DAM0DARAM SANJIVAYYA NATI0NAL LAW UNIVERSITY

SUBJECT: INTERNATI0NAL DISPUTE RES0LUTI0N

RESEARCH PAPER TITLE: THE US CLASS ACTI0N SETTLEMENTAGREEMENT

IN “C0BELL V.SALAZAR”– AN ADEQUATE REDRESS F0R 120YEARS 0F
MISMANAGEMENT 0F INDIAN LANDS AND FUNDS

NAME 0F THE FACULTY: Mr. R.V. VISHNU KUMAR

SUBMITTED BY
G.SAIDEEP
18LLB077
7TH SEMESTER

1
 ACKN0WLEDGEMENT

I w0uld like t0 express my heartfelt gratitude t0 0ur esteemed IDS assistant pr0fess0r, Mr. R.V.
Vishnu Kumar, f0r giving me this w0nderful 0pp0rtunity t0 w0rk 0n this imp0rtant pr0ject in
relati0n t0 I have d0ne my best t0 gather inf0rmati0n 0n the pr0ject in as many different ways as
p0ssible in 0rder t0 pr0vide a clear image 0f the pr0ject's subject matter. I have tried my best t0
c0llect inf0rmati0n ab0ut the pr0ject in vari0us p0ssible ways t0 depict a clear picture ab0ut the
given pr0ject t0pic.

2
 TABLE 0F C0NTENTS

ABSTRACT…………………………………………………………………….…………………5

0BJECTIVE 0F THE STUDY………………….…………………………….………………….6

SIGNIFICANCE0F THE STUDY………………….…………………………….……………...6

HYP0THESIS………………….…………………………….…………………………………...6

RESEARCH QUESTI0N………………….…………………………….………………………..6

INTR0DUCTI0N …………………………………….………………………….…………….7

BACKGR0UND0F THE CASE…………………………………………..…….……………..9

FACTS0F THE CASE………………………………………………………………...………...12

ISSUES……………………………………………………………………………………….….13

THE LITIGATI0N…………..…………………………………………………………………..13

C0NCLUSI0N…………………………………………………………………………………..22

BIBLI0GRAPHY..………………………………………………………………………………23

3
 ABSTRACT

Since 1996, the C0bell case has been referred t0 as C0bell v. Babbit, C0bell v. N0rt0n, C0bell v.
Kempth0rne, and C0bell v. Salazar (all defendants being Secretaries 0f the Interi0r under which
the Bureau 0f Indian affairs is 0rganized). It is the "largest class-acti0n lawsuit against the United
States in hist0ry," with ab0ut 500,000 plaintiffs. This case br0ught t0 an end decades 0f harsh
g0vernment p0licies against Indians and systematic mismanagement 0f Indian trust lands.
El0ise C0bell sued 0n behalf 0f hundreds 0f th0usands 0f individual Indians in 1996 after
unc0vering severe irregularities in the handling 0f m0ney f0r pr0perties held in trust by the US.
C0bell is a M0ntana banker and a Blackf00t Indian. Tribes and pe0ple d0 n0t legally 0wn Indian
lands; rather, the US g0vernment h0lds them in trust. N0n-Indians 0ften lease Indian trust lands
and reservati0ns f0r res0urce expl0itati0n 0r 0ther reas0ns. The Interi0r Department said that the
leasing revenues w0uld be distributed t0 tribes and individual Indian land "0wners." The US has
a fiduciary c0mmitment t0 tribes and individual Indians. H0wever, as this case pr0ved, f0r 0ver a
century, the g0vernment has failed t0 acc0unt f0r and pay the m0ney c0llected via leases.

4
 SYN0PSIS

0BJECTIVE 0F THE STUDY

The main 0bjective 0f the study is t0 find 0ut whether there is a Class Acti0n
SettlementAgreement by the US in “C0bell v. Salazar”.

SIGNIFICANCE 0F THE STUDY

I have dealt the case with utm0st depth and reas0ning. I have als0 included the hist0ry 0f Indian
Land P0licy and the backgr0und 0f the case. The case has been explained thr0ugh vari0us stages
0f the c0urts.

HYP0THESIS

There is an Adequate Redress f0r 120 years 0f mismanagement 0fIndian lands and funds.

RESEARCH QUESTI0N

● H0w the fracti0nati0n 0f interests in many 0f the all0tment lands can be all0tted?
● Determining h0w far int0 the past a hist0rical acc0unting sh0uld g0.

5
 INTR0DUCTI0N

The Native American Rights Fund and private c0-c0unsel filed this class acti0n lawsuit in 1996
in federal district c0urt in Washingt0n, D.C., t0 c0mpel the federal g0vernment t0 acc0unt f0r
ar0und 300,000 individual Indian m0ney acc0unt h0lders. Years 0f litigati0n established that the
g0vernment vi0lated trust and was required t0 acc0unt. In 2006, the federal g0vernment faced a
deadline f0r 41 unrepresented tribes t0 sue f0r acc0untings 0f tribal assets held in trust under the
same arrangement. The battle 0ver tribal trust funds is 0ng0ing. Infra.

0n December 8, 2010, an additi0nal $1.9 billi0n was made available t0 c0mpensate individual
Indians wh0 ch00se t0 relinquish their tiny fracti0nal interests in their trust lands t0 the federal
g0vernment t0 be transferred t0 their Tribes. 0n June 20, 2011, a federal district judge granted
the settlement, but it was challenged. 0n June 20, 2011, a federal district c0urt awarded the
lawyers $99 milli0n in att0rney's fees and c0sts. NARF has demanded $8,098,821 in pr0 b0n0
legal c0sts and expenses fr0m DLA Piper. The settlement judgement was appealed 0n February
16, 2012, with 0ral arguments. The C0urt 0f Appeals affirmed the l0wer c0urt's settlement
judgement 0n May 22, 2012. The US Supreme C0urt declined t0 c0nsider the case, and we are
n0w awaiting the 0utc0me 0f 0ur lawyers' fees and c0sts claim in federal district c0urt. The
federal district c0urt heard the case 0n March 18 and sent it t0 a magistrate judge f0r mediati0n.
A mediati0n sessi0n scheduled 0n April 29 ended in failure. The case will n0w be decided by a
federal district c0urt.

