No. 01-1375
In the Supreme Court of the United States
UNITED STATES OF AMERICA, PETITIONER
v.
NAVAJO NATION
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
THEODORE B. OLSON
Solicitor General
Counsel of Record
THOMAS L. SANSONETTI
Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
GREGORY G. GARRE
Assistant to the Solicitor
General
TODD S. AAGAARD
Attorney
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
QUESTION PRESENTED
The Indian Mineral Leasing Act of 1938 (IMLA), 25 U.S.C. 396a et seq., and regulations thereunder, authorize an Indian Tribe, with the approval of the Secretary of the Interior (Secretary), to lease tribal lands for mining purposes. The question presented is:
Whether the court of appeals properly held that the United States is liable to the Navajo Nation for up to $600 million in damages for breach of fiduciary duty in connection with the Secretary's actions concerning an Indian mineral lease, without finding that the Secretary had violated any specific statutory or regulatory duty established pursuant to the IMLA.
In the Supreme Court of the United States
No. 01-1375
UNITED STATES OF AMERICA, PETITIONER
v.
NAVAJO NATION
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
The Solicitor General, on behalf of the United States of America, respectfully petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App., infra, 1a-30a) is reported at 263 F.3d 1325. The opinion of the Court of Federal Claims (App., infra, 31a-79a) is reported at 46 Fed. Cl. 217.
JURISDICTION
The judgment of the court of appeals (App., infra, 80a) was entered on August 24, 2001. A timely petition for rehearing was denied on November 16, 2001 (App., infra, 80a-81a). On February 4, 2002, the Chief Justice extended the time within which to file a petition for a writ of certiorari to and including March 15, 2002. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
STATUTORY PROVISIONS INVOLVED
1. Section 1 of the Indian Mineral Leasing Act of 1938 (IMLA), 25 U.S.C. 396a, states:
On and after May 11, 1938, unallotted lands within any Indian reservation or lands owned by any tribe, group, or band of Indians under Federal jurisdiction, except those specifically excepted from the provisions of sections 396a to 396g of this title, may, with the approval of the Secretary of the Interior, be leased for mining purposes, by authority of the tribal council or other authorized spokesmen for such Indians, for terms not to exceed ten years and as long thereafter as minerals are produced in paying quantities.
2. Other pertinent statutory provisions-the Tucker Act, 28 U.S.C. 1491(a), and Indian Tucker Act, 28 U.S.C. 1505- are set forth in the appendix. App., infra, 86a.
STATEMENT
This case concerns the potential liability of the United States in money damages for breach of trust when the Secretary of the Interior has approved a mineral lease agreed to by an Indian Tribe and a private lessee.
1. The United States, through the Secretary of the Interior (Secretary), regulates the leasing of mineral resources on Indian tribal lands under the Indian Mineral Leasing Act of 1938 (IMLA), 25 U.S.C. 396a-396g, and regulations thereunder. The IMLA authorizes an Indian Tribe, "with the approval of the Secretary," to lease unallotted tribal lands for mining purposes for a term not to exceed 10 years and as long thereafter as minerals are produced in paying quantity. 25 U.S.C. 396a. The IMLA also delegates to the Secretary the authority to promulgate rules and regulations governing mineral "operations," 25 U.S.C. 396d, and permits the Secretary to authorize other officials in the Indian Service to approve Indian mineral leases, 25 U.S.C. 396e.
The Secretary has promulgated regulations implementing the IMLA. The regulations in effect during the events at issue in this case provided that "Indian tribes * * * may, with the approval of the Secretary * * * or his authorized representative, lease their land for mining purposes." 25 C.F.R. 211.2 (1985). The regulations established minimum royalty rates for minerals subject to leasing, including, for coal, "a royalty of not less than 10 cents per ton of 2,000 pounds of [coal]." 25 C.F.R. 211.15(c) (1985).1 The regulations also provided that lessees could not assign or transfer a lease without the Secretary's approval, 25 C.F.R. 211.26 (1985), and established various other requirements concerning mineral leases and parties to such leases.
2. The Navajo Nation (Tribe), a federally recognized Indian Tribe, occupies the largest Indian reservation in the United States. The Tribe's Reservation comprises more than 25,000 square miles, and spans parts of northeast Arizona, northwest New Mexico, and southeast Utah. Over the past century, large deposits of minerals-including coal, oil, and gas-have been discovered on the Tribe's reservation lands, which are held for the Tribe in trust by the United States. Each year, the Tribe receives tens of millions of dollars in royalty payments pursuant to Indian mineral leases that it has entered into with private companies in accordance with the IMLA. See C.A. App. A2255-A2262.
a. Peabody Coal Company (Peabody) mines coal on the Tribe's lands pursuant to leases covered by the IMLA. Lease 8580 was executed by the Tribe and the Sentry Royalty Company (Peabody's predecessor in interest), and was approved by the Secretary in 1964. The lease established a royalty rate of 37.5 cents per ton of coal, but provided that "the royalty provisions of this lease are subject to reasonable adjustment by the Secretary * * * or his authorized representative" on the 20-year anniversary of the lease, and every ten years thereafter. App., infra, at 82a. In 1966, Peabody (through Sentry Royalty Company) entered into two other coal leases, Lease 9910 and Lease 5743. Those leases contained somewhat higher royalty rates than Lease 8580, see C.A. App. A2678, but did not contain a provision subjecting those rates to reasonable adjustment by the Secretary.2
b. In the 1970s, the Tribe sought to renegotiate its existing mineral leases with its private lessees, including Peabody, to increase the royalty payments generated by those leases. As the 20-year anniversary of Lease 8580 approached, the royalty rate established by that lease of 37.5 cents per ton was "equivalent to about 2% of gross proceeds" on the lease. App., infra, 2a. That royalty rate was considerably above the minimum royalty rate (10 cents per ton) established by the IMLA regulations for coal leases subject to approval by the Secretary, 25 C.F.R. 211.15(c) (1985), but at the same time was below the minimum rate (12 1/2 percent of gross proceeds) set by Congress in 1976 for coal mined on federal lands not subject to the IMLA. See 30 U.S.C. 207(a); App., infra, 38a.
In March 1984, the Chairman of the Navajo Tribal Council wrote to the Secretary and asked him to adjust the royalty rate under Lease 8580, in accordance with the term of that lease allowing a "reasonable adjustment" by the Secretary after 20 years. C.A. App. A375-A376. The Chairman asserted that an increase substantially in excess of 12 1/2 percent was warranted in light of the quality of the coal, but that "simple equity" indicated that the minimum royalty rate should not be less than the 12 1/2 percent provided for under federal coal leases. Id. at A375. The Chairman also sought the Secretary's "assistance and support in securing voluntary adjustment" in the royalty rates with respect to leases that did not contain an adjustment clause like Lease 8580's and that, in the Chairman's view, contained rates that were "unfair and inequitable." Id. at A375-A376.
In June 1984, the Area Director of the Bureau of Indian Affairs for the Navajo Area Office, acting pursuant to the Tribe's request, adjusted the royalty from 37.5 cents per ton to 20 percent of gross proceeds. He then notified Peabody of the adjustment. App., infra, 2a-3a; C.A. App. A438.
c. Peabody appealed the Area Director's decision pursuant to 25 C.F.R. 211.2 (1985), challenging, inter alia, the Area Director's failure to consult Peabody before reaching his decision. See C.A. App. A2288-A2315.3 The appeal was taken under consideration by Acting Assistant Secretary of the Interior for Indian Affairs, John Fritz. Shortly thereafter, the Tribe broke off negotiations with Peabody on the proposed amendments. App., infra, 39a-40a.
While its appeal was pending, Peabody wrote to Department of the Interior (DOI) officials, asking them to postpone a decision on its appeal in order to permit the parties to attempt to reach a negotiated settlement with respect to a full range of issues, including the royalty rate adjustment to Lease 8580. C.A. App. A2686. In July 1985, following a meeting with the Tribe, Peabody wrote to Secretary of the Interior Donald Hodel, stating that the Tribe apparently had received word of an imminent decision in the Tribe's favor on the appeal of the Area Director's decision, and had informed Peabody that it was breaking off negotiations until DOI had ruled on the appeal. Peabody asked the Secretary to assume jurisdiction of its appeal and either to postpone a decision to allow for a negotiated settlement or to rule in Peabody's favor. Id. at A2688. A copy of that letter was sent to the Tribe. In response, the Tribe wrote to the Secretary, urging him to reject Peabody's request and to decide the appeal in its favor. Ibid.; App., infra, 40a.
Peabody then retained Stanley Hulett, a former aide and friend of Secretary Hodel, and sought a meeting with the Secretary. The record indicates that Hulett and Peabody representatives met with Secretary Hodel in July 1985. App., infra, 40a. On July 17, 1985, Secretary Hodel sent a memorandum to Acting Assistant Secretary Fritz, a draft of which had been provided to the Secretary by Peabody, "suggest[ing]" that he inform the parties "that a decision on th[e] appeal is not imminent and urge them to continue with efforts to resolve this matter in a mutually agreeable fashion." Id. at 76a. The Secretary's memorandum explained that "[a]ny royalty adjustment which is imposed on the parties without their concurrence will almost certainly be the subject of protracted and costly appeals," and "could well impair the future of the contractual relationship" between the parties. Ibid. The Secretary assured the Assistant Secretary, however, "that this memorandum is not intended as a determination of the merits of the arguments of the parties with respect to the issues which are subject to the appeal." Id. at 77a.4
d. The Tribe "has denied contemporaneous knowledge of the Hodel-Hulett meeting or its results," and at most "admit[s] that 'someone from Washington' had urged a return to the bargaining table." App., infra, 43a; see C.A. App. A2370, A2689, A2690-A2691. In late August 1985, the Tribe and Peabody renewed their negotiations. On September 23, 1985, they reached a tentative agreement over a package of amendments not only to Lease 8580, but also to Leases 9910 and 5743. App., infra, 42a. The negotiated agreement resolved a broad range of issues concerning the existing lease agreements between the parties.
In particular, "[i]n consideration of the benefits associated with [these lease] amendments," the parties agreed to jointly move to vacate the Area Director's July 1985 decision and, instead, adjust the royalty rate under Lease 8580 from 37.5 cents per ton to 12 1/2 percent of the monthly gross proceeds. App., infra, 84a-85a. Peabody further agreed to pay royalties at the new 12 1/2 percent rate on all coal mined under the lease since February 1, 1984. Ibid. As part of the deal, Peabody also agreed to increase the royalty rates with respect to Leases 9910 and 5743, even though those leases, unlike Lease 8580, did not contain any provision for the adjustment of the royalty rate during the term of the lease. C.A. App. A2678, A2692.
At the same time, Lease 8580 was amended to acknowledge the validity of tribal taxation of coal production, and to recognize the Tribe's agreement to waive certain back tribal taxes. C.A. App. A805-A810. The tax rate was to be capped at 8 percent, which "would thus permit the tribe to realize as much as 20.5 percent yield in royalties and taxes combined." App., infra, 44a.5 Peabody further agreed to pay the Tribe $1.5 million when the amendments became effective, and $7.5 million when it began mining additional coal agreed to by the parties. C.A. App. A804-A805; see App., infra, 43a (The agreement not only adjusted existing royalty rates on the leases, but "also addressed ancillary matters such as provisions for future royalty adjustments, arbitration procedures, rights of way, the establishment of a tribal scholarship fund, and the payment by Peabody of back royalties, bonuses, and water payments.").
e. In August 1987, the Navajo Tribal Council approved the lease amendments. A final agreement was signed by the parties in November 1987. The parties then asked Secretary Hodel to approve their agreement. The Secretary formally approved the lease amendments on December 14, 1987. Shortly thereafter, the Area Director's June 1984 decision adjusting the royalty rate to 20 percent was vacated. App., infra, 45a.
3. In 1993, the Tribe brought suit against the United States in the Court of Federal Claims, alleging that the Secretary's approval of the lease amendments agreed to by the Tribe and Peabody and adjusting the royalty rate on Lease 8580 to 12 1/2 percent of gross proceeds constituted a breach of trust and a breach of contract. The Tribe did not seek to invalidate the lease amendments, but instead sought $600 million in damages. On cross-motions for summary judgment, the Court of Federal Claims rejected both the Tribe's breach of trust and breach of contract claims, and granted judgment for the United States. App., infra, 31a-79a.
