FOR DISTRICT O f COlUMBIA CthWIT
No. 05- 5068 R ETE I VED
4
ELOUISE PEPION COBELL, et al.,
Plaintiffs-Appellees,
V.
GALE A. NORTON, SECRETARY OF THE INTERIOR, et al.,
Defendants-Appellants.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
APPELLANTS' EMERGENCY MOTION FOR STAY PENDING APPEAL
AND EXPEDITION
PETER D. XEISLER
Assistant Attorney General
KENNETH L. WAINSTEIN
Actinq United States Attorney
GREGOIiY G . --- ---
KA'I'SAS
Deputy Assistant Attorney General
ROBERT E. KOPP
MARK B. STERN
THOMAS M. BONDY
ALISA B. KLEIN
MARK R. FREEMAN
I. GLENN COHEN
( 2 0 2 ) 514- 5089
Attorneys, Appellate Staff
DeDartment of Justictg
950 Pennsvlvania Ave., N.W.
Washinqton, D.C. 20530-0001
Civil Division, Room 7531
1
1
Plaintiffs- Appellees, )
1
ELOUISE PEPION COBELL, ct al., )
V. ) NO. 05-5068
GALE A. NORTON, i [Civil Action No. 96-1 285 (D.D.C.)]
Secretary of thc Interior, et a]., 1
1
Defendants-Appellants. 1
1
EMERGENCY MOTION FOR STAY PENDTNC APPEAL AND EXPEDITION
INTRODUCTION AND SUMMARY
Defendants-appellants the Secretary of the Interior, et al., rcspcctfully a,sk this Court to slay
the “Structural Injunction” ciitcrcd by the district court on February 23,2005, pending disposition of
this appeal. I n that ruling, the district court reissued, wilhoul modification, the “historical accounting”
portion o f the Structural Injunction vacatcd by this Court on December 10,2004. Cobell v. Norton,
392 F.3d 461 (D.C. Cir. 2004). The order declares that the district court “will not grant a stay
pending appeal” of thc injunction. Mem. Op. 14. The injunction establishes an elaborate series of
deadlines. commencing 60 days from the issuance ofthc ordcr, that direct in minute detail accounting
activities costing many biiiions of doiiars. Absent a stay, Interior will be required to redeploy its
resources in an attempt to comply with requirements having 110 basis in law. We thus ask for a stay
pcuums dppGd1, a i u , 11 riuxs-saiy, iur a icrnpurary slay to permit thc Couri to consider the stay
application. We also ask that the Court establish an expedited briefing schedulc to permit early
---A‘-.- I ,I +-A :c r-- - I -___-- c~~ ~ ~ . ~ - - ~
rcs(-)!&(-)n (-)f this c(-)r?&\Tersy* ’
The district court’s order is remarkable in d l respects. Plaintiffs did not scck rciiistatement
of the injunction, which issucd sua suonte and without prior notice to thc parties, T!E injnnction !hat
.- ‘Pursuant to Local Rule 8, plainti Ks’ counsel has bccn given advancenotice, by telephone, of
the filing of this motion.
has now reissued formcd part ofa still broader structural injunction issued in Scptember 2003, which
also included an array of provisions directing virtually every aspect of Indian trust management
grouped under the heading of “Fixing the System.” In that injunction, the district court rejected thc
Department of thc Interior’s plan for completing historical accounting activities within five years. In
its placc, the court imposed requircments that transfomicd the accounting’s parameters and dictated
the minutiae of its performance at a cost then estimated at between $6 billion and $12 billion.
Congress responded to the 2003 injunction by amending governing law in the FY 2004 lntcrior
appropriations statute, Pub. L. No. 108-1 08, so as to slay operation of the accounting portion of the
injunction until expiration ofthe legislation on Deccmber 3 1,2004. This Court granted a stay pending
a p p ~ ! ofthe eiitire iiijiiiidoii.
On December 10,2004, this Court vacated all aspects of the injunction, except for a siiiglc
filing requirement cmtained in the ‘‘Fixilnlg the Syst~,m”pxt dthe ifij~ixii~ii. L? li&t ofttie legisiiitiiion
govcniing the accounting portion ofthe injunction, thc Court did not rulc on the govemnieiit ’s argument
that the injunction was fatally flawed cven without regard to the appropriztinns !cgis!ati~n. !!cwcvei-,
the Court offered guidance plainly pertinent to the accounting injunction.
The Court explained that Congress had passed Pub. L. No. 108-108 in response to the district
c0~1-t’~ injunction “to clarify Congress’s determination that Interior should not bt: obliged to perform
the kind of historical accounting thc district court required.” 392 F.3d at 466. ‘The COUII cited the
conference committee’s statement that “‘[i]nitial cstimates indicatc that the accounting ordered by thc
Court would cost between $6 billion and $12 billion,”’ and the committee’s rejection of“‘the notion
that in passing the American Indian Trust Fund Management Reform Act of I994 Congress had any
intention of ordeiing an accounting on the scale of that which has now been ordered by thc Court.”’
- Ibid. (quoting H.R. Conf. Rep. 108-330, at 118).
