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The Indian Trust Fund Litigation:
An Overview of Cobell v. Salazar
Todd Garvey
Legislative Attorney
July 13, 2010
Congressional Research Service
7-5700
www.crs.gov
RL34628
CRS Report for Congress
P
repared for Members and Committees of Congress
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The Indian Trust Fund Litigation: An Overview of Cobell v. Salazar
Summary
Reportedly, if Congress does not authorize the settlement recently reached in Cobell v. Salazar
without any material changes by August 6, 2010, it will be rendered null and void. In this
settlement, signed on December 7, 2009, the government agreed to pay $1.4 billion to members
of the class who sought to have a historical accounting of their IIM accounts (an abbreviation for
Individual Indian Monies). An additional $2 billion is to be provided by the government for the
purpose of consolidating fractionated trust and restricted lands.
First filed in 1996, Cobell v. Salazar involves the Department of the Interior’s (DOI’s)
management of several money accounts. These money accounts, or IIMs, as distinguished from
tribal trust funds, are monies which the federal government holds for the benefit of individual
Indians. The conflict in the case traces to the federal government’s trust responsibility with
respect to American Indians. In the capacity of trustee, the United States holds title to much of
Indian tribal land and land allotted to individual Indians. Receipts from leases, timber sales, or
mineral royalties are paid to the federal government for disbursement to the appropriate Indian
property owners. Flowing from the federal trusteeship of Indian lands and mineral resources are
fiduciary responsibilities on the part of the United States to manage Indian monies and assets
which have been derived from these lands and are held in trust. However, several of the
beneficiaries of these trust funds have alleged that DOI has mismanaged these funds and filed suit
in order to obtain a proper accounting of these funds and to receive damages if warranted.
In January 2008, the United States District Court for the District of Columbia reached the
conclusion that DOI would be unable to produce the required accounting. Instead, in a later
hearing on August 7, 2008, the district court imposed a remedy of $455.6 million in restitution,
which differed greatly from what the plaintiffs had sought—approximately $47 billion. In its
ruling, the court rejected the plaintiffs’ methodology of computing the amount owed to the trust
beneficiaries and their additional claims for “benefit to the government” for funds not credited to
the accounts of the beneficiaries. However, on July 24, 2009, the United States Court of Appeals
for the District of Columbia reversed the district court, ordering that DOI, in light of the limited
appropriations provided by Congress, conduct the best accounting possible with the monies
available. Plaintiffs filed a petition for certiorari to the U.S. Supreme Court to review the court of
appeals decision.
The purpose of this report is to provide a brief background of the history leading up to the
litigation and a review of the issues that have proven so difficult for the judiciary to resolve. The
report will be updated as warranted by judicial decisions or legislative action.
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The Indian Trust Fund Litigation: An Overview of Cobell v. Salazar
Contents
Background ................................................................................................................................ 1
The Litigation ............................................................................................................................. 3
The Latest Decision: District Court Instructed to Enforce “The Best Accounting” DOI
Can Provide with “Limited Government Resources” ................................................................ 7
December 7, 2009, Settlement ..................................................................................................... 8
Future Considerations ............................................................................................................... 10
Contacts
Author Contact Information ...................................................................................................... 11
Acknowledgments .................................................................................................................... 11
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The Indian Trust Fund Litigation: An Overview of Cobell v. Salazar
Background
First filed in 1996, Cobell v. Salazar involves the Department of the Interior’s (DOI’s)
management of several money accounts. These money accounts, known as IIMs (an abbreviation
for Individual Indian Monies) are monies which the federal government holds for the benefit of
individual Indians rather than property held for the benefit of an Indian tribe.1 The conflict in the
case emanates from the federal government’s trust responsibility with respect to American
Indians. The Supreme Court first formulated the concept of the federal government as trustee for
Indian tribes in 1831, likening the relationship to that of “a ward to its guardian.”2 In the capacity
of trustee, the United States holds title to much of Indian tribal land and land allotted to individual
Indians. Receipts from leases, timber sales, or mineral royalties are paid to the federal
government for disbursement to the appropriate Indian property owners. Flowing from the federal
trusteeship of Indian property are fiduciary responsibilities on the part of the United States to
manage Indian monies and assets which have been derived from these lands and are held in trust.3
The case is premised on statutory duties imposed upon the federal agencies handling Indian
monies as well as on the existence of property rights in funds and assets held in trust for Indians.
