Free Stipulation - District Court of Federal Claims - federal

Case 1:99-cv-00550-ECH

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

) ) ) Plaintiff, ) ) v. ) ) ) ) THE UNITED STATES OF AMERICA, ) ) Defendant. ) __________________________________________)

THE OSAGE NATION AND/OR TRIBE OF INDIANS OF OKLAHOMA,

No. 99-550 L (into which has been consolidated No. 00-169 L) Judge Emily C. Hewitt Filed Electronically March 15, 2007

JOINT SUBMISSION ON TRANCHE ONE DAMAGES

MATTHEW J. McKEOWN Acting Assistant Attorney General KEVIN WEBB United States Department of Justice Environment & Natural Resources Division Natural Resources Section MARTIN LALONDE BRETT BURTON United States Department of Justice Environmental & Natural Resources Section Natural Resources Section 601 D Street, N.W. 3rd Floor Washington, D.C. 20004 Telephone: (202) 305-0212/0247 Fax: (202) 353-2021 Attorneys for Defendant The United States

WILSON K. PIPESTEM Pipestem Law Firm, P.C. 1333 New Hampshire Avenue, N.W. Washington, D.C. 20036 Telephone: (202) 419-3526 Fax: (202) 659-4931 [email protected] Attorney for Plaintiff Osage Nation

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The Osage Nation and the United States make this joint submission in response to the Court's instruction to present a joint damages calculation in accordance with its opinion issued February 15, 2007.1 DAMAGES FOR ROYALTY UNDERCOLLECTION 1. The parties agree that based on the Court's order dated February 15, 2007,

damages for "Failure to Collect Full Royalties During Price Controls" and "Failure to Collect Royalties Based on Highest Offered Prices" for Tranche One leases in Tranche One months total $246,988.42. The attached Exhibit A shows how this amount was derived. 2. The parties agree that based on the Court's order dated February 15, 2007, the

present value, through February 28, 2007, of the $246,988.42 in the preceding paragraph is $1,835,111.69. The attached Exhibits A and F show how this amount was derived. DAMAGES FOR DEPOSIT LAG 3. The parties agree that based on the Court's order dated February 15, 2007,

damages for "Failure Promptly to Deposit Funds Because of Unreasonable Failure to Certify a Federal Depositary" for royalties collected from Tranche One leases in Tranche One months is $197.71. The attached Exhibits B, C, and D show how this amount was derived. 4. The parties agree that there are no deposit-lag damages for the Tranche One leases

in the Tranche One months November 1980, February 1986, and July 1989, because in those months all royalties for the Tranche One leases were paid by electronic funds transfer (EFT).

The parties make this submission for the purpose of complying with the requirements of the Court's order. In so doing, the parties reserve all rights to appeal the Court's orders and neither party waives any rights it may have in other contexts.

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5.

Deposit-lag damages for royalty payments on Tranche One leases made by check

for the Tranche One months January 1976 and May 1979 were calculated according to the method approved by the Court's order dated February 15, 2007. 6. The parties agree that based on the Court's order dated February 15, 2007, the

present value, through February 28, 2007, of the $197.71 in ¶ 3 above is $1565.36. The attached Exhibits B and G show how this amount was derived. DAMAGES FOR UNDERINVESTMENT AND INVESTMENT UNDERPERFORMANCE 7. The parties agree that based on the Court's order dated February 15, 2007,

damages for "Failure to Maintain Appropriate Cash Balances (Underinvestment)" and "Failure to Obtain Investment Yields in Accordance with Law (Investment Underperformance)" for royalties collected from Tranche One leases in Tranche One months total $4,467.21. The attached Exhibit E shows how this amount was derived. This amount was obtained by first calculating an amount of damages for each Tranche One month. Damages for each entire month were then prorated to reflect an estimated amount of damages attributable to the Tranche One leases. Prorating percentages were calculated using the parties' agreed-upon number for the royalty collected from Tranche One leases and dividing by the estimated total royalty collections for the month. 8. The parties agree that based on the Court's order dated February 15, 2007, the

present value, through February 28, 2007, of the $4,467.21 in the preceding paragraph is $40,201.26. The attached Exhibits E and G show how this amount was derived. TOTAL JUDGMENT AMOUNT FOR TRANCHE ONE 9. In accordance with the foregoing and the Court's orders, the parties agree that

final judgment for Tranche One should be entered for the plaintiff in the amount of $1,876,878.30 as detailed in Exhibit H.

