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Sunday August 31, 2003
A Betrayal of Trust
Land-lease deal with U.S. is a trail of broken promises by Andrew Metz STAFF CORRESPONDENT Newsday One in an occasional series on American Indians in the 21st century.
Browning, Mont. – His land is a treasury of America’s natural wealth, 118 acres of grazing grass, crop soil and oil percolating underground.
On these flatlands that spill off the Montana Rockies, three pumps draw black gold to the surface, as oil wells here have done for generations.
This is Blackfeet territory, however, and resources that would make anybody else rich are just reminders of what Indians have lost at the hands of the United States government.
And from the shanty where he lives, through gaps in the plastic bags that are his window panes, Mad Dog Kennerly bitterly surveys it all – the mountain corner his people were backed into, the broken-down ’75 Camaro beached at his doorstep.
“We are dirt poor,” Kennerly said here on the Blackfeet Indian Reservation, where a man like him is actually one of the lucky ones because down the road at the Medicine Bear homeless shelter there are families holding land claims, government-arranged oil and agriculture leases and not much else.
“I used to get $500, $600 a month off those wells. Now we’re down to $20, $40, if anything. There is something drastically wrong,” said Kennerly, at 62 as convinced as ever that the U.S. system meant to make sure Indians fairly profit from their lands, has instead cheated them and let fortunes bleed away. “They’ve robbed us, that’s all there is to it. They systematically robbed us.”
Throughout Indian Country, these long-rebuffed complaints are now behind the largest class-action lawsuit ever against the United States, alleging that the government lost, misused and usurped as much as $176 billion in Indian assets.
One of the most significant reckonings between the United States and its native people, the case is based on a 19th century federal trust that controls Indian lands and is supposed to distribute royalties from government-approved leases on millions of acres allotted to Native Americans. But after 116 years, the most profound results have been a saga of government mismanagement and a trail of destitution.
Hundreds of thousands of Indians have watched their checks from the Department of the Interior, which administers the trust, dwindle to surprisingly small amounts or disappear entirely, and are unable to get even basic answers from the government about their land and their accounts.
Against decades of failed U.S. promises to improve, the case has risen from reservation lore to challenge the nation’s conscience and checkbook with a financial malfeasance suit that dwarfs the scandals at Enron or WorldCom and is exposing what the presiding judge in the seven-year-old battle has called “a century-long reign of mismanagement.”
In the coming weeks, U.S. District Court Judge Royce Lamberth, a Ronald Reagan-appointee from Texas, is expected to decide how the Interior Department must go about accounting for all the money that should have gone to the Indians and whether he should appoint an outside administrator for the system, which would be historic for a federal program.
Precisely how the Indian money evaporated may never be fully reconstructed, though the verdict against the United States, has in many ways already been delivered. Lamberth has said he has “never seen more egregious misconduct by the federal government” and determined that U.S. officials have continued “to write checks on an account that they cannot balance or reconcile.”
“Such behavior certainly would not be tolerated from private sector trustees,” the judge wrote in 1999. “It is fiscal and governmental irresponsibility in its purest form.”
Earlier this month, the special master in the case reported that government-approved deals for oil and gas pipelines on trust land in the West have been netting far less than those on adjoining non-Indian property.
Nothing, not a 1994 act of Congress, not court orders or outside monitors, has been able to bridge the gulf between the Indians, who claim they have been shortchanged at least $176 billion counting interest, and the government, which puts its liability in the “very low millions.”
And with such high stakes, Congress is also poised to take action. Prominent lawmakers are backing a bill that would foster a settlement by creating a new position in the Interior Department to oversee the trust and by empaneling a congressional commission to monitor the progress.
“If this type of egregious action had been inflicted on any other ethnic group, there would have been a tremendous public outcry,” Sen. John McCain (R-Ariz.), one of the sponsors, told a Senate Indian Affairs Committee hearing on the case last month.
The government’s response to the barrage of criticism and court decisions, which have included rare contempt rulings on former Interior Secretary Bruce Babbitt, former Treasury Secretary Robert Rubin and current Interior Secretary Gale Norton, has swung from contrition to defiance.
Officials in the administrations of George W. Bush and Bill Clinton have repeatedly acknowledged that there have been serious problems with the fund. Even as Lamberth has cited them for obstructionism, document destruction and deception, they have promised to make amends. The government has spent hundreds of millions of dollars on trust reform since the case began in 1996, establishing a special office for historical accounting and undertaking the most systematic streamlining and reorganizing of the trust in its history.
“The accounting process isn’t quite as bad as one might be led to believe,” James Cason, associate deputy secretary of interior, testified at a July House hearing. Cason told lawmakers that he was spending 95 percent of his time dealing with the lawsuit and that Norton, whose contempt citation was overturned last month, is devoting as much as a quarter of her attention to it. Sample audits and studies, Cason said, have showed only a very small margin of error in dispensing money to the accounts.