With respect to the claim for breach of trust, the Court of Federal Claims found that the United States had entered into a general fiduciary relationship with the Navajo Nation by virtue of the nature of its relationship with Indian Tribes, and the fact that the United States holds tribal lands in trust. App., infra, 48a. Although the court noted that the relationship between Indians and the United States "is not necessarily described by the common law of trusts," the court nevertheless decided to consider at the outset the government's actions against the duties governing a common law trustee. Ibid. Applying common law standards, the court concluded that the Secretary had contravened the common law fiduciary duties of care, loyalty, and candor by meeting with Peabody while the company's administrative appeal was pending and not disclosing that meeting to the Tribe. Id. at 48a, 52a. The court further observed that, "[w]ere this a court of equitable jurisdiction considering a private trust, [the Tribe] might easily qualify for [damages]." Id. at 52a (emphasis added).
The court continued, however, that "to succeed in litigation in this Court, [the Tribe] must show that the IMLA imposes specific fiduciary duties on the government, as opposed to general duties, and that the United States violated a specific fiduciary duty which Congress intended to compensate with money damages." App., infra, 53a. In determining whether the Tribe had made such a showing, the court reviewed the IMLA and its implementing regulations in the light of this Court's decisions in United States v. Mitchell, 445 U.S. 535 (1980) (Mitchell I), and United States v. Mitchell, 463 U.S. 206 (1983) (Mitchell II). See App., infra, 54a, 59a-61a.
The court recognized "that in enacting IMLA, the United States assumed the responsibility to manage minerals such as coal in a fiduciary capacity." App., infra, 55a. But after reviewing the IMLA and implementing regulations, the court concluded that the United States' "responsibility as it relates to coal royalties does not rise above a generalized trust obligation," which under the Mitchell decisions, it explained, is not sufficient to create a money-mandating duty on the government's part. Id. at 66a; see also id. at 67a ("[N]either the IMLA nor its implementing regulations, 25 C.F.R. Part 211, impose specific duties regarding the Secretary's adjustment of royalty rates for coal."). The court further concluded that, although the Tribe's complaint "[a]lleg[ed] breaches of general fiduciary duties, [it] failed to link any breach to a specific money-mandating statutory or regulatory provision." Id. at 66a.
The court emphasized that "[the Tribe] cites no provision with respect to royalty-setting that demonstrates federal control over that process." App., infra, 67a. Indeed, the court noted that in this case "the Secretary's role with respect to royalty adjustment, in particular, derives solely from the terms of the lease" between the Tribe and Peabody -i.e., the provision of Lease 8580 allowing the Secretary to adjust the royalty rate after 20 years, ibid.-rather than from a statute or regulation. "Even then," the court continued, "the Secretary's only guidance was to be 'reasonable' in revising rates." Id. at 67a-68a. The court acknowledged that, although it is not required to do so by statute or regulation, "as a matter of policy, DOI would not approve coal leases with royalties less than those the [United States] would receive for its own coal- * * * 12.5 percent." Id. at 68a. But the court noted that "there is no claim by the [Tribe] that the 1987 approval of Lease 8580, with royalties of 12.5 percent, ran afoul of that policy." Ibid.6
4. a. A divided panel of the Federal Circuit reversed on the breach of trust claim. App., infra, 1a-30a. The court began by discussing this Court's Mitchell decisions, see id. at 5a-6a, and then its own precedents involving breach of trust claims by Indians, including its recent decision in White Mountain Apache Tribe v. United States, 249 F.3d 1364 (2001), petition for cert. pending, No. 01-1067 (filed Jan. 22, 2002). In White Mountain Apache, the court noted, "[a]lthough the statute was silent on how the United States was to administer the property," the court had applied the common law of trusts to find a duty on the part of the United States enforceable in a suit for damages, "despite the absence of a specific statute and regulations." App., infra, 6a.
The court of appeals then analogized the degree of federal involvement with respect to mineral leasing on Indian lands under the IMLA and its implementing regulations to the degree of federal involvement with respect to forest management on Indian lands, which this Court held in Mitchell II gave rise to a fiduciary duty that, if breached, would support a claim for money damages. App., infra, 8a; see id. at 8a-10a. Pointing to 25 U.S.C. 399 (which, as explained below, is not part of the IMLA), the court also concluded that "the statute explicitly requires that the Secretary must act in the best interests of the Indian tribes." App., infra, 8a-9a; id. at 11a. With that understanding, the court concluded that the Court of Federal Claims had erred in finding that there was no sufficient trust relationship between the United States and the Tribe with respect to coal resources that could give rise to a suit for damages in this case. Id. at 11a.
After finding the existence of such a trust relationship, the court of appeals held that the Secretary's actions with respect to Peabody's administrative appeal concerning the adjustment of the royalty rate under Lease 8580-which the court characterized as "suppressing and concealing" the decision of the Assistant Secretary and "thereby favoring Peabody interests to the detriment of Navajo interests," App., infra, 11a-violated both the common law duties on which the Court of Federal Claims had relied, as well as what the court of appeals described as a statutory duty "to obtain for the Indians the maximum return for their minerals." Id. at 12a. The court did not, however, identify what specific provision of the IMLA or its implementing regulations had imposed such a duty, or had been violated by the Secretary. Then, citing Mitchell II, the court concluded that the Tribe was entitled to money damages for breach of the fiduciary duties the court had described. Ibid.; see ibid. ("Breach by the federal government of its fiduciary duty is subject to remedy by the assessment of 'damages resulting from a breach of the trust.'") (quoting Mitchell II, 463 U.S. at 226). The court remanded for a "determination of damages." Ibid.
b. Judge Schall concurred in part and dissented in part. App., infra., 13a-30a. Drawing on this Court's Mitchell decisions and circuit precedent, he reasoned that it is not enough to show a violation of a general fiduciary relationship stemming from federal involvement in a particular area. Rather, "to state a claim upon which relief can be granted," Judge Schall reasoned, a Tribe "must show the breach of a specific fiduciary obligation that falls within the contours of the statutes and regulations that create the general fiduciary relationship at issue." Id. at 29a-30a; see id. at 16a ("[U]nder Mitchell II, the focus is on the statute and regulations that create the fiduciary relationship.").
Judge Schall agreed that the IMLA and implementing regulations create a "general fiduciary relationship" between the United States and the Tribe with respect to mineral leases on Indian lands, but at "this point [he] part[ed] company with the majority." App., infra, 25a. In his view, "the only government action in this case that implicated a specific fiduciary responsibility to the [Tribe] was DOI's approval of the Agreement" in 1987. Id. at 26a. He explained that, although other government actions "may demonstrate disloyalty to the [Tribe] in a vacuum," the Tribe was required to show that the government breached a specific fiduciary obligation with respect to the agreed package of lease amendments. Id. at 28a. Judge Schall concluded that the Secretary had breached such a duty by failing to conduct an economic analysis of the lease agreement, which he found, citing common law principles, was implicit in the Secretary's authority to approve the lease amendments. Id. at 27a, 30a.
REASONS FOR GRANTING THE PETITION
The divided court of appeals' decision in this case holds that the United States is liable for up to $600 million in damages for breach of trust by the Secretary's actions in 1985 in requesting the Acting Assistant Secretary to defer a decision on Peabody's administrative appeal concerning a royalty rate adjustment under Lease 8580, without finding that the United States violated any specific fiduciary duty established by the IMLA or regulations thereunder. And the court did so without finding that the Secretary violated any statutory or regulatory duty in 1987 by approving the package of negotiated lease amendments, which superseded the royalty-adjustment provision in Lease 8580.
The decision of the court of appeals directly contravenes this Court's precedents establishing the predicate necessary to show that the United States may be liable in damages for breach of a trust responsibility owed to an Indian Tribe. United States v. Mitchell, 445 U.S. 535 (1980) (Mitchell I); United States v. Mitchell, 463 U.S. 206 (1983) (Mitchell II). The decision in this case, particularly coupled with the court of appeals' recent decision in White Mountain Apache Tribe v. United States, 249 F.3d 1364 (2001), in which the United States also has filed a petition for a writ of certiorari (No. 01-1067), demonstrate the need for review by this Court with respect to the proper application of its Mitchell decisions, and with respect to the important sovereign immunity principles on which the Mitchell decisions rest.
A. This Case Presents A Threshold Immunity Question Of Fundamental Importance
The United States enjoys sovereign immunity from suit for damages except when it has undertaken, by statute or implementing regulation, to subject itself and the public's Treasury to claims for violations of specific duties that such provisions of law have imposed. The central question in this case is whether the United States has waived its sovereign immunity with respect to the breach of fiduciary duty claim that the court of appeals sustained below.
1. "[T]he Court of Claims' jurisdiction to grant relief depends wholly upon the extent to which the United States has waived its sovereign immunity to suit and * * * such a waiver cannot be implied but must be unequivocally expressed." United States v. King, 395 U.S. 1, 4 (1969) (citing United States v. Sherwood, 312 U.S. 584, 586 (1941)). Congress has consented to be sued on certain claims for money damages under the Tucker Act and the Indian Tucker Act. 28 U.S.C. 1491(a), 1505. Those statutes, however, are merely jurisdictional. See Mitchell II, 463 U.S. at 212-217. They do "not create any substantive right enforceable against the United States for money damages." Id. at 216; see United States v. Testan, 424 U.S. 392, 398 (1976). As a result, in order to state a claim for money damages against the United States that is cognizable under the Tucker Acts, a plaintiff must point to a "substantive right" stemming from some other provision of law-such as an Act of Congress or implementing regulation-that "can fairly be interpreted as mandating compensation by the Federal Government for the damage sustained." Mitchell II, 463 U.S. at 217. The requisite waiver of sovereign immunity exists only "[i]f a claim falls within this category." Id. at 218; see Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 431 (1990).
2. This Court's Mitchell decisions rest on that foundation. In the underlying Mitchell litigation, the Quinault Tribe and numerous 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- which provides for the United States to hold allotted lands "in trust for the sole use and benefit of [Indian allotees]," 445 U.S. at 541 (quoting 25 U.S.C. 348)-did not support a money-damages action against the United States for alleged mismanagement of timber resources on allotted lands. As the Court explained, the General Allotment Act created "only a limited trust relationship between the United States and the [Tribe]." Id. at 542. "The Act does not unambiguously provide that the United States has undertaken full fiduciary responsibilities as to the management of allotted lands." Ibid.
In Mitchell II, the Court considered a different set of statutes and implementing regulations, under which the government itself managed virtually every aspect of Indian timber operations, and held that those provisions could "fairly be interpreted as mandating compensation by the Federal Government" for mismanagement of such resources. 463 U.S. at 228. In so holding, the Court emphasized that those provisions established "comprehensive responsibilities of the Federal Government in managing the harvesting of Indian timber." Id. at 222. Distinguishing the situation in Mitchell I, the Court stated: "In contrast to the bare trust created by the General Allotment Act, the statutes and regulations now before us clearly give the Federal Government full responsibility to manage Indian resources and land for the benefit of the Indians. They thereby establish a fiduciary relationship and define the contours of the United States' fiduciary responsibilities." Id. at 224.7
Together, the Mitchell decisions establish important limitations on the liability of the United States in damages for breach of a fiduciary duty owed to an Indian Tribe or Indians.
B. The Court Of Appeals' Decision Conflicts With This Court's Precedents
In finding that the United States is liable in damages in this case for breach of trust, the court of appeals contravened the central teachings of this Court's Mitchell decisions.
1. In Mitchell I, the Court held that the fact that a statute creates a trust relationship between the United States and an Indian Tribe with respect to property is not in itself sufficient to give rise to a money-mandating obligation on the part of the United States. 445 U.S. at 542. The Court reached that conclusion even though the statute in Mitchell I, the General Allotment Act, explicitly requires the United States to hold land "in trust for the sole use and benefit of the Indian to whom such allotment shall have been made." Id. at 541 (emphasis added). The Court explained that "[t]he Act does not unambiguously provide that the United States has undertaken full fiduciary responsibilities as to the management of allotted lands." Id. at 542 (emphasis added); see id. at 543.
