Report to the Court Number Twenty-Seven. Theinformationprovided in this section is accurate to the best of my knowledge.

Date: October 26, 2006

Name: Signature on FileBert T. Edwards, Executive DirectorOffice of Historical Trust Accounting

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November 1, 2006


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November 1, 2006 Office of the Special Trustee for American Indians

II. OFFICE OF TIlE SPECIAL TRUSTEE FOR AMERICAN INDIANS

Introduction

The Office of the Special Trustee for American Indians was created by the AmericanIndianTrust Fund Management Reform Act of 1994. The 1994 Act provides direction to theDepartment of the Interior on accounting for Indian trust funds and reforming theoperation ofthe Indian fiduciary trust. The Special Trustee's responsibilities under the Actinclude creating acomprehensive strategic plan for the operation of the trust and providingoversight of theaccounting for Indian trust funds and the reform of the trust.

Special Trustee's Observations

Trust Reform Initiatives

During FY2006, Interior made significant progress in converting the BIA legacyleasing systemand land record title system to TAAIVIS leasing and title, and integrating thesetwo new systemswith the trust funds accounting system operated by OST. Major advantages of theconversionare the establishment of a single ownership system, detailed account statementsfor beneficiariesand a payments receivable module. The conversion and integration was prioritizedbased on

dollars of throughput from the BIA agencies. As of the end of FY2006, 80 percentof the dollarsflowing through the IIM accounts are being processed using the new systems. It isexpected thatthe conversion will be complete by the end of FY2007.

Congressional Action

The Interior appropriation bill was not enacted before the end of the fiscal year.As a result,Interior bureaus and offices are required to operate on a continuing resolutionfrom Congress.This resolution allows agencies to continue the same level of spending as was

available in theprevious year, unless either house of Congress has a lesser amount in its proposedappropriations. The House Appropriations Committee allowed only $21,353,000 forthe Officeof Historical Trust Accounting for FY2007, although the Senate AppropriationsCommitteeproposed funding OHTA at the same level as FY2006, as requested by Interior, whichwas $56million. This results in OHTA having to reduce operations significantly until anappropriationsbill is enacted.


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In other action from Congress, Mr. Carl Artman was approved by unanimous vote ofthe SenateIndian Affairs Committee, after having been nominated by the President for theposition ofAssistant Secretary for Indian Affairs. It is expected that Mr. Artman will beconfirmed by thefull Senate either during the "lame duck" session or early in the next Congress.

The duties of theoffice are currently being performed by the Associate Deputy Secretary, Mr. JamesCason.

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November 1, 2006 Office of the Special Trustee for American Indians

S1439 - Cobell Settlement Legislation

Negotiations continued during this reporting period between the Administration and

Congresstoward a possible legislative settlement of the extensive Cobell litigation. Theearliest suchlegislation could be considered is during the lame duck session that is expectedto begin in mid-November.

Assurance Statement

The comments and observations are provided by the Special Trustee for AmericanIndians andreflect the opinion of the Special Trustee only.


Name: Signature on FileRoss 0. SwimmerSpecial Trustee for American Indians

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Sometimes account holder statements are returned due to an invalid address, or anaccountholder refuses or does not claim mail. A variety of methods and means are used tolocate WAUaccount holders.

Small balance accounts are defined as those with balances of $01 - $1.00 and noactivity in the

preceding eighteen months. Management expenses for these accounts areconsiderable, in partbecause (as directed by Congress) annual statements must be sent to these accountholders.

! "Lockbox" represents the process of using a post office box that the contractoror bank maintains to receiveproceeds for the sale or use of trust lands, which are then deposited fordistribution to the beneficiaries.

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November 1, 2006 Trust Services - Current Accounting

a. Trust Funds Accounting System

Accomplishments and Completions

During this reporting period, the remaining agencies in the Great Plains Region,all agencies inthe Rocky Mountain and Navajo Regions, as well as the Fort Hall and Yakamaagencies from theNorthwest Region, were converted. In addition, the Palm Springs and SouthernCaliforniaagencies from the Pacific Region; the Uintah & Ouray, Papago, San Carlos, Pima andColoradoRiver agencies and the Fort Yuma Field Office from the Western Region wereconverted. Theinterface between TAAIVIS and TFAS allows for quarterly account statements of

performance,which include ownership and encumbrance information of trust assets managed at theconvertedagencies.

b. Special Deposit Account Activity

Current Status

BIA has the responsibility for distribution of SDA funds received since January 1,2003(prospective receipts). It is the policy of BIA to distribute funds within 30 daysof receipt into

SDA. During this reporting period, there were 2,742 receipt transactions posted toSDA.

During this reporting period, aged funds (those held in SDA longer than 30 days)were held in180 fewer SDA than in the previous reporting period. Undistributed aged receiptsdecreased by518 and the combined dollar amount decreased by $304,873.59. As of September 30,2006, agedSDA totaled $1,229,594.43, which represented 3,245 undistributed receipts. As ofSeptember30, 2006, there were 641 receipts in 180 SDA aged more than one year totaling$517,520.47.

During this reporting period, OST staff and contractors assisted BIA staff inperforming worknecessary to distribute aged and current receipts at the Standing Rock, FortBerthold, Uintah &Ouray, Fort Hall, Fort Belknap, Fort Peck, and Wind River Agencies.


Resolution of SDA totaling over $278,000 is delayed by adjudication of rangerates, need for


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cadastral surveys, need for SOL opinions, and other litigation related matters.

Lack of use of the Internet also continues to delay access to information usefulto resolving SDA.

c. Whereabouts Unknown Accounts

Current Status

Priority continues to be placed on securing current addresses for account holdersof the rollingtop 100 highest dollar balance WAU accounts. During this reporting period, 13 ofthe top 100

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WAU accounts, with combined account balances in excess of $1.4 million, wereupdated withcurrent addresses.

During this reporting period, 3,459 accounts with a combined balance of $1.8million wereadded to the WAU list, and 3,427 account holders with a combined balance of $5.8million werelocated.

As of September 30, 2006, there were 53,899 WAU accounts with a combined balanceof$62,962,019. The following table illustrates the number of accounts stratified byaccountbalance and WAU category.

