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Cobell v. Norton

December 3, 2004

ELOUISE PEPION COBELL, ET AL., APPELLEES
v.
GALE A. NORTON, AS THE SECRETARY OF THE INTERIOR AND AURENE M. MARTIN, ACTING ASSISTANT SECRETARY OF THE INTERIOR FOR INDIAN AFFAIRS, APPELLANTS



Appeals from the United States District Court for the District of Columbia (No. 96cv01285)

Before: Ginsburg, Chief Judge, and Randolph and Rogers, Circuit Judges.

The opinion of the court was delivered by: Rogers, Circuit Judge

Argued September 14, 2004

The Secretary of the Interior and others ("the Secretary") appeal the preliminary injunction of March 15, 2004, which superseded and replaced an injunction of July 28, 2003, and required disconnection of substantially all of the Department of the Interior's computer systems from the Internet. Cobell v. Norton, 310 F. Supp. 2d 77 (D.D.C. 2004) (" Cobell XI "). The injunction also requires the Secretary to submit a plan for secure reconnection of Interior's computer systems. In Cobell v. Norton, 240 F.3d 1081 (D.C. Cir. 2001) (" Cobell VI "), the court affirmed the district court's finding of a breach of fiduciary duty by the Secretary of the Interior and the other defendants, as trustees of funds held in trust for individual Native Americans (hereafter, "Indians"), in failing to provide an accurate accounting. On remand, the district court entered several injunctive orders mandating Interior to disconnect its computers from the Internet in light of concerns about the security of individual Indian trust data ("IITD"), which are the basis for accounting for Indian funds and are housed on an unknown number of Interior's computer systems. On appeal from the latest injunction entered March 15, 2004, the Secretary contends that the district court exceeded its lawful authority and, alternatively, lacked a factual predicate for the injunction.

We hold, contrary to the Secretary's contention, that issuance of the March 15, 2004 injunction is not precluded by Pub. L. 108-108, 117 Stat. 1241, 1263 (2003), which applies only to "historical accounting activities." As the district court noted, "Interior's present obligation to administer the trust presents sufficient grounds for finding that Plaintiffs will be irreparably injured." Cobell XI, 310 F. Supp. 2d at 96 n.27. We further hold that the district court's jurisdiction properly extends to security of Interior's information technology systems ("IT") housing or accessing IITD, because the Secretary, as a fiduciary, is required to maintain and preserve IITD. We nevertheless vacate the injunction because the district court erred by placing the burden of persuasion upon the Secretary, disregarding Interior's certifications on the state of IT security, and failing to hold an evidentiary hearing prior to entering the injunction.

I.

The underlying litigation concerns individual Indian money accounts ("IIM"), which collectively form a trust established by the General Allotment Act in 1887 for the benefit of American Indians.*fn1 The trust corpus consists of the revenues derived from land that was carved out of pre-existing Indian reservations under the 1887 Act. See generally Cobell VI, 240 F.3d at 1086-88. In 1994, after decades of mismanagement of the trust by the Interior and Treasury Departments, the Secretaries of which serve as trustees for the trust, Congress enacted the Indian Trust Fund Management Reform Act ("1994 Act"), Pub. L. No. 103-412, 108 Stat. 4239 (1994), which requires the Interior Secretary, among other things, to "provid[e] adequate systems for accounting for and reporting trust fund balances." Cobell VI, 240 F.3d at 1089-90; 25 U.S.C. § 162a(d)(1). In 1999, the district court found a breach of fiduciary duty by the Secretary, and ruled that, pursuant to the 1994 Act, the Secretary must provide "an accurate accounting of all money in the IIM trust," and establish written policies for the "computer and business systems architecture necessary" for an accurate accounting. Cobell v. Babbitt, 91 F. Supp. 2d 1, 58 (D.D.C. 1999) (" Cobell V ").

This court affirmed, although holding in Cobell VI that "the actual legal breach [by the Secretary] is the failure to provide an accounting, not failure to take the discrete individual steps that would facilitate an accounting." 240 F.3d at 1106. Noting Interior's stipulation that it was unable to meet the requirements of "numerous provisions" of the 1994 Act, the court observed that "the federal government will be unable to provide an adequate accounting without computer systems, staffing, and document retention policies that are adequate for the task." Id. The court also stated there was "no need to alter the district court's order [in Cobell V ]" because while:

[t]he level of oversight proposed by the district court may well be in excess of that countenanced in the typical delay case ... so too is the magnitude of government malfeasance and potential prejudice to the plaintiffs' class....

