Pressure builds on Interior to fix Indian trust fund system

After six years, a multibillion-dollar lawsuit against the federal government on behalf of hundreds of thousands of American Indians may be nearing its end. The suit, filed by Elouise Cobell, a Blackfeet Indian, seeks to recover the funds from undeniably mismanaged Individual Indian Money (IIM) accounts that the Bureau of Indian Affairs has administered for more than a century.

The individual Indian accounts date from the allotment acts of the 1880s, when--in a purported effort to "civilize" Native Americans--the government divided 11 million acres of tribal lands into 80- and 160-acre plots and assigned them to individual Indians. Because the assigned parcels were rarely occupied by their new owners, those lands were held in trust by the Bureau of Indian Affairs, a division of the Interior Department.

Money that the government earned by allowing grazing, logging, mining, or other activities on that property was supposed to go to the Indian owners. But shoddy management, corruption, and indifference have made the program a shambles almost from its beginning. After more than a century of mismanagement, it seems nearly impossible to determine how much the government owes. No one even agrees on how many Indians should receive money. The Interior Department says 300,000, but the plaintiffs put the number above 500,000.

In 1996, Cobell, who is a Montana banker, sued the Bureau of Indian Affairs and the Interior Department. Two years ago, U.S. District Judge Royce Lamberth ruled that the BIA had violated its trust responsibilities and that the Indians are owed a valid accounting of the trust funds, as well as a thorough overhaul of the trust management system. The judge said he had never seen more-egregious conduct by the federal government.

Then-Treasury Secretary Robert Rubin and then-Interior Secretary Bruce Babbitt were held in contempt of court when it turned out that many of the documents they had promised to produce had been lost or destroyed. Now, Interior Secretary Gale A. Norton faces five counts of contempt, most of them stemming from alleged Clinton-era malfeasance. She was forced to testify in Lamberth's court on February 13.

"We're motivated to get this problem solved," Norton told the judge. "We're dedicated to doing this. I'd really like to see significant change take place during my tenure as secretary. I'd like the chance to do it."

But she might not get that chance. Cobell and her legal team are pushing hard for a conviction on the contempt charges and for a court-appointed receiver to take control of the Indian accounts.

Already-high tensions increased when a court-ordered computer shutdown at Interior kept 40,000 Indians from receiving their trust fund checks over the Christmas holidays.

Lamberth had been worried about computer security at the department for more than a year. After a hacker demonstrated how easy it was to create or manipulate trust accounts, the judge ordered every Interior computer with Internet access disconnected. A few systems were back up and running again within days, but the trust account computers are still only partially reactivated.

Rep. Tom Udall, D-N.M., who represents thousands of Navajos, called the shutdown devastating. "These people were subject to losing their car or their home," he told National Journal. "I'm outraged by it. If this happened to Social Security checks, Congress would be in an uproar."

At a House Resources Committee hearing on February 6, Udall pressed Norton about whether Interior Department lawyers had warned the judge of the effect his order would have. After consulting with her staff, Norton was unable to answer. "I assume if there was an answer that was positive, it would have been given," Udall said.

Cobell says she thinks that the department intentionally gave low priority to the trust fund computers. "I think they put it at the bottom of their priorities, and they continued to withhold [IIM] checks as retaliation against the lawsuit," she said. "Out in the agency offices, when people would call and say, `Where's my check?' the employees would reply, `You go ask Elouise Cobell," or `You ask the judge.' "

Bureau of Indian Affairs Director Neal McCaleb says that his agency was working on the computer problems before the shutdown. The trust fund computers, he added, are going back online as soon as possible.

Cobell disagrees. "They say the IIM system was a priority. But you heard in court, the first system they brought up was the USGS [U.S. Geological Survey]. They weren't working on getting the IIM system up," she said. "They said they needed USGS in case there was a fire or a flood, but the Indians were starving because they had no checks."

McCaleb says that USGS went back up first because its computers were not connected to the systems worrying the court.

Norton, who says that Indian trust issues have consumed as much as 60 percent of her time during her first year in office, has announced a new plan to revamp the trust system. She wants to combine management of the individual trust accounts with tribal trusts in a new Bureau of Indian Trust Assets Management that would be within the Interior Department, but outside the Bureau of Indian Affairs. Norton has said she chose this approach "because it consolidates trust asset management, establishes a clearly focused organization, provides additional senior management attention to this high-priority program, and retains the program within the department to facilitate coordination with the Native American community."

The plan, which was formulated without tribal input, has sparked a firestorm of criticism.

Ivan Makil, president of the Salt River Pima-Maricopa Indian Community, blasted the proposal at the February 6 hearing. "For many years, tribal leaders have specifically requested that the department focus on the core problems of trust asset management and stop making politically motivated cosmetic changes that only exacerbate the issue," he said. "Moving organizational boxes around will not solve the problem."

Indian leaders are especially skeptical because this is not the first trust-reform initiative since Cobell filed her lawsuit. Two years ago, Secretary Babbitt and then-BIA Director Kevin Gover touted a Trust Asset and Accounting Management System computer program that was supposed to improve IIM management. After hundreds of millions of dollars were spent, the computer program has turned out to be nearly useless.

Cobell and her allies contend that Babbitt and Gover "ran out the clock" by pushing a phony reform effort to stall the courts until they were out of office. The Indian activists are determined to force the Bush Administration to face the issue. "It was crystal clear to me what [the Clinton officials] were doing," Cobell said. "They were stalling, stalling, stalling."

The plaintiffs in the Cobell case are urging Lamberth to hold Norton in contempt, which they think would strengthen their chances of having the trust responsibilities given to a court-appointed receiver. "Babbit and Norton have both made decisions based on short-term political goals or litigation strategy," said Keith Harper, a lawyer with the Native American Rights Fund. "We need an institution with the sole responsibility for reorganizing the system. The contempt finding helps create a record of bad faith and violation of court orders."

Some members of Congress are losing patience with Interior's efforts to revamp the trust system. The senior Democrat on the Resources Committee, Rep. Nick J. Rahall II, D-W.Va., said at the February 6 hearing that under both political parties, the Interior Department has been the "Enron of federal agencies" when it comes to managing Indian trust assets.

"The Secretary, having finally admitted to both the House Resources Committee and the court that she is unable to provide a historical accounting of the trust funds, should now immediately settle this case and move to fix the system," Rahall told National Journal. "This department's proposal to shift all Indian trust funds from one agency to a new one with no new protections in place is a waste of time and taxpayer money, which threatens the loss of even more important data. Merely rearranging the deck chairs will not save this sinking Titanic."

Settling valid Indian claims would be extremely expensive. Norton estimates that it would cost hundreds of millions of dollars; Cobell says that paying anything less than $10 billion would be an insult. Regardless of the amount, Congress would have to ratify any settlement agreement before it could take effect.

After more than 100 years of broken promises, the government is clearly under mounting pressure to resolve this complicated dispute during the Bush Administration's watch.