Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-05068/USCOURTS-caDC-05-05068-0/pdf.json

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

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 16, 2005 Decided November 15, 2005

No. 05-5068

ELOUISE PEPION COBELL, ET AL.,

APPELLEES

v.

GALE A. NORTON,

SECRETARY, DEPARTMENT OF THE INTERIOR, ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 96cv01285)

Mark B. Stern, Attorney, U.S. Department of Justice, argued

the cause for appellants. With him on the briefs were Peter D.

Keisler, Assistant Attorney General, Kenneth L. Wainstein, U.S.

Attorney, Gregory G. Katsas, Deputy Assistant Attorney

General, Robert E. Kopp, Thomas M. Bondy, Alisa B. Klein,

Mark R. Freeman, and I. Glenn Cohen, Attorneys.

G. William Austin III argued the cause for appellees. With

him on the brief were Dennis M. Gingold, Elliott H. Levitas,

Mark I. Levy, and Keith M. Harper. 

USCA Case #05-5068 Document #932126 Filed: 11/15/2005 Page 1 of 16
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Before: GARLAND, Circuit Judge, and SILBERMAN and

WILLIAMS, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS.

WILLIAMS, Senior Circuit Judge: In 1994 Congress passed

legislation that acknowledged the fiduciary duties that the

Secretaries of the Departments of the Interior and Treasury—the

defendants in this case—owed to beneficiaries of Individual

Indian Money (“IIM”) accounts. Frustrated by delay in the

fulfillment of these duties, plaintiffs filed a class action in 1996

on behalf of present and past beneficiaries of the accounts.

Since that time, the district court has drawn on a range of its

powers in an effort to ensure that defendants live up to their

duties as the accounts’ trustees. One such duty required

defendants to complete a historical accounting of all trust fund

assets. This past February, the district court reissued an

injunction that set out, in great detail, the means by which they

were to fulfill this duty. The defendants argue that reissuance of

the injunction was an abuse of discretion. Even the plaintiffs

agree that the injunction should not stand because they believe

it to be impossible to perform. In short, neither party thinks that

the injunction should survive in its present form. We agree. 

* * *

The trust relationship at issue here dates back to the passage

of the General Allotment Act of 1887, ch. 119, 24 Stat. 388.

The Act allotted land to individual Indians and provided that the

government would “hold the land thus allotted, for the period of

twenty-five years [subject to discretionary extension by the

President], in trust for the sole use and benefit of the Indian to

whom such allotment shall have been made.” Id. Whenever the

government authorized money-producing transactions, such as

leasing allotted lands or selling timber rights, it was supposed to

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hold the revenue in individual accounts for the Indian owners of

the beneficial interests in the lands. See Cobell v. Norton, 392

F.3d 461 (D.C. Cir. 2004) (“Cobell XIII”); Cobell v. Norton, 240

F.3d 1081, 1087 (D.C. Cir. 2001) (“Cobell VI”). Legislation

passed in 1934 halted the process of allotting additional land but

indefinitely extended the trust period for the lands that had

already been allotted. Indian Reorganization Act of 1934, 48

Stat. 984 (codified as amended at 25 U.S.C. § 461 et seq.). A

separate statute enacted in 1938 authorized the Secretary of the

Interior to transfer trust funds from the United States Treasury

to banks or to invest them in government (or governmentguaranteed) securities. An Act to Authorize the Deposit and

Investment of Indian Funds, 52 Stat. 1037 (codified as amended

at 25 U.S.C. § 162a). The Department of the Interior estimates

that approximately $13 billion has flowed into IIM accounts

since 1887, and about $12.6 billion has been distributed from

them, leaving an overall balance of $416.2 million as of

December 31, 2000. Declaration of James E. Cason, Associate

Deputy Secretary, U.S. Department of the Interior, in Support of

Motion for Emergency Stay Pending Appeal, at 3 (filed Mar. 9,

2005) (“March 2005 Cason Declaration”).

The legislative enactments that initially made the federal

government a trustee and then extended the trusteeship said little

as to how the government was to fulfill its fiduciary obligations

except to indicate the range of permissible investments. But it

is not disputed that the government failed to be a diligent trustee.

