Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-05084/USCOURTS-caDC-00-05084-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 5, 2000 Decided February 23, 2001

No. 00-5081

Elouise Pepion Cobell, et al.,

Appellees

v.

Gale A. Norton, Secretary of the Interior, et al.,

Appellants

Consolidated with

00-5084

Appeals from the United States District Court

for the District of Columbia

(No. 96cv01285)

David C. Shilton, Attorney, U.S. Department of Justice,

argued the cause for appellants. With him on the briefs were

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 1 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Lois J. Schiffer, Assistant Attorney General, John A. Bryson,

and Charles W. Findlay, Attorneys.

Thaddeus Holt argued the case for appellees. With him on

the brief were Dennis Gingold, Keith Harper and Lorna K.

Babby.

Before: Williams, Sentelle and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: This case involves a class action

suit by beneficiaries of Individual Indian Money ("IIM") trust

accounts against Interior Secretary Gale A. Norton and other

federal officials who serve, in their official capacities, as

trustee-delegates on behalf of the federal government. IIM

trust beneficiaries filed suit alleging breach of fiduciary

duties. Specifically, plaintiffs sought a declaratory judgment

delineating appellants' trust obligations to IIM trust beneficiaries and injunctive relief to ensure that such trust obligations are carried out. After a lengthy trial, the district

court concluded that the federal government and its officers

have been derelict in their duties, and issued a remand to the

Interior and Treasury Departments so that appellants could

discharge their fiduciary obligations. The district court further retained jurisdiction and ordered appellants to file quarterly reports detailing steps taken in fulfillment of their

duties. Although the decision did not resolve every issue

raised by plaintiffs, the district court certified the order for

interlocutory appeal.

Appellants challenge the district court's delineation of their

trust obligations and assert that the district court exceeded

its authority in ordering equitable relief for plaintiffs. We

find that the district court had before it ample evidence to

support its finding of ongoing material breaches of appellants'

fiduciary obligations. Notwithstanding the fact that appellants have taken significant steps towards the discharge of

the federal government's fiduciary obligations, appellants

clearly have yet to fulfill their trust duties. The relief

ordered was well within the district court's equitable powers.

While we order the district court to modify the characterizaUSCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 2 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

tion of some of its findings, we generally affirm its judgment

and order.

I. Background

The federal government has substantial trust responsibilities toward Native Americans. This is undeniable. Such

duties are grounded in the very nature of the governmentIndian relationship. "[A] fiduciary relationship necessarily

arises when the Government assumes ... elaborate control

over forests and property belonging to Indians." United

States v. Mitchell ("Mitchell II"), 463 U.S. 206, 225 (1983). It

is equally clear that the federal government has failed time

and again to discharge its fiduciary duties. Here, there is no

dispute that appellants, as trustee-delegates of the federal

government, have failed to discharge fully their fiduciary

obligations. The issue we confront is whether the district

court properly delineated the contours of the obligations owed

by the Interior Secretary, Treasury Secretary and other

officials, and whether such officials have been so derelict in

their obligations to justify the relief ordered by the district

court.

A. The Government-Indian Trust Relationship

The federal government-Indian trust relationship dates

back over a century. The trusts at issue here were created

over one hundred years ago through an act of Congress, and

have been mismanaged nearly as long. To appreciate truly

the nature and extent of the government's responsibilities,

and appellants' failure to discharge them, it is necessary to

review the history of the government-Indian trust relationship.

Since the founding of this nation, the United States' relationship with the Indian tribes has been contentious and

tragic. America's expansionist impulse in its formative years

led to the removal and relocation of many tribes, often by

treaty but also by force. See, e.g., Cherokee Nation v.

Georgia, 30 U.S. (5 Pet.) 1 (1831). Official policy sought to

encourage westward migration of Indian tribes by offering to

exchange unsettled lands in the West for Indian land in the

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 3 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

East. See, e.g., The Indian Removal Act of 1830, ch.

CXLVIII, 4 Stat. 411. Unofficial policy encouraged the forcible dislocation of Indian tribes.

In the second half of the nineteenth century, the policy of

relocation was replaced with one of assimilation. At that time

the federal government began to divide Indian lands into

individual parcels, taking lands that had been set aside for

Indian tribes and allotting them to individual tribe members.

See Felix S. Cohen, Handbook of Federal Indian Law 98

(1982 ed.). "The objectives of allotment were simple and

clear cut: to extinguish tribal sovereignty, erase reservation

boundaries, and force assimilation of Indians into the society

at large." Yakima v. Yakima Indian Nation, 502 U.S. 251,

254 (1992); see also Muscogee (Creek) Nation v. Hodel, 851

F.2d 1439, 1441 (D.C. Cir. 1988) ("Allotment was justified as a

means of accomplishing the then current policy of assimilation."). Once tribal lands were allotted in fee to individual

Indians, white settlers could purchase the lands for settlement. Allottees, by divorcing themselves from the tribal

estate, also became subject to federal and state jurisdiction on

the same terms as other citizens.

This assimilationist policy began with individually negotiated treaties and was eventually enacted into federal law with

passage of the General Allotment Act of 1887, also known as

the "Dawes Act," ch. 119, 24 Stat. 388 (as amended at 25

U.S.C. s 331 et seq.). Under the General Allotment Act,

beneficial title of the allotted lands vested in the United

States as trustee for individual Indians. The trust was to last

for 25 years or more, at which point a fee patent would issue

to the individual Indian allottee. During the trust period,

individual accounts were to be set up for each Indian with a

stake in the allotted lands, and the lands would be managed

for the benefit of the individual allottees. Indians could not

sell, lease, or otherwise burden their allotted lands without

government approval. Where tribes resisted allotment, it

could be imposed. See Act of June 28, 1898, ch. 517, 30 Stat.

495 ("Curtis Act"). While the Dawes Act may not have

achieved assimilation, it did result in the widespread transfer

of land from Indians to white settlers. As the district court

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 4 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

found, from 1887 to 1934, an estimated 90 million acres,

accounting for approximately two-thirds of all Indian lands,

left Indian ownership. Cobell v. Babbitt, 91 F. Supp. 2d 1, 8

(D.D.C. 1999) ("Cobell V").

Allotment of tribal lands ceased with enactment of the

Indian Reorganization Act of 1934 ("IRA"), 48 Stat. 984

(codified as amended at 25 U.S.C. s 461 et seq.). Lands

already allotted remained so, but the IRA provided that

unallotted surplus Indian lands would be returned to tribal

ownership. 25 U.S.C. s 463. Rather than undo the assimilationist allotment polices, the 1934 Act extended the trust

period for allotted lands indefinitely. Id. s 462. The federal

government retained control of lands already allotted but not

yet fee-patented, and thereby retained its fiduciary obligations to administer the trust lands and funds arising therefrom for the benefit of individual Indian beneficiaries. These

lands form the basis for the Individual Indian Money ("IIM")

accounts that are at the heart of this case.

After passage of the IRA, federal Indian policy changed yet

again. In the 1950s, Congress adopted a "termination policy," whereby it sought to release Indian tribes from federal

supervision and terminate the government-Indian relationship. As Assistant Interior Secretary Gover testified at trial,

the policy was "specifically" aimed at "severing ... the trust

relationship." Cobell V, 91 F. Supp. 2d at 8. In some cases,

the U.S. withdrew recognition of Indian tribes altogether.

Id. at 9.

The termination policy was no more successful than earlier

assimilation efforts, and was soon replaced with the current

policy of "self-determination and self-governance." Id. at 9.

In 1975 Congress enacted the Indian Self-Determination and

Education Assistance Act, Pub. L. No. 93-638, 88 Stat. 2203

(1975), which, among other things, authorizes tribes to assume some of the management functions currently imposed

on the Bureau of Indian Affairs ("BIA") and Office of Trust

Fund Management. In particular, a tribe may contract with

BIA to manage trust accounts, including IIM accounts, for

the tribe or its members. Such contracts must be approved

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 5 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

unless BIA determines that the tribe lacks the accounting or

management capabilities to fulfill the contract. See Cobell V,

91 F. Supp. 2d at 9. Where such capacity is lacking, BIA is

to assist tribes in developing the necessary capabilities to

manage IIM accounts themselves. See id. In sum, because

of BIA's own fiduciary obligations to IIM trust beneficiaries,

it must ensure that a tribe can fulfill the fiduciary obligations

attendant to trust management before transferring control.

B. Federal IIM Trust Responsibilities

Because the United States holds IIM lands in trust for

individual Indian beneficiaries, it assumes the fiduciary obligations of a trustee. " '[W]here the Federal Government

takes on or has control or supervision over tribal monies or

properties, the fiduciary relationship normally exists with

respect to such monies or properties (unless Congress has

provided otherwise) even though nothing is said expressly in

the authorizing or underlying statute (or other fundamental

document) about a trust fund, or a trust or fiduciary connection.' " United States v. Mitchell ("Mitchell II"), 463 U.S.

206, 225 (1983) (quoting Navajo Tribe of Indians v. United

States, 224 Ct. Cl. 171, 183 (1980)). As a result of allotment,

individual Indians became beneficiaries of the trust lands, but

lost the right to sell, lease, or burden the property without

the federal government's approval. The federal government

also probates estates related to Indian trust lands and receives and distributes income from the lease of allotted lands.

Income generated from the trust lands is to be paid to the

individual beneficiaries.

Under current law, the Secretary of the Interior and the

Secretary of the Treasury are the designated trusteedelegates for the IIM trust. Each Secretary, or his designates, has specific fiduciary responsibilities that must be

fulfilled lest the United States breach its fiduciary obligations.

Several governmental agencies have specific trust obligations.

These include, among others, BIA, Office of Trust Funds

Management ("OTFM"), and Office of the Special Trustee

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 6 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

("OST"). (Their responsibilities are extensively detailed in

the decision below. See Cobell V, 91 F. Supp. 2d at 9-12.)

