Appeals court rules for trust beneficiaries

Brian Stockes
3/7/01

WASHINGTON - A federal court has again ruled the federal government violated its trust responsibilities to American Indians after falling to manage billions of dollars in tribal trust funds.

The ruling came as part of an appeal by the government after an earlier decision by Judge Royce C. Lambert in Cobell vs. Norton, formerly Cobell vs. Babbitt.

Elouise Cobell, a member of the Blackfeet tribe, along with a group of other Indian plaintiffs, initiated a class action lawsuit in 1996 to force the federal government to account for billions of dollars in unreconciled tribal trust funds and individual Indian monies.

In December 1999, Judge Lamberth ruled that Indian plaintiffs had a judicially enforceable right to an accounting of their money and that the secretaries of Interior and Treasury were in breach of their trust responsibilities to Indian account beneficiaries.

Judge Lamberth kept jurisdiction over trust reform efforts for five years and ordered Interior officials to file quarterly reports on their progress. The government appealed that decision in January 2000.

A three-judge panel for the U.S. Court of Appeals agreed with Lamberth and ruled that record keeping and data collection has been so bad the federal government cannot even execute "the most fundamental of trust duties, an accurate accounting."

"We are very excited about the result," said Keith Harper, an attorney for the Indian plaintiffs. "The failure here is that the government has acted like this is a regulatory process when this is a trust. When the government acts as a trustee it should follow the rules of a trustee."

The panel held that, "Notwithstanding the fact that appellants have taken significant steps toward the discharge of the federal government's fiduciary obligations, appellants clearly have yet to fulfill their trust duties. The relief ordered was well within the district court's equitable powers."

The appeals court said that during the initial trial in 1999, Lamberth heard substantial evidence that the government attempts at reform were " a day late and a dollar short." The court also rejected a government argument that a 1994 law limited its responsibility. The 1994 law requires an accounting for "all funds," the court said. "All funds means all funds ... ."

The appeals court disagreed with the government and said the lack of a timetable "does not give government officials carte blanche to ignore their legal obligations."

The government appealed Judge Lamberth's ruling based on the Justice Department's position that Lamberth's decision goes beyond the scope of the law and the intent of Congress. The government claimed Judge Lamberth overreached his authority when he ordered a full account of Indian trust funds and appointed himself as the overseer of trust reform efforts.

In 1994, Congress passed the Indian Trust Fund Management Reform Act in an attempt to begin to rectify long-standing problems. Among other things, the act created the Office of the Special Trustee for American Indians and the Advisory Board on Trust Fund Management Reform. It was expected the special trustee would create an accountable system by implementing reforms necessary for proper discharge of the secretary's trust responsibilities to Indian nations and people.

The Cobell suit followed in 1996.

Just days before the appeals court ruled, a special attorney appointed by Judge Lamberth issued a report that he had found reason to believe Interior officials retaliated against a BIA employee who provided testimony in the Cobell litigation. Alan Barlan, the court-appointed "special master," referred the issue to Judge Lamberth for appropriate action.

Barlan's report was issued after he investigated a complaint by Indian plaintiffs that then-Interior Secretary Bruce Babbitt, then-head of the BIA Kevin Gover and eight other Interior officials be found in contempt of court and personally fined or jailed for violating a court order prohibiting government retaliation against witnesses in the case.

Barlan found that BIA employee Mona Infield, a computer specialist, was stripped of her duties and reassigned to her home by Interior officials immediately after she provided evidence to the court that contradicted Interior officials' claims that Indian trust reforms were succeeding.

Barlan said their actions violated an anti-retaliation order drafted by government lawyers and approved by Judge Lamberth. Since she was ordered home, Infield has performed no work and has remained on the payroll.

"We regret the recommendation of the special master," said Stephanie Hanna, spokeswomen for Interior. "But we will be prepared to offer evidence at a hearing that would support the department's position that no retaliatory actions have been taken against Mona Infield."

Judge Lamberth already found former Secretary of Treasury Robert Rubin, former Interior Assistant Secretary Kevin Gover and former Interior Secretary Bruce Babbitt in contempt of court for failing to comply in a full and timely manner with an earlier discovery order in the case. Lamberth said he would consider personal fines and confinement for government officials if they were again found in contempt.

"We believe this implicates high officials in the Department of Interior,"

Harper said. "This contempt case is going to be more specific. The first case was only based on their role in an official capacity. This points to direct actions taken by officials against employees."

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