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Lamberth lays out future of Indian trust reform
Friday, September 26, 2003

Comparing the Department of Interior to a prison system, a federal judge on Thursday said he will appoint a judicial monitor to ensure the federal government is meeting its obligations to hundreds of thousands of American Indians.

U.S. District Judge Royce Lamberth decided not to strip Interior of its trust duties, although that option is still on the table. He instead gave government officials five more years to complete an historical accounting of billions of dollars of Indian funds, imposing a set of deadlines on a project that is expected to cost at least $335 million.

In the 270-page opinion, Lamberth explained that he was "of two minds" in the seven-year-old lawsuit. He acknowledged that there was a "contradiction" in allowing Interior to retain control because "little has changed" in the past decade.

"Interior continues to pile it on," he wrote, "the only difference is that instead of Congress, this court is now its chosen receptacle."

But he said a judicial monitor, along with a group of agents, will be able to determine whether the department lives up to its pledges to some of the most "impoverished" Americans.

"The results of Interior's failure to take its trust responsibilities seriously are plain today," Lamberth wrote. "Although they are citizens of the greatest and most prosperous nation in the world today, the beneficiaries of the IIM trust live under conditions that would not be alien to citizens of the poorest Third World nations. Many of them live in abject poverty."

The decision represents a minor win for the Bush administration, which argued against further court oversight of the Individual Indian Money (IIM) trust. Lamberth largely adopted the methodology the department is proposing to account for at least $13 billion in oil, gas, timber and other royalties that have been collected on Indian lands since the turn of the century.

However, Lamberth rejected several limits the administration sought to place on the initiative. Reiterating the language of the D.C. Circuit Court of Appeals, he said Interior must account for "all funds" dating back to 1887, not just the money held in the accounts as of 1994, when Congress passed the American Indian Trust Reform Act with the aim of fixing the broken system.

Lamberth also said the government must account for the assets Indians who died waiting for an accounting. By 2006, for most trust accounts, and 2007 for a handful of large-dollar accounts, he directed Interior to provide each beneficiary with a list of his or her trust holdings. He forbade the use of statistical sampling to verify whether the transactions in the accounts are correct.

The expansion of the accounting is sure to drive up the cost. Before announcing a scaled-back plan in January of this year, Bush officials said it could take up to 10 years and $2.4 billion to fulfill Lamberth's mandate. The department will have to meet the court's order in half the time.

Reacting to the decision, Mark Pfeifle, an Interior spokesperson, said "it appears the judge accepted the department's general framework for reform but beyond the scope of what the department proposed and what Congress has been willing to fund." Lawmakers, upset that Interior has spent more than $700 million since 1996, have already cut back funding for the accounting in 2004. Pfeifle added that the administration was "reviewing the decision and the options for it," including a possible appeal.

Keith Harper, a Native American Rights Fund (NARF) attorney on the case, said the Indian plaintiffs scored a major victory. He pointed to a separate 79-page ruling on fixing the system, also issued yesterday, in which Lamberth ruled that Interior is required to manage Indian funds just like any other trustee in the commercial world.

"It is a watershed event when a federal court, for the first time in an Indian trust case, sets forth that kind of specificity on all the duties that are applicable," he said. Lamberth identified and explained 16 fiduciary obligations in the decision.

Harper said the plaintiffs still believe the government's accounting is impossible due to missing records, inadequate data and faulty computer systems. The plaintiffs had proposed their own methodology that relies on third-party databases, and Lamberth directed Interior to "consider" how this information can help fill in the known gaps.

"We would prefer that [Lamberth] would have adopted our plan because we ultimately think they cannot do an accounting," he said. "But this is a longer road to the top of the same hill. They will now demonstrate they cannot do an accounting."

The opinion on fixing the system recognized the role of tribal governments. Lamberth called on the department to ensure that it follows tribal law when necessary, and allowed the National Congress of American Indians (NCAI) a continued role in the suit as a friend of the court. "It is manifest that the Indian tribes are major stakeholders in the administration of the IIM trust," he wrote.

In an 18-page order, Lamberth set out timelines for the government to meet. He said Interior should complete the accounting for per capita and judgment accounts by September 30, 2004; all land-based accounts by September 2006 and all special deposit accounts by September 2007.

Lamberth imposed deadlines on the department's "to-be" project of trust reform. Noting that it is "really only a plan to make a plan," he said it should be completed by March of next year.

The judicial monitor and its agents shall have "unlimited access to Interior's premises and records, as well as the power to conduct confidential interviews with Interior officials and employees," Lamberth stated in the order.

But mindful of the separation of powers, Lamberth said he will instruct the monitor and the agents "not to intervene in the administrative management of Interior, and not to direct the Interior defendants or any of their subordinates to take or refrain from taking any specific action to achieve compliance [and] will further direct the monitor and his or her agents not to consider matters that go beyond superintending compliance with this court's injunction."

Yesterday's decisions come after a 44-day trial Lamberth concluded on July 8. Initially, Lamberth planned on holding only two trials, one for fixing the system and the other for the accounting. But he decided an interim Trial 1.5 was necessary because he said the government had lost its way.

"The past is gone, however, and this court recognizes that Interior can no more undo its past actions than this court can unwrite its past opinions," Lamberth concluded. "But Interior has an unprecedented opportunity within its grasp: to take real steps now to redress some of the harm that has been inflicted against some of this nation's most impoverished citizens, and to take real measures that will improve the quality of their lives."

Interior admits to about 260,000 living IIM beneficiaries and about 800,000 since 1887. About $300 million to $500 million flows through the accounts every year. Interior admits $13 billion has been collected from activity on Indian lands since 1909.

Decisions:
Historical Accounting | Fixing the System | Structural Injunction

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

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Swimmer criticized for remarks on trust accounting (9/25)
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Editorial: Trust fund settlement bill 'disgraceful' (7/7)
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Swimmer finally off the stand in Cobell trial (7/3)
Swimmer testimony in Cobell trial wrapping up (7/2)
Swimmer recalls 'fuzzy' Reagan years (7/1)
Lamberth questions Norton's trust limits (7/1)
Pombo targets trust fund settlement program (6/30)
Swimmer testifies on trust fund accounting (6/27)
Swimmer challenged on Bush reform plans (6/27)
Swimmer expected to take stand in Cobell trial (6/25)
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Lamberth criticizes interference with trust fund case (05/22)
Tribes oppose OST expansion into Indian County (5/22)
Swimmer: Don't fear changes at Interior (5/22)
On trust, Swimmer turns to private sector (5/14)
Trial in Cobell trust fund case kicks off (05/02)
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Cobell v. Norton Recap: Day 1 of Trial 1.5 (05/02)
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