Free Motion to Dismiss - Rule 12(b)(1) - District Court of Federal Claims - federal

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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,

Electronically Filed: June 14, 2005 No. 00-169 L Judge Emily C. Hewitt

DEFENDANT'S MOTION TO DISMISS, IN PART, PLAINTIFF'S TRANCHE ONE CLAIMS Pursuant to the Rules of the Court of Federal Claims ("RCFC") 12(b)(1) and RCFC 12(h)(3), Defendant respectfully moves this Court to dismiss, in part, Plaintiff's Tranche One claims for lack of jurisdiction on the following grounds: (a) Plaintiff has failed, under the Tucker Act and the Indian Tucker Act1/, to set out any Acts, regulations, or lease provisions, that impose specific duties or full managerial responsibility on the Secretary of the Interior with respect to calculating royalties, collecting royalties, or imposing and collecting late fees on oil and gas leases; (b) Plaintiff's claims related to royalty calculation and collection are already squarely before the Court of Federal Claims ("CFC") in a separate case filed earlier than the instant case, See Osage Nation and/or Tribe of Indians of Oklahoma v. United States, No. 99-550L (Fed. Cl. filed Aug. 2, 1999), which claims in that separate case are currently subject to a Motion to Dismiss of the United States on statute of limitations grounds; (c) Plaintiff's claim that Defendant failed to properly calculate royalties is barred by the applicable six-year statute of limitations, 28 U.S.C. § 2501; (d) Plaintiff has failed to sufficiently articulate the fiduciary duties associated with its investment claims; (e) Defendant's

1/

28 U.S.C. § 1491(a)(1) and 28 U.S.C. § 1505, respectively.

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exercise of its discretionary authority to invest and manage Plaintiff's funds under 25 U.S.C. §§ 161a and 162a should be evaluated under an arbitrary and capricious or abuse of discretion standard; and (f) Plaintiff has failed, under the Tucker Act and Indian Tucker Act, to show that Defendant has a duty to earn interest on Plaintiff's funds between the time the funds are disbursed and the time that the Payee obtains those funds ("disbursement lag time" claim). A memorandum in support of this motion follows. Respectfully submitted, on June 14, 2005, KELLY A. JOHNSON Acting Assistant Attorney General s/ Brett D. Burton BRETT D. BURTON United States Department of Justice Environment and Natural Resources Division P. O. Box 663 Washington, D.C. 20044-0663 Telephone: (202) 305-0212 Fax: (202) 353-2021 Counsel of Record for Defendant s/ Martin J. LaLonde MARTIN J. LALONDE United States Department of Justice Environment and Natural Resources Division P. O. Box 663 Washington, D.C. 20044-0663 Telephone: (202) 305-0247 Fax: (202) 353-2021 Attorney for Defendant OF COUNSEL: -2-

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Stephen Simpson Attorney Office of the Solicitor Division of Indian Affairs U.S. Department of the Interior MS 6456 Washington, D. C. 20240 Telephone: (202) 219-1659 Fax: (202) 208-3490 Teresa E. Dawson Senior Counsel Office of Chief Counsel Financial Management Services U.S. Department of the Treasury 401 14th Street, S.W. Room 552A Washington, D.C. 20227 Telephone: (202) 874-2567 Fax: (202) 874-6627

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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. ) __________________________________________)

Electronically Filed: June 14, 2005 No. 00-169 L Judge Emily C. Hewitt

MEMORANDUM IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS, IN PART, PLAINTIFF'S TRANCHE ONE CLAIMS

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TABLE OF CONTENTS I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 II. STATEMENT OF THE QUESTIONS INVOLVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 III. STATEMENT OF THE FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A. B. C. D. THE 1906 ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 OIL AND GAS ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 FUNDS MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 THE LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

IV. ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 A. LEGAL STANDARDS FOR EVALUATION OF THE COURT'S JURISDICTION UNDER THE TUCKER ACT AND INDIAN TUCKER ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. 2. Standards for a Motion to Dismiss for Lack of Jurisdiction . . . . . . . . . . . 7 Standards for Determining Whether the Court of Federal Claims Possesses Jurisdiction under the Tucker Act and Indian Tucker Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

B.

PLAINTIFF HAS FAILED TO DEMONSTRATE THAT THE COURT HAS JURISDICTION OVER ITS OIL AND GAS ROYALTY CALCULATION AND COLLECTION CLAIMS . . . . . . . . . . . . . 15 1. 2. Plaintiff's Claims and the Statutory, Regulatory, and Lease Provisions Relevant to Their Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 The Statutory and Regulatory Provisions are not Sufficiently Specific or Directive to Allow Plaintiff to Pass the Threshold Test of Navajo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 The 1906 Act and its Implementing Regulations do not Establish in Interior Sufficiently Pervasive Managerial Control Over the Calculation and Collection of Royalties to Establish a Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

3.

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4.

Precedent Supports the Conclusion that the 1906 Act and its Regulations do not Establish Money-Mandating Duties to Calculate and Collect Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 The Court Should Dismiss Plaintiff's Claims Related to the Calculation and Collection of Royalties Because that Claim is Before Another Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Plaintiff's Claim that the United States Failed to Calculate Royalties is Barred by the Statute of Limitations . . . . . . . . . . . . . . . . . . 34 a. The Tribe knew or should have known of its claim at the time that royalty payments were received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 The Interior Appropriations Act Language excepting certain claims from the application of statutes of limitations until an accounting is completed does not apply to Plaintiff's royalty calculation claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

5.

6.

b.

C.

PLAINTIFF HAS FAILED TO SUFFICIENTLY ARTICULATE THE FIDUCIARY DUTIES ASSOCIATED WITH ITS INVESTMENT CLAIMS AND, TO THE EXTENT THE DUTIES CAN BE INFERRED FROM PLAINTIFF'S STATEMENTS, THEY SHOULD BE DISMISSED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 1. Defendant's Discretionary Authority to Invest and Manage the Osage Funds Is Grounded in Sections 161a and 162a, and Is Evaluated under an Arbitrary and Capricious or Abuse of Discretion Standard . . . . . . . . . . . . . . . . . . . 43 Plaintiff Has Not Set Forth a Standard Against Which to Measure Defendant's Duty to Timely Deposit Funds . . . . . . . . . . . . . . . 49 Plaintiff Has Failed to Articulate Any Fiduciary Duty Related to "Disbursement Lag Times" Nor Any Standard Against Which Such Alleged Duty Should Be Measured . . . . . . . . . . . . . . . . . . . 49

2. 3.