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March 15, 2007 s/Kevin Webb__ KEVIN WEBB Counsel of Record for Defendant s/Martin LaLonde____ MARTIN LALONDE BRETT BURTON United States Department of Justice - ENRD Washington, D.C. 20044-663 Telephone: (202) 305-0212 Fax: (202) 353-2021 Attorneys for Defendant

Respectfully submitted, s/Wilson K. Pipestem Counsel of Record for Plaintiff Pipestem Law Firm, P.C. 1333 New Hampshire Avenue, N.W. Washington, D.C. 20036 Telephone: (202) 419-3526 Fax: (202) 659-4931 [email protected] Attorney for Plaintiff Osage Nation

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EXHIBIT A Royalty Damages

Filed 03/15/2007

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A

B

C

D

E

F

I

J

K

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

Reported Highest Current Current Value Tranche Royalty Volume Royalty Offered Price T1 Damages Value of T1 One Tranche One Lease Rate (Bbl) Price Paid Unregulated Factor Damages Month Jan-76 Jan-76 Jan-76 Jan-76 Jan-76 Jan-76 Jan-76 TOTAL May-79 May-79 May-79 May-79 May-79 May-79 May-79 TOTAL Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 Nov-80 TOTAL North Burbank Unit North Burbank Unit North Avant Unit Osage Hominy Unit Osage Hominy Unit East Hardy Unit East Hardy Unit 12.50% 160,738 16.67% 120 12.50% 3,030 16.67% 10,434 12.50% 37,916 12.50% 347 16.67% 8,181 220,766 12.50% 139,506 16.67% 90 12.50% 2,067 12.50% 22,908 16.67% 11,640 12.50% 5,254 16.67% 345 181,809 12.50% 16.67% 12.50% 16.67% 12.50% 12.50% 12.50% 16.67% 16.67% 16.67% 12.50% 12.50% 16.67% 88,379 149 21,142 126 4,990 1,233 11,752 4,760 3,244 3,323 12,038 5,499 177 156,812 $13.31 $13.31 $13.22 $5.33 $5.33 $13.50 $5.35 $13.46 $13.46 $13.42 $13.46 $13.46 $13.50 $13.50 $3,024.19 $3.00 $70.79 $14,142.67 $38,532.09 $0.00 $11,090.06 10.26 10.26 10.26 10.26 10.26 10.26 10.26 $31,027.22 $30.78 $726.31 $145,099.51 $395,327.54 $0.00 $113,780.65

North Burbank Unit North Burbank Unit North Avant Unit Osage Hominy Unit Osage Hominy Unit East Hardy Unit East Hardy Unit

$19.12 $18.31 $19.19 $19.32 $7.03 $6.02 $19.35

$19.31 $19.31 $19.27 $19.31 $19.31 $19.35 $19.35

$3,288.69 $15.01 $21.15 $0.00 $23,820.94 $8,754.48 $0.00

6.75 6.75 6.75 6.75 6.75 6.75 6.75

$22,185.87 $101.26 $142.71 $0.00 $160,698.86 $59,058.72 $0.00

North Burbank Unit North Burbank Unit North Burbank Unit North Burbank Unit North Burbank Unit North Avant Unit Osage Hominy Unit Osage Hominy Unit Osage Hominy Unit Osage Hominy Unit Osage Hominy Unit East Hardy Unit East Hardy Unit