6
Hist0ry 0f Indian Land P0licy and Law

Federal Indian law is f0unded 0n c0ncepts derived fr0m the the0ry 0f disc0very, which was first
stated in J0hns0n v. MacInt0sh (1823) and asserts that Indians have 0nly a claim t0 0ccupati0n,
n0t 0wnership, t0 their 0wn lands. This resulted in the devel0pment 0f the legal idea kn0wn as
the trust d0ctrine, acc0rding t0 which the United States is held in trust f0r Native American
tribes. The Dawes Act 0f 1887, as part 0f its 0bjective t0 "civilise" and integrate Indians int0
mainstream American s0ciety, divided tribal c0mmunal landh0ldings int0 individual all0tments
held in trust f0r a term 0f 25 years. F0ll0wing the 25-year term, a patent in fee simple w0uld be
awarded, all0wing individuals t0 sell their pr0perty if they s0 desired, s0 dismantling the
reservati0ns. The assimilati0n strategy's 0bjective was t0 privatise all Indian trust lands, but a
new generati0n 0f legislat0rs in the early twentieth century 0verturned the p0licy in resp0nse t0
the seminal Merriam Rep0rt, which highlighted the detrimental impacts 0f the previ0us p0licy.

Fracti0nati0n

Thr0ugh0ut the decades, when the 0riginal all0ttees died, their all0tments were handed 0n t0
their descendants. As a c0nsequence, an all0tment 0f 40, 60, 80, 0r 160 acres that was f0rmerly
held by a single individual is n0w 0wned by hundreds, if n0t th0usands, 0f pe0ple. These
fracti0nated all0tments are 0ften un0ccupied pieces 0f pr0perty that the US c0ntinues t0
administer under res0urce leases and has made unusable f0r any 0ther use since devel0pment
requires the agreement 0f 51% 0f all 0ther 0wners, an impr0bable situati0n. Individual Indian
M0ney (IIM) acc0unts are issued t0 each 0f th0se individuals, which are credited with any
m0ney earned by the rentals (0r w0uld have been had there been appr0priate acc0unting and
crediting maintained). Acc0unting has dev0lved int0 a bureaucratic nightmare, with hundreds 0f
th0usands 0f IIM acc0unts currently in existence.

7
 BACKGR0UND 0F THE CASE

A case against the Department 0f the Interi0r (D0I) regarding m0ney acc0unt administrati0n was
res0lved in 1999. Individual Indian M0nies (IIMs) are funds kept by the federal g0vernment f0r
the benefit 0f individual Indians, rather than tribal 0rganisati0ns. The discussi0n f0cused 0n the
federal g0vernment's trust pr0mise t0 American Indians. The Supreme C0urt 0f the United States
initially declared in 1831 that the federal g0vernment serves as trustee f0r Indian tribes,
c0mparing the relati0nship t0 that 0f "a ward t0 its guardian." The United States retains title t0 a
large part 0f Indian tribal territ0ry and pr0perty all0cated t0 individual Native Americans as
trustee. In exchange f0r these m0nies, the federal g0vernment pays the pr0per Indian land0wners
in line with federal law. The US is resp0nsible f0r managing Indian funds and assets earned fr0m
these territ0ries and held in trust f0r the Indian pe0ple.

The lawsuit f0cused 0n the federal instituti0ns' statut0ry resp0nsibility f0r managing Indian
m0ney, as well as Indians' legal 0wnership rights t0 cash and assets held in trust f0r them. The
c0urts have rec0gnised that Indian affairs legislati0n and Indian pr0perty are subject t0 extensive
c0ngressi0nal auth0rity, but that Indian pr0perty may n0t be transferred with0ut due
c0mpensati0n. N0t a demand f0r c0mpensati0n, but a lawsuit against the trustee (in this instance,
the US) f0r revenue and distributi0ns fr0m a trust fund f0r individual Indians.

As a result 0f the federal g0vernment's fiduciary duty in c0nnecti0n with three unique gr0ups 0f
m0ney acc0unts held in trust f0r particular Indian beneficiaries, the C0bell case emerged.
Individual Indian M0ney (IIM) acc0unts are 0ften used t0 refer t0 these types 0f transacti0ns.
The names 0f them are as f0ll0ws: (3) Judgment and Per Capita Acc0unts—created t0 receive
funds fr0m tribal distributi0ns 0f litigati0n settlements and tribal revenues, as well as revenues
fr0m the appr0ximately 11 milli0n acres held in trust f0r individual Indians by the United States;
(2) Special Dep0sit Acc0unts (SDAs)—created t0 h0ld funds that c0uld n0t be immediately
credited t0 the appr0priate IIM acc0unt h0lder; and (3) Land-based Acc0unts—created t0 receive
funds fr0m tribal distributi0ns 0f litigati0n settlements and tribal revenues. The Secretary 0f the
Interi0r and the Secretary 0f the Treasury were each entrusted with the 0bligati0n 0f acting as
trustees f0r the IIM acc0unts by C0ngress. The Bureau 0f Indian Affairs (BIA) is in charge 0f the
management 0f trust lands as well as the c0llecting 0f inc0me 0n behalf 0f Indian tribes.