In the two decades leading up to plaintiffs’ initiation of their

lawsuit, report after report excoriated the government’s

management of the IIM trust funds. See Cobell VI, 240 F.3d at

1089 (describing reports by the General Accounting Office, the

Interior Department Inspector General, and the Office of

Management and Budget, among others). Embarrassed by this

record, Congress in 1994 passed legislation reaffirming the

government’s obligation to “account for the daily and annual

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balance of 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 [1938 Act to Authorize the

Deposit and Investment of Indian Funds].” American Indian

Trust Fund Management Reform Act of 1994, Pub. L. No. 103-

412 § 102, 108 Stat. 4239 (codified as amended at 25 U.S.C.

§ 161a-162a & § 4001 et seq.) (“1994 Act”).

Addressing plaintiffs’ claim under the Administrative

Procedure Act, 5 U.S.C. §§ 702 & 706, and the Declaratory

Judgment Act, 28 U.S.C. § 2201, the district court found that the

defendants had unlawfully delayed the congressionally

mandated accounting and remanded the case to the defendants

with instructions to bring themselves into compliance with their

trust duties. Cobell v. Babbitt, 91 F. Supp. 2d 1, 45-48, 57-59

(D.D.C. 1999). We affirmed the district court’s order. Cobell

VI, 240 F.3d at 1106. 

Following our affirmance and a 29-day trial, the district

court issued an opinion holding Interior Secretary Gale Norton

and Assistant Secretary of Interior for Indian Affairs Neal

McCaleb in contempt of court. Cobell v. Norton, 226 F. Supp.

2d 1, 161 (D.D.C. 2002). On appeal from the contempt

citations, we overturned each of the five separate specifications

articulated by the district court for charging the individuals with

contempt. Cobell v. Norton, 334 F.3d 1128, 1147-50 (D.C. Cir.

2003) (“Cobell VIII”). 

In spite of our decision reversing the district court’s

contempt citations, the court made clear that it considered its

findings of facts undisturbed. Cobell v. Norton, 283 F. Supp. 2d

66, 85 (D.D.C. 2003) (“Cobell X”). Without making any

additional findings of fact on the need for broader injunctive

relief, it initiated another bench trial to evaluate the parties’

competing plans for bringing the defendants into compliance

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with their fiduciary obligations. See id. At the trial’s

conclusion the court issued a comprehensive and detailed

injunction specifying how the defendants were to go about the

accounting. See id. at 287-95.

The district court’s injunction expanded the scope of the

accounting well beyond that of the plan submitted by the

defendants. Among other differences, the injunction required

coverage of the accounts of deceased beneficiaries and

accounting for transactions prior to 1938, and it completely

precluded the use of statistical sampling. The defendants had

proposed to use such sampling for verification of the accuracy

of the transactions underlying entries for individual accounts.

In an exhibit attached to their motion to stay the injunction

pending appeal, the defendants estimated that the ultimate cost

of complying with the injunction would range from $6-$14

billion, as opposed to the $335 million estimated cost of the

defendants’ plan. Declaration of James E. Cason, Associate

Deputy Secretary, U.S. Department of the Interior, in Support of

Motion for Stay Pending Appeal, at 3-5 (filed Nov. 10, 2003)

(“November 2003 Cason Declaration”). A more recent

submission identified Interior’s current best estimate as $12-$13

billion. March 2005 Cason Declaration, at 1. 

On appeal, defendants raised a number of specific

objections to the injunction, as well as a challenge based on a

fiscal year 2004 appropriations bill passed in November 2003.

The bill stated that “nothing in the [1994 Act], or in any other

statute, and no principle of common law, shall be construed to

require the Department of the Interior to commence or continue

historical accounting activities with respect to the Individual

Indian Money Trust” until either Congress passed legislation

amending the 1994 Act to delineate the defendants’ specific

historical accounting obligations or the date December 31, 2004,

had passed. Pub. L. No. 108-108, 117 Stat. 1241 (2003). We

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did not reach any of the specific objections because this last

challenge trumped the others; we held that by enacting that

provision, Congress provided Interior temporary relief and

bought itself some time to come up with a legislative solution.

