JEFFREY BROWN: Next, a very different challenge for the federal government, this one in the Black Hills of South Dakota.
Hari Sreenivasan tells the story.
HARI SREENIVASAN: It's August on the Pine Ridge Indian Reservation in western South Dakota, and the annual powwow is in full swing. The celebration is a highlight for the Oglala Sioux tribe, bringing together thousands of Native Americans to sing, dance and honor their traditional culture.
Tonight's good cheer, however, is in stark contrast to everyday life in one of the most difficult places to live in the United States. Few people in the Western Hemisphere have shorter life expectancies. Males, on average, live to just 48 years old, females to 52. Almost half of all people above the age of 40 have diabetes.
And the economic realities are even worse. Unemployment rates are consistently above 80 percent. In Shannon County, inside the Pine Ridge Reservation, half the children live in poverty, and the average income is $8,000 a year.
But there are funds available, a federal pot now worth more than a billion dollars. That sits here in the U.S. Treasury Department waiting to be collected by nine Sioux tribes. The money stems from a 1980 Supreme Court ruling that set aside $105 million to compensate the Sioux for the taking of the Black Hills in 1877, there an isolated mountain range rich in minerals that stretched from South Dakota to Wyoming.
The only problem: The Sioux never wanted the money because the land was never for sale.
MARIO GONZALEZ, Oglala Sioux: The Black Hills are very important to the Sioux Indian tribes because they are the spiritual center of the Sioux people.
HARI SREENIVASAN: For tribal attorney Mario Gonzalez, the compensation fund is the embodiment of Indian mistreatment by the U.S. government, and the taking of the Black Hills was the gravest sin of all.
MARIO GONZALEZ: The Sioux tribes have always maintained that that confiscation is illegal and that the tribes must have some of their ancestral lands returned to them.
HARI SREENIVASAN: Compared to the natural resource-rich Black Hills, the reservations the Sioux were relegated to are mostly dry, desolate landscapes. Shannon County has one of the lowest per capita incomes in the United States.
MARIO GONZALEZ: At one time, the Sioux Indians were a wealthy people. And they had a place here that satisfied all their needs.
HARI SREENIVASAN: The land dispute dates back to 1868, when the U.S. signed a treaty at Fort Laramie that set aside the Black Hills as part of the Great Sioux Reservation.
But when gold was discovered in the hills a few years later, the floodgates opened, and Western pioneers poured in, and the Fort Laramie Treaty was broken.
ROSS SWIMMER, former special trustee for American Indians: There's a long history of treaties having been made with Indian tribes that were broken. Some would say that no treaty was ever kept with an Indian tribe.
HARI SREENIVASAN: Ross Swimmer served as a special trustee for American Indians during the George W. Bush administration.
ROSS SWIMMER: It's been a psychological issue for all the Sioux tribes all this time. And much of that land is still owned by the federal government. And so the tribes are simply saying, well, wait a minute. You took our land. We want the land back.
HARI SREENIVASAN: From 2003 to 2009, Swimmer oversaw the Black Hills trust account, one that grew substantially from the initial $105 million settlement.
ROSS SWIMMER: Tribal moneys invested have to be in basically government securities or better, where there is no danger of loss. Well, 30 years later, it's worth $1 billion, so not a bad return.
HARI SREENIVASAN: But the Sioux say that money is far less than what the land is worth. The Black Hills are a major draw for tourists, helping to promote an industry that generates over $2 billion of economic activity every year for the state of South Dakota.
And there are still questions on the best way to distribute the billion dollars. Any compensation money for the Sioux would mainly be distributed on a per capita basis.
ROSS SWIMMER: If you have got 100,000 Sioux and $1 billion, you're talking about $10,000 a piece or something. That goes pretty fast.
MARIO GONZALEZ: That type of plan is unacceptable to the Sioux tribes, because when you give out per capita payments, the money is gone in a year or two, and then the tribes still end up with nothing to show for their ancestral lands.
HARI SREENIVASAN: After more than 130 years of standoff over what the U.S. government owes the Sioux, President Obama's election to office appeared to provide an opening.
PRESIDENT BARACK OBAMA: I am absolutely committed to moving forward with you and forging a new and better future together.
HARI SREENIVASAN: The president said he would meet with the Sioux tribes on the Black Hills land claim, the first to do so. Obama said the nine tribes must first agree unanimously on a proposal among themselves.
That is a problem, says Native American journalist Tim Giago, who has covered this story for more than 30 years.
TIM GIAGO, "Lakota Times": We have got a lot of infighting, a lot of squabbling amongst our own people. There have been meetings taking place in the past year-and-a-half, two years on the different reservations in which a lot of the people are coming together and they're sitting down and actually discussing the whole prospects about where we're going to go.
HARI SREENIVASAN: Theresa Two Bulls is a former Oglala Sioux president who helped organize the efforts to restart the Black Hills talks following Obama's 2008 election. She agrees with Giago that there are serious divisions, but says that the tribes are making progress.
THERESA TWO BULLS, former Oglala Sioux president: This is the closest we have gotten. And, believe me, it's hard to unite people. It's hard to stay positive. But you have to. I'm tired of this poverty. I'm tired of this rut that we live in.
HARI SREENIVASAN: Gonzalez says the tribes have formed a reparations alliance and are aiming to finalize a proposal to be submitted to Congress by the end of the year. He hopes that proposal will give the Sioux shared ownership of over one million acres of federal land within the Black Hills, along with financial compensation.
But he quickly points out that the Sioux are not seeking any private property and knows that popular tourism attractions will be off the table.
MARIO GONZALEZ: The tribes are trying to be realistic. When the Sioux tribes are asking that all the federal lands be returned to them, that doesn't include Mount Rushmore, post offices, or any property that is being used by the government for government purposes.
HARI SREENIVASAN: And what Gonzalez and the Sioux are asking for does have precedent. President Nixon returned nearly 50,000 acres of federal lands in the Carson National Forest in New Mexico to the Taos Pueblo tribe in 1970.
And although recent polls show the younger generation of the Sioux more willing to accept the Black Hills money, some of the poorest people in the country have thus far remained steadfast in their opposition to taking it.
ROSS SWIMMER: It's a tough group up there. I'm amazed that they have been willing to sit on the money, so to speak, this long without taking the money.
THERESA TWO BULLS: We accept the money, then we don't have the treaty obligations that the federal government has with us for taking our land, for taking our gold, all our resources out of the Black Hills.
HARI SREENIVASAN: Sioux leaders say they will take up the Black Hills issue again at tribal meetings in the coming months.