... [Accordingly,] the [district] court should not abdicate its responsibility to ensure that its instructions are followed. This would seem particularly appropriate where, as here, there is a record of agency recalcitrance and resistance to the fulfillment of its legal duties.

Id. at 1109 (citing In re Center for Auto Safety, 793 F.2d 1346, 1354 (D.C. Cir. 1986)). The court added: "[n]onetheless, we expect the district court to be mindful of the limits of its jurisdiction." Id. at 1110.

On remand, as relevant here, the district court, in light of the Special Master's recommendation regarding inadequate IT security of IITD, granted the plaintiffs' motion for a temporary restraining order on December 5, 2001, requiring Interior "immediately [to] disconnect from the Internet" its IT systems housing or accessing IITD. See Cobell v. Norton, 274 F. Supp. 2d 111, 113 (D.D.C. 2003) (" Cobell IX "). The plaintiff also moved for a preliminary injunction and an order to show cause why the Secretary and counsel for the Secretary should not be held in contempt. With the consent of Interior, the district court on December 17, 2001, entered a Consent Order providing that "Interior shall not reconnect any information technology system to the Internet without the concurrence of the Special Master," and "the Special Master shall verify compliance with this Consent Order...." Id. at 114. The relationship between the Special Master and Interior in carrying out the Consent Order apparently operated effectively, with almost 95 percent of Interior IT systems being reconnected within one year, Cobell XI, 310 F. Supp. 2d at 82, until April 2003, when the Special Master and his contractor attempted to recheck whether computers recently found vulnerable were secure against unauthorized Internet access, id. The Special Master suspected that an Interior employee had frustrated the "penetration" of the vulnerable computers by providing advance warning to the computer administrator. Cobell IX, 274 F. Supp. 2d at 114-24. This dispute escalated and resulted in the breakdown of the relationship between the Special Master and Interior and its attorneys from the Justice Department. See generally id.

On June 26, 2003, the plaintiffs filed a motion for a temporary restraining order and a preliminary injunction to mandate the Secretary to disconnect from the Internet all Interior computers and IT systems that house or access IITD until the Special Master certified that all the data was properly secured. Id. at 119. Following a hearing, the district court entered a temporary restraining order, modifying the order in light of Interior's suggestions. Interior, while protesting entry of any order, stated that it was willing to work things out with the Special Master. Id. at 120. Soon thereafter, however, Interior requested that " `Special Master Balaran ... be disqualified from acting in any capacity in this case.' " Id. at 124. Following a hearing on July 28, 2003, the district court entered a preliminary injunction, and stayed the Consent Order. Id. at 133. The July 28, 2003 injunction called for disconnection of all Interior computers from the Internet, except: (1) "those essential for protection against fires or other threats to life or property;" and (2) those that [Interior] certified "in accordance with Rule 11 of the Federal Rules of Civil Procedure," were secure from unauthorized Internet access or did not house or access IITD. Id. at 135-36. In light of Interior's objection to any further involvement by the Special Master in determining the security of Interior's IT systems, the district court decided to make the determinations itself. Id. at 133. The Secretary appealed.

In the interim, on August 11, 2003, the Secretary filed certifications on the state of IT security in response to the July 28, 2003 injunction. On March 15, 2004, the district court entered a preliminary injunction that "supersede[d] and replace[d]" the July 28, 2003 injunction. Cobell v. Norton, 310 F. Supp. 2d 98, 99 (D.D.C. 2004) (" Cobell XI (Order) "). The March 15, 2004 injunction called for disconnection from the Internet of all Interior computers, with exceptions for (1) systems essential to protect against fire or other threats to life or property, and (2) IT systems of the National Park Service, the Office of Policy Management and Budget, and the United States Geological Survey. Id. at 100-01. The injunction further provides for reconnection if the Secretary submits and the court approves a suitable proposal. Id. at 101. In issuing the injunction, the district court rejected the Secretary's certifications as "procedurally and substantively defective," finding they "were not properly subscribed as true as required by local rule and statute and the very Interior officials who drafted the reports simultaneously gave conflicting information to other government agencies such as the Office of Management and Budget and the General Accounting Office stating that Interior's IT systems were in fact vulnerable." Cobell XI, 310 F. Supp. 2d at 83. Further, the district court found the Secretary's proposal for reconnections unsatisfactory, essentially because past experience indicated the Secretary and Interior's closely-aligned contractor could not be relied upon to do an adequate job. Id. at 86-95. The district court, however, emphasized in its accompanying memorandum ...


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