The courts have recognized broad powers of Congress with respect to Indian affairs legislation
and Indian property, but have also recognized that Indian property may not be taken for a public
purpose without just compensation.4 This case is not a claim for just compensation; it is a claim
for an accounting by the trustee (i.e., the United States) for receipts and disbursements
representing the trust corpus held for the benefit of individual Indians.
The Cobell litigation sprang out of the federal government’s trust responsibility with respect to
three groups of money accounts held in trust for individual Indian beneficiaries. These accounts
are commonly referred to as the Individual Indian Money (IIM) accounts. They include (1) Land-
based Accounts—established to receive revenues derived from the approximately 11 million acres
held in trust by the U.S. for individual Indians;5 (2) Special Deposit Accounts (SDAs)—intended
to be temporary accounts to hold funds that could not be immediately credited to the proper IIM
account holder; and (3) Judgment and Per Capita Accounts—established to receive funds from
tribal distributions of litigation settlements and tribal revenues.6 Congress has delegated to the
Secretary of the Interior and the Secretary of the Treasury its responsibilities as trustee with
1 Both the Department of Justice website, http://www.usdoj.gov/civil/cases/cobell/, and the Cobell plaintiffs’ website,
http://www.indiantrust.com/index.cfm, include documents and opinions filed in the case.
2 Cherokee Nation v. Georgia, 30 U.S. 1 (1831).
3 United States v. Mitchell, 463 U.S. 206, 225 (1983) (quoting Navajo Tribe of Indians v. United States, 624 F. 2d 981,
987 (Ct. Cl. 1980)).
4 See, e.g., United States v. Sioux Nation, 448 U.S. 371 (1980).
5 These accounts trace their beginnings to the federal government’s allotment program of the late 19th and early 20th
centuries. Under this program, the Secretary of the Department of the Interior (DOI) was authorized to allot portions of
reservation land to individual Indians. Title would remain with the United States in trust for a number of years, after
which it would pass to the individual allottees free from all encumbrances. The allotment policy resulted in large
amounts of land passing into non-Indian ownership, and Congress abandoned the policy in 1934, extending indefinitely
the trust periods of allotments that had not yet passed into fee ownership. Many of these properties remain in trust to
this day. See Felix F. Cohen, Handbook of Federal Indian Law § 1.04 (2005 ed.).
6 Id., at § 5.03[3][a], n. 138.
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The Indian Trust Fund Litigation: An Overview of Cobell v. Salazar
regard to the IIM accounts.7 The Bureau of Indian Affairs (BIA) has general responsibility for
trust land management and income collection.8
Most transactions involving IIM accounts require BIA approval.9 One of BIA’s most important
duties in this regard is managing IIM funds derived from income-producing activities on
allotment land, including grazing leases, timber leases, timber sales, oil and gas production,
mineral production, and rights-of-way. The Office of Trust Fund Management (OTFM) is
responsible for BIA’s fiduciary duty to keep accurate financial records of these activities. OTFM
also shares the banking aspect of DOI’s trust responsibility with the Treasury Department. OTFM
and BIA officers collect payments and deposit them into a local bank where there is a Treasury
General Account.10 The Treasury Department maintains a single “IIM account” for all IIM funds,
rather than individual accounts, while OTFM is responsible for maintaining accounting records
for the individual funds.11 Treasury also invests the funds at the direction of DOI.12
The federal government—as holder of these accounts in trust for the Indian beneficiaries—has
fiduciary obligations to administer the trust lands and funds arising from them for the benefit of
the beneficiaries. The federal government has stipulated, however, that it does not know the exact
number of IIM trust accounts that it is supposed to administer; nor does DOI know the correct
balances for each IIM account.13 DOI has conceded that it is currently unable to provide an
accurate accounting for a majority of IIM trust beneficiaries.14 The Treasury Department also has
problems with trust fund management procedures. First, the Treasury Department has permitted
the destruction of documents over six years and seven months old, and made no effort to ensure
that documents related to accounting for IIM accounts are preserved.15 In addition, there can be a
time lapse between the deposit of funds with the Treasury Department and the investment of
those funds.16 There can also be a time lapse between the issuance of a check and when the payee
presents the check, resulting in lost interest.17
Congressional oversight committees became concerned with alleged IIM mismanagement in the
late 1980s and began holding oversight hearings regarding the IIM accounts in 1988. Four years
later, the House Committee on Government Operations produced a report highly critical of the
Interior Department.18 In 1994, Congress enacted the Indian Trust Fund Management Reform Act
7 25 U.S.C. § 161a(a).
