Lawyers prepare for October hearing on Indian trust fund accounts

By Jenny Mandel

May 17, 2007

Litigants in a long-running battle over management of American Indians' trust funds are laying the groundwork for an October hearing into the Interior Department's accounting for the funds.

Lawyers in the 11-year old case, Cobell v. Kempthorne, met with U.S. District Court Judge James Robertson this week to begin working out the rules that will govern the evidentiary hearing.

Robertson scheduled the hearing last month to work through the wide gap that divides the government and plaintiffs in a class-action lawsuit on whether Interior's proposed accounting plan meets the government's obligations to individuals with agency-managed trust funds dating back to 1887.

"More than seven years (and 28 quarterly status reports) after [a court decision that mandated the accounting], it is both prudent and well within the supervisory powers of this court to review the accounting project in detail, and to do so in open court, where the government may present, and plaintiffs may test or challenge, the methodology and results of the accounting project," Robertson said in the April order.

He said the October hearing, which would be like a trial, would set out to answer whether the government had fixed the accounting problems identified in the 1999 decision, whether historical statements of accounts being prepared by Interior meet their legal obligations and whether the government has unreasonably delayed the accounting process.

Bill McAllister, a spokesman for lead plaintiff Eloise Cobell, said the new hearing was a major milestone in the case that shows Robertson's intention to resolve the issues after years of delay. "We've been saying for some time [that] where the two parties parted company is the question of what type of accounting can be done," he said.

Cobell's side has argued that the government does not have the records needed to accurately reconcile the roughly 500,000 individual trust funds in dispute. McAllister said the government should not rely on existing records, as it has proposed to do, but should recreate transaction records for oil and gas lease payments.

McAllister said some of the questions he would like to see the court address are how far back the review should go, which trust beneficiaries have the right to an accounting and how many records must be validated.

A Justice Department spokesman said he could not comment on lawyers' strategy in presenting Interior's side of the case, but officials have argued that ongoing accounting work has unearthed only small discrepancies in the trust fund records, some of which benefited the account holder.

Cobell soundly rejected an Interior Department proposal, floated earlier this year, to settle all cases from individuals as well as a series of separate cases brought by American Indian tribes, for $7 billion. The plaintiffs said the amount offered by the government was too low, while a mediator has said that $7 billion to $9 billion could settle the Cobell case alone.

McAllister said reaching a settlement is complicated by the high price tag. Unless a payment is dictated by the court, it would most likely require an appropriation from Congress. But political will to end the case may have ebbed when Sen. John McCain, R-Ariz., who headed the Indian Affairs Committee last year, was unable to pass a bill before the session ended, he said.

"At the moment, there doesn't seem to be any movement on Congress' part," McAllister said.

By Jenny Mandel

May 17, 2007