8
The BIA, 0ffice 0f Trust Funds Management, and the 0ffice 0f the Special Trustee all have trust
0bligati0ns relating t0 IIM acc0unts. M0st transacti0ns inv0lving IIM acc0unts require BIA
appr0val.1 Theref0re, The Bureau 0f Indian Affairs (BIA) is in charge 0f managing IIM funds
derived fr0m rights-0f-way and mineral pr0ducti0n, as well as grazing leases, timber leases,
timber sales, 0il and gas pr0ducti0n, and mineral pr0ducti0n, in additi0n t0 0verseeing IIM funds
generated by inc0me-pr0ducing activities 0n all0tment land. The 0ffice 0f Trust Fund
Management (0TFM) is resp0nsible f0r carrying 0ut the BIA's fiduciary 0bligati0n t0 keep
accurate financial rec0rds 0n these 0perati0ns. 0TFM als0 w0rks with the Treasury Department
0n the banking side 0f the Interi0r Department's trust 0bligati0n. 0fficers fr0m the Treasury
Department and the Bureau 0f Internal Revenue c0llect payments and dep0sit them in l0cal
banks with a Treasury General Acc0unt. Rather 0f h0lding separate acc0unts f0r each IIM fund,
the Treasury Department maintains a single "IIM acc0unt" f0r all IIM funds, with the 0ffice 0f
the Treasurer and Fiscal Management (0TFM) in resp0nsibility 0f maintaining acc0unting
rec0rds f0r the individual funds. Treasury als0 undertakes investments 0n behalf 0f the Interi0r
Department. Finally, the Trust Fund Management Ref0rm Act 0f 2002 established the 0ffice 0f
the Special Trustee f0r American Indians t0 0versee "trust ref0rm eff0rts."

As the h0lder 0f these acc0unts in trust f0r Indian beneficiaries, the federal g0vernment has
fiduciary resp0nsibility t0 manage the trust lands and revenues derived fr0m them f0r the benefit
0f the beneficiaries. H0wever, the federal g0vernment has said that it d0es n0t kn0w the actual
number 0f IIM trust acc0unts that it is resp0nsible f0r administering, n0r d0es D0I kn0w the
accurate am0unts f0r each IIM acc0unt. The Department 0f the Interi0r has admitted that it is
unable t0 give an accurate acc0unting f0r the vast maj0rity 0f IIM trust beneficiaries. The
Treasury Department is likewise experiencing issues with trust fund administrati0n pr0cesses.
First, the Treasury Department has all0wed the deleti0n 0f rec0rds that are m0re than six years
and seven m0nths 0ld and has taken n0 eff0rt t0 guarantee that papers pertaining t0 IIM
acc0unting are maintained. Furtherm0re, there may be a time lag between dep0siting m0nies
with the Treasury Department and investing th0se funds. There may als0 be a time lag between
when a check is issued and when the payee delivers it, resulting in l0st interest.

1Cobell v. Babbitt, 91 F.Supp.2d 1, 9 (D.D.C. 1999), afff'd, 240 F.3d 1081 (D.C. Cir. 2001).

9
C0ngressi0nal 0versight c0mmittees became c0ncerned with IIM mismanagement in the late
1980s and began h0lding 0versight hearings regarding the IIM acc0unts in 1988. F0ur years
later, the H0use C0mmittee 0n G0vernment 0perati0ns pr0duced a rep0rt highly critical 0f the
Interi0r Department.2 The Indian Trust Fund Management Ref0rm Act (the Ref0rm Act) was
passed by C0ngress in 1994, rec0gnising the federal g0vernment's pre-existing trust
resp0nsibilities and identifying s0me 0f the Interi0r Secretary's trust fund resp0nsibilities, such
as pr0viding adequate acc0unting f0r trust fund balances; pr0viding adequate c0ntr0ls 0ver
receipts and disbursements; pr0viding accurate and timely rec0nciliati0ns; and preparing and
supplying peri0dic statements 0f acc0unt pedigree. N0tably, the 0riginal H0use measure (H.R.
1846) w0uld have limited the acc0unting 0bligati0n t0 the future. That clause was 0mitted when
a c0mparable measure was pr0p0sed t0 replace H.R. 1846. This new bill became the Ref0rm
Act, and the c0urts interpreting it in the C0bell litigati0n have determined that D0I 0wes a
hist0rical acc0unting duty g0ing back t0 June 24, 1938.3 As the U.S. C0urt 0f Appeals f0r the
D.C. Circuit (D.C. Circuit) stated, “the 1994 Act identified a p0rti0n 0f the g0vernment’s
specific 0bligati0ns and created additi0nal means t0 ensure that the 0bligati0ns w0uld be carried
0ut.”

2Misplaced Trust: The Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund, H.Rept. 102-
499 (1992).
3Cobell v. Norton, 240 F.3d 1081, 1102 (D.C. Cir. 2001). The statute which authorized the Secretary to

make deposits to be held in trust by the United States was enacted on June 24, 1938. 52 Stat. 1037

10
 FACTS 0F THE CASE

The Native American Rights Fund (NARF), t0gether with 0ther lawyers, filed a class acti0n
lawsuit against the federal g0vernment 0n June 10, 1996, f0r the g0vernment's failure t0 pr0perly
handle Indian trust funds. The case was br0ught 0n behalf 0f all current and f0rmer individual
Indian trust beneficiaries, as well as 0ver 300,000 current Individual Indian M0ney (IIM)
acc0unt h0lders.

The plaintiff class was certified by the United States District C0urt f0r the District 0f C0lumbia
0n February 4, 1997. This implies that unless they filed separate c0mplaints f0r mismanagement
bef0re t0 June 10, 1996, all current and previ0us individual Indian trust beneficiaries, including
appr0ximately 300,000 current IIM acc0unt h0lders, are aut0matically included as plaintiffs in
this class acti0n case.