V.

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

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TABLE OF AUTHORITIES FEDERAL CASES Andrade v. United States, 202 Ct. Cl. 988, 485 F.2d 660 (Ct. Cl. 1973) . . . . . . . . . . . . . . . . . . 36 Army & Air Force Exch. Serv. v. Sheehan, 456 U.S. 728 (1982) . . . . . . . . . . . . . . . . . . . . . . 9, 10 Blankenship v. Boyle, 329 F.Supp. 1089 (D.D.C. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Bowen v. Massachusetts, 487 U.S. 879 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Brown v. United States, 195 F.3d 1334 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 38 Brown v. United States, 42 Fed. Cl. 538 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Brown v. United States, 86 F.3d 1554 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 23, 43 Capoeman v. United States, 440 F.2d 1002, 194 Ct. Cl. 664 (1971) . . . . . . . . . . . . . . . . . . . . . 36 Carter v. United States, 62 Fed. Cl. 66 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Catellus Dev. Corp. v. United States, 31 Fed. Cl. 399 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Cheyenne-Arapaho Tribes of Oklahoma v. United States, 966 F.2d 583 (10th Cir.1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Cheyenne-Arapaho Tribes of Oklahoma v. United States, 33 Fed. Cl. 464 (1995) . . . . . . . . . . . 45 CheyenneArapaho Tribes of Indians of Oklahoma v. United States, 512 F.2d 1390 (Ct. Cl. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Commodity Futures Trading Com'n v. Nahas, 738 F.2d 487 (D.C. Cir. 1984) . . . . . . . . . . . . . . 7 Common Cause v. Judicial Ethics Comm., 473 F. Supp. 1251 (D.D.C. 1979) . . . . . . . . . . . . . . 34 Fisher v. United States, 402 F.3d 1167 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Hart v. United States, 910 F.2d 815 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Hopland Band of Pomo Indians v. United States, 855 F.2d 1573 (Fed. Cir. 1988) . . . . . . . . . . 35 LaMear v. United States, 9 Cl. Ct. 562 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

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Laughlin v. United States, 22 Cl. Ct. 85 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403 (5th Cir. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . 34 McDonald v. United States, 37 Fed. Cl. 110 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Menominee Tribe of Indians v. United States, 97 Ct. Cl. 158 (1942) . . . . . . . . . . . . . . . . . . . . . 43 Menominee Tribe v. United States, 726 F.2d 718 (Fed. Cir. 1984) . . . . . . . . . . . . . . . . . . . . 35, 36 Mitchell v. United States, 445 U.S. 535 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 11, 19, 20 Mitchell v. United States, 463 U.S. 206 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 13, 43, 47 Mitchell v. United States, 664 F.2d 265, 229 Ct.Cl. 1 (1981) . . . . . . . . . . . . . . . . . . . . . . . . 47, 48 Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) . . . . . . . . . . 48 Nager Electric Co. v. United States, 177 Ct. Cl. 234, 368 F.2d 847 (1966) . . . . . . . . . . . . . . . . 35 Navajo Tribe of Indians v. United States, 624 F.2d 981 (Ct. Cl. 1980) . . . . . . . . . . . . . . . . . . . 48 Ochran v. United States, 19 Cl. Ct. 455 (1990). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 OPM v. Richmond, 496 U.S. 414 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Osage Nation v. United States, 57 Fed. Cl. 392 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 39 Pawnee v. United States, 830 F.2d 187 (Fed. Cir.1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 48 Poafpybitty v. Skelly Oil Co., 390 U.S. 372 (1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Renne v. Geary, 501 U.S. 312, 315 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . 8 Sankey v. United States, 22 Cl. Ct. 743 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Sauer v. United States, 173 Ct. Cl. 642, 354 F.2d 302 (1965) . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Short v. United States, 25 Cl. Ct. 722 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Shoshone Indian Tribe of the Wind River Reservation v. United States, 364 F.3d 1339 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . 3, 7, 29, 30, 33, 39, 40, 42, 46 -v-

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Shoshone Indian Tribe v. United States, 51 Fed. Cl. 60 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . 39 Shoshone-Bannock Tribes v. Reno, 56 F.3d 1476 (D.C. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . 25 United Nuclear Corp. v. United States, 12 Cl. Ct. 45 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 United States v. King, 395 U.S. 1 (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 United States v. Mason, 412 U.S. 391 (1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 United States v. Mottaz, 476 U.S. 834 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 United States v. Navajo Nation, 537 U.S. 488 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12, 14, 20, 21, 24, 27, 43, 45, 46 United States v. Sherwood, 312 U.S. 584 (1941) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 United States v. Testan, 424 U.S. 392 (1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10 West Gulf Maritime Ass'n. v. ILA Deep Sea Local 24, 751 F.2d 721 (5th Cir. 1985) . . . . . . . . . 34 White Mountain Apache Tribe vs. United States, 249 F.3d 1364 (Fed. Cir. 2001) . . . . . . . . . . . 47 White Mountain Apache v. United States, 537 U.S. 465 (2003) . . . . . . . . . . . . . . . . 12, 13, 14, 47 Wright v. United States, 32 Fed. Cl. 54 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

FEDERAL STATUTES 25 U.S.C. § 161a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 43 25 U.S.C. § 161a(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 45 25 U.S.C. § 162a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 25 U.S.C. § 162a(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 44, 45 25 U.S.C. § 162a(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 7, 44 25 U.S.C. § 396f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 25 U.S.C. § 4011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 -vi-

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28 U.S.C. § 1491 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 9, 10, 34 28 U.S.C. § 1505 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 9, 34 28 U.S.C. § 2501 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34, 36, 39 30 U.S.C. § 1701(b)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 30 U.S.C. § 1702(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 30 U.S.C. § 1711(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Pub. L. No. 86392, 74 Stat. 8 ("1960 Act") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ibid

FEDERAL REGULATIONS 25 C.F.R. Part 226 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 25 C.F.R. § 183.11 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 19, 20, 37 25 C.F.R. § 183.11(a) (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 21, 26 25 C.F.R. § 183.11(b) (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 25 C.F.R. § 183.13 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 22 25 C.F.R. § 183.13(a) (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 25 C.F.R. § 183.2 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 25 C.F.R. § 183.42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 22 25 C.F.R. § 183.43 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 25 C.F.R. § 183.5 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 25 C.F.R. § 211.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 25 C.F.R. § 211.40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 25 C.F.R. § 211.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

