Landmark trust fund decision upheld

FEBRUARY 26, 2001

The plaintiffs in the billion dollar trust fund lawsuit against the government celebrated a major victory on Friday with an appeals court decision affirming their right to a full historical accounting of money owed to at least 300,000 American Indians.

Known as Cobell v. Norton, the class action lawsuit was initiated in 1996 against former Secretary of Interior Bruce Babbitt. After numerous delays, attempts to dismiss the case, and a contempt of court trial resulting in sanctions against top officials, a federal judge in December 1999 ruled the government had failed to fulfill its financial obligations to trust fund account holders.

Among other findings, Judge Royce Lamberth called on the government to provide "an accurate accounting" of money held in trust for American Indians. The government subsequently challenged Lamberth's decision but the District of Columbia Court of Appeals rejected their arguments -- to the delight of the plaintiffs.

"For the first time, Indian people are going to know what they own," said Elouise Cobell, the Blackfeet Nation of Montana banker who is the lead plaintiff in the case. "They are going to be empowered."

Yet for all of Cobell's enthusiasm, her prediction may be a hard one to realize, given the government's history. Created more than 100 years ago, the Individual Indian Money (IIM) accounts which the Departments of Interior and Treasury hold in trust for American Indians throughout the country have been mismanaged for nearly as long.

And according to the ruling issued by the District of Columbia Court of Appeals, not much has changed since then. Despite being aware of the system's failings and the passage of a 1994 law aimed at reforming it, the three-judge panel on Friday criticized the government's more recent efforts as "a day late and a dollar short."

"Federal officials were aware of their fiduciary obligations long before the passage of the 1994 Act -- let alone the initiation of this action -- and yet little progress has been made in discharging those duties," they wrote. "What little progress the government has made appears more due to the litigation than diligence in discharging its fiduciary obligations."

Known as the Indian Trust Fund Management Reform Act, the 1994 law formed the basis of the government's appeal. The government claimed Lamberth overstepped his authority by requiring the Interior and Treasury to perform duties beyond those listed in the law but the appeals court rejected this argument and said the law recognized the government's pre-existing financial obligations but "did not create them."

The appeals court did make some minor concessions to the government, however. The court said Lamberth may have "mischaracterized" some of the government's obligations but it upheld his ruling in light of the evidence against the Interior and Treasury.

The appeals court also acknowledged that Lamberth's requirement that the government file quarterly status reports on its progress and his retention of jurisdiction over the system for five years may be excessive and "unusual" but said both were entirely appropriate given the circumstances.

Department of Interior spokesperson Stephanie Hanna issued a short statement following the ruling: "We're dissapointed with some parts and heartened by some parts of the decision of the Court of Appeals and will be working with the Department of Justice to determine our next course of action."

"We believe that the Court agrees with the Department of Interior and the Congress that it is our responsibility to design and implement an accounting. We will continue our commitment to live up to the duties that we owe all Indian beneficiaries."

Get the Decision:
Cobell v. Norton (DC Court of Appeals No. 00-5081, 00-5084 February 23, 2001)

Relevant Links:
Trust Management Improvement Project, BIA - www.doi.gov/bia/trust/tmip.htm
Indian Trust: Cobell v. Norton - www.indiantrust.org

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