Cobell v. Salazar: The $3.4 Billion Indian Trust Settlement

The Cobell v. Salazar settlement was a $3.4 billion agreement, ratified by Congress in the Claims Resolution Act of 2010, that resolved a class action brought on behalf of more than 500,000 Native Americans whose Individual Indian Money trust accounts and allotted lands had been mismanaged by the federal government for more than a century.¹ The money was split two ways: $1.5 billion in direct payments to class members and $1.9 billion to buy back fractionated land interests and return them to tribal trust ownership.²

What the Lawsuit Was About

Elouise Cobell, a member of the Blackfeet Nation and former treasurer of her tribe, filed the class action in the U.S. District Court for the District of Columbia in 1996.¹ At issue were the Individual Indian Money (IIM) accounts held by the Department of the Interior. When allotted Indian lands produced income from oil and gas leases, timber sales, grazing permits, and other resource activity, Interior collected the money and was supposed to deposit it into IIM accounts on behalf of the individual landowners.

As trustee, the government owed a fiduciary duty to manage the money, keep accurate records, and distribute royalties. Records dating to the 1880s were incomplete, damaged, or missing altogether, and by the time the case was filed, many account holders had no way to know what they were owed. The lawsuit also confronted fractionation: when an original allottee died, the land interest was divided among heirs, and over generations a single parcel could carry dozens or hundreds of co-owners, each holding a tiny share.

After nearly 15 years of litigation, both sides accepted that a complete historical accounting was impossible. That pushed the parties toward settlement, reached on December 7, 2009 and ratified by Congress the following year.

How the $3.4 Billion Was Divided

The settlement created two main pots of money. The first, $1.5 billion, went to direct payments for class members. Within that, $1.4 billion funded the Accounting/Trust Administration Fund, and a separate $100 million supported the Trust Administration Adjustment Fund.¹ Rather than attempting to reconstruct individual losses, the settlement used flat payments and formula-based distributions.

The second pot, $1.9 billion, created the Trust Land Consolidation Fund, better known as the Land Buy-Back Program for Tribal Nations. It paid willing individual owners fair market value for their fractional interests and placed those interests in trust for the tribe where the land was located.³

Who Was Paid and How Much

Eligibility ran to anyone who held an IIM account or an interest in trust land as of September 30, 2009. Class members fell into one of two groups, with different payment structures.

Historical Accounting Class

This class covered everyone who held an IIM account. Each member received a flat $1,000 payment to resolve claims tied to the government’s failure to provide a historical accounting of their trust funds.¹

Trust Administration Class

This class covered people with land interests or specific claims about how the government administered their trust. Members received a base payment of $500 plus additional amounts calculated by a formula that weighted the estimated value of each person’s account activity. Class members whose records supported a better estimate of potential losses received larger shares, and the $100 million Trust Administration Adjustment Fund supplemented those payments.¹

The first checks went out in December 2012. Distribution was difficult. The same record-keeping failures that had caused the lawsuit meant that tens of thousands of class members had no current address on file with the government. Payments owed to minors were deposited into restricted IIM accounts, accessible when the account holder turns 18.⁴

Heir Claims and the Scholarship Fund

Many class members died before payments were distributed, so the settlement built in a process for heirs. To claim a deceased account holder’s share, an heir had to submit proof of heirship, such as a state or tribal probate order, documentation appointing an estate executor, or a federal probate order directing distribution of trust assets.⁵

The deadline for heirs to submit documentation was June 30, 2025.⁶ Under the settlement, funds still unclaimed after that date flow to the Cobell Education Scholarship Fund, managed by Indigenous Education, Inc.⁷ The scholarship fund also received up to $60 million from the Buy-Back Program under a formula written into the settlement, and it supports higher education for Native American students.⁸

What the Land Buy-Back Program Accomplished

The Buy-Back Program launched in December 2012 and ran for a full decade before closing on November 24, 2022.³ By the end, it had returned nearly 3 million acres of fractionated land to tribal trust ownership, spending $1.69 billion to purchase interests from more than 123,000 individual sellers. The program worked with more than 50 tribes across 15 states.⁹

Fractionation was not eliminated. The problem had been compounding for well over a century, and $1.9 billion could only reach part of it. The consolidation did, however, make large tracts of land manageable again for tribal governments.

Taxes on the Payments

Settlement payments to class members were excluded from gross income for federal tax purposes. The Claims Resolution Act of 2010 wrote that exclusion directly into the statute.¹⁰ Class members owed no federal income tax on what they received. Interest earned on the money after it was paid out is a separate question, and would be treated like any other investment income.

Elouise Cobell

Elouise Cobell, known in the Blackfeet language as Yellow Bird Woman, did not live to see the full distribution of the settlement. She died on October 16, 2011, months after a federal court gave final approval to the agreement in June 2011. Before filing the lawsuit, she had served as treasurer of the Blackfeet Nation, where she first saw the accounting failures that became the foundation of her case. She fought cancer while pursuing the lawsuit for 15 years, and the settlement bears her name for that reason.

1
U.S. Government Publishing Office. Public Law 111-291 – Claims Resolution Act of 2010
2
U.S. Department of the Interior. Consultations on Cobell Trust Land Consolidation
3
U.S. Department of the Interior. Land Buy-Back Program for Tribal Nations
4
eCFR. IIM Accounts – Minors, 25 CFR Part 115 Subpart C
5
Cobell v. Salazar Indian Trust Settlement. Indian Trust Settlement – Heir Claims
6
Cobell v. Salazar Indian Trust Settlement. Frequently Asked Questions – Indian Trust Settlement
7
Cobell v. Salazar Indian Trust Settlement. Indian Trust Settlement
8
U.S. Department of the Interior. Cobell Education Scholarship Fund
9
U.S. Department of the Interior. Three Million Acres of Land Returned to Tribes Through Interior Department’s Land Buy-Back Program
10
Congress.gov. H.R.4783 – Claims Resolution Act of 2010