In the IMLA, the United States has assumed certain fiduciary responsibilities with respect to the leasing of minerals on Indian lands, but that Act "does not unambiguously provide that the United States has undertaken full fiduciary responsibilities as to the management of [leased] lands." Mitchell I, 445 U.S. at 542 (emphasis added). To the contrary, the key provision of that Act transferred leasing authority from the Secretary to the Tribes. It provides that tribal lands "may, with the approval of the Secretary * * *, be leased for mining purposes, by authority of the tribal council or other authorized spokesmen." 25 U.S.C. 396a (emphasis added). Moreover, as the Court of Federal Claims explained, that provision squares with an important purpose of the IMLA-"to foster Indian self-determination," an "ideal" that is "directly at odds" with the notion that the Secretary has full "control over leasing." App., infra, 58a-59a; see Crow Tribe of Indians v. Montana, 650 F.2d 1104, 1112 (1981), amended, 665 F.2d 1390 (9th Cir.), cert. denied, 459 U.S. 916 (1982) (The IMLA gave "tribal governments control over decisions to lease their lands and over lease conditions, subject to approval of the Secretary of Interior, where before the responsibility for such decisions was lodged in large part only with the Secretary").8
To be sure, another purpose of the IMLA is to see that Indian Tribes receive "a profitable source of revenue" from the leasing of mineral resources on their lands. Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 179 (1989). That conclusion is supported by the legislative history of the IMLA, which states in part: "It is not believed that the present law is adequate to give the Indians the greatest return from their property." S. Rep. No. 985, 75th Cong., 1st Sess. 2 (1938). But as this Court admonished in Cotton Petroleum, 490 U.S. at 179, that statement cannot be given "talismanic effect." Even when "[r]ead in the broadest terms possible," the reference in the committee report to "greatest return from their property" "suggests that Congress sought to remove 'disadvantages in [leasing mineral rights] on Indian lands that are not present in applying for a claim on the public domain.'" Ibid.
The reference in the legislative history thus does not entitle a Tribe to renegotiate a lease-or to sue the United States-any time that it believes in retrospect that it did not receive the greatest possible return for its resources. Nor does it obligate the Secretary to second guess or disapprove leases that already have been negotiated and agreed to by a Tribe and a lessee on the ground that, in the Secretary's view, the royalty rate and other conditions agreed to by the parties would not maximize the Tribe's profits, or that an alternative set of lease terms would be more in the best interests of the Tribe. The IMLA authorizes the Tribes to negotiate mineral leases with others. The Act's requirement of approval by the Secretary furnishes a general backstop protection, not a duty on the part of the Secretary independently to determine and impose on the parties the terms that she believes will maximize the return for one side of the negotiated transaction.
Moreover, as discussed above, in Mitchell I, the statute explicitly obligated the United States to act for the "sole * * * benefit" of the Indians, but the Court nonetheless concluded that it did not give rise to a money-mandating obligation on the part of the United States. 445 U.S. at 541 (emphasis added). In the same vein, to the extent that the IMLA generally obligates the Secretary to act for the benefit of Indian Tribes, or in the interests of Tribes, the existence of such a general fiduciary duty does not in itself authorize a damages action against the United States with respect to every claim that the Secretary erred in some particular way in implementing the IMLA.9
2. Trying to take this case out of the realm of Mitchell I, the court of appeals reasoned that here, as in Mitchell II, the statutory and regulatory scheme gives the Secretary "control" over the management of the Indian resources at issue, and that the existence of such control gave rise to a money-mandating duty on the part of the United States in managing those resources, including with respect to "all appurtenant trustee duties, obligations, and liabilities." App., infra, 5a (emphasis added); see id. at 8a ("The [IMLA] and its regulations are similar to those governing timber resources that were subject of Mitchell II, insofar as federal authority is concerned."). That understanding of Mitchell II is flawed on several different levels.
a. First, the degree of control exercised by the Secretary with respect to timber management on Indian lands is much greater than the degree of any control exercised by the Secretary with respect to Indian mineral leases. In Mitchell II, this Court went to great lengths to describe the "pervasive" control that the United States has expressly assumed with respect to Indian timber sales. 463 U.S. at 219; see id. at 220 ("regulations address[] virtually every aspect of forest management"); id. at 222 (statutes establish "'comprehensive' responsibilities of the Federal Government in managing the harvesting of Indian timber"); id. at 225 (government has "assume[d] * * * elaborate control over forests and property belonging to Indians."); id. at 225 n.29 (discussing "pervasive federal control" in this area). As the Court of Federal Claims explained, "the level of management and control that the government has assumed over coal leases under IMLA" does not come close to the level of federal control on which this Court grounded Mitchell II. See App., infra, 54a; see id. at 55a-59a.
b. Second, in Mitchell II this Court did not focus on the existence of federal control with respect to Indian resources vel non. Instead, in addition to pointing to the existence of a "pervasive" regulatory scheme, the Court emphasized that the government had specifically assumed "fiduciary management duties" with respect to Indian resources. 463 U.S. at 218 (emphasis added); see id. at 222 ("emphasizing the Secretary of the Interior's management duties"). For example, the statute in Mitchell II expressly provided that "[s]ales of timber 'shall be based upon a consideration of the needs and best interests of the Indian owner and his heirs." Id. at 209 (citations omitted); see id. at 222. In addition, Congress mandated that, "[i]n performing this duty, the Secretary was specifically required to take into account" several different factors, including "the highest and best use of the land" and the "'present and future financial needs of the owner and his heirs." Ibid.; see also id. at 220-221 (Congress has imposed "strict[] duties upon the Government with respect to Indian timber management," including by "expressly direct[ing] that the Interior Department manage Indian forest resources 'on the principle of sustained-yield management.'") (emphasis added).
Congress has not imposed any comparable "fiduciary management duties" on the Secretary with respect to Indian mineral leases. When the Secretary approves a lease (or an amendment to an existing lease), the IMLA neither mandates that she establish a particular royalty rate or other terms, nor imposes specific standards that the Secretary must assure are satisfied. The regulations that applied when Peabody filed its appeal in 1985 and the Secretary approved the lease amendments in 1987, for example, provided only that the Secretary could not approve a lease with a minimum royalty rate of less than "10 cents per ton." 25 C.F.R. 211.15(c) (1985 and 1987). As noted above, the current regulations have increased the minimum royalty rate to 12 1/2 percent of gross proceeds-the rate that applies to coal leases on federal lands-and state that "[a] lower royalty rate shall be allowed if it is determined to be in the best interest of the Indian mineral owner." 25 C.F.R. 211.43(b) (2001). The regulations do not separately refer to the Secretary's approval of a rate that is at least equal to the minimum 12 1/2 percent rate, much less require the Secretary to insist that the parties agree to a higher rate under particular circumstances. That structure of even the current regulations underscores that the United States has not assumed any specific fiduciary management duties with respect to the approval of a lease that contains a royalty rate at least equal to the minimum rate. See 56 Fed. Reg. 58,734, 58,736 (1991) (minimum royalty rate regulation provides "reasonable royalty rates for lessors.").10
If Congress or the Secretary, acting pursuant to statute, determines that it is appropriate to adopt additional, or more innovative, management duties with respect to coal leases, the statutes and regulations discussed in Mitchell II with respect to timber management underscore that they are capable of doing so.
c. Third, Mitchell II establishes that, even when the United States has entered into a money-mandating trust relationship with an Indian Tribe, to recover damages for breach of trust an Indian plaintiff must establish a violation of one of the specific statutes or regulations giving rise to that relationship. See 463 U.S. at 224 (The statutes and regulations governing Indian timber management "establish a fiduciary relationship and define the contours of the United States' fiduciary responsibilities.") (emphasis added); id. at 219 (To determine whether an Indian Tribe has a damages claim, the Court examines whether the statutes and regulations at issue "can be fairly interpreted as mandating compensation for damages sustained as a result of a breach of the duties they impose.") (emphasis added). That causal link was present in Mitchell II, where the Indian plaintiffs claimed that the government had breached specific fiduciary duties that it owed to them under the statutes and regulations discussed above in managing the timber resources at issue. See id. at 210.
The requisite causal link, however, is missing here. Even assuming (contrary to the considerations discussed above) that the IMLA and its implementing regulations establish the kind of trust relationship that the Court found in Mitchell II, the court of appeals did not find, and indeed the Tribe has not even alleged, the breach of any specific duties imposed by the statutes or regulations giving rise to that re-lationship. See App., infra, 66a (In "[a]lleging breaches of general fiduciary duties, the Navajo have failed to link any breach to a specific money-mandating statutory or regulatory provision."). The Tribe's money damages claim for breach of trust fails for that reason alone.
In finding that the United States had breached money-mandating duties owed to the Tribe, the court of appeals did not object to the Secretary's approval of the lease amendments, or to the fairness of the lease package that the Tribe negotiated and asked the Secretary to approve in 1987. Instead, the court pointed to the "[t]he action of the Secretary in suppressing and concealing the decision of the Assistant Secretary" on Peabody's administrative appeal concerning a provision in Lease 8580 that was superseded by those amendments. App., infra, 11a; see id. at 11a-12a. Nothing in the IMLA itself or in the regulations implementing the IMLA imposes any specific duties on the Secre-tary with respect to his supervision of his subordinates on such appeals. Rather, DOI regulations of general applicability establish a process for appeals from administrative actions by various DOI officials, see 25 C.F.R. Pt. 2 (1985 and 2001), and the procedural standards governing that process are defined by the Administrative Procedure Act (APA) and the DOI regulations, not by the IMLA. The court of appeals did not find that the Secretary's actions violated any provision of the DOI's procedural rules or the APA and, in fact, the DOI rules in place at the time the Secretary acted explicitly reserved to the Secretary all powers conferred upon him by law and authorized him "to direct any [Department employee] to reconsider a decision." 43 C.F.R. 4.5(a)(2) (1985); see note 4, supra.11
Even if there were a procedural rule or principle that the Secretary violated with respect to Peabody's administrative appeal, that would not justify an action for money damages under the Tucker Act. Procedural duties are in the nature of due process protections, and even constitutional procedural due process violations do not give rise to a damages claim under the Tucker Act. See, e.g., Testan, 424 U.S. at 403; United States v. Hopkins, 427 U.S. 123, 130 (1976). Instead, the proper recourse would be an APA action to set aside the Secretary's 1987 decision approving the lease amendments, or to timely seek to challenge or reinstate the administrative proceedings concerning the Area Director's decision to increase the royalty rate under the adjustment clause in Lease 8580, not a claim for money damages against the United States for breach of any trust relationship established pursuant to the IMLA.12
3. The court of appeals also erred to the extent that it treated the United States as if it were a private trustee that may be liable in money damages to an Indian Tribe for any breach of the common law duties cited by the court. See App., infra, 11a-12a, 12a-13a. As the Court of Federal Claims explained, the violations of the common law duties that it found "do not themselves confer jurisdiction on this Court, nor entitle [the Tribe] to money damages." Id. at 52a.
The United States occupies a unique relationship with the Indian Tribes that has long been characterized as one of "guardianship" or "trust." See United States v. Kagama, 118 U.S. 375, 382-384 (1886); Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831). The United States fully accepts the implications of that relationship and the undertakings that go with it. Not all those undertakings, however, give rise to legally enforceable duties on the part of the United States, much less duties that are enforceable in a suit for money damages. In determining when an alleged breach of those duties may give rise to a suit for money damages, this Court has invoked the same principles that govern the determination whether the United States is immune from money-damages actions in other contexts. See Mitchell II, 463 U.S. at 218-219; Mitchell I, 445 U.S. at 538; see also United States v. Mottaz, 476 U.S. 834, 851 (1986); Klamath & Moadoc Tribes of Indians v. United States, 296 U.S. 244, 250, 255 (1935); Blackfeather v. United States, 190 U.S. 368, 376 (1903). To the extent that the court of appeals' decision puts the United States in the shoes of a private, common law trustee for purposes of determining whether the government has assumed money-mandating obligations to an Indian Tribe, the decision departs significantly from this Court's precedents.13
C. The Court Of Appeals' Decision Could Have Serious Adverse Consequences For The Government
The practical implications of the court of appeals' decision are significant. The Tribe's damages claim in this case alone totals $600 million. The decision below will encourage the filing of damages claims against the United States for breach of trust with respect to the Secretary's approval of Indian mineral leases with private entities. Indeed, any Indian Tribe that believes, with the benefit of hindsight or due to market corrections, that it could have negotiated a better mineral lease deal may seek to obtain damages from the Secretary for breach of trust in approving such an agreement under the IMLA or, as in this case, even under a separate lease term. At a minimum, such a development will subject the United States to costly litigation over such matters as the market value of lease terms negotiated several-or, as here, many-years ago. The Court of Federal Claims already has applied the decision in this case in holding that the United States may be liable in money damages for alleged mismanagement of resources. See Shoshone Indian Tribe of the Wind River Reservation v. United States, 51 Fed. Cl. 60, 68 (2001).