The assets at issue in this case are n0t g0vernment gifts, but rather m0ney bel0nging t0 0rdinary
Indians. The maj0rity 0f this m0ney has c0me thr0ugh the sale 0r leasing 0f natural res0urces 0n
designated Indian territ0ry. This case c0ncerns the g0vernment's persistent inability t0 acc0unt
f0r these individual Indian trust funds; it d0es n0t address the mismanagement 0f tribal trust
funds 0r the mishandling 0f the underlying Indian lands and natural res0urces.

The federal g0vernment, in its functi0n as trustee, auth0rises all leases and sales 0f natural
res0urces 0n Indian territ0ry and is resp0nsible f0r c0llecting payments 0n behalf 0f the
beneficial Indian 0wner 0f the pr0perty. Since the turn 0f the century, the g0vernment has
c0llected billi0ns 0f d0llars thr0ugh agricultural and grazing leases, timber sales, and 0il and gas
extracti0n 0n Indian lands, m0ney that is meant t0 have been returned t0 the legal Indian 0wner.
N0b0dy kn0ws if this happened 0r n0t since the g0vernment has never b0thered t0 acc0unt f0r
the Indian trust funds under its c0ntr0l in 0ver a century.

The acti0n alleges, am0ng 0ther things, that the federal g0vernment has c0ntinu0usly failed t0
ref0rm an acc0unting system that it admits is fundamentally faulty and entirely useless at
acc0unting f0r these assets. As a c0nsequence, billi0ns 0f cash bel0nging t0 specific Indians
remain unacc0unted f0r t0 this day.

11
The suit has tw0 basic 0bjectives:

1. T0 require the federal g0vernment t0 create and maintain an adequate system t0

pr0perly manage and accurately acc0unt f0r the trust assets 0f individual Indians.
2. T0 require the federal g0vernment t0 pr0vide a full and accurate acc0unting t0
individual Indian trust beneficiaries, and t0 restate IIM acc0unt balances
acc0rdingly.

ISSUES

● H0w the fracti0nati0n 0f interests in many 0f the all0tment lands can be all0tted?
● Determining h0w far int0 the past a hist0rical acc0unting sh0uld g0.

THE LITIGATI0N

F0r purp0ses 0f trial, the case has been bifurcated int0 tw0 phases which r0ughly c0rresp0nd t0
these 0bjectives.

• Despite the g0vernment's delaying tactics, which included c0ntempt citati0ns issued
against Secretary 0f the Interi0r Bruce Babbitt and then-Secretary 0f the Treasury R0bert
Rubin in early 1999, the first phase trial began 0n June 10, 1999 B three years t0 the day
after the acti0n was filed. Thr0ugh0ut the six-week trial, Secretary Babbitt c0nceded that
the United States is failing t0 meet its fiduciary resp0nsibility t0 individual Indian trust
beneficiaries. Kevin G0ver, Assistant Secretary f0r Indian Affairs, als0 c0nfirmed that
the g0vernment's mechanism f0r managing Indian trust assets is dysfuncti0nal.
• 0n December 21, 1999, the c0urt delivered a decisi0n c0ncluding that the US has vi0lated
its trust 0bligati0ns t0 individual Indian trust beneficiaries and that the g0vernment's
delayed trust ref0rm measures are insufficient t0 remedy the c0ntinuing breach 0f trust.
The c0urt, describing its decisi0n as a remarkable success f0r the Indian plaintiffs, urged
the g0vernment t0 ad0pt appr0priate ref0rm measures, reserving jurisdicti0n f0r at least
five years t0 guarantee that change is implemented. Additi0nally, the c0urt created the

12
 framew0rk f0r the litigati0n's sec0nd phase, which w0uld include an acc0unting t0 the
individual Indian trust beneficiaries.
• The g0vernment challenged the district c0urt verdict in January 2000, claiming that the
c0urt exceeded its p0wer by asking the g0vernment t0 administer and acc0unt f0r Indian
trust m0nies appr0priately. 0ver a year later, 0n February 23, 2001, a three-judge panel 0f
the United States C0urt 0f Appeals f0r the District 0f C0lumbia Circuit unanim0usly
affirmed the l0wer c0urt finding, emphasising the gravity 0f the g0vernment wr0ngd0ing
at issue. The appeals c0urt judgement is an0ther significant win f0r the Indian plaintiffs
and establishes the framew0rk f0r the case's sec0nd phase, the acc0unting, which has n0t
yet been scheduled f0r trial.

The C0bell litigati0n began in 1996, and itsd0cket enumerated 0ver 3,600 d0cuments and 0ver
20 federal district c0urt and c0urt 0f appeals 0pini0ns. The f0ll0wing attempts t0 distill the
hist0ry 0f this litigati0n s0 that it f0cuses 0n the substantive issues regarding the IIM acc0unts.

In 1996, a gr0up 0f IIM acc0unt h0lders filed a class acti0n lawsuit seeking t0 c0mpel the
perf0rmance 0f trust 0bligati0ns, alleging that the Secretaries 0f the Interi0r and Treasury—as
delegates 0f the federal g0vernment's trust resp0nsibilities—had vi0lated plaintiffs' fiduciary
duties by mismanaging the IIM acc0unts. Tw0 years later, the district c0urt judge divided the
trial int0 tw0 stages, with Phase 1 f0cusing 0n impr0ving the IIM trust funds' administrati0n and
acc0unting, and Phase 2 addressing the acc0unts' hist0rical acc0unting. In 1999, United States
District Judge R0yce C. Lamberth ruled 0n Phase 1, c0ncluding that the Treasury and Interi0r
Secretaries had vi0lated their fiduciary 0bligati0ns t0 IIM acc0unt h0lders. The transiti0n t0
Phase 2 was challenging because the defendants were unable t0 present pr0p0sals f0r
restructuring the acc0unting system and pr0viding hist0rical acc0unting in terms acceptable t0
the c0urt.4

Tw0 specific issues made it particularly difficult f0r D0I t0 pr0vide an acc0unting in the C0bell
litigati0n. The first 0f these issues was the fracti0nati0n 0f interests in many 0f the all0tment
lands. These interests have been fracti0nated 0ver the years as they have been divided am0ng the
heirs 0f the 0riginal all0ttees, increasing exp0nentially with each generati0n and leading t0
incredibly small interests that are difficult t0 track. D0I estimates that there are currently 0ver 1.4

4Cobell v. Norton, 226 F.Supp.2d 1, 162 (D.D.C. 2002).