Account Balance Correspondence! Account Awaiting Refused!Total

Check Returned Setup Address UnclaimedNo Confirmation Mail

AddressEqual to or over 12 8 0 0 20$100,000Under $100,000 and 37 12 0 0 49equal to or over$50,000Under$50,000and 2 139 761 0 1 2901equal to or over$5,000

Under$5,000and 5,761 1,433 4 57,203equal to or over$1,000Under $1,000 and 7 928 2 895 14 3 10840equal to or over $100 'Under$looandequal 11 983 4599 28 316613toorover$1 'Under$1 4,077 12,149 46 116,273

Total 31,937 21,857 92 13

53,899


Due to implementation of the FT1\4, accounts continue to be created in TFAS fornon-financialasset owners in order to generate asset statements. Many of these owners do nothave currentaddresses. As a result, the total number of WAU has increased. After the FTMconversion iscompleted, however, the rate of increase of WAU is expected to stabilize. The


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accountscategorized as WAU will then mainly consist of accountholders that cannot belocated,accountholders that have moved without a forwarding address, and accounts that areestablishedwithout an address for heirs of a probate or recipients of per capitadistribution.

The lack of Internet access limits communication effectiveness. OST and itscontractor mustrely primarily on mail and telephone communication with TIM account holders.

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d. Small Balance Accounts

As of September 30, 2006, there were 24,540 accounts that have a $01 - $1.00balance with noactivity for the previous 18 months. The total sum included in those accounts is$7,278.73.Statements are sent to account holders for these accounts on an annual basispursuant to directionfrom Congress.

Assurance Statements

I concur with the content of the information contained in the Whereabouts UnknownAccountssubsection of the Current Accounting Activities section of the Status Report to

the Court NumberTwenty-Seven. The information provided in this subsection is accurate to the bestof myknowledge.


Name: Signature on FileBryan MarozasProgram Manager, Beneficiary Call CenterOffice of the Special Trustee for American Indians

I express no opinion on the content of the Whereabouts Unknown Accountssubsection, above. Iconcur with the content of the information contained in the balance of the CurrentAccountingActivities section of the Status Report to the Court Number Twenty-Seven, and thisinformationis accurate to the best of my knowledge.


Name: Signature on FileMargaret WilliamsDeputy Special Trustee, Trust Accountability

Office of the Special Trustee for American Indians

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November 1, 2006 Office of Trust Records

B. OFFICE OF TRUST RECORDS

Introduction

The Office of Trust Records was established in 1999 to develop and implement aprogram for theeconomical and efficient management of trust records, consistent with the 1994Act, the FederalRecords Act and other statutes and implementing regulations. The OTR recordsmanagementprogram has been developed and implemented, and continues to evolve, to ensurethat necessaryIndian records are maintained, records retention schedules are consistent withretention needs,and records are safeguarded throughout their life-cycles.


American Indian Records Repository

The American Indian Records Repository was built by Interior in collaboration withNARA forthe purpose of consolidating and preserving Indian records at one NARA regionalrecords center.The facility, located in Lenexa, Kansas, opened in May 2004. Prior to the openingof AIRR,Indian records were stored in various NARA regional records centers, BIA, andothergovernment facilities across the United States. All Indian records from the NARA

centers havebeen shipped to AIRR, while records continue to be collected from the otherlocations forshipment to AIRR. Indian records are indexed at the AIRR Annex before beingtransferred toAIRR for storage. A file level index of the contents of each box is stored in anelectronic database called the Box Index Search System.

Approximately 4,410 boxes of inactive records were moved from BIA/OST fieldlocations to theLenexa Annex for indexing during this reporting period. Indexing of approximately147,640

boxes has been completed as of the end of this reporting period. Approximately144,545indexed boxes have been sent to AIRR for permanent storage.

Training

OTR provided records management training for 298 BIA and OST records contacts and220tribal employees during this reporting period. During FY2006, 543 BIA and OSTrecordscontacts and 381 tribal employees received records management training. OTR has


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Current Status

Safeguarding Records

As previously reported, since June 2005, NARA has completed remediation of all butsix of thepreviously-reported 283 boxes of inactive records that were damaged orcontaminated by mold,mildew, mouse droppings or other adverse elements.

The materials NARA could not repair consisted of one box that has about 25% of itscontentscovered with a tar-like substance; one entire box that had mold and the files arestuck together;and one box of green bar printouts from 1989 oil and gas royalty disbursementsthat have holes

in the printout caused by insects. Three boxes have extensive water damage and thecontents arestuck together. Although NARA recommended that the documents should not beseparated, anindependent conservator indicated that it would be possible to salvage some of theinformationthrough physical stabilization or recovery of the information through reproductiontechniques.During this reporting period, OTR contracted with the conservator to begin work onthe contentsof these boxes to salvage as much information as possible.

Records Retention Schedules

Record retention schedules for the following BIA electronic records systems havebeencompleted and it is anticipated that the schedules will be forwarded to NARA inthe nextreporting period: National Irrigation Information Management System, PC Lease, SanCarlosIrrigation Project, Document Management Program, and Integrated TransportationInformationManagement System. The BIA Geographic Information System records retentionschedule ispending approval by the Archivist of the United States.

Records retention schedules for the following OST offices were completed thisreporting periodand it is anticipated that the schedules will be forwarded to NARA in the nextreporting period:Office of the Principal Deputy Special Trustee; Office of External Affairs; Officeof the ChiefInformation Officer; Office of Budget, Finance and Administration; Office of theDeputy SpecialTrustee, Trust Accountability; Office of the Deputy Special Trustee, FieldOperations; andOffice of the Deputy Special Trustee, Trust Services.


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Assurance Statement

I concur with the content of the information contained in the Office of Trust

Records section ofthe Status Report to the Court Number Twenty-Seven. The information provided inthis sectionis accurate to the best of my knowledge.