Cobell XIII, 392 F.3d at 465-66. As it turned out, Congress

passed no amending legislation before its self-imposed deadline.

On December 8, 2004, however, the President signed into law

an appropriations bill that limited the funds available for

historical-accounting purposes in fiscal year 2005 to $58

million. Pub. L. No. 108-447, 118 Stat. 2809 (2004). 

The district court, and not any of the parties to this

litigation, made the next move. On February 23, 2005, without

holding a hearing and without making any modifications to the

prior injunction’s content, the district court reissued its

historical-accounting injunction: 

Of course, December 31, 2004 has come and

gone, and no legislative solution to the issues in

this litigation is available or in the offing.

Therefore, the Court is bound, by its findings of

fact and conclusions of law set forth in its

September 25, 2003 Memorandum Opinion, to

reissue without modification the “historical

accounting” provisions of its structural injunction.

Cobell v. Norton, 357 F. Supp. 2d 298, 300 (D.D.C. 2005)

(citation omitted) (“Cobell XIV”). 

* * *

We review the district court’s reissuance of the injunction

for abuse of discretion and its underlying legal conclusions de

novo. Katz v. Georgetown University, 246 F.3d 685, 688 (D.C.

Cir. 2001). In Cobell XIII we explained that any injunction

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issued by the district court must be grounded not only in (1) “the

defendants’ statutory trust duties,” but also in (2) “specific

findings that Interior breached those duties.” 392 F.3d at 465.

We examine first the consistency of the district court’s

injunction with these two requirements, and then turn to the

particular circumstances under which the district court reissued

its injunction.

The most relevant statute for ascertaining the defendants’

duty to provide a historical accounting is the 1994 Act, which

requires the Secretary of Interior to 

account for the daily and annual balance of 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

Act of June 24, 1938. 

1994 Act § 102(a), 25 U.S.C. § 4011(a). While the statute

clearly reaffirms the requirement that the Secretary complete an

accounting, its text offers little help in defining the accounting’s

scope. 

In the ordinary APA case Interior would clearly enjoy a

high degree of deference to its interpretation of the 1994 Act,

including its ideas on the appropriate trade-off between absolute

accuracy and cost (in time and money). See, e.g., Chevron v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 844,

104 S. Ct. 2778, 2782-83 (1984). The Department embodied its

interpretation in the plan that it submitted to the district court for

fulfilling its fiduciary duties. See Cobell X, 283 F. Supp. 2d at

147-52.

Although plaintiffs’ core claim is under the APA, Cobell VI,

240 F.3d at 1095, this is not an ordinary APA case. In Cobell

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XIII we explained that the availability of common law trust

precepts complicates the application of conventional deference

principles to Interior’s interpretations of the 1994 Act’s

historical-accounting provision. 392 F.3d at 473. But because

the IIM trust differs from ordinary private trusts along a number

of dimensions, the common law of trusts doesn’t offer a clear

path for resolving statutory ambiguities. Where a trustee has by

misconduct or negligence made a proper accounting more

difficult, the trustee may be charged for the accounting’s cost,

and no precept of common law constrains the cost of such an

accounting, see GEORGE GLEASON BOGERT &GEORGE TAYLOR

BOGERT,THE LAW OF TRUSTS AND TRUSTEES § 963, at 459 n.36

(rev. 2d ed. 1983) (citing Haas v. Wishmier’s Estate, 190 N.E.

548 (Ind. App. 1934)), though obviously bargaining between

trustee and beneficiaries might eliminate some excesses. Absent

such misconduct or negligence, however, the costs of an

accounting would fall on the trust estate itself, which, as we said

before, would automatically give private beneficiaries an

incentive not to urge extravagance. Cobell XIII, 392 F.3d at

473. While Congress in the 1994 Act plainly faulted the United

States’ management, see, e.g., H.R. REP. NO. 103-778, at 9-11

(1994), the Act’s general language doesn’t support the

inherently implausible inference that it intended to order the best

imaginable accounting without regard to cost. Even plaintiffs’

counsel, responding during oral argument to a hypothetical

involving $1 million in accounting expenses for a $1,000 trust,

conceded some role for practicality. Oral Arg. Tr. at 63-64.

