The Indian Trust Fund, or Cobell Settlement Act, is part of the Claims Settlement Act of 2010 that covers the disbursement of funds agreed to in the settlement of a class action suit, Cobell v. Salazar. The act authorizes the federal government to disburse funds arising from the $3.4 billion settlement of this suit, which accused the government of mishandling funds and accounts set up to deposit income generated from the leasing of Indian land held in trust.
Over the course of several decades, the Department of the Interior misplaced or mishandled numerous Individual Indian Money accounts and it failed to deposit funds. It also failed to establish a system to manage and administer the land it held in trust for thousands of Indians. From the $3.4 billion settlement, $1.9 billion is reserved for a Trust Land Consolidation Fund, while $1.5 billion is reserved for a Trust Accounting and Administration Fund.
The Trust Land Consolidation Fund is to be used to purchase fractionated land from willing sellers and return it to the tribes. Fractionated land is a parcel for which ownership shares have become so small after successive divisions among heirs of previous owners as to become useless or unsalable. The agreement calls for $60 million from this fund to be set aside for an Indian Education Scholarship fund to provide educational and vocational opportunities to Indian youths.
The Trust Accounting and Administration Fund is reserved for making payments to individual Indians and their estates whose accounts were lost or mismanaged by the Department of Interior. There are an estimated 500,000 individuals affected by the settlement who may be eligible to receive payments from this fund.