Name: Signature on FileEthel J. AbeitaDirector, Office of Trust RecordsOffice of the Special Trustee for American Indians

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November 1, 2006 Trust Business Process Modeling

C. TRUST ACCOUNTABILITY

1. TRUST BUSINESS PROCESS MODELING

Introduction

Interior is working to build a highly effective fiduciary trust servicesorganization byimplementing the business objectives contained in the Comprehensive TrustManagement plan.The CTI\4 laid the groundwork for the development of the Fiduciary Trust Model.The FTM isbeing implemented to transform the current trust business processes into moreefficient,consistent, integrated and fiscally responsible business processes that meet theneeds and

priorities of the beneficiaries. Implementation of the FTM is a collaborativeeffort of BIA, OST,BLM, MIMS and OHA, and is integrated with Interior's other trust reforminitiatives.


The OST DOP for Lockbox Receipting was completed during this reporting period. Thedeskoperating procedure describes how to bring funds into the commercial lockbox andhow toautomatically distribute funds that were received at the commercial lockboxfacility.

The draft BIA Procedural Handbooks for Trust Funds Receipting - Phase 1 and Phase2(formerly identified as the Collection and Distribution handbook) have beencompleted anddelivered to BIA for review. This serves as a companion to the OST DOP for LockboxReceipting, referenced above.

Current Status

Drafting continues on the following handbooks/chapters related to Land Conveyances(25 CFR152): Sales and Exchanges of Tribal Trust or Restricted Land; Negotiated Sales,

Gifts andExchanges of Individually Owned Land; Tribal Tract Purchases; and Consolidation bySale ofHighly Fractionated Tracts.


Lack of Internet access impedes communication with other trust bureaus andoffices, and hindersthe expansion of reengineered processes that utilize the Internet. Thisexacerbates the


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complexity of reengineering the existing trust business processes.

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November 1, 2006 Trust Business Process Modeling

Assurance Statement

I concur with the content of the information contained in the Trust Business

Process Modelingsection of the Status Report to the Court Number Twenty-Seven. The informationprovided in thissection is accurate to the best of my knowledge.


Name: Signature on FileMargaret WilliamsDeputy Special Trustee, Trust AccountabilityOffice of the Special Trustee for American Indians

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November 1, 2006 Trust Data Quality and Integrity

2. TRUST DATA QUALITY AND INTEGRITY

Introduction

The success of trust reform depends, in part, on the accuracy of data generatedfrom themaintenance of trust assets, ownership of trust assets, distribution of trustincome, andmanagement of trust accounts. The DQ&I project focuses on three primaryinitiatives. The firstinitiative is assisting BIA with document encoding into TAAMS Title and TAAMSLeasing.Currently, BIA is converting to TAAMS Leasing, which tracks the use of Indiantrust land. BIAcompleted its conversion to TAAMS Title, used to record Indian trust land titleactivity.

The second initiative involves the validation and correction of critical dataelements (CDE) totheir respective source documents. CDE are defined as those trust data elementsthat are neededto provide: (1) timely and accurate payments to beneficiaries; (2) timely andaccurate transactionlistings and asset inventories to beneficiaries, and (3) effective management ofthe assets.Examples of CDE are beneficiary name, account number, tract identification number,and landownership interests.

The third initiative is implementation of a Post-QA process. The Post-QA processcompares theencoded CDE in TAAMS to the CDE in the respective source document(s). The purposeofperforming Post-QA is to help ensure the ongoing accuracy of CDE encoded intoTAAMS.


During this reporting period, TPMC's contractors completed:

Site Assessment

* A DQ&I site assessment at the Alaska Regional Office. Site assessments areconducted at

the respective BIA locations where the DQ&I project is scheduled to beimplemented. The

purpose for conducting an assessment is to determine: (1) the amount of TAAMSdocument

encoding that is required; (2) what kind of assistance the BIA location mayneed with their

conversion efforts, and (3) any office space limitations for DQ&I projectcontractor

personnel.


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Recording and Research

* Recording 1,242 documents, for a total of 5,575, at the R{VIRO LTRO. Thisprocess involved

recording documents into TAAIVIS Title that affect ownership (i.e., conveyancedocuments)

or use (i.e., encumbrance documents) of Indian trust lands. For example, a BIA

agency sendsin a grazing lease to the LTRO. At the LTRO, the document is reviewed for

completeness,date and time stamped, and assigned a unique recordation number. Next, the

document isscanned or micro-filmed and a LTRO file copy made. The original document is

thenreturned to the originating BIA agency.

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* A third Global ID research and encoding task for SPRO LTRO which resulted in230, for a

total of 881, Global ID changes being made in TAAMS Title. Historically, some

beneficiaries have been assigned multiple landowner ID numbers. Whereapplicable, current

requirements call for one unique landowner ID number to be used in TAAMS. Forthis task,

research was conducted to identify all multiple landowner ID numbers assignedto a

beneficiary. BIA then designated one landowner ID number for future use. Thenall

TAAIVIS land ownership interests and transactions were linked to the designatedlandowner

ID number.

* Research of land ownership interest variances for Fort Hall (30,402), Yakama

(3,578), CrowCreek (5,896), Sisseton (15,070), Winnebago (2,344), Pine Ridge (802), Rosebud

(1,818),Fort Totten (1,330), Fort Yuma (9,979), Papago (1,677), Uintah and Ouray

(7,679), and PimaAgencies (17,762). Land ownership interest variance research compares the

landowners'name, ID number and fractional land ownership interest as shown in TAAMS for a

particularland tract and like information in a BIA legacy realty system, such as IRT's4S.

Typically,variances were the result of: one system being more up to date than the other;

the same

individual having different landowner ID numbers in each system, or the sameindividual

having different fractional land ownership interests in each system. Researchwas then

conducted to identify the cause of the variance and a recommendation was madeto the BIA

for correction.

* Research and recommended corrections for 3,120 landowner ID number variancesfor Pacific

Region.

* Research of non-enrolled ID number variances for Fort Yuma (330), Papago

(1,527), Uintahand Ouray (132), and Eastern Navajo Agencies (748).

* Verification of four probate order inventories, for a total of 86, for theConcho and Miami

Agencies.

Encoding

* Encoding of surface leases for Fort Hall (933), Yakama (1,189), Rosebud (306),Fort Totten


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(296) and Colorado River Agencies (543). Encoding involves entering data intoTAAMS.