Nor does the Act have language in any way appearing to grant

courts the same discretion that an equity court would enjoy in

dealing with a negligent trustee. Congress was, after all,

mandating an activity to be funded entirely at the taxpayers’

expense. 

Congress’s post-1994 appropriations fall equally short of

supporting a mandate to indulge in cost-unlimited

USCA Case #05-5068 Document #932126 Filed: 11/15/2005 Page 8 of 16
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1

 Plaintiffs erroneously cite Cherokee Nation of Oklahoma v.

Leavitt, 125 S. Ct. 1172 (2005), for the proposition that “Congress’s

failure to appropriate sufficient funds does not relieve government

of its obligations.” Br. for Appellees 17 n.21. Cherokee Nation

concerned government contracts with Indian tribes under the Indian

Self-Determination and Education Act. The Court ruled that the

government was legally bound to honor those contracts where

Congress had, without any relevant statutory restriction,

appropriated amounts ample to cover the government’s contractual

obligations.

accounting—in fact, they suggest quite the opposite. Our

analysis in Cobell XIII of the fiscal year 2004 appropriations

bill, Pub. L. No. 108-108, 117 Stat. 1241 (2003), quoted one

Senator’s conclusion that completing the judicially ordered

accounting would be “nuts.” 392 F.3d at 466. More

importantly, Congress later limited Interior’s annual

expenditures for historical accounting to $58 million for two

years in a row. See Pub. L. No. 108-447, 118 Stat. 2809 (2004)

(appropriating funds for fiscal year 2005 for the operation of

trust programs for Indians, “of which not to exceed $58,000,000

shall be available for historical accounting”); Pub. L. No. 109-

54, 119 Stat. 499 (2005) (appropriating such funds for fiscal

year 2006, “of which not to exceed $58,000,000 from this or any

other Act, shall be available for historical accounting”). 

The significance of appropriations bills is of course limited

and the associated legislative history even more so. First, by

their own terms such bills are controlling only for a limited

period except to the extent that they explicitly provide

otherwise. Second, post-enactment legislative history is not

only oxymoronic but inherently entitled to little weight. See

United States ex rel. Long v. SBC Business & Technical

Institute, Inc., 173 F.3d 870, 878-79 (D.C. Cir. 1999).

Nonetheless, the appropriations can’t be completely

disregarded.1

 They unequivocally control what may be spent on

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historical-accounting activities during the period of their

applicability. If the appropriations pattern should continue and

the government’s current $12-$13 billion estimate proves

correct, an accounting of the sort ordered by the district court

would not be finished for about two hundred years, generations

beyond the lifetimes of all now living beneficiaries. Plaintiffs

themselves recognize an impact from the appropriations, if only

indirectly, by arguing that the defendants’ “recognition” of the

inadequacy of the annual appropriations “further demonstrates

that the historical-accounting provisions of the structural

injunction are impossible of compliance.” Plaintiffs’ 28(j)

Letter, Sept. 7, 2005. 

Thus neither congressional language nor common law trust

principles (once translated to this context) establish a definitive

balance between exactitude and cost. This being so, the district

court owed substantial deference to Interior’s plan. The choices

at issue required both subject-matter expertise and judgment

about the allocation of scarce resources, classic reasons for

deference to administrators. See, e.g., Heckler v. Chaney, 470

U.S. 821, 831-32, 105 S. Ct. 1649, 1655-56 (1985); Steel

Manufacturers Ass’n v. EPA, 27 F.3d 642, 648 (D.C. Cir. 1994);

Methodist Hospital v. Shalala, 38 F.3d 1225, 1230, 1233 (D.C.

Cir. 1994). Here the district court invoked the common law of

trusts and quite bluntly treated the character of the accounting as

its domain. It thus erroneously displaced Interior as the actor

with primary responsibility for “work[ing] out compliance with

the broad statutory mandate.” Norton v. Southern Utah

Wilderness Alliance, 124 S. Ct. 2373, 2381 (2004). 