13
milli0n fracti0nal interests subdividing 58,000 tracts 0f land. While D0I has stated that it can
perf0rm a transacti0n-by-transacti0n acc0unting 0f the judgment and per capita acc0unts and the
SDAs, the pr0blems presented by the land-based acc0unts have pr0ven very difficult t0 res0lve.
D0I has argued that it sh0uld be able t0 use statistical sampling with respect t0 s0me 0f these
acc0unts.

The sec0nd difficult questi0n is determining h0w far int0 the past a hist0rical acc0unting sh0uld
g0. At vari0us p0ints in the litigati0n, the different parties argued f0r an acc0unting 0f
transacti0ns as far back as 1887 (date 0f the All0tment Act), 1938 (creati0n 0f the Secretary's
auth0rity t0 dep0sit tribal trust funds), and 1994 (date 0f the Ref0rm Act). Res0lving this
pr0blem w0uld likely enc0mpass a ch0ice between what is fair and what is p0ssible. 0ne c0uld
have very different answers t0 these tw0 questi0ns, mainly because, as the litigati0n sh0wed, D0I
and Treasury rec0rds relating t0 the IIM acc0unts are at best inc0mplete.

In January 2003, D0I pr0vided a new hist0rical acc0unting plan t0 Judge Lamberth that w0uld
c0ver all acc0unts 0pen as 0f 0ct0ber 25, 1994, when the Ref0rm Act was enacted. After
reviewing D0I's plan, Judge Lamberth in September 2003 issued a c0ntr0versial structural
injuncti0n giving the c0urt br0ad 0versight auth0rity t0 ensure that (1) D0I carries 0ut the
acc0unting (the c0urt ad0pted what is essentially a m0dified versi0n 0f D0I's hist0rical
acc0unting plan, but did n0t all0w D0I t0 use statistical sampling with respect t0 the land-based
acc0unts); and (2) D0I ref0rms its system f0r managing the IIM acc0unts. Judge Lamberth als0
app0inted a m0nit0r t0 ensure c0mpliance with the injuncti0n 0rder.5

Appr0ximately a m0nth after the Senate passed the appr0priati0ns bill, the H0use passed a rider
t0 the bill that stated that "[n]0thing in [the Ref0rm Act] 0r any 0ther statute, and n0 principle 0f
c0mm0n law, shall be c0nstrued 0r applied t0 require the Department 0f the Interi0r [t0]
c0mmence 0r c0ntinue hist0rical acc0unting activities with respect t0 the [IIM] Trust" until
2005, 0r until C0ngress m0re clearly defines D0I's acc0unting 0bligati0ns under the Ref0rm Act.
C0nf0rming t0 Judge Lamberth's structural injuncti0n decisi0n, acc0rding t0 C0ngress, might
c0st as much as $6 billi0n, and channelling that kind 0f m0ney w0uld be "devastating t0 the
Indian nati0n." F0ll0wing that, in fiscal years 2005 and 2006, tw0 further appr0priati0ns acts

5Cobell v. Norton, 283 F.Supp.2d 66, 225 (D.D.C. 2003).

14
restricted the Department 0f the Interi0r's access t0 m0ney f0r hist0rical acc0unting t0 a
c0mbined t0tal 0f $58 milli0n.

0n December 10, 2004, the D.C. Circuit issued an 0pini0n striking d0wn alm0st all 0f Judge
Lamberth's injuncti0n.6 The c0urt initially determined that, in acc0rdance with C0ngress's
mandate c0ntained in the af0rementi0ned appr0priati0ns rider, the D0I c0uld n0t be required t0
d0 any hist0rical acc0unting. The c0urt 0bserved, h0wever, that the directive w0uld expire 0n
December 31, 2004, and the justices said that they c0uld n0t "address the c0ncerns that might
arise if the district c0urt reissued th0se rules [requiring hist0rical acc0unting] after December 31,
2004." F0ll0wing that, the c0urt essentially reversed Judge Lamberth's 0rder against D0I's
systemic ref0rm. The D.C. Circuit c0ncluded, citing Supreme C0urt precedent, that judicial
review under the Administrative Pr0cedure Act (APA) is restricted t0 individual agency acts and
cann0t be expanded t0 "claims 0f widespread systemic failure." The c0urt determined that Judge
Lamberth had erred by issuing his injuncti0n int0 this latter d0main, which is m0re appr0priately
reserved f0r executive 0r legislative acti0n. While the D.C. Circuit upheld Judge Lamberth's
requirement that D0I submit a plan 0utlining h0w it will c0mply with its fiduciary 0bligati0ns,
the c0urt determined that 0ther elements 0f Lamberth's 0rder (e.g., the app0intment 0f a m0nit0r,
the listing 0f and c0mpliance with tribal laws) were unrelated t0 specific findings 0f wr0ngd0ing
and suggested a greater, and inappr0priate, judicial intrusi0n int0 agency discreti0n.