$36.04 $52.83 $35.86 $35.96 $35.86 $35.88 $15.43 $6.84 $15.43 $35.86 $36.00 $48.00 $36.00

$36.00 $36.00 $36.00 $36.00 $36.00 $35.94 $36.00 $36.00 $36.00 $36.00 $36.00 $36.04 $36.04

$0.00 $0.00 $369.99 $1.00 $87.33 $10.68 $30,219.26 $23,138.22 $11,123.73 $77.55 $0.00 $0.00 $0.82

9.20 9.20 9.20 9.20 9.20 9.20 9.20 9.20 9.20 9.20 9.20 9.20 9.20

$0.00 $0.00 $3,402.57 $9.21 $803.12 $98.24 $277,908.15 $212,788.15 $102,298.20 $713.16 $0.00 $0.00 $7.56

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EXHIBIT A Royalty Damages

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A

B

C

D

E

F

I

J

K

1 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65

Tranche Reported Highest Current Current Value Royalty Volume One Tranche One Lease Royalty Offered Price T1 Damages Value of T1 Rate (Bbl) Month Price Paid Unregulated Factor Damages Feb-86 Feb-86 Feb-86 Feb-86 Feb-86 Feb-86 Feb-86 TOTAL Jul-89 Jul-89 Jul-89 Jul-89 Jul-89 Jul-89 Jul-89 TOTAL TOTAL North Burbank Unit North Burbank Unit North Avant Unit Osage Hominy Unit Osage Hominy Unit East Hardy Unit East Hardy Unit 12.50% 16.67% 12.50% 12.50% 16.67% 12.50% 16.67% 79,698 112 13,987 18,599 14,321 3,196 ** 129,913 35,459 174 5,601 18,359 13,395 ** 1,198 74,186 $20.71 $20.70 $18.62 $20.74 $20.54 $24.69 ** $24.51 $24.51 $23.96 $24.69 $24.46 $24.69 $37,863.22 $71.21 $9,326.10 $9,178.37 $9,359.50 $0.00 4.07 4.07 4.07 4.07 4.07 4.07 $154,019.89 $289.67 $37,936.66 $37,335.76 $38,072.55 $0.00

North Burbank Unit North Burbank Unit North Avant Unit Osage Hominy Unit Osage Hominy Unit East Hardy Unit East Hardy Unit

12.50% 16.67% 12.50% 12.50% 16.67% 12.50% 16.67%

$19.66 $19.25 $19.43 $19.68 $19.67 ** $19.36

$21.00 $21.00 $21.00 $21.00 $21.00 $21.00

$5,920.83 $49.10 $1,099.20 $3,034.75 $2,965.66 $328.84

3.08 3.08 3.08 3.08 3.08 3.08 3.08

$18,228.36 $151.17 $3,384.08 $9,343.02 $9,130.32 $1,012.39

$246,988.42

$1,835,111.69

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EXHIBIT B Deposit Lag Summary

A 1 2 3 4 5 6 7 8 9

B

C

D

E

F

G

H

I

T1 month Jan-1976 May-1979

Base Amount of Deposit Lag Damages Mailing Lag Andersen Lag Combined $ 64.37 $ $ 64.37 $ 133.27 $ 0.07 $ 133.34

Current Value of Deposit Lag Damages Mailing Lag Andersen Lag Combined $ 662.09 $ $ 662.09 $ 902.79 $ 0.47 $ 903.26

$

197.64

$

0.07

$

197.71

$

1,564.89

$

0.47

$

1,565.36

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EXHIBIT C Mailing Deposit Lag

A

B Tranche One Receipts Paid by Check 315,129.18 333,718.56

C

D

E

F

T1 month

1 2 Jan-1976 $ 3 May-1979 $ 4 5 TOTAL

Average Current Annual Damages Current Value of Prudent for 1.4 Lag Value T1 Days Rate for Factor Damages FY 5.34% $ 10.44% $ $ 64.37 133.27 197.64 10.29 6.77 $ 662.09 $ 902.79 $ 1,564.89