8 See, e.g., the federal timber management statutes, at 25 U.S.C. §§ 406-407, 466.
9 See Cobell v. Babbitt, 91 F.Supp.2d 1, 9 (D.D.C. 1999), afff’d, 240 F.3d 1081 (D.C. Cir. 2001).
10 Id., at 9-10.
11 Cobell v. Norton, 240 F.3d 1081, 1089 (D.C. Cir. 2001). When OTFM issues a check to an IIM trust beneficiary, the
amount is deducted from the individual fund, even though the money remains in the Treasury’s general account. As a
result, the beneficiary loses any interest that would accrue between issuance and cashing of the check, a time lapse that
“may be short in the private sector, [but] can be much longer in the IIM trust context because OTFM often has incorrect
addresses for the recipients.” Cobell v. Norton, 91 F.Supp.2d 1, 12 (D.D.C. 1999).
12 Id., at 1088-1089.
13 Id., at 1089.
14 Id.
15 See id., at 1092.
16 Id.
17 Id.
18 Misplaced Trust: The Bureau of Indian Affairs’ Mismanagement of the Indian Trust Fund, H.Rept. 102-499 (1992).
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(the Reform Act),19 recognizing the federal government’s pre-existing trust responsibilities and
further identifying some of the Interior Secretary’s trust fund responsibilities, such as providing
adequate accounting for trust fund balances; providing adequate controls over receipts and
disbursements; providing accurate and timely reconciliations; preparing and supplying periodic
statements of account performance and balances to account holders; and establishing consistent,
written policies and procedures for trust fund management.20 Significantly, the original House bill
(H.R. 1846) would have made the accounting duty prospective only. When another similar bill
was introduced to replace H.R. 1846, that provision was left out. This new bill became the
Reform Act, and the courts interpreting it in the Cobell litigation have determined that DOI owes
a historical accounting duty going back to the act of June 24, 1938.21 As the D.C. Circuit Court of
Appeals stated, “the 1994 Act identified a portion of the government’s specific obligations and
created additional means to ensure that the obligations would be carried out.”22
The Litigation
The Cobell litigation began in 1996, and its docket enumerates over 3,600 documents and over 20
district court and federal court of appeals opinions. The following attempts to distill the history of
this litigation so that it focuses on the substantive issues regarding the IIM accounts.
In 1996, a group of IIM account holders filed a class action suit to compel performance of trust
obligations, alleging that the Secretaries of the Interior and the Treasury—as delegatees of the
federal government’s trust responsibilities—had breached the fiduciary duties owed to plaintiffs
by mismanaging the IIM accounts.23 Two years later, the district court judge bifurcated the trial
into two phases, with Phase 1 to focus on reforming the management and accounting of the IIM
trust funds, and Phase 2 to address the historical accounting of those accounts.24 In 1999, United
States District Judge Royce C. Lamberth issued a ruling as to Phase 1, holding that the Treasury
and Interior Secretaries had breached their fiduciary duties to the IIM account holders.25 The
transition to Phase 2 has proven difficult because the defendants have been unable to submit—in
forms acceptable to the court—plans for reforming the account-management system and for
providing a historical accounting.26
Two specific issues have made it particularly difficult for DOI to provide an accounting in the
Cobell litigation. The first of these issues is the fractionation of interests in many of the allotment
lands. These interests have been fractionated over the years as they have been divided among the
heirs of the original allottees, increasing exponentially with each generation and leading to
19 P.L. 103-412 (25 U.S.C. §§ 4001 et seq.).
20 25 U.S.C. § 162a(d).
21 Cobell v. Norton, 240 F.3d 1081, 1102 (D.C. Cir. 2001).
22 Id., at 1100.
23 For a discussion of the history of the case, see id., at 1092-1093 (D.C. Cir. 2001).
24 Id.
25 Cobell v. Babbitt, 91 F.Supp.2d 1 (D.D.C. 1999), aff’d, 240 F.3d 1081 (D.C. Cir. 2001).
26 Cobell v. Norton, 226 F.Supp.2d 1, 162 (D.D.C. 2002). Finding a workable method to provide the historical
accounting has proven extremely difficult. Adding to that difficulty is the fact that the litigation has become
increasingly acrimonious. See Can a Process Be Developed to Settle Matters Relating to the Indian Trust Fund
Lawsuit?: Oversight Hearing Before the Committee on Resources, U.S. House of Representatives, 108th Cong. 1st Sess.
