Pesata: Honoring the trust relationship

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The United States government manages more than 56 million acres of land and billions of dollars in other assets belonging to American Indian tribes and individual Indians. The government acts as trustee over these lands and assets and, as trustee, it must manage the assets prudently on behalf of the tribes and individuals who are the real owners.

The trust relationship between the United States and Indian tribes is grounded in the U.S. Constitution and further based on centuries-old treaties, statutes, executive orders and pronouncements, and case law. This historic relationship has been the subject of considerable public scrutiny in recent years, especially with the swearing in of the 44th American President Barack Obama.

On Nov. 5, 2009, I attended President Obama’s inaugural Tribal Leaders White House Summit in Washington, D.C. where he pledged to honor and strengthen the trust relationship between the federal government and the Indian tribes. Many cabinet officials also attended the summit and rolled out bold initiatives to improve health care, education, public safety and economic development, to name a few areas of focus. Indeed, the president and his cabinet made many momentous commitments to Indian country the magnitude of which tribal leaders had not heard since the later years of the Clinton administration.

Indian tribes, like all other trust beneficiaries, are entitled to full disclosure of all information from the trustee about how trust assets are being managed.

And to the president’s credit, he has followed through on several key commitments, including passage of the Indian Health Care Improvement Act, a substantial funding boost for Indian health care, passage of the Tribal Law and Order Act along with a new law enforcement initiative announced by Attorney General Holder, and, though not without controversy, a proposed settlement of the longstanding, divisive Cobell litigation involving federal mismanagement of Individual Indian Money trust funds. Against this backdrop, it is hard to understand why the Obama administration is fighting against Indian tribes who have been forced to sue the United States for mismanagement of tribal trust funds and assets.

The Jicarilla Apache Nation is one of dozens of tribes asserting claims against the United States for mismanaging tribally owned land and assets. The federal government has negotiated for years with the Jicarilla Apache Nation, yet it is now taking a hard line approach. Among other things, the government is refusing to turn over volumes of documents relevant to the Jicarilla Apache Nation’s claims of federal mismanagement. This position is at stark odds with the government’s stated policy of promoting transparency, accountability and proper trust management, and is certainly inconsistent with the pledge the president made directly to me and other tribal leaders who attended the historic White House Summit last November.

Indian tribes, like all other trust beneficiaries, are entitled to full disclosure of all information from the trustee about how trust assets are being managed. The government claims the documents it is withholding are protected by attorney-client privilege. Specifically, the documents contain advice given by the Department of the Interior Solicitor’s Office (and other federal legal offices) about acceptable investments for tribal trust assets.

It is well-settled that a trustee cannot withhold from the beneficiary any advice from an attorney about the management of trust assets. This rule of simple fairness is known as the “fiduciary exception” to the attorney-client privilege. See, Restatement (Third) of Trusts § 82: Duty to Furnish Information to Beneficiaries (2007). The justification for this exception is two-fold.

First, the trustee, sometimes referred to as the fiduciary, is not the exclusive client of the attorney rendering advice, but rather is obtaining that advice as a proxy for the trust’s beneficiaries. Thus, the trustee does not enjoy an attorney-client privilege exclusive of the beneficiary in the first instance. Second, the trustee has a duty to disclose all information related to trust management to the beneficiary. This duty overrides the attorney-client privilege, especially where the information sought by the beneficiary is relevant to an alleged breach of a fiduciary duty.

In our case, the United States has argued that the “fiduciary exception” should not apply to it as our trustee, and that it should be entitled to keep secret any advice that it receives from government attorneys about managing Indian trust assets. Every federal court that has heard this argument has rejected it. Most recently, the Federal Circuit Court of Appeals ruled in our favor that the “fiduciary exception” applies to the U.S. just like other trustees.

Unfortunately, the United States has requested the U.S. Supreme Court to review and overrule the Federal Circuit’s decision. From our perspective, there is no good reason – legal or moral – for doing this. As many tribal leaders know, litigation is expensive, especially litigation against the federal government, which has an army of litigators and an unlimited budget. The “discovery” process is especially burdensome and having to fight for documents which relate directly to how our trust funds and assets were being managed is not only costly but insulting.

Litigation is expensive, especially litigation against the federal government, which has an army of litigators and an unlimited budget.

The Obama administration says it wants to fix festering problems in Indian country and improve its relations with Indian tribes. As noted above, the president and his administration have taken important steps in that direction and have several key accomplishments no other president has been able to achieve. For that, the president deserves our appreciation, and we thank him and congratulate him for his leadership and work on these endeavors.

That said, the administration should stop trying to avoid its responsibilities as a trustee over tribally owned land and assets. We call on President Obama and Attorney General Holder to withdraw the United State’s petition it filed recently seeking the Supreme Court to overturn the Federal Circuit’s ruling that is favorable to all Indian tribes. They should accept and obey the Federal Circuit’s ruling, disclose the relevant documents, and work with the Jicarilla Apache Nation and other tribes to resolve the remaining tribal trust mismanagement cases.

Levi Pesata is president of the Jicarilla Apache Nation, a federally recognized Indian tribe with nearly 4,000 enrolled tribal members. The Jicarilla Apache Reservation consists of approximately 1 million acres of trust land and is located in northern New Mexico. Jicarilla is one of the largest producers of natural gas in the lower 48.