WASHINGTON - At first glance, the Dec. 10 decision of a federal appeals
court seemed to turn the lawsuit over the Individual Indian Money trust in
the government's favor. The appellate court clearly found that District
Judge Royce C. Lamberth had exceeded his authority, cause for a press
release of unconcealed rejoicing from Interior. Lamberth and the department
have clashed over and over again in the long-running class action lawsuit,
which pits approximately 300,000 IIM account holders against the federal
government and Interior, the government's delegate over the trust funds.
In light of the Dec. 10 decision, Lamberth cannot direct the details of an
Interior Department accounting for losses from the Individual Indian Money
trust. The trust accounts receive and pay out again revenues derived from
natural resource royalties - gas, grazing, rights-of-way, timber - drawn
from Indian lands that are held in trust by the federal government.
All royalties received in the accounts are due to the Indian account
holders, technically known as beneficiaries. Losses from the accounts, due
to mismanagement at Interior and its subordinate agency, the BIA, may mount
into the billions of dollars, depending on who does the calculating.
Congress and the courts have already determined that Interior has breached
its fiduciary duties to the beneficiaries.
Among the many issues spawned by the case, the two at issue in the Dec. 10
ruling were whether Interior must go forward with a court-ordered
historical accounting and a comprehensive fix of its current IIM accounting
systems. The appellate court did nothing to overturn the lower court's
order for a historical accounting; it simply found that a congressional
moratorium on expenditures for it was valid, and suggested the order could
be reinstated once the moratorium lapses on Dec. 31. But Interior will
conduct any accounting by its own lights, without interference from the
court. Likewise, Interior must submit a plan to the Lamberth court for
fixing its current IIM accounting system, and Lamberth will eventually
consider how well it complies with the 1994 American Indian Trust
Management Reform Act. But Lamberth cannot micro-manage the steps Interior
takes toward compliance.
A considerable sum of money is at stake. The historical accounting and
"system fix" alone will have cost hundreds of millions of dollars, at a
minimum, by the time they are finished. Assuming they are finished, they
will only provide an accounting for past sums, and a system for managing
future IIM sums with confidence.
But on Capitol Hill at least, the consensus expectation is that once the
accounting phase of the case is finished, lawsuits for compensation and
damages will be filed thick and fast by IIM account holders. In the
compensation phase, billions of dollars could be on the table.
The courts have held Interior, as the trustee for IIM beneficiary revenues,
to a strict standard of fiduciary accountability. But uniquely, all funds
in settlement of the IIM case - funds for accounting, fixing the system,
and paying compensation and damages if it comes to that - must be
appropriated by Congress. For that matter, Congress will end up paying many
of the total litigation costs of the case.
With that daunting price tag in mind, Congress has undertaken two efforts
to settle the case. The first, a moderated settlement negotiation between
the parties litigant, as they say in legal circles, has gone nowhere. The
second, a bill that would settle the case through the authority of
Congress, never made it to a committee vote in the now-adjourned 108th
Congress, but may be taken up again in next year's 109th.
Both efforts have been driven by another term from legal circles -
"litigation risk." As the prospective cost of court proceedings has
impressed itself on congressional members, settlement efforts have gone
forward with litigation risk in mind - that is, settlement sums have been
considered in light of comparison with the likely costs of a court
settlement. For instance, according to a Capitol Hill staffer well-informed
on settlement efforts, a draft settlement bill in the 108th Congress took
$10 billion as a reasonable settlement figure when compared against
litigation risk at the time. IIM account holders would have been offered
$25,000 to consider their accounts settled as to past losses and future
It is unclear how far a $10 billion settlement proposal would have gotten
with the 108th Congress, let alone other elements in the bill that may have
proved controversial. But that was the figure under consideration.
Then the Dec. 10 decision cleared the way for Interior to apply statistical
sampling to the historical accounts (Lamberth had forbidden it in previous
rulings). By sampling the accuracy of a percentage of the accounts, and
interpreting the results as valid for them all, Interior may arrive at a
smaller sum for losses than a full historical accounting of every account
would yield. Therefore, by this line of thinking, litigation risk to the
government has gone down since Dec. 10. The next Congress will take account
of the lower litigation risk as it crafts a new settlement bill, one that
offers substantially less than $10 billion in settlement.
Keith Harper, a Native American Rights Fund attorney on the case, called
that interpretation "wholly unreasonable." The Dec. 10 decision actually
strengthened the plaintiff case, he said, despite correcting Lamberth on
narrow procedural issues. In particular, language in the decision stating
beneficiaries will receive their "due or more," including interest, from
all account revenues notwithstanding delays in accounting have altered the
playing field, Harper added. Any intervention of Congress to settle the
case for less than the "due or more" recognized by the appeals court would
constitute an illegal taking under Article Five of the Constitution, he
said. "We would appeal."
He acknowledged that the plaintiff position is less strong in Congress in
one respect - the defeat in the November elections of Sen. Tom Daschle,
D-S.D., the Senate Minority Leader and a stalwart friend of the plaintiffs.
But Harper named other congressional members who have championed the
plaintiff case. "J.D. Hayworth [an Arizona Republican in the House of Representatives] has stood up for us time and again, and he brings
Republicans along with him." Rep. Dale Kildee, D-Mich., has done the same
on the Democratic side of the aisle. The House Native American Caucus,
which the two men co-chair, has regularly backed the plaintiff position in
the case, he said. Rep. Richard Pombo, R-Calif., chairman of the House
Committee on Resources in its wide jurisdiction over Indian-specific
issues, resisted and then denounced the "midnight rider" that delayed the
In the Senate, Harper said, plaintiffs are better off with Sen. John McCain
as chairman of the Senate Committee on Indian Affairs. The retired
chairman, Sen. Campbell, R-Colo., considered the lawsuit "an attorney
case," according to Harper. "He couldn't be more wrong. It's a beneficiary
Campbell also had a penchant for venting frustration at Interior's
non-answers during committee hearings, and then moving on to the next
question, Harper acknowledged. Citing McCain's reputation for getting
things done, he said the Arizona Republican is likely to ask hard questions
and get to the bottom of them.