Trust funds settlement should not be left to the fossil record


The Individual Indian Money trust remains a troubled realm, and it is likely to stay that way well into the next Congress.

Indian country was right to reject the case settlement concepts offered by the administration. But as spelled out by the next Senate Committee on Indian Affairs chairman, Sen. Byron Dorgan, D-N.D., failure to resolve the IIM litigation “overhangs everything else” in federal Indian affairs, on the funding front above all.

That overhang, 10 years in the making, isn’t likely to get any less severe under a Democratic Congress over the next couple of years. Another leading figure on the issue, Sen. John McCain, R-Ariz., has stated outright that he will not vote for a bill to settle the IIM litigation if it does not also settle as many subsidiary trust claims as may be possible. He wants a “whole” settlement, in contrast to an IIM-only settlement that would be considered “partial.” As a Republican of high stock right now and a probable presidential candidate in 2008, McCain’s views will take many lawmakers along with him.

So for now, any hope of an IIM-only, “partial” settlement is out.

So is any hope of the huge settlement described as fair by the IIM plaintiff class. Remember, the litigation itself is only about an accounting. When the frail pages of the lawsuit are found among other fossils many centuries from now, they may show that a court has “settled” the mismanaged accounts for a larger sum than the government will agree to, left to its own devices. But the government can litigate for decades yet at a cost still light-years from the settlement figure(s) the plaintiffs have initiated.

The starting figure of $176 billion, though never actually sought, was off-putting; $27.5 billion proved another non-starter; $13 billion also struck the administration as unrealistic; $8 billion to $9 billion, considered a reasonable “rough justice” number by the SCIA, might have been reachable two years or so ago, but now the administration considers a much lower figure justice enough.

Nonetheless, according to Interior Secretary Dirk Kempthorne, it is willing to invest “billions” in a kind of omnibus bill on trust claims. The key verb is not “to settle” or “to reimburse” but “to invest,” and in the short term there is no getting around it.

Indian country should engage with the administration’s case settlement concepts, then, and come forward with an improved set of proposals based on them.

It’s a steep order, but the case settlement concepts do provide some footholds. For starters:

The administration foresees “voluntary and involuntary” mechanisms for consolidating fractionated lands. Given the history here, the concept of an involuntary taking of land to be consolidated is troublesome, to say the least. But assuming economic use is the goal of consolidation, there is no other way. Land tracts with hundreds of owners cannot be managed for profit, period. Consolidation that requires consent from all owners is impossible for many reasons. Tribes should be able to propose sensible limits on involuntary consolidation mechanisms that don’t also torpedo the purposes of consolidation.

The administration foresees a “beneficiary managed trust” that would grow the trust estate. This was dangerous at the time of the Dawes Severalty Act, a century and some years ago, but nowadays it simply isn’t a new concept. In fact, it’s a solid, tested concept that can help prosperity along by goading individuals and tribes toward the aggressive management of their own resources. After a 10-year period for technical assistance as financed in the law itself, individuals would manage their own lease property, with payments going direct to individuals instead of being lightened along the way by the government. The original trust funds reform law of 1994 foresaw every bit of that. But the government would still fulfill vital residual roles, maintaining the land as inalienably tribal land, in trust and tax-exempt, as well as probating estates, correcting errors in the accounts, transferring titles and keeping title records. A proposal like this should not be rejected with outrage, but embraced with care. Again, tribes can certainly offer proposals for the longer-term protection of their more vulnerable members.

Tribes have especially reviled the idea of limits on federal liability, should IIM beneficiaries choose to manage their own lands. But already, the U.S. Supreme Court has established limits on federal liability in cases where statutory language does not assign liability. Tribes should be willing to propose strictly limited statutory language that assigns certain modified federal liabilities, but without going so far as to convince McCain and company that the settlement is therefore “partial.”

Tribes also seem to despise the idea of an alteration in the trust relationship. But Elouise Cobell, lead plaintiff in the IIM case, suggests the same and then some every time she declares the IIM trust should be taken from Interior and placed in receivership. This could never be done because no bank could responsibly take on the liabilities, but if it were done it would profoundly alter the trust relationship. So let’s alter it already, not through receivership but by participating and directing. It really is too important to be left to lawyers and individuals.

Finally, tribes have objected to the idea that tribal claims should be included in any settlement that approaches the $8 billion range. But the guessing here is that if tribes genuinely got behind a “whole” settlement at some realistic cost, providing their own serious counterproposals with a minimum of posturing, billions more might be found.