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25 C.F.R. § 226.11 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 25 C.F.R. § 226.11(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 25 C.F.R. § 226.11(a)(2) (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 26, 37 25 C.F.R. § 226.11(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 25 C.F.R. § 226.13(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 26 25 C.F.R. § 226.2 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 25 C.F.R. § 226.42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 25 C.F.R. § 226.5 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 25 C.F.R. §§ 183.11, 183.13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 25 C.F.R. §§ 183.16 183.41 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 30 C.F.R. chapter II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 30 C.F.R. § 206.103 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 30 C.F.R. § 206.52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 30 C.F.R. § 218.200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

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APPENDIX TO DEFENDANT'S EXHIBITS IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS, IN PART, PLAINTIFF'S TRANCHE ONE CLAIMS

Exhibit No. 1

Description Letter from George E. Tallchief, Principal Chief of Osage Tribal Council, to Jack Shoemate, Superintendent Osage Indian Agency (Aug. 29, 1984) Letter from George Tallchief, Principal Chief, Osage Tribe to Jack Shoemate, Superintendent, Osage Indian Agency (undated) Resolution of the Osage Tribal Council, No. 26-624 (Aug. 21, 1985) Resolution of the Osage Tribal Council, No. 28-363 (Sept. 18, 1991) Resolution of the Osage Tribal Council, No. 26-659 (Oct. 8, 1985) Memorandum from Jim Littleton, Tribal Auditor, to Mary Lou Drywater, Realty Specialist (April 24, 1987) Memorandum from Jim Littleton, Tribal Auditor, to Jack Shoemate, Superintendent Osage Indian Agency, et. al. (Aug. 28, 1987) Letter to Dark Oil Co. from E.A. Green, Acting Superintendent, Osage Indian Agency (undated) Complaint, Osage Nation and/or Tribe of Indians of Oklahoma v. United States, No. 99-550L (Fed. Cl. filed Aug. 2, 1999) Plaintiff's Motion to Amend and Consolidate and Brief in Support, No. 99-550L (May 1, 2000) Defendant's Motion to Reconsider Consolidation Order, No. 99-550L, No. 00-169L (May 26, 2000) Order, No. 99-550L (September 14, 2000) -ix-

Beginning Page Number in Appendix 1

2

6

3 4 5 6

8 11 14 16

7

18

8 9

20 22

10 11 12

42 47 54

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Exhibit No. 13 14 15 16

Description Third Amended Complaint, No. 99-550L (Oct. 24, 2005) Amended Joint Preliminary Status Report, No. 99550L (Feb. 11, 2005) Motion to Dismiss, No. 99-550L (April 15, 2005) Memorandum from Superintendent Osage Agency to Joseph C. Johnston, Chief, Division of Energy & Mineral Resources (May 30, 1986) Resolution of the Osage Tribal Council (Res. No. 28393), dated December 18, 1991 Memorandum from Jim W. Littleton to Osage Tribal Council (July 11, 1986)

Beginning Page Number in Appendix 55 113 121 157

17 18

180 181

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I. INTRODUCTION In its April 15, 2005, Order, the Court required Plaintiff to identify issues for Tranche One of this case through a statement that, inter alia, was to include "legal authorities supporting recovery, and time frames for which recovery is sought under each legal authority." April 15, 2005, Order at § 2, p. 3. In turn, Defendant is to "file any dispositive motions with respect to legal authorities supporting recovery and time frames for which recovery is sought under each legal authority. . ." Id. § 3, p. 3. Pursuant to the Order, Plaintiff, on May 13, 2005, filed a Statement of Claims and later, during a status conference before the Court, provided further explanation of its claims. Pursuant to the April 15 Order, Defendant herein moves for dismissal under Rule 12(b)(1) of the Rules of the Court of Federal Claims ("RCFC") of certain of Plaintiff's stated claims. In its Statement of Claims and during the status conference with the Court, Plaintiff asserted that the Act of June 28, 1906, 34 Stat. 539 ("1906 Act") and its implementing regulations, as well as lease terms, establish in the Department of the Interior ("Interior") specific fiduciary duties to calculate and collect royalties on oil and gas leases. In addition, Plaintiff contended that 25 U.S.C. §§ 155, 161a, 161b, and 162a establish specific fiduciary duties to deposit the collected royalties in a trust fund and to invest those funds according to law. As to Plaintiff's royalty calculation and collection claims, nothing in the 1906 Act, its implementing regulations, or leases imposes any specific duties on the Secretary of the Interior with respect to calculating royalties, collecting royalties, or imposing and collecting late fees. The 1906 Act is silent as to the calculation of royalties, their collection, and imposition and collection of late fees. The regulations implementing the 1906 Act, and lease terms that mirror and incorporate the -1-

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regulations, require the lessees, not Interior, to calculate and pay royalties by dates certain. In addition, the sources of law do not together give the United States full management responsibility or plenary or pervasive control of the royalty calculation or collection process. For these reasons, the Court should find that, under the Tucker Act, 28 U.S.C. § 1491, and Indian Tucker Act, 28 U.S.C. § 1505, it has no jurisdiction to consider Plaintiff's claims related to the calculation or collection of royalties or late fees for the oil and gas leases that are the subject of this case. In addition, the Court should dismiss Plaintiff's claim related to royalty calculation and collection because these claims are squarely before another Court in an earlier-filed case. Osage Nation and/or Tribe of Indians of Oklahoma v. United States, No. 99-550L (Fed. Cl. filed Aug. 2, 1999). In that case, the specifics of Plaintiff's royalty underpayment claim and collection claim have been expressly articulated in Plaintiff's original complaint and rearticulated in several amended complaints. See Case No. 99-550L, Docket entries 1, 52, 65, 69. Further, in rejecting Plaintiff's attempt to consolidate these cases, the other Court deemed that the two actions were distinct and unrelated. Order, (September 14, 2000), Docket entry 32. In addition, these claims are currently subject to the United States' Motion to Dismiss on statute of limitations and other grounds in Case No. 99-550L. Docket entry 80. Accordingly, this Court should dismiss Plaintiff's royalty calculation claim, which is Plaintiff's royalty underpayment claim in a different guise, and its royalty collection claim to allow those claims to be adjudicated in Case No. 99-550L. If, despite the existence of the identical claim in Case No. 99-550L, this Court should proceed in considering the royalty calculation and collection claims, it should dismiss the royalty calculation claim as barred by the statute of limitations. The Osage Tribe knew or should have know about the claim six years before the initiation of this case. Moreover, the Appropriations Act