The Court also ideiitified fundamental legal crrors underlying the “Fixing the Systcm” aspects
ofthe structural injunction that had also formed thebasis for thc historical accounting provisions. The
premiseofthe accounting injunctionis that thedistrict court’s authorityextends farbeyond thcpower
Lo review agencyaction for compliance with law. As this Court notcd, the district court believed that
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it could go further and “Tormulate a plan ofits own that will satisfy the defenclant’s liability.”’ 392
F.3d at 475 (quoting 283 F. Supp. 2d at 142) (addressing accounting provisions). The Court
explained, however, that while the district court is ernpowercd to “compel an agency. . . to takc action
upon a matter,’’ it is not crnpowered to “direct[] how it shall act.”’ m. (quoting Norton v. Southern
Utah Wildcrness Alliance, 124 S. Ct. 2373,2379 (2004)). The Court thus rejected the ‘‘[t]he prospect
of pervasive oversight by fcdcral courts over the mantier mid pace of agency compliance with such
[broad] congressional directives . . .” - Id. at 472 (quoting Southcrn Utah, 124 S. Ct. at 2381).
Moreover, as fne Court expiaincd, even private trustccs, though “held to high fiduciary standards, arc
generally free of direct judicial controi over their methods of implenienting these duties, arid trustee
choices ofmethods are rei..iztiia“ule only ‘io prevent an abuse by the trustee ofhis discretion.”’ @. at
473 (quoting Rcstatenient (Second) of Trusts $9 186-87 ( I 959)).
The district COUT-!’S reinstrtement ~f the a c c ~ u n t i ~ g ifij’unctioii accords esseiiiialiy no
consequence to thc intervening actions of Congress and this Court. The district couit dismissed
Congress’s action as “a bizarrc and futile attempt at legislating a se!!!eme!~? of?his case, ” !.!em. Op.
14, and concludcd that, with the expiration of Public Law 108-108, the remainder of this Court’s
opinion was “not relevant for thc present purposc.” U. at 2. Because the provisions of thc historical
accounting portion ofthc stnictural injunction ”were never addrcsscd specifically on the merits,” there
was, in the district court’s view, ‘ho ruling from thc Court of Appeals obstructing this Court’s
authority, sitting as a Court of Equity, to issue injunctive relicf ofthe kind sct forth in the ‘historical
accounting’ portion of the September 2003 Structural Injunction.” Id. at 4.
A stay pending appeal is plainly warranted. Thc district court has reissued without
modification injunctive provisions requiring thc cxpenditure ofbillions ofdollars to account for hnds
currently totaling approximately $400 million. In so doing, the courl did not address Congress’s
concern that this expenditure of billions of dollars would not provide a single dollar to the plaintiff
class, and did not explain how a mandate to begin such a task would do anything other than to delay,
yet again, the type of accounting conleniplatcd by Congress.
AS set forth below, all of the deadlines imposed by the injunction are keyed to thc district
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court’s ultimate vision of an accounting, and would result in a wholesale diversion of the limited
resources appropriated by Congress away from the accounting activities nciw being pursued by
Interior, in favor ofexpenditurcs that will not bear fruit and are beyond the scope of the district court’s
authority. Any attcrnpt to comply with even the most distant of the district court’s deadlines would
require that diversion to begin immediately. Wc thus ask that this Court issue a stay pending appeal,
and, if necessary, a temporary stay while it considers the stay application.
STATEMENT
A. Background.
Interior holds approxiniately$400 million in trust for the benefit of individual Tndians. As of
Deceiaber 3 I, 2000, ihcsc fun& were maintained in approximateiy 260,000 separatc Individual Indian
Money accounts.
.n P - *
I- Tn ! 994, C‘mgess enxted the Pumxican Libian Trisi Find Mwagcrncnr Jceronn Act, rub. L.
No. 103-412, 108 Stat. 4239 (‘‘1994 Act”). Section 102(a) providcs that “[tlhe Secretary shall
account for the daily and annual balance of all fimds held in tnir? by the U~itec! States fsr the bciicfit
of an Tndian tribe or ai individual Indian which are deposited or invcsted pursuant to the Act ofJunc
24, 1938 (25 U.S.C. tj 162a).” 1994 Act, 0 102,25 U.S.C. 4 401 l(a>.
Plaintiffs brought this class action in 1996. In 1999, thc district court itssued a declaratory
judgment holding that thc 1994 Act “requires defendants to provide plaintiffs an <accurate accountins
ofall money in the IIM trust held in trust for the benefit ofplaintiffs, without regard to when the funds
were deposited.” Cobell v, Norton, 91 F. Supp. 2d 1,58 (D.D.C. 1999). Rccause the agency had not
yet provided such an accounting, the district court rcrnanded the matter to allow Interior to comc into
compliance. The district court rctained jurisdiction for five years, and required Interior to file
quatcrly reports explaining the steps Laken to rectiry the breaches found. 4. at 59.
On interlocutory review, this Court largely affimied, rejecting the govcrnment’s contention that
Congress had committed to thc agency’s discretion decisions regarding the extent to which to revicw
transactions that pre-dated the 1994 Act. Cobell v. Norton, 240 F.3d 108 1 , 1 102 (D.C. Cir. 2001 ).
1 he Court ”ruled that thc 1994 Act, 25 1J.S.C. 9 401 l(a), confcrred a right on TIM beneficiaries to ‘a -_
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coiiiplete historical accounting of trust fund assets,’ explaining that “‘all fiinds” [as used in that
provision] means all funds, irrespective of when they were deposited (or at least so long as they were
deposited aAer the Act o f Junc 24, 1938).”’ Cobcll v. Norton, 392 F.3d at 465.