50 (2003) (statement of John Berry, Chairman, Quapaw Tribe).
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incredibly small interests that are difficult to track. DOI estimates that there are currently over 1.4
million fractional interests subdividing 58,000 tracts of land.27 While DOI has stated that it can
perform a transaction-by-transaction accounting of the judgment and per capita accounts and the
SDAs, the problems presented by the land-based accounts have proven very difficult to resolve.
DOI has argued that it should be able to use statistical sampling with respect to some of these
accounts.28
The second difficult question is determining how far into the past a historical accounting should
go. At various points in the litigation, the different parties have argued for an accounting of
transactions as far back as 1887 (date of the Allotment Act), 1938 (date of the Indian
Reorganization Act), and 1994 (date of the Reform Act). Resolving this problem would likely
encompass a choice between what is fair and what is possible. One could have very different
answers to these two questions, mainly because, as the litigation so far has shown, DOI and
Treasury records relating to the IIM accounts are at best incomplete.
In January 2003, DOI provided a new historical accounting plan to Judge Lamberth that would
cover all accounts open as of October 25, 1994, when the Reform Act was enacted. After
reviewing DOI’s plan, Judge Lamberth in September 2003 issued a controversial structural
injunction giving the court broad oversight authority to ensure that (1) DOI carries out the
accounting (the court adopted what is essentially a modified version of DOI’s historical
accounting plan, but did not allow DOI to use statistical sampling with respect to the land-based
accounts); and (2) DOI reforms its system for managing the IIM accounts. Judge Lamberth also
appointed a monitor to ensure compliance with the injunction order.29
One month later, Congress passed an appropriations rider stating that “nothing in [the Reform
Act] or in any other statute, and no principle of common law, shall be construed or applied to
require the Department of the Interior to commence or continue historical accounting activities
with respect to the [IIM] Trust” until 2005 or when Congress more clearly delineates DOI’s
accounting obligations under the Reform Act.30 Congress took this action in direct response to
Judge Lamberth’s structural injunction order, stating that compliance could cost upwards of $6
billion and that diverting that amount of resources could be “devastating to Indian country.”31
Two subsequent appropriations bills have limited the funds available to DOI for the historical
accounting to $58 million for FY2005 and FY2006.32
On December 10, 2004, the D.C. Circuit issued an opinion striking down almost all of Judge
Lamberth’s injunction.33 The court first held that, pursuant to Congress’s directive contained in
the aforementioned appropriations rider, DOI could not be compelled to perform any historical
27 See Can a Process Be Developed to Settle Matters Relating to the Indian Trust Fund Lawsuit?: Oversight Hearing
Before the Committee on Resources, U.S. House of Representatives, 9 (statement of James Cason, Associate Deputy
Secretary, U.S. Department of the Interior). For a description of the various accountings that DOI has attempted,
including the historical accounting for the named plaintiffs in Cobell, see 12-13.
28 Id.
29 Cobell v. Norton, 283 F.Supp.2d 66, 225 (D.D.C. 2003).
30 P.L. 108-108 (117 Stat. 1263). Congress has not attempted to more clearly delineate DOI’s accounting obligations
since enacting this statute.
31 See H.Rept. 108-330, at 117 (October 28, 2003).
32 P.L. 108-447 (118 Stat. 2809) and P.L. 109-54 (119 Stat. 499).
33 Cobell v. Norton, 392 F.3d 461 (D.C. Cir. 2004).
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accounting. The court noted, however, that the directive would sunset on December 31, 2004, and
the judges pointed out that they could not “address the issues that would be relevant if the district
court [after December 31, 2004] reissued those provisions [compelling a historical accounting].”34
The court next largely overturned Judge Lamberth’s injunction as to DOI’s systemic reform.
Looking to Supreme Court precedent, the D.C. Circuit held that judicial review under the
Administrative Procedure Act (APA) is limited to specific agency actions, and that such review
cannot be extended to “claims of broad programmatic failure.”35 The court held that Judge
Lamberth, in issuing his injunction, had impermissibly wandered into this latter area, which is
more properly reserved for executive or legislative action. While the D.C. Circuit upheld Judge
Lamberth’s requirement that DOI submit a plan laying out how it will come into compliance with
its fiduciary obligations, the court found that the other elements of Lamberth’s order (e.g., the
appointment of a monitor, the listing of and compliance with tribal laws) were not tied to specific
findings of wrongdoing and suggested greater, and inappropriate, judicial intrusion into agency
discretion.
