The agreement will award $1.4 billion to individual beneficiaries and place $2 billion in a land consolidation fund that will be used by the federal government to buy and consolidate individual Indian land holdings. Before it becomes effective, the settlement must be approved by Congress and the U.S. District Court, District of Columbia.
The lawsuit, known as Cobell v. Salazar, was brought by plaintiffs for Indian trust account beneficiaries: Elouise Pepion Cobell, Blackfeet Tribe, Montana; Earl Old Person, chairman of the Blackfeet Tribe for over 40 years; Mildred Cleghorn, 20-year chairman of the Fort Sill Apache in Oklahoma; Thomas Maulson, Lac du Flambeau Chippewa of Wisconsin and James Louis Larose, Winnebago Tribe, Nebraska. All the plaintiffs have years of experience in finance and government. Cobell took wwthe lead in organizing the Blackfeet National Bank, the first bank on Indian land owned by a tribe, and is prominent in national Indian affairs.
Continuation of litigation would have been costly to both sides. Cobell said in a recent news conference, "Yes, we could prolong our struggle and fight longer. But we are compelled to settle now by the sobering realization that our class grows smaller each year, each month, and every day as our elders die and are forever prevented from receiving their just compensation."
The Defendants in the class action suit are U.S. Secretary of the Interior Ken Salazar, U.S. Assistant Secretary/Indian Affairs Larry Echohawk and U.S. Secretary of the Treasury Timothy Geithner. Salazar was quoted in Indian Country Today as saying "We are here today to right a past wrong."
The agreement creates two groups of Indian beneficiaries eligible to receive settlement money: the Historic Accounting Class and the Trust Administration Class. Many individuals will qualify in both categories. The money belongs to individuals, but it is held in trust for them by the federal government. The government also holds trust accounts for tribes, but no redress for tribes was sought in this claim.
The $1.4 billion will be placed in two separate trust accounts. The first one will be divided among individuals who have or have had funds in an Individual Indian Money (IIM) Account during a certain time period. This includes more than 500,000 current IIM account holders. Those who qualify will receive an initial payment of $500, and later up to $1,500. Before it can be distributed, the number of beneficiaries must be determined.
The $2 billion account is a Trust Land Consolidation Fund that relates to land, oil, natural gas, mineral, timber, grazing, water and other resources and rights on or under individual Indian lands. A portion of the $2 billion account has been designated for a federal Indian Education Scholarship Fund of up to $60 million. In addition, the settlement includes a commitment by the federal government to appoint a commission that will oversee and monitor improvements in the accounting and management procedures of individual Indian trust assets.
When the settlement is finalized, notice will be published in local papers and sent out to tribal members. Detailed information about the settlement and benefits may be found at http://cobellsettlement.com.
The civil suit was filed initially in 1996 "to compel the performance of trust obligations" when Bruce Babbitt was Interior secretary and Ada Deer was head of the Bureau of Indian Affairs. It charged gross mismanagement of IIM accounts, failure to keep adequate records, failure to account to beneficiaries, and preventing the Special Trustee for American Indians (appointed in 1994) from carrying out his duties and responsibilities to correct unlawful practices and procedures. The plaintiffs claimed Congress never appointed sufficient money for the Special Trustee to do the job he was commissioned to do. Banker and financier Paul Homan attempted to centralize and update the accounting system through a "High Level Implementation Plan," but was never able to do so for lack of funding.
The Plaintiffs stated they had no adequate administrative remedies, although they had repeatedly asked the Interior Department to comply with their obligations, so taking the case to court was their only option. They claimed that legislation had been enacted by Congress to correct the situation, but the defendants "refused to obey the mandate of Congress and had undermined the efforts of the Special Trustee" to reform the system.
The bulk of the money held in trust by the government is from income derived from individual land allotments. It dates back to a period more than a century ago when U.S. policy was to break up Indian lands into small tracts of 80-160 acres and "give" them to individual Indians. The landowners were not allowed to handle the money, however - it was held in trust by the government for them.
Individual Indians were given legal titles to the land, but the money was paid to the federal government and held "in trust" for them. The U.S. had the legal responsibility to invest or deposit the funds that accrued to "maximize the return." If the individual Indian wanted to lease or sell his allotment he could, but only with permission of the government.
According to the Plaintiffs, at the close of 1995 there were 387,000 accounts. At least 15,000 were duplicate accounts, and there were other inconsistencies. The Plaintiffs stated they "have no way of knowing the true state of their accounts."
Historically, their claim goes back to the General Allotment Act of 1887, known as the "Dawes Act." In effect until 1934, the Act authorized the president to allot tribal lands to individual Indians. The purpose of the Act was to break up Indian land so it could be sold to white settlers. Most allotments were parcels of 160 acres or less. The federal government was to hold the allotments in trust for 25 years at which time Indian people were free to sell them if they wanted to. The government later extended the trust period "indefinitely."
According to the Handbook of Federal Indian Law 98, "The objectives of allotment were to extinguish tribal sovereignty and erase reservation boundaries and force the assimilation of Indians into the society at large." Native Americans lost, over the 47 years of the Act's life, about 90 million acres of treaty land, or about two-thirds of the 1887 land base. Additionally, 90,000 Indians were made landless through the sale of their allotments.
Former Hopi Chairman and head of Kiva Institute Ben Nuvamsa said, "It (the lawsuit) all stems from the General Allotment Act. The BIA has not been able to account for all the revenue generated from landholders. Because of its trust relationship, the Bureau put together the leases and managed the money . . . They are alleging that the accounting was not accurate."
Thousands of accounts from multiple sources are involved. "It's very very complicated," Nuvamsa said. "It's not tribal land. [The allotments] belong to hundreds of individuals. The value depends on when the land was allotted and how it was appraised."
Other problems involve probates of beneficiaries who have died, people who are designated "address unknown," orphans, the elderly and mentally incompetent.
Nuvamsa said, "It sounds like a lot of money, but it will have to be divided among all the account holders. Some don't even know they have land," he said. "I don't think it will ever be 'fair.' There are many discrepancies that happen. It's a settlement."
In the 1950s, federal policy toward Indians changed to "termination." The government sought to sever the trust relationship once and for all. It was not successful.
The present policy began under President Richard Nixon and was put into place by President Gerald Ford in 1975. It is called the "Indian Self-Determination and Education Assistance Act." Under the present policy, tribes can contract with the BIA Office of Trust Fund Management to manage their own accounts if they have the fiduciary capability.
In 1988 it became apparent there were serious problems in accounting procedures. Congress held oversight hearings on alleged mismanagement of Indian trust accounts. An independent study concluded that reconciling all the accounts could cost the government more than $200 million.
Problems continued to increase until Cobell and the other Plaintiffs filed a complaint for declaratory and injunctive relief in U.S. District Court in 1996. The two sides finally came to an agreement on a total amount Defendants were required to pay to settle the historic accounting claims and land administration claims, as well as legal fees. The Garden City Group, Inc. was selected to administer the claims.