Indians Continue Wait for Accounts' Resolution; Nine-Year-Old Lawsuit Against Interior Department on Trust Funds Appears Far From Settlement

by Evelyn Nieves, Washington Post Staff Writer

Washington Post, August 5, 2005

Nine years have ticked away since Elouise Cobell sued the government on behalf of as many as 500,000 Native Americans whose land the United States was supposed to manage. But the end of what has become the longest, largest class action lawsuit against the federal government remains nowhere in sight.

Sometimes, when Cobell returns home here to the Blackfeet Indian Reservation in northwest Montana from Washington, where the case is being heard in U.S. District Court, she feels buoyed by a development she thinks might help settle the case once and for all. But the feeling is fleeting.

Last week, a major court victory was still fresh; Judge Royce C. Lamberth had issued his most scathing critique of the Interior Department's handling of the Indians and the case. Lamberth cited Interior's "mismanagement, falsification, spite and obstinate litigiousness," among other failings, and his disgust was palpable.

"Perhaps Interior's past and present leaders have been evil people, deriving their pleasure from inflicting harm on society's most vulnerable," he wrote in the extraordinary, 34-page July 12 ruling, which agreed with the plaintiffs' claim that the department's information was unreliable.

But Cobell was preoccupied by a bill to settle the case that was introduced July 20 by Sens. John McCain (R-Ariz.) and Byron L. Dorgan (N.D.), chairman and ranking Democrat, respectively, of the Indian Affairs Committee. The bill, which the senators called "a starting point," was far from the remedy Indian leaders had hoped for, Cobell said. And she testified to that point.

"This bill proposes a formula for accounting that looks at the trust records from 1980 to 2005," Cobell said when she returned here from testifying. "The judge has already ruled that Interior has to make an accounting going back to the beginning."

Cobell v. Norton (for Interior Secretary Gale A. Norton) dates to 1996, but the complicated debacle some members of Congress have likened to a "Federal Enron" traces its origins back more than a hundred years.

Under a forced arrangement, in 1887 the government divided much tribal land across the country, which it had not already taken, into separate, private allotments for Indians. It then leased individuals' land, which ranged from 40 to 160 acres, usually to oil, gas, timber, grazing or coal interests. The Treasury Department placed the fees into a trust and was -- and remains -- responsible for doling out checks to the individual Indian trust beneficiaries.

But from the beginning, the plaintiffs say -- and the government has conceded until recently -- the basic recordkeeping for these lands was botched.

In 1994, six years after Congress began oversight hearings into the mismanagement of Indian trusts going back for decades, it passed a law ordering a special trustee to monitor the accounting of the trusts and creating a plan for reforming the system. The 1996 lawsuit followed after the first special trustee resigned in protest of what he said were attempts to obstruct his efforts to reconcile accounts.

Norton and her predecessor, Bruce Babbitt, have said it is impossible to provide a full historical accounting of the trusts -- there are said to be about 300,000 accounts, incorporating perhaps 500,000 individual beneficiaries, with combined balances in the trust of $500 million to $800 million.

But Interior officials say that as they perform a historical accounting of the trusts ordered by Lamberth -- an effort costing $100 million so far -- their research, performed by using statistical sampling, has shown that the trust holders are owed little for their land. "If you use the facts that we have found so far in the accounting process, the number would be very, very low," James E. Cason, the associate deputy secretary for the Interior, told the Indian Affairs Committee last month.

"In court, the plaintiffs seek a historical accounting but are now working hard to prevent that accounting from occurring," Cason added. "In Congress, they argue against providing funding for that accounting; in court, they argue that the accounting is impossible. . . . Instead of an accounting, they want lots of money."

This stance, fairly new in the history of the lawsuit, infuriates the plaintiffs. What they object to, they say, is the Interior Department's taking money from already underfunded Indian health and education programs to fund its defense against the lawsuit. And they say Interior is basing its accounting on records that date only since 1985.

Interior officials say the Indians keep shifting their figures on the amount of money the government owes them -- from more than $100 billion at one point to, most recently, $27.5 billion (the figure the plaintiffs announced in June as acceptable to settle the case). But the plaintiffs say their figure has changed because as court testimony from Interior officials and court findings have shown, no one can be sure what is owed to trust holders.

Last week the plaintiffs pleaded with the judge to keep computers holding trust data shut down. They argued that the information remained as vulnerable to hackers as it was four years ago, when Lamberth ordered a shutdown of all computers in the Interior Department after an Inspector General's report showed that a computer hacker could move or change trust account balances with ease. The judge has not yet ruled on the matter.

From the start of the Indian trusts, accounting has been a problem. Allotment holders would receive Treasury checks with no additional paperwork. They were not told who leased their land, what it was used for, how much was used, or the price the company paid for obtaining the land's oil, timber or other resource. Allottees complained that they received checks -- sometimes for as little as 2 cents -- that the government did not explain. Many say that practice continues.

Recent history has also revealed problems.

In 1999, Treasury's financial management office destroyed 162 boxes of trust documents as Interior officials were telling the court they were searching for the records. A court-appointed master assigned to oversee the preservation production of documents found that Treasury violated ethical rules for not reporting the documents' destruction for 16 months. He called the trust system "clearly out of control."

In a ruling in 1999 ordering Interior to make a full accounting of the trust, Lamberth declared that "it would be difficult to find a more historically mismanaged federal program."

In 2001, after a 19-month investigation, a federal monitor assigned to provide the judge with assessments of Interior's representations called the department's efforts to provide an accounting in compliance with his order a sham marked by unrealistic responses and evasion.

Last month, when McCain and Dorgan introduced their bill on the Senate floor, Dorgan said: "The Cobell litigation has brought to light a very disturbing problem: The federal government may not know the proper balances of these accounts nor have sufficient documentation to determine the value of these accounts."

The government acknowledges one failure of recordkeeping. As original allotment holders died and their land was inherited by more and more heirs, the paperwork involved in keeping track of beneficiaries proved onerous. Nearly 50,000 active accounts, with a balance of nearly $74 million, languish because, the government says, the beneficiaries' "whereabouts are unknown."

Cobell, a banker and accountant, said her husband began receiving trust checks a year ago with no documentation. "He doesn't know what they're for," she said, "but he was told they go back from three years ago. He was one of those 'whereabouts unknown,' though we've lived here forever."

Interior has appealed every major ruling in the case. Last week, it appealed Lamberth's July 12 order, in which he ordered Interior to include notices in its correspondence with Indians whose land the government holds in trust, warning them that the government's information may not be credible. Interior was issued a stay pending a ruling next month.