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provision that this Court has interpreted to limit the commencement of the accrual of the statute of limitations on claims of mismanagement or loss to funds, Public Law No. 108-447, 118 Stat 2809, does not apply to the royalty calculation claim under the reasoning of Shoshone Indian Tribe of the Wind River Reservation v. United States, 364 F.3d 1339 (Fed. Cir. 2004), cert. denied, 73 USLW 3338 and 73 USLW 3415 (2005). As to Plaintiff's investment claims, Plaintiff has failed to articulate the fiduciary duties of the Government. Nevertheless, Defendant maintains that, to the extent Plaintiff's claim is that the United States has a duty to invest that entails a higher standard of care than the arbitrary and capricious or abuse of discretion standard, that claim should be dismissed. As to Plaintiff's "deposit lag time" claim, Defendant does not dispute the existence of a duty to place in the Treasury of the United States royalties received from oil and gas leases, but notes that Plaintiff has not articulated a standard for measuring the scope of that duty. As for Plaintiff's "disbursement lag time" claim, Plaintiff has failed to provide any legal authority on which the Court could find a related moneymandating fiduciary duty. That claim, therefore, should be dismissed for lack of jurisdiction. II. STATEMENT OF THE QUESTIONS INVOLVED 1. Does the Court have jurisdiction under the Tucker Act and Indian Tucker Act over Plaintiff's royalty calculation or collection claims? 2. Should the Court dismiss Plaintiff's royalty calculation and collection claims because they are subject to an earlier-filed case? 3. 4. Is the Tribe's royalty calculation claim barred by the statute of limitations? Does the Court have jurisdiction under the Tucker Act and Indian Tucker Act over Plaintiff's investment claims?

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III. STATEMENT OF THE FACTS A. THE 1906 ACT The Osage Tribe, at the turn of the last century, occupied a reservation which now constitutes Osage County, Oklahoma. By virtue of the 1906 Act,2/ the surface interests were allotted to individual tribal members. Section 3 of the 1906 Act reserved "the oil, gas, coal, and other minerals covered by the lands for the selection and division of which provision is herein made are hereby reserved to the Osage Tribe for a period of twenty-five years from and after the eighth day of April, nineteen hundred and six . . . ." The ownership of the minerals by the Osage Tribe has been extended from time to time and was last extended in perpetuity by the Act of October 21, 1978, Pub. L. No. 95-496, 92 Stat. 1660. The 1906 Act provides that leases are to be made by the Osage Tribal Council and approved by the Bureau of Indian Affairs ("BIA"). The Act also created a trust fund consisting of proceeds from the sale of Osage lands in Kansas and income from the Osage mineral estate. See H.R. Rep. No. 92-963, at 8. The history of the 1906 Act shows that the Tribe sought the legislation and was closely involved in its formulation. By 1906, the Osage Tribe of Indians had, for several years, "been considering the question of asking the Government to divide its lands and moneys among the members of the tribe." House Committee on Indian Affairs, Division of Lands and Funds of Osage Indians, Oklahoma, H.R. Rep. No. 59-3219, at 1. In 1906, the Tribe had agreed on a plan to divide its lands and moneys. Id. The final bill enacted by Congress "was submitted to the Osages at [a] general election held by them, and it was adopted by all factions of the tribe. It was brought to

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Defendant will provide to Plaintiff a proposed appendix of the relevant statutes, legislative history, and regulations and will work with Plaintiff to file jointly the appendix with the Court by the time the briefing on Defendant's Motion to Dismiss is complete. -4-

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Washington by delegates representing those factions, submitted to the Secretary of the Interior for his consideration, and the committee has given the measure very careful consideration and recommends its passage . . . ." Id. B. OIL AND GAS ROYALTIES Oil and gas from the Tribe's mineral estate has been extracted pursuant to leases that provide for, among other things, the payment of royalties from production. In general, a royalty under an oil lease is calculated by applying the "royalty rate," which has historically been and is currently stated in the regulations as being not less than 16 b percent3/ or 12 ½ percent if the oil is produced by secondary recovery processes, to the gross proceeds obtained from the sale of the oil after subtracting out the oil used by the lessee for development and operational purposes. See 25 C.F.R. § 226.11(a)(1).4/ The "gross proceeds" are the total monies or other consideration received at an established sales price for the oil. The established sales price is the higher of either the actual selling price or the highest posted price in a particular geographical area. 25 C.F.R. § 183.11 (1975); 25 C.F.R. § 226.11 (1990). Although the "royalty rate" has remained at its historical rate of 16 2/3 percent of the gross proceeds, the geographical area for determining the sales price has changed over time. Compare 25 C.F.R. § 183.11(a)(2) (1975) (actual selling price or highest posted or offered price in the Kansas-Oklahoma area) with 25 C.F.R. § 226.11(a)(2) (1990) (selling price or highest posted

3/

The current regulations provide that the royalty rate shall not be less than 16 2/3 percent. This allows the Tribe to execute leases at other rates as it deems appropriate. For ease of reference, however, the United States refers herein to the royalty rate as being 16 2/3 percent.
4/

Unlike the regulations that apply to other Tribes' oil royalties, see 30 C.F.R. § 206.52, the regulations applicable to the Osage Tribe do not require major portion analysis, see 25 C.F.R. Part 226. -5-

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price in Osage County).5/ C. FUNDS MANAGEMENT The royalties that are received by Interior are deposited in the United State Treasury ("Treasury"). 1906 Act § 4. The funds in Treasury are initially invested in public debt securities. 25 U.S.C. § 161a(a). At the discretion of the Secretary of the Interior, the funds may be withdrawn from the Treasury and invested in banks, 25 U.S.C. § 162a(a), or, at the request of the Tribe, in other restricted investments, 25 U.S.C. 162a(c). On a quarterly basis, the funds are disbursed to the "headright" owners. 1906 Act § 4. D. THE LITIGATION Plaintiff Osage Tribe sues the United States here for "money damages for breach of fiduciary duty in the management of tribal trust funds and for failure to account." Complaint ¶ 4. Reciting and partially quoting language from two treaties between the Osage and the United States, the Treaty of November 10, 1808, and the Treaty of September 29, 1865; various statutes from 1906 to 1978; and assorted federal regulations, the Tribe asserts that United States has "exercised involuntary, pervasive management and complete control over the mineral assets of the Osage." Complaint ¶ 12. It further asserts that Government control extended to funds held originally in trust by treaty, appropriations, statutory allotment, "lease bonuses and rentals, royalties, and income from investments of funds since the early 1800s." Id. The Osage Complaint sets forth two counts or causes of action.