In addition, the important and recurring nature of the basic question presented by this case is underscored by the Federal Circuit's recent decision in White Mountain Apache Tribe v. United States, 249 F.3d 1364 (2001), petition for cert. pending, No. 01-1067. There, the Federal Circuit held that the United States is accountable in money damages for an alleged breach of trust in connection with the property placed in trust by the Act of March 18, 1960 (1960 Act), Pub. L. No. 86-392, 74 Stat. 8, even though the Tribe did not allege that the United States had breached a specific statutory or regulatory duty to manage the property for the benefit of the Tribe and, indeed, the 1960 Act explicitly reserved to the government the right to use the property for its own purposes "for as long as" (74 Stat. 8) it deems necessary. In this case, the Federal Circuit specifically relied upon the fundamentally flawed reasoning of White Mountain Apache in finding the breach of a money-mandating obligation, without identifying the violation of any specific statutory or regulatory duty. See App., infra, 6a ("Although the statute [in White Mountain Apache] was silent on how the United States was to administer the property, the court applied the common law of trusts to hold that the United States had a trustee's duty to preserve the trust corpus, despite the absence of a specific statute and regulations.").
Under the Tucker Acts, the Federal Circuit is the only circuit that has jurisdiction to consider claims against the United States for money damages for violation of a statute or implementing regulation. It is therefore critical for this Court to review the Federal Circuit's recent, and marked, departure from the teaching of the Mitchell decisions with respect to the necessary predicate that a Tribe must show to bring a damages claim against the United States for breach of fiduciary duty. In addition, because this case and White Mountain Apache arise under different statutory schemes, they each present that question in a different light. As a result, granting plenary review in both cases would materially assist the Court in addressing the proper application of the Mitchell decisions in a comprehensive manner.
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted.
THEODORE B. OLSON
Solicitor General
THOMAS L. SANSONETTI
Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
GREGORY G. GARRE
Assistant to the Solicitor
General
TODD S. AAGAARD
Attorney
MARCH 2002
1 In 1996, the minimum royalty rate on new leases for coal was increased to "12 1/2 percent of the value of production produced and sold from the lease." 25 C.F.R. 211.43(a)(2) (2001). The regulations further state, however, that "[a] lower rate shall be allowed if it is determined to be in the best interest of the Indian mineral owner." 25 C.F.R. 211.43(b).
2 Leases 9910 and 5743 cover coal resources located within a former joint use area shared by the Navajo Nation and the Hopi Tribe. The Navajo and Hopi split the revenues from those leases. See C.A. App. A1988, A2678. Leases 9910 and 5743 paid combined royalties of 6.67 percent for coal sold off the leases and 5.33 percent for coal sold on the leases. Id. at A2678.
3 The Department of the Interior's regulations allowed "any interested party adversely affected by a decision * * * of an Area Director of the Bureau of Indian Affairs not approved by the Secretary before the decision was made" to file an administrative appeal. 25 C.F.R. 2.3(a) (1985). The appellant was required to serve the notice of appeal on any other known interested parties, 25 C.F.R. 2.11 (1985), who had the right to file a response, 25 C.F.R. 2.12 (1985). In this case, Peabody (and the utility companies that used coal produced under the lease) appealed the Area Director's royalty adjustment decision to the Commissioner of Indian Affairs. The Tribe filed an answer brief in opposition to those appeals. C.A. App. A477-A483.
4 The court of appeals appears to have believed that Acting Assistant Secretary Fritz had decided Peabody's appeal in favor of the Tribe, but then withdrew that decision in response to the Secretary's July 1985 memorandum. App., infra, 3a. Although a draft decision in favor of the Tribe had been prepared, a final decision (which would have required the signature of the Commissioner of Indian Affairs, 25 C.F.R. 2.3, 2.19 (1985)) had not been issued. See id. at 40a; C.A. App. A2686-A2687. In any event, the DOI regulations authorized the Secretary "to direct any [Department employee] to reconsider a decision." 43 C.F.R. 4.5(a)(2) (1985).
5 This Court had just upheld the right of the Navajo Nation to impose taxes on lessees under tribal leases. Kerr-McGee Corp. v. Navajo Tribe, 471 U.S. 195 (1985).
6 The Court of Federal Claims also rejected the Tribe's breach of contract claim, finding that the Secretary was not a party to the lease, and that the Secretary's authority under the lease to adjust the royalty rate was not a binding contractual obligation to do so. App., infra, 69a-75a.
7 Justice Powell, joined by then-Justice Rehnquist and Justice O'Connor, dissented in Mitchell II. 463 U.S. at 228-238. In their view, even the type of comprehensive statutory and regulatory scheme involved in that case-requiring the government to manage trust property for the benefit of the Indians-failed to confer "the necessary legislative authorization of a damages remedy" against the United States, because "[n]one of [those provisions] contains any 'provision . . . that expressly makes the United States liable' for its alleged mismanagement of Indian forest resources and their proceeds or grants a right of action 'with specificity.'" Id. at 230 (quoting Testan, 424 U.S. at 399, 400).
8 See also Assiniboine & Sioux Tribes of the Fort Peck Indian Reservation v. Board of Oil & Gas Conservation, 792 F.2d 782, 796 (9th Cir. 1986) (noting that one of the purposes of the IMLA was "to increase Indian authority in granting leases"). That purpose is promoted by the IMLA. As this Court recognized in Cotton Petroleum Corp. v. New Mexico, 490 U.S. 177, 179 (1989), the legislative history of the IMLA makes clear that the statute was intended to make it easier for Tribes to engage in-and profit from-mineral leasing by eliminating obstacles placed on such leasing that did not apply to non-Indians.
9 The court of appeals relied on "the interests of the Indians" language in 25 U.S.C. 399 as evidence that the IMLA creates a fiduciary responsibility to manage the mineral resources for the benefit of the Indians. App., infra, 11a. But Section 399 is not a part of the IMLA. Section 399 was enacted almost 20 years before the IMLA, and authorized the Secretary to lease certain unallotted Indian lands for mining purposes under terms set by the Secretary, without approval by the Tribes. The legislative history to the IMLA specifically notes that the Act was intended to correct Section 399's deficiencies, including with respect to the lack of control by Indian Tribes over the leasing of their mineral resources. S. Rep. No. 985, supra, at 2; H.R. Rep. No. 1872, supra, at 2. In any event, even if Section 399 were a part of the IMLA, its reference to the interests of the Indians would not compel the conclusion here, any more than in Mitchell I, that the United States has breached a money-mandating duty owed to the plaintiff Tribe.
10 In this case, there is no question that the leases at issue complied with the IMLA's minimum royalty rate. In 1987, the minimum royalty rate for coal leases under the IMLA was 10 cents per ton. 25 C.F.R. 211.15(c) (1987). The original royalty rate on Lease 8580 was 37.5 cents per ton-considerably higher than that standard. Following their amendment in 1987, the three leases-each of which has a total royalty rate of 12 1/2 percent-were well above the minimum rate, and also satisfy the new standard that was subsequently promulgated by the Secretary in 1996. 25 C.F.R. 211.43(a)(2) (2001) (minimum royalty rate for open-pit or strip coal leases is 12 1/2 percent of the value of coal produced and sold from the lease).
11 The court of appeals was not free to override or supplement the procedural rules adopted by the Secretary with its own view of the proper relationship between the Secretary and a subordinate official concerning an internal agency appeal. Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519 (1978). Indeed, the court of appeals seriously misapprehended the constitutional structure of our government in characterizing the decision by a Head of an Executive Department not to allow a draft of a decision of a subordinate officer to go into effect as the improper "suppressing and concealing" (App., infra, 11a) of the subordinate's action.
12 To the extent that the court of appeals believed that the Secretary's actions with respect to Peabody's administrative appeal rendered his subsequent approval of the lease amendments a breach of the United States' fiduciary obligations, the court was mistaken. As the Court of Federal Claims noted (App., infra, 67a), the Secretary's authority to adjust the royalty rate at issue in this case was "derive[d] solely from the terms of the lease" that the Tribe had executed in 1964, not from the IMLA. Moreover, even assuming (contrary to the considerations discussed above) that the IMLA imposed a fiduciary obligation on the Secretary not to approve lease amendments unless they were in the best interest of the Indian mineral owner, the Tribe at a minimum would be required to establish that the Secretary could not reasonably have believed that the overall outcome of the approval decision-the lease amendments themselves-was in the Indian mineral owner's best interest. The Tribe has made no such claim. Cf. Duquesne Light Co. v. Barasch, 488 U.S. 299, 312-313 (1989); FPC v. Hope Natural Gas Co., 320 U.S. 591, 602 (1944) ("If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry * * * is at an end. The fact that the method employed to reach that result may contain infirmities is not then important.").
13 To the extent that the Federal Circuit based its decision on finding a breach of common law trust duties, rather than specific statutory or regulatory duties assumed by the United States, its decision also parts with prior circuit precedent applying the Mitchell principles. For example, in Brown v. United States, 86 F.3d 1554 (Fed. Cir. 1996), the court distinguished between the existence of a fiduciary relationship and whether a cognizable claim for relief had been stated, and held that, "where no specific statutory requirement or regulation is alleged to have been breached by the Secretary, the money claim against the government must fail." Id. at 1563; see also Pawnee v. United States, 830 F.2d 187, 191-192 (Fed. Cir. 1987), cert. deneid, 486 U.S. 1032 (1988).
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
No. 00-5086
NAVAJO NATION, PLAINTIFF-APPELLANT
v.
UNITED STATES, DEFENDANT-APPELLEE
Aug. 10, 2001
Before: NEWMAN, SCHALL, and LINN, Circuit Judges.
Opinion for the court filed by Circuit Judge PAULINE NEWMAN. Concurring in part and dissenting in part opinion filed by Circuit Judge SCHALL.
DECISION
PAULINE NEWMAN, Circuit Judge.
The Navajo Nation appeals the decision of the United States Court of Federal Claims, dismissing its complaint against the United States for breach of trust and breach of contract.1 The court ruled that although the United States had breached its fiduciary obligations to the Navajo Nation, this breach was not actionable because the United States did not have a trust relationship with the Navajo Nation and monetary relief was not available. However, a trust relationship indeed existed and exists with the Navajo Nation, and monetary damages are an available remedy for breach of this trust.
BACKGROUND
The United States, through the Secretary of the Interior and the Interior Department's Bureau of Indian Affairs (BIA), supervises and regulates the development and sale of mineral resources on Indian reservation lands, pursuant to the Indian Mineral Leasing Act of 1938, 25 U.S.C. § 396 et seq., the Indian Mineral Development Act of 1982, 25 U.S.C. §§ 2101-2108, and implementing regulations.
In 1964 the Navajo Nation entered into a lease agreement with the Sentry Royalty Company (predecessor in interest to the Peabody Coal Company) for the mining of coal deposits on Navajo lands. The agreement provided for payment of a royalty not to exceed 37.5 cents per ton, and authorized the Secretary of the Interior or his delegate to readjust the royalty rate to a "reasonable" level on the twentieth anniversary of the lease. As that anniversary approached, due to increases in the market price of coal the rate of 37.5 cents per ton was equivalent to about 2% of gross proceeds. It is not disputed that this was well below then-prevailing royalty rates.
Negotiations proceeded between the Navajo and Peabody. No agreement was reached, and the Navajo asked the Department of the Interior to resolve the issue, in accordance with statute, and to set the royalty at a fair market rate. The BIA Area Real Property Management Officer issued an Initial Decision to increase the royalty rate to 20%, based on an analysis by the Bureau of Mines. The BIA's Navajo Area Director adopted this decision, and so notified Peabody. Peabody appealed to the Deputy Assistant Secretary for Indian Affairs John Fritz, acting as both Commissioner of Indian Affairs and the Assistant Secretary of Indian Affairs, an appellate path provided by the regulations. See 25 C.F.R. §§ 211.2, 211.3. The Deputy Assistant Secretary for Indian Affairs considered the matter and reached a decision affirming the 20% rate. However, this decision was withdrawn at the instruction of the Secretary of the Interior. The Appendix to the decision of the Court of Federal Claims contains a memorandum from Secretary Hodel to John Fritz, Deputy Assistant Secretary for Indian Affairs, stating "I suggest that you inform the involved parties that a decision on this appeal is not imminent and urge them to continue with efforts to resolve this matter in a mutually agreeable fashion." 46 Fed. Cl. at 237. Mr. Fritz complied with this instruction.
The record before the Court of Federal Claims reports numerous contacts during this period, on behalf of Peabody, with Interior officials including the Secretary. The Navajo were not told that a decision on Peabody's appeal had been made in their favor. Facing severe economic pressures, the Navajo eventually agreed to a royalty rate of 12.5%.
It can not be reasonably disputed that the Secretary's actions were in Peabody's interest and contrary to the Navajo's interest. The Court of Federal Claims found that the government's actions "violated the most fundamental fiduciary duties of care, loyalty and candor." 46 Fed. Cl. at 227. However, the court also held that there was no trust relationship between the agency and the Navajo with respect to these events, and thus that no monetary relief was available.
