Indians Win Trust Fund Appeal; Plaintiffs Alleging Federal Neglect
May Seek Up to $10 Billion
The Washington Post
By: Bill Miller
Washington Post Staff Writer
February 26, 2001
A federal appeals court yesterday found the U.S. government has mismanaged and neglected trust funds kept on behalf of Native Americans for more than a century, clearing the way for Indians to seek up to $10 billion they say is rightfully theirs.
Upholding a lower court’s ruling, a three-judge appellate panel declared that record-keeping has been so poor that government officials cannot say for certain how many Indians have trust fund accounts or how much money is in them. Officials are “unable to execute the most fundamental of trust duties — an accurate accounting,” the panel stated.
“The federal government has substantial trust responsibilities toward Native Americans. This is undeniable,” the panel of the D.C. Circuit of the U.S. Court of Appeals said. “It is equally clear that the federal government has failed time and again to discharge its fiduciary duties.”
The ruling was the latest development in a class action lawsuit filed nearly five years ago by the Native American Rights Fund over the trust accounts, which were set up in 1887 to compensate Indians for use of their lands. Royalties from the sale of oil, timber and other natural resources are channeled into Individual Indian Money Trusts, which are passed down through generations.
Federal officials estimate that at least 300,000 Indians have accounts, out of an overall national population of 2.2 million. Roughly $500 million in royalties is put into the accounts each year, and many impoverished Indians rely on the money to pay for food and everyday needs.
Government lawyers had hoped to overturn a December 1999 decision issued by U.S. District Judge Royce C. Lamberth, which held that the Indians were entitled to a full accounting of money over the decades. Complaining about missing records and the destruction of other trust documents, Lamberth ordered the government to overhaul the trust fund system and put it under five years of strict judicial oversight.
Lamberth said he would review results of the accounting at a trial to determine how much money is owed for decades of lapses. Lawyers for the Indians have pegged the amount at a minimum of $10 billion. Government officials have said the total is probably much less, but estimate that it is at least in the hundreds of millions.
“This is the most significant decision ever in Indian trust law,” said Dennis M. Gingold, a lawyer for the plaintiffs. “We believe the judge [Lamberth] has the authority now to ensure that trust reform is conducted properly, that people will be held accountable and that the trust accounts will be restated to reflect what’s actually in them.”
Elouise Cobell, a member of the Blackfeet tribe and the lead plaintiff, said, “None of us know what we own. Now we will finally get an accurate accounting.”
Government lawyers said they had not yet decided whether to ask the entire appellate court to review the case. They declined comment on the ruling.
The decision — issued unanimously by Judges David B. Sentelle, Stephen F. Williams and Judith W. Rogers — means that Lamberth now can move forward and determine how much is owed to the Indians. Sentelle and Williams were appointed to the bench by President Ronald Reagan; Rogers by President Bill Clinton. Sentelle wrote the 46-page opinion, which cast the trust fund controversy in the context of the history of relations between the U.S. government and Indian tribes.
“Since the founding of this nation, the United States’ relationship with the Indian tribes has been contentious and tragic,” Sentelle wrote.
According to the appellate judges, the Interior and Treasury departments failed to untangle the trust fund problems even after Congress passed a law in 1994 demanding reforms. Although officials since attempted to improve records management, the appellate panel said evidence showed “these efforts were, at best, a day late and a dollar short.”
Government lawyers had argued that Lamberth overstepped his bounds in demanding judicial oversight. They also contended that it was up to the Interior Department — not Lamberth — to decide how to provide an accounting.
The appellate panel said Lamberth did not abuse his discretion, citing “the magnitude of government malfeasance.” But, in a victory for the government, the judges said they expect Lamberth to permit Interior to perform its accounting before he passes judgment.
The case has generated much acrimony. Two years ago, Lamberth found former interior secretary Bruce Babbitt and former treasury secretary Robert E. Rubin in contempt of court in a dispute over records. This week, a court-appointed special master assigned to oversee the case urged Lamberth to investigate allegations that an Interior Department employee suffered retaliation for criticizing reform efforts.
Interior spokeswoman Stephanie Hanna issued a statement yesterday saying officials were disappointed with parts of the appellate ruling but “heartened” by others.
“We believe that the court agrees with the Department of the Interior and the Congress that it is our responsibility to design and implement an accounting,” she said. “We will continue our commitment to live up to the duties that we owe all Indian beneficiaries.”
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