B. The Structural Injunction.
1. The 2002 Contempt Kuling.
The structural injunction was the outgrowth of contempt proceedings culminating in a 2002
decision holding the Secretary of the Interior and an Assistant Secretary in contempt on thc basis of
interior‘s purported faiiure to initiate an historical accounting and on clairncd inaccuracies in
Interior’s quartcrly reports. Cobell v. Norton, 226 F. Supp. 2d I (D.D.C. 2002). The district court
declmd :hiit “Seci-ztai-y NoiTuri and Assistant Sccrerary McCaieb can now nghtfully take their place
* * * in thepantheon ofunfit trustee-delegates.” u. at 161. Based on its contempt findings, thcdistrict
court an~~nunced !!?at it, rather t h x ~ the agcmy, would direct the coilduci ofaccounting and ot‘ner trust
activities. The district courl thus ordered the government to submit aplan for an accounting as well
as a plan for achieving compliance with the governnent’s f i d ~ i a r y eh!igatims to hidiiiiis, t~ be
cvaluated by the court with a view to issuance of structural relief. u. at 148-49.
I n July 2003, this Court vacated the contempt ruling. The Court concludod that t ? ~ e cmte!rrpt
order did not fall within the civil contempt aulliority. Thus, the onlyrelevant findings to emerge from
the trial were those relcvant to the conduct of the officials currently charged wilh responsibility for
Indian trust fiinds management - Secretary Norton and, at that timc, Assistant Secrctary McCaleb, The
Court held that the record denionstrated that “in her first six months in officc Secretary Norton took
significant stcps toward complcting an accounting.” Cobell v. Norton. 334 F.3d 1128, I 148 (U.C.
Cir. 2003). The Court described the district court’s reasoning with respect to the remaining contempt
charges as “mystifying,” 2. at 1 149, and “inconceivable,” id. at 1 150.
Meanwhile, in January 2003, liitenor filed its accounting plan pursuant 101 the district court’s
direclive. The Historical Accounting Plan for Individual Indian Money Accoun~ set out a plan to
complete an accounting within five years, sub.ject to congrcssional appropriations. At thc time, the
estimated cost of iriipleinenting the pIan was $335 million.
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2. The 2003 Stnictural hiunction.
Thc district court conducted a 44-day trial beginning in May 2003. As contemplated by the
district court’s contempt dccision, the trial did not determine whethcr to enter an injunction but,
instead, determined the content of the injunction. Plaintiffs attempted to show that an historical
accounting was impossible and that the district court should adopt a model that would, in plaintiffs’
view, reflect the rcvcnue generated by their trust assets over morc than a century. The government
urged that the work it had already performed demonstrated that it could accomplish thc historical
accounting ouriincd in the Accounting Plan, subject to available appropriations.
As explained above, in July 2003, this Court vacated the contempt ruling that formed the
prediczte Ir=r !he district zouri’s =sumpiion o fauihoriiy. Nonetheiess, the district court found no need
to revisit its decision to issue structural relief. In September 2003, the district court issued a
sweeping ‘‘structural injt!r?ctinn” encempassi::g b ~ t h the perf~rirziice of an accounting and tile
implementation of a broad program of trust refonn. Cobell v. Norton, 283 F. Supp. 2d 66 (D.D.C.
2003). The district court announced that it would treat its prevlnus cnntempt findings as “establish&’’
because, in the district court’s view, they revdined their vitality even though the contempt ruling had
been vacated by this Court. @. at 85. Echoing the contempt ruling. the district court exp!ained !!?at
it was issuing a striictiiral injunction, rather than remanding to the agcncy, because it did not trust thc
Secretaryorher subordinates to carry out their official duties. a. at 225. Although the accountiny
portion ofthe injunction purported to adopt amodified version of hterior’s historical accounting plan,
its requirements bore no meaningful rcseniblance to the Interior Plan. Under the Jnteriorplan, Interior
would have provided each holder of an mM account open as of October 25,1994. or thereafter, with
an accounting of all transactions in the account since 1938. Interior would producc, based on
hiterior’s paper and electronic bookkeeping records, a ledger for cach open TlM account that describes
all of the post-1938 transactions in cach account. Thc account slalement would be bascd 011 an actual
compilation of transactions pertaining to the account without the use of statistncal sampling. See
Accounting Plan at HI-5.
The Accounting Pim also included ail audit process forvcri@ng the accuracy of an individual
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account statement. Whereas sampling would not be used to generate the account statements, sampling -
would be used to verify the reliability of the underlying records uscd to prepare the statement. The
use of sampling was crucial to the viability of the Plan, and reflected the fact that the vast majority of
transactions involved rclatively small sums of money. Cason Decl. at 4.
in contrast, the court's injunction radically expanded the parameters of the accounting and
dictated its methodology. Its provisions - now reinstated - requirc that Tnterior:
w Produce account statements for all accounts that have ever been in existence,
regardless of whether the accounts were long closcd. and regardlcss ofwhether !he
account holdcrs were long deccased and their estates made the subject of a final
probate order. Injunction, $9 IIT(E), (F); cf. 283 F. Supp. 2d at 169-75.
hjiri7Ciioii, 0 iiijEj; d. 283 F. Supp. 26 at i 72-73.
. Produce account statements that describe cvcry account transaction since 1887.
Account for all transactions in land held in trust for individuat Indians dating back to
1887. Injunction, $0 III(G), (M); Lr. 283 F. Supp. 2d at 175-77.
a Account for monies that were never held in trust at all, but were paid dircctly to
Indians by third partics. Lnjunction, 4 IIT(H); cf. 283 I;. Supp. 2d at 177-80.
use of statislical sampling. Injunction, $8 III(K), (L); cf. 283 F. Supp. 2d at 194-98.