0n February 23, 2005, Judge Lamberth granted an0ther structural injuncti0n relating t0 hist0rical
acc0unting, n0ting that the date specified in the appr0priati0ns rider had past. He appr0ved a
m0dified versi0n 0f the D0I's hist0rical acc0unting plan, but disall0wed the use 0f statistical
sampling and mandated acc0unting dating all the way back t0 the 1887 All0tment Act. He
declined t0 p0stp0ne the ruling pending appeal, n0ting the plaintiffs' nine-year wait and "a delay
imp0sed by C0ngress in a weird and unsuccessful eff0rt t0 legislate a res0luti0n in this matter."

Judge Lamberth's injuncti0n and hist0rical acc0unting 0rder were vacated by the D.C. Circuit 0n
N0vember 15, 2005, and the district c0urt was instructed t0 c0nsider D0I's plan f0r statistical
sampling t0 acc0mplish hist0rical acc0unting while keeping in mind the general language 0f the
Ref0rm Act and subsequent c0ngressi0nal funding limitati0ns. The D.C. Circuit suggested that
the Ref0rm Act sh0uld n0t be interpreted as mandating "the best available acc0unting with0ut

6Cobell v. Norton, 392 F.3d 461 (D.C. Cir. 2004).

15
regard t0 c0st." Judge Lamberth was eventually rem0ved fr0m this case by the c0urt 0f appeals
due t0 abuse 0f discreti0n and bias 0n his part.

0n January 30, 2008,7 Judge James R0berts0n, wh0 was app0inted t0 the case in December 2006,
rejected D0I's hist0rical acc0unting plan n0t f0r its use 0f statistical sampling meth0ds, but f0r its
extent 0f years and acc0unts 0r m0nies included. He theref0re c0ncluded that D0I's acc0unting
f0r the m0ney was imp0ssible "as a matter 0f law" because D0I was unable t0 "create an
acc0unting that passes muster as a trust acc0unting" 0wing t0 C0ngress' insufficient financing.
Judge R0berts0n c0nvened a hearing t0 determine an appr0priate remedy.

Judge R0berts0n rendered a ruling 0n the remedy issue 0n August 7, 2008, awarding plaintiffs
$455.6 milli0n in reparati0ns. The value sh0ws the am0unt t0 be credited t0 plaintiffs' acc0unts
f0r receipts that were n0t credited. Claims f0r damages f0r unc0llected m0nies 0r f0r asset
mismanagement are n0t included in the am0unt and were n0t br0ught bef0re the c0urt in C0bell.
T0 assess the am0unt 0f restituti0n, the c0urt examined the m0dels agreed up0n by the parties f0r
calculating the difference between what Treasury dep0sited as receipts t0 the IIM acc0unts and
what was distributed t0 individual acc0unts 0r acc0unt h0lders. The c0urt used inf0rmati0n
gleaned fr0m years 0f trying t0 devise a suitable and reliable meth0d 0f rebuilding the data at the
D0I and Treasury t0 evaluate the m0dels submitted by the parties.

The c0urt ch0se n0t t0 pr0vide plaintiffs the full benefit 0f evidentiary presumpti0ns in their
fav0ur while devel0ping its remedy. As a result, the c0urt shifted the burden 0f evidence 0n the
g0vernment's statistical meth0d0l0gy f0r calculating data it was unable t0 supply. Acc0rding t0
the D0I, 0nly 77% 0f funds received f0r the IIM system were p0sted t0 IIM acc0unts. Accepting
the g0vernment's revenues c0mputati0n but devel0ping their 0wn meth0d f0r determining the
annual distributi0n rate, the plaintiffs asserted a $3.6 billi0n gap 0ver 122 years. They pr0p0sed
adding appr0ximately $43.4 billi0n as a "benefit t0 the g0vernment" based 0n a f0rmula they
devised that assumed whatever was n0t distributed t0 acc0unt h0lders was available f0r general
g0vernmental expenses, thereby relieving the g0vernment 0f the need t0 issue and pay interest
0n Treasury b0nds.

7 Cobell v. Kempthorne, 532 F.Supp.2d 37 (D.D.C. 2008) (Cobell XX).

16
The g0vernment pr0duced evidence explaining s0me 0f the sh0rtfall between receipts and
disbursements. A D0I expert testified that the discrepancy reflected the fact that n0t all the funds
received int0 Treasury's IIM acc0unt are intended t0 be credited t0 individual Indian trust fund
acc0unts. S0me, such as tribal trust fund receipts 0r bid 0r lease dep0sits, are t0 be funneled 0n a
pass-thr0ugh basis t0 0ther recipients.

Having admitted that 23% 0f IIM receipts had n0t been p0sted t0 IIM acc0unts and faced with
the plaintiffs' charge that appr0ximately $4 billi0n had n0t been disbursed t0 acc0unt h0lders, the
g0vernment was required t0 explain the sh0rtfall and put a figure 0n it. The explanati0n was
essentially that the individual Indian trust beneficiaries were n0t entitled t0 all 0f the funds that
Treasury dep0sited in the IIM acc0unt. The g0vernment attempted t0 dem0nstrate this p0int by
using a statistical m0del that empl0yed a "multiple imputati0n" technique t0 acc0unt f0r the
multiplicity 0f variables imputed t0 the large range 0f missing data with respect t0 the acc0unts.

With b0th the plaintiffs' and defendant's statistical m0dels bef0re him, Judge R0berts0n n0t 0nly
f0und the m0del 0ffered by the plaintiffs t0 be defective, he als0 criticized their failure t0 0ffer
specific evidence t0 discredit the defendant's m0del. Acc0rding t0 his 0pini0n, the plaintiffs'
m0del c0uld n0t be c0nsidered, am0ng 0ther reas0ns, because it was inc0nsistent in accepting
the g0vernment's estimate 0f receipts, but n0t 0f disbursements, which reflected "a super-str0ng
interpretati0n 0f the presumpti0n against the breaching trustee that cann0t be equitably applied t0
the trusts at issue here."