BIA is responsible for trust land management, including

the approval of leases and land transfers, and income collection. See id. at 9. As noted above, BIA is also required to

contract with qualifying tribes for the management of IIM

accounts. OTFM, with the assistance of the Treasury Department, deposits IIM land revenues, maintains the individual IIM accounts, and ensures that money is distributed to

IIM account holders or special deposit accounts where money

cannot be distributed to the individual account holder. OST,

created in 1994 by the Indian Trust Fund Management

Reform Act, oversees IIM trust reform efforts. 25 U.S.C.

ss 4042-43.

While the Interior Department is responsible for executing

most of the federal government's trust duties, the Treasury

Department has substantial trust responsibilities as well. In

particular, Treasury holds and invests IIM funds at the

Interior Department's direction and provides accounting and

financial management services. See Cobell V, 91 F. Supp. 2d

at 11. The Treasury Department maintains only a single

"IIM account" for all IIM funds, rather than individuated

accounts for each individual IIM beneficiary, leaving the

maintenance of individualized accounting records to OTFM.

OTFM relies upon the Treasury Department's accounting

records to reconcile its own IIM records. Of note, when

OTFM issues a check to an IIM trust beneficiary, the amount

is deducted from the relevant fund, even though the money

remains in the Treasury's general account. Thus, the IIM

beneficiary loses any interest that would be accrued between

issuance and cashing of the check. The district court found

that while "this time lapse may be short in the private sector,

it can be much longer in the IIM trust context because

OTFM often has incorrect addresses for the recipients." Id.

at 12.

The federal government does not know the precise number

of IIM trust accounts that it is to administer and protect. At

present, the Interior Department's system contains over

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 7 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

300,000 accounts covering an estimated 11 million acres, but

the Department is unsure whether this is the proper number

of accounts. See id. at 10.1 Plaintiffs claim that the actual

number of accounts is far higher, exceeding 500,000 trust

accounts. See id.

Not only does the Interior Department not know the

proper number of accounts, it does not know the proper

balances for each IIM account, nor does Interior have sufficient records to determine the value of IIM accounts. As the

district court found, "[a]lthough the United States freely

gives out 'balances' to plaintiffs, it admits that currently these

balances cannot be supported by adequate transactional documentation." Id. Current account reconciliation procedures

are insufficient to ensure that existing account records, reported account balances, or payments to IIM beneficiaries are

accurate. As the Interior Secretary testified at trial, the

Department is presently unable to render an accounting for a

majority of the IIM trust beneficiaries. Trial Transcript at

3762. As a result, the government regularly issues payments

to trust beneficiaries "in erroneous amounts--from unreconciled accounts--some of which are known to have incorrect

balances." Cobell V, 91 F. Supp. 2d at 6. Thus, the district

court concluded, and the government does not deny, that "[i]t

is entirely possible that tens of thousands of IIM trust

beneficiaries should be receiving different amounts of money--their own money--than they do today. Perhaps not.

But no one can say...." Id.

C. The Indian Trust Fund Management Reform Act

("1994 Act")

Concern over federal mismanagement of the IIM trust

funds is not new. The General Accounting Office, Interior

Department Inspector General, and Office of Management

and Budget, among others, have all condemned the mismanagement of the IIM trust accounts over the past twenty

years. See, e.g., U.S. General Accounting Office, Financial

Management: BIA's Management of the Indian Trust Funds,

__________

1 Note that these figures are in addition to land and accounts held

in trust for tribes.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 8 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

GAO/T-AIMD-93-4 (1993); U.S. General Accounting Office,

Financial Management: Status of BIA's Efforts to Reconcile

Indian Trust Fund Accounts and Implement Management

Improvements, GAO/T-AIMD-94-99 (1994); Misplaced Trust:

The Bureau of Indian Affairs' Mismanagement of the Indian

Trust Fund, H.R. Rep. No. 102-499, at 2-3 (1992) (citing

critiques of IIM trust management by Interior Department

IG, OMB, and others). Time and again Interior Department

officials pledged to address these concerns. Yet, as Interior

officials readily acknowledge, there has been little progress at

reforming the management of IIM trust accounts. See Cobell

V, 91 F. Supp. 2d at 32-33 (citing Interior Department's

factual stipulations); Trial Transcript at 3768 (testimony of

Interior Secretary Bruce Babbitt acknowledging that "[t]he

fiduciary obligation of the United States government is not

being fulfilled").

Beginning in 1988, Congress held oversight hearings on

Interior's management of the Indian trust accounts. These

hearings led to a report, Misplaced Trust: The Bureau of

Indian Affairs' Mismanagement of the Indian Trust Fund,

H.R. Rep. No. 102-499 (1992) [hereinafter "Misplaced Trust"],

which harshly criticized the Interior Department's mishandling of the trust accounts. Consistent with prior analyses,

the report found, "significant, habitual problems in BIA's

ability to fully and accurately account for trust fund moneys,

to properly discharge its fiduciary responsibilities, and to

prudently manage the trust funds." Id. at 2. Interior's

persistent failure to meet its obligations led the congressional

investigators to conclude that top officials "have utterly failed

to grasp the human impact of its financial management of the

Indian trust fund." Id. at 5. To address these concerns,

Interior commissioned an independent study which determined that reconciling the IIM trust accounts could cost over

$200 million. See Cobell V, 91 F. Supp. 2d at 13. Yet "[e]ven

that expenditure would have yielded only a 'reconciliation' of

approximately eighty-five percent reliability." Id. Once

again the Interior Department pledged reforms; once again

there was little improvement.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 9 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

In 1994, Congress enacted the Indian Trust Fund Management Reform Act ("1994 Act"), Pub. L. No. 103-412 (1994).

This law recognized the federal government's preexisting

trust responsibilities.2 It further identified some of the Interior Secretary's duties to ensure "proper discharge of the

trust responsibilities of the United States." 25 U.S.C.

s 162a(d). These "include (but are not limited to) the following":

t "Providing adequate systems for accounting for and

reporting trust fund balances";

t "Providing adequate controls over receipts and disbursements";

t "Providing periodic, timely reconciliations to assure

the accuracy of accounts";

t "Preparing and supplying ... periodic statements of

... account performance" and balances to account

holders; and

t "Establishing consistent, written policies and procedures for trust fund management and accounting."

Id.

There is no dispute that the federal government owes IIM

beneficiaries--the plaintiffs/appellees--these duties. The district court so found and the Interior Department conceded as

much at trial. See, e.g., Cobell V, 91 F. Supp. 2d at 32-33.

While arguing that plaintiffs' claims should be evaluated on

the basis of what is contained in the Act alone, the Interior

Department did not dispute that these duties "must be interpreted in light of the common law of trusts and the United

States' Indian policy." Id. at 33. Most significantly, the

Interior Department stipulated that many of the duties owed

under the 1994 Act were not being fulfilled. See id. (listing

Interior Department stipulations). In other words, the feder-

__________

2 That the law recognized, rather than created, the government's

IIM trust duties is clear from the Act's text and structure. Indeed,

Title I of the Act is titled "Recognition of Trust Responsibility."

al government readily acknowledges that it is in breach of at

least some of the fiduciary duties owed to IIM beneficiaries.

The Office of the Special Trustee & the High Level Implementation Plan

The 1994 Act created the Office of the Special Trustee for

American Indians ("OST") "to provide for more effective

management of, and accountability for the proper discharge

of, the Secretary's trust responsibilities" and ensure proper

reform measures are implemented. 25 U.S.C. s 404(1). The

Special Trustee ("ST") is a sub-cabinet level officer appointed

by the President and confirmed by the Senate who reports

directly to the Interior Secretary. Id. s 4042(b). The ST is

required to develop a "comprehensive strategic plan" for trust

management reform and an appropriate reform timetable to

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 10 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

ensure "proper and efficient discharge of the Secretary's

trust responsibilities." Id. s 4043(a)(1). The ST is also to

oversee a "fair an accurate accounting" of the trust accounts

and submit annual reports to Congress. Id. s 4043(b)(2)(A)

and (f). Despite these responsibilities, the ST only has

"general oversight" responsibilities; decision-making authority for IIM trust management remains with the Secretary of

the Interior. Id. s 4043(b)(1).

The first ST under the Act was Paul Homan. In April

1997, Homan submitted a "strategic plan" to the Secretary

and Congress pursuant to the 1994 Act. Among other things,

the plan called for the reorganization of Indian trust fund

management and the centralization of record-keeping,

changes that may have required legislative authorization.

The Interior Secretary opted to implement portions of the

strategic plan, including the upgrade of computer systems,

the clean-up of trust records, and the elimination of processing backlogs. The Secretary's plan, known as the High Level

Implementation Plan ("HLIP"), was issued in July 1998. As

drafted, the HLIP consisted of twelve "subprojects" which

focus on ensuring the accuracy of information regarding the

IIM trust accounts and developing uniform policies and procedures to guide trust management in the future. These

subprojects included data cleanup, clearing probate backlogs,

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 11 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

improving records management, and establishing internal

controls to prevent future mismanagement.

The HLIP is designed to overcome numerous gaps and

deficiencies in the Interior Department's record-keeping and

trust management. Those identified by the district court as

"central" to this case are the following:

t Data Cleanup--The records upon which the government must rely to fulfill its trust duties are woefully

deficient. In particular, the Interior Department

does not have complete or accurate information on

the identities or whereabouts of all trust beneficiaries, nor does the Department have complete land

title records. For instance, as of 1998, there were

over 46,000 IIM trust accounts without current addresses for the beneficiary and over 123,000 accounts without a Social Security or Tax Identification number. To address these concerns, the HLIP

calls for the inventorying of existing documents from

IIM trust offices around the country and the reconciliation of conflicting records. However, the trial

court found "no written plan" to obtain "missing

information" necessary for compiling complete land

title records. Cobell V, 91 F. Supp. 2d at 17.

t Probate Backlog--The Bureau of Indian Affairs has

a probate backlog of approximately 12,000 cases,

some or all of which could affect the payments owed

to individual trust beneficiaries. There is currently

"no formal plan" to address this backlog. There is,

however, a "reinvention team" that is to address

probate concerns and fractionated interests in land.

Id.

t Appraisal Program--The trial court found evidence

of an estimated 212,000 title defects. These defects

can impact the processing of leases which can, in

turn, impact the government's ability to render an

accounting for the trust beneficiaries. Under the

HLIP, the Interior Department plans to reduce the

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 12 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

backlog, at least in part, "by re-defining when appraisals are required as a matter of Interior policy."

