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American Indians living in Montana stand to receive about $27 million from the proposed settlement of a class action lawsuit that charged the federal government with mismanaging Indian trust accounts.

According to information supplied Wednesday by the Department of Interior Office of the Special Trustee, 18,158 Montanans have Individual Income Money accounts managed by the U.S. government. Money in those accounts comes from agricultural leases, timber sales, mining and oil and gas production on lands owned by tribe members.

If Congress and the courts sign off on the settlement, Montana Indians who have accounts will receive between $500 and $1,500, according to Debby Pafel, public affairs specialist for the Office of the Special Trustee. Most will probably receive $1,500. Some with high-income property may see significantly larger checks, she said.

Although the settlement agreement could be approved by the end of the year, it is not clear when payments will be distributed to tribe members.

The settlement was reached in a 13-year-old lawsuit filed by Indians from around the country on behalf of all present and past individual Indian trust beneficiaries. Lead plaintiff in the case was Elouise P. Cobell, a member of Montana’s Blackfeet Tribe.

Although the government continues to deny any wrongdoing, an agreement announced Tuesday would settle the lawsuit for about $3.4 billion. Of that, $1.4 million would be disbursed to IIM account holders. The remaining $2 billion would be used to consolidate tribal lands by purchasing “fractionated” land interests.

Fractionation is one of the root causes of the lawsuit, because it made accounting for land interests nearly impossible. In various allotment acts starting in 1887, reservation lands were divided into small parcels and allotted to individual tribal members. When an original allottee died, usually without a will, his or her land was divided among the heirs. Through successive generations, fractionation has rendered many of those interests so small that they are virtually worthless. They became a management nightmare, and the problem grew whenever land was passed on.

A few hundred people may have interest in a single parcel of land. Their income interest in the land may be only a few cents. No matter how small, the income goes into an IIM account for the individual owner, and the government must keep track of it.

The government and tribes have tried for years to find a way to consolidate those fractionated interest by buying the interest and putting the land in tribal ownership.

“The Indian Land Consolidation Office has been purchasing fractionated interests for years, but as a slower pace,” Pafel said. “Each year the office runs out of money before its runs out of people willing to sell.”

The Department of Interior manages more than 384,000 IIM accounts nationwide, plus more than 250 tribal accounts representing about 56 million acres of land. Nearly 131,000 of those accounts have balances of less than $15 and have had no activity for at least 18 months, and more than 73,000 receive less than $10 per year.

In Montana, the 18,158 people with IIM accounts have a total of 205,990 interests in 3,107 tracts of land.

Regardless of how much the accounts are worth, the settlement agreement will likely mean a $1,500 payment. The settlement divides account holders into two classes, and many IIM account holders fall into both.

The first category is the Historical Accounting Class, entitled to a $1,000 payment. According to definitions in the settlement agreement, members include anyone who had an IIM account between Oct. 25, 1994, and Sept. 30, 2009, and anyone whose account has at least one cash transaction at any time.

The second category is the Trust Administration class: anyone who has or had an IIM account in the Electronic Ledger Era starting in 1985 or anyone who can demonstrate ownership interest in trust land, regardless of the existence of an IIM and regardless of the proceeds, if any, from the land. Account holders in this category will receive $500.

Not all tribal members have IIM accounts or qualifying land interests, but thousands on Montana’s seven reservations will benefit.

Members of the Blackfeet Nation have a total of 3,721 accounts; the Crow have 3,089; the Fort Peck Tribes have 3,026; the Salish and Kootenai Confederation have 2,606; the Northern Cheyenne have 1,629; the Fort Belknap Community has 1,485; and the Chippewa Cree Tribe has 350. The remaining IIM accounts belong to people living in Montana, but who belong to tribes in other states.

Provisions in the agreement allow people who don’t like the settlement agreement to opt out. They are free to continue to press their own individual claims against the government.

Conrad Stewart, a senator in the Crow Tribal Legislature, urges tribal members to read and study the settlement agreement and make up their own minds. Overall, he said, he was pleased that the Obama administration was willing to negotiate.

“It does show that President Obama is putting Indian Country on top of his priority list,” he said. “He’s keeping his promises.”

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Stewart is also excited about the $2 billion for land consolidation efforts, though he’s not advising tribal members one way or another on whether they should sell their fractionated interests.

“This is a positive effort at moving something forward that’s been a priority for us for years,” he said.

Hubert Two Leggins, Crow cultural director and renewable resources co-op director, said he’s not opposed to tribal members selling their fractionated interests as long as the land is going to the tribe. But like many in Indian Country who own pieces of fractionated parcels, his interest in the land is more than its monetary value.

“I wouldn’t want to sell land I inherited from my grandfathers,” he said. “I have my kids and grandkids to think of.”

While many hold tiny interests in a small parcel of land, that piece of property represents a valued ancestral tie to their homeland. They have been unwilling, especially for the small sum their land interest would bring, to break that bond.

No one will be forced to sell their land interest, said Frank Quimby of the Office of Special Trustee. That could bring complications when owners of a fractionated piece of land disagree on whether to sell.

“If 100 people own a tract and 99 want to sell and one does not, we can’t buy the land,” Pafel said. “We recognize the fact that we can’t capture them all.”

The Cobell settlement isn’t the final solution to fractionation, Pafel said. Lands continue to be divided every time someone who owns an interest dies without a will.

“But there is great hope this is going to have a definite impact,” she said.

As an incentive to tribal members considering selling fractionated interests, the settlement ties sales to a $60 million scholarship fund for Indian students. For every fractionated interest purchased for $200 or less, $10 will go to the education fund; for every sale between $250 and $500, the fund will get $25; and for every purchase over $500, the fund will receive 5 percent of the purchase price.

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