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American Indian Royalties Lawsuit Settled for $3.4B

The U.S. government last Tuesday agreed to pay $3.4 billion to settle long-standing claims that it mismanaged revenue in American Indian trust funds, including revenue raised through natural gas and oil drilling.

Elouise Cobell, the lead plaintiff, filed a class action lawsuit in 1996 claiming that the federal government mismanaged the trust fund and that more money was owed to the Indians than had been paid.

The lawsuit, which generated 22 published judicial opinions, was appealed in federal court 10 times. Last year Judge James Robertson of the U.S. District Court for the District of Columbia sided with the American Indians in Elouise Pepion Cobell, et al., v. Dirk Kempthorne, Secretary of the Interior, et al., No. 96-1285 (see NGI, Feb. 4, 2008).

Among other things the lawsuit claimed that the Department of Interior (DOI) had mismanaged more than $100 billion in natural gas and oil royalty revenue since 1887.

"The United States could have continued to litigate this case, at great expense to the taxpayers," said Attorney General Eric Holder last week. "It could have let all of these claims linger and could even have let the problem of fractionated land continue to grow with each generation. But with this settlement, we are erasing these past liabilities and getting on track to eliminate them going forward."

DOI manages nearly 56 million acres of Indian trust land across the country, which it leases for drilling, mining, livestock grazing and timber harvesting. Revenue raised by the leases is then distributed to American Indians. In fiscal year 2009 DOI collected close to $300 billion for more than 384,000 individual Indian accounts. Under the settlement, the government agreed to pay to compensate for claims of historical accounting irregularities and any accusation that officials had mismanaged the leasing process over the years.

Cobell, who originally expected the case to last only two to three years, said Tuesday she thought the Indians were owed more than the settlement amount, but she said it was better to reach an agreement to help impoverished trust holders than to spend more time in court.

"We are compelled to settle by the sobering realization that our class grows smaller each day as our elders die and are forever prevented from receiving just compensation," she said.

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