A federal appeals court on Friday lifted an injunction disconnecting the Interior Department from the Internet but two key agencies remain off-line three years after an investigation exposed massive security holes in the Indian trust fund.

In a unanimous decision, the D.C. Circuit Court of Appeals said U.S. District Judge Lamberth erred when he ordered the shutdown, the third since December 2001. Lamberth failed to hold a hearing and disregarded the department's attempts to secure the information technology systems, the court concluded.

"Had such examination occurred, and the sources been credited, there would have been no factual basis for disconnecting Interior's IT computer systems from the Internet," wrote Judge Judith W. Rogers for the majority.

But the three-judge panel rejected the Bush administration's arguments in two key respects. The court, for the first time, held that the Interior Secretary Gale Norton has a fiduciary obligation to protect the computer data and the computer systems of the Indian trust.

"It is indisputable that the Secretary has current and prospective trust management duties that necessitate maintaining secure IT systems in order to render accurate accountings now and in the future," Rogers wrote.

Second, the court affirmed that the eight-year-old class action lawsuit is, at its core, a trust case. Norton and her attorneys have been arguing that Lamberth has repeatedly overstepped his bounds by scrutinizing the department's actions in almost every aspect of the trust.

To the contrary, the court said Lamberth "retains substantial latitude, much more so than in the typical agency case, to fashion an equitable remedy because the underlying lawsuit is both an Indian case and a trust case in which the trustees have egregiously breached their fiduciary duties."

The plaintiffs in the Cobell v. Norton claimed the decision as another victory in their long-running case. "This is a huge step for justice," said Elouise Cobell, a member of the Blackfeet Nation of Montana who is the lead plaintiff. "It is the beginning of the end of more than 100 years of destroying and mishandling data relating to what is owed to American Indians for the use of their land." The plaintiffs are seeking an emergency hearing to address their concerns about IT security.

The Bush administration also said it was pleased with the ruling. "The department has made significant investments to upgrade its [IT] capabilities, including substantial funding for systems that protect the security of sensitive data," Interior said in a statement.

But the decision, as well as the injunction at issue, does little to change the Bureau of Indian Affairs and the Office of Special Trustees. Both agencies, whose computer systems handle billions in Indian trust funds and millions of acres in trust land, have been disconnected from the Internet since December 2001.

The shutdown came after a court investigator found that the agency's systems were prone to hacking. Attorney Alan Balaran, in his role as special master in the case, hired a computer security firm that was able to break into the trust fund and change trust data without being detected.

Following the shutdown, the plaintiffs and Interior entered into a court-approved consent decree that would allow for the reconnection of the computer systems once they were secured. Nearly every agency at the department was able to show Balaran some improvement until he was forced to quit the case in April at the prodding of the Bush administration.

Since the debacle was exposed, BIA officials say they have made substantial progress in improving the system. Assistant secretary Dave Anderson, who has called the Cobell suit a "blessing," says the agency's new computer command center in suburban Washington, D.C., rivals that of NASA. Employees there can monitor every single computer on the BIA's network to identify potential threats.

During a tour of the facility earlier this year, Brian Burns, the BIA's deputy assistant secretary for information technology, said the shutdown gave officials a chance to make long-awaited changes. "We've focused on our Internet presence, so that when we do come up, that we're ready," he said at the time.

The situation has caused much grief throughout Indian Country. Some royalty payments to account holders were delayed, leaving many without an important source of revenue at critical times, particularly the holiday season.

Friday's ruling is the first of two expected from the D.C. Circuit in the coming weeks. In another part of the case, the Bush administration is challenging a structural injunction Lamberth issued to monitor the historical accounting and reform of the system.

The court gave a preview of sorts to what it might say on the issue by rejecting the Bush administration's attempt to use a controversial appropriations rider to bar Lamberth from acting. The "plain text of the statute addresses only the historical accounting activities ... rather than the Secretary�s current trust obligations," the court said.

The rider was inserted in the 2003 Interior appropriations bill at the behest of the Bush administration and some members of Congress who don't like the way the case is going. The so-called "time out" -- as Norton and other officials described it -- expired in October.

Norton is also seeking to have the case dismissed altogether or to limit Lamberth's authority but the court hinted that her wish may not be granted because of the trust involved. "The Secretary cannot now try to 'escape [her] role as trustee by donning the mantle of administrator� to claim that courts must defer to [her] expertise and delegated authority," the judges wrote.

Get the Decision:
Cobell v. Norton (December 3, 2004

Relevant Links:
Indian Trust: Cobell v. Norton - http://www.indiantrust.com
Cobell v. Norton, Department of Justice - http://www.usdoj.gov/civil/cases/cobell/index.htm
Indian Trust, Department of Interior - http://www.doi.gov/indiantrust