Federal Judge Holds Gale Norton in Contempt for
Failing to Fix Indian Trust

ROBERT GEHRKE / AP 17sep02

[ Wall Street Journal article below ]

WASHINGTON – A federal judge Tuesday held Interior Secretary Gale Norton in contempt for failing to heed his order to fix oversight problems with a trust handling hundreds of millions of dollars in royalties from Indian land.

U.S. District Judge Royce Lamberth called the department's handling of the Indian money and the action of government attorneys in the case disgraceful, noting that he has the authority to take management of the funds away from the department.

Norton is the third Cabinet officer that Lamberth has held in contempt over the trust fund. Former President Clinton's treasury secretary, Robert Rubin, and interior secretary, Bruce Babbitt, also were held in contempt on the case.

In December the judge shut down most of the Interior Department's Internet connections because he said the agency could not ensure hackers wouldn't break in and steal money.

The government has acknowledged major problems with the trust fund. The Interior Department has spent more than $600 million since 1996 to comply with instructions from both Congress and Lamberth, but accounting problems persist.

Norton inherited many of the problems with the trust fund. During a 29-day trial that ended in late February, she asked Lamberth for more time to make fixes. Lamberth was unmoved. On several occasions during the trial and since it concluded, he scolded Interior officials for foot-dragging and failure to comply with his orders.

In a 267-page opinion, the judge said the Interior Department not only failed to comply with his orders but also had lied to him about its progress in repairing the trust.

"The agency has indisputably proven to the court, Congress, and the individual Indian beneficiaries that it is either unwilling or unable to administer competently the (Indian) trust," Lamberth wrote.

"Worse yet, the department has now undeniably shown that it can no longer be trusted to state accurately the status of its trust reform efforts. In short, there is no longer any doubt that the secretary of Interior has been and continues to be an unfit trustee-delegate for the United States."

The trust, which now handles funds for about 300,000 Native Americans, began in 1887 when Congress took 90 million acres from Indian tribes and gave the land to white homesteaders.

The Indians were left with allotments ranging from 40 acres to 320 acres, with the Interior Department assigned to manage grazing, timber and oil and gas drilling on the land, and ensure Indians received royalties for those activities.

For more than a century, an untold amount of money meant for some of the nation's poorest residents was lost, stolen or never collected. Indians sued in 1996, claiming the mismanagement cost them between $10 billion and $40 billion.

Lamberth ordered the department in 1999 to fix the system and piece together what the Indians are owed. He also found Babbitt and Rubin in contempt and ordered the government to pay $600,000 of the plaintiffs' attorneys fees for failing to turn over documents in the case.

In the latest ruling, Lamberth ordered the Interior Department to pay the attorneys' fees for the group of Indians who sued the department in 1996. Dennis Gingold, the plaintiff's attorney, said those fees would be in the millions of dollars.

Lamberth also said that he has the authority to strip the department of its oversight of the Indian royalties and appoint a trust expert outside the department to mange the money. The judge asked the plaintiffs to propose a new management structure.

Norton's own efforts to overahaul the management of the trust funds stalled last week when a task force of tribal leaders refused to back down on a demand that a panel outside the Interior Department, and including Indian members, supervise the department's management of the money.

Judge Holds Interior Secretary In Contempt Over Indian Trust 

JOHN J. FIALKA / Wall Street Journal 18sep02

WASHINGTON -- A federal judge here held Interior Secretary Gail Norton and another agency official in contempt of court for what he termed a continuing failure to reform the error-prone trust-fund system that handles more than $300 million a year for individual Indians.

Judge Royce C. Lamberth indicated that his next action may be to take over the trust fund by putting it under a court-appointed receiver. He asserted that the Department of Interior's reform effort is only "marginally closer" to its objective than it was three years ago, when he held Ms. Norton's predecessor, Bruce Babbitt, in contempt.

In a frequently scathing 267-page opinion, Judge Lamberth asserted that Ms. Norton had followed a series of practices to mislead the court that he traced back to Mr. Babbitt. He added that Ms. Norton didn't change course until the plaintiffs in the class-action lawsuit moved to cite her for contempt.

The judge's ruling finds Ms. Norton and Neal McCaleb, assistant secretary for Indian Affairs, in civil contempt. The move doesn't carry criminal penalties, but it requires the government to pay legal fees for the Indians' lawyers. In an accompanying order, the judge said he also will hold a trial over what accounting system will be used to measure trust-fund losses, a matter that had been previously left to the Interior to decide.

Robert D. McCallum Jr., an assistant attorney general of the Justice Department, which is defending Interior, argued that the facts in the case don't justify contempt against Ms. Norton or Mr. McCaleb. Justice, he said, is considering "all of the options for appeal."

Rep. J.D. Hayworth (R. Ariz.), who is co-chairman of a congressional caucus on Indian matters, called the findings "unfair."

"To subject Secretary Norton to this sort of judicial jawboning is unnecessary," he said, asserting that Ms. Norton was "devoting extraordinary attention" to the reform effort.

The trust fund was created in the 1800s by Congress to help Indians who owned individual plots of land keep track of their income from grazing leases, mining and other outside uses. Because there were no banks on reservations, the system grew to more than 300,000 individual accounts.

Since 1996, plaintiffs have been suing for an accounting of the funds, which are kept in the U.S. Treasury, asserting that thousands of records are missing, damaged, tampered with or destroyed. Dennis Gingold, lead attorney for the Indian plaintiffs, said they are prepared to use a historical accounting system to show more than $100 billion in losses and resulting damages.

Earlier, after holding Mr. Babbitt in civil contempt, Judge Lamberth concluded that he had never seen "more egregious misconduct by the federal government." In Tuesday's phone-book-size opinion, he corrected himself. "The Department of Interior has truly outdone itself this time."