We now turn to the second requirement articulated in

Cobell XIII—that the injunction be grounded in specific findings

that Interior breached its statutory trust duties. As noted earlier,

the district court explicitly relied on its earlier contempt findings

to justify a remedy more intensive than its initial remand to the

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defendants, see Cobell X, 283 F. Supp. 2d at 85, even though

this court had in the meantime ruled that the record was

inadequate to support the contempt citations. Our decision

reversing the contempt citations rested in part on the timing of

the misconduct found by the district court—it occurred prior to

either McCaleb’s or Norton’s assumption of responsibility. This

point of course does not exonerate the Department of the Interior

as an institution. But we also relied on the court’s disregard of

Interior’s affirmative accomplishments on Norton’s watch,

Cobell VIII, 334 F.3d at 1148, and on the apparently

uncontradicted truth of certain statements Norton made

regarding efforts to improve computer security (which the

district court had mistakenly thought contradicted), id. at 1149-

50. Thus a return to the record was plainly in order before the

court could rely carte blanche on the factual findings underlying

its contempt citations. 

Further, even if the prior findings had been fully valid and

had supported issuance of the injunction in September 2003,

they would not necessarily have supported its reissuance 17

months later in February 2005. During that 17-month period

defendants continued to submit status reports to the district court

documenting their progress in completing the historical

accounting and otherwise fulfilling their fiduciary duties. See,

e.g., Department of the Interior, Status Report to the Court

Number Twenty-One, Docket No. 2950 (filed May 2, 2005).

For the district court to rely on the old record in the face of our

previous decision and of subsequent developments was error.

Thus reissuance of the injunction was not properly

grounded in either fact or law. In a sense these deficiencies

aren’t surprising in light of the circumstances. Because the

district court reissued the injunction sua sponte without holding

a hearing or even soliciting briefs from the parties, it failed to

recognize that no party favored the injunction as now written. 

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What is more, the district court completely disregarded

relevant information about the costs of its injunction. While the

district court was unaware of just how much compliance would

cost when it initially issued the injunction in September 2003,

less than two months later the government submitted a cost

estimate running between $6 billion and $14 billion. November

2003 Cason Declaration, at 5. Moreover, this court’s opinion in

Cobell XIII quoted the congressional conference committee

report that estimated the cost of compliance at somewhere

between $6 billion and $12 billion. 392 F.3d at 466. Most

recently, the government stated its best estimate as $12-$13

billion. March 2005 Cason Declaration, at 1. With the benefit

of a hearing or at least briefing, the district court could have

learned more about the sources and validity of these estimates

and used the results to guide it in any contemplated supersession

of Interior’s judgment. 

To recap: the district court reissued an injunction dictating

how Interior must fulfill its obligation to complete an accounting

for the IIM trust fund in the absence of any pending request for

reissuance by any party and on the ill-founded assumption that

the 1994 Act gave it the freedom of a private-law chancellor to

exercise its discretion. Instead of deferring to Interior’s

judgment about how best to execute the historical accounting,

the district court set out, in great detail, how Interior must go

about the job. The resulting modifications of Interior’s plan

evidently caused the cost of complying with the injunction to

rise by more than an order of magnitude, from $335 million over

five years to more than $10 billion. Under these circumstances,

the district court abused its discretion by reissuing the

injunction. We reach this conclusion without prejudice to

plaintiffs’ argument on appeal that execution of the reissued

injunction is impossible, and, of course, without prejudice to

future claims, such as beneficiaries’ challenges to the

correctness of specific account balances.

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2

 The “land-based” accounts hold revenue from land allotted

between 1887 and 1934. Interior would not use sampling to verify

transactions in the remaining types, which include special-deposit

accounts (those holding funds that could not be immediately

credited to the proper owner), judgment accounts (those holding

funds from tribal distributions of litigation settlements), and per

capita accounts (those holding distributions from tribal revenues). 

* * *

Although it is unnecessary at this stage to review all of the

defendants’ specific objections to the injunction, which if to be

reissued at all will require drastic modification, one central

point, the provision barring statistical sampling, see Cobell XIV,

357 F. Supp. 2d at 304, deserves mention. 

As the district court pointed out, “a proper accounting does

not consist merely of a list of transactions; rather, the trustee

must provide supporting documentation that is adequate to

demonstrate that each listed transaction actually took place.”