DISCUSSION
The Fiduciary Relationship
The legal relationship between the United States and the Indian tribes takes a variety of forms, and in part is that of a fiduciary and its charge. See, e.g., United States v. Mason, 412 U.S. 391, 398, 93 S. Ct. 2202, 37 L. Ed. 2d 22 (1973) ("There is no doubt that the United States serves in a fiduciary capacity with respect to these Indians and that, as such, it is duty bound to exercise great care in administering its trust."); Seminole Nation v. United States, 316 U.S. 286, 296, 62 S. Ct. 1049, 86 L. Ed. 1480 (1942) ("this Court has recognized the distinctive obligation of trust incumbent upon the Government in its dealings with these dependent and sometimes exploited people"); United States v. Shoshone Tribe, 304 U.S. 111, 117-118, 58 S. Ct. 794, 82 L. Ed. 1213 (1938) ("As transactions between a guardian and his wards are to be construed favorably to the latter, doubts, if there were any, as to ownership of lands, minerals, or timber would be resolved in favor of the tribe.")
The fiduciary relationship between the United States and the Indian tribes is manifested in various ways. For example, with respect to Indian reservation lands, precedent recognizes a distinction between the laws whereby the United States has only a limited trust relationship with the Indian tribes who occupy the land, and the laws giving rise to a full fiduciary duty toward the Indians. The difference lies in the level of control the United States exercises in its management of the land and its resources for the benefit of the Indians. When the United States controls the Indian resources, the duty is that of a fiduciary; when the Indians control their own resources, the duty of the United States is lessened appropriately.
These relationships and duties were discussed in United States v. Mitchell, 445 U.S. 535, 100 S. Ct. 1349, 63 L. Ed. 2d 607 (1980) (Mitchell I) and 463 U.S. 206, 103 S. Ct. 2961, 77 L. Ed. 2d 580 (1983) (Mitchell II). The Court explained that when the United States is assigned control of the management of Indian resources and the duty to manage those resources, there is created a full fiduciary relationship with respect to that management, including all appurtenant trustee duties, obligations, and liabilities. In Mitchell I the Court explained that the United States' role of trustee holding title to reservation land under the General Allotment Act is simply an expedient to avoid state and local burdens, whereas the role of the United States in management of the resources of the land is as a full fiduciary, see Mitchell II, implementing the government's statutory obligation to manage these resources entirely for the benefit of the Indians. Thus the Court distinguished the government's holding of "bare trust" title to an Indian land allotment without responsibility to manage the resources thereof, from the government's control and management responsibility of these resources as a fiduciary:
In contrast to the bare trust created by the General Allotment Act, the statutes and regulations now before us clearly give the Federal Government full responsibility to manage Indian resources and land for the benefit of the Indians. They thereby establish a fiduciary relationship and define the contours of the United States' fiduciary responsibilities.
Mitchell II, 463 U.S. at 224, 103 S. Ct. 2961.
This guidance has frequently been applied. In Brown v. United States, 86 F.3d 1554 (Fed. Cir. 1996) the issue concerned the commercial leasing of land that had been allotted to Indians. The court explained that the test of the government's fiduciary responsibility is whether "the Secretary, rather than the allottees, has control or supervision over the leasing program." Id. at 1561. The court observed that a full fiduciary duty exists even when the government has less than total control of management of the resources, and that participation by the Indians in resource management does not absolve the United States of its responsibility to act in the sole and best interests of the Indians.
In White Mountain Apache Tribe v. United States, 249 F.3d 1364 (Fed. Cir. 2001), the statute establishing "an enforceable fiduciary relationship between the United States and the Tribe," id. at 1383, provided that Fort Apache, which had been a military facility within what later became the Tribe's reservation in Arizona, be "held by the United States in trust for the White Mountain Apache Tribe, subject to the right of the Secretary of the Interior to use any part of the land and improvements for administrative or school purposes for as long as they are needed for that purpose." This court held that the statute established a full fiduciary relationship. Although the statute was silent on how the United States was to administer the property, the court applied the common law of trusts to hold that the United States had a trustee's duty to preserve the trust corpus, despite the absence of a specific statute and regulations. This court stated:
Although neither the 1960 Act nor any pertinent regulation sets forth clear guidelines as to how the government must manage the trust property, we think it is reasonable to infer that the government's use of any part of the property requires the government to act in accordance with the duties of a common law trustee.
White Mountain, 249 F.3d at 1377.
In Confederated Tribes of the Warm Springs Reservation v. United States, 248 F.3d 1365, 1371 (Fed. Cir. 2001), the fiduciary breach arose from the government's mismanagement of Indian timber resources. Since the United States exercised "comprehensive control over the management and harvesting of timber on Indian reservations," the statutes and regulations established a fiduciary duty in the government to manage the resources in the interest of the Tribes. The court looked to the common law of trusts to determine the measure of damages for the government's breach of this duty, stating:
Under trust law generally, a beneficiary is entitled to recover damages for the improper management of the trust's investment assets. In determining the amount of damages for a breach of the trustee's fiduciary duty with regard to investments of the trust property, courts attempt to place the beneficiary in the position in which it would have been absent a breach.
248 F.3d at 1371. The court recognized its obligation, upon breach of trust, to resolve any uncertainty in the measurement of damages against the trustee. See id. ("It is a principle of long standing in trust law that once the beneficiary has shown a breach of the trustee's duty and a resulting loss, the risk of uncertainty as to the amount of the loss falls on the trustee.")
In Pawnee v. United States, 830 F.2d 187, 190 (Fed. Cir. 1987) this court held that statutes giving the Department of the Interior power and authority with respect to oil and gas leases on Native American lands imposed fiduciary obligations upon the government and provided a remedy of money damages in the Claims Court for their breach.
The Indian Mineral Leasing Act and its regulations are similar to those governing timber resources that were the subject of Mitchell II, insofar as federal authority is retained. The Mineral Leasing Act starts with the provision that no mining lease may be entered unless approved by the Secretary of the Interior:
25 U.S.C. § 396a. On and after May 11, 1938, unallotted lands within any Indian reservation or lands owned by any tribe, group, or band of Indians under Federal jurisdiction, except those specifically excepted from the provisions of sections 396a to 396g of this title, may, with the approval of the Secretary of the Interior, be leased for mining purposes, by authority of the tribal council or other authorized spokesmen for such Indians, for terms not to exceed ten years and as long thereafter as minerals are produced in paying quantities.
(Emphasis added.) The statute and its implementing regulations give the Secretary the final authority on all matters of any significance in the leasing of Indian lands for mineral development. The statute assigns to the Secretary the broad and unqualified obligation to "protect[ ] the interests of the Indians," and includes the power to "perform any and all acts and to make such rules and regulations not inconsistent with this section as may be necessary and proper for the protection of the interests of the Indians and for the purpose of carrying the provisions of this section into full force and effect." 25 U.S.C. § 399. Thus the statute explicitly requires that the Secretary must act in the best interests of the Indian tribes.
Throughout the statute and its implementing regulations is seen the pervasive control by the United States of the manner in which mineral leases are sought, negotiated, conditioned, and paid, and the pervasive obligation to protect the interests of the Indian tribes. For example, the regulations require the written permission of the Commissioner of Indian Affairs before a Tribe can enter into negotiations for a lease rather than offer the lease in an advertised sale.
25 C.F.R. § 211.2. The regulations state the amount of bond to be secured, 25 C.F.R. § 211.6, and authorize a reduced bond if "the circumstances warrant and the interests of the Indian landowners are fully protected," 25 C.F.R. § 211.6(a). The regulations set forth the corporate information to be furnished to the appropriate officer of the Bureau of Indian Affairs, and state the officer's power to require other information. 25 C.F.R. § 211.7. The regulations control the size of coal leases by limiting them, with certain exceptions, to 2,560 acres,
25 C.F.R. § 211.9; and permit the Secretary to approve leases in excess of the acreage limitations if such approval "is in the interest of the lessor." § 211.9(b)(1). The regulations state that the shape of the leased area must be reasonably compact and conform to the system of public land surveys. 25 C.F.R. § 211.8. The regulations prescribe the term of mineral leases and the conditions of their extension. 25 C.F.R. § 211.10.
The regulations provide that royalties earned under such leases must be deposited in the Treasury "to the credit of the Indians belonging and having tribal rights on the reservation where the leased land is located." 25 U.S.C. § 399. Royalties are paid to the superintendent "for the benefit of the lessors." 25 C.F.R. § 211.12(a). The regulations set the minimum royalties for various minerals. 25 C.F.R. § 211.15. The regulations require that no mining operations shall begin until the lease is approved by the Secretary of the Interior, and must be conducted "in accordance with the operating regulations promulgated by the Secretary of the Interior." 25 C.F.R. § 211.20. The Secretary may cancel a lease for any violation of the lease terms or regulations, and may do so without the consent of the Indian lessors. 25 C.F.R. § 211.27.
It is quite clear that the statute and regulations assign to the Secretary of the Interior and other government officials the authorization, supervision, and control of Indian mineral leasing activities. The statute and regulations leave no significant authority in the hands of the Indian tribes whose reservation land contains the minerals, and all procedures, responsibilities, and even details are prescribed by Act of Congress and in the regulations promulgated by the Secretary of the Interior. The statutory purpose is to protect the natural resources of the Indians and manage them in a manner that maximizes their benefit to the Indians. The Court has consistently resolved ambiguity in favor of the Indian tribes. For example, in Montana v. Blackfeet Tribe, 471 U.S. 759, 767 n.5, 105 S. Ct. 2399, 85 L. Ed. 2d 753 (1985) the Court noted that state taxation of royalty interests would frustrate the IMLA's purpose of "ensur[ing] that Indians receive 'the greatest return from their property,'" quoting the legislative history of the IMLA.
The Indian Mineral Leasing Act's history elaborates upon the fiduciary relationship. When the Act was proposed, the Secretary of the Interior urged that the legislation be enacted because "it is not believed that the present law is adequate to give the Indians the greatest return from their property." Senate Report No. 985 at 2 (1937); House Report No. 1872 at 2 (1938). Congress responded to the need to ensure that the Indians' welfare is protected and their natural resources managed to the tribes' maximum benefit by emphasizing the Secretary's fiduciary obligations. For example, the legislative reports explained that now the Secretary would approve mineral leases only when they are "in the interest of the Indians." Id. Statute, regulations, and precedent place on the federal official a clear and unqualified fiduciary responsibility to manage the mineral resources for the benefit of the Indians. The Court of Federal Claims erred in holding that there was no authorization for a trust relationship between the United States and the Navajo Nation as to the coal resources.
Breach of the Fiduciary Relationship
The action of the Secretary in suppressing and concealing the decision of the Deputy Assistant Secretary for Indian Affairs, thereby favoring Peabody interests to the detriment of Navajo interests, was characterized by the Court of Federal Claims as "violat[ing] the most basic common law fiduciary duties owned to the Navajo Nation." 46 Fed. Cl. at 219. As that court explained:
Let there be no mistake. Notwithstanding the formal outcome of this decision, we find that the Secretary has indeed breached these basic fiduciary duties. There is no plausible defense for a fiduciary to meet secretly with parties having interests adverse to those of the trust beneficiary, adopt the third parties' desired course of action in lieu of action favorable to the beneficiary, and then mislead the beneficiary concerning these events. Even under the most generous interpretation of the series of events leading up to the approval in December 1987 of the renegotiated lease package, the Secretary of Interior violated his common law fiduciary responsibilities.
46 Fed. Cl. at 226. In addition to violation of common law fiduciary duties, the Secretary also violated statutory fiduciary duties, in acting to benefit Peabody to the detriment of the Navajo. By suppressing the royalty decision of Interior's Deputy Assistant Secretary for Indian Affairs, the Secretary acted in direct contravention of the Act's charge to the Secretary to obtain for the Indians the maximum return for their minerals. In failing to act in the best interests of the Navajo, the government violated its fiduciary responsibilities. Although the government argued, at the hearing of this appeal, that the Secretary's actions were justified in that they reflected a balance of national interests, it is hornbook law that a trustee's competing interests do not excuse a breach of fiduciary duty.
Breach by the federal government of its fiduciary duty is subject to remedy by the assessment of "damages resulting from a breach of the trust," as confirmed in Mitchell II :
This Court and several other federal courts have consistently recognized that the existence of a trust relationship between the United States and an Indian or Indian tribe includes as a fundamental incident the right of an injured beneficiary to sue the trustee for damages resulting from a breach of the trust.