5/

Royalty on gas is determined by multiplying the royalty rate of 16 b percent by the market value of all natural gas and products extracted under the lease that have been produced and sold, less the natural gas used in the operation and development of the lease. See 25 C.F.R. § 182.11(b)(2) (1975); 25 C.F.R. § 226.11(b)(2) (1990). -6-

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On April 15, 2005, the Court amended its Order issued on March 25, 2005, setting forth the schedule for the first phase of this case. Therein, the Court stated that The first tranche will encompass those of plaintiff's trust fund mismanagement claims falling within the parameters described in Shoshone Indian Tribe v. United States, 364 F.3d 1339, 1350-51 (Fed. Cir. 2004), for five oil and gas leases for the following six months: January 1976, May 1979, November 1980, February 1986, July 1989, and October 1990. April 15, 2005 Order, at 1. Pursuant to this Order, Plaintiff on May 13, 2005, filed the Osage Nation's Statement of Trust Fund Mismanagement Claims for Tranche One ("Tribe's Statement of Claims"). Therein, Plaintiff identified five oil and gas leases that would form the basis of Tranche One. Furthermore, Plaintiff set forth two broad trust fund mismanagement claims that it asserts are within the parameters of Shoshone Indian Tribe v. United States. Tribe's Statement of Claims at 2. In a broad sense, Plaintiff seeks damages for "payments due under the Tranche One leases for the Tranche One months that the trustee failed to collect," id., and "investment income from the proceeds of the Tranche One leases during the relevant months that the United States failed [to] earn as required by law," id. at 5. IV. ARGUMENT A. LEGAL STANDARDS FOR EVALUATION OF THE COURT'S JURISDICTION UNDER THE TUCKER ACT AND INDIAN TUCKER ACT 1. Standards for a Motion to Dismiss for Lack of Jurisdiction

RCFC 12(b)(1) provides for dismissal of a claim if the court lacks jurisdiction over the subject matter of a claim. A party seeking federal court jurisdiction bears the burden of

demonstrating that it is so entitled. Commodity Futures Trading Com'n v. Nahas, 738 F.2d 487, 492 n. 9 (D.C. Cir. 1984). The Supreme Court presumes that federal courts lack jurisdiction unless the contrary appears affirmatively from the record. See United States Department of Energy v. Ohio, -7-

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503 U.S. 607, 614 (1992); Renne v. Geary, 501 U.S. 312, 315 (1991). A plaintiff must also provide and support a jurisdictional basis for judicial review. See Wally Packaging, Inc. v. United States, 578 F. Supp. 1408, 1410 (Ct. Int'l Trade 1984); McDonald v. United States, 37 Fed. Cl. 110, 113 (1997). To the extent that Defendant relies on evidence outside the pleadings, the Court may properly consider such evidence in ruling on jurisdictional issues. Carter v. United States, 62 Fed. Cl. 66, 67-68 (2004). "Plaintiff cannot rely merely on the allegations in the complaint if jurisdiction is challenged." Osage Nation v. United States, 57 Fed. Cl. 392, 396 (2003). "[I]f the truth of jurisdictional facts is challenged, then the court may consider relevant evidence in order to resolve the factual dispute." Id., citing Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988). 2. Standards for Determining Whether the Court of Federal Claims Possesses Jurisdiction under the Tucker Act and Indian Tucker Act

"It is elementary that `[t]he United States, as sovereign, is immune from suit save as it consents to be sued . . . , and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.'" Mitchell v. United States, 445 U.S. 535, 538 (1980) ("Mitchell I") (quoting United States v. Sherwood, 312 U.S. 584, 586 (1941)). In determining whether such consent is present, the Supreme Court has long held that "[a] waiver of sovereign immunity `cannot be implied but must be unequivocally expressed.'" Mitchell I, 445 U.S. at 538 (quoting United States v. King, 395 U.S. 1, 4 (1969)). Congress has consented to suit against the United States for certain claims for money damages in the Court of Federal Claims ("CFC"). The Tucker Act grants the CFC jurisdiction with respect to any claim against the United States founded either upon the Constitution, any Act of -8-

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Congress, any regulation of an executive department, upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort. 28 U.S.C. § 1491(a)(1). The Indian Tucker Act grants jurisdiction to the same court with respect to claims by an Indian Tribe against the United States, "whenever such [a] claim is one arising under the Constitution, laws or treaties of the United States, or Executive orders of the President, or is one which otherwise would be cognizable in the Court of Federal Claims if the claimant were not an Indian tribe." 28 U.S.C. § 1505. The Indian Tucker Act was enacted in 1946 to ensure that Indian or tribal claimants would enjoy the "same" rights and remedies in suits against the United States as non-Indians, but no more. Mitchell I, 445 U.S. at 539; see Mitchell v. United States, 463 U.S. 206, 212 n.8 (1983) ("Mitchell II"); H.R. Rep. No. 79-1466 at 13 (1945) (Indian "claimants are to be entitled to recover in the same manner, to the same extent, and subject to the same conditions and limitations, and the United States shall be entitled to the same defenses, both at law and in equity, . . . as in cases brought [under The Tucker Act] by non- Indians."). The Tucker Acts themselves do "not create any substantive right enforceable against the United States for money damages." Mitchell II, 463 U.S. at 216; see also Army & Air Force Exch. Serv. v. Sheehan, 456 U.S. 728, 738 (1982); United States v. Testan, 424 U.S. 392, 398 (1976). Thus, in order to state a cause of action under one of the Tucker Acts, a plaintiff suing other than for breach of contract must point to an "Act of Congress" or "regulation of an executive department," 28 U.S.C. 1491(a)(1), that "can fairly be interpreted as mandating compensation by the Federal Government for the damage sustained." Mitchell II, 463 U.S. at 217 (quoting Testan, 424 U.S. at 400, and Eastport S.S. Corp. v. United States, 372 F.2d 1002, 1009 (Ct. Cl. 1967)); see