Althoughthc injunction purports to allow Interior to use sampling to pcrform an audit function,
this statcment is without practical significance becausc the injunction requires the government to verify
individually each transaction encompassed by the injunction. Injunction, $0 IIl(K). (L); see 283 1;.
aupp. LU ar 1 r4-95 (LUW opinion); 283 F. Supp. 2d at 288 (2003 injunction). In effect, therefore, thc
injunction makes the auditing or verification process part of the accounting itself, rendering the
auditing ( a d samphg) envisioned by Interior cntireiy superfluous. 392 F.3cl at 465 (explaining
that the district court had rejected anyuse ofstatistical sampling) (citing 283 F. Supp. 2d at 288-90).
In addition, the in&mctio~. asserk ~urkdicti~n Over the maniicr hi which hierior identifies and
Verify every transaction covered hy the ifijunc!ic?n, regardless of size &id hie, without
0 __ ? _ 1 - L , r . " */-,.f.-.
retrieves missing trust records, including the issuance of subpoenas to third parties, set Injunction,
4 TTl(B); the manner in which Interior collects and indexes t x s t records, g; s., tj m('c); the
mechanics ofvarious system tests and quality control measures discussed in the Interior Accounting
Plan, scc id., $5 III(N), (0); and the "industry production databases" and related ~:mipcter seft.vare
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that Tnterior niay decide to use in connection with the accounting and audit, see id., 6 III(P).
The government appealed from the 2003 injunction and sought a stay pending appeal.
Congress responded to the injunction with legislation enacted as part of the FY 2004 hterior
appropriation, Pub. L. No. 108-108. The statute amended substantive law until December 31,2004,
to provide that neither the 1994 Act nor any provision of common law required the pcrformance of
an historical accounting.* This Court stayed all aspects of the injunction pcncling appeal.
3. This Court’s December 10. 2004 Decision.
On December 10, 2004, this Court vacated the structural injunction cxcept insofar as it
requires the filing of Interior’s “To Be” Plan.
The Court concludcd that the passage of Pub. L. No. 108- 108 had dcprived the histoi-ical
accounting portion of the injunction of any legal basis. The Court explained that “[tlhe provision’s
!egis!s:ive history makes clear that Congress passed it in response to [the district court’s structural
injunction] to clarify Congress’s dctermination that Iiitcrior should not be obliged lo perform the kind
ofhistorica! acco~nting the district court rccjuired.” -- Cobdl v. Norton, 392 F.3ci at 466. The Court
cited the conferencc committee’s rejection oT“‘ihe notion that in passing the Anierican Indian Tmst
Management Reform Act of 1994 Conprcss !?ad any in!e!itien eferdering an acctoiliitiiig on the scaie
ofthat which has now been ordered by the Court.”’ m. (quoting H.R. Conf. Rep. 108-330, at I 18).
The Court noted that, in addition, “individual legislators said in erred that the d;span!y between the
costs ofthe judicially ordered accounting, and the value ofthe hnds to be accounted for, rendercd the
ordered accounting, as one senator put it, ‘nuts.”’ m. (quoting 149 Cong. Rec. at S13,786 (2003)
(statement of Scn. Dorgan)).
’ That enactment provided that “nothing in thc American Indian Trust Managcment Refomi Act
of 1994, Public Law 103-412, or i n any olher statute, and no principle of common law, shall be
construed or applied to require the Department of thc Interior to coninience s?r continue histwica!
accounting activities with respcct to the Individual Indian Money Trust until the earlier of the
following shall have occurred: (a) Congress shall have amended the American Indian Trust
Managenicnt Reform Act of 1994 to delineatc the specific historical accounting obligations of the
Department of!he Intcrior with respect tc the !d\ridiia! Iiibiari Money Trust; or jb) Zlecembcr 3 1,
2004.”
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The Court rccognized that absent Congressional action by December 3 1,2004, Pub. L. No.
108-1 08 would “cease to bar the historical accounting provisions ofthe injunction.” 392 F.3d at 44%.
The Court stated: “Wc do not address thc issues that would be rclevant if the district court then
reissued those provisions.” &kJ. The Court then vacated the remainder of the district court’s ruling
(with thc exception of one filing requirement contained in the “Fixing the System” portion of the
injunction, the rcquirement that the government submit its “To Be” plan). In so doing, the Court
addressed the manner in which common law trust duties may inforni statutory dutics and made clear
that general limitations on judicial rcview of agency action apply in this litigation.
Aftcr noting district court’s “litigation innovation” of “requiring defenclants to cxplaiii how
;hey wiii cure a iong list ofderauits as to which the court has made no evidence-based finding,” this
Court observcd that the district court had “abstracted the common law duties from any statutory basis.”
392 F.3d at 471. The explaiiieb ihai mniiiiun iaw trust duries couid not be incorporated into
federal law in this manner. Instead, “once a statutory obligation is identified, the court may look to
coninion Iaw trust principles t~ particu!xize that ob!igation.” - Id. a: 472.
This Court also made clear that the fiduciary nature of the duties at issue did not vitiate the
normal structure ofjudicial review of agency action. Citing the Supreme Court’s recent dccisi~:: in
Norton v. Southern Utah Wilderness Alliance, the Court noted that the purpose of “[tlhe M A ’ S
rcquirement of ‘discretc agency action,’ * * * was ‘to protect agencies from unduej udicial interference
with their lawful discretion, and to avoidjudicial cntanglernent in abstract policy disagreements which
courts lack both expertise arid information toresolve.”’ 392 F.3d at 472 (quoting;Southern Utah, 124
S . Ct. at 2381). The Court explained:
Ifcourts were empowered to entcrgeneral orders compelling compliance with broad statutory
mand~tes, they wmk! mcessarily bc zmpowereb, as wcii, to deierniine winelher compliance
was achieved--which would mean that it would ullimatcly become the task ofthe supervising
court, rather than the agcncy, to work out compliance with the broad statutory mandate,
injecting the judge into day-to-day agency management .. .. The prospect of pcrvasive oversight
by federal courts over the mamcr and pace af 2ge::cy compliance with such [broad]
congressional directivcs is not contemplated by the M A .
