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Court decision 'watershed' for trust law

WASHINGTON - In his Sept. 25 decision giving the Interior Department until 2007 to provide a historical accounting of the Individual Indian Money trust accounts, Judge Royce C. Lamberth entered a "structural injunction" committing his court to something called "institutional reform litigation."

The institution in question is the Interior Department. The federal government has delegated Interior to oversee the functioning of the IIM accounts, for which the government stands as trustee. As followers of the widely publicized court proceedings know, the litigation has been brought by a class of IIM accountholders headed by Elouise Cobell.

Institutional reform litigation is a model of court action that may apply to government institutions that have established a form of monopoly power over the clients and beneficiaries who must rely on it. When the service provision of the established institution goes bad for whatever reason, clients cannot "vote with their feet" because there is nowhere else to go; they cannot vote with their pocketbooks because they do not pay for services. They often suffer their disservices in silence or unknowingly, as IIM beneficiaries did until the late 1970s, when demands began to be leveled at the Interior Department (by the Red Lake Band in Minnesota, soon followed by others) for an accounting of their trust resources.

Since then, as Lamberth's 270-page decision painstakingly details, the Interior Department has responded to its poor track record on management of the Indian trust accounts by preserving its institutional character and protecting itself from criticism.

Lamberth concludes that the Interior can't be relied upon to fix its trust accounting problems on its own - the institution must be reformed. That is the point of the many plans he demands from the Interior, the court monitor he will appoint, the several schedules he has laid out for the performance of Interior tasks, and his retention of court jurisdiction in the case through 2009.

But Lamberth parted with plaintiffs in the case by ruling that Interior must have its chance to deliver a historical accounting of all IIM assets. Plaintiffs had argued for a shortcut based on Interior's alleged inability to produce it, due to missing documents, institutional incompetence and lack of good faith efforts. In rejecting the argument for a "shortcut" remedy, according to Keith Harper, a Native American Rights Fund attorney for the plaintiffs, Lamberth is basically saying that if the Interior insists it can produce a historical accounting of IIM assets, then it will have the chance to do so - but on the court's timeframe, following its many foot dragging and delay tactics mentioned in the decision.

The Interior has long maintained that it could perform such an accounting in some form, but it has sought to attach conditions that limit its accountability, added Harper. He said one of the most important features of the Sept. 25 decision is that Lamberth specifically dismissed each of the Interior's attempts to limit the definition of a historical accounting. That only money would be accounted for, not land and other assets; that the accounting would proceed only from 1994, the date of the congressional reform law that plaintiffs sued to enforce; that accounts in the name of deceased beneficiaries would not be included; statistical sampling; sums directly paid from lessees to lessors - all have been dismissed as limitations on Interior's historical accounting, Harper said.

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Interior must now account for all assets in the Individual Indian Money trust going all the way back to 1887, "from lease to distribution," Harper said.

In sum, he called the decision "unassailable as a matter of law. He set forth the duties that govern this trust, all the duties of an ordinary trust, the duties and standards of care ? This is what is done [in trust management outside Interior]. It's not like we're asking for the moon."

He added that the decision is a foundation for the future of Indian trust management. "A watershed event, this decision, both for this case and for trust law."

Harper's enthusiasm for the decision hasn't led him to assume the struggle for trust management reform is over, however. One thing the case has taught him is that when one problem seems to be subdued another will crop up - "there's always another mole," he said, referring to the well-known "whack-a-mole" video game favored by his daughter.

He also isn't confident that Interior will come to the negotiating table in a legislated mediation process, as discussed in a major Senate Committee on Indian Affairs hearing prior to the August congressional recess. Key members of Congress had entertained the idea of appointing a mediator in the case between Interior and the plaintiffs. They had not formulated a response to the Lamberth decision at press time. Harper said plaintiff attorneys continue to work with the Senate Committee on Indian Affairs on potential mediation scenarios. They also hope Interior will participate in a resolution process, he said.

A spokesperson for the Interior did not return voice-messages by press time.

Lamberth seems to have left receivership - a form of bankruptcy for large institutions that fail beyond the point of reform from within - on the table by noting that Congress mentioned it as a remedy for Interior's trust management shortcomings as far back as 1994.