Required information is entered into TAAIVIS by referring to the originalsurface lease

document and any subsequent modifications.

* Encoding 580 range unit permits for Eastern Navajo Agency.

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Post-QA Review

* Post-QA review implementation at the Rocky Mountain, Northwest, and Southwest

LTROs.

* Post-QA review of BIA encoding into TAAMS Leasing for Sisseton and WinnebagoAgencies.

Current Status

The DQ&I Project continues to assist BIA with TAAMS Leasing conversion efforts by:

* Validating and correcting Shawnee Agency beneficiary ownership data.

* Verifying the accuracy of landowner ID numbers in probate orders for the SPRO-LTRO;

landowner ID numbers for 78 of 380 probate orders have been completed.

* Performing CDE validation/correction on 195, for a total of 266, Horton Agencytrust land

tracts.

* Encoding ROW documents for RIVIRO LTRO (2,725), Uintah and Ouray Agency (235),and

Palm Springs Agency (474).

* Encoding 400 surface leases for GPRO LTRO, 219 O&G leases for FIMO, and 52homesite

leases for Papago Agency.


Lack of access to the Internet has resulted in: (1) communication delays; (2)adverse projectcoordination issues; (3) increased administrative program costs, and (4) theoverall DQ&I projectbeing unable to take full advantage of available information technology.

Assurance Statement

I concur with the content of the information contained in the Trust Data Qualityand Integrity

section of the Status Report to the Court Number Twenty-Seven. The informationprovided inthis section is accurate to the best of my knowledge.


Name: Signature on FileJohn E. WhiteTrust Reform OfficerOffice of the Special Trustee for American Indians


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November 1, 2006 Indian Fiduciary Trust Training Program

3. INDIAN FIDUCIARY TRUST TRAINING PROGRAM

Introduction

Interior has a continuing responsibility to provide adequate staffing, supervisionand training fortrust fund management and accounting activities. Fiduciary trust training isessential to thesuccess of Interior's trust reform efforts and forms an integral part of alltraining for Interioremployees who are involved in the management of Indian trust assets.

Current Status

During this reporting period, Cannon Financial Institute personnel presented fivecourses to 143

OST, BIA and tribal personnel. The specialty courses, RiskManagement, Probate,AssetManagement, Fiduciary Behavior and Guardians/ups are part of the Certified IndianFiduciaryTrust Specialist certification program.

During this reporting period, OST training staff conducted 13 training sessionsfor 85 OST, BIA,and contractor staff on the use of TFAS and related systems and reporting programsthat include:

* CSS - used to enter, approve and post, cash transactions;* Stratavision - contains daily, weekly and monthly reports for viewing by OST

and BIA

staff, and* Historical Query Database - contains account transaction history going back

to 1985.

OST and BIA staff presented two Trust Fundamentals courses to 38 OST, BIA,I\'ll\45, BLM,USGS, IRS, and tribal staff This course includes such topics as the history andpolicy of Indiantrust, current trust reform activities, job roles and responsibilities, andorganization and workingrelationships.


The lack of Internet access inhibits electronic communication with othergovernmental agenciesand contractors, hinders the research of training tools and potential contractors,and restrictsOST's ability to access online training programs.

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November 1, 2006 Indian Fiduciary Trust Training Program

Assurance Statement

I concur with the content of the information contained in the Indian Fiduciary

Trust TrainingProgram section of the Status Report to the Court Number Twenty-Seven. Theinformationprovided in this section is accurate to the best of my knowledge.


Name: Signature on FileDianne M. MoranDirector, Trust TrainingOffice of the Special Trustee for American Indians

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November 1, 2006 Risk Management

4. RISK MANAGEMENT

Introduction

The objectives of the risk management initiative are to design, deliver, andimplement acomprehensive risk management program that includes extensive management controlsformonitoring and evaluating Interior's Indian trust asset management program. Theriskmanagement program continues to be implemented by TPMC. The Office of Trust ReviewandAudit monitors and evaluates management corrective action plans to ensure thatappropriatecontrols are in place to mitigate deficiencies in Indian trust programs.


As previously reported, RM-PLUS content for OST trust programs was under review tomeet therevised OIVIB Circular A-123 requirements. These revisions became effective inFY2006 andinclude expanded requirements for documentation, monitoring and reporting. Duringthisreporting period:

* Testing of a sample selection of financial transactions was completed andsummarized.

* The management control plan was updated to reflect all testing for A-123and

FMIFIA in RM-PLUS.* OST provided substantial comments to PMB in developing the FY2007 A-123

guidance.* The interim and final statements of assurance were drafted, finalized and

timelysubmitted to PMB.

* During this reporting period, OST updated and closed out the remainingeight prior-

year corrective action plans that mitigated previously-identified risks.

Current Status

OST performed its FY2006 risk assessments and updated and closed out 54 of the 112

identifiedcorrective action plans. OST continues to work on and resolve the remaining 58identifiedcorrective action plans from this reporting period.

BLM provided the remaining required IT security documents to OST, receivedtraining andconducted its pilot testing of risk assessments in RN/I-PLUS.



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The lack of Internet access complicates the implementation and use of RM-PLUS,since it isdesigned as a web-based application.

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November 1, 2006 Trust Regulations, Policies and Procedures

5. TRUST REGULATIONS, POLICIES AND PROCEDURES

Introduction

The Office of Trust Regulations, Policies and Procedures was established on April21, 2003, toassist Interior in establishing "consistent, written policies and procedures fortrust fundmanagement and accounting" as stated in the 1994 Act. OTP oversees and facilitatesthedevelopment, promulgation and coordination of trust-related regulations, policies,proceduresand other materials to guide the proper discharge of Interior's fiduciaryresponsibilities. OTP isseparate from BIA's Office of Planning and Policy Analysis, which is responsiblefor policies,

procedures and regulations affecting all BIA activities. PPA activities thus arereported in theBIA section of the reports to the Court.