- %id. (quoting Southcm Utah, 124 S. Ct. at 2381).
The Court noted two additional factors at odds with thc view that more expansive judicial
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oversight was permissible because ofproposed analogies to thc duties of private tnistees. Thc Court
observed that “while the expenditures that plaintiffs seek are to be made out of appropriated funds,
trust expenses for private trusts are normally met out of the tiust funds themsclvfes,”so that “plaintiffs
here are free of private beneficiaries’ incentivc not to urge judicial compulsion of wasteful
expcnditures.” 392 F.3d at 473. The Court further rioted that courts do not micromanage the methods
by which privatc trustees implenient their duties, and step in only to prevent an abuse of discretion.
- hid.
Applying these principles, this Court stressed that it is not thc roIe of a court to assume control
over the conduct of an agency’s duties if it determines that its plans fail to comply with those legal
duties. The Court noted that the district court (in the accounting portion of its opinion) had “uscd
language suggesting an intent to take complctc charge of thc details of whatever plan Interior might
siitimi:: ‘if the coUii jconciudes that the pian wiii not satisfy defendants’ legal obligation], it may
decide to modify the institutional dekndant’s plan, adopt a plan submitted by another cntity, or
_formdate a p!m c?fi!s ow:: thzt will sztisfjr the defendmi’s iiabiiity.’” 392 F.3d at 475 (quoting 283
F. Supp. 2d at 142). The Court declared that “[tlhis is in sharp contrast with &uthern Utah’s point
that ‘ 5 706( 1 ) empowcrs a court only to compe! 21; ~ g e a c ~ .. . tc; take 3ctioi-r i i p g a iiidiicr, without
directing how it shall act.”’ m. (quoting 124 S. Ct. at 2379).
The Court determined that thc requirement that lnterior filc a To Be ?!an ‘‘&I some respects
continucs or logically extends the original order to file thc Comprehensive Plan,” which the Court’s
2003 decision had tipheld as “‘akin to an order ... relat[ing] only to thc conduct or progess of
litigation.”’ 392 F.3d at 474 (quoting Cobell v. Norton, 334 F.3d at 1138). Thc Court stressed,
however, that the plan could not be used “as a device for indefinitely extended all-purpose
supervision ofthe defendants’ compliance with the sixteen gcneral fiduciary duties listed.” w. This
Court held that “the [districl] court’s authority is limited to considcring specific claims that Iriterior
breached particular statutory trust duties, understood in light of the coinmon law of trusts, and to
ordering specific relief for those brcaches.” @. at 477. The district court “may not micronlanagc
court-ordered reform efforts undertaken to comply with gcneral trust duties enunileratcd by the court,
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and thensubject defendants to findingsofcontempt for failure to implement such reform.” Id. at 478.
C. Reinstatement of the Accounting Injunction.
The Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, which was signed into law
on December 8,2004, did not contain the language ofPub. L. No. 108- 108 set to1 expire on December
31,2004.
On remand, plaintiffs - who had not sought a structural injunction in the first place - did not
ask the district court to rcissue the historical accounting portion of the injunction. Instead, plaintiffs
rcnewed their position (opposed by thc government) that an accounting is impossrble and that the court
should, accordingly, devisc some other form of relief.
Neveriheiess, on February 23,2005, fhe court decided to “reissue without modification” the
historical accounting provisions of the structural injunction vacated by this Court, Meni. 01). 3. The
district court ificnprated by reference :he teiigthy opinion that it had previousi y iissucd in connection
with the 2003 structural injunction, see id. at 3 & 11.1, and announced that it would retain jurisdiction
over the matter unti1 March 27, 201 1, see !d. at 14.
The district court saw no need to revisit the requirements of its ordcr in light of this Court’s
decision vacating the structural injunction. h thedistrict court’s view, the on!ygemane q x c t of:l;is
Court’s decision was the holding that “Public Law 108-108 deprived the ‘historical accounting’
provisions ofthc Structural Injunction ofits basis in law.” u. at 2. Thedistrict court announced that
the remainder ofthis Court’s discussion was “not relevant for the present purpose.” m. The district
court felt free to rcissue the injunction because this Court “did not disturb [lie findings of fact and
conclusions of law upon which the ‘historical accounting’ provisions of this Court’s Structural
Injunction arc predicated.” g. at 3. Although thc district court noted this Court’s determination that
aspects ofthe structural injunction were beyond the court’s equitable powcr, it found that these rulings
provided no guidance because of the “kct-sensitive nature of the Court of Appeals’ dccisions
regarding the outer bouiids of this Court’s equitable authority.” u. at 4.
The district court reissucd the historical accounting provisions ofthe stnictural injunction and
also rcissued “General Provisioris” stating that the provisions of the injunction mlust be construed in
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standards’ demanded ora trustee,” absent clarification by the court. Injunction, $8 II(B), (C). The
court also reissued the directive that Interior “administer the Trust in compliance with applicable
Tribal law and ordinances,” 4.’ 5 II(D), although this Court had specifically held this provision
“impermissiblc.” 392 F.3d at 475.
