Appeals court blocks critical trust fund reports

Three reports that criticized the Bush administration's trust reform efforts were suppressed by a federal appeals court on Friday.

The reports were produced by the special master in the Cobell trust fund case. One detailed how negative information about an accounting system was removed from a court-ordered report while the other two questioned whether the Interior Department was meeting its obligation to preserve trust records.

But in a unanimous decision, the D.C. Circuit Court of Appeals threw out the reports as "tainted." A three-judge panel said the special master -- who resigned under pressure from the administration -- erred by hiring an individual whose private-sector company was in a contract dispute over the Trust Asset and Accounting Management System (TAAMS).

The individual, an employee of a Native-owned firm called Native American Industrial Distributors, "stood to gain financially from a finding of misconduct" regarding the TAAMS contract, the court said, so he shouldn't have been involved with the Cobell case.

Any reports prepared after the hiring of the individual must be suppressed as well, whether or not they were related to TAAMS, the D.C. Circuit panel added. "If those reports have not been used against the [Interior] department and are not presently part of the record before the district court, then so much the better," wrote Judge Donald H. Ginsburg for the majority.

The decision is the first to bear new Interior Secretary Dirk Kempthorne's name. The former governor of Idaho took office earlier this month with an interest in settling the nine-year-old case, according to tribal leaders who met with him in private.

But Cobell v. Kempthorne, as the lawsuit is now known, is far from over. The D.C. Circuit is still weighing a decision on three more matters that the administration considers central to its trust reform initiatives.

The first is a preliminary injunction that requires the disconnection of trust fund systems from the Internet; the second is a notice the government is required to send to all Indian beneficiaries that warns them of "unreliable" trust data; and the third is an unprecedented motion to remove Judge Royce Lamberth from the case by assigning it to another judge.

Oral arguments were held in April. It isn't known when a decision might be issued but Interior officials are hoping for a victory in a case that has seen the department painted as the "morally and culturally oblivious hand-me-down of a disgracefully racist and imperialist government that should have been buried a century ago," in the words of Lamberth.

The three reports that are now suppressed added more fire to the government's failure to account for billions in money owed to hundreds of thousands of individual Indians across the country. Even though Lamberth had never adopted them into the record, the appeals court judges said they needed to be removed out of concern for the "public's confidence in the judicial process."

Although the TAAMS report can't be cited as evidence in the case, many in Indian Country view the $40 million system as a waste of resources that could have been better used for other purposes. Tex Hall, an Indian account holder who serves as chairman of the Mandan, Hidatsa and Arikara Nation in North Dakota, said the trust fund remains broken despite the Bush administration's claims that progress is being made.

"You will receive a check and not know what it's for," he said at a forum in Washington, D.C., in April. "The system needs to be fixed. It is a broken system."

The other two reports -- in the form of site visits to Interior locations -- detailed poor record-keeping that is no stranger to Indian Country. The Clinton administration was held in contempt for destroying 162 boxes of trust fund records despite court orders against doing so.

In related Cobell news, Keith Harper, one of the attorneys on the case, is leaving the Native American Rights Fund next month. He will be joining the law firm of Kilpatrick Stockton, the firm where the other members of the litigation team are based.

Harper, a member of the Cherokee Nation, will continue to work on Cobell but he also plans to pursue other cases on behalf of tribes and individual Indians. He spent more than 10 years at NARF, a non-profit organization founded in 1970.

John Echohawk, the executive director of NARF, remains as co-counsel in the case. He will continue to serve as a chief lobbyist on legislation to settle Cobell. A bill is pending before the Senate Indian Affairs Committee and the House Resources Committee.

Trust Fund Report Decision:
In re: Kempthorne (June 9, 2006)

TAAMS Report:
Interim Report of the Special Master Regarding the Filing of Interior's Eighth Quarterly Report (April 21, 2003)

Relevant Links:
Indian Trust: Cobell v. Norton -
Office of Special Trustee -
Cobell v. Norton, Department of Justice -
Native American Rights Fund -