“We are trying to stretch very scarce resources,” he said. “The today and now kind of takes precedence over a revisitation of history over the last hundred years.”
The government’s latest plan would, over the next five years, review accounts that existed as of Congress’ 1994 Indian Trust Fund Management Reform Act. The department would trace the roots of the large accounts, transaction by transaction, and use a statistical sampling methodology for the smaller holdings.
“It is true that there are hundreds of years of bad history, horrible history between the United States government and Indian people and there is the Trail of Tears and Wounded Knee and the stories in my family’s Sioux traditions,” said Daniel Dubray, a spokesman for the department’s Bureau of Indian Affairs, and an Indian whose father is an account holder. “But this case isn’t about the Trail of Tears or Wounded Knee. This case is about what is required under a law passed in 1994 to perform an accounting, and the department believes it can perform an accounting and repair these issues.”
Many Indians, however, have lost faith in the government’s ability to fix the system and administer the trust.
While the fight in Washington, where the suit was filed, is being waged with highly technical trust law and accounting concepts, on the reservation, it has become a symbolic, watershed event.
“People were, for so long, snowed by the complicated financing of the trust and couldn’t sort it out,” said Elouise Cobell, a Blackfeet Indian who as the lead plaintiff has been the driving force behind the case.
A banker and former tribal treasurer, Cobell has trained her sights on the trust with an unmatched perseverance, dissatisfied with the government’s excuses. She is demanding an accounting back to the inception of the system.
“I knew I wasn’t dumb and I have just stayed in their face,” she said recently at her office in the Native American Community Development Corp. in Browning. “Every person they owe money for what they stole should be paid.”
Cobell is urging Lamberth to appoint an outside administrator, known as a receiver, to take over the trust and begin a reconciliation akin to how Holocaust victims are being compensated.
“This court has issued 50 published opinions in this case. All of them say the same thing: ‘the trust is broken,'” Dennis Gingold, the Indians’ lead attorney, said in his closing remarks to the current phase of the trial, which has been broken into stages due to its complexity. “Somebody has to stop it.”
The land-trust relationship between Indians and the United States dates back to the early 19th century when, as part of the effort to corral Indians into reservations, the government began controlling land on behalf of the tribes. Under the 1887 Dawes Act, the Department of the Interior started allotting individual Indians 40- to 160-acre parcels, restricting their ability to lease or sell the property, but promising to pay them royalties from whatever mining or farming was arranged.
Instead, millions of acres left Indian hands, and land holders quickly began to complain of being cheated. The recent special master’s report said that companies would pay $25 to $40 to run pipelines across small stretches of Navajo land but $140 to over $500 on nearby, non-Indian property.
From the outset, too, the accounting proved a nightmare that has only grown darker with each passing year. The government lost track of Indians as they moved from place to place, leaving thousands of accounts without addresses. Land was divided among heirs, increasing the number of stakeholders in parcels to the point where today some shares are worth pennies. And as money kept flowing into the federal coffers, some of it infusing national spending, trust documents were being stored in shabby facilities and destroyed, making it tremendously difficult to keep the books. It is even unclear how many accounts there actually are; the numbers range from below 200,000 to above 500,000.
Interior Department officials have insisted that the spotty records and preponderance of fractionated shares and small accounts would make a complete reconciliation a wasteful, Herculean task. And, Dubray said, many of the check discrepancies could be explained by the changing values of agriculture and oil assets over time. He likened the Indians’ demands to reconstructing a family’s checkbook back many generations.
It has taken decades for Indians to make their complaints cause general alarm. Even when there were flashes of outrage, such as a highly critical 1992 congressional report, titled “Misplaced Trust,” it wasn’t until the Cobell lawsuit that the depth of the problems began to leach into the public domain.
“It has taken a suit of this scope to awaken the general public to the special fiduciary relationship tribes have with the United States,” said David Getches, dean of the University of Colorado Law School and Indian law expert.
Throughout the 20th century, Getches said, there were lawsuits brought by individual Indians and tribes, which alleged deficiencies and held the government accountable. The cases helped establish bedrock trust principles, however, none of them sought the sort of vast reform and accounting demanded by Cobell and her fellow plaintiffs.
“The federal government portrays this as a snap judgment, that they did something wrong and all of a sudden we are jumping on them,” said Keith Harper, a Cherokee attorney at the Colorado-based Native American Rights Fund, which is representing the Indians. “But the government has had ample opportunity to deal with this issue without being forced to do so.”
Still, government and Indian opponents complain that however well intentioned, the battle over the trust has begun to backfire and is interfering with the issuing of trust checks and consuming the resources for other important programs for some of the poorest people in America.
Furthermore, if a receiver is appointed many Indians who work at the Bureau of Indian Affairs administering the trust fear they will be out of jobs. “This litigation is the flame that is pulling all the oxygen out of the room,” Dubray said. There is also a prevailing sentiment among many in Washington and elsewhere that even if Lamberth continues to rule in favor of the Indians, ultimately, either the higher courts or Congress will have the final say.