463 U.S. at 226, 103 S. Ct. 2961. The Court confirmed that "The Court of Claims therefore has jurisdiction over respondents' claims for alleged breaches of trust." Id. at 228, 103 S. Ct. 2961. The Court of Federal Claims erred in holding that it was without jurisdiction to grant monetary relief and improperly dismissed the complaint.
CONCLUSION
The United States breached its fiduciary obligations to the Navajo Nation in connection with these coal leases with Peabody. A claim for damages for that breach is within the jurisdiction of the Court of Federal Claims. The dismissal is reversed, and the case is remanded for further proceedings including determination of damages.
REVERSED AND REMANDED.
SCHALL, Circuit Judge, concurring-in-part and dissenting-in-part.
The Tucker Act and the Indian Tucker Act establish the jurisdiction of the United States Court of Federal Claims over certain claims against the government and constitute a waiver of sovereign immunity as to those claims. 28 U.S.C. §§ 1491, 1505 (1994). However, those statutes, by themselves, do not create "any substantive right enforceable against the United States for money damages." United States v. Mitchell, 463 U.S. 206, 216, 103 S. Ct. 2961, 77 L. Ed. 2d 580 (1983) ("Mitchell II") (citing United States v. Mitchell, 445 U.S. 535, 538, 100 S. Ct. 1349, 63 L. Ed .2d 607 (1980) ("Mitchell I") (discussing the Tucker Act and Indian Tucker Act)). For a claimant to state a claim upon which relief can be granted, a substantive right for money damages "must be found in some other source of law, such as 'the Constitution, or any Act of Congress, or any regulation of an executive department.'" Mitchell II, 463 at 216, 100 S. Ct. 1349 (quoting 28 U.S.C. § 1491). In this case, the Navajo Nation ("Nation") asserts a claim for money damages against the government based upon alleged breaches of the government's trust obligations to the Nation.
I.
The Supreme Court, in Mitchell I, addressed the issue of under what circumstances fiduciary obligations are created and breached so as to establish a claim for money damages contemplated by the Tucker Act and Indian Tucker Act. In Mitchell I, the Quinault Tribe alleged, under a breach of trust theory, that it was entitled to recover money damages in the United States Court of Claims, one of our predecessor courts, for the government's mismanagement of its timber resources. 445 U.S. at 537, 100 S. Ct. 1349. The Tribe alleged that a trust was established by the General Allotment Act of 1887 (codified at 25 U.S.C. § 331 et seq.). However, the Court held that the Act "created only a limited trust relationship between the United States and the allottee that does not impose any duty upon the [g]overnment to manage timber resources." Id. at 542, 100 S. Ct. 1349. The Court determined that the Act did "not unambiguously provide that the United States ha[d] taken full fiduciary responsibility as to management of allotted lands," in particular, the management of timber resources on the allotted lands. Id. at 542-43, 100 S. Ct. 1349. The Court concluded that the General Allotment Act did not establish that the government had a fiduciary duty to manage the Tribe's forest lands; therefore, the Tribe's ability to recover money damages for the government's actions had to be found "in some other source than the Act." Id. at 546, 100 S. Ct. 1349.
The Supreme Court revisited the Quinault Tribe's claim for money damages in Mitchell II, 463 U.S. at 224, 103 S. Ct. 2961, where the Court held that there was a fiduciary relationship between the government and the Tribe. The Court found statutes and regulations that "establish[ed] the 'comprehensive' responsibility of the [government] in managing the harvesting of Indian timber," with "[v]irtually every stage of the process . . . under federal control." Id. at 222, 103 S. Ct. 2961 (citations omitted). From these statutes and regulations, the Court determined that "a fiduciary relationship necessarily arises when the [g]overnment assumes such elaborate control over forests and property belonging to Indians." Id. at 225, 103 S. Ct. 2961. The Court stated that the very statutes and regulations that create the fiduciary relationship also "define the contours of the United States' fiduciary responsibilities." Id. at 224, 103 S. Ct. 2961. The Court concluded that the Court of Claims had jurisdiction over the Tribe's claims that the government had violated its fiduciary obligations in management of the Tribe's timber land. Id. at 228, 103 S. Ct. 2961.
This court applied the Court's teachings in Mitchell I and Mitchell II in Pawnee v. United States, 830 F.2d 187 (Fed. Cir. 1987). In Pawnee, the Cheyenne-Arapaho Tribe claimed that the government had breached its fiduciary obligation to receive gas royalties computed at the highest market value for two of the Tribe's oil and gas leases. Id. at 188-89. In addressing this claim, we first considered whether there was "any general fiduciary relationship" between the Tribe and the government. Id. at 189. We found such a relationship, noting that the Indian Long-Term Leasing Act, codified at 25 U.S.C. § 396, placed the Secretary of the Interior "at the center of the leasing of Indian mineral lands." Id. We also pointed to certain accompanying regulations as evidence of the government's involvement in all aspects of the leasing arrangement. Id. at 190. We concluded, based on these statutes and regulations, "that the United States has a general fiduciary obligation toward the Indians with respect to the management of [the] oil and gas leases." Id.
We noted, however, that the existence of a general fiduciary relationship "does not mean that any and every claim by the Indian lessor necessarily states a proper claim for breach of the trusta claim which must be fully tried in the Claims Court." Id. at 191. We looked to the statutes and regulations that established the fiduciary relationship and noted that the Tribe's claim ran counter to the requirements of the governing regulations, which expressly restricted the highest price for a majority of the oil and gas produced on the leased land. Id. We also noted that "the fiduciary relationship springs from the statutes and regulations" that define the relationship, and that the Tribe had failed to allege the violation of any specific statute or regulation. Id. We concluded that, under Mitchell II, the focus is on the statute and regulations that create the fiduciary relationship, and that the Tribe could not create a "viable fiduciary claim purely by insisting that this court (or the Claims Court) establish different or higher standards" than those established by law. Id. at 192. We therefore found that the Tribe had failed to state a proper claim for breach of trust, and affirmed the dismissal of its claim. Id.
We revisited Mitchell I, Mitchell II, and Pawnee in Brown v. United States, 86 F.3d 1554 (Fed. Cir. 1996). Brown, and other Indians, alleged that the government had breached a fiduciary duty imposed by 25 U.S.C. § 415 and 25 C.F.R. part 1622 by failing either to compel the Indians' lessees to fulfill their reporting and payment responsibilities or to cancel the leases. Brown, 86 F.3d at 1557. As we did in Pawnee, we first looked to see if a fiduciary relationship existed between the Indians and the government with respect to the leased properties. Id. at 1559-61. We noted that, under Mitchell II, the test for determining whether there was such a relationship was whether the government "takes on or has control or supervision over the tribal monies or properties" that are at issue. Id. at 1560 (quoting Mitchell II, 463 U.S. at 225, 103 S. Ct. 2961). We termed this the "control or supervision test" and noted that nearly complete government management was not necessary to create a fiduciary relationship. Id. at 1560-61. Applying these standards, we found that the government did control the Indians' leasing program enough to created an enforceable fiduciary duty. Id. at 1561-62. This established a general fiduciary duty, but we noted that the Indians still needed to allege a breach of a specific statutory requirement or regulation to sustain a money claim against the government. Id. at 1563.
We reiterated that the statutes and regulations that create the general fiduciary relationship define the scope and extent of the fiduciary relationship. Id. We concluded that, on the record before us, it was not clear that the Indians had "alleged the breach of a specific duty that the regulations squarely place on the [government]." Id. Accordingly, we remanded the case for the trial court to determine whether the Indians "alleged the breach of a specific duty that the regulations squarely place[d] on the [government]." Id.
Recently, in White Mountain Apache Tribe v. United States, 249 F.3d 1364 (Fed. Cir. 2001), we found an enforceable fiduciary relationship between the White Mountain Apache Tribe and the government whose breach could give rise to a claim for money damages. First, we determined whether there was a fiduciary relationship between the Tribe and the government regarding buildings and land at Fort Apache, which is within the borders of the Tribe's reservation in Arizona. Id. at 1376-77. We found such a relationship existed, based on a 1960 Act of Congress, Pub. L. No. 86-392, 74 Stat. 8 (1960), to the extent that the government controlled and used the buildings and land at Fort Apache. Id. at 1373-77. Then, we determined the government's obligations under this fiduciary relationship, first looking to the common law of trusts to define the nature of the government's obligations. Id. at 1377-80. We found that general principles of trust law required the government to use "reasonable care and skill" to preserve the buildings and lands at the fort with respect to which the government had a fiduciary duty to the Tribe. Id. at 1379 (citations omitted). We stated: "[I]n each case, we must . . . examine the particular statute, treaty, 'or other fundamental document,' that creates the trust relationship in order to determine the nature of the relationship and whether the general law of trust has been altered in any particular way, either by the imposition of additional obligations or by the modification of existing obligations." Id. at 1380 (citations omitted). We concluded that the Tribe had stated a proper claim for money damages, but pointed out that just because there was a general fiduciary relationship did not mean that every claim by the Tribe was meritorious. Id. at 1383 (citing Pawnee, 830 F.2d at 191).
With the legal framework established, I now turn to the facts of this case.
II.
In 1964, the Nation entered into Lease 8580 (the "1964 Lease") with Sentry Royalty Company, the predecessor in interest of Peabody Coal Company ("Peabody"), for the mining of coal on the Nation's land at a royalty rate of not more than 37.5 cents/ton. Article VI of the 1964 Lease provides as follows:
During the period that the land so leased is under Federal jurisdiction, the royalty provisions of this lease are subject to reasonable adjustment by the Secretary of the Interior or his authorized representative at the end of twenty years from the effective date of this lease, and at the end of each successive ten-year period thereafter. In the event of termination of Federal jurisdiction, the royalty provisions shall, in lieu of Secretarial adjustment, be subject to renegotiation between Lessor and Lessee at the times aforesaid, provided that if the parties are unable to agree, such royalty shall be submitted to arbitration.
In 1984, after negotiations between the Nation and Peabody proved unproductive, the Nation requested, under Article VI, that the Bureau of Indian Affairs ("BIA") raise the royalty rate. BIA, which is part of the Department of the Interior ("DOI"), initially determined that the rate should be raised to 20% of the gross value of the coal mined. Peabody appealed that decision to the Commissioner of Indian Affairs in the DOI, pursuant to the procedures outlined in 25 C.F.R. part 2. Although the official handling the appeal was prepared to issue a decision affirming the 20% royalty rate, then-Secretary of the Interior Donald Hodel requested that release of the decision be delayed. Consequently, both Peabody and the Nation were informed by DOI that a decision on the appeal was not imminent and that they should try to negotiate. Unbeknownst to the Nation, prior to acting on the matter, Secretary Hodel had met with representatives of Peabody who had asked the Secretary to delay the release of DOI's decision.
Peabody and the Nation resumed negotiations, and in 1987, an agreement was reached with respect to renegotiation of the 1964 Lease (the "Agreement"). In addition to amending the lease by raising the royalty rate to 12.5%, the Agreement also addressed other matters, including confirming the Nation's ability to tax Peabody, amending two other leases by raising their royalty rates to 12.5%, adding provisions for future royalty adjustments, establishing a tribal scholarship fund, and requiring the payment by Peabody of certain back royalties, bonuses, and water payments. The Agreement was submitted to DOI for review, and DOI formally approved the Agreement on December 14, 1987.
The Nation filed suit against the government in the Court of Federal Claims on December 14, 1993. The Nation charged that the government had breached its fiduciary duties to the Nation, based on Secretary Hodel's ex parte communications with Peabody, DOI's alleged failure to properly oversee negotiations between Peabody and the Nation, and DOI's final approval of the Agreement, which only raised the 1964 Lease's royalty rate to 12.5%, instead of 20%. The Nation also alleged that the government had breached contractual obligations under Article VI of the 1964 Lease by approving the Agreement. Both the government and the Nation moved for summary judgment on these claims.3
The Court of Federal Claims first rejected the government's contention that the Nation's claims were time-barred. Navajo Nation v. United States, 46 Fed. Cl. 217, 224-25 (2000). The court then discussed the Nation's breach of trust claim, first looking at the claim under general trust principles. Id. at 226-27. The court concluded that the government's ex parte communications with Peabody and its following actions during the royalty adjustment proceedings violated the "most fundamental fiduciary duties of care, loyalty and candor." Id. at 227. The court noted, however, that in order for the Nation to succeed on its money claim against the government, it had to show that some statute, treaty, regulation, or other source of law imposed specific fiduciary obligations on the government and that the government had violated those fiduciary obligations. Id. at 227-28.