On February 23, 2005, Judge Lamberth—noting that the deadline contained in the appropriations
rider had passed—issued another structural injunction with respect to the historical accounting.36
Once again, he adopted a modified version of DOI’s historical accounting plan, but prohibited the
use of statistical sampling and required an accounting going back to the Allotment Act of 1887.
He refused to stay the order pending appeal, citing the plaintiffs’ nine-year wait and “a delay
directed by Congress in a bizarre and futile attempt at legislating a settlement in this case.”37
On November 15, 2005, the D.C. Circuit vacated Judge Lamberth’s injunction and historical
accounting order and directed that, on remand, the district court, in evaluating DOI’s plan for a
statistical sampling to accomplish the accounting, should not ignore the general language of the
Reform Act and subsequent congressional limitations on funding, suggesting that the Reform Act
should not be seen as mandating “the best available accounting without regard to cost.”38 The
court of appeals would later remove Judge Lamberth from this case for abuse of discretion and
bias.39
34 Id., at 468.
35 Id., at 472.
36 Cobell v. Norton, 337 F.Supp.2d 298 (D.D.C. 2005).
37 Id.
38 Cobell v. Norton, 428 F.3d 1070, 1075 (D.C. Cir. 2005).
39 On July 11, 2006, the court of appeals found the district court to have abused its discretion in ordering DOI to
disconnect from the Internet many of its computer systems, ordered the district court to vacate an order requiring DOI
to include in any communication to class members a warning that information provided about trust matters might be
unreliable, and removed Judge Lamberth from the case for bias in accusing DOI of racism. See Cobell v. Norton, 428
F.3d 1070, 1075 (D.C. Cir. 2005). While the appellate court recognized that Judge Lamberth’s opinion did not reflect
an animosity toward DOI, independent of the developments in the case, it concluded that the language Judge Lamberth
used might give rise to an impression that justice could not be done in this case. See Cobell v. Kempthorne, 455 F.3d
317 (D.C. Cir. 2006). Bias was seen in Judge Lamberth’s language in Cobell v. Norton, 229 F.R.D. 5 (D.D.C. 2005),
such as the following quoted by the appellate court: “‘Alas, our “modern” Interior department [sic.] has time and again
demonstrated 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 as the last pathetic outpost of the indifference and
anglocentrism we thought we had left behind.’”
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On January 30, 2008,40 Judge James Robertson, assigned to the case in December 2006, rejected
DOI’s historical accounting plan not because of its use of statistical sampling methodology, but
on the basis of finding its scope legally inadequate in terms of years and accounts or funds to be
covered. He then held that DOI’s accounting for the funds was impossible “as a conclusion of
law” because DOI could not “achieve an accounting that passes muster as a trust accounting” due
to the inadequacy of funding provided by Congress.41 Judge Robertson ordered a hearing to
develop a process for determining an appropriate remedy.
On August 7, 2008, Judge Robertson issued a decision on the remedy issue in which he awarded
plaintiffs $455.6 million in restitution.42 The figure represents the amount to be restored to
plaintiffs as receipts not credited to their accounts. Claims for damages for funds which never
were collected or for mismanagement of assets are not included in the figure and were not before
the court in Cobell.43 To determine the amount of restitution, the court had to examine the models
the parties had set forth for determining the difference between what Treasury had posted as
receipts to the IIM accounts and what had been disbursed to individual accounts or account
holders. Information accumulated from the years of attempts at arriving at a satisfactory and
reliable means of reconstructing the records at DOI and Treasury aided the court in evaluating the
models offered by the parties.
The Court, in formulating its remedy, decided not to accord plaintiffs the full benefit of
evidentiary presumptions in their favor.44 This led the court to apply a modified burden of proof
on the government’s statistical model for calculating data that it could not produce.45 DOI had
shown that only 77% of the monies collected for the IIM system had been posted to IIM accounts.
Accepting the government’s calculation of receipts but using their own formula for calculating a
disbursement rate for each year, the plaintiffs claimed a shortfall of $3.6 billion over 122 years.
To this they proposed adding approximately $43.4 billion as “benefit to the government” based
on a formula they had devised which assumed that whatever was not disbursed to the account
holders was available for general governmental expenses, relieving the government of a need to
issue and pay interest on Treasury bonds.