Acc0rdingly, Judge R0berts0n accepted the g0vernment's m0del, but pr0vided a certain
evidentiary advantage t0 the plaintiffs by selecting the "maximally c0nservative" estimate.50
Theref0re, using the maximally c0nservative estimate as established by the g0vernment m0del,
the c0urt c0ncluded that $455.6 milli0n was the am0unt missing in the IIM trust and that 0nly
that am0unt w0uld be awarded in restituti0n.

District C0urt Instructed t0 Enf0rce the "Best Acc0unting" D0I Can Pr0vide with "Limited
G0vernment Res0urces"

17
The July 24, 2009,8 decisi0n issued by the U.S. C0urt 0f Appeals f0r the District 0f C0lumbia
vacated the h0lding in Judge R0berts0n's January 2008 decisi0n that D0I did n0t have t0 c0nduct
an acc0unting due t0 imp0ssibility and remanded the case t0 the district c0urt f0r further
pr0ceedings.9 The c0urt 0f appeals determined that the district c0urt was pr0per t0 defer t0 the
D0I's acc0unting appr0ach since it "'a[r0se] 0ut 0f an administrative weighing 0f c0st, time, and
accuracy.'" The c0urt 0f appeals, h0wever, determined that the district c0urt's decisi0n that "the
right breadth 0f the acc0unting requirement... is the 0utc0me... 0f a legal interpretati0n 0f the
1994 Act and 0ther acts regulating the IIM trust" was n0t entirely accurate. While the district
c0urt was c0rrect in c0ncluding that the acc0unting's sc0pe is determined by statute, the c0urt 0f
appeals c0ncluded that "the unique nature 0f this trust requires the district c0urt t0 exercise
equitable p0wers in res0lving the parad0x between classical acc0unting and limited g0vernment
res0urces." Thus, the c0urt 0f appeals determined that the district c0urt erred in presuming that it
c0uld n0t change the sc0pe 0f the acc0unting in 0rder t0 0ffer the best acc0unting feasible within
the c0nstraints imp0sed by C0ngress. Rather than that, "the district c0urt sitting in equity must
d0 all p0ssible t0 assure they get a fair acc0unting fr0m Interi0r." The district c0urt's declarati0n
0f imp0ssibility runs c0unter t0 the necessity 0f fair acc0unting—0ne that makes the best use 0f
limited g0vernment res0urces."

After c0ncluding that the D0I must d0 the best acc0unting feasible given the funds auth0rised by
C0ngress f0r the purp0se, the c0urt 0f appeals gave guidelines t0 the district c0urt t0 assist in
establishing the c0rrect sc0pe 0f the acc0unting. The c0urt 0f appeals said first that "the district
c0urt sh0uld empl0y its equitable auth0rity t0 ensure that Interi0r distributes its limited res0urces
in a manner that appr0ximates the pr0jected financial w0rth 0f payments 0wed t0 class
members." Additi0nally, the c0urt 0f appeals urged the district c0urt t0 "expl0re l0w-c0st
statistical meth0d0l0gies f0r calculating benefits acr0ss class subgr0ups." Finally, the c0urt 0f
appeals determined that the district c0urt erred in requiring an acc0unting f0r acc0unts cl0sed
bef0re t0 the enactment 0f the 1994 Ref0rm Statute, since the act envisi0ned 0nly an acc0unting
f0r m0ney held in trust by the United States at the time 0f the act's passage.

8Cobell v. Salazar, 573 F.3d 808 (D.C. Cir. July 24, 2009) (cert. dismissed 2010 U.S. LEXIS 5260) (Cobell
XXII).
9Cobell XXII, 573 F.3d at 809.

18
Settlement Date: December 7, 2009 The Interi0r and Treasury Secretaries neg0tiated a settlement
deal with the plaintiffs' class 0n December 7, 2009. H0wever, the settlement's pr0visi0ns state
that it will n0t take effect unless C0ngress auth0rises it. 0riginally, the settlement deal required
C0ngress t0 appr0ve it legislatively by December 31, 2009. H0wever, the deadline was extended
eight times, t0 February 28, 2010, April 16, May 25, June 15, July 9, August 6, and eventually t0
January 7, 2011. After many unsuccessful eff0rts, C0ngress appr0ved the settlement thr0ugh the
Claims Res0luti0n Act 0f 2010 (CRA), which President 0bama signed 0n December 8, 2010.

The settlement agreement res0lved the claims 0f tw0 distinct gr0ups 0f pe0ple. 0ne categ0ry,
dubbed the "Hist0rical Acc0unting Class," is described as Indian beneficiaries wh0 held an 0pen
IIM acc0unt between 0ct0ber 25, 1994, and September 30, 2009, with at least 0ne cash
transacti0n attributed t0 it. Individual Indian beneficiaries alive as 0f September 30, 2009 wh0
have 0r had IIM acc0unts between appr0ximately 1985 and the present (the peri0d during which
IIM acc0unts were maintained in electr0nic databases) and individual Indian beneficiaries wh0,
as 0f September 30, 2009, had a rec0rded 0r 0ther dem0nstrable 0wnership interest in land held
in trust 0r restricted status, regardless 0f the existence 0f an IIM acc0unt 0r pr0ceeds generated
fr0m it.

The settlement agreement abs0lved the federal g0vernment 0f allegati0ns f0r mishandling 0f IIM
funds bel0nging t0 b0th the Hist0rical Acc0unting and Trust Administrati0n classes. H0wever,
the settlement expressly excludes fr0m the release (1) claims f0r payment 0f existing IIM
acc0unt balances; (2) claims f0r payment 0f existing am0unts in special dep0sits acc0unts, tribal
acc0unts, 0r judgement fund acc0unts; (3) claims f0r breach 0f trust 0r alleged wr0ngs 0ccurring
after September 30, 2009; and (4) claims f0r envir0nmental damages 0ther than th0se expressly
identified as Land Administrat0r claims. Additi0nally, the settlement indicated that the federal
g0vernment w0uld have n0 additi0nal m0netary resp0nsibilities when the sums agreed up0n in
the settlement are given.

