In a victory for the government in a long-running dispute with Native Americans, a federal appeals court yesterday threw out most of a judge's plan for making the Interior Department account for billions of dollars the Indians say they are owed.
The appeals court told U.S. District Judge Royce C. Lamberth that he could no longer "micromanage" how the system gets fixed.
 
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The ruling means Interior can propose its own plan rather than create a recipe based on ingredients pre-ordered from the bench. Lamberth then would assess the result.
"Yet the court may not micromanage court-ordered reform efforts . . . and then subject defendants to findings of contempt for failure to implement such reforms," Judge Stephen Williams wrote for a unanimous three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit.
Deputy Interior Secretary J. Steven Griles called the decision "a watershed victory for individual Indian account holders, for the Interior Department and its employees, for Congress and for American taxpayers."
The department "has invested hundreds of millions of dollars on this issue since this lawsuit was filed back in 1996," he said in a statement. The department "has conducted more than 30,000 intricate accountings of individual Indian money accounts, found almost no discrepancies exceeding $1, and no evidence of systemic accounting irregularities."
Lamberth ordered the accounting from the Interior Department last year to find out how much the government owes more than 300,000 Indians from mismanaged oil, gas, timber and grazing royalties going back more than a century.
He and department officials have grappled repeatedly. In 1999, Lamberth found President Bill Clinton's interior and Treasury secretaries, Bruce Babbitt and Robert E. Rubin, in contempt for failing to turn over documents. He also has found the current secretary, Gale A. Norton, in contempt of court for failing to follow his orders.
"Rather than acting to assure that 'agency action' conforms to law, the court has sought to make the law conform to the court's views as to how the trusts may best be run," Williams wrote.
Interior officials had complained that such an extensive historical audit could cost up to $12 billion. At the urging of the White House, Congress intervened in November 2003 and passed legislation that prevented an accounting from going forward until Congress had defined the scope and methods to be used.
Congress did that by adding language to the Interior budget bill that expires at the end of this month.
Interior officials have said Lamberth lacked authority to issue his order for the accounting last year because there was no evidence of "unreasonable delay" by the government. They have said they could provide a full accounting by 2008 at a cost of $335 million, with use of a statistical technique known as sampling.
The appeals judges already had upheld Lamberth's finding that Interior officials had breached their duties. Their latest order topples Lamberth's plan to establish a September 2007 deadline to account for the money and his decision to forbid the use of statistical sampling.
The budget provision, Williams wrote, "appears to give Interior temporary relief from any common law or statutory duty to engage in historical accounting."
Despite the provision's temporary nature, attorneys for the Indian plaintiffs in the case had offered "no reason overcoming the usual principle that a court is to apply the law in effect at the time the court rules," the appeals judges agreed.
Dennis Gingold, an attorney for the Indian plaintiffs, cast the decision in a positive light. "We're very pleased that the court of appeals ruled that Interior must fix the system rather than just provide a historical accounting, and that Judge Lamberth has full authority to fashion an equitable remedy," he said.
Gingold also said he was pleased that the appeals court recognized that the plaintiffs have the right to 117 years of interest earned from the multibillion-dollar case.
The ruling is the latest in a huge eight-year-old class-action lawsuit filed in 1996 on behalf of more than 300,000 Indians, who demanded an accounting that had been ordered by Congress two years earlier.
The plaintiffs allege that the government mismanaged billions of dollars in oil, gas, timber and grazing royalties that it had a duty to manage. Congress created a trust fund in 1887 to manage revenues from parcels for individual tribal members.
Associated Press writer Sam Hananel contributed to this report.
