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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ) ) ) Plaintiff, ) ) v. ) ) ) ) THE UNITED STATES OF AMERICA, ) ) Defendant. ) __________________________________________) ERRATUM When plaintiff filed the Parties' Joint Submission on Calculation of Tranche One Damages on November 16, 2006, plaintiff inadvertently included three irrelevant pages in Appendix B. Those pages, numbered 15, 16, and 17 in the header, relate to an account that has nothing to do with the calculation of damages in Tranche One and should be disregarded. For the convenience of the Court and the parties, plaintiff has attached a copy of the Parties' Joint Submission on Calculation of Tranche One Damages that omits the three erroneously filed pages. November 17, 2006 Respectfully submitted, s/Wilson K. Pipestem 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 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 November 17, 2006

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

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

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

No. 99-550 L (into which has been consolidated No. 00-169 L) Judge Emily C. Hewitt Filed Electronically November 16, 2006

JOINT SUBMISSION ON CALCULATION OF TRANCHE ONE DAMAGES

SUE ELLEN WOOLDRIDGE Assistant Attorney General BRETT BURTON United States Department of Justice Environment & Natural Resources Division Natural Resources Section MARTIN LALONDE KEVIN WEBB 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 Court has instructed the parties to present a joint calculation, to the extent that they can, of "the amount of damages to which plaintiff is entitled in accordance with the" Opinion issued September 21, 2006. Osage Tribe of Indians v. United States, 72 Fed. Cl. 629, 671 (2006). The Osage Nation and the United States make this joint submission in response to the Court's instruction. Since the issuance of the Court's Opinion, plaintiff and defendant have had numerous meetings and telephone conferences aimed at making as much progress as possible on reaching agreement on the Tranche One damage calculations. The parties have devoted substantial time and resources to this effort. The parties' experts and consultants have participated, either in person or by telephone, in virtually all of the meetings. In addition, plaintiff's and defendant's petroleum experts have met separately on several occasions in an effort to reach agreement on significant elements of the damage calculations. While these efforts have not succeeded in producing agreement on a complete set of damage calculations, the parties have been able to agree on important components of such a calculation. Moreover, as noted below, they are hopeful of being able to continue to make progress on the development of information that will be useful in resolving issues that are likely to arise in further proceedings in this matter. The damage-calculation elements to which the parties have agreed are described in the following sections. I. ROYALTY UNDERCOLLECTION DAMAGES The parties have agreed on the following elements regarding the Tranche One oil royalty undercollection damage calculation. 1. Based on the trial record and currently available data, the parties have agreed on

the amount of royalty undercollections for the Tranche One leases in the first three Tranche One

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months, with the sole exception of the East Hardy unit in May 1979 (which the parties will address in their separate briefs). 2. For the Tranche One leases in the last two Tranche One months (February 1986

and July 1989), the parties have agreed on certain aspects of the royalty-undercollection damage calculations. The parties identify in their respective briefs the issues on which there remains disagreement. 3. The parties have agreed to the amount of the gravity-adjustment deduction to be

used in determining royalty undercollections for Tranche One. 4. In response to the Court's ruling that government records can serve as proxies for

price information required by the regulations, the United States has produced electronic files containing price information collected by the Minerals Management Service (MMS) for the period running from approximately the mid-1980s through 1990. The parties' experts have considered such data in determining the highest posted or offered prices by major purchasers in Oklahoma and Kansas.1 5. The parties have agreed on which prices were offered by "major purchasers"

within the meaning of the Osage Regulations. As explained in the parties' respective separate briefs, however, disagreements remain over whether particular prices by major purchasers in the MMS dataset may be used to set royalty value for the Tranche One leases in the Tranche One months. 6. The parties have agreed to try to develop a process, which would involve the use

of their respective petroleum experts, for compiling a common database of price information that

Even so, as explained in Defendant's brief, Defendant notes several fundamental limitations about utilizing MMS data as a source of offered prices.

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could be used to resolve outstanding royalty undercollection issues. The parties intend to begin developing an agreement on the process for gathering relevant pricing information. II. UNDERINVESTMENT AND INVESTMENT UNDERPERFORMANCE DAMAGES 1. The parties agree that both Account 7386 and Account 7886 should be evaluated

for purposes of computing investment damages, because Account 7886 was the interest-related account for Account 7386 until FY 1985, when the Accounts were combined. Therefore, for purposes of analyzing trust duties, Accounts 7386 and 7886 should be treated as being two parts of a single account. Most of the testimony at trial focused on 7386 because it is the main trust account for royalties. The Statements of Account for 7386 appear in the record as JX028, JX035, JX048, JX053, JX064. Statements of Account for 7886 for the Tranche One fiscal years that account existed (1976, 1979, and 1981) were not introduced into evidence at trial, so they are appended to this filing as Appendices A, B, and C. For purposes of this submission only, and not for any other or future purpose or calculation of damages, the parties also agree on the average daily balance for each of these accounts during the fiscal years containing the Tranche One months.2 2. The parties agree on the amounts of interest derived from CDs and Government

Securities that were credited to Accounts 7386 and 7886 during the fiscal years containing the Tranche One months. The parties further agree on the amounts of Treasury Interest on Cash for the 1979, 1981, 1986, and 1989 fiscal years. The parties expressly do not agree that the average daily balances for 7386 and 7886 agreed to here for purposes of the Tranche One months should apply to damages calculations for other months in the same fiscal years as the Tranche One months. The parties reserve the right to revise and disagree on such balances when damages are calculated for other months in the same fiscal years as the Tranche One months. Nor do the parties agree with respect to any particular methodology for computing such figures or any particular interpretation of available data.
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3.

The parties agree that expected rates on funds not part of the permissible cash

balance should be computed using data from the Federal Reserve Historical Release, available at http://www.federalreserve.gov/releases/H15/data.htm. 4. The parties agree that three-month discount-basis interest rates can be converted

to three-month investment-basis interest rates, and vice versa, by means of algebraic formulas, which formulas the parties also agree on.3 5. The parties agree on the interest rates to be used to calculate the expected return

on permissible cash balances (4% in the first three Tranche One months, and overnighter rates of 7.12% and 9.01%, respectively, for the last two Tranche One months). 6. The parties agree for Tranche One that, when Defendant's actual performance as

an investor, on behalf of the Tribe, exceeded the expected rate of return, the Court should assess no damages for the Tribe, and that the Court should not assess "negative damages" for the months of February 1986 and July 1989 (when Defendant's actual performance as an investor exceeded the expected rate of return) against damages for the months of January 1976, May 1979, and November 1980 (when the Defendant's actual performance as an investor fell below the expected rate of return).

Investment basis interest rate = (365*D) ÷ (360 ­ (91*D)), where D represents the discount-basis interest rate. Conversely, discount basis interest rate = (360*I) ÷ (365+(91*I)), where I represents the investment-basis interest rate.

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November 16, 2006 s/Brett D. Burton BRETT D. BURTON Counsel of Record for Defendant s/Kevin Webb MARTIN J. LALONDE KEVIN WEBB United States Department of Justice - ENRD Washington, D.C. 20044-663 Telephone: (202) 305-0212 Fax: (202) 353-2021 Attorneys for Defendant OF COUNSEL: Elisabeth Brandon Brenda Riel Teresa E. Dawson

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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APPENDIX A

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APPENDIX B

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APPENDIX C

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