The Obama administration said Tuesday that it would pay $1.4 billion to a group of American Indians who said the government mismanaged a century-old system of Indian land trusts.

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WASHINGTON — The Obama administration said Tuesday that it would pay $1.4 billion to a group of American Indians who said the government mismanaged a century-old system of Indian land trusts.

The payout, an effort to settle one of the nation’s epic lawsuits, is to be divided among more than 300,000 people, the descendants of Indians whom the government originally assigned plots of tribal land under an 1887 law. Many plots now are controlled by hundreds or even thousands of heirs, and a federal system designed to keep track of the claims and distribute revenues generated by the parcels has broken down.

“A shovelful of land becomes a trowel full,” said Washington state Rep. John McCoy, D-Tulalip, a Tulalip tribal member. “This has been a long time coming.”

Under the settlement’s terms, officials said, most individual Indian shareholders will receive a check for $1,000. Some could get more, however, if the judge decides they lost more money because of federal mismanagement. Some of the $1.4 billion also will be used to pay attorneys’ fees.

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The administration said it would spend an additional $2 billion to try to buy back sole ownership of the many plots and return the land to tribal control, one fraction at a time. A scholarship account of up to $60 million would be created for tribal members to attend college or vocational school.

The deal, announced by Interior Secretary Ken Salazar and Attorney General Eric Holder, ends a lawsuit that lasted 13 years, coloring the relationship between federal and tribal governments with a bitter reminder of the Indian Wars.

President Obama said settlement of the case, known as Cobell v. Salazar, was an important step to reconcile decades of acrimony between Indian tribes and the federal government.

“As a candidate, I heard from many in Indian Country that the Cobell suit remained a stain on the nation-to-nation relationship I value so much,” Obama said Tuesday in a written statement. “I pledged my commitment to resolving this issue, and I am proud that my administration has taken this step today.”

Cleveland presidency

The origin of the case goes back to the administration of President Cleveland, when Congress passed a law intended to push Indians toward a life of settled farming. Individual tribe members were allotted parcels from 40 to 160 acres, to be held in trust for 25 years. In most cases, the land never left government hands.

Today, the Interior Department manages more than 100,000 parcels of land, totaling more than 56 million acres, mainly on reservations in the West. When these lands are used for grazing, mining or drilling for oil or natural gas, the revenue is supposed to be split among its owners.

But the system quickly devolved into an intractable accounting mess.

The number of owners multiplied, because many Indians died without wills, and their children inherited equal ownership fractions. Today, the parcels are split up 4 million ways, with shares held by about 300,000 people.

To make things worse, government records were kept in poorly maintained warehouses, where some were destroyed by fire, floods or insects. Owners complained they were being paid irregularly, improperly, or not at all.

They filed suit in 1996. Since then, officials said, there have been of hundreds of motions, dozens of hearings, 192 days of trial proceedings, and multiple appeals to higher courts. And two judges: In 2006, an appeals court removed U.S. District Judge Royce Lamberth from the case, after finding that he appeared to be biased against the Interior Department.

The settlement must be voted on by Congress and formally approved by the new judge, James Robertson.

Asked about the lack of an apology for mismanagement of tribal lease payments for so many years, Tulalip member McCoy laughed. “The federal government doesn’t like to do that,” he said.

Information from Seattle Times staff reporter Lynda V. Mapes and The Associated Press is included in this report.

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