The injunction reimposes the dcadlines in the original stnictural injunction for compliance with
its array of requirements. Thc district court noted, however, that it was subtracting from the longer-
term time periods set forth in the original injunction the 52 days that had elapscd between its issuance
and this Court’s stay, because it “prcsurne[d] that liiterior was working toward conipletion of the
various tasks set forth in the Stnicturai Injunction during that time.’’ Mem. Op. 3-4 n.2.
The order issuing the injunction also denies a stay pending appeal. Scc id. at 14-15. Thc
district cmrt declmc! that “due io a delay directed by Congress in a bizarre a.nd futile attempt at
legislating a settlcment ofthis casc, the merits ofthis Court’s September 25,2003 Structural Tnjunction
have still not been decided,” mr! conc!uded that a stay pending appeai ivvuid he inappropriatc
because “[tlhe defendants have not demonstrated to this Court that they are entitlcd to such relief,”
- Id. at 14. The district court expressed the hope tha! “the defe~dmts’ aext ::ppeaI wiI: bz irulji
expedited” and would resolve thc issues in the case. u. Thc district court declared that “[i]n ihis
casc the government has not only set the gold standard formismanageinent~ it is ori tlic verge ofsetting
the gold standard for arrogancc in litigation strategy and tactics.” u. at 1 5. The district court closed
by requcsting that “the Court of Appeals expedite this casc while there is still ii chance to provide
meaningful relief to these Tndians who have bcen so gievously wronged by the govenunent’s
misconduct.” m.3
REASONS WHY THE STAY SHOULD BE GRANTED
I. THE GOVERNMENT’S APPEAL WILL SUCCEED ON THE MXRITS.
Thc district court also ordered briefing on the effcct of this Court’s December 10, 2004
decision 011 the =-historical zccnt!~thg aspects sfthe ~rigifial siriiciiid injunction. & iviem. Qj.
15. The govcrnrnent does not seek a slay of this briefing order.
-1 2-
Court observed, is expccted to cost more than $6 billion. 392 F.3d at 466. The decision paysno heed
to the vicws of Congress or the rulings ol lhis Court.
district court required.” m. (emphasis added). The conference committee ‘“reject[ed] the notion
that inpassing thc American IndianTrust Management Refonti Act of 1994 Congress had any intention
mu trust rcsources. f~11l. (quoting H.K. C:ont. Kcp. 108-330, at 1 18). As tihis Court explained,
individual legislators indicated that “the disparity between the costs o f thlc judicially ordcred
accounting, and t!:e vdue ofthe fiiilbs to be accouiiied for, Teiibered the orciereld accounting, as one
senatorput it, ‘nuts.”’ m. (quoting 149 Cong. Rec. at S13,786 (2003) (statcmenl ofSen. Dorgan)).
As Senator Bums declared: ‘“Ifther~ is nne thing with which e=qc!-y?xdy ia.:o!ved in this seems
to agree, it is that we should not spend that kind ormoney 011 an incredibly cumbersome accounting
that will do almost nothing to benefit the Indian people."' m. fquoting I49 Cmg. Rec. S 13,785
(2003)). The new legislation underscored the same view set out in the “Misplaced Trust Rcport” that
gave rise to the 1994 legislation. That reporl cautioned that it would make “litile sense to spend”cven
as much as the $281 million lo $390 million that had been estimated as the cost of auditing the IIM
accounts “when there was only $440 million deposited in the UM trust fund for account holdcrs,” at
the time of the report. H.R. Rep. No. 102-499, at 26 (1 992).
Consistent with thesc views, Congress appropriated $58,000,000 for hiistorical accounting
activities (for individuals and Tribes) in FY 2005, see Consolidated Appropriations Act, 2005, Pub.
L. No. 108-447, Title I (appropriations for Office ol‘Special Trustee for Anicrican Indians, Fcderal
Trust Programs), and expressly provided that “total funding for historical accounling activities shall
not exceed amounts specifically designated in the Act for such purpose,” sec ic!. 0 1 12.
In reissuing the injunction, the district court attached no significance to Congress's views,
-13-
dismissing Congress’s evidcnt concern with the accounting injunction as “a bizarre and futile attempt
at lcgislating a settlcmcnt of this case[. 1” Mein, Op. 14.
The district court likewisc improperly dismissed this Court’s legal analysis as irrelevant. This
Court made clear that it is not the role ofa court to determinc the content ofanagencyplan and dictatc
the means for achieving it. Thc Court rejected thc district court’s view, set out in the accounting
portionofthe2003 ruling, that “[ilfthecourt [concludes that thcplan will not satisfy defendants’ legal
obligation], it may decide t o modify the institutional defendant’s plan, adopt a plan submitted by
another entity, or formulatc a plan of its own that will satisfy the dcfendant’s liability.”’ 392 F.3d at
475 (quoting 283 F. Supp. 2d at 142). As this Court stressed, a court may compel an agciicy to act;
but it must do so “‘without directing how it shall act.”’ m. (quoting 124 S. Ct. at 2379).
This Court also made clear that the district court could not pi-operly dictate thc means and
iiieihdoiogies used in the accounting. This Court contrasted its earlier approval csfthe district court’s
“cxpression o f intcnt to leave [thc] issue of choice of accounting nicthods, including statistical
smqding, ts adminis:rat;,vc r;gencies,” s. at 473 (citing 240 Fi3d at i i 04j, with tine district court’s
September 2003 order “forbidding use of statistical sampling,” u. (citing 283 F. Supp. 2d at 289).