The court first addressed whether the government had a general fiduciary obligation with regard to coal leases on Indian land, focusing on the amount of management and control the government assumed over such leases. Id. at 228. In that regard, the court considered the Indian Mineral Leasing Act of 1938, 52 Stat. 347 (1938) (codified at 25 U.S.C. §§ 396a-396g) ("IMLA"), and the accompanying regulations, 25 C.F.R. part 211 (1985). Navajo Nation, 46 Fed. Cl. at 228-30. The court determined that, while the level of management and control exercised by the government over oil and gas leases may be enough to establish a fiduciary obligation, the government's level of control over coal leases, and in particular coal royalties, is not enough to "rise above a generalized trust obligation." Id. at 231-33. In addition, the court concluded that even if a fiduciary obligation does exist, the Nation failed to "link any breach [it alleged] to a specific money-mandating statutory or regulatory provision." Id. at 233-34.
The court also found that the government owed no contractual obligation toward the Nation under the 1964 Lease. Id. at 234. The court pointed out that the government was not a party to the lease, and that no consideration had passed to the government under the 1964 Lease from either the Nation or Peabody. Id. at 234-35. Finally, the court dismissed the Nation's claim that there was an implied-in-fact contract between the government and the Nation with respect to the revision of the royalty rate of the 1964 Lease because there was no intent to contract by the government, no consideration to the government, and no clear offer and acceptance by the government.4 Id. at 236. Based on its findings, the Court of Federal Claims granted the government's motion for summary judgment and dismissed all of the Nation's claims. Id.
III.
On appeal, the Nation argues that the government has general fiduciary obligations to it with respect to coal leases involving Indian land, and that, in this case, the government breached those obligations. Specifically, the Nation asserts that IMLA requires the government to review all leases and lease amendments in order to assure that they are in the best interests of the Indians and that Indian profits are maximized. The Nation contends that the government breached this obligation by prohibiting a 20% royalty rate and approving the Agreement for a lower royalty rate of 12.5%. The Nation also contends that the government violated its general fiduciary duties of care, candor, and loyalty to the Nation by preventing the royalty rate adjustment of 20%, engaging in ex parte communications with Peabody, misleading the Nation into resuming negotiations with Peabody, and approving the Agreement to amend the 1964 Lease without review.
The Nation further argues that the government violated 25 U.S.C. § 396a and 25 C.F.R. § 211.2 by approving the Agreement without any economic analysis. The Nation contends that the government violated 25 C.F.R. § 211.2 by colluding with Peabody to compel further negotiations and by failing to supervise the negotiations. The Nation states that DOI, by allowing a low royalty rate in the Agreement, violated the minimum royalty rate established by 30 U.S.C. § 207(a) and the BIA Manual ("BIAM"), 54 BIAM § 604.05. According to the Nation, the government violated the DOI Manual, 130 DM 10.5, and the BIA Manual by failing to perform any economic analysis before approving the Agreement to amend the 1964 Lease. Finally, the Nation argues that the government violated Article VI of the 1964 Lease by preventing a "reasonable" royalty adjustment that was explicitly required by the Lease. The Nation concludes that these specific violations of the government's fiduciary duties entitle it to monetary damages against the United States.
The majority concludes that IMLA and the accompanying regulations, "assign to the Secretary of the Interior and other government officials the authorization, supervision, and control of Indian mineral leasing activities." Majority, op. at 1331. Based on this finding of supervision and control, the majority determines that a trust relationship is created, giving the government "a clear and unqualified fiduciary responsibility to manage the mineral resources for the benefit of the Indians." Id. at 1332. The majority holds that the Court of Federal Claims erred in finding no trust relationship between the government and the Nation with regard to the Nation's coal leases. Id. at 1332. Next, noting that the lower court found that Secretary Hodel's actions with respect to BIA's initial royalty rate decision violated common law fiduciary duties owed to the Nation, the majority concludes that the Nation has stated a claim upon which monetary relief can be granted. Id. at 1332. The majority also finds that what it characterizes as the Secretary's "suppression and concealment" of BIA's decision "acted in direct contravention of the [IMLA's] charge to the Secretary to obtain the Indians the maximum return for their minerals." Id. at 1332. It therefore reverses the decision of the Court of Federal Claims dismissing the complaint and remands for further proceedings. Id. at 1333.
I agree with the majority that IMLA and the regulations at 25 C.F.R. part 211 create a scheme under which the government plays a major role in mineral leasing on Indian land and that, therefore, there exists a general fiduciary relationship between the Nation and the government regarding coal leases, such as the 1964 Lease at issue here.
It is at this point, however, that I part company with the majority. A court first must decide whether a general fiduciary relationship exists in a particular area between Indians and the government. Then, it must determine whether, in the context of that relationship, the government has breached any specific fiduciary responsibilities. It makes this determination by considering the government conduct at issue in light of the requirements of the statutes and regulations that create the general fiduciary relationship in the first place. See Brown, 86 F.3d at 1563; see also Mitchell II, 463 U.S. at 224, 103 S. Ct. 2961 (noting that "the statutes and regulation now before us . . . establish a fiduciary relationship and define the contours of the United States' fiduciary responsibilities." (emphasis added)); White Mountain Apache Tribe, 249 F.3d at 1377-80 (determining, after finding a fiduciary relationship, what the government's specific obligations are and whether the statute that created the relationship altered the general law of trusts in any way); Pawnee, 830 F.2d at 191 (stating that the existence of a "general fiduciary relationship does not mean that any and every claim by the Indian lessor necessarily states a proper claim for breach of the trust"). In this case, the majority properly undertakes the first step of the analysis but not the second. After concluding that a general fiduciary relationship exists between the government and Indians with respect to the mining of coal on Indian lands, the majority, focusing exclusively on Secretary Hodel's actions relating to BIA's royalty decision, fails to properly conduct the required second step of the analysis. I believe the majority errs in two respects: first, it fails to find a breach of a specific fiduciary responsibility that falls within the scope of the statutes and regulations that establish the general fiduciary relationship; second, it only considers one aspect (Secretary Hodel's actions relating to BIA's royalty decision) of the overall government conduct that is at issue.
IV.
In my view, the only government action in this case that implicated a specific fiduciary responsibility to the Nation was DOI's approval of the Agreement. The Nation and Peabody submitted the Agreement to DOI for review. DOI indicated, in an internal report, that it was reviewing the Agreement pursuant to DOI's powers of lease approval under 25 U.S.C. § 396a and the regulations under 25 C.F.R. part 211, sources of law that establish a fiduciary relationship between the Nation and the government. Thereafter, when DOI approved the Agreement, it invoked its approval powers under 25 U.S.C. § 396a and 25 C.F.R. § 211.2, both of which subject the leasing of mineral rights on Indian land to DOI approval.5 The government's obligation under 25 U.S.C. § 396a and 25 C.F.R. § 211.2 is to either approve, or disapprove, a lease, or lease amendment, and since this obligation falls within "the contours of the United States' fiduciary responsibilities," Mitchell II, 463 U.S. at 224, 103 S. Ct. 2961, the government must make its approval decision with the reasonable care and skill demanded of a trustee, White Mountain Apache Tribe, 249 F.3d at 1378-79. It is undisputed that, when deciding whether to approve the amendment of the 1964 Lease, DOI failed to perform any economic analysis regarding the lease amendments. In my view, this failure constituted a breach of a fiduciary obligation owed to the Nation. I believe it is reasonable to conclude that one aspect of the lease approval obligation is determining whether a proposed lease is financially beneficial for the Indians involved. See Restatement (Second) of Trusts § 174 (1959) (noting that a trustee is under a duty to the beneficiary to administer the trust with reasonable care and skill); Cheyenne-Arapaho Tribes of Ok. v. United States, 966 F.2d 583, 589-91 (10th Cir. 1992) (requiring the Secretary of the Interior to consider relevant economic factors before approving a communization agreement under 25 U.S.C. § 396d of IMLA). I do not believe, however, that any of the other breaches that are alleged by the Nation implicate a fiduciary obligation on the part of the government so as to give rise to a claim for monetary damages against the United States.
Initially, the Nation alleges general violations of the common trust obligations of care, candor, and loyalty. In making this allegation, the Nation points to the ex parte communications between Secretary Hodel and Peabody and DOI's failure to secure a 20% royalty rate. While these duties, based on the common law of trust, are relevant to determining the government's obligations, White Mountain Apache Tribe, 249 F.3d at 1377-78, the scope and extent to which these obligations apply to governmental action is governed by the statutes and regulations that create the fiduciary relationship, id. at 1380. See also Mitchell II, 463 U.S. at 224, 103 S. Ct. 2961; Brown, 86 F.3d at 1563. The Nation must explain how DOI's actions, which may demonstrate disloyalty to the Nation in a vacuum, fall within the boundaries of a specific fiduciary obligation. That it has not done.
The Nation also alleges violations based on internal agency policy, expressed in BIA Manuals, 54 BIAM § 604.5 for example, and DOI manuals, 130 DM 10.5 for example. Neither of these manuals, or general agency policy, can support a claim for monetary damages because a substantive right to monetary relief must be found "in some . . . source of law, such as 'the Constitution, or any Act of Congress, or any regulation of an executive department.'" Mitchell II, 463 U.S. at 216, 103 S. Ct. 2961 (citing 28 U.S.C. s 1491). The Nation fails to show how these manuals "can be fairly interpreted to create a substantive right to monetary compensation from the United States," Hamlet v. United States, 63 F.3d 1097, 1102 (Fed. Cir. 1995).
The same analysis applies to the Nation's claims based upon Article VI of the 1964 Lease and DOI's actions relating to the review of BIA's initial royalty rate decision. While the language of Article VI states that the government will, after 20 years, raise the royalty rate under the Lease to a reasonable rate, the 1964 Lease is not a document by which the government is bound. Consequently, actions under the Lease are not within the contours of the government's fiduciary relationship with the Nation. As the Court of Federal Claims correctly noted, the government was not a party to the 1964 Lease and there is no evidence of an intent by the government to assume any contractual obligations under the Lease. Navajo Nation, 46 Fed. Cl. at 235-36. Finally, the government's actions during the review of BIA's initial decision to raise the royalty rate to 20%, including Secretary Hodel's ex parte communications with Peabody and his actions relating to BIA's royalty decision, occurred in the context of DOI's review of an internal decision, under 25 C.F.R. part 2, not in the context of a fiduciary responsibility regarding mineral leases arising under IMLA. The Nation also asserts a breach of trust based on 30 U.S.C. § 207(a), which establishes a minimum royalty rate for coal leases of 12.5%. Section 207(a), which applies to federal land in general, did not apply to leases of Indian land until 1996, when 25 C.F.R. § 211.43(a)(2) was promulgated. The government was not required to conform to the standards set in 30 U.S.C. § 207(a), because, at the time of the government's actions in this case, § 207(a) did not apply to Indian land.
In sum, I agree with the majority that a general fiduciary relationship exists between the government and the Nation with respect to coal leases on the Nation's lands. However, the analysis cannot stop there. In order to state a claim upon which relief can be granted, the Nation must show the breach of a specific fiduciary obligation that falls within the contours of the statutes and regulations that create the general fiduciary relationship at issue. In my view, the only conduct that is alleged in this case that implicates a specific fiduciary obligation owed by DOI to the Nation is DOI's failure to perform an economic analysis on the Agreement between Peabody and the Nation that was approved by the government under 25 U.S.C. § 396a and 25 C.F.R. § 211.2. I believe that this failure amounted to a breach of a fiduciary obligation owed to the Nation. I would remand the case to the Court of Federal Claims for the limited purpose of determining what damages, if any, the Nation suffered as the results of that breach. Otherwise, I would, in all respects, affirm the decision of the Court of Federal Claims.
For the foregoing reasons, I respectfully concur-in-part and dissent-in-part.
1 Navajo Nation v. United States, 46 Fed. Cl. 217 (2000).
2 Section 415 provides that Indian lands may be leased by those tribes or individuals who own them with the approval of the Secretary of the Interior. 25 U.S.C. § 415. Section 415 also indicates that such leases are made under the terms and regulations established by the Secretary, which include those regulations found in 25 C.F.R. part 162. 25 U.S.C. § 415.
3 The government acknowledges that the Court of Federal Claims had jurisdiction over the Nation's claims, and that it thus was proper for the court to reach the merits of those claims and entertain motions for summary judgment.
4 The Nation does not appeal the Court of Federal Claims' dismissal of its breach of contract claims.
5 The Nation also argues that 25 C.F.R. § 211.2 places upon the government the obligation of overseeing negotiations for leases and lease amendments. However, the regulation does not discuss the government supervising lease negotiations. As § 211.2 indicates, the Secretary makes a decision regarding negotiations only if (1) the Indians do not want to take bids and request a negotiation or (2) a negotiation is granted in lieu of bidding and the negotiated document is submitted to the government. Neither situation is present in this case.