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EXHIBIT D Andersen Deposit Lag

A

B

C

D

E

F

G

H

I

J

K

L

T1 month

FY

Average Annual Average Daily Prudent Return Rate for FY

4 to 6 day lag

7 to 10 day lag

1 $ 2 3 4 5 6 7 8 9 Jan-1976 1976 May-1979 1979 5.34% 0.01459016% $ 10.44% 0.02860274% $ 111 Avg Lag 5 5 Adj Lag Damages 0.08 $ $ $ Avg Lag 8.5 8.5 Adj Lag Damages -

2.6 $ 2.6 $

6.1 $ 6.1 $

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EXHIBIT D Andersen Deposit Lag

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z

11 to 30 day lag

Over 30 day lag

Approx. % Current Approx. $ Current Value of Annual T1 Month Damages Damages Value T1 for T1 Damages Damages for T1 Factor Damages Leases*

1 $ 2 3 4 5 6 7 8 9 $ $ 66 Avg Lag Adj Lag Damages 0.34 $ $ $ 541 Min Lag Adj Lag Damages 4.43 $ $ 4.85 $ $ 0.40 18.61% $ 17.07% $ $ 0.07 0.07 10.29 6.77 $ $ $ 0.47 0.47

20.5 18.1 $ 20.5 18.1 $

31 28.6 $ 31 28.6 $

*Derived from royalty percentages as shown in Columns Y-AB of Exhibit E

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EXHIBIT E Investment Damages

A

B

I

J Average Monthly Interest (Actual) $ 23,485.81 $ 66,419.26 $ 267,873.08 $ 48,904.73 $ 41,997.08

M

N Average Daily Expected Invested Balance $ 6,167,141.48 $ 8,309,699.98 $ 23,220,766.35 $ 7,549,986.90 $ 4,232,500.19

O 3-mo. CD rate for T1 month 5.14% 10.16% 15.68% 7.69% 8.76%

P

Q

R

S T1 month expected yield on invested funds $ 26,271.18 $ 70,114.55 $ 298,546.31 $ 47,877.13 $ 30,468.23

T1 Month 1 2 3 4 5 6 7 8

FY

Total Annual Interest

Total Average Daily Balance

Invt. Discount Expected Basis 3- Basis 3Rate for month T- month TT1 mo. Bill rate Bill rate 4.87% 9.61% 13.73% 7.06% 7.88% 5.00% 9.99% 14.42% 7.29% 8.15% 5.11% 10.13% 15.43% 7.61% 8.64%

Jan-1976 May-1979 Nov-1980 Feb-1986 Jul-1989

1976 1979 1981 1986 1989

$ 281,829.77 $ 797,031.06 $ 3,214,476.97 $ 586,856.76 $ 503,964.94

$ 6,192,141.48 $ 8,334,699.98 $ 23,245,766.35 $ 7,574,986.90 $ 4,257,500.19

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EXHIBIT E Investment Damages

T

U

V

W 1-month total expected $ 26,354.51 $ 70,197.89 $ 298,629.64 $ 48,025.47 $ 30,655.94

X

Y

Z Estimated T1 Month Royalty Collected $ $ $ $ $ 1,693,056.87 2,417,852.69 6,242,867.54 2,661,208.29 1,817,720.56

AA

AB

AC

1 2 3 4 5 6 7 8

T1 month Interest Allowable expected Rate on Uninvested yield on Uninvested Funds uninvested Funds funds $ $ $ $ $ 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 4.00% 4.00% 4.00% 7.12% 9.01% $ $ $ $ $ 83.33 83.33 83.33 148.33 187.71