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Bowen v. Massachusetts, 487 U.S. 879, 905-906 n.42 (1988); Sheehan, 456 U.S. at 739. The requisite waiver of sovereign immunity is present under the Tucker Acts only if "a claim falls within th[at] category." Mitchell II, 463 U.S. at 218; see OPM v. Richmond, 496 U.S. 414, 431 (1990). The Supreme Court has observed that "the substantive source of law may grant the claimant a right to recover damages either `expressly or by implication.'" Mitchell II, 463 U.S. at 217 n.16; but cf. Sheehan, 456 U.S. at 739-740 ("Testan [held] that the Tucker Act provides a remedy only where damages claims against the United States have been authorized explicitly."). But the Court has been reluctant to recognize a damages remedy against the United States under the Tucker Acts when a statute does not clearly sanction one. See Testan, 424 U.S. at 400 ("We are not ready to tamper with these established principles [concerning the reach of the Tucker Act] because it might be thought that they should be responsive to a particular conception of enlightened governmental policy."); see also Mitchell II, 463 U.S. at 218 ("Of course, in determining the general scope of the Tucker Act, this Court has not lightly inferred the United States' consent to suit.") (citation omitted). That restraint reflects the general rule that waivers of sovereign immunity must be unequivocally expressed. See Mitchell I, 445 U.S. at 538; OPM, 496 U.S. at 432. The Supreme Court's Mitchell decisions, the seminal cases involving claims brought by Indian claimants under the Tucker Acts, were governed by the general principles outlined above. In the Mitchell litigation, the Quinault Tribe and individual Indians sought damages from the United States for alleged breach of fiduciary duties with respect to timberlands on the Quinault Indian Reservation that had been allotted in trust to individual Indians. In Mitchell I, the Court held that the General Allotment Act, under which the United States holds allotted lands "in trust for the sole use and benefit of the Indian [allottees]," 445 U.S. at 541 (quoting 25 U.S.C. 348), did not authorize a

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damages action against the United States for alleged mismanagement of timber resources on allotted lands. The Court explained that the General Allotment Act created "only a limited trust relationship between the United States and the [Tribe]," and that it did "not unambiguously provide that the United States has undertaken full fiduciary responsibilities as to the management of allotted lands." Id. at 542. Thus, the Court held, the General Allotment Act did not support "[a]ny right of the [Indians] to recover money damages for Government mismanagement of timber resources." Id. at 546. In Mitchell II, the Court considered a different set of statutes and regulations and held that those provisions, unlike the General Allotment Act, could "fairly be interpreted as mandating compensation for damages sustained as a result of a breach of the duties they impose[d]." 463 U.S. at 219 (citations omitted). In so holding, however, the Court emphasized that the provisions established "`comprehensive' responsibilities of the Federal Government in managing the harvesting of Indian timber," id. at 222 (citations omitted); see id. at 221 (regulations "required the preservation of Indian forest lands in a perpetually productive state"), and that "the statutes and regulations at issue in this case clearly establish fiduciary obligations of the Government in the management and operation of Indian lands and resources." Id. at 226. In United States v. Navajo Nation, 537 U.S. 488, 506 (2003), the Supreme Court reiterated the two-stage inquiry developed in Mitchell I and Mitchell II. In summary, first, "a Tribe must identify a substantive source of law that establishes specific fiduciary or other duties, and allege that the Government has failed faithfully to perform those duties." Id. (citing Mitchell II, 463 U.S. at 216-17, 219). "[T]he analysis must train on specific rights-creating or duty-imposing statutory or regulatory prescriptions." Id. If Plaintiff meets that threshold, "the court must then determine

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whether the relevant source of substantive law `can fairly be interpreted as mandating compensation for damages sustained as a result of a breach of duties [the governing law] impose[s]." Id. (citing Mitchell II, 463 U.S. at 219). "[T]he availability of such damages may be inferred. Id. (citing Mitchell II, 463 U.S. at 217 n.16). Both Navajo and White Mountain Apache v. United States, 537 U.S. 465 (2003), decided the same day as Navajo, were primarily concerned with the threshold issue "of whether the United States owed fiduciary duties to Indian tribes under the laws relevant to the cases." Fisher v. United States, 402 F.3d 1167, 1174 (2005). "In White Mountain a duty was found to exist; in Navajo Nation it was not." Id. The Court in White Mountain also determined that the statute creating the Tucker Act right mandated a right of recovery in damages. 537 U.S. at 475-76. In addressing the threshold question of whether the Tribe has identified "a substantive source of law that establishes specific fiduciary or other duties," 537 U.S. at 506, the Court in Navajo determined that the Indian Minerals Leasing Act ("IMLA") and its implementing regulations did not establish such duties over the Secretary of Interior's approval of leases or lease amendments. Id. at 511.6/ It noted that the IMLA did "not `give the Federal Government full responsibility to manage Indian resources . . . for the benefit of the Indians. . . . The Secretary is neither assigned a comprehensive managerial role nor, at the time relevant here, expressly invested responsibility to secure `the needs and best interests of the Indian owner and his heirs.'" Id. at 507-508 (internal quotation marks omitted in original), citing Mitchell II, 463 U.S. at 224. Further, the Court held that "the IMLA and its regulations do not assign to the Secretary managerial control over coal leasing."

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The relevant provisions of IMLA do not apply to the Osage Reservation. 25 U.S.C. § -12-

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Id. at 508.7/ In White Mountain Apache, the Court held that a fiduciary duty did exist to preserve trust property based on the legislation that provided that land would be held in trust for the Tribe and that the land would be occupied by the Government so long as it was needed for certain purposes. Pub. L. No. 86-392, 74 Stat. 8 ("1960 Act"). Justice Ginsberg wrote a concurrence in White Mountain Apache clarifying the difference between White Mountain Apache and Navajo Nation, noting that she joined the Court's opinion in White Mountain Apache because it was consistent with her opinion in Navajo Nation. Id. at 479-81. As Justice Ginsberg described, Navajo Nation is a Mitchell I case, turning on the threshold question of whether a substantive source of law establishes specific fiduciary or other duties. Id. at 480-81. White Mountain Apache, on the other hand, is a Mitchell II case because the Tribe met the threshold by showing that the 1960 Act necessarily entailed fiduciary obligations. Id. at 480. Justice Ginsberg concluded that "[t]he plenary control the United States exercises under the Act as sole manager and trustee . . . places the case within Mitchell II's governance." Id. at 481. The majority opinion in White Mountain Apache emphasized that the Federal Government exercised even more control than in Mitchell II: "the United States has not merely exercised daily supervision but has enjoyed daily occupation and so has obtained control at least as plenary as its authority over the timber in Mitchell II." 537 U.S. at 475. White Mountain Apache entailed a

7/

Navajo undermines the reasoning set forth by the Federal Circuit in Brown v. United States, 86 F.3d 1554, 1560-61 (Fed. Cir. 1996), where the court stated that a fiduciary duty can be established if the Government merely has supervision over trust assets without having control over the assets. In Navajo, the Court rejected the assertion that the approval authority of the Secretary of the Interior, which also formed the basis for finding a fiduciary duty in Brown, was sufficient to establish a money-mandating fiduciary duty. 537 U.S. at 509 & 510 n.13. -13-

