Feds to pay $940M to settle claims over tribal contracts

ALBUQUERQUE, N.M. -- The Obama administration has agreed to pay hundreds of Native American tribesnearly $1 billion to settle a decades-old claim that the government failed to adequately compensate tribes while they managed education, law enforcement and other federal services.

The Interior Department announced the proposed $940 million agreement in Albuquerque on Thursday along with leaders from the Oglala Sioux Tribe, Zuni Pueblo and Ramah Chapter of the Navajo Nation. They were among the lead plaintiffs in a contract-dispute lawsuit filed on behalf of more than 600 tribes and tribal agencies. They brought the case in 2012 before the U.S. Supreme Court, where justices ruled for the tribes.

They had argued underfunded federal contracts dating as far back as the 1970s often left them to face shortfalls as they tried to meet critical needs in their communities, ranging from health services to housing.

The settlement still must be approved in federal district court.

"Deep and painful cuts were made every year," said Val Panteah, governor of Zuni Pueblo, resulting in what he described as "a financial death spiral" for his community in eastern New Mexico. He said poverty, inadequate health care and education present major challenges for the pueblo.

Oglala President John Yellow Bird Steele said the $940 million negotiated with the government was a fair settlement for tribes.

The Interior's proposed payout would represent the latest in a series of recent major settlements addressing years of legal disputes between tribes and the federal government.


"When the plaintiffs in this case forced the administration to confront an issue that had festered for decades, the administration embraced the principle that the plaintiffs won in court," said Kevin Washburn, the Interior Department's Assistant Secretary for Indian Affairs. "We have fully funded these costs ever since."

Interior Secretary Sally Jewell said she expected the case would be fully settled in 2016 if there aren't appeals. After that, tribes that file for compensation under the settlement could receive funds within a month of filing their claim, according to lawyers for the tribes.

More than 600 tribes and their agencies are members of the plaintiff class in the lawsuit.

At a minimum, a tribe could be compensated $8,000 for a year of underpaid contracts as part of the lawsuit, said Michael Gross, a lawyer for the Oglala Sioux Tribe and Zuni Pueblo in the case.

The Navajo Nation stands to gain $58 million -- the largest sum for a single plaintiff under the settlement -- in light of claims federal agencies shorted the tribe on contracts for nearly a decade.

Unlike the $3.4 billion Cobell settlement -- named for Elouise Cobell of Browning, Montana -- Congress does not have to approve the settlement. Instead, the money would come from a judgment fund of the Treasury Department, Washburn said.

In the Cobell case settled in 2010, the government was sued for lost royalties owed to generations of individual Indian landowners.

It remains the largest government settlement in U.S. history, while a $554 million settlement last year with Navajo Nation leaders over mismanagement of resources on the sprawling, 27,000-square-mile reservation is the government's largest agreement of its kind with a single tribe.

"From the tribes' perspective, underfunding of contract costs is another broken promise," Washburn said.

Since 1975, tribes have been able to opt into federal contracts under the Indian Self-Determination Act, gaining oversight of Bureau of Indian Affairs programs meant to fulfill the government's trust obligations to Native Americans established through treaties and other agreements.

The policy change ended an era of broad BIA oversight on reservations and gave control of critical programs totribes.

"We started gaining control of our own destiny. But the federal government found a way to undermine us on this process too" said Panteah of Zuni Pueblo. "The BIA blamed Congress. Congress blamed the president. And we were stuck in the middle."