Skip to Main Content
Project on Government Oversight

Crime of the Century? Judge Approves $3.4 Billion Settlement for More Than 100 Years' Worth of Bungled Royalty Payments to Native Americans

Related Content: Oil & Gas Royalty Revenue
Printer Friendly
June 22, 2011

After 15 years of fighting, a judge has approved a $3.4 billion settlement for activist Elouise Cobell and others who joined in her class action suit to recoup billions of dollars owed to Native Americans in mineral royalties, grazing fees, and other revenues that were mishandled or lost over the course of more than 100 years. A quick recap of the case from our 2008 blog post:

The origins of the case date back to 1887, when the federal government divided up millions of acres of reservation land and parceled it out to individual Native Americans. According to that 1887 law, known as the Dawes Act, the Indians were not considered capable of actual ownership. Thus the land was put into trusts for the individual Indians, with the U.S. government acting as trustee. Proceeds of the oil and mineral leasing rights were supposed to be paid into the Indian trusts, but the government accounting system was sloppy from the beginning, and it only got worse over the next 100 years.

Cobell's own story is almost mythic. At the age of 30, she became treasurer of the Blackfoot Nation, and immediately discovered the accounts were in total chaos. When she sought answers from the Interior Department's Bureau of Indian Affairs, they either insulted or ignored her. After more than a decade of banging her head into bureaucratic walls, she found an official who lent her a sympathetic ear, and introduced her to a banking lawyer named Dennis Gingold, known for his hard-charging style. He couldn't believe the kind of run-around Cobell had been getting.

In addition to depriving Native Americans of their fair share, the government’s defending the stewardship of the program by the Office of the Special Trustee (OST), an agency within the Interior Department which was “created to improve the accountability and management of Indian funds held in trust by the federal government,” resulted in collateral waste and abuse. Robbie Levine, then the Chief of the Information Office of the Bureau of Land Management (which approves and supervises leases on Indian lands), received her first negative job rating after she came forward about security weaknesses and was threatened with removal by her bosses before she took the stand in the case.

Additionally, the Department of Justice's defense of OST's mismanagement may have figured into its lack of action against an employee who steered lucrative contracts to an accounting firm that had lavished him with gifts, golfing trips, and a free place to live. As POGO’s former Director of Investigations Beth Daley noted at the time:

A criminal prosecution of OST employees would only serve to undermine DOJ's efforts to convince the court that the OST and other affiliated agencies at DOI are acting in good faith. DOJ is also unlikely to pursue anyone at CD&L [Chavarria, Dunne & Lamey, LLC], which, according to a May 2007 filing by DOJ, is listed as one of five accounting firms under contract with DOI to conduct the historical accounting of individual Indian money accounts, which has been a central point of contention in the litigation.

POGO is glad that the Obama administration made settling this case a priority and that Native Americans will finally receive some of the money they deserve, and the hard work of Senators John McCain (R-AZ), Byron Dorgan (D-ND), and others on the Senate Indian Affairs Committee for their oversight work that brought this injustice to national attention.

The case represents the largest class-action settlement ever approved against the U.S. government (but incidentally, is about half the size of the settlement offered by the government in 2007).

UPDATE: Eloise Cobell's spokesman, Bill McAllister, responded to POGO's blog and says that the $7 billion 2007 settlement never really existed:

That "settlement" was only a hint by Bush officials that if a wide range of Indian issues, many well beyond the Cobell suit, could be settled the government might offer $7 billion for resolving all these problems. Judge Thomas Hogan reviewed this "offer" during his judgment on Monday and pronounced it a bogus settlement claim. It was never proposed as a formal settlement to the Cobell legal team, although some people in Indian Country believed it was an actual offer.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

Related Work