Id. at 18.

t Computer Systems--The Interior Department does

not have computer systems in place capable of tracking trust resources and relevant data. The current

system, known as the "legacy" system, is not capable

of performing this function. The HLIP calls for the

acquisition and implementation of two new computer

systems to replace the legacy system: the Trust

Fund Accounting System ("TFAS") and the Trust

Asset and Accounting Management System

("TAAMS"). Id.

t Records Management--The Interior Department

acknowledges that adequate record-keeping is essential if the Department is to fulfill its fiduciary obligations to the IIM trust beneficiaries. Yet, as Interior stipulated at trial, the current record-keeping

system is woefully inadequate. To address this concern, the HLIP establishes a "records management

group" to develop a plan for transferring financial

records from BIA to OST and maintaining trust

records into the future. Id. at 20-21.

Despite OST's substantial responsibilities, Congress did not

provide for funding of OST in the 1994 Act, nor has the

Interior Department sought funding for OST in its departmental budget requests sufficient to meet the ST's estimated

costs. In January 1999, the Interior Secretary announced his

unilateral reorganization of OST, prompting Homan's resignation.3

__________

3 Thomas Thompson was acting ST at the time of trial. In

February 2000, then-President Clinton nominated Thomas N. Slonaker for the position, who at the time of briefing was awaiting

Senate confirmation.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 13 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

There are also trust management problems at the Treasury

Department. In response to plaintiff's charges, the Treasury

Department stipulated to the following problems and remedies:

t Illegal Document Policies--The Treasury Department regularly allows the destruction of documents

over six years and seven months old in conformity

with the National Archives and Records Administration's document destruction schedule. At present,

no effort is made to ensure that IIM trust records or

other documents that could be needed to conduct an

adequate accounting are preserved. As a result,

IIM trust records necessary for an accounting of the

trust accounts have been irretrievably lost. The

Treasury Department has agreed to develop a record retention schedule for trust documents for the

purposes of this litigation and into the future. Id. at

23.

t Time Lapse in Fund Availability--There can be a

time lapse between the deposit of funds with the

Treasury Department and the investment of those

funds by the Interior Department on behalf of IIM

trust beneficiaries. The Treasury Department has

agreed to facilitate investment when funds are initially deposited. Id. at 22.

t Lost Interest on IIM Checks--According to plaintiffs, some IIM beneficiaries lose interest during the

delay between the time a check is issued and when

that check can be presented for payment. Treasury

has agreed to conduct a study of the alleged time

lapse and resulting lost interest. Id. at 22-23.

The Treasury Department further stipulated to the development of new systems and procedures that could potentially

fulfill the Department's fiduciary obligations. Id. at 22.

D. District Court Proceedings

On June 10, 1996, appellees filed this class-action suit "to

compel performance of trust obligations." They alleged that

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 14 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

the federal government's trustee-delegates, including the Secretaries of the Interior and Treasury, breached the fiduciary

duties owed to plaintiffs by mismanaging the IIM trust

accounts. On February 4, 1997, the district court certified

the named plaintiffs under Federal Rule of Civil Procedure

23(b)(1)(A) and (b)(2) as class representatives for all present

and former IIM account beneficiaries. Cobell v. Babbitt (Cobell I), 30 F. Supp. 2d 24, 28 (D.D.C. 1998). On May 5, 1998,

the district court bifurcated the case for trial. Phase I would

address "fixing the system" or reforming the management

and accounting of the IIM trusts so as to meet the federal

government's fiduciary responsibilities. Phase II will address

historical accounting of the accounts.

On November 5, 1998, the district court rejected the government's motion to dismiss and for summary judgment.

The court found that the government waived sovereign immunity pursuant to Section 702 of the Administrative Procedure

Act. Id. at 30-35. The court also dismissed some of plaintiffs'

claims for money damages and held that the government's

fiduciary duties to IIM trust beneficiaries were not ministerial in nature and therefore could not be compelled by mandamus. Id. at 35-36.

Later in 1998, the court held Interior Secretary Bruce

Babbitt, Treasury Secretary Robert Rubin, and Assistant

Interior Secretary Kevin Gover in contempt of court for

failing to comply with the court's production orders and

imposed monetary sanctions. See Cobell v. Babbitt ("Cobell

II"), 37 F. Supp. 2d 6 (D.D.C. 1999) (holding defendants in

contempt of court for failing to make good faith effort to

comply with discovery order); Cobell v. Babbitt ("Cobell IV"),

188 F.R.D. 122 (D.D.C. 1999) (awarding sanctions). As trustee delegates these officials had a clear obligation to maintain

trust records and furnish such records to beneficiaries upon

request, yet they were unable to provide such records and

related documents to the court in response to an Order of

Production. See Cobell II, 37 F. Supp. 2d at 23. The district

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 15 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

court found that these officials had failed to make a good faith

effort to produce such information. Indeed, the district court

found that the defendants "proposed a stipulated order to the

court and then immediately improperly instructed their field

personnel on what documents were required to be produced."

Id. at 28. The egregious nature of this conduct was only

compounded by the Treasury Department's contemporaneous

destruction of documents potentially responsive to the court's

production order, and the failure of government officials "to

apprise the court or the plaintiffs of the defendants' unwillingness and self-inflicted inability to comply" with the production orders. Id. at 28, 31.

On June 7, 1999, the district court denied the government's

motion for summary judgment on some of the plaintiffs'

claims. In addition, the court found that the federal government waived its sovereign immunity against a suit for injunctive and declaratory relief for the breach of trust duties. See

Cobell v. Babbitt ("Cobell III"), 52 F. Supp. 2d 11 (D.D.C.

1999).

The court held a six-week trial on the Indians' claims, and

issued its opinion on December 21, 1999. After satisfying

itself that it had jurisdiction over plaintiffs' claims, the district

court found that the federal government had breached some

of the fiduciary duties owed to plaintiffs. Among the district

court's specific conclusions were:

t under the 1994 Act defendants must provide IIM

trust beneficiaries with "an accurate accounting of

all money in the IIM trust held in trust for the

benefit of plaintiffs, without regard to when the

funds were deposited," Cobell V, 91 F. Supp. 2d at

58;

t under the 1994 Act defendants must "retrieve and

retain all information concerning the IIM trust that

is necessary to render an accurate accounting" for

the trust beneficiaries, id.;

t the Interior Secretary and Assistant Secretary must

"establish written policies and procedures" for: a)

"collecting from outside sources missing information

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 16 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

necessary to render an accurate accounting of the

IIM trust"; b) "the retention of IIM-related trust

documents necessary" for an accurate accounting; c)

"computer and business systems architecture necessary" for an accurate accounting; and d) "the staffing of trust management functions necessary" for an

accurate accounting, id.;

t the Treasury Secretary owes IIM trust beneficiaries

"the statutory trust duty to retain IIM trust documents" necessary for an accurate accounting, id.

The court further found that the defendants were in violation

of the above-mentioned fiduciary duties, ordered them to

come into compliance with their duties and remanded the

required actions to the defendants for further proceedings

"not inconsistent" with the court's opinion. Id. The court

rejected plaintiffs' plea for the appointment of a special

master to oversee the government's compliance with its fiduciary duties. Id. at 49.

The court did not rule for the plaintiffs on all counts,

however. The court dismissed their pure common-law claims

as well as those claims alleging obstruction of the Special

Trustee. Id. at 28-31, 51-52. The court retained continuing

jurisdiction over the case for the next five years, during which

time the defendants are required to submit quarterly status

reports summarizing the government's progress in meeting

its fiduciary duties to the IIM trust beneficiaries. Id. at 58-

59.

The court certified its order for interlocutory appeal under

28 U.S.C. s 1292(b) "[t]o the extent that the court's order is

not 'otherwise appealable.' " Cobell V, 91 F. Supp. 2d at 57.

The defendants appealed, alleging that the district court

improperly construed the nature and extent of the government's fiduciary duties to IIM trust beneficiaries. Specifically, appellants take issue with the district court's finding of

specific trust obligations, including a judicially enforceable

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 17 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

duty to account, and the district court's conclusion that trust

reforms have been unlawfully withheld or unreasonably delayed. Further, appellants allege that the district court

lacked sufficient basis to award equitable relief and that the

relief awarded was unwarranted.

II. Jurisdiction

A. Subject Matter Jurisdiction

Although appellants have not renewed their jurisdictional

challenge to plaintiffs' claims, we must assure ourselves that

we have jurisdiction. Plaintiffs' claims allege breach of trust

obligations grounded in federal law and plaintiffs seek enforcement of their federal rights. Plaintiffs' claims thus

"arise under" the laws of the United States, granting federal

court jurisdiction under 28 U.S.C. s 1331. See, e.g., Robbins

v. Reagan, 780 F.2d 37, 43 (D.C. Cir. 1985); Association of

National Advertisers, Inc. v. FTC, 617 F.2d 611, 619 (D.C.

Cir. 1979).

B. Sovereign Immunity

The federal government claimed sovereign immunity below,

but did not renew this claim on appeal. As the court below

noted, section 702 of the Administrative Procedure Act waives

federal officials' sovereign immunity for actions "seeking relief other than money damages" involving a federal official's

action or failure to act. 5 U.S.C. s 702. Insofar as the

plaintiffs seek specific injunctive and declaratory relief--and,

in particular, seek the accounting to which they are entitled--

the government has waived its sovereign immunity under this

provision. See Bowen v. Massachusetts, 487 U.S. 879, 894-95

(1988). That plaintiffs rely upon common law trust principles

in pursuit of their claim is immaterial, as here they seek

specific relief other than money damages, and federal courts

have jurisdiction to hear such claims under the APA.

C. Final Agency Action

Whether there is a final agency action is also a jurisdictional question. With a few exceptions, if there is no final agency

action, there is no basis for review of the government's

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 18 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

decision or policy. One exception occurs where plaintiffs

claim that a governmental action was unlawfully withheld or

unreasonably delayed.

When the district court rejected the government's motion

to dismiss in November 1998, it held that the HLIP itself

constitutes final agency action. Cobell I, 30 F. Supp. 2d at 33.

