In a victory for the government in a long-running dispute with American Indians, a federal appeals court yesterday threw out most of a judge's plan for making the Interior Department...

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WASHINGTON — In a victory for the government in a long-running dispute with American Indians, a federal appeals court yesterday threw out most of a judge’s plan for making the Interior Department account for billions of dollars Indians say they are owed.

The appeals court told the judge he no longer could “micromanage” how the system is fixed, allowing Interior to propose a plan rather than create a recipe based on ingredients preordered from the bench. U.S. District Judge Royce Lamberth then would assess the result.

“Yet the court may not micromanage court-ordered reform efforts … and then subject defendants to findings of contempt for failure to implement such reforms,” Judge Stephen Williams wrote for a unanimous three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia.

Interior Deputy Secretary J. Steven Griles called the decision “a watershed victory for individual Indian account holders, for the Interior Department and its employees, for Congress, and for American taxpayers.”

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The ruling is the latest in an 8-year-old class-action lawsuit filed on behalf of more than 300,000 American Indians who demanded an accounting ordered by Congress in 1994. The plaintiffs allege the government mismanaged, misplaced or stole billions of dollars in oil, gas, timber and grazing royalties. Congress created an Indian trust fund in 1887 to manage revenues from parcels designated to each tribal member.

Lamberth ordered the accounting last year to find out how much the government owes. The ensuing struggle has prompted Lamberth to hold three Cabinet secretaries in contempt of court.