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Cobell v. Norton

September 29, 2004

ELOUISE PEPION COBELL, ET AL., ON HER OWN BEHALF AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, PLAINTIFFS,
v.
GALE NORTON SECRETARY OF THE INTERIOR, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Royce C. Lamberth, United States District Judge

MEMORANDUM OPINION

This matter comes before the Court on the plaintiffs' motion for a preliminary injunction [2646], filed August 25, 2004. Oral argument was heard on August 31, 2004, at which time a temporary restraining order was granted; and the Court ordered the Interior defendants to submit a supplemental memorandum in opposition to the plaintiffs' motion, and the plaintiffs to submit a supplemental reply. The Interior defendants submitted their supplemental memorandum on September 8, 2004; the plaintiffs filed their supplemental reply on September 15, 2004.

In their supplemental reply memorandum, the plaintiffs discuss the Court's Order of December 23, 2002 (the "2002 Order"), which was issued pursuant to Rule 23(d) of the Federal Rules of Civil Procedure. They argue that the standard for relief under that rule, a "likelihood of serious abuses," is applicable and controlling of the current issue before the Court. Pl.'s Supp. Reply in Support of Mot. For Prelim. Inj., at 15-16. They also argue that the conduct of the Interior defendants giving rise to this dispute violates the 2002 Order. Given the arguments of the plaintiffs and the procedural posture of the case and current motion, the Court will treat the discussion in plaintiff's supplemental reply memorandum as a request that the Court find that Interior is in violation of the 2002 Order and for relief under Rule 23(d) as an alternative to a preliminary injunction.

Federal Rule of Civil Procedure 23(d) grants a district court presiding over a class action the authority to "impos[e] conditions on the representative parties" in order to prevent interference with the rights of class members and to protect the integrity of the class and of the proceedings. Cobell v. Norton, 212 F.R.D. 14, 20 (D.D.C. 2002); see FED. R. CIV. P. 23(d). Even if the plaintiffs had not impliedly requested this alternative relief, it is the Court's "duty" to issue a Rule 23(d) order to protect the integrity of the class action and the rights of class members. See Jack Faucett Assocs., Inc. v. AT&T Co., 1985 WL 25746 (D.D.C. 1985) at *5. Additionally, it is unquestionably within the power of the Court to enforce its 2002 Order against Interior if the Court finds that it has been violated.

Upon consideration of plaintiffs' motion, opposition thereto, the arguments of counsel, the applicable law, and the record in this case, the Court finds that the plaintiffs' motion for preliminary injunction should be DENIED AS MOOT, in light of the Court's conclusion that the Interior defendants have violated the 2002 Order and the relief granted. On the basis of this conclusion, a supplement to the 2002 Order shall issue pursuant to Federal Rule of Civil Procedure 23(d).

I. BACKGROUND

On September 20, 2002, the plaintiffs moved for a preliminary injunction to preclude the defendants' ongoing communications with members of the plaintiff class in the form of mailings from the Department of the Interior to individual Indians containing "Historical Statements of Account." These communications, the plaintiffs alleged in their motion, interfered with the rights of class members, beneficiaries of Individual Indian Money Trust Accounts ("IIM Accounts"), to receive a full and accurate accounting of their trust accounts from the Trustee Delegates, the Departments of the Interior and the Treasury. After hearing oral argument and requesting supplemental briefing, this Court granted the plaintiffs' amended motion for an order under Rule 23(d) of the Federal Rules of Civil Procedure that prevented the Interior defendants from communicating with class members regarding "this litigation, or the claims that have arisen therein, without the prior authorization of this Court." Cobell v. Norton, 212 F.R.D. 14, 20 (D.D.C. 2002). The Court explained that "[t]his restriction includes, but is not limited to, any communications that affect the rights of class members to a full and accurate accounting of their Individual Indian Money trust accounts." Id. at 24.

The 2002 Order was issued to prohibit the Interior defendants' practice of mailing historical statements of account to individual Indian trust beneficiaries that contained the following language:

If you have concerns about the Historical Statement of Account included with this letter or if you believe it is in error, you may wish to file a challenge with OHTA [the Office of Historical Trust Accounting].... If you do not challenge the historical account statement or request an extension within 60 calendar days of the postmark on the envelope containing this letter, the enclosed Historical Statement of Account will be final and cannot be appealed.... You may appeal OHTA's final response to the Interior Board of Indian Appeals (IBIA) by filing a Notice of Appeal with the IBIA within 30 calendar days of the date you receive OHTA's response. [emphasis in original].

The Court found that the mailings, all of which included this language, had "the effect of extinguishing the class members' rights to a full and accurate accounting after defendants have 'fixed the system.'" Cobell, 212 F.R.D. at 17. On the basis of that finding, the Court entered the Rule 23(d) order restricting future communications of this nature.

On July 30, 2004, the Department of the Interior's Anadarko Agency, a division of the Bureau of Indian Affairs ("BIA") that administers some of the Indian land that comprises the corpus of the trust, distributed an invitation to bid on 26 parcels of land in Oklahoma owned by Indian tribes and individual Indians at an auction to be held on September 1, 2004. Pl.'s Mot. for Prelim. Inj., Ex. 1 ("INVITATION FOR BIDS - SALE OF INDIAN LANDS") ("Invitation No. 69"). The parcels that were to be sold are situated in Caddo, Comanche, Cotton, Kiowa, Tillman, and Grady Counties. Fifty-eight individual Indian owners of trust lands filed 70 applications for sale of portions of the various parcels listed in Invitation No. 69. Upon learning of the pending sale, the plaintiffs filed their motion for a temporary restraining order and preliminary injunction. The Court granted the TRO pending a decision on the preliminary injunction, and the auction scheduled for September 1 was subsequently canceled by Interior. Def.'s Supp. Mem. in Opp., Ex. 4.