Current Status

In 2003, OTP formed a liaison group with members from those Interior bureaus andofficeshaving Indian trust asset responsibilities. The group has met periodically toreview policies,procedures and regulations applicable to Interior's trust duties. Representativesfrom USGS,BOR, BIA, IVIIMS, and OST met during this reporting period to discuss updates on

trust reformand related developments.

Work on the Reporting and Reconciliation DOP is 95% complete. Approval andissuance of theentire DOP now is scheduled during the next reporting period.

Final issuance of the Osage Nation Account Maintenance DOP and the Osage NationDisbursingDOP continued to be delayed due to pre-conversion activities and its impact onDOPs. TheseDOPs are now scheduled to be completed in the first quarter of CY2007.


Lack of access to the Internet and its repository of online statutes, the FederalRegister and otherresources continues to present challenges to this office.

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November 1, 2006 Trust Review and Audit

D. TRUST REVIEW AND AUDIT

Introduction

OTRA reports directly to the Special Trustee for American Indians. OTRA wascreated by OSTas a response to trust initiatives developed during the tribal consultationprocess of 2002. OTRAconducts performance audits, examinations and reviews of Interior entities as wellas Tribes thatmanage fiduciary trust activities. Examinations are routinely conducted atlocations that performtrust operations, and are planned to result in a performance rating. Also,compliance reviews areundertaken in response to information and complaints received from beneficiaries,employees

and the public.

Current Status

Indian Trust Examinations

The Indian trust examination process includes conducting on-site visits toevaluate operationsand compliance, performing sufficient testing to verify the integrity of trustoperations, andanalyzing the effectiveness of management and management controls. Based upon theresults ofan examination, OTRA assigns an overall rating reflecting the quality of the

administration offiduciary trust functions. OTRA follows up on findings in its reports withregions, agencies, andtribes.

During this reporting period, OTRA performed trust reviews at 20 sites, issued tentrust reviewdraft reports for comment and issued eight final reports.

Records Assessments

The record assessment is a focused evaluation of records maintenance and security.OTRA

completed 20 trust record assessments and issued 16 final reports.

Compliance Reviews

OTRA performed one investigation of allegations received and issued a draft reporton theresults of that review. Two reviews are pending with fieldwork and/or reportdrafting continuingon these cases. Two reviews were closed.



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Lack of Internet access impedes OTRA's work processes and its ability tocommunicateeffectively, both internally and externally.

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November 1, 2006 Office of Appraisal Services

E. OFFICE OF APPRAISAL SERVICES

Introduction

The Office of Appraisal Services, under a management contract with Interior'sNationalBusiness Center-Appraisal Services Directorate, is responsible for Indian Landvaluations. Thecontract was established to provide impartial estimates of market value for avariety of realproperty interests on land owned in trust or restricted status by individualIndians, AlaskaNatives, and Indian Tribes. Various regulations governing Indian trust landsrequire valuations.To meet these requirements, an appraisal or other valuation method is used todetermine fair

market value of Indian lands.


A mass-appraisal system was deployed in the Great Plains Region. This systemprovides morereliable and efficient appraisal services in a region with a high volume ofappraisal requestsgenerated from sales and agricultural leases.

The department-wide appraisal policy handbook, which incorporates the OAS handbooksection,was completed and will be disseminated during the next reporting period.

Current Status

The Office of Minerals Evaluation within ASD has begun its initial operations.OIVIE establishesthe line of authority for mineral appraisals and performs mineral evaluationservices related tothe sale of mineral interests.

OAS has contracted for the development of an automated Indian Trust AppraisalRequestTracking System. After resolving a cable problem in the test region, roll-out ofthe pilot now is

expected during the next reporting period.

OAS presented the fractionated interest study to the TESC during this reportingperiod.

The Deputy Chief Appraiser for Policy and Compliance, and Deputy Chief Appraiserfor OSTcontinued to implement and enforce standard appraisal practices for OASoperations.

The Deputy Chief Appraiser for OST continues to examine operations and monitor


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Appraisal Backlog

As of this reporting period, the appraisal backlogs are as follows:

Appraisal Backlog Appraisal BacklogRegion As of 06/30/06 As of 09/30/06

Northwest 150 0Rocky Mountain 326 100Midwest 69 6Western 26 24Southwest 3 0Eastern Oklahoma 157 80Navajo 71 20Pacific 4 0Alaska 410 267Eastern 0 0

Southern Plains 7 0Great Plains 2 0

TOTAL 1,225 497

* The backlog often includes all requests from BIA, even when the property to beappraised

has yet to be defined and whether or not an appraisal is required for a proposedtransaction.

OAS addresses the requests in priority order based on factors such as court-ordered

transactions, economic transactions, and rights-of-way transactions.

This table does not include appraisal backlog information from self-governance and

self-determination Tribes. The MOUs that are currently being negotiated with Tribesrequirequarterly reporting of backlog information. This information is expected to beincorporated intofuture reports to the Court.


The inability to utilize the Internet as a tool to communicate with outsidecontacts to researchcomparable sales and other information is a continuing hardship.

Difficulties continue in recruiting qualified appraisers for permanent, temporaryand contractpositions, particularly in remote locations.

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Assurance Statement

I concur with the content of the information contained in the Appraisal section of

the StatusReport to the Court Number Twenty-Seven. The information provided in this sectionis accurateto the best of my knowledge.


Name: Signature on FileKathryn GearheardDeputy Chief Appraiser for OSTNational Business Center-Appraisal Services Directorate

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November 1, 2006


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the Federal Register.

In early CY2007, Interior will begin Phase III of the project. This phase includestribalconsultation and proposal for the following regulations: leasing, grazing, landacquisitions andrights-of-way.

25 CFR 216- Surface Exploration, Mining, and Reclamation of Lands - The projectcontinues on schedule, with publication of the proposed revisions expected duringthe firstquarter of CY2007.

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November 1, 2006 Trust Regulations, Policies and Procedures

25 CFR 224 - Tribal Energy Resource Agreements - The comment period for theproposedrule ended on September 20, 2006. The comments and the proposed rule are under

internalreview and Interior expects to publish a final rule during the first quarter ofCY2007.

25 CFR 292 - Gaming on Trust Lands Acquired After October 17, 1998 - The proposedrulewas published in the Federal Register on October 5, 2006. The public commentperiod ends onDecember 4, 2006.


