WASHINGTON — The U.S. Interior Department must determine how much money should be in the government-run trust accounts held by individual Indians, a federal appeals court ruled Friday in the long-running legal battle over the trust system.

The District of Columbia Circuit Court of Appeals threw out a district judge’s award of $455.6 million in restitution to the Indian account holders and said the judge must order the Interior Department to do the best accounting possible with the money Congress is willing to spend on it.

The ruling was a victory for the Interior Department and a major defeat for the Indians, who sued the government in 1996 claiming their accounts were being mismanaged.

The appeals court said the Interior Department could focus its accounting on "low-hanging fruit” and ignore complexities that might be costly and time-consuming.

Elouise Cobell, the lead plaintiff in a case that has come to be known by her last name, said Friday the ruling would further delay a resolution in the case, perhaps for years.

"We will continue to seek justice, no matter how long that takes,” she said. "Tens of thousands of beneficiaries have died while this case has been pending without ever receiving an accounting of their trust assets.”

Betsy Hildebrandt, communications director for the Interior Department, declined to comment, saying the ruling was still being reviewed.

Judge wrong to abandon accounting

The accounts were established in 1887 — after land allotments to Indians — to hold the proceeds from leases on land owned by individual Indians for such activities as oil and gas drilling, grazing and timber cutting. There are more than 300,000 individual account holders, including about 53,000 in Oklahoma.

The appeals court said the law under which the Indians sued the government 13 years ago entitles the account holders to know how much should be in their accounts.

U.S. District Judge James Robertson had ruled that such an accounting would be impossible because of the complexity of accounts going back more than 100 years and because Congress had refused to appropriate the money for the accounting.

Instead, he sought to bring an end to a case that had been bogged down in bitter arguments for years and included contempt citations for high-ranking government officials and the removal of the first judge in the case.

After a trial last year, Robertson tried to find a fair figure to compensate the Indians for what he deemed the government’s violation of its responsibilities to properly manage the accounts.

But the appeals court said Robertson was wrong to throw up his hands and abandon a proper accounting of the money.

Without an accounting, the appeals court said, "it is impossible to know who is owed what. The best any trust beneficiary could hope for would be a government check in an arbitrary amount. Even if this did justice for the class, it would be inaccurate and unfair to an unknown number of individual trust beneficiaries.”

Indians sought billions

Though the Indians originally sued for an accounting, they have since argued much the same thing that Robertson did — that an accounting would be impossible. In fact, when that decision was issued in early 2008, Cobell called it a "great day.”

The Indians say too many records have been lost or destroyed and too many transaction errors have occurred over decades to come up with a trustworthy accounting. It was the Indians who appealed Robertson’s $456 million judgment; they argued that, including interest, the Indians were owed $47 billion.

The ruling Friday was a victory for the Interior Department because the department maintains there are very few discrepancies in the individual accounts it has already audited and that there was no justification for Robertson’s $456 million restitution order.

Also, the court told the government that it could take some shortcuts in doing the accounting, including doing statistical "sampling” for millions of transactions of less than $500 — something the government has argued it should be able to do.

Moreover, the court said the government could restrict its analysis to accounts going back only to 1938, rather than 1887 when the accounts were first created. And the court said the government did not have to deal with closed accounts.

"The purpose of an equitable accounting, as we have tried to articulate, is for Interior to concentrate on picking the low-hanging fruit,” the court said Friday. "We must not allow the theoretically perfect to render impossible the achievable good.”