Invitation Number 69 is an example of one way in which Interior sells Indian lands -- by sealed-bid auction. This is not, however, the only way. First, under the same regulatory provision that authorizes sale of Indian land by auction, Interior may also broker negotiated sales of Indian land; and land owners may enter into transfers of Indian trust land in the form of gifts, other exchanges, or conversion to fee patent for retention or sale. Additionally, under the Indian Land Consolidation Act of 2000, 25 U.S.C. §§2201-09, and Interior's Indian Land Consolidation Plan enacted pursuant to that statute, Interior may acquire land from individual Indian owners to consolidate fractional ownership interests and thereby "lessen the number of owners." See Def.'s Supp. Mem. in Opp. At 17 n.18; Dept. of Int. Stat. Rep. to Ct. No. 13, at 79 (May 2003).

As of the date that Invitation Number 69 was issued, 93,184 allotted land interests had been sold by their holders through Interior's Indian Land Consolidation Plan. Dept. of Int. Stat. Rep. to Ct. No. 18, at 53 (Aug. 2, 2004). Interior recently conducted a survey that showed some 1,660 or more applications for sale of an interest in allotted land that have been approved by the Secretary pursuant to the regulations governing sales by auction or negotiation, but that have not yet been sold. See Goodwin Decl. ¶6. Roughly 5 percent (around 80) of these approved applications are for sale by bid invitation, with the rest set for negotiated sale. Id.

Sales of allotted land interests by auction or negotiation are governed by provisions set out in 25 C.F.R. § 152. Part 152 allows individual Indians to file formal applications with Interior for the sale of trust land. 25 C.F.R. § 152.18. Part 152 allows for the sale of trust land by bid invitation or negotiated sale brokered by Interior, see 25 C.F.R. §§ 152.25, 152.26, as well as by exchange, other conveyance, or conversion to fee patent with the approval of the Secretary. See 25 C.F.R. §§ 152.17; 152.4. All sales of Indian lands under Part 152 require approval of the Secretary. See 25 C.F.R. §§ 152.4; 152.17; 152.23. For a sale, exchange, or other conveyance, approval may be obtained: (1) from the Secretary for action by the owner; or (2) from the owner for action by Interior. 25 C.F.R. § 152.17. Fee patent conversion also requires approval by the Secretary. 25 C.F.R. § 152.4.

For sale by negotiated contract or auction, as in the case of Invitation No. 69 discussed above, the individual Indian owner must submit a special application to Interior, which is then approved if the Secretary determines that, "after careful examination of the circumstances in each case, the transaction appears to be clearly justified in light of the long-time best interest of the owner or owners ...." 25 C.F.R. § 152.23. The regulations also provide that no sale may be completed until the property has been appraised. 25 C.F.R. § 152.24. In the case of a sale by auction, bids lower than the appraised value of the property may be accepted by Interior only if the highest bid "approximates said appraised fair market value" and the Secretary concludes that the land is unlikely to bring a higher price under the circumstances. See 25 C.F.R. § 152.28(b). For other types of transfers authorized by Part 152, sales of land at lower than fair market value are generally not allowed unless the transaction is between relatives or individuals with a close personal relationship. See 25 C.F.R. §§ 152.25(a); 152.25 (c)-(d).

The common feature of all these kinds of Part 152 sales is that they require communication between individual Indian trust-land owners and agents of Interior. The plaintiffs claim that these communications, whether in the form of formal applications for sale by auction or negotiated contract brokered by Interior, or requests for approval of other types of sales or exchanges, violate this Court's 2002 Order. The plaintiffs allege that, though Part 152 requires that an appraisal be performed before any sale is consummated, there are instances in which Indian land is sold with no appraisal at all, making it possible that trust lands are being sold at below market value. Furthermore, plaintiffs claim that some owners' applications, which constitute their consent to sales by Interior, are out of date -- that is, they were signed years before Interior took any action to sell the land in question.

It is unnecessary to give a detailed account of the numerous flaws the plaintiffs cite in the application and authorization process, evidenced by the written documentation for Invitation No. 69 alone -- a few examples will suffice to illustrate the plaintiffs' concerns. First, in the case of parcel "Kiowa # 669," (number 20 on Invitation No. 69), the beneficial owner of the tract submitted a request that the land be sold to Interior's Bureau of Indian Affairs ("BIA") in 1997. In 1998, an auction was held, a bid was received, and the owner was notified of the receipt of the bid. Later that year, the BIA notified the owner that it had cancelled the sale, and the owner never reapplied for sale of the land. The owner now attests that he or she does not want to sell the land; but it nevertheless appears on the list of parcels up for auction in Invitation No. 69. See Aff. of Guest, ¶ 6 (Pl.'s Supp. Reply, Ex. 3).

Second, in the case of the parcel designated "Comanche 762" (number 11 on Invitation No. 69), the landowner, according to records furnished to plaintiffs by Interior, did not know that his or her land was part of the auction and had never submitted the required application to include the parcel in the auction advertised ...


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