Lack of access to the Internet has hindered PPA's ability to research statutes and

departmentalmanuals and makes distribution of documents for review by Tribes more difficultand costly.

Assurance Statement

I concur with the content of the information contained in the Trust Regulations,Policies andProcedures - BIA section of the Status Report to the Court Number Twenty-Seven.Theinformation provided in this section is accurate to the best of my knowledge.


Name: Signature on FileDebbie L. ClarkDeputy Assistant Secretary - Indian Affairs (Management)Bureau of Indian Affairs

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the totalnumber of participating reservations to 17 located within five BIA Regions. Otherreservationsunder consideration for future inclusion in FY2007: Fort Totten, Crow Creek,Yankton, andTurtle Mountain in the Great Plains Region; and Blackfeet, Wind River, and FortPeckReservations in the Rocky Mountain Region. These reservations are among the top

fifteen mosthighly fractionated reservations in the nation.

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November 1, 2006 Probate

B. PROBATE

Introduction

Federal law permits Indian owners to pass title to their trust assets bytestamentary devise or byintestate succession, and imposes upon Interior the duty of determining the legalheirs. BIA,OHA and OST must coordinate their work to complete the probates of Indian estates.Information on the status of probates is contained within the ProTrac system. EachBIA regionaloffice and corresponding agency is responsible for encoding new cases, examining"initial load"cases and making corrections. The majority of the data-cleanup for ProTrac hasbeen completed,which should make ProTrac a more complete source of probate data.

Current Status

Case Preparation

Case preparation is the initial stage of the probate process. During this stageinformation isresearched and gathered regarding the identity and whereabouts of presumptiveheirs, and aninventory of the trust assets of an estate is prepared. According to ProTrac,6,905 probate casesare in the case preparation stage.

Case Adjudication

Depending on the complexity of the case, probates are adjudicated by OHAAdministrative LawJudges, Indian Probate Judges, or Attorney Decision Makers. According to ProTrac,7,197probate cases are in the case adjudication stage. As reported by OHA, decidingofficialsreceived 2,150 cases and issued decisions in 2,231 cases. OHA reported 4,760 casespending.

Case Closure

Cases in the closing stage are ones that have been adjudicated but not updated inTFAS, LTRO,or the Lease Distribution System. According to ProTrac, there are 3,713 cases inthe closingstage and 2,101 cases were closed during this reporting period.

Financial Case Closure

Financial case closure is the posting and recording of ownership and distributionof assets afterthe case has been adjudicated. OST reported that it distributed funds and closed


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1,720 accountsin TFAS, representing 1,665 estates. As of the end of September 2006, TFAScontained 31,309open estate accounts, which is an increase of 881 from the 30,428 estate accountsat the end ofthe last reporting period.

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November 1, 2006 Probate


The following obstacles have been identified as having an impact on the progressof the probateprogram:

* Lack of access to the Internet, which includes the inability to use electronicmail

communication between OHA and BIA/OST;* Continued fractionation of ownership of Indian lands;* Numerous initiatives competing for resources (e.g., Youpee revestitures, Cobell

requirements);* Cultural diversities regarding the subject of death;* BIA probate reorganization has not been completed.

Assurance Statement

I concur with the content of the information contained in the Probate section ofthe Status Reportto the Court Number Twenty-Seven. The information provided in this section isaccurate to thebest of my knowledge.


Name: Signature on FileWilliam TitchywySpecial Projects Director

Western RegionBureau of Indian Affairs

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November 1, 2006 Information Technology

V. OTHER TOPICS

A. INFORMATION TECHNOLOGY

Introduction

This section describes the status of Interior IT systems, particularly the systemsthat house orprovide access to IITD or provide various computing capabilities, includingfunctions critical tothe proper administration of the individual Indian trust responsibilities withinInterior. Inaddition, this section describes various efforts being made to improve IITDsecurity withinInterior, pursuant to OIVIB Circular A- 130 Appendix III, and challenges due to noInternet

connectivity at four bureaus.


Computer Security:Interior continues to make progress in enhancing IT security through improvementsto thePOA&M5 process and implementation of OIG recommendations. The most noteworthyaccomplishments, completions and challenges during the reporting period aredescribed below.

ESN:* Completed an audit of all routers managed by ESN for unauthorized accounts

and forappropriate configuration. This ensures that standardized configurations

are in placeat all external entry points.

* Architecture has been developed to provide redundancy for the IntrusionPrevention

Systems and is currently being deployed. Once completed, this will ensurethat

Interior's networks are monitored around-the-clock, providing for a moresecure

computing environment.

MMS* I\'ll\45 stated its intent to make the 1VIRI\4 Internet Portal operational

in the previousreport to the Court. MIMS made the 1VIR1\4 Internet Portal operational

during thisreporting period.

Prevention and Monitoring:* The ESN upgraded the software used to manage and perform vulnerability

assessments of the connected bureaus' Internet-facing systems. Once all ofthe


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A Plan of Action and Milestones (POA&M), also referred to as a con!ctive actionplan, is a management tool thatoutlines identified IT security program and system weaknesses along with the tasksnecessary to con!ct or mitigatethem. To facilitate the remediation of weaknesses, the POA&M process provides ameans of planning and

monitoring corrective actions; identifies those responsible for solving problems;assists in identifying securityfunding requirements; tracks and prioritizes resources; and informs seniormanagement of the security status ofprograms and systems.

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bureaus have upgraded to the same version, this should enhance Interior'sIT security

posture by providing more capability for the detection of vulnerabilities.

* There were no security incidents detected during this reporting periodthat were

successful in compromising trust systems or data.

* A BIA laptop computer was inadvertently connected to the NBC network inthe

ESN/BIA network operations and security center. The connection wasdiscovered

during routine security monitoring. The laptop hard drive was examined bya

forensic expert and determined to contain no trust information.

* Per an independent auditor's recommendation, NBC deployed a system thatprovides

secure connectivity between other bureaus and NBC' s mainframe computersystem.

* NBC conducted independent penetration testing of its network. Allidentified

vulnerabilities were added to the appropriate POA&Ms for tracking andremediation.

