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

The Obama administration has agreed to pay almost $1 billion to a group of Native American tribes — ending a decades-long battle for compensation from the government to cover the costs of mandated federal programs on reservations.

Interior Secretary Sally Jewell and Justice Department officials announced the proposed class-action settlement Thursday in a press conference call along with leaders from the Oglala Sioux Tribe, Zuni Pueblo and Ramah Chapter of the Navajo Nation.

“This landmark settlement represents another important step in the Obama Administration’s efforts to turn the page on past challenges in our government-to-government relationship with tribes,” Interior Secretary Sally Jewell said in a press release. “Tribal self-determination and self-governance will continue to be our North Star as we navigate a new chapter in this important relationship, and we are committed to fully funding contract support costs so that tribal contracting can be more successful.”

“Today’s announcement resolves past claims and allows money wrapped up in litigation to be used more productively,” she added.

The $940 million payout is the latest in a series of settlements resulting from a 2012 Supreme Court decision that ruled in favor of the tribes in a long-running dispute over shortfalls in federal funding for tribal programs. The settlement must still be approved in federal district court.

The tribes first filed their lawsuit in 1990 in the New Mexico Federal District Court. After losing, they appealed and the case moved to the Supreme Court, which ultimately ruled that the federal government was responsible for all costs associated with federal programs on reservations.

In 1975, the Indian Self-Determination and Education Assistance Act (ISDA) transferred responsibility to tribes to administer programs that were otherwise provided to Native communities by the federal government — while maintaining federal funding of those programs.

Those services included law enforcement, road maintenance, housing and education, a press release from the Department of Interior said.

While funding for the programs was maintained, contract support costs — including audits, liability insurance and personnel systems — were often not fully covered, according to a 2011 cert petition by the tribes filed with the Supreme Court.

In 1988, Congress amended the ISDA to require contract support costs to be covered and negotiated on an annual basis — but with the important caveat that those funds would be “subject to the availability of appropriations,” the petition said. That made appropriations for contract support costs subject to Congress’ annual funding decisions.

Beginning in fiscal year 1994, and each year since then, Congress imposed a cap on appropriations available to pay contract support costs, the petition added.

It is undisputed that these appropriations caps have restricted the available funds at a level “well below the sum total” required for the Bureau of Indian Affairs to cover all contract support costs, the tribes said in their petition. 

The tribes argued that the government was not providing enough money to cover all the costs under the ISDA, and that the underfunded contracts meant tribes faced shortfalls that affected their abilities to adequately govern their communities.

“The Department of Justice is pleased that the parties have reached an agreement to finally resolve this litigation that has spanned four administrations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer. “This agreement was long in the making — each only after years of complex negotiations — and both sides can be proud of the result.”

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

At a minimum, a tribe could be compensated $8,000 for a year of underpaid contracts as part of the lawsuit. However, numerous tribes could expect to receive six- to seven-figure payouts, said Michael Gross, a lawyer repesenting the Oglala Sioux Tribe and Ramah Navajo Chapter in New Mexico.

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 numerous 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.

With wire services