This conclusion was based on a concession made by government counsel at oral argument on the motion. Id. At trial,

however, appellants argued that there was no final agency

action for the court to review. Cobell V, 91 F. Supp. 2d at

35-36. Appellants' new position was that the HLIP was not a

final agency action because it was (and continues to be) a

"work in progress." Id. at 36. The court rejected this

argument holding that the preexisting accounting system

used to administer the IIM trust constituted a final agency

action capable of review. Id.; see also Cobell I, 30 F. Supp.

2d at 33-34. It is the existing system, and not any proposed

reform or replacement that "aggrieves plaintiffs today." Cobell V, 91 F. Supp. 2d at 36.

Although the government does not press the issue, this

conclusion by the district court is questionable. While a

single step or measure is reviewable, an on-going program or

policy is not, in itself, a "final agency action" under the APA.

See Lujan v. National Wildlife Federation, 497 U.S. 871, 890

(1990). A plaintiff "cannot seek wholesale improvement of [a]

program by court decree, rather than in the offices of the

Department or the halls of Congress, where programmatic

improvements are normally made." Id. at 891.

This is not to say that the district court lacked jurisdiction

to hear plaintiffs' claims, however. Where a federal court has

jurisdiction to hear challenges to an agency action it also has

jurisdiction over claims of unreasonable delay. See Telecommunications Research and Action Center v. FCC, 750 F.2d

70, 75 (D.C. Cir. 1984). As this court has noted in the past,

where "an agency is under an unequivocal statutory duty to

act, failure so to act constitutes, in effect, an affirmative act

that triggers 'final agency action' review." Sierra Club v.

Thomas, 828 F.2d 783, 793 (D.C. Cir. 1987); see also Public

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 19 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Citizen Health Research Group v. Commissioner, 740 F.2d

21, 32 (D.C. Cir. 1984). Were it otherwise, agencies could

effectively prevent judicial review of their policy determinations by simply refusing to take final action.

In the case at bar, it is clear that the federal government

has been under an obligation to discharge the fiduciary duties

owed to IIM trust beneficiaries for decades. It is also clear

that refusing to hear plaintiffs' claims could unduly prejudice

their rights as trust beneficiaries. The district court's findings of fact, largely unchallenged by the government, make

clear that insofar as the federal government owes trust

beneficiaries a duty to maintain records and provide an

accounting, delaying review is tantamount to denying review

altogether. The district court further concluded that appellants' extensive delay in discharging their fiduciary duties was

unreasonable. In such circumstances, federal courts may

exercise jurisdiction to compel agency action "unlawfully

withheld or unreasonably denied." 5 U.S.C. s 706.

Even assuming, as appellants argue, that the 1994 Act

effectively reset the clock for a finding of unreasonable delay,

appellants' "reasonable time to discharge" its fiduciary obligations "has expired." Cobell V, 91 F. Supp. 2d. at 48. The

district court's judgment came down over six years after

passage of the 1994 Act. During that time, deadlines were

missed, documents destroyed, and, in the words of the district

court, appellants had yet to progress much beyond planting

the "seed" for discharging their fiduciary obligations. See id.

at 20. Courts owe substantial deference to agency prerogatives in fulfilling their legal obligations, especially where

Congress intervenes to address longstanding problems, as it

did with the 1994 Act. But this does not require courts to

turn a blind eye when government officials fail to discharge

their duties.

As a general rule, Section 706 of the APA "leaves in the

courts the discretion to decide whether agency delay is unreasonable." Forest Guardians v. Babbitt, 174 F.3d 1178, 1190

(10th Cir. 1999). The legal standard used to determine

whether agency delay is unreasonable is a question of law to

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 20 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

be reviewed de novo by this court. However, the factual

findings that underlie that determination are only to be

overturned if the district court's findings are clearly erroneous.

For good reason, courts are reluctant to upset existing

agency priorities, unless the delay is "egregious." See Telecommunications Research and Action Center, 750 F.2d at 79.

An agency's own timetable for performing its duties in the

absence of a statutory deadline is due "considerable deference." Sierra Club v. Gorsuch, 715 F.2d 653, 658 (D.C. Cir.

1983). Moreover, "a finding that delay is unreasonable does

not, alone, justify judicial intervention." In re Barr Labs.,

Inc., 930 F.2d 72, 75 (D.C. Cir. 1991).4

In reviewing an unreasonable delay claim, this court considers four factors:

First, "the court should ascertain the length of time that

has elapsed since the agency came under a duty to

act".... Second, "the reasonableness of the delay must

be judged 'in the context of the statute' which authorizes

the agency's action."... Third, the court must examine

the consequences of the agency's delay.... Finally, the

court should give due consideration in the balance to

"any plea of administrative error, administrative convenience, practical difficulty in carrying out a legislative

mandate, or need to prioritize in the face of limited

resources."

In re International Chemical Workers Union, 958 F.2d 1144,

1149 (D.C. Cir. 1992) (citations omitted).

Considering the first two factors, it is beyond question that

the government has delayed fulfilling its trust obligations for

many years. The district court specifically found that IIM

trust beneficiaries have been denied their rights--in particular their right to an accounting--for decades. See Cobell V,

91 F. Supp. 2d at 47 (noting that IIM beneficiaries have

waited "a century" for "an accurate accounting" which is the

__________

4 But see Forest Guardians, 174 F.3d at 1191 ("once a court

deems agency delay unreasonable, it must compel agency action.").

"most basic fiduciary duty"). That Congress enacted its own

remedial statute to address this unconscionable delay does

not mitigate the egregious amount of time plaintiffs have

waited for, as discussed below, the 1994 Act is not the source

of plaintiffs' rights. Rather, it is designed to help rectify the

government's longstanding failure. Given the record before

it, the district court reasonably concluded that absent court

intervention, discharge of the government's fiduciary obligations may yet be far off.

Appellants note that the 1994 statute provides no deadlines

for the reforms at issue. Failure to provide a statutory

timetable may indicate that Congress sought to leave the

timing of reform to agency discretion. But the lack of a

timetable does not give government officials carte blanche to

ignore their legal obligations. This is particularly true where,

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 21 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

as here, the act of outlining specific steps toward reform was

enacted against a background of agency delay dating back

many years.

The district court noted that the consequences of further

agency delay are potentially quite severe. Documents necessary for a proper accounting and reconciliation have been lost

or destroyed, and the district court found little reason to

believe that this would change in the near future. "The

longer defendants delay in creating the plans necessary to

render an accounting, the greater the chance that plaintiffs

will never receive an actual accounting of their own trust

money." Cobell V, 91 F. Supp. 2d at 47. Given that many

plaintiffs rely upon their IIM trust accounts for their financial

well-being, the injury from delay could cause irreparable

harm to plaintiffs' interests as IIM trust beneficiaries. Thus

it seems that "the interests at stake are not merely economic

interests in [an administrative scheme], but personal interests

in life and health." Public Interest Health Research Group v.

Auchter, 702 F.2d 1150, 1156 (D.C. Cir. 1983) (citation omitted).

Concern for "administrative convenience" certainly counsels against interfering with the government's reform priorities. See Grand Canyon Air Tour Coalition v. FAA, 154

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 22 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

F.3d 455, 476 (D.C. Cir. 1998) ("Although the APA gives

courts the authority to 'compel agency action unlawfully

withheld or unreasonably delayed,' we are acutely aware of

the limits of our institutional competence in the highly technical area at issue in this case."(citations omitted)). Yet neither

a lack of sufficient funds nor administrative complexity, in

and of themselves, justify extensive delay, nor can the government claim that it has become subject to unreasonable

expectations. Federal officials were aware of their fiduciary

obligations long before the passage of the 1994 Act-let alone

the initiation of this action-and yet little progress has been

made in discharging those duties. What little progress the

government has made appears more due to the litigation than

diligence in discharging its fiduciary obligations. See Misplaced Trust H.R. Rep. No. 102-499, at 5 (noting that "the

only thing that seems to stimulate a flurry of activity at the

Bureau [of Indian Affairs] is an impending appearance ...

before a congressional committee"). See also Cobell V, 91

F. Supp. 2d at 20 n.15 (noting that the "positive steps taken

by defendants toward bringing themselves into compliance

with the law" have "not come easily"). For these reasons, we

find no basis for disturbing the district court's conclusion that

appellants unreasonably delayed the discharge of their fiduciary obligations, nor for upsetting the district court's exercise of jurisdiction under 5 U.S.C. s 706 on this basis.

III. Discussion

Appellants contend that the district court erred in finding

that the Secretary of the Interior committed "four statutory

breaches of IIM trust duties ... that warrant prospective

relief." Cobell V, 91 F. Supp. 2d at 40. They challenge both

the district court's conclusions that specific measures were

required under the 1994 Act for the government to fulfill its

fiduciary obligations and its provision of prospective equitable

relief awarded. Specifically, the government argues that the

1994 Act does not require the creation of written policies and

procedures covering the four areas identified by the district

court.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 23 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

To the extent that appellants contest the district court's

conclusions defining the federal government's fiduciary obligations to IIM trust beneficiaries, they raise questions of law

that we review de novo. Yet insofar as appellants challenge

factual findings, we will uphold the district court unless its

findings are clearly erroneous. Such findings include the

district court's determination whether the steps taken by

appellants in recent years toward fulfilling their legal obligations have been sufficient, or whether there has been

unreasonable delay in discharging the government's fiduciary

duties.

Applying these standards, the government is incorrect to

the extent that it assumes that the 1994 Act forms the basis

for its fiduciary obligations. The 1994 Act did not create

these obligations any more than it created the IIM trust

accounts. As noted above, the 1994 Act was a remedial

statute designed to ensure more diligent fulfillment of the

government's obligations. It recognized and reaffirmed what

should be beyond dispute--that the government has longstanding and substantial trust obligations to Indians, particularly to IIM trust beneficiaries, not the least of which is a

duty to account. While the district court erred in characterizing some specific actions as material breaches that were

themselves merely indicia of appellants' breach, there is

ample evidence in the record to support the district court's

broader conclusion that appellants' failure to take reasonable

steps toward the discharge of their trust obligations constituted a breach of their fiduciary duties. Once this conclusion

was reached, the district acted well within its power to

provide modest equitable relief, requiring appellants to do

little more than develop plans to ensure proper discharge of

their duties within a reasonable time. The district court did

not exceed its powers with this order, nor with its decision to

maintain jurisdiction over the case.