The government produced evidence explaining some of the shortfall between receipts and
disbursements. A DOI expert testified that the discrepancy reflected the fact that not all the funds
received into Treasury’s IIM account are intended to be credited to individual Indian trust fund
accounts. Some, such as tribal trust fund receipts or bid or lease deposits, are to be funneled on a
pass-through basis to other recipients.46
40 Cobell v. Kempthorne, 532 F.Supp.2d 37 (D.D.C. 2008) (Cobell XX).
41 Cobell XX, 532 F.Supp.2d at 102 n. 19.
42 Cobell v. Kempthorne, 569 F.Supp.2d 223 (D.D.C. August 7, 2008) (hereinafter Cobell restitution award decision or
Cobell XXI).
43 Id., at 5, n. 1. It is possible such claims may be within the jurisdiction of the Court of Federal Claims.
44 Cobell XXI, slip op., at 63-66.
45 Cobell XXI, slip op., at 66.
46 DOI’s expert also testified to various means by which bookkeeping entries might not be captured as disbursements to
individual accounts. The court found the testimony to be persuasive in “explaining the nature of the discrepancy
between receipts and postings.” Id., slip op., at 28. The testimony, however, did not quantify percentages of “receipts ...
for stakeholders, for tribal trusts, and for third parties,” but acknowledged that to do so would be “not impossible, but ...
time consuming ... and has not been done.” Id., slip op., at 28-29.
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Having admitted that 23% of IIM receipts had not been posted to IIM accounts and faced with the
plaintiffs’ charge that approximately $4 billion had not been disbursed to account holders, the
government was required to explain the shortfall and put a figure on it. The explanation was
essentially that the individual Indian trust beneficiaries were not entitled to all of the funds that
Treasury deposited in the IIM account. The government attempted to demonstrate this point by
using a statistical model that employed a “multiple imputation” technique to account for the
multiplicity of variables imputed to the large range of missing data with respect to the accounts.47
With both the plaintiffs’ and defendant’s statistical models before him, Judge Robertson not only
found the model offered by the plaintiffs to be defective, he also criticized their failure to offer
specific evidence to discredit the defendant’s model. According to his opinion, the plaintiffs’
model could not be considered, among other reasons, because it was inconsistent in accepting the
government’s estimate of receipts, but not of disbursements, which reflected “a super-strong
interpretation of the presumption against the breaching trustee that cannot be equitably applied to
the trusts at issue here.”48
Accordingly, Judge Robertson accepted the government’s model and provided a certain
evidentiary advantage to the plaintiffs by selecting the “maximally conservative” estimate.49
Therefore, using the maximally conservative estimate as established by the government model,
the court concluded that $455.6 million was the amount missing in the IIM trust and that only that
amount would be awarded in restitution.50
The Latest Decision: District Court Instructed to
Enforce “The Best Accounting” DOI Can Provide
with “Limited Government Resources”
The July 24, 2009,51 decision issued by the U.S. Court of Appeals for the District of Columbia
vacated the holding in Judge Robertson’s January 2008 decision that DOI did not have to conduct
an accounting due to impossibility and remanded the case to the district court for further
proceedings.52 The court of appeals concluded that the district court was correct to grant
deference to DOI’s methodology in conducting the accounting because “it ‘a[rose] out of an
administrative balancing of cost, time, and accuracy.’”53 However, the court of appeals also found
that the district court’s conclusion that “the proper scope of the accounting obligation … is the
result … of a legal interpretation of the 1994 Act and other statutes governing the IIM trust” was
not completely correct.54 Although the district court correctly concluded that the extent of the
47 Cobell XXI, slip op., at 29-33.
48 Id., slip op., at 68.
49 Id., slip op., at 69-70. According to Judge Robertson, the 99% confidence level addresses the fact that there is more
uncertainty in the data than the government’s expert witness acknowledged, and such a figure “is a legally sound way
of crediting obscurities and doubts to the plaintiffs.” Id., at 70.