APPENDIX B
UNITED STATES COURT OF FEDERAL CLAIMS
No. 93-763L
THE NAVAJO NATION, PLAINTIFF
v.
UNITED STATES, DEFENDANT
Feb. 4, 2000
OPINION
BASKIR, Judge.
Mr. Donald Hodel, Secretary of the Interior during the critical period of this dispute, offered this denunciation of ex parte contacts in his deposition:
The decision-maker isn't suppose (sic) to talk to one of the two sides while he is in the process of making a decision or may be in the process of making a decision. And it goes to fundamental fairness.
* * * * * *
I should go further in saying one other thing, that the ex parte communication taints the subsequent decision. So that even if you would have made exactly the same decision, you can never establish that, if you are challenged on it.
So it's folly to engage in ex parte communications. And I would expect people who dealt with me inside and outside the Department would have known that I would have been pretty firm on that as a matter of practice.
Deposition of Donald P. Hodel, November 20, 1995; I Plaintiff's Appendix (Pl. App.) at 1149-50.
Although Mr. Hodel's memory fails him on this point, the evidence is overwhelming that he did what he condemns. On or about July 17, 1985, he met with a personal friend who had been hired a few days earlier, solely because of his access, by one party in a royalty dispute with the Navajo Nation. The Secretary sided with his friend's new employer in this brief ex parte meeting, a meeting which remained undisclosed for eleven years until revealed inadvertently during discovery in this case.
Mr. Hodel might well have added that ex parte contacts, especially those that result in decisions worth millions of dollars to the party with special access to high officials, betray the public trust and transgress the high ideals of public service. Not incidentally, by his conduct Mr. Hodel also violated basic fiduciary duties owed the plaintiff in this action, the Navajo Nation.
Mr. Hodel's July 1985 meeting forms the dramatic centerpiece in the Navajo Nation's suit for breach of trust and breach of contract against the United States. However, it is not the act which the plaintiff contends constitutes the government's specific wrongs. Both breaches allegedly arise from the entire series of events which ultimately resulted in the December 1987 approval by Mr. Hodel of royalty revisions to one of the Navajo Nation's coal leases with Peabody, the subject of that earlier meeting.
According to plaintiff, by this approval the Secretary breached fiduciary duties owed the Navajo Nation under the Indian Mineral Leasing Act of 1938, 25 U.S.C. § 396 et seq. (IMLA) and related treaties and regulations, and breached contractual obligations under the coal lease itself. The present matter comes before the Court on cross-motions for summary judgment on the issue of liability.
We conclude that the defendant, acting through former Secretary Hodel, violated the most basic common law fiduciary duties owed the Navajo Nation. Regrettably, we also conclude that the trust relationship necessary for our jurisdiction does not exist, and these violations do not mandate monetary relief, both as required by our jurisdictional precedents. We also conclude that the government owed no contractual duty to the plaintiff. We are thus compelled to deny plaintiff's motion for summary judgment and to grant the government's cross-motion.
The Dispositive Motions In Context
A number of related matters require mention at this early juncture to place this Opinion in context. In February 1999, prior to oral argument on these motions, the Navajo Nation filed a collateral lawsuit in United States District Court for the District of Columbia. The Navajo Nation v. Peabody Holding Company, Inc., et al., No. CA-99-469-EGS (D.D.C.). Plaintiff named as a defendant, Peabody, the lessee at the heart of our case. Plaintiff's claims against Peabody evolve out of the same factual context. Also currently pending before our Court is Peabody's motion to find plaintiff in contempt in connection with the Navajo use in District Court of materials produced in discovery pursuant
to a Confidentiality and Protective Order, entered February 26, 1996, in our litigation. Plaintiff subsequently filed a motion asking this Court to determine the status of those same materials, some of which plaintiff claims are not properly subject to the protective order.
In this Opinion, we no doubt make use of documents and information that are the subject of both these motions. However, in preparing this Opinion, we have relied only on the pleadings and other matters of public record. Those pleadings were received in unredacted form and were filed publicly. To this day, Peabody has not sought to apply the protective order to these filings and thereby remove them from the public domain. Although we reserve ruling on the motions respecting plaintiff's activities in District Court and the status of the protected documents, we view any objection by Peabody to inclusion of protected documents in this Opinion as waived.
SUMMARY OF ISSUES
At issue in plaintiff's first claim for relief is the scope of the Secretary's fiduciary duties, if any, under IMLA. Do those duties establish a trust relationship between the United States and the Navajo Tribe the violation of which gives rise to a claim for money damages in this Court? The Navajo Nation has asserted that the statute imposes a host of strict fiduciary duties upon the government and that each of those duties has been clearly breached. In particular, the Navajo Nation contends the statute imposes a fiduciary obligation to maximize the financial returns from coal leases; in this case, a fiduciary duty to require a twenty percent royalty rate for the Peabody lease. The Secretary's 1987 approval of a rate of 12.5 percent violates this duty.
The government counters that plaintiff's claim is not properly before the Court. First, plaintiff has failed to establish subject-matter jurisdiction in this Court. The trust relationship imposed by IMLA is of so limited a nature, it argues, that it cannot serve as the basis for a claim for money damages. Second, the Navajo's claim is barred by the statute of limitations. Failing those arguments, the government maintains that it is entitled to summary judgment because the Secretary satisfied any fiduciary duties owed the Navajo Tribe.
With the Navajo's second claim for relief, breach of contract, the Court faces issues of fundamental contract formation. Plaintiff alleges that the Secretary violated the pertinent coal lease to which the government was a party when he failed to provide a "reasonable adjustment" of the royalty according to the lease provisions, twenty percent being that reasonable adjustment. In the alternative, plaintiff argues under a contract implied-in-fact theory that the government failed to act in good faith and treat the parties fairly in reviewing and approving lease amendments between the Navajo Nation and the private parties involved in this dispute.
The government denies that the lease formed any contractual relationship between the Secretary and the Navajo Nation. Alternatively, defendant argues that to the extent any contractual duties have been created, the Secretary has sufficiently carried them out. Furthermore, defendant alleges that the breach of contract claim, like the breach of trust claim, is barred by the six-year statute of limitations.
The Court finds the government's statute of limitations argument without merit. However, the statutory and regulatory provisions upon which the Navajo Nation relies are not "money-mandating" as required under the Tucker Act, 28 U.S.C. § 1491 (1988), or the "Indian Tucker Act," 28 U.S.C. § 1505 (1999), to invoke the jurisdiction of this Court and to afford the requested relief. Plaintiff's breach of contract theory is equally unavailing. As we will explain, the Court finds as a matter of law that the Secretary is not a contractual party to the lease in question.
BACKGROUND
A firm grasp of the extensive history of this case is indispensable to an understanding of the trust relationship between the United States and the Navajo Tribe in the mineral leasing context. The parties have spared no detail in describing the background of this case in their briefs and argument. The Court held two hearings on dispositive motions, the first of which exceeded five hours. For the most part, the following series of events is undisputed, and subject only to interpretation.
Introduction
On February 1, 1964, the Navajo Nation, a federally recognized Indian tribe, entered into Lease 8580 with the Sentry Royalty Company for the mining of coal on tribal lands. Pursuant to the Indian Mineral Leasing Act the Assistant Area Director of the Bureau of Indian Affairs (BIA) approved the lease on August 28, 1964, under authority delegated by the Secretary of the Interior.
The original lease provided for an extremely low royalty rate of not more than 37.5 cents per ton, but Article VI allowed the Secretary or his delegate to adjust the royalty rate to a "reasonable" level on the twentieth anniversary of the lease. Ultimately the Secretary did not exercise this authority. Instead, on December 14, 1987, he approved amendments to the lease, negotiated by the parties, establishing a royalty rate of 12.5 percent.
A few years earlier, in anticipation of the maturity of Article VI, the Navajo Nation had instituted proceedings in the Department of Interior (DOI) with a view toward converting the royalty to a percentage basis, and dramatically boosting its level. At this time, the rate for coal leases on federal lands was 12.5 percent, which the Navajo considered a minimum. Indeed, the first-level DOI authority's initial decision in June 1984 was to increase the royalty to a rate of twenty percent. The lessee, Peabody Coal Company, Sentry's successor in interest, appealed that decision.
By mid-summer 1985 it was apparently well-known to all parties that the BIA planned to deny the appeal and affirm the twenty percent rate. The Secretary then intervened and directed that the decision on Peabody's appeal be deferred so that the parties to the lease could negotiate a royalty rate. This directive, the events leading up to it, and the Secretary's subsequent approval of a lease package the parties negotiated, form the basis of plaintiff's breach of trust and contract claims. With this outline in mind, we now examine the events and their legal context in more detail.
Basis of Trust Relationship
Two treaties-the 1849 Treaty and the 1868 Treaty -form the foundation of the trust relationship between the United States and the Navajo Nation. See 9 Stat. 974; 15 Stat. 667. Under the 1849 Treaty, the United States assumed the responsibility to regulate trade and intercourse with the Navajo and to secure their permanent prosperity and happiness.
The principles of the treaties were echoed in the policies and procedures established by the United States. The BIA was established as an agency within DOI in order to encourage and train Indians to manage their own affairs and to utilize fully their natural resources under the trust relationship. As early as 1975 it was DOI policy to provide technical assistance to assure that development of coal resources provided a fair monetary return. Furthermore, the Code of Federal Regulations and departmental manuals governing the affairs of Interior and its agencies establish procedures intended to prevent private industry from exploiting Native Americans in the management of their resources. These measures range from placing limitations on the tribe's negotiations to providing technical and economic support for mineral management.
The Royalty Rate Revision of Lease 8580
The cents-per-ton basis of determining royalties under the original 1964 lease was, by any measure, an inequitable deal for the mineral owner. In fact, in 1977 Congress set a 12.5 percent minimum royalty rate for federal strip-mined coal, and the Department of the Interior adopted a policy prohibiting the federal trustee of Indian coal from approving a tribal coal lease with royalties less than that amount.
During this same period, it was noted that Lease 8580 violated several of the limitations later put in place by the DOI and BIA. Economic studies, some commissioned by federal agencies, confirmed that the royalty rate was not providing the Navajo a fair return for their coal. It is in this context that on June 18, 1984, Donald Dodge, the BIA Navajo Area Director, implemented Article VI and significantly raised the royalty rate to twenty percent. This decision was made under delegated authority of the Secretary of Interior, and in consultation with the Department of Justice.
Appeal of the Rate Adjustment
Not surprisingly, the prospect of such a significant increase in the cost of coal concerned Peabody and its major utility customers, Southern California Edison Company and the Salt River Project Agricultural Improvement and Power District (collectively, the "companies"). The companies appealed the Area Director's decision formally in July 1984. However, the record also establishes parallel ex parte attempts on behalf of industry representatives to communicate with those deciding the appeal. Whether these attempts sought to overturn the adjusted rate or merely to defer the decision on appeal is not clear. What is clear is that they were rebuffed by then-Secretary William P. Clark, who had a firm policy against ex parte meetings. The Navajo were apparently not apprised of the efforts.
John Fritz, Acting Assistant Secretary of Interior for Indian Affairs, the decision-maker on Peabody's appeal, took the matter under consideration. In March 1985, Mr. Fritz granted the companies' petitions to supplement their briefs, and asked them for additional cost, revenue and investment data. This request apparently led the companies to suspect that the decision was going to be favorable to the Navajo.
On April 16, 1985, the Supreme Court decided Kerr-McGee Corp. v. Navajo Tribe of Indians, 471 U.S. 195, 105 S. Ct. 1900, 85 L. Ed. 2d 200 (1985). That case upheld Navajo taxes that had been contested by the companies, and supported the Navajo Nation's position that it was entitled to obtain maximum revenues from its mineral leases. This confirmation of tribal authority no doubt concerned the companies, and arguably improved the bargaining position of the Navajo, who had broken off negotiations on lease amendments in November 1984 to await a decision on the appeal.
In June 1985, the decision document affirming the Area Director's decision awaited Mr. Fritz's signature. The companies learned that a decision affirming the twenty percent adjustment was imminent. On July 5, 1985, Peabody wrote a letter to Secretary Hodel requesting he postpone decision on the appeal and force the Navajo to negotiate. This letter was provided to the Navajo Nation, which promptly rejected further negotiations and urged DOI to decide the appeal with all deliberate speed.
However, the Navajo were not made aware of other lobbying efforts aimed at delaying the rate decision. Early in July 1985, Peabody