The district court nnnethdess reissw?. the szme prwisims baming the iisc of siaiisiical sanipiing
cited with disfavor by this Court. Similarly, the injunction’s dctailed provisions, iiicIuding those
governing the manner in which Interior should gather and process records, i g ~ o r e !!?is C=l:fi’s
directives. As this Court madc clear, judicial micromanagement, which is proscribed by principles
governing judicial review of agency action, is likewise without foundation in the context of private
trusts. Thc Court stressed that cven private trustecs “are generally free ofdirect judicial control over
thcir methods of implementing these duties, and trustee choices of methods are revicwable only ‘to
prevent an abuse by the trustee of his discretion.’” 392 F.3d at 473.
The district court failed as well to revisit the lcgal basis of the substantive rcquirements
incorporated into its injunctive order, including the requiremcnts that the district court itself
acknowledged to bc without connection to a statute. This Court niadc clear that enforceable duties
must be anchored in a slatutc, cven ifthe statute is to be read in light of common law trust principles.
-14-
in and outlined by the relevant statutcs and treaties,’ 240 F.3d at 1099, although those obligations may
then be ’dcfined in traditional equitable terns,’ id.” 392 F.3d at 472. Thus, as the Court stressed,
dctail in its briefs on appeal from the original structural injunction, the parameters ofthe “accounting”
ordered by tlic district court have no nexus lo any statutory requirement. For example, the district
- 3ee L U ~ r . supp. ~ c i at I /L- 13. Nonetheless, the district court held that the govenmient has a fiduciary
duty- without identified connection to any statute- to account for all funds dcposited or invested in
, * . .,.”_ w . --- - ~ ~ A ~ n n ~ . . . ~ ~ ” ~ ~ - ~,.,~-l--~:--- l - - A - - -1
w--J -. - ...*. ..-.. .....IVUVIIVIIU. u l J c l I b ~ ~ V ~ I L 3 ~ ~ ~ u ~ ~ ~ , l ~ u ~ ~ wouw require
Tnterior to account for more than 60 million IIM transactions. &Cason Decl. at 5-6. Moreover, the
r--- --- . . . . - _- - - -_ -
injunction would require Interior to venfvcach transaction iiidividitnllv 3 1nnt-tllrn~mfial tact mwI- -*?--
Similarly, although the 1994 Act requires an accounting for funds, the injunction requires an
accounting for all “assets,” i.e., lands, held in trust since thc 1 887. Injunction, 9 IIT(G); see 283 F.
464. Contrary to the district court’s understanding, there is no unitary ormonolithic: “Indian trust,”The
land held in trust for an individual Indian and the funds held in trust for the same individual are
lands held for the benefit of an individual Indian is often deposited in an 11M account for that
-1 5-
. .. -
producing at all, or produce revenue that is paid directly to the individual Indian.
The injunction’s requirements transfomi the accounting activities envisioncd by Congress
has yielded over the past century land ownership interests recorded to the 42nd decimal point. H.R.
Rep. No. 102-499, at 28; see also id. at 28 n.94 (“One 320-acre tract at the Standing Rock reservation
10.35 square feet or 7.1 inchcs by 7.1 inches].”). This endeavor (assuming that it is even feasible)
would dwarf thc task of accounting for the funds in the IIM accounts.
1 - . . - . . T S * n . %
-__=..____ --A -- .,..” “..A.”.ALL, , “ , U , l l L ~
approximately $400 million. Congress clearly did not authorize that result, which is without
countcrpart in the law of private trusts upon which the district court pumorted to relv. This Court’<
“rather than acting to assure that ‘agency action’ conforms to law, the court has sought to makc the law
conform to the court’s views as to how the trusts may best be run.” 392 F.3d at 477,
and scope that has no roots in any statutory requirement that requircs expenditurc ofbillions ofdoIlars
-16-
court’s decision to reissue its injunction without regard to its costs andbenefitswould warrant a stay.
In enacting Pub. L, 108-1 08, Congress estimated that the accounting injunction would require
may be even higher. Cason Decl. at 4-5, 12.
Congress observed that the reallocation of resources required by the injunction “would be
-wouicL not provide a single dollar lo the plaintiffs, and would without question displace funds
available for education, health care and other services.” m.
r+ ...~. ” :__^._&--LA-* ~ ~ 1% -. . . 1 ..
-.-r-.....---- v L V I . . . ~ ~ . L . C I I W V L ~ W D wuuiu abbwiipiiaiL IUI LIIC; pldlllllll Class.
The structural injunction contains a variety of deadlines commencing April 24,2005. While
each of these deadlines is significant in itself. twn nvernrrhiiio nnintc hear ornnh-&-
---i ----- - J -
As discussed above, the injunction requires a re-crcation of all transactions related to funds and land
from 1887 onwards as acondition Tor providing an accounting to current account holdcrs. To Drovide
require different tasks in a different order and would allow completion of accounting for many IIM
accounts far in advance of the very differcnt accounting contemplated by the district court. ‘
possession and then seek to f i l l any gaps by seeking information from third partics. Under thedistrict
-1 7-
court's ordcr, however, Tnterior would be forccd to focus immediately on a dietailed plan to obtain
outside records including theuseofpotentially large numbers ofsubpoenas (see-hjunction, 4 NIP)).
Such record-gathering would be largely unnecessary and extremely burdensome lo third parties as
well as Interior, costing the government an cstirnated sum in the hundreds ofmillions ofdollars.
Cason Decl. at 10.
Second, even to coinply with thc more distant deadlines of the Structural Injunction would
requirehterior ininicdiately to reallocate resources to perform tasks that Interior wouldnot otherwise
perform and are not part o f the accounting activities contemplated by Congress. For exarnplc, as
noted, the injunction doubles h e number oftransactioils that form part ofthe accounting and requires
that each transaction be verified individuaiiy without use of sampling. See Cason Decl. at 5-6. An
attempt to perforni this redefined accounting would require immediate and substantial expend; tures
~n cqliim~cfit t a d persoime! that woiili: ultirnaieiy yield iirric if anything ofvi3lue to thc public or
account holders. See id. at 5-6, I I .