Policies and Guidance* The Interior ClO issued "Enterprise Services Remote Access" to the heads

of bureaus

and offices on August 8, 2006. This memorandum announced that ESN remoteaccess will replace existing bureau configurations, and requires all

bureaus totransition to the ESN by January 31, 2007. Use of a single, centrally-

managed remoteaccess solution will enable the ESN to assure that external computers

connecting toInterior are adequately protected and authorized before being allowed

access toInterior resources.

* The Interior ClO issued "Incorporation of Findings Resulting from InternalControl

Reviews... Self-Assessments into Plan of Action and Milestones..." tobureau and

office Chief Information Officers on August 9, 2006. This memorandum re-emphasized that use of NTST publications is not optional for Federal

agencies and re-stated Interior's requirement to develop remedial action plans as

necessary andincorporate those plans into the appropriate POA&M.

* The Interior ClO issued "Transport Layer Security (TLS) ..." to the bureauand office


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and regulatory training requirements for employees, contractors, partners,and

volunteers within their oversight with a completion target goal of 100%.

* The Interior ClO issued "Office of the Secretary Web Sites Compliance withthe DOT

Web Standards" to the Office of the Secretary and Secretarial Offices -Policy,

Management and Budget on August 22, 2006. This memorandum announced theestablishment of an OS Web Developers work group to assist Web Managers incomplying with the DOT Web Standards required by the Departmental Manual.

* The Interior CIO issued "Protection of Personally Identifiable...Information and

Department Sensitive Information" on August 25, 2006, to the heads ofbureaus and

offices, and bureau and office Chief Information Officers, and issued anupdated

memorandum on September 8, 2006. This memorandum distributed an OIG datarequest and established requirements to comply with OIVIB memorandum M-06-

16,which addresses protection of sensitive agency data.

* The Interior CIO issued "Interior Enterprise IT Security ArchitectureStandard" to the

heads of bureaus and offices on August 28, 2006. This memorandumestablishes a

process to ensure that security is considered throughout the life-cycle ofa system, and

ensures appropriate consideration of security and privacy protectioncontrols and

requirements in enterprise/system architectures, and in strategic planningand

investment decision processes.

* The Interior CIO issued "Certification and Accreditation (C&A)Improvements" to

the heads of bureaus and offices, and bureau and office Chief InformationOfficers on

September 20, 2006. This memorandum reiterated the requirement to complywith

earlier OCTO C&A Directives. Tt also provided guidance and timelines for

correctingsystemic defects which were identified during an on-going review of

existing C&Adocumentation and processes.

Training andAwareness* FISMA requires annual security awareness training for all end-users. The

FY2006Federal Tnformation Systems Security Awareness training was completed by

98% ofDOT personnel during this reporting period, including contractors and


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other externalauthorized users with access to Tnterior information systems.

* FISMA requires additional training for users with significant securityresponsibilities

as defined by the roles or job functions they perform within anorganization

(commonly known as role-based training). The FY2006 role-based training

wascompleted by 61% of those users.

Plan of Action and Milestones:* Tnterior has continued to remediate and close out a significant number of

weaknesses,eliminating 280 during this reporting period. However, 858 new weaknesses

were

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identified and added; many resulted from the annual Internal ControlReview process.

Interior continues to proactively address the remaining 1,702 open

weaknesses. The1,098 open weaknesses reported in the previous report should have been

reported as1,124.

A-130 Certification and Accreditation:* NTST requires recertification & reaccreditation (re-C&A) periodically and

wheneverthere is a significant change to the system or its operational environment.

Over 50% ofInterior's systems will be required to undergo re-C&A in FY2007.

* During this reporting period, re-C&A was completed for the BIA TAAMS.

* BLM consolidated one trust system and seven non-trust systems to create onenew Land

and Resources Project Office major application.

IT Systems Architecture:* DOT updated DEAR by adding an input tool that will assist the bureaus in

updating theC&A status of their systems. This upgrade will enhance the accuracy of the

C&Ainformation maintained in Interior's master inventory.

* The Interior EA program received the E-Gov Institute's Enterprise

Architecture Awardfor Government Civilian Leadership in Enterprise Architecture for 2006. This

awardrecognizes best practices in developing and implementing a successful

EnterpriseArchitecture.

* The Interior EA program was rated as the most mature EA program within thefederal

government in s final report "Enterprise Architecture: Leadership RemainsKey to

Establishing and Leveraging Architectures for OrganizationalTransformation... ," issued

on August 14, 2006. The maturity level reflects the current status of anorganization in

the process that consists of an orderly sequence of recommended steps for EAdevelopment.

* The MIMS EA Team is refining its EA processes and procedures. Some of theupcoming

maj or events include more detailed documentation of system components andboundaries, expanding the EA web presence and implementing several new

processesand procedures for data management.


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* The MIMS EA Team continues to integrate its system inventory data containedin DEAR

into the five DOl/OIVIB reference models (Business, Performance, Data,Services, and

Technical). MIMS expects to have the data integration completed during thenext

reporting period.

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E-Authentication6 and HSPD-127:The HSPD-12 project will provide a new standardized badging process designed

to

enhance security, reduce identity fraud, and protect the personal privacy ofthose issued

government identification. Proposals were received and are being evaluatedfor the

HSPD-12 implementation at Interior. Award of the contract is expected earlyin the next

reporting period.

Current Status

A-130 Certification and Accreditation:* Of the 35 trust systems that are currently tracked in DEAR, all have full ATO

status

except the FWS Isolated Realty Network (IRN). IRN is currently in the ST&Estage of

the C&A process and is expected to be fully accredited during next reportingperiod.

* BIA completed the Trust Active Directory root services C&A package in August2006.

This system provides authentication services for TrustNet, which is thenetwork

supporting the disconnected bureaus. BIA is currently coordinating a MOUamong all

trust bureaus. The MOU will outline how the root services will beadministered and

managed until being transferred to the ESN. Full accreditation is expected inthe next

reporting period.

* I\/ll\4S began the re-C&A of MIMSNet, producing updated versions of thesystem security

plan and risk assessment documents.

