Cobell decision close to low figure cited by government

Cobell

Friday, August 8, 2008

Holding true to his promise to resolve the long-running Cobell case, a federal judge on Thursday said Indian beneficiaries are only owed $455.6 million for the historical mismanagement of their trust funds.

Judge James Robertson hinted at a low figure when he heard final arguments last month. But his decision still shocked the plaintiffs in the 12-year-old case, who are weighing an appeal of the decision.

"I am disappointed, to say the least," said lead plaintiff Elouise Cobell, a member of the Blackfeet Nation of Montana. "We believe we presented a strong, compelling case that individual Indian trust beneficiaries are entitled to much more than the government's admitted mismanagement of our trust monies over the past 120 years."

The Bush administration, on the other hand, hailed the ruling even though the government has maintained throughout the case that it has not mishandled billions of dollars in trust funds. The Interior Department and the Treasury Department were found in breach of trust for failing to account for the money.

"The department is gratified that the court recognized the complexities and uncertainties involved in this case," responded Jim Cason, the associate deputy secretary at Interior. "We look forward to working with the court, the Congress, and the plaintiffs to bring the case to final closure."

Robertson's final judgment was strikingly close to an amount that the Department of Justice conceded at a hearing last month. "At worse, no more than $409.8 million cannot be explained in the IIM system," government attorney Robert Kirschman said.

The plaintiffs cited a much higher figure -- around $46 billion -- that they said they were owed. The amount was based the government's failure to conduct an historical accounting of the Individual Indian Money (IIM) trust, plus any alleged benefits the government received for not disbursing all of the funds.

Robertson concluded that his court has "broad equitable authority" to address the government's admitted failure to account. But he rejected the plaintiffs' legal theories and model for disbursement as unsound and unsupported by evidence.

"Whatever problems have existed in the history of this trust, and however serious the misfeasances and malfeasances of the trustees over 120 years, there has never been any evidence of such prodigious pilfering of assets from within the trust system itself," Robertson said, rejecting claims of large amounts of money owed.

Robertson said the next step would be yet another proceeding to determine how to allocate the $455.6 million among hundreds of thousands of Indian beneficiaries. He plans to hold a hearing later this month to address the issue.

Another trip to the D.C. Circuit Court of Appeals, or even to the U.S. Supreme Court, could delay the distribution of any funds. The government, or Congress, also could conceivably fail to restore the money to the IIM trust regardless of the outcome of the case.

The government still faces the possibility of a damages case in the U.S. Court of Federal Claims. Attorneys have repeatedly argued that some of the plaintiffs' claims -- such as leasing land for below market value -- belong in the claims court.

The Bush administration previously proposed to settle such claims, along with the historical accounting aspect of the Cobell case, for $3.5 billion. The controversial deal was contingent on tribes and individual Indians disclaiming all future liability for their trust funds.

"Perhaps it is not too much to hope that the announcement in this memorandum of a hard number will give rise to some off-line conversation between the parties in the meantime," Robertson said in his ruling.

Cobell and four other Indian leaders filed the case on June 10, 1996, during the Clinton administration. The lawsuit was certified as a class action to represent hundreds of thousands of current and former trust beneficiaries who never received an accounting of their funds.

The first major victory came in December 1999, when Judge Royce Lamberth held that the American Indian Trust Fund Management Reform Act of 1994 required the Interior Department to account for "all funds" in the IIM trust. The D.C. Circuit Court of Appeals in February 2001 upheld the decision, noting that the law did not create the duty to account but merely affirmed it.

Once the Bush administration came on board, the case took on a particularly acrimonious tone. After a slew of trials, contempt charges and appeals that favored the government, Lamberth was removed from the case in July 2006 amid complaints about his impartiality.

Robertson was assigned to the case in December 2006 and pledged to resolve it as quickly as possible. He convened a trial in October 2007 to examine all of the issues surrounding the historical accounting.

In January 2008, Robertson ruled that the accounting was "impossible" due to funding restraints and limitations placed on the effort by the Bush administration. He started a trial on June 9 to finally put an end to the long-running case.

The trial, which lasted less than two weeks, focused on the plaintiffs' claim that they are entitled to restitution for the failure to account and for the benefits allegedly obtained by the government for failing to distribute all of the trust funds to beneficiaries. By adding up the data from 1887, the inception of the IIM trust, to 2007, the plaintiffs arrived at $46 billion.

The government responded during trial that the overwhelming majority of trust funds were distributed. Witnesses testified that the government did not benefit from the trust, which they said represents only a small portion of the trillion-dollar U.S. economy.

Court Decision:
Cobell v. Kempthorne (August 7, 2008)