The deadlines reflect the court': &tempt to take cofitrc;! over boih the ge:nerai su'pstance and
dctailed particulars of the accounting:
Within 60 davs of the-court's ruling - Aori! 24,2005:
File a detailed plan for identifying trust-related rccords likcly to be possessed by
third-parties and for issuing subpoenas to those entities. hiunction, 9 ITI(B). . File a detaiied pian describing, among other things, the quality control measures ofthe
Interior Accounting Plan. Id., 5 III(0).
Within 90 davs of the court's rulinp - May 24,2005:
File a timetable for completing the collection and indexing of records related to trust
Fi!e a detai!cd plan desciibiiig each of iivc system tests described in the Interior
accounts, including a complete explanation of indexing methods. Id., 9 III(C).
Accounting Plan. Id., $ III(N).
File a detailed timetable for completion of the historical acc~ounting, including . - specified dates for kpxtmt nii!estmes, kC!l:ding coinpkikjii of the coiieciion
process, accounting process, and rcporting process. Id., 0 IV(B)( 1).
File a timctable for completion orthe entirc indexing process of trust-related records
to be undertaken as part of the historical accounting. E., 9 Fl(E>(2).
-18-
. File a plan that anaiyzes, among other things, use of"industry production data bases"
in conjunctioii with an accounting. Id., 5 III(P).
Tho ..,,,..lrl ,4iwOn4 ,.,,,-A:+..,- - r l : - : d - . l C.->- - . J - - * .. I
_. -~~~ _._. ~ _._ ____ __. -__- r--r -.-_..... .,. U.U.VIIIwI.LY VI WWVWCLIIL IUL UVL abbuuiib
holders. To date, about $I 1 I million has been obligated for historical accounting activities. As of
Dccernber 3 1,2004, Interior has perfornied an accounting for 36,701 iudment accounts with balancca
-
and either closcd the account, converted the account to a proper account type, or had residual balances
in the account distributed to the proper parties. See Cason Decl. at 3 . And, consistent with annual
plan submitted in rcsponse to judicial order are subject to increase, a substantial body of records
exists upon which an accounting can be based, and the agencycontinues to seek the most cost-effective
redeployment of rcsources from thcse efforts.
Although the district court condemncd the govemmcnt for "setting the gold standard for
. - .-: _.--_-________ 4 ? * ~ ~ - - n - j z ~ 3 3 1 3 - s . . ' .
-.Lwnanybwu, vvwll Lnl LLI ~ I ~ ~ ~ ~ ~ ~ ~ ~ I I ~ WIICLIICI LIIC ~ U V G I I I I I I C I I L [lau ueiayea In mc perromanceof an
accounting was the 2002 contempt trial. Although the district court held Secretary Norton in contempt
and declared that she could take hcr nlare "in thr naiiih.-nn nr1tnGt tnlcte- AeI-<*n+fin '9 7 7 ~ r Q.----
“inconsistent” with a finding that Secretary Norton failed to “initiate an historical accounting project.”
334 F.3d at I 148. The district court’s rhetorical assaults are without basis in any record proceeding.
As noted, Interior has continued to make substantial progress toward the completion of account
statements. It has done so despitc the fact that the district court, from the commencement of thc
contempt proceedings in the fall of 2001, has purported to dictate the methods and content of its
accounting activities, precluding the USC of essential tools such as statistical sanipling, and imposing
requirements bearing no relation to available funding or congressional intent that finally prompted
Congress to enact Pub. L. 108-1 08. The govemnient is as eager as the district court to obtain an early
rcsolution of this appeal, so that it may proceed with discharging the responsibilities vested by
Congress i i i the Depfliiiciit of interior.
CONCLUSION
T!x district cairt’s Febrcary 23, 2005 iiijiiiiciion slioiiid be stayed pending appeai.
Respectfully submitted,
PETER D. F&ISLER
Assistant Attomcv Gene&
KENNETH L. WAINSTEIN
Actinc United States Atlomey
GREGORY G. KATSAS
Deputy Assistant Attorney General
ROBERT E. KOPP
MARK B. STERN
(202) 5 14-5089
Civil Divisioii, Room, 7 5 2
DeDartment of Justice
950 Pennsylvania Ave.. N x
Washin.gton. D.C. 20530
MARCH 2005
-20-
Pursuant to Circuit Rules 8 and 28(a)(l)(A), undersigned counsel certifies that the named
plaintiffs in this action are Elouise Pepion Cobell: Earl Old Person Pennv C'IP-hnm. TF.n--n
=- ______ ___ -vIIIIvI VVIIVI.YALUILIP u A lllulvluual L L I U I ~ ~ J ~ lvloneyk-.m") accounts, excluding those who
had filed their own actions prior to the filing of the complaint in this case.
-. . h - -
u -_--- -IHC)MAS M. BONDY
INDEX OF EXHIBITS
- Tab
District Court’s Memorandum and Order (Feb. 23,2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Declaration of Associate Deputy Secretary James E. Cason (Mar. 9,2005 j . . . . . . . . . . . . . . . . B
Department of Interior’s Historical Accounting Plan (Jan. 6,2003) ...................... C
Memorandum Opinion and Structural Injunction
Csbe!! v. NGrtGr,, 283 F. 3yp. 26 66 (D.D.C. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . s