Lawyers anticipate failures in Indian trust fund accounting plan

The Interior Department is expected to file a proposal this week detailing how it will review American Indians' assets held in trust by the federal government, but plaintiffs in a long-running lawsuit already say the plan is likely to be flawed.

"Defendants impermissibly exclude from the accounting the vast majority of the beneficiary class and their trust assets," lawyers for lead plaintiff Eloise Cobell and others in the class action lawsuit Cobell v. Kempthorne argued in a brief filed Tuesday.

In the 61-page document, the first of two to be filed on the subject, lawyers argued that the plan will likely wrongly exclude 11 categories of account holders and assets.

Justice Department lawyers are due to submit Interior's accounting plan to U.S. District Judge James Robertson by Thursday. A Justice spokesman said Wednesday that the plan was not yet available. Lawyers for Cobell said their filing was based on an accounting plan proposed by Interior officials in 2003, quoting the defense as saying that the new plan won't contain anything that was not in the earlier proposal.

The court filings are in preparation for a trial-like hearing scheduled to start in October that will examine the adequacy of Interior's accounting for assets held for American Indians since the 1800s. Groups pay Interior to use American Indian lands for oil, gas and mineral extraction, as well as other activities, and Interior then distributes money to trust funds. But the long-standing lawsuit claims the department has mismanaged the accounts.

Interior officials have proposed carving out some accounts as outside the scope of a reckoning the department was ordered to provide under an earlier court ruling, and have said some types of assets also do not require an accounting.

In the new brief, Cobell's lawyers argue that four proposed exclusions that already have been listed are not justified: accounts closed before a 1994 court ruling, transactions that took place before a 1938 law took effect, payments made directly to beneficiaries under Interior-negotiated oil and gas lease agreements, and payments made to deceased beneficiaries, even if they have living heirs.

They also argued against a series of "likely" exclusions that have been proposed in the past, including accounting for noncash assets such as trust land, assets that were unlawfully turned over from minor account-holders to tribes, lease income that was due to land-owners but never paid, and accounts opened since 2001.

"Impermissible exclusions with respect to the scope of defendants' historical accounting plan remain so remarkably broad that an adequate accounting will not be rendered for the plaintiff class," the lawyers wrote in rejecting the expected plan.