ZANTAZ8:* Solutions for the three BIA ZStage9 irregularities, as reported in the Status

Report to theCourt Number Twenty-Five, have been identified.

Concerning the misconfiguration by one user that caused the user's

messages notto reach ZANTAZ, BIA used a utility to transmit those messages that were

able tobe recovered to the ZANTAZ digital safe. BIA requested verification that

6 E-Authentication is designed to provide a trusted and secure standards-basedauthentication architecture. Thisapproach would provide a uniform process for establishing electronic identity andeliminate the need to developredundant solutions for the verification of identity and electronic signatures. E-Authentication's distributed


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architecture would also allow citizens and businesses to use non-government-issuedcredentials to conducttransactions with the government.

HSPD-12 would establish a common identification stanthrd for all federalgovernment employees and contractorsfor physical and computerized systems and data access while providing a roadmapfor other applications. The

HSPD-12 policy establishes sound criteria for verifying an employee's identitydesigned to be strongly resistant toidentity fraud, tampering, counterfeiting and terrorist exploitation. The standardincludes graduated criteria, fromleast secure to most secure, to ensure flexibility in selecting the appropriatelevel of security for each application.

8 ZANTAZ is a contractor that archives emails sent to and from certain bureaus andoffices.

! ZStage refers to a mechanism that verifies delivery of emails to the ZANTAZdigital safe. Each message isassigned a value indicating success or failure of delivery.

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randomly selected messages were present in the digital safe and ZANTAZconfirmed that they were.

* ZANTAZ notified Interior that the ZStage software was not designed to

capturethe notification messages informing the user of e-mail delivery

failures. In theevent of a network problem, capturing these notices could potentially

overload thesystem. As previously documented, this could result in a discrepancy

betweensending and receiving users' message counts.

* ZANTAZ notified Interior that upgrading to the latest version ofLiveCapture

software will correct the process irregularity that created a falsenegative in the

ZStage value. This is also expected to correct the NBC/BLM

irregularitiesreported in the Status Report to the Court Number Twenty-Six. BLM andZANTAZ are testing the new LiveCapture software, which identified

severalissues during testing that require resolution before this product can be

deployedinto the production environment.

* The 25 BLM tapes that were awaiting shipment to ZANTAZ, as reported in theprevious

report, were shipped to ZANTAZ on September 25, 2006.

* The statement of work for a forensic analysis of the 268 blank BIA tapes

documented inthe previous status report to the Court is being resubmitted to a wider

contractoraudience.

Reports:These reports were among those issued during this reporting period.

* OIG issued "Penetration Testing Results for the Enterprise ServicesNetwork... ," to the

Assistant Secretary for Policy, Management and Budget on August 28, 2006.This report

presents the results of a penetration test performed by a contractor for the

01G. Thisreport also included the penetration testing results for FWS, OSM, MIMS and

NBC. Theresults showed that the implementation of the ESN has improved the overall

security ofInterior systems. MIMS was noted to have continued good security, with the

contractorunable to penetrate successfully any I\'ll\45 application. NBC was also

singled out ashaving made significant improvements when compared to the 2005 testing.

However,


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FWS's environment was found to be at risk, while vulnerabilities detected atOSM were

considerably more significant than previously found in 2005. Despite ESN'ssound

perimeter, FWS and OSM were used to launch successful application-basedinternal

attacks. All recommendations, weaknesses and vulnerabilities that were notcorrected

were added to the appropriate POA&Ms for tracking and remediation.

* OIG issued "Evaluation Report for the Enterprise Services Network... ," tothe Assistant

Secretary for Policy, Management and Budget on September 7, 2006. The reportfound

that the foresight and planning devoted to ESN network security demonstratesa solid

understanding of security best-practices. It noted that the ESN is welldesigned,

supported by good configuration management practices, and administered byskilled

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federal and contract staff However, the OIG found that there was difficultyin

compelling the bureaus to fully transition to the ESN managed services.

Interior isconsidering the recommended improvements in continuous monitoring and

testing.

* OIG issued "National Business Center - Reston Trusted Insider ThreatEvaluation... ," to

the Assistant Secretary for Policy, Management and Budget and the InteriorClO on

August 28, 2006. This report presents the findings and recommendations of theanalysis

of NBC-Reston's internal security control architecture. A normal user havingphysical

access to an NBC-Reston workstation could fairly easily elevate his/her role

to that of anadministrator. The weaknesses were related to configuration management,

accesscontrols and lack of monitoring. All recommendations and weaknesses that were

notcorrected were added to the appropriate POA&Ms for tracking and remediation.

* OIG issued "Department of the Interior, Information Technology... SystemInventory... ,"

to the Interior ClO on August 30, 2006. This report concluded that an ITinventory does

exist, but that internal controls and system mapping to an accreditationboundary needs

improvement. The report provided four recommendations which Interior hasaccepted

and has initiated action.

* OIG issued "Evaluation Report for the Department of the Interior's Plan ofAction &

Milestones Process...," to the Assistant Secretary for Policy, Management andBudget

and the Interior ClO on September 7, 2006. This report states that the POA&Mprocess

has improved, including significant improvement at the bureaus. Theweaknesses noted

were related to problems with the manual processing of large amounts of

bureauinformation at the department level and the need to ensure that the POA&M

process isnot used to circumvent parts of the C&A process. The report's recommendations

wereaccepted and are being implemented.


Like other federal agencies, Interior must address many challenges regarding theintegration,


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performance, funding, security, and data integrity of IT systems. Interiorinitiated or completedsteps to address some of the challenges reported in this and previous reportingperiods.However, delays and obstacles listed below impede progress in achieving Interior'sITmanagement goals.

Staffing* Interior is experiencing high staff and management turnover in critical IT

positions,particularly IT security. Recruitment challenges to attract qualified

candidates continue,particularly in light of past litigation impacts.

* Interior's Deputy CISO, NBC's ClO, BIA's ClO, BLM's Deputy ClO and BIA'sC&A Project Manager positions remain vacant at the end of this reporting

period.Additionally, Interior's Security Policy Lead, Security Program Manager

and

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ZANTAZ Liaison