T1 Month Damages

Total Royalty $ in T1 Year

Approx. Royalty Approx. $ % Damages Collected from Damages for T1 T1 Leases in for T1 Leases T1 Month Leases $ $ $ $ $ 315,129.18 412,684.69 667,451.12 346,385.81 87,159.05 18.61% 17.07% 10.69% 13.02% 4.79% $ 533.95 $ 644.95 $ 3,288.31 $ $ $ 4,467.21

$ 2,868.70 $ 3,778.63 $ 30,756.56 $ $ -

$ 20,316,682.44 $ 29,014,232.28 $ 74,914,410.42 $ 31,934,499.42 $ 21,812,646.77

TOTAL

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EXHIBIT E Investment Damages

AD Current Value Factor 1 2 3 4 5 6 7 8 10.29 6.77 9.23 3.84 3.09

AE Total Damages Through 2/28/2007 $ 5,492.19 $ 4,369.02 $ 30,340.05 $ $ $ 40,201.26

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EXHIBIT F Current Value (Royalty)

A

B

C

D

E

F

G

H

I

J

K

L

M

7-year T7-year Tranche 1st Royalty Due Bill Rate, rollover One Date Monthly rollover Month rate Average 1 2 3 4 5 6

2nd rollover

7-year rollover rate

Value of $1 on Royalty Portion of Due Date, 7-year 7-year 4th 3rd Year Between Invested in rollover rollover rollover rollover Anniversary 7-Year Trate rate and Feb. 28 Bills Through 2/28/2007 6.32% Feb-2004 6.33% 4.86% 3.59% 0.010958904 $10.259696 0.682191781 $6.746116 0.180821918 $9.196392 0.934246575 $4.067797 0.515068493 $3.078685

Jan-1976 May-1979 Nov-1980 Feb-1986 Jul-1989

25-Feb-1976 25-Jun-1979 25-Dec-1980 25-Mar-1986 25-Aug-1989

7.72% 8.86% 13.00% 7.67% 8.11%

Feb-1983 10.56% Feb-1990 Jun-1986 7.75% Jun-1993 Dec-1987 8.82% Dec-1994 Mar-1993 5.66% Mar-2000 Aug-1996 6.52% Aug-2003

8.48% Feb-1997 5.61% Jun-2000 7.80% Dec-2001 6.51% 3.96%

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EXHIBIT G Current Value (Investment)

A

B

C

D

E

F

G

H

I

J

K

L

M Value of $1 on the Day After T1 Month, Invested in 7-Year TBills Through 2/28/2007 $10.285919 $6.774251 $9.226632 $3.835040 $3.086858

T1 month

1st month after T1 month

7-year TBill for 7-year 1st 1st rollover month rollover rate after T1 month 7.72% 8.86% 13.00% 7.67% 8.11%

2nd rollover

7-year rollover rate

Fraction of 7-year year between 7-year 4th 3rd rollover anniversary rollover rollover rollover rate rate and Feb 28, 2007

1 2 3 4 5 6

Jan-1976 May-1979 Nov-1980 Feb-1986 Jul-1989

Feb-1976 Jun-1979 Dec-1980 Mar-1986 Aug-1989

Feb-1983 10.56% Feb-1990 Jun-1986 7.75% Jun-1993 Dec-1987 8.82% Dec-1994 Mar-1993 5.66% Mar-2000 Aug-1996 6.52% Aug-2003

8.48% 5.61% 7.80% 6.51% 3.96%

Feb-1997 Jun-2000 Dec-2001 Mar-2007

6.32% Feb-2004 6.33% 4.86%

3.59%

1/12 3/4 1/4 0 7/12

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EXHIBIT H Tranche One Damages Summary

A

B Base Amount of Damages

1 2 3 4 5 6 7 8 9

C Current Value Through Feb. 28, 2007

Undercollection Deposit Lag Underinvestment and Underperformance

$ 246,988.42 $ 197.71 $ 4,467.21

$ 1,835,111.69 $ 1,565.36 $ 40,201.26

TOTAL

$ 251,653.34

$ 1,876,878.30

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