50 Id., slip op., at 70.
51 Cobell v. Salazar, 573 F.3d 808 (D.C. Cir. July 24, 2009) (cert. dismissed 2010 U.S. LEXIS 5260) (Cobell XXII).
52 Cobell XXII, No. 08-5500 at 2.
53 Id., at 8 (quoting Cobell XX, 532 F.Supp.2d at 91).
54 Id., at 9 (quoting Cobell XX, 532 F.Supp 2d at 89) (emphasis in original).
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scope of the accounting is derived from statutory law, the court of appeals concluded that “the
unique nature of this trust requires the district court to exercise equitable powers in resolving the
paradox between classical accounting and limited government resources.”55 Thus, the court of
appeals concluded that the district court was incorrect in assuming it could not adjust the scope of
the accounting in order provide the best accounting possible with the limited resources made
available by Congress.56 Rather, “the district court sitting in equity must do everything it can to
ensure that Interior provides them an equitable accounting. The district court’s holding of
impossibility contradicts the requirement of an equitable accounting—one that makes most
efficient use of limited government resources.”57
After holding that DOI must conduct the best accounting possible with the money Congress
appropriated for the task, the court of appeals then provided some guidance to the district court in
order to help establish the proper scope of the accounting.58 The court of appeals first noted that
“the district court should exercise its equitable power to ensure that Interior allocates its limited
resources in rough proportion to the estimated dollar value of payments due to class members.”59
The court of appeals also recommended that the district court “consider low-cost statistical
methods of estimating benefits across class sub-groups.”60 Finally, the court of appeals concluded
that the district court erred in ordering an accounting for accounts closed before the 1994 Act was
passed because the act only contemplated an accounting of funds held in trust by the United
States at the time of the act’s passage.61
December 7, 2009, Settlement
On December 7, 2009, the Department of the Interior reached a settlement agreement with the
plaintiffs’ class. Currently, because of a mutual agreement between both the plaintiffs’ class and
the federal government, Congress must authorize the settlement through legislation without
material changes or it will be considered “null and void.”62 The settlement agreement originally
called for Congress to authorize it legislatively by December 31, 2009.63 The deadline, however,
has been extended six times to February 28, 2010, April 16, May 25, June 15, July 9, and
currently to August 6.64 Furthermore, the settlement agreement also stipulates that it will be
rendered null and void if Congress makes any “material changes” to the authorization that deviate
from what the parties have already agreed upon.65 Although the parties have repeatedly agreed to
extend the settlement approval deadline, the parties have made no statement concerning material
55 Id., at 10.
56 Id.
57 Id.
58 Id., at 11.
59 Id.
60 Id.
61 Id., at 12.
62 See http://legaltimes.typepad.com/blt/2010/04/deadline-in-cobell-case-extended-for-third-time.html.
63 Settlement Agreement at 12, 15. A copy of the settlement agreement can be found at
http://www.cobellsettlement.com/docs/2009.12.07_Settlement_Agreement.pdf.
64 See http://www.cobellsettlement.com/docs/2010.02.26_Settlement_Agreement_Extension%202.pdf;
http://legaltimes.typepad.com/blt/2010/04/deadline-in-cobell-case-extended-for-third-time.html;
http://legaltimes.typepad.com/blt/2010/07/yet-another-extension-in-cobell-indian-trust-case.html
65 Settlement Agreement at 15.
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changes; thus it appears that the stipulation that no material changes be made to the settlement
still applies. Approval of the settlement has passed the House on two occasions and is currently
pending before the Senate.66
The settlement agreement addresses the claims of two separate classes. One class, the “Historical
Accounting Class,” is defined as those Indian beneficiaries who had an open IIM account
between October 25, 1994, and September 30, 2009, in which there was at least one cash
transaction credited to it.67 The “Trust Administration Class” is defined as those individual Indian
beneficiaries alive as of September 30, 2009, who have or had IIM accounts between roughly
1985 to the present (the time period when IIM accounts were kept in electronic databases) and
individual Indians who, as of September 30, 2009, had recorded or other demonstrable ownership
interest in land held in trust or restricted status, regardless of the existence of an IIM account or
proceeds generated from the land.68
The settlement agreement offers to release from the federal government the claims of both the
Historical Accounting Class relating to their right to a historical accounting and the claims of the
Trust Administration Class that were raised or claims that should have been raised in the class
action because they were related to the mismanagement of the IIM accounts.69 However, the
settlement also specifically excludes from the release (1) claims related to the payment of the
account balances of existing IIM accounts; (2) claims related to the payment of existing amounts
in special deposits accounts, tribal accounts, or judgment fund accounts; (3) claims related to the
breaching of trust or alleged wrongs after September 30, 2009; (4) claims for damages to the
environment other than those claims expressly identified as Land Administration Claims; (5)
claims for trespass; (6) claims against tribes, contractors, and other third parties; (7) equitable,
injunctive, or non-monetary claims for boundary correction and appraisal errors; (8) money
damages arising from boundary or appraisal errors that occur after September 30, 2009; (9)
claims arising out of leases, easements, rights-of-way, and similar encumbrances existing as of
September 30, 2009; (10) claims related to failure to assert water rights and quantification; and
(11) health and mortality claims.70 The settlement also states that no further monetary obligations
shall attach to the federal government after the funds agreed upon in the settlement are
dispensed.71
In return for this release of liability, the settlement calls for the establishment of two funds.
