WASHINGTON – The Obama administration has taken a definitive step to settle a long-running trust mismanagement class action lawsuit involving hundreds of thousands of Native Americans.
The Department of the Interior announced Dec. 8 that it had negotiated a settlement to the Cobell v. Salazar litigation, which could amount to a $1.4 billion payback to Indian plaintiffs involved in the case, plus another $2 billion to buy back fractured trust interests.
“We are here today to right a past wrong,” Interior Secretary Ken Salazar said during a briefing on the plan held at Interior headquarters.
For the settlement to become final, Congress must pass legislation to approve it, and the court overseeing the case must also agree, said Attorney General Eric Holder.
Salazar is hopeful that legislative action will occur before the end of the year, based on discussions he’s already had with some lawmakers.
The litigation has centered on the argument that the government mismanaged billions of dollars in oil, gas, grazing, timber and other royalties overseen by the Interior for Indian trustees since 1887.
The case has gone through numerous appeals since it was first filed in 1996.
If the settlement is approved, a $1,000 check will be sent to each member of the class, said Associate Attorney General Tom Perrelli.
Then, a formula established by the U.S. District Court for the District of Columbia, the overseeing court, would provide more settlement funds to individual class members.
President Barack Obama, perhaps signifying a turning point in federal Indian relations, said he was proud of the decision to settle.
“As a candidate, I heard from many in Indian country that the Cobell suit remained a stain on the nation-to-nation relationship I value so much,” the president said in a statement.
“I pledged my commitment to resolving this issue, and I am proud that my administration has taken this step today. …”
Obama also urged Congress “to act swiftly to correct this long-standing injustice and to remember that no special appropriations are required.”
Dennis Gingold, the lead lawyer for the plaintiffs, said the request from Obama to Congress was especially important.
“It shows he really cares about getting this done quickly, which is a good sign.”
Elouise Cobell said she was thankful to Interior for the gesture, adding she had thought the case would be settled long ago.
“Today we have an administration that is listening to us,” the lead plaintiff said.
It was a big shift in her position from the spring when she had expressed dissatisfaction with the administration for not focusing on the issue more quickly.
Still, Cobell said there is “no doubt” that the settlement amount is “significantly less than the full accounting to which the class members are entitled.”
Estimates of lost principal and interest offered by lawyers for the Indian plaintiffs during legal proceedings ranged much higher than the Obama administration’s offer, with some figures towering as high as $58 billion.
But Cobell said as the case has progressed through the years, some class members have passed away, and many are living in extreme poverty.
“A settlement can address the situation,” Cobell said, adding that she doesn’t believe trust reform should stop at this point.
Later, she noted that an August 2008 ruling from U.S. District Judge James Robertson said individual account holders deserved $455.6 million. The ruling was on appeal, but the number appeared to weigh on the decision to make the deal with the Obama administration.
Cobell is hopeful Interior will work to permanently correct wrongs so Indian account holders will have knowledge of money that is rightfully theirs.
As part of the settlement, a $2 billion fund would also be set up by Interior aimed at buying back trust interests from individuals, Salazar said, although he acknowledged that some class members would likely be distrustful of choosing to sell their interests.
Salazar called the plan a “land consolidation program,” saying it will provide individual Indians with an opportunity to obtain cash payments for divided land interests and free up lands for the benefit of tribal communities.
In order to provide owners additional incentive to sell their interests, the settlement authorizes Interior to set aside up to five percent of the value of the interests into a college and vocational school scholarship fund for American Indian students.
The decision to settle did not come easily, according to administration officials who said serious work on the deal had been ongoing since summer.
Holder noted that Justice could have decided to continue litigating the case “at great expense to taxpayers.”
Announcement of the decision received generally positive reaction from leaders in Indian country, although some have said the settlement offer was too low.
Others, like Tex Hall, former president of the National Congress of American Indians, were more accepting.
“At long last, President Obama and Secretary Salazar have held true to their word and settled this case unlike past administrations who have not listened to us,” Hall said, echoing the words of many across Indian country.
Hall called on Congress to quickly support the settlement, which has already been done by lawmakers who tend to be supportive of Indian issues.
Interior currently manages about 56 million acres of Indian trust land, administering more than 100,000 leases and about $3.5 billion in trust funds.
For fiscal year 2009, funds from leases, use permits, land sales and income from financial assets, totaling about $298 million were collected for more than 384,000 open Individual Indian Money accounts and $566 million was collected for about 2,700 tribal accounts for more than 250 tribes.
More information on the settlement is available online.