Before a House hearing on the case last month, chairman John Berrey of the Quapaw tribe said that both sides were pursuing “scorched-earth tactics” and that the suit has caused “the burning down of the house of the very trustee delegated to providing services to the Indian beneficiary.” Some Indian leaders also fear that Lamberth has stepped too far into their affairs and is on course to severely eroding tribal authority and independence. Indian tribes are acutely protective of their status as separate nations and the government-to-government relation they have with the United States.
In addition to these fissures, there is the looming threat of individual Indians suing the government on their own for compensation based on the current case, which is not seeking damages. There are also pending legal claims by Indian tribes whose roughly 45 million acres have been managed in the same trust system.
“There is a lot of money that goes through that system every year,” said Tex Hall, president of the National Congress of American Indians and the head of the Mandan, Hidatsa and Arikara Nation. “You put it all together and it is a huge issue.”
Such realities have intensified efforts to find a solution, generating proposals from Indian country and beyond.
Out here among the Blackfeet, though, under snow-capped mountains that once belonged to the tribe, there is still an overwhelming urge to fight and an expectation that the case will deliver overdue justice, which could be a far more uplifting incentive than a settlement or yet another government program meant to improve their lot.
“At least someone is standing up for us,” said Wilbur Bear Leggings, 43, one of the tenants in the Medicine Bear shelter, who insists he has 1,200 acres being leased out through the government.
On a hot summer evening, he gazes out at the dusty reservation and then back inside the shelter at children darting around upended mattresses and a debris of personal effects.
“The United States is finally going to have to say what they’ve done to us,” he said, “and give us what they owe us.”
Trail of Broken Trust
The Indian trust system was designed to break up the tribal structure. But since 1887, the most profound results have been government mismanagement and a trail of destitution. A look at the history of the system.
1824: The Bureau of Indian Affairs is created. One of its main goals is the relocation of Indians from tribal lands.
1830: The Indian Removal Act is passed, offering Indians land in the West in exchange for eastern territory.
1887: The General Allotment Act, also known as the Dawes Act, is passed, giving individual Indians 40- to 160-acre parcels of land. The land and assets are to be held in trust for at least 25 years and managed by the Department of the
Interior, which forbids owners from leasing, selling or “burdening” the property without government approval. Over the next 50 years, 90 million acres,
65 percent of Indian holdings, are estimated to leave Indian hands.
1929: A General Accounting Office report on the Indian trust system finds widespread mismanagement by the United States government.
1934: The Indian Reorganization Act is passed, repealing the allotment system, but extending the life of the trust indefinitely.
1950s: Congress adopts a “termination” policy, trying to release Indians from federal supervision. The government withdraws recognition of some
tribes and gives up responsibility for them.
1960s: Termination policy is replaced with a plan for restoring Indian self-determination and selfgovernance.
1989: A special investigation by the Senate Committee on Indian Affairs finds fraud and corruption in the Department of the Interior.
1992: The House Committee on Government Operations issues a report alleging incompetence and the bureau’s unwillingness to repair the trust
system.
1994: Congress passes the Indian Trust Fund Management Reform Act and appoints a trustee to oversee an overhaul of the system. The act
calls for an accounting of all the money by Sept. 30, 1995.
1996: Plaintiff Elouise Cobell, a member of Montana’s Blackfeet
tribe, joins with the Native American Rights Fund to file a class-action lawsuit against the departments of the Interior and Treasury. The Department
of the Interior admits it does not know how much money should have passed through the accounts or even how many account holders there are.
1999: In the face of little progress and the disclosure that 162 boxes of trust-related documents were destroyed, U.S. District Judge Royce C. Lamberth holds Interior Secretary Bruce Babbitt and Treasury Secretary Robert Rubin in
contempt of court.
July 2001: The Department of the Interior sets up the Office of Historical Trust Fund Accounting, but a court monitor reports the department has
made no progress.
December 2001: Lamberth orders the department to disconnect all its trust-related
computers from the Internet due to “deplorable” security.
September 2002: Lamberth holds Interior Secretary Gale Norton and other high-level officials in contempt of court, saying they deceived him about progress being made to reform the trust system and flouted orders to begin the historical accounting process.
July 2003: A House Appropriations bill proposes giving Norton the money and authority to settle with individual Indians, but the effort is overturned
by Indians and sympathetic lawmakers; U.S. Court of Appeals
throws out Norton’s contempt order; Senate bill proposes an outof- court settlement that would create a new position in Interior to deal with
trust matters.
August 2003: Both sides file plans for conducting an accounting of the
The great American land row American Indians are embroiled in a $137bn lawsuit with the US Government over land royalties. The saga, which has been going on for seven years, rests on a judge’s decision, which is expected shortly.
