End to Indian trust fund dispute could be closer

A recent appeals court ruling and a legislative proposal have the potential to bring the long-standing legal battle over royalties from an Indian trust fund managed by the Interior Department closer to a resolution.

A Nov. 15 decision by a panel of three judges on the U.S. Court of Appeals for the District of Columbia allows Interior to avoid a costly, comprehensive historical accounting of individual Native American trust fund records ordered by a lower court. The appeals ruling comes as part of the long-running Cobell v. Norton litigation, in which a group of American Indians is seeking billions of dollars that it claims the department owes trust fund beneficiaries.

The case began in 1996 and revolves around alleged mismanagement of trust accounts that have been handled by Interior's Bureau of Indian Affairs since the 1880s. Groups pay Interior to use Indian lands for oil, gas and mineral extraction, as well as other activities, and Interior then distributes money to trust funds for more than 500,000 Native American landowners.

The appellate court found that "the district court abused its discretion" in ordering a detailed historical accounting of the trust accounts. Interior Department estimates show that the accounting, ordered by U.S. District Judge Royce Lamberth, could have cost between $12 billion and $13 billion.

"Instead of deferring to Interior's judgment about how best to execute the historical accounting, the district court set out, in great detail, how Interior must go about the job," wrote Senior Circuit Judge Stephen Williams.

Interior Secretary Gale Norton said in a statement that she was pleased with the ruling.

"It is gratifying that our detailed and comprehensive plan to conduct a statutorily mandated historical accounting has been underscored by today's decision," Norton said. "It is particularly encouraging that the department's proposal to rely on statistical sampling to conduct this effort has been so strongly endorsed in today's ruling."

According to Norton, Interior has spent more than $100 million in a historical accounting effort and has found evidence that funds were distributed properly to the correct recipients.

Dennis Gingold, lead attorney for Indian landowners, said that his side also asked for the decision to be vacated, but for different reasons.

A 59-day hearing last summer on the security of the Interior's information technology systems showed that an accurate historical accounting cannot be completed because information on the funds was susceptible to tampering.

"It makes it factually and legally impossible for the government to do an accounting because of its own malfeasance," Gingold said. "We're saying the historical accounting is impossible, but we do think there should be current accounting."

Gingold said his side plans to ask the district court to commence an "impossibility proceeding" where the court could decide to declare the historical accounting impossible and then request an "equitable restitution" to resolve the case.

He said the Interior Department's estimate that the accounts have collectively earned about $13 billion since the fund was established in 1887 is a good starting point for determining how much trust recipients should be reimbursed. The amount the agency can prove that it has already distributed to account holders and the interest earned on the difference could be subtracted from the $13 billion.

Bill McAllister, a spokesman for the Indian landowners, said that the appeals court ruling could have created a new and faster way to resolve the case "than we'd hope or than the government expected."

Last week, House Resources Committee Chairman Richard Pombo, R-Calif., and ranking member Nick Rahall, D-W.Va., introduced legislation that also could settle the trust fund lawsuit. The bill matches one introduced last month by Sens. John McCain, R-Ariz., and Byron Dorgan, D-N.D. (S. 1439). It would establish a fund to reimburse individual plaintiffs in the case and require the Interior secretary to inventory trust assets.

Staff members from the four offices sponsoring the legislation have been meeting with representatives of the Indian landowners.

Elliott Levitas, one of the participants in discussions with Congress and a representative of the Indian landowner lawsuit, said that the Pombo legislation is a "very positive step." A confidentiality agreement prevented Levitas from discussing the specifics of the negotiations.

"We are trying to meet as often as we can to push this forward," Levitas said. "I don't know if we can get it done right away, but I'm optimistic that if we keep pushing on both sides, we'll see this come to a resolution."

The issues being discussed, according to Levitas, include the amount of money owed to the Indian landowners and who will be responsible for implementing the adjustment to the Indian accounts once a resolution is reached.