The first fund is to receive $1.412 billion from the Judgment Fund and will be called the
“Accounting/Trust Administration Fund.” From this fund, each member of the Historical
Accounting Class shall receive $1,000. After this payment is made, the next stage involves
establishing the identities of the members of the Trust Administration class and paying each
member a pro rata amount. This amount involves a $500 base payment. In addition, each member
of the class will receive a pro rata amount of the remaining monies in the Accounting/Trust
Administration Fund. Any money remaining in this fund will be used to finance a program called
66 See H.R. 4213, 111th Cong. (2010); H.R. 4899, 111th Cong. (2010).
67 Settlement Agreement at 10.
68 Settlement Agreement at 14.
69 Settlement Agreement at 43-44.
70 Settlement Agreement at 44-45.
71 Settlement Agreement at 51.
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“Funds for Indian Education Scholarships,” which provide for the cost of post-secondary
educations for Indian students.72
The second fund, called the “Trust Land Consolidation Fund,” is to receive $2 billion. This fund,
which will terminate in 10 years, will be used to acquire fractional interests in trust or restricted
land pursuant to 25 U.S.C. § 2201 et seq., which authorizes a program called the Land
Consolidation program. This program is the principal vehicle by which the federal government
consolidates fractionated trust and restricted lands. Monies from this account would also be made
available for the “Funds for Indian Education Scholarships.”73
The settlement calls for legislation that will exclude from federal taxation any monies a class
member may receive from this settlement.74 The settlement also leaves for the district court’s
future consideration the amount of attorney’s fees and also the amount of the incentive award for
the named plaintiffs of the class.75 Associate Attorney General Thomas Perrelli has testified to the
Senate Indian Affairs Committee that the two sides have agreed to attorneys fees ranging from
$50 million to $100 million that will come out of the $1.4 billion settlement.76
Future Considerations
If, by August 6, Congress does not decide whether to approve or reject the settlement agreement,
or again extend the settlement deadline, the agreement will be rendered by its terms, null and
void. If Congress decides to reject the settlement, or if the settlement otherwise becomes null and
void, the district court will then oversee DOI’s attempt to provide the best accounting possible of
the IIMs.77 It appears that the court of appeals has contemplated that DOI may use “low-cost
statistical methods” in order to carry out its accounting obligations, but has not directly ordered a
particular methodology to be used.78 Thus, it will be largely left to the district court to oversee the
tailoring of the methodology and scope of the accounting. While the district court can and must
use its equitable powers to determine an accounting methodology that can be paid for with the
appropriations provided by Congress, Congress has the option to legislate the methodology and
scope if it so chooses and to provide more appropriations for an accounting.
72 Settlement Agreement at 23-34.
73 Settlement Agreement at 35-37. While the settlement agreement does not dictate where the $2 billion will come
from, the attached “Proposed Legislation” has a clause stating the monies will come out of the Judgment Fund.
74 Settlement Agreement at 42-43.
75 Settlement Agreement at 48-50.
76 See http://legaltimes.typepad.com/blt/2009/12/attorneys-fees-in-cobell-case-capped-at-100-million.html. Webcast
of the hearing can be seen at http://www.senate.gov/fplayers/I2009/urlPlayer.cfm?fn=indian121709&st=60&dur=3476.
77 Id., at 14.
78 Id., at 11.
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Alternatively, if the current settlement should fail, Congress could propose an alternative
settlement offer through legislation.79 The question is whether the plaintiffs’ class would accept
an alternative settlement, especially considering that a settlement has already been negotiated
between them and DOI.
Author Contact Information
Todd Garvey
Legislative Attorney
tgarvey@crs.loc.gov, 7-0174
Acknowledgments
This report was originally prepared by Yule Kim. It has now been updated by Todd Garvey, who is
available to answer questions on these issues.
79 See, e.g., the Indian Trust Reform Act of 2005, S. 1439, 109th Cong. (2005) for an example of a possible legislative
settlement of the Cobell case.
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