US Department of the Interior botched accounting for Native American trust fund

Posted on CNN Money

WASHINGTON (AP) -- A federal judge on Wednesday ruled that the Interior Department has "unreasonably delayed" its accounting for billions of dollars owed to Indian landholders.

The federal agency "has not, and cannot, remedy the breach" of its responsibilities to account for the Indian money, U.S. District Judge James Robertson said in a 165-page decision in a long-running federal lawsuit alleging mismanagement of Indian trust funds.

"Indeed, it is now clear that completion of the required accounting is an impossible task" for the department, Robertson said, adding that he would schedule a hearing next month to discuss ways to solve the problem. He added that his conclusion that Interior is unable to perform an adequate accounting does not mean that the task is hopeless.

"It does mean that a remedy must be found for the department's unrepaired, and irreparable, breach of its fiduciary duty over the last century. And it does mean that the time has come to bring this suit to a close," he said.

The suit, first filed in 1996 by Blackfeet Indian Elouise Cobell, claims the government has mismanaged more than $100 billion in oil, gas, timber and other royalties held in trust from Indian lands dating back to 1887.

Cobell said in a statement Wednesday that "this is a great day in Indian Country."

"We've argued for over 10 years that the government is unable to fulfill its duty to render an adequate historical accounting, much less redress the historical wrongs heaped upon the individual Indian trust beneficiaries," Cobell said.

An Interior Department spokeswoman said officials were reviewing Robertson's decision and had no immediate comment.

Robertson said that although department officials had attempted and continued to attempt to "cure the breach of their fiduciary duty" they have not succeeded in doing so and "have unreasonably delayed the completion of the required accounting."

Robertson also blamed Congress for the lack of money appropriated for the cause, citing the "tension between the expense of an adequate accounting and congressional unwillingness to fund such an enterprise."

Interior Department officials argued during the October trial that their job was difficult with limited money from Congress. The judge agreed, saying the department deserves credit for trying to strike a balance between "exactitude and cost."

He said he did not agree with the Indian plaintiffs' assertion that an adequate accounting is not possible because of missing records. The record is inconclusive on that point, he said.

The lawsuit deals with individual Indians' lands. Several tribes have sued separately, claiming mismanagement of their lands.

The government proposed paying $7 billion partly to settle the Cobell lawsuit in March 2007, but that was rejected by the plaintiffs, who estimate the government's liability could exceed $100 billion. The Interior Department estimates that it has spent $127 million on its accounting in the past five years.

Sen. Byron Dorgan, D-N.D., chairman of the Senate Indian Affairs Committee, said Wednesday that he hopes the judge's decision is a catalyst for a settlement.

"Ultimately the question is going to be for the administration and the Justice Department, are they willing to settle for all of these years of mismanagement," he said.

Robertson took over the case after Judge Royce Lamberth was removed by the U.S. Court of Appeals for the District of Columbia Circuit, which said he had lost his objectivity.

The government had asked that Lamberth be replaced after the judge lambasted the Interior Department, writing in a decision that it "is a dinosaur - the morally and culturally oblivious hand-me-down of a disgracefully racist and imperialist government that should have been buried a century ago." [editor: emphasis mine]

In his decision, Robertson detailed the extensive background of the case, saying that it would "stretch the limits of understatement" to say the case's history has been exhaustively chronicled in district court. He noted there are 3,504 entries on the case's docket and 10 circuit judges have been engaged in the case. His opinion will have the shorthand of "Cobell XX," he noted.

Throughout his conclusion, Robertson quoted Charles Dickens' "Bleak House," which chronicles a never-ending legal suit. Using passages from that novel, he notes that the "suit has, in course of time, become so complicated" that "no two lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises."

"'Innumerable children have been born into the cause,' and, as plaintiffs have reminded us on occasion, 'innumerable old [plaintiffs] have died out of it,"' Robertson said.