A. The Trust Relationship

There is no doubt that the federal government has a longstanding fiduciary obligation to IIM trust beneficiaries.

"[T]he law is 'well established that the Government in its

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 24 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

dealings with Indian tribal property acts in a fiduciary capacity.' " Lincoln v. Vigil, 508 U.S. 182, 194 (1993) (quoting

United States v. Cherokee Nation of Oklahoma, 480 U.S. 700,

707 (1987)). In the leading case on Indian trust responsibilities, United States v. Mitchell ("Mitchell II"), the Supreme

Court was clear:

A fiduciary relationship necessarily arises when the Government assumes such elaborate control over forests and

property belonging to Indians. All of the necessary

elements of a common-law trust are present: a trustee

(the United States), a beneficiary (the Indian allottees),

and a trust corpus (Indian timber, lands, and funds).

463 U.S. 206, 225 (1983) (citing Restatement (Second) of

Trusts s 2, cmt. h (1959)).

This rule operates as a presumption. See Loudner v.

United States, 108 F.3d 896, 900 (8th Cir. 1997) (" '[T]here is a

presumption that absent explicit language to the contrary, all

funds held by the United States for Indian tribes are held in

trust.' " (quoting Rogers v. United States, 697 F.2d 886, 890

(9th Cir. 1983))). Therefore, courts correctly recognize a

trust relationship even where it is not explicitly laid out by

statute. Specifically, " 'where the Federal Government takes

on or has control or supervision over tribal monies or properties, the fiduciary relationship normally exists with respect to

such monies or properties (unless Congress has provided

otherwise) even though nothing is said expressly in the

authorizing or underlying statute (or other fundamental document) about a trust fund, or a trust or fiduciary connection.' "

Mitchell II, 463 U.S. at 225 (quoting Navajo Tribe of Indians

v. United States, 224 Ct. Cl. 171, 183 (1980)).

It is no doubt true that "the government's fiduciary responsibilities necessarily depend on the substantive laws creating

those obligations." Shoshone-Bannock Tribes v. Reno, 56

F.3d 1476, 1482 (D.C. Cir. 1995); see also Mitchell II, 463

U.S. at 224 (the relevant statutes and regulations "define the

contours of the United States' fiduciary responsibilities.");

National Wildlife Federation v. Andrus, 642 F.2d 589, 611

(D.C. Cir. 1980) ("[A] trust responsibility can only arise from

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 25 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

a statute, treaty, or executive order." (citation omitted)).

This does not mean that the failure to specify the precise

nature of the fiduciary obligation or to enumerate the trustee's duties absolves the government of its responsibilities. It

is well understood that "[t]he extent of [a trustee's] duties

and powers is determined by the trust instrument and the

rules of law which are applicable." Restatement (Second) of

Trusts s 201, at 442 (1959). It is the nature of any instrument that establishes a trust relationship that many of the

duties and powers are implied therein. They arise from the

nature of the relationship established.

While the government's obligations are rooted in and outlined by the relevant statutes and treaties, they are largely

defined in traditional equitable terms. "Where Congress

uses terms that have accumulated settled meaning under

either equity or the common law, a court must infer, unless

the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms." NLRB v.

Amax Coal Co., 453 U.S. 322, 329 (1981). Courts "must infer

that Congress intended to impose on trustees traditional

fiduciary duties unless Congress has unequivocally expressed

an intent to the contrary." Id. at 330. Much as the Supreme

Court has regularly turned to the Restatement and other

authorities to construe trust responsibilities, it is appropriate

for the district court to consult similar sources.

Despite the imposition of fiduciary duties, federal officials

retain a substantial amount of discretion to order their priorities. In Lincoln v. Vigil, for example, the Supreme Court

held that the government's fiduciary relationship with Indians

"could not limit" an agency's discretion "to reorder its priorities" as among beneficiaries. 508 U.S. 182, 195 (1993). In

Lincoln, the Court rejected a challenge to the Indian Health

Service's decision to discontinue a health program for handicapped Indian children in one region of the country in order

to devote greater resources to a national program. Nonetheless, the Secretary "cannot escape his role as trustee by

donning the mantle of administrator" to claim that courts

must defer to his expertise and delegated authority. Jicarilla Apache Tribe v. Supron Energy Corp., 728 F.2d 1555, 1567

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 26 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

(10th Cir. 1984) (Seymour, J., concurring in part and dissenting in part), adopted as majority opinion as modified en

banc, 782 F.2d 855 (10th Cir. 1986).

The Secretary has an "overriding duty ... to deal fairly

with Indians." Morton v. Ruiz, 415 U.S. 199, 236 (1974).

This duty necessarily constrains the Secretary's discretion.

When faced with several policy choices, an administrator is

generally allowed to select any reasonable option. Yet this is

not the case when acting as a fiduciary for Indian beneficiaries as "stricter standards apply to federal agencies when

administering Indian programs." Jicarilla, 728 F.2d at 1567.

Summarizing federal case law on fiduciary obligations owed to

Indian tribes, the Tenth Circuit concluded that where "the

Secretary is obligated to act as a fiduciary ... his actions

must not merely meet the minimal requirements of administrative law, but must also pass scrutiny under the more

stringent standards demanded of a fiduciary." Id. at 1563.

The federal government has "charged itself with moral obligations of the highest responsibility and trust" in its relationships with Indians, and its conduct "should therefore be

judged by the most exacting fiduciary standards." Seminole

Nation v. United States, 316 U.S. 286, 297 (1942); cf. Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439, 1445 n.8 (D.C.

Cir. 1988) (giving "careful consideration to Interior's interpretation" of the Oklahoma Indian Welfare Act, but not deferring

to it).

B. The 1994 Act

The crux of appellants' argument is that there was no

material breach of their fiduciary obligations as defined by

the 1994 Act. Specifically, appellants contend that the district court found obligations beyond those enumerated in the

Act, when Congress had intended that OST would determine

the proper content and timing of policies and procedures to

discharge appellants' fiduciary obligations. Therefore, insofar as this process has yet to be completed, appellants

contend that there is no basis for the district court to find

that appellants unlawfully withheld or unreasonably delayed

discharge of their obligations.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 27 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

The fundamental problem with appellants' claims is the

premise that their duties are solely defined by the 1994 Act.

The Indian Trust Fund Management Reform Act reaffirmed

and clarified preexisting duties; it did not create them. It

further sought to remedy the government's long-standing

failure to discharge its trust obligations; it did not define and

limit the extent of appellants' obligations. While appellants

are right to quibble with some of the district court's specific

findings, the premise upon which much of their appeal rests is

unsustainable.

The trust nature of the federal government's IIM responsibilities was recognized long before passage of the 1994 Act.

See Felix S. Cohen, Handbook of Federal Indian Law, 630-31

(1982 ed.). As early as 1831, the Supreme Court recognized

that the relationship between Indians and the federal government was like "that of a ward to his guardian." Cherokee

Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831) (Marshall,

C.J.). Half a century later, in upholding a statute placing

certain crimes between Indians under federal jurisdiction, the

Court again noted that "Indian tribes are the wards of the

nation" and reaffirmed that the federal government owes

Indians a "duty of protection." United States v. Kagama, 118

U.S. 375, 383, 384 (1886). The fiduciary nature of the government's duty was made explicit in Seminole Nation v. United

States, 316 U.S. 286 (1942). In Seminole Nation the Court

applied the "most exacting fiduciary standards" of the common law in assessing the government's discharge of its duties.

Id. at 297. And in Mitchell II, the Court reiterated the

existence of a "general trust relationship" which imposes

"distinctive obligation[s]" in addition to those established by

statute. 463 U.S. at 225 (citation omitted).

Enactment of the Indian Trust Fund Management Reform

Act in 1994 did not alter the nature or scope of the fiduciary

duties owed by the government to IIM trust beneficiaries.

Rather, by its very terms the 1994 Act identified a portion of

the government's specific obligations and created additional

means to ensure that the obligations would be carried out.

Indeed, the 1994 Act explicitly reaffirmed the Interior Secretary's obligation to fulfill the "trust responsibilities of the

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 28 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States." 25 U.S.C. s 1629(d). From this express

language, "we must infer that Congress intended to impose

on trustees traditional fiduciary duties unless Congress has

unequivocally expressed an intent to the contrary." NLRB v.

Amax Coal Co., 453 U.S. 322, 330 (1981).

Section 101 of the 1994 Act states that the Interior Secretary's "proper discharge of the trust responsibilities shall

include (but are not limited to)" eight enumerated actions, 25

U.S.C. s 1629(d) (emphasis added). In other words, the

government has other trust responsibilities not enumerated in

the 1994 Act. See Puerto Rico Mari. Shipping Auth. v. ICC,

645 F.2d 1102, 1112 n.26 (D.C. Cir. 1981) ("It is hornbook law

that the use of the word 'including' indicates that the specified

list ... that follows is illustrative, not exclusive." (citation

omitted)). Moreover, applicable canons of statutory construction counsel against interpreting a statute creating a new

remedy to eliminate prior remedies and in favor of construing

a statute affecting Indians in a manner favorable to Indians.

See 2B s 50.05 Sutherland, Statutory Construction, at 109

(5th ed. Norman J. Singer ed. 1992); see also Rosebud Sioux

Tribe v. Kneip, 430 U.S. 584 (1977); United States v. Santa

Fe Pacific R.R. Co., 314 U.S. 339 (1941).

Section 101 of the 1994 Act does not create "trust responsibilities of the United States." Rather it lists some of the

means through which the Secretary shall discharge these

preexisting duties. For instance, the first listed duty is

"[p]roviding adequate systems for accounting for and reporting trust fund balances." 25 U.S.C. s 162a(d)(1). This would

not be necessary to discharge the government's trust responsibilities were not the government already obliged to account

for and report trust fund balances. Rather than exhaust the

list of duties owed by the federal government to IIM trust

beneficiaries, the 1994 Act clarified and augmented aspects of

the government's preexisting obligations to facilitate their

fulfillment.