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situation where the Government was physically occupying, using, and controlling property that was specifically held in trust for the Tribe. In short, to establish the necessary threshold fiduciary duty, the Tribe must identify sources of law that either, by their terms, plainly establish the duty or that provide full managerial responsibility or plenary control that would necessarily encompass the fiduciary duty that the Tribe claims has been breached. In examining whether the Government sufficiently controlled the trust property or funds for purposes of establishing a money-mandating duty, the Court should also consider the extent of the Tribe's involvement with the exercise of those duties. Navajo introduced this additional factor in its consideration of whether there was a specific fiduciary duty on the Government in that case. The Court stated: imposing fiduciary duties on the Government here would be out of line with one of the statute's principal purposes. . . The IMLA aims to enhance tribal selfdetermination by giving Tribes, not the Government, the lead role in negotiating mining leases with third parties. . . As the Court of Federal Claims recognized, `[t]he ideal of Indian self-determination is directly at odds with Secretarial control over leasing.'" 537 U.S. at 508 (citations omitted). In considering whether the substantive law creates a fiduciary duty, the Court should examine not only the duties of the Government but also the rights, role, and responsibilities that the statute and its implementing regulations grant to the Tribe. The Court should not impose a money-mandating duty on the Government if doing so would be inconsistent with the role delegated to or reserved for the Tribe. As explained below, a proper understanding of the Mitchell decisions-and application of the basic principles governing suits against the United States and limitations on implied rights to recover money damages-compels the conclusion in this case that several of the Tribe's claims do not involve a breach of money-mandating duties. -14-

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B.

PLAINTIFF HAS FAILED TO DEMONSTRATE THAT THE COURT HAS JURISDICTION OVER ITS OIL AND GAS ROYALTY CALCULATION AND COLLECTION CLAIMS 1. Plaintiff's Claims and the Statutory, Regulatory, and Lease Provisions Relevant to Their Claims

Plaintiff asserts that the United States "failed to collect payments due under the Tranche One Leases for the tranche one months. . ." Plf.'s Statement of Claims at 4. Specifically, Plaintiff states that the United States (1) "failed to compute the royalty in the manner prescribed by the applicable lease provisions and regulations," (2) "failed to collect these payments in a timely manner as required by the terms of the leases and applicable regulations," (3) "damaged the Osage Nation by depriving it of late payment fees . . . for payments that were not collected in a timely manner," and (4) "damaged the Osage Nation by depriving it of investment income on the payments due" that the United States failed to collect. Id. at p. 5. In support of these claims, Plaintiff points to the 1906 Act, lease terms, and, generally, to Interior regulations. Section 4 of the 1906 Act provides: That all funds belonging to the Osage tribe, and all moneys due, and all moneys that may become due, or may hereafter be found to be due the said Osage tribe of Indians, shall be held in trust by the United States . . . .... That the royalty received from oil, gas, coal, and other mineral leases . . . shall be placed in the Treasury of the United States to the credit of the members of the Osage tribe of Indians as other moneys of said tribe are to be deposited under the provisions of this Act, . . . 1906 Act § 4; Transcript of May 23, 2005 Telephonic Status Conference ("May 23 Tr."), at 32. Plaintiff also cites to various lease terms as creating the substantive money-mandating duty. Plaintiff cites to the first paragraph of one of the leases for the proposition that the "lease is issued pursuant to the 1906 Act[, which] confirms that it's subject to whatever statutory provisions are in

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the 1906 Act." May 23 Tr. at 43, citing to Kewanee Oil Company Lease for the Stanley Stringer Unit, Contract No. 14-20-201-2679 (Jan. 20, 1954) (hereinafter "Stanley Stringer Lease") (attached as Exh. A to Plaintiff's Statement of Claims). Specifically, the leases provide that they are entered "under and in pursuance of Section 3, of the Act approved June 28, 1906, (34 Stat. L., 539-543); the Act approved March 3, 1921, (41 Stat. L., 1249); and the Act of March 2, 1929, (45 Stat. L., 1478), and the Act of June 24, 1938, (52 Stat. 1034); and the Act of June 15, 1950, (P. L. 548-81st Congress)." Stanley Stringer Lease at 9. Section 3 of the 1906 Act provides that "leases for all oil, gas, and other [Osage] minerals may be made by the Osage tribe of Indians through its tribal council, and with the approval of the Secretary of the Interior, and under such rules and regulations as he may prescribe. . . ." See also Stanley Stringer Lease, § 1, p. 11; May 23 Tr. at 44-45. Section 2 of the Lease sets forth a lessee's responsibility to pay royalties: "The lessee agrees to pay, or cause to be paid, to the Superintendent of the Osage Indian Agency, at Pawhuska, Oklahoma, for the lessor as royalty" varying royalty percentages of the "gross proceeds" from the sales of specified volumes of oil from specified sands. Stanley Stringer Lease at 11-13. Further, Section 2 provides that "[p]ayment for the royalty hereunder shall be made at the time of sale or removal of the oil from the leased premises, except where payments are made on division orders, and settlement shall be based on the actual selling price, but at no less than the highest posted market price in the Mid-Continent Field on the day of sale or removal." Id. at 13. Although the obligation set forth in Section 2 is placed on the lessee, Plaintiff asserts that this provision relates back to the statutory language of Section 4 of the 1906 Act in that it establishes "a payment that will come due to the tribe. . ." May 23 Tr. at 46. The royalty payment under Section 2 "is a check that belongs to the Osage Tribe, and it's going to be deposited in a trust for the Osage Tribe." Id. Further, Plaintiff