Cobell X, 283 F. Supp. 2d at 183-84. This step is labeled

“verification”; its purpose is to correct errors that may have

arisen when transactions, such as receipts of lease rentals, were

posted to individual accounts. Interior proposed to verify all

transactions with stated values above $5,000. For transactions

valued at less than $5,000 in the “land-based” accounts,2

 Interior

proposed to match only a statistically representative sample of

transactions to their supporting documentation. See Department

of the Interior, Historical Accounting Plan for Individual Indian

Money Accounts, Docket No. 1705 (filed Jan. 6, 2003)

(“Interior Plan”); Cobell X, 283 F. Supp. 2d at 149-50, 187. For

the initial testing the plan was to study about 10% of the roughly

800,000 transactions with values between $500 and $5,000 and

about 0.3% of the roughly 25 million transactions under $500.

Interior Plan, at III-12. Interior’s plan was to proceed in this

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3

 Interior’s plans were not yet fully formalized when submitted

to the district court. Interior will start by hypothesizing an error rate

of 1% or less; if sample results show that the true error rate is

greater, it may target and correct systematic errors, revise its initial

hypothesis, or select additional samples. Interior Plan, at III-12, D2 to 3. The absence of a precise rule for testing the error rate may

account for potentially conflicting statements interpreting the results

of Interior’s proposed analysis. Compare id. at III-13 (statistical

analyses “will allow Interior to state, for each stratum, that it is 99

percent confident that the Historical Statements of Account are 99

percent accurate) with id. at D-2 (sample notice to beneficiary

stating that “[w]ith 99 percent confidence, we can say that more

than 99 percent of the transactions are accurate”) (emphasis added).

Interior has also indicated that it plans to employ a set of de

minimis rules in assessing accuracy, but has not yet developed

them. See id. at III-12 n.22. These rules are significant because

they will affect Interior’s error rate calculations. 

manner until it was 99% confident that statements of account

reached some threshold level of accuracy (as yet not fully

specified).3 Id. at III-12 to 13.

In rejecting the defendants’ plan to rely on statistical

sampling, the district court acknowledged the extra burden in

time and money but saw that singular burden as outweighed

simply by the beneficiaries’ preferences: 

[W]eighing against these factors [of extra

monetary and time costs] is the fact that the

beneficiaries themselves have overwhelmingly

rejected the use of statistical sampling in the

performance of Interior’s historical accounting,

even when confronted with the fact that such a

rejection would substantially increase the time

necessary to complete the accounting.

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Cobell X, 283 F. Supp. 2d. at 196. The court also reasoned that

“no evidence has been presented to the court that statistical

sampling has ever been considered to be an appropriate method

to use in conducting an accounting.” See id. at 188 (emphasis

omitted). 

Under the circumstances presented here, neither

beneficiaries’ preferences nor the absence of precedent, nor the

combination, could properly be deemed controlling. Where

trade-offs are necessary because it is costly to increase accuracy,

the preference of a party that will bear none of the monetary

costs can’t sweep the cost issue off the table. And in the

situation here, where common law precedents don’t map directly

onto the context, the absence of precedent tells us little.

Interior’s decision to use statistical sampling seems especially

reasonable in light of information submitted to the district court

after it issued the injunction: for the subset of transactions

valued at less than $500, Interior estimated that the average cost

of accounting, per transaction, would exceed the average value

of the transactions. November 2003 Cason Declaration, at 4. 

Because the district court’s ban on statistical sampling

reflected no deference to defendants’ expertise or to their

judgment regarding the allocation of scarce resources, the

district court abused its discretion by including that provision in

the injunction. The other specific challenges to the injunction

raised by defendants should be resolved (if necessary) by the

district court under the same principles that we have applied

here. In this class action under the APA the court may to a

degree use the common law of trusts as a filler of gaps left by

the statute, but in doing so it may not assume a fictional plaintiff

class of trust beneficiaries completely and uniformly free of bars

or limitations that the common law may provide. 

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* * *

Accordingly, we vacate the district court’s order reissuing

the historical-accounting injunction. 

So ordered. 

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