This view of the federal government's fiduciary duties is

supported by Mitchell II which held that "a fiduciary relationship necessarily arises when the government assumes

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 29 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

such elaborate control over ... property belonging to Indians"--in particular where, as here, "[a]ll of the necessary

elements of a common-law trust are present." 463 U.S. at

225. The general "contours" of the government's obligations

may be defined by statute, but the interstices must be filled

in through reference to general trust law. While Mitchell II

involved a claim for damages, nothing in that decision or

other Indian cases would imply that appellants are not entitled to declaratory or injunctive relief. Such remedies are

the traditional ones for violations of trust duties.

Appellants imply that the district court did not show sufficient deference to their roles as administrative officials

charged with developing and implementing policies and procedures to ensure the discharge of the federal government's

obligations. Appellants thus imply, but do not argue, that

their interpretation of the 1994 Act, and the obligations that it

imposes, is due deference under Chevron U.S.A. Inc. v.

NRDC, 467 U.S. 837 (1984). Assuming that the 1994 Act is

ambiguous, this does not enable the government to escape

liability by interpreting away its fiduciary obligations. While

ordinarily we defer to an agency's interpretations of ambiguous statutes entrusted to it for administration, Chevron deference is not applicable in this case. The governing canon of

construction requires that "statutes are to be construed liberally in favor of the Indians, with ambiguous provisions

interpreted to their benefit." Montana v. Blackfeet Tribe of

Indians, 471 U.S. 759, 766 (1985). Therefore, even where the

ambiguous statute is one entrusted to an agency, we give the

agency's interpretation "careful consideration" but "we do not

defer to it." Muscogee (Creek) Nation v. Hodel, 851 F.2d

1439, 1445 n.8 (D.C. Cir. 1988). This departure from the

Chevron norm arises from the fact that the rule of liberally

construing statutes to the benefit of the Indians arises not

from ordinary exegesis, but "from principles of equitable

obligations and normative rules of behavior," applicable to the

trust relationship between the United States and the Native

American people. Albuquerque Indian Rights v. Lujan, 930

F.2d 49, 59 (D.C. Cir. 1991); see also County of Oneida v.

Oneida Indian Nation of New York State, 470 U.S. 226, 247-

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 30 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

48 (1985) (Court resolves ambiguity in favor of Indian claims);

Pueblo of Sandia v. Babbitt, 231 F.3d 878, 880 (D.C. Cir.

2000). Thus, even if the statutory language did not make

clear that the government's duties predate and extend beyond

those enumerated in the 1994 Act, the Interior Department

would retain its fiduciary obligations to IIM trust beneficiaries.

C. Duty to Account

Holding that appellants' fiduciary duties predate the 1994

Act does not dispose of all their claims. Having determined

the source of appellants' obligations, we must now consider

what those duties entail, at least with respect to the claims at

hand. Specifically, we must consider the nature and extent of

the fiduciary duty to account appellants owe to IIM trust

beneficiaries.

Appellants' challenge focuses on the district court's conclusion that the IIM trust beneficiaries are entitled to a complete historical accounting of their trust accounts. The government maintains that no such right is conferred by the 1994

Act. Rather, the Act delegates responsibility for determining

the nature and scope of an accounting to the Interior Department. The accounting required by Section 102 of the Act is

merely a prospective right and, according to appellants, "does

not speak to the extent to which the Secretary must inquire

into the correctness of past transactions." Reply Brief for

Appellants at 17. While appellants concede that "some type

of review of past transactions may indeed be necessary to

accurately state opening balances," this does not mean that

the plaintiffs have a judicially enforceable right to a complete

historical accounting. Id. Even were the plaintiffs entitled

to such an accounting, appellants contend that the Interior

Department, and not the court, would have the authority to

determine the nature and scope of the accounting.

Contrary to appellants' claims, Section 102 of the 1994 Act

makes clear that the Interior Secretary owes IIM trust

beneficiaries an accounting for "all funds held in trust by the

United States for the benefit of an Indian tribe or an individual Indian which are deposited or invested pursuant to the

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 31 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Act of June 24, 1938." 25 U.S.C. s 4011(a) (emphasis added).

"All funds" means all funds, irrespective of when they were

deposited (or at least so long as they were deposited after the

Act of June 24, 1938). Therefore, the 1994 Act reaffirms the

government's preexisting fiduciary duty to perform a complete historical accounting of trust fund assets.

Appellants place substantial weight on the fact that Title

III of the 1994 Act instructs the ST to oversee any accounting

or account reconciliation conducted by Interior. Under Section 303(b)(2)(A) the ST "shall monitor the reconciliation" of

trust accounts and ensure that there is "a fair and accurate

accounting of all trust accounts." Id. s 4043(b)(2)(A). Further, Section 304 of the Act requires the Interior Secretary to

report on any account reconciliation that takes place and what

steps will be taken to resolve disputes over account balances.

Id. s 4044. Section 101 of the Act, on the other hand,

specifies numerous actions that must be taken by the government, but does not dictate the nature or scope of any accounting. See id. s 162a(d).

Yet Title III of the 1994 Act does not vindicate the government's position as these provisions merely detail the oversight

functions of the ST, not the fiduciary responsibilities of the

federal government. The language in Title III, if anything,

supports plaintiffs' claims, as it requires the ST to "ensure"

that BIA "provides the account holders, with a fair and

accurate accounting of all trust accounts." Id. s 4043(b)(2)(A)

(emphasis added). Appellants never explain how one can give

a fair and accurate accounting of all accounts without first

reconciling the accounts, taking into account past deposits,

withdrawals, and accruals. Indeed, the government's own

expert acknowledged that one could not determine an accurate account balance without confirming historical account

balances.

Even were the language of the 1994 Act ambiguous, this

would not redeem appellants' position, as we follow the same

rules of construction with regard to Indian trust expectations

discussed above. Courts "must be guided by that 'eminently

sound and vital canon' that 'statutes passed for the benefit of

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 32 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Indian tribes ... are to be liberally construed, doubtful

expressions being resolved in favor of the Indians.' " Bryan

v. Itasca County, 426 U.S. 373, 392 (1976) (citations omitted);

see also Alaska Pacific Fisheries v. United States, 248 U.S.

78, 89 (1918) ("[s]tatutes passed for the benefit of dependent

Indian tribes ... are to be liberally construed, doubtful

expressions being resolved in favor of the Indians."); Muscogee (Creek) Nation, 851 F.3d at 1445 n.8 (courts should

consider, but not defer, to agency interpretations of statutes

concerning the federal government's obligations to Indians);

Jicarilla, 728 F.2d at 1563 ("[W]henever doubt or ambiguity

exists in federal statutes or regulations, such doubt is resolved in favor of the tribes."). Again, as we noted above, the

canon of liberality of construction in favor of the Indians acts

with its "special strength" even where a federal agency would

in other cases enjoy the implied authority to implement

ambiguous statutory language supporting a competing interpretation. Albuquerque Indian Rights, 930 F.2d at 59; see

also Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766

(1985) (noting that "the standard principles of statutory construction do not have their usual force in cases involving

Indian law").

Not only does the 1994 Act plainly reaffirm the government's preexisting duty to provide an accounting to IIM trust

beneficiaries, but it is plain that such an obligation inheres in

the trust relationship itself. "The obligation of a trustee to

provide an accounting is a fundamental principle governing

the subject of trust administration." White Mountain

Apache Tribe of Arizona v. United States, 26 Cl. Ct. 446, 448

(1992) (citing G.T. Bogert, Trusts s 141, at 494 (6th ed.

1987)).

The 1994 Act requires that the Interior Department perform an "adequate" accounting. This indicates that the accounting must be sufficient to serve the purposes for which a

trust accounting is typically conducted. By this standard, the

district court's conclusion that the management of a trust and

rendering of an adequate accounting requires the locating and

retention of records, operational computer systems, and adequate staffing was, in plaintiffs' words, "self-evident." Anything less would produce an inadequate accounting.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 33 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

This conclusion is reinforced by basic common law trust

principles. It is black-letter trust law that "[a]n accounting

necessarily requires a full disclosure and description of each

item of property constituting the corpus of the trust at its

inception." Engelsmann v. Holekamp, 402 S.W.2d 382, 391

(Mo. 1966); see also Black's Law Dictionary (7th ed. 1999)

(defining accounting as "the report of all items of property,

income, and expenses" prepared by the trustee for the beneficiary). Under traditional equitable trust principles, "[t]he

trustee's report must contain sufficient information for the

beneficiary readily to ascertain whether the trust has been

faithfully carried out." White Mountain Apache Tribe, 26 Cl.

Ct. at 449.

Appellants maintain that even if an accounting is required,

the district court overstepped its bounds by defining the

nature of the accounting required. This argument both misrepresents the district court's opinion and misconstrues the

relevant trust law principles. The district court made clear

that it was "not ruling upon what specific form of accounting,

if any," is required by the 1994 Act or the government's

preexisting fiduciary obligation. Cobell V, 91 F. Supp. 2d at

40, n.32. Rather, it noted that an accounting is, in fact,

required, and that such an accounting must be "of all money

in the IIM trust held in trust for the benefit of plaintiffs,

without regard to when the funds were deposited." Id. at 58.

The district court explicitly left open the choice of how the

accounting would be conducted, and whether certain accounting methods, such as statistical sampling or something else,

would be appropriate. Such decisions are properly left in the

hands of administrative agencies.

Claiming the role of administrator, however, does not absolve the government of its enforceable obligations to the IIM

trust beneficiaries. As noted above, appellants may not

escape from their fiduciary obligations by appealing to their

roles as administrators of a federal program. In those capacities, they are trustee delegates of the federal government

who owe substantial fiduciary duties to IIM trust beneficiaries. "If the Secretary is obligated to act as a fiduciary ...

then his actions must not merely meet the minimal requireUSCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 34 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

ments of administrative law, but must also pass scrutiny

under the more stringent standards demanded of a fiduciary."

