December 7, 2005

Tribes may lose on trust fund payments


Billions of dollars will potentially be lost if tribes do not
file claims with the Department of Interior to negotiate settlements that will
recoup lost revenues owed to the tribes for leases, royalties and sale of

Any tribal claims are subject to a statute of limitations established by
Congress in 1999 and which runs out Dec. 31. The revenues owed the tribes come
from non-reconcilable funds that were to have been paid to tribes for royalties
and leases, sale of land and other negotiations handled by the Interior as
part of the department’s fiduciary responsibility over the past decades.

So far only three or four tribes have reached a settlement with the
government, nine tribes have filed and most all of the 562 federally recognized
tribes may have claims to file, attorneys who are working the claims assert.

The statute of limitations was established based on the Osage Nation v.
United States case and many tribes may not be aware of the limitations, attorneys

”If they [tribes] do not file, they could lose out on collecting past lease
money; and, just as important, they could lose the right to litigate for
treaty lands that have been taken,” stated Gary Frischer, strategic legal
consultant for a group of attorneys working on claims.

”This could be, if the reservations do not file a claim, the greatest land
grab in 150 years,” he added.

The accounting firm of Arthur Andersen LLP conducted an audit of the trust
funds at the request of the federal government and determined that
mismanagement by Interior was involved and that tribes had not received the payments due them. Andersen sent reconciliation reports to the tribes, which were
encouraged by Congress to negotiate settlements with the government rather than file
in federal court. The tribes were given five years after the notice from
Andersen to negotiate.

Sens. John McCain, R-Ariz., and Byron Dorgan, D-N.D., introduced legislation
in October that would extend the statute of limitations date for another
five years; however, that bill has not been taken up by the full Senate.

A house companion bill introduced by Reps. Richard Pombo, R-Calif. and Nick
Rahall, D-W.Va., would also extend the deadline to negotiate a settlement
until Dec. 31, 2011. The Senate Committee on Indian Affairs and the House
Resources Committee approved the legislation, but has not been taken up on the floor
of either house.

Congress in 1993 required Interior to pay interest on trust funds held for
tribes and to demonstrate new approaches for the management of ”Indian trust
funds; to clarify the trust responsibility of the United States with respect
to Indians,” said written comments from the Senate Committee on Indian
Affairs that year.

A year later, Congress, with an amended reform act, created the office of
special trustee. Also that year, the Cobell v. Norton case began. (The Cobell
litigation is unrelated to the tribal trust fund issue.)

The Osage case was based on the fact that the federal government mismanaged
its fiduciary responsibility to the Osage Nation of Oklahoma. Congress passed
the Osage Allotment Act in 1906, which directed the federal government to
place all money due, or funds that may become or may be found to be due, in
trust. Those monies were royalties from oil, gas, coal and other mineral leases,
and were to be held for the tribe and individual members of the Osage Nation.

The Osage Nation argued that the federal government held funds in excess of
$8 million in escrow for almost 10 years, prior to payment and transfer of
title to the lands from 1873 to 1883. In court, the Osage argued that the
federal government ”exercised involuntary, pervasive management and complete
control over the mineral assets of the Osage – but has never rendered an

In 1996 Arthur Andersen attempted to reconcile the trust fund accounts from
between July 1, 1972 and September 1992. Its report shows that the federal
government did not comply with the federal law that required reconciliation of
the accounts.

The federal government’s attempt to have the case dismissed failed. It also
asked the court to impose a statute of limitations on claims for funds before
1984. According to Federal Claims Court regulations, the statute of
limitations is six years, a term set by Congress. However, according to the many
Appropriations Acts (the first of which was passed in 1908), a reconciliation of
the due funds held for the tribe is the key to determining dates for statutes
of limitations.

As it has been determined that all tribes received a reconciliation in 1999,
the statute of limitations date will be Dec. 31.

The Arthur Andersen report was the first reconciliation completed by
Interior that complied with the standards set forth in the many Appropriations Acts.

The Osage case leaves open the chance for tribes to file claims for past
revenues not reconciled based on technicalities in the Indian Claims Commission
Act. The act set the time limit at 1951; however, Hewitt wrote that because
the Osage argued that revenue was lost, funds mismanaged and reconciliation did
not occur until December 1999, the statute of limitations set by the Indian
Claims Commission was not applicable.

The requirements of the reconciliation reports established by Congress state
that as full and complete an accounting as possible must be submitted at the
earliest possible date.

”The court finds that the language ‘to the earliest possible date’ to be
further indication of the intent of Congress to allow Indian tribes to file
tribal trust fund mismanagement claims within six years after an accounting of
the trust fund is furnished to the tribe no matter when the mismanagement
occurred,” Hewitt wrote.

Tribes are now faced with the possible termination of their right to file
claims by the end of the year unless the two pending bills are enacted in time.

Tribes are encouraged to meet with their tribal attorneys to determine if
they have a claim and to file. Also, a consortium of attorneys who are
experienced in federal Indian law and who have a track record in these types of land
claims has been formed.

Attorney Mario Gonzalez, Oglala, in Rapid City, S.D., heads the consortium.
He is joined by attorneys Gregory Yates from South Dakota and California,
Maurice Johnson in Nebraska, Benjamin Thompson in Minnesota and Jerry Guenther
in Montana.

Tribal officials wishing to contact any of these attorneys can call (800)
404-4658 or e-mail:

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