The settlement created tw0 funds in exchange f0r this liability release. The first fund, t0 be
termed the "Acc0unting/Trust Administrati0n Fund," w0uld receive $1.412 billi0n fr0m the
Judgment Fund. Each participant 0f the Hist0rical Acc0unting Class will receive $1,000 fr0m
this fund. F0ll0wing this payment, the f0ll0wing step entails identifying the names 0f the Trust
Administrati0n Class members and giving each member a pr0 rata share 0f the Trust

19
Administrati0n Class's assets. This sum includes a $500 d0wn payment. Additi0nally, each
member 0f the class will receive a pr0 rata share 0f the Acc0unting/Trust Administrati0n Fund's
remaining funds. Any residual funds will be utilised t0 supp0rt a pr0gramme called "Funds f0r
Indian Educati0n Sch0larships," which assists Indian students with the expense 0f p0st-
sec0ndary educati0n.

$2 billi0n w0uld be all0cated t0 the sec0nd fund, dubbed the "Trust Land C0ns0lidati0n Fund."
This 10-year fund will be used t0 buy fracti0nal interests in trust 0r restricted pr0perty in
acc0rdance with 25 U.S.C. 2201 et seq., which permits the Land C0ns0lidati0n pr0gramme. This
is the primary mechanism thr0ugh which the federal g0vernment c0ns0lidates partiti0ned trust
and restricted lands. Additi0nally, funds fr0m this acc0unt will be used t0 supp0rt the "Funds f0r
Indian Educati0n Sch0larships."

The CRA excludes am0unts received by individual Indians pursuant t0 the settlement fr0m
inclusi0n as gr0ss inc0me f0r federal tax purp0ses. The settlement and CRA als0 left f0r the
district c0urt's c0nsiderati0n the am0unt 0f att0rneys' fees and the am0unt 0f the incentive award
f0r the named plaintiffs 0f the class.

The district c0urt appr0ved the settlement 0n July 27, 2012. A few members 0f the class
appealed the settlement t0 the U.S. C0urt 0f Appeals f0r the D.C. Circuit, which upheld the
fairness 0f the settlement. After the Supreme C0urt denied a petiti0n f0r certi0rari10 and the
appeal peri0d expired, the settlement became final 0n N0vember 24, 2012.

10Craven v. Cobell, 2012 U.S. LEXIS 8318 (October 29, 2012).

20
 C0NCLUSI0N
The settlement in C0bell v. Salazar was permitted 0n December 8, 2010 under the Claims
Res0luti0n Act 0f 2010. The United States g0vernment will pay $1.4 billi0n t0 class members
wh0 requested a hist0rical acc0unting 0f their IIM acc0unts under the terms 0f the settlement (an
abbreviati0n f0r Individual Indian M0nies). The g0vernment will c0ntribute an extra $2 billi0n
t0ward the c0ns0lidati0n 0f fracti0nated trust and restricted lands.
C0bell v. Salazar was first filed in 1996 and c0ncerned the Department 0f the Interi0r's (D0I)
administrati0n 0f multiple m0ney acc0unts. As 0pp0sed t0 tribal trust funds, these m0ney
acc0unts, 0r IIMs, are funds held by the federal g0vernment f0r the benefit 0f individual Indians.
The case was a debate c0ncerning the federal g0vernment's trust duty t0wards American Indians.
The United States retains title t0 a large p0rti0n 0f Indian tribal territ0ry and land all0cated t0
individual Indians in its p0siti0n as trustee. The federal g0vernment receives receipts fr0m
leases, f0rest sales, and mineral r0yalties f0r distributi0n t0 the relevant Indian land 0wners. The
US has fiduciary 0bligati0ns f0r the management 0f Indian cash and assets 0btained fr0m these
lands and held in trust. H0wever, numer0us beneficiaries 0f these trust funds said that D0I
misused these m0ney and br0ught acti0n t0 demand an accurate acc0unting 0f these m0nies and,
if merited, t0 rec0ver damages.
After m0re than a decade 0f litigati0n c0ncerning IIM acc0unt management 0bligati0ns—which
included 0ver 3,600 d0cuments and 0ver 20 federal district c0urt and c0urt 0f appeals 0pini0ns—
the parties achieved a settlement 0n December 7, 2009. H0wever, the settlement, which included
pr0visi0ns f0r the establishment 0f a Trust Administrati0n Fund and a Land C0ns0lidati0n Fund,
c0uld n0t take effect with0ut legislative permissi0n. C0ngress appr0ved the settlement a year
later via the Claims Res0luti0n Act 0f 2010 (CRA), which President 0bama signed 0n December
8, 2010.
0n July 27, 2011, the district c0urt auth0rised the deal. The settlement became effective 0n
N0vember 24, 2012, after challenges t0 the United States C0urt 0f Appeals f0r the District 0f
C0lumbia Circuit and requests f0r certi0rari t0 the Supreme C0urt were refused.

21
 BIBLI0GRAPHY

● Br00ke Campbell, C0bell Settlement Finalized After Years 0f Litigati0n: Vict0ry at

Last?, Am. Indian L. Rev. 629 (2016)
● Mary C. Curtis, "0bama Hails Passage 0f Settlement f0r Native Americans, Black
Farmers", Huffingt0n P0st, 30 N0vember 2010, accessed 1 December 2011
● James Warren, "A Vict0ry f0r Native Americans?", The Atlantic, 7 June 2010

22