Jicarilla, 728 F.2d at 1563.

Appellants also argue that whatever right to an accounting

plaintiffs may have, the district court erred insofar as it

determined that such a right was judicially enforceable. The

only action for an accounting that could be judicially compelled, according to the government, would be an accounting

accompanying an action for money damages in the court of

claims under the Tucker Act. According to appellants,

Mitchell II provides that plaintiffs can seek monetary damages in a Tucker Act claim, but not declaratory or injunctive

relief because these "prospective equitable remedies are totally inadequate." 463 U.S. at 227. No common law claim for

an accounting is cognizable, and even if it were, such a claim

has been waived by the plaintiffs' failure to file a cross-appeal

on that claim.

Here again, appellants misconstrue the relevant case law.

We have already determined that there is federal jurisdiction

to hear plaintiffs' claims insofar as the federal government

has unreasonably delayed or unlawfully withheld performance

of its trust duties. Federal courts have repeatedly recognized the right of Native Americans to seek relief for breaches of fiduciary obligations, including suits for monetary damages under the Tucker Act where prospective remedies would

be inadequate. Indeed, this is the clear import of Mitchell II.

See 463 U.S. at 226 n.31, 227. "It is fundamental that an

action for accounting is an equitable claim and that courts of

equity have original jurisdiction to compel an accounting."

Klamath and Modoc Tribes v. United States, 174 Ct. Cl. 483,

487 (1966).

This position should not come as a surprise to appellants,

as it has been the official position of the federal government.

In 1996 (prior to the filing of the initial complaint in this case)

the Interior Department's Solicitor issued an opinion that

government trustees have an "affirmative duty ... to make a

full and proper accounting." Nothing in the 1994 Act, nor

any other federal statute, acts to limit or alter this right.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 35 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

D. Breach

Based upon the foregoing facts and recognition of the

federal government's broad fiduciary obligations to IIM trust

beneficiaries, particularly a duty to render a complete and

accurate historical accounting, the district court found several

specific breaches on the part of appellants. Specifically, the

district court found that a) appellants failed to provide plaintiffs with "an accurate accounting of all money in the IIM

trust held in trust for the benefit of plaintiffs, without regard

to when the funds were deposited"; b) appellants in both the

Interior and Treasury Department failed to "retrieve and

retain all information concerning the IIM trust that is necessary to render an accurate accounting" for the trust beneficiaries; c) the Interior Secretary and Assistant Secretary failed

to "establish written policies and procedures" for collecting

and retaining necessary documents and information, implementing "computer and business systems architecture necessary" and ensuring sufficient "staffing of trust management

functions" to fulfill such obligations. Cobell V, 91

F. Supp. 2d at 58. As discussed separately below, the court

also found that the Treasury Secretary failed to retain IIM

trust documents necessary for an accurate accounting. Id.

Appellants do not contest the district court's factual findings; appellants have failed to do what the district court

concluded they failed to do. Nor do appellants forcefully

maintain that those steps which they have taken toward

discharging their fiduciary obligations come anywhere close

to those steps necessary to fulfill the obligation to provide an

accounting. Even were these findings challenged, there is

more than enough substantial evidence to support the district

court's findings in this regard.

Appellants do object to the district court's conclusions,

however. Specifically, appellants argue that the district court

found specific breaches of obligations that do not exist. Save

for the first breach listed--that of failing to render an accounting--appellants have a point. While there is a specific

duty to provide a complete accounting, there is no specific

duty to, for example, implement particular policies or retrieve

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 36 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

information either in the 1994 Act or elsewhere. This does

not vindicate appellants' position, however, for while appellants may not have breached a specific duty to perform the

particular tasks identified by the district court, such as implementing a IIM trust management computer system, appellants' failure to take such steps provides ample support for

the district court's ultimate conclusion that appellants have

unreasonably delayed the discharge of their fiduciary obligations to IIM beneficiaries, and that there is little reason to

believe that, absent court intervention, these duties will be

discharged any time soon.

The government's broad duty to provide a complete historical accounting to IIM beneficiaries necessarily imposes substantial subsidiary duties on those government officials with

responsibility for ensuring that an accounting can and will

take place. In particular, it imposes obligations on those who

administer the IIM trust lands and funds to, among other

things, maintain and complete existing records, recover missing records where possible, and develop plans and procedures

sufficient to ensure that all aspects of the accounting process

are carried out. As the district court concluded, this may

well include an obligation to develop or obtain computer

software capable of tracking and reconciling fund data, hire

staff sufficient to execute management duties, and implement

specific plans to ensure that all reasonable efforts are made

to provide the most complete and accurate historical accounting of IIM trust funds that is possible. The failure to

implement a computer system is not itself the breach. Rather it is indicative of appellants' failure to discharge their

fiduciary obligations in a reasonably prompt manner. It is

the latter which constitutes the breach.

There are similar problems with some of the district court's

other specific findings of breach. For instance, one provision

in Section 101 of the 1994 Act requires "[e]stablishing consistent, written policies and procedures for trust fund management and accounting." 25 U.S.C. s 162a(d)(6). Another

requires the Interior Secretary to provide "adequate staffing

... for trust fund management and accounting." Id.

s 162a(d)(7). The district court concluded that the DepartUSCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 37 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

ment of Interior had breached a duty to have "written policies

and procedures for the staffing of trust management functions." Cobell V, 91 F. Supp. 2d at 40. This may technically

overstate the case. There may not literally be a duty to have

such written policies and procedures. Were there a means of

ensuring discharge of appellants' fiduciary obligations absent

such steps, there would be no breach. Nonetheless, though

the failure to take such steps may not constitute a breach, it

surely provides substantial evidence that such a breach has

occurred.

In sum, there are numerous provisions of the 1994 Act

which appellants, by their own stipulation, are unable to meet.

Most significantly, the government cannot provide an adequate accounting or reconciliation and does not provide the

required reports to IIM trust beneficiaries, nor did the

district court find any basis for believing that such obligations

would soon be met. Thus the district court's conclusions that

certain types of policies and plans would be necessary for the

government to discharge its fiduciary obligations are sustainable. It is clear that the federal government will be unable to

provide an adequate accounting without computer systems,

staffing, and document retention policies that are adequate

for the task. At the same time, defendants should be afforded sufficient discretion in determining the precise route they

take, so long as this threshold is met. The actual legal

breach is the failure to provide an accounting, not its failure

to take the discrete individual steps that would facilitate an

accounting. Thus, while the district court must amend its

opinion on remand to account for this distinction, there is no

need to alter the district court's order, as the bottom line is

the same: By failing to take reasonable steps toward the

discharge of the federal government's fiduciary obligations to

IIM trust beneficiaries, appellants breached their duties.

E. The Treasury Department

Appellants specifically object to the district court's decision

to award relief against the Treasury Department. Treasury

stipulated it would take actions to preserve trust-related

documents, which the district court acknowledged might "satUSCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 38 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

isfactorily discharge" the Department's duties. Cobell V, 91

F. Supp. 2d at 51. Moreover, appellants argue, there is no

proof that the documents destroyed by the Treasury Department included anything "necessary" to render an accounting

of the IIM trust accounts. At a more fundamental level, the

government challenges the court's finding of any breach by

the Treasury Department for failing to retain trust-related

documents. While the 1994 Act does impose obligations upon

the Treasury Department, there are no enumerated document retention obligations in the Act. Congress gave no

indication that the government's trust responsibilities required it to alter the record destruction schedules set for the

Treasury Department by the National Archives and Records

Administration ("NARA").

Appellants have stipulated that the federal government is

the IIM beneficiaries' trustee and that the Treasury Secretary is a trustee-delegate. A trustee is required to preserve

those documents necessary to fulfill the trustee's obligations

to trust beneficiaries. This includes maintaining those documents that are necessary for an accounting. Therefore,

insofar as the Treasury Department has records and documents that are necessary to perform an adequate accounting,

the district court was correct in holding that the Department

must maintain these records. The Treasury Department's

failure to maintain such documents is a breach of its fiduciary

duty. The destruction of potentially relevant IIM-related

trust documents that may have been necessary for a complete

accounting is clear evidence that the Department committed

such a breach. See id. at 50 n.35 (citing Pls. Ex. 152,

Treasury Declarations Re: Document Destruction, June 18,

1999).5 As noted above, in the context of Indian trust obligations "the Government, in both its executive and legislative

branches, is held to a high standard of conduct, one consonant

with its 'moral obligations of the highest obligation and

__________

5 The Special Master's Report released after trial, but prior to the

court's decision, detailed additional cases in which Treasury failed

to safeguard documents potentially necessary for an accounting.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 39 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

trust.' " Jicarilla, 728 F.2d at 1563 (quoting Seminole Nation v. United States, 316 U.S. at 297).

Although the NARA guidelines direct the Treasury Department to destroy check records more than six years and seven

months old, this cannot excuse the Treasury Department

from its fiduciary obligations under the 1994 Act. Another

agency's development, in consultation with the Treasury Department, of document retention regulations which allow for

the destruction of trust-related documents cannot relieve the

Treasury Department of its responsibilities. Not only are

NARA's record retention schedules modified regularly to

account to each agency's particular needs at a given point in

time, but NARA typically approves the record retention

schedule proposed by the agency. Thus, there is no basis for

Treasury to contend that it was unable to maintain the

records under federal rules.

F. Relief

Upon concluding that appellants committed several substantial breaches of their fiduciary obligations to IIM beneficiaries, the district court issued an order to compel those

actions which had been unlawfully withheld or unreasonably

delayed. Specifically, the district court remanded the required

actions to appellants so that they may begin to discharge the

duties found by the court. Furthermore, the court retained

jurisdiction over the matter in order to "ensure that defendants are diligently taking steps to rectify the continuing

breaches of trust." Cobell V, 91 F. Supp. 2d at 58. Finally,

the court ordered that appellants prepare a revised HLIP

and file "quarterly status reports setting forth and explaining

the steps that defendants have taken to rectify the breaches

of trust declared by the court." Id. at 59.