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stated that it was putting "together two provisions: one, the statutory provision that . . . requires the United States to affirmatively collect money and get [it] into a trust. The other provision simply identifies a payment that is due the Osage Tribe and, therefore, falls within the statutory duty to collect this money and get it into the United States Treasury." Id. at 48-49. Plaintiff also points to Section 15 of the lease, which provides that "[a]ll amounts due and payable under this lease shall be paid to the Superintendent by check or bank draft on a solvent bank in favor of the Treasurer of the United States." Stanley Stringer Lease at 19; May 23 Tr. at 42. In addition, Plaintiff cites to Section 16 of one of the leases to be addressed in Tranche One of the case, which section provides: This lease is subject to the regulations now or hereafter prescribed by the Secretary of the Interior, relative to such leases, all of which are made a part of this lease; PROVIDED, that no regulation made after the approval of this lease shall operate to affect the term of the lease, rate of royalty, rental or acreage, unless agreed to by both parties. Stanley Stringer Lease at 19-20; May 23 Tr. at 37-39. As for the regulations incorporated into the leases, Plaintiff noted "the provisions of the regulations that require the collection of late-payment fees if a royalty isn't made on time." May 23 Tr. at 52. As cited in the Tribe's Statement of Claims, the late-fee provision is found at 25 C.F.R. § 183.13 (1975), the provision in place from April 1975 to March 1982 when the provision was redesignated as section 226.13. Section 183.13 provides, in full, that: (a) Royalty payments due may be paid by either purchaser or Lessee. Unless otherwise provided by the Osage Tribal Council and approved by the Superintendent, all payments shall be due by the 25th day of each month and shall cover the preceding month. Failure to make such payments shall subject Lessee or purchaser, whoever is responsible for royalty payment, to a late charge at the rate of not less than 1 ½ percent for each month or fraction thereof until paid. (b) Lessee shall furnish certified monthly reports by the 25th of each following -17-

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month covering all operations whether there has been production or not, indicating therein the total amount of oil, natural gas, casinghead gas, and other products subject to royalty payment. (c) Failure to remit payments or reports shall subject Lessee to further penalties as provided in §§ 183.42 and 183.43 . . . . Section 226.13(a) was amended in August 1990 with the following additional language: "The Osage Tribal Council, subject to the approval of the Superintendent, may waive the late charges." 25 C.F.R. § 226.13(a). Plaintiff further referenced, without any citation to sections of regulations, "provisions in the regulations that say the government can assess civil penalties against lessees that don't comply with the lease." May 23 Tr. at 53. Presumably, Plaintiff refers to 25 C.F.R. § 183.42, subsequently redesignated as section 226.43, which provides, in part: Violation of any of the terms or conditions of any lease or of the regulations in this part shall subject the lease to cancellation by the Superintendent, or Lessee to a fine of not more than $500 per day for each day of such violation or noncompliance with the orders of the Superintendent, or to both such fine and cancellation. . . Payment of penalties not received within 10 days after notice of final decision is given shall be subject to late charges at the rate of not less than 1 ½ percent per month for each month or fraction thereof until paid. 25 C.F.R. § 183.42 (1975). In August 1990, this language was amended through the addition of the following language: "The Osage Tribal Council, subject to the approval of the Superintendent, may waive the late charge." 25 C.F.R. § 226.42. Although Plaintiff did not cite to the section in the Tribe's Statement of Claims or during the May 23, 2005 Status Conference, section 183.11, redesignated as section 226.11 in 1982, would also appear relevant to Plaintiff's claims related to royalty calculations. The section provides, in part: (a) Lessee shall pay or cause to be paid to the Superintendent, as royalty, the sum of not less than 16 b percent of the gross proceeds from sales after deducting the oil used by Lessee for development and operation purposes on the lease . . . The Osage -18-

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Tribal Council may, upon presentation of justifiable economic evidence by Lessee, agree to a revised royalty rate subject to approval by the Superintendent, applicable to additional oil produced from a lease or leases by enhanced recovery methods, which rate shall not be less than 12 ½ percent of the gross proceeds from sale of oil produced by enhanced recovery processes, . . . (b) Unless the Osage Tribal Council, with approval of the Secretary, shall elect to take the royalty in kind, payment shall be made at the time of sale or removal of the oil, except where payments are made on division orders, and settlement shall be based on the actual selling price, or the highest posted or offered price by a major purchaser in the Kansas-Oklahoma area whichever is higher on the day of the sale or removal. 25 C.F.R. § 183.11 (1975). In August 1990, subsection 226.11(b) was amended to provide as follows: "settlement shall be based on the actual selling price, but at not less than the highest posted price by a major purchaser (as defined in § 226.1(h)) in Osage County, Oklahoma, who purchases production from Osage oil leases." 25 C.F.R. § 226.11(b). 2. The Statutory and Regulatory Provisions are not Sufficiently Specific or Directive to Allow Plaintiff to Pass the Threshold Test of Navajo

To support an action for money damages, Plaintiff must show that the statutes or regulations "unambiguously provide that the United States has undertaken full fiduciary responsibilities" as to the particular activity at issue. Wright v. United States, 32 Fed. Cl. 54, 56 (1994), citing Mitchell I, 445 U.S. at 542. Plaintiff's fatal flaw is that it is unable to cite to any controlling provision directing the United States to undertake any duties with respect to the calculation or collection of royalties. Accordingly, Plaintiff fails to meet the threshold requirement under Navajo for articulating "a substantive source of law that establishes specific fiduciary or other duties. . ." 537 U.S. at 506. The language of the 1906 Act does not place an unambiguous or specific fiduciary duty on the United States to calculate or collect royalties owing on oil and gas leases. The Act provides generally that, inter alia, the United States shall hold in trust "all funds belonging to the Osage tribe,

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and all moneys due, and all moneys that may become due, or may hereafter be found to be due the said Osage tribe of Indians," 1906 Act § 4. As in Mitchell I, this broad language creates a limited trust relationship but does not impose specific duties with respect to these funds or moneys. Mitchell I, 445 U.S. at 542. It does not create functional obligations to calculate or collect the moneys due. Other language in the Act provides more specific directives. The Act provides that "the royalties received from oil [and] gas . . . leases shall be placed in the Treasury" and held in trust by the United States. 1906 Act § 4 (emphasis added). This provision places the specific duty on the United States to deposit royalties that are received. It also, however, falls short of establishing a specific duty on the United States to calculate or collect the royalties.8/ The duties related to the calculation and payment of royalties are found in the regulations implementing the 1906 Act, and those duties fall on the lessees.9/ The regulations provide that the "[l]essee shall pay or cause to be paid to the Superintendent,

8/

The 1906 Act also provides that "the royalties to be paid to the Osage tribe under any mineral lease . . . shall be determined by the President of the United States." 1906 Act § 3. As Plaintiff recognizes, under this provision "the royalty rate for such leases had to be determined by the President of the United States." Statement of Claims at 3 (emphasis added). Establishing royalty rates is a different function than calculating royalties based on those rates. Under the authority of this provision, Interior promulgated implementing regulations that established the royalty rates at 16 ½ percent and 12 ½ percent for for oil produced by secondary recovery processes. See Preamble, 39 Fed. Reg. 22254; 25 C.F.R. § 183.11 (1975). Also, in 1950, Congr