There is no question that appellants have made significant

steps toward the discharge of the federal government's fiduciary obligations. See, e.g., id. at 18 (noting acquisition of

Trust Fund Accounting System (TFAS) software); id. at 20

& n.15 (noting development of high-level records management

plan). The district court, however, as the finder of fact,

heard substantial evidence that these efforts were, at best, a

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 40 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

day late and a dollar short. Thus, while appellants acquired

new computer systems to track trust resources, inadequate

efforts were made to ensure that the data entered into the

new systems would be accurate. See id. at 18-19, 48-49.

The district court reasonably concluded that appellants had

unreasonably delayed the discharge of these duties by failing

to ensure the provision of a complete historical accounting.

As explained in detail above, this court is duly deferential to

the burdens under which administrative agencies must operate, and recognizes that courts should not disrupt their

timetables and priorities lightly. Nonetheless, there is ample

evidence that appellants unreasonably delayed their actions to

the detriment of IIM beneficiaries, to whom appellants owe

the highest fiduciary obligations.

Appellants maintain that there is no basis in law for the

district court to provide the relief granted in its decision, even

if legal violations of appellants' fiduciary obligations occurred.

Specifically, insofar as plaintiffs sought relief under the APA,

the district court exceeded its power by ordering the Interior

and Treasury Departments to take the specific actions toward

fulfilling their fiduciary obligations. Moreover, insofar as the

court's injunctive commands resemble mandamus, they are

precluded given the lack of a "clear, ministerial duty" that

could be enforced in such a fashion. Appellants' arguments

are unavailing.

Federal courts have repeatedly recognized the right of

Native Americans to seek relief for breaches of fiduciary

obligations, including suits for monetary damages under the

Tucker Act where prospective remedies would be inadequate.

See United States v. Mitchell ("Mitchell II"), 463 U.S. 206,

226 n.31, 227 (1983). "It is fundamental that an action for

accounting is an equitable claim and that courts of equity

have original jurisdiction to compel an accounting." Klamath

and Modoc Tribes v. United States, 174 Ct. Cl. 483, 487

(1966).6

In Mitchell II, the Supreme Court (and the federal government) simply assumed that Indian beneficiaries could pursue

__________

6 This is distinct from the question whether the district court can

itself perform the required accounting, as we discuss below.

equitable relief against the government for its breach of

fiduciary duties. At issue was whether beneficiaries could

seek monetary damages where injunctive or declaratory relief would be insufficient. Mitchell II, 463 U.S. at 227.

Indeed, the district court only considered such relief. Therefore, there is no basis for concluding that plaintiffs are

somehow precluded from seeking an historical accounting,

provided that they can overcome the relevant jurisdictional

requirements discussed below.

More importantly, the district court acted well within its

broad equitable powers in ordering specific relief. "[I]f a

right of action exists to enforce a federal right and Congress

is silent on the question of remedies, a federal court may

order any appropriate relief." Franklin v. Gwinnett County

Public Schools, 503 U.S. 60, 69 (1992) (emphasis added). As

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 41 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

this court has concluded in other contexts, "courts are presumed to possess the full range of remedial powers--legal as

well as equitable--unless Congress has expressly restricted

their exercise." Crocker v. Piedmont Aviation, Inc., 49 F.3d

735, 749 (D.C. Cir. 1995). This means that the district court

has substantial ability to order that relief which is necessary

to cure the appellants' legal transgressions:

The essence of equity jurisdiction has been the power of

the Chancellor to do equity and to mould each decree to

the necessities of the particular case. Flexibility rather

than rigidity has distinguished it. The qualities of mercy

and practicality have made equity the instrument for nice

adjustment and reconciliation between the public interest

and private needs as well as between competing private

claims.

Hecht Co. v. Bowles, 321 U.S. 321, 329-30 (1944); see also

Brown v. Board of Education ("Brown II"), 349 U.S. 294, 300

(1955) ("Traditionally, equity has been characterized by a

practical flexibility in shaping its remedies and by a facility

for adjusting and reconciling public and private needs."

(footnote omitted)).

"Once a right and a violation have been shown, the scope of

a district court's equitable powers to remedy past wrongs is

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 42 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

broad, for breadth and flexibility are inherent in equitable

remedies." Swann v. Charlotte-Mecklenburg Bd. of Educ.,

402 U.S. 1, 15 (1971). Because the agencies involved delayed

performance of their legal obligations, the court was justified

in fashioning equitable relief that would ensure the vindication of plaintiffs' rights. That this case involves decades-old

Indian trust funds rather than segregated schools does not

change the nature of the court's remedial powers.

One factor the district court cites in support of its ordered

relief is the government's "historical record of recalcitrance"

in performing its trust duties. Cobell V, 91 F. Supp. 2d at 54.

Additionally, the APA confers authority on the court to order

agency action that has been unlawfully withheld or unreasonably delayed. At the same time, the court properly notes

that it "cannot 'become ... enmeshed in the minutiae' of

agency administration." Id. (quoting Bell v. Wolfish, 441

U.S. 520, 562 (1979)). It is proper for a court to allow the

government "the opportunity to cure the breaches of trust

declared" by the court. Id.

The federal government characterizes the ordered relief--

the promulgation of regular reports and updates to the court

while it retains jurisdiction--as excessive interference in the

federal government's administration of the IIM trust. Because there are no clear, specific "ministerial" duties, the

government contends, there should not be mandatory injunctive relief akin to that provided in a writ of mandamus.

These are sound legal principles. However, the district

court's ordered relief is relatively modest. The government

must develop written policies and procedures, but the court

does not tell the government what these procedures must

entail. This seems consonant with the judicial policy of

granting agencies that have acted in an unlawful manner

"discretion to determine in the first instance," how to bring

themselves into compliance. Global Van Lines, Inc. v. ICC,

804 F.2d 1293, 1305 n.95 (D.C. Cir. 1986). As the district

court noted, in such cases "the proper course is to remand the

case for further agency consideration in harmony with the

court's holding." Cobell V, 91 F. Supp. 2d at 54-55 n.36

(citation omitted).

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 43 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

The level of oversight proposed by the district court may

well be in excess of that countenanced in the typical delay

case, but so too is the magnitude of government malfeasance

and potential prejudice to the plaintiffs' class. Given the

history of destruction of documents and loss of information

necessary to conduct an historical accounting, the failure of

the government to act could place anything approaching an

adequate accounting beyond plaintiffs' reach. This fact, combined with the longstanding inability or unwillingness of

government officials to discharge their fiduciary obligations,

excuse court oversight that might be excessive in an ordinary

case.

The government is correct that the court imposed continual

reporting requirements that may be in excess of that which

would be minimally required to discharge the government's

duties. However, it does not seem that the district court's

remedies are disproportionate to the nature of the government's breach. Moreover, while the court should (and did)

remand to the agency for the proper discharge of its obligations, the court should not abdicate its responsibility to

ensure that its instructions are followed. This would seem

particularly appropriate where, as here, there is a record of

agency recalcitrance and resistance to the fulfillment of its

legal duties. See In re Center for Auto Safety, 793 F.2d 1346,

1354 (D.C. Cir. 1986). While a court's retaining of jurisdiction of five years may be unusual, federal courts regularly

retain jurisdiction until a federal agency has complied with its

legal obligations, and have the authority to compel regular

progress reports in the meantime. See, e.g., In re United

Mine Workers of Amer. Int'l Union, 190 F.3d 545, 546 (D.C.

Cir. 1999) (retaining jurisdiction and requiring status reports

pending completion of agency action); Northern States Power

Co. v. U.S. Dep't of Energy, 128 F.3d 754, 760 (D.C. Cir. 1997)

(retaining jurisdiction pending agency's compliance with

court's mandate); Air Line Pilots Ass'n, Int'l v. CAB, 750

F.2d 81, 88-89 (D.C. Cir. 1984) (retaining jurisdiction and

ordering periodic progress reports). Of course, nothing prohibits the appellants from moving for reconsideration should

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 44 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

they be able to demonstrate at some time in the future that

adequate compliance has been achieved.

G. Future Proceedings

This case is on appeal from the first of two trial phases. In

its initial scheduling order of May, 5, 1998, the district court

announced its intention to hold a second phase of the trial for

the purpose of "correcting the accounts." In its opinion, the

district court explained what this entails: "In general terms,

[the second phase] will involve the government bringing

forward its proof on IIM trust balances and then plaintiffs

making exceptions to that proof." Cobell V, 91 F. Supp. 2d at

31. The district court also identified "significant legal issues"

to be resolved in the second phase, such as whether relevant

statutes of limitations preclude some of plaintiffs' claims, the

use of statistical sampling, and the precise scope of the

certified class. Id. at 31 n.22. Presumably, the district court

plans to wait until a proper accounting can be performed, at

which point it will assess appellants' compliance with their

fiduciary obligations.

Although appellants object to the second phase of the trial,

they do so largely on the grounds that IIM beneficiaries have

no judicially enforceable right to an accounting at all--a claim

with which we dispose above. Until the district court has

undertaken the second phase of the trial, and specific objections to its actions or jurisdiction are brought, it is premature

for this court to rule on the precise scope of the district

court's planned proceedings. Nonetheless, we expect the

district court to be mindful of the limits of its jurisdiction. It

remains to be seen whether in preparing to do an accounting

the Department takes steps so defective that they would

necessarily delay rather than accelerate the ultimate provision of an adequate accounting, and the detection of such

steps would fit within the court's jurisdiction to monitor the

Department's remedying of the delay; beyond that, supervision of the Department's conduct in preparing an accounting

may well be beyond the district court's jurisdiction. Again,

however, until these proceedings have begun, and specific

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 45 of 46
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

objections are brought, these are questions we cannot address.

IV. Conclusion

The Interior Department has failed to discharge the fiduciary duties it owes to IIM beneficiaries for decades. Despite

passage of the 1994 Act, the Department is still unable to

execute the most fundamental of trust duties--an accurate

accounting. While the district court may have mischaracterized some of the government's specific obligations, its broader

conclusion that government officials breached their obligations to IIM beneficiaries is in accordance with the law and

well-supported by the evidentiary record. Therefore, we

affirm the order of the district court and remand the case to

that court for further proceedings.

USCA Case #00-5